First NBC Bank Holding and committee file competing Chapter 11 plans

By Caroline Salls

Pittsburgh, March 16 – First NBC Bank Holding Co. and its official committee of unsecured creditors both filed Chapter 11 plans and related disclosure statements for the company’s bankruptcy case with the U.S. Bankruptcy Court for the Eastern District of Louisiana on Thursday.

Under the company’s plan, administrative claims and priority claims will be paid in full in cash.

Holders of general unsecured claims will receive a distribution equal to their share of liquidation trust assets.

The rights of common stockholders and series D and series E preferred equityholders will be left unaltered.

According to the committee’s disclosure statement, “the committee believes the debtor and its former auditor (Ernst) engaged in serious mismanagement and wrongdoing.”

The committee said the extent of the exact roles in the alleged wrongdoing will be determined through litigation that will likely not end until after the plan effective date, but “the committee lacks confidence that the debtor, managed and controlled by its pre-petition shareholders and directors, will operate the debtor consistently with the debtor’s fiduciary duties and the paramount interests of creditors.”

As a result, the committee said it is seeking confirmation of a plan that divests First NBC’s shareholders and current management from any control over the company after the effective date in a way that may preserve net operating losses for monetization.

Under the committee’s plan, administrative and priority claims will be paid in full from existing cash on hand.

General unsecured claims will be converted to equity in the reorganized company. In addition, these creditors will hold interests in a litigation trust that will prosecute former officer and director claims and Ernst claims for the benefit of the trust interest holders.

Holders of equity interests will receive no distribution under the committee’s plan.

First NBC, a New Orleans-based bank holding company, filed bankruptcy on May 11, 2017. The Chapter 11 case number is 17-11213.

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