According to a report by the Milwaukee Business Journal, Briggs & Stratton’s largest unsecured creditors want to delay the company’s fast-track plan to sell its assets at auction. The creditors say a business reorganization could result in a better financial outcome for the company’s trade creditors, retiree health plan and pensioners.

According to the report, “the company proposes an auction process with an Aug. 28 bid deadline and a Sept. 11 hearing on the sale. That would complete the Chapter 11 process within 7.5 weeks of Briggs & Stratton’s bankruptcy filing and allegedly give an unfair advantage to stalking-horse bidder KPS Capital Partners, said attorneys representing the holders of $195 million in senior unsecured notes.” 

On July 20, along with announcing the bankruptcy filing, Briggs announced an agreement to sell most of its assets to private equity firm KPS for $550 million. KPS also would be a major contributor of $265 million to $677 million in debtor-in-possession financing to keep the company operating, reports the Business Journal. The article goes on saying, 

If the bankruptcy court judge approves the Briggs-KPS proposal, the company’s retiree benefits plan, pension obligations and trade creditors “stand to receive very little if anything,” the note holders said.

The company said its board voted prior to the Chapter 11 filing to terminate the company's group insurance plan for retirees, which provides retiree health and welfare benefits. With the termination, benefits will cease on Aug. 31.

A reorganization plan, on the other hand, could potentially preserve some financial value for those stakeholders and others, the objection states.

The note holders suggest that selling Briggs' “several distinct businesses” separately rather than as a whole “may realize optimal value.” Another possibility would be a combination of selling some non-core assets and reorganizing the company’s core business, the note holders said.

The note holders also questioned Briggs & Stratton’s statements about the need for $275 million to maintain its product inventory when the company reported large inventory levels for the quarter ending March 31. The creditors said heavy spending on building inventory is “puzzling” and “must be scrutinized.”