SquareTwo Financial Services reorganization plan effective June 15

By Caroline Salls

Pittsburgh, June 15 – SquareTwo Financial Services Corp.’s modified pre-packaged plan of reorganization took effect on Thursday, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of New York.

The plan was confirmed on June 9.

As previously reported, the pre-packaged plan provides for a new money investment in cash from the Resurgent in exchange for 100% of the equity of the reorganized debtors.

Holders of first-lien financing agreement and 1.25-lien credit agreement claims will be paid in full in cash plus post-bankruptcy interest.

Holders of 1.5-lien claims will receive a share of remaining cash.

Holders of existing U.S. interests will receive no distribution under the plan.

Last month, SquareTwo reported that it had reached a settlement and distribution trust agreement with the official committee of unsecured creditors for the SquareTwo case, Apollo Global Management, LLC and some entities controlled by it and KKR Credit Advisors (US) LLC and some entities it controls.

From the committee’s perspective, SquareTwo said the settlement provides an opportunity for distributions to holders of U.S. general unsecured claims and holders of second-lien lender claims from a $1.3 million credit distribution trust.

These creditors were originally slated to receive no distribution under the plan.

SquareTwo Financial is a Denver-based asset recovery and management company. The company filed bankruptcy on March 19 under Chapter 11 case number 17-10659.

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