Truvo USA LLC, a bankrupt directory publisher, must to wait to move forward with its restructuring plan after a judge said he will postpone ruling on whether creditors can begin voting on it.
U.S. Bankruptcy Judge Arthur Gonzalez in New York said today at a hearing that he wouldn’t rule on whether the company can send its plan to creditors. He said he may hold another hearing next week.
Truvo’s unsecured creditors, including AllianceBernstein LP, who are fighting the plan, urged Gonzalez today not to allow voting to proceed so that they can continue negotiating with the company.
“They’re trying to ram this through without giving us time to do our job,” said Mark Ellenberg, an attorney for the creditors.
Truvo, a unit of Truvo Luxembourg Sarl, publishes print and online telephone directories in Europe. It filed for bankruptcy in July with a restructuring plan that would give control of the company to senior lenders with claims totaling 777.6 million euros ($995.5 million). Substantially all of the equity in Truvo Luxembourg is owned by Apax Partners Worldwide LLP and Cinven Ltd., according to court papers.
Sean O’Neal, an attorney for Truvo, said in an interview after the hearing that the company will make small changes to a summary of the plan, known as a disclosure statement. He said creditors will respond Sept. 7 to the changes, and Gonzalez could hold a hearing the next day. The disclosure statement must be approved for voting to proceed. The judge said he may rule without a hearing.
Noteholders, including AllianceBernstein and Normandy Hill Capital LP, oppose the plan and urged Gonzalez today not to allow it to move forward. Ellenberg, their attorney, said the bankruptcy plan is designed for the “exclusive benefit” of senior lenders. While Truvo claims broad creditor support for the plan, investors holding 52 percent of the company’s high- yield notes haven’t said they’ll support it, according to Ellenberg.
“All it does is shift value away from the high-yield notes and into the bank debt. I don’t think that’s what Chapter 11 is for,” Ellenberg said.
O’Neal, Truvo’s lawyer, said objections from noteholders are premature and should be considered when Truvo seeks court approval of the plan. The plan doesn’t benefits only lenders, he said.
The company negotiated a deal to provide a small recovery to noteholders even though they aren’t entitled to one based on Truvo’s value, he said. The noteholders would receive a recovery of as much as 5.4 percent on their claims, according to court papers.
The case is In re Truvo USA LLC, 10-13513, U.S. Bankruptcy Court, Southern District of New York (Manhattan).