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Red Lobster Plan Confirmed; Reorganized Company Under Lenders’ Control Will Have 545 Go-Forward Restaurants

Relevant Documents: Amended Plan (and Blackline) Confirmation Order (Entered Sept. 6) Judge Grace E. Robson confirmed the Red Lobster debtors’ amended chapter 11 plan at an uncontested hearing today. The debtors resolved all objections to the plan ahead of today’s hearing. The plan contains opt-in releases, as directed by Judge Robson at the disclosure statement hearing, in light of the U.S. Supreme Court’s Purdue decision. The Office of the U.S. Trustee nevertheless objected to the plan on other grounds including matters related to UST fees and exculpation, but, as discussed below, the objection was resolved ahead of today’s hearing. The debtors filed an amended plan yesterday, Sept. 4, that incorporates a resolution with insurer Zurich regarding the assignment of Zurich’s insurance policy under the plan. The plan is premised on a prepetition restructuring support agreement that envisioned either a 363 asset sale or a reorganized equity sale. On Aug. 30, the debtors decided to pursue a reorganized equity sale. The prepetition term lenders, led by Fortress as agent, agreed to provide $275 million in DIP financing (including rolled-up debt) and serve as stalking horse with a credit bid of the DIP loans. The debtors selected the lenders’ stalking horse entity RL[...]