RCS Capital filed with the U.S. Bankruptcy Court a First Amended Joint Plan of Reorganization and related Disclosure Statement.
According to the Disclosure Statement, “The Plan provides for, among other things, (i) an injection of $150 million to $170 million dollars of incremental liquidity to fund, among other things, the Debtors’ working capital needs and a critical retention program for the independent financial advisors, (ii) a deleveraging of the Debtors’ balance sheet by over $200 million, including the conversion of $100 million of first and second lien secured debt into equity of Reorganized Holdings, (iii) the reduction in interest expense on an annual basis, (iv) recoveries for unsecured creditors through the establishment and funding of a creditor trust, and (v) the cancellation of all existing preferred and common equity securities in RCS Capital Corporation.”
The Disclosure Statement continues, “The key components of the Plan are as follows: Payment in full, in cash, of all Allowed Administrative Claims, Priority Tax Claims, statutory fees, Other Priority Claims and Other Secured Claims; The establishment and funding of a creditor trust with the following: (i) the Creditor Assets, consisting of $12 million in Cash and warrants to purchase up to 10% of the new equity issued by Reorganized Holdings, (ii) the Litigation Assets, consisting of certain claims and causes of action held by the Debtors, their respective estates, and certain of the Debtors’ subsidiaries; (iii) the right to prosecute the causes of action transferred to the Creditor Trust; and (iv) the right to prosecute, object to, settle, or otherwise resolve all General Unsecured Claims; Each holder of a Convertible Note Claim, Senior Unsecured Note Claim, or General Unsecured Claim will receive Class A Units in the Creditor Trust entitling it to receive its pro rata share of the Creditor Trust Assets available for distribution, which will be distributed in accordance with the Creditor Trust Distribution Schedule and Section 6.11 of the Plan; The conversion of $50 million of the Claims under the First Lien Facility into 38.75% of the equity in Reorganized Holdings, with the remainder of the claims under the First Lien Facility receiving a pro rata share of a $500 million new second lien term facility; The conversion of $50 million of the Claims under the Second Lien Facility into 38.75% of the equity in Reorganized Holdings; The capping of the Second Lien Deficiency Claims at $105 million, with Second Lien Lenders agreeing to waive any distributions on account of the Second Lien Deficiency Claim from (a) the Creditor Assets and (b) the first $30 million in proceeds received by the Creditor Trust from the Litigation Assets, which shall be distributed in accordance with the Creditor Trust Distribution Schedule and Section 6.11 of the Plan; Entry into a $100 million new secured superpriority debtor-in-possession facility provided by certain existing First Lien Lenders and Second Lien Lenders, which will, on the Effective Date, be repaid with proceeds from a new $150 million first lien term facility; and The cancellation of all existing Preferred Stock and existing common equity interests in RCS Capital Corporation.”
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