BRADENTON, Fla. - Hillview, Ky., and Truck America plan to hold court-ordered mediation talks on Monday, although some portions of the process will be kept secret.
U.S. Bankruptcy Judge Alan C. Stout ordered the city and the truck training company to produce a mediation statement in advance of Monday's session that will not be part of the court record.
A mediation statement will include each party's position and may include settlement information that is not admissible in court, according to bankruptcy attorney John Whitlock, with Locke Lord LLP.
"Since mediation is a form of settlement negotiation, where the parties make their cases to the mediator and the mediator tries to bring them to a settlement, the mediation statements would be part of the settlement communications that are inadmissible and therefore would not be filed in court," Whitlock said.
The mediation comes after earlier settlement negotiations failed.
Hillview and Truck America, the city's largest creditor, conducted settlement discussions earlier this year while the city waited for the court to rule on whether it qualifies to continue with its bankruptcy case.
Truck America rejected a settlement offer made by Hillview and issued a counteroffer on Feb. 7, said the company's attorney Brian Meldrum, with Stites & Harbison PLLC.
"There have been no further discussions since our last counteroffer," Meldrum said Thursday.
The city's attorney did not immediately respond to a request for comment.
The Hillview City Council held a special meeting Feb. 4 and approved a deal to take a $5 million loan from the Kentucky League of Cities as part of its most recent settlement offer, according to the Pioneer News.
In addition, the paper said the city agreed to pay Truck America at least $100,000 annually over five years, plus "any carryover funds at the end of the fiscal year," although the story did not state what the total deal was worth.
Meldrum did not provide any details about Truck America's counteroffer, but he said that the parties were scheduled to meet with a designated judge serving as a mediator on Monday.
The talks take place at the federal courthouse in nearby Louisville.
Hillview, the first city in Kentucky to seek restructuring, filed its petition on Aug. 20 claiming it was intended to stop the 12% interest compounding annually on an $11.4 million breach of contract judgment owed to Truck America.
By the time the city filed, the award had grown to $14.7 million.
However, Truck America said in a letter to the court in January that the correct amount is in excess of $15.23 million due to a computational error in calculating the interest.
In addition to its largest creditor, the city also owed a combined $2.02 million on a pool bond issued by the Kentucky Bond Corp., and on outstanding general obligation bonds that officials have said they do not intend to restructure.
An evidentiary hearing was held Dec. 9 and Dec. 10 on whether Hillview is qualified to pursue its Chapter 9 bankruptcy case, and objections filed by Truck America. A ruling is pending.
