Ultimate Escapes Holdings files plan based on CapitalSource settlement

By Caroline Salls

Pittsburgh, June 30 - Ultimate Escapes Holdings LLC filed a Chapter 11 liquidating plan and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The company said the plan is based on a settlement with CapitalSource under which the final $300,000 of financing approved as part of Ultimate Escapes' debtor-in-possession facility will be funded on the plan effective date and applied toward payment of administrative claims.

The settlement also outlines the allocation of avoidance action proceeds:

• The first $2.3 million in avoidance action proceeds will be paid to CapitalSource in settlement of its post-bankruptcy secured lender claim;

• The next $500,000 of avoidance action proceeds will be distributed to professionals for any deferred compensation claims that remain unpaid on the plan effective date;

• 80% of the next $1 million of proceeds will go to CapitalSource on account of its lender unsecured deficiency claims, and 20% will go to holders of unsecured claims;

• 65% of the next $1 million in avoidance action proceeds will go to CapitalSource for unsecured deficiency claims, and 35% will go to unsecured creditors;

• 40% of the next $1 million in avoidance action proceeds will be used to pay CapitalSource's lender unsecured deficiency claims and 60% to pay unsecured creditors; and

• 15% of the balance of avoidance action proceeds will be applied to CapitalSource lender unsecured deficiency claims, and 85% will be applied to unsecured claims.

Under the plan, remaining assets will be transferred to a liquidating trust for distribution to creditors.

Creditor treatment

Treatment of creditors will include:

• The company's pre-bankruptcy secured lender will receive the proceeds of Ultimate Escapes' asset sale, up to the amount of its credit bid;

• The post-bankruptcy secured lender claim will be satisfied under the CapitalSource settlement;

• Tax and other priority claims will be paid in full in cash;

• Holders of other secured claims will either be paid in full in cash, receive the property securing their claims or retain their liens;

• Holders of general unsecured claims will receive a share of an unsecured claims distribution; and

• Interest holders will receive no distribution.

Ultimate Escapes, a Kissimmee, Fla.-based destination club operator, filed for bankruptcy on Sept. 20, 2010. The Chapter 11 case number is 10-12915.

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