Cetera Financial Holdings (f/k/a Finch Holdings) and 17 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 16-10733. The Company, which provides financial advisory and retail services to the investment programs of banks and credit unions, is represented by Robert S. Brady of Young Conaway Stargatt & Taylor.
Cetera Financial Holdings is wholly owned by RCS Capital Corporation, which filed for Chapter 11 protection on January 31, 2016. At the time of parent RCS Capital’s Chapter 11 filing, R. Lawrence “Larry” Roth, chief executive officer of Cetera Financial Group, commented, “We believe the initiatives announced today will enable Cetera Financial Group to maximize its opportunities to achieve long-term growth and success.”
Commenting on the March 26, 2016 Cetera Financial and related filings, Roth states, “We are excited about this important step forward, which puts us in the home stretch to complete our transformation into a Cetera-only organization that is independent, well-capitalized and privately owned.”
Cetera Financial Holdings’ Chapter 11 petition indicates assets greater than $1 billion. Cetera Financial Holdings also filed with the U.S. Bankruptcy Court a Joint Prepackaged Plan of Reorganization and related Disclosure Statement. The Plan documents are docketed under the RCS case proceedings. According to documents filed with the Court, “All Allowed General Unsecured Claims against the Debtors will either (i) be paid in full in the ordinary course of business during the pendency of the Prepackaged Chapter 11 Cases or (ii) be reinstated and left unimpaired under the Plan.”
The Disclosure Statement continues, “All Allowed Administrative Claims, Priority Tax Claims, statutory fees, Other Priority Claims and Other Secured Claims against the Debtors will be paid in full in cash; The Debtors will transfer the applicable Litigation Assets to the Creditor Trust free and clear of all liens, Claims, encumbrances and Interests, and such Litigation Assets will vest in the Creditor Trust as of the Effective Date; (A) The Reorganized Debtors will continue to own, directly or indirectly, the equity Interests in their subsidiaries, (B) all equity Interests of any of the Debtors currently owned, directly or indirectly, by any RCS Debtor Affiliates will continue to be owned by the applicable Reorganized RCS Debtor Affiliate, and (C) except as otherwise provided in the Plan, the property of each Debtor’s Estate will vest in the applicable Reorganized Debtor free and clear of all liens, Claims, encumbrances and Interests; and the Reorganized Debtors will incur the obligations under the Exit Credit Documents and the New Second Lien Credit Documents.”
Court-filed documents continue, “The Debtors estimate that there will be up to approximately $2 million of Allowed Priority Claims. The First Lien Claims as of the Petition Date will be Allowed in the aggregate amount of $556.0 million .The Second Lien Claims will be Allowed in the aggregate amount of $153.2 million, with $50 million of such Allowed Claims to be treated as Secured Second Lien Claims and $103.2 million to be treated as Second Lien Deficiency Claims. The Debtors estimate that Other Secured Claims will be approximately $8.8 million.”
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