Zais' Anchorage and Hildene plan proponents file third amended plan

By Caroline Salls

Pittsburgh, Dec. 7 - Zais Investment Grade Ltd. VII's involuntary bankruptcy petitioners changed the treatment of senior notes claims and junior A-2 notes claims under an amended plan of reorganization filed Wednesday with the U.S. Bankruptcy Court for the District of New Jersey.

The third amended plan was filed by GRF Master Fund, LP, Anchorage Illiquid Opportunities Offshore Master, LP and Anchorage Capital Master Offshore, Ltd., together with Hildene Capital Management and Hildene Opportunities Master Fund, Ltd.

The Hildene entities were the proponents of a competing plan filed for Zais' case in October.

According to a separate filing made Wednesday, Hildene's objection to Anchorage's pre-packaged plan filed for Zais has been settled via court-supervised mediation.

Hildene is now a proponent of the third amended plan.

Under the revised plan, holders of senior notes claims will receive a share of available cash for a recovery not to exceed 100% of the claim, plus interest paid from the effective date at the contract rate.

Senior noteholders will also receive all of their share of an amount equal to the allowed junior A-2 notes claim, plus any interest earned on unpaid principal after the effective date at the contract rate under the A-2 notes indenture. This portion of the senior noteholders' recovery is new under the amended plan.

Meanwhile, junior A-2 noteholders will receive their share of a one-time $4.38 million cash payment, minus the amount of a Hildene 503(b) claim.

Under the previous version of the Anchorage plan the junior A-2 noteholders were slated to receive their share of available cash after senior notes were paid in full.

Treatment of creditors

Treatment of creditors under the third modified plan will include the following:

• Holders of administrative claims, tax claims, senior indenture administrative claims and indenture priority claims will be paid in full in cash;

• Holders of senior notes claims will receive their share of available cash for a recovery not to exceed 100% of the claim plus interest paid from the effective date at the contract rate, as well as their share of an amount equal to the junior A-2 notes claim;

• Holders of A-2 junior notes claims will receive their share of a one-time $4.38 million cash payment, minus the amount of the Hildene claim;

• Holders of A-3 junior notes claims will receive their share of available cash after all senior notes claims and all A-2 junior notes claims are paid in full;

• Holders of B-1 junior notes claims will receive their share of available cash after all senior notes claims and all A-2 and A-3 junior notes claims are paid in full;

• Holders of B-2 junior notes claims will receive their share of available cash after all senior notes claims and all A-2, A-3 and B-1 junior note claims are paid in full; and

• Holders of subordinated claims, income note claims, general unsecured claims and old equity interests will receive no distribution.

Zais is a Cayman Islands-based investment company. The involuntary Chapter 11 case was filed on April 1, 2011. The case number is 11-20243.

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