Hydrospa Bankruptcy - The Latest

[GregJarredd]

FROM http://topstories.troubledcompanyreporter..../200711015.html

HYDRO SPA: Gets Interim Okay to Use Principals' Cash Collateral

The U.S. Bankruptcy Court for the Middle District of Florida gave

Hydro Spa Parts and Accessories, Inc. interim authority to use

cash collateral securing its principal's claim.

The secured debt of the Debtor is held by the Debtor's principals

who were required during early 2006 to retire the secured claim of

Fifth Third Bank with their personal funds when that financial

institution's secured lending relationship with the Debtor

matured. The secured claim consists of three separate

obligations, which amounts approximately to $3,042,610.

The claim is secured by virtually all assets of the Debtor. The

Debtor's schedules list assets for $10,657,077, without regard to

actual fair market value.

The Debtor obtained authority from the Court to use the cash

collateral for:

a) care, maintenance, and preservation of the Debtor's assets;

payment of necessary payroll and other business expenses;

c) purchase of goods and services, including inventory; and

d) continued business operations.

The Court has scheduled a final evidentiary hearing on the cash

collateral request on Nov. 2, 2007, at 1:30 p.m.

About Hydro Spa

Based in St. Petersburg, Florida, Hydro Spa Parts and Accessories,

Inc. -- http://www.hydrospa.com/ -- sells bathroom, hot tub, and

spa equipment and accessories. The Debtor filed for Chapter 11

protection on Sept. 19, 2007 (Bankr. M.D. Fla. Case No. 07-08616).

John A. Anthony, Esq., John I. Van Voris, Esq., and Stephenie M.

Biernacki, Esq., at GrayRobinson, P.A., represent the Debtor in

its restructuring efforts. Foley & Lardner LLP represents the

Official Committee of Unsecured Creditors appointed in the

Debtor's in the Chapter 11 case. When the Debtor filed for

protection from its creditors, it listed total assets of

$10,659,077, and total liabilities of $13,611,578.

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HYDRO SPA: Files Chapter 11 Plan of Reorganization in Florida

Hydro Spa Parts and Accessories, Inc. filed with the U.S.

Bankruptcy Court for the Middle District of Florida its Chapter 11

Plan of Reorganization and a Disclosure Statement explaining that

plan.

Treatment of Claims

The Debtor estimates that the aggregate total of administrative

claims will range from $220,000 to $560,000, while priority tax

claims amount to approximately $1,579. Both administrative

expense claims, priority tax claims, and priority claims will be

paid to equal to each claim's allowed amount. Each holder of

priority tax claims will receive from the Debtor deferred cash

payments over a period not exceeding six years after the date of

each claim's assessment.

Holders that are parties to executory contracts or unexpired

leases that are expressly assumed and assigned will not be

permitted any recovery under the plan. Holders whose contracts

are rejected will be treated as Class 4 creditors, and will be

permitted to receive a distribution pro rata on the allowed claim

of each, with all other creditors in this Class 4 from an escrow

to be administered by the reorganization trustee.

Holders that are parties to executory contracts and unexpired

leases that were reject after bankruptcy filing, but that give

rise to priority claims, will be paid an amount equal to its

allowed amount.

Each holder of Class 4 general unsecured claims will receive a pro

rata distribution on its allowed claim with all other creditors in

Class 4. The anticipated unsecured claims are in the approximate

aggregate amount of $10,567,399, most of which are undisputed by

the Debtor.

Wiley Brothers' Claims and Equity Interests

Brian K. Wiley, Robert M. Wiley, and Charles S. Wiley obtained a

secured claim upon the pay off of a Fifth Third Bank secured

claim. The holders will receive cash payments equal to its

present value on the effective date of the plan, together with

interest and attorney's fees. No distribution will be made on the

Wiley Brothers secured claim until such time as the rights and

intere3st of the Wiley Brothers have been adjudicated in a

declaratory relief proceeding.

The Debtor estimates the Wiley Brothers secured claim is

approximately $3,042,600, exclusive of accrued late fees,

interest, and attorney's fees.

Additionally, the Wiley Brothers possess equity interests,

representing all equity interests held by all holders of the

Debtor's existing common stock. Under the Plan, the equity

interest will receive their pro rate share, if any, of estate

assets after satisfaction in full of all allowed secured claims,

allowed priority claims, and allowed unsecured claims. All

existing stock options will be deemed cancelled without any

further action by any party.

Appointment of Reorganization Trustee

No later than 10 days prior to the plan confirmation hearing, the

Debtor will select a proposed reorganization trustee to act

pursuant to the plan and the confirmation order.

On the effective date of the plan, all property of the estate

shall re-vest in the reorganized Debtor. The Debtor's liquidation

efforts will be subject to the sole and exclusive responsibility

of the reorganization trustee. The trustee will have the rights

as "client" to:

a) investigate and pursue claims;

to retain and direct the affairs of counsel;

c) to direct all litigation contemplated under the Plan;

d) to compromise and settle claims;

e) to dismiss claims;

f) to object to claims asserted by the creditors; and

g) to otherwise act in a manner consistent with the plan.

About Hydro Spa

Based in St. Petersburg, Florida, Hydro Spa Parts and Accessories,

Inc. -- http://www.hydrospa.com/ -- sells bathroom, hot tub, and

spa equipment and accessories. The Debtor filed for Chapter 11

protection on Sept. 19, 2007 (Bankr. M.D. Fla. Case No. 07-08616).

John A. Anthony, Esq., John I. Van Voris, Esq., and Stephenie M.

Biernacki, Esq., at GrayRobinson, P.A., represent the Debtor in

its restructuring efforts. Foley & Lardner LLP represents the

Official Committee of Unsecured Creditors appointed in the

Debtor's in the Chapter 11 case. When the Debtor filed for

protection from its creditors, it listed total assets of

$10,659,077, and total liabilities of $13,611,578.