Le-Nature's unsecured creditors, lenders, noteholders file plan of liquidation

By Caroline Salls

Pittsburgh, April 25 - 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 an amended plan of liquidation and accompanying disclosure statement Monday with the U.S. Bankruptcy Court for the Western District of Pennsylvania.

Under the plan, distributions allocable to holders of senior subordinated notes will be shared with the lenders on account of any unsecured deficiency claims. This provision was not included in the company's original plan of reorganization.

The amended plan provides for the liquidation of estate assets, including the investigation and prosecution of estate causes of action, by a liquidation trust to be formed under the plan and a liquidation trust agreement.

The liquidation trust will be managed by a liquidation trustee, as well as by a liquidation trust oversight board selected by the official committee of unsecured creditors, the informal lenders committee and the informal noteholders committee.

In addition, the claims asserted by insiders, Wachovia, BDO Seidman, E&Y and the pre-bankruptcy professionals will be deemed to be disputed claims, and any distributions otherwise allocable on account of those claims will be placed in disputed claims reserves pending ultimate resolution of causes of action against them.

The liquidation trust will be initially funded with available cash on the plan effective date, the liquidation of lenders collateral and/or advances under a planned exit facility, with terms to be disclosed in a plan supplement, and the initial trust funding will be used to make initial plan distributions and to establish the liquidation trust reserve.

The amount of the initial trust funding will be disclosed in a future plan supplement.

Le-Nature's said the liquidation plan is based on compromises in connection with the amount and priority of the lenders secured claims, the extent to which holders of lenders secured claims may successfully assert liens on estate assets and proceeds of the assets, and the extent to which claims held by holders of senior subordinated notes are structurally and/or contractually subordinated to the lenders claims.

As part of this compromise, Le-Nature's said the amount and seniority of lenders claims is fixed by the plan.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of administrative claims, priority tax claims, priority non-tax claims and fee claims will recover 100% in cash;

• Holders of up to $278 million in lenders pre-bankruptcy secured claims will receive tier-one trust beneficial interests, including interests as a result of disallowance of any disputed claims, as well as a share of all proceeds distributed under the plan and liquidation trust agreement;

• Holders of other secured claims will receive either proceeds in cash from the sale of the collateral securing the claim or surrender of the collateral;

• Holders of up to $278 million in lenders unsecured claims will receive tier-two trust beneficial interests, including interests as a result of disallowance of any disputed claims and interests that result from turnover enforcement of class distributions, as well as a share of all proceeds distributed under the plan and liquidation trust agreement;

• Holders of general unsecured claims will receive tier-two trust beneficial interests, including interests as a result of disallowance of any disputed claims, as well as a share of all proceeds distributed under the plan and liquidation trust agreement;

• Holders of $150 million in unsecured senior subordinated notes claims will receive tier-two trust beneficial interests, including interests as a result of disallowance of any disputed claims, as well as a share of all proceeds distributed under the plan and liquidation trust agreement; provided, however, that the distributions will be deemed reallocated and distributed to the lenders unsecured claims class as a settlement of potential lenders claims for enforcement of contractual subordination provisions in the senior subordinated notes indenture;

• Holders of subordinated litigation claims will receive tier-three trust beneficial interests, including interests as a result of disallowance of any disputed claims, as well as a share of all proceeds distributed under the plan and liquidation trust agreement; and

• Holders of interests will receive tier-four trust beneficial interests, including interests as a result of disallowance of any disputed claims, as well as a share of all proceeds distributed under the plan and liquidation trust agreement.

Turnover enforcement agreement

Under the turnover enforcement agreement that dictates the distribution to holders of unsecured senior subordinated notes claims, until $110 million has been distributed on account of lenders claims, 100% of all distributions on account of senior subordinated notes claims will be reallocated and distributed as turnover enforcement to holders of lenders unsecured claims.

After $110 million has been distributed from the estate or the liquidation trust on account of lenders claims, the next $15 million in cash distributions on account of subordinated notes claims will be distributed to these noteholders.

Thereafter, distributions on account of subordinated notes claims will be reallocated and distributed as turnover enforcement to holders of lenders unsecured claims under a specified formula until lenders unsecured claims are paid in full.

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.

© 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.