GNC Holdings Inc. won approval of its bankruptcy reorganization plan that centered on a $770 million sale to its largest shareholder, keeping open at least 1,400 of its nutrition supplement stores and saving thousands of jobs.
The plan, approved Wednesday by Judge Karen B. Owens of the U.S. District Court for the District of Delaware, follows a global settlement among GNC, the creditors committee, buyer Harbin Pharmaceutical Group Holding Co., and other creditors that fought over sale terms and the structuring of GNC’s reorganization.
The planwill pay unsecured creditors from a pool of $4.5 million cash, plus another $20 million in convertible and non-convertible notes payable in up to eight years.
Unsecured creditors can elect to be treated in a “convenience class,” created for holders of claims up to $50,000. Those creditors—or those with larger claims choosing to limit them to $50,000—should recover about 7% of their claims, attorney Richard Levy of Latham & Watkins LLP said Wednesday at the remote hearing.
Other unsecured creditors will likely receive a smaller percentage of their claims, Levy said. Some of the future payments to unsecured creditors will come from notes issued by Harbin, Levy said.
GNC filed Chapter 11 in June, suffering from the industry-wide retail decline exacerbated by the Covid-19 pandemic.
Owens approved last month GNC’s sale to China-based Harbin.
Sen. Marco Rubio (R-Fla.) had raised concerns that the sale would lead to customer personal data being exposed to the Chinese government.
The case is In re GNC Holdings, Inc., Bankr. D. Del., No. 20-11662, hearing 10/14/20.