DMX Music files liquidation plan based on lender settlement

By Caroline Salls

Pittsburgh, April 3 - DMX Music, Inc. filed a plan of liquidation and related disclosure statement Friday with the U.S. Bankruptcy Court for the District of Delaware.

The plan implements a settlement resolving all claims held by DMX Music's lender group, under which the lender group consented to the creation of a $3.5 million creditor fund consisting of cash and other assets.

The creditor fund will be transferred to the liquidation trust upon the plan's effective date, and proceeds will be distributed to holders of general unsecured claims.

The fund will also include 50% of the proceeds from each of avoidance actions, a tax account after payment of priority tax claims and the lender's group share of the net proceeds of Maxide avoidance actions.

Treatment of creditors under the plan will include:

• Holders of $86 million of lender group secured claims will recover 75% in all the remaining assets of the company, including any unused portion of a $15,000 liquidating debtors professional fund;

• Holders of $38,500 in other secured claims will receive 100% recovery in all liquidation proceeds for the assets to which they hold a lien senior to the lender group lien;

• Holders of $13.2 million in general unsecured claims will receive 20% recovery in their share of the creditor trust distributable assets; and

• Holders of intercompany claims and equity interests will receive no distribution under the plan.

DMX's case is under parent company Maxide Acquisition, Inc. The Los Angeles-based provider of music, video and entertainment to businesses, consumers and airlines filed for bankruptcy on Feb. 14, 2005. Its Chapter 11 case number is 05-10429.

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