Former Edgenet disclosure statement on liquidation plan gets approval

By Kali Hays

New York, Oct. 30 – EI Wind Down, Inc., formerly Edgenet, Inc., received support of the disclosure statement related to its proposed liquidation plan from a Thursday order with the U.S. Bankruptcy Court for the District of Delaware.

A hearing to confirm the plan is scheduled for Dec. 9.

As previously reported, the company entered a global settlement and plan support agreement with its pre-bankruptcy lender Liberty Partners Lenders, LLC and its official committee of seller noteholders on Sept. 29, which provided the basis of the liquidation plan.

Pursuant to the support agreement, Liberty will receive a $5 million cash payment from proceeds of EI’s $7.98 million sale of substantially all company assets to EdgeAQ, LLC.

Former Edgenet employees Steve Proctor, Chris Dowdy and J.J. Freitag formed EdgeAQ for the purpose of purchasing Edgenet’s assets.

In addition, through a negotiated $1.34 million reduction of Liberty’s secured claim, Liberty will fund EI’s liquidation plan and allow for payment of any related fees and costs.

Any remaining funds from the $1.34 million will be paid directly to the secured seller noteholders.

According to the disclosure statement, about $815,000 will be left to be paid to the seller noteholders, providing a recovery of 4.4% on aggregate claims of $18.4 million.

Specific treatment of creditors included in the liquidation plan are as follows:

• Holders of allowed administrative claims, professional fees claims, priority tax claims and other priority claims will receive a full cash recovery;

• Liberty Partners will receive all remaining cash in the bankruptcy estates less any amounts used to fund the plan and related costs;

• Holders of seller noteholder claims will receive a proportionate distribution of the remaining amount of Liberty’s plan contribution after the payment of professional fee claims; and

• Holders of general unsecured claims and equity interest claims will receive no distribution under the plan.

Required milestones under the plan support agreement include confirmation of the plan by Dec. 15 and that the plan be effective no later than Dec. 31.

Edgenet, an Atlanta-based provider of cloud-based content, applications and services, filed for bankruptcy on Jan. 14, 2014. The Chapter 11 case number is 14-10066.

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