Knotel Chapter 11 plan of liquidation effective as of June 30

By Sarah Lizee

Olympia, Wash., July 1 – Knotel, Inc.’s Chapter 11 plan of liquidation went into effect on Wednesday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

According to the plan, which was confirmed on Tuesday, the debtor-in-possession facility claims were partially satisfied through the sale of the company’s assets to Digiatech, the company’s DIP lender and an affiliate of Newmark Group, Inc. The transaction included a purchase price of $70 million in the form of a credit bid, subject to adjustments, $6.81 million in cash, and the assumption of certain liabilities.

Digiatech will not receive any distribution on account of the DIP facility claim or any deficiency claim, as that has been waived as part of a settlement between Knotel, the official committee of unsecured creditors and Digiatech.

The pre-petition first-lien claim was included as part of the roll-up DIP loans and any remaining amounts owed to Digiatech as part of the pre-petition first-lien claim were fully satisfied through the sale and credit bid.

The pre-petition second-lien claim was partially included in the roll-up DIP loans and was fully satisfied through the sale and credit bid.

Bridge Bank has been granted relief from the automatic stay to exercise its rights against some cash collateral. In addition, JPMorgan has exercised or may exercise its rights against some cash collateral related to letters of credit. JPMorgan’s recovery against the debtors is limited to any cash collateral securing the letters of credit and it is not entitled to receive a distribution from the debtors or the liquidating trust.

The intercompany promissory note in favor of Knotel has been satisfied through a credit bid for the Knotel Canada assets in connection with the sale to Digiatech and the promissory note has been canceled.

Administrative expense claims incurred prior to March 24 are the responsibility of the purchaser and, as such, will not receive a distribution from the debtors or the liquidating trust.

The purchaser is also responsible for payment of certain taxes and, as such, holders of claims related to those taxes will not receive a distribution from the debtors or the liquidating trust.

Other administrative expense claims, other priority tax claims, other priority claims and professional fee claims will be paid in full in cash.

Holders of general unsecured claims will receive their pro rata share of the cash to be distributed from the liquidation trust, if any, after payment of all liquidating trust expenses and all senior claims.

Holders of interests in the debtors will retain no ownership interests and will receive no distribution.

New York-based Knotel operates a flexible workspace platform that matches, tailors and manages space for customers. The company filed bankruptcy on Jan. 31, 2021 under Chapter 11 case number 21-10146.

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