Interstate Reorganization Plan
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. 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 thegeneral 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.
From the October 13, 2008, Prepared Foods e-Flash