In and Out of Bankruptcy in One Day: Record-Setting Prepackaged Restructuring Plan Confirmed Within Hours of Chapter 11 Filing
March 4, 2021 – Herrick Restructuring ReviewThe Herrick Restructuring Review provides insights and information related to restructuring and finance litigation. The Herrick team regularly represents official and ad hoc creditor committees, hedge funds, distressed debt investors, bondholders, and other parties in interest, and often serve as conflicts or special counsel for large-scale complex litigation matters.
Belk Inc., a national privately-owned department store chain, just completed a $450 million debt restructuring in less than 24 hours! U.S. Bankruptcy Judge Marvin Isgur confirmed the plan the morning of the First Day Hearing despite the U.S. Trustee’s concerns about adequate notice. The Debtors’ prepackaged plan became effective hours after it was confirmed by the Court.
Belk argued that the plan must be confirmed quickly because the company had no cash reserves and no committed DIP financing. The Court agreed with the need for a speedy plan to protect thousands of jobs and hundreds of stores from closing. The prepackaged restructuring plan was supported by nearly all the creditors. The U.S. Trustee objected to hasty plan confirmation because the interested parties would be rushed to evaluate, respond, or object to the plan.
Addressing the U.S. Trustee’s concern, the Court combined its plan approval with an order protecting the parties’ due process rights. The due process order preserves various parties’ rights to raise objections, opt out of releases, and dispute adequate assurance of future performance with respect to assumed leases, among other reservations. When seeking the fast approval, Belk emphasized that it took extreme efforts to notice 90,000 different parties. The Court noted that while there were no apparent due process violations, the due process order would protect “people who may have fell through the cracks.”
For more information on this alert or other restructuring & finance litigation matters please contact:
Gabrielle Fromer at +1 212 592 1575 or [email protected]
© 2021 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.