November 3, 2020 – The Debtors filed solicitation versions of their Plan and Disclosure Statement (Plan attached to the Disclosure Statement as Exhibit A), along with a blackline of those documents (changed pages only) showing immaterial changes to the versions of the documents filed on October 31, 2020 [Docket Nos. 899 and 900, respectively].

On November 2, 2020, the Court issued an order approving (i) the Disclosure Statement (conditionally), (ii) the Plan solicitation and voting procedures and (iii) a proposed timetable culminating in a December 17, 2020 combined hearing [Docket No. 896].

Overview of the Plan

The Disclosure Statement [Docket No. 893] notes, “The Plan provides for a comprehensive restructuring of the Debtors’ balance sheet and corporate organizational structure and a significant investment of capital in the Debtors’ business. The transactions contemplated in the Plan will strengthen the Company by substantially reducing its debt and increasing its cash flow on a go-forward basis and preserving approximately 900 jobs. Specifically, the proposed restructuring contemplates, among other things: 

• a complete discharge of the Company’s debt under the Syndicated Facility Agreement in the amount of approximately $633.9 million;
• a Plan Sponsor Selection Process that will run simultaneously with the solicitation of the Plan, with the goal of securing potentially higher recoveries for the Debtors’ creditors;
• a $500 million equity investment provided by the Plan Sponsor in cash (or such greater amount as may be determined pursuant to the Plan Sponsor Selection Process);
• a $150 million recovery to holders of Allowed Syndicated Facility Secured Claims in cash (or such greater recovery as may be determined pursuant to the Plan Sponsor Selection Process);
• a $25 million recovery to holders of Unsecured Trade Claims in cash; an establishment of a Litigation Trust for the benefit of Other Unsecured Claims.”

Amended Plan Documents

The amended Disclosure Statement does add new language that highlights disparate treatment between unsecured creditors in classes 4A and 4B, ie go-forward trade creditors who are set to receive a modest recovery when they split a $25.0mn cash pool and other creditors who will effectively get nothing in respect of over $500.0mn of claims, treatment which the Debtors' Official Committee of Unsecured Creditors has now signed off on, as reflected in the new paragraph below. Additionally, the amended Disclosure Statement attached a new Exhibit J which lists go-forward creditors in Class 4A.

The Disclosure Statement adds: "Settlement with Creditors’ Committee: The Plan embodies a contribution of cash by the Plan Sponsor to ensure the Debtors’ essential trade creditors support of the Reorganized Debtors. The Plan also embodies a settlement with the UCC that includes the establishment and funding of the Litigation Trust in connection with treatment of the Other Unsecured Claims, and the compromise and settlement of potential Causes of Action, including any and all of the UCC’s potential (a) objections or challenges to the amount, validity, perfection, enforceability, priority or extent of the Prepetition Loans or the Prepetition Secured Parties’ Liens (as defined in the Final DIP Order) and (b) assertions or actions for preferences, fraudulent transfers or conveyances, other avoidance power claims or any other claims, counterclaims or causes of action, objections, contests or defenses against the Prepetition Secured Parties). Taking into account the current facts and circumstances of these chapter 11 cases, the Committee has determined that the agreements embodied in the Plan, including the foregoing, and the recoveries provided to the holders of Class 4A Claims and Class 4B Claims thereunder, represent a fair and reasonable resolution of the rights and interests of the Debtors’ creditors. As such, the Committee supports the Plan.

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

• Class 1 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 3 (“Syndicated Facility Secured Claims”) is unimpaired and entitled to vote on the Plan. The aggregate amount of claims is $150.0mn and expected recovery is 100%. The change in respect of this class, unimpaired (according to the Debtors) but now entitled to vote on the Plan (should the Court disagree), is described as follows: ”The Debtors are soliciting votes to accept or reject the Plan from holders of Syndicated Facility Secured Claims to the extent Class 3 is determined to be Impaired under the Plan by the Bankruptcy Court. The Debtors reserve all rights to the extent Class 3 is determined to be Impaired.”
• Class 4A (“Unsecured Trade Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $67.0mn – $93.0mn and expected recovery is 27% – 37%.
• Class 4B (“Other Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $507.0mn – $516.0mn and expected recovery is ≥0%. Other Unsecured Claims include Syndicated Facility Deficiency Claims in an aggregate amount of approximately $483.0mn. 
• Class 5 (“Intercompany Claims”) is unimpaired, deemed to accept or reject and not entitled to vote on the Plan. The aggregate amount of claims is TBD and expected recovery is 100%/0%.
• Class 6 (“Subordinated Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is TBD and expected recovery is 0%.
• Class 7 (“Parent Interests”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is TBD and expected recovery is 0%.
• Class 8 (“Intercompany Interests”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan. The aggregate amount of claims is TBD and expected recovery is 0%.

Exhibits attached to the Disclosure Statement [Docket No. 810]:

• Exhibit A: Plan
• Exhibit B: Organizational Chart
• Exhibit C: Equity Commitment Agreement
• Exhibit D: Liquidation Analysis
• Exhibit E: Financial Projections
• Exhibit F: Valuation Analysis
• Exhibit G: Release Provisions
• Exhibit H: Plan Sponsor Selection Procedures
• Exhibit I: Creditors’ Committee Recommendation Letter
• Exhibit J: Class 4A Unsecured Trade Creditors

Amended Key Dates:

• Plan Supplement Filing Deadline: December 1, 2020
• Plan Voting Deadline/ Objection Deadline: December 8, 2020
• Combined Hearing: December 17, 2020

Liquidation Analysis (see Exhibit D of Disclosure Statement [Docket No. 893] for notes)

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