Dan River plans debt for equity swap
August 6, 2004,
NEW YORK CITY — Textiles producer Dan River Inc., working its way through Chapter 11, has filed a plan of reorganization in U.S. Bankruptcy Court that call for paying unsecured creditors — largely its raw material and merchandise suppliers — in newly minted stock once the company emerges from bankruptcy.
In a fairly conventional debt for equity swap, the company's current common stock, now worth only two cents a share, would be cancelled, in a move that would have a punishing impact on senior managers, including Joseph L., Lanier Jr., chairman and CEO. New common stock would be issued once the company emerges from bankruptcy, and doled out to unsecured creditors with claims of more than $2,500 on a pro rata basis, making them the company's new owners. Unsecured claims of less than $2,500 would be paid in cash.