As you may recall from a bankruptcy post here on Monday about Lionel, one of the eyebrow-raising aspects of the company's Chapter 11 plan, confirmed by Manhattan Judge Burton Lifland on March 31, was the conspicuous absence of the music legend and model train enthusiast in reorganized Lionel's ownership group.
Young, who owned 20% of Lionel before it filed for bankruptcy in November 2004, was wiped out in the iconic model train maker's Chapter 11 plan along with the company's other stakeholders. According to the plan, pre- and postpetition lender Guggenheim Corporate Funding LLC (48.6%) and Train Acquisition LLC (28.6%), a holding company controlled by the late Martin Davis' estate, walked away with the bulk of reorganized Lionel's equity. The rest was to be split between CEO Jerry Calabrese and senior management.
But according to Calabrese, despite what the plan says, Young "continues to have a meaningful, minority stake in the new Lionel just as he did in the prebankruptcy company."
In an e-mail exchange on Wednesday, Calabrese declined to disclose how much equity Young has in reorganized Lionel, but offered a reason for his absence in the company's reorganization plan.
The former Marvel Comics chief who brought Lionel out of bankruptcy says Young was out of the country on tour when Lionel and its lawyers were crafting the plan, "though it had always been intended that he would be part of the post-bankruptcy company." Calabrese says Lionel worked out the final details of Young's ownership in the reorganized company three days before the plan's May 1 effective date.
We may never know Young's new equity stake in Lionel, but we do know this: Lionel owns a stake in Creative Trains LLC, a company Young partially controls. And together, Lionel and Creative Trains developed a joint venture, Liontech Trains LLC, to share technology. It's awfully complicated. But the bottom line is, Young and Lionel still seem to be coupled together. - John Blakeley
We know he's a rock 'n' roll star and all that, but why is Neil Young's continued stake in the now post-bankruptcy Lionel LLC need to be such a mystery?
