NEW YORK — A federal bankruptcy court this morning told WestPoint Stevens to try harder at achieving a Chapter 11 plan of reorganization before seeking to sell off the company to Wilbur Ross, Carl Icahn or anyone else.
In a stunning ruling from the bench following a nearly two-hour hearing, U.S. District Judge Robert Drain denied a package motion seeking approval of the auction and bidding procedures for the bankrupt mill. Further, he found that since two bidders had already expressed interest in WestPoint, a $5 million breakup fee for Wilbur Ross and the Steering Committee of first-tier lenders was unnecessary.That finding defeated the entire motion.Eighty percent of the breakup fee would have been payable to the steering committee. "With the exception of Mr. Ross, the bidders already have a vested interest in the company," Drain said.The judge told the company that a sale of the assets should be attempted within the context of a reorganization plan. WPS had claimed a stalemate among creditors prevented ratification of a plan and argued that a court-ordered "363" sale was its only alternative.Drain said WestPoint should continue the preparation for the 363 sale in the event the reorg plan fails again. Following the hearing, attorneys for the steering committee and Icahn continued to express strong interest in the company and supported the ruling.