Harry & David Wins U.S. Bankruptcy Court’s Approval of Reorganization Plan
Harry & David Holdings Inc., the gift-box retailer that has sold fruit by mail since the 1930s, received approval of its reorganization plan and said it’s set to emerge from bankruptcy protection on Sept. 13.
U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, yesterday signed the final order approving the plan after giving her tentative endorsement Aug. 11.
“We’ve reached a significant milestone for Harry & David and are excited to emerge from the Chapter 11 process as a stronger company,” Kay Hong, the Medford, Oregon-based company’s chief restructuring officer and interim chief executive officer, said today in a statement.
Harry & David’s modified plan resolved the objection of the Pension Benefit Guaranty Corp. over the classification of its claim. Under the plan, PBGC will get a claim of $36 million and in return won’t appeal Walrath’s decision to terminate the pensions of more than 2,700 past and present employees.
PBGC’s claim will get the same cash treatment as unsecured claims. Unsecured creditors supported the plan, which will pay them 10 percent of their claims in cash, with 40 percent of that paid in 2012 and the rest in 2013. Senior noteholders will get control of the company in exchange for canceling more than $200 million in debt.
Harry & David filed for bankruptcy in March, blaming competition from Internet retailers and warehouse-style stores and the recession.
Before filing, the company reached agreement on a reorganization plan with holders of 81 percent of the senior notes, including Wasserstein & Co., which also owns 63 percent of the stock. A Wells Fargo & Co. unit is indenture trustee for the noteholders.
The case is In re Harry & David Holdings, Inc., 11-10884, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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