Cyxtera’s disclosure statement draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Sept. 14 – Cyxtera’s disclosure statement for its Chapter 11 plan of reorganization drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to documents filed Thursday with the U.S. Bankruptcy Court for the District of New Jersey.

Vara said the disclosure statement and plan lack enough information for holders of claims and interests to reasonably determine whether any proposed distribution or recovery on their claims is proper.

“The debtors are asking creditors to accept a plan that simultaneously approaches three possible paths toward confirmation, without knowing what path the case will take,” the U.S. trustee said in the objection.

The default path is the recapitalization transaction, under which no percentage or range of percentages is given for the recovery for general unsecured claims.

The other path is a sale toggle, which could result in either an equity investment transaction or an asset sale.

The debtors have not provided an estimated range of recoveries for the general unsecured claims for either scenario, and no form of purchase agreement is provided for either possible sale transaction, Vara said.

“Ultimately, the general unsecured creditors are being asked to vote blind collectively on all three paths to confirmation, rather than allowing the sale process to play out prior to moving ahead with confirmation,” the U.S. trustee said.

Cyxtera is a data center firm based in Coral Gables, Fla. The company filed bankruptcy on May 4 under Chapter 11 case number 23-14853.

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