PJ Finance files amended plan based on new $22.5 million investment

By Caroline Salls

Pittsburgh, Jan. 23 - PJ Finance Co., LLC filed an amended plan of reorganization and disclosure statement on Jan. 23 to reflect the winning sponsorship offer from its equity owners, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the original plan called for a $10 million investment by the equity owners. However, the sponsorship auction was reopened and several rounds of bidding occurred in December and January.

According to the amended disclosure statement, the plan sponsors will now invest $22.5 million. The sponsors have also committed to provide up to $5 million of additional funding to the extent they deem necessary.

The plan sponsors will receive 100% of the equity in the reorganized company.

The amended plan calls for the effective date to occur by April 15.

Under the amended plan, creditors will be treated as follows:

• Holders of administrative claims, priority tax claims, unsecured priority claims and secured claims of governmental units will be paid in full in cash;

• The company's senior lender will receive new senior debt in exchange for its secured claim and deficiency claim;

• Holders of other secured claims will either be paid in full in cash or receive the property securing the claim;

• Holders of general unsecured claims will receive a share of cash distributions from a general unsecured fund, minus the amount of a plan expense reserve;

• A general unsecured cure claims class has been eliminated from the amended plan; and

• All equity interests will be cancelled, and holders will receive no distribution.

Plan comparison

Under the original plan, treatment of creditors was as follows:

• Holders of administrative claims, priority tax claims, unsecured priority claims, general unsecured cure claims, other secured claims and secured claims of governmental units will be paid in full in cash;

• The holder of senior lender secured claims will receive new senior debt;

• Holders of general unsecured claims will receive a share of cash distributions from a net general unsecured fund, with the initial distribution to be made by the later of 60 business days after the plan effective date or 10 business days after the claim is allowed;

• The holder of the senior lender deficiency claim will receive a new senior unsecured note; and

• Holders of existing equity interests will receive no distribution.

PJ Finance is a Chicago-based owner of a portfolio of apartment communities in Arizona, Florida, Georgia, Tennessee and Texas. The company filed for bankruptcy on March 7, 2011. Its Chapter 11 case number is 11-10688.

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