EXHIBIT 99.1
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
ASHLAND DIVISION
IN RE: ) CASE NO. 03-10078
)
ASHLAND STEEL LIQUIDATING ) CHAPTER 11
COMPANY, FKA KENTUCKY ELECTRIC )
STEEL, INC., ) HON. WILLIAM S. HOWARD
)
DEBTOR. )
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ORDER GRANTING DEBTOR'S MOTION FOR ENTRY OF AN ORDER, PURSUANT TO 11
U.S.C SS.SS. 105 AND 1112(B), DISMISSING CHAPTER 11 CASE, AUTHORIZING THE
DISSOLUTION OF THE DEBTOR, AND APPROVING WIND DOWN OF THE DEBTOR'S
BUSINESS AFFAIRS
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THIS MATTER is before the Court on the DEBTOR'S MOTION FOR ENTRY OF AN
ORDER, PURSUANT TO 11 U.S.C ss.ss. 105 AND 1112(b), DISMISSING CHAPTER 11 CASE,
AUTHORIZING THE DISSOLUTION OF THE DEBTOR, AND APPROVING WIND DOWN OF THE
DEBTOR'S BUSINESS AFFAIRS (the "Motion") (1) filed on October 30, 2003 by
Ashland Steel Liquidating Company, fka Kentucky Electric Steel, Inc., debtor and
debtor in possession herein (the "Debtor"); and it appearing that the Motion is
in the best interest of the Debtor, its estate and creditors; and notice of the
Motion having been given to (a) the United States Trustee; (b) counsel to the
Secured Lender Group; (c) counsel to the Official Unsecured Creditors'
Committee, (d) members of the Official Unsecured Creditors' Committee; (e) all
other parties claiming to be secured creditors in this chapter 11 case; (f) all
parties requesting notice in this Chapter 11 case; (g) the Debtor's
shareholders; and, (h) all creditors and other parties in interest as provided
in Rule 2002 of the Federal Rules of Bankruptcy Procedure; and in light of the
circumstances and the nature of the relief requested, it appearing that no other
notice of the Motion and the relief requested therein need be given; the Court,
having reviewed the Motion,
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(1) Unless otherwise stated, all capitalized terms will have the same meaning as
set forth in the Motion.
and otherwise being fully advised in the premises, finds that the legal and
factual bases set forth in the Motion establish cause for the relief granted
herein.
THE COURT HEREBY FINDS THAT:
A. This Court has subject matter jurisdiction over this Motion pursuant to
28 U.S.C.ss. 1334. This is a core proceeding pursuant to 28 U.S.C.ss.
157(b)(2)(A). The Court can exercise its subject matter jurisdiction pursuant to
28 U.S.C.ss.157(b)(1). Venue of this proceeding and the Motion is proper in this
district pursuant to 28 U.S.C.ss.ss.1408 and 1409.
B. The Debtor has served the Motion in compliance with the Bankruptcy Code,
the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules of this
Court. Service of the Motion is therefore proper.
C. Pursuant to the Agreed Final Order Authorizing Debtor's Use of Cash
Collateral Pursuant to 11 U.S.C. 363 entered on February 26, 2003 (Doc. #110)
(the "Cash Collateral Order"), National City Bank of Kentucky (the "Bank"),
acting in its capacity as "Collateral Agent" under a certain Intercreditor and
Collateral Agency Agreement dated as of January 14, 2002 among Connecticut
General Life Insurance Company, Modern Woodmen of America, and the Bank, for the
benefit of the "Lenders" (as therein defined) (hereinafter the "Secured Lender
Group") has a valid, properly perfected lien on substantially all of the
Debtor's assets, including, but not limited to the Debtor's remaining cash,
restricted cash and deposit accounts, accounts receivable, prepaid expenses,
deposits, tax refunds, insurance policies, insurance rebates, and certain
contingent, unliquidated assets relating to various claims or causes of action
(the "Remaining Assets, Claims and Causes of Action"). (2)
D. The Debtor has no equity in the Remaining Assets, Claims and Causes of
Action.
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(2) Pursuant to the Cash Collateral Order, any party in interest (including the
Official Committee of Unsecured Creditors appointed in this chapter 11 case) had
until May 6, 2003 to file an adversary proceeding or contested matter
challenging the validity, enforceability or priority of the Secured Lender
Group's lien position, or to otherwise assert any claims or causes of action
against the Secured Lender Group. See Cash Collateral Order, paragraph 11. The
challenge period was extended through May 31, 2003. See Agreed Order Extending
Challenge Period (Doc. #299). No party in interest filed an adversary proceeding
or contested matter to challenge the Secured Lender Group's lien position, or to
otherwise assert any claims or causes of action against the Secured Lender
Group.
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E. The Debtor has established that "cause" exists to dismiss this Chapter
11 case pursuant to section 1112(b) of the Bankruptcy Code.
F. The Debtor has established that the dismissal of this Chapter 11 case is
in the best interest of the creditors and the estate.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:
1. The Motion is granted in its entirety;
2. The Debtor is hereby dissolved;
3. The Debtor shall file this Order dissolving the corporation in the
office of the Secretary of State of the State of Delaware;
4. The Debtor is hereby authorized to wind down its business affairs
substantially in accordance with the Wind Down Budget attached hereto and
incorporated herein as Exhibit A;
5. With the exception of the cash, deposit accounts and retainers, which
the Debtor may continue to use in accordance with the Wind Down Budget, all
right, title and interest in the Remaining Assets, Claims and Causes of Action
are hereby abandoned to the Bank on behalf of the Secured Lender Group;
6. The Debtor is hereby authorized to take all actions necessary to
effectuate the terms of this Order, the dissolution of the corporation and the
wind down of the business affairs of the Debtor consistent with the terms of
this Order;
7. With the exception of resolving (if necessary) whether the
Debtor/Secured Lender Group or American Compressed Steel is entitled to the
proceeds of the sale of certain scrap material pursuant to the Agreed Order
Granting Debtor's Motion for Entry of An Agreed Order Authorizing the Debtor to
Sell by Private Sale Certain Scrap Material Pursuant to 11 U.S.C ss.ss. 363(b)
and (f) (Doc. #329), this Court specifically does not retain any jurisdiction
for any disputes, issues or any matter relating to the Wind Down Budget or any
other matter relating to the winding down of the business affairs of the Debtor;
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8. This chapter 11 case is hereby dismissed; and,
9. Pursuant to Local Rule 9022-1(c), counsel for the Debtor shall cause a
copy of this order to be served on each of the parties designated to receive
this order pursuant to Local Rule 9022-1(a) and shall file with the Court a
certificate of service of the order upon such parties within ten (10) days
hereof.
Parties to be served with a copy of this Order:
All parties served with the Motion.
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WIND DOWN BUDGET EXHIBIT A
(IN THOUSANDS OF DOLLARS)
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WEEK ENDED
8/29/03 SEPTEMBER OCTOBER NOVEMBER
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Current Asset Recovery
Existing A/R/Refund $ 79 $ 16 $ 3 $ -
Bonus payment from electrode settlement - - 80 -
Insurance and Utility Deposit refund - 34 81 -
Other Cash Sources
Retainers and Professional Fee Account - - - -
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TOTAL CASH SOURCES $ 79 $ 50 $ 164 $ -
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Shutdown Expenses
Utilities $ - $ 18 $ 3 $ -
Facility and Office Expenses 11 14 3 -
Trustee Fees - 10 - -
Professional Fees - Ordinary Course and
Contract Workers - 5 11 10
Professional Fees To Be Paid From
Professional Fee Account/Retainers* - - - -
Property Insurance - - - -
Administrative Claims - - - 37
Workers Compensation Expenses - - 23 -
Environmental Related Costs 15 - - -
Sales and Lease Back - - - -
Other 4 10 7 13
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Total $ 30 $ 57 $ 47 $ 60
Compensation and Benefits
Maintenance and Engineering Payroll $ 5 $ 1 $ - $ -
Shipping Payroll - - - -
Administrative Payroll 7 14 13 12
Retention Bonuses - - - 17
Vacation Pay - - - -
Workers Compensation Insurance Payment - - - -
Directors and Officers Liability Insurance - - - -
Fiduciary Liability Insurance - - - -
Employment Agreements - - - -
Funded Medical Claims Account - - - -
Disability Payments - - - -
Taxes 3 2 2 3
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Total $ 15 $ 18 $ 15 $ 31
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TOTAL CASH USES $ 45 $ 75 $ 62 $ 91
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NET CASH FLOW $ 34 $ (25) $ 102 $ (91)
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WIND DOWN BUDGET EXHIBIT A
(IN THOUSANDS OF DOLLARS)
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DECEMBER JANUARY TOTAL
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Current Asset Recovery
Existing A/R/Refund $ - $ - $ 98
Bonus payment from electrode settlement - - 80
Insurance and Utility Deposit refund - - 115
Other Cash Sources
Retainers and Professional Fee Account 584 - 584
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TOTAL CASH SOURCES $ 584 $ - $ 877
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Shutdown Expenses
Utilities $ - $ - $ 21
Facility and Office Expenses - - 28
Trustee Fees 10 - 20
Professional Fees - Ordinary Course and
Contract Workers 5 5 36
Professional Fees To Be Paid From
Professional Fee Account/Retainers* 584 ** 584
Property Insurance - - -
Administrative Claims 13 - 50
Workers Compensation Expenses - - 23
Environmental Related Costs - - 15
Sales and Lease Back - - -
Other 28 18 80
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Total $ 640 $ 23 $ 857
Compensation and Benefits
Maintenance and Engineering Payroll $ - $ - $ 6
Shipping Payroll - - -
Administrative Payroll 12 12 69
Retention Bonuses - 14 30
Vacation Pay - - -
Workers Compensation Insurance Payment - - -
Directors and Officers Liability Insurance - - -
Fiduciary Liability Insurance - - -
Employment Agreements - - -
Funded Medical Claims Account - - -
Disability Payments - - -
Taxes 2 3 16
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Total $ 14 $ 28 $ 121
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TOTAL CASH USES $ 654 $ 51 $ 979
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NET CASH FLOW $ (70) $ (51) $(101)
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*Includes Frost Brown Todd LLC, VanAntwerp, Monge, Jones & Edwards, LLP,
Navigant Consulting, Inc., Bryan Cave LLP, Deloitte and Touche, Thompson Hine
LLP, Katz, Teller, Brant & Hild, LPA and Stoll, Keenon & Park, LLP. Budgeted
amount represents the balance in the professional fee account and the retainers
held by certain professionals. Fees and expenses incurred prior to the dismissal
of this chapter 11 case will be invoiced and paid on or before December 15,
2003. Fees and expenses incurred after the dismissal of this chapter 11 case
will be paid within ten days of the invoice date.
**Some fees and expenses budgeted for December 2003 may actually be incurred or
paid in January 2004 or thereafter depending on the date of service and the
timing of the wind down of the Debtor's business affairs but total fees and
expenses shall not exceed the total amount budgeted absent approval by the
Secured Lender Group.