A judge on Thursday said creditors can vote on Velti Inc.'s (VELTF) liquidation plan, another step toward the mobile-advertising company closing its sale to Blackstone Group LP's (BX) credit unit.
Judge Peter J. Walsh of U.S. Bankruptcy Court in Wilmington Del., approved Velti's so-called disclosure statement, a plain-English version of a company's restructuring proposal, and scheduled a May 29 hearing to decide whether to approve the plan.
Blackstone's GSO Capital Partners, which bought Velti's $57.5 million top-ranking debt ahead of the company's Chapter 11 filing last year and later extended a $25 million bankruptcy loan, credit bid $40 million in addition to the assumption of other liabilities. GSO was the only bidder to appear at a court-ordered auction, and the sale was approved shortly after.
The purchased assets include Velti's U.S. mobile-marketing businesses and certain U.S.-based advertising units, along with some foreign holdings. Those businesses are continuing as normal throughout the sale process.
Velti's liquidation proposal creates a litigation trust for unsecured creditors, who can claw back all so-called preference payments---money paid to suppliers and trade creditors in the 90 days before a bankruptcy. Often the proceeds from such clawback suits are the only recoveries unsecured creditors will see from a liquidating business.
Of the $550,000 earmarked for the trust, about $300,000 would be distributed to unsecured creditors, while the rest would go to legal fees related to the trust. The unsecured creditors, owed nearly $6.8 million, will recover between three cents on the dollar up to 6.6 cents on the dollar, according to Velti's latest estimate. While Velti said that number could end up being "substantially higher," the company said in the filing that because of the uncertainty of litigation," there is no way to project a recovery and distribution of more than the $300,000" for the unsecured creditors.
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