With a court-approved sale already in place, downtown-based GNC Holdings Inc. was awarded approval of its Chapter 11 bankruptcy plan by Judge Karen B. Owens of the United States Bankruptcy Court in the District of Delaware.
The approval comes with the company's largest shareholder, China-based Harbin Pharmaceutical Group, set to buy the nutritional supplements retailer for $770 million in a transaction described by the company in its initial Chapter 11 filing in late June.
In a decision ordered last week, the plan approval settles what had been a large number of objections largely by landlords representing hundreds of GNC stores, with court documents indicating all the liens filed against the nutritional supplements retailer to be released and settled.
The approved plan and sales agreement is expected to preserve the operation of a healthy proportion of GNC's remaining stores as well as a healthy percentage of its employees.
GNC started its Chapter 11 with total debts of $895 million and total assets of $1.4 billion in a move that came when the company faced the disruption of the Covid-19 pandemic shut downs at a time when it faced an impending debt maturity, in the process opting to close 800 to 1,200 stores out of more than 5,000.
In a bankruptcy filing in which GNC indicated it had more than 100,000 creditors, the company set up its plan to include a total of eight different creditor classes, including what it called a convenience class to handle small, unsecured claims of $50,000 or less.
GNC, Harbin and its various creditors reached a comprehensive settlement recorded in the bankruptcy filings in September 18. Through the settlement, GNC and Harbin as its new owner put aside $4.5 million for various claims and issued $10 million in junior convertible notes, and agreed to remove a "death trap" provision to provide the notes only if various creditors didn't object to the sale, among other provisions.