Zais Investment Grade petitioners file plan; exclusivity terminated

By Caroline Salls

Pittsburgh, May 18 - Zais Investment Grade Ltd. VII's involuntary bankruptcy petitioners filed the pre-packaged plan of reorganization and related disclosure statement for the company's Chapter 11 case Wednesday with the U.S. Bankruptcy Court for the Northern District of Texas.

In addition, Zais agreed to the termination of its exclusive periods for filing and soliciting votes on a plan.

The plan proponents said the company does not intend to file its own plan, and termination of exclusivity will help to move the bankruptcy case forward.

According to the disclosure statement, a new investment vehicle will be formed under the plan to hold, manage and eventually monetize substantially all of Zais' assets.

On the plan effective date, Zais will transfer all of its collateral securities and other designated assets to a new entity in exchange for a new LP interest in the new company and any cash needed to fund the company's senior obligations.

Z-CDO Liquidation Fund GP, LLC, an affiliate of the investment manager of the plan proponents, will be the new company's general partner, and Anchorage Capital Group, LLC will be its investment manager, responsible for liquidating the designated assets.

To the extent necessary to provide cash to make plan payments, the plan proponents said they would obtain an up to $5 million exit facility.

Treatment of creditors will include:

• 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 an estimated recovery of 71.84%; and

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

The plan proponents include GRF Master Fund, LP, Anchorage Illiquid Opportunities Offshore Master, LP and Anchorage Capital Master Offshore, Ltd., which hold a combined $145.36 million principal amount of Zais senior notes and $10 million principal amount of junior notes and income notes.

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

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