Did you hear?...Keys bankruptcy reorganization plan approved by court despite belated objection by Icon

The U.S. Bankruptcy Court, Northern District of Texas, has approved the amended plan for Keys in its Chapter 11 bankruptcy reorganization case.

The U.S. Bankruptcy Court, Northern District of Texas, has approved the amended plan for Keys in its Chapter 11 bankruptcy reorganization case.

The first plan was filed July 3 (click here to see a story about that plan and its contents in a July 7, 2008, SNEWS® story.), while an amended plan was filed Aug. 1. The second amended plan was filed for the final hearing on Sept. 11.

"The plan satisfies (the) Bankruptcy Code section," the court wrote in the final approval. "The disclosure statement and the evidence adduced at the confirmation hearing are persuasive and credible; are based on reasonable and sound assumptions; and establish that each holder of an impaired claim or interest either has accepted the plan or will receive or retain under the plan, on account of such claim or Interest, property of a value, as of the effective date, that is not less than the amount that such holder would receive or retain if the debtor were liquidated under Chapter 7 of the Bankruptcy Code on such date."

The court noted, "Accordingly, confirmation of the plan is in the best interests of the debtors' creditors and Interest holders."

In July, the court set Sept. 3 to confirm the amended plan for "reorganized fitness," as the new company would be known since it combined both the Keys Fitness and Keys Backyard cases and companies. According to the court documents, the last day to object to the plan was Aug. 26, on which date Icon as well as two other Keys' creditors filed objections.

The court noted in its approval that three objections to the plan were filed by the deadline of Aug. 26 and two of those were resolved. However, it added, "the remaining objection to the plan and/or the amended plan filed by Icon Health & Fitness is overruled."

In another attempt to stop the reorganization plan's approval, Icon filed on Sept. 3 an "adversary case" requesting the court deny Keys' discharge under the proposed plan since it provides for liquidation of all property and a dissolution by the debtors. On Sept. 10, Icon filed a second objection to confirmation of the amended plan of Keys' joint reorganization.

In that Sept. 10 objection, Icon stated that Keys stopped making its royalty payments to Icon but continued to use its patents. Icon had initiated two suits but prior to their resolution an involuntary Chapter 7 liquidation was filed against Keys in March and the company filed for its own Chapter 11 reorganization in April.

"The Debtors have continued, post-petition, to infringe Icon patents and trademarks, including two additional trademarks owned by Icon that are not the subject of the pending litigation," the Icon objection stated.

Icon in its filing noted Keys had told the court its plan would be modified to accommodate Icon's objections but Icon stated that the modification only addressed a portion of its complaint.

The court wrote, "Icon received adequate notice of, and adequate opportunity to be heard with respect to, the proposed form and content of this order, including all revisions thereto that were proposed after the conclusion of the confirmation hearing. Icon proposed a number of changes to the proposed confirmation order, which are incorporated herein."

The order also states that Icon will be barred from making further claims against Keys that relate to matters that arose on or before the plan's effective date, including claims for infringement of any kind.

Officers of the restructured company will be, per the court document, Miquel Nistal as president and CEO, with directors to be Nistal, Steven C. Jaffe and Charles W. Moore. All other officers have been removed.