Meruelo Maddux's second amended plan faces opposition from PNL Pomona

By Lisa Kerner

Charlotte, N.C., July 8 - PNL Pomona, LP asked the court to deny approval of Meruelo Maddux Properties, Inc.'s modified second amended joint plan of reorganization, according to a Wednesday filing with the U.S. Bankruptcy Court for the Central District of California.

A hearing is set for July 21.

"This is now the debtors' fourth attempt to create a confirmable plan; and while it has created a different program to obtain new equity, the end result remains the same," PNL said in the filing.

According to PNL, the modified amended disclosure statement allows for the choice between two options to "holders of allowed interests in the class."

As previously reported, under the amended plan interest holders can elect to receive either $0.08 per share of existing common stock or to contribute $0.07 in cash for each share of new equity interests plus two shares of existing common stock for an equal amount of new equity interests in the reorganized company.

PNL said there is "no mechanism to ensure that anyone other than the current management can buy these shares and thus the same management team will continue to maintain power and control over the assets."

Creditor treatment

Treatment of creditors under the reorganized plan will include:

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

• Holders of common lender secured claims will be paid in full in cash over a period of five years if they vote to accept the plan or over a period of seven years if they vote to reject it;

• Holders of unsecured convenience claims of $500 or less will be paid in full in cash on the plan effective date;

• Holders of general unsecured claims will be paid in full over five years with 1% interest;

• Interest holders can receive either $0.08 per share or contribute cash and shares in exchange for new equity; and

• Holders of interests in subsidiary debtors will retain those interests.

Meruelo Maddux, a self-managed, full-service real estate company that develops, redevelops and owns commercial and multi-family residential properties, filed for bankruptcy on March 26, 2009. Its Chapter 11 case number is 09-13356.

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