King Mountain Tobacco disclosure statement draws objection from TTB

By Sarah Lizee

Olympia, Wash., Feb. 2 – King Mountain Tobacco Co., Inc.’s disclosure statement for its Chapter 11 plan of reorganization drew an objection from the Alcohol and Tobacco Tax and Trade Bureau (TTB), according to a Monday filing with the U.S. Bankruptcy Court for the Eastern District of Washington.

The TTB said that the disclosure statement does not provide enough information about when the debtor will be entitled to receive funds from qualified escrow accounts, the debtor’s potential recovery from related entities, and the debtor’s compensation to insiders.

As previously reported, under the plan, allowed claims will be paid in full over time from net income of the debtor and, in the case of the TTB’s secured claim, from distributions of escrow funds.

For the TTB’s secured claim, starting with the first escrow release date in 2032 and continuing through each subsequent escrow release date until the claim is paid in full, the holder will receive distributions equal to 80% of all escrow funds that are subject to release on each date. In addition, the reorganized debtors will make monthly payments to the holder in the amount of $50,000. Interest will accrue on the unpaid balance of the claims at the Federal Judgment Rate.

King Mountain Tobacco is a White Swan, Wash.-based tobacco manufacturer owned and operated by citizens of the Yakama Nation. The company filed Chapter 11 bankruptcy on Sept. 25 under case number 20-01808.

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