M. Fabrikant files plan of liquidation, related disclosure statement

By Jennifer Lanning Drey

Portland, Ore., Sept. 28 - M. Fabrikant & Sons, Inc. filed a plan of liquidation and related disclosure statement on Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

The plan provides for the establishment of two liquidating trusts, with the beneficiaries of the first trust being current lenders and the second trust, proceeds from which will be distributed to creditors.

Creditor treatment

Under the plan:

• Holders of administrative expense claims will receive a full cash recovery on the plan effective date;

• Holders of priority tax claims will receive either a full cash recovery on the plan effective date or deferred cash payments plus interest;

• Holders of other priority claims will receive a full cash recovery on the plan effective date;

• Holders of $161.95 million in current lender claims will receive their share of distributions from the Shared Assets Trust;

• Holders of $70.08 million in general unsecured claims against the company will receive a share of trust interests; and

• Holders of other secured claims will either receive a full cash recovery, have their rights reinstated, or receive collateral securing their claim. The trustee for the Shared Assets Trust will decide treatment. At the time of the disclosure filing, M. Fabrikant estimated there were zero claims in this class, but said the deadline for filing a claim had not yet passed.

A hearing for confirmation of the plan of liquidation is scheduled for Dec. 6.

M. Fabrikant, a New York-based manufacturer and distributor of diamonds and gemstone jewelry, filed for Chapter 11 on Nov. 17, 2006. Its case number is 06-12737.

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