GNC Holdings Inc. has received approval for a bankruptcy reorganization plan centered around a $770 million sale to Harbin Pharmaceutical Group Holding Co., its largest shareholder, according to Bloomberg Law. The sale raised security concerns when the plan was put into motion in September.
The plan will keep open at least 1,400 GNC stores and save thousands of jobs.
The plan was approved by Judge Karen B Owens of the U.S. District Court for the District of Delaware, Bloomberg Law reports. It follows a global settlement between GNC, the creditors committee, Harbin, and other creditors. It will pay unsecured creditors from a pool of $4.5 million in cash, plus another $20 million in convertible and non-convertible notes payable in up to eight years.
Unsecured creditors can choose to be treated in a “convenience class,” created for holders of claims up to $50,000. Those creditors—or those with larger claims that choose to limit those claims to $50,000—should recover about 7% of their claims, as stated by attorney Richard Levy of Latham & Watkins LLP in a hearing on Wednesday. Other unsecured creditors will likely receive a smaller percentage of their claims.
Some of the future payments to unsecured creditors will come from notes issued by Harbin.