The J.G. Wentworth Company’s Chapter 11 Plan of Reorganization

The Company has been assisted in negotiating the restructuring by Evercore Group, L.L.C., as financial advisor, and Simpson Thacher & Bartlett LLP, as legal counsel. The administrative agent of the Credit Facility, Jefferies Finance LLC, has been assisted by FTI Consulting, as financial advisor, and Davis Polk & Wardwell LLP, as legal counsel.

The J.G. Wentworth Company signed an agreement, with lenders (the “Lenders”) holding over 87% of the aggregate principal amount outstanding under the Company’s $449.5 million senior secured credit facility (the “Credit Facility”), to significantly deleverage the Company. The agreement, under which current Lenders have agreed to exchange their claims under the Credit Facility for cash consideration and at least 95.5% of the equity in the newly-restructured Company, will enable the Company to enhance its financial flexibility, fortify its balance sheet and accelerate its long-term growth initiatives.

Under the terms of the agreement, the Company will: Fully extinguish the loans under the Credit Facility totaling $449.5 million and obtain a new secured revolving credit facility between $65 million and $70 million, to be supplied by one of the Company’s Lenders; Significantly reduce the Company’s annual debt service from $32 million to less than $5 million; Deleverage the Company’s balance sheet, reducing its net leverage from approximately 12.4x to less than 1.0x; and

Reconstitute the Board of Directors to reflect the new ownership of the Company.

The restructuring will be accomplished through a voluntary, pre-packaged, in-court process. The Company’s operating entities – including those serving employees, customers, vendors and suppliers – will not be involved in the in-court process. The restructuring is not expected to impact daily management or operations of the Company.

This agreement follows a period of stable operational performance at the Company. J.G. Wentworth Home Lending, LLC is experiencing record growth in loan originations, and increasing operational capacity through various technology and process improvements. During the same period, the Company has continued to lead the market in structured settlement, annuity and lottery payment purchasing.

The Company aims to complete the restructuring process as quickly and as efficiently as possible. The Company intends to retain its leadership team, which remains critical to its commitment to providing diversified products that can meet any number of consumer needs.

Davis Polk advised with a team including Damian S. Schaible (Picture), Natasha Tsiouris, Stephen D. Piraino and Erik Jerrard (Restructuring) Leonard Kreynin, Bryan M. Quinn (Corporate), Meyer C. Dworkin, Scott G. Johnsson (Banking & Finance), Kathleen L. Ferrell (Tax) and Ann Becchina (executive compensation).

Involved fees earner: Damian Schaible – Davis Polk & Wardwell; Natasha Tsiouris – Davis Polk & Wardwell; Stephen Piraino – Davis Polk & Wardwell; Erik Jerrard – Davis Polk & Wardwell; Leonard Kreynin – Davis Polk & Wardwell; Bryan Quinn – Davis Polk & Wardwell; Meyer Dworkin – Davis Polk & Wardwell; Scott Johnsson – Davis Polk & Wardwell; Kathleen Ferrell – Davis Polk & Wardwell; Ann Becchina – Davis Polk & Wardwell;

Law Firms: Davis Polk & Wardwell;

Clients: Jefferies Finance LLC;

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Author: Ambrogio Visconti