Point Blank files plan; DIP loan lenders to backstop rights offering

By Caroline Salls

Pittsburgh, Jan. 11 - Point Blank Solutions, Inc. filed a joint plan of reorganization and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

The other plan proponents are the company's official committee of unsecured creditors, its official committee of equity security interest holders, Privet Fund Management LLC as investment manager for Privet Opportunity Fund I, LLC and Privet Fund LP, Privet Opportunity Fund I, LLC, Prescott Group Capital Management, LLC and Lonestar Capital Management, LLC as investment adviser to Lonestar Partners, LP and manager of PB Funding, LLC.

Under the plan, the company will conduct a rights offering to purchase 100% of the equity interests in the reorganized company. The rights offering will be backstopped by Point Blank's existing debtor-in-possession facility lenders.

Point Blank said the plan will be funded using cash on hand, an exit facility if necessary, the sale of shares of new common stock to holders of general unsecured claims and old equity interests under the rights offering and through a direct subscription of shares to existing DIP lenders Privet and Prescott.

The total amount of the rights offering will be $11.85 million, or, if the company does not obtain an exit facility, the rights offering can be increased to up to $19.75 million.

In addition, holders of general unsecured claims, subordinated unsecured claims, class action claims and old equity interests will receive beneficial interests in a recovery trust to be established to liquidate assets and distribute the proceeds to trust beneficiaries.

On the plan effective date, the reorganized company will fund the recovery trust with a $3 million cash payment, as well as an additional $1 million for expenses and rights to potentially valuable causes of action.

Creditor treatment

Treatment of creditors will include:

• Holders of priority claims, DIP loan claims and miscellaneous secured claims will be paid in full;

• Holders of general unsecured claims and old equity interests will receive a share of recovery trust distributions and rights to participate in the rights offering;

• Holders of subordinated unsecured claims will receive a share of any distributions remaining from the recovery trust after payment in full of general unsecured claims;

• Holders of class action claims will receive a share of distributions from the recovery trust; and

• Holders of other subordinated claims and interests and unexercised options will receive no recovery.

The disclosure statement hearing is scheduled for Feb. 14.

Point Blank, a Pompano Beach, Fla., producer of body armor systems for law enforcement and the military, filed for bankruptcy on April 14, 2010. Its Chapter 11 case number is 10-11255.

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