Article published March 05, 2006
Outsiders will be key players in guiding Dana in bankruptcy
High-powered professionals will get millions in fees
By GARY T. PAKULSKI
BLADE BUSINESS WRITER
Most Dana Corp. employees have likely never heard of Ted Stenger.
But he will play an important role in their future.
Mr. Stenger, a consultant with AlixPartners LLC of suburban Detroit, will be Dana's chief restructuring officer in its Chapter 11 bankruptcy filing.
The post is a key for firms operating in bankruptcy. He will manage Dana's case and be the main liaison with creditors' committees set up to represent banks, bond-holders, and vendors. The post is typically filled by an insider, and legal experts said it is possible that lenders demanded an outsider as a condition of providing new financing to the firm.
AlixPartners declined comment. A Dana spokesman couldn't be reached.
Mr. Stenger is among a raft of outside professionals - many who are veterans of the nation's largest corporate bankruptcies - hired by Dana to help it through Chapter 11. They stand to collect millions of dollars in fees. In the next month alone, AlixPartners will collect $2.3 million; the outside financial adviser will get $1.3 million.Professionals include lead attorneys Jones Day, an international law firm started in Cleveland, according to documents filed in U.S. Bankruptcy Court in New York City. The law firm has been involved in many high-profile bankruptcies, including a pending one at Kaiser Aluminum.
The Jones Day team will be led by Corrine Ball, who heads the bankruptcy practice at the firm's New York office. Three lawyers from the Cleveland office also will work on the case.
Dana has designated its longtime counsel, Hunton & Williams, a white-shoe firm in Richmond, Va., as "special counsel." While its assignment is unclear, legal experts said Dana's board likely has a specific task for it.
Advising Dana on financial matters is Miller Buckfire & Co. LLC, of New York. Founded in 2002 by Wall Street veterans Henry Mill and Kenneth Buckfire, the firm has helped 100 firms restructure $180 billion in debt, according to its Web site.
It has provided advice in bankruptcies at Dow Corning, Calpine Corp., J.L. French Automotive Castings, and Kmart.
Miller Buckfire is accustomed to working with AlixPartners, the crisis manager for Dana. The two have collaborated in several bankruptcies, including Kmart, where Mr. Stenger assumed the post of corporate treasurer.
Working out of AlixPartners' New York office, but now assigned full-time to Dana, Mr. Stenger's past assignments included Fruit of the Loom, FINOVA Group, and Allied Holdings.
At Maidenform, the women's apparel manufacturer, he was interim chief executive.
When Toledo's Owens Corning filed for Chapter 11 in 2000, that firm's then-legal chief, Maura Abeln Smith, was named chief restructuring officer. After she left, the duties were split between two executives.
Legal experts say it is unclear why Dana has its restructuring position set up as it does.
In some instances, outside restructuring officers are brought in when lenders lack confidence in management, said Professor James J. White, a bankruptcy expert at the University of Michigan in Ann Arbor. "When a company is forced to hire a restructuring officer, he will to some extent be a spy," Mr. White said. "He will report back to creditors on managers and, in some cases, suggest they be replaced."
In other cases, the board hires an outsider to focus on the bankruptcy process while executives concentrate on operating the company.
Still, the allegiance of an outside restructuring officer isn't necessarily to his fellow executives, Mr. White said. His comments to creditors about management influence their views and the recommendations they make to the bankruptcy judge.
"It is an important position," Mr. White added, because every major decision made by a company in Chapter 11 must first be approved by the bankruptcy judge.
Contact Gary Pakulski at:
gpakulski@theblade.com
or 419-724-6082.
Permanent Link
|
|
 |
|
Search
advertisement
