Malden Mills struck a preliminary deal with its major creditors that will allow it to emerge from bankruptcy protection this spring. The plan of reorganization will include an exclusive option in favor of president & CEO Aaron Feuerstein to purchase the interest of the secured lenders and unsecured creditors to retain ownership of the company.
Malden filed for Chapter 11 bankruptcy protection in November 2001.
A U.S. Bankruptcy Judge gave the company until February 18, 2003 to file a proposed plan of reorganization consistent with an agreement in principle. Under the agreement, both the agent for the senior lenders and the unsecured creditors committee have agreed to “vigorously recommend” approval of this plan of reorganization to their respective creditor constituencies. This plan should allow Malden Mills to successfully emerge from Chapter 11 during Q2 2003.
Terms call for the firm’s secured and unsecured creditors to retain majority control of Malden Mills while Feuerstein would initially keep only about 5%. The deal would give Feuerstein an exclusive option lasting several years to buy back the remainder of the company. Feuerstein said last month he had already raised most of the required capital.
