A key hearing for Dolan Company’s bankruptcy reorganization plan, which has drawn opposition from the U.S. Trustee and shareholders, has been rescheduled for May 27 at U.S. Bankruptcy Court in Delaware.
The judge this week postponed a scheduled May 1 hearing of the plan, negotiated before the Minneapolis-based publisher and legal-services company filed for Chapter 11 bankruptcy on March 23.
Secured lenders including California’s Bayside Capital voted on the plan, designed to reduce debt by about $100 million to $50 million by giving them all the new stock and at least $50 million in new debt. Unsecured creditors didn’t vote on the plan because they will be paid in full, the company has said.
Existing common and preferred shareholders would be wiped out.
An official shareholders’ committee appointed by the U.S. Trustee in April filed a preliminary objection to the plan and asked for the delay of the approval hearing, Bloomberg reported on Monday.
Dolan responded by asking the judge to disband the committee, saying the group will cause “significant harm” and “needless expenditures.”
The U.S. Trustee, the Justice Department’s bankruptcy watchdog, sided with the shareholders, saying pre-bankruptcy disclosure materials were inadequate and didn’t explain a $50 million decline in the Minneapolis-based company’s value over six weeks, according to the U.S. Trustee.
Dolan management lost control of the company late in 2013 when lenders led by U.S. Bank balked, and sold their loans in the struggling legal publisher to Bayside Capital, an affiliate of private investment firm H.I.G. Capital. Bayside expects to become the majority owner of Dolan, which publishes Finance & Commerce and other business publications.
This report contains material from Bloomberg News.