Ditech disclosure statement approved; plan hearing set for June 20

By Caroline Salls

Pittsburgh, May 10 – Ditech Holding Corp. obtained court approval of the disclosure statement for its amended plan of reorganization, according to an order filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

The plan confirmation hearing is scheduled for June 20.

As previously reported, Ditech filed bankruptcy to facilitate a financial restructuring under a support agreement reached with lenders holding more than 75% of its term loans. Ditech Holding subsidiaries Ditech Financial LLC and Reverse Mortgage Solutions, Inc. are also parties to the restructuring support agreement.

The company said the support agreement provides for a restructuring of its debt while it continues to evaluate strategic alternatives, including a sale of the company, a sale of all or a portion of its assets and potential changes to its business model.

Under the restructuring support agreement, Ditech will pursue a recapitalization that deleverages its capital structure by extinguishing more than $800 million in corporate debt and a liquidity enhancing transaction that includes an appropriately sized working capital facility at emergence.

Ditech said the reorganization transaction also calls for the cancellation of equity securities with no distribution to holders.

Holders of term loan claims will receive a share of $400 million in new term loans and 100% of the new common stock in the reorganized company.

Holders of second-lien notes claims and general unsecured claims will receive no distribution.

Holders of go-forward trade claims deemed integral to the ongoing operations of Ditech will receive a cash payment.

Following the effective date, reorganized Ditech will adopt a post-restructuring management incentive plan under which up to 10% of the new common stock will be reserved for issuance as awards.

Ditech is a mortgage servicer, asset manager and portfolio owner based in Fort Washington, Pa. The company filed bankruptcy on Feb. 11 under Chapter 11 case number 19-10412.

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