The U.S. Bankruptcy Court for the Southern District of New York last week approved Golden Books' reorganization plan, making it possible for the children's publisher to emerge from Chapter 11 within a few weeks. The plan that was approved was basically the same one the company submitted in February, which reduces its long-term debt from approximately $300 million to $87 million by exchanging outstanding notes for stock (News, March 1). In addition, shareholders will receive out-of-money warrants in exchange for surrendering their stock. The plan also calls for all trade debt to be paid in full.
Consummation of the reorganization plan is conditioned upon finalizing requisite documentation contemplated by the plan as well as court approval of a class-action lawsuit that has been brought against Golden on behalf of its shareholders. In mid-August, the publisher settled the class action suit for $5.25 million.
Philip Galanes, chief administrative officer for Golden, told PW that the approval of the reorganization plan is "wonderful news for our business. We've been dividing our time between running the company and dealing with bankruptcy issues. We can now turn our full attention to the company."