Shopko modified plan of reorganization confirmed by bankruptcy court

By Caroline Salls

Pittsburgh, June 7 – Shopko’s modified Chapter 11 plan has been confirmed, according to a docket entry made Friday in the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Shopko’s second amended plan of reorganization was denied confirmation on May 30.

The company said in its motion to modify the second amended plan that the court denied confirmation because the plan contained nonconsensual third-party releases and an exculpation provision that covered pre-bankruptcy conduct.

As a result, Shopko said it and key constituents negotiated changes to the release provisions.

Under those modifications, third-party releases will be provided only on a consensual basis. All parties who did not previously opt out of the releases will still be bound by them.

To the extent the court modifies the third-party releases, the Shopko debtors will continue to support the plan as modified by the court.

The exculpation provided for in the modified plan will be limited to post-bankruptcy conduct.

In March, Shopko announced that it was unable to find a buyer for its go-forward business as a going concern and that it would launch a winddown of its retail operations. In addition, Shopko said it was evaluating strategic options for its optical business.

The company said it would not move forward with a previously announced auction, and Gordon Brothers would oversee a liquidation process that was expected to conclude in 10 to 12 weeks.

Treatment of creditors under the plan will include a toggle feature under which Shopko may determine whether to complete an equitization restructuring or an asset sale restructuring.

New Shopko interests will be issued under the plan. Existing interests will be canceled.

The company’s pre-bankruptcy ABL obligations were rolled into debtor-in-possession financing obligations.

Lenders are expected to convert their claims into exit financing commitments, or Shopko will enter into a new credit facility sufficient to pay lender claims in full and provide incremental liquidity.

General unsecured creditors will receive either 100% of the new Shopko interests or a share of an equitization reserve.

Shopko is a Green Bay, Wis., operator of general merchandise stores throughout the Central, Western and Pacific Northwest regions of the United States. The company filed bankruptcy on Jan. 16 under Chapter 11 case number 19-80064.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.