Anagram reaches settlement with second-lien noteholders to end case

By Sarah Lizee

Olympia, Wash., Feb. 26 – Anagram Holdings, LLC is seeking approval of a settlement with holders of about 83% of its second-lien notes that could bring an end to its Chapter 11 case, according to a motion filed Sunday with the U.S. Bankruptcy Court for the Southern District of Texas.

If approved, the settlement will allow the debtors to efficiently complete the Chapter 11 cases by transferring their remaining assets to the second-lien noteholders following the completion of a few remaining case administration matters, primarily final fee applications of estate professionals, Anagram said.

The company is asking the court to dismiss the Chapter 11 cases afterward.

As a reminder, on Dec. 29, the debtors sold substantially all of their assets to Celebration Bidco, LLC, an entity formed and controlled by an informal group of holders of about 60% in principal amount of the debtors’ first-lien notes and more than 50% in principal amount of the debtors’ second-lien notes – including many of the settling second-lien noteholders.

The debtors estimate that, following payment of the debtors’ and lenders’ professional fees, they will have no more than $1.2 million in remaining cash.

The purchaser credit bid the company’s debtor-in-possession facility and first-lien notes in full and assumed substantially all of the debtors’ contracts and all pre- and post-petition trade claims.

As a result, only the second-lien notes remain outstanding in the principal amount of about $110 million.

The second-lien notes were granted liens on substantially all of the debtors’ assets, including adequate protection liens on post-petition assets through the final DIP order.

“Given the size and priority of their claims relative to any other creditors (if any), these cases are effectively being administered for the benefit of the second-lien noteholders and any case resolution will need their consent,” the company said in the motion.

Absent a consensual resolution, the noteholders could seek to lift the automatic stay for the debtors’ inability to adequately protect their collateral or would move to convert the cases to Chapter 7, the company added.

Through the settlement, the debtors plan to assign all remaining assets, consisting of the remaining cash, to the second-lien trustee to be distributed to the noteholders.

The foil balloon manufacturer is based in Eden Prairie, Minn. It filed bankruptcy on Nov. 8 under Chapter 11 case number 23-90901.

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