Fremont unsecured creditors committee adds third plan to the mix

By Caroline Salls

Pittsburgh, Aug. 13 - Fremont General Corp.'s official committee of unsecured creditors has filed a competing plan of reorganization for the company's Chapter 11 case, according to a Wednesday filing with the U.S. Bankruptcy Court for the Central District of California.

The committee said it expects the reorganized company to have roughly $351 million of available cash on the plan effective date, of which $275 million will be distributed to unsecured creditors and noteholders on that date.

Under the plan:

• Holders of administrative claims, priority tax claims, convenience claims and other priority claims will be paid in full in cash;

• Holders of secured claims will be paid in full either in cash or through the return of the collateral securing the claim;

• Holders of non-note general unsecured claims, senior note claims and junior note claims will receive a share of an effective date cash distribution plus interest, a share of post-effective date distributable cash plus interest and a share of equity trust interests if they have not otherwise been paid in full.

However, these creditors can elect to receive the full principal amount of their claims in cash without any post-bankruptcy interest;

• Holders of subordinated claims will receive series B equity trust interests; and

• Holders of exchanged common stock will receive series A equity trust interests.

The disclosure statement hearing is scheduled for Sept. 17.

As previously reported, Fremont and its official committee of equity security holders have also filed plans for Fremont's case.

Equity committee plan terms

The equity committee's plan gives all of Fremont's creditors, including equityholders, a 100% recovery on their claims.

Treatment of creditors under that plan will include:

• Holders of administrative claims, priority tax claims, priority non-tax claims and convenience claims will recover 100% in cash;

• Holders of general unsecured claims will recover 100% either in cash plus any pre-bankruptcy interest but no post-bankruptcy interest within 15 days of the plan effective date or 100% in cash plus pre-bankruptcy and post-bankruptcy interest and 6% interest from the effective date to the payment date over two years, at the claimant's option;

• Holders of TOPrS claims will retain the rights to their claims;

• Holders of general unsecured claims of 7 7/8% senior noteholders will receive a $175 million cash payment in full satisfaction of their claims;

• Holders of equity interests will retain their interests in the reorganized company; and

• Holders of Section 510(b) claims will receive interests in the reorganized company for 100% recovery.

Company plan terms

Under the company's plan, which was filed in June, a plan administrator would be appointed to liquidate the company's assets, prosecute causes of action, make plan distributions and make distributions on account of equity trust interests.

Fremont's proposed creditor treatment includes:

• Holders of administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• Holders of general unsecured claims and TOPrS claims will receive a share of distributable cash after the administrative and priority claims and equity trust expense reserves have been established and funded;

• Holders of equity interests will receive series A equity trust interests, which will entitle holders to a share of any cash distribution made to the equity trustee; and

• Holders of Section 510(b) claims will receive series B equity trust interests, which could entitle holders to a share of any cash distribution made to the equity trustee.

Fremont General, a financial services holding company located in Santa Monica, Calif., filed for bankruptcy on June 18, 2008. Its Chapter 11 case number is 08-13421.

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