Reader's Digest parent proposes second amended plan of reorganization

By Caroline Salls

Pittsburgh, May 8 - RDA Holding Co., parent company of the Reader's Digest Association, Inc., filed a second amended plan of reorganization and related disclosure statement on Tuesday with the U.S. Bankruptcy Court for the Southern District of New York to further amend the proposed treatment of general unsecured creditors.

The disclosure statement for the second amended plan was approved on May 8. The plan confirmation hearing is scheduled for June 28.

Under the first amended plan filed in April, general unsecured creditors were to receive a share of a $500,000 cash distribution if they voted to accept the plan and no distribution if they voted to reject it.

Under the second amended plan, the holders of general unsecured claims against Reader's Digest that vote to accept the plan would receive a share of a $3.88 million distribution, and holders of all sub-classes of general unsecured claims that vote to accept the plan would receive a share of the $500,000 distribution.

RDA said the changes were made in connection with a global settlement reached with its official committee of unsecured creditors and an informal committee comprised of holders of more than two-thirds of its floating-rate senior secured notes due 2017.

As previously reported, RDA filed bankruptcy to implement a financial restructuring under an agreement reached with its secured lenders and more than 70% of its secured noteholders.

Under the restructuring support agreement with the lenders and noteholders, the company will convert roughly $475 million of secured notes to equity, which RDA said will significantly deleverage its balance sheet.

Creditor treatment

Treatment of creditors under the second amended plan will include the following:

• Priority claims will be paid in full in cash;

• Other secured claims will either be paid in full in cash or holders will receive the collateral securing their claims;

• Holders of senior noteholder secured claims will receive a share of 100% of the new common stock in the reorganized company;

• Holders of all sub-classes of general unsecured claims will receive a share of a $500,000 general unsecured creditor cash distribution if they vote to accept the plan, and holders of general unsecured claims against Reader's Digest will also receive a share of a $3.88 million distribution if they vote to accept the plan.

Holders of general unsecured claims in sub-classes that do not accept the plan will receive no distribution. The distribution earmarked for those sub-classes will go to claimants in accepting sub-classes. If holders of general unsecured claims against Reader's Digest vote to reject the plan, there will be no Reader's Digest general unsecured claim distribution;

• Plan debtor intercompany claims will be either reinstated or compromised; and

• Existing RDA Holding interests will be cancelled, and holders will receive no distribution.

Reader's Digest, a subsidiary of RDA Holding Co., is a media and direct marketing company based in New York. The company filed for bankruptcy on Feb. 17 under Chapter 11 case number 13-22233.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.