Muzak says judge OKs reorganization plan, expects to leave Chapter 11 by end of month

Judge approves Muzak bankruptcy exit plan

FORT MILL, S.C. — A bankruptcy judge approved Muzak Holdings LLC’s reorganization plan to clear the way for its exit from court protection by the end of the month, the company said Tuesday.

The company that is synonymous with elevator music reduced its debt by more than half to $230 million during its Chapter 11 case. Creditors approved its reorganization plan.

Under its exit plan, top secured creditors will receive either cash in full or stock in the reorganized company. Some unsecured creditors such as vendors will be paid in full in cash.

Music companies such as Universal Music Enterprises, EMI Capital Records and others listed as unsecured creditors will recover 100 percent of their claims as cash, as long as they are valid.

A federal bankruptcy judge in Delaware also approved Muzak’s $108.8 million loan to exit bankruptcy. Proceeds from that loan will be used to pay back pre-bankruptcy loans to secured lenders, such as banks, and to fund other general expenses.

The exit loan is being provided by GE Capital, Restructuring Finance, Silver Point Finance LLC and MFC Global Investment Management.

Muzak, based in Fort Mill, S.C., filed for Chapter 11 protection in Delaware in February to refinance heavy debt. The company’s music programming is heard in stores, office buildings and on-hold phone systems.

(This version CORRECTS to say secured creditors will get equity and eligible unsecured creditors will get cash.)