In an effort to emerge successfully from bankruptcy protection, Criimi Mae Inc. and two of its holdings have submitted a third recapitalization plan to the U.S. Bankruptcy Court.

The March 31 proposal is the second amended plan to be submitted to the court; the first was submitted Dec. 23, 1999 and the original was filed in October 1999. The Rockville, Md.-based commercial mortgage real estate investment trust originally filed for Chapter 11 bankruptcy protection Oct. 5, 1998.

The $856 million recapitalization plan will consist of secured financing by Criimi Mae's creditors, secured notes issued to unsecured creditors and the sale of non-securitized commercial mortgage-backed securities.

Criimi Mae estimates that $275 million of recapitalization financing will come from two of its largest creditors, Merrill Lynch Mortgage Capital Inc. and the German American Capital Corp., with an additional $35 million coming from a yet-unnamed creditor. New secured notes totaling $155 million will be issued to certain unsecured creditors, and the rest of the plan will be the sale of the non-securitized CMBS assets.

The company hinted it might seek new equity capital from at least one additional investor, though it is not a requirement of the recapitalization plan.

So what sets this plan apart from the plan filed in January? "It differs primarily because this plan is being supported by the unsecured creditors," said James Pastore, spokesman for Criimi Mae. He noted that the unsecured creditors had originally filed their own plan to liquidate the company.

The U.S. Bankruptcy Court has scheduled a hearing of the proposed plan and the disclosure statement for April 25 and 26. Upon approval by the court, the plan and the disclosure statement will be sent to impaired creditors and equity security holders to be approved or rejected.

"So that's going to be basically a final blessing of the document that goes out," Pastore said. While Pastore did not give a time frame for when the plan could be approved by the parties reviewing it, he did say that "there will be a reasonable amount of time for the parties to review it and return it, and everything will be finalized."

Class-Action Suit Dropped

In other Criimi Mae legal news, the U.S. District Court for the District of Maryland, Southern Division dismissed a class-action suit filed against Criimi Mae directors and officers. The judge stated that the plaintiffs - those who purchased Criimi Mae securities between Feb. 20, 1998 and Oct. 5, 1998 - did not substantiate claims that those officers and directors violated federal securities laws.

The suit's dismissal, which was a consolidation of a number of class-action suits, does not affect any other pending suits against the company.

As for the outlook of Criimi Mae's future, "These two things are both positive and are just good solid steps on the way to reorganization," Pastore said.

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