November 3, 2020 – The Debtors filed a Second Amended Chapter 11 Plan and a related Disclosure Statement [Docket Nos. 1233 and 1234, respectively]; and further filed a redline showing changes to the versions of those documents filed on October 29th [Docket No. 1235]. The amended Plan documents do not materially amend the treatment of classes and claims, otherwise summarized below, but do add detail as to projected recoveries.

[Update] On November 4th, the Court issued an order approving (i) the Disclosure Statement, (ii) proposed Plan solicitation and voting procedures and (iii) a proposed timetable culminating in a December 15, 2020 Plan confirmation hearing [Docket No. 1244]. The Debtors also filed solicitation versions of their Second Amended Chapter 11 Plan and Disclosure Statement [Docket Nos. 1246 and 1247, respectively].

Plan Overview

The Amended Disclosure Statement [Docket No. 1215] provides, “The Plan is the result of extensive good faith negotiations, overseen by the Debtors’ Restructuring Committee, among the Debtors and a number of their key economic stakeholders, that have agreed to support the Plan pursuant to that certain Plan Support Agreement dated as of September 4, 2020 (the ‘Original PSA’), as amended and restated on September 25, 2020 (the ‘Amended and Restated PSA’), and further amended and restated on October 21, 2020 (as further amended and restated, the ‘Second Amended and Restated PSA’). With the addition of the Initial Additional Consenting Creditors and Noteholder Additional Consenting Creditors…the Second Amended and Restated PSA now includes holders of in excess of 92% of the obligations outstanding under the First Lien Credit Agreement and holders of in excess of 80% of the obligations outstanding under the Senior Unsecured Notes Indenture.

The Plan provides for a comprehensive restructuring of the Company’s balance sheet and a significant investment of capital in the Debtors’ business. Specifically, the proposed restructuring contemplates, among other things:

• A debt-for-equity exchange transaction (or similar transaction)
• The following treatment of Claims and Equity Interests:

1. A holder of an Allowed First Lien Debt Claim will receive on the Effective Date, in full and final satisfaction of such Allowed First Lien Debt Claim, its Pro Rata Share of: (i) 100% of the New Equity Interests, subject to the dilution described herein, and and (ii) the Second-Out Term Loan Facility.
2. Each holder of an Allowed Senior Unsecured Notes Claim will receive, in full and final satisfaction of such Senior Unsecured Notes Claim, its Pro Rata Share of New Warrants, subject to dilution by the MIP Equity.
3. Each holder of an Allowed General Unsecured Claim will receive a GUC Trust Interest which shall entitle each holder of an Allowed General Unsecured Claim to receive, in full and final satisfaction of such Allowed General Unsecured Claim, its Pro Rata Share GUC Trust Assets after the GUC Trust Expenses have been paid in full or otherwise reserved for
4. Each holder of Existing Queso Interests will receive no recovery.

• A $200 million first lien first out term loan facility (the ‘Exit Facility’), which will be backstopped by the Initial Consenting Creditors, and which is subject to increase as necessary to repay claims under the DIP Facility and fund the liquidity requirements of the Reorganized Debtors.

The Debtors will fund distributions and satisfy applicable Claims under the Plan with Cash on hand, the Exit Facility, the New Second-Out Term Loan Facility, New Equity Interests, and New Warrants.

The Debtors believe that upon consummation of the Plan and the transactions contemplated thereby, the post-emergence enterprise will have the ability to withstand the challenges of operating in a pandemic and post-pandemic environment and be best positioned to fully reopen operations, as permitted.”

The following is a second amended summary of classes, claims, voting rights and expected recoveries changes highlighted below (defined terms are as in the Plan and/or Disclosure Statement, also see Liquidation Analysis below):

• Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated recovery is 100%.
• Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated recovery is 100%.
• Class 3 (“First Lien Debt Claims”) is impaired and entitled to vote on the Plan. The estimated recovery is 31.1% – 52.8%. Each Holder shall receive its Pro Rata Share of (a) 100% of the New Equity Interests, subject to dilution by the (w) New Warrant Equity (if any), (x) Exit Facility Equity, (y) Exit Facility Put Option Premium, and (z) MIP Equity, and (b) the New Second-Out Term Loan.
• Class 4 (“Senior Unsecured Notes Claims”) is impaired and entitled to vote on the Plan. The estimated recovery is 1.5% – 10.6%. Each Holder shall receive its Pro Rata Share of the New Warrants, subject to dilution by the MIP Equity.
• Class 5 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The estimated recovery is 12.2% – 19.4%. Each holder shall receive a GUC Trust Interest, which shall entitle each holder of an Allowed General Unsecured Claim to receive, in full and final satisfaction of such Allowed General Unsecured Claim, its Pro Rata Share of the GUC Trust Assets (ie $5.5mn) after the GUC Trust Expenses have been paid in full or otherwise reserved for.

FN: As of the Bar Date, approximately $141.0mn of General Unsecured Claims (excluding over $222.0mn of Senior Unsecured Notes Claims) have been filed and scheduled against the Debtors’ estates. The projected recoveries for Holders of Class 5 General Unsecured Claims are the Debtors’ preliminary estimates as of the date hereof and are subject to material change, including as the result of additional rejection damages claims that may be asserted against the Debtors’ estates. Neither the Creditors’ Committee nor the GUC Trustee has independently verified the Debtors’ assumptions and makes no representation or warranty with respect to the proposed recoveries set forth herein. Actual recoveries may materially differ (either higher or lower) from this estimated range based on, among other thing: (i) the Debtors’ final determinations whether to assume or reject executory contracts and unexpired leases (which have not been finalized as of the date hereof); (ii) the reduction of Allowed amounts of claims based on claims objections and the claims reconciliation process; (iii) the amount of GUC Trustee expenses; (iv) the potential allowance of contingent and/or unliquidated litigation and other claims; (v) the potential coverage of certain claims by insurance or other third-party sources; (vi) the potential allowance of late-filed claims (including any claims that may not have been filed as of the date hereof); and (vii) the potential impact of U.S. Trustee fees on the GUC Trust. Analysis of asserted claims and discussions with holders of claims remain ongoing.

• Class 6 (“Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated recovery is 100%.
• Class 7 (“Subordinated Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The estimated recovery is 0%.
• Class 8 (“Existing Queso interests”) is impaired, deemed to reject and not entitled to vote on the Plan. The estimated recovery is 0%.
• Class 9 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated recovery is N/A.

Exhibits attached to the Second Amended Disclosure Statement [Docket No. 1215]:

• Exhibit A: Plan
• Exhibit B: Amended and Restated PSA
• Exhibit C: Creditors’ Committee’s Letter
• Exhibit D: Valuation Analysis
• Exhibit E: Organizational Chart
• Exhibit F: Exit Facility Commitment Letter
• Exhibit G: Purchase Transaction
• Exhibit H: Liquidation Analysis
• Exhibit I: Financial Projections
• Exhibit J: Release Provisions

Key Dates:

• Voting Deadline: December 8, 2020
• Plan Objection Deadline: December 8, 2020
• Confirmation Hearing: December 15, 2020

Liquidation Analysis (see Exhibit F of Disclosure Statement [Docket No. 1215] for notes)

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