ILX Resorts' disclosure statement approved by bankruptcy court

By Lisa Kerner

Charlotte, N.C., June 15 - ILX Resorts Inc.'s disclosure statement was approved on Tuesday, according to an attorney close to the case.

The company filed a joint plan of reorganization and disclosure statement with creditor Textron Financial Corp. in May.

A hearing to confirm the plan is scheduled for July 23, according to the attorney.

As previously reported, the plan calls for the sale of substantially all of ILX's assets to a third party.

In addition, a liquidating trust will be created under the plan, and real property, residual rights to proceeds and other assets not sold will be transferred to the trust.

On Monday ILX asked the court to approve the sale of substantially all of its assets to stalking horse bidder ILX Acquisition, Inc. for $29,672,251.

ILX and its debtor subsidiaries own nine resorts located in Arizona, Indiana and Colorado and operate one in San Carlos, Mexico.

Under the plan:

• Administrative claims and priority claims will be paid from sale proceeds and cash on hand, as will pre-confirmation and post-confirmation operating expenses;

• Secured claims will be paid from the proceeds of the sale of the assets subject to their lien, and some secured creditors will receive the collateral securing their claims;

• The liquidating trust will be created for the benefit of unsecured creditors;

• A stock pool will be created for the benefit of holders of ILX stock, and Textron will transfer $2.1 million of its own funds to the stock pool.

For every dollar distributed under the stock pool, preferred shareholders will receive two-thirds of the distributions and common shareholders will receive one-third, provided that preferred shareholders will receive a maximum distribution of $2.00 per share, and the balance of any money available for distribution will go to common shareholders;

• Holders of equity interests, which are classified under a separate plan class than holders of ILX stock, will receive no distribution;

• The company's corporate shell, related income tax benefits and some merchant deposits will be retained for the ILX stock pool; and

• Causes of action against Textron will be settled and released, and Textron's claim and the validity and priority of its security interests will be allowed.

Phoenix-based ILX Resorts acquires, develops and operates timeshare resorts primarily in the western United States. The company filed for bankruptcy on March 2, 2009 in the U.S. Bankruptcy Court for the District of Nevada. Its Chapter 11 case number is 09-03594.

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