China Fishery Group units’ confirmation hearing continued to June 10

By Sarah Lizee

Olympia, Wash., June 9 – An informal group of creditors for China Fishery Group Ltd. debtors CFG Peru Investments Pte. Ltd. (Singapore) and Smart Group Ltd. (Cayman) had the hearing on their Chapter 11 plan for CFG Peru and Smart Group continued to Thursday, according to a notice filed Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

On March 1, following several months of discussions regarding potential restructuring transactions, the informal group of creditors, comprised of holders of 56% of the principal amount of senior notes and 71% of the principal amount of a club facility, executed a restructuring support agreement, as previously reported.

The deadline to become an earlybird creditor was March 16.

As of Friday, 87.8% of the principal amount of the senior notes and 71.2% of the principal amount of the club facility have executed the restructuring support agreement.

The restructuring support agreement contemplates a comprehensive restructuring and recapitalization transaction for the plan debtors and some of their non-debtor affiliates that will safeguard and provide funding for the fishmeal business of the Peruvian OpCos.

The plan provides for change in ownership of the Peruvian OpCos through a transfer of the equity in CFGI to NewCo, and the recapitalization of the Peruvian OpCos through the provision of a committed $150 million new money facility to fund working capital and transaction costs.

The new money facility will accrue cash interest at the rate of Libor plus 900 basis points per annum and mature 10 years from the date of the drawdown, which is anticipated to occur on or around the effective date.

The new money facility will be backstopped by some consenting creditors. The backstop parties are entitled to a backstop commitment fee equal to 5% of their respective backstop commitments on the new money facility, payable in cash at the closing of the transaction.

The club facility and senior notes will be exchanged for $300 million of new notes. The new notes will accrue cash interest at the rate of Libor plus 900 bps per annum and mature 10 years from the date of the closing of the transaction.

The debt structure of NewCo will only include the new money facility and the new notes.

Interests in the equity of NewCo and the new notes will be apportioned between holders of senior notes claims and club facility lenders.

Under the plan, each administrative claim, secured claim and other priority claim will be paid in full in cash or receive other treatment that renders their claim unimpaired.

Each priority tax claim will be treated in line with the terms in section 1129(a)(9)(C) of the Bankruptcy Code.

Chapter 11 trustee fee claims will be paid in the amount allowed by the bankruptcy court.

Each superpriority loan claim will be set off, capitalized, forgiven or such other similar or equivalent mechanisms as required in a specific jurisdiction under the superpriority loan settlement order, provided that the plan administrator is authorized to cause Sustainable Fishing Resources SAC to transfer proceeds from the sale of non-core assets listed in the first and second non-core asset sales procedures motions either directly or indirectly to CFG Peru to effectuate the SFR distributions contemplated under the plan promptly following the confirmation date.

Each holder of a senior notes claim will receive distributions under the U.K. proceeding and/or Singapore scheme. On the effective date, all of the senior notes will be canceled, provided, however, that any distribution will be in addition to any distributions made by the plan administrator or any other entity with respect to the interim distribution.

Unless otherwise provided for under the plan, each holder of a general unsecured claim will receive its pro rata share of the wind-down trust interests.

Each holder of the BANA-CFG Peru claim will receive its pro rata share of $30.99 million in cash, which will be remitted by NewCo or the Peruvian OpCos.

Each holder of a club facility subordination claim will receive distributions under the U.K. proceeding and/or Singapore scheme.

Each section 510(b) claim will be deemed canceled and released without any distribution.

Interests in CFG Peru and Smart Group will be reinstated as of the effective date or, at the creditor plan proponents’ option, will be canceled. No distribution will be made on account of any interests in CFG Peru and Smart Group.

The consenting creditors and other parties will grant full, mutual releases under the plan.

The creditor group had said in its disclosure statement that the Chapter 11 trustee intended to run a final formal bidding process for the sale of the CFG Investments SAC equity interests. If a qualified bidder had come forward at a price sufficient to satisfy the senior notes claims and club facility lenders, the creditor plan proponents would have no longer sought confirmation of their plan by the bankruptcy court. However, the trustee notified the court last week that it received no conforming bids.

China Fishery is a Hong Kong-based manager and operator of fishing vessels for coastal and deep-sea industrial fishing. The company filed bankruptcy on June 30, 2016 under Chapter 11 case number 16-11895.

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