Progrexion files Chapter 11 plan, gets approval to sell assets

By Sarah Lizee

Olympia, Wash., Aug. 28 – PGX Holdings, Inc., which does business as Progrexion, filed a Chapter 11 plan and related disclosure statement with the U.S. Bankruptcy Court for the District of Delaware.

The company also received court approval to sell its assets under two stalking horse agreements, according to two orders filed Friday.

As previously reported, the first stalking horse agreement is with the company’s prepetition and debtor-in-possession lenders, who seek to purchase all assets except those of Lexington Law for $257.49 million, consisting of a credit bid and assumed liabilities.

The second stalking horse agreement is with the owners and the principal attorney at Lexington Law for substantially all of the Lexington Law assets.

The two agreements are conditioned on each other and are intended to permit the debtors’ businesses to continue as a going concern.

Plan terms

The plan provides for the vesting of assets following the sale transactions in the wind-down debtor or creditor trust, as applicable, for the purpose of distribution to claimholders.

It also provides for distributions to go-forward trade creditors from the prepetition first-lien and second-lien lenders’ collateral.

And, it provides for the issuance of PIK notes by the purchaser of the assets for the benefit of general unsecured creditors.

A plan administrator will wind down the debtors’ affairs, pay and reconcile claims, and administer the plan.

Secured tax claims, other secured claims and other priority claims will be unimpaired.

Holders of $219.7 million of prepetition first-lien claims are expected to see an 88.7% recovery. The projected amount of claims in this class was adjusted from the original total prepetition amount of $262.4 million to account for the $39.9 million rollup into the super-priority debtor-in-possession facility, and the $2.9 million transfer of bridge loan principal and related prepetition interest into the DIP loan.

The projected recovery for prepetition first-lien claims reflects the lenders’ roughly $194.8 million portion of the total purchase price, calculated by subtracting the $62.7 million credit bid related to the DIP from the total purchase price of $257.5 million.

Holders of prepetition second-lien claims are expected to receive a 0% recovery.

Holders of $3 million to $6.4 million of continuing trade claims are expected to receive a recovery of at least 51%.

Holders of $2.7 million to $13.7 million of other general unsecured claims are expected to receive a recovery of up to 50%.

Holders of up to $189.1 million of litigation claims are expected to receive a recovery of under 1%.

The Consumer Financial Protection Bureau (CFPB) will receive $50,000 of settlement cash on account of its $2.7 billion claim.

As previously reported, prior to filing bankruptcy the debtors shut down about 80% of their business in response to an adverse ruling in litigation with the CFPB.

The company noted in the plan that it could become party to additional litigation in the future, which could effect the recovery of general unsecured creditors.

The CFPB has moved to convert the case to Chapter 7.

Holders of intercompany claims, intercompany interests, interests in Progrexion, interests in Lexington Law Firm and section 510(b) claims will receive no distribution.

Progrexion is a provider of consumer credit repair services based in Salt Lake City. The company filed bankruptcy on June 4 under Chapter 11 case number 23-10718.

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