Groeb Farms second amended reorganization plan effective as of Dec. 31

By Caroline Salls

Pittsburgh, Dec. 31 - Groeb Farms, Inc.'s second amended Chapter 11 plan of reorganization took effect on Dec. 31, according to a filing with the U.S. Bankruptcy Court for the Eastern District of Michigan.

The plan was confirmed on Dec. 20.

As previously reported, Peak Rock Capital affiliate Honey Financing Co., LLC agreed to restructure Groeb Farms' debt obligations and acquire the equity of the reorganized company.

Groeb Farms entered into plan support agreements with Honey Financing as well as senior subordinated debtholders Argosy Investment Partners II, LP and Marquette Capital Fund I, LP.

The company also reached a settlement of the putative class action resulting in a restructuring support agreement with the class members.

Under the settlement, the class action claimants will receive $1.75 million of proceeds from the insurance policy of Groeb Farms' directors and officers.

Creditor treatment

Treatment of creditors under the pre-packaged plan includes the following:

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

• Holders of DIP facility claims will receive a share of new equity in satisfaction of $7 million of the claims and will be paid in full in cash for the balance of the claim;

• Holders of senior loan claims will receive cash in satisfaction of any claim in excess of $3 million and a share of new equity in satisfaction of all remaining claims;

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

• Holders of senior subordinated note claims will receive a share of new senior subordinated notes and new warrants;

• Holders of trade claims will receive either a cash recovery equal to the claimant's distribution if the claimant and company enter into a new trade agreement or a share of proceeds from a general unsecured claims litigation trust.

The company will satisfy the cash recovery by paying 110% on each invoice for products ordered post-effective date with each holder that executes a new trade agreement until the trade claim distribution has been paid in full. The distribution will be satisfied by no later than 18 months from the plan effective date;

• Holders of other unsecured claims will receive a distribution from the litigation trust;

• Unsecured convenience class claims will be paid in full in cash, subject to a $250,000 cap; and

• Holders of existing equity interests and section 510(b) claims will receive no distribution.

Groeb Farms, an Onsted, Mich.-based processor and packager of honey for food manufacturers, food service companies and retail customers, filed bankruptcy on Oct. 1. The Chapter 11 case number is 13-58200.

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