Holdco Advisors files alternative plan for FirstFed Financial case

By Caroline Salls

Pittsburgh, Jan. 26 - Holdco Advisors LP filed a plan of reorganization and disclosure statement for FirstFed Financial Corp.'s Chapter 11 case on Wednesday with the U.S. Bankruptcy Court for the Central District of California.

As previously reported, FirstFed filed a plan of liquidation on Nov. 12, 2010 and filed an amended version of that plan on Dec. 29, 2010. According to the disclosure statement, Holdco Advisors' plan is an alternative to the FirstFed plan.

Holdco Advisors said the court approved the disclosure statement for the company's plan in February 2011, but the plan confirmation has been continued twice. A hearing on the status of the liquidating plan was scheduled for Jan. 25.

Because no class of voting creditors has approved FirstFed's plan, Holdco Advisors said it does not expect that plan to be confirmed.

Under Holdco Advisors' plan, the company would be reorganized, and holders of some allowed claims would receive equity in reorganized FirstFed. General unsecured creditors would have an option to receive a cash out-right payment and/or a security that results in cash from the company's assets, instead of equity.

Creditor treatment

Treatment of creditors under the Holdco Advisors plan would include the following:

• Holders of administrative claims, non-FDIC priority claims, convenience claims and priority tax claims would be paid in full in cash;

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

• Holders of FDIC priority claims would receive all net free cash available until the claim is paid in full;

• Holders of senior debt unsecured claims and FDIC non-priority claims would receive directors and officers litigation trust interests, as well as the holder's choice of new series A common stock or class B common stock election trust interests, which would entitle the holder to receive a share of net free cash from a class B common stock election trust;

• Holders of other unsecured claims would receive a share of directors and officers litigation trust; and

• Equity interests would be cancelled.

A hearing on approval of Holdco Advisors' disclosure statement is scheduled for March 14.

FirstFed plan

Under FirstFed's liquidation plan, the company's assets, including causes of action, would be transferred on the plan effective date to the liquidating trust to be distributed according to the plan.

Creditors would be treated as follows under the company's plan:

• Holders of administrative claims, priority tax claims, secured claims and other priority claims would be paid in full in cash;

• Holders of general unsecured claims would receive a share of available cash as soon as possible and interim distributions of available cash when the liquidating trust has enough cash for distributions; and

• Holders of FirstFed common stock would receive no distribution.

FirstFed Financial, a Woodland Hills, Calif.-based bank holding company, filed for bankruptcy on Jan. 5, 2010. Its Chapter 11 case number is 10-10150.

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