Benitago’s disclosure statement approved; plan hearing set for Jan. 17

By Sarah Lizee

Olympia, Wash., Dec. 21 – Benitago Inc. received approval of the disclosure statement for its Chapter 11 plan of reorganization from the U.S. Bankruptcy Court for the Southern District of New York, according to an order filed Wednesday.

The plan confirmation hearing is scheduled for Jan. 17.

As previously reported, the U.S. trustee overseeing the case had objected to the disclosure statement, saying that it coerces creditors to vote in favor of the plan despite their inclination not to do so only in order to obtain a somewhat larger distribution. The language regarding that provision was removed in response to the U.S. trustee’s objection.

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 new-money term loan, which will provide enough funding to pay all allowed administrative and priority claims in full and make available a $1 million 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. The company said that doing so will allow for a recovery for general unsecured claimholders that would otherwise be significantly diluted to nearly zero. SellersFunding has likewise agreed to subordinate its deficiency claims to holders of allowed general unsecured claims.

The plan also provides for SellersFunding, the senior secured creditor of Benitago’s parent company, to receive $9 million in exit second-lien takeback debt, subordinate to the exit new-money term loan.

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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