🌑New Chapter 11 Filing - Cloud Peak Energy Inc.🌑

Cloud Peak Energy Inc.

May 10, 2019

In what ought to come as a surprise to absolutely no one, Cloud Peak Energy Inc. ($CLD) and a slate of affiliates FINALLY filed for bankruptcy.

Not the first Trump era coal bankruptcy, but it's the largest. https://t.co/2UXZkYKVjB

— ⚡Taylor Kuykendall (@taykuy) May 10, 2019

Let’s take a moment of silence for coal country, shall we? If this is what MAGA looks like, we’d hate to see what happens when a global downturn eventually hits. There’s gonna be blood in the water.

Sounds like hyperbole? Note that since 2016, there have been a slate of coal-related bankruptcies, i.e., Westmoreland Coal Company, Mission Coal Company LLC, and now Cloud Peak Energy Inc. Blackhawk Mining LLC appears to be waiting in the wings. We suppose it could be worse: we could be talking about oil and gas country (and we will be, we certainly will be…and SOON.).

Cloud Peak is an impressive company. Since its formation in 2008, it has become one of the largest (subbituminous thermal coal) coal producers in the US — supplying enough coal to satisfy approximately 2% of the US’ electricity demand. Its three surface mines are located in the Powder River Basin in Wyoming and Montana; it sold approximately 50mm tons of coal in 2018 to 46 domestic and foreign end users.*

In the scheme of things, Cloud Peak’s balance sheet isn’t overly complicated. We’re not talking about billions of dollars of debt here like we saw with Walter Energy, Peabody Energy, Arch Coal, Patriot Coal or Alpha Natural Resources. So, not all coal companies and coal company bankruptcies are created equal. Nevertheless, the company does have $290.4mm of ‘21 12% secured notes (Wilmington Trust NA) and $56.4mm of ‘24 6.375% unsecured notes (Wilmington Trust NA as successor trustee to Wells Fargo Bank NA) to contend with for a total of $346.8mm in funded debt liability. The company is also party to a securitization facility. And, finally, the company also has reclamation obligations related to their mines and therefore has $395mm in third-party surety bonds outstanding with various insurance companies, backed by $25.7mm in letters of credit. Coal mining is a messy business, homies.

So why bankruptcy? Why now? Per the company:

The Company’s chapter 11 filing, however, was precipitated by (i) general distress affecting the domestic U.S. thermal coal industry that produced a sustained low price environment that could not support profit margins to allow the Company to satisfy its funded debt obligations; (ii) export market price volatility that caused decreased demand from the Company’s customers in Asia; (iii) particularly challenging weather conditions in the second quarter of 2018 that caused spoil failure and significant delays in coal production through the remainder of 2018 and into 2019, which reduced cash inflows from coal sales and limited credit availability; and (iv) recent flooding in the Midwestern United States that has significantly disrupted rail service, further reducing coal sales.

To summarize, price compression caused by natural gas. Too much regulation (which, in turn, favors natural gas over coal). Too much debt. And, dare we say, global warming?!? Challenging weather and flooding must be really perplexing in coal country where global warming isn’t exactly embraced with open arms.

Now, we may be hopping to conclusions here but, these bits are telling — and are we say, mildly ironic in a tragic sort of way:

In addition to headwinds facing thermal coal producers and export market volatility, the Company’s mines suffered from unusually heavy rains affecting Wyoming and Montana in the second quarter of 2018. For perspective, the 10-year average combined rainfall for May, June, and July at the Company’s Antelope Mine is 6.79 inches. In 2018, it rained 10.2 inches during that period. While certain operational procedures put in place following heavy flooding in 2014 functioned effectively to mitigate equipment damage, the 2018 rains interrupted the Company’s mining operations considerably.

It gets worse.

The problem with rain is that the moisture therefrom causes “spoil.” Per the company:

Spoil is the term used for overburden and other waste rock removed during coal mining. The instability in the dragline pits caused wet spoil to slide into the pits that had to be removed by dragline and/or truck-shovel methods before the coal could be mined. This caused significant delays and diverted truck-shovel capacity from preliminary stripping work, which caused additional production delays at the Antelope Mine. The delays resulting from the spoil failure at the Antelope Mine caused the Company to have reduced shipments, increased costs, and delayed truck-shovel stripping in 2018. Consequently, the reduced cash inflows from coal sales limited the Company’s credit availability under the financial covenants in the Amended Credit Agreement prior to its termination, and limited access to any new forms of capital.

But, wait. There’s more:

Additionally, the severe weather affecting the Midwest region of the United States in mid-March 2019 caused, among other things, extensive flooding that damaged rail lines. One of Cloud Peak’s primary suppliers of rail transportation services – BNSF – was negatively impacted by the flooding and has been unable to provide sufficient rail transportation services to satisfy the Company’s targeted coal shipments. As of the Petition Date, BNSF’s trains have resumed operations, but are operating on a less frequent schedule because of repairs being made to rail lines damaged by the extensive flooding. As a result, the Company’s coal shipments have been materially impacted, with cash flows significantly reduced through mid-June 2019.

Riiiiiiiight. But:

Patrick Moore, co-founder of Greenpeace: “The whole climate crisis is not only Fake News, it’s Fake Science. There is no climate crisis, there’s weather and climate all around the world, and in fact carbon dioxide is the main building block of all life.” @foxandfriends Wow!

— Donald J. Trump (@realDonaldTrump) March 12, 2019

More about Moore here: the tweet, as you might expect, doesn’t tell the full story.

Anywho.

The company has been burning a bit over $7mm of liquidity a month since September 2018. Accordingly, it sought strategic alternatives but was unable to find anything viable that would clear its cap stack. We gather there isn’t a whole lot of bullishness around coal mines these days.

To buy itself some time, therefore, the company engaged in a series of exchange transactions dating back to 2016. This enabled it to extinguish certain debt maturing in 2019. And thank G-d for the public markets: were it not for a February 2017 equity offering where some idiot public investors hopped in to effectively transfer their money straight into noteholder pockets, this thing probably would have filed for bankruptcy sooner. That equity offering — coupled with a preceding exchange offer — bought the company some runway to continue to explore strategic alternatives. The company engaged J.P. Morgan Securities LLC to find a partner but nothing was actionable. Ah….coal.

Thereafter, the company hired a slate of restructuring professionals to help prepare it for the inevitable. Centerview Partners took over for J.P. Morgan Securities LLC but, to date, has had no additional luck. The company filed for bankruptcy without any prospective buyers lined up.

Alas, the company filed for bankruptcy with a “sale and plan support agreement” or “SAPSA.” While this may sound like a venereal disease, what it really means is that the company has an agreement with a significant percentage of both its secured and unsecured noteholders to dual track a sale and plan process. If they can sell the debtors’ assets via a string of 363 sales, great. If they have to do a more fulsome transaction by way of a plan, sure, that also works. These consenting noteholders also settled some other disputes and support the proposed $35mm DIP financing

*Foreign customers purchased approximately 9% of ‘18 coal production.

• Jurisdiction: D. of Delaware (Judge Gross)

• Capital Structure: $290mm 12% ‘21 secured debt (Wilmington Trust NA), $56.4mm unsecured debt (BOKF NA)

• Professionals:

  • Legal: Vinson & Elkins LLP (Paul Heath, David Meyer, Jessica Peet, Lauren Kanzer, Matthew Moran, Steven Zundell, Andrew Geppert, Matthew Pyeatt, Matthew Struble, Jeremy Reichman) & (local) Richards Layton & Finger PA (Daniel DeFranceschi, John Knight)

  • Financial Advisor: FTI Consulting Inc. (Alan Boyko)

  • Investment Banker: Centerview Partners (Marc Puntus, Ryan Kielty, Johannes Preis)

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

• Other Parties in Interest:

  • Major shareholders: Renaissance Technologies LLC, The Goldman Sachs Group Inc., Dimensional Fund Advisors LP, Kopernik Global Advisors, Blackrock Inc.

  • DIP Agent: Ankura Trust Company LLC

    • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Aryeh Ethan Falk, Christopher Robertson) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller, Paige Topper)

    • Financial Advisor: Houlihan Lokey

  • Prepetition Secured Noteholder Group (Allianz Global Investors US LLC, Arena Capital Advisors LLC, Grace Brothers LP, Nomura Corporate Research and Asset Management Inc. Nuveen Alternatives Advisors LLC, Wexford Capital LP, Wolverine Asset Management LLC)

    • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Aryeh Ethan Falk, Christopher Robertson) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller, Paige Topper)

  • Indenture Trustee: BOKF NA

    • Legal: Arent Fox LLP (Andrew Silfen, Jordana Renert) & (local) Womble Bond Dickinson US LLP (Matthew Ward)

  • Official Committee of Unsecured Creditors (BOKF NA, Nelson Brothers Mining Services LLC, Wyoming Machinery Company, Cummins Inc., ESCO Group LLC, Tractor & Equipment Co., Kennebec Global)

    • Legal: Morrison & Foerster LLP (Lorenzo Marinuzzi, Jennifer Marines, Todd Goren, Daniel Harris, Mark Lightner) & Morris James LLP (Carl Kunz III, Brya Keilson, Eric Monzo)

    • Investment Banker: Jefferies LLC (Leon Szlezinger)

Update: 7/7/19 #379

New Chapter 22 Filing - Geokinetics Inc.

Geokinetics Inc.

6/25/18

Just when we thought companies had mysteriously figured out how to stay out of bankruptcy court, alas, a filing!

And just when we thought oil and gas-related distress had ridden off into the proverbial Texan sunset, in walks Houston-based geophysical services provider Geokinetics Inc. into the Southern District of Texas with a plan to sell substantially all of its assets to (one-time bankruptcy candidate) SAE Exploration Inc. for $20mm. Looks like the oil and gas downturn still has some appetite for prey. And it must be tasty prey: this is the second time in four years that this company is in bankruptcy. #Scarlet22. Indeed, this company is so good at bankruptcy that, the first time, it emerged from chapter 11 a full year before it even confirmed its plan!! From paragraph 24 of the First Day Declaration:

"On March 10, 2014, GOK and certain affiliated subsidiaries confirmed a prepackaged chapter 11 plan of reorganization in the District of Delaware. Pursuant to the Plan, GOK equitized over $300 million of debt and paid off its revolving credit facility. On May 10, 2013, GOK and certain affiliated subsidiaries emerged from chapter 11."

And we thought Westworld had mind-bending timelines. Whoops. 

The company blames the prolonged downturn and certain discreet "operational difficulties" that resulted in uncollectable receivables for its bankruptcy. Wanting to jump ship as the iceberg approached, Wells Fargo sought to minimize its exposure but the company and its bankers, Moelis, weren't able to find a suitable secured loan facility to refinance its revolving loan. So Moelis toggled to "strategic alternatives" mode which, seemingly, included dumping this turd on unsuspecting public equity investors as the company -- under the guidance of Fried Frank Harris Shriver & Jacobson -- filed a confidential S-1 under the JOBS Act. Sounds a lot like Domo Inc. Or Tintri Inc., for that matter. #HailMary

Obviously the company didn't IPO. Instead, it continued to bleed cash. Ascribe Capital replaced Wells Fargo and funded bridge loans for some time until they were no longer willing to perform triage. The company and its advisors stepped on the gas, lined up the stalking horse bidder, and secured interest in a $15mm DIP credit facility -- from Whitebox Advisors and Highbridge Capital, two funds that are stakeholders in the stalking horse bidder -- and filed for bankruptcy. The proceeds of the DIP will be used, in part, to pay off Ascribe's bridge loans. 

Meanwhile, remember that IPO? It seems the company thought that that was a gigantic waste of time: among the top creditors are Fried Frank Harris Shriver & Jacobson LLP and Moelis & Co. ($MO). Savage. 

• Jurisdiction: S.D of Texas (Judge Jones)
• Capital Structure: $15.6mm Term Loan A (Ascribe Capital, Wilmington Trust), $6.8mm RCF (Ascribe Capital, Wilmington Trust)
• Company Professionals:
  • Legal: Porter & Hedges LLP (John Higgins, Joshua Wolfshohl, Aaron Power)
  • Financial Advisor: FTI Consulting Inc. 
  • Investment Banker: Moelis & Co. 
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Ascribe Investments LLC
    • Legal: Simpson Thacher & Bartlett LLP (Michael Torkin, Bryce Friedman, Randi Lynn Veenstra, Megan Tweed, Sandeep Qusba, Yun Joo Lim) & (local) Haynes and Boone LLP (Charles Beckham Jr., Martha Wyrick)
  • SAExploration Inc.
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Sarah Link Schultz, Eric Seitz)
  • DIP Lenders: Whitebox Advisors LLC, Highbridge Capital Management LLC
    • Legal: Brown Rudnick LLP (Andreas Andromalos, Steven Levine, Jeffrey Jonas, Robert Stark, Kimberly Cohen)

Updated 6/26 6:54 PT

New Chapter 11 Filing - R.E. Gas Development LLC (a/k/a Rex Energy)

R.E. Gas Development LLC

5/18/18

Pennsylvania-based R.E. Gas Development LLC and its affiliates are independent publicly-traded ($REXX) oil and gas companies operating in the Appalachian Basin with a focus on drilling and exploration activity in the Marcellus Shale, Utica Shale and Upper Devonian Shale, mostly throughout Western Pennsylvania. Like most other exploration and production companies that have found their way in bankruptcy court over the last several years, the sudden steep decline in crude oil and nat gas prices that began in 2014 significantly affected the company's liquidity and ability to manage its balance sheet. After all, this company isn't operating in the Permian. Revenues for 2017 were $205.3 million. 

After months and months of foreplay, the company enters bankruptcy court with a restructuring support agreement ("RSA") in tow: it provides for a dual path pursuant to which the company will, in agreement with its secured lenders, pursue a sale of substantially all assets or, in the absence of qualified bids, pursue a plan process pursuant to which the first lien lenders (i.e., Angelo Gordon) will swap (DIP) debt for equity in the reorganized company. The RSA purportedly has the support of 100% of the first lien lenders and 71.8% of the outstanding second lien notes.

To fund the company throughout the dual process, the company seeks a $411 million DIP credit facility, the proceeds of which will be used to (i) roll up $261 million of prepetition loans and (ii) settle the "makewhole provision" under the first lien credit agreement to the tune of $50 million. The makewhole was put into place at the time of the issuance of the first lien loan just short of a year ago.  For the uninitiated, the makewhole entitles the lender to certain economics in the event the lenders are "repaid in whole or in part prior to the maturity date or the outstanding indebtedness under the facility is accelerated for any reason." The economics are calculated "based on the sum of remaining interest payments and certain fees due on all loans for the remainder of the make whole period, which terminates on October 28, 2019." In other words, Angelo Gordon structured this to give themselves the utmost economics in the (highly likely) case of an event of default and eventual bankruptcy. Solid planning on their part -- assuming, in particular, that the assets fetch a purchase price that will clear the first lien debt and makewhole amount. Respect. 

So, lo and behold, there was an event of default called in February for failure to deliver quarterly financial statements (which led to other defaults as well). In April, the lenders, after a short forbearance period, issued a notice of acceleration. Cha ching! Makewhole!!

The DIP credit agreement imposes fairly expedited -- but not wholly unreasonable (relative to other recent cases) -- timing on the company, including closing of any sale or confirmation of a plan 170 days after the filing date. 

• Jurisdiction: W.D. of Pennsylvania (Judge Deller)
• Capital Structure: see below.
• Company Professionals:
  • Legal: Jones Day (Scott Greenberg, Tom Howley, Michael Cohen, Anna Kordas, Rachel Biblo Block) & (local) Buchanan Ingersoll and Rooney PC (James Newell, Timothy Palmer, Tyler Dischinger)
  • Financial Advisor: FTI Consulting Inc. (Albert Conly)
  • Investment Banker: Perella Weinberg Partners (Alexander Tracy)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Prepetition First Lien Admin Agent: Angelo Gordon Energy Servicer
    • Legal: Simpson Thacher & Bartlett LLP (Michael Torkin) & (local) Duane Morris LLP
    • Financial Advisor: PJT Partners
  • Informal Group of 1%/8% Senior Secured Second Lien Notes due 2020 of Rex Energy Corporation
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Michael Stamer, Meredith Lahaie, Stephen Kuhn, Kevin Zuzolo) and (local) Reed Smith LLP (Eric Schaffer, Maura McIntyre)
    • Financial Advisor: Stephens Inc.
  • Wilmington Savings Fund Society FSB
    • Legal: Morrison & Foerster LLP (Jonathan Levine, Daniel Harris) & (local) Reed Smith LLP (Eric Schaffer, Maura McIntyre)
  • BOKF, National Association
    • Legal: Arent Fox LLP (Andrew Silfen, George Angelich, Jordana Renert) & (local) Federic Dorwart, Lawyers PLLC (Samuel Ory)
  • Official Committee of Unsecured Creditors
    • Legal: Brown Rudnick LLP (Robert Stark, Chelsea Mullarney, Sigmund Wissner-Gross, Brian Rice, Steven Pohl, Andrew Carty, Bennett Silverberg, Chelsea Mullarney, Emily Koruda, Justin Cunningham) & (local) Leech Tishman Fuscaldo & Lampl LLC (Patrick Carothers, David Lampl, John Steiner)
    • Financial Advisor: Conway MacKenzie Inc. (John Young Jr.)

Source: First Day Declaration

New Chapter 11 Filing - Southeastern Grocers LLC

Southeastern Grocers LLC

3/27/18

Southeastern Grocers LLC, the Jacksonville Florida-based parent company of grocery chains Bi-Lo, Winn-Dixie and others, has filed a prepackaged bankruptcy in the District of Delaware - mere weeks after Tops Holding II Corporation, another grocer, filed for bankruptcy in the Southern District of New York. The company notes that, as part of the chapter 11 filing, it intends to "close 94 underperforming stores," "emerge from this process likely within the next 90 days," and "continue to thrive with 582 successful stores in operation." Unlike Tops, it helps when you don't have any collective bargaining agreements.

More to come...

• Jurisdiction: D. of Delaware
• Capital Structure: $385mm ABL (Deutsche Bank AG New York Branch), $425mm 9.25% '19 secured notes (Wilmington Savings Fund Society, FSB), $522mm 8.625%/9.375% '18 Senior PIK Toggle Notes unsecured notes (Wells Fargo Bank, NA)     
• Company Professionals:
  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Matthew Barr, Sunny Singh) & (local) Richards Layton & Finger PA (Daniel J. DeFranceschi, Paul N. Heath, Amanda R. Steele) 
  • Financial Advisor: FTI Consulting Inc.
  • Investment Banker: Evercore Group LLC (Stephen Goldstein)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Independent Director: Neal Goldman
• Other Parties in Interest:
  • Ad Hoc Group of Unsecured Noteholders & 9.25% '19 Senior Secured Noteholders
    • Legal: Morrison & Foerster LLP (Dennis Jenkins, Brett Miller) & (local) Drinker Biddle & Reath LLP (Steven Kortanek)
    • Financial Advisor: Moelis & Company LLC
  • Private Equity Sponsor: Lone Star Funds
    • Legal: King & Spalding LLP (W. Austin Jowers, Paul Ferdinands)

Source: First Day Declaration

New Chapter 11 Filing - The Weinstein Company Holdings LLC

The Weinstein Company Holdings LLC

3/19/18

The good news is that the company believes that its total exposure to victims (and creditors) is limited to 999 people/entities and its liability exposure is capped at $1 billion - or at least that's what one could glean from the boxes that the company checked on its chapter 11 petition. 

TWC Chapter 11 Petition

Let's review what's "new" here without regurgitating everything the mainstream media has covered the last several months... 

The Weinstein Company's primary assets fall into three categories: (i) the film library, (ii) the television business, and (iii) the unreleased films portfolio. The library consists of 277 films and thanks to distribution rights sales internationally and to the likes of Netflix and broadcast/cable networks, generates ongoing cash flow. The television business includes the Project Runway franchise and other content like Peaky Blinders, Scream and Six. The latter unreleased portfolio includes five completed films (including Benedict Cumberbatch's "Current War") and other projects in various stages of development. 

The sale effort to a consortium of investors including Yucaipa, Lantern Asset Management and Maria Contreras-Sweet is well documented. As is the Attorney General of New York's complaint against the company. Neither are worth noting in detail here after months of incessant press coverage. Notably, however, Lantern Asset Management stuck with the process after its consortium partners dropped out, agreeing to become the stalking horse bidder for the assets pursuant to a proposed expedited sale process. Why expedited? In the company's words,

"It is an understatement to say that the last six months have been trying for the Company. Intense media scrutiny and various other factors have resulted in, among other things, the Company’s loss of goodwill with employees, contract counterparties, key talent and the entertainment industry at large. In order to preserve the going concern value of the Company’s Assets for the benefit of its stakeholders, the Debtors have determined that a sale of substantially all of their Assets is necessary. Further, the Debtors believe that time is of the essence and that effectuating any such sale as quickly as possible is necessary to maintain operations and preserve value for the benefit of the Debtors’ stakeholders."

Well, also, the company has no cash and the buyer is pushing for speed as a condition to its bid. Lantern has that luxury as the remaining bidder; it is offering $310 million and the assumption of certain project-level non-recourse indebtedness (read: the debt associated with individual projects). Moreover, the company has indicated that Lantern anticipates retaining "most of the Company's employees." That's good: something positive must come out of this for those who had nothing to do with Mr. Weinstein's behavior. Speed is needed, the company argues, to prevent more employees from leaving (25% have already left). 

Some other miscellaneous facts of note:

1. Top Creditor. The number one creditor is a judgment creditor to the tune of $17.36 million.
2. It's Hard Out There for a Pimp. Boies Schiller & Flexner LLC is listed twice in the top 25 creditors. Fresh on the heels of the Theranos fraud suit, this has not been a good week for David Boies and company. 
3. Other Creditors. Other major creditors include Viacom International ($5.6 million), Sony Pictures Entertainment ($3.7 million), Creative Artist Agency ($1.49 million), and Disney ($1.13 million).
4. It's Hard Out There for a Pimp Part II. Several law firms are listed in the top 25 creditors for accounts payable due and owing for professional services. Notably, O'Melveny & Myers LLP is listed at #10 and $3.1 million; it had long been rumored to be representing the company leading into the bankruptcy filing. This means, more likely than not, that Cravath was hired as an 11th hour replacement, leaving O'Melveny as a creditor. Also, Debevoise & Plimpton LLP has been left hanging after conducting the internal investigation of the charges against Mr. Weinstein. 
5. The Cumberbatch. "Current War," the feature starring Benedict Cumberbatch is levered up by $7mm under a production-level loan agreement with East West Bank. Nothing unusual here: just a fun fact. We'll see if Cumberbatch's star power can raise this movie above the debt and the Weinstein taint. 
6. Timing. To the extent any bidder wants to trump Lantern Asset Management, the deadline for bids is April 30 and an auction will occur on May 2 for court approval on May 4. 
7. #FakeNews. The New York Times and the New Yorker both get credit for taking down Mr. Weinstein and for starting the #metoo movement and Time's Up campaign. 
8. Ramifications. The company notes that the response to Mr. Weinstein's misconduct was fast and furious including (i) Apple ceasing plans for a 10-part Elvis biopic to be produced by TWC; (ii) Lin Manuel Miranda demanding that TWC release its rights to the movie adaptation of In the Heights, (iii) Amazon ditching TWC, cancelling plans for a David O'Russell series and dropped TWC as co-producer of a Matthew Weiner series; (iv) Channing Tatum halting development of a movie with the company, and (v) Quentin Tarantino seeking a different studio for his next and ninth film, the first time he would use a studio other than TWC. 
9. Board of Directors. 5 members went running for the exits, including Paul Tudor Jones and Marc Lasry. 
10. Lawsuits. TWC has been named in at least 9 civil actions by victims of Mr. Weinstein, including a broad federal class action, two civil actions by Mr. Weinstein himself, and 6 civil actions by contract counterparties. 

Lastly, it has been reported that any and all NDAs will be "lifted" and no longer apply. This means that those who aren't as financially able as, say, Uma Thurman and Saima Hayek, may now speak out with impunity. Hopefully this frees various women from the shackles of their memories. 

• Jurisdiction: D. of Delaware (Judge Walrath)

• Capital Structure: $156.4mm secured debt (ex-accrued and unpaid interest, MUFG Union Bank NA), $15.6mm junior secured debt (UnionBanCal Equities Inc.), $18.1mm secured term loan (Bank of America NA), $45.4mm secured industries debt (AI International Holdings BVI Ltd.), $42.5mm secured production facility (MUFG Union Bank NA), $57.2mm of production level debt (including Spy Kids and Current War), $8.3mm secured debt (Viacom Media Networks)

• Company Professionals:
  • Legal: Cravath Swaine & Moore LLP (Paul Zumbro, George Zobitz, Karin DeMasi) & (local) Richards Layton & Finger PA (Mark Collins, Paul Heath, Zachary Shapiro, Brett Haywood, David Queroli)
  • Restructuring Advisor/CRO: FTI Consulting (Robert Del Genio, Luke Schaeffer, Michael Healy, Thomas Ackerman)
  • Investment Banker: Moelis & Company LLC
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Stalking Horse Bidder: Lantern Asset Management
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Stephen Kuhn, Meredith Lahaie) & (local) Pepper Hamilton LLP (David Stratton, David Fournier) 
  • DIP Agent ($25mm): MUFG Union Bank NA (11% minimum)
    • Legal: Sidley Austin LLP (Jennifer Hagle) & (local) Young Conaway Stargatt & Taylor LLP (Robert Brady)
  • Official Committee of Unsecured Creditors
    • Legal: Pachulski Stang Ziehl & Jones LLP (James Stang, Debra Grassgreen, Robert Feinstein, Bradford Sandler)

Updated 3/30/18

New Chapter 11 Filing - Claire's Stores Inc.

Claire's Stores Inc. 

3/19/18

Claire’s® Stores Inc. is the latest in a string of specialty "treasure hunt"-styled retailers to find its way into bankruptcy court. In this case, the debtors, together with their 33 non-debtor affiliates, sell jewelry, accessories, and beauty products to young women/teen/tweens/kids; it has a presence in 45 nations spread throughout 7,500 company-owned stores, concession stands, and franchises. The company proudly states that "[a] Claire's store is located in approximately 99% of major shopping malls through the United States." Moreover, "[e]ach of the Debtors' store locations are leased, and are typically located in traditional shopping malls with, on average, 1,000 square foot of selling space." PETITION NOTE: this explains a lot. Hashtag, retail apocalypse.

First Day Declarations are interesting in that they are the first opportunity for a debtor-company to tell its story to the public, to parties in interest, and, significantly, to the bankruptcy judge. And this declaration is particularly interesting because, unlike many of its bankrupt specialty retail predecessors, Claire’s® makes a concerted effort to delineate why its physical presence is so critical. So what is that critical piece? Apparently, it is ear piercing. Yup, you read that right. Ok, well that and the "treasure hunt" shopping atmosphere which "simply cannot be replicated online." The company boasts about solid operating margins. and notes that, at the time of filing, it only intends to shed 95 leases. 

The company notes that it has established trust with parents and the number of pierced ears is indicative of that; it estimates that it has pierced over 100 million ears worldwide (since 1978) and 3.5 million in fiscal year 2017. While that is gimmicky and cute, the company doesn't not note how much of the reported $212 million of EBITDA (on $1.3 billion of revenue) is related to this phenomenon. Moreover, all of the trust in the world cannot overcome a capital structure with $1.9 billion of funded debt (ex-$245 million more at the non-debtor affiliate level) and $162 million in cash interest expense (see chart below) - especially when $1.4 billion of that funded debt matures in Q1 '19. And particularly when fewer and fewer people tend to frequent the malls that Claire’s® dominate. Notably, the company says ONLY the following about e-commerce: "Finally, the Claire's Group operates a digital sales platform through which new and existing customers can purchase products directly through the Claire’s® and Icing® websites and mobile application." So, as the malls go, Claire’s® goes. Notably, the company makes a point that it "is growing, not shrinking, its business. The Company expects its concessions business to grow by more than 4,000 stores in 2018." Landlords take note: the company highlights its CONCESSIONS BUSINESS, which is essentially a "mini-footpring" utilizing the store-within-a-store model. In other words, this growth won't help the landlords much. 

In addition to its debt, the company notes - as a primary cause for its bankruptcy filing - that the "Debtors operate in a highly competitive market." PETITION NOTE: No effing sh*t. Mall traffic has declined 8% year-over-year and the debtors - ear-piercing demand notwithstanding - aren't impervious to this. Accordingly, revenue is down $200mm since 2014. 

To counteract these trends, the company engaged in exchange transactions back in 2016 that had the effect of stripping out intellectual property collateral, swapping out debt, and deleveraging the company by $400 million. Clearly that was a band-aid rather than a solution. 

Now the company purports to have a restructuring support agreement with the Ad Hoc First Lien Group which, in addition to 72% of the first lien debt, holds 8% of the second lien notes and 83% of the unsecured notes. The members of the Ad Hoc Group of First Lien Creditors have agreed to provide the Company with approximately $575 million of new capital, including financing commitments for a new $75 million asset-based lending facility, a new $250 million first lien term loan, and $250 million as a preferred equity investment. In addition, the company has lined up a Citibank-provided DIP credit facility of $75 million ABL (supported, seemingly, by the consenting ad hoc first lien group) and a $60 million "last out" term loan. Consequently, Claire's expects to complete the chapter 11 process in September 2018, emerge with over $150 million of liquidity, and reduce its overall indebtedness by approximately $1.9 billion. We'll believe it when we see it. 

• Jurisdiction: D. of Delaware (Judge Walrath)
• Capital Structure: see below. 
• Company Professionals:
  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Matthew Barr, Ryan Dahl) & (local) Richards Layton & Finger PA (Daniel DeFranceschi, Zachary Shapiro, Brendan Schlauch, Brett Haywood)
  • Financial Advisor: FTI Consulting Inc.
  • Investment Banker: Lazard Freres & Co. LLC 
  • Real Estate Advisor: Hilco Real Estate LLC 
  • Independent Director: Michael D'Appolonia 
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • PE Sponsor: Apollo Investment Fund VI, L.P. (owns 97.7% of Claire's Inc, the parent)
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Jeffrey Saferstein)
  • DIP Agent: Citibank
    • Legal: Latham & Watkins LLP
  • Prepetition ABL Facility & Revolving Credit Facility Agent: Credit Suisse AG, Cayman Islands Branch
  • Ad Hoc First Lien Group (Initial Consenting Creditors: Diameter Capital Partners LP, Elliott Management Corporation, Monarch Alternative Capital LP, The Cincinnati High Yield Desk of J.P. Morgan Investment Management Inc., The Indianapolis High Yield Desk of J.P. Morgan Investment Management Inc., and Venor Capital Management LP.)
    • Legal: Willkie Farr & Gallagher LLP (Matthew Feldman, Brian Lennon, Daniel Forman) & (local) Morris Nichols Arsht & Tunnell LLP
    • Financial Advisor: Millstein & Co. 
  • First Lien Note Agent: The Bank of New York Mellon Trust Company N.A.
  • First Lien Term Loan Agent: Wilmington Trust NA
    • Legal: Pryor Cashman LLP (Seth Lieberman, Patrick Sibley, Matthew Silverman)
  • Second Lien Note Agent: Bank of New York 
  • Unsecured Note Indenture Trustee: Bank of New York 
  • Official Committee of Unsecured Creditors
    • Legal: Cooley LLP (Cathy Hershcopf, Seth Van Aalten, Summer McKee) & (local) Bayard PA (Justin Alberto, Erin Fay, Gregory Flasser)
    • Financial Advisor: Province Inc. 

Source: First Day Declaration

Updated 3/30/18

New Chapter 11 Filing - Orion Healthcare Corp.

Orion Healthcare Corp.

3/16/18

You don't see this as the preface to a bankruptcy filing every day:

"...the Debtors are the victims of a large, complex, and brazen fraud that was subject to a complex and deliberate concealment effort perpetrated by their former management that was years in the making. After acquiring several of their businesses, the Debtors’ former CEO, Parmjit “Paul” Parmar (“Parmar,” who previously owned the company) took Constellation Healthcare Technologies, Inc., the parent company of the Debtors (and itself a Debtor), public on the London AIM and then proceeded to raise additional equity for additional acquisitions, many of which are believed to be largely or entirely fictitious. The Debtors borrowed approximately $130 million in debt in connection with a go-private transaction, the majority of which is believed to have been paid to Parmar (as a shareholder, through entities under his control), which is a financial burden the Debtors simply cannot sustain. The Debtors borrowed such funds based upon financials recently discovered by the Debtors’ new management and their professionals to be largely fictitious and involving numerous sham companies and fabricated transactions, revenues, and customers. The Debtors have commenced these chapter 11 cases to (i) market and sell their assets, (ii) wind down certain of their businesses, and (iii) to enable them to ultimately pursue claims against the individuals that put the Debtors in this position for the benefit of all their creditors."

Salacious. 

Orion Healthcare Corp. is in the business of (a) outsourced revenue cycle management (“RCM”) for physician practices, (b) physician practice management, (c) group purchasing services for physician practices, and (d) an independent practice association services, which is organized and directed by physicians in private practice to negotiate contracts with insurance companies on their behalf while such physicians remain independent and which also provides other services to such physician practices. The various businesses were cobbled together after a series of acquisitions. 

Constellation Healthcare LLC, a non-debtor, is an investment vehicle owned by Parmar and set up for the purpose of acquiring Orion back in 2013. Thereafter, the assets were transferred to a vehicle set up to be the holding company of the enterprise and subsequently listed on the London Stock Exchange's Alternative Investments Market. After that, the company went on an acquisition spree, picking up five new businesses. The company also hit the secondary market twice to finance the transactions. As if that isn't enough tomfoolery, the company then engaged in a take private transaction pursuant to which the sponsor contributed $82.5 million of cash as equity and the company obtained $130 million in financing from lenders. The company also issued unsecured promissory notes to its shareholders to the tune of $39.6 million. 

Parmar resigned from the company in September 2017 and, subsequently, the company has been engaged in a large forensic investigation that purports to have uncovered multiple fraudulent transactions while the company was publicly listed, including fabricated customer lists and associated revenue (which, naturally, would have the effect of jacking up valuation and violating reps and warranties, presumably, to the lenders). Moreover, it is alleged that there were a variety of sham acquisitions that had the effect of unjustly enriching Parmar to the detriment of the now-over-levered company.

In light of all of this - as well as the unsustainable debt on the balance sheet and other issues such as the lack of integration between business lines and various litigation - the company filed for bankruptcy. The purpose of the filing is to market and sell some of the business, wind down certain of the businesses, and pursue claims against a coterie of allegedly fraudulent m*therf*ckers. 

• Jurisdiction: E.D. of New York (Judge Trust)

• Capital Structure: $159.3mm senior term loan, revolving loan and bridge loan (Bank of America NA)

• Company Professionals:

  • Legal: DLA Piper (US) LLP (Richard Chesley, Thomas Califano, Rachel Nanes)

  • Legal (Conflicts Counsel): Hahn & Hessen LLP

  • Financial Advisor/CRO: FTI Consulting Inc. (Timothy Dragelin)

  • Investment Banker: Houlihan Lokey Capital Inc. (Bradley Jordan, Dave Salemi, Andrew Redmond, Ethan Kopp, Jack Foster)

  • Independent Director: Robert Rosenberg

  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)

• Other Parties in Interest:

  • Prepetition Agent & DIP Agent ($7.5mm): Bank of America NA

    • Legal: Moore & Van Allen PLLC (James Langdon, Zachary Smith, David Eades, Gabriel Mathless)

  • Parmjit Singh Parmar (and affiliated non-Debtor entities

    • Legal: Windels Marx Lane & Mittendorf LLP (Charles Simpson)

  • Official Committee of Unsecured Creditors (JQ 1 Associates LLC, Christine Cohen, Kolb Radiology P.C.)

    • Legal: Pachulski Stang Ziehl & Jones LLP (Ilan Scharf, Richard Mikels, Maxim Litvak)

    • Financial Advisor: CBIZ NY (Charles Berk, David Greenblatt, Sharmeen Khan, Patrick Donnelly, Michal Sudo)

Updated 11/28/18

New Chapter 11 Bankruptcy - Cenveo Inc.

Cenveo Inc.

• 2/2/18 Recap: Publicly-traded ($CVO) large envelope and label manufacturer with roots tracing back 100 years filed for bankruptcy. Interestingly, you, our treasured PETITION readers, probably interact with Cenveo's products in your day-to-day life. Cenveo prints comic books you can buy at the bookstore, produces specialized envelopes used by JPMorgan Chase Bank ($JPM) and American Express ($AMEX) to deliver credit card statements, and manufactures point of sale roll receipts used in cash registers and prescription labels found on medication at national pharmacies. Why did it file for bankruptcy? Disruption. And debt. The company notes that its filing was necessary to tame its burdensome funded debt and corresponding annual $99.4mm debt payments (inclusive of cash and "principle" payments). In light of its leverage, the company apparently also suffered from other pressures on the business, including restrictive trade terms and/or the departure of business from vendors. But, wait! There's more. And its textbook disruption. Per the company, "In addition to Cenveo’s leverage issues, macroeconomic factors, including the introduction of new e-commerce, digital substitution for products, and other technologies, are transforming the industry. Consumers increasingly use the internet and other electronic media to purchase goods and services, pay bills, and obtain electronic versions of printed materials. Moreover, advertisers increasingly use the internet and other electronic media for targeted campaigns directed at specific consumer segments rather than mail campaigns." Ouch. To put it simply, every single time you opt-in for an electronic bank statement, you're f*cking over Cenveo. More from the company, "As society has become increasingly dependent on digital technology products such as laptops, smartphones, and tablet computers, spending on advertising and magazine circulation has eroded, resulting in an overall decline in the demand for paper products, and in-turn lowering reliance on certain of Cenveo’s print marketing business. In addition, there is generally a decline in supply of paper products in the industry, such that only a handful of paper mills control the majority of the paper supply. As a result, paper mills and other vendors that sell paper products have a large amount of leverage over their customers, including Cenveo. The overall decline in the paper industry combined with the diminished supply in paper products has led to overall decline in the industry, dramatically impacting Cenveo’s revenues." Consequently, the company has spent years trying to streamline operations and cut costs: it is not entirely clear from the company's filing, but this disruption clearly led to the "downsizing [of] its workforce," a reduction in its geographic footprint, and asset dispositions. But, ultimately, earnings couldn't manage the balance sheet. The company engaged its various parties in interest and was able to secure a (shaky?) restructuring support agreement and a commitment of financing in the amount of a $190 million ABL DIP Facility provided by the Prepetition ABL Lenders and a new $100 million DIP Term Facility backstopped by more than a majority of the holders of First Lien Notes. It will need to address its underfunded pensions (approximately $92.9mm). 
• Jurisdiction: S.D. of New York 
• Capital Structure: see below.
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Jonathan Henes, Joshua Sussberg, Michael Slade, Gregory Pesce, Melissa Koss, George Klidonas, Natasha Hwangpo)
  • Financial Advisor: Zolfo Cooper LLC (Eric Koza)
  • Investment Banker: Rothschild Inc. (Neil Augustine, Dan Skolds, Matthew Chou, Philip Engel, Daniel Flanary, Thomas Galluccio, Trip Burke, Farhat Suvhanov)
  • Real Estate Consultants: VanRock Real Estate Consulting LLC
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • New Independent Director: Eugene Davis
• Other Parties in Interest:
  • Prepetition ABL Agent; $190mm ABL DIP Facility Agent: Bank of America NA
  • $100mm DIP Term Facility Agent: Wilmington Savings Fund Society FSB
  • FILO Notes Trustee/First Lien Notes Trustee/Second Lien Notes Trustee/Unsecured Notes Trustee: Bank of New York Mellon
    • Legal: Riker Danzig Scherer Hyland & Perretti LLP (Joseph Schwartz, Curtis Plaza, Tara Schellhorn)
  • FILO Noteholder: Allianz GI US High Yield Fund
  • First Lien and Second Lien Noteholder: Brigade Capital Management, LP
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Michael Stamer, David Zensky, Stephanie Lindemuth, James Savin, Kevin Eide)
  • Ad Hoc Committee of First Lien Noteholders
    • Legal: Stroock & Stroock & Lavan LLP (Brett Lawrence, Erez Gilad, Matthew Garofalo, Gabriel Sasson)
    • Financial Advisor: Ducera Partners LLC
  • Examiner: Susheel Kirplani
    • Legal: Quinn Emanuel Urquhart & Sullivan
  • Official Committee of Unsecured Creditors
    • Legal: Lowenstein Sandler LLP (Kenneth Rosen, Mary Seymour, Bruce Buechler, Bruce Nathan)
    • Financial Advisor: FTI Consulting Inc. (Samuel Star)

Source: DIP Motion

Updated 4/2/18

New Chapter 11 Bankruptcy - EXCO Resources Inc.

EXCO Resources Inc.

• 1/15/18 Recap: Dallas-based oil and gas exploration and production company filed for bankruptcy with no plan, no buyer, and a $250mm DIP credit facility in hand from the likes of Fairfax Financial Holdings Limited, Bluescape Resources Company LLC, and JPMorgan Chase Bank, N.A. ($JPM). The company intends to use bankruptcy to try and find a strategic buyer. Shockingly, it doesn't have a stalking horse bidder, all-the-more-surprising because this bankruptcy filing has been anticipated for a year, if not more. W.L Ross & Co. LLC, the former firm of Commerce Secretary Wilbur Ross (#MAGA!!), and Oaktree Capital Management Funds ($OAK) are two large equityholders with holdings of 12.5% and 8.29%, respectively. Companies in EXCO's list of top unsecured creditors is a who's who lineup of once-stressed, distressed, or bankrupt companies, including Azure Midstream, Goodrich Petroleum ($GDP), Chesapeake Energy ($CHK), Stallion Oilfield Services, Nuverra Environmental Solutions, and Light Tower Rentals, among others. At the time of this writing, the company hasn't completed its first day filing but do we even need to read the papers to understand why this company with $1.3 billion of total debt is in bankruptcy court? RIght, probably not. 
• Jurisdiction: S.D. of Texas (Judge Isgur)
• Capital Structure: $1.35b of debt including $131.5mm 7.5% '18 Senior Notes (Wilmington Savings Fund Society), $70.1mm 8.5% '22 Senior Notes (Wilmington Savings Fund Society). 
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (Patrick Nash, Christopher Greco, Alexandra Schwarzman, Stephen Hackney, Ryan Moorman) & (local) Gardere Wynne Sewell LLP (Marcus Helt)
  • Financial Advisor: Alvarez & Marsal LLC (John Stuart)
  • Investment Banker: PJT Partners (Steven Zelin, Michael O'Hara, Adam Schlesinger, Zachary Rigoni, Keith Lord, Jeremey Woodard, Scott Meyerson, Gregory Nelson, Emmanuel Recachinas, Aaron Brenner, Tony Yang, Jennifer Wang)
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP Lender: JPMorgan Chase Bank NA
    • Legal: Simpson Thatcher & Bartlett LLP (Nicholas Baker, Sandeep Qusba) & (local) Norton Rose Fulbright US LLP (Louis Strubeck, Kristian Gluck, Ryan Manns)
  • DIP Lender: Fairfax Financial Holdings Limited
    • Legal: Kasowitz Benson Torres LLP (Andrew Glenn, Eric Taube, Adam Shiff, Emily Kuznick, Shai Schmidt)
  • Indenture Trustee: Wilmington Savings Fund Society FSB
    • Legal: Seward & Kissel LLP (John Ashmead, Robert Gayda, Catherine LoTempio)
  • Cross Sound Management
    • Legal: Quinn Emanuel Urquhart & Sullivan LLP (Benjamin Finestone, K. John Shaffer) & (local) Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh)
  • Gen IV Investment Opportunities LLC and VEGA Asset Partners LLC
    • Legal: White & Case LLP (Thomas Lauria, Michael Shepherd) & (local) Gray Reed & McGraw (Jason Brookner)
  • Bluescape Resources Company LLC
    • Legal: Bracewell LLP (Kurt Mayr, David Lawton, Jason Cohen)
  • Official Committee of Unsecured Creditors
    • Legal: Brown Rudnick LLP (Robert Stark, Kenneth Aulet, Sigmund Wissner-Gross, Gerard Cicero, Steven Levine) & (local) Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh)
    • Financial Advisor: FTI Consulting Inc. (Andrew Scruton)
    • Investment Bank: Intrepid Partners LLC (Matthew Hart)

Updated 4/1/18 at 12:13 CT

New Chapter 11 Bankruptcy - Orchard Acquisition Company LLC (The J.G. Wentworth Company)

The J.G. Wentworth Company

• 12/12/17 Recap: What's the statute of limitations for getting tagged with the "Chapter 22" label? While this may be out of bounds thanks to the passage of time, this is not the company's first foray in bankruptcy court, having previously filed during the financial crisis in 2009. It subsequently emerged under new private equity ownership and then IPO'd in 2013. This time around, the specialty-finance company in the business of providing financing solutions ((e.g., mortgage lending (as an approved issuer with Ginnie Mae, Freddie Mac, and Fannie Mae), structured settlement, annuity and lottery payment purchasing, prepaid cards, and personal loans)) filed a prepackaged bankruptcy pursuant to which its lenders will be swapping debt for at least 95.5% of the new equity and some cash. Holders of partnership interests and tax-related claims will get the remaining equity (subject to dilution by the 8% of equity set aside for management allocations). The company will eliminate its $449.5mm of debt and have a $65-70mm revolving credit facility to utilize going forward. The company blames regulatory requirements and a highly competitive market that pressured rates, service levels, products, and fees for its downfall. 
• Jurisdiction: D. of Delaware (Judge Gross)
• Capital Structure: $449.5mm '19 first lien TL (Jefferies Finance LLC)     
• Company Professionals:
  • Legal: Simpson Thatcher & Bartlett LLP (Elisha Graff, Kathrine McLendon, Edward Linden, Randi Lynn Veenstra, Haley Garrett, Nicholas Baker, Bryce Friedman) & (local) Young Conaway Stargatt & Taylor LLP (Edmon Morton, Sean Beach)
  • FInancial Advisor: Ankura Consulting
  • Investment Banker: Evercore 
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Jefferies Finance LLC
    • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Natasha Tsiouris, Erik Jerrard) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)
    • Financial Advisor: FTI Consulting Inc. (formerly CDG Group LLC)
  • New RCF Commitment Party (HPS Investment Partners LLC)
    • Legal: Weil Gotshal & Manges LLP (Matthew Barr, Kelly DiBlasi, Damian Ridealgh) & (local) Morris Nichols Arsht & Tunnell LLP (Curtis Miller, Matthew Talmo)

Updated 12/13/17

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 Bankruptcy - Cumulus Media Inc.

Cumulus Media Inc.

• 11/29/17 Recap: It has become routine for a company to tout the synergistic benefits of an acquisition. But synergies only come from solid execution and integration of the new properties into the existing franchise. As we often see, that's a pipe dream that often fails to come to fruition. Take, Cumulus Media, for instance, which from 1998 through 2013, "completed approximately $5 billion worth of acquisitions to grow its network and station businesses," including two large recent acquisitions (Citadel Broadcasting in 2011 and Westwood One in 2013). Notably, "[t]he Company struggled to develop the management and technology infrastructure required to integrate the acquired assets and to support and manage its expanding portfolio. Additionally, certain of the acquisition projections proved erroneous and a number of subsequent management decisions failed to achieve their desired results. The Company was thus unable to achieve the cash flow projections it had made to support the prices paid for those acquisitions...." Projections didn't translate to reality? Color us shocked. Combine these operational challenges with "industry challenges" and you've got a recipe for decreased YOY trends in ratings, revenue and EBITDA. Since 2012. Yikes. But like most bankruptcies, this is a storm of multiple elements. Clearly, the above-noted transactions led to a tremendous amount of incurred debt, capex for integration, and interest expense on that debt. But, in addition, "advertiser and listener demand for radio overall has been negatively impacted by the availability of content and advertising opportunities in growing digital streaming and web-based digital formats, resulting in declines in radio industry revenue and listenership. As a result of these general industry pressures, high acquisition prices and subsequent poor performance, Cumulus Media found itself with an excessive level of debt relative to its earnings and rapidly approaching maturities on its funded debt." So, in other words, blame the debt, Facebook ($FB), Google ($GOOGL), Netflix ($NFLX), Amazon ($AMZN), podcasts, etc., for the decline in radio consumption. So, now the company is in bankruptcy with a restructuring support agreement in place to equitize the term loan. The term loan lenders will get take-back paper and 83.5% percent of the reorganized company. The noteholders will get 16.5% of the equity subject to management incentive plan. Shareholders will get bupkis. 
• Jurisdiction: S.D. of New York (Judge Chapman)
• Capital Structure: $1.73b TL (JP Morgan Chase Bank NA), $637mm 7.75% senior notes (U.S. Bank NA)   
• Company Professionals:
  • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Paul Basta, Lewis Clayton, Jacob Adlerstein, Claudia Tobler)
  • Financial Advisor: Alvarez & Marsal North America LLC (David Miller)
  • Investment Banker: PJT Partners LP
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Board of Directors: Mary Berner, Jill Bright, Ralph Everett, Jeffrey Marcus, Ross Oliver, Jan Baker
• Other Parties in Interest:
  • Ad Hoc Group of Term Loan Lenders (Eaton Vance Management and Boston Management & Research, Franklin Mutual Advisors, Highland Capital Management LP, JP Morgan Chase Bank NA, Silver Point Finance LLC, Symphony Asset Management LLC and Nuveen Fund Advisors, Voya Investment Management Co. LLC, Beach Point Capital Management LP)
    • Legal: Arnold & Porter Kaye Scholer LLP (Michael Messersmith, Michael Solow, Seth Kleinman)
    • Financial Advisor: FTI Consulting LLC
  • Ad Hoc Senior Noteholder Group (Angelo Gordon & Co. LLP, Brigade Capital Management, Capital Research and Management Co., Greywolf Capital Management LP, Waddell & Reed Investment Corporation)
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Michael Stamer, Meredith Lahaie, Abid Qureshi, Kate Doorley)
  • Administrative Agent: JP Morgan Chase Bank NA
    • Legal: Simpson Thacher & Bartlett LLP (Elisha Graff, Nicholas Baker)

Updated 11/30/17

New Chapter 11 Filing - ExGen Texas Power LLC

ExGen Texas Power LLC

• 11/7/17 Recap: The last 12 months haven't been friendly to companies in the power space. The following have filed for bankruptcy: Panda Temple Power LLC, Westinghouse Electric Company LLC, GenOn Energy Inc., Illinois Power Generating Co., and La Paloma Generating Company LLC. Here, the owner of five natural-gas-fired power generation projects in the great state of Texas filed for bankruptcy in the face of significant headwinds. Literally. In its bankruptcy papers, the company primarily blames decreased demand and, in turn, decreased revenue, on an increase in wind production. And mild weather. Indeed, unlike retailers who incessantly blame weather for poor performance, this is actually believable. The company notes, "public policy initiatives and incentives continue to promote the development of additional wind capacity, placing downward pressure on wholesale power prices. Such additional capacity, coupled with low natural gas prices and mild and windy weather, have exacerbated the Debtors' financial struggles. By way of example, the cost per megawatt hour in 2008 was more than $70; in 2016, it was less than $25, and just prior to the Petition Date, it was approximately $25. These factors have persisted, as additional wind and other capacity is being added to the grid, which has driven down prices in light of relatively flat demand, thereby further constricting the Debtors' revenues and cash flow." In light of these issues, the company hired a banker to market the assets and only non-Debtor Exelon Generation Company LLC bit on one of the five debtor projects to the tune of $60mm (plus various forms of other consideration). The debt in the other four projects will be equitized and the term lenders will now be owners of power generation projects, subject to approval of a plan of reorganization. Interestingly, this all comes in the same week that a proposed tax overhaul bill by the House Republicans seeks to significantly curtail wind energy production tax credits. 
• Jurisdiction: D. of Delaware (Judge Shannon)
• Capital Structure: $660mm first lien TL (funded, ex-interest)(Bank of America NA)     
• Company Professionals:
  • Legal: Richards Layton & Finger PA (Daniel DeFranceschi, Paul Heath, Zachary Shapiro, Joseph Barsalona)
  • Financial Advisor/CRO: FTI Consulting (David Rush)
  • Investment Banker: Scotia Capital (USA) Inc.
  • Independent Board of Director: Alan Carr
  • Claims Agent: KCC (*click on company name for docket)
• Other Parties in Interest: 
  • Asset Purchaser: Exelon Generation Company LLC
    • Legal: DLA Piper (US) LLP (Richard Chesley, Daniel Simon)
  • TL Agent: Bank of America NA
    • Legal: Norton Rose Fulbright US LLP (Louis Strubeck, Greg Wilkes) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
  • Commodity Hedge Counterparty: Merrill Lynch Commodities Inc.
    • Legal: Davis Polk & Wardwell LLP (Marshall Heubner, Angela Libby) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)

Updated: 11/8/17 at 1:00pm CT (No UCC)

New Chapter 11 Bankruptcy - Armstrong Energy Inc.

Armstrong Energy Inc.

• 11/1/17 Recap: What a week or so for coal. #MAGA! While oil and gas post-reorg equities have, despite some recent upward movement, had middling results, coal has fared well. Last week Peabody Energy Inc. ($BTU) reported solid numbers and saw its stock pop above $30/share and Arch Coal Inc. ($ARCH) has also enjoyed a nice run. It's up nearly 4% today. While Contura Energy (f/k/a Alpha Natural Resources Inc.) remains in limbo with a pulled-IPO, Armstrong Energy now joins the aforementioned companies as a bankruptcy filer, with the hopes of effectuating a restructuring support agreement-based debt-for-equity transaction that will effectively turn the keys over to a joint venture comprised of the holders of the company's first lien senior secured notes and Knight Hawk Holdings LLC. More to come once the filing is complete.
• Jurisdiction: E.D. of Missouri (Judge Surratt-States)
• Capital Structure: $200mm 11.75% '19 first lien senior secured notes (Wells Fargo Bank NA)
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (James Sprayragen, Jonathan Henes, Ross Kwasteniet, William Guerrieri, Travis Bayer, Timothy Bow) & (local) Armstrong Teasdale LLP (Richard Engel Jr., Erin Edelman, John Willard)
  • Financial Advisor: MAEVA Group LLC (Harry J. Wilson)
  • Restructuring Advisor/CRO: FTI Consulting Inc. (Alan Boyko, Brian Martin, Christopher Marshall)
  • Financial Advisor: Houlihan Lokey Capital Inc.
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Indenture Trustee: Wells Fargo Bank NA
    • Legal: Loeb & Loeb LLP (Walter Curchack, Vadim Rubinstein) & (local) Spencer Fane LLP (Eric Peterson, Ryan Hardy)
  • Ad Hoc Group of Senior Secured Noteholders (BlueMountain Capital Management LLC, Caspian Capital LP, GoldenTree Asset Management LP, Marathon Asset Management LP, Panning Master Fund LP, Teachers Insurance and Annuity Association of America)
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Brian Hermann, Elizabeth McColm, Diane Meyers, Adam Denhoff, Daniel Youngblut) & (local) Carmody MacDonald PC (Christopher Lawhorn, Thomas Riske)
  • Large Creditors: Thoroughbred Holdings GP LLC, Thoroughbred Resources, L.P., Western Mineral Development, LLC, and Ceralvo Holdings, LLC
    • Legal: Willkie Farr & Gallagher LLP (Matthew Feldman, Debra McElligott) & (local) Husch Blackwell LLP (Marshall Turner)
  • Creditor: Kenergy Corp.
    • Legal: Jones Day (Scott Greenberg, Kyle Patrick Lane)
  • Official Committee of Unsecured Creditors
    • Legal: Morrison & Foerster LLP (Lorenzo Marinuzzi, Jennifer Marines, Daniel Harris, Rahman Connelly) & (local) Affinity Law Group LLC (J. Talbot Sant Jr.)

Updated 11/17/17

New Chapter 11 Filing - GST AutoLeather Inc.

GST AutoLeather Inc.

• 10/3/17 Recap: Disruption, illustrated. The automobile industry is at the beginning of a downturn marked by auto price reductions and a drop in new vehicle production. Automobile output is down 4% over the past year as automobile dealers are placing fewer manufacturing orders and dealing with excess supply. Moreover, auto OEMs are decreasing the leather content in certain new vehicles. Finally, automobiles are lasting longer and "the climbing popularity of ride-sharing services, such as Uber and Lyft...diminish consumers' needs for their own cars." Put simply, there is a demand side decline. Consequently, here, the Southfield Michigan-based supplier of leather interiors filed a freefall bankruptcy with the hope of consummating an expedited (approximately 2-month timeframe) 363 asset sale. The company has secured a $40mm DIP credit facility to fund its bankruptcy; it continues talks with its senior lenders about a stalking horse bid to purchase the company. In addition to the aforementioned macro factors, the company blames its deteriorated financial performance on (i) issues associated with certain new customer launches in Europe, (ii) supply chain issues with a critical Chinese supplier who is using leverage to extract out-of-contract economics from the company and (iii) constraints imposed by significant working capital investments to mitigate supply chain disruption to its customers (which include the likes of major auto OEMs, e.g., Audi, BMW/Mini, Daimler, Fiat Chrysler, Ford, General Motors, Hyundai, Honda, Porsche, PSA, Nissan, Kia, Toyota and Volkswagen).
• Jurisdiction: D. of Delaware (Judge Silverstein)
• Capital Structure: $24mm '19 RCF, $140mm '20 TL-B (Royal Bank of Canada), $32mm mezz debt (Triangle Capital Corp./Alcentra Capital Corp.)
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (James Sprayragen, Ryan Blaine Bennett, Michael Slade, Alexandra Schwarzman, Timothy Bow, Benjamin Rhode, Luke Ruse) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Timothy Cairns, Joseph Mulvihill)
  • Financial Advisor/CRO: Alvarez & Marsal North America LLC (Jonathan Hickman, Jay Herriman)
  • Investment Banker: Lazard Middle Market (Jason A. Cohen)
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Sponsor: Advantage Partners
  • Lender Group (Royal Bank of Canada, as DIP Admin Agent)
    • Legal: Paul Hastings LLP (Andrew Tenzer, Michael Comerford, Shlomo Maza) & Young Conaway Stargatt & Taylor LLP (Pauline Morgan, M. Blake Cleary, Justin Rucki)
    • Financial Advisors: FTI Consulting
  • Mezzanine Lenders:
    • Legal: McGuireWoods LLP (Anne Croteau, Douglas Foley) & (local) Benesch Friedlander Coplan & Aronoff LLP (Jennifer Hoover, William Alleman Jr.)
  • Official Committee of Unsecured Creditors
    • Legal: Foley & Lardner LLP (Erika Morabito, Brittany Nelson, John Simon, Richard Bernard, Leah Eisenberg) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Kevin Shaw, Christopher Jones, David Gaffey)
    • Financial Advisor: Berkeley Research Group LLC (Christopher Kearns, Peter Chadwick, Michelle Tran, Kevin Beard, Jay Wu)
    • Investment Banker: Configure Partners LLC (Jay Jacquin)

Updated 11/15/17 7:55 am CT

New Chapter 11 Filing - Lombard Public Facilities Corporation

Lombard Public Facilities Corporation

• 7/28/17 Recap: Illinois-based not-for-profit corporation formed to finance the cost of acquiring, designing, constructing, and equipping a conference center, hotel (Westin), restaurant and related improvements in the Village of Lombard filed for bankruptcy with a prearranged deal with its creditors. The corporation was funded via revenue bonds (A through C, with the A-2 bonds wrapped by an ACA Financial Guaranty Corporation policy) on the basis of a 2005 market study. Much like we saw with the Chapter 9 filing of The Kennewick Public Hospital District back in June, the study proved to be off the mark and the project has underperformed from the get-go. Some of this was bad timing: the project came online in August 2007: we all know what came shortly thereafter. The convention business the Project depended upon never came, rendering revenues insufficient and debt service payments difficult. Reserves set aside for the bonds were quickly depleted and the Project defaulted on the bonds. The Project enters bankruptcy with the A bonds as the declared fulcrum and a consensual restructuring in hand with each of ACA, holders of a majority of the bonds (here, Nuveen Asset Management LLC and OppenheimerFunds Inc.), and the hotel and restaurant managers, respectively. Taking it as given that Lombard is an "affluent" suburb of Chicago, you have to wonder why people thought this financing was a good idea. Lombard sounds quaint and all - with its annual Lilac Festival and parade - but there's nothing there, far as we can tell, that screams "convention business." Query how many Mom and Pop municipal bond investors are getting burned by this (seemingly) ill-advised financing. 
• Jurisdiction: N.D. of Illinois (Judge Cox) 
• Capital Structure: $246.65mm principal and interest municipal debt (Amalgamated Bank of Chicago)   
• Company Professionals:
  • Legal: Adelman & Gettleman, Ltd. (Henry Merens, Brad Berish, Alexander Brougham)
  • Financial Advisor: EisnerAmper LLP (Thomas Buck, Deborah Friedland, Allen Wilen)
  • Claims Agent: Epiq Bankruptcy Solutions LLC (click on case name above for free docket)
• Other Parties in Interest:
  • ACA Financial Guaranty Corp.
    • Legal: Greenberg Traurig LLP (Nancy Peterman)
  • Lord, Abbett & Co. LLC
    • Legal: Shaw Fishman Glantz & Towbin LLC (Peter Roberts)
  • Indenture Trustee: Amalgamated Bank of Chicago
    • Financial Advisor: FTI Consulting Inc.

Updated 7/28/17

New CCAA Filing - Sears Canada Inc.

Sears Canada Inc.

• 6/22/17 Recap: No one saw this dumpster fire coming. That's sarcasm, ya'll. Riddled with debt, a burdensome $267mm pension liability, a pattern of declining earnings (see below), and a 1950s sensibility that nobody is interested in, this penny stock ($SCRC) was bound to end up in bankruptcy court. Negative net cash flows have ranged from $30-$100mm per month for the past five months. Hence the "dumpster fire" comment: that's some serious cash burn. Yiiiikes. So, what, in addition to filing for bankruptcy, do you do when your company has sh*t the bed so badly that its brand equity is strongest as a punchline? You step up the marketing game by shunning the term "restructuring" and deploying the flashier descriptor "reinvention" instead. Or toss some pixie dust in the air and come up with "Sears 2.0". Because nobody will know the wiser. Anyway, Sears Holdings ($SHLD) notably holds 12% of SRSC so presumably that 12% is now worth 0% but we wouldn't put it past Eddie Lampert to pull a bunny out of a hat. Somehow. But what do we know: we've never even stepped foot in Ontario. Ps. SHLD traded up nearly 3% on the news. Pss. The Company intends to close at least 59 of 200 locations and layoff 2900 people - all pursuant to a $450mm cumulative DIP credit facility. 
• Jurisdiction: Ontario Superior Court of Justice
• Capital Structure: $300mm '19 senior secured debt (Wells Fargo)($170mm funded inc. LOCs), $94mm TL (funded)(GACP Finance Co. LLP, KKR Capital Markets LLC, TPG Specialty Lending Inc.); major shareholders (ESL Investments Inc., Fairholme Capital Management Inc.)    
• Company Professionals:
  • Monitor: FTI Consulting Canada Inc. (Greg Watson, Paul Bishop, Jim Robinson, Steven Bissell, Linda Kelly, Kamran)
  • Monitor Legal: Norton Rose Fulbright Canada LLP (Orestes Pasparakis, Virginie Gauthier, Alan Merskey, Evan Cobb, Alexander Schmitt, Catherine Ma)
  • Company Legal: Osler Hoskin & Harcourt LLP (Marc Wasserman, Jeremy Dacks, Michael De Lellis, Tracy Sandler, Shawn Irving, Martino Calvaruso, Karin Sachar)
  • Financial Advisor: BMO Nesbitt Burns Inc.
• Other Parties in Interest:
  • $300mm DIP ABL Agent: Wells Fargo Capital Finance Corporation Canada
    • Legal: Cassels Brock & Blackwell LLP (Ryan Jacobs, Jane Dietrich, R. Shayne Kukulowicz, Tim Pinos, Lara Jackson, Ben Goodis)
    • Financial Advisor: Alvarez & Marsal (Doughas McIntosh, Al Hutchens, Joshua Nevsky)
  • $150mm DIP Term Agent: GACP Finance Co. LLP
    • Legal: Goodmans LLP (Joe Latham, Jean Anderson, Dan Dedic, Graham Smith, Jason Wadden, Ryan Baulke)
  • Board of Directors
    • Legal: Bennett Jones LLP (Gary Solway, Raj Sahni, Sean Zweig)
  • Active Employees and Retirees
    • Legal: Koskie Minsky LLP (Andrew Hatnay, Mark Zigler)

Updated 7/11/17 6:11 pm

New Chapter 11 Filing - Gulfmark Offshore Inc.

Gulfmark Offshore Inc.

• 5/17/17 Recap: Everyone has been waiting for the offshore action and it's finally here. Except, its fairly anticlimactic. Here, the publicly-traded Houston-based offshore oil and gas logistics services provider filed for bankruptcy to effectuate a financial restructuring pursuant to a Restructuring Support Agreement signed with holders of its unsecured senior notes. The noteholders will get approximately 36% of the equity in the newly reorganized company along with rights to purchase an additional 60% equity slug pursuant to a backstopped $125mm rights offering. Existing equity will get a small equity "kiss" and some warrants. This is so boring that EVEN WE can't really find much to make fun of. 
• Jurisdiction: D. of Delaware
• Capital Structure: $100mm RCF ($72mm funded)(Royal Bank of Scotland), NOK600mm Norwegian Facility ($44.3mm funded)(DNB Bank ASA), $430mm '22 6.375% unsecured senior notes (funded)(US Bank NA)    
• Company Professionals:
  • Legal: Weil (Gary Holtzer, Ronit Berkovich, Debora Hoehne) & (local) Richards Layton & Finger PA (Mark Collins, Zachary Shapiro, Brett Haywood, Christopher De Lillo)
  • Financial Advisor: Alvarez & Marsal LLC (Brian Fox, Kevin Larin, RIchard Niemerg, Don Koetting, Lacie Melasi, Robert Country)
  • Investment Banker: Evercore Group LLC (Stephen Hannan, David Andrews, Sachin Lulla, Pranav Goel, Arth Patel)
  • Claims Agent: Prime Clerk LLC (*click on company name above for access to free docket)
• Other Parties in Interest:
  • Indenture Trustee: US Bank NA
    • Legal: Foley & Lardner LLP (Derek Wright, Mark Prager)
  • Ad Hoc Group of Unsecured Noteholders
    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Evan Fleck, Nelly Almeida) & (local) Morris Nichols Arsht & Tunnell LLP (Gregory Werkheiser, Robert Dehney)
      • Financial Advisor: Houlihan Lokey Capital Inc.
  • Prepetition Multicurrency RCF Lender: Royal Bank of Scotland
    • Legal: Sullivan & Cromwell LLP (Michael Torkin, Brian Glueckstein, David Zylberberg) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Joseph Barry, Ian Bambrick)
    • Financial Advisor: FTI Consulting Inc.
  • Prepetition NOK Lender: DNB Bank ASA
    • Legal: Hughes Hubbard & Reed LLP (Christopher Kiplok, Anson Frelinghuysen, Erin Diers) & (local) Bayard PA (Erin Fay)
    • Financial Advisor: Guggenheim Securities LLC
  • Gulfmark Rederi AS
    • Legal: Norton Rose Fulbright US LLP (Jason Boland, William Greendyke) & (local) Womble Carlyle Sandridge & Rice LLP (Matthew Ward)

Updated 7/12/17 9:301 am CT

New Chapter 11 Filing - rue21 Inc.

rue21 Inc.

• 5/15/17 Recap: Pennsylvania-based specialty fashion retailer (owned by private equity shop Apax Partners LP) with 1184 brick-and-mortar locations (pre recent closing initiative) in various strip centers, regional malls and outlet centers filed for bankruptcy to (i) further revamp its e-commerce strategy, (ii) improve the in-store experience, (iii) right-size the store footprint and lease portfolio, (iv) de-lever its capital structure, and (v) effectuate a long-term business plan under its relatively new management. The numbers here are interesting: the company had a negative EBITDA swing of approximately $51mm from 2015 to 2016 - despite rising sales. The company's girls' division got decimated due to "an evolution of customer tastes." Wow! Who knew that teenage girls have fickle fashion tastes? These merchandising issues combined with (a) supply chain issues (heightened - in a self-fulfilling kind of way - by all of the rumors surrounding the company's bankruptcy), (b) "the shift away from brick-and-mortar retail sales to online channels," AND (c) a "not as robust" e-commerce presence relative to competitors, to put the company in a tough spot. A digression: we have previously noted David Simon's comments on the Simon Properties Group (SPG) earnings call from 4/27/17 that SPG is NOT experiencing a decline in traffic - though he offered absolutely ZERO data to back that up. According to SPG's own website, there are currently 90 rue21 locations in SPG properties (which translates to nearly 8%): we're curious to see whether any of these 90 locations will be featured in store closing motions coming soon to a bankruptcy court near you; indeed, in the first instance, it appears that some already are). The company is proposing a deal whereby the Term Lenders will effectively own the majority of the company post-bankruptcy after rolling-up a $100 DIP credit facility (applied in addition to $50mm of new money to be rolled into an exit facility). They've been so kind so as to give general unsecured creditors (read: the little guys) a 4% equity kiss - but only if they vote to accept the plan. Otherwise, the "death trap" door opens and general unsecured creditors end up with nada. We're sure a creditors' committee will have something to say about that. 
• Jurisdiction: W.D. of Pennsylvania
• Capital Structure: $150mm RCF ($78mm funded)(Bank of America), $521mm '20 TLB (Wilmington Savings Fund Society as successor to JPMorgan Chase Bank NA), $239mm '21 9% unsecured bonds (Wells Fargo Bank NA).    
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (Jonathan Henes, Nicole Greenblatt, Robert Britton, George Klidonas) & (local counsel) Reed Smith LLP (Eric Schaffer, Jared Roach)
  • Financial Advisor: Berkeley Research Group LLC (Stephen Coulombe, Kyle Richter, Patrick Farley)
  • Investment Banker: Rothschild Inc. (Neil Augustine, Jonathan Brownstein)
  • Real Estate Advisor: A&G Realty Partners LLC
  • Liquidator: Gordon Brothers Retail Partners LLC
    • Legal: Greenberg Traurig LLP (Nancy Peterman)
  • Claims Agent: KCC (*click on company name for access to the free docket)
• Other Parties in Interest:
  • ABL Agent and DIP ABL Agent: Bank of America
    • Legal: Morgan Lewis & Bockius LLP (Matthew Furlong, Marc Ledue, Julia Frost-Davis) & (local) Buchanan Ingersoll & Rooney PC (James Newell, Timothy Palmer, Kelly Neal)
  • TL Agent and DIP TL Agent: Wilmington Savings Fund Society FSB and Term Lender Group (Bayside Capital LLC, Benefit Street Partners LLC, Bennett Management Corporation, Citadel Advisors LLC, Eaton Vance Management, JPMorgan Chase Bank NA, Octagon Credit Investors LLC, Southpaw Credit Opportunity Master Fund LP, Stonehill Capital Management LLC, Voya Investment Management)
    • Legal: Jones Day LLP (Scott Greenberg, Michael J. Cohen, Jeffrey Bresch, Genna Ghaul)
    • Financial Advisor: PJT Partners
  • Indenture Trustee: Wells Fargo Bank NA
    • Legal: Milbank Tweed Hadley & McCloy LLP (Gerard Uzzi, Robert Nussbaum, Eric Stodola)
  • Sponsor: Apax Partners LP
    • Legal: Simpson Thacher & Bartlett LLP (Elisha Graff, Nicholas Baker, Jonathan Endean) & Duane Morris LLP (Joel Walker, Kenneth Argentieri)
  • Official Committee of Unsecured Creditors
    • Legal: Cooley LLP (Jay Indyke, Cathy Hershcopf, Seth Van Aalten, Michael Klein, Lauren Reichardt) & Fox Rothschild LLP (John Gotaskie Jr.)
    • Financial Advisor: FTI Consulting Inc. (Samuel Star)

Updated 7/12/17

New Chapter 11 Filing - Marsh Supermarkets Holding LLC

Marsh Supermarkets Holding LLC

• 5/11/17 Recap: After weeks of rumors and run-up, another Sun Capital Partners portfolio company has filed for bankruptcy with the hope of selling its remaining 44 locations to a buyer. A buyer is not currently lined up. The company cited the usual reasons for the filing: (a) the increasingly competitive grocery space with mega-retailers and specialty chains crowding the market, and (b) falling produce and retail food prices. We're frankly surprised that they didn't bother to mention Amazon like everyone else. When it doubt, "Amazon Effect" it. But we digress. Anyway, it also noted that capital investment (particularly relating to technological advances) trailed big players like Kroger ($KR) and Meijer. While those players reaped the benefits of their heavy investments, Marsh could not keep up, foot traffic declined, revenue suffered, and liquidity constraints increased. This is pretty basic sh*t. 
• Jurisdiction: D. of Delaware
• Capital Structure: $60mm RCF debt ($5.2mm funded + $2.5mm LOC)(Wells Fargo Bank NA), $25.7mm June 2016 junior note, $6.3mm October 2016 junior note    
• Company Professionals:
  • Legal: Young Conaway Stargatt & Taylor LLP (Robert Brady, Michael Nestor, Robert Poppiti Jr., Ashley Jacobs, Shane Reil)
  • Financial Advisor/CRO: Clear Thinking Group LLC (Lee Diercks, Anthony Gehringer, A.R. Williams, Thomas Burke)
  • Investment Banker: Peter J. Soloman Company (Scott Moses, Derek Pitts, Greg Grambling, Brandon Yoshimura, Dan Stolar)
  • Liquidator: Hilco Merchant Resources
    • Legal: Pepper Hamilton LLP (Douglas Hermann, Michael Custer)
  • Real Estate Advisor: Hilco Real Estate LLC (Ryan Lawlor)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Senior Lien Agent: Wells Fargo Bank NA
    • Legal: Otterbourg PC (Jonathan Helfat, Daniel Fiorillo)
  • Junior Noteholder: Marsh Group Finance LLC
    • Legal: Kirkland & Ellis LLP (James Stempel) & (local) Morris Nichols Arsht & Tunnell LLP (Curtis Miller)
  • Official Committee of Unsecured Creditors
    • Legal: Cooley LLP (Cathy Hershcopf, Seth Van Aalten, Robert Winning, Max Schlan, Sarah Carnes) & (local) Bayard PA (Justin Alberto, Erin Fay, Gregory Flasser)
    • Financial Advisor: FTI Consulting Inc. (Conor Tully)

Updated 7/12/17