Petra Fund REIT and Petra Offshore Fund reorganization plan confirmed

By Caroline Salls

Pittsburgh, March 2 - Petra Fund REIT Corp. and Petra Offshore Fund, LP's plan of reorganization was confirmed Friday by the U.S. Bankruptcy Court for the Southern District of New York.

Under the plan, Petra Offshore Fund will be sold, as will settlement payments and equity interests. Petra Fund REIT Corp. will be reorganized.

Unless an auction is held before the plan effective date, ABC Corp. will buy $2 million in outstanding settlement payments due to be paid each July and December from 2012 through 2014. ABC will pay $900,000 for the settlement payments.

In addition, unless an auction is held, ABC will pay the equity interests of Petra Fund REIT for $50,000.

A liquidation trust was to be established under the original plan if not all of both funds' assets were converted to cash before the effective date.

Treatment of creditors under the plan will include the following:

• Holders of JPM secured claims will receive a new secured debt instrument and no cash;

• Holders of RBS secured claims will receive class F and class G bonds to the extent they were not previously foreclosed upon and a new $10 million debt instrument;

• Holders of other secured claims will be paid from sale proceeds, but only after payment in full of trustee fees, administrative claims and priority tax claims;

• Holders of subordinated claims and interests in the funds will receive nothing; and

• Holders of general unsecured claims will receive nothing unless sale proceeds collected in Petra Fund REIT Corp.'s auction are substantially higher than the opening bids.

Petra Fund REIT is a New York-based real estate investment trust. The companies filed for bankruptcy on Oct. 20, 2010. The Chapter 11 case number is 10-15500.

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