The ad hoc committee of certain unaffiliated holders of outstanding first lien debt (the “First Lien Committee”) of Frontier Communications Corporation and its Debtor Affiliates objects to the Third Amended Joint Plan of Reorganization of Debtors.
The First Lien Committee opposes the Plan because it alters the First Lien Lenders’ legal, equitable, and contractual rights, depriving them of the benefits of the bargain they struck with the Debtors for more than $4 billion of credit.
The First Lien Committee claims that a linchpin of the Debtors’ restructuring is their asserted ability to reinstate some or all of the First Lien Debt. While the Debtors acknowledge that, to do so, they must not alter the First Lien Lenders’ rights, the Plan honors that requirement in the breach.
The First Lien Committee points out that the Plan violates the Term Loan Lenders’ rights to pro rata treatment under the Credit Agreement. Inexplicably, the Debtors acquiesce to the Revolving Lenders’ insistence on full repayment on the Effective Date, while attempting to reinstate obligations to the Term Loan Lenders under the very same Credit Agreement.
The First Lien Committee asserts that while disregarding the rights of the First Lien Lenders, the Plan provides the Senior Noteholders with significant benefits to which they are not entitled. The Plan requires full payment, in cash, of accrued but unpaid prepetition interest, thereby providing certain Senior Noteholders with a far greater recovery than other Senior Noteholders.
The First Lien Committee further asserts that the Plan impairs the First Lien Lenders’ legal, equitable, and contractual rights in multiple ways. In their pursuit of peace with the Senior Noteholders, their efforts to appease the Revolving Lenders and entice them to provide exit financing, and their commitment to maximum optionality through the Effective Date, the Debtors have disregarded the First Lien Lenders’ rights, leaving the First Lien Committee no choice but to oppose confirmation.
A full-text copy of the First Lien Committee’s objection dated July 31, 2020, is available at https://tinyurl.com/y434q4w7 from PacerMonitor.com at no charge.
Counsel to the First Lien Committee:
Brian S. Hermann
Julia Tarver Mason Wood
Gregory F. Laufer
Kyle J. Kimpler
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
1285 Avenue of the Americas
New York, New York 10019-6064
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a variety of services to residential and business customers over its fiber-optic and copper networks in 29 states, including video, high-speed internet, advanced voice, and Frontier Secure digital protection solutions.
Frontier Communications Corporation and 103 related entities sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on April 14, 2020. Judge Robert D. Drain oversees the cases.
Debtors tapped Kirkland & Ellis LLP as legal counsel; Evercore as financial advisor; and FTI Consulting, Inc., as restructuring advisor. Prime Clerk is the claims agent, maintaining the page http://www.frontierrestructuring.com/ and https://cases.primeclerk.com/ftr
The U.S. Trustee for Region 2 appointed a committee to represent unsecured creditors in Debtors’ Chapter 11 cases. The committee tapped Kramer Levin Naftalis & Frankel LLP as its counsel; Alvarez & Marsal North America, LLC as financial advisor; and UBS Securities LLC as investment banker.