Nine West Holdings – Files Third Amended Joint Plan Following Settlement with Key Stakeholders, Confirmation Hearing Set for February 25, 2019

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February 15, 2019 – The Debtors filed a third Amended Chapter 11 Plan with a related redline [Docket No. 1251] showing changes to the Plan from the version filed on January 20, 2019 [Docket No. 1111]. The amended Plan incorporates the global settlement announced on the record at the Court hearing held on February 8, 2019. The Debtors, the Official Committee of Unsecured Creditors (the “UCC”), the Secured Term Loan Lenders, the Unsecured Term Loan Lenders, the Equity Holders, the 2019 Notes Trustee, the 2034 Notes Trustee, and the Ad Hoc Group of Unsecured Noteholders each support confirmation of the Third Amended Joint Plan.

The Third Amended Joint Plan states, “The modified recoveries for Classes 5A–5I are the result of additional settlements and compromises between the case parties and are further described and implemented in the Third Amended Plan. The enhanced recoveries for the 2019 Notes Claims, the 2034 Notes Claims, and the General Unsecured Claims against Nine West Holdings, Inc. under the Third Amended Plan are the result of the following modifications and agreements in comparison to the Second Amended Plan.”

 
  • Equity Holders Settlement: The Equity Holders have agreed to increase their cash contribution from $115 million to $120 million.
  • Distribution of the Equity Holders Settlement: The UTLs will receive $16.25 million of the Equity Holders Settlement Proceeds (versus 25% of the Distributable Equity Holders Settlement Proceeds under the Second Amended Plan) and holders of Class 5B, 5C, and 5D Claims will receive a pro rata distribution of $48.75 million from the Equity Holders Settlement (versus 75% of the Distributable Equity Holders Settlement Proceeds under the Second Amended Plan). The remaining $55 million of the Equity Holders Settlement Proceeds will vest in the Debtors, which may be used to pay the sources and uses under the Plan.
  • NWHI-Only Unsecured Creditor Cash Recoveries: In addition to their share of the Equity Holders Settlement Proceeds, the holders of Claims in Classes 5B, 5C, and 5D will also receive $29,400,000 in Cash from (a) the first $5,000,000 from the Professional Fee Savings, and (b) $24,400,000 from the Debtors.
  • Unsecured Term Loan Lender Cash Recoveries: In addition to their share of the Equity Holders Settlement Proceeds, the holders of Claims in Class 5A will also receive Cash in an amount equal to (a) the Administrative Expense Savings and (b) the Professional Fee Savings in excess of $5,000,000.
  • Equity of Reorganized Debtors: Under the Plan, the Unsecured Term Lenders were to receive 92.5% of the New Common Stock. Under the Amended Plan, the Unsecured Term Loan Lenders have agreed to provide an additional 2.5% (as compared to the Plan) of the New Common Stock to the non-Unsecured Term Loan Lender unsecured creditors of Nine West Holdings, Inc., whose claims are in Classes 5B, 5C, and 5D. Holders of claims in Classes 5B, 5C, and 5D will now receive their pro rata share of approximately 9.5% of the New Common Stock (subject to dilution by the New Warrants and Management Incentive Plan). The remaining approximately 0.5% of the New Common Stock will be distributed to holders of Claims in Classes 5E, 5F, 5G, 5H, 5I, and 5J.
  • New Warrants: The amount of New Common Stock available upon exercise of the New Warrants has been reduced from 25 percent to 20 percent (subject to dilution by the Management Incentive Plan). Terms of the New Warrants are otherwise unchanged.
  • Non-Released Parties Trust: The allocation of the Non-Released Party Trust Distributable Proceeds has been modified such that the first $2.5 million of Non-Released Party Trust Distributable Proceeds shall be distributed to holders of the 2034 Notes Claims, with Non-Released Party Trust Distributable Proceeds in excess of $2.5 million to be distributed on a pro rata basis to holders of Allowed 2034 Notes Claims (based on an allowed claims amount of $319,996,745), Allowed 2019 Notes Claims, and Allowed Class 5D General Unsecured Claims against NWHI. The Non-Released Party Trust Loan provided by the Reorganized Debtors pursuant to the Second Amended Plan has been eliminated in the Third Amended Plan. Instead, on the Effective Date, the Ad Hoc Group of Unsecured Noteholders will provide the approximately $7.7 million Non-Released Party Trust Loan to the Non-Released Party Trust.  The Third Amended Plan also provides that the Non-Released Party Trust Advisory Board will consist of four representatives selected by the Ad Hoc Group of Unsecured Noteholders and one selected by the UCC.
  • Elimination of GUC Cash-Out Option: The GUC Cash-Out Option in the Second Amended Plan has been eliminated, and all elections pursuant to the GUC Cash-Out Form are null and void, and of no further force or effect. Accordingly, holders of General Unsecured Claims in Classes 5D, 5E, 5F, 5G, 5H, and 5I will not be entitled to receive cash in exchange for their Non-Cash Distributions as set forth in the Second Amended Plan.
  • Non-Released Party Trust Cash-Out Option: The Third Amended Plan provides the Cash-Out Option to holders of Claims in Classes 5B, 5C, and 5D, other than members of the Ad Hoc Group of Unsecured Noteholders. Under the Cash-Out Option, holders of Claims in Classes 5B, 5C, and 5D (other than members of the Ad Hoc Group of Unsecured Noteholders) shall have the opportunity to irrevocably elect to receive either (1) their pro rata portion of cash equal to 1.78% of such holders’ Allowed Claim, or (2) their pro rata portion of Non-Released Party Trust Interests. The members of the Ad Hoc Group of Unsecured Noteholders will provide a commitment to fund the Cash-Out Option.
  • Elimination of NWHI Administrative Expense Settlement: Under the Second Amended Plan, the Debtors settled allocation issues with respect to professional and administrative expenses incurred in the chapter 11 cases pursuant to the NWHI Administrative Expense Settlement, which charged 35 percent of such expenses against the Equity Holders Settlement Proceeds available for distribution to holders of Claims in Classes 5A, 5B, 5C, and 5D. The NWHI Administrative Expense Settlement has been eliminated under the Third Amended Plan.
  • Payment of Ad Hoc Group of Noteholders’ Fees and Expenses: The Third Amended Plan now provides that the reasonable, actual, and documented fees and expenses incurred by the Ad Hoc Group of Unsecured Noteholders in the amount of $12.5 million will be payable as Restructuring Expenses, or pursuant to a substantial contribution application under section 503(b) of the Bankruptcy Code.
 
The following is an updated summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan):
 
  • Class 1 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The projected amount of claims is $189,698 and projected recovery is 100%.
  • Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The projected amount of claims is $812,852 and projected recovery is 100%. 
  • Class 3 (“Secured Tax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. 
  • Class 4 (“Secured Term Loan Claims”) is impaired and entitled to vote on the Plan. The projected amount of claims is $432,798,741 and projected recovery is 100%.
  • Class 5A (“Unsecured Term Loan Claims”) is impaired and entitled to vote on the Plan. The projected amount of claims is $305,099,461 and projected recovery is 78.8%.
  • Class 5B (“2034 Notes Claims”) is impaired and entitled to vote on the Plan. The projected amount of claims is $255,997,396 and projected recovery is 22.8%.
  • Class 5C (“2019 Notes Claims”) is impaired and entitled to vote on the Plan. The projected amount of claims is $476,002,016 and projected recovery is 20.1%.
  • Class 5D (“General Unsecured Claims against NWHI”) is impaired and entitled to vote on the Plan. The projected amount of claims is $157,897,543 and projected recovery is 20.1%.
  • Class 5E (“General Unsecured Claims against Nine West Development LLC”) is impaired and entitled to vote. The projected amount of claims is $92,843 and projected recovery is 100%.
  • Class 5F (“General Unsecured Claims against Nine West Management Service LLC”) is impaired and entitled to vote. The projected amount of claims is $2,705,054 and projected recovery is 13.4%.
  • Class 5G (“General Unsecured Claims against Nine West Distribution LLC”) is impaired and entitled to vote. The projected amount of claims is $76,133 and projected recovery is 6.9%.
  • Class 5H (“General Unsecured Claims against One Jeanswear Group Inc.”) is impaired and entitled to vote. The projected amount of claims is $2,386,675 and projected recovery is 22.7%.
  • Class 5I (“General Unsecured Claims against Kasper Group LLC”) is impaired and entitled to vote. The projected amount of claims is $1,994,648 and projected recovery is 13.5%.
  • Class 5J (“General Unsecured Claims against Non-Operating Debtors”) is impaired and entitled to vote on the Plan. The projected amount of claims is $76,352 and projected recovery is 0%. The estimated recovery under Chapter 7 is 0%.
  • Class 6 (“Intercompany Claims”) and Class 8 (“Intercompany Interests “) are either impaired or unimpaired and will be presumed to accept or deemed to reject the Plan. The estimated recovery under Chapter 7 is 0%.
  • Class 7 (“Interests in Holdings”) and Class 9 (“Section 510(b) Claims”) are impaired, deemed to reject and not entitled to vote on the Plan. Estimated recovery is 0%.
 
The Court scheduled a confirmation hearing for February 25, 2019, with objections due by February 22, 2019.

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