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Prince Sports Confirms Reorganization Plan; Shifts From Manufacturing Business to Licensing Operation
On July 27, 2012, Judge Kevin Carey confirmed the plan of reorganization for Prince Sports, a well-known manufacturer of performance racquet sport products. Under the plan, senior secured lenders Authentic Brands Group acquired 100% of the equity in reorganized Prince in exchange for their prepetition debt. Pachulski Stang Ziehl & Jones represented the debtors in navigating Prince from a manufacturing business to a licensing operation that will constitute the reorganized debtors’ business postconfirmation.
The plan is the result of a successful settlement among the debtors, the creditors' committee, and the lenders that was reached at the disclosure statement hearing in June 2012, thereby resolving a contentious dispute over the amount allocated for distribution for unsecured creditors as well as approval of the debtors' motion to enter into a licensing agreement with Prince America to license Prince’s products throughout the Americas.
The granting of the licensing motion was a critical component in the ability of the debtors to reorganize and provided substantial licensing revenues to the company over the course of the agreement. The plan provides for a cash contribution by the reorganized debtors by the prepetition lenders of $4,000,000 for distribution to unsecured creditors. In addition, allowed general unsecured claims would be entitled to their pro rata share of any net avoidance actions proceeds. The plan provides for appointment of a liquidating trustee by the committee to manage the liquidating trust on behalf of unsecured creditors, including holding and distributing the $4 million in cash and maintaining the avoidance actions for the benefit of general unsecured creditors.