Rural Metro filed two critical documents outlining how the company plans to emerge from bankruptcy on Sunday, September 15. Those documents are the Plan of Reorganization and Disclosure Statement. At this point, the documents are consistent with the statements made by the company in prior filings—that they have reached consensual debt-reduction agreement with their lenders and there appears to be no impact on Teamster-represented units. In addition, neither document indicates a specific timeline but we believe Rural Metro is on track to emerge from bankruptcy by the end of the year.
Below is some background about how each of these documents corresponds to the bankruptcy process.
A Plan of Reorganization (“POR or “Plan”) is a legal document filed with the court that states how the company’s current debts will be restructured, and specifically how each class of claims will be treated under the Plan. Creditors who will be paid less than the full value of their claims under the plan, including secured creditors, are asked to vote on the plan by ballot. In order to obtain approval by a Plan, it must be approved by certain numbers of creditors and by creditors holding a certain amount of claims. A Plan also provides for the division of stock and level of debt after reorganization.
A Disclosure Statement (“DS”) is a document the company or plan proponent must file and obtain court approval before there can be a vote on the Plan of Reorganization. The Disclosure Statement provides necessary background information on the company and the POR and is distributed with the POR and ballot so the company’s creditors can make an informed decision on whether to vote for the Plan or not.
After the voting, the Bankruptcy Court must find that the POR received the necessary approvals in voting and that it otherwise meets certain legal requirements.
You can find both documents on the court docket or at www.teamster.org/ruralmetro.