As an example of their suspicions, the creditors' Orlando lawyer Denise Dell cites, in a court-filed motion, the May 13-filed plan. The plan notes a pending sale of Planet's London property to a buyers' group controlled by Earl and Tom Avallone, the firm's former chief financial officer.
In an unusual move, Dell is asking U.S. Bankruptcy Judge Arthur B. Briskman to appoint a special examiner to audit the restaurant chain's financials. Scott Shuker, representing Planet and Earl, has agreed to the request.
In her filing, Dell tells the court Planet plans to write off assets or claims against celebrities of $4.8 million. That amount could raise the value of Planet's estate and potentially make more assets available to creditors.
The Chapter 11 plan leaves Earl in charge of the 11-year-old company at a base salary of $200,000 per year for three years. Earl would also receive a $400,000 consulting fee. Earl's salary, prior to the Oct. 15, 2001 Chapter 11 filing, was $600,000 per year, court papers show.
Under the plan, which the judge must approve or reject, Earl would control 10% of the company's equity and continue as a director. Avallone would become chief financial officer. Mark Helm would remain general counsel and vice chairman.
Bondholders, owed a total $76 million, would get a $20 million promissory note and 51% of the equity. A total 100,000 shares of new stock would be issued; existing stock would be canceled.
Planet Hollywood's common stock is no longer listed on the Over-the-Counter Bulletin Board. The stock traded on Nov. 28, 2001 for nine cents per share. There were 10 million shares outstanding. The company's market capitalization at that time was $900,000.
Planet Hollywood first filed for Chapter 11 protection from its creditors under the U.S. Bankruptcy Code in October 1999 and completed a court-approved reorganization plan in May 2000.
That reorganization was short-lived, however. The company filed for protection again on Oct. 15, 2001. Planet listed assets of $121 million and liabilities of $131 million.
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