The Relay Company (f/k/a The Rockport Company) – Files Amended Combined Plan and Disclosure Statement, $485,000 Fund Established for U.S Unsecured Creditors

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December 17, 2018 – The Relay Company (f/k/a The Rockport Company) filed a Combined Plan and Disclosure Statement [Docket No. 649] and a blackline of the amended Combined Plan and Disclosure Statement reflecting changes to the version filed on October 16, 2018 [Docket No. 650]. 
The Court documents explain, “This Combined Plan and Disclosure Statement contemplates the creation of a Liquidating Trust from which, under the terms of this Combined Plan and Disclosure Statement and the Liquidating Trust Agreement, Distributions shall be made for the benefit of Holders of Allowed Claims against the U.S. Debtors. The Combined Plan and Disclosure Statement also contemplates the establishment of the Rockport Canada Fund from which, under the terms of this Combined Plan and Disclosure Statement and the Rockport Canada Plan Administrator Agreement, Distributions shall be made for the benefit of Holders of Allowed Claims against Rockport Canada.”
 
The following is a summary of claims, classes, voting rights and projected recoveries:
  • Class 1(a) (“Other Secured Claims against U.S. Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
  • Class 1(b) (“Other Secured Claims against Rockport Canada”) is unimpaired, deemed to accept not entitled to vote on the Plan. Expected recovery is 100%.
  • Class 2 (“Prepetition Note Secured Claims against U.S. Debtors”) is deemed impaired and entitled to vote on the Plan. Expected recovery is 26% – 28%.
  • Class 3(a) (“Other Priority Claims against U.S. Debtors”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
  • Class 3(b) (“Other Priority Claims against Rockport Canada”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
  • Class 4(a) (“General Unsecured Claims against U.S. Debtors”) is deemed impaired and entitled to vote on the Plan. Expected recovery is 0-8%. See below for further on this Class 4 claim.
  • Class 4(b) (“General Unsecured Claims against Rockport Canada”) is deemed impaired and entitled to vote on the Plan. Expected recovery is 68% -80%. See below for further on this Class 4 claim.
  • Class 5(a) (“Intercompany Claims against U.S. Debtors”) is deemed impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0%.
  • Class 5(b) (“Intercompany Claims against Rockport Canada”) is deemed impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0%.
  • Class 6(a) (“Equity Interests in U.S. Debtors”) is deemed impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0%.
  • Class 6(b) (“Equity Interests in Rockport Canada”) is deemed impaired, deemed to reject and not entitled to vote on the Plan. Expected recovery is 0%.
In a footnote as to the recovery potential for holders of general unsecured claims (ie Class 4), the Disclosure Statement notes, “The Debtors estimated at the time that $246,000 would be available for distribution to the Holders of Class 4 Allowed General Unsecured Claims against the U.S. Debtors following the payment of all senior Claims. This projected recovery, however, was dependent on the Debtors’ estimates as to the aggregate amount of the senior Claims to be paid from the Wind-Down Reserve and was therefore subject to fluctuate upwards or downwards in the event such estimates proved to be incorrect. The amount of the Wind-Down Reserve, however, proved insufficient to cover the actual amount of U.S. Professional Fee Claims, U.S. General Administrative Claims, U.S. Priority Tax Claims and Other Priority Claims against the U.S. Debtors asserted in the Chapter 11 Cases. Accordingly, following a series of good faith negotiations, the Prepetition Noteholders have consented to the additional use of their cash collateral in the manner reflected in the Plan. Pursuant to the terms of the Plan, as revised, the Prepetition Noteholders have agreed to fund a Post-Effective Date Trust Reserve in the amount of $485,000, which, along with any U.S. Litigation Proceeds, can be used to fund a potential distribution to Class 4 Holders of General Unsecured Claims against the U.S. Debtors following the payment of all Liquidating Trust Operating Expenses.”

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