Washington Prime shareholders win delay of bankruptcy case timeline

By Sarah Lizee

Olympia, Wash., July 29 – Washington Prime Group Inc.’s official committee of equity security holders’ motion seeking to delay the timeline of the company’s bankruptcy case was approved Thursday by the U.S. Bankruptcy Court for the Southern District of Texas, according to an order.

According to the amended timeline, the deadline for filing a plan supplement is Aug. 20, and the deadline for creditors to vote on the plan is 5 p.m. ET on Aug. 26. If the debtors choose an equitization restructuring, the combined hearing on the statement and plan will be held on Aug. 30. If they choose a toggle restructuring, the hearing will be on Sept. 13.

Washington Prime had objected to the committee’s adjournment motion, saying it was “premised on the committee’s need to prepare a theoretical, desktop valuation, an analysis that is neither required nor appropriate” in a case where the debtors are marketing their assets under a court-approved process.

The company said that any extension of time without the plan sponsor’s consent would be highly prejudicial to the debtors, their creditors and the debtors’ existing equity interests because it entitles the plan sponsor to terminate the backstop commitment agreement and trigger a $65 million administrative claim.

“The requested relief will increase the hurdle for equity recoveries by $65 million and eviscerate the plan sponsor’s commitment to fund a plan that pays general unsecured creditors in full in cash and provides a meaningful recovery to equity holders – paradoxically, the very group that the [committee] owes its fiduciary duties to – a result that would substantially prejudice the debtors, their creditors, and their equity holders,” the company said.

Committee motion

The committee had said in its motion that the initial timeline was established prior to the appointment of the committee and without its participation.

The group said that prior to filing the motion, it requested the extension from the debtors because the current timeline would not provide enough time for the committee to analyze the plan, assess the debtors’ value and address voting rights and protections. However, the debtors declined to agree to any extension.

The committee said that it is difficult to discern the debtors’ current worth, other than to say that it is “undoubtedly in the upswing,” given the advent of vaccinations and pent-up demand not only for general congregation but also shopping.

The group claims that the proposed purchaser of the company’s assets, SVPGlobal, would be buying the debtors’ assets and business for a price that may not reflect the true inherent value, exploiting the momentary economic disruption caused by Covid-19.

The real estate investment trust is based in Columbus, Ohio. The company filed bankruptcy on June 13 under Chapter 11 case number 21-31948.

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