Isolagen's plan of reorganization approved by court

By Alice Popovici

New York, Aug. 27 - Isolagen, Inc. received approval for its plan of reorganization, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan is based on an agreement reached with holders of about 90% of its 3.5% convertible subordinated notes to swap debt for equity.

Under the plan:

• Holders of administrative, priority and priority tax claims will be paid in full in cash;

• Holders of pre-bankruptcy lender claims will receive a share of up to 61% of the new common stock in the reorganized company;

• Holders of 3.5% unsecured convertible notes will receive a share of $6 million in unsecured debentures due June 1, 2012, which will bear interest either at 12.5% cash interest or 15% paid-in-kind interest, as well as a share of 33% of the new common stock;

• Holders of general unsecured claims will receive 1% of the new common stock;

• Members of Isolagen's management will receive a share of 5% of the new common stock; and

• Holders of old common stock will retain their interests, subject to a reverse stock split and dilution upon the issuance of new common stock and exit financing; and

• Holders of intercompany claims will receive no distribution.

Isolagen previously said plan funders have agreed to provide $2 million in exit financing, which will be secured by the new common stock in the reorganized company.

Isolagen is based in Exton, Pa., and specializes in autologous cellular therapies for soft and hard tissue regeneration. The company filed for bankruptcy on June 15. Its Chapter 11 case number is 09-12072.

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