GT Real Estate Holdings Chapter 11 plan is problematic, trustee says

Chicago, Nov. 8 – GT Real Estate Holdings, LLC’s Chapter 11 plan has been objected to by Regions 3 and 9 U.S. trustee Andrew R. Vara, according to an objection filed with the U.S. Bankruptcy Court for the District of Delaware on Tuesday.

Tuesday was the objection deadline. A confirmation hearing is scheduled for Nov. 16.

The trustee objects on the grounds that the solicitation procedures force claim holders to release third-party holders of their claims.

The plan, according to Vara, channels priority contract claims and secured contractor claims to a $60 million settlement trust that will be funded by the plan sponsor, DT Sports Holding, LLC (a third party).

General unsecured claims are also being channeled to the settlement trust, whereby they will receive payment from a $500,000 cash pool and remaining funds in the settlement trust (from the third party).

The plan, Vara said, also provides for the implementation of a second trust, the class 5 trust, which will be funded with certain causes of action and the real estate from the project site. GT’s liability for all the class 5 claims will be channeled to that trust.

Such channeling would be permissible in a tort case, but this is not a tort case.

Additionally, there is a problem with the plan in that it “contravenes applicable law with respect to quarterly fee liability.”

Because of the establishment of the two trusts, the non-cash assets in the trusts would not be included for the purposes of assessing the quarterly fees on disbursements that would normally be paid.

The trustee recommends denying confirmation of the plan.

The Charlotte, N.C.-based real estate company filed Chapter 11 bankruptcy on June 1 under case number 22-10505.

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