GSC Group asset buyer Black Diamond's plan takes effect as of March 9

By Caroline Salls

Pittsburgh, March 12 - The plan of reorganization filed by GSC Group Inc. designated asset purchaser Black Diamond Capital Management, LLC for GSC's bankruptcy case took effect on March 9, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the company's Chapter 11 trustee agreed to support the Black Diamond plan in late December.

The Chapter 11 trustee had filed its own liquidating plan for GSC in August. Black Diamond filed its competing plan in October.

According to Black Diamond's amended disclosure statement, the Chapter 11 trustee agreed to support the asset buyer's plan and to adjourn seeking confirmation of the trustee plan while Black Diamond solicited votes and sought confirmation of its plan.

Creditor treatment

Treatment of creditors under the amended Black Diamond plan will include the following:

• Holders of administrative and priority claims will be paid in full in cash;

• Holders of secured claims will either be paid in full in plan cash or receive the collateral securing their claims;

• Holders of general unsecured claims will choose from an up-front cash option, a combination cash option or an equity option;

• Holders of preferred equity interests will be issued reorganized GSC Group class A common stock equal to between 51% and 67% of the total reorganized GSC Group common stock, at Black Diamond's discretion; and

• Holders of remaining equity interests will receive no distribution.

General unsecured creditors who selected the up-front cash option will receive a share of a cash distribution. Those who selected the combination cash option will receive a combination cash distribution share and a share of trust units. Those who did not select an option will be deemed to have accepted the up-front cash option.

General unsecured creditors who selected the equity option will receive one share of reorganized GSC Group series B preferred stock with a liquidation preference equal to the lesser of the face amount of their claim and a portion of 80% of the net asset value of the reorganized company, as well as a share of the class B common stock in the reorganized company.

Florham Park, N.J.-based investment manager GSC Group filed for bankruptcy on Aug. 31, 2010. Its Chapter 11 case number is 10-14653.

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