J.L. French Automotive Castings Inc. has gained federal bankruptcy court approval to pay fees to its creditors, in keeping with the Restructuring Support Agreement formed between the company and its top creditors prior to its filing for creditor protection in February. The payments had been opposed by the official committee of unsecured creditors, who contended that the fees implied the creditors’ approval of the agreement.

J.L. French, Sheboygan, WI, produces high-pressure aluminum diecastings for automotive components and assemblies.

The Restructuring Support Agreement and the Rights Offering Term Sheet obtained by J.L. French prior to the Chapter 11 filing outlines the basis on which the company expects to reorganize financially, based upon a new money equity investment of $110 million-$130 million.

J.L. French stated in February that the new investment is necessary in order to allow the company to grow after reorganization.

As a result of the agreement and court ruling, J.L. French will pay a 1% restructuring transaction fee to the creditors that committed to backstop up to $130 million in the rights offering. The court also authorized J.L. French to pay a 2% fee upon funding of the new money investment, once the reorganization is effected.

The court also approved a maximum 2% "break up" fee to the creditors if J.L. French were to accept a "higher and better" offer for a takeover than the reorganization and creditors’ agreement anticipates.