HMY RoomStore disclosure statement approved by court

By Ellen Chang

Houston, March 10 - The disclosure statement of Heilig-Meyers Co.'s HMY RoomStore, Inc. subsidiary was approved Thursday by the U.S. Bankruptcy Court for the Eastern District of Virginia.

Objections to the plan must be filed by April 7. A hearing to confirm the plan is scheduled for April 21.

Heilig-Meyers Co.'s unsecured creditors will receive the common stock of the reorganized company for a 50.4% recovery, according to the plan of reorganization and disclosure statement.

HMY RoomStore will emerge from Chapter 11 as the reorganized business while Heilig-Meyers is to be liquidated.

Under RoomStore's plan, the company will obtain a new asset-based revolving credit facility and may issue junk bonds to fund the reorganization and its operations after emerging from Chapter 11.

Unsecured creditors of RoomStore, with an estimated $27.4 million of claims, and Heilig-Meyers, with an estimated $57.9 million claim, will receive all the common stock of RoomStore, subject to dilution by a management incentive plan.

Heilig-Meyers previously filed its own reorganization plan with the U.S. Bankruptcy Court for the Eastern District of Virginia. Under the plan, creditors of the parent company will receive interests in a liquidation trust.

Both plans have been jointly proposed with the official committee of unsecured creditors.

Both Heilig-Meyers and RoomStore are Richmond, Va.-based home furnishing retailers.

Heilig-Meyers filed for bankruptcy on Aug. 16, 2000. Its Chapter 11 case number is 00-34533.

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