Parts iD secures confirmation of pre-packaged Chapter 11 plan

By Sarah Lizee

Olympia, Wash., Feb. 6 – Parts iD, Inc.’s pre-packaged Chapter 11 plan was confirmed by the U.S. Bankruptcy Court for the District of Delaware, according to an order filed Monday.

As background, the debtors and a committee comprising eight of its vendors entered into a restructuring support agreement in October. The vendor RSA provided that the debtors would raise at least $10 million in new capital and pay acceding vendors 55% of outstanding invoiced amounts, in a structured payment plan.

As of the petition date, vendors owed more than 80% of the total amount of all outstanding vendor payments had acceded to the RSA.

Ultimately, the debtors’ pursuit of new financing resulted in an agreement with Fifth Star, Inc. to honor the debtors’ agreement with vendors through a plan of reorganization.

The company entered into a debtor-in-possession financing credit agreement with Fifth Star, consisting of $12 million in new money loans and $6.3 million in rolled up bridge loans.

The financing set out the terms of the restructuring transactions, which will be implemented either though the plan or, at the election of the plan sponsor, through a sale of substantially all of the debtors’ assets. Fifth Star may act as stalking horse bidder under the sale track.

As part of the exit financing, Fifth Star will purchase 100% of the preferred equity interests of the reorganized debtors for about $23 million.

While the terms of the vendor RSA are independent from the plan and Chapter 11 cases, the vendors that voted in favor of the plan will receive substantially the same treatment under the plan as they would have under the vendor RSA and were entitled to vote on the plan as an impaired class.

The company said the plan also has the support of senior secured lender Lind Global Fund II, LP, merchant cash advance (MCA) lenders, subordinated secured noteholders and Pravati Investment Fund VI LP in addition to the vendor group.

Other priority claims, other secured claims and litigation funding claims are unimpaired by the plan.

Holders of senior secured note claims will receive their pro rata share of payment in cash in the total amount of $4.22 million minus any payments made during the Chapter 11 cases.

Holders of subordinated secured note claims will receive two of the following:

• Payment in cash of 55% of their claims;

• Their pro rata share from the net recoveries (after payment of fees, litigation financing and taxes) from litigation proceeds; and

• Payment in cash by the reorganized debtors upon the achievement of an EBITDA target to be agreed between the plan sponsor and the debtors.

Holders of vendor claims will receive cash equal to 25% of their claims. They will also receive a total payment equal to 30% of the claim, paid in equal monthly installments over a period of 36 months. The reorganized debtors’ obligations to make the installment payments are contingent upon the holder of the allowed vendor claim continuing to maintain and provide favorable trade terms, unless such holder is permitted to modify the trade terms because of the reorganized debtors’ failure to make a payment owed to the holder.

Holders of convenience claims will receive cash in an amount equal to 65% of their claims.

General unsecured claims, intercompany claims and existing equity interests will be canceled with no distribution.

Intercompany interests will be either reinstated for administrative convenience or canceled with no distribution.

Customer programs claims will be reinstated.

Parts iD is a Cranberry, N.J.-based digital commerce company specializing in the U.S. automotive aftermarket and the adjacent complex parts markets. It filed bankruptcy on Dec. 26 under Chapter 11 case number 23-12098.

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