United Subcontractors plan of reorganization confirmed; company plans to emerge June 30

By Jennifer Lanning Drey

Portland, Ore., June 25 - United Subcontractors, Inc. received court approval of its plan of reorganization Thursday from the U.S. Bankruptcy Court for the District of Delaware, according to a company news release.

The company expects to emerge from bankruptcy on June 30.

"As a result of our achievements during our reorganization, we look forward to emerging as a financially stronger company with, in essence, a debt-free balance sheet," Paul Lustig, chief executive officer of United Subcontractors, said in the release.

"Our progress through the restructuring process demonstrates the strength of our business and our creditors' confidence in the future of USI."

As previously reported, the company and holders of its first-lien loans due 2012 and holders of the company's second-lien loans due 2013 have agreed on the terms of a financial restructuring that reduces funded debt by $314 million through the conversion of debt to equity.

United Subcontractors said Thursday that it has more than $30 million of cash on hand, which combined with the cash generated from ongoing operations, will be more than sufficient to run the business and fund normal business obligations.

The company said it does not anticipate needing any financing facilities in the near term.

Creditor treatment

Creditor treatment under the plan will include:

• Holders of $5 million in administrative claims, $500,000 in priority tax claims and $3.5 million in miscellaneous priority claims will recover 100% in cash;

• Holders of subsidiary interests will retain their interests but will receive no distribution under the plan;

• Holders of $14.2 million in general unsecured claims will recover 100% either in cash or through reinstatement of their claim;

• Holders of $290.1 million in first-lien secured claims will receive their share of 96% of the new common stock in the reorganized company and $22.5 million of new six-year senior secured notes;

• Holders of $66.45 million in second-lien secured claims will receive their share of 4% of the new common stock in the reorganized company;

• Holders of $2 million in rejection claims will recover 5% through their share of the lesser of $125,000 and 5% of the total amount of all rejection claims; and

• Holders of old USI Holdings common stock and interests and insider claims will receive no distribution under the plan.

United Subcontractors, an Edina, Minn.-based installer of residential and commercial insulation systems and provider of related products and services, filed for bankruptcy on March 31. The Chapter 11 case number is 09-11150.

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