Motorsport Aftermarket Group reorganization plan takes effect March 30

By Caroline Salls

Pittsburgh, April 2 – Motorsport Aftermarket Group, Inc.’s plan of reorganization took effect on March 30, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on March 29.

As previously reported, the company filed Chapter 11 bankruptcy to implement a comprehensive recapitalization that is expected to eliminate roughly $300 million in debt through a debt-for-equity exchange supported by holders of more than 90% of the principal amount of the company’s first-lien secured debt and its asset-backed lenders.

According to the disclosure statement, the company will issue new common units, enter into an exit revolving credit facility and term loan and issue new warrants exercisable into new common units constituting 0.0008% of the total equity at an initial exercise price of $0.01 per share.

The warrants will be exercisable at any time before the expiration of a 10-year term beginning on the plan effective date or the occurrence of a liquidity event.

The new warrants will be issued to each of the exit term lenders in the proportion of one new warrant per $1,000 of principal amount of exit term loan provided.

Other secured claims will either be paid in full in cash, be reinstated or the holders will receive the collateral securing the claim.

Holders of first-lien term loan claims will receive 100% of the new common units, subject to dilution by the warrants and a management incentive plan.

Holders of second-lien term loan claims and general unsecured claims will receive a share of an opt-in distribution if they consent to releases or no distribution if they do not consent.

Interests in the holding company will be cancelled, and holders will receive no distribution.

Other debtor interests will be unaffected by the plan and will remain in place “solely for the administrative convenience of maintaining the existing corporate structure of the debtors,” the disclosure statement said.

Motorsport Aftermarket is a Coppell, Texas-based independent manufacturer and distributor of branded aftermarket products and online retailer for the powersports industry. The company filed bankruptcy on Nov. 15, 2017 under Chapter 11 case number 17-12442.

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