Relativity disclosure statement approved; plan hearing set for Feb. 1

By Caroline Salls

Pittsburgh, Dec. 17 – Relativity Media, LLC received court approval of the disclosure statement for its second amended plan of reorganization, according to an order filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

The plan confirmation hearing is scheduled for Feb. 1.

The company said the plan is designed to reorganize Relativity’s non-TV business units with a substantially de-levered balance sheet utilizing new equity investments and new financing.

Specifically, Relativity said its balance sheet will be de-levered in the amount of $500 million by paying off or eliminating Manchester debtor-in-possession claims, TLA/TLB secured claims, Ultimates secured claims, Vine/Verite secured claims and the claim under the Manchester pre-bankruptcy credit facility in exchange for a $60 million note and a $100 million new facility.

Relativity said Jim Cantelupe of Summit Trail Advisors, LLC has committed to work with the debtors to raise up to $100 million of new equity to fund the plan. Those funds are to be escrowed by Dec. 31.

Plan terms

The plan terms will include the following:

• Administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• Holders of TLA/TLB secured claims are entitled to receive 100% of the equity value of the Relativity debtors. However, the company said some holders of these claims agreed to less favorable treatment and will receive a note in full and final satisfaction of their claim;

• Chief executive officer Ryan C. Kavanaugh and Joseph Nicholas have agreed to receive reorganized Relativity Holdings preferred units and other treatment on account of $165 million of their TLA/TLB secured claims;

• RKA Film Financing, LLC, as the holder of a pre-release P&A secured claim, will receive a proposed alternative plan treatment related to the release and distribution of films if it votes to accept the plan. If it votes to reject, RKA will receive five replacement P&A notes;

• Reorganized Relativity will allow a $26.82 million post-release P&A claim, subject to documentation of a replacement credit agreement, which will provide for an extension of the maturity dates as compared to the pre-bankruptcy terms;

• Holders of production loan secured claims will be treated in accordance with a settlement if they vote to accept the plan or receive a production loan replacement note if they vote to reject the plan;

• Holders of Ultimates secured claims will be paid in full in cash;

• Holders of secured guilds claims will receive a share of $6.65 million minus the amount received on the claims before the plan effective date, as well as payment in full of the remaining balance one year after the effective date;

• Holders of Vine/Verite secured claims will either have their claims reinstated or receive the collateral securing the claim;

• Holders of other secured claims will either be paid in full in cash or receive the collateral securing the claim or the claims will be reinstated;

• Holders of general unsecured claims will receive a share of a guaranteed general unsecured creditor payment and a general unsecured creditor interest; and

• Holders of interests and subordinated claims will receive no distribution.

Relativity Media is a media company based in Beverly Hills, Calif., that filed for bankruptcy on July 30. The Chapter 11 case number is 15-11989.

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