Dolan To Exit Bankruptcy; Stock Will Be Cancelled
The Dolan Company has been given the green light to proceed with its planned bankruptcy reorganization plan—and the Minneapolis-based firm, formerly one of Minnesota’s 50 largest public companies, will become privately owned and its stock will be cancelled.
Dolan provides an array of business information and professional services to the legal, financial, and real estate industries, and it owns the Finance & Commerce newspaper, among other publications. The company filed for Chapter 11 bankruptcy protection in March, at which time its founder, James Dolan, stepped down from his role as CEO.
The company announced this week that the United States Bankruptcy Court for the District of Delaware has approved its “prepackaged” reorganization plan, describing the approval as “a critical step toward the company’s emergence from bankruptcy, which the company anticipates will occur later this week.”
Under the terms of the reorganization plan, Dolan’s secured lenders will assume ownership of Dolan Company and its “e-discovery” business, DiscoverReady LLC, each of which will be operate as distinct entities. Bayside Capital, Inc., an affiliate of private investment firm H.I.G. Capital, will be the majority owner. Dolan’s stock, which was previously delisted by the New York Stock Exchange and moved to the “over-the-counter” marketplace, will be cancelled. (Read more about the events that led to Dolan’s bankruptcy here and about James Dolan's severance package here.)
Dolan said its bankruptcy plan will allow it and its subsidiaries to cut their debt by more than $100 million to roughly $50 million.
Dolan's initial bankruptcy plans did not call for shareholder compensation, but as it sought approval for its reorganization plan, Dolan reached a settlement with its “Official Committee of Equity Security Holders,” a deal that requires Dolan to pay about $3.2 million to a trust designed to benefit stockholders. “Approximately 20 percent of the proceeds of the trust will subsequently be distributed pro rata to holders of the company’s preferred stock; the balance will be distributed pro rata to holders of the company’s common stock,” Dolan said.
“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, Dolan’s “chief restructuring officer,” said in a statement. “Emergence from bankruptcy, which we expect to occur later this week, will be the capstone of the company’s efforts to secure a bright future for the company and its customers, employees, and vendors.”