Phoenix Services’ disclosure statement approved; plan hearing June 21

By Sarah Lizee

Olympia, Wash., May 10 – Phoenix Services LLC received approval of the disclosure statement for its Chapter 11 plan of reorganization on Tuesday, according to an order filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan confirmation hearing is scheduled for June 21.

As previously reported, in March, the company reached an agreement with an informal group of lenders for a restructuring and expects to emerge from Chapter 11 mid-year.

The group of lenders represent about 78% of the company's debtor-in-possession facility and about 76% of its other prepetition secured debt.

Phoenix said the restructuring will reduce more than $500 million of funded debt and includes $45 million of new money exit debt to invest in the business.

The right to participate in the new money exit debt syndication will be allocated as follows: 50% allocated to members of the informal lender group that area backstop parties on a pro rata basis; and 50% offered to all holders of new money DIP loans on a pro rata basis.

Backstop parties will receive their pro rata share of a backstop premium equal to 20% on a fully diluted basis of the new interests.

Under the plan, all DIP claims will be exchanged for, on account of the rollup DIP loans, a pro rata share of 99% of new interests, subject to dilution by a management incentive plan, a participation premium and the backstop premium. On account of new money DIP loans, the claims will be exchanged for a pro rata share of a the takeback debt and the Newco participation contract right.

All administrative expense claims, priority tax claims, other secured claims and priority non-tax claims are unimpaired.

Each holder of prepetition lender claims will receive its pro rata share of 1% of the new interests, subject to dilution.

Holders of general unsecured claims will not receive anything.

Intercompany claims will be reinstated, or distributed, contributed, set off, canceled, released or otherwise addressed.

Intercompany interests will be reinstated or canceled.

Existing equity will be canceled with no distribution.

Radnor, Pa.-based Phoenix Services is a provider of outsourced slag handling, metal reclamation and complementary services to steel mill customers. The company filed bankruptcy on Sept. 27, 2022 under Chapter 11 case number 22-10906.

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