Reader's Digest parent amends plan treatment for unsecured creditors

By Caroline Salls

Pittsburgh, April 11 - RDA Holding Co., parent company of the Reader's Digest Association, Inc., filed an amended plan of reorganization and related disclosure statement on April 10 with the U.S. Bankruptcy Court for the Southern District of New York to amend the proposed treatment of general unsecured creditors.

Under the amended plan, general unsecured creditors will receive a share of a $500,000 cash distribution if they vote to accept the plan and no distribution if they vote to reject it.

The amount of the general unsecured creditor distribution was still to be determined when RDA filed its original plan.

As previously reported, RDA filed bankruptcy to implement a financial restructuring under an agreement reached with its secured lenders and more than 70% of its secured noteholders.

Under the restructuring support agreement with the lenders and noteholders, the company will convert roughly $465 million of secured notes to equity, which RDA said will significantly deleverage its balance sheet.

Creditor treatment

Treatment of creditors under the amended plan will include the following:

• Priority claims will be paid in full in cash;

• Other secured claims will either be paid in full in cash or holders will receive the collateral securing their claims;

• Holders of senior noteholder secured claims will receive a share of 100% of the new common stock in the reorganized company;

• Holders of general unsecured claims will receive a share of a $500,000 general unsecured creditor cash distribution if they vote to accept the plan and no distribution if they vote to reject it;

• Holders of non-debtor intercompany claims will receive, at the plan debtors' discretion, either a share of the general unsecured creditor distribution or other treatment determined by the plan debtors;

• Plan debtor intercompany claims will be either reinstated or compromised; and

• Existing RDA Holding interests will be cancelled, and holders will receive no distribution.

Reader's Digest, a subsidiary of RDA Holding Co., is a media and direct marketing company based in New York. The company filed for bankruptcy on Feb. 17 under Chapter 11 case number 13-22233.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.