MobiTV, committee get interim OK of plan; combined hearing Sept. 22

By Sarah Lizee

Olympia, Wash., Aug. 11 – MobiTV, Inc. and its official committee of unsecured creditors received interim approval of their Chapter 11 plan and related disclosure statement on Tuesday, according to an order filed with the U.S. Bankruptcy Court for the District of Delaware.

The combined hearing on final confirmation of the plan and approval of the statement is scheduled for Sept. 22.

In May, the debtors conducted an auction for their assets. TiVo Corp. was the winning bidder, with a purchase price of $17.4 million plus assumed cure and other liabilities in the approximate amount of $6 million. The sale closed on June 1.

The sale order established a settlement framework among the debtors, the committee, and pre-petition lender Ally Bank. Under the framework, the debtors agreed to pay the proceeds of the sale to Ally Bank, net of certain expenses.

Ally Bank agreed to transfer any further recovery it was entitled to in connection with the pre-petition loan documents, including on account of any diminution and deficiency claims, to general unsecured creditors.

The plan contemplates the establishment of a liquidation trust through which a liquidation trustee will marshal the remaining assets of the states, review claims and make distributions from the assets to holders of allowed claims.

Under the plan, holders of administrative claims and priority tax claims will receive cash equal to their claims.

Holders of secured claims will receive payment in full in cash, the collateral securing their claims, or other treatment leaving their claims unimpaired.

Holders of priority unsecured non-tax claims will receive cash equal to their claims or other treatment leaving their claims unimpaired.

Holders of general unsecured claims will receive their pro rata share of distributable cash, which is the cash remaining in the liquidation trust following the payment of all senior claims and liquidation trust expenses.

Under the settlement with Ally Bank, holders of allowed non-subordinated general unsecured claims will receive their pro rata share of distributions otherwise allocable to holders of subordinated general unsecured claims until the $11 million pre-petition lender deficiency claim would otherwise have been paid in full.

The debtors and committee said they do not expect there to be enough distributable cash to pay the pre-petition lender deficiency claim in full. As such, the estimated recovery to holders of subordinated general unsecured claims is zero and the full amount otherwise allocable to holders of subordinated general unsecured claims will be re-allocated for distribution to holders of non-subordinated general unsecured claims.

Intercompany claims and interests will be canceled with no distribution.

MobiTV is an Emeryville, Calif.-based provider of live and on-demand video delivery solutions. The company filed bankruptcy on March 1 under Chapter 11 case number 21-10457.

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