Cenveo Reaches Global Ch. 11 Plan Settlement With Creditors

Cenveo Inc. Tuesday submitted a revised Chapter 11 plan to a New York bankruptcy court it said reflects a global settlement with creditors that drops claims of insider dealings and more than triples the cash pool for unsecured creditors.

The company said it had reached a settlement with the unsecured creditors committee and an ad hoc noteholders group for a revised Chapter 11 plan. The revisions will include bumping a $1.5 million fund for unsecured creditors to a $7 million fund for unsecured creditors and second-tier lien holders, halving the take-back debt and releasing any claims against current and former directors and officers.

“After months of hard-fought, good-faith discussions between Cenveo and its key stakeholders — the Committee and the Ad Hoc Group — Cenveo has entered into a series of settlements that form the basis of its amended plan, provides for a significant recovery for general unsecured creditors, eliminates hundreds of millions of dollars in prepetition funded indebtedness, and clears the way for Cenveo to emerge from Chapter 11 as a healthier, stronger company around this summer, less than six months after the commencement date,” it said.

The 99-year-old company — one of the largest U.S. printing and envelope companies — declared bankruptcy on Feb. 2 with the hope of shedding $700 million in debt.

Tuesday’s proposed plan revises a plan originally filed in April. According to Cenveo, the changes include increasing the cash pool for unsecured creditors from $1.5 to $7 million. Instead of receiving warrants as they did under the first proposal second-tier lien holders will also draw from this cash pool, it said.

Cenveo said the first-lien noteholders will not recover from the pool and have agreed to reduce the amount of take-back debt in the plan from $200 million to $100 million.

The settlement also calls for the release of “all possible claims and causes of action” against Cenveo and related parties, including current and former directors and officers, the filing said.

In February Cenveo noteholder Brigade Capital Management LP filed a motion accusing Cenveo’s controlling shareholders of engaging in insider dealings that culminated in a restructuring support agreement that undervalued the company and shortchanged second-tier noteholders while handing out “substantial” equity grants to the current management.

In response, U.S. Bankruptcy Judge Robert C. Drain appointed an examiner to oversee an inquiry by the unsecured creditors committee into the alleged insider dealings.

Under the terms of the settlement the committee and Cenveo’s board will both end their investigations into the allegations and send their most recent draft reports and finding summaries to the examiner, who will prepare a report for the court, according to the filing.

The revised plan also calls for the company to pay Allianz approximately $50 million in cash for its senior secured notes in exchange for its support for the plan and to assume all of its qualified pre-bankruptcy pension obligations and union contracts when it emerges from Chapter 11, according to the filing.

Cenveo said the new plan will satisfy objections filed by the U.S. Trustee, the Securities and Exchange Commission and others who had argued the plan lacked details on releases and recoveries. Other objections, such as claims the releases are too broad, are premature and should be raised at the confirmation hearings, it said.

Counsel for Cenveo, the unsecured creditors and the noteholders did not immediately respond to requests for comment Tuesday.

Cenveo is represented by Jonathan S. Henes, Joshua A. Sussberg, George Klidonas, James H.M. Sprayregen, Melissa N. Koss and Gregory F. Pesce of Kirkland & Ellis LLP.

The unsecured creditors are represented by Kenneth A. Rosen, Mary E. Seymour, Bruce Buechler and Eric S. Chafetz of Lowenstein Sandler LLP.

The noteholders are represented by Brett Lawrence, Erez E. Gilad, Matthew G. Garofalo and Gabriel E. Sasson of Stroock & Stroock & Lavan LLP.

The case is In re: Cenveo Inc. et al., case number 7:18-bk-22178, in the U.S. Bankruptcy Court for the Southern District of New York.

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