American Restaurant Group's revised disclosure statement, reorganization plan criticized by creditors

New York, Feb. 9 - American Restaurant Group, Inc.'s fourth amended disclosure statement and plan of reorganization was criticized by the official committee of unsecured creditors as suffering from many of the same failings as the earlier documents.

Noting that nearly all their previous objections to the earlier versions were upheld by the bankruptcy court, the creditors said: "Unfortunately, the fourth amended disclosure statement and the plan which it describes continue to lack coherence and suffer from many fundamental inconsistencies and errors.

"The debtors, for example, cannot even provide a clear answer to the following simple but critical question: which debtor holds the cash?" the creditors said in a filing Tuesday with the U.S. Bankruptcy Court for the Central District of California.

In one place the disclosure statement says American Restaurant Group, Inc. holds the cash while elsewhere it says ARG Enterprises, Inc. does, according to the creditors.

The revised plan also fails to contain an avoidance analysis - even though the court said that one of the failings of the previous version was that it did not contain one.

"What has become apparent is that the debtors require far more time to prepare an approvable disclosure statement than the debtors are prepared to admit," the creditors said.

The creditors went on to list seven major problems with the plan, some with multiple sub-sections.

The American Restaurant Group, Inc. filed its revised plan on Feb. 1 after the court had rejected the company's plan on Jan. 27 and agreed with 32 objections filed by the unsecured creditors committee.

Under the revised plan, the company has changed the treatment of the classes of creditors. It has also removed provisions that treated entire classes of creditors differently, depending on whether they accept or reject the plan, one of the points of contention raised by the creditors committee.

The revised plan calls for substantive consolidation of the company, which American Restaurant believes will give a higher recovery to unsecured creditors.

A hearing on the new disclosure statement is scheduled for Feb. 11.

American Restaurant filed for Chapter 11 on Sept. 28, 2004. Its case number is 04-30732.

© 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.