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Madison Square Boys & Girls Club, Inc. – With Completed Mediation Yielding an “Agreement in Principle” with Creditors’ Committee, Debtor Looks for Extra Exclusive Plan Filing Time to Reach Definitive Settlement and Woo Insurers

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December 28, 2022 – The Debtor filed a motion to extend (for a second time) the periods during which it has an exclusive right to file a Chapter 11 Plan and solicit acceptances thereof, through and including April 10, 2023 and July 24, 2023, respectively [Docket No. 330]. Absent the requested relief, the Plan filing and solicitation periods are scheduled to expire on January 10, 2023 and April 25, 2023, respectively.

In requesting the extra exclusive time, the Debtor noted that it had reached a "critical milestone in its restructuring: a successful conclusion to the Court-ordered mediation." That resolution, or more specifically/modestly "an agreement in principle between the Debtor and the Committee," is noted in a final mediator's report filed on December 28th [Docket No. 329, a two-pager providing no specific detail as to agreed terms]. That leaves the Debtor and it creditors' committee (the "Committee") "working to memorialize the terms of the Committee Settlement in a plan of reorganization." Absent at this point, however, is committed support from the Debtors' insurers who were not directly involved in the mediation and, although apparently apprised throught on that mediation, not yet part of a "global consensus regarding the plan of reorganization."

A hearing to consider the motion is scheduled for January 12, 2023, with objections due by January 5, 2023.

Case Status

On June 29, 2022, Madison Square Boys & Girls Club, Inc. (“Madison” or the “Debtor”) filed for Chapter 11 protection noting estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $100.0mn and $500.0mn. At filing, the New York City based youth facility noted that it tended to use Chapter 11 “to facilitate the efficient and equitable resolution of legacy claims filed under the New York State Child Victims Act.” 

Over 90% of the CVA Claims filed against Madison arose from the conduct of Dr. Reginald Archibald, an endocrinologist specializing in growth issues who was employed by Rockefeller and volunteered as a physician for Madison’s members at Madison’s former clubhouse on East 29th Street (which closed in 1999)….Dr. Reginald died in 2007.

On July 20th, the Court hearing the Madison Square Boys & Girls Club case agreed to grant a temporary stay of some proceedings in the Debtor’s Chapter 11 case while the Debtor pursued mediation (concluded on October 21st) geared toward resolution of sexual-abuse claims.

On November 10th, the Court issued an order authorizing the Debtor to access a $11.0mn in alternative DIP financing being provided by Carver Federal Savings Bank [Docket No. 283].

On December 28th, "the Mediator filed the Mediator’s Report [Docket No. 329], informing the Court that Debtor and the Committee have reached an agreement in principle in the Mediation on a proposed resolution of this Chapter 11 Case.” The "report' is a two-pager which does little more than note the conclusion of mediation without providing any details as the "agreement in principle."

The Extension Motion

The motion [Docket No. 330] states, “[t]he Debtor reached a critical milestone in its restructuring: a successful conclusion to the Court-ordered mediation that resulted in an agreement in principle (the ‘Committee Settlement’) with the Official Committee of Unsecured Creditors (the ‘Committee’) regarding the treatment of Abuse Claims under a proposed chapter 11 plan—a resolution with the Debtor that will also provide the Debtor with a pathway to emerge from chapter 11 to continue its vital mission to serve New York City’s youth. Judge Shelley Chapman (Ret.), in her capacity as court-appointed mediator, facilitated negotiations between the Debtor and the Committee regarding a variety of complex issues led to this significant achievement less than six months into the Chapter 11 Case.’

The Debtor and the Committee are currently working to memorialize the terms of the Committee Settlement in a plan of reorganization and related documentation. The Debtor also continues to engage with other parties in interest in the hopes of reaching a global consensus regarding the plan of reorganization, including its insurance providers, which the Debtor has kept apprised every step of the way throughout the Mediation process.

Given the significant progress made in this Chapter 11 Case since the First Exclusivity Order, the Debtor believes that pushing forward to implement the Committee Settlement and continuing discussions with other parties in interest will lead to a confirmable plan in the near future. Thus, permitting other parties to file competing plans now would be highly destructive to this progress and could potentially derail the Debtor’s ability to successfully implement the Committee Settlement to the detriment of the Debtor’s estate and its stakeholders.…The Committee is supportive of these extension requests.

The Exclusivity Period extensions requested herein are intended to allow the Debtor sufficient time to work with the Committee to implement the terms of the Committee Settlement in a confirmable plan of reorganization, continue discussions with other key stakeholders, including insurance providers, build additional consensus, and take other necessary steps to achieve a consensual confirmation process.

On December 28, 2022, the Mediator filed the Mediator’s Report [Docket No. 329], informing the Court that Debtor and the Committee have reached an agreement in principle in the Mediation on a proposed resolution of this Chapter 11 Case.”

About the Debtor

According to the Debtor: “Since 1884, Madison Square Boys & Girls Club has provided a safe, stable, supportive environment for youth in some of New York City’s most under-served neighborhoods."

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The post Madison Square Boys & Girls Club, Inc. – With Completed Mediation Yielding an “Agreement in Principle” with Creditors’ Committee, Debtor Looks for Extra Exclusive Plan Filing Time to Reach Definitive Settlement and Woo Insurers appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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