A Delaware bankruptcy court has confirmed the reorganization plan of Orchard Brands, the direct marketing firm with annual sales in excess of $1 billion.
The confirmation order on April 14 paves the way for Orchard Brands to exit bankruptcy proceedings by the end of the month.
Orchard Brands filed a voluntary Chapter 11 petition in January 2011 under the name Appleseed’s Intermediate Holdings. The filing incorporated a pre-negotiated reorganization plan with the majority of its secured lenders.
Neal Attenborough, chief executive officer of Appleseed’s, said, “Our approved plan, which reduces our debt by over half and gives us access to significant new capital, will enable Orchard Brands to emerge from this process with a financial structure that firmly positions us for long-term success.”
He said in court papers in support of the plan of reorganization that the company has “eliminated $420 million” in debt and its exit from bankruptcy will allow “4,000 employees to retain their jobs.”
The company is part of Golden Gate Capital’s portfolio. Prior to the bankruptcy, it did more than $1.1 billion in revenues and includes 17 catalogue businesses. Those umbrella of brands include Appleseed’s, Blair, Haband, Draper’s & Damon’s, Norm Thompson, Sahalie and Tog Shop. Most, if not all, target the consumer market above the age of fifty-five.
Golden Gate tried to sell the company in the latter part of 2010, but couldn’t find a buyer. The bankruptcy followed in January.
Under the terms of the plan of reorganization, lenders holding first priority for repayment will convert their debt to 95 percent equity in the reorganized firm. The balance of the equity will go to lenders holding secondary priority for repayment.
It was unclear exactly what the return rate would be on claims of unsecured creditors.