Island One files amended plan based on $13 million equity sponsor deal

By Caroline Salls

Pittsburgh, March 22 - Island One, Inc. filed an amended plan of reorganization and related disclosure statement on March 22 with the U.S. Bankruptcy Court for the Middle District of Florida to incorporate the terms of a plan sponsorship agreement with Timeshare Acquisitions, LLC.

The court conditionally approved the amended disclosure statement on March 22. A combined hearing on final approval of the statement and plan confirmation is scheduled for April 20.

Under the plan sponsor agreement, Island One will sell one million newly issued shares of reorganized company common stock to TAC in exchange for a $13 million payment.

In addition, the agreement gives Island One the option to sell 100% of the membership interests in its Crescent One debtor to TAC.

Creditor treatment

Treatment of creditors under the amended plan will include:

• Holders of administrative claims and priority tax claims will be paid in full from the cash consideration;

• Holders of Textron Financial Corp. (TFC) receivables loan obligations will receive all of the Island One/TFC receivables, except those that are between 120 days and one year past due, as well as 75% of the face value of any note receivable collateral generated by the company during the bankruptcy cases;

• Holders of the TFC/Liberty Bank Island One receivables loan obligations will have those obligations assumed by the reorganized company at an interest rate of Prime plus 200 basis points with a floor of 7% per annum;

• The reorganized company will pay to TFC a TAC/lender cash consideration in satisfaction of all of TFC's Coven inventory loan claims;

• BB&T property and equipment will be transferred to a BB&T liquidating trust to satisfy BB&T's loan claims or abandoned by Island One;

• Holders of Island One noteholder claims, Island One general unsecured claims, Crescent general unsecured claims, Island One Management general unsecured claims and Navigo general unsecured claims will receive a share of all distributions to be made by an unsecured creditor trust;

• Holders of IOI Funding general unsecured claims will receive no distribution; and

• Interest holders will receive no distribution.

Previous plan

As previously reported, the original plan was based on two possible options, including liquidation of the company's assets or an equity sale.

Treatment of creditors under the original plan was scheduled to include:

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

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

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

• Equity interests would 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, 2010. Its Chapter 11 case number is 10-16177.

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