Heilig-Meyers granted approval of $2 million settlement agreement with pre-bankruptcy lenders

By Caroline Salls

Pittsburgh, Nov. 15 - Heilig-Meyers Co. obtained court approval of a settlement agreement with its pre-bankruptcy lenders that resolves multiple disputes and claims related to collateral proceeds in the company's Chapter 11 case, according to a Monday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

Under the agreement, the lenders will pay Heilig-Meyers $2 million from the lenders' collateral proceeds.

Both the company and the lenders have agreed to drop litigation and appeals in connection with the claims and the company's plan of liquidation.

In addition, the lenders agreed to waive their unsecured claims and administrative claims against the company and will not receive any distribution under Heilig's plan of liquidation.

Also, the lenders have agreed to vote to accept Heilig's plan.

The lenders will also transfer $20.13 million of the cash proceeds of their collateral, which is the undrawn balance on three workers compensation letters of credit, to an interest-bearing cash collateral account in order to secure Heilig's reimbursement obligations under their pre-bankruptcy workers compensation letters of credit.

Heilig-Meyers, a Richmond, Va.-based furniture retailer, filed for bankruptcy on Aug. 16, 2000. Its Chapter 11 case number is 00-34533.

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