Crescent Jewelers, Friedman's given court OK for plan of liquidation

By Jennifer Lanning Drey

Portland, Ore., April 20 - Crescent Jewelers and Friedman's Inc. obtained court approval for their plan of liquidation, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, under the plan holders of general unsecured claims against Friedman's can choose to receive either a share of a plan trust distribution or an accelerated payment option that would give them a 27% lump sum payment in exchange for assigning their plan trust interests to a plan sponsor.

The plan calls for the liquidation and distribution of the assets of the companies' estates, including the investigation and possible prosecution of causes of action by two liquidating trusts.

In addition, the plan is based on a settlement that provides for the allowance of Friedman's intercompany claim against Crescent, the recharacterization of an equity note representing Crescent's $8.5 million debt to Friedman's, a class 5 interest and a stipulated expense allocation, which supplies a formula for sharing the total expenses of administering the Chapter 11 cases.

Creditor treatment

Treatment of creditors includes:

• Holders of administrative claims, priority tax claims, professional fee claims and other priority claims will recover 100% in cash;

• Holders of other secured claims will recover 100% either in cash, retention of the rights to the claim or the return of the collateral securing the claim;

• Holders of general unsecured claims against Friedman's will recover 31.6%, including an initial distribution of 22.6%, through a share of plan trust interests if they choose the first payment option or a 27% lump sum payment if they choose the second payment option;

• Holders of general unsecured claims against Crescent will recover 22.6%, including an initial distribution of 22.3%, through a share of plan trust assets; and

• Interests will be cancelled, and holders will receive no distribution.

Crescent Jewelers and Friedman's, Addison, Texas, jewelry retailers, filed for bankruptcy on Jan. 28, 2008. The Chapter 11 case number is 08-10161.

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