I.B.C. financing motion passes, amends plan
October 06, 2008
by Eric Schroeder
KANSAS CITY — The U.S. Bankruptcy Court for the Western District of Missouri late Friday granted Interstate Bakeries Corp.’s motion to commit approximately $600 million in financing to help reorganize the company.
The announcement came after the hearing was pushed back a day as I.B.C. attempted to work out a deal with its unsecured creditors, who earlier in the week filed a motion objecting to the wholesale baker’s plans. Initially, the unsecured creditors, who are owed about $190 million, were not expected to receive any compensation, but last-minute talks with I.B.C. and Ripplewood Holdings set the groundwork for a revised plan in which the creditors are expected to receive up to $890,000 in expenses as well as an opportunity to invest in the reorganized company. I.B.C. also agreed to establish a creditors’ trust upon its emergence from Chapter 11. The trust will be funded through a cash payment of $5 million, with costs of administering the trust to be paid from the trust assets, I.B.C. said.
As a result of the compromise, the unsecured creditors withdrew their previously filed objection and agreed to support I.B.C. plan of reorganization. I.B.C. said the plan has the support of approximately 53.8% of the pre-petition secured debt holders.
I.B.C. filed a new reorganization plan this past weekend and plans to send it out to creditors for review by the end of October. If accepted by enough creditors, the new plan may be voted on in early December, I.B.C. said.
As part of the agreements with investors, I.B.C. would receive a $130 investment from Ripplewood Holdings and a financing package of $469 from a group of lenders including Silver Point Capital LP. A hearing on the investment agreements is set for Oct. 22.