King Mountain Tobacco statement hearing continued to Feb. 18

By Sarah Lizee

Olympia, Wash., Feb. 10 – King Mountain Tobacco Co., Inc.’s hearing on approval of the disclosure statement for its Chapter 11 plan of reorganization has been continued to Feb. 18, according to a minute entry filed Monday with the U.S. Bankruptcy Court for the Eastern District of Washington.

According to the disclosure statement, all allowed claims will be paid in full over time from net income of the debtor and, in the case of the Alcohol and Tobacco Tax and Trade Bureau’s secured claim, from distributions of escrow funds.

For the Alcohol and Tobacco Tax and Trade Bureau’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.

The reorganized debtors will make monthly payments in the amount of $33,232.12 each to First Insurance Funding, until its secured claim is paid in full. Interest will continue to accrue on the claims at the rate specified in the premium financing agreement until the claims are paid in full.

The reorganized debtors will make monthly deposits into the escrow accounts designated for the State of Indiana and the State of South Carolina in the amounts of $25,000 and $15,000, respectively, until the unsecured claims have been paid in full. No interest will accrue on these claims.

The reorganized debtors will make monthly payments to the U.S. Department of Agriculture in the amount of $30,000 each until the claim has been paid in full. Interest will accrue on the claims at the Federal Judgment Rate until the claims are paid in full.

The reorganized debtors will make monthly payments to the U.S. Food and Drug Administration in the amount of $25,000 each until the claim has been paid in full. Interest will accrue on the claims at the Federal Judgment Rate until the claims are paid in full.

Administrative convenience claims will be paid in cash in full.

Holders of other unsecured claims will receive, on a monthly basis, their pro rata share of a total monthly payment of $10,000, until all other unsecured claims are paid in full. Simple interest will accrue on the unpaid balance of each other unsecured claim at the Federal Judgment Rate.

The reorganized debtors will effect a setoff against each affiliate claim as to which a receivable is owing to the reorganized debtor to reduce the amount of such receivable on a dollar-for-dollar basis. The plan will otherwise provide for no payment on any remaining balance owed to affiliate claimholders.

Equity interests will be retained.

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, 2020 under case number 20-01808.

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