December 21, 2020 – The Court issued an order approving (i) the adequacy of the Debtors' Amended Disclosure Statement, (ii) the procedures for solicitation of votes on the Debtors' Plan and (iii) a timeline culminating in a February 4, 2021 Plan confirmation hearing [Docket No. 759].

On December 18, 2020, the Debtors filed their First Amended Plan and Disclosure Statement [Docket No. 749]. On December 21, 2020, the Debtors filed the solicitation versions of the Amended Plan and Disclosure Statement [Docket Nos. 761 and 762, respectively].

The Amended Plan specifies the amount of distribution earmarked for holders of General Unsecured Claims. Under the Amended Plan, each holder of General Unsecured Claims will receive its Pro Rata share of no less than $3.0mn (the “Class 4 Aggregate Cash Distribution”).

The Amended Disclosure Statement includes a “Statement from the Official Committee of Unsecured Creditors” that states, "The Creditors' Committee does not support the Plan and recommends that Class 4 creditors vote no." (See more on Committee statement below).

Plan Overview

The Disclosure Statement [Docket No. 762] notes, “The Plan reflects the agreement reached among the Debtors and Prepetition Secured Creditors to follow a dual path whereby the Debtors will either reorganize via a consensual transaction that would provide for the Debtors to emerge from these chapter 11 proceedings under new ownership by the Prepetition Secured Creditors or sell their assets as a going concern. The Debtors and the Prepetition Secured Creditors believe that the financial restructuring, the operational restructuring (through, among other things, focused lease rejections) and the other transactions reflected in the Plan would position the Reorganized Debtors well to succeed post-emergence from bankruptcy. With a sustainable business plan and adequate operating liquidity, the Reorganized Debtors will be positioned to compete more effectively in the challenging casual dining industry. Pursuant to the Plan, the operations of the Debtors will be bifurcated. Specifically, all of RTI’s operating assets other than RT Lodge and interests in its subsidiaries shall be transferred to RT Asset Company, which shall be wholly-owned after the Effective Date by TCW, subject to dilution. Also, pursuant to the Plan, the Debtors will transfer to each Holder of an Allowed Subclass 3A Claim its Pro Rata share of one hundred percent (100%) of the Equity Interests in RT Lodge Company, which shall retain the RT Lodge."

The following is an updated summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):

• Class 1 (“Non-Tax Priority Claim”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is $0 – $770,331 and the estimated recovery is 100%.
• Class 2 (“Miscellaneous Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is $0.50mn and the estimated recovery is 100%.
• Class 3 (“Prepetition Secured Debt Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $37.91mn and estimated recovery is N/A. On the Effective Date, (1) unless the holders of the DIP Facility Claims and Prepetition Secured Debt Claims (other than with respect to any such Claims that have been credit bid in connection with a Successful Bid) have been paid in full previously from Net Sale Proceeds, each holder of a Subclass 3A Claim will receive its Pro Rata share of (i) the GS Cash Payment, (ii) any GS Adjustment Equity and (iii) one hundred percent (100%) of the equity in RT Lodge Company; and (2) unless it has been paid in full previously from Net Sale Proceeds, each holder of an Subclass 3B Claim will receive its Pro Rata share of (i) the TCW Cash Payment and (ii) one hundred percent (100%) of the equity in RT Asset Company less any GS Adjustment Equity, subject to dilution on account of the Warrants and management incentive plan. If a Successful Bid is selected after the Auction, the proceeds of all Asset Sales by the Debtors made prior to the Effective Date shall first be applied to the repayment of the Prepetition Secured Debt Claims (other than any such Claims that have been credit bid in connection with a Successful Bid) on the Effective Date, and, following their repayment in full, repayment of the DIP Facility Claims (other than any such Claims that have been credit bid in connection with a Successful Bid). For avoidance of doubt, Class 3 shall be a Vacant Class if the Prepetition Secured Debt Claims (other than any such Claims that have been credit bid in connection with a Successful Bid) have been paid in full from Net Sale Proceeds before the Effective Date. If Class 3 becomes a Vacant Class, then in addition all of the provisions of the Plan related to Article III.C.3.c of the Plan shall not be operative, including (without limitation) provisions that implement or reference exit financing or the assumption of executory contracts and unexpired leases of the Debtors, unless such contracts and/or leases are listed on a schedule to the Plan Supplement.
• Class 4 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $111.0mn – $120.0mn and estimated recovery is 2.5% – 2.7%. Each holder of a General Unsecured Claim will receive its Pro Rata share of no less than $3.0mn (the “Class 4 Aggregate Cash Distribution”).
• Class 5 (“Preserved Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 6 (“Extinguished Intercompany Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 7 (“Dissenters Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 8 (“Equity Interests in Holding”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 9 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of interests is N/A and the estimated recovery is 100%.

Committee Statement

In respect of the Committee's statement that it does not support confirmation of the Plan, the Amended Disclosure Statement provides, "Since the Creditors’ Committee’s formation, it has been engaged in diligence concerning the Debtors’ assets as well as discussions with the Prepetition Secured Creditors and the DIP Lenders and the Debtors on a global resolution that would provide for what the Creditors’ Committee believes would be fair and equitable treatment for all general unsecured creditors under either a sale of assets or any proposed reorganization of the Debtors pursuant to the Plan. To date, those discussions have not resulted in any agreement.

The Creditors’ Committee believes that there are meaningful unencumbered assets (including the funds from the rabbi trusts) which can provide a fair recovery to general unsecured creditors. In addition, the Creditors’ Committee believes that there may be various causes of actions that should not be released (discussed in more detail below) that could also provide a recovery to general unsecured creditors. As such, the Creditors’ Committee does not believe that the proposed treatment of general unsecured creditors in the Plan is fair or appropriate and does not support acceptance of the Plan absent modification that would include global settlement or otherwise acceptable treatment for general unsecured creditors. The Creditors’ Committee hopes to continue to work with the Debtors, the Prepetition Secured Creditors and the DIP Lenders on a global resolution. If a global resolution is reached, the Creditors’ Committee would work with all parties to have such resolution publicized and alter its recommendation….

The Creditors’ Committee has submitted certain informal document requests to the Debtors and NRD to diligence the Merger, among other NRD transactions and NRD’s control of and interactions with the Debtors. While the Debtors have produced some documents, the Creditors’ Committee awaits production of additional documents from both Debtors and from NRD. Moreover, the Creditors’ Committee understands that the Debtors performed a high-level review of the transactions involving NRD – but the independent directors have not done so, deferring such investigation to the Creditors’ Committee. The Creditors’ Committee is still investigating and continues to follow up with Debtors and NRD concerning outstanding documents. At this time, therefore, the Creditors’ Committee does not support a release of NRD and its Related Persons without further information and a contribution from those parties as consideration for the release from any potential claims or actions. Alternatively, causes of action against NRD should be placed into a trust for the benefit of general unsecured creditors.

In addition, the Plan provides for unsecured creditors to be deemed Releasing Parties unless they affirmatively opt-out of the release. General unsecured creditors should read the release provisions carefully as well as the information on the ballot. If you do not wish to be a Releasing Party, you must return the ballot AND check the opt-out box of the release. Otherwise, you will be deemed a Releasing Party. The Committee submits that the release provisions are not appropriate and reserve all rights on this issue at Confirmation." 

The Disclosure Statement [Docket No. 762] attached the following documents:

• Exhibit A: Plan of Reorganization 
• Exhibit B: Restructuring Support Agreement 
• Exhibit C: Organizational Chart of the Debtors 
• Exhibit D: Liquidation Analysis
• Exhibit E: Financial Projections

Key Dates

• Plan Supplement Deadline: January 22, 2021
• Voting Deadline: January 29, 2021
• Plan Objection: January 29, 2021
• Confirmation Hearing: February 4, 2021

Liquidation Analysis (see Exhibit D of Amended Disclosure Statement [Docket No. 749] for Analysis Assumptions)

About the Debtors

According to the Debtors: “Founded in 1972 in Knoxville, Tennessee, Ruby Tuesday, Inc., is dedicated to delighting guests with exceptional casual dining experiences that offer uncompromising quality paired with passionate service every time they visit. From signature handcrafted burgers to the farm-grown goodness of the Endless Garden Bar, Ruby Tuesday is proud of its long-standing history as an American classic and international favorite for nearly 50 years. The Company currently owns, operates and franchises casual dining restaurants in the United States, Guam, and five foreign countries under the Ruby Tuesday® brand.”

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