AgFeed wins approval of disclosure statement, exclusivity extension

By Kali Hays

New York, Sept 15 – AgFeed USA, LLC received approval of the disclosure statement related to its proposed second amended plan of liquidation, according to a Sept. 15 order with the U.S. Bankruptcy Court for the District of Delaware.

Under a separate order, the court also approved an extension of the company’s exclusive plan filing and solicitation periods through Oct. 3 from Sept. 15 and Dec. 2 from Nov. 14, respectively.

As previously reported, all of the AgFeed debtors' remaining assets will vest in and be transferred to a liquidating trust on the plan effective date.

The trust will liquidate any remaining estate assets, resolve disputed claims, prosecute avoidance actions, make distributions and wind down the company's affairs.

The amended plan also includes a settlement with the company's equity holders' committee regarding the allocation of cash and future recoveries.

Under the amended plan, the Securities and Exchange Commission and class plaintiffs will contribute all or a portion of their allowed claims to the trust for distribution to holders of subordinated claims and/or interests.

Specifically, $12.5 million of an $18 million SEC claim will go to interest holders and $5.5 million to a fairness fund to be established under the plan. The class plaintiffs will receive a $7 million claim, of which the $5.25 million remaining after payment of fees and expenses will go to the fairness fund.

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

• Administrative claims, priority tax claims, priority non-tax claims and interests in the AgFeed USA debtors 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 the claims;

• General unsecured claims will be paid in full in cash plus post-bankruptcy interest;

• The SEC will receive an $18 million claim, which will be contributed to the liquidating trust for the benefit of interest holders;

• AgFeed Industries interest holders will receive cash from the SEC contribution and the debtors' net distributable cash, as well as their share of any proceeds from settlement or litigation of causes of action. Some interest holders, to the extent they were damaged as a result of the purchase or sale of securities, will share in fairness fund distributions; and

• Holders of subordinated claims against the AgFeed Industries debtor will receive distributions from the fairness fund.

A hearing to confirm the plan is set for Oct. 27.

AgFeed USA, an Ames, Iowa-based producer of animal feed, filed for bankruptcy on July 15, 2013. Its Chapter 11 case number is 13-11761.

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