New Chapter 11 & CCAA Filing - SquareTwo Financial Services Corporation

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SquareTwo Financial Services Corporation

  • 3/19/17 Recap: Colorado-based privately held acquirer, manager, and collector of charged-off U.S. and Canadian consumer and commercial accounts-receivable filed a prepackaged plan of reorganization seeking to split the company into an acquired-co and "wind down co", with Resurgent Holdings LLC putting in approximately $264mm of new money in exchange for 100% equity in the acquired co. This is on the heels of a prior recapitalization that provided for the exchange of second lien notes for a 1.5 Lien Term Loan & preferred stock (enter Apollo and KKR here). Under the proposed plan of reorganization, the lenders holding claims under the first lien credit facilities will get paid in full; the holders of claims under the 1.5 Lien Term Loan will get a pro rata share of remaining cash; Resurgent will own the remaining business (with the rest liquidated); and the remaining creditors - including the second lien holdouts and the Pennsylvania Public School Employees' Retirement System (?!?!) - will get a big fat donut. Because who gives a sh*t about public school teachers anyway: what have they ever done for folks who work at Apollo and KKR?
  • Jurisdiction: S.D. of New York
  • Capital Structure: $60mm first lien RCF ($41mm out) & $105mm first lien Term Loan (Cerberus Business Finance LLC), $15mm 1.25 Lien Term Loan (plus $1.3mm interest) & $176.1 mm 1.5 Lien Term Loan (plus $15.4mm interest) (Cortland Capital Market Services LLC), $1.9 mm second lien notes (unexchanged in prior recapitalization)(U.S. Bank National Association)    
  • Company Professionals:
    • Legal: Willkie Farr & Gallagher LLP (Matthew Feldman, Paul Shalhoub, Robin Spigel, Debra McElligott, Gabriel Brunswick) & (Canadian counsel) Thornton Grout Finnigan LLP (D.J. Miller, Leanne Williams, Asim Iqbal, Mitch Grossell)
    • Financial Advisor: AlixPartners LLC (Mark Thorson)
    • Investment Banker(s): Keefe Bruyette & Woods Inc. & Miller Buckfire & Co. (John McKenna)
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Prepetition Agent & DIP Agent: Cerberus Business Finance LLC
      • Legal: Schulte Roth & Zabel LLP (Frederic Ragucci, Adam Harris)
    • Ad Hoc Group of 1.25 lien and 1.5 lien Lenders (Apollo Capital Management LP, KKR Credit Advisors LLC)
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Elizabeth McColm, Michael Turkel)
    • Prepetition 1.25 Lien and 1.5 Lien Agent: Cortland Capital Market Services LLC
      • Legal: Holland & Knight LLP (Barbra Parlin, Joshua Spencer)
    • U.S. Bank National Association
      • Legal: Dorsey & Whitney LLP (Eric Lopez Schnabel, Alessandra Glorioso) & (local) Maslon LLP (Clark T. Whitmore)
    • Preferred Stock Holders: Apollo Investment Corporation & KKR Financial CLO 2007-1 Ltd.
    • Majority Common Stock Holders: Norwest Mezzanine Partners II LP & Pennsylvania Public School Employees' Retirement System
    • New Money Investor: Resurgent Holdings LLC
      • Legal: Foley & Lardner LLP (Patricia Lane, Michael Small, Benjamin Rikkers, Jack Haake)
    • Official Committee of Unsecured Creditors
      • Legal: Arent Fox LLP (Robert Hirsh, George Angelich, Jordana Renert)
      • Financial Advisor: Gavin/Solmonese LLC (Ted Gavin)

Updated 5/31/17