AAC Holdings files Chapter 11 plan with sale, reorganization options

By Caroline Salls

Pittsburgh, July 27 – AAC Holdings, Inc. filed a plan of reorganization and related disclosure statement on Sunday with the U.S. Bankruptcy Court for the District of Delaware.

If AAC receives a winning bid for the sale of all or substantially all of its assets that would pay in full, in cash, all administrative, priority, other secured, debtor-in-possession lender, senior lender and junior lender claims, then the sale will be implemented through the plan with creditors to receive the net sale proceeds.

Meanwhile, if a bid that pays those claims in full is not received, a stand-alone reorganization will be implemented.

Under either scenario, administrative, priority tax, other priority and other secured claims will be paid in full in cash or be unimpaired.

If the sale is completed, DIP lender claims and senior lender claims will be paid in full in cash from the sale proceeds.

Remaining sale proceeds would be distributed to holders of junior lender claims and, if any distributable proceeds remain after payment in full of the junior lender claims, to holders of general unsecured claims.

If a reorganization transaction is completed, holders of DIP lender claims will receive a share of any partial asset sale proceeds, up to the full amount of the claims.

To the extent there are any remaining amounts due to holders of DIP lender claims, those creditors will receive either a share of an exit term loan facility, cash or new warrants.

Holders of senior lender claims will receive a share of any partial sale proceeds remaining after all DIP lender claims have been paid in full, plus a share of the exit term loan facility, new warrants or cash to cover any remaining amounts.

Holders of junior lender claims will receive a share of any partial sale proceeds remaining after payment of DIP lender claims and senior lender claims. To the extent any amounts remain outstanding, these creditors will receive a share of 100% of reorganized AAC equity interests, subject to dilution by the new warrants and a management incentive plan.

Holders of general unsecured claims would not receive a distribution under the reorganization scenario.

In either case, holders of existing interests in AAC Holdings will not receive a distribution.

The disclosure statement hearing is scheduled for Aug. 31.

AAC provides inpatient substance abuse treatment services and is based in Brentwood, Tenn. The company filed bankruptcy on June 20 under Chapter 11 case number 20-11648.

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