October 28, 2020 – In advance of their scheduled October 29th Plan confirmation hearing, the Debtors have filed a Second Amended Chapter 11 Plan of Reorganization which attaches a redline showing changes to the version of the Plan filed on October 1, 2020. The amendments do not materially alter the Plan as to classes and claims, otherwise summarized in the table below.

Also filed in anticipation of the hearing: (i) Plan voting results [Docket 584], (ii) a Second Amended Plan Supplement, (iii) a valuation analysis [Docket No.589], (iv) a memorandum of law in support of the Plan (the "Memorandum") [Docket No. 594] and (v) a proposed confirmation order [Docket No. 595].

Plan Overview (post Settlement)

The Memorandum [Docket No. 594] provides a pre-confirmation hearing overview:, “The Debtors commenced these chapter 11 cases approximately three months ago, while firmly in the midst of an unprecedented global pandemic, with the goals of right-sizing their capital structure, reducing their lease footprint, and preserving thousands of jobs. For months, the Debtors worked to build consensus with stakeholders across their capital structure, which efforts led to the execution of the Restructuring Support Agreement with the Consenting Stakeholders, allowing the Debtors to enter chapter 11 contemplating a swift transaction that would provide the necessary liquidity to continue operations, market their assets, and, importantly, engage with all parties to build consensus around a plan of reorganization. Such negotiations were productive, and, prior to the hearing to approve the Disclosure Statement, the parties to the Restructuring Support Agreement entered into a Settlement with the Committee and certain Second Lien Lenders, building further consensus around the Plan. As a result, today the Debtors seek confirmation of a Plan that carries the widespread support of the Debtors’ stakeholders, and one that each Voting Class has overwhelmingly voted to accept.

The Plan before the court today proposes to deleverage the Debtors’ balance sheet by approximately $225 million and provide a meaningful recovery to the Debtors’ stakeholders, including general unsecured creditors. Further, the Plan contemplates a secured a fully committed DIP-to-exit facility that provides approximately $15 million of additional liquidity at emergence, which will allow the Company to achieve its long-term plans in the future. Confirmation of the Plan represents a significant milestone for the Debtors, particularly during these uncertain times. Today, the Debtors are on the verge of positioning their businesses to emerge from chapter 11 as a healthier, better-capitalized enterprise, equipped for go-forward success."

As to the prospect of outstanding objections interfering with a smooth confirmation hearing, the Memorandum adds: "The only objections that the Debtors received relate to disputes regarding cure amounts listed on the Plan Supplement as well as certain other counterparty-specific issues related to contract assumption or rejection."

The Debtors' solicitation Disclosure Statement [Docket No. 434] adds: “On September 23, 2020, the Consenting Lenders, the official committee of unsecured creditors appointed in these Chapter 11 Cases (the 'Committee'), certain Holders of Second Lien Claims (the 'Certain Second Lien Claim Holders') and the Debtors entered into a settlement (the 'Settlement'), pursuant to that certain term sheet (the 'Settlement Agreement') filed with the Bankruptcy Court on September 23, 2020 [Docket No. 411], that sets forth a few additional terms of the restructuring of the Debtors, including that:

• each Holder of a Convenience General Unsecured Claim shall receive its Pro Rata share of a Convenience GUC Recovery; and
• each Holder of a non-Convenience General Unsecured Claim shall receive (i) its Pro Rata share of a GUC Cash Recovery (less any Stakeholder Reimbursements); and (ii) its Pro Rata share of a GUC Equity Recovery.

Pursuant to the Settlement, in the event of an Alternative Transaction, each Holder of a General Unsecured Claim shall receive its Pro Rata Share of the GUC Cash Recovery (less any Stakeholder Reimbursements) and an Additional Cash Payment.

The Restructuring Transactions under the Plan provide for the reorganization of the Debtors as a going concern with a deleveraged balance sheet, reduced debt obligations and sufficient liquidity to fund the Debtors’ post-emergence business plan. Additionally, the Alternative Transaction acts as a market check for the Restructuring Transactions, ensuring that the Debtors are pursuing a transaction that maximizes value for all stakeholders.

The key financial components and commitments of the Restructuring Transactions are as follows. On the Effective Date:

• all Administrative Claims, Priority Tax Claims and Other Secured Claims will be paid in full in Cash or receive such other treatment that renders such Claims Unimpaired;
• each Holder of a DIP Facility Claim shall receive its allocated share of the New First Lien Term Loan Exit Facility; 
• each Holder of a First Lien Secured Claim shall receive its Pro Rata share of and interest in, as applicable, (i) 96.5% – 100% of the New Common Stock (subject to dilution by a Management Incentive Plan, a New Money DIP Fee and an Exit Facility Fee), (ii) the participation in the New First Lien Exit L/C Facility and (iii) the New Second Lien Term Loan Exit Facility;
• the Debtors shall obtain the Exit Facilities; and
• the parties to the Restructuring Support Agreement will grant full, mutual releases, subject to revocation as set forth in the Restructuring Support Agreement….In parallel with the Restructuring Transactions, the Plan and Disclosure Statement contemplate a sale and marketing process to solicit bids for a sale transaction of all or substantially all of the Debtors’ assets in accordance with the terms and conditions of the Restructuring Support Agreement.”

The following is a summary of classes, claims, voting rights and projected recoveries (defined terms are in the Plan and/or Disclosure Statement, also see the Liquidation Analysis attached below)

• Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is N/A and estimated recovery is 100%.
• Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is N/A and estimated recovery is 100%.
• Class 3 (“First Lien Secured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $267.4mn and estimated recovery is 31.4% – 85.6%. Each Holder of an Allowed First Lien Secured Claim shall receive:

1. with respect to any First Lien Credit Agreement L/C Secured Claims, participation in the New First Lien Exit L/C Facility in an amount equal to such Holder’s First Lien Credit Agreement L/C Secured Claims; and
2. with respect to any First Lien Credit Agreement Secured Claims, its Pro Rata Share of and/or interest in (A)(1) if the Settlement is in effect, 96.5% of the New Common Stock (subject to dilution by the Management Incentive Plan, the New Money DIP Fee and the Exit Facility Fee), or (A)(2) if the Settlement is no longer in effect, 100% of the New Common Stock (subject to dilution by the Management Incentive Plan, the New Money DIP Fee and the Exit Facility Fee); and (B) the New Second Lien Term Loan Exit Facility (in an aggregate amount of $50.0mn); or
3. in the event of an Alternative Transaction, its Pro Rata share of the Sale Proceeds up to the Allowed amount of such Claims, less (A) the Sale Proceeds distributed to Holders of Class 1 and Class 2 Claims and (B) the GUC Cash Recovery and Additional Cash Payment distributed to Holders of General Unsecured Claims.

• Class 4 (“Second Lien Secured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claim is $0 and estimated recovery is 0%. The Debtors believe that, unless an Alternative Transaction occurs that pays First Lien Secured Claims in full, there are no Claims in Class 4 Second Lien Secured Claims.  Each Holder of an Allowed Second Lien Secured Claim shall receive no recovery or distribution; provided that if, and only if, the Alternative Transaction occurs and Holders of Claims in Class 1, Class 2 and Class 3 have been paid in full or have otherwise received such treatment as such Holders are entitled to under the Plan, each Holder of a Second Lien Secured Claim shall receive its Pro Rata share of the Sale Proceeds up to the Allowed amount of such Claim, less (A) the Sale Proceeds distributed to Holders of Class 1, Class 2 and Class 3 Claims and (B) the GUC Cash Recovery and Additional Cash Payment distributed to Holders of General Unsecured Claims. 
• Class 5 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claim is $100.5mn and estimated recovery is 3.0% – 8.2%. If the Alternative Transaction does not occur, each Holder of a General Unsecured Claim shall receive (i) with respect to any Convenience General Unsecured Claim, its Pro Rata share of the GUC Convenience Recovery, provided that payment on account of each Convenience General Unsecured Claim shall not exceed 3.4% of such Allowed Claim; and (ii) with respect to any General Unsecured Claim that is not a Convenience General Unsecured Claim, its Pro Rata share of (A) the GUC Cash Recovery, less any Stakeholder Reimbursements; and (B) the GUC Equity Recovery.

If, and only if, the Alternative Transaction occurs, each Holder of an Unsecured Claim shall receive (i) its Pro Rata share of the Additional Cash Payment; (ii) its Pro Rata share of the GUC Cash Recovery, less any Stakeholder Reimbursements; and (iii) if and only if Holders of Allowed Claims in Class 1, Class 2, Class 3 and Class 4 have been paid in full or have otherwise received such treatment as such Holders are entitled to under the Plan, its Pro Rata share of the Sale Proceeds up to the Allowed amount of such Claim, less the Sale Proceeds already distributed to Holders of non-Class 5 Claims in accordance with the Bankruptcy Code.

Pursuant to the Settlement, the Holders of First Lien Deficiency Claims have agreed to waive any recovery on account of each respective Holder’s First Lien Deficiency Claims (including any right to turnover or similar relief with respect to the Second Lien Claims); provided that, to the extent any Holder of Second Lien Claims objects to the Settlement and seeks a recovery inconsistent with what is set forth in the Settlement Agreement, for those purposes only, the First Lien Deficiency Claims (including turnover and all rights under the First Lien/Second Lien Intercreditor Agreement) are preserved, but only with respect to the Claims held by the objecting Holders of Second Lien Claims (if any).

In the event that the Settlement is no longer in effect, then recovery on account of First Lien Deficiency Claims shall not be waived and Class 5 shall not be entitled to a recovery.

The estimated recoveries for General Unsecured Claims assume that (a) the Debtors do not deliver the alternative transaction notice set forth in Section 7.01 of Restructuring Support Agreement and/or pursue a sale transaction without the consent of the Required Consenting Lenders and the Supermajority Required DIP Lenders and the Restructuring Support Agreement is terminated as a result and (b) the Settlement is not voided by the Committee in accordance with the terms thereof. In those circumstances, the estimated recovery for Class 5 General Unsecured Claims is 0%.

• Class 6 (“Intercompany Claims”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan.
• Class 7 (“Intercompany Interests”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan.
• Class 8 (“Existing Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.

Voting Results

The Debtors' claims agent notified the Court of the Plan voting results [Docket No. 584], which were as follows:

• Class 3 (“First Lien Secured Claims”): 103 claim holders, representing $251,500,909.56 in amount and 100% in number, accepted the Plan.
• Class 4 (“Second Lien Secured Claims”): 169 claim holders, representing $77,607,378.94 (or 99.72%) in amount and 84.08% in number, accepted the Plan. 32 claim holders, representing $219,544.67 (or 0.28%) in amount and 15.92% in number, rejected the Plan.
• Class 5 (“General Unsecured Claims”): 38 claim holders, representing $69,770,000.00 in amount and 100% in number, accepted the Plan.

Key Documents

The Disclosure Statement [Docket Nos. 413 and 418] attached the following documents:

• Exhibit A: Plan of Reorganization (filed separately at Docket No. 412]
• Exhibit B: Restructuring Support Agreement [filed at Docket No. 434]
• Exhibit C: Financial Projections [Docket No. 418]
• Exhibit D: Liquidation Analysis [Docket No. 418]

The Second Plan Supplement attached the following documents [Docket No. 592]:

• Exhibit A: Governance Term Sheet
• Exhibit F: Identities of the Members of the Reorganized CPK Board and the Officers of Reorganized CPK
• Exhibit G: Rejected Executory Contract and Unexpired Lease List
• Exhibit G-1: Redline to Version in the Initial Plan Supplement
• Exhibit H: Assumed Executory Contract and Unexpired Lease List
• Exhibit H-1: Redline to Version in the First Amended Plan Supplement

Liquidation Analysis (see Exhibit B to Docket No. 418 for notes)

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