Trident Holding Company – Files Amended Plan Ahead of September 12th Confirmation Hearing, Debtors to Delever by $600mn and Emerge in Hands of Silver Point

September 5, 2019 – The Debtors filed a Second Modified Second Amended Plan [Docket No. 852] which attaches a blackline showing changes to the version of the Plan filed on July 3, 2019. 

On May 8, 2019, the Court approved the adequacy of the Debtors' Disclosure Statement [Docket No. 384]. A Plan confirmation hearing, originally scheduled for June 13, 2019, is now set to occur on September 12, 2019. In advance of that hearing, the Debtors have filed their Plan voting results, proposed confirmation order and memorandum of law in support of Plan confirmation [Docket Nos. 850, 854 and 857, respectively].

Plan Overview

The memorandum of law provides the following Plan summary: "The Debtors now seek confirmation of their joint chapter 11 plan of reorganization, which contemplates a restructuring that would deleverage the Company’s balance sheet by approximately $600 million and preserve the going-concern operations of the nation’s largest mobile diagnostic health care services provider and thousands of jobs. All three secured creditor classes—holding more than $700 million in claims—have voted to accept the Plan, and it is supported by the Official Committee of Unsecured Creditors. On a consolidated basis, the class of general unsecured creditors at the Operating Companies has also voted to accept the Plan, subject to an outstanding motion filed by MetroStat temporarily allowance of its claim pursuant to Bankruptcy Rule 3018, which, if successful, would result in the rejection of the Plan by the Class of Operating Company General Unsecured Claims on a consolidated basis as discussed in Section III.D below. Even if MetroStat’s claims are allowed for voting purposes, the Plan should still be confirmed because it satisfies the cramdown standards under section 1129(b) of the Bankruptcy Code.

The Debtors filed initial versions of the Plan and the Disclosure Statement on March 25, 2019. Since then, the Debtors have filed four amended versions of the Plan in addition to the Plan Supplement and four amendments thereto.

The solicitation version of the Plan contained the following key features:

• the receipt by the Priority First Lien Lender [ie Silver point] of 100% of the equity in the Reorganized Debtors;
• the issuance to Holders of First Lien Claims and Second Lien Claims of Warrants exercisable for up to a total of 5% of the equity in the Reorganized Debtors;
• the funding of a $100,000 cash pool for Holders of Operating Company General Unsecured Claims if the Class of Operating Company General Unsecured Claims accepted the Plan;
• the conversion of DIP Facility Claims into obligations under the Exit Term Loan Facility; and
• the extension of $105 million in first lien credit to the Debtors under the New First Lien Facility."

The following is a summary of classes, claims, voting rights and expected recoveries that is derived from the Debtors' May 8, 2019 Disclosure Statement [Docket No. 387] (defined terms are as defined in the Plan and/or Disclosure Statement, please see also "Plan Modifications" below):

• Class 1B – 1C (“Priority First Lien Claims”) is impaired and entitled to vote on the Plan. Each holder shall receive its pro rata share and interest in (i) the New First Lien Facility, and (ii) 100% of the New Pioneer Units to be issued by Reorganized Pioneer, subject to dilution on account of the warrants and the Management Incentive Plan (the “MIP”). Expected recovery is 44% to 63%.
• Classes 2B – 2C (“First Lien Claims”) is impaired and entitled to vote on the Plan. If the First Lien Classes and the Second Lien Classes are Accepting Classes, each Holder of an Allowed First Lien Claim shall receive its Pro Rata share and interest in 4% of the Warrants: provided that Ares, the Audax Debt Funds, and Capital Finance Opportunities 1701C, LLC agree to waive all rights to any distribution on account of their First Lien Claims under the Plan and any Warrants otherwise distributable to those parties under the Plan, if any, shall be cancelled and not re-distributed to other Holders of Allowed First Lien Claims or any other Person. If the First Lien Classes are Accepting Classes, but Second Lien Classes are not Accepting Classes, each Holder of an Allowed First Lien Claim shall receive its Pro Rata share and interest in 5% of the Warrants: provided that Ares, the Audax Debt Funds, and Capital Finance Opportunities 1701C, LLC agree to waive all rights to any distribution on account of their First Lien Claims under the Plan and any Warrants otherwise distributable to those parties under the Plan, if any, shall be cancelled and not re-distributed to other Holders of Allowed First Lien Claims or any other Person. If the First Lien Classes are not Accepting Classes, Holders of Allowed First Lien Claims shall not receive any distributions on account of such Allowed First Lien Claims. Expected recovery is 0% less than 1%.
• Classes 3B – 3C (“Second Lien Claims”) is impaired and entitled to vote on the Plan. If the First Lien Classes and the Second Lien Classes are Accepting Classes, each Holder of an Allowed Second Lien Claim shall receive its Pro Rata share and interest in 1% of the Warrants: provided, however, notwithstanding anything herein to the contrary, such treatment in no way affects the priority of distribution among creditors in Classes 3B and 3C, including with respect to any intercreditor agreements and other similar agreements or arrangements; provided that Ares, the Audax Debt Funds, and Capital Finance Opportunities 1701C, LLC agree to waive all rights to any distribution on account of their Second Lien Claims under the Plan and any Warrants otherwise distributable to those parties, if any under the Plan, shall be cancelled and not re-distributed to other Holders of Allowed Second Lien Claims or any other Person. If the First Lien Classes or the Second Lien Classes are not Accepting Classes, Holders of Allowed Second Lien Claims shall not receive any distributions on account of such Allowed Second Lien Claims. Expected recovery is 0% less than 1%.
• Classes 4A – 4C (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Estimated Recovery is 100%.
• Classes 5A – 5C (“Other Priority Claims”) is unimpaired and deemed to accept and not entitled to vote on the Plan. Estimated Recovery is 100%.
• Classes 6C (“Operating Company General Unsecured Claims”) is impaired and entitled to vote on the Plan. Each Holder of an Allowed Operating Company General Unsecured Claim shall receive its Pro Rata share and interest in the General Unsecured Claims Cash Pool, provided, that the Settling Parties (other than the Creditors’ Committee and its members) and Capital Finance Opportunities 1701C, LLC shall not receive their respective Pro Rata share and interest in the General Unsecured Claims Cash Pool and such amounts shall be redistributed Pro Rata among the order Holders of Operating Company General Unsecured Claims
• Classes 7A – 7B (“Holding Company General Unsecured Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. Estimated Recovery is 0%.
• Classes 8A – 8C (“Intercompany Claims”) is impaired or unimpaired, deemed to reject or accept, and not entitled to vote on the Plan. Estimated Recovery is 100% or 0%.
• Classes 9A – 9C (“Other Subordinated Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. Estimated Recovery is 0%.
• Classes 10A – 10C (“Interests in Debtor Subsidiaries”) is impaired or unimpaired, deemed to reject or accept, and not entitled to vote on the Plan. Estimated Recovery is 0% or 1000%.
• Class 11A (“Interests in Pioneer”) is impaired, deemed to reject and not entitled to vote on the Plan. Estimated Recovery is 0%.

Voting Results

The voting certification submitted by the Debtors' claims agent [Docket No. 850] indicates the following voting results for Classes 1B – 1C, 2B – 2C, 3B – 3C, and 6C (the “Voting Classes”) on a consolidated basis:

As noted in the table above, all of the Voting Classes accepted the Plan, on 

Post-Solicitation Plan Modifications

The Debtors' proposed confirmation notes that, subsequent to solicitation, the Debtors have  made certain modifications to the Plan including, among other things, 

1. the expansion of the Operating Company General Unsecured Claims Cash Pool from $100,000 to $950,000; 
2. the removal of Class 6C's acceptance of the Plan as a condition to distributions from the Operating Company General Unsecured Claims Pool; 
3. the addition of provisions for a GUC Administrator to administer Claims in relation to the Operating Company General Unsecured Claims Cash Pool, including the creation of a $250,000 GUC Administrator Account; 
4. the narrowing of the scope of the nonconsensual third-party releases; 
5. the inclusion of the Creditors’ Committee and its members among the Released Parties covered under the Debtors’ Releases and Consensual Third Party Releases
6. the inclusion of Capital Finance Opportunities 1701C, LLC ("Peak Rock"), Ares, the Audax Debt Funds, and Ivy Hill among the Released Parties covered under the Debtors’ Releases; and the addition of language specifying that Ares, the Audax Debt Funds, and Peak Rock agree to waive any rights to distributions under the Plan.

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