Stephen B. Darr, the Chapter 11 Trustee of TelexFree, LLC, TelexFree, Inc., and TelexFree Financial, Inc., filed a Chapter 11 Plan for the Debtors’ estates.
The Plan proposes to treat claims as follows:
* Class 2 Participants with claims of $4,250 or less (estimated number of claims 78,759). The claims in the class are estimated to total $125,000,000. Creditors in the class will recover 43%. A single distribution from the Restitution Funds as soon as practicable after the later of the Effective Date or entry of an order of the Bankruptcy Court allowing such Claim.
* Class 3 Participant claims other than Class 2 (estimated number of claims 22,327). This class is projected to total $230,000,000. The class will recover 39% on initial distribution, and 2% to 10% on additional distributions. One or more distributions as follows: (i) An initial distribution from the Restitution Funds, the SEC Settlement Funds, and Available Cash, in the approximate amount of 39% of each Allowed Claim, as soon as practicable after the later of the Effective Date or the entry of an order of the Bankruptcy Court allowing such Claim,; (ii) Additional distributions from Restitution Funds, SEC Settlement Funds, and Available Cash as and when such proceeds become available to the Liquidating Trustee, in the estimated range of 2% to 10% of each Allowed Class 3 Claim.
* Class 4 Vendor Claims (estimated number of claims less than 10). The claims total $75,000 to $125,000. Vendors will recover 40% to 65%. Claimants will receive a single distribution from available cash as soon as practicable after the later of the Effective Date or the entry of an order of the Bankruptcy Court allowing such Claim equal to a pro rata share of $50,000.
* Class 5 Equity Interests. This class is impaired. Equity Interests shall be deemed canceled and terminated as of the Effective Date, and the holders of Equity Interests shall not receive or retain any property or interest in property on account of such Equity Interest.
A full-text copy of the Disclosure Statement dated May 6, 2020, is available at https://tinyurl.com/y8slzdpf from PacerMonitor.com at no charge.
Counsel to Chapter 11 Trustee Stephen B. Darr:
Harold B. Murphy, Esq.
Andrew G. Lizotte, Esq.
MURPHY& KING, Professional Corporation
One Beacon Street
Boston, MA 02108
Tel: (617) 423-0400
Fax: (617) 556-8985
About TelexFree, LLC
TelexFREE is a telecommunications business that uses multi-level marketing to assist in the distribution of voice over internet protocol telephone services. TelexFREE’s retail VoIP product, 99TelexFREE, allows for unlimited international calling to seventy countries for a flat monthly rate of $49.90. TelexFREE had over 700,000 associates or promoters worldwide.
TelexFREE though was facing accusations of operating a $1 billion-plus pyramid scheme.
TelexFREE LLC and two affiliates sought bankruptcy protection (Bankr. D. Nev. Lead Case No. 14-12525) on April 13, 2014. TelexFREE estimated $50 million to $100 million in assets and $100 million to $500 million in liabilities.
Alvarez & Marsal North America, LLC, is serving as restructuring advisor and Greenberg Traurig, LLP and Gordon Silver are serving as legal advisors to TelexFREE. Kurtzman Carson Consultants LLC serves as claims and noticing agent.
In May 2014, the Nevada bankruptcy court approved the motion by the U.S. Securities & Exchange Commission to transfer the venue of the Debtors’ cases to the U.S. Bankruptcy Court for the District of Massachusetts (Bankr. D. Mass. Case Nos. 14-40987, 14-40988 and 14-40989).
On June 6, 2014, Stephen Darr was appointed as Chapter 11 trustee.