Emergent Capital files Chapter 11 bankruptcy with plan to swap debt

By Sarah Lizee

Olympia, Wash., Oct. 15 – Emergent Capital, Inc. and subsidiary Red Reef Alternative Investment, LLC filed voluntary Chapter 11 bankruptcy petitions in the U.S. Bankruptcy Court for the District of Delaware on Thursday, according to an 8-K filing with the Securities and Exchange Commission.

Support agreement

On Wednesday, the company entered into restructuring support agreements with a majority of holders of its 8˝% senior secured notes due 2021 and 5% senior unsecured convertible notes due 2023.

Emergent said the restructuring process will result in the company moving its headquarters and operations to its indirect wholly owned Irish subsidiary, Lamington Road DAC.

The contemplated restructuring process will provide that holders of 8˝% senior secured notes, 5% convertible notes and Emergent’s common stock and common stock equivalents will receive securities of Lamington and of a Cayman grantor trust to be formed that are substantially similar to, and in exchange for, their current Emergent securities.

Subsequent to the restructuring, Emergent will wind up its remaining affairs.

Plan terms

According to the company’s disclosure statement

• Holders of other priority claims will be paid in full in cash or receive other treatment that leaves their claims unimpaired;

• Holders of other secured debt claims will receive payment in full in cash or the collateral securing their claims, or have their claims reinstated;

• Holders of senior secured notes claims will receive their pro rata share of the new notes and convertibles, respectively;

• Holders of general unsecured claims will receive payment in full in cash or other treatment that leaves their claims unimpaired; and

• Equity interests will be cancelled, and holders will receive their pro rata share of grantor trust certificates.

Debt details

According to court documents, Emergent has $100 million to $500 million in both assets and liabilities.

The company’s largest unsecured creditor is U.S. Bank NA of Boston, with a $67.84 million convertible note claim.

Emergent is a Boca Raton, Fla.-based specialty finance company that invests in life settlements. The Chapter 11 case number is 20-12602.

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