Nellson Nutraceutical granted court approval for liquidation plan

By Jennifer Lanning Drey

Portland, Ore., Sept. 10 - Nellson Nutraceutical, Inc. obtained court approval for its plan of liquidation from the U.S. Bankruptcy Court for the District of Delaware, according to a Wednesday filing.

As previously reported, Nellson's plan is based on a settlement with its principal creditors and equity holders on the means of distributing the company's remaining assets and winding up its affairs.

The company's first-lien lenders will receive the bulk of its remaining assets in the form of cash distributions.

General unsecured creditors have been released from any potential avoidance claims but will receive no other distributions under the plan.

The company said in its disclosure statement that its estate assets include $22.34 million in cash, a patent infringement lawsuit and several potential litigation and avoidance recoveries.

Creditor treatment

Treatment of creditors under the plan will include:

• Holders of $1.72 million in administrative expense claims and $30,300 in tax claims will recover 100% in cash;

• Holders of $255 million in first-lien lender claims will recover 48.6% through a share of first-lien distributable cash;

• Holders of $75 million in second-lien lender claims will recover 2.7% through a share of $2 million in cash;

• Holders of general unsecured claims will be released from avoidance claims but will receive no distribution under the plan;

• Holders of subordinated debt claims will be released from any company and lender rights of action; and

• Interest holders will receive no distribution under the plan.

The court approved the $122 million sale of substantially all of the company's assets to Nellson Acquisition Co., LLC on Aug. 24, 2007.

Nellson Acquisition is an entity owned and funded by some of Nellson Nutraceutical's first-lien lenders.

Nellson, an Irwindale, Calif., nutrition bar and powder manufacturer, filed for bankruptcy on Jan. 28, 2006. Its Chapter 11 case number is 06-10072.

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