Former Avadim Health gets confirmation of Chapter 11 liquidation plan

By Sarah Lizee

Olympia, Wash., Oct. 27 – AH Liquidation, Inc., formerly Avadim Health, Inc., and its official committee of unsecured creditors’ Chapter 11 plan of liquidation was confirmed on Wednesday by the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Avadim closed the sale of substantially all of its assets to stalking horse bidder Midava Holdings 3, Inc., a newly created company owned by funds advised by lender Hayfin Capital Management. The stalking horse purchase price included a credit bid of $69.95 million against the company’s debtor-in-possession facility and the pre-petition loan and notes, plus the assumption of some liabilities.

Under the plan, administrative expense claims and priority tax claims will be paid in full in cash.

Professional fee claims will be paid up to a fee limit for each professional.

Debtor-in-possession lenders will receive the lender recovery and will share that recovery with holders of pre-petition lender claims, provided that DIP claims are paid in full first.

Holders of other priority claims will be paid in full.

Holders of other secured claims will receive the collateral securing their claims, cash in an amount equal to the value of the collateral, or other treatment leaving their claims unimpaired.

Holders of general unsecured claims will receive their pro rata share of the GUC recovery, which is the sum of (i) the $450,000 of GUC cash, (ii) the committee fee savings amount, (iii) any proceeds recovered from the former insider claims and the non-insider claims, (iv) prior to the indefeasible payment in full in cash of the DIP facility claims and the pre-petition lender claims, 25% of any recovery from the current insider claims, and (v) after the payment in full in cash of the DIP facility claims and pre-petition lenders claims, 100% of any recovery from the current insider claims.

After payment in full of DIP claims and pre-petition lender claims, holders of subordinated notes claims will receive their pro rata share of the GUC recovery. The company noted that it does not expect the DIP facility and pre-petition lender claims to be paid in full, and as such, the estimated recovery to holders of subordinated notes claims is zero.

Holders of intercompany claims and equity interests will not receive any distribution.

Avadim Health is an Asheville, N.C.-based health care and wellness business that sells topical products to improve neuromuscular health and skin barrier health. The company filed bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on May 31 under Chapter 11 case number 21-10883.

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