💪 New Chapter 11 Bankruptcy Filing - GGI Holdings LLC (Gold's Gym) 💪

in

GGI Holdings LLC

May 4, 2020

As many talking heads pontificate about whether J.Crew is the canary in the coal mine for post-COVID retail, we have our first fitness-related chapter 11 bankruptcy filing. Is Gold’s Gym the canary in the coal mine for post-COVID gym-based fitness? GGI Holdings LLC and 14 affiliates (the “debtors”) are “…seeking relief under the provisions of chapter 11 of the Bankruptcy Code to facilitate the closing of certain locations, the rejection of the related leases and contracts and the sale of the remaining business operations on the terms proposed by [non-debtor holding company] TRT Gym Asset Holdings, LLC and its assigns through a confirmed chapter 11 plan.” After recently (permanently) closing 30 locations, the debtors have ~700 remaining locations of which 63 are company-owned and operated. They are owned by TRT Holdings, a Texas-based private holding company that, in addition to Gold’s Gym, owns Omni Hotels. In turn, TRT Holdings is owned and run by Robert Rowling, an American billionaire who made his fortune by working for his father’s oil and gas company — a company that sold to Texaco in the late 80s for hundreds of millions of dollars. If only we could be so lucky.

This is as pure a COVID-19 story as we’ve seen yet. All of the debtors company-owned gyms are closed and a majority of its franchised gyms are too = no revenues and no franchising fees, respectively. The filing is meant to jam those 32 landlords who wouldn’t play ball by way of rent abatements/concessions. The debtors’ pre-petition lenders — big banks like JPMorgan Chase Bank NA, Bank of America NA, and Wells Fargo Bank NA — were unwilling to fund a DIP. The debtors’ pre-petition owner, however, wants to stay in the mix; TRT is offering a $20mm DIP and intends to purchase the company out of bankruptcy. The debtors indicate that they think TRT’s bid will satisfy the big banks, take care of admin expenses, cure defaults under leases the debtors intend to keep and “establish a settlement fund” for general unsecured creditors. The DIP requires a plan on file by mid-May and confirmation by August 1. The timing is predicated upon being ready to open up shop when COVID-exhausted Americans are just about ready to stream themselves back into fourth-tier gyms and take out their longing for “Freedom” on a deep stack of rusty weights. Get pumped b*tches.

  • Jurisdiction: N.D. of Texas (Judge )

  • Capital Structure: $51.3mm RCF

  • Professionals:

    • Legal: Dykema Gossett PLLC (Danielle Rushing, Aaron Kaufman, Ariel Snyder)

    • Financial Advisor:

    • Investment Banker:

    • Claims Agent: BMC Group (*click on the link above for free docket access)

  • Other Parties in Interest:

New Chapter 11 Bankruptcy Filing - All American Oil & Gas Inc.

in

All American Oil & Gas Inc.

November 12, 2018

San Antonio-based independent oil company All American Oil & Gas Inc. (“AAOG”) and its two affiliated companies, Western Power & Steam Inc. (“WPS”) and Kern River Holding Inc. (“KRH”) filed for bankruptcy earlier this week in the Western District of Texas. WPS is a power company that sells power to the likes of Pacific Gas & Electric — a company that, as we’ve previously noted, is having problems of its own (which only appear to be getting worse) — and provides electricity and steam to KRH to aid KRH’s efforts to extract oil.

The enterprise is reportedly cash flow positive, with approximately $25mm in EBITDA in 217 and higher EBITDA projected for 2018. So what gives?

The debtors accuse their successor lender, Kern Cal Oil 7 LLC (“KCO7”), which acquired the company’s secured debt from Alliance-Bernstein, of “not act[ing] as a typical lender,” instead “implement[ing] a predatory ‘loan to own’ strategy.” The debtors note:

Unlike many E&P cases, this bankruptcy filing is not the result of the Company’s poor operational performance, illiquidity, debt maturities or lack of underlying value. Rather, it was precipitated by KCO7’s efforts to exploit its rights under the Credit Agreements to obtain the Debtors’ assets ‘on the cheap,’ and thereby to destroy tens of millions in equity value.

In a dramatic twist, Kern Cal Oil 7 LLC is, according to the debtors, run by two former investment bankers “who were fired allegedly for cause from AAOG’s and KRH’s former investment banker and financial advisor Cappello Capital Corporation” and have an SEC claim filed against them for “breach of fiduciary duty, misappropriation of confidential information, and fraud, among other allegations.” Salacious.

In October, Kern Oil 7 LLC, under the auspices of attending a constructive meeting relating to potential M&A involving Kern Oil and the debtors, issued a notice of default on the basis of insufficient hedging, a move the debtors claim “was a transparent attempt to intimidate AAOG into handing over the Company to KCO7 for little or no value to its shareholders.” Suffice it to say that there is other dramatic stuff here including the debtors’ inability to put hedges in place, purportedly due to the notice of default, incomplete documentation relating to the change from Alliance-Bernstein to KCO7, and more. KCO7 notified the debtors that default interest now applied and on November 8, the debtors had a scheduled interest payment to make which, given these circumstances, the debtors opted not to make. In turn, the debtors filed for bankruptcy to “protect its going concern enterprise value and to restructure its secured debt.”

To fund their cases, the debtors seek authority to use their pre-petition lenders’ (read: KCO7) cash collateral. That ought to be a fun first day hearing.

  • Jurisdiction: W.D. of Texas (Judge King)

  • Capital Structure: $80.1mm ‘19 first lien debt (plus $789k in accrued/unpaid interest)(Kern Cal Oil 7 LLC), $50mm ‘20 second lien debt (plus $10.6mm PIK and $440k accrued/unpaid interest)(Kern Cal Oil 7 LLC)

  • Company Professionals:

    • Legal: Hogan Lovells US LLP (Richard Wynne, Bennett Spiegel, Erin Brady, Christopher Bryant, John Beck, Sean Feener) & (local) Dykema Gossett PLLC (Deborah Williamson, Patrick Huffstickler, Danielle Rushing)

    • Investment Banker: Houlihan Lokey

    • Claims Agent: BMC Group Inc. (*click on company name above for free docket access)

  • Other Parties in Interest:

    • Kern Oil 7 LLC

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

New Chapter 11 Filing - Red Fork (USA) Investments Inc.

in

8/7/18

Red Fork (USA) Investments Inc., a Texas-headquartered oil and gas exploration and production company focused on five counties in Oklahoma, filed for bankruptcy after capitulating under the weight of its debt and inability to generate enough revenue to cover it. The company is also the subject of a number of legal actions asserting that the company owned and/or operated saltwater disposal wells that "caused or contributed" to certain earthquakes. Given the costs of the latter and the lack of revenue from E&P initiatives, the company commenced its chapter 11 cases. 

  • Jurisdiction: W.D. of Texas 
  • Capital Structure: $119.5mm debt (Guggenheim Corporate Funding LLC)    
  • Company Professionals:
    • Legal: Dykema Gossett PLLC (Deborah Williamson, Patrick Huffstickler, Jesse Moore)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
    • Independent Board Director: Eugene Davis
  • Other Parties in Interest:
    • Prepetition Secured Lenders: Guggenheim Corporate Funding LLC
      • Legal: Haynes and Boone LLP (Charles Beckham Jr., Martha Wyrick, Matthew Ferris)