EYP Group’s disclosure statement OK’d; plan hearing set for Nov. 1

By Sarah Lizee

Olympia, Wash., Sept. 20 – EYP Group Holdings, Inc. received approval of the disclosure statement for its Chapter 11 plan of liquidation, according to an order filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan confirmation hearing is scheduled for Nov. 1.

According to the disclosure statement, a litigation trust will be created on or prior to the effective date. With agreement from the official committee of unsecured creditors, $500,000 of distributable cash will be set aside for the payment of litigation trust expenses incurred by the trust.

Under the plan, holders of administrative claims and priority tax claims will be paid in full.

Professional fee claims will be paid from an administrative claims fund.

Holders of secured claims will receive, at the option of the litigation trustee, transfer by conveyance, assignment or otherwise of the debtors’ right and title and interest in and to the collateral securing the claims, or other treatment rendering the claims unimpaired.

Holders of other priority claims will receive cash equal to the unpaid amount of their claims, or other treatment as the debtors or the litigation trustee and claimholders have agreed to.

On the effective date, the litigation trustee will deposit into the disputed claims $4.92 million in cash for the benefit of the holder of the LPC note claim.

The litigation trustee will deposit into the disputed claims reserve an amount sufficient to render the LPC indemnification claims unimpaired in full.

Holders of A2A indemnification claims will receive the following: for Tom and Karen Birdsey, $625,000; and for David and Marilyn Watkins, $275,000.

The holder of the A2B indemnification claim will receive $200,000.

Each holder of an A2C indemnification claim will receive from distributable cash an amount as determined by the bankruptcy court in an amount sufficient to render the claim unimpaired.

Holders of class A3 general unsecured claims will receive their pro rata share of $100,000 from the distributable cash. Any excess amounts remaining will be paid to creditors in class C1 below.

Holders of class A4 and B3 equity interests will receive nothing.

The holders of the class B1 redemption note claims will receive their pro rata share of $5.68 million. From this amount, $275,000 will be distributed to counsel to the holders of redemption notes.

Holders of class B2 general unsecured claims will receive their pro rata share of $5,000, but any excess amounts after satisfying these payments will be paid to creditors in class C1 below.

Holders of class C1 group I/II noteholder claims will receive distributions from the following: distributable cash less payments to classes A0, A2A, A2B, A2C, A3, B0, B1, B2, C0, C2 and C3, split 60% to holders of group I notes and 40% to holders of group II notes; and the proceeds of recoveries or benefits obtained through the prosecution of the retained causes of action, including any claims by or on behalf of the company in the New York litigation or otherwise, or retained causes of action by a litigation trust pursuing claims under the bankruptcy code or otherwise, which will be assigned by the debtors to the litigation trust, of which holders of group I notes and holders of group II notes will receive their pro rata share.

From the distributions to the holders of the group I notes, up to $350,000 will be distributed to counsel to the holders of group I notes. From the distributions to the holders of the group II notes, up to $425,000 will be distributed to counsel to the holders of group II notes.

Additionally, in consideration for the payment of the Birdsey indemnification claim and the release of the obligations under a promissory note dated Aug. 27, 2018, in the amount of about $171,181, Tom and Karen Birdsey agree to distribute through the litigation trust their recoveries in relation to $3.5 million, plus any accrued interest at the non-default contract rate as of the petition date, of the group I notes held by either or both of Tom and/or Karen Birdsey to the remaining group I noteholders.

Any unused balance in the disputed claims reserve, litigation trust reserve and administrative claims fund will be distributed 60% to the holders of group I notes and 40% to the holders of group II notes.

Holders of SBS equity owner claims will receive a payment from the distributable cash in the total amount of $226,444, with that amount being shared pro rata between holders of SBS equity owner claims, in exchange for the alleged value of the warrants provided to the SBS equity owners at the closing of the SBS acquisition.

Holders of class C3 general unsecured claims will receive their pro rata share of $100,000.

Holders of class C5 initial warrant claims and purchase warrant claims will receive nothing.

Albany, N.Y.-based EYP is an integrated design firm specializing in higher education, health care, government and science & technology. It filed bankruptcy on April 24 under Chapter 11 case number 22-10367.

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