Houghton Mifflin receives OK for Chapter 11 plan disclosure statement

By Jim Witters

Wilmington, Del., June 21 - Houghton Mifflin Harcourt Publishing Co. received approval for the disclosure statement associated with its pre-packaged Chapter 11 bankruptcy plan, according to documents filed June 21 with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the plan, which is supported by the vast majority of the company's key financial stakeholders, will eliminate $3.1 billion of debt through a debt-to-equity transaction and reduce annual cash interest costs.

Plan terms

Under the terms of the comprehensive financial restructuring plan:

• Senior creditors will receive their share of 100% of new common stock in the reorganized company and $30.3 million of cash;

• Except to the extent that a holder of an allowed letter-of-credit facility claim and the debtors agree to a different treatment, outstanding letters of credit will either continue unaffected or be replaced by an exit facility, and the letter-of-credit facility will be deemed terminated;

• Trade creditors and other unsecured creditors will be paid in full in the ordinary course; and

• If their class votes in favor of the restructuring plan, existing equityholders will receive warrants exercisable for up to 5% of the equity in the reorganized company. If the equityholders vote to reject the plan, they will receive no distribution.

Houghton Mifflin Harcourt, a Boston-based educational publisher in the K-12 market, filed for bankruptcy on May 21. Its Chapter 11 case number is 12-12171.

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