Independent Pet gets interim approval of lender, committee settlement

By Sarah Lizee

Olympia, Wash., March 24 – Independent Pet Partners Holdings, LLC gained interim approval of a settlement among the debtors, lenders, and the official committee of unsecured creditors, according to an order filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

A final hearing is scheduled for April 4.

As background, the company is seeking approval to sell 66 of its stores in five states under the Chuck and Don’s and Kriser’s Natural Pet banners to stalking horse bidder IPP Buyer Acquisition, an entity formed by the prepetition lenders. Some of the prepetition lenders are also lenders of the company’s $27.26 million debtor-in-possession facility.

The purchase price under the stalking horse agreement includes a $60 million credit bid and some assumed liabilities.

The settlement provides for the framework to close the stalking horse deal sooner and file a Chapter 11 plan that will provide for the orderly liquidation of the debtors’ remaining assets for the benefit of creditors.

The settlement provides for the resolution of any objections to the prepetition lenders’ claims and liens, and a waiver of distributions to prepetition lenders and TPG Growth III Management, LLC’s asserted general unsecured claims, which will significantly reduce the size of the general unsecured claims pool.

The lenders will waive their rights to distributions on account of their deficiency claims under the plan but retain their right to vote their deficiency claims in connection with confirmation.

TPG will waive all amounts of its general unsecured claim against the estates under its management services agreement with the debtors.

The committee has agreed to support the sale, including the sale of claims against TPG. The committee will also permanently terminate its investigation and consent to termination of the challenge period, which will allow the sale to close sooner.

The settlement parties will attempt to close the sale by April 7.

The committee will select a trustee who will oversee a trust for the benefit of unsecured creditors and implement the plan of liquidation.

The plan of liquidation will provide for creation of a trust for the benefit of the general unsecured creditors, funded with a $2 million wind-down amount, which will be used to administer the trust, make distributions to general unsecured creditors, pay about $150,000 in fees and expenses of the noticing agent, pay administrative, priority or secured claims required to be paid in full to the extent cash and other assets are not sufficient to pay those claims, and pay up to $20,000 of required court clerk and U.S. trustee fees.

The wind-down amount will be excluded from any prepetition or DIP liens.

The plan provides for the transfer of the wind-down amount to the trust, as well as any estate claims and causes of action not acquired as part of the stalking horse agreement or other sales of the debtors’ assets.

The plan will fund the trust with a 40% net recovery of any tax credit, establish an administrative claim fund and a priority claims fund, and provide for an up to $6.9 million carveout for professional fees.

The plan also provides for releases and exculpation in favor of the settlement parties, including third-party releases.

The multichain pet care business has headquarters in Woodbury, Minn. The company filed bankruptcy on Feb. 5 under Chapter 11 case number 23-10153.

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