After one of the shortest stays under a bankruptcy umbrella on record, Zenith Electronics is emerging from Chapter 11, but only as a research, sales and marketing organization, with its manufacturing days behind it.
Zenith had its credit-approved, pre-packaged emergence plans approved by the Wilmington, Del., Federal Bankruptcy Court on November 8. The company announced its intention to seek protection from creditors last spring but didn't actually file for Chapter 11 until August.
As previously announced, the plan calls for all trade creditors to be paid in full, a restructuring of bank debt and the transfer of manufacturing assets not already sold, including Zenith's TV manufacturing operations in Mexico, as well as a 100% stock interest, to Korea's LG Electronics in return for cancellation of most outstanding debt and $125 million in new financing.
President Jeffrey Gannon said Zenith is emerging "with a healthier balance sheet and more financial flexibility to participate fully in the transition to digital TV and HDTV." He noted Zenith has a three-year $150 million bank credit agreement.
Speaking for LG Electronics, CEO John Koo said his company is looking forward to "building on the strength of the powerful Zenith brand name and further strengthening LGE's presence in North America."