Video Corporation of America and the Official Committee of Unsecured Creditors filed with the U.S. Bankruptcy Court for the District of New Jersey a Disclosure Statement in support of Joint Plan of Orderly Liquidation dated May 22, 2020.
The Plan provides a means by which the proceeds of the liquidation of the Debtor’s assets will be distributed under chapter 11 of the Bankruptcy Code and sets forth the treatment of all claims against and equity interests in the Debtor. The Debtor has consummated the sale of substantially all of its assets pursuant to the sale order. The Plan implements the distribution of the Debtors’ assets, including the sale proceeds, to holders of allowed claims against the Debtor’s Estate and provides for liquidation of any remaining assets.
On March 6, 2020, the Bankruptcy Court entered the Sale Order, pursuant to which the Bankruptcy Court authorized and approved the Debtor’s sale of substantially all of its assets in furtherance of the sale transaction to York for the sum of $4,600,000, pursuant to an asset purchase agreement between the Debtor and York. The sale transaction closed in escrow on March 18, 2020, and the proceeds from the sale transaction were released from escrow on March 23, 2020.
York made it clear that, because of the Debtor’s substantial liabilities, York would only purchase the Debtor’s assets through a bankruptcy proceeding, under which York could obtain an order of the Bankruptcy Court approving the Debtor’s sale of assets to York free and clear of all creditor liens, claims and encumbrances. After significant negotiation and drafting, by late January 2020, the Debtor and York had reached agreement on the terms of the proposed sale. Further, throughout the sale process, the Debtor had remained in contact with Wells Fargo and its counsel, to assure that Wells Fargo understood and supported the process to be undertaken.
Before the Bankruptcy Court’s approval of the Sale Transaction, the Committee objected to the sale. After litigation, the Debtor, the Committee, Albert Berlin and David Berlin entered into a settlement arrangement whereby, among other things, Albert and David Berlin effectively assumed responsibility for the payment of the Wells Fargo Term Loan, in the approximate amount of $600,000, by agreeing to pay the sum of $600,000 to the Estate at the closing on the sale, and agreed to subordinate any and all claims that they have against the Estate to the claims of unsecured creditors in the Bankruptcy Case in exchange for a general release from the Estate.
Class 3 consists of the Claims of Holders of General Unsecured Claims. Each Holder of an Allowed General Unsecured Claim will receive a pro rata share of the Net Estate Assets, which include net proceeds from Causes of Action, following the payment in full of all Allowed Administrative Claims, Allowed Claims in Classes 1 and 2, if any, and Post-Confirmation Expenses.
The amounts that will be collected from the Causes of Action and any other remaining Assets of the Estate is uncertain, as are the amounts of Allowed Class 3 Claims. Nonetheless, based on the best information currently available, the Proponents estimate that Holders of Class 3 Claims will receive distributions under the Plan of between 5% and 10%.
The Proponents believe that the Holders of Class 5 Equity Interests will not receive or retain any property under the Plan on account of such Equity Interests. Upon the Effective Date, the Equity Interests will be deemed canceled and will cease to exist.
The Debtor currently has in its possession Cash totaling $543,865.54, which represents (i) the net Sale proceeds from the Sale Transaction, (ii) the funds paid by the Berlins in connection with the settlement and (iii) other Cash, after payment of certain professional fees. It is anticipated that the Plan Administrator will recover further monies from Causes of Action, which will enhance the distribution to unsecured creditors under this Plan.
A full-text copy of the Disclosure Statement dated May 22, 2020, is available at https://tinyurl.com/yab7c8pn from PacerMonitor at no charge.
Counsel to the Debtor:
WASSERMAN, JURISTA & STOLZ, P.C.
Daniel M. Stolz, Esq.
Donald W. Clarke, Esq.
110 Allen Road, Suite 304
Basking Ridge, NJ 07920
Tel: (973) 467-2700
Fax: (973) 467-8126
Counsel to the Official Committee of Unsecured Creditors:
RIKER, DANZIG, SCHERER, HYLAND & PERRETTI LLP
Joseph L. Schwartz, Esq.
Tara J. Schellhorn, Esq.
Tod S. Chasin, Esq.
Headquarters Plaza, One Speedwell Avenue
Morristown, NJ 07962-1981
Tel: (973) 583-0800
Fax: (973) 538-1984
About Video Corporation
Video Corporation of America offers full-scale design, engineering, project management, fabrication, installation and support services for AV, broadcast and post-production applications.
Video Corporation of America sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 20-11768) on Feb. 3, 2020. At the time of the filing, the Debtor disclosed assets of $8,107,684 and liabilities of $11,158,360. The petition was signed by David Berlin, president. The Hon. Christine M. Gravelle oversees the case. Daniel M. Stolz, Esq., of Wasserman, Jurista & Stolz, P.C., is the Debtor’s counsel.