Allied Holdings Inc.

Atlanta, GA: (Apr-26-07) In a lawsuit filed against Allied Holdings Inc. by its shareholders, a federal judge approved a settlement that allowed investors to keep a stake in the reorganized automobile hauler, ending a legal battle that had threatened Allied's exit from bankruptcy. The settlement will allow the shareholders to buy, at a discount, a portion of the company's post-bankruptcy stock. Allied and its biggest unsecured creditor buyout firm, Yucaipa Cos., brokered the deal with the shareholders group. As part of the settlement, Allied agreed to change its Chapter 11 reorganization plan to give unsecured creditors, which hold a total of $196.9 million in claims, the option sell at least $40 million of those claims for 25 cents on the dollar and opt out of the stock distribution. The shareholders, whose legal fees in the case will be covered, weren't due to recover anything under Allied's proposed Chapter 11 reorganization plan. The company intends to cancel its old shares when it exits bankruptcy protection and issue new ones to repay its unsecured creditors, including Yucaipa, which co-sponsored the Chapter 11 plan. Allied also agreed to pay up to $525,000 in fees and expenses incurred by the ad hoc committee of shareholders that negotiated the deal. [FORBES: SHAREHOLDER BANKRUPTCY]

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Published on May-1-07