FriendFinder wins bankruptcy court approval of reorg plan

friendfinder_optU.S. Bankruptcy Court Judge Christopher Sontchi approved the reorganization plan for FriendFinder Networks on Monday, clearing the path for the company to exit its short stay in Chapter 11.

Under the plan, about $234.3 million in first-lien claims against FriendFinder, identified in court filings as PMGI Holdings Inc., will be exchanged for an equal amount of principal in new first-lien notes, and their pro rata share of non-default interest. If there’s any first-lien excess cash available, claim holders will receive a portion of their first-lien default interest.

About $330.8 million in second-lien claims will receive their pro rata share of 100% of the reorganized company’s new common stock as well as any available second-lien cash. About $12.7 million in general unsecured claims will recover in full.

FriendFinder, owner of the Penthouse brand and a series of online dating and adult entertainment websites, filed for bankruptcy protection on Sept. 17, after reaching a transaction-support agreement with 80% of its noteholders (see “FriendFinder Networks, owner of Penthouse, files for Chapter 11,” Sept. 17, 2013).

CFO Ezra Shashoua blamed the company’s Chapter 11 on declining financial performance and pending debt maturities. “The agreement with the overwhelming majority of our noteholders will allow FriendFinder Networks to refinance our long-term debt, permit us to reinvest in our business, and position some of the strongest brands in the market for additional growth,” CEO Anthony Previte said at the time of the filing. – John Bringardner

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