Bashas' files plan of reorganization, hopes to continue operation

By Caroline Salls

Pittsburgh, Jan. 19 - Bashas' Inc. filed its plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the District of Arizona.

The company said the goal of its plan is to continue the operation of its business, which currently employs about 8,500 members.

Bashas' said the continuing business will allow it to repay its creditors in full and continue conducting business with long-term trade vendors.

Treatment of creditors will include:

• Holders of administrative expense claims will be paid in full;

• Holders of the Grace Funding Group, LLC secured claim will receive payment of all interest, fees and costs on the plan effective date. Any outstanding principal and additional interest will be paid within 12 months of the effective date, and the maturity of this pre-bankruptcy credit facility will be extended to the one-year anniversary of the effective date;

• If holders of bank group claims vote to accept the plan, they will be paid in cash their proportionate share, with the allowed claim of noteholders, from funds sequestered in connection with the company's use of cash collateral. During the first 12 months after the effective date, the company will make interest only payments on the bank group claim. After that, they will pay principal and interest for 48 months. Any remaining balance will be paid in full on the fifth anniversary of the effective date.

Holders of bank group claims will also receive a beneficial interest in the net proceeds from the sale of liquidation trust assets.

If these creditors vote to reject the plan, they will be paid over 10 years, with interest only payments to be made during the first year;

• If holders of noteholder claims vote to accept the plan, they will be paid in cash their proportionate share, with the allowed claim of bank group creditors, from funds sequestered in connection with the company's use of cash collateral. During the first 12 months after the effective date, the company will make interest only payments on the bank group claim. After that, they will pay principal and interest for 48 months. Any remaining balance will be paid in full on the fifth anniversary of the effective date.

If these creditors vote to reject the plan, they will be paid over 10 years, with interest only payments to be made during the first year;

• Holders of secured tax claims will recover 10% on the plan effective date, and equal payments of the balance of the claims will be made every April and October through April 2014;

• Holders of priority tax claims will recover 10% on the plan effective date, and equal payments of the balance of the claims will be made monthly beginning the July after the effective date through July 2014;

• The company will honor all obligations under its defined benefit pension plan in satisfaction of the Pension Benefit Guaranty Corp.'s claim;

• Holders of unsecured vendor claims can choose from an accelerated repayment plan or repayment over five years, with interest;

• Holders of non-vendor unsecured claims will recover 10% on the plan effective date, with the balance to be paid in annual distributions from 50% of net cash flow, beginning on the first anniversary of the effective date, until up to five years after the effective date;

• Holders of convenience claims of $5,000 or less will receive a one-time payment of 80% of their claim; and

• Holders of pre-bankruptcy equity interests will continue their ownership of the company but will receive no distribution on account of that ownership until Bashas' EBITDA reaches a threshold to be set at confirmation.

Bashas', a Chandler, Ariz.-based retail grocery business, filed for bankruptcy on July 12, 2009. Its Chapter 11 case number is 09-16050.

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