U.S. Tobacco Cooperative’s Chapter 11 plan effective as of July 14

By Sarah Lizee

Olympia, Wash., July 15 – U.S. Tobacco Cooperative Inc.’s Chapter 11 plan went into effect on Thursday, according to a notice filed with the U.S. Bankruptcy Court for the Eastern District of North Carolina.

The plan was confirmed on June 23, as previously reported.

According to the disclosure statement, the plan is funded with a $90 million exit facility, 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 were to 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 were to be paid in full.

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

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

Holders of 1982-84 proceeds claims and Fetra proceeds claims were to 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 were to be canceled with no distribution.

Common stock interests, subsidiary equity interests and 2010-2015 capital equity credit claims were 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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