Supplements LT's liquidation plan confirmed

By Caroline Salls

Pittsburgh, Oct. 15 - Supplements LT Inc.'s plan of liquidation was confirmed Wednesday by the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, Supplements LT's plan is based on a settlement with the company's lender agent and its official committee of unsecured creditors.

Under that settlement, at least $249.5 million of the secured lenders' claim will be paid using proceeds from the $371 million sale of substantially all of the company's assets.

As long as the secured lender claim is paid in full in cash under the plan, the senior secured lenders have agreed to waive any post-bankruptcy interest and any right to enforce subordination rights against the holders of the company's senior subordinated notes.

In addition, an up to $8 million management backstop will be established, which could result in a reallocation of the proceeds of an asset sale incentive program to holders of general unsecured claims to ensure a guaranteed minimum distribution to those creditors.

Creditor treatment

Treatment of creditors under the plan will include:

• Holders of $554,068 million in administrative claims and $885,792 in priority tax claims will recover 100% in cash;

• Holders of other priority claims, although none are estimated, will also recover 100% in cash;

• Holders of $285.54 million in secured lender claims will recover 96% to 100% in cash, plus the full amount of related out-of-pocket fees.

• Holders of $343,438 in other secured claims will recover 100% either in cash or through the return of the collateral securing the claim;

• Holders of $212.22 million in general unsecured claims will recover 2% to 6% through their share of a liquidating trust fund; and

• Holders of equity interests and $139.24 million in canceled intercompany claims will receive no distribution under the plan.

KDW Liquidating Services LLC has been appointed as liquidating trustee.

Supplements LT, formerly Leiner Health Products, is a Carson, Calif.-based manufacturer of store-brand vitamins, minerals and nutritional supplements. The company filed for bankruptcy on March 10, 2008. Its Chapter 11 case number is 08-10446.

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