March 19 (Bloomberg) -- Scrub Island Development Group Ltd., the owner of a British Virgin Islands luxury resort, filed a proposed restructuring plan that resolves a dispute with lender FirstBank Puerto Rico, which forced it to seek court protection.
The company filed a reorganization plan today in U.S. Bankruptcy Court in Tampa, Florida, where it is based, that will allow it to exit bankruptcy through capital infusions from new and current investors and an agreement with FirstBank reducing its claims of about $120 million.
The plan provides for “the settlement and payment of the allowed claims of FirstBank Puerto Rico, and the payment in full of all of the other allowed claims,” the company said in court papers.
Scrub Island Development Group owns the island and resort of the same name nestled into the side of the smaller of two halves of a 230-acre private island connected by a narrow strip of land. It’s the first resort development built in the British Virgin Islands in more than 15 years, according to its website.
The company sought bankruptcy protection to fight a receivership initiated by FirstBank. Scrub Island Development Group listed debt and assets of more than $100 million each in Chapter 11 documents filed Nov. 19.
Under the restructuring plan the receivership will be dismissed and all the property in the receiver’s possession would be turned over to reorganized company.
New investors would inject about $9.1 million into reorganized Scrub Island Development Group for a majority equity interest in the company, according to the plan. Current investors in Scrub Island Development Group would contribute about $6 million for a minority equity interest in the reorganized company. The investments will be used to make payments under the plan and fund capital expenditures of the resort.
FirstBank Puerto Rico has agreed to receive a $37.5 million secured claim against the reorganized company. The bank would receive an initial payment of $7.5 million from the funds contributed by new investors to reduce that claim. The bank would be paid over five years on a $30 million note and receive 50 percent of the proceeds of any real estate sales. A reserve of about $1.3 million would be set up to fund interest payments.
The bank agreed to waive the right to receive any recovery on an unsecured deficiency claim of $84.9 million, and vote that claim in favor of the plan. Unsecured creditors would be paid in full over five years.
The case is In re Scrub Island Development Group Ltd., 13-15285, U.S. Bankruptcy Court, Middle District of Florida (Tampa).
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