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November 3, 2020 – The Debtors filed a Memorandum of Law in support of (i) final approval of the Disclosure Statement and (ii) confirmation of the Plan [Docket No. 805]. The Plan calls for a post-sale winddown of the Debtors' estates and features a Global Settlement that the Debtors say "forms the framework for the Plan and provides significant value for general unsecured creditors, who, given the Debtors’ capital structure, would likely receive no (or a substantially diminished) recovery absent the substantial consideration provided by the Prepetition Secured Lenders pursuant to the terms of the Global Settlement."
In light of the Global Settlement and with the resolution of informal comments and responses related to the Plan and Disclosure Statement, no significant objections to confirmation and final approval remain.
The memorandum notes, “On November 14, 2019 (the 'Petition Date'), facing significant liquidity constraints, the Debtors commenced these bankruptcy cases (the 'Chapter 11 Cases') by each filing a voluntary petition under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the 'Court'). After exploring out-of-court strategic alternatives, the Debtors concluded that the best way to maximize value for the benefit of all stakeholders was through filing for Chapter 11 protection, obtaining postpetition financing and pursuing an orderly sale of their assets in a controlled, court-supervised environment (the 'Sale'). Following the successful Sale and Global Settlement with the Creditors’ Committee and the Prepetition Secured Lenders, winddown of operations and the subsequent sale of certain miscellaneous assets, and less than one (1) year after commencing these Chapter 11 Cases, the Debtors now seek confirmation of the Plan with the full support of the Creditors’ Committee and the Prepetition Secured Lenders. If confirmed, the Plan will fairly and appropriately distribute the remaining assets in and value of the Debtors’ estates to their creditors and provide for the orderly wind down of the Debtors’ estates.
The Plan is the culmination of the Debtors’ substantial efforts over the past year to bring these Chapter 11 Cases to a fully consensual, value-maximizing close following the sale of substantially all of the Debtors’ assets and the winddown of the Debtors’ operations. The Plan includes and effectuates the terms of the Global Settlement reached among the Debtors, the Creditors’ Committee and the Prepetition Secured Lenders that compromises claims and Causes of Action asserted or that could have been asserted by the Creditors’ Committee, and by and against the Debtors and the Prepetition Secured Lenders, as well as potential disputes related to the allocation of available value as among the Debtors’ stakeholders. The Global Settlement forms the framework for the Plan and provides significant value for general unsecured creditors, who, given the Debtors’ capital structure, would likely receive no (or a substantially diminished) recovery absent the substantial consideration provided by the Prepetition Secured Lenders pursuant to the terms of the Global Settlement, as incorporated into the Plan.
…in the Declaration of Matthew R. Manning in Support of Confirmation of the Joint Chapter 11 Plan of HRI Holding Corp. and its Debtor Affiliates [D.I. 804] and as will be shown at the confirmation hearing, the Disclosure Statement and the Plan meet all of the requirements under the Bankruptcy Code to be approved and confirmed. Accordingly, the Debtors request that the Disclosure Statement be approved on a final basis and the Plan be confirmed.”
- On November 3, 2020, the claims agent notified the Court of the Plan voting results [Docket No. 803] which were as follows:
- Class 4 (“Prepetition Secured Obligations Claims”): 39 claim holders, representing $2,030,853,117.93 (100%) in amount and 100% in number, voted in favor of the Plan.
- Class 5 (“General Unsecured Claims”): 152 claim holders, representing $3,254,360.80 (84.55%) in amount and 84.44% in number, voted in favor of the Plan. 28 claims holders, representing $594,559.66 (15.45%) in amount and 15.56% in number, rejected the Plan. 2 claim holders abstained, representing $892.00
- Class 6 (“Prepetition Secured Obligations Deficiency Claims”): 39 claim holders, representing $39.00 (100%) in amount and 100% in number, voted in favor of the Plan.
Summary of Treatment of Voting Classes:
- Class 4 (“Prepetition Secured Obligations Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $47.4mn and the estimated recovery is 65%. Each holder will receive payment to the Administrative Agent of: (i) any Residual Cash Reserve Amounts, (ii) Residual Cash and (iii) the Residual Remnant Liquor License Proceeds.
- Class 5 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $34.0mn and the estimated recovery is approximately 3%. Each holder will receive its Pro Rata share of Class A and Class B Interests, which shall entitle such holder to its Pro Rata share after deducting the expenses of the Plan Administrator of the following: (A) on account of its Class A Interests: (i) the Residual Retained Sale Proceeds, (ii) the Residual Wind Down Amounts and (iii) the Identified Liquor License Proceeds and (B) on account of its Class B Interests: the Residual Excluded Liquor License Proceeds.
- Class 6 (“Prepetition Secured Obligations Deficiency Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims and estimated recovery is Unknown. Prepetition Secured Obligations Deficiency Claims shall be calculated by the Plan Administrator in consultation with the Administrative Agent after all distributions have been made to the Prepetition Secured Lenders on account of their Allowed Class 4 Prepetition Secured Obligations Claims.
About the Debtors
Formed in September 1992 under the name “Gilbert/Robinson, Inc.,” and headquartered in Leawood, Kansas, the Debtors today own and operate forty-seven restaurants in fourteen states (Connecticut, Florida, Illinois, Indiana, Kansas, Michigan, Missouri, Nebraska, New Jersey, New York, Ohio, Pennsylvania, Texas and Virginia).
The Company’s thirty-four Houlihan’s Restaurant + Bar (a/k/a Houlihan’s) restaurants are leaders in the “polished casual” dining space, offering a unique, made from scratch menu and energetic bar scene; its six J. Gilbert’s Wood-Fired Steak + Seafood (a/k/a J. Gilbert’s) restaurants offer a modern twist on the classic American steakhouse, crafting high-quality, wood-fired steaks in an upscale yet rustic and warm environment; its six seafood restaurants (three Bristol Seafood Grill (“Bristol”) and three Devon Seafood Grill (“Devon”)) feature high quality ocean fare delivered with simplicity in an elegant, approachable fine dining setting; and its newest concept, Make Room for Truman, offers classic, time-honored recipes prepared with modern techniques, served in an authentic atmosphere. The Company also has twenty-three franchised locations, twenty-one Houlihan’s and two Bristol and Devon, in California, Georgia, Illinois, Indiana, Iowa, Kansas, Maryland, Minnesota, Missouri, Pennsylvania, Texas and Virginia.
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