Ignite Restaurant Group sale proceeds distribution settlement OK’d

By Caroline Salls

Pittsburgh, Sept. 8 – Ignite Restaurant Group, Inc. obtained court approval of a settlement that sets the terms for the distribution of the proceeds from the sale of the company’s assets, according to an order filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

Before the final hearing on its cash collateral use motion, Ignite said the official committee of unsecured creditors appointed for its case and its pre-bankruptcy secured lenders reached a settlement regarding the terms of the cash collateral use and governing the distribution of net proceeds arising from the sale of substantially all of the assets.

Under the agreement reached between the committee and the lenders, a general unsecured creditor trust will be established and will receive the first $800,000 of net sale proceeds.

To the extent the purchase price for the assets exceeds $55 million, Ignite said the settlement provides for an upside sharing percentage on an incremental basis.

The settlement also details the treatment of avoidance actions and commercial tort claims and the treatment of secured lender deficiency claims and sets a maximum recovery amount for holders of allowed general unsecured claims.

Specifically under the settlement, to the extent they are excluded assets or assets otherwise not released under the purchase agreement, avoidance actions and commercial tort claims will be deposited into the GUC trust, and the trust will receive the first $500,000 of net proceeds recovered from those avoidance actions and commercial tort claims.

Net claims over and above the $500,000 minimum amount will be shared with the holders of the secured lender deficiency claims.

According to the settlement term sheet, the percentage recovery to holders of general unsecured claims may not exceed the percentage recovery to holders of allowed secured lender claims.

As previously reported, the court approved the $57 million sale of Ignite’s assets to Landry’s Inc. on Aug. 17.

The company said it has now approved of and consented to the settlement, and will seek to distribute the proceeds through a plan that is consistent with the settlement.

Ignite is a Houston-based owner and operator of restaurant brands, including Joe’s Crab Shack, Romano’s Macaroni Grill and Brick House Tavern + Tap. The company filed for bankruptcy on June 6 under Chapter 11 case number 17-33550.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.