VarTec Telecom files plan of liquidation

By Caroline Salls

Pittsburgh, May 30 - VarTec Telecom, Inc. filed a plan of liquidation and related disclosure statement Friday with the U.S. Bankruptcy Court for the Northern District of Texas that gives unsecured creditors either plan trust interests or cash.

Under the plan, the company will establish a creditors trust. Remaining assets will be transferred to the creditors trust for liquidation and distribution under the plan.

Treatment of creditors under the plan will include:

• Holders of priority claims will receive 100% recovery in cash from a senior claim distribution reserve;

• Holders of other secured claims who have a lien on collateral that was a divested asset will receive the cash proceeds from the sale of the assets that secured the claim. Claimants with a lien on collateral that was not a divested asset will receive a cash payment equal to the amount of their claim;

• Holders of general unsecured claims will receive their share of either the creditor trust interests or available cash on account of the creditor trust interests; and

• Holders of subordinated claims and equity interests will receive no distribution under the plan.

VarTec, a Dallas-based telecommunications provider, filed for bankruptcy Nov. 1, 2004. Its Chapter 11 case number is 04-81694.

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