Bankruptcy Court Approves Jackson Hewitt’s Restructuring Plan

by San Antonio Attorney

Jackson Hewitt Tax Service Inc’s restructuring plan was approved by a court on Monday, paving the way for the tax preparer company to come out of bankruptcy.

The agreement successfully completes a fast restructuring for the tax preparer company. It filed for bankruptcy protection in May under Chapter 11 with a prepackaged reorganization plan.

U.S. Bankruptcy Judge Mary Walrath authorized the plan at a court hearing in Delaware.

According to Jackson Herwitt’s bankruptcy attorney Mark MsDermott, the group of lenders led by Bayside Capital will receive a 75 to 80 percent share, while the rest goes to Bank of Ireland and Wells Fargo & Co.

An attorney for the official creditors’ committee Christopher Winter said the reorganization plan also makes a $1.1 million trust that would be used to pay unsecured creditors. In addition, a trustee would also be allowed to pursue around $2 million for avoidance actions on the part of unsecured creditors. Investors will not be able to recover anything.

Jackson Hewitt did not immediately respond to a request for comment. A lawyer for the group of lenders led by Bayside could not be reached.

Jackson Hewitt is second-largest U.S. tax preparer. It filed for bankruptcy when regulators started clamping down on income tax refund anticipation loans or RAL, which tax preparers usually lend to customers anticipating tax refunds. The loan was considered by the regulators as unsafe, which made it more difficult for Jackson Hewitt and other tax prepares to obtain funds for RAL.

The clamp down put Jackson Hewitt into trouble with the lenders because it was unable to provide complete financing for the loans, one of the main conditions of its credit agreement.

In its bankruptcy filing in May, the tax preparer company declared $388.6 million in assets and $444.8 million in debt. At that time, Jackson Hewitt was hoping to emerge from bankruptcy within two months.

 

–      Whatever type of bankruptcy case you file, a successful case leads to a discharge of debts that remain once the case along with other procedures has been completed. With the expertise of an experienced San Antonio bankruptcy attorney, you will have the best chance at achieving your goals in filing for bankruptcy.

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