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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 16, 1999
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CITYSCAPE FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-27314 11-2994671
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State or Other Jurisdiction Commission File Number (IRS Employer Identification No.)
of Incorporation
565 Taxter Road, Elmsford, New York 10523-2300
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(Address of Principal Executive Offices) Zip Code
Registrant's telephone number, including area code: (914) 592-6677
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Former name or former address,
if changed since last report
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Item 3. Bankruptcy or Receivership.
On October 6, 1998, Cityscape Financial Corp. ("Cityscape") announced
that it and Cityscape Corp., Cityscape's wholly-owned subsidiary ("CSC"), filed
a joint prepackaged plan of reorganization pursuant to chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York. In April 1999, Cityscape and CSC filed their First Amended
Joint Plan Of Reorganization dated as of April 27, 1999. On June 16, 1999, the
bankruptcy court entered the order confirming the reorganization plan . The
proceedings are captioned In re Cityscape Financial Corp. (Case No. 98-B-22569
(ASH)), and In re Cityscape Corp. (Case No. 98-B-22570 (ASH)).
The reorganization plan provides for substantive consolidation of the
assets of Cityscape and CSC and for distributions to creditors as summarized
below. Estimated recoveries are based upon (1) principal of and accrued and
unpaid interest on Cityscape's old senior notes (Cityscape's 12 3/4% Senior
Notes due 2004) and old subordinated debentures (Cityscape's 6% Convertible
Subordinated Debentures due 2006) as of the petition date and (2) an estimated
aggregate amount of allowed claims in classes 5 and 5a of $10.0 million. On the
effective date of the reorganization plan, of the 25.0 million shares of new
common stock that are authorized, approximately 7.7 million shares will be
issued and outstanding and the remainder of which will be available for future
issuance in respect of claims and interests filed and allowed under the
reorganization plan.
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ESTIMATED
CLASS DESCRIPTION TREATMENT RECOVERY
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N/A Administrative claims (unclassified) Each holder will be paid cash equal to the full amount 100%
of its claim on, or as soon as practicable after, the
later of the effective date of the reorganization plan
and the day on which such claim becomes an allowed
claim, unless (i) the holder and the debtors or the
reorganized company agree to other treatment, or (ii) an
order of the bankruptcy court provides for other terms.
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ESTIMATED
CLASS DESCRIPTION TREATMENT RECOVERY
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N/A Priority tax claims (unclassified) Each holder will receive, at the sole option of the 100%
reorganized company (i) cash equal to the unpaid portion
of such holder's claim, or (ii) equal quarterly cash
payments in an aggregate amount equal to such claim,
together with interest at a fixed annual rate to be
determined by the bankruptcy court or otherwise agreed
to by the holder and the reorganized company over a
period through the sixth anniversary of the date of
assessment of such claim, or upon other terms approved
by the bankruptcy court.
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1 Bank claims Unimpaired. To the extent there are any allowed bank 100%
claims as of the effective date of the reorganization
plan, each holder of an allowed bank claim will be paid
in full in cash on the effective date of the
reorganization plan.
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2a et seq. Other secured claims (other than Unimpaired. Either (i) the claim will be left unaltered, 100%
secured claims in class 1) (ii) any default with respect the claim (other than a
default of a kind specified in Section 365(b)(2) of the
Bankruptcy Code) will be cured, the maturity of the claim
will be reinstated and the holder of the claim will be
compensated for any damages, or (iii) the claim will
receive other treatment to which the holder consents.
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3 Priority claims Unimpaired. Each holder will receive cash equal to the 100%
amount of its claim, or other treatment, as determined
by the bankruptcy court, required to render such claim
unimpaired.
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4
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ESTIMATED
CLASS DESCRIPTION TREATMENT RECOVERY
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4 and 4a Senior note claims and small senior Impaired. Each holder of an allowed class 4 Claim will 22.1%
note claims receive a pro rata portion of 7,346,708 shares of new
common stock (i.e., one share of new common stock for
every $45.26 in principal of and accrued interest on
such holder's old senior notes). Each holder of a class
4a claim (i.e., claims represented by old senior notes
of a principal amount of $5,000 or less) will receive
cash in an amount equal to $10.00 multiplied by the
number of shares of new common stock that such holder
would have been entitled to receive as a holder of an
allowed class 4 claim. Any holder of a class 4a claim,
however, may elect on a ballot or otherwise in writing
to receive the treatment afforded by class 4 (i.e., new
common stock) rather than class 4a (i.e., cash).
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5 and 5a General unsecured claims and small Impaired. Each holder of an allowed class 5 claim will 16.6%
unsecured claims receive on account of its allowed claim one share of new
common stock for every $60.32 of its allowed claim. Each
holder of an allowed class 5a claim (i.e., general
unsecured claims of $8,000 or less) will receive cash in
an amount equal to $10.00 multiplied by the number of
shares of new common stock that it would have been
entitled to receive as a holder of an allowed class 5
claim. Any holder of a class 5a claim, however, may
elect on a ballot or otherwise in writing to receive the
treatment afforded by class 5 (i.e., new common stock)
rather than class 5a (i.e., cash).
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5
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ESTIMATED
CLASS DESCRIPTION TREATMENT RECOVERY
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6 and 6a Subordinated debenture claims and Impaired. Each holder of an allowed class 6 claim will 3.2%
small subordinated debenture claims receive a pro rata portion of 431,702 shares of new
common stock (i.e., one share of new common stock for
every $316.56 in principal of and accrued interest on
such Holder's old subordinated debentures). Each holder
of an allowed class 6a claim (i.e., claims represented
by old subordinated debentures of a principal amount of
$50,000 or less) will receive cash in an amount equal to
(i) $10.00, multiplied by (ii) the number of shares of
new common stock that such holder would have been
entitled to receive as a holder of an allowed class 6
claim. Any holder of a class 6a claim, however, may
elect on a ballot or otherwise in writing to receive the
treatment afforded by class 6 (i.e., new common stock)
rather than class 6a (i.e., cash).
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7 Securities claims of old debt Impaired. Holders will not receive or retain any interest 0%
or property under the reorganization plan.
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8 Interests of holders of Series A Impaired. Holders will not receive or retain any interest 0%
Preferred Stock or property under the reorganization plan.
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9 Securities claims of Series A Impaired. Holders will not receive or retain any interest 0%
Preferred Stock or property under the reorganization plan.
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10 Interests of holders of Series B Impaired. Holders will not receive or retain any interest 0%
Preferred Stock or property under the reorganization plan.
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11 Securities claims of Series B Impaired. Holders will not receive or retain any interest 0%
Preferred Stock or property under the reorganization plan.
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12 Interests of holders of old Cityscape Impaired. Holders will not receive or retain any interest 0%
common stock or property under the reorganization plan.
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13 Interests of holders of old stock rights Impaired. Holders will not receive or retain any interest 0%
in Cityscape and all claims arising out or property under the reorganization plan.
of these old stock rights
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ESTIMATED
CLASS DESCRIPTION TREATMENT RECOVERY
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14 Securities claims of old Cityscape Impaired. Holders will not receive or retain any interest 0%
common stock and old warrants or property under the reorganization plan.
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The reorganization plan provides for certain releases by the debtors of
claims against various parties (including the debtors' officers and directors)
which claims relate in any way to Cityscape, CSC, the company's trust
indentures, the company's credit facilities, the debtors, the reorganization
cases, the reorganization plan or the related disclosure statement.
The Unaudited Pro Forma Consolidated Balance Sheet presented below is
based upon the historical consolidated financial position of the debtors as of
December 31, 1998. The pro forma adjustments made to the historical consolidated
balance sheet (based on the assumptions set forth below) give effect to the
reorganization as if that entire series of transactions, including the issuance
of the new common stock to the holders of the old senior notes, the old
subordinated debentures, and the trade creditors had occurred on December 31,
1998. In addition, since the reorganization is to be effectuated through a plan
of reorganization under chapter 11 of the Bankruptcy Code, the provisions of the
American Institute of Certified Public Accountants Statement of Position ("SOP")
90-7, (Financial Reporting by Entities in Reorganization under the Bankruptcy
Code), which require the application of fresh start reporting, have been
reflected in the pro forma consolidated balance sheet as of December 31, 1998.
The pro forma consolidated balance sheet is unaudited and was derived by
adjusting the historical balance sheet of the debtors for transactions described
in the footnotes. THIS PRO FORMA BALANCE SHEET IS PROVIDED FOR INFORMATIONAL
PURPOSES ONLY AND SHOULD NOT BE CONSTRUED TO BE INDICATIVE OF THE FINANCIAL
CONDITION OF THE DEBTORS HAD THE TRANSACTIONS BEEN CONSUMMATED ON THE DATE
INDICATED AND ARE NOT INTENDED TO BE PREDICTIVE OF THE FINANCIAL CONDITION OF
THE DEBTORS AT ANY FUTURE DATE.
The pro forma adjustments are based on available information and certain
assumptions that the debtors believe are reasonable under the circumstances. The
Unaudited Pro Forma Consolidated Balance Sheet and accompanying notes should be
read in conjunction with the historical consolidated financial statements of the
debtors, including the notes thereto, and the other information pertaining to
the debtors appearing in Cityscape's annual report on Form 10-K. In addition,
the independent auditors of Cityscape and CSC have neither examined nor compiled
the Unaudited Pro Forma Consolidated Balance Sheet and accordingly assume no
responsibility for it.
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UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
Adjustments
Adjustments For Fresh
For After Start
Historical Reorganization Reorganization Reporting Pro Forma
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Assets
Cash And Cash Equivalents $ 18,405 $ (1,000) 1 $ 17,405 $ $ 17,405
Cash Held In Escrow 3,769 3,769 3,769
Mortgage Servicing Receivables - -
Trading Securities 33,661 33,661 33,661
Mortgages Held for Sale, Net 123,346 123,346 123,346
Mortgages Held for Investment, Net - -
Equipment And Leasehold Improvements, Net - -
Investment In Discontinued Operations, Net 13,008 13,008 13,008
Income Tax Receivable 1,550 1,550 1,550
Reorganization Value (600) 7 (600)
Other Assets 15,599 - 15,599 - 15,599
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Total Assets $ 209,338 $ (1,000) $ 208,338 $ (600) $ 207,738
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Liabilities
Warehouse Financing Facilities $ 105,969 $ $ 105,969 $ $ 105,969
Accounts Payable and Other Liabilities 23,519 23,519 23,519
Allowance For Loan Losses - -
Liabilities Subject to Compromise 47,804 (47,804) 2 - -
Old Senior Notes 300,000 (300,000) 3 - -
Old Subordinated Debentures 129,620 (129,620) 4 - - -
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Total Liabilities 606,913 (477,424) 129,489 - 129,489
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Equity (Deficit)
Old Cityscape Common Stock 649 (649) 5 - -
Old Cityscape Preferred Stock 0 (0) 5 - -
Treasury Stock (175) 175 5 - -
New Common Stock 128 5 128 128
Additional Paid-In Capital 175,304 347 5 175,651 (97,529) 78,121
Retained Earnings (Accumulated Deficit) (573,354) 476,424 6 (96,929) 96,929 7 -
Total Stockholder's Equity (Deficit) (397,575) 476,424 78,849 (600) 7 78,249
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Total Liabilities and Equity (Deficit) $ 209,338 $ (1,000) $ 208,338 $ (600) $ 207,738
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1 To record estimated fees and expenses consisting of estimated financing
costs, severance, and professional fees.
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2 To record the elimination of interest accrued on the old senior notes and
old subordinated debentures and the extinguishment of other liabilities
subject to compromise.
3 To record the extinguishment of the old senior notes.
4 To record the extinguishment of the old subordinated debentures.
5 To reflect the issuance of new common stock and the cancellation of old
Cityscape common stock, old Cityscape preferred stock and treasury stock.
6 To record the net gain on forgiveness of debt and additional reorganization
expenses, as follows:
Gain on Forgiveness of Debt:
Extinguishment of the old senior notes $300,000
Extinguishment of the old subordinated debentures 129,620
Elimination of accrued interest and liabilities
subject to compromise 47,804
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Net gain on forgiveness of debt 477,424
Reorganization expenses (1,000)
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Total change in retained earnings $476,424
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7 To eliminate the historical deficit and reflect fresh start adjustments
(pursuant to SOP 90-7) related to the reorganization value of the
reorganized company.
This summary does not purport to be complete and is qualified in its
entirety by reference to the First Amended Joint Plan Of Reorganization filed as
exhibit 2.1 and incorporated into this report.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) Exhibits
2.1 First Amended Joint Plan Of Reorganization dated as
of April 27, 1999
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
CITYSCAPE FINANCIAL CORP.
(Registrant)
By: /s/Tim S. Ledwick
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Name: Tim S. Ledwick
Title: Vice President and Chief Financial
Officer
Dated: June 30, 1999
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INDEX TO EXHIBITS
Exhibits Description Page
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2.1 First Amended Joint Plan Of Reorganization dated as of
April 27, 1999