Harry and David Holdings Inc. said this morning it plans to exit bankruptcy late this summer.

The Medford-based gourmet food and gift company, along with its subsidiaries, today filed a joint plan of reorganization and disclosure statement in Delaware bankruptcy court.

Harry & David, which filed for Chapter 11 court protection in March, said the plan has the support of both the official committee of unsecured creditors and the holders of approximately 81 percent of the Company's bonds.

The filing, said Kay Hong, Chief Restructuring Officer and interim Chief Executive Officer, is a vital step in the reorganization process.

“Our employees, customers, suppliers and other supporters have been instrumental in our ability to reach this important milestone, and we deeply appreciate their support,” Hong said in a statement.

In a news release, Harry & David said it expects to emerge from its financial restructuring with a significantly improved balance sheet and with substantially less debt.

Under the plan, the company's $200 million of outstanding public notes would be converted into equity in the reorganized company. The debt proved too much of a burden for the company when the economy soured and business to business gift sales — a key element in the company's record revenue years — took a nose dive in the latter portion of the past decade.

Under the plan, an equity cash infusion backed by a group of existing noteholders would generate another $55 million after the company emerges from bankruptcy proceedings. That would allow Harry & David to pay off obligations from its $55 million post-petition term loan.
Once the company emerges from Chapter 11 protection, a $100 million revolving loan commitment to finance operations will replace its present $100 million credit line.

The company expects to hold a hearing on the plan in June, after which it will solicit approval from the necessary creditors.

-Greg Stiles