EYP Group receives confirmation of Chapter 11 plan of liquidation

By Sarah Lizee

Olympia, Wash., Nov. 1 – EYP Group Holdings, Inc.’s recently amended Chapter 11 plan of liquidation was confirmed on Tuesday by the U.S. Bankruptcy Court for the District of Delaware, according to an order.

The amended plan contemplates the distribution of proceeds generated by the going-concern sale of substantially all of the debtors’ assets and is premised on a comprehensive settlement with and among several stakeholders.

Global settlement

Key components of the global settlement include one settlement with the Long Point Capital Partners parties, the debtors, the official committee of unsecured creditors, and certain noteholder groups, and another settlement with Tom and Karen Birdsey.

The Long Point settlement increases distributable proceeds to the fulcrum creditors – namely, the group I and group II noteholders – by close to $6.5 million in total.

The increased distributable proceeds are the result of the Long Point parties’ reduction of their claims that were asserted in a liquidated amount of at least $7.95 million in exchange for the dismissal of pending litigation and releases of related claims and causes of action.

The Birdsey settlement increases the distributable proceeds to other group I noteholders and to group II noteholders as Tom and Karen Birdsey agreed to reallocate their total recovery under the plan on account of $4 million of their group I notes to other group I noteholders and to group II noteholders, in exchange for, among other things, a general release granted by each of the plaintiffs in New York litigation, Long Point, and each of the creditors’ committee members.

The global settlement is also premised on the waiver of accrued interest by the redemption noteholders, a structurally senior class, allowing reallocation of close to $1 million in proceeds to group I and group II noteholders, as well as the compromise and reallocation of distributions between group I noteholders and group II noteholders – including the SBS noteholders.

Creditor treatment

Under the plan, holders of administrative claims and priority tax claims will be paid in full.

Professional fee claims will be paid from an administrative claims fund.

Holders of secured claims will receive, at the option of the litigation trustee, treatment rendering the claims unimpaired.

Holders of other priority claims will receive cash equal to the unpaid amount of their claims, or other treatment that the litigation trustee and claimholders have agreed to.

As under the global settlement, LPC claimholders will receive $1.5 million from distributable cash.

Holders of A2A indemnification claims will receive the following: for Tom and Karen Birdsey, $625,000; and for David and Marilyn Watkins, $275,000.

The holder of the A2B indemnification claim will receive $200,000.

Holders of class A3 and B2 general unsecured claims will be paid in full from distributable cash so as to render the claims unimpaired.

Holders of class A4 and B3 equity interests will receive nothing.

The holders of the class B1 redemption note claims will receive their pro rata share of $5.49 million. From this amount, $90,375 will be distributed to counsel to the holders of redemption notes.

Holders of class C1 group I/II noteholder claims will receive distributions from the following: distributable cash less payments to classes A, A0, A1, A2A, A2B, A3, B0, B1, B2, C0, C2 and C3, less the LPC claim reduction amount, split 60% to holders of group I notes and 40% to holders of group II notes; their pro rata share of the LPC claim reduction amount; and the proceeds of recoveries or benefits obtained through the prosecution of the retained causes of action, which will be assigned by the debtors to the litigation trust, of which holders of group I notes and group II notes will receive their pro rata share.

From the distributions to the holders of the group I notes, up to $340,505 will be distributed to counsel to the holders of group I notes. From the distributions to the holders of the group II notes, up to $394,119 will be distributed to counsel to the holders of group II notes.

Additionally, in consideration for the payment of the Birdsey indemnification claim and the release of the obligations under a promissory note dated Aug. 27, 2018, in the amount of about $171,181, Tom and Karen Birdsey agree to distribute through the litigation trust their recoveries in relation to $4 million, plus any accrued interest at the non-default contract rate as of the petition date, of the group I notes held by either or both of Tom and/or Karen Birdsey to the remaining group I noteholders.

Each group I noteholder, other than the Birdseys, and each group II noteholder will receive their pro rata share of the value distributable on account of the Birdsey claim reduction amount.

Any unused balance in the disputed claims reserve, litigation trust reserve and administrative claims fund will be distributed 60% to the holders of group I notes and 40% to the holders of group II notes.

Holders of SBS equity owner claims will receive a payment from the distributable cash in the total amount of $351,444, with that amount being shared pro rata between holders of SBS equity owner claims, in exchange for the alleged value of the warrants provided to the SBS equity owners at the closing of the SBS transaction. From the distributions to the holders of the SBS equity owner claims up to $125,000 will be distributed to Rupp Baase Pfalzgraf Cunningham as counsel.

Holders of class C3 general unsecured claims will receive their pro rata share of $50,000 from distributable cash, not to exceed 35% in recoveries on account of any claim, provided that any amounts remaining of the $50,000 after payment of claims in this class will be paid to holders of class C1 claims.

Holders of C4 equity interests in EYP Group Holdings, class C5 initial warrant claims and purchase warrant claims will receive no distribution.

Albany, N.Y.-based EYP is an integrated design firm specializing in higher education, health care, government and science & technology. It filed bankruptcy on April 24, 2022 under Chapter 11 case number 22-10367.

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