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MAINES PAPER: Lineage Providing $2M for GUC Fund for Plan

Maines Paper & Food Service, Inc., and its debtor-affiliates filed with the U.S. Bankruptcy Court for the District of Delaware a Joint Plan of Liquidation and a Disclosure Statement on June 11, 2020.

If confirmed and consummated, the Plan will facilitate the orderly wind down of the Debtor’s remaining business, including formation of a liquidating trust to pursue any remaining causes of action, liquidate remaining assets, and distribute all proceeds according to the Plan. The Debtors recently completed a prepetition foreclosure process, through which substantially all of the Debtors’ assets were foreclosed upon by Lineage Bluebird Debtco, LLC pursuant to the Strict Foreclosure Agreement. The Strict Foreclosure Agreement, among other things, provides for the set-aside of $2 million for distribution to holders of general unsecured claims upon consummation of a plan of liquidation and the approval of the plan releases in favor of Lineage. This $2 million GUC Fund provided by Lineage will be the primary source of recovery for general unsecured creditors (Class 6), and such distributions would otherwise not be available under the Debtors’ circumstances.

As of the Petition Date, the total principal outstanding under the Revolving Credit Agreement is $10.329 million plus accrued and unpaid interest. With the additional funding to the Debtors provided by Lineage under the Foreclosure Agreement, the outstanding amount under the Revolving Credit Agreement was in excess of $90 million.

Lineage also agreed pursuant to the Foreclosure Agreement to contribute $2 million in recoveries to holders of allowed general unsecured claims pursuant to the Debtors’ proposed plan of liquidation, fund the payment of up to $825,000 in PACA claims against the Debtors, and fund certain other items as contemplated by the Strict Foreclosure Agreement.

Each Holder of an Allowed Unsecured Claim in Class 6 will receive a Pro Rata share of the Liquidating Trust Interests in exchange for their Allowed Claims following the payment or reserve for Administrative Claims, Priority Tax Claims, Priority Non-Tax Claims, and Other Secured Claims. The $2,000,000 GUC Fund will be released to the Liquidating Trustee for administration in accordance with the Plan.

Holders of Equity Interests will receive no distribution under the Plan and therefore are deemed to have rejected the Plan.

Available Cash, which expressly excludes the GUC Fund, shall be used to fund distributions to creditors or other payments to be made pursuant to or otherwise consistent with the Plan and the Confirmation Order. The GUC Fund may only be used to fund distributions to be made to Holders of Class 6 Claims on account of Allowed Class 6 Claims. Available Cash, and not any of the GUC Fund, will be used by the Liquidating Trustee to pay for the expenses of the Liquidating Trust in accordance with the Liquidating Trust Agreement.

A full-text copy of the disclosure statement dated June 11, 2020, is available at https://tinyurl.com/ya8p5rto from PacerMonitor.com at no charge.

from PacerMonitor.com at no charge.

Counsel for the Debtor:

PACHULSKI STANG ZIEHL & JONES LLP
Laura Davis Jones
David M. Bertenthal
Timothy P. Cairns
919 North Market Street, 17th Floor
P.O. Box 8705
Wilmington, Delaware 19899-8705
Tel: (302) 652-4100
Fax: (302) 652-4400
E-mail: ljones@pszjlaw.com
dbertenthal@pszjlaw.com
tcairns@pszjlaw.com

About Maines Paper & Food Service

Maines Paper & Food Service, Inc. is an independent foodservice distributor. The Company distributes meat, fruits, vegetables, dairies, beverages, and seafood. The company’s customers include restaurants, convenience stores, delis, bars, pizzerias, educational institutions, healthcare facilities, cruise lines, concessionaires, and camps.

Maines Paper & Food Service, Inc., based in Conklin, NY, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. D. Del. Lead Case No. 20-11502) on June 10, 2020.

In its petition, the Debtor was estimated to have $1 million to $10 million in assets and $100 million to $500 million in liabilities. The petition was signed by John C. DiDonato, chief restructuring officer.

PACHULSKI STANG ZIEHL & JONES LLP, KLEHR HARRISON HARVEY BRANZBURG LLP, as attorneys for the Debtor. HURON CONSULTING SERVICES LLC, is the restructuring advisor. GETZLER HENRICH & ASSOCIATES LLC, is the financial advisor. STRETTO, is the claims and noticing agent.

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