Announcements
May 26, 2016

RCS Capital Corp. Successfully Emerges From Bankruptcy

On May 23, 2016, RCS Capital Corporation and its affiliated debtors emerged from bankruptcy, under the new moniker, Aretec Group, Inc. Through a largely consensual Chapter 11 plan, RCS reorganized around its network of 9,100 independent retail investment advisors, who provide financial advice to approximately 2.5 million clients and have approximately $220 billion in assets under administration. The overwhelming support for the plan from both secured and unsecured creditors allowed RCS to emerge from bankruptcy in under four months and maintain the business’s operational stability. In connection with the bankruptcy, Kramer Levin represented Luxor Capital Group, LP, and certain of its affiliates and managed funds, as RCS’s largest unsecured creditor.

Before the bankruptcy filing, Luxor, with the advice of Kramer Levin, engaged in extensive negotiations with RCS and its secured lenders and entered into a restructuring support agreement to implement a restructuring plan that would maximize recoveries for unsecured creditors while preserving the value of the debtors’ businesses. Under the restructuring plan, which was overwhelming approved by all classes of creditors and the Creditors’ Committee, RCS agreed to transfer certain litigation claims to a trust for the benefit of unsecured creditors, and funded the trust with $15 million in cash and warrants for 10% of the reorganized company. After a contested confirmation hearing, the U.S. Bankruptcy Court for the District of Delaware ultimately confirmed the RCS restructuring plan on May 19, 2016.

The Kramer Levin team included Corporate Restructuring and Bankruptcy partner Kenneth H. Eckstein and associates Rachael Ringer and David Z. Braun; Corporate partners Abbe L. Dienstag, David S. Berg, and David J. Fisher and associate Jeffrey H. Taub; Litigation partner Gregory Aaron Horowitz and associate Darren C. Halverson; and Tax partner Barry Herzog and special counsel Helayne Oberman Stoopack.

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