June 22, 2012 / 1:18 PM / 8 years ago

Court approves Houghton Mifflin reorganization plan

(Reuters) - Houghton Mifflin Harcourt Publishers Inc, whose textbooks have been a staple in American schoolhouses for decades, received approval from a U.S. court to exit bankruptcy, eliminating about $3 billion in debt.

The company, which filed for bankruptcy last month, said its creditors will gain full control of the company, following its exit from bankruptcy, and they will also receive $30.3 million in cash.

Trade and unsecured creditors would be paid in full and shareholders who back the plan will receive warrants for up to 5 percent of the equity in the reorganized company.

“We have emerged with significantly less debt, a much improved balance sheet and capital structure and the financial strength to invest in new products and innovative digital education solutions to grow our business,” Chief Executive Linda K. Zecher said in a statement.

However, in a bankruptcy court filing, judge Robert Gerber granted the U.S. trustee’s motion to transfer the venue of the case from the Southern District of New York.

A Houghton Mifflin spokesman told Reuters that the new venue for the cases was not known as yet.

The company, which publishes the “Curious George” and J.R.R. Tolkien’s “Lord of the Rings” children’s book series, had lined up $500 million in financing from Citigroup Inc.

Houghton’s investors include the investment firm Guggenheim Partners and hedge fund manager John Paulson’s firm Paulson & Co.

The case is In re: Houghton Mifflin Harcourt Publishing Co, U.S. Bankruptcy Court, Southern District of New York, No. 12-12171.

Reporting by Tanya Agrawal in Bangalore; Editing by Anil D'Silva and Joyjeet Das

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