Avado receives court approval of DDJ Capital settlement

By Rebecca Melvin

New York, Jan. 8 - The agreement settlement between Avado Brands Inc.'s official committee of unsecured creditors and DDJ Capital Management LLC was approved by the U.S. Bankruptcy Court for the District of Delaware on Monday, according to an attorney.

DDJ Capital is the administrative and collateral agent for Avado's debtor-in-possession facility.

Under the proposed settlement:

• The prepetition lawsuit filed against Jeffrey A. Eischeid, tax partner at KPMG, LLP, and R.J. Ruble, partner at Sidley Austin Brown & Wood, over a tax strategy dispute shall remain an asset of the company, subject to DDJ liens;

• DDJ agrees to support the continuation of the company's Chapter 11 case;

• DDJ will give the creditors' committee a collateral carve-out from its liens. The litigation give-up will be equal to 15% of the net recoveries in the amount of $10 million or less; plus 12½% of the net recoveries over $10 million;

• DDJ will give the committee a collateral carve-out from DDJ's liens and claims for the costs of administering the litigation give-up, including the fees of the unsecured creditor trustee, its agents and advisers in the amount of up to $75,000; and

• DDJ agrees to extend the term of the DIP facility.

Avado, a Madison, Ga., restaurant company, filed for bankruptcy on Sept. 5. Its Chapter 11 case number is 07-11276.

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