Orion Healthcorp has cancelled its scheduled auction of New York Network Management (“NYNM Management”) assets and named “stalking horse” bidder HealthTek Solutions as the Successful Bidder (Docket No. 402). The notice states, “On July 5, 2018, New York Network Management (‘NYNM Management’) entered into that certain Asset Purchase Agreement for the sale of certain of its assets (the ‘NYNM Assets’) to HealthTek Solutions (together with any permitted assignee, the ‘Purchaser’), which provides for, among other things, the payment of $16.5 million….Pursuant to the Bidding Procedures Order, the Bid Deadline was July 17, 2018 at 4:00 p.m. (ET). If no Qualified Bids (other than Purchaser’s Agreement) were submitted by the Bid Deadline, the Bidding Procedures Order provides that NYNM Management shall not hold the Auction, but shall proceed with the Sale Hearing to seek approval of the sale of the NYNM Assets to the Purchaser pursuant to the Agreement (or any modifications agreed to between NYNM Management and Purchaser, in consultation with the Committee and the DIP Agent). Because NYNM Management did not receive any Qualified Bids by the Bid Deadline, it did not conduct the Auction and the Purchaser was deemed the Successful Bidder.” The Sale Hearing has been scheduled for July 23, 2018.
The U.S. Bankruptcy Court has approved a Bon-Ton Stores’ request to allow it to abandon or destroy certain documents and records (Docket No. 950). As previously reported (Docket No. 864), “The Debtors have identified certain Documents and Records which (i) the Purchaser has determined are not necessary to its go-forward needs under the Agency Agreement or its ability to monetize the Assets it acquired through the Sale, and (ii) the Debtors have determined are not essential to the further administration of these chapter 11 cases, including with respect to the Debtors’ reporting requirements….The Purchaser has advised the Debtors that it does not need the Documents and Records….”
The U.S. Trustee assigned to Hobbico’s case filed with the U.S. Bankruptcy Court a notice announcing the appointment of Alfred T. Giuliano as Trustee in the Hobbico case (Docket No. 545).
Gibson Brands’ Official Committee of Unsecured Creditors filed with the U.S. Bankruptcy Court an objection (Docket No. 452) to the Debtors’ Disclosure Statement (Docket No. 303). The objection asserts, “The Debtors' Plan, as described in the Disclosure Statement, is patently un-confirmable and should not be approved. While proposing a paltry 0.2% recovery to Class 6 General Unsecured Claims, and de minimis recoveries to Class 8 Convenience Claims, the Plan delivers substantial consideration to prior equity holders and the Supporting Noteholders by, among other things: violating the absolute priority rule by providing for (a) recoveries in cash of approximately $5.45 million to the controlling shareholders and senior officers in Debtor Gibson Brands and the other Debtors, Henry Juszkiewicz (the Debtors' Chief Executive Officer) and David Benyman (the Debtors' President, and collectively with Henry Juszkiewicz, the ‘Supporting Principals’), and (b) Mr. Berryman and Mr. Juszkiewicz will each receive New Warrants for up to 2.25% of the Equity Interests in Reorganized Gibson, and for Mr. Juszkiewicz to receive $1.5 million of ‘profits interest’ in the TEAC stock; delivering nearly all of the Debtors' considerable enterprise value to the Prepetition Secured Noteholders through recoveries on account of their Prepetition Secured Notes Claims and DIP Facility Claims - including the value of certain unencumbered assets not subject to their prepetition lines - at valuation levels that materially undervalue the Debtors' going concern value in violation of section 1129(b)(2)(C) of the Bankruptcy Code….The Debtors and Ad Hoc Noteholders Group have asserted that the Noteholder Deficiency Claims is in excess of $100 million. These efforts constitute a blatant attempt to circumvent the "cram down" provisions of section II29(b)(2)(B) of the Bankruptcy Code in order to provide insider equity holders with a significant and impermissible recovery, turn over control of the significant enterprise value of Gibson to the Prepetition Secured Noteholders, and leave practically no recovery for Class 6 General Unsecured Creditors. This obvious tactical maneuver - which is tantamount to ‘reverse gerrymandering’ - subverts the rights of holders of General Unsecured Claims by ignoring the requirement of section 1122(a) that different claims be separately classified. Additionally, the Disclosure Statement fails to provide certain basic information to enable creditors entitled to vote on the Plan to make an informed decision whether to accept or reject the Plan….The Disclosure Statement fails to correctly describe certain significant value derived from (a) the Debtors' unencumbered assets (including China Guitar and Baldwin Zhongshan)…The Disclosure Statement fails to adequately disclose the terms of the Management Incentive Plan (the ‘MIP’) (such as, do the Supporting Principals share in the MIP) and the complete details regarding the nature and amount of any compensation to other post-confirmation officers and directors.”
The U.S. Bankruptcy Court has approved the sale of substantially all of The Rockport Company’s assets to CB Marathon Opco, LLC (“CB Marathon”), an affiliate of Charlesbank Equity Fund IX, LP (Docket No. 387). On July 6, 2018, the Company had notified the Court that it had (i) cancelled its scheduled asset sale auction and (ii) designated stalking horse bidder CB Marathon as the successful bidder. As previously reported, “After reviewing and carefully considering the Bids received from the 4 Interested Parties, the Debtors determined, in consultation with their advisors, that CB Marathon Opco…had submitted the highest or otherwise best offer (the ‘Charlesbank Bid’), pursuant to which the Stalking Horse Bidder agreed to acquire substantially all of the Debtors’ Assets (other than the North American Retail Assets) for a purchase price of (i) $150 million in cash (the ‘Base Cash Amount’) subject to certain working capital adjustments plus the NAM Store Inventory Amount (the ‘Initial Cash Consideration’); (ii) a warrant to purchase up to 5% of common equity of the indirect parent of the Stalking Horse Bidder once the Stalking Horse Bidder receives a return equal to 2.5 times its initial equity investment as of the Closing Date (the ‘Warrant’); and (iii) the assumption of certain liabilities.”