On May 21, Van Buren Township Supervisor Paul White signed an agreement to sell $9,831,427.66 in unsecured claims against Visteon to Fulcrum Credit Partners of Austin, Texas, for 58% of its value.
Fulcrum wired the purchase price of $5,702,228.04 to VBT to deposit in the Local Development Finance Authority account to pay for future Visteon bond payments.
The official documents on the sale were acquired from the township clerk’s office under a Freedom of Information Act request.
Matthew W. Hamilton was the authorized signatory for Fulcrum, which is registered as a Delaware limited liability company.
In an April 6 resolution passed by the township board, the board unanimously agreed to sell its $9.8 million claim against Visteon to a third-party entity interested in purchasing the claim for more than the $2.2 million minimum guaranteed by Visteon.
The resolution authorized Kilpatrick and Associates, the township’s bankruptcy counsel, to negotiate a sale of the claim for the maximum financial benefit of the township.
Since everyone on the board agreed the time between the purchase offer and its acceptance was critical, the board agreed to give the supervisor authority to sign such acceptance of a good offer, provided he passed the offer by all of the elected officials he could contact.
In exchange for the $5.7 payment, Fulcrum gets all right, title and interest in and to Proof of Claim 3304 and the Transferred Rights in the total aggregate face amount of $9,831,427.66.
Visteon is before Judge Christopher S. Sontchi in Federal Bankruptcy Court in Delaware for a voluntary chapter 11 bankruptcy filing, seeking reorganization.
The corporation, a former subsidiary of Ford Motor Co., is a leading global supplier of climate, interiors, lighting, electronics, and other automotive system, modules, and components to original equipment.
Among the hundreds of debtors being considered by Judge Sontchi was Van Buren Township which, under Supervisor Cindy King, entered into agreements to help Visteon build its corporate headquarters in the township.
Over the past few years, Visteon Village became partially vacant. The property stretches from Tyler to Ecorse roads between I-275 and Hannan, and encompassed nine buildings.
Recently General Electric leased some of the village and now a landfill-gas-to-electrical-energy plant is seeking approval on the east side of the Visteon property.
The Visteon parcels are subject to property tax valuation and assessment within the township. In 2002, VBT assisted Visteon in financing the construction of Visteon Village by issuing about $28 million in 30-year bonds supported by the full faith and credit of the township.
The township primarily relied on the property taxes it collects from Visteon to service the debt obligations owed on account of the township bonds.
Since petitioning for bankruptcy on May 29, 2009, Visteon has paid about $2.9 million to the township for full payment of the summer and winter property taxes.
For purposes of computing real property taxes, the township valued Visteon Village at about $165 million.
Visteon thought that was too high so last fall it began to negotiate with the township to reduce the assessed value of Visteon Village, saying it would probably have to sue if the assessed valuation wasn’t reduced.
So, the township hired appraisers to value the property and the parties engaged in a series of negotiations on the tax assessed value of Visteon Village.
The negotiations took into account the issue of the industrial facility tax agreements that provide tax abatements to Visteon which enticed them to locate in the township.
Visteon had been unable to meet obligations for the staffing levels at Visteon Village and so the township was entitled to revoke the tax abatements.
To solve the disputes in January, the township and Visteon agreed – and so did Judge Sontchi – to reduce the value of Visteon Village by $100 million (to $60 million), to a taxable and assessed value of $30 million.
In exchange, Visteon agreed to pay the township $2.2 million in cash. Also, Visteon agreed not to object to a proof of claim for a general unsecured claim for VBT in the amount of $9.8 million for the remaining amounts owed (what they would have paid in taxes and other breaks).
Also, the township agreed that Visteon’s good faith inability to meet its commitments in the tax abatement agreement shall not be a basis to void or cancel the tax abatements.
In the bankruptcy court documents, Visteon stated that it expects no shortfall with respect to the township bonds to arise until 2015 at the earliest.
The extra $5.7 million will be used for bond payments and extend the LDFA bond fund out a few more years, with township officials hoping the economy will be better then.
At the April 5 township workshop meeting, Dan Swallow, Director of Planning and Economic Development, said Visteon was trading much higher these days and that’s why the issue has become such a “hot button now.”
At the regular meeting on April 6, Swallow said the advantage of negotiating a sale of what is owed to the township is that the township will get a certain settlement in cash and quickly. The disadvantage would be that the township might receive less than it would by waiting until the end of the bankruptcy.
He said the question was whether the board wants to negotiate a sale now or wait until the bankruptcy court decides later. He said Visteon’s bankruptcy is expected to end during the third quarter.
Supervisor White said a group of investors could offer 85 to 92% of the total owed or the township could wait and get 60% — or the full 100% from the bankruptcy judge. No one knew for sure.
Recently, bankruptcy proceedings were delayed again because rival Johnson Controls had offered to purchase Visteon and the judge thought it should be considered.