Metropolitan 885 Third Avenue's plan confirmed, disclosure approved

By Lisa Kerner

Charlotte, N.C., Dec. 22 - Metropolitan 885 Third Avenue Leasehold, LLC's plan of reorganization was confirmed and its disclosure statement approved on Dec. 22, according to an attorney close to the case.

As previously reported, Metropolitan 885 made a pre-packaged Chapter 11 bankruptcy filing after reaching a plan support agreement with principal secured lender Royal Bank of Canada and an equity commitment agreement with New Lipstick LLC.

RBC agreed to reduce the outstanding principal amount of its loan to $130 million, and Metropolitan will be required to prepay a $15 million portion, leaving a $115 million balance that will be consolidated into one note.

Plan terms

The following terms are included in Metropolitan's pre-packaged plan:

• New entity New Lipstick will contribute (in exchange for 100% of the newly issued membership interests of the reorganized company) an amount equal to a payment by parent company Metropolitan 885 Third Avenue Leasehold Sub Junior Mezz, LLC (MJM); plus other funds needed to implement the planned repayment of principal on the restructured mortgage loan; plus a class-3 reserve payment, RBC expenses, plan expenses and all allowed administrative, priority and fee claims not otherwise paid under a cash collateral order;

• The MJM payment will be distributed to Metropolitan's parent on the plan effective date;

• The plan calls for the assumption of two ground leases for the Third Avenue property and assumption of all other executory contracts of Metropolitan;

• The company must use part of the equity infusion to pay $15 million on account of principal due to RBC;

• RBC will waive its $80 million deficiency claim to allow unsecured creditors to be paid in full;

• Holders of administrative claims, priority tax claims, other priority claims and general unsecured claims will be paid in full in cash;

• The reduced RBC secured claim will be repaid, with $15 million to be paid on the plan effective date and the balance to repaid in accordance with the plan support agreement; and

• MJM interests will be canceled in exchange for the MJM payment, which will be distributed in connection with a limited liability company agreement.

MJM wholly owns Metropolitan 885 Third Avenue Leasehold.

Metropolitan owns the leasehold interest in the "Lipstick Building" in New York. The company filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on Nov. 16. Its Chapter 11 case number is 10-16103.

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