Mrs. Fields Chap. 11 Rescue Plan Is Now Fully Baked

The U.S. Bankruptcy Court has approved the Chapter 11 plan of Mrs. Fields, a chain of more than 1,200 Mrs. Fields Cookies and TCBY frozen yogurt franchises. The recipe for survival includes a $10 million, three-year senior term credit facility and issuance of its first publicly traded stock.

U.S. Bankruptcy Judge Peter Walsh today approved the plan at a hearing in Wilmington, Delaware. ``I can't remember the last time I had a bona fide reorganization case,'' Walsh said.

Under the plan, Mrs. Fields will exchange about $195 million in bondholder debt for $87.5 million in cash, $52.5 million in new notes and a controlling equity stake in the reorganized company. Capricorn Investors III LP, holder of a $6.5 million note, will receive the remaining 12.5 percent of the new stock. The expected recovery is 96.4 percent. Existing stock will be canceled. Five of Mrs. Fields original noteholders, which hold 60 percent of the notes' value, agreed to loan the company as much as $10 million to fund its reorganization, after the company was unable to find an outside source willing to provide financing, according to court papers. [Bloomberg]

Do judges really have so few real reorganization cases when companies file Chapter 11? I thought that was why there is a Chapter 11 reorganization filing for bankruptcy.

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