Former Angelica wins confirmation of third amended Chapter 11 plan

By Caroline Salls

Pittsburgh, Aug. 31 – RFID Corp., formerly Angelica Corp., obtained confirmation of its third amended Chapter 11 plan, according to an order filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, substantially all of the company’s assets were scheduled to be sold before the plan confirmation hearing.

Global settlement

On July 31, RFID received court approval of a global settlement with its official committee of unsecured creditors and asset purchaser, which stemmed from committee concerns about both the feasibility of winding down RFID’s estates following the sale and also proceeding to confirmation of the plan with associated distributions to unsecured creditors.

Based on an investigation conducted by the committee, the company said the creditor group believes there are potential causes of action against KKR Credit Advisors (US) LLC entities and potential derivative causes of action against the company’s directors and officers.

An affiliate of KKR is the stalking horse bidder for Angelica’s assets.

Under the settlement, the purchaser will assume post-bankruptcy trade, employee wages, vacation claims, and related administrative expenses.

A creditor distribution trust will be established on the plan effective date, and the committee will appoint the oversight board to administer the RFID estates following the plan effective date in accordance with a creditor distribution trust agreement.

At closing, the purchaser will fund $1.4 million to be held in a segregated account for the benefit of general unsecured creditors, which will in turn go into the creditor distribution trust fund to make distributions to holders of those claims.

Also under the settlement, the committee will not oppose the company’s request for a release of any directors and officers claims.

The purchaser will retain all potential causes of action against vendors, customers, employees, and other parties with whom it will continue to do business after the closing.

Plan terms

The company said the sale proceeds will be used to satisfy debtor-in-possession facility claims, ABL claims, term loan B-2 claims and, if the stalking horse bidder is not the successful bidder for the assets, term loan B-1 claims.

After those claims are paid, the proceeds will be used to fund the ongoing wind-down costs of the Chapter 11 cases and, ultimately, plan distributions.

The company said the plan is designed to provide a mechanism to implement the liquidation of Angelica’s remaining assets, reconcile any outstanding claims and distribute the net liquidation proceeds.

According to the disclosure statement, the plan calls for the payment in full in cash of all claims, to the extent not already satisfied upon the sale closing, other than the term loan B-1 claim and general unsecured claims.

To the extent any amount of the term loan B-1 claim is outstanding on the plan effective date, the holder of that claim will release any term loan B-1 collateral remaining in the company’s estates after the sale closing to the estates and will waive all liens it holds on the collateral.

Holders of general unsecured claims will receive their share of a general unsecured claims recovery amount, the proceeds from any asset sales, settlements of causes of action or investments of cash executed by the plan administrator after the effective date and creditor recovery trust interests if a trust is established for the plan administrator to liquidate any remaining assets.

Holders of equity interests will receive no distribution unless all other claims have been paid in full, in which case interest holders will receive a share of any remaining assets.

Angelica is a St. Louis-based provider of outsourced linen management services to the health care industry. The company filed bankruptcy on April 3 under Chapter 11 case number 17-10870.

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