Former Journal Register wins approval for plan disclosure statement

By Jim Witters

Wilmington, Del., Aug. 27 - Pulp Finish 1 Co., formerly Journal Register Co., and its official committee of unsecured creditors won approval for the disclosure statement associated with their joint Chapter 11 plan of liquidation, according to an attorney in the case.

The approval came during an Aug. 27 hearing in the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the debtor sold substantially all of its assets to 21st Century Media, Inc. - formerly 21st CMH Acquisition Co., an affiliate of funds managed by Alden Global Capital LLC.

The sale, which closed on April 5, included a cash payment equal to the sum of $1.75 million plus cash sufficient to pay off the company's debtor-in-possession credit facility obligations, a $117.5 million credit bid, an amount equal to the severance pay and accrued paid time off that is required to be paid to any of Journal Register's employees who are not offered employment with the buyer and the assumption of liabilities.

The debtors' remaining assets of any significant value consist of the wind down cash and a 2007 tax refund, according to the disclosure statement.

The proposed liquidation plan provides for the liquidation of the debtors' remaining assets, an orderly wind down of the estates and the prompt distributions of cash to holders of allowed claims through a liquidating trust.

Creditor treatment

The liquidating trust will satisfy in full all allowed priority tax claims, allowed priority non-tax claims and allowed administrative claims that have not previously been paid by the debtors before making any distributions to holders of allowed general unsecured claims.

The plan proponents estimate that each holder of an allowed general unsecured claim will receive a distribution under the plan of about 0% to 5% of its allowed general unsecured claim.

Treatment of creditors under the proposed plan includes the following:

• Holders of priority non-tax claims will receive payment in full in cash;

• Holders of pre-petition revolving credit facility claims have been paid in full in cash;

• Holders of TLA/TLB secured claims have been satisfied in full and released before the sale transaction.

The TLA/TLB lenders held in excess of $154 million in secured claims but their affiliate - the purchaser - ultimately credit bid only $114.15 million of those claims. The balance of such claims, approximately $40 million, was waived as part of the 363 sale settlement;

• Holders of other secured claims will receive the collateral securing the claim or cash equal in amount to the value of the collateral;

• Holders of 363 sale assumed and assigned claims will receive payment from the purchaser and no distribution from the debtors' estates or from the liquidating trust;

• Holders of general unsecured claims will receive a proportional share of the liquidating trust assets after payment of allowed administrative claims, priority non-tax claims, other secured claims and the costs of administration of the trust;

• Intercompany claims will be adjusted, paid, continued or discharged to the extent reasonably determined appropriate by the liquidating trustee; and

• Holders of equity interests will receive no distribution.

Journal Register, a New York-based media company, filed for bankruptcy on Sept. 5, 2012. Its Chapter 11 case number is 12-13774.

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