Le-Nature's lenders, noteholders file plan of reorganization

New York, March 8 - Le-Nature's, Inc.'s official committee of unsecured creditors, ad hoc committee of secured lenders and ad hoc committee of senior subordinated noteholders filed a plan of reorganization and accompanying disclosure statement with the U.S. Bankruptcy Court for the Western District of Pennsylvania on Friday.

Under the proposed plan, a liquidation trust will be established and given responsibility for taking legal action on behalf of the bankruptcy estate and making distributions to creditors. It will be overseen by a board selected by the official committee of unsecured creditors, ad hoc committee of secured lenders and ad hoc committee of senior subordinated noteholders.

Claims by insiders, Wachovia for bank debt under the pre-bankruptcy credit facility, BDO Seidman, Ernst & Young and the other professionals who advised Le-Nature's before its Chapter 11 filing will be classed as disputed claims. Any payments to these groups will be placed in a reserve until litigation against them is resolved.

Under the plan:

• Bank lenders' secured claims will be allowed up to the liquidated value of the collateral securing the debt with an additional $7.5 million added for the loss of value of the collateral during the bankruptcy case. This class will also receive the cash making up collateral for their claims.

In exchange for the claim up to the liquidated value of collateral, these lenders will receive tier one beneficial interests in the liquidation trust. Disputed claims that are disallowed will be redistributed to the other lenders.

• Bank lenders' unsecured claims will be allowed for an amount of $278 million. In exchange, they will receive tier two beneficial interests in the liquidation trust.

• Holders of general unsecured claims will also receive tier two beneficial interests in the liquidation trust.

• Holders of subordinated notes will have claims allowed for $150 million plus accrued interest up to the bankruptcy filing date. They will receive tier two beneficial interests in the liquidation trust.

Any distributions due to noteholders will be redirected to the bank lenders until the lenders receive $110 million.

The next $15 million will go to noteholders.

After that, up to $175 million, the distribution will be split equally between lenders and noteholders, then 45% to lenders and 55% to noteholders up to $200 million, 40% to lenders and 60% to noteholders up to $225 million, 35% to lenders and 65% to noteholders up to $250 million, 30% to lenders and 70% to noteholders up to $280 million and then 25% to lenders and 75% to noteholders.

• Holders of subordinated litigation claims will receive tier three trust interests.

• Holders of interests in Le-Nature's will receive tier four trust interests.

The plan proposes to pay tier one first, then tier two, then tier three and finally tier four will receive whatever is left.

Under the plan, Le-Nature's will be substantively consolidated.

Le-Nature's, a Latrobe, Pa., manufacturer of flavored bottled water and other beverages, had an involuntary Chapter 7 bankruptcy case filed against it on Nov. 1. The case was converted to Chapter 11 on Nov. 3. The case number is 06-25454.

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