Relativity committee formally supports approval of Chapter 11 plan

By Caroline Salls

Pittsburgh, Jan. 4 – Relativity Media LLC’s official committee of unsecured creditors formally stated its support for the company’s plan of reorganization and recommended that all unsecured creditors vote to accept the plan, according to a company news release.

“We are pleased to receive this support from the creditors’ committee, which further clears the path for the company to emerge in early 2016 with a robust slate of films and the flexibility to execute our strategy as a fully integrated 360 degree content engine,” Relativity chairman and chief executive officer Ryan Kavanaugh said in the release.

A court hearing to consider confirmation of the plan is scheduled for Feb. 1.

As previously reported, the committee filed objections to the expedited marketing and auction process proposed by the sale and some terms of the proposed debtor-in-possession financing. The committee said in its letter to creditors that these objections were resolved before the hearings on those motions.

“The committee, having already secured $2 million in cash and third-party causes of action for the benefit of the general unsecured creditors under its agreement with the [stalking horse bidder], has been supportive of a plan process that affords the obvious benefits of maintaining the debtors as a going concern,” the committee’s letter said.

“Further, it is anticipated that in the proposed reorganization, the dilution of the general unsecured creditor claim pool will be minimized by elimination of hundreds of millions of dollars of indebtedness (whether by voluntary waiver, conversion to equity in the reorganized debtors, or reinstatement) and assumption of executory contracts and payment of cure costs, rather than creation of rejection damages claims, which will enhance the recovery to general unsecured creditors – a result which appeared impossible in early October following the sale bid deadline.”

The committee said the proposed plan should result in an estimated recovery rate of 4% to 11.5% for the general unsecured creditor class.

Relativity Media is a media company based in Beverly Hills, Calif., that filed for bankruptcy on July 30 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 15-11989.

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