| Item 1.03 |
Bankruptcy or Receivership. |
As previously reported in its Current Report on Form 8-K, dated January 23, 2024 (the “January 8-K”), on December 10, 2023, Pennsylvania Real Estate Investment Trust (“PREIT” or the “Company”) and certain of its direct and indirect affiliates (collectively, the “Company Parties” and together with PREIT, the “Debtors”) filed voluntary petitions (the cases commenced thereby, the “Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to pursue a joint prepackaged chapter 11 plan as contemplated by the Restructuring Support Agreement, dated December 7, 2023 (as amended from time to time through the date hereof, the “RSA”). The Chapter 11 Cases are jointly administered under the caption In re Pennsylvania Real Estate Investment Trust, et al., Case No. 23-11974.
As previously reported in the January 8-K, on January 23, 2024, the Bankruptcy Court entered an order (the “Confirmation Order”), confirming the Modified Joint Prepackaged Chapter 11 Plan of Reorganization of Pennsylvania Real Estate Investment Trust and Its Debtor-Affiliates (the “Plan”) of the Debtors. A copy of the Plan and the Confirmation Order were filed as exhibits to the Company’s January 8-K. Capitalized terms used but not defined in this Current Report on Form 8-K have meanings ascribed to such terms in the Plan.
On April 1, 2024 (the “Effective Date”), each condition precedent to consummation of the Plan, enumerated in Article IX.A of the Plan, was satisfied or waived in accordance with the Plan and the Confirmation Order; therefore, the Effective Date of the Plan occurred, and the Debtors emerged from their Chapter 11 Cases. On April 1, 2024, the Debtors filed the notice of the occurrence of the Effective Date (the “Effective Date Notice”) with the Bankruptcy Court. Accordingly, the Plan is binding, enforceable and in full force and effect pursuant to its terms.
A copy of the Effective Date Notice is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. All capitalized terms used in this Current Report on Form 8-K and not otherwise defined herein have the meanings ascribed to such terms in the Plan.
| Item 3.03 |
Material Modification to Rights of Security Holders. |
As of the Effective Date, the Equity Distribution Conditions set forth in the Plan were met; therefore, holders of the Existing Equity Interests (including the OP Units as defined below) received, or will receive shortly after the Effective Date, their Pro Rata share of $10 million in cash (which amount was carved out of and provided by the holders of Prepetition Second Lien Claims from their recoveries under the Plan) pursuant to the Equity Distribution Allocation set forth in the Plan. The Company, with the consent of the requisite lenders, waived any and all Equity Costs, and, therefore, no Equity Costs were deducted from such $10 million amount.
As of the Effective Date, pursuant to the terms of the Plan and the Confirmation Order, all classes of preferred and common securities issued by the Company (referred to in the Plan as the “Existing Equity Interests”), namely the Company’s prior Shares of Beneficial Interest, par value $1.00 per share (the “Common Shares”), Series B Preferred Shares, par value $0.01 per share (the “Series B Preferred Shares”), Series C Preferred Shares, par value $0.01 per share (“Series C Preferred Shares”), and Series D Preferred Shares, par value $0.01 per share (“Series D Preferred Shares”), were automatically cancelled and extinguished as of the Effective Date. As of the Effective Date, the limited partnership units in the operating partnership of PREIT Associates, L.P. issued to third parties (the “OP Units”) were also automatically cancelled and extinguished.
| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensation Arrangements of Certain Officers. |
On March 29, 2024 (the “Amendment Date”), the Company entered into amendments to the Severance Plan for Certain Officers, effective January 1, 2007, with each of Andrew Ioannou and Joseph Aristone (the “Severance Plan Amendments”). The Severance Plan Amendments modify the terms of Mr. Ioannou’s and Mr. Aristone’s respective rights to severance compensation in the event of a change of control in the Company, specifically providing that if such officer’s employment with the Company terminates prior to or more than 12 months after a Change of Control and such officer executes a general release, such officer will be entitled to receive a severance payment equal to his base salary as of the Amendment Date plus a sum equal to the average of the two bonuses he received prior to the Amendment Date under the Company’s annual incentive plan and COBRA premiums reimbursements for a period of 52 weeks.