The Dolan Co. said Monday its Chapter 11 plan of reorganization has been approved by the U.S. Bankruptcy Court in Delaware.
The Minneapolis-based publishing company anticipates that it will emerge from bankruptcy later this week.
Under the reorganization plan, Dolan’s secured lenders will become the owner of Dolan and its e-discovery business, DiscoverReady, which will be operated as separate businesses. Investment funds managed by Bayside Capital, Inc. will be the majority owner. Bayside Capital is an affiliate of H.I.G. Capital, a global private investment firm
“Confirmation of the plan is a key step in unlocking the company’s businesses from the weight of debt associated with the company’s former mortgage foreclosure processing businesses,” Kevin Nystrom, the company’s chief restructuring officer, said in a statement. “Emergence from bankruptcy will be the capstone of efforts to secure a bright future.”
The plan allows Dolan and its subsidiaries to reduce their debt by more than $100 million to about $50 million. And Dolan’s secured lenders will refinance DiscoverReady’s capital structure with a $10 million revolving facility.
Dolan said it will “continue to provide its usual, high-quality services and products to its customers and to pay trade creditors in the ordinary course of business.”
DiscoverReady provides legal administrative services to major companies and their lawyers.
The court also approved a settlement between Dolan and the shareholders’ committee. Dolan will transfer approximately $3.2 million, including cash and a note receivable. to a trust established for the benefit of holders of the company’s preferred and common stock.
Approximately 20 percent of the proceeds of the trust will subsequently be distributed to holders of the company’s preferred stock; the balance will be distributed to common-stock holders.
Dolan’s stock plunged from about $7 per share two years ago to a 7-cents-per-share close on Monday. Upon emergence from bankruptcy, Dolan’s preferred and common stock will be canceled.
Dolan went public in 2007 and was a once-growing provider of foreclosure-processing services to lawyers. Dolan also is the longtime publisher of the Minneapolis-based Finance and Commerce business journal, which continues to publish daily, and other publications.
Dolan management lost control of the company late in 2013 while attempting an out-of-bankruptcy reorganization. The company’s lenders balked and the company sought bankruptcy protection in March.
CEO Jim Dolan, who built the company over many years, resigned earlier this year.