Judge rejects Ahern Rentals' reorganization plan
By Lindsey Anderson03 December 2012
A Nevada bankruptcy judge has rejected Ahern Rentals' draft plan of reorganization. At a hearing Nov. 30 in Reno, U.S. Bankruptcy Court Judge Bruce Beesley said Ahern's plan could not be approved because it allows Don Ahern to keep his 97 percent stake while lenders would be forced losses over time.
Ahern Rentals' filed for Chapter 11 bankruptcy protection almost a year ago on Dec. 23, 2011, but was repeatedly granted extensions to present its plan of reorganization. While Ahern did present a draft, a final completed plan has yet to be brought forth.
On Nov. 21, Ahern presented a draft of the plan but creditors objected on the grounds that only delayed and discounted payments were offered while Don Ahern, who owns 97 percent of the company, was unaffected.
According to reports, the plan set forth would give two sets of lenders holding $379.2 million in debt an option: accept a discounted lump sum upfront as payment in full or receive rewritten loans for replayment over a term as long as seven years.
According to the Las Vegas Review-Journal, Judge Beesley deferred until Dec. 7 to make a decision as to allow lenders to submit their own proposals, which could erase or dilute Don Ahern's ownership.
Judge Beesley wrote, "The debtor offers the first and second lien creditors the option of either accepting significant discounted cash payouts or accepting new debt obligations with significantly extended maturities and extraordinarily reduced interest rates, and in some instances, deferred interest. A cashout over time does not satisfy the absolute priority rule."
Beesley told Ahern to reconsider his position with lendors through his extended exclusivity (ending Dec. 7) and ordered Ahern's attorneys to file a 20-page brief by Dec. 5 explaining how the plan is acceptable under the absolute priority rule.
The largest debtholder is Platinum Equity, which owns Maximum Cranes and Nesco.