RCS Capital fourth amended plan of reorganization confirmed by court

By Caroline Salls

Pittsburgh, May 19 – RCS Capital Corp. received court approval of the fourth amended Chapter 11 plan, according to an order filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, some of the holding companies of RCS’ broker-dealers and other first-lien and second-lien debt guarantors filed a pre-packaged Chapter 11 bankruptcy plan in March as part of the second phase of the RCS bankruptcy proceedings.

In February, RCS Capital made a pre-arranged Chapter 11 bankruptcy filing as part of its strategic initiatives to transform to a Cetera Financial Holdings, Inc.-only independent retail business.

Under the RCS plan, $150 million to $170 million of incremental liquidity will be injected into the reorganized companies to fund working capital needs and a retention program for the independent financial advisers. The plan also calls for a deleveraging of the company’s balance sheet by more than $200 million, including the conversion of $100 million of first-lien and second-lien secured debt into equity of the reorganized holding company, as well as a reduction in interest expense on an annual basis.

The holders of first-lien claims will receive their share of 38.75% of the reorganized holding company’s equity interests and a share of a new second-lien facility.

The holders of second-lien claims will receive a share of 38.75% of the reorganized holding company equity interests and a share of class B units in a creditor trust.

Holders of general unsecured claims will receive a share of class A units entitling them to a share of creditor trust assets.

The reorganized debtors will continue to own the equity interests in their subsidiaries.

RCS Capital is a New York-based investment firm focused on the individual retail investor. The company filed bankruptcy on Jan. 31 under Chapter 11 case number 16-10223.

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