Breaking News: JHTXQ will exit from the CH11 today!
Jackson Hewitt wins OK to emerge from bankruptcy
Mon Aug 8, 2011 2:11pm EDT
* Plan turns bulk of company over to lenders
* Creates $1.1 mln trust for unsecured creditors
* Equity holders wiped out
By Nick Brown
NEW YORK, Aug 8 (Reuters) - Jackson Hewitt Tax Service Inc (JHTXQ.PK) won court approval of its reorganization plan on Monday, clearing the way for the second-largest U.S. tax preparer to emerge from bankruptcy under the control of lenders led by Bayside Capital.
The deal effectively completes a swift restructuring for Jackson Hewitt, which filed for Chapter 11 protection from creditors in May with a prepackaged restructuring plan.
U.S. Bankruptcy Judge Mary Walrath confirmed the plan at a hearing in Wilmington, Delaware, lawyers for Jackson Hewitt and its creditors said.
The Bayside group will take a 75 to 80 percent stake, with the remainder going to Wells Fargo & Co (WFC.N) and Bank of Ireland (BKIR.I), said Mark McDermott, Jackson Hewitt's bankruptcy lawyer.
"We got a lot accomplished," he said. "We managed to leave behind most of the litigation, and we did it all in only a couple of months."
The plan also creates a $1.1 million trust to be paid out to unsecured creditors, said Christopher Winter, a lawyer for Jackson Hewitt's official creditors' committee, which supports the plan.
It will also allow a trustee to pursue about $2 million in so-called avoidance actions on behalf of unsecured creditors, Winter added. Shareholders will recover nothing.
"It was a very difficult case and there was no apparent value for unsecured creditors, so the committee is pleased with the outcome," Winter said.
Jackson Hewitt did not immediately provide a comment. An attorney for the Bayside lenders could not be reached.
Jackson Hewitt filed for bankruptcy May 24, after regulators began clamping down on refund anticipation loans, which tax preparers often provide to tide over customers expecting refunds. Regulators called the loans unsafe, making it harder for tax preparers to secure funding for them.
The curbs caused Jackson Hewitt to get into trouble with lenders when it failed to secure full funding for the loans, a key covenant in its credit agreement.
In its May 24 bankruptcy filing, Jackson Hewitt showed assets of $388.6 million and debt of $444.8 million. The company said at the time it hoped to emerge within two months.
The case is In re: Jackson Hewitt Tax Service Inc, U.S. Bankruptcy Court, District of Delaware, No. 11-11587.
(Reporting by Nick Brown; Editing by Richard Chang)
I'm not sure if the common shares will be canceled today or later!
Profits-For-You board has spot totally 31 OTC killers so far from 125-bagger to 2.1-bagger since its creation on 03/05/2011!
