M&G debtors confirm chapter 11 plan of liquidation and close sale of Corpus Christi plant for $1 billion
Client(s) M&G Resins USA, LLC, et al.
On December 17, 2018, the United States Bankruptcy Court for the District of Delaware entered an order confirming the Third Amended Plan of Liquidation (the "Plan") of Jones Day client M&G USA Corporation and eight of its affiliates (the "M&G Debtors"), which prior to the chapter 11 filing, were, along with their affiliates in Mexico, Brazil and Europe, one of the largest producers of polyethylene terephthalate resin – used for packaging applications – in the world. On December 28, 2018, after receiving antitrust approval, the M&G Debtors closed the sale of their partially constructed manufacturing facility in Corpus Christi, Texas, (the "Corpus Christi Plant") with a deal value in excess of $1 billion. The Plan became effective on December 31, 2018.
The M&G Debtors, along with three Luxembourg affiliates, entered chapter 11 in October 2017 with liabilities of approximately $2 billion. Between October 2017 and April 2018, the M&G Debtors entered into four funding arrangements with four different lenders to fund their chapter 11 cases and sale process. In February of 2018, the M&G Debtors sold their facility in Apple Grove, West Virginia for $33 million. In March of 2018, the sale of the Corpus Christi Plant for $1 billion in deal value was approved. In August of 2018, the chapter 11 cases of the three Luxembourg affiliates were dismissed, effective in November of 2018. Voting on the Plan began in November of 2018 and creditors entitled to vote on the Plan ultimately voted overwhelmingly in its favor, resulting in a consensual confirmation. The chapter 11 plan provides for (1) the payment or deemed payment in full of the Debtors' postpetition financing and prepetition first lien lender and other secured lenders; (2) the establishment of a reserve of $265 million to pay mechanics lien claims; and (3) the establishment of a litigation trust - funded by a cash pool of up to $50 million negotiated in connection with the sale of the Corpus Christi Plant - to pursue and resolve claims and make distributions to creditors.
