Cliffs Club & Hospitality Group files reorganization plan, statement

By Caroline Salls

Pittsburgh, May 23 - Cliffs Club & Hospitality Group, Inc. filed a plan of reorganization and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the District of South Carolina.

As previously reported, Cliffs Club announced last month that it did not receive any qualified bids for the sale of its assets by the April 13 bid deadline. As a result, no sale auction was held on April 23.

Silver Sun LLC members SunTx Urbana GP I, LP; Arendale Holdings Corp.; and Carlile Cliffs Investment LLC formed an entity to operate the clubs should stalking horse bidder and plan sponsor Carlile Development Co., LLC be named the winning bidder.

According to Tuesday's plan, Cliffs Club Partners, LLC is the limited liability company that will operate the clubs following the plan effective date.

Creditor treatment

Under the plan, indenture trustee - secured noteholder claims will be satisfied through modification of the terms of the notes to provide for repayment of the $64.05 million principal amount without interest in 20 annual payments. The payments will begin on the one-year anniversary of the plan effective date in the amount of the greater of $1 million or 50% of New ClubCo net cash flow, with a balloon payment of any remaining principal at maturity.

The terms of the notes and indenture will also be modified to subordinate the liens of the trustee to an exit facility and Mountain Park facility. After subordination, the company will transfer real property collateral and substantially all other property to the sponsor.

The sponsor will then transfer the assets to an indenture trustee special purpose entity in return for a 100% economic and managing membership interest in the entity.

The entity will assume all modified notes in satisfaction of the noteholders' claim.

Treatment of other creditors will include:

• Holders of administrative claims, debtor-in-possession facility claims and priority tax claims will be paid in full in cash;

• The holder of the indenture trustee - bridge loan claim will be paid in full in cash with interest;

• Holders of mechanic's lien claims and administrative convenience claims will be paid in full in cash without interest, costs or fees;

• Holders of other senior secured party claims will receive either cash, cure and reinstatement of equipment leases or the equipment subject to those leases;

• Holders of general unsecured claims will receive a share of a general unsecured claims fund, less a reserve established by a liquidation trustee for administration expenses;

• Holders of club member claims will have the option to join the new clubs or receive a share of a rejecting members fund; and

• Holders of equity interests will receive no distribution.

Travelers Rest, S.C.-based Cliffs Club owns luxury golf communities. The company filed for bankruptcy on Feb. 28 under Chapter 11 case number 12-01220.

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