Progrexion’s Chapter 11 plan effective as of Dec. 29

By Sarah Lizee

Olympia, Wash., Jan. 2 – PGX Holdings, Inc., which does business as Progrexion, had its second amended Chapter 11 plan go into effect on Friday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Dec. 26, as previously reported.

As background, the company sold most of its assets in September to its prepetition and debtor-in-possession lenders for $257.49 million through a credit bid.

The plan provides for the vesting of assets following the sale transactions in the winddown 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 DIP 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.

Prior to filing bankruptcy, the debtors shut down about 80% of their business in response to an adverse ruling in litigation with the CFPB. A settlement was reached between the parties in August.

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, 2023 under Chapter 11 case number 23-10718.

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