Benitago files plan of reorganization and disclosure statement

By Sarah Lizee

Olympia, Wash., Nov. 27 – Benitago Inc. filed a Chapter 11 plan of reorganization and related disclosure statement Monday with the U.S. Bankruptcy Court for the Southern District of New York.

The plan includes a consensual and global resolution of lender CoVenture’s potential claims and causes of action against the debtors and third parties.

Benitago said that while the debtors dispute CoVenture’s claims and arguments, the consensual resolution of them as part of the plan provides significant value to the debtors and allows for a pathway for an expeditious emergence from bankruptcy.

CoVenture has agreed to provide a $7 million first-lien new-money term loan, which will provide enough funding to pay all allowed administrative and priority claims in full and make available a general unsecured creditor cash pool, and to provide working capital financing to the reorganized debtors.

CoVenture will equitize its claims against the debtors in exchange for 100% of the equity in the reorganized debtors. Because of this, the debtors will avoid having to pay cash interest, fees or other expenses on account of CoVenture’s claims under the plan.

The lender has also agreed to voluntarily subordinate its deficiency claims to holders of allowed general unsecured claims in the event that the class of holders of general unsecured claims vote in favor of the plan. The company said that doing so will allow for a minimal recovery for general unsecured claimholders that would otherwise be significantly diluted to nearly zero.

The plan also provides for SellersFunding, the senior secured creditor of Benitago’s parent company, to receive $5 million in exit second-lien takeback debt, subordinate to the exit new-money term loan.

Similar to CoVenture’s deficiency claims, the plan provides that the SellersFunding deficiency claims will be waived if the class of general unsecured claimholders votes to accept the plan.

Holders of subordinated claims, intercompany claims and parent interests are expected to receive no recovery.

Intercompany interests will be either reinstated or canceled and released with no distribution.

New York-based Benitago purchases companies that sell their products through Amazon. The company filed bankruptcy on Aug. 30 under Chapter 11 case number 23-11394.

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