Town Sports gets interim OK of statement; combined hearing Dec. 14

By Sarah Lizee

Olympia, Wash., Nov. 3 – Town Sports International, LLC received interim approval of the disclosure statement for its Chapter 11 plan of reorganization on Tuesday by the U.S. Bankruptcy Court for the District of Delaware.

The court set a combined hearing on final approval of the disclosure statement and confirmation of the plan on Dec. 14.

The plan provides the vesting of all available cash from the proceeds of a sale transaction in the post-effective date debtors for the purpose of distribution to holders of claims.

It also provides for full resolution of funded debt obligations and designates a plan administrator to wind down the debtors’ affairs and pay and reconcile claims.

Under the plan, holders of secured tax claims will receive payment in full in cash on the effective date or in full with interest on semiannual dates for five years after the effective date.

Holders of other secured claims will receive payment in full in cash, receive the collateral securing their claims, have their claims reinstated or receive other treatment that renders the claim unimpaired.

Holders of other priority claims will receive payment in full in cash.

Holders of pre-petition loan claims will receive their pro rata share of the excess distributable cash in line with a distribution waterfall.

Holders of general unsecured claims will receive their pro rata share of the GUC reserve amount and, following the payment in full in cash of the pre-petition loan claims, their pro rata share of the excess distributable cash.

Holders of intercompany claims will not receive any distribution.

Intercompany interests will be either reinstated or discharged with no distribution, at the debtors’ option.

Section 510(b) claims and interests in Town Sports International will be cancelled with no distribution.

The debtors are seeking an interim disclosure statement hearing on Nov. 3 and a combined hearing on final approval of the disclosure statement and confirmation of the plan on Dec. 11.

Town Sports is a Jupiter, Fla.-based owner and operator of fitness clubs. The company filed bankruptcy on Sept. 14 under Chapter 11 case number 20-12168.

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