L&L Wings disclosure statement approved; plan hearing set for March 1

By Sarah Lizee

Olympia, Wash., Jan. 21 – L&L Wings, Inc.’s disclosure statement for its Chapter 11 plan was approved Friday by the U.S. Bankruptcy Court for the Southern District of New York, according to an order.

The plan confirmation hearing is scheduled for March 1.

According to the disclosure statement, the plan will be funded from a portion of the debtor’s cash on hand, post-effective date financing from TD Bank, NA or another lender, up to $2 million in cash and an up to $4 million loan from interest holders.

Under the plan, administrative claims, priority tax claims and non-tax priority claims will be paid in full in cash.

General secured claims are unimpaired, and holders will retain their liens on their specifically financed collateral and will continue to receive payments in line with their finance agreements.

TD Bank will not receive a distribution on behalf of its secured claim, but will continue to retain its liens against the debtor’s assets to secure the debtor’s obligations under its guarantees executed in favor of TD and any post-effective date loan agreements.

Holders of convenience claims will be paid in full in cash.

Upon final order of the court, Beach Mart, Inc. will receive a 50% distribution on the allowed portion of the non-subordinated portion of its claim, if any. The disbursing agent will reserve in cash the maximum distributions to BMI required under the plan based on the full amount of the claim, or $10.69 million.

BMI will not receive any distribution on account of the subordinated portion of its claim.

Holders of general unsecured claims will receive a 50% distribution on account of their claims in cash, and a pro rata distribution from the disputed BMI claim reserve to the extent of any excess funds available due to a reduction in the amount of the unsubordinated BMI claim as a result of any final order determining the adversary proceeding. Holders will not receive more than 100% of the allowed claims.

Holders of unsecured claims arising from pre-petition guarantees of the debtor signed in connection with some of its nonresidential leases will not receive a distribution, but the guarantees will remain in full force and effect.

Holders of insider claims will receive no distribution and will be deemed to have waived their claims against the debtor in full exchange for and in partial consideration of the Levy parties’ releases.

Interests will be retained.

The New York-based beachwear and beach sundry items retailer filed bankruptcy on April 24, 2021 under Chapter 11 case number 21-10795.

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