National CineMedia unsecured creditors object to disclosure statement

By Sarah Lizee

Olympia, Wash., May 9 – National CineMedia, LLC’s motion seeking conditional approval of the disclosure statement for its Chapter 11 plan drew an objection Tuesday from the official committee of unsecured creditors, according to documents filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The committee said the debtors attempted the “committee death trap,” which purported to provide a higher recovery to unsecured creditors under a potential plan if no official committee of unsecured creditors was formed.

“Unsecured creditors recognized the proposal for what it was: a transparent ploy to evade the oversight of an official committee,” the committee said.

“It is telling that several unsecured creditors that would have supposedly received payment in full under that proposal volunteered to sit on the committee.

“And fortunately so, as the committee has already identified problems with the debtor’s proposed plan (among other things, it violates the absolute priority rule on its face) and potentially meaningful sources of unencumbered value that would require improved plan treatment for unsecured creditors.”

The committee said the debtor is now seeking approval of solicitation and voting procedures designed to deprive certain unsecured claimants of their right to vote.

Specifically, the disclosure statement motion seeks to set a voting deadline that would be earlier than the debtor’s requested general bar date, give the debtor broad discretion to ignore votes based on timely-filed proofs of claim, and disenfranchise a potentially large number and amount of unsecured claims based on contract rejection damages, the group said.

The proposed procedures would also deny certain unsecured creditors the opportunity to vote if they do not appear on the debtor’s schedules, which will not be filed until well after the proposed voting record date, unless they file a proof of claim by May 10.

“These proposed procedures are particularly problematic in light of this proposed plan because the debtor’s confirmation case is predicated on limiting unsecured creditor involvement,” the committee said.

National CineMedia is a Centennial, Colo.-based integrated media company. The company filed bankruptcy on April 11 under Chapter 11 case number 23-90291.

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