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March 6, 2019 – The Debtors filed (i) a Joint Chapter 11 Plan, (ii) a related Disclosure Statement and (iii) a scheduling motion [Docket Nos. 145,146 and 147, respectively].
The Disclosure Statement provides the following summary of the Plan, "In December 2018, the Company began in earnest negotiating with groups of holders of its corporate debt on the terms and implementation of an acceptable recapitalization structure, culminating in a restructuring support agreement (the ‘Restructuring Support Agreement’) with the Term Loan Ad Hoc Group…—the Company’s senior creditors—holding, in the aggregate, approximately $722.8 million of Prepetition Term Loans.
By virtue of the Restructuring Support Agreement, the Company commenced the Chapter 11 Cases with a clear path to a confirmable chapter 11 plan of reorganization and a viable recapitalization—in which, among other things, over $800 million in funded debt would be extinguished, leaving a significantly deleveraged reorganized Company, wholly owned by the holders of the Prepetition Term Loans, with $400 million of new term loan debt, and an appropriately sized exit working capital facility or consummation of another liquidity enhancing transaction (the ‘Reorganization Transaction’).
As a toggle to the Reorganization Transaction, the Restructuring Support Agreement also provides for the continuation of the Company’s prepetition review of strategic alternatives whereby any and all bids for the Company or its assets will be evaluated as a precursor to confirmation of any chapter 11 plan of reorganization (the ‘Marketing Process'). Specifically, the Marketing Process will provide a public and comprehensive forum in which the Debtors seek bids or proposals for three (3) potential transactions that, if representing higher or better value, will either be incorporated into a Reorganization Transaction or pursued as an alternative to the Reorganization Transaction in consultation with and subject to the rights of the Term Loan Ad Hoc Group under the Restructuring Support Agreement and the DIP Lenders under the DIP Facilities (as defined below).
The three types of transactions for which bids will be solicited are
- ‘Sale Transaction’ meaning, a sale of substantially all of the Company’s assets as provided in the Restructuring Support Agreement;
- 'Asset Sale Transaction' meaning, the sale of a portion of the Company’s assets other than a Sale Transaction consummated on or as soon as is reasonably practicable after the Effective Date; provided such sale shall only be conducted with the consent of the Requisite Term Lenders (as defined in the Plan); and
- 'Master Servicing Transaction' meaning, as part of a Reorganization Transaction to the extent the terms thereof are acceptable to the Requisite Term Lenders, entry by the Company into an agreement or agreements with an approved subservicer or subservicers (a “New Subservicer”) whereby, following the Effective Date, all or substantially all of the Company’s mortgage servicing rights are subserviced by the New Subservicer.
Although the Debtors will pursue the Marketing Process in earnest, the Reorganization Transaction will serve as a backstop and provide the Company the optionality to enter into such other transactions that can either augment the Reorganization Transaction (such as the Master Servicing Transaction) or, if representing higher or better value, replace the Reorganization Transaction (such as the Sale Transaction). Further, if during the Marketing Process the Debtors receive separate bids for certain of their assets that represent higher or better value for the estate, the Debtors can elect to proceed with such Asset Sale Transaction in conjunction with either a Reorganization Transaction or a Sale Transaction, as applicable."
The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and Disclosure):
- Class 1 (“Priority Non-Tax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The projected recovery is 100%.
- Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The projected recovery is 100%.
- Class 3 (“Term Loan Claims”) is impaired and entitled to vote on the Plan (is the only voting class). The projected recovery is uncertain (ie, •%).
- Class 4 (“Second Lien Notes Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The projected recovery is 0%.
- Class 5 (“General Unsecured Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The projected recovery is 0%.
- Class 6 (“Go-Forward Trade Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The projected recovery is uncertain (ie, •%).
- Class 7 (“Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The projected recovery is N/A.
- Class 8 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The projected recovery is N/A.
- Class 9 (“Parent Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. The projected recovery is 0%.
- Class 10 (“Subordinated Securities Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The projected recovery is 0%.
Proposed Key Dates:
- Disclosure Statement Objection Deadline: April 4, 2019
- Disclosure Statement Hearing: April 11, 2019
- Voting Deadline: May 24, 2019
- Plan Confirmation Objection Deadline: May 24, 2019
- Sale and Confirmation Hearing: June 5, 2019
The Disclosure Statement attached the following Exhibits:
- Exhibit A: Joint Plan of Reorganization
- Exhibit B: Restructuring Support Agreement
- Exhibit C: Organizational Structure Chart
- Exhibit D: Financial Information and Projections (Yet to be Filed Separately)
- Exhibit E: Liquidation Analysis (Yet to be Filed Separately)
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