LaFrance gets OK to exit bankruptcy

Emergency vehicle manufacturer American LaFrance was given the green light Friday to emerge from bankruptcy when a Delaware judge entered an order confirming the company's financial restructuring.

The company's creditors voted last month to approve the plan.

A. Matthew Karmel, president and chief executive officer, announced the news to the staff before the end of Friday's shift. He said Memorial Day weekend was the perfect time to leave behind the distractions of the bankruptcy process.

"Now we can focus on the business itself," Karmel said.

At its Summerville plant off Jedburg Road Friday morning, production was in full swing, with the company almost back to its pre-furlough work force of more than 500.

American LaFrance sought protection from creditors in January, blaming a new inventory-tracking system for hampering its operations, along with a slowdown in demand for its fire trucks and other vehicles.

The reorganization plan was approved by U.S. Bankruptcy Court Judge Brendan L. Shannon in Wilmington, Del., where American LaFrance is incorporated.

Under the plan, creditors with claims not secured by collateral will be paid out of a fund that will include $6.1 million in cash and proceeds from the sale of two buildings. Unsecured creditors owed $2,500 or less, or those willing to reduce their claims to $2,500, will be paid in full but without interest.

The reorganized company will be responsible for paying back another $28 million in debt. All told, the company owes unsecured creditors $85 million, according to its Jan. 28 bankruptcy filing.

In a written statement, Lynn Tilton, chief executive officer of New York-based Patriarch Partners LLC, which bought American LaFrance in 2005 from truck maker Freightliner, called the court approval "another milestone in the long history of this epic 175-year-old manufacturing company."