Bashas' and lender group agree to resolve plan confirmation issues

By Caroline Salls

Pittsburgh, Aug. 25 - Bashas' Inc. has reached an agreement with its lender group and official committee of unsecured creditors to make changes to its plan of reorganization to avoid the potential cost and delay related to a lender group appeal, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Arizona.

As previously reported, the lender group appealed the plan confirmation order on Tuesday and asked the court to stay the ruling pending outcome of the appeal.

The lender group includes Wells Fargo Bank, NA, Bank of America, NA, Compass Bank, The Prudential Insurance Co. of America and related noteholders.

According to the stay motion, the lender group provided evidence of the company's inability to achieve its projections and plan payments over the term of the plan.

"The debtors, on the other hand, failed to produce any evidence of critical elements of the plan, including, most notably, substantive consolidation of two of the debtors," the lenders said in the motion.

Bashas' clarified in the stipulation that the plan confirmation was only designed to consolidate the Sportsman's LLC debtor into Bashas', and Bashas' Leaseco Inc. will still be a separate company after the plan takes effect.

Under the agreement, the lender group's plan principal payments will be made on the first business day of the month based on projections submitted at the confirmation hearing, rather than in lump sum annual principal payments.

The parties also agreed that nothing in the plan or confirmation order resolves or affects any rights related to allowance of noteholders' yield maintenance claims, allowance of lender group fees and costs and allowance of the lender group's claim for default interest.

In addition, the lender group will withdraw its stay motion and notice of appeal, and Bashas' has agreed to dismiss a lawsuit filed against the lenders in 2009.

A hearing is scheduled for Aug. 26.

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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