The reorganized ConvergeOne, its consenting stakeholders and the minority lender ad hoc group have settled the minority group’s objection to the plan after the District Court for the Southern District of Texas reversed the confirmation order entered by Judge Christopher Lopez of the US Bankruptcy Court for the Southern District of Texas.

The District Court found that an exclusive opportunity for some lenders to participate in a backstopped equity rights offering violated the Bankruptcy Code’s equal treatment and absolute priority rules, when the offer was not open to all creditors in the same class.

To resolve the appeal, the parties have now filed a stipulation with the court that contains a modified confirmation order and plan that allows the minority lender ad hoc group the opportunity to participate pro rata in the backstop agreement, the direct investment commitment, and the put option premium. In addition, the members of the minority ad hoc lender group will be deemed to be released parties under the plan.

With that offer, the minority lender ad hoc group agreed to stipulate that the plan now complies with Bankruptcy Code section 1123(a)(4). The stipulation is now before Judge Lopez to approve.

The Chapter 11 docket can be found here.