Sungard files Chapter 11 plan; disclosure statement hearing June 29

By Sarah Lizee

Olympia, Wash., June 6 – Sungard AS filed a Chapter 11 plan and related disclosure statement on Friday in the U.S. Bankruptcy Court for the Southern District of Texas.

On April 11, the company entered into a restructuring support agreement with holders of over 80% of first-lien credit agreement claims and holders of over 80% of second-lien credit agreement claims.

The RSA provides for two potential restructuring paths with the support of the consenting stakeholders.

The first is a sale scenario. The debtors are currently seeking to sell all or some of their assets through one or more third-party sales, or through a credit bid sale.

The second is an equitization scenario, under which outstanding funded debt would be equitized.

The proposed Chapter 11 plan provides for alternative treatment options based on the different outcomes.

Specifically, the plan provides for the potential distribution of a third-party sale consideration, a credit bid sale consideration, reorganized equity and take-back debt in the reorganized debtors, and/or cash, or the proceeds of any assets not included in the above to the holders of term loan DIP facility claims, first-lien credit agreement claims, second-lien credit agreement claims and non-extending second-lien credit agreement claims.

The plan also contemplates a global settlement negotiated by the debtors, the official committee of unsecured creditors and the required consenting stakeholders in resolution of the committee’s disputes relating to the company’s debtor-in-possession financing.

The global settlement provides for holders of general unsecured claims to receive, among other things, their pro rata share of a recovery pool in the amount of $1.375 million, plus an amount equal to 50% of any unused funds authorized under the critical vendor order up to a cap of $1 million, plus, if applicable, 3.5% of each dollar realized from one or more third-party sales where the cash proceeds collectively exceed $425 million.

Holders of other secured claims will receive payment in full in cash, delivery of the collateral securing their claims, reinstatement of their claims, or other treatment leaving their claims unimpaired.

Holders of other priority claims will receive payment in full, reinstatement, or other treatment leaving their claims unimpaired.

Holders of term loan deficiency claims will receive their pro rata share of the debtors’ cash on hand after senior classes have been paid in full, excluding the general unsecured creditor recovery pool, contingent distribution amount and wind-down amount.

Intercompany claims and interests will be reinstated or canceled with no distribution, depending on which scenario takes place.

Existing equity will be canceled.

Holders of first- and second-lien credit agreement claims, non-extending second-lien credit agreement claims, general unsecured claims and term loan deficiency claims are entitled to vote on the plan and will be receiving solicitation packages. The proposed voting deadline is 5 p.m. ET on Aug. 3.

A hearing on conditional approval of the disclosure statement has been scheduled for June 29.

The debtors are seeking an Aug. 9 combined hearing on final approval of the disclosure statement and confirmation of the plan.

Sungard is a Wayne, Pa.-based provider of disaster recovery services, managed IT services, information availability consulting services and business continuity management software. The company filed bankruptcy on April 11 under Chapter 11 case number 22-90018.

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