CHANDLER, Ariz. — Bashas' here has reached agreement with its lenders on a reorganization plan and is in the process of trying to reconcile that agreement with a prior plan negotiated with its unsecured creditors, the chain's bankruptcy attorney told SN last week.
If the chain cannot come up with a consensus plan that all parties endorse, it has the option to go back to the U.S. Bankruptcy Court to see if the judge will approve the prior plan, Michael McGrath, an attorney with the Tucson, Ariz.-based law firm of Mesch, Clark & Rothschild, said.
He said the judge is keeping after the chain to resolve the differences among its secured and unsecured creditors by scheduling status hearings every week or so “to monitor the situation and to keep our feet to the fire.”
The court has scheduled a confirmation hearing for mid-May, though confirmation could come sooner if all parties can agree on a plan, McGrath pointed out.
Asked why the lenders did not approve the chain's original plan, McGrath said, “They wanted the typical things lenders want — more money, more collateral and higher interest rates. But we've resolved most of the issues, and now we're looking to get a consensus among both groups of creditors and the chain.”
The lenders, including banks and insurance companies, are in possession of bonds worth an estimated $215 million.
Bashas' filed for Chapter 11 bankruptcy protection in June and filed a reorganization plan with the bankruptcy court in January — which had the backing of chain management and the official committee of unsecured creditors — with the goal of emerging this month. However, the court declined to confirm the plan without support from the secured creditors.
LETTER TO WORKERS
In a letter to Bashas' employees two weeks ago, Edward N. Basha 3rd, senior vice president, said the lenders had expressed an interest “in working with us through the remainder of the reorganization process … to come up with a plan that would be accepted by all three parties.”
Coming up with a consensual plan, he said, “would avoid costly litigation, shorten the confirmation process and create a plan that would ensure a successful reorganization,” he wrote. “Creating a consensual plan is the goal of Chapter 11 reorganization, and we will be working hard over the next few weeks to reach this goal.”
