📺New Chapter 11 Bankruptcy Filing - MobiTV Inc.📺

MobiTV Inc.

On Monday, Emeryville, California-based MobiTV, Inc. and an affiliated debtor filed for chapter 11 bankruptcy in the District of Delaware. MobiTV is “a creative thinking technology company making TV better.” Which is funny because we’re willing to bet that literally nobody thinks about MobiTV when they think about whether they enjoy their television-watching user experience. Anyway, what that actually means is MobiTV sells a white-label software application to cable providers that allows consumers to stream programming on (i) streaming devices like Roku, Apple TV, Amazon Fire TV, XBox or (ii) a smart TV, without the need for a set-top cable box. Key customers include T-Mobile USA Inc. ($TMUS) and over 120 cable/broadband television providers to deliver content to over 300k end user subscribers. In other words, if you’re streaming HBO via T-Mobile, your experience may very well be powered by MobiTV.

MobiTV has been around since 2000 and had gone through several shifts in its fortunes and business model. In 2020, MobiTV generated $13M in revenue with an operating loss of approximately $34M. That is a long fall from grace for a company that filed for an IPO in 2011 with reported 2010 sales of $67M. At the time, MobiTV was entirely focused on providing licensed TV programming to the personal devices of customers on wireless networks with AT&T Inc. ($T), Sprint, and T-Mobile accounting for almost all of the company’s revenues. MobiTV had raised over $110M from investors like Menlo Ventures, Redpoint Ventures, Adobe Ventures, and Hearst Ventures.

But despite its rosy trajectory, MobiTV withdrew its IPO filing a few months later citing unfavorable market conditions. In hindsight, there were obviously deeper problems with the business model. Broadcast TV viewing on mobile devices failed to take off in the way the company predicted and MobiTV pivoted away from serving wireless carriers.

Its new target customer was midsize cable providers. Set-top boxes have long been at the center of consumers interactions with cable providers. But these boxes have plenty of drawbacks:

Pay-TV providers (and their consumers) are looking for a way beyond set-top boxes, which can be expensive for consumers to buy, costly to maintain for the pay-TV providers and often limited in their functionality. Their clunkiness, in fact, has made them ripe for disruption, and many now opt for lighter options like Fire TV or Apple TV to bypass those services altogether. In other words, pay-TV providers need to find other routes to providing services to customers that can compete better with the newer generation of video services. (emphasis added)

MobiTV saw the shift towards streaming devices and smart TVs and aimed to position itself as a “television as a service provider” to midsized cable providers like C Spire, DirectLink, and Citizens Fiber. These companies lack the R&D budgets of the likes of Comcast Corporation ($CMCSA) to invest in user interface and software applications in their set-top boxes. In 2017, MobiTV raised $21M from Oak Investment Partners and Ally Bank ($ALLY) (at a reported ~$400M valuation!) to develop its MobiTV ConnectTM Platform, “a product for pay TV and on-demand TV providers to stream broadcast TV and offer other services, like catch-up and recording, without the need of a set-top box.”

The idea was to capture some of the “customer ownership” that was slipping from cable set-top boxes to streaming devices and services. In 2019, MobiTV raised $50M more from Oak Investment Partners and Ally Bank as well as Cedar Grove Partners to fund further growth. At the time, MobiTV had about 90 cable providers signed up as customers.

Middlemen can make good money and at first glance it seemed like MobiTV might have been able to carve out a position for itself. MobiTV offered cable providers a small way to stem the tide of cord cutting and the proliferation of streaming services like HBO Max, Netflix Inc ($NFLX), Hulu, and the rest. As TechCrunch laid out, “The pitch that MobiTV makes to pay TV providers goes something like this:”

…set-top-box-free pay TV services gives operators a wider array of channels and potentially more flexibility in how they are provisioned. At the same time, a solution like MobiTV’s potentially lowers the total cost of ownership for providers by removing the need for the set-top boxes.

That’s not to say that some of its customers are not using both, though: they can provide a certain set of channels directly through boxes, and the MobiTV service gives them the option of having another set that are offered on top of that.

By 2020, MobiTV’s customer base had grown to about 120 midsize cable TV operators as well as legacy T-Mobile customers. Revenue was growing and its subscribers and customers bases were both increasing. So what the hell happened here? 🤔

An agnostic software solution for cable providers to capture some of the shift towards streaming? Coupled with more people stuck at home from a pandemic? If this product were ever going to work, one would think it would have been during the last year. From the First Day Declaration:

That’s the entirety of section D. Maybe we are dense but it would be interesting to know what exactly about the COVID-19 pandemic and related stay-at-home orders materially impaired the Company’s growth opportunities. Seems like that should have been good for business, no?

But we can speculate.

As every content provider has rolled out their own streaming service over the last twelve months, MobiTV was probably in the worst position in the entire television streaming value chain. On the supply side, content providers are focused on promoting their own streaming services and have little reason to give any sort of pricing concessions to a niche service provider like MobiTV. This surely kept MobiTV’s licensing costs at an elevated level.

On the demand side, consumers likely were not calling in to their cable providers demanding MobiTV considering they could get the same content with a $30 Roku, their streaming subscriptions, and their broadband bill. Cable providers apparently were willing to pay for the service, but not enough to keep the company from losing money.

After 20 years of trying to figure out what its business model was, MobiTV finally threw in the towel and management took COVID cover.

The “tell” that the business issues were more elemental than COVID? The fact that the company has been operating under a series of 17 amendments and forbearance agreements.

At the time of its Ch. 11 filing, MobiTV had ~$25M of debt obligations, owed entirely to its sole pre-petition secured lender, Ally Bank.

In 2017 Ally Bank provided MobiTV a $10M term loan as well as a $5M revolving credit facility which was fully drawn. The original maturity of these loans was February 3, 2019, but following the aforementioned amendments and forbearance agreements, the maturity date was pushed back to January 2021. To fund the business in the interim, Oak Investment Partners threw good money after bad, underwriting three Subordinated Convertible Promissory Notes on August 6, 2020 ($4mm); December 14, 2020 ($1mm); and December 30, 2020 ($0.3mm). As a condition to one of Ally Bank’s credit amendments, MobiTV engaged FTI Capital Advisors LLC to evaluate strategic alternatives. A subsequent marketing effort came up empty: the “alternatives” were non-existent.

Consequently, on January 29, 2021, MobiTV and Ally Bank entered into another amendment and forbearance. T-Mobile — the customer most reliant upon the MobiTV’s services — provided $2.5mm in bridge financing lest they upset thousands of customers right around Super Bowl time. On February 12, 2021, T-Mobile agreed to provide an additional ~$2.3mm and Ally Bank agreed to forbear until February 26, 2021.

Following negotiations with Ally Bank and T-Mobile, the interested parties concluded that a sale process should be implemented through the filing of chapter 11. An affiliate of T-Mobile, TVN Ventures, LLC, has committed to a $15mm DIP credit facility (12%), junior to the pre-existing pre-petition Ally Bank position. As of this writing, management is still seeking a stalking horse bidder to backstop the sale process.

At $13mm of revenue with an operating loss that high, there’s a very good chance that T-Mobile knows it’s buying this thing with that DIP commitment.

---

Date: March 1, 2021

Jurisdiction: D. of Delaware (Judge Silverstein)

Capital Structure: $25mm funded debt

Company Professionals:

• Legal: Pachulski Stang Ziehl & Jones LLP (Debra Grassgreen, Mary Caloway, Maxim Litvak, Nina Hong, Jason Rosell)

• Financial Advisor: FTI Consulting Inc. (Chris LeWand, Catherine Moran, Chris Post, Chris Tennenbaum, Doug Edelman)

• Claims Agent: Stretto (Click here for free docket access)

Other Parties in Interest:

• DIP Lender: T-Mobile USA Inc. and TVN Ventures LLC

  • Legal: Alston & Bird LLP (William Sugden, Jacob Johnson) & Young Conaway Stargatt & Taylor LLP (Edmon Morton, Kenneth Enos)

• Silicon Valley Bank

  • Legal: Morrison Foerster LLP (Alexander Rheaume, Benjamin Butterfield) & Ashby & Geddes LLP (Gregory Taylor, Katharina Earle)

• Ally Bank

  • Legal: McGuireWoods LLP (Kenneth Noble, Kristin Wigness, Ha Young Chung) & Richards Layton & Finger PA (John Knight, David Queroli)

• Official Committee of Unsecured Creditors:

  • Legal: Fox Rothschild LLP (Seth Niederman, Michael Sweet, Gordon Gouveia)

✈️ New Chapter 11 Bankruptcy Filing - LATAM Airlines Group S.A. ($LTM) ✈️

LATAM Airlines Group S.A.

May 26, 2020

COVID-19 is starting to notch a long list of corporate victims. Chapter 11 bankruptcy filings have NOT been in short supply the last two months. Yet while many of the debtors may cite COVID-19 as a factor leading to the bankruptcy filings, in the super-majority of cases it was merely a contributing factor. The icing on the cake, if you will. From our vantage point, prior to the last week, there had only been (arguably) four pure-play COVID-19 chapter 11 bankruptcy filings:

• Ravn Air Group Inc. — COVID-19 effectively shut down Alaska and CARES Act funds were unavailable to stave off a filing.

• Alpha Entertainment LLC (XFL) — COVID-19 cold-stopped all sports mid-season.

• GGI Holdings LLC (Gold’s Gym) — COVID-19 shuts down gyms nationwide.

• Avianca Holdings SA — COVID-19 and mandated government shutdowns hindered all travel and flight bookings went negative.

Those were just the appetizer. This week things got VERY, VERY, REAL. The Hertz Corporation ($HTZ) became one of the largest chapter 11 bankruptcy filings EVER because COVID-19 put a stop to air travel — the thing that HTZ is most dependent upon in its business. This caused used-car values to fall through the floor and, in turn, effectively blow up the company’s securitization structure. And then LATAM Airlines Group S.A. ($LTM) became the second large latin american airline to file. This should not have been a surprise to anyone.

On May 13 in “✈️ Airlines, Airlines, Airlines ✈️ ,” we wrote about (i) the airline bailout debate engulfing folks in the US, (ii) the Avianca bankruptcy filing, (iii) Virgin Australia’s voluntary administration filing in Australia (after the Aussie government refused to partake in a bailout), (iv) Norway’s attempts to deal with Norwegian Air Shuttle SA’s ($NWARF) troubles, and (v) Boeing Corporation ($BA) CEO Dave Calhoun’s flippant remarks that “it’s probable that a major [US] carrier will go out of business” — yet another example of people confusing the concepts “filing for chapter 11 bankruptcy” with “going out of business and disappearing from the face of the earth.” For the avoidance of doubt, no, they are not necessarily the same thing (outside of retail anyway). In what was not exactly our boldest call, we noted that there would be more COVID-19-spawned action to come — particularly, in the near-term, in Latin America:

Which leaves Latin America’s other air carriers in a bad spot, including Latam Airlines Group SA (the finance unit of which has debt bid in the 30s and 40s), Gol Linhas Aereas Inteligentes SA ($GOL)(the finance unit of which has debt bid in the low 40s), and Aerovías de México SA de CV (Aeromexico)(which has debt bid in the 30s). Will one of these be one of the next airlines in bankruptcy court?

Early in the morning on May 26th, LATAM Airlines Group SA (“LATAM Parent, and with 28 direct or indirect subsidiary debtors, the “Debtors”) filed for bankruptcy in the Southern District of New York. It is the fourteenth-largest airline in the world (measured by passengers carried) and Latin America’s leading airline; it services 145 different destinations in 26 countries. Including 20 aircraft leased to non-debtor third-parties, the company has a total fleet of 340 aircraft.

Source: First Day Declaration. Docket #3.

On the strength of this fleet, in 2019, the company did $10.1b in revenue with over $1b of operating cash flow after investments (for the third straight year) and $195.6mm of net income. While the majority of said revenue comes from passenger services, the company also supplements revenues with cargo-related services to 151 destinations in 29 countries (11% of revenue but growing quickly). With four consecutive years of net profits, the company was, as far as airline companies go, doing very well — particularly in Brazil (38% revenue), Chile (16%) and the United States (10%).

Contributing to the positive performance trend is the fact that the company has apparently been executing its business plan quite well. It has rejiggered its cost structure; established new routes; reduced fleet commitments; and upgraded operational execution and customer experience (including the implementation of a frequent flyer program).* Improved operational performance gave the company flexibility in other parts of the business. Notably, the company decreased leverage by $2b — dropping its leverage ratio from 5.8x to 4x. It also reduced its capital fleet commitments by $6.3b from 2015 to 2019. Everything was going in the right direction.

But then COVID-19 caused a 95% reduction in LATAM’s passenger service. All of the business plan execution in the world couldn’t have prepared the Debtors for such a meaningful drop off. To state the obvious, this created an immediate liquidity strain on the business and instantly called the Debtors’ capital structure into question. To address the liquidity situation, the Debtors drew down the entirety of their secured revolving credit facility giving them $707mm total cash on hand (plus another $621 held by non-debtor affiliates). Here is the rest of the Debtors’ largely unsecured capital structure:

The rubber is going to meet the runway with a lot of the aircraft leases. The finance leases are all entered into by special purpose vehicles (“SPVs”) which then lease the planes to LATAM Parent which then subleases the aircraft to other opcos including certain of the Debtors. The SPVs finance the acquisition of aircrafts through various banks, pledging the owned aircraft as collateral. The principal amount outstanding under the various SPV financings is $3.3b.

Meanwhile, the operating leases are entered into with third-party lessors like AerCap Holdings N.V., Aircastle Holding Corporation Limited and Avolon Aerospace Leasing Ltd. The Debtors have negotiated rent deferrals with these parties but, generally, they pay $44mm/month in rent and, all in, have $2.9b in aircraft-related lease liabilities.

Similarly, certain aircraft purchase agreements are likely to be grounded. The company has agreements to purchase 44 aircraft from Airbus S.E. and 7 aircraft from Boeing.

The Debtors seem primed to leverage certain bankruptcy tools here. First and foremost is right-sizing the fleet, which means a lot of the aforementioned agreements will be (or are likely to be) on the chopping block. Indeed, the Debtors have already filed a motion seeking to reject around 19 of them.

Two significant shareholders have agreed to fund $900mm of super-priority DIP financing which will be part of a larger $2.15b DIP Facility (PETITION Note: reminder that Avianca has not sought approval of a DIP credit facility…yet). Given that many Latin American countries have suspended air travel for months (i.e., Argentina through September, Colombia through August) and the US recently announced it would deny entry to non-citizens from Brazil, the Debtors will need this financing to complement the cash already on hand to stay afloat.

Like Hertz and Avianca, it looks like this one will linger in bankruptcy court for awhile as all of the various parties in interest try to figure out what a business plan looks like in a post-COVID world.

*Notably, the company brags that it was able to “…increase available seat kilometers (or ASKs, used to measure an airline’s carrying capacity) by approximately 11%…” which, in turn, contributed to an increase in passengers carried from 68mm to 74mm per year and increased its operational margin from 5% to 7%. This is confirmation of what we already knew: to juice revenues airlines have been engaging in sardine-packing experiment, squeezing as many passengers into a flight as possible. And it worked! Query, however, what will happen to ASKs in a post-COVID-19 world. 🤔

• Jurisdiction: S.D. of New York (Judge Garrity Jr.)

• Capital Structure: see above

• Professionals:

  • Legal: Cleary Gottlieb Steen & Hamilton LLP (Richard Cooper, Lisa Schweitzer, Luke Barefoot, Thomas Kessler, David Schwartz) & Togut Segal & Segal LLP (Albert Togut, Kyle Ortiz)

  • Financial Advisor: FTI Consulting Inc.

  • Investment Banker: PJT Partners LP

  • Claims Agent: Prime Clerk LLC (*click on the link above for free docket access)

• Other Parties in Interest:

  • Large equityholders: Cueto Group, Delta Air Lines Inc. ($DAL), Chilean Pension Funds,

  • Large Equityholder: Qatar Airways investments UK Ltd.

    • Legal: Alston & Bird LLP (Gerard Catalanello, James Vincequerra)

  • Official Committee of Unsecured Creditors

    • Legal: Dechert LLP (Benjamin Rose)

    • Conflicts Legal: Klestadt Winters Jureller Southard & Stevens LLP

🏠New Chapter 11 Bankruptcy Filing - Stearns Holdings LLC🏠

Stearns Holdings LLC

July 9, 2019

Hallelujah! Something is going on out in the world aside from the #retailapocalypse and distressed oil and gas. Here, Blackstone Capital Partners-owned Stearns Holdings LLC and six affiliated debtors (the “debtors”) have filed for bankruptcy in the Southern District of New York because of…drumroll please…rising interest rates. That’s right: the FED has claimed a victim. Stephen Moore and Judy Shelton must be smirking their faces off.

The debtors are a private mortgage company in the business of originating residential mortgages; it is the 20th largest mortgage lender in the US, operating in 50 states. We’ll delve more deeply into the business model down below but, for now, suffice it to say that the debtors generate revenue by producing mortgages and then selling them to government-sponsored enterprises such as Ginnie Mae, Fannie Mae and Freddie Mac. There are a ton of steps that have to happen between origination and sale and, suffice it further to say, that requires a f*ck ton of debt to get done. That said, on a basic level, to originate loans, the debtors require favorable interest rates which, in turn, lower the cost of residential home purchases, and increases market demand and sales activity for homes.

Except, there’s been an itsy bitsy teeny weeny problem. Interest rates have been going up. Per the debtors:

The mortgage origination business is significantly impacted by interest rate trends. In mid-2016, the 10-year Treasury was 1.60%. Following the U.S. presidential election, it rose to a range of 2.30% to 2.45% and maintained that range throughout 2017. The 10-year Treasury rate increased to over 3.0% for most of 2018. The rise in rates during this time period reduced the overall size of the mortgage market, increasing competition and significantly reducing market revenues.

Said another way: mortgage rates are pegged off the 10-year treasury rate and rising rates chilled the housing market. With buyers running for the hills, originators can’t pump supply. Hence, diminished revenues. And diminished revenues are particularly problematic when you have high-interest debt with an impending maturity.

This is where the business model really comes into play. Here’s a diagram illustrating how this all works:

Source: First Day Declaration, PETITION

The warehouse lenders got nervous when, over the course of 2017/18, mortgage volumes declined while, at the same time, the debtors were obligated to pay down the senior secured notes; they, rightfully, grew concerned that the debtors wouldn’t have the liquidity available to repurchase the originated mortgages within the 30 day window. Consequently, the debtors engaged PIMCO in discussions about the pending maturity of the notes. Over a period of several months, however, those discussions proved unproductive.

The warehouse lenders grew skittish. Per the debtors:

Warehouse lenders began reducing advance rates, increasing required collateral accounts and increasing liquidity covenants, further contracting available working capital necessary to operate the business. Eventually, two of the warehouse lenders advised the Debtors that they were prepared to wind down their respective warehouse facilities unless the Debtors and PIMCO agreed in principle to a deleveraging transaction by June 7, 2019. That did not happen. As a result, one warehouse lender terminated its facility effective June 28, 2019 and a second advised that it will no longer allow new advances effective July 15, 2019. The Debtors feared that these actions would trigger other warehouse lenders to take similar actions, significantly impacting the Debtors’ ability to fund loans and restricting liquidity, thereby jeopardizing the Debtors’ ability to operate their franchise as a going concern.

On the precipice of disaster, the debtors offered the keys to PIMCO in exchange for forgiveness of the debt. PIMCO rebuffed them. Subsequently, Blackstone made PIMCO a cents-on-the-dollar cash-out offer on the basis that the offer would exceed liquidation value of the enterprise and PIMCO again declined. At this point there’s a lot of he said, she said about what was offered and reneged upon to the point that it ought to suffice merely to say that the debtors, Blackstone and PIMCO probably aren’t all sharing a Hamptons house together this summer.

So, where did they end up?

The debtors have filed a plan of reorganization with Blackstone as plan sponsor. Blackstone agreed to inject $60mm of new equity into the business — all of which, notably, is earmarked to cash out the notes in their entirety (clearly at at discount — read: below par — for PIMCO and the other noteholders). The debtors also propose to subject Blackstone’s offer to a 30-day competitive bidding process, provided that (a) bids are in cash (credit bids will not be allowed) and (b) all obligations to the GSEs and other investors are honored.

To fund the cases the debtors have obtained a commitment from Blackstone for $35mm in DIP financing. They also sourced proposals from warehouse lenders prepetition and have obtained commitments for $1.5b in warehouse financing from Barclays Bank PLC and Nomura Corporate Funding Americas LLC (guaranteed, on a limited basis, by Blackstone). In other words, Blackstone is ALL IN here: with the DIP financing, the limited guarantee and the equity check, they are placing a stake in the ground when it comes to mortgage origination.

• Jurisdiction: S.D. of New York (Judge Chapman)

• Capital Structure: $184mm 9.375% ‘20 senior secured notes (Wilmington Trust Association NA)

• Professionals:

  • Legal: Skadden Arps Slate Meagher & Flom LLP (Jay Goffman, Mark McDermott, Shana Elberg, Evan Hill, Edward Mahaney-Walter)

  • Financial Advisor: Alvarez & Marsal LLC (Robert Campagna)

  • Investment Banker: PJT Partners LP (Jamie O’Connell)

  • Claims Agent: Prime Clerk LLC (*click on the link above for free docket access)

  • Board of Directors: David Schneider, William Cary, Glenn Stearns, Nadim El Gabbani, Chinh Chu, Jason Roswig, Chris Mitchell

• Other Parties in Interest:

  • Indenture Trustee: Wilmington Trust Association NA

    • Legal: Alston & Bird LLP (Jason Solomon)

  • Major Noteholder: Pacific Investment Management Company LLC

    • Legal: Hogan Lovells US LLP (Bennett Spiegel, Stacey Rosenberg)

  • Blackstone Capital Partners VI-NQ/NF LP

    • Legal: Simpson Thacher & Bartlett LLP (Elisha Graff, Jamie Fell)

  • Barclays Bank PC

    • Legal: Hunton Andrews Kurth LLP (Peter Partee Sr., Brian Clarke)

  • Nomura Corporate Funding Americas LLC

    • Legal: Milbank LLP (Mark Shinderman, Lauren Doyle) & Alston & Bird LLP (Karen Gelernt)

  • Fannie Mae

    • Legal: O’Melveny & Myers LLP (Stephen Warren)

  • Freddie Mac

    • Legal: McKool Smith PC (Paul Moak)

7/9/19 #30

Copy of New Chapter 11 Filing - Waypoint Leasing Holdings Ltd.

Waypoint Leasing Holdings Ltd.

November 25, 2018

“Get to the Choppa!” - Arnold Schwarzenegger

It has been a tough couple of years for companies in the helicopter business (see, e.g., Erickson Aircrane and CHG Group, not to mention PHI Inc. and Bristow Group, both of which restructuring professionals continue to watch and salivate over). So tough, in fact, that even Thanksgiving weekend wasn’t sacrosanct and even some big name sponsors couldn’t keep this thing out of court. Over the weekend, helicopter leasing company, Waypoint Leasing Holdings Ltd., “facing imminent liquidity constraints and potential defaults under their secured loan facilities,” filed for bankruptcy with a goal of…

…TO READ THE REST OF THIS SUMMARY — WHICH INCLUDES DISCUSSION OF THE COMPANY’S CAPITAL STRUCTURE AND A ROSTER OF THE PLAYERS AND PROFESSIONALS INVOLVED IN THE MATTER — YOU MUST BE A MEMBER. BECOME ONE HERE.

New Chapter 11 Filing - VER Technologies Holdco LLC

VER Technologies Holdco LLC

4/4/18

VER Technologies, a Los Angeles-based provider of for-rent production equipment and engineering support for live and taped television, cinema, live events and broadcast media has filed for chapter 11 bankruptcy in the District of Delaware. We hadn't heard of these guys before and we're guessing that, unless you live in Los Feliz or Silverlake, you haven't either. Suffice it to say that they're they guys behind the guy, so to speak. Recent broadcast work included the 2018 Super Bowl broadcast (eat it Brady); they also serve over 350 live music customers per year including the Biebs and the band-formerly-known-as-Coldplay-now-called-the-Chainsmokers. 

In some respects, this is a story about attempted avoidance of disruption leading to disruption. The company initially specialized in rentals with no equipment customization but, with time, opted to expand its product and service offerings to include customization. This endeavor, however, proved capital intensive to the point where the company exceeded $270 million on its prepetition asset-backed lending facility. This triggered cash sweeps to the company's bank which proved to further constrain liquidity. This sparked a need for an operational and balance sheet restructuring to maximize cash and get the company to the point of a potential transaction.

In other respects, this is another leveraged buy-out that saddled the target company with a wee bit too much debt. Moreover, the company seems to have undertaken a number of ill-advised or ill-executed operational initiatives that, ultimately, undercut revenue. It happens. 

Now the company -- supported by a restructuring support agreement with its lenders (including funds managed by GSO Capital Partners) -- hopes to facilitate a pre-negotiated merger with an entity controlled by Production Resource Group LLCl ("PRG"). PRG is a Jordan Company-owned provider of entertainment and event technology solutions. Naturally, the term lenders will also own a portion of the reorganized company. Per the term sheet, PRG will get 72% preferred and 80% common; the term lenders will get the delta. The reorganized company will still have a meaningful amount of debt on its balance sheet with a proposed new (unquantified) first lien term loan and a $435 million new second lien term loan. 

The company has secured a proposed $364.7 million DIP credit facility ($300mm ABL, $64.7mm Term Loan, of which $50mm is new money) to support its time in bankruptcy. The company seeks to be in and out of bankruptcy court in approximately 115 days. 

• Jurisdiction: D. of Delaware (Judge Gross)
• Capital Structure: $296.3mm ABL Facility (Bank of America NA), $424.2mm term loan (GSO Capital Partners LP/Wilmington Trust NA), $14mm FILO loan, $18.75mm New FTF Inc. Note, $7.5mm Catterton Notes.  
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (Joshua Sussberg, Ryan Blaine Bennett, Christine Pirro, Jamie Netznik) & (local) Klehr Harrison Harvey Branzburg LLP (Domenic Pacitti, Morton Branzburg)
  • Financial Advisor/CRO: AlixPartners LLC (Lawrence Young, Stephen Spitzer, Bradley Hunter, Christopher Blacker, James Guyton, Brad Hall)
  • Investment Banker: PJT Partners LP (Nick Leone)
  • Strategic Communications: Joele Frank
  • Independent Director: Eugene Davis
    • Legal: Kramer Levin Naftalis Frankel LLP (Philip Bentley)
  • Claims Agent: KCC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Prepetition ABL Agent and DIP ABL Agent:
    • Legal: Skadden Arps Slate Meagher & Flom LLP (Shana Elberg, Christopher Dressel, Anthony Clark, Robert Weber, Cameron Fee)
    • Financial Advisor: Perella Weinberg Partners
  • DIP Term Loan Agent: Wilmington Trust NA
    • Legal: Alston & Bird LLP (Jason Solomon)
  • Supporting Term Loan Lenders: GSO Capital Partners, ABR Reinsurance Ltd., Consumer Program Administrators Inc., Irving LLC
    • Legal: Morgan Lewis & Bockius LLP (Frederick Eisenbeigler, Andrew Gallo, Christopher Carter) & Richards Layton & Finger PA (Mark Collins, Amanda Steele, Joseph Barsalona)
  • 12% Subordinated Noteholder:
    • Legal: King & Spalding LLP (Jeffrey Pawlitz, Michael Handler)
  • Indenture Trustee FTF Note:
    • Legal: Robins Kaplan LLP (Howard Weg, Michael Delaney)
  • Production Resource Group LLC
    • Legal: Greenberg Traurig LLP (Todd Bowen) & Morrison Cohen LLP (Joseph Moldovan, Robert Dakis)
  • Wells Fargo NA
    • Legal: Otterbourg PC (Andrew Kramer)
  • Official Committee of Unsecured Creditors
    • Legal: SulmeyerKupetz PC (Alan Tippie, Mark Horoupian, Victor Sahn, David Kupetz) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Aaron Stulman, Kevin Hroblak)
    • Financial Advisor: Province Inc. (Carol Cabello) 

Updated 5/19/18

New Chapter 11 Bankruptcy - Walter Investment Management Corp.

Walter Investment Management Corp. 

• 11/30/17 Recap: Mortgage banking firm focused primarily on the servicing and origination of loans, including forward and reverse loans, has filed a much-anticipated prepackaged bankruptcy with the intention of shedding nearly $800mm of debt from its balance sheet. The company originates "conventional conforming loans eligible for securitization by government-sponsored enterprises, such as Fannie Mae and Freddie Mac, or eligible for guarantees by government agencies, such as Ginnie Mae MBSs." If that was painful reading, imagine how the lawyers felt drafting that. Even more painful is understanding that this bankruptcy is directly attributable to decisions the company made in the aftermath of the financial crisis. From 2010 through 2015, the company went on a debt-ridden acquisition spree (including once bankrupt Residential Capital LLC) which just goes to show that, while one's crisis is another's opportunity, one's crisis could be one's crisis. With this deleveraging transaction, the company hopes to be more competitive in the market going forward.

• Jurisdiction: S.D. of New York (Judge Garrity)

• Capital Structure: $100mm '18 RCF, $1.4b '20 TL (Credit Suisse AG), $540mm 7.875% '21 senior unsecured notes (Wilmington Savings Fund Society FSB), $242mm '19 senior subordinated convertible notes (Wells Fargo Bank NA)(public equity: $WAC)

• Company Professionals:

  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Matthew Barr, Sunny Singh)

  • Financial Advisor: Alvarez & Marsal North America LLC (David Coles)

  • Investment Banker: Houlihan Lokey Capital Inc. (Reid Snellenbarger, Jeffrey Levine, Jeffrey Lewis, James Page, Daniel Martin, Derek Kuns)

  • Claims Agent: Prime Clerk LLC (*click on case name above for free docket access)

• Other Parties in Interest:

  • Administrative Agent: Credit Suisse AG

    • Legal: Davis Polk & Wardwell LLP (Brian Resnick, Michelle McGreal)

  • Consenting Term Lenders (Carlson Capital LP, TAO Fund LLC, Credit Suisse Asset Management LLC, Marathon Asset Management LP, Nuveen, Symphony Asset Management LLC, Eaton Vance Management)

    • Legal: Kirkland & Ellis LLP (Patrick Nash, Gregory Pesce)

    • Financial Advisor: FTI Consulting Inc.

  • Consenting Senior Noteholders (Canyon Capital Advisors LLC, CQS UK LLP, Deer Park Road Management Company LP, Lion Point Capital LP, Oaktree Capital Management LP, Omega Advisors Inc.)

    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Gregory Bray, Haig Maghakian, Rachel Franzoia)

    • Financial Advisor: Moelis & Co.

  • Prepetition Indenture Trustee: Wilmington Savings Fund Society FSB

    • Legal: Pryor Cashman LLP (Patrick Sibley, Seth Lieverman, Matthew Silverman)

  • Prepetition Convertible Notes Indenture Trustee: Wells Fargo Bank NA

    • Legal: Thompson Hine LLP (Curtis Tuggle)

  • Administrative Agent for DIP Warehouse Facilities: Credit Suisse First Boston Mortgage Capital LLC

    • Legal: Alston & Bird LLP (Gerard Catalanello, Karen Gelernt, James Vincequerra)

  • Fannie Mae

    • Legal: O'Melveny & Myers LLP (Darren Patrick, Steve Warren, Jennifer Taylor)

  • Freddie Mac

    • Legal: McKool Smith (Paul Moak, Kyle Lonergan)

First Day Declaration

Updated 11/30/17 10:05 CT

New Chapter 11 Filing - Westinghouse Electric Company LLC

Westinghouse Electric Company LLC

• 3/29/17 Recap: File this under the most heavily leaked/discussed bankruptcy filing of all time: the Japanese government seemed to make an announcement about the proposed filing every hour. So...Pennsylvania-based nuclear power company filed for bankruptcy (30 debtors in total) after its parent, Toshiba, took a uuuuuuuuuge $6b+ write-down due to delayed and above-budget construction of plants in Georgia and South Carolina. The company secured a $800mm commitment for a DIP facility to fund the cases after a competitive DIP process with powerhouses like Goldman Sachs, Highbridge and Silver Point duking it out with Apollo. We've already covered this company a lot in previous weeks so suffice it to say that the upshot of this filing is that it will lead many to question the viability of nuclear as an alternative power source.
• Jurisdiction: SD of New York 
• Company Professionals:
  • Primary Legal: Weil (Gary Holtzer, Garrett Fail, Robert Lemons, David Griffiths, Charles Persons, David Cohen)
  • Legal for Toshiba Nuclear Energy Holdings (UK) Limited: Togut Segal & Segal LLP (Albert Togut, Brian Moore, Kyle Ortiz)
  • Financial Advisor: AlixPartners LLC (Lisa Donahue)
  • Investment Banker: PJT Partners Inc. (Timothy Coleman, John Singh, Mark Buschmann, Harold Kim)
  • Claims Agent: KCC (*click on company name for docket)
• Other Parties in Interest:
  • Toshiba Corporation
    • Legal: Skadden Arps Slate Meagher & Flom LLP (Van Durrer, Paul Leake, Annie Li) 
  • Prepetition Agent:
    • Legal: Latham & Watkins LLP (Zulfiqar Bokhari) 
  • Proposed DIP Lenders: Apollo Investment Corporation, AP WEC Debt Holdings LLC, Midcap Financial Trust, Amundi Absolute Return Apollo Fund PLC, Ivy Apollo Strategic Income Fund, Ivy Apollo Multi Asset Income Fund
    • Legal: Paul Weiss Rifkand Wharton & Garrison LLP (Jeffrey Saferstein, Claudia Tobler, Kevin O'Neill) 
  • Proposed DIP Agent: Citibank NA
    • Legal: Shearman & Sterling LLP (Fredric Sosnick, Ned Schodek) 
  • Competing (but losing) DIP Providers: Goldman Sachs Bank USA, HPS Investment Partners LLC, Silver Point Finance LLC
  • Georgia Power Company, Oglethorpe Power Corporation, Municipal Electric Authority of Georgia and City of Dalton Georgia
    • Legal: Jones Day (Gregory Gordon, Dan Prieto, Amanda Rush, Anna Kordas, Jeffrey Ellman)
  • Municipal Electric Authority of Georgia
    • Legal: Alston & Bird LLP (Dennis Connolly)
  • South Carolina Electric & Gas Company and South Carolina Public Service Authority
    • Legal: Reed Smith LLP (Paul Singer, Derek Baker, Tarek Abdalla)
  • Oglethorpe Power Corporation (An Electric Membership Corporation)
    • Legal: Dechert LLP (Michael Sage, Stephen Wolpert) & Parker Hudson Rainer & Dobbs LLP (C. Edward Dobbs)
  • Exelon Generation Company LLC
    • Legal: Ballard Spahr LLP (Matthew Summers)
  • Official Committee of Unsecured Creditors
    • Legal: Proskauer Rose LLP (Martin Bienenstock, Timothy Karcher, Vincent Indelicato)
    • Financial Advisor: Alvarez & Marsal LLC

Updated 5/31/17

New Chapter 11 Filing - Answers Holdings Inc.

Answers Holdings Inc.

•  3/3/17 Recap: Apax Partners' backed website operator has filed for bankruptcy because it never evolved from Internet 1.0, has too much debt, its main site, Answers.com, is the red-headed step-child of Quora, and, quite frankly, not a single person receiving the PETITION newsletter has visited the site(s) since 2006. Yahoo, Facebook, Amazon (AWS), Amex and Silicon Valley Bank are among the top 10 creditors. The debtors solicited a prepackaged plan and so all of the above will be unimpaired - somewhat ironic given that algorithmic changes by Google and Facebook - in addition to a mountain of debt - are the real root causes of the company's decline.
• Jurisdiction: SD of New York
• Capital Structure: $40mm revolver, $325mm '21 first lien TL, $180mm '22 second lien TL.   
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (James Sprayragen, Jonathan Henes, Christopher Greco, Melissa Koss, John Weber, Anthony Grossi)
  • Financial Advisor: Alvarez & Marsal LLC (Justin Schmaltz, Erin McKeighan)
  • Investment Banker: Rothschild (Steven Antinelli)
  • Claims Agent: Rust Bankruptcy/Omni Consulting (*click on company name for docket)
• Other Parties in Interest:
  • Ad Hoc Group of Consenting First Lien Lenders
    • Legal: Jones Day LLP (Scott Greenberg, Michael Cohen, Bryan Kotliar)
    • Financial Advisor: Houlihan Lokey
  • First Lien Agent: Credit Suisse AG
    • Legal: Gibson Dunn & Crutcher LLP (David Feldman, J. Eric Wise)
  • Ad Hoc Group of Consenting Second Lien Lenders (Deerpath Capital Management LP, North Haven Credit Partners LP, Summit Partners Credit Advisors LP)
    • Legal: Akin Gump Strauss Haur & Feld LLP (David Botter, David Simonds)
      • Financial Advisor: FTI Consulting Inc.
  • Second Lien Agent: Wilmington Trust NA
    • Legal: Alston & Bird LLP (Jason Solomon, David Wender)
  • Sponsor Entities: Apax Partners LP, Clarity Holdco LP, Clarity GP LLC
    • Legal: Simpson Thacher & Bartlett LLP (Elisha Graff, Edward Linden)
  • Proposed Board of Directors of the Reorganized Entity: William Ruckelshaus, Eric Ball, Peter Daffern, Eugene Davis, John Federman, Lonne Jaffe, Brian Mulligan.

Updated 4/2/17