Enesco seeks approval of $1.25 million litigation trust funding agreement

By Caroline Salls

Pittsburgh, Sept. 19 - Enesco Group, Inc. requested court approval of a contingency litigation trust funding agreement under which Plainfield Special Situations Master Fund Ltd. will contribute $1.25 million to the plan of liquidation contingency litigation trust, according to a Wednesday filing with the U.S. Bankruptcy Court for the Northern District of Illinois.

Under the agreement, $1 million of the trust funding must be used for the trust's litigation expenses, with the other $250,000 earmarked for the contingency lender to pay due diligence expenses and an origination fee.

The trust will only be established if Enesco's plan of liquidation takes effect.

The contingency lender will also receive a litigation success fee to be based on the net recovery amount.

The company has the right to enter into an alternative funding agreement by Oct. 17. If Enesco does enter an alternative agreement, it must pay Plainfield a $250,000 termination fee.

In addition, an informal group of Enesco common stockholders has a one-time option to buy up to $612,500 in participation interests in the Plainfield funding. This option expires on Oct. 17 and is only available if the company does not enter an alternative financing transaction.

Because the informal group played a key role in the formulation of the trust agreement, Plainfield will pay it $75,000 of the $250,000 it receives for due diligence expenses, and the group will receive 10% of the net litigation recovery proceeds.

A hearing is scheduled for Oct. 3.

Enesco is an Itasca, Ill., producer of fine gifts, collectibles and home decor accessories. It filed for bankruptcy on Jan. 12, 2007. Its Chapter 11 case number is 07-00565.

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