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Law360 (August 28, 2020, 7:23 PM EDT) -- A New York bankruptcy judge confirmed the Chapter 11 plan of educational tour company WorldStrides on Friday, saying settlement agreements with creditors made it an easy decision.
During a virtual hearing, attorneys for the debtor and parent company Lakeland Tours LLC said the plan's confirmation was proceeding without objection following a series of deals reached with creditors that absolved all opposition to the plan.
"I am very pleased to report that we are here today to confirm the pre-packaged plan of Lakeland Tours on a fully consensual basis," Nicole Greenblatt of Kirkland & Ellis LLP said. "This is quite an achievement."
Under the terms of the plan, the consenting lenders and Lakeland owners Eurazeo and Primavera Capital Group would provide up to $368 million for its debtor-in-possession facility, which will be rolled up into $260 million in exit financing and the equity of the reorganized business. The $126 million in unsecured notes will be canceled, and the remaining secured debt will be exchanged for $200 million in new secured debt and $160 million in unsecured debt.
A settlement with the existing unsecured noteholders and minority equity interest holders provides for payments of $1.5 million to those constituencies, whose debt is otherwise canceled under the plan.
Earlier this month, U.S. Bankruptcy Judge James Garrity approved the disclosure statement and Chapter 11 plan without objection, saying the documents met the standards of the bankruptcy code.
The company, which does business as WorldStrides, hit bankruptcy in July citing travel restrictions associated with the global outbreak of COVID-19 and an immediate erosion of its revenue earlier in the spring. Lakeland said its cash reserves dwindled quickly as it paid out refunds to nearly all of its customers in the aftermath of the pandemic.
As of the filing date, the company had about $768 million in funded debt, with $642 million in senior secured debt and $126 million in unsecured notes, Lakeland CFO Kellie Goldstein said in her Chapter 11 declaration.
Goldstein said the company had about $650 million in net revenue in 2019 and had projected more than $840 million in net revenue for 2020, but COVID-19 travel restrictions have "decimated" its business, stopping current income, slowing future bookings and requiring it to find the capital to provide what it estimates will total $366 million in refunds for canceled trips.
Lakeland was founded in 1967 to provide middle school travel programs in the Washington, D.C., area, according to the company. It offers worldwide educational travel to about 550,000 students annually from about 7,000 schools and 800 universities. In its bankruptcy announcement, Lakeland said it has about 1,500 employees worldwide and about 500 are currently furloughed.
Lakeland is represented by Nicole L. Greenblatt, Susan D. Golden and Whitney C. Fogelberg of Kirkland & Ellis LLP.
The case is In re: Lakeland Tours LLC et al., case number 20-11647, in the U.S. District Court for the Southern District of New York.
--Additional reporting by Rick Archer. Editing by Steven Edelstone.
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