Prime Trust receives court approval of disclosure statement

By Sarah Lizee

Olympia, Wash., Oct. 10 – Prime Trust, LLC received approval of the disclosure statement for its Chapter 11 plan, according to an order filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

The plan confirmation hearing is scheduled for Nov. 14.

As previously reported, the debtors started a marketing and sale process shortly after the petition date to identify a party willing to either buy all, or substantially all, their assets or invest in the company’s potential enterprise value through a comprehensive plan sponsor transaction.

The company said the debtors have contacted more than 200 potential counterparties and intend to contact about 200 more.

The plan contemplates an option for the debtors to toggle to a liquidation event if they determine in good faith that the liquidation event is in the best interests of the debtors’ estates due to complications or inability to implement the sale transaction or the reorganization transaction.

The liquidation event contemplates providing distributions to creditors from three primary sources: the debtors’ cash on-hand; the proceeds of liquidating the debtors’ cryptocurrency holdings; and the proceeds of certain claims and causes of action with respect to the debtors’ prepetition operations that the plan preserves and monetizes for the benefit of holders of claims entitled to such litigation proceeds.

Under the plan, secured tax claims and other priority claims will be paid in full in cash or receive other treatment leaving the claims unimpaired.

Holders of Prime Core general unsecured claims, Prime Trust general unsecured claims, Prime IRA general unsecured claims and Prime Digital general unsecured claims will receive, after payment in full of higher priority claims, their pro rata share of plan trust assets or wind-down trusts attributable to Prime Core, Prime Trust, Prime IRA or Prime Digital, as applicable.

Holders of convenience claims will receive a to-be-determined percentage of their claims to be paid from the plan trust assets or wind-down trust assets attributable to Prime Trust.

Holders of section 510(b) claims and existing interests are not entitled to a distribution. However, if all higher-priority classes are paid in full, they may receive distributions from the plan trust or wind-down trust.

Treatment for intercompany claims will be determined by the court.

Intercompany interests will be reinstated or set off, settled, addressed, distributed, contributed, merged or canceled.

The Las Vegas-based cryptocurrency custodian filed bankruptcy on Aug. 14 under Chapter 11 case number 23-11161.

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