On Monday, hospitality and health-care industry services provider LodgeNet Interactive (NASDAQ: LNET) announced it has received the consent of its senior debtholders to proceed with a "prepackaged Chapter 11" bankruptcy process originally announced back in December. Over the course of the next 60 days, LodgeNet expects to enter into Chapter 11, recapitalize itself with $60 million from a "syndicate" of companies led by global investment firm Colony Capital, and emerge as a subsidiary of Colony.
"Throughout this process, LodgeNet's business operations will continue in the normal course, and current hospitality and health-care customers will continue to receive services without interruption," LodgeNet said in a statement.
Lenders participating in the process are said to have given "overwhelming support" to the prepackaged bankruptcy plan, which promises to extend the duration of existing senior debt and pay unsecured creditors "in full in cash for any prepetition claims." Holders of LodgeNet common stock and of Series B preferred stock, however, will be wiped out entirely.
Despite the clear statement that the shares are certainly worthless, LodgeNet common stock dropped only $0.01, and by close of trading it was still fetching $0.02 a share.
