USA Commercial Mortgage files plan of reorganization; creditors to share sale proceeds

By Caroline Salls

Pittsburgh, Sept. 18 - USA Commercial Mortgage Co. filed its plan of reorganization and related disclosure statement Friday with the U.S. Bankruptcy Court for the District of Nevada.

According to the disclosure statement, proceeds from the company's asset sale will be deposited into the FT distribution account, and the expense reserves of each debtor will be deposited into their respective distribution accounts.

Unclassified claims and class 1 priority non-tax claims will be paid from the distribution accounts.

On the initial distribution date, the company will distribute the cash in the accounts to plan creditors.

Within 30 days of the effective date, the USA Capital First Trust Deed Fund, USA Commercial Mortgage, USA Securities and USA Capital Diversified Trust Deed Fund excluded assets will be transferred to the debtor's corresponding liquidation trust.

The trust estates will be liquidated by separate estate administrators and advisory committees under the plan.

The liquidation proceeds will then be distributed to beneficiaries of the liquidation trusts.

If the asset sales do not close within 120 days of the due diligence completion date, the First Trust assets and the USA Commercial Mortgage assets will be transferred to the their respective liquidation trusts.

The USA Capital Realty estate will also be liquidated under the plan and cash, if any, will be deposited into its distribution account.

Treatment of creditors under the plan will include:

• Holders of secured claims will receive payment in full in either cash from the distribution account or the return of the collateral securing the claim;

• Holders of general unsecured claims, late claims, subordinated claims and penalty claims will receive their share of all cash available for distribution if the asset sales close, up the full amount of the claim after satisfaction in full of all liquidation expenses, secured claims, administrative expense claims, priority tax claims and priority non-tax claims.

If the asset sales do not close, or cash in the distribution account is not sufficient to pay the claim in full, holders will receive their share of all cash distributed from the USA Commercial Mortgage liquidation trust, up to the full amount of the claim after the other claims are satisfied; and

• Holders of interests will receive their share of any cash remaining in the distribution fund.

Exclusivity extension request

In addition, the company requested an extension to Dec. 31 from Oct. 13 to its deadline for confirmation of the plan.

USA Commercial Mortgage said it will not be able to obtain approval of the disclosure statement and solicit votes by Oct. 13.

USA Commercial Mortgage, a privately held real estate lender based in Las Vegas, filed for bankruptcy on April 13. Its Chapter 11 case number is 06-10725.

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