Reddy Ice Chapter 11 reorganization plan receives court confirmation

By Jim Witters

Wilmington, Del., May 18 - Reddy Ice Holdings, Inc. received court confirmation of its Chapter 11 plan of reorganization on May 18, according to a representative of the debtors law firm.

The approval came during a hearing in the U.S. Bankruptcy Court for the Northern District of Texas.

As previously reported, Reddy Ice filed for bankruptcy on April 12 after securing the support of a majority of its lenders and major creditors for a plan of reorganization.

As part of the reorganization, Reddy Ice intends to pursue acquisition of all or substantially all of the operations and assets of Arctic Glacier Income Fund and its subsidiaries.

Arctic Glacier acquisition

Arctic Glacier filed for creditor protection under the Companies' Creditors Arrangement Act in Canada, and those CCAA proceedings have been recognized under a Chapter 15 bankruptcy case in the United States.

In its CCAA proceedings, Arctic Glacier is implementing a sale and investor solicitation process for its business and assets.

On March 28, Reddy Ice submitted a non-binding letter of intent for the purchase of all or substantially all of Arctic Glacier's operations and assets.

The company said in a court filing that significant creditor Centerbridge Capital Partners II, LP or one or more of its parallel funds and related vehicles have indicated interest in providing the entire amount of equity financing for the Arctic Glacier acquisition.

Under its confirmed plan of reorganization, Reddy Ice is seeking to pay unsecured trade vendors in full and provide its existing holders of common stock with a recovery, which would be increased if a transaction with Arctic is completed.

Treatment of creditors

Before the hearing, the debtors adjusted treatment of some creditors.

Under the confirmed plan, treatment of creditors includes the following:

• Holders of first-lien notes will retain those notes, which will be governed by an amended first-lien notes indenture, provided that the plan sponsor's first-lien notes are subject to sponsor equitization in the event of an Arctic termination;

• Second-lien notes will be exchanged for each holder's share of 6.09 million shares of reorganized Reddy Ice common stock and the right to purchase shares of reorganized Reddy Ice preferred stock in a rights offering. The second-lien notes deficiency claim will be treated as a general unsecured claim;

• Holders of first-lien notes guarantee claims will receive a guarantee from reorganized Reddy Holdings, which will secure the obligations of reorganized Reddy Corp. under the amended first-lien notes indenture;

• Holders of second-lien notes guarantee claims will receive the proceeds of an intercompany claim, but only to the extent necessary to make Reddy Holdings general unsecured claim settlement payments and specified transfers;

• Holders of discount notes claims will receive a share of a discount notes initial payment from amounts to which holders of second-lien notes claims and second-lien notes guarantee claims would otherwise be entitled.

On the three-month anniversary of the plan effective date, holders of discount notes claims will receive a share of a discount notes subsequent payment, also from amounts that would otherwise go to second-lien notes claimants and second-lien notes guarantee claimants;

If the Arctic acquisition is completed, holders of discount notes claims will also be entitled to receive a share of an Arctic acquisition discount notes payment from amounts that would otherwise go to the second-lien noteholders and second-lien notes guarantee claimants;

• Holders of Reddy Holdings general unsecured claims will receive a share of Reddy Holdings general unsecured claim settlement payments, provided that the holders of allowed MDL litigation claims shall not receive a share of the Reddy Holdings unsecured claims settlement payments;

• Holders of Reddy Corp. general unsecured claims will receive a share of the Reddy Corp. general unsecured claim settlement payment, provided that allowed MDL litigation claims and allowed second-lien notes deficiency claims shall not receive any share of the settlement payment; and

• Holders of interests and Reddy Corp. and Reddy Holdings subordinated 510(b) claims will receive no distribution.

However, the company said holders of second-lien notes claims and second-lien notes guarantee claims will make distributions to Reddy Holdings interest holders.

Reddy Ice, a Dallas-based manufacturer and distributor of packaged ice, filed for bankruptcy on April 12. The Chapter 11 case number is 12-32349.

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