J.G. Wentworth debtor Orchard Acquisition’s Chapter 11 plan confirmed

By Caroline Salls

Pittsburgh, Jan. 17 – J.G. Wentworth Co. debtor Orchard Acquisition Co., LLC’s pre-packaged Chapter 11 plan was confirmed Wednesday by the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, J.G. Wentworth entered into an agreement with lenders holding more than 87% of the principal amount outstanding under its $449.5 million senior secured credit facility to significantly deleverage the company.

The company said the agreement, under which current lenders will exchange their credit facility claims for cash consideration and at least 95.5% of the equity in the newly-restructured company, will enable the company to enhance its financial flexibility, fortify its balance sheet and accelerate its long-term growth initiatives.

Under the agreement, the company said it will fully extinguish the loans under the credit facility and obtain a new secured revolving credit facility between $65 million and $70 million, to be supplied by one of the lenders.

The pre-packaged plan calls for termination of term loan claims in exchange for a share of cash equal to the lesser of $45 million and the total amount needed to maintain liquidity. The term lenders will also receive 95.5% of the new common equity in the reorganized company in the form of new class A common stock.

All existing partnership interests will be cancelled in exchange for a share of a partnership consideration in a form to be elected by each holder, including an equity consideration equal to up to 4.5% of the new common equity, cash equal to up to 4.5% of $145 million or a combination of these considerations.

Existing J.G. Wentworth interests will be cancelled, and holders will receive no distribution.

To fund the fees and expenses of the restructuring transactions, the partnership cash consideration and a portion of the term lender cash consideration, if necessary, as well as for general corporate purposes and working capital, reorganized Orchard will borrow funds from under a new four-year $65 million to $70 million revolving credit facility bearing interest at Libor plus 500 basis points on drawn amounts and 3% on undrawn amounts.

J.G. Wentworth is Radnor, Pa.-based purchaser of deferred payments from illiquid financial assets such as structured settlements and fixed annuities. The company filed bankruptcy on Dec. 12, 2017 under Chapter 11 case number 17-12914.

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