Island One looks to sell assets or equity under reorganization plan

By Caroline Salls

Pittsburgh, Oct. 6 - Island One, Inc. filed its plan of reorganization and disclosure statement Tuesday with the U.S. Bankruptcy Court for the Middle District of Florida.

The company said the overall purpose of the plan is to liquidate some of its assets and/or to restructure its debt "in a manner designed to maximize recoveries to all stakeholders."

According to the disclosure statement, if the court rules that the best offer for the company's assets is a cash offer for all of the assets, then they will be sold and the proceeds will be distributed through the plan.

However, if the best offer for the assets turns out to be an offer to acquire the company's equity, the plan will be modified to reflect that scenario.

If a combination of assets and equity is sold, some classes would be paid from sale proceeds and others would be subject to treatment outlined in the winning equity bid.

Island One said it is in negotiations that could result in a stalking horse equity bid from Bay Harbour Management.

Treatment of creditors will include:

• Holders of administrative expense claims will be paid in full from sale proceeds;

• Holders of priority tax claims, Island One noteholder claims, general unsecured claims and secured claims will either be paid from sale proceeds or treated in accordance with an equity bid;

• Holders of Ormond Beach loan obligations, Maple Leaf, LLC acquisition loan obligations and Virgin Islands Design acquisition loan obligations will be treated as general unsecured creditors, and their second mortgage loan will be extinguished because they are undersecured;

• If neither the assets nor equity are sold, all unsecured creditors and noteholders will receive no distribution; and

• Equity interests will be cancelled on the plan effective date.

Island One, an Orlando, Fla.-based timeshare resort development and hospitality management company, filed for bankruptcy on Sept. 10. Its Chapter 11 case number is 10-16177.

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