Pegasus Home Fashions’ Chapter 11 plan effective as of April 18

By Sarah Lizee

Olympia, Wash., April 18 – Pegasus Home Fashions, Inc.’s Chapter 11 plan went into effect on Thursday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on March 28, as previously reported.

As a reminder, the company sold its assets to an affiliate of prepetition secured lender Blue Torch Finance, LLC. The purchase price included assumed liabilities, assumption of or payment in cash of all debt under a prepetition revolver and a $64.1 million credit bid of prepetition term loan debt and debtor-in-possession term loan debt.

Under the plan, priority non-tax claims and other secured claims are unimpaired.

Blue Torch, as the holder of the $7.6 million prepetition prepayment premium claim, will receive, after payment of any liquidation trust expenses, a $125,000 investigation fund repayment, 60% of liquidated value of any distributable liquidation trust assets (to be paid concurrently with any distributions to holders of general unsecured claims) and, upon payment in full of all allowed general unsecured claims, payment in full of any remaining portion of the prepetition prepayment premium claim from the liquidation trust assets.

Holders of general unsecured claims will receive, after payment in full of the investigation fund repayment and after payment of any liquidation trust expenses, their pro rata share of 40% of the liquidated value of the distributable liquidation trust assets until all claims in this class are paid in full.

Holders of subordinated claims will receive a pro rata share of remaining distributable liquidation trust assets after payment of liquidation trust expenses.

Holders of intercompany claims and interests will receive no recovery.

Elizabeth, N.J.-based Pegasus Home Fashions manufactures bedding and home products. The company filed bankruptcy on Aug. 24, 2023 under Chapter 11 case number 23-11235.

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