Patriot National filed with the U.S. Bankruptcy Court an amended Disclosure Statement.
According to the Disclosure Statement, “Pursuant to the Plan, all of the issued and outstanding equity interests in PNI and each of its direct and indirect subsidiaries (the ‘Subsidiary Debtors’) will be extinguished, and the First Lien Lenders (or their designees) will receive 100% of newly issued equity interests in Reorganized PNI and each of the Reorganized Subsidiary Debtors on account of a portion of their claims arising under their applicable financing agreements as further described below. Additionally, the Plan provides for the creation of a Litigation Trust and for the transfer free and clear into the Litigation Trust of all of the Debtors’ Litigation Claims, which include avoidance actions, commercial tort claims, including claims against certain of the Debtors’ current and former officers and directors, claims against certain of the Debtors’ former professionals, and other claims against third parties held by the Debtors. The proceeds from the settlement or successful prosecution of the causes of action transferred to the Litigation Trust will be distributed pursuant to the Litigation Proceeds Waterfall…the Cash proceeds of the Litigation Claims will first be used to pay Litigation Trust Expenses, then to repay amounts borrowed under the Litigation Trust Facility and then to repay any indebtedness incurred under the DIP Facility or Exit Facility.
Remaining Cash proceeds from the Litigation Claim will then be split with 80% being distributed rateably to holders of Allowed First Lien Lender Deficiency Claims and 20% being allocated to the GUC Cash Pool for distribution to holders of Allowed General Unsecured Claims and Allowed Subordinated Claims pursuant to the GUC Cash Pool Waterfall. Allowed Priority Claims and Allowed Other Secured Claims will either be paid in full, reinstated, or otherwise rendered unimpaired. Allowed Continuing Vendor Claims and Allowed Continuing Retail Agent Claims will be paid in full in the ordinary course of business, or if such amounts are overdue on the Effective Date of the Plan, in two equal installments with the first such installment occurring on the Effective Date and the second occurring six months after the Effective Date. The Plan provides for Allowed DIP Claims, Allowed Administrative Expense Claims, Allowed Priority Tax Claims and U.S. Trustee Fee Claims to receive 100% recoveries or such other treatment as is agreed to in writing among such Holder, the Debtors and the First Lien Agents. On the Effective Date, Reorganized Debtors will enter into a new credit facility (the ‘Exit Facility’) with commitments sufficient to (a) repay in full all amounts outstanding under the DIP Facility, (b) make the cash distributions contemplated by the Plan, (c) provide working capital for the ongoing business operations of the Reorganized Debtors, and (d) pay all related transaction costs and expenses. The Exit Facility shall have a first priority lien upon and security interest in substantially all of the assets of the Reorganized Debtors. The Plan also provides for the Reorganized Debtors to enter into a New Term Loan Facility on the Effective Date. The New Term Loan Facility will be used to make certain distributions to the First Lien Lenders under the Plan. The New Term Loan Facility shall have a second priority lien upon and security interest in substantially all of the assets of the Reorganized Debtors.”
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