Most creditors agree to Rainbows plan
03/23/2010 12:00 AM
08/06/2014 10:15 AM
Rainbows United's creditors have overwhelmingly approved the nonprofit's reorganization plan, a major step in its emergence from bankruptcy.
Next up is a 10 a.m. Wednesday hearing before U.S. Bankruptcy Court Judge Robert Nugent to seek confirmation of the plan and its provisions.
"We're very much looking forward to Wednesday," said Steve Cox, the Rainbows board chairman.
"It's not the final step in the process, but it's a key step that lets us get back to operating a facility focused on the kids and moving forward. It's a tremendous obstacle to get behind us.
"We are very grateful that the community has chosen to support the plan and for its overwhelming support."
According to a court document filed Friday by Ed Nazar, Rainbows' bankruptcy attorney, only one creditor voted to reject the plan: Rusty Eck Ford, with a claim of $1,481.
However, Emprise Bank and its financial partners in two loans to Rainbows for $3.8 million did not cast a vote on the plan.
That bank vote was the subject of some legal wrangling earlier this month when Equity Bank, a participant in a pre-petition $2.3 million Rainbows loan, indicated that it wanted to oppose the plan.
In response, Emprise asked Nugent earlier this month to allow it and its loan partners to vote separately on the plan, a motion denied by the judge on March 11.
So Tom Page, Emprise president, said the bank elected not to vote "since we did not have unanimous opinion on the plan."
The reorganization plan calls for the 30-year payment of the $2.1 million balance of the pre-petition Emprise loan, according to the Friday filing, with a variable interest rate opening at 5.75 percent.
The Rainbows sale of property at 340 S. Broadway and 251 S. Whittier will be used to pay off a $1.5 million post-petition operations loan from Emprise and its partners.
And the plan calls for the repayment of the $2.3 million owed the Internal Revenue Service over five years.
Rainbows, which serves children with special needs and their families, filed for Chapter 11 bankruptcy in July after the nonprofit's board of directors discovered "financial irregularities" in the group's financial reports.
A day after filing for bankruptcy, Rainbows United said that it would sell two buildings, lay off staff members and reduce services as part of its reorganization plan.
Retired Wichita businessman Hale Ritchie has managed the Rainbows reorganization plan since his August appointment.
Join the Discussion
The Wichita Eagle is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.