DavidsTea details plan of arrangement’s unsecured creditor treatment

By Sarah Lizee

Olympia, Wash., June 21 – DavidsTea Inc. detailed some of the terms of its plan of arrangement in an 8-K filed Monday with the Securities and Exchange Commission.

The provides for a total distribution to creditors of about C$18 million, comprised of three funds: a Canadian convenience class fund, a DavidsTea fund and a DavidsTea (USA) Inc. fund.

The plan divides unsecured creditors into those having claims against the DavidsTea and subsidiary DavidsTea (USA).

Unsecured creditors of DavidsTea who have a proven claim of up to C$1,800 will be deemed to form the Canadian convenience class and will receive a distribution equal to the lesser of C$1,800 and the amount of their claim.

The creditors who are not deemed to be part of the Canadian convenience class will receive a distribution from the DavidsTea fund equal to 22.4% of their proven claim.

The distribution of the DavidsTea USA fund to creditors will be an initial payment in an amount equal to the lesser of C$8,900 or the amount of the proven claim. They will also receive a pro rata share of the balance of the amount that remains in the fund after making the initial payment.

The DavidsTea USA fund has been established at C$1 million.

The plan does not affect employee priority claims, excluded claims, gift card claims, insured claims, post-filing trade payables, crown priority claims and secured claims.

DavidsTea is a tea company based in Montreal. The company filed bankruptcy on July 8, 2020 in the U.S. Bankruptcy Court for the District of Delaware under Chapter 15 case number 20-11802.

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