January 2, 2019 – The Debtors filed a Chapter 11 Plan [Docket No. 522] and a related Disclosure Statement [Docket No. 523]. The Debtors also asked the Court to sign off on the adequacy of their Disclosure Statement and approve solicitation and notice procedures in respect of the Plan [Docket No. 524].
There are three classes entitled to vote on the Plan and recoveries will depend on a waterfall payment process that will flow from Class 3 (DIP Facility Claims, currently estimated to be $209.2mn) down through Class 4 (Second Lien Secured Claims) and finally to Class 5 (General Unsecured Claims). The Class 3 treatment is not entirely clear in the Disclosure Statement, listed as “impaired/unimpaired” in a summary table and simply “impaired” in further disclosure relating to the class. What is clear, however, is that the class is entitled to vote and that the Debtors’ Disclosure Statement notes the class’s anticipated recovery as an indeterminate range.
The Debtors state, “The Plan and Disclosure Statement contemplate (a) the sale and transfer of substantially all of the Debtors’ assets, (b) efficient distributions to creditors, and (c) a subsequent wind-down of the Debtors’ businesses and affairs upon distribution of the sale proceeds pursuant to the Plan. Upon the Plan Effective Date, the Plan Administrator will be appointed to act on behalf of the Debtors’ estates on all subsequent matters, including the orderly wind-down of the remaining assets of the estates. The Plan Administrator will make distributions to creditors in accordance with the terms and conditions of the Plan. The Plan contemplates classifying holders of Claims and Interests into the following Classes of Claims and Interests for all purposes, including with respect to voting on the Plan.”
Further the Disclosure Statement notes, “Generally speaking, the Plan: (a) Provides for 100 percent recoveries for Holders of DIP Facility Claims (or treatment otherwise acceptable to the Required Lenders), Allowed Administrative Claims, Priority Tax Claims, Estate Retained Professional Fee Claims, Other Priority Claims and Other Secured Claims; (b) provides for the distribution of the General Unsecured Claims Amount (if any) to Allowed Holders of General Unsecured Claims; (c) provides for consummation of the Sale Transaction; and (d) designates a Plan Administrator to (i) wind down the Debtors’ businesses and affairs; and (ii) pay and reconcile Claims as provided therein; and (iii) administer the Plan in an effective and efficient manner. The Debtors believe that Confirmation of the Plan will avoid the lengthy delay and significant cost of liquidation under chapter 7 of the Bankruptcy Code. The Plan classifies Holders of Claims and Interests according to the type of the Holder’s Claim or Interest, as more fully described below. Holders of Claims in Class 3 (DIP Facility Claims), Class 4 (Second Lien Secured Claims) and Class 5 (General Unsecured Claims) are entitled to vote to accept or reject the Plan.”
The following is a summary of classes, claims, voting rights and projected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):
- Class 1 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%. Each Holder of an Allowed Other Priority Claim shall receive payment in full in cash or other treatment rendering such claim unimpaired.
- Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
- Class 3 (“DIP Facility Claims”) is impaired (NB: the summary claims table lists the class as impaired/unimpaired) and entitled to vote on the Plan. The estimated aggregate amount of claims is $209.2mn (calculated as at Januuary 2, 2019) and each holder of an Allowed DIP Facility Claim will receive either (i) payment in full in cash of the Obligations (which amount shall include the full roll-up of the Prepetition First Lien Obligations Amount, including the Prepayment Premium, plus the First Lien Accrued Adequate Protection Payments) or (ii) treatment that is otherwise acceptable to the Required Lenders.
- Class 4 (“Second Lien Secured Claims”) is impaired and entitled to vote on the Plan. Each holder of an Allowed Second Lien Secured Claim will receive its pro rata share, based on the Allowed amount of its Second Lien Secured Claim, of the Sale Transaction Proceeds, solely to the extent the DIP Facility Claims are paid in full in cash.
- Class 5 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. Each holder of an Allowed General Unsecured Claim will receive (i) its pro rata share of the General Unsecured Claims Amount as provided in Article IVE (if any), and (ii) the Sale Transaction Proceeds, to the extent the DIP Facility Claims and the Second Lien Secured Claims are paid in full in cash.
- Class 6 (“Intercompany Claims”) is impaired/unimpaired, deemed to accept or reject the Plan and not entitled to vote on the Plan. Each Intercompany Claim will, at the election of the Debtors be reinstated; or canceled, released, and extinguished as of the Plan Effective Date, and will be of no further force or effect. Unimpaired, in which case the Holders of Allowed Intercompany Claims in Class 6 are conclusively presumed to have accepted the Plan or Impaired, and not receiving any distribution under the Plan, in which case the Holders of Allowed Intercompany Claims in Class 6 are deemed to have rejected the Plan.
- Class 7 (“Intercompany Interests”) is impaired/unimpaired, deemed to accept or reject the Plan and not entitled to vote on the Plan. Each Intercompany Claim will, at the election of the Debtors be reinstated; or canceled, released, and extinguished as of the Plan Effective Date, and will be of no further force or effect. Unimpaired, in which case the Holders of Allowed Intercompany Claims in Class 7 are conclusively presumed to have accepted the Plan or Impaired, and not receiving any distribution under the Plan, in which case the Holders of Allowed Intercompany Claims in Class 7 are deemed to have rejected the Plan.
- Class 8 (“Section 510(b) Claims”) is impaired, deemed to reject the Plan and not entitled to vote on the Plan.
- Class 9 (“Interests”) is impaired, deemed to reject the Plan and not entitled to vote on the Plan.
The Court scheduled a Plan confirmation hearing for March 20, 2019.
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