Patriot National filed with the U.S. Bankruptcy Court an Amended Joint Chapter 11 Plan of Reorganization and a Second Amended Disclosure Statement.
According to the Disclosure Statement, “The Plan contemplates that any and all claims that the Debtors have or may have against Cerberus will be released upon the Effective Date as part of a global settlement and compromise pursuant to which the Debtors and their creditors are receiving significant consideration. The Debtors, in the exercise of their reasonable business judgment, have concluded that this settlement and compromise is in the best interests of the Debtors, their estates and creditors….First, in an effort to stabilize the Debtors in the wake of the GIC Receivership Order and the virtually overnight loss of not less than 60% of the Debtors’ revenues, Cerberus and the Lenders entered into the RSA providing for the restructuring of the Debtors through pre-arranged Chapter 11 cases to be funded by debtor in possession financing provided by the Lenders.”
In addition, “Second, pursuant to the Plan, Cerberus and the Lenders have agreed to convert a portion of their debt to equity and new second lien notes, and provide exit financing so that the Debtors can pay all administrative expense and priority claims and continue to operate their businesses (including the employment of over 400 people)….[A]s additional consideration to the Debtors and their other creditors, Cerberus and the Lenders have agreed to cap their share of recoveries from the Litigation Trust at a ratio of 4 to 1 in relation to General Unsecured Creditors, even though their deficiency claim is currently expected to be approximately 5 to 6 times the aggregate amount of General Unsecured Claims….Based upon the foregoing, the Debtors believe that Cerberus and the Lenders have provided (and under the Plan will further provide) significant consideration to the Debtors and their estates that support the settlement, compromise and releases embodied in the Plan.”
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