October 2, 2018 – In a late afternoon hearing, the Court hearing the Gibson Brands case confirmed the Debtors’ Fifth Amended Joint Chapter 11 Plan of Reorganization [Docket No. 842].
In a press release issued by the Company, Brian Fox, Gibson’s Chief Restructuring Officer said, “Today’s confirmation of our plan of reorganization is a significant milestone toward completing our restructuring and beginning a new chapter for Gibson as a stronger company with essentially no debt and a bright future. Focusing on our iconic brands and core musical instruments, Gibson is poised to continue as one of America’s premier manufacturers of musical instruments with a clear path that will benefit our customers, business partners and employees over the long term. As Gibson moves forward, we would like to thank our employees, customers and business partners for continuing to support the Company and its iconic brands throughout this process.”
The following is a summary of classes, claims, voting rights and treatment under the Plan:
- Class 1 (Other Priority Claims) is unimpaired and is deemed to accept. Estimated recovery is 100%. Holders will receive … “(A) Cash equal to the amount of such Allowed Class 1 Claim; (B) such other less favorable treatment as to which the Debtors or Reorganized Debtors and the Holder of such Allowed Class 1 Claim will have agreed upon in writing; or (C) such other treatment rendering such Claim Unimpaired.”
- Class 2 (Other Secured Claims) is unimpaired and is deemed to accept. Estimated recovery is 100%. Holders will receive … “(A) Cash equal to the amount of such Allowed Class 2 Claim; (B) such other less favorable treatment as to which the Debtors or Reorganized Debtors and the Holder of such Allowed Class 2 Claim will have agreed upon in writing; return of the Collateral securing such Allowed Class 2 Claim; or such other treatment rendering such Claim Unimpaired.”
- Class 3 (ABL Revolver Claims) is unimpaired and is deemed to accept. Estimated recovery is 100%. “All ABL Revolver Claims that are Secured have been paid in full in Cash prior to the Confirmation Hearing or have been Cash collateralized and thus shall be Allowed in the amount of $0.”
- Class 4 (Domestic Term Loan Claims) is unimpaired and is deemed to accept. Estimated recovery is 100%. “All Domestic Term Loan Claims that are Secured have been paid in full in Cash prior to the Confirmation Hearing pursuant to the exercise of the Purchase Option pursuant to the Settlement Order and thus shall be Allowed in the amount of $0.”
- Class 5 (Allowed Prepetition Secured Notes Claims) is impaired and is entitled to vote. According to the most recent Disclosure Statement [Docket No. 566], estimated recovery is approximately Estimated recovery is 52.7%. “On the Effective Date, the Allowed Class 5 Prepetition Secured Notes Claims shall be exchanged for New Common Stock equal to 100% of the New Common Stock authorized and outstanding as of the Effective Date, prior to, and subject to, dilution for the issuance of New Common Stock: (A) on account of the DIP Facility Claims, if applicable; (B) to the DIP Backstop Parties on account of the DIP Backstop Premium; (C) on account of the Exit Premium; (D) in accordance with the Management Incentive Plan; and (E) upon the exercise of the New Warrants.”
- Class 6 (General Unsecured Claims – (Other than Class 7, 8 and 9 Claims)) is impaired and is entitled to vote. According to the most recent Disclosure Statement, estimated recovery is approximately 2.7% to 5.4%. “Each holder shall receive its Pro Rata share of (i) Cash equal to $4,250,000, which shall be paid by the Debtors into a segregated bank account of Cakewalk, Inc. on the Effective Date (the “Distribution Account”), and (ii) $4,000,000 of Profits Interests.”
- Class 7 (General Unsecured Claims Against Gibson Holdings) is impaired and is entitled to vote. According to the most recent Disclosure Statement, estimated recovery is approximately 14.7%. Each holder shall receive “their Pro Rata share of Profits Interests in 100% of the TEAC Shares that are not otherwise allocable to the Profits Interests distributed on account of Allowed Claims under this Plan or Profits Interests that are to be issued to Mr. Juszkiewicz pursuant to his Management Employment and Consulting Agreement, provided, however, that at the election of the Required Supporting Noteholders, the Holders of Gibson Holdings Claims in Class 7 on account of the Allowed Prepetition Secured Notes Claims may, prior to or after the Effective Date, waive the Prepetition Secured Noteholders’ recovery in Class 7 and instead treat such Holders’ recovery in Class 5 as being also on account of their Gibson Holdings Claims in Class 7, provided further, however, that any such waiver of recovery in Class 7 by the Required Supporting Noteholders shall not result in a greater distribution of Profits Interests to any other Person. For the avoidance of doubt, the total number of TEAC Shares subject to Profits Interests shall not exceed the total number of TEAC Shares.”
- Class 8 (Convenience Class Claims) is impaired and is entitled to vote. According to the most recent Disclosure Statement, estimated recovery is approximately 50.0%. Each holder shall receive “cash in an amount equal to up to 50% of the Allowed Convenience Class Claim, provided, however, that, to the extent the Cash necessary to pay all Allowed Convenience Class Claims exceeds the Convenience Class Cap, Allowed Convenience Class Claims shall instead receive their Pro Rata share of Cash up to the Convenience Class Cap in an amount less than or equal to 50% of their Allowed Convenience Class Claim.”
- Class 9 (Intercompany Claims) is impaired/unimpaired and is entitled/not entitled to vote. According to the most recent Disclosure Statement, estimated recovery is approximately 100% or 0%.”All Class 9 Intercompany Claims shall be, at the option of the Company with the consent of the Required Supporting Noteholders, either: (a) Reinstated, (b) converted into equity, or (c) cancelled, and may be compromised, extinguished, or settled after the Effective Date.”
- Class 10 (Equity Interests in Gibson) is impaired and is deemed to reject. Estimated recovery is 0%. “All Class 10 Equity Interests in Gibson will be deemed cancelled upon the Effective Date and will be of no further force or effect, whether surrendered for cancellation or otherwise, and the Holders of all Class 10 Equity Interests in Gibson shall neither retain nor receive any property under the Plan on account of such Equity Interests.”
- Class 11 (Class 11 (Equity Interests in Subsidiaries (Other than Excluded Debtor Subsidiaries)) is unimpaired and is deemed to accept. Estimated recovery is 100%. “Reorganized Gibson will own 100% of the Equity Interests in the other Debtors and its Non-Debtor Subsidiaries, except for (a) the Excluded Debtor Subsidiaries (other than Cakewalk, Inc.), and (b) the Excluded Non-Debtor Subsidiaries.”
- Class 12 (Equity Interests in Excluded Debtor) is impaired and is deemed to reject. Estimated recovery is 0%. “The Debtors’ Equity Interests in the Excluded Debtor Subsidiaries shall be, and shall be deemed to be, cancelled and will be of no further force or effect. The Debtors’ shall neither receive nor retain any property on account of their cancelled Equity Interests in the Excluded Debtor Subsidiaries.”
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