J.G. Wentworth parent affiliates make pre-packaged Chapter 11 filing

By Caroline Salls

Pittsburgh, May 19 - Three of J.G. Wentworth's non-operating parent holding company level affiliates made a pre-packaged Chapter 11 bankruptcy filing Tuesday in the U.S. Bankruptcy Court for the District of Delaware, according to a company news release.

The affiliates included in the filing are JGW Holdco, LLC, J.G. Wentworth LLC and J.G. Wentworth, Inc.

The company said the decision to file bankruptcy followed an extensive review of alternatives to address pressures from extremely challenging capital markets and high borrowing costs, and was unanimously approved by the company's board of directors.

"J.G. Wentworth serves a very important market niche, and we have successfully provided liquidity to tens of thousands of customers over the years," J.G. Wentworth chief executive officer David Miller said in the release.

"However, we have recently faced significant challenges due to the well-published disruption of the ABS market.

"After careful review, we made the decision to restructure the business through a Chapter 11 filing so that we can strengthen our balance sheet and be better positioned for the future."

Before the bankruptcy filing, the companies solicited acceptance of a plan of reorganization from its $370 million term lenders, and J.G. Wentworth said 90% of the term lenders approved the plan.

According to the release, the plan will allow the company to substantially reduce its debt load at the parent holding company level while providing the enterprise with $100 million of new equity to support ongoing operations.

Treatment of creditors will include:

• General unsecured claims, other priority claims and other secured claims will be reinstated;

• Holders of pre-bankruptcy lender claims will receive their share of either a total cash consideration or new preferred interests, depending on which debt exchange option they choose; and

• Holders of JGW common interests, Holdco common interests and JGW Inc. equity interests will retain their interests.

The company's operating units will continue to conduct business without interruption during the reorganization process, which is expected to be completed in about 30 days.

In conjunction with the bankruptcy filing, the company has secured a commitment for $10 million in debtor-in-possession financing. JLL JGW Distribution LLC is the administrative agent.

The DIP financing will consist of $4.65 million of DIP loans and $5.35 million of roll-up loans.

The DIP facility will mature on May 30, subject to an extension to no later than July 11 if the bankruptcy transactions are delayed.

Interest will be payable in kind at the Prime rate.

According to court documents, J.G. Wentworth LLC has $100,000 to $500,000 in assets and $100 million to $500 million in debt. The company did not report its largest unsecured creditors.

J.G. Wentworth is a Bryn Mawr, Pa., purchaser of structured settlements and annuities. The Chapter 11 case number is 09-11731.

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