Digerati Technologies reorganization plan in effect as of Dec. 31

By Kali Hays

New York, Jan. 14 – Digerati Technologies, Inc.’s joint Chapter 11 plan of reorganization took effect on Dec. 31, according to a Wednesday notice with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the company reduced its debt through the sale of two subsidiaries, Hurley Enterprises, Inc. and Dishon Disposal, Inc., while maintaining the common stock in its remaining subsidiary, Shift8 Technologies, Inc.

In July, Hurley was sold to secured creditors Hurley Fairview, LLC and Sheyenne Rae Nelson Hurley with a credit bid of $14 million and Dishon was sold to Buckhorn Energy Services, LLC for $27 million.

Treatment of creditors under the plan will include the following:

• Holders of non-tax administrative claims will be paid in cash in full from either net sales proceeds, a Dishon or Hurley plan carve-out and/or a financing alternative;

• Holders of administrative tax claims resulting from the sale of Hurley or Dishon will be paid from a disputed claim reserve account;

• Holders of priority claims will be paid in cash in full;

• The allowed secured claim of Terry Dishon will be paid in full from the net proceeds of the Dishon sale;

• Holders of allowed secured claims of Hurley Fairview LLC and Sheyenne Hurley will be paid in full on the closing date from the net proceeds of the Hurley sale;

• Holders of allowed general unsecured claims of $1,000 or less will be paid in full within 30 days of the confirmation date, without interest, from surplus cash;

• Holders of allowed general unsecured claims in excess of $1,000 will be paid in full with no interest from the net sale proceeds of either Dishon or Hurley, whichever occurs first, the carve-outs or the financing alternative;

• Holders of allowed subordinated unsecured claims arising out of disputed rights to preferred series A interests will receive a share of surplus net sale proceeds after senior claims are paid in full under formulas set in the plan;

• Holders of super voting rights that may have arisen out of the disputed rights to preferred series E interests of Oleum Capital, LLC will receive no distribution;

• Holders of allowed equity interests of Digerati common stock that were not released in a settlement will receive a share of surplus net sales proceeds and retain their common stock in the reorganized debtor; and

• All warrants, preferred stock not covered elsewhere in the plan and stock options issued by Digerati before the filing date will be canceled.

Digerati, a Stafford, Texas-based diversified holding company with operating subsidiaries in the oil field services and cloud communications industries, filed for bankruptcy on June 3, 2013. The Chapter 11 case number is 13-22364.

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