RMH Franchise Holdings – U.S. Trustee Objects to Disclosure Statement, Citing “Informational Deficiencies”

October 4, 2018 – The U.S Trustee in the RMH Franchise Holdings case filed an objection to the Debtors’ Disclosure Statement [Docket No. 603]. The Trustee asserts, “The U.S. Trustee objects to the Disclosure Statement because it does not provide adequate information concerning the Plan to creditors whose votes will be solicited, as required by Section 1125 of the Bankruptcy Code. In addition, the Disclosure Statement also does not include the information necessary to allow non-voting creditors to make informed decisions about whether to object to confirmation of the Plan. The U.S. Trustee has identified several informational deficiencies where adequate information is not contained in the Disclosure Statement…. The Disclosure Statement is missing two key exhibits: (a) a liquidation analysis, and (b) the Debtors’ financial projections. The information to be provided in these exhibits is necessary for creditors in voting classes to properly evaluate whether to vote to accept or reject the Plan, and for creditors in non-voting classes to determine whether to object to confirmation of the Plan. Without the liquidation analysis and projections, the Disclosure Statement does not contain adequate information, and therefore cannot be approved. The Plan is also missing an exhibit, which is the Term Sheet that is to be attached as Exhibit B to the Plan. That Term Sheet is supposed to set forth the terms of amendments to be made to the credit agreement with the Debtors’ lenders. This information is also necessary for creditors in voting classes to properly evaluate whether to vote to accept or reject the Plan, and for creditors in non-voting classes to determine whether to object to confirmation of the Plan.”