Money Tree Chapter 11 trustee, committee file joint liquidation plan

By Caroline Salls

Pittsburgh, Jan. 15 - Money Tree Inc.'s Chapter 11 trustee and official committee of unsecured creditors filed a joint plan of liquidation and related disclosure statement for the company's case Monday with the U.S. Bankruptcy Court for the Middle District of Alabama.

According to the disclosure statement, substantially all of the estates' assets have been sold. The plan calls for the liquidation and conversion to cash of the Money Tree debtors' remaining assets and the distribution of the net proceeds by a liquidating trustee.

The liquidating trustee will liquidate the company's remaining assets. A post-confirmation committee will have an active role in prosecuting lawsuits and managing Money Tree's affairs after its bankruptcy.

In addition, the company said it expects extensive post-confirmation litigation, and the estates are believed to have valuable claims against third parties that may exceed the value of asset sale proceeds.

Treatment of creditors will include the following:

• Administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• Holders of secured claims will receive the collateral securing their liens;

• Holders of convenience claims will recover 15% from available funds after all administrative and priority claims have been paid in full;

• Holders of general unsecured claims will receive a 90% share of available funds after the higher priority claims are paid in full.

If enough funds are available, these creditors could receive a second distribution no later than 14 months after the initial distribution; and

• Equity interests will be cancelled. Interest holders will receive no distribution.

Previous plan

As previously reported, Money Tree filed a plan of reorganization in April 2012. The Chapter 11 trustee was also appointed in April 2012 at the committee's request.

Under the previous plan, the company would have entered into a transaction under which an equity interest buyer or its designee would buy the reorganized company's equity.

The buyer had agreed to provide a $2 million infusion of working capital into the Money Tree debtors and to obtain an $11 million senior debt facility.

Treatment of creditors under the company's plan was slated to include:

• Holders of administrative claims and priority claims would have been paid in full in cash;

• Holders of general unsecured claims against Money Tree would have recovered 95% of their claim;

• Holders of intercompany debt claims would have agreed to subordinate their claims, and any sums due to these creditors from an equity interest transaction would have been paid to a liquidating trust for holders of subordinated debt claims;

• Holders of subordinated debt claims would have received a share of the subordinated debt payment, with the company estimating that a total of $15.2 million would flow to the liquidating trust for the benefit of these creditors; and

• Existing equity interests in Money Tree would have been cancelled and new equity interests would have been issued to an equity interest buyer.

Money Tree, a Bainbridge, Ga., consumer loan company, filed for bankruptcy on Dec. 16, 2011. The Chapter 11 case number is 11-12254.

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