COURT: Belk judge confirms prepack plan on first day, with conditions - Debtwire

COURT: Belk judge confirms prepack plan on first day, with conditions

24 February 2021 - 12:00 am

Belk has secured confirmation of its prepackaged plan of reorganization less than 24 hours after filing a Chapter 11 petition.


The office of the US Trustee objected to day-one confirmation, arguing that the company was “racing” through bankruptcy “too quickly,” and taking issue with the plan’s proposed releases. Judge Marvin Isgur of the US Bankruptcy Court for the Southern District of Texas said he would sign an order confirming the plan, but with certain conditions reflecting his and the US Trustee’s concerns about the speed of the restructuring.


The judge suggested that the company extend creditor rights to opt out of releases until 31 March and set a 1 March hearing to consider any individual creditor objections to the plan. The judge added that any individual creditor that had a problem with their claims could come to him, “any court of competent jurisdiction,” or arbitration if they want to avoid coming to his court from other parts of the country for a small claim.


After a break, the debtor, the parties supporting the plan and the US Trustee agreed that those terms were acceptable.




The department store chain has 291 stores in 16 states. The company has been negotiating with its creditors for months after the coronavirus pandemic forced it to temporarily close its stores.


The plan, backed by owner Sycamore Partners, 99% of first lien lenders and 100% of second lien lenders, would cut most of its existing debt but re-load the company with new debt consisting of a USD 300m first lien first out loan (FLFO), an USD 822m first lien second out loan (FLSO), and a USD 110m second lien term loan.


Certain first and second lien lenders and Sycamore have agreed to backstop the FLFO loans. First lien lenders would receive FLSO loans worth 55% of their prepetition debt, while second liens would get FLSO loans worth 15% of their debt, new second lien debt worth 20% of their debt, and 34.9% of the company’s equity.


General unsecured creditors, owed USD 443m, are unimpaired and would be repaid in the ordinary course of business. Sycamore would retain its interests, subject to dilution by the new equity going to the second lien lenders.




by Pat Holohan