Dueling plans to pull Ahern Rentals Inc. out of Chapter 11 bankruptcy will now go to creditors for a vote as majority owner Don Ahern showed a new willingness to cut a deal with his arch nemesis.
U.S. Bankruptcy Court Judge Bruce Beesley approved on Friday the disclosure statements, nonlegal explanations of how a business will be reorganized and creditors repaid, submitted by both the company and its junior lenders. Although similar in numerous respects, the lenders’ plan accepts ownership of the longtime pillar of the Las Vegas business community as repayment; the company’s version would pay them a combination of cash and new notes while letting Ahern retain his 97 percent stake.
Mutual suspicion between Ahern and the junior lenders, led by the Los Angeles investment firm Platinum Equity, has marked the case from the beginning.
The court schedule calls for voting in May, followed by what could be a multiday court battle in early June to decide the winner.
John Murtha, a Reno attorney who officially entered the case last week to represent Ahern and a couple of entities he owns, conceded that his client and the company had committed “tactical missteps” in the case.
The company, one of the largest construction equipment lessors in the country, is handled by a separate law firm.
“The (company’s) first plan was overly aggressive, no doubt at all,” said Murtha. “The (company) has listened and so has Mr. Ahern” to the complaints registered not only by creditors but also Beesley.
The first edition of the plan proposed paying $111.5 million in senior loans and $267.7 million in junior loans at less than current value, while keeping Ahern’s ownership intact. This ran contrary to basic bankruptcy law that owners lose part of all of their positions if creditors don’t get repaid in full.
Since then, Ahern sweetened the terms in several respects, notably by repaying the senior loans completely in cash.
“Had Mr. Ahern’s plan looked like this a few months ago, he probably would not be in this situation,” said Beesley, referring to the competing plan from the junior lenders.
Now, Murtha says a settlement is possible prior to a protracted and expensive court fight.
Daniel Connolly, representing the junior lenders, said, “I would not hold out an enormous amount of hope” for settling.
In the past, Ahern has publicly expressed concern that Platinum would take control of the company and institute major layoffs.
In a January interview with the trade publication Access Lift & Handler, Ahern was quoted as calling bankruptcy “an incestuous and evil process” and promising to launch a competitor if he lost control of Ahern Rentals.
Ahern Rentals court papers later said he was quoted out of context.
Ahern Rentals has also reported in court papers that its sales and earnings have rebounded sharply after tumbling during the recession.
Contact Tim O’Reiley at email@example.com or 702-387-5290.