BSPV-Plano’s, bond trustee’s competing plans to be heard June 26

By Sarah Lizee

Olympia, Wash., May 11 – BSPV-Plano, LLC and bond trustee Huntington National Bank’s competing Chapter 11 plans will be considered for confirmation at a continued hearing scheduled for June 26, according to a minute entry filed with the U.S. Bankruptcy Court for the Eastern District of Texas.

As previously reported, the debtor received court approval of the disclosure statement for its plan. The confirmation hearing was originally scheduled for April 13. However, the company’s exclusive plan filing period expired on Feb. 28.

In March, the bond trustee filed its plan, which calls for the sale of all the debtor’s assets, with distributions to creditors from the proceeds.

A liquidation trust will be established to hold and liquidate any assets, including preserved causes of action, not sold.

Huntington said it believes that an orderly sale of the debtor’s main asset, the independent senior luxury apartment community known as the Bridgemoor at Plano, is the best and only viable means for all creditors to receive meaningful distributions on account of their claims under the priority scheme of the bankruptcy code.

The remaining assets of the estate not sold through the Bridgemoor sale will be transferred to a liquidation trust to be liquidated for the benefit of holders of the liquidation trust interests.

The bond trustee said that if the debtor’s estimate of the market value of the project is correct, holders of allowed claims will be paid in full with interest from the petition date.

Notably, the plan provides for payment in full of all allowed unsecured claims through a carve-out from the payments otherwise due to the bond claims if the net sale proceeds are insufficient to pay the allowed unsecured claims in full.

Interest holders will receive nothing unless all above classes have been paid in full with accrued interest. If the above classes have been satisfied, any remaining assets of the debtor and liquidation trust interests will revert to holders in this class on a pro rata basis.

Debtor’s plan

As previously reported, BSPV said that about $1.5 million is needed to complete the project, and much more is needed to properly market and open the project, all of which the debtor’s equity holders have committed to fund. It could take around two years for the project to reach stabilization.

The company said that if it is given enough time to complete the project and ramp up leasing, all creditors will be able to be paid in full.

Under the proposed plan, administrative claims will be paid in full on the effective date, and secured tax claims will be paid shortly after the effective date.

The plan proposes to pay bond A/B secured claims in full over seven years. The first two years won’t have any amortization, while the remaining payments include amortization over a 40-year basis, with a balloon payment at the end of the plan. This class will bear interest under the plan at 5.15%.

Bond C and D secured claims will also be paid in full over seven years, with the first two years without amortization and the remaining payments including amortization over a 40-year basis, with a balloon payment at the end of the plan. These classes bear interest under the plan at 5% and 4%, respectively.

Class 6 consists of the DIP loan, which was provided by an insider of the debtor. It came due on Dec. 31, but the company didn’t have enough funds to make the payment. However, the lender agreed to extend the loan indefinitely so that it would be repaid only when the bonds are paid in full, or later, such as when the project is sold or refinanced. The lender will keep its liens securing the loan.

There is an option where the DIP loan may be converted into new equity in the debtor on a preferential basis, and a mechanism where the debtor’s equity interest holders may purchase a portion of the DIP loan at par in order to participate in the conversion.

While the holders of the A&C Hauler secured claim and the BKJ secured claim must prove their claims, if they are allowed, they will be repaid with a lien securing the repayment, if they vote for the plan. To the extent the claims are allowed, they will be repaid through quarterly payments over five years, with 5% interest. And, if the holders vote to accept the plan, they may compel the debtor to pay 50% of the claims shortly after they become allowed.

If the holder of the CJ project management secured claim votes to accept the plan, it will get a junior lien, ensuring that any claim it is allowed is paid through quarterly payments over four years. If the holder votes for the plan, the plan provides for the allowance of the claim at $200,000 and a release by the debtor of its claims and counterclaims.

Unsecured claims will be paid without interest in full through quarterly payments over four years. There is an option to each holder whereby the debtor will pay the claim through a one-time payment of 33% of the allowed amount of the claim.

The plan retains all equity interests. But, other than with the 2% interest of Spectrum Housing Corp., the plan contains a mechanism under which the capital accounts, or ownership interests, of the debtor’s members will be adjusted to take into account additional prepetition and post-petition equity contributions they have made toward the construction of the project and the funding of the debtor’s costs and expenses.

The Plano, Tex.-based company was formed in May 2018 to acquire, own, develop and operate the Bridgemoor at Plano. It filed Chapter 11 bankruptcy on March 1, 2022 under case number 22-40276.

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