Prince Sports won bankruptcy-court approval of its second amended reorganization plan on Friday, confirming a deal that hands the company’s equity to Authentic Brands Group and gives Prince’s unsecured creditors a recovery of 29%.
U.S. Bankruptcy Judge Kevin Carey signed the order confirming the plan on July 27, following a hearing in Wilmington, Del.
The iconic tennis-racquet manufacturer filed for Chapter 11 protection on May 1, with a proposed plan that would hand the company’s equity to licensing company Authentic Brands Group, which had acquired Prince’s secured debt. Under the proposed plan, Authentic would discharge all of Prince’s $67.2 million of secured debt in exchange for 100% of the new equity interests in the reorganized company. Authentic – a joint-venture formed by Battle Sports Science and Omaha-based investment firm Waitt Company – also agreed to provide the company with a $2.5 million DIP facility.
But the deal would have given holders of roughly $13.8 million of its unsecured debt a recovery valued at just 2.7%. That plan came under fire following the appointment of an unsecured creditors’ committee. (See, “Prince Sports DIP hearing delayed as creditor committee balks,” LCD News, June 1, 2012).
At a June 19 hearing on the disclosure statement, Prince and the creditors’ committee reached a global settlement on an amended plan under which Prince agreed to contribute $4 million in cash to fund a liquidation trust with the authority to pursue potential avoidance actions in the case. Unsecured claims holders can opt for a pro rata share of the funding in lieu of pursuing the avoidance claim, so the apportionment of the $4 million between the financing of the liquidating trust and the payment of settled unsecured claims will depend upon the percentage of claims that opt to settle and a determination to be made by the unsecured creditors’ committee, the disclosure statement and reorganization plan show. – John Bringardner/Alan Zimmerman