U.S. Tobacco Cooperative receives confirmation of Chapter 11 plan

By Sarah Lizee

Olympia, Wash., June 22 – U.S. Tobacco Cooperative Inc.’s Chapter 11 plan was confirmed by the U.S. Bankruptcy Court for the Eastern District of North Carolina, according to a docket entry filed Wednesday.

According to the disclosure statement, the plan will be funded with a proposed $90 million exit facility. The company’s investment banker is soliciting proposals for the facility.

The plan will also be funded with proceeds from an investment account containing $36.9 million in cash, the sale of non-core assets and tobacco leaf, proceeds from insurance policies, proceeds from pending litigation, proceeds from duty drawback claims and cash on hand.

Under the plan, holders of bank group claims will receive cash in an amount equal to 50% of their claims, and the balance with interest at the non-default rate provided in the credit agreement on or before the six-month anniversary of the effective date of the plan.

Holders of other secured claims, non-tax priority claims and general unsecured claims will be paid in full.

Holders of membership fee claims will receive payment in cash in full, except if the total of all membership fee claims exceeds $4 million. However, the company said it believes these claims will be substantially lower.

Holders of capital equity credit claims will receive payment in full in cash, except if the total of all capital equity credit claims exceeds $20 million. The company said it believes these claims will be substantially lower as well.

Holders of 1982-84 proceeds claims and Fetra proceeds claims will receive payment in cash in the amount of their pro rata share of the class 7 and 8 fund, and in the event the claims are not already paid in full, nonqualified capital equity credits or equivalent interests in an amount equal to the balance of the claim.

Intercompany claims will be canceled with no distribution.

Common stock interests, subsidiary equity interests and 2010-2015 capital equity credit claims are unaltered.

Raleigh, N.C.-based U.S. Tobacco is the largest tobacco cooperative in the United States. It filed bankruptcy on July 7, 2021 under Chapter 11 case number 21-01511.

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