Nine West Holdings and certain of its affiliates filed an amended Chapter 11 plan of reorganization with the U.S. Bankruptcy Court for the Southern District of New York. The plan is accompanied by an amended and restated restructuring support agreement which has been signed by parties that hold or control more than 85% of its secured term debt, more than 80% of its unsecured term debt, and the company’s indirect equity owners.
“Following the successful sale of our Nine West and Bandolino footwear and handbag business, today’s filing of the amended plan and entry into the amended restructuring support agreement is another important milestone in our work to right-size the company’s capital,” said Ralph Schipani, interim chief executive officer of Nine West Holdings.
According to Bloomberg, the proposed deal is likely to face opposition from unsecured creditors who are seeking to file a $1 billion lawsuit against Sycamore Partners for its role in the retailer’s 2014 leveraged buyout.
The plan reduces the company’s pre-bankruptcy debt obligations by more than $1 billion. The plan further provides significant near-term cash recoveries to stakeholders through the settlement of potential claims and causes of action against the company’s indirect equity owners that have been at the center of creditor investigations during the company’s bankruptcy cases. These claims will be settled for a $105 million cash contribution by the indirect equity owners to the company, which cash will be distributed to the company’s unsecured creditors.
The proposed plan contemplates the following creditor recoveries:
- The company’s secured term debt holders will be repaid in full in cash
- The company’s unsecured term debt holders will receive (i) 92.5% of the equity of the reorganized company, subject to certain adjustments and dilutions set forth in the Plan, and (ii) one third of the equity holder settlement proceed
- The company’s unsecured noteholders and general unsecured creditors will share in an equity pool of 7.5% of the equity of the reorganized company, subject to dilution and certain adjustments set forth in the Plan
- The company’s unsecured noteholders and other unsecured creditors at Nine West Holdings, Inc. will also receive (i) warrants for 20% of the reorganized company’s equity, and (ii) two-thirds of the equity holder settlement proceeds
A hearing has been scheduled for November 7, 2018, to consider approval of the disclosure statement related to the plan. Following Court approval of the disclosure statement, the company will distribute the plan and disclosure statement to voting creditors for their consideration. The plan remains subject to bankruptcy court approval and customary closing conditions.
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