Manchester, Palm Beach agree on reorganization plan; Palm Beach to receive all equity

New York, April 4 - Manchester, Inc. and Palm Beach Multi-Strategy Fund, LP said the company has accepted a reorganization plan proposed by Palm Beach that will give the fund all the company's equity in exchange for its secured claim.

A plan incorporating the full terms will be filed by April 16, the company and the fund said in a joint announcement.

The reorganization depends on the deposit of $3 million, which will be used to satisfy the claims of unsecured creditors and to fund the expenses of that will be incurred by the company during the approval process and provision of DIP financing of up to $10 million to fund Manchester while it is in bankruptcy.

Once the $3 million is deposited, Rick Stanley, former chief executive officer, and Tony Hamlin, former chief accounting officer, will be reinstated as chief operations officer and chief accounting officer, respectively, reporting to the current board of directors.

As part of the proposal, claims asserted by Manchester against Palm Beach in cases pending in the U.S. Bankruptcy Court and in the District Court, 101st Judicial District, Dallas County and the claims asserted by the fund against the current officers and directors of the company will be resolved.

Manchester and Palm Beach said they expect the plan to become effective in early to mid June.

Manchester, a Dallas-based auto dealership that sells and finances used cars to buyers with limited credit histories or past credit problems, filed for bankruptcy on Feb. 7. Its Chapter 11 case number is 08-30703.

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