Interstate Bakeries Corporation (IBC) (OTC:IBCIQ) announced today that
it filed an amended Plan of Reorganization and related Disclosure
Statement with the U.S. Bankruptcy Court for the Western District of
Missouri on October 4, 2008.
The filing of the Plan of Reorganization and related Disclosure
Statement was made in connection with the plan funding commitments,
announced on September 12, 2008, from an affiliate of Ripplewood
Holdings L.L.C. (the "Equity Investor") and from Silver Point Finance,
LLC, and Monarch Master Funding Ltd. As previously announced, the
funding commitments form a basis for IBC to emerge from Chapter 11 as a
stand-alone company, under the Plan of Reorganization filed with the
Bankruptcy Court.
The Plan of Reorganization and related Disclosure Statement filed on
October 4, 2008 reflect a substantially impaired recovery for
pre-petition senior secured creditors. For general unsecured creditors
and equity security holders, the amended Plan of Reorganization and
related Disclosure Statement reflect no recovery, although on October 3,
2008 the Company and its pre-petition secured creditors reached a
compromise with the Official Committee of Unsecured Creditors appointed
in the cases. As a result of the compromise, the Official Committee of
Unsecured Creditors withdrew its previously filed objection to the
Company’s efforts to obtain Bankruptcy Court
approval of the plan funding commitments and agreed to support the
Company’s Plan of Reorganization as it will be
subsequently amended to reflect the compromise. The Plan of
Reorganization has the support of approximately 53.8% of the pre
petition secured debt holders.
The compromise reached with the Official Committee of Unsecured
Creditors, which is subject to definitive documentation, provides for,
among other things, the establishment of a creditors’
trust upon IBC’s emergence from Chapter 11 for
the benefit of the general unsecured creditors. The creditors’
trust will be funded through a cash payment of $5 million. Costs of
administering the trust will be paid from the trust assets. The creditors’
trust will also receive rights to pursue certain litigation claims at
the expense of the creditors’ trust. Finally,
the creditors’ trust will potentially receive
a cash payment upon a future liquidity event with such payment based on
the increase, if any, in value of a 3% equity ownership stake in the
reorganized IBC in excess of 150% of the investment equity value paid by
the Equity Investor. There can be no assurance that the litigation
claims or the potential cash payment described above will result in any
distributable value for general unsecured creditors.
The filing of the Plan of Reorganization and related Disclosure
Statement is an important step in IBC’s
ongoing efforts to emerge from Chapter 11.
