Letters to Suppliers
November 17, 2009
Dear Trade Partners/Suppliers,
We are pleased to report that during first-day hearings today in our voluntary Chapter 11 case, the Court approved up to approximately $31 million in interim debtor-in-possession (DIP) financing pursuant to the terms of the facility for immediate use by the Company to continue to purchase goods and services and fund operations. As you know, in conjunction with its voluntary Chapter 11 filing, the Company obtained a $40 million DIP financing credit facility from certain of its current lenders, which will be used to fund post-petition operating expenses and supplier and employee obligations. A hearing has been set for Thursday, December 10, 2009 for final approval of the DIP agreement.
With our interim DIP financing in place and the protections provided under the Bankruptcy Code for payment of post-petition goods and services, there is every reason for you to feel confident that you can ship to us on customary terms.
The Court will allow us to expedite the provision under Section 503(b)9 of the Bankruptcy Code which allows for payment to vendors who have delivered goods within the last 20 days.
A copy of our public announcement is enclosed. The Company filed its voluntary petitions in the U.S. Bankruptcy Court for the District of Delaware in Wilmington. The cases are being jointly administered under case number 09-14019.
We will continue to keep you informed as to the progress of our reorganization. We thank you for your continued support and trust that, going forward, we can continue to build on our working relationship to create long-term opportunities for our mutual success.
If you have any additional questions, please feel free to call our restructuring information line at (877) 857-7554 or (248)-614-8390 if you are calling from outside the United States or visit the Company’s restructuring website at www.championrestructures.com.
Sincerely,
Phyllis A. Knight
Executive Vice President and Chief Financial Officer
Champion Enterprises, Inc.
November 15, 2009
Dear Trade Partners/Suppliers,
Today, Champion Enterprises, Inc. and its domestic operating subsidiaries filed voluntary petitions for Chapter 11 of the U.S. Bankruptcy Code to restructure its balance sheet. We believe the filing will allow us to improve our capital structure in order to further strengthen the company as a whole.
For many years the Company has been operating with a significant debt load that has become increasingly burdensome as a result of the troubled economy in which we operate. As a result, the Company determined that the Chapter 11 process provides Champion with the most timely and orderly means to restructure its debt obligations and to facilitate a sale and recapitalization so that it can be best positioned to capitalize on opportunities as they arise in the future. The Company expects that this restructuring will be accomplished through a court-supervised sale of its operations.
This does not mean Champion Enterprises is going out of business. We plan to continue to purchase goods and services and fulfill all customer orders. Further, Champion’s operations outside of the United States were not included in the filing.
Champion has sufficient resources to meet its ongoing obligations. We received obtained a $40 million loan from certain of our current lenders, subject to court approval. Access to this financing will ensure that Champion continues to have the ability to pay suppliers and employees in the ordinary course of business going forward.
Further, the Company will seek to expedite the provision under Section 503(b)9 of the Bankruptcy Code which allows for payment to vendors who have delivered goods within the last 20 days. The Company expects the vast majority of its trade partners will be paid under this provision.
With respect to our ongoing business relationship, the Bankruptcy Code provides administrative priority status for post-petition orders and shipments (goods and services received after the Chapter 11 filing date). Therefore, you can be assured that we can and will pay for the goods and services you provide to us after the November 15, 2009 filing date.
Unfortunately, other than as noted above, federal law prohibits us from paying for goods that were delivered or services rendered before November 15, 2009. If you have not been paid for goods delivered before this date, you will be provided with a claim form to be completed and filed with the Court. Any distribution on the claim will be pursuant to a plan of reorganization that is accepted by creditors and approved by the Court or other Court orders. We sincerely regret any hardship this may cause.
For your information, a copy of the public announcement of our restructuring activities is enclosed. If you have any further questions, please feel free to call our restructuring information line at 877-857-7554 or 248-614-8390 for callers from outside the United States. The restructuring information line will be staffed Monday through Friday, 8 a.m. to 6 p.m. Eastern Standard Time. Additional information about our Chapter 11 restructuring is also available at www.championrestructures.com.
We value our relationship with you and appreciate your patience and understanding during our reorganization. We fully expect to emerge from Chapter 11 as a stronger company with a capital structure that will see us through this challenging economic time as well as far into the future.
Sincerely,
Phyllis A. Knight
Executive Vice President and Chief Financial Officer
Champion Enterprises, Inc.