Michael Jordan's Steakhouse Resturants in New York City file Bankruptcy

Michael Jordan, owner of the Charlotte Bobcats, throws the ball back to an official during their game against the San Antonio Spurs at Time Warner Cable Arena on November 8, 2010 in Charlotte, North Carolina.

 

An agreement that Credit-Based Asset Servicing & Securitization LLC negotiated with senior secured creditors would create an $8.2 million pot that the company can use to operate the Chapter 11 case and distribute to lower- ranking creditors under a reorganization plan.

To receive a distribution, creditors must agree not to sue the lenders or executives of the company, known as C-Bass, according to the agreement. If senior lenders are fully paid within three years, half the excess over the principal amount of the lenders' secured debt would go to C-Bass for distribution to lower-ranking creditors.

The agreement requires New York-based C-Bass to file a Chapter 11 plan and secure approval of the explanatory disclosure statement by Dec. 31. The court must hold a confirmation hearing for approval of the plan by Feb. 15.

Even with the lenders' seeming largesse, the first hearing didn't go well yesterday. U.S. Bankruptcy Judge Allan Gropper refused to approve the temporary use of the lenders' so-called cash collateral on the terms proposed by C-Bass. For Bloomberg coverage of the hearing, click here.

Gropper said that C-Bass hadn't shown an emergency need for cash. He also said an agreement with the lenders shouldn't be approved without first being analyzed by a yet-to-be-formed creditors' committee.

The judge told C-Bass to submit a simplified agreement on the use of cash.