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Cengage committee calls plan process premature, objects to statement
By Caroline Salls
Pittsburgh, Nov. 5 - Cengage Learning, Inc.'s official committee of unsecured creditors objected to the disclosure statement for the company's proposed plan of reorganization and sought court approval to include a letter in the plan voting solicitation package detailing its stance if the U.S. Bankruptcy Court for the Eastern District of New York overrules its objection, according to a Nov. 5 court filing.
The committee said it believes the plan confirmation process is premature because there are numerous outstanding core issues and disputes in Cengage's bankruptcy cases that need to be resolved before the consideration and formulation of a confirmable plan.
The committee said the plan's premise that first-lien secured parties have a first lien on the enterprise value of the company "is fundamentally flowed and is entirely false."
The creditor group said the validity of any liens on copyrights, as well as the value of the copyrights, remain unresolved.
"Building a plan on a foundation that is, at a minimum, disputed and unresolved, is a futile exercise and a waste of estate and judicial resources," the committee said.
In addition, the committee said the proposed disclosure statement "clearly does not enable creditors to cast their votes for or against the plan on an informed basis," and lacks critically important information that a creditor would need to know before making an informed judgment on the plan.
The disclosure statement hearing is scheduled for Nov. 12.
Cengage, a Stamford, Conn.-based provider of teaching, learning and research services for the academic, professional and library markets, filed for bankruptcy on July 2. The Chapter 11 case number is 13-44106.
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