Gorham disclosure statement approved; plan hearing set for Dec. 17

By Sarah Lizee

Olympia, Wash., Oct. 28 – Gorham Paper and Tissue, LLC received approval of the disclosure statement for its Chapter 11 plan of liquidation, according to an order filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

A hearing on confirmation of the plan is scheduled for Dec. 17.

As previously reported, the company sold substantially all of its assets to Behrens Investment Group LLC affiliate Gorham Acquisition, LLC. The purchase price included $8.75 million in cash payable by means of a completed Federal Funds wire transfer, less the deposit of $1 million, a portion of which was funded upon approval of the bid procedures; a credit bid of all the debtor-in-possession financing held by the purchaser; and, the assumed liabilities, which includes the debt owed by subsidiary White Mountain to the Bank of New Hampshire.

After the sale closed, the company engaged in settlement discussions with the official committee of unsecured creditors, Zohar III and Ankura Trust Co., LLC regarding a plan to fund the wind-down of the debtors’ affairs and their exit from bankruptcy.

In exchange for mutual releases and other consideration, Zohar III and Ankura agreed to disburse to the debtors $1.26 million from the cash that Zohar III and Ankura received at the closing of the sale. The debtors used the cash to fund certain professional fee claims and approved management bonuses, with the remaining funds designated to pay expenses of pursuing, consummating and funding the plan and other budgeted operating expenses of the debtors. Zohar III and Ankura also agreed to “gift” a portion of their dividend under the plan to some other general unsecured claimholders.

Under the plan, administrative claims, priority tax claims and priority unsecured non-tax claims will be paid in full.

Holders of general unsecured claims will receive their pro rata share of any beneficial interest in the cash remaining in the liquidating trust. General unsecured claims will also be treated in line with the settlement agreement. Zohar III and Ankura will “gift” any respective recoveries they are entitled to receive on account of the deficiency claims by authorizing the liquidating trustee to redistribute to other non-insider claim holders, pro rata, the distribution that otherwise would be transferred on account of deficiency claims until administrative and priority claims are satisfied in full, and holders of general unsecured claims have received a 5% pro rata recovery on account of their claims, up to a maximum aggregate distribution to holders of $500,000.

Interests will be canceled with no distribution.

Gorham, N.H.-based Gorham Paper and Tissue manufactures towel and tissue rolls for at-home and away-from-home markets. The company filed bankruptcy on Nov. 4, 2020 under Chapter 11 case number 20-12814.

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