Service America files reorganization plan

Nation's Restaurant News, Jan 11, 1993

STAMFORD, Conn. -- Seeking a quick emergence from Chapter 11 bankruptcy, Service America Corp. has filed a new reorganization plan in U.S. Bankruptcy Court in Bridgeport, Conn.

The contract feeder proposes to continue its $151 million term loan and $70 million revolving credit line with senior lender GE Capital Corp. and to pay its creditors and equity holders with cash, securities or both.

Under the plan, bondholders of the company's 13-percent and 14-percent senior unsecured subordinated notes will be offered $35 million of senior preferred stock. Those purchasers would own about 70 percent of the common equity in the reorganized company. GE Capital would buy any unpurchased senior preferred stock.

Bondholders would also receive $15 million of junior preferred stock and $10.6 million in cash within 30 days of Service America's emergence from Chapter 11. Additionally, all outstanding 13-percent to 14-percent notes would be converted to 15 percent of the company's common stock.

Other unsecured creditors would receive about $42.4 million to go toward 80 percent of their pre-petition claims, as well as 15 percent of the restructured company's common stock.

Service America, a subsidiary of Servam Corp., filed for protection from creditors in October, when bondholders rejected an earlier reorganization plan.