Claire’s Stores’ Official Committee of Unsecured Creditors filed with the U.S. Bankruptcy Court an objection to the Debtors motion for entry of an order (i) approving the proposed Disclosure Statement and (ii) establishing solicitation and voting procedures.
The Committee states, “The Plan delivers all of the Debtors’ considerable enterprise value to its controlling shareholder, Apollo, and the holders of the First Lien Debt Secured Claims. It is premised on an artificially low valuation and a new money exit financing package that is structured to deliver outsized returns, but is not being market tested. Unlike the Debtors’ senior lenders and private equity sponsor, who are poised to recover more than the value of their claims, the Debtors’ junior creditors are left to share in a pro rata recovery from a vaguely defined but undoubtedly minimal ‘Unsecured Recovery Cash Pool’ that provides them with far less than their fair share. The Committee is prepared to submit compelling evidence that the Debtors’ businesses are far more valuable than the Debtors conclude and, therefore, that the Plan violates the absolute priority rule. In light of this unfair allocation of value, both the Committee and Oaktree oppose the Plan, and without their support, Class 8 will not vote in favor of the Plan, rendering the Plan unconfirmable and making any efforts to solicit votes for or seek confirmation of the Plan a waste of time.” The Committee also filed a separate motion for entry of an order authorizing the Committee to file the objection in redacted form.
The Committee explains, “The adjudication of the Disclosure Statement Motion and the Objection requires the discussion and review of certain confidential business and commercial terms, including confidential information the Committee received from the Debtors.”
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