DMX Music liquidation plan confirmed

By Jennifer Lanning Drey

Eugene, Ore., June 27 - DMX Music Inc. obtained court approval of its plan of liquidation from the U.S. Bankruptcy Court for the District of Delaware, according to an attorney.

The plan implements a settlement resolving all claims held by DMX's lender group, under which the lender group consented to the creation of a $3.5 million creditor fund consisting of cash and other assets.

The creditor fund will be transferred to the liquidation trust upon the plan's effective date, and proceeds will be distributed to holders of general unsecured claims.

The fund will also include 50% of the proceeds from each of avoidance actions, a tax account after payment of priority tax claims and the lender group's share of the net proceeds of Maxide avoidance actions.

Treatment of creditors under the proposed plan includes:

• Holders of $86 million of lender group secured claims will recover 75% through all the remaining assets of the company, including any unused portion of a $15,000 liquidating debtors professional fund;

• Holders of $38,500 in other secured claims will receive 100% recovery through the liquidation proceeds for the assets to which they hold a lien senior to the lender group lien;

• Holders of $13.2 million in general unsecured claims will receive 20% recovery through their share of the creditor trust distributable assets; and

• Holders of intercompany claims and equity interests will receive no distribution under the plan.

DMX's case is under parent company Maxide Acquisition Inc. The Los Angeles-based provider of music, video and entertainment to businesses, consumers and airlines filed for bankruptcy on Feb. 14, 2005. Its chapter 11 case number is 05-10429.

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