New Stream U.S./Cayman cash escrow distribution settlement approved

By Caroline Salls

Pittsburgh, Nov. 8 - New Stream Secured Capital, Inc. segregated account receiver John C. McKenna received court approval of a settlement reached with lenders and investors to allow distribution of a U.S./Cayman cash escrow ahead of plan of reorganization confirmation, according to a Nov. 8 filing with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, McKenna is the receiver for New Stream Capital Fund Ltd.'s segregated account classes C, F and I.

McKenna said New Steam Insurance, LLC and the lenders were granted court approval of a settlement in July that set the allowed amount of the secured lenders' claims at $93.75 million, according to court documents.

As part of that settlement, the lenders agreed to contribute up to $20.3 million of the settlement cash payment. This contribution included a $10.15 million purchase price related to a conditional assignment of non-investor claims filed by litigation claimants and a $10.15 million payment to be distributed to all investors in a U.S./Cayman fund who signed a required release.

According to the motion, the parties hoped to obtain the releases and disburse the funds in connection with New Stream's plan of reorganization.

However, McKenna said in the motion that it now appears that the plan will not be confirmed before the distribution deadline.

As a result, McKenna said he and the company will need to distribute the escrow amount, requiring parties who wish to receive a share of the distribution to provide a comprehensive release before plan confirmation.

Under the procedures outlined in the settlement, U.S./Cayman investors must submit their release forms to the receiver by 5 p.m. ET on Dec. 8 to be eligible for the distribution.

The distributions will then be made by Dec. 10.

The portion of the escrow earmarked for investors who do not return their release forms by the deadline will revert back to the receiver, the motion said.

New Stream, a Ridgefield, Conn.-based investment fund, filed for bankruptcy on March 13, 2011. Its Chapter 11 case number is 11-10753.

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