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August 22, 2019 – The Debtors filed a Combined Chapter 11 Plan of Liquidation and Disclosure Statement [Docket Nos. 308] and further requested a Court order that would (i) conditionally approve their Disclosure Statement, (ii) approve Plan solicitation and voting procedures and (iii) approve a proposed timetable, including a September 30, 2019 Plan confirmation hearing date [Docket No. 309].
The combined document attaches a liquidation analysis which notes estimated cash available for distribution of $32.9mn which leaves holders of the Debtors' pre-petition term loan claims (class 2) with a 13% recovery. The balance of the $223.8mn in claims held by this class gets pushed down to the level of general unsecured claims (class 4) where recovery, absent any litigation proceeds recovered by the Debtors, is expected to be zero. The $32.9mn in distributable cash was largely generated by the sale of inventory (the Debtors have gone from $59.4mn as at the Petition date to just $228k), collection of accounts receivable (down from $23.5mn to $11.2mn) and the $7.4mn sale of their Ohio distribution facility [NB, the sale price was ultimately increased to $8.4mn].
The combined Plan/Disclosure Statement states, “The Combined Plan and Disclosure Statement is a liquidating chapter 11 plan. The Combined Plan and Disclosure Statement provides for the proceeds from the Debtors’ assets already liquidated or to be liquidated over time to be distributed to holders of Allowed Claims in accordance with the terms of the Combined Plan and Disclosure Statement and the priority of claims provisions in the Bankruptcy Code. Distributions will occur on the Effective Date or as soon thereafter as is practicable and at various intervals thereafter, except as otherwise provided by Order of the Bankruptcy Court. The Liquidating Trustee will cause the Debtors’ existence to be terminated by dissolution, or as otherwise permitted by applicable law, as soon as practicable on or after the Effective Date on such terms as the Liquidating Trustee determines to be necessary or appropriate to implement the Combined Plan and Disclosure Statement and without further order of the Bankruptcy Court. The Liquidating Trustee may cause the Debtors to adopt any plan and execute, deliver, and file any agreement or document the Liquidating Trustee determines to be necessary and appropriate.”
The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the combined dicument):
- Class 1 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $563,000 and expected recovery is 100%.
- Class 2 (“Prepetition Term Loan Claim”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $249,800,405 and expected recovery is 13%.
- Class 3 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $815 and expected recovery is 100%.
- Class 4 (“General Unsecured Claims and Prepetition Term Loan Deficiency Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims for General Unsecured Claims is $43,000,000 and for Prepetition Term Loan Deficiency Claims is $223,828,000.
- Class 5 (“Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is $0 and expected recovery is 0%.
- Voting Deadline: September 24, 2019
- Objection Deadline: September 24, 2019
- Confirmation Hearing: September 30, 2019
As of the Petition Date, 94.30% of SportCo’s fully-diluted shares were held by three investor groups: Wellspring Capital Partners IV, L.P. (60.58%), Prospect Capital Corporation and certain affiliates (21.16%), and Summit Partners Credit Fund, L.P. and certain affiliates (12.55%). The remaining 5.70% of SportCo’s fully-diluted shares are held by individuals, including current and former members of SportCo’s management team or reserved for issuance under the Debtors’ management incentive plan.
About the Debtors
United Sporting Companies describes itself as "leading the shooting sports industry for 85 years, offering one of the largest product selections in the hunting, shooting, and marine industries. The most knowledgeable sales team in the country supports the broad product offerings of over 85,000 products. Coupled with our best in class distribution facilities, this allows us to provide excellent service to over 30,000 independent retail customers across all 50 states.
Our product selection includes firearms, reloading, marine electronics, trolling motors, optics, cutlery, archery equipment, ammunition, leather goods, sportsman gifts, and a variety of other outdoor sporting goods products."
SportCo operates its business primarily through Ellett Brothers, LLC, a South Carolina limited liability company and wholly-owned subsidiary of United Sporting Cos. (“Ellett”), and four of Ellett’s six wholly-owned subsidiaries: Evans Sports, Inc., a South Carolina corporation (“Evans”); Jerry’s Sports, Inc., a Delaware corporation (“Jerry’s”), Outdoor Sports Headquarters, Inc., a Delaware corporation (“Outdoor Sports”); and Simmons Gun Specialties, Inc., a Delaware corporation (“Simmons” and, together with Evans, Jerry’s, and Outdoor Sports, the “Operating Subsidiaries”). Ellett’s two remaining wholly-owned subsidiaries, Bonitz Brothers, Inc., a Delaware corporation (“Bonitz”) and Quality Boxes, Inc., a South Carolina corporation (“Quality Boxes” and, together with Bonitz, the “Non-Operating Subsidiaries”), ceased operations prior to the Petition Date.
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