November 13, 2020 – The Debtors’ notified the Court that their First Amended Joint Plan of Reorganization had become effective as of November 13, 2020 [Docket No. 644]. The Court had previously confirmed the Debtors’ Plan on October 20, 2020 [Docket No. 598].

On June 1, 2020, Libbey Glass Inc. and ten affiliated Debtors (“Libbey” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 20-11439. At filing, the Debtors, one of the world's largest glass tableware manufacturers, noted estimated assets between $100.0mn and $500.0mn and estimated liabilities between $500.0mn and $1.0bn. In a subsequently Schedule A/B, the Debtors noted $206.69mn of assets and $562.18mn of liabilities [Docket No. 174].

In 2019, Libbey Inc.'s net sales totaled $782.4mn.

The Debtors’ were represented by John H. Knight of Richards, Layton & Finger, P.A. Further board-authorized engagements include (i) Latham & Watkins LLP as general bankruptcy counsel, (ii) Alvarez & Marsal North America, LLC as financial advisors, (iii) Lazard LTD as investment banker and (iv) Prime Clerk as claims agent.

In a press release announcing the Plan's confirmation, the Debtors advised: “Libbey expects to complete its court-supervised restructuring and emerge from Chapter 11 in the coming weeks with a stronger balance sheet, reduced debt and the agility to position the Company to succeed in the current operating environment. Libbey has secured exit financing consisting of a $150 million term loan and a $100 million asset-based lending  facility, and expects to emerge from the Chapter 11 process with less than $200 million of funded debt.”

Plan Overview

The Plan, amended in the run-up to the confirmation hearing, incorporates settlements with the unions and the Debtors' Official Committee of Unsecured Creditors (the "Committee"), each as discussed below, and also added language relating to a now agreed registration rights agreement (the agreement attached to the Second Plan Supplement).

The Debtors' memorandum in support of Plan confirmation (the "Memorandum," Docket No. 579) provided the following as the Debtors neared their October 19th Plan confirmation hearing: "The significant support for the Plan among the Debtors’ stakeholders, the Official Committee of Unsecured Creditors (the 'Committee’), and the Unions was the product of significant negotiation and compromise: the Plan preserves the Debtors’ business and enhances their value by substantially deleveraging the Debtors’ balance sheet by approximately $300 million. Among other things, the Plan represents the culmination of hard-fought settlements with the Ad Hoc Term Lender Group, the Committee, and the Unions that will ultimately allow the Debtors to focus on long-term growth prospects and their competitive position in the market and to emerge from the chapter 11 cases (the ‘Chapter 11 Cases’) as a stronger company.

The Debtors and the Unions ultimately agreed to certain consensual modifications to the applicable collective bargaining agreements and union-related retiree benefits, which were executed on September 19, 2020 and ratified by the Unions’ membership on September 25, 2020 (the ‘Union Settlement’ [See more on this settlement below]). Debtors estimate these modifications will yield pre-tax cost savings of approximately $31 million….The Plan further incorporates a compromise and settlement of potential Claims and Causes of Action of the Committee on behalf of the Holders of General Unsecured Claims (the ‘Committee Settlement’), whereby (i) the General Unsecured Claim Recovery Pool will total $900,000, (ii) the Prepetition Term Loan Lenders have agreed to forgo a distribution on their Unsecured Deficiency Claim, and (iii) the Debtors have agreed to waive Avoidance Actions (including those against Holders of General Unsecured Claims) are being released as of the Effective Date.

As to outstanding objections and the prospects for a non-contentious Plan confirmation hearing, the Memorandum notes: "The Debtors are pleased to report that all but one of these objections have been resolved, and the Debtors will endeavor to address the outstanding objection to the Cure Notice in advance of the Confirmation Hearing. The Debtors are not aware of any outstanding or unresolved objections to confirmation of the Plan."

The Disclosure Statement [Docket No. 393] notes, “The Plan contemplates certain transactions, including, without limitation, the following transactions (described in greater detail in Section IV herein): 

Please note that references to the $100k "General Unsecured Recovery Cash Pool" should now be read as incorporating the $900k figure agreed in the Committee Settlement

• Each Holder of an Allowed DIP ABL Facility Claim, in full satisfaction, settlement, discharge and release of, and in exchange for such Allowed Claim, will be indefeasibly Paid in Full in Cash from the proceeds of the Exit Facilities.
• Each Holder of an Allowed DIP Term Loan Facility Claim, in full satisfaction, settlement, discharge and release of, and in exchange for such Allowed Claim, shall be paid in part in Cash or, in the case of a DIP Term Loan Lender that will be an Exit Facility Lender under the Exit Term Loan Facility Credit Agreement, if elected by such DIP Term Loan Lender, rolled into Exit Term Loan Facility Loans as part of a cashless roll of DIP Term Loan Facility Claims from the Exit Term Loan Facility Loans and paid in part by the issuance of New Preferred Equity Interests on the terms set forth in the Exit Term Loan Facility Term Sheet, which, when consummated, will result in the indefeasible Payment in Full of the DIP Term Loan Facility Claims.
• Each Holder of an Allowed Prepetition Term Loan Claim (Secured Portion) will receive, in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Claim, its Pro Rata share of 100% of the New Equity Interests Pool (subject to dilution by the New Management Incentive Plan Equity).
• Each Holder of an Allowed General Unsecured Claim, on, or as soon as reasonably practicable after, the later of (i) the Initial Distribution Date if such Class 6 Claim is an Allowed Class 6 Claim as of the Effective Date or (ii) the next Subsequent Distribution Date after the date on which such Class 6 Claim becomes an Allowed Class 6 Claim, will receive, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claim, its Pro Rata share of the General Unsecured Recovery Cash Pool (which equals $100,000 in the aggregate); provided that the Holders of the Prepetition Term Loan Claims (Unsecured Deficiency Portion) shall not share in the General Unsecured Recovery Cash Pool which is equal to $100,000 (with a full reservation of rights to their Pro Rata share of the General Unsecured Recovery Cash Pool in excess of $100,000, if any).
• Each Holder of an Allowed Intercompany Claim will have its Allowed Intercompany Claim reinstated, compromised, or cancelled, at the option of the relevant Holder of such Intercompany Claim with the consent of the Super-Majority Term Loan Lenders.
• Each Holder of an Allowed Old Parent Interest will have its Allowed Old Parent Interest cancelled without further notice to, approval of or action by any Entity, and each Holder of an Old Parent Interest will not receive any distribution or retain any property on account of such Old Parent Interest.
• Each Holder of an Allowed Old Affiliate Equity Interest will have its Allowed Old Affiliate Equity Interest remain effective and outstanding on the Effective Date and will be owned and held by the same applicable Person that held and/or owned such Allowed Old Affiliate Interest immediately prior to the Effective Date.
• The legal, equitable and contractual rights of each Holder of an Allowed Other Priority Claim, Allowed Other Secured Claim, Allowed Secured Tax Claim, and Allowed Prepetition ABL Claim will be unaltered by the Plan.

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

• Class 1 (“Other Priority Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is 100%.
• Class 2 (“Other Secured Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $1.5mn and the estimated recovery is 100%.
• Class 3 (“Secured Tax Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is 100%.
• Class 4 (“Prepetition ABL Claims”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is "(i) loans in the aggregate principal amount of not less than $66,954,400 and letters of credit issued under the Prepetition ABL Loan Documents with a face amount of $9,419,321.29, (ii) Swap Obligations (as defined in Prepetition ABL Agreement) in an aggregate amount not less than $22,404,935" and the estimated recovery is 100%.
• Class 5 (“Prepetition Term Loan Claims”) (Secured Portion) is impaired and entitled to vote on the Plan. The projected aggregate amount of claims is $162.9mn (and expected recovery is 51.1%. Each holder of an Allowed Term Loan Claim shall receive, in full satisfaction, settlement, discharge and release of, and in exchange for, such Allowed Class 5 Claim, (i) its Pro Rata share of 100% of the New Equity Interests Pool (subject to dilution by the New Management Incentive Plan Equity).
• Class 6 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The projected aggregate amount of claims is $210.0mn (includes Prepetition Term Loan deficiency claims of $155.8mn) and expected recovery is “Less than 1%.” On, or as soon as reasonably practicable after, the later of (i) the Initial Distribution Date if such Class 6 Claim is an Allowed Class 6 Claim as of the Effective Date or (ii) the next Subsequent Distribution Date after the date on which such Class 6 Claim becomes an Allowed Class 6 Claim, each Holder of an Allowed General Unsecured Claim shall receive, in full satisfaction, settlement, discharge and release of, and in exchange for, such Claim, its Pro Rata share of the General Unsecured Recovery Cash Pool (which equals $900,000 in the aggregate); provided that the Holders of the Prepetition Term Loan Claims (Unsecured Deficiency Portion) shall not share in the General Unsecured Recovery Cash Pool which is equal to $900,000 (with a full reservation of rights to their Pro Rata share of the General Unsecured Recovery Cash Pool that is in excess of $900,000, if any). General Unsecured Claims remain subject to the Claim reconciliation process being conducted by the Debtors and their advisors. The expected General Unsecured Claim amount includes Prepetition Term Loan Claims (Unsecured Deficiency Portion) of approximately $155.8 million, with the remainder of approximately $54 million constituting other General Unsecured Claims. For the avoidance of doubt, the Holders of Prepetition Term Loan Claims are not waiving their rights to any Unsecured Deficiency Claims under the Bankruptcy Code.
• Class 7 (“Intercompany Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is N/A.
• Class 8 (“Old Parent Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is N/A.
• Class 9 (“Old Affiliate Interests”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is N/A and the estimated recovery is 100%.

Voting Results

On October 15, 2020, the Debtors claims agent notified the Court of the Plan voting results [Docket No. 578], which were as follows:

• Class 5 (“Prepetition Term Loan Claims (Secured Portion)”): 174 claim holders, representing $143,632,506.81 in amount (or 100%) and 100% in number, voted in favor of the Plan.
• Class 6 (“General Unsecured Claims”): 240 claim holders, representing $188,816,857.60 (or 99.26%) in amount and 89.55% in number, accepted the Plan. 28 claim holders, representing $1,406,150.42 (or 0.74%) in amount and 10.45% in number, rejected the Plan.

Union Settlement

In a September 25, 2020 press release, the Debtors announced that they had "reached consensual, ratified agreements with the United Steelworkers ('USW') and the International Association of Machinists & Aerospace Workers ('IAM') regarding modifications to their collective bargaining agreements ('CBAs') and union-related retiree health and welfare benefits," which would result in a reduction of costs "that are essential to the company's successful reorganization." The new contracts will extend through September 2024. The deal is subject to Court approval either before or as part of the Plan confirmation hearing.

Mike Bauer, the Debtors' Chief Executive Officer, said in the press release: "The ratification of these modifications to our CBAs by our union employees is a key milestone on Libbey's path toward emerging from bankruptcy with the agility to succeed post-emergence."

Prepetition Indebtedness

• Prepetition ABL Facility: Libbey Glass and Libbey Europe B.V. (“Libbey Europe”) are parties to a $100.0mn February 2010 Amended and Restated Credit Agreement, with JPMorgan Chase Bank, N.A.as administrative agent with respect to the US Loans (as defined in the Prepetition ABL Facility), and J.P. Morgan Europe Limited as administrative agent with respect to the Netherlands Loans (as defined in the Prepetition ABL Facility), as of the Petition date, the Debtors had $66.9mn of outstanding borrowings under the Prepetition ABL Facility and $9.4mn in letters of credit and $5.6mn of other reserves, and a borrowing base of $83.1mn, resulting in $1.4mn of unused availability. The Prepetition ABL Facility matures on December 7, 2022. However, in the event that the Prepetition Term Loans are not refinanced by January 9, 2021, the Prepetition ABL Facility’s springing maturity date becomes effective and the Prepetition ABL Facility matures on such date.
• Prepetition Term Loan: Libbey Glass is the borrower under a $440.0mn April 2014 Senior Secured Credit Agreement, with Cortland Capital Market Services LLC, as administrative agent and collateral agent, (as successor agent to Citibank, N.A.). As of the Petition date, the principal amount of Prepetition Term Loans outstanding was approximately $377.9mn. 
• Other Unsecured Debt (trade debt, pension, employee obligations, etc): The Debtors believe that, as of the Petition Date, their obligations related to unsecured trade debt are in excess of $35.0mn.

The Debtors filed Plan Supplements at Docket Nos. 452, 583 and 586 which attached the following documents:

[Docket No. 452] 

• Exhibit 1: Amended / New Organizational Documents
• Exhibit 2: Corporate Governance Term Sheet
• Exhibit 3: Directors and Officers of the Reorganized Debtors
• Exhibit 4: Restructuring Transaction Steps
• Exhibit 5: Retained Causes of Action
• Exhibit 5: A Restructuring Transaction Steps Redline
• Exhibit 6: Schedule of Rejected Executory Contracts and Unexpired Leases

[Docket No. 583] 

• Exhibit 1: Exit ABL Facility Commitment Letter
• Exhibit 2: Second Schedule of Rejected Executory Contracts and Unexpired Leases
• Exhibit 3: Schedule of Assumed Employee Benefit Programs
• Exhibit 4: Assignment and Assumption Agreement
• Exhibit 5: Restructuring Transaction Steps
  • Exhibit 5-A: Restructuring Transaction Steps Redline
• Exhibit 6: Registration Rights Agreement
• Exhibit 7: Certificate of Designation (Series A Convertible Preferred)
  • Exhibit 7-A: Certificate of Designation (Series A Convertible Preferred) Redline
• Exhibit 8: LG Parent Holdco Inc. Stockholder Agreement
• Exhibit 9: Agreement and Plan of Merger

[Docket No. 586] 

• Exhibit 1: Exit Term Loan Facility Credit Agreement
• Exhibit 2: Settlement Agreement Term Sheet between Libbey Glass Inc., USW, and IAM Lodge 105

Liquidation Analysis (see Exhibit D to Disclosure Statement [Docket No. 393] for notes)

About the Debtors

According to the Debtors: "Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's global brand portfolio, in addition to its namesake brand, includes Libbey Signature®, Master's Reserve®, Crisa®, Royal Leerdam®, World® Tableware, Syracuse® China, and Crisal Glass®. In 2019, Libbey Inc.'s net sales totaled $782.4 million."

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