Shopko creditors deem disclosure statement ‘inadequate, inaccurate’

By Caroline Salls

Pittsburgh, Feb. 27 – Shopko’s official committee of unsecured creditors objected to approval of the disclosure statement for the company’s Chapter 11 plan, saying the disclosure statement is “inadequate, inaccurate and describes a plan that is not confirmable on its face,” according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Nebraska.

The committee said the disclosure statement falsely claims that “the plan is supported by the debtors and a large number of debtors’ creditors and stakeholders.”

“In truth, creditors do not support the debtors’ plan,” the objection said. “There is no restructuring agreement between the debtors and their secured lenders or any other writing evidencing significant creditor support for the plan.”

In addition, the creditor group said the disclosure statement does not provide significant facts concerning the Shopko bankruptcy cases, including the company’s entrance into numerous post-bankruptcy leases to set up a new line of business of standalone optical stores without previous notice or court approval.

“A number of these new leases span five years or more and contain no exit clause, exposing the estates to millions of dollars in uncapped administrative damage claims in the event the newly-leased premises are vacated in a liquidation,” the committee said.

The committee said the disclosure statement also does not provide facts on “expansive, virtually unlimited direct and third-party releases of claims and causes of action” against current and former officers and directors and the debtors’ majority equity owner.

“The debtors have not and cannot provide adequate information and their insistence on pushing forward with solicitation nonetheless should be resisted as it only compounds creditor disenfranchisement, confusion and expense,” the objection said.

The committee said the plan is unconfirmable because the Shopko debtors are administratively insolvent and are attempting to bind administrative and priority creditors to “deemed” agreements to accept less than full payment on their claims.

Shopko is a Green Bay, Wis., operator of general merchandise stores throughout the Central, Western and Pacific Northwest regions of the United States. The company is a $3 billion retailer that operates more than 360 stores in 26 states. The company filed bankruptcy on Jan. 16 under Chapter 11 case number is 19-80064.

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