Bankruptcy News

Appvion Amended Combined Plan & Disclosure Statement

Appvion filed with the U.S. Bankruptcy Court a Second Amended Chapter 11 Combined Plan & Disclosure Statement. The Court documents explain, “Upon the Effective Date, without the need for further order of the Bankruptcy Court or motion of, or notice from, the Debtors or the Liquidating Trustee, the Chapter 11 Cases of each of the Debtors shall be deemed closed as of the Effective Date without prejudice to the rights of any party in interest to seek to reopen any of the Chapter 11 Cases under section 350(b) of the Bankruptcy Code; provided, however, that the case of Appvion shall remain open until the Liquidating Trustee for Appvion files a motion seeking entry of a final decree closing its case….Pursuant to the Section X.M of the Plan, all Distributions in respect of Allowed Claims will be allocated first to the principal amount of the Allowed Claim (as determined for federal income tax purposes), with any excess allocated to accrued but unpaid interest. However, there is no assurance that such allocation would be respected by the IRS for federal income tax purposes.” The Court subsequently approved the Plan & Disclosure Statement and scheduled an August 14, 2018 hearing to consider the Plan with objections due by August 2, 2018.

HCR ManorCare Seal Approved

The U.S. Bankruptcy Court issued an Order approving HCR ManorCare’s motion to file under seal certain confidential documents related to the Plan Confirmation. As previously reported, “authorizing the Debtor to file redacted versions of the Plan Supplement containing the Alternative Master Lease and the form of lease with respect to certain real property owned by Welltower….Specifically, the redacted information in the Confidential Documents contains confidential commercial information (both from the perspective of the lessor and lessee parties under the Confidential Documents), including negotiated terms agreed to specifically in the context of this transaction, disclosure of which would provide an unfair advantage to the lease parties’ competitors and other parties in interest who may use the information to the detriment of the lease parties.”

Hobbico Chapter 7 Conversion Sought

Hobbico filed with the U.S. Bankruptcy Court a motion to convert its Chapter 11 case to a Chapter 7 case. The conversion motion explains, “In accordance with the Bidding Procedures Order, an auction was held on March 28, 2018, and continued and concluded on April 12, 2018. As a result, the Debtors have now sold all of their operational assets of any meaningful value. While the Debtors have taken several steps since closing the Sale to wind-up their estates, at this point the Debtors do not believe that their estates will continue to benefit by remaining in chapter 11. Accordingly, the Debtors submit that these chapter 11 cases should be converted to chapter 7. In addition, the Debtors have insufficient funds to confirm a chapter 11 plan of reorganization. With the cessation of operations and no significant tangible assets left to administer, a successful rehabilitation under the auspices of chapter 11 of the Bankruptcy Code is not possible. Thus, drawing out the chapter 11 process will result in additional administrative expense with little or no benefit to the Debtors’ estates, and the Debtors believe that conversion of these chapter 11 cases to cases under chapter 7 of the Bankruptcy Code will maximize residual value for the benefit of all stakeholders.” The Court scheduled a July 11, 2018 hearing to consider the conversion motion with objections due by July 5, 2018.

Gibson Brands Plan and Disclosure Statement Filed

Gibson Brands filed with the U.S. Bankruptcy Court a Joint Chapter 11 Plan of Reorganization and a related Disclosure Statement. According to the Disclosure Statement, “In connection with developing the Plan, the Company reviewed its current business operations and compared its prospects as an ongoing business enterprise with the estimated recoveries in various liquidation scenarios. As a result, the Company concluded that the Company’s enterprise value would be maximized by continuing to operate as a going concern. The Company believes that its ongoing business and assets have significant value that would not be realized in a liquidation, either in whole or in substantial part….The Debtors have outstanding secured debt in the principal amount of over $518 million, consisting of $375 million of principal amount of Prepetition Secured Notes (plus accrued and unpaid prepetition interest of $8,227,865) and, following the satisfaction of the Prepetition ABL/Term Loan Secured Claims through exercise of the Purchase Option or the ABL Refinancing, will have $135 million to $139 million of principal amount of outstanding DIP Financing (depending on whether the ABL Refinancing Increment is borrowed under the DIP Facility)….The New Exit Term Loan Facility, however, may be less than the $135 million to $139 million that may be outstanding under the DIP Facility as of the Effective Date…. Under the Management Employment and Consulting Agreement, the Supporting Principals will receive (i) in the case of Mr. Berryman, a salary and bonus totalling $3.35 million and New Warrants exercisable for up to 2.25% of the Equity Interests in Reorganized Gibson plus ongoing health benefits, and (ii) in the case of Mr. Juszciewicz, (a) $2.1 million in consulting fees payable in quarterly instalments and New Warrants exercisable for up to 2.25% of the Equity Interests in Reorganized Gibson plus ongoing health benefits and (b) in consideration for future assistance in monetizing the Reorganized Debtors’ interest in TEAC, a profits interest in the TEAC Shares owned by Gibson Holdings.” The Court scheduled a July 25, 2018 hearing to consider the Plan with objections due by July 18, 2018

Gibson Brands Inventory Purchase Agreement Approval Sought

Gibson Brands filed with the U.S. Bankruptcy Court a motion for approval of an inventory purchase agreement and the sale of remaining inventory of Gibson Innovations USA to JAAXC, the Buyer, free and clear of liens, claims, encumbrances and other interests. The sale motion explains, “Buyer has agreed to purchase the GI USA Inventory for a cash purchase price of $1,600,000, to be paid into escrow upon the closing of the Sale Transaction, which funds will be disbursed to the Debtors upon the shipment of the inventory in accordance with the Inventory Purchase Agreement….GI USA is currently liquidating and, accordingly, is unable to sell the remaining GI USA Inventory in the ordinary course of its business. A bulk sale of the remaining GI USA Inventory will significantly reduce the costs that would be incurred if the inventory was sold piecemeal, including costs to maintain appropriate levels of staffing and ongoing warehouse fees.” The Court scheduled a July 9, 2018 hearing to consider the purchase agreement with objections due by July 2, 2018.

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