Beard Corporate Restructuring Review For Aprll 2013

Beard Group Corporate Restructuring Review For April 2013
Presented by Beard Group, Inc. P.O. Box 4250 Frederick, MD 21705-4250 Voice: (240) 629-3300 Fax: (240) 629-3360 E-mail: nina@beard.com
An audio recording of this presentation is available at http://bankrupt.com/restructuringreview/

____________________________________________________ Welcome to the Beard Group Corporate Restructuring Review for April 2013, brought to you by the editors of the Troubled Company Reporter and Troubled Company Prospector. In this month's Corporate Restructuring Review, we'll discuss five topics: first, last month's largest chapter 11 filings and other statistics; second, large chapter 11 filings TCR editors anticipate in the near-term; third, a quick review of the major pending disputes in chapter 11 cases that we monitor day-by-day;
fourth, reminders about debtors whose emergence from chapter 11 has been delayed; and fifth, information you're unlikely to find elsewhere about new publicly traded securities being issued by chapter 11 debtors. April 2013 Mega Cases
Now, let's review the largest chapter 11 cases in April 2013. Danilo Muoz reports that four cases were filed in April involving assets in excess of $100 million. During the first three months of 2013, 16 such cases were filed. Of the four mega cases in April, one involved at least one billion dollar in assets, raising this year's billion dollar case total to six. Three of those billion dollar cases were filed in March. For fiscal year 2012, there were a total of 12 companies that filed for Chapter 11 with excess of $1 billion in assets, five of which were filed in May. A total of 64 mega filings with assets in excess of $100 million were filed that year, compared to 82 mega filings during the same period in 2011 and 106 in 2010. The largest Chapter filing in April this year was by Central European Distribution Corp. or C.E.D.C. one of the world's largest vodka producers and Central and Eastern Europe's largest integrated spirit beverages business. The Company's primary operations are in Poland, Russia and Hungary. On April 7, 2013, CEDC and two subsidiaries sought bankruptcy protection under Chapter 11 of the Bankruptcy Code
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with the Bankruptcy Court for the District of Delaware [Lead Case No. 13-10738]. CEDC filed, together with its petition, a prepackaged Chapter 11 plan that reduces debt by US$665.2 million. The Company listed total assets of US$1.98 billion and total liabilities of US$1.74 billion at September 30, 2012. The Delaware Bankruptcy Court scheduled a hearing to consider confirmation of the Plan on May 13, 2013. According to the official vote tabulation prepared by CEDC's voting and information agent, impaired creditors have voted overwhelmingly to accept the Plan. The financial restructuring, which will eliminate approximately US$665.2 million in debt from CEDC's and CEDC FinCo's balance sheets, does not involve the Company's operating subsidiaries in Poland, Russia, Ukraine or Hungary and should have no impact on their business operations. Operations in these countries are independently funded and will continue to generate revenue during this process. All obligations to employees, vendors, credit support providers and government authorities will be honored in the ordinary course without interruption. The second largest Chapter 11 filing was by Rotech Healthcare and 114 of its subsidiary companies. Rotech filed petitions seeking relief under chapter 11 of the Bankruptcy Code with the Bankruptcy Court for the District of Delaware [Lead Case No. 13-10741] to implement a pre-arranged plan negotiated with secured lenders. Rotech's balance sheet at September 30, 2012, showed $255.76 million in total assets, $601.98 million in total liabilities, and a $346.22 million total stockholders' deficiency.
Based in Orlando, Florida, Rotech provides home medical equipment and related products and services in the United States, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. The company provides equipment and services in 48 states through approximately 500 operating centers located primarily in nonurban markets. Rotech also filed its plan of reorganization as the next step towards completing its debt reduction and restructuring announced on March 15, 2013. Once the plan, which is supported by Consenting Holders with a majority in outstanding principle amount of both Rotech's 10.75% First Lien Secured Notes and 10.5% Senior Second Lien Secured Notes, is confirmed, Rotech expects it will have eliminated approximately half of its secured debt. The third largest Chapter 11 filing was by GMX Resources Inc., an independent natural gas production company. Oklahoma City-based GMXR has 53 producing wells in Texas and Louisiana, and 7 producing wells in New Mexico. The Company's balances sheet at Sept. 30, 2012, showed $343.14 million in total assets and $467.64 million in total liabilities. GMXR filed for Chapter 11 protection with the Bankruptcy Court for the Western District of Oklahoma [Case No. 13-11456], on April 1, 2013, to pursue a sale of the business to secured lenders in exchange for $324.3 million in first-lien notes. Another mega case filer is Yarway Corporation, which sought Chapter 11 protection with the Bankruptcy Court for the District of Delaware [Case No. 13-11025], on April 22, 2013, to deal with claims arising from asbestos containing products it allegedly sold as early as the 1920s.
Yarway, a unit of Tyco International Ltd., originally manufactured pipe clamps, steam traps, valves and controls. Yarway's asbestos-related liabilities derive from the company's (i) purported use of asbestos-containing gaskets and packing, manufactured by others, in its production of steam valves and traps from the 1920s to 1970s, and (ii) alleged manufacture of expansion joint packing that was allegedly made up of a compound of Teflon and asbestos from the 1940s to the 1970s. Over the past five years, about 10,021 new asbestos claims have been asserted against Yarway, including 1,014 in Yarway's 2013 fiscal year ending March 31, 2013. Yarway estimated assets and debts in excess of $100 million as of the Chapter 11 filing. Two of the four bankruptcy mega filings in April involved a prepackaged Chapter 11 plan. During the first quarter of 2013, 10 of the 16 mega filings involved a prepackaged filing. For fiscal year 2012, 13 of the 64 mega cases -- about 20% -- were prepackaged in nature. This is an increase from 2011 where 13 of the 83 mega cases -- or about 16% -- were prepacks. For fiscal year 2010, a total of 35 prepacks/pre-arranged cases were filed out of the 106 bankruptcy mega cases -- or about one in every three filings in 2010. For April this year, two of the four mega filings came from the manufacturing industry. During the four months of 2013, 10 of the mega filings belonged to the information industry while 4 are involved in manufacturing. The distribution of bankruptcy mega cases by industry for 2012 is:
Manufacturing Information Finance & Insurance Real Estate Transportation Others
10 cases 16% 8 cases 13% 7 cases 11% 6 cases 9% 5 cases 8% 28 cases 44%
The distribution of bankruptcy mega cases by industry for 2011 is: Manufacturing 14 cases 17% Accommodation & Food Services 12 cases Finance & Insurance 9 cases 11% Information 8 cases 10% Retail Trade 7 cases 8% Real Estate 7 cases 8% Others 26 cases 32% 14%
Three of the four Chapter 11 mega cases in April were filed in the Bankruptcy Court for the District of Delaware. For the first four months of 2013, the Delaware Bankruptcy Court cornered 14 of the 20 mega filings, while the Southern District of New York had two mega filings. Last year, the Bankruptcy Court for the Southern District of New York was the most favored venue for mega filers with 21. The Delaware Bankruptcy Court had 19 of the mega cases. In 2011, the Delaware Bankruptcy Court was the most favored venue with 38 filings, or 46% of the mega cases, followed by the Southern District of New York with 16 filings, or 19% of the mega cases, and by the Northern District of Texas with 4 filings,
or 5% of the mega cases. The rest of the bankruptcy mega cases are spread evenly throughout the various bankruptcy courts. Lehman Brothers Holding Corp. remains the biggest corporate bust in history. Lehman, which filed in 2008, had $639 billion in total assets and $613 billion in total debts at that time of its filing. For 2011, the largest Chapter 11 filing was filed by MF Global Holdings Ltd. and its affiliates. As of Sept. 30, 2011, MF Global had $41.05 billion in total assets and $39.68 billion in total liabilities. For 2012, the largest Chapter 11 filing was by Residential Capital LLC, which disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. For first four months 2013, the largest Chapter 11 filing was filed by Dex One Corp., which listed total assets of $2.84 billion and total liabilities of $2.79 billion in its petition. For the first three months of 2013, Young Conaway Stargatt & Taylor LLP represented 5 of the 20 mega filings either as counsel or co-counsel. The law firm represented the School Specialty, Penson Worldwide, Super Media, Otelco and Rotech Healthcare in their respective Chapter 11 cases.
Anticipated Large Chapter 11 Filings Now, let's turn to the topic of large chapter 11 filings Troubled Company Reporter editors anticipate in the near-term. Carlo Fernandez identified 5 companies that may be close to filing for bankruptcy. These are Orchard Supply, Energy Future Holdings, Excel Maritime Carriers, Maxcom Telecom and Physiotherapy Associates. (A) Orchard Supply Orchard Supply Hardware Stores Corp. has reportedly hired restructuring lawyers at DLA Piper and financial advisors from FTI Consulting. Lenders involved in restructuring talks have enlisted turnaround firm Zolfo Cooper LLC and lawyers at Dechert LLP, The Wall Street Journal reported, citing people familiar with the talks. The sources said Orchard Supply and its lenders are discussing an out-of-court restructuring or a prepackaged bankruptcy filing. San Jose, California-based Orchard Supply operates neighborhood hardware and garden stores focused on paint, repair and the backyard. It was spun off from Sears in 2012. Orchard Supply has obtained a waiver from its term loan lenders related to the leverage ratio covenant for the fiscal quarters ending February 2, 2013 and the quarter ending May 4, 2013.
S&P in April lowered its corporate credit rating on Orchard Supply one notch to 'CCC-'. S&P believes that a default, distressed exchange, or redemption could be inevitable within six months, without unanticipated significantly favorable changes in the company's circumstances. (B) Energy Future Holdings Energy Future Holdings Corp. reported a net loss of $569 million on $1.26 billion of operating revenues for the three months ended March 31, 2013, wider than the net loss of $304 million on $1.22 billion of revenue reported during the same period last year. In a regulatory filing in April, Energy Future confirmed it has been in talks with creditors regarding proposed changes to the Companies' capital structure. This includes a consensual restructuring of TCEH's approximately $32 billion of debt via a prepackaged plan of reorganization by commencing voluntary cases under Chapter 11 of the U.S. Bankruptcy Code. No agreement has been reached. Energy Future has retained Kirkland & Ellis LLP and Evercore Partners for advice on the restructuring. Creditors have retained Paul, Weiss, Rifkind, Wharton & Garrison LLP and Millstein & Co., L.P. Energy Future, formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. The Company's balance sheet at March 31, 2013, showed $40.1 billion in total assets and $51.6 billion in total liabilities.
(C) Excel Maritime Excel Maritime Carriers Ltd. may file for bankruptcy protection with a restructuring plan negotiated with lenders. To enable ongoing discussions, lenders have agreed to extend the forbearance they had granted in connection with the principal installments that have become due in the current fiscal year through May 31, 2013. The Company's access to the escrowed funds to fund its equity raising commitment has been similarly extended to May 31. Dow Jones' Daily Bankruptcy Review reported in April that Excel has hired Skadden, Arps, Slate, Meagher & Flom LLP and Bracewell & Giuliani LLP as its attorneys; and Miller Buckfire & Co. as its financial adviser. Excel owns a fleet of 39 vessels. It is based in Greece but incorporated in Liberia. (D) Maxcom Telecom Maxcom Telecomunicaciones SAB has admitted it's considering a Chapter 11 bankruptcy filing, among other options, after a takeover deal with Ventura Capital Privado SA collapsed. The Mexican phone company said in a statement that only 61.93% of old notes were tendered in a bond exchange, not enough to complete a swap, which was a requirement for an equity offer from Ventura Capital. "In light of this outcome, Maxcom is considering all of its alternatives including, but not limited to, commencement of a Chapter 11 case or other restructuring proceeding," the company said in the statement.
Maxcom was seeking to complete the 2.90-pesos-a-share takeover offer, which would include an investment of $45 million to use for network improvements, to better compete with America Movil SAB, Mexico's biggest phone company. Maxcom said its operational and financial position has further deteriorated by virtue of not having received the capital contribution and, without additional sources of capital, the company may not be able to make the coupon payment due on June 15, 2013, with respect to the company's outstanding senior secured notes and the Company may not be able to meet other financial obligations as they come due. The company said it is currently assembling a plan intended to achieve that restructuring, which includes the company's assessment of the implications that the plan will have, if any, on its financial position, results of operations, cash flows and related disclosures. The company expects to report 2.2 billion pesos in net revenues for the year ended December 31, 2012. The company expects to report net loss of 136.1 million pesos for the year ended December 31, 2012, which reflects operating loss, as well as interest expense. (E) Physiotherapy Associates Physiotherapy Associates Holdings Inc., a provider of outpatient physical therapy, on May 1 didn't make a $12.5 million interest payment on senior notes. Although there is 30-day grace period for the payment, the failure to pay ended a waiver under a bank-loan agreement
required by failure to file 2012 financial statements. Moody's lowered the corporate credit another two grades to Caa3, on top of a downgrade one month ago. The Exton, Pennsylvania-based company generated $365 million in revenue for the year ended in September. The company was acquired in May 2012 by Court Square Capital Partners LP. * * *
In addition to the challenged companies mentioned in Mr. Fernandez's report, the Troubled Company Reporter provides ongoing reporting about more than 3,000 companies experiencing financial distress or restructuring their balance sheets in a judicial proceeding. Stay tuned to learn more about obtaining a trial subscription to the TCR at no cost or obligation. Major Pending Disputes In Chapter 11 Cases Next, we'll quickly review major pending disputes in large chapter 11 cases that Troubled Company Reporter editors monitor day-by-day. (A) Patriot Coal Ivy Magdadaro reports that a long-awaited hearing began on April 29 in the bankruptcy case of Patriot Coal Corp. where the company insists it must significantly cut thousands of retirees' health care and pension benefits or risk liquidation -- a claim that the United Mine Workers of America union strongly rejects. The scenario highlights a management-labor fight.
Patriot's benefits cuts have been the most contentious aspect of its bankruptcy case, when it estimated it would have to spend $1.6 billion to cover retirees' health care costs. The union labeled the proposed cuts as immoral and unfair. The union, along with consumers, have staged weeks of protests against Patriot and former parent, Peabody Energy Corp. In March, Patriot gave the union a proposal that would create a trust with a maximum of $300 million from future profitsharing to fund some level of health benefits. Patriot also agrees to give the union a 35% equity stake in the company once it emerges from bankruptcy. Union leaders have alleged that when Patriot was spun off as a separate company in 2007, Peabody saddled it with pension and long-term health care obligations that would prove to be too burdensome and would have to be shed. Peabody denied all these allegations, rather it pointed out that it was on Patriot's watch when a series of unforeseen events affecting coal producers occurred -- which include the global financial crisis, burdensome federal regulations and drop in the price of coal. Patriot itself is seeking court permission to investigate its 2007 spinoff from Peabody, saying the transaction freed Peabody of $600 million in healthcare and environmental liabilities. Also in March, Patriot sued Peabody saying it wants to ensure that Peabody doesn't try to use the bankruptcy to avoid its own health care obligations to some 3,100 retirees whose benefits would not be included in the package Patriot proposed to the union.
The Patriot-Peabody lawsuit was the first order of business at the April 29 hearing. Attorneys for Patriot accused Peabody of pursuing "a free ride on Patriot's bankruptcy to escape its obligations." Attorneys for Peabody asked the judge to dismiss the complaint, calling the lawsuit premature and not filed in the proper jurisdiction. Peabody said the lawsuit isn't "ripe" because it depends on the outcome of Patriot's negotiation with its union. The bankruptcy judge has not issued a ruling on the matter. Patriot, which mines for coal in West Virginia and Kentucky, filed for bankruptcy in a Missouri court in July as coal demand decreased and it faced stricter environmental regulations. (B) Ambac Financial Ambac Financial Group Inc. finally cleared the last remaining hurdle to its exit from Chapter 11 protection when it obtained bankruptcy court approval on April 29 of a settlement with US tax authorities, the Internal Revenue Service in particular, over its treatment of credit-default swaps. Ambac will pay $1.9 million to the United States, on behalf of the IRS, under the settlement, while Ambac Assurance Corp will pay $100 million to the United States. The company will also pay additional amounts, based on any payments received under an existing tax-sharing agreement. The IRS has disputed the eligibility of billions of dollars of tax refunds Ambac said it could claim as a result of its net operating
losses. The settlement reduces Ambac's entitlement to these refunds by $1.1 billion. The settlement also resolves an adversary complaint filed by Ambac against the IRS in 2010, seeking a declaration that Ambac and members of its consolidated tax group have no tax liability for tax years 2003 to 2008, and that Ambac is entitled to retain about $700 million in tax refunds it received from carrying back losses resulting from credit default swap contracts. Delayed Exits From Chapter 11 Julie Anne Lopez-Toledo reports about three Chapter 11 debtors whose emergence from Chapter 11 has been delayed: W.R. Grace, Flintkote and Quigley. (A) W.R. Grace W.R. Grace & Co., still in Chapter 11 reorganization after 12 years, received court approval for bonuses costing $18.9 million if targets are met. For executives, the bonuses will be paid in stock. There were no objections. The company has won court approval to pay bonuses every year since the bankruptcy filing in April 2001 to deal with asbestos claims. The company may also soon be in a position to exit bankruptcy. The bank lenders' appeal of the orders confirming Grace's plan will be argued in June in the U.S. Court of Appeals in Philadelphia. The plan, which was confirmed by the bankruptcy and district courts, can't be implemented because pre-bankruptcy secured bank lenders filed an appeal. Arguments will be held on June 17 in the U.S. Court of Appeals in Philadelphia.
The banks argue on appeal that they are entitled to $185 million in interest on their claims because shareholders are retaining stock worth $4.9 billion. Banks filing the appeal include Bank of America NA, Barclays Bank Plc and JPMorgan Chase Bank NA. Grace projects it could complete its reorganization by the end of this year. (B) Flintkote The U.S. Bankruptcy Court for the District of Delaware approved a stipulation that resolves a bid by Imperial Tobacco Canada Limited and certain wholly-owned subsidiaries, including Genstar Corporation, for a District Court review of the Bankruptcy Court's order confirming The Flintkote Company, et al.'s Plan of Reorganization. The stipulation was entered among Flintkote, Imperial, the Asbestos Personal Injury Claimants, and James J. McMonagle, in his capacity as Future Claimants Representative. Judge Fitzgerald has confirmed Flintkote's Amended Joint Plan of Reorganization, which deals with asbestos personal injury claims. The Plan is supported by the Official Committee of Asbestos Personal Injury Claimants and the Future Claimants' Representative. Judge Fitzgerald's findings that the Plan complies with Sections 1129 and 524(g) in all respects still need to be affirmed by the District Court. Imperial expressed that it wanted a review of the confirmation opinion and confirmation order through an appeal. The Plan Proponents wished to avoid post-trial motion practice
and further wished to reach an agreement on the standard of review applicable to the Bankruptcy Court's findings of fact. In relation to this, Imperial and the Plan Proponents have reached an agreement on the procedure for the District Court Review that provides for an orderly, efficient and timely review process. The stipulation provides for, among other things: 1. All findings of fact of the Bankruptcy Court will be subject to the "clearly erroneous" standard of review by the District Court. 2. Neither Imperial nor any of the Plan Proponents will request an evidentiary hearing or affirmatively seek to reopen the evidentiary record before the District Court. The parties agree that, absent request for an evidentiary hearing or supplementation of the evidentiary record as raised sua sponte by the District Court, the District Court Review will be based solely on the record before the Bankruptcy Court and the briefing contemplated in the stipulation. (C) Quigley In April, a Texas appeals court overturned an $8.7 million judgment against Pfizer Inc. and its defunct subsidiary Quigley Co. Inc. after the company announced it had reached a settlement in bankruptcy court with a group of asbestos victims.
Pfizer previously set a June 26, 2013 confirmation hearing for its fifth amended Chapter 11 reorganization plan, almost nine years after the pharmaceutical giant entered bankruptcy. The June hearing date marks Quigley's first bid for confirmation since U.S. Bankruptcy Judge Stuart M. Bernstein denied its fourth amended plan in September 2010 after finding that the company manipulated creditor votes and engineered the case for its own benefit. Quigley, which Pfizer bought in 1968, at one time faced suits by more than 160,000 plaintiffs, and it filed for bankruptcy in 2004. * * *
The Troubled Company Reporter provides detailed reporting about every chapter 11 filing nationwide. Stay tuned to learn more about obtaining a trial subscription to the TCR at no cost or obligation. New Publicly Traded Securities Psyche Maricon Castillon reports of five companies who issued or will issue shares of new common stock upon emergence pursuant to the plans of reorganization they filed or intend to file in their Chapter 11 cases in April 2013. These companies are: Newland International, Eastman Kodak, Ambac Financial, Reader's Digest, and Geokinetics, Inc.
(A) Newland International Newland International Properties Corp., a unit of Panamabased Ocean Point Development Corp. that developed luxury hotel and condominium known as the "Trump Ocean Club International Hotel & Tower," located in Panama City, Panama, has sought Chapter 11 protection in New York in the United States with a bankruptcy exit plan that would further restructure $220 million secured notes used to finance the project. Bankruptcy Judge Martin Glenn will convene a hearing to consider confirmation of the Plan and approval of the explanatory disclosure statement on May 28, 2013. Prepetition, the Debtor negotiated with noteholders and on Jan. 23, 2013, executed a plan support agreement with Noteholders representing 41.76% in aggregate principal amount of the prepetition senior secured notes. The Chapter 11 plan filed by the Debtor on the Petition Date embodies the terms of the PSA. The Plan provides for these terms: * Unclassified claims. Administrative expense claims, professional compensation claims and priority tax claims will be paid in full and are unimpaired. Recovery: 100% * Secured Notes. Each holder of an allowed prepetition senior secured notes claim will receive new notes. The new notes will reschedule the Debtor's principal payment obligations to more closely align such obligations with the cash flows expected to be generated by sales and closings on unit purchase agreements Noteholders are impaired. Recovery: 95% to 100%.
* General Unsecured Claims. General unsecured claims, including trade claims, will be reinstated, paid in full or otherwise rendered unimpaired. The Debtor owes $32.1 million in principal amount of unsecured trade debt as of March 13, 2013. Recovery: 100%. * Interests. Interests will be reinstated. Interest holders are unimpaired and are presumed to have accepted the Plan. Recovery: N/A The Debtor commenced solicitation of votes prepetition. Only the lone impaired class -- the secured noteholders -- was entitled to vote on the Plan. According to Epiq Bankruptcy Solutions, LLC, the tabulation agent, accepting votes from holders of 100% in number and 100% in amount of all voted claims from noteholders were received prior to the voting deadline. (B) Eastman Kodak Eastman Kodak Co. filed a reorganization plan and disclosure statement on April 30, just before the deadline set in the loan agreement financing for the Debtor to file a plan. The plan offers full payment to holders of the remaining $375 million in second-lien notes by giving them 85 percent of the stock on emergence from bankruptcy. Negotiations are also under way on a rights offering to generate additional cash so the second-lien debt can be paid in full in cash, with interest. The draft disclosure statement showed the second-lien noteholders and unsecured creditors would recover nothing in liquidation. Other than the conclusion about no recovery for junior creditors, the disclosure materials as yet don't have a liquidation analysis explaining the zero recovery.
The plan offers 15 percent of the stock to unsecured creditors with $2.7 billion in claims. On account of their $635 million claim for loss of retirement benefits, retirees will share pro rata in the 15 percent of the stock. The disclosure statement doesn't predict how much unsecured creditors and retirees should recover under the plan. It says the recovery under the plan would be "better than liquidation" where they would receive nothing. (C) Ambac Financial Ambac Financial Group, Inc. on May 1 announced the effectiveness of its Second Modified Fifth Amended Plan of Reorganization, which marks the completion of its financial restructuring and Ambac's emergence from Chapter 11 bankruptcy protection. Under the terms of the restructuring, all allowed claims of Ambac's former creditors were discharged and such creditors received new common stock, and in certain instances, new warrants, issued by the reorganized company. Ambac's new common stock and warrants are listed on the NASDAQ Global Select Market under the ticker symbols AMBC and AMBCW, respectively. All common stock of the Company in existence prior to Ambac's emergence from bankruptcy has been cancelled. Holders of such existing stock have not, and will not, receive distributions under the Plan. Although Ambac Financial secured court approval of its Chapter 11 plan more than a year ago, the lack of resolution of claims by the Internal Revenue Service prevented the insurance holding company from implementing the plan and emerging from bankruptcy. On April 8, Ambac filed papers in bankruptcy court for approval of settlement with the IRS and announced that most other conditions to the settlement have been satisfied. The
settlement calls for Ambac to pay the IRS $1.9 million while the insurance company pays $100 million. In the future, Ambac will also pay the IRS a portion of money it receives from a tax sharing agreement. The settlement reduces net operating losses by $1.1 billion. (D) Reader's Digest Reader's Digest Association Inc.'s publisher received a New York bankruptcy judge's approval of its disclosure statement, allowing the company to begin soliciting creditor votes for its Chapter 11 exit plan. According to the report, the plan calls for RDA Holdings Co., which entered bankruptcy in February for the second time, to be turned over to bondholders' control upon its emergence from the Chapter 11 proceedings. The plan calls for the conversion of $231 million in senior noteholder claims to new equity and another $244.9 million to general unsecured creditors. Reader's Digest's revised reorganization plan and disclosure statement explains to pay unsecured creditors with $380 million in claims why they should be satisfied with a sharing of $500,000 for a recovery of 0.1%. The plan is designed to carry out an agreement negotiated before the Chapter 11 filing with holders of 70% of what amounts to $475.9 million in second-lien floating-rate notes. The plan would reduce debt by 80% from conversion $231 million of the notes into the new equity. The noteholders' deficiency claim of $244.9 million would be treated as a general unsecured claim if unsecured creditors don't vote for the plan.
(E) Geokinetics Geokinetics Inc. has an approved Chapter 11 plan. Holders of $300 million in 9.75 percent senior secured notes take ownership in exchange for debt, for a predicted 70 percent recovery. Before bankruptcy, holders of 85 percent of the notes voted for the plan as did holders of all the preferred stock. Holders of $141 million in preferred stock receive $6 million in cash for a 4 percent recovery, according to the disclosure statement. Unsecured creditors with as much as $13.2 million in claims will be paid in full. The Company expects to emerge from chapter 11 in early May 2013 after the conditions to effectiveness of the Plan are satisfied. The Plan, which was overwhelmingly approved by the Company's stakeholders in connection with its pre-packaged solicitation of votes for the Plan, provides for the payment in full of the Company's $50 million secured credit facility, the conversion of the $300 million (plus accrued and unpaid interest) of the Company's senior secured notes into newly issued common equity of the reorganized Company and the payment of allowed general unsecured claims in full either at the conclusion of the chapter 11 case or in the ordinary course of business. The outstanding borrowings under the Company's debtor-inpossession credit facility will be repaid with shares of New Common Stock at a discount to Plan value, as provided in the Plan. * * *
That ends the Beard Group Corporate Restructuring Review for April 2013, brought to you by the editors of the Troubled
Company Reporter and Troubled Company Prospector. If you'd like to receive the Troubled Company Reporter for 30-days at no cost -- and with no strings attached -- call Nina Novak at (240) 629-3300 or visit bankrupt-dot-com-slash-free-trial and we'll add you to the distribution list. That telephone number, again, is (240) 629-3300 and that Web site address, again, is bankrupt-dot-comslash-free-trial. Tune in to our next monthly Restructuring Review on June 16th. Thank you for listening.

Beard Corporate Restructuring Review For Aprll 2013

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