🍤New Chapter 11 Bankruptcy Filing - RUI Holding Corp.🍤

RUI Holding Corp.

July 7, 2019

Back in October 2016, in the context of Sun Capital Partners’-owned Garden Fresh Restaurant Intermediate Holdings bankruptcy filing, we asked, “Are Progressives Bankrupting Restaurants?” We wrote:

Morberg's explanation for the bankruptcy went a step farther. He noted that cash flow pressures also came from increased workers' compensation costs, annual rent increases, minimum wage increases in the markets they serve, and higher health benefit costs -- a damning assessment of popular progressive initiatives making the rounds this campaign season. And certainly not a minor statement to make in a sworn declaration.  

It's unlikely that this is the last restaurant bankruptcy in the near term. Will the next one also delineate progressive policies as a root cause? It seems likely.

There have been a plethora of restaurant-related bankruptcy filings between then and now and many of them have raised rising costs as an issue. Perhaps none as blatantly, however, than Sun Capital Partners’ portfolio companies: enter RUI Holding Corp and its affiliated debtors, Restaurants Unlimited Inc. and Restaurants Unlimited Texas Inc. (the “Debtors”).

On July 7, 2019, the Sun Capital-owned Debtors filed for bankruptcy in the District of Delaware. The Debtors opened their first restaurant in 1969 and now own and operate 35 restaurants in 6 states under, among 14 others, the trade names “Clinkerdagger,” “Cutters Crabhouse,” “Maggie Bluffs,” and ”Horatio’s.” The Debtors note that each of their restaurants offer “fine dining” and “polished casual dining” “situated in iconic, scenic, high-traffic locations.” Who knew that if you want something to scream “iconic” you ought to name it Clinkerdagger?

As we’ve said time and time again, casual dining is a hot mess. Per the Debtors:

…the Company's revenue for the twelve months ended May 31, 2019, was $176 million, down 1% from the prior year. As of the Petition Date, the Company has approximately $150,000 of cash on hand and lacks access to needed liquidity other than cash flow from operations.

The Debtors have over $37.7mm of secured debt; they also owe trade $7.6mm. There are over 2000 employees, of which 168 are full-time and 50 are salaried at corporate HQ in Seattle Washington.

But enough about that stuff. Back to those damn progressives. Per the Debtors:

Over the past several years, certain changes to wage laws in the Debtors’ primary geographic locations coupled with two expansion decisions that utilized cash flow from operations resulted in increased use of cash flow from operations and borrowings and restricted liquidity. These challenges coupled with additional state-mandates that will result in an additional extraordinary wage hike in FYE 2020 in certain locations before all further wage increases are subject to increases in the CPI and the general national trend away from casual dining, led to the need to commence these chapter 11 cases.

They continue:

Over the past three years, the Company’s profitability has been significantly impacted by progressive wage laws along the Pacific coast that have increased the minimum wage as follows: Seattle $9.47 to $16.00 (69%), San Francisco $11.05 to $15.59 (41%), Portland $9.25 to $12.50 (35%). As a large employer in the Seattle metro market, for instance, the Company was one of the first in the market to be forced to institute wage hikes. Currently in Seattle, smaller employers enjoy a statutory advantage of a lesser minimum wage of $1 or more through 2021, which is not available to the Company. The result of these cumulative increases was to increase the Company’s annual wage expenses by an aggregate of $10.6 million through fiscal year end 2019.

For a second we had to do a double-take just to make sure Andy Puzder wasn’t the first day declarant!

Interestingly, despite these seemingly OBVIOUS wage headwinds and the EVEN-MORE-OBVIOUS-CASUAL-DINING-CHALLENGES, these genius operators nevertheless concluded that it was prudent to open two new restaurants in Washington state “in the second half of 2017” — at a cost of $10mm. Sadly, “[s]ince opening, the anticipated foot traffic and projected sales at these locations did not materialize….” Well, hot damn! Who could’ve seen that coming?? Coupled with the wage increases, this was the death knell. PETITION Note: this really sounds like two parents on the verge of divorce deciding a baby would make everything better. Sure, macro headwinds abound but let’s siphon off cash and open up two new restaurants!! GREAT IDEA HEFE!!

The Debtors have therefore been in a perpetual state of marketing since 2016. The Debtors’ investment banker contacted 170 parties but not one entity expressed interested past basic due diligence. Clearly, they didn’t quite like what they saw. PETITION Note: we wonder whether they saw that Sun Capital extracted millions of dollars by way of dividends, leaving a carcass behind?? There’s no mention of this in the bankruptcy papers but….well…inquiring minds want to know.

The purpose of the filing is to provide a breathing spell, gain the Debtors access to liquidity (by way of a $10mm new money DIP financing commitment from their prepetition lender), and pursue a sale of the business. To prevent additional unnecessary cash burn in the meantime, the Debtors closed six unprofitable restaurants: Palomino in Indianapolis, Indiana, and Bellevue, Washington; Prime Rib & Chocolate Cake in Portland, OR; Henry’s Tavern in Plano, Texas; Stanford’s in Walnut Creek, California; and Portland Seafood Co. in Tigard, Oregon. PETITION Note: curiously, only one of these closures was in an “iconic” location that also has the progressive rate increases the Debtors took pains to highlight.

It’s worth revisiting the press release at the time of the 2007 acquisition:

Steve Stoddard, President and CEO, Restaurants Unlimited, Inc., said, “This transaction represents an exciting partnership with a skilled and experienced restauranteur that has the requisite financial resources and deep operating experience to be instrumental in strengthening our brands and building out our footprint in suitable locations.”

Riiiiight. Stoddard’s tenure with Sun Capital lasted all of two years. His successor, Norman Abdallah, lasted a year before being replaced by Scott Smith. Smith lasted a year before being replaced by Chris Harter. Harter lasted four years and was replaced by now-CEO, Jim Eschweiler.

A growing track record of bankruptcy and a revolving door in the C-suite. One might think this may be a cautionary tale to those operators in the market for PE partners.*

*Speaking of geniuses, it’s almost as if Sun Capital Partners thinks that things disappear on the internets. Google “sun capital restaurant unlimited” and you’ll see this:

Source: Google

Source: Google

Click through the first link and this is what you get:

Source: Sun Capital Partners

Source: Sun Capital Partners

HAHAHAHAHA. WHOOPS INDEED!

THEY DELETED THAT SH*T FASTER THAN WE COULD SAY “DIVIDEND RECAP.”


  • Jurisdiction: D. of Delaware (Judge Silverstein)

  • Capital Structure: $37.7mm (plus $1.7mm of accrued and unpaid interest)(Fortress Credit Co LLC)

  • Professionals:

    • Legal: Klehr Harrison Harvey Branzburg LLP (Domenic Pacitti, Michael Yurkewicz, Sally Veghte)

    • Financial Advisor: Carl Marks Advisory Group LLC (David Bagley)

    • Investment Banker: Configure Partners LLC

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

    • Board of Directors: Stephen Cella, Jonathan Jackson, James Eschweiler

  • Other Parties in Interest:

    • PE Sponsor: Sun Capital Partners Inc.

    • Prepetition Agent & DIP Agent ($10mm): Fortress Credit Co LLC

      • Legal: Hunton Andrews Kurth LLP (Tyler Brown, Justin Paget) & Gellert Scali Busenkell & Brown (Michael Busenkell)

      • Financial Advisor: Grant Thornton LLP

    • DIP Lenders: Drawbridge Special Opportunities Fund LP, NXT Capital LLC

      • Legal: Goldberg Kohn Ltd. (Randall Klein, Prisca Kim)

Updated 7/7/19

New Chapter 11 Filing - AcuSport Corporation

AcuSport Corporation

5/1/18

AcuSport Corporation, an Ohio-based (i) distributor of outdoor and shooting sports products and (ii) consultant to independent retailers, has filed for bankruptcy. Why? #MAGA!! That's why. 

In the company's words,

At a time when the defense market experienced a downturn in demand, the civilian small arms and ammunition market of the firearms industry was doing well. Consumers were concerned about the possibility of stricter gun control laws, which led to increased sales. Many firearms manufacturers, retailers, and distributors, including AcuSport, understood that consumers anticipated Hillary Clinton would win the presidential election in 2016. The common belief shared by businesses in the firearms industry was that demand would increase if Clinton was elected as President because consumers expected the new administration to seek to implement gun-control legislation. As a result, AcuSport, along with other firearms businesses, prepared for a spike in demand by, among other things, purchasing substantial amounts of inventory.

This should sound familiar. Remington Outdoor Company had a similar narrative when it filed for bankruptcy. Hilary Clinton's election loss has apparently wreaked havoc on the gun industry. To put some numbers around this, AcuSport's revenue decreased 30% in fiscal 2017 YOY. And yet it apparently has substantial inventory -- a fact borne out by its who's who list of top creditors. Gun lovers will recognize some of the names: Sturm Ruger & Company Inc. ($RGR), Glock Inc., Sig Sauer Inc., and others. If you're not a gun lover and happen to be a bankruptcy professional, you should recognize two others: Remington Arms Co. and Colt's Manufacturing Co. The latter two know their way around a bankruptcy court.

This turn of events triggered a default under the company's Wells Fargo-provided credit facility. The company proposes to sell to Ellett Brothers LLC, which has executed a stalking horse asset purchase agreement for a purchase price of $7.75 million plus the value of AcuSport's inventory. Subject to AcuSport's option and an administrative fee, the purchaser will also collect any accounts receivable existing at the time of closing. 

All of the Trump/NRA lovefests in the world can't seem to prevent gun-related companies from going bankrupt. Ironic. #MAGA!!

  • Jurisdiction: S.D. of Ohio (Judge Hoffman)
  • Capital Structure: $17.5mm debt (Wells Fargo Bank NA)      
  • Company Professionals:
    • Legal: Bryan Cave Leighton Paisner LLP (Jason Dejonker, Cullen Kuhn) & (local) Allen Kuehnle Stovall & Neuman LLP (Thomas Allen, Richard Stovall, Erin Gapinski)
    • Financial Advisor: Huron Consulting Services LLC (Daniel Wikel)
    • Investment Banker: Huron Transaction Advisory LLC (Geoffrey Frankel)
    • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
  • Other Parties in Interest:
    • DIP Lender: Wells Fargo Bank NA
      • Legal: Goldberg Kohn Ltd. (Jacob Marshall, Jeremy Downs, Michael Tucker) & (local) Ulmer & Berne LLP (Reuel Ash)
    • Prospective Buyer: Ellett Brothers LLC
      • Legal: McDermott Will & Emery LLP (Timothy Walsh, Megan Preusker) & (local) Hahn Loeser & Parks LLP (Lawrence Oscar, Daniel DeMarco)

Updated 5/4 at 7:05 CT

New Chapter 11 Filing - Hobbico Inc.

Hobbico Inc.

1/10/18

Chicago-based designer, manufacturer and distributor of hobby products like radio-control toys filed for bankruptcy after struggling from (i) too much debt, (ii) lack of investment in product innovation and in its core ecommerce platform, (iii) a systemic shift in the drone market (wherein Asian suppliers started competing by selling direct-to-consumer), (iv) the bankruptcy of a key supplier of racing products, and (v) disruption to its Asian supply chain. The company defaulted on its secured debt and is using the chapter 11 process in order to attempt to sell its business as a going-concern. 

  • Jurisdiction: D. of Delaware
  • Capital Structure: $74.5mm revolver and term loan (Wells Fargo Bank NA), $41.2mm subordinated secured note (Cyprium Investors IV AIV I LP)     
  • Company Professionals:
    • Legal: Neal Gerber & Eisenberg LLP (Mark Berkoff, Nicholas Miller, Thomas Wolford) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller, Matthew Talmo, Andrew Golden)
    • Financial Advisor: CR3 Partners LLC (Tom O'Donoghue, Douglas Flannery, Chris Creger, Layne Deutscher) & Keystone Consulting Group LLC (Louis Brownstone)
    • Investment Banker: Lincoln International LLC (Alexander Stevenson)
    • Claims Agent: JND Corporate Restructuring (*click on company name above for free docket access)
  • Other Parties in Interest:
    • DIP Agent: Wells Fargo Bank NA
      • Legal: Goldberg Kohn Ltd. (Randall Klein, Zachary Garrett, Prisca Kim, Jacob Marshall) & (local) Burr & Forman LLP (J. Cory Falgowski)
    • Lender: Cyprium Investors IV AIV I LP
      • Legal: Cahill Gordon & Reindel LLP (Joel Levitin, Richard Stieglitz Jr.)
    • Official Committee of Unsecured Creditors
      • Legal: Cullen and Dykman LLP (S. Jason Teele, Nicole Stefanelli, Michelle McMahon, Bonnie Pollack) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Stephen Gerald, Kevin Shaw)
      • Financial Advisor: Emerald Capital Advisors (John Madden)

New Chapter 11 Bankruptcy - Shiekh Shoes LLC

Shiekh Shoes LLC

  • 11/29/17 Recap: More retail in bankruptcy. Here, the retailer of footwear, apparel and accessories aimed at the urban subculture has filed for bankruptcy. Of note, the company has 124 specialty retail store locations across ten states; it also owns "e-tailer" Karmaloop, which, itself, was in bankruptcy a few years ago. Interestingly, the Karmaloop transaction is now riddled in controversy and serves as a cautionary tale to any purchaser of distressed retail assets like customer lists which, as we've seen from a variety of retail bankruptcies of late, is often one of the more "valuable" assets a retailer has. Data, baby, data! Of course, the data needs to be current and relevant as opposed to technologically engineered and enhanced. Which, the company alleges, is exactly what Comvest Partners did with Karmaloop's customer lists. The company notes, "The Debtor’s decision to acquire Karmaloop was based on Comvest’s representation that it had accumulated approximately 6 million unique customer email addresses, 3.7 million of which were alleged to be responsive/active consumers. After the acquisition was finalized in March of 2016, however, the Debtor found out that more than 80% of these emails were no longer valid and the overall health status of the Karmaloop email database/system was in very poor condition." The company continues, "The evidence discovered by the Debtor’s CTO and E-Commerce Director further indicated a concerted effort by Comvest/Karmaloop executives, and third party email ecommerce marketer, Klaviyo, to conceal the poor condition of the email list to give the appearance to prospective buyers that Comvest had “stabilized” losses and “grown” the business since taking over after Karmaloop’s prior bankruptcy in 2015 (out of which Comvest purchased Karmaloop). This was achieved by, among other means, constantly switching IP addresses so the company would not be blacklisted, as well as changing the code on both the Karmaloop and PLNDR sites to double-count traffic on the websites. Interestingly, the “double-pixel” (the means through which Karmaloop was doublecounting traffic on the websites to create the appearance the websites were experiencing increased traffic) was removed from Karmaloop’s website shortly before the Debtor took over and site traffic quickly nosedived. Thus, the Debtor has reason to believe Comvest knew the representations it made in the offering memoranda were false and it took affirmative steps to cover it up." As if this wasn't enough, the company also discovered that its "confidential" email list was in the possession of another business, the result of a previously-undisclosed pre-acquisition settlement between Karmaloop and a vendor. On account of these issues, it looks like the company and Comvest are primed for a bankruptcy court battle royale. Compounding matters is the company's reliance on Nike Inc. ($NKE) for product. Nike, the company notes, refused to ship product to the company without cash in advance payment; it also didn't support the company's attempted Midwest expansion. Unfortunately, that lack of support came after the company had already committed the capital to pursue said expansion. Whoopsies. Now, the company is unwinding those efforts. The company is also planning to close 31 stores. Yay #retailapocalypse! The company has no plan in bankruptcy other than to leverage the appropriate provisions of the bankruptcy code to pursue a restructuring of leases and its debt. Liquidation isn't out of the realm of possibility which, naturally, isn't great Christmas news for the company's 1,743 employees. One final note: the company noted soft sales in men's shoes (Nike and Brand Jordan): this seems consistent with the broader footwear narrative that specialty footwear and Adidas are eating into Nike's market share. 
  • Jurisdiction: C.D. of California (Judge Zurzolo)
  • Capital Structure: $20mm RCF (State Bank and Trust Company & Comvest Capital II LP), $15mm unsecured LOC    
  • Company Professionals:
    • Legal:  SulmeyerKupetz PC (David Kupetz, Asa Hami, Steven Werth)
    • Financial Advisor:  KGI Advisors Inc.
    • Real Estate Advisors: Gordon Brothers Retail Partners LLC
  • Other Parties in Interest:
    • Comvest Partners II LP
      • Legal: Goldberg Kohn Ltd. (Randall Klein, Dimitri Karcazes) & (local) Robins Kaplan LLP (Scott Gautier, Kevin Meek)

Updated 11/30/17

New Chapter 11 Bankruptcy - Velocity Pooling Vehicle LLC

Velocity Pooling Vehicle LLC

  • 11/15/17 Summary: A few weeks ago we questioned whether the restructuring industry ought to be focusing more on the automotive space, asking whether the bankruptcy of GST Autoleather Inc. was the canary in the coal mine. Now, here, Velocity Pooling Vehicle LLC (d/b/a Motorsport Aftermarket), an Indianapolis-based motorcycle aftermarket parts seller has filed for bankruptcy to address its balance sheet in the face of declining trends in the motorcycle market. The company has announced a consensual restructuring pursuant to which it will equitize its debt; it intends to fast-track the case and emerge from bankruptcy in Q1 '18. The company has secured a $135mm DIP credit facility. Term lenders Monomoy Capital Partners, BlueMountain Capital and Contrarian Partners are coming out with the equity in the company. More to come.
  • Jurisdiction: D. of Delaware (Judge Carey)
  • Capital Structure: $295mm '21 TL (Wilmington Trust NA), $85mm '22 second lien TL     
  • Company Professionals:
    • Legal: Proskauer Rose LLP (Jeff Marwil, Paul Possinger, Christopher Hayes, Jeramy Webb) & (local) Cole Schotz P.C. (Norman Pernick)
    • Financial Advisor: AlixPartners LLP
    • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access once link appears)
  • Other Parties in Interest:
    • Administrative Agent: Wells Fargo Bank, NA
      • Legal: Goldberg Kohn Ltd. (Randall Klein, Prisca Kim) & (local) Richards Layton & Finger PA (John Knight, Brett Haywood)
    • Ad Hoc Group
      • Legal: Stroock & Stroock & Lavan LLP (Jayme Goldstein, Daniel Ginsberg, Matthew Garofalo) & (local) Young Conaway Stargatt & Taylor LLP (Edmon Morton, Matthew Lunn)

Updated 11/17/17 6:11 CT

New Chapter 11 Filing - Keystone Tube Company LLC (A.M. Castle & Co.)

Keystone Tube Company LLC (A.M. Castle & Co.)

  • 6/18/17 Recap: Publicly-traded ($CASL) Illinois-based specialty metals distribution company with customers in some hard hit sectors of late, e.g., oil and gas, retail, mining, defense, filed a prepackaged bankruptcy case to de-lever its balance sheet. 
  • Jurisdiction: D. of Delaware 
  • Capital Structure: $112mm first lien debt (Cantor Fitzgerald Securities), $177mm
  • 18 12.75% second lien notes (US Bank NA), $22.3mm '19 5.25% convertible third lien notes (US Bank NA)     
  • Company Professionals:
    • Legal: Pachulski Stang Ziehl & Jones LLP (Richard Pachulski, Jeffrey Pomerantz, Maxim Litvak, John Lucas, Peter Keane)
    • Financial Advisor & Investment Banker: Imperial Capital LLC (Joseph Kazanovski)
    • Claims Agent: KCC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Ad Hoc Lender Committee (At Filing: Corre Partners Management LLC, Highbridge Capital Management LLC, SGF Inc., Pandora Select Partners LP, Whitebox Advisors LLC, Wolverine Asset Management Ltd.)
      • Legal (except SGF Inc.): Paul Weiss Rifkind Wharton & Garrison LLP (Andrew Rosenberg, Jacob Adlerstein, Michael Rudnick) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Joel Waite, Ian Bambrick)
      • Legal (SGF Inc): Goodwin Proctor LLP (Michael Goldstein, Gregory Fox) & (local) Pepper Hamilton LLP (David Fournier, John Schanne)
      • Financial Advisor: Ducera LLC
    • Prepetition First Lien Agent: Cantor Fitzgerald Securities
      • Legal: Shipman & Goodwin LLP
    • Prepetition Indenture Trustee: US Bank NA
      • Legal: Dorsey & Whitney LLP (Eric Lopez Schnabel, Robert Mallard, Alessandra Glorioso)
    • Administrative Agent: PNC Bank NA
      • Legal: Goldberg Kohn Ltd (Jacob Marshall, Danielle Juhle) & (local) Blank Rome LLP (Josef Mintz)
    • Bank of America NA
      • Legal: Morgan Lewis & Bockius LLP (Jody Barillare, Rachel Jaffe Mauceri)
    • Nantahala Capital Management
      • Legal: King & Spalding LLP (Arthur Steinberg) & (local) The Rosner Law Group LLC (Frederick Rosner)

Updated 7/11/17 6:22 pm

Source: First Day Declaration.

Source: First Day Declaration.

New Chapter 11 Filing - CST Industries Holdings Inc.

CST Industries Holdings Inc.

  • 6/9/17 Recap: So this is a soap opera. Kansas City-based manufacturer of (i) industrial containers used to store architectural and agricultural products, water, dry bulk and oil and gas and (ii) domes, filed for bankruptcy due to its unsustainable capital structure and seemingly strained relationship with its senior subordinated noteholders. According to the company's first day declaration, the company sought a prepetition sale that would pay off its BNP Paribas' loan and make a "substantial payout" to its unsecured creditors. But one obstreperous unsecured creditor rejected the sale overtures and demanded that the company pay to hire advisors "that in turn charged CST substantial fees and expenses" to the tune of $8-10mm (inclusive of its own pros fees). Welcome to the party pal. These fees, coupled with downturns in the oil and gas and Middle Eastern water markets, led to a precipitous drop in EBITDA and a liquidity crisis. Now the company hopes to use Chapter 11 to sell itself (pursuant to a $15mm DIP credit facility).
  • Jurisdiction: D. of Delaware
  • Capital Structure: $57.5mm TL (funded, BNP Paribas), $114.3mm senior subordinated notes (The Northwestern Mutual Life Insurance Company & OCM Mezzanine Fund II LP).     
  • Company Professionals:
    • Legal: Hughes Hubbard & Reed LLP (Kathryn Coleman, Christopher Gartman, Jacob Gartman, Anson Frelinghuysen) & Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)
    • Financial Advisor/Investment Banker: CDG Group LLC (Robert Del Genio)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • TL Agent: BNP Paribas
      • Legal: Chadbourne & Parke LLP (Howard Beltzer, James Copeland, Joseph Giannini) & Norton Rose Fulbright US LLP (Louis Strubeck Jr.) & (local) Young Conaway Stargatt & Taylor LLP (Kara Hammond Coyle)
    • Official Committee of Unsecured Creditors
      • Legal: Lowenstein Sandler LLP (Jeffrey Prol, David Banker, Wojciech Jung, Bruce Nathan) & (local) Shaw Fishman Glantz & Towbin LLC (Thomas Horan, Ira Bodenstein, Christina Sanfelippo)
      • Financial Advisor: Teneo Restructuring and Teneo Capital LLC (Christopher Wu)
    • OCM Mezzanine Fund II, L.P.
      • Legal: Goldberg Kohn Ltd. (William Meyers)
    • Private Equity Sponsor: The Sterling Group

Updated 7/11/17

New Chapter 11 Filing - Ignite Restaurant Group

Ignite Restaurant Group

  • 6/6/17 Recap: Publicly-traded ($IRG) Houston-based owner of 112 Joe's Crab Shack locations and 25 Brick House Tavern + Tap locations filed for bankruptcy because people can't tear their eyes off of whatever mobile device they're towing around long enough to sit at a casual dining spot. "The market for casual dining has been deteriorating for some time." No kidding, dudes. That said, someone clearly still believes in the space as the company has lined up a stalking horse bidder to purchase the company in bankruptcy for $50mm and some assumed liabilities (subject to deductions/increases). That "someone" is KRG Acquisitions Co LLC, an affiliate of Kelly Investment Group. Maybe it's the "'I'm relaxed' restaurant experience" that the buyer finds compelling...? (Serious question: is weed legal in Texas yet?). Anyway, good luck with that. 
  • Jurisdiction: S.D. of Texas
  • Capital Structure: $30mm RCF & $165mm TL (Credit Suisse AG)     
  • Company Professionals:
    • Legal: King & Spalding LLP (Sarah Borders, Jeffrey Dutson, Edward Ripley, Elizabeth Dechant)
    • Financial Advisor: Alvarez & Marsal LLC (John Tibus)
    • Investment Banker: Piper Jaffray & Co. (Richard Shinder, Teri Stratton)
    • Real Estate Advisor: Hilco Real Estate LLC 
    • Claims Agent: Garden City Group LLC (*click on company name above for the free docket)
    • Other Parties in Interest:
      • Credit Suisse AG
        • Legal: Latham & Watkins LLP (Keith Simon, David Hammerman, Hugh Murtagh) & (local) Porter Hedges LLP (John Higgins)
      • KRG Acquisition Co LLC 
        • Legal: Goldberg Kohn Ltd. (Randall Klein, Prisca Kim) & (local) Okin Adams LLP (Matthew Okin, Ryan O'Connor)
      • Official Committee of Unsecured Creditors
        • Legal: Pachulski Stang Ziehl & Jones LLP (Jeffrey Pomerantz, Bradford Sandler) & (local) Cole Schotz PC (Michael Warner)
      • Potential Buyer: Landry's Inc.
        • Legal: Haynes and Boone LLP (Patrick Hughes, Arsalan Muhammad, Jonathan Pressment, Sarah Jacobson)

Updated 7/17/17 11:23 am CT

New Chapter 11 Filing - Katy Industries Inc.

Katy Industries Inc.

  • 5/14/17 Recap: St. Louis-based manufacturer, importer and distributor of commercial cleaning (brooms, brushes and mops) and consumer storage products filed for bankruptcy to effectuate a 363 sale to an affiliate of private equity sponsor Victory Park Capital Management. The company has been around forever, it seems, but recent acquisitions, failed integration, unrealized synergies, and operational pitfalls appear to have hit the company hard and strained liquidity. Hence, bankruptcy.
  • Jurisdiction: D. of Delaware
  • Capital Structure: $31.5mm debt (Encina Business Credit SPV LLC)    
  • Company Professionals:
    • Legal: DLA Piper LLP (John Lyons, Daniel Simon, Stuart Brown, Oksana Koltko Rosaluk)
    • Financial Advisor/CRO: SierraConstellation Partners LLC (Lawrence Perkins)
    • Investment Banker: Lincoln International Inc. (Alexander Stevenson)
    • Claims Agent: JND Legal Administration (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Buyer: Jansan Acquisition LLC (Highview Capital LLC & VPCM)
      • Legal: Skadden Arps Meagher & Flom LLP (Lisa Laukitis)
    • Sponsor: Victory Park Capital Management
    • Encina Business Credit SPV LLC
      • Legal: Goldberg Kohn Ltd. (Jeremy Downs, Zachary Garrett) & (local) Reed Smith LLP (J. Cory Falgowski)
    • Successor Trustee: Wells Fargo Bank NA
      • Legal: Morgan Lewis & Bockius LLP (Rachel Jaffe Mauceri)
    • Official Committee of Unsecured Creditors
      • Legal: Drinker Biddle & Reath LLP (Steven Kortanek, Andrew Flame, Patrick Jackson, Robert Malone)
      • Financial Advisor: Emerald Capital Advisors (John Madden)

Updated 7/12/17 

New Chapter 11 Filing - Nuverra Environmental Solutions Inc.

Nuverra Environmental Solutions Inc.

  • 5/1/17 Recap: Once publicly-traded Arizona-based environmental solutions provider (obviously) to oil and natural gas shale-oriented energy and exploration companies filed for chapter 11 to delever its balance sheet pursuant to a restructuring support agreement and prepackaged plan of reorganization agreed to by its major lenders. The company seeks approval of a $31.5mm DIP to fund the cases. The term lenders will receive equity, cash, and board seats, the '21 noteholders 99.75% of the reorganized equity and the '18 noteholders will get the remainder (subject to a rights offering post-confirmation and a management incentive plan...of course). And as you might expect, the equityholders stand to recover bupkis. 
  • Jurisdiction: D. of Delaware
  • Capital Structure: $24.6mm ABL (funded - Wells Fargo Bank NA), $80mm TL, $327mm 12.5%/10% '21 senior secured second lien notes, $40.4mm '18 9.875% unsecured senior notes (Bank of New York Mellon Trust Company NA, replaced by Wilmington Trust Savings Fund Society FSB) 
  • Company Professionals:
    • Legal: Shearman & Sterling LLP (Douglas Bartner, Fredric Sosnick, Sara Coelho, Stephen Blank) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Kenneth Enos, Jamie Luton Chapman)
    • Financial Advisor/CRO: AlixPartners LLC (Robert Albergotti, Dan Kelsall)
    • Investment Banker: Lazard Middle Market LLC (Andrew Torgove)
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Ad Hoc Group of '21 Supporting Noteholders
      • Legal: Fried Frank Harris Shriver & Jacobson LLP (Brad Scheler, Jennifer Rodburg, Carl Stapen) & Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Peter Keane)
    • RCF Agent: Wells Fargo Bank NA
      • Legal: Goldberg Kohn Ltd. (Randall Klein, Dimitri Karcazes, Gary Zussman, Jacob Marshall) & (local) DLA Piper LLP (Stuart Brown, Daniel Brogan)
    • Trustee to '21 Senior Secured Second Lien Notes & TL Agent: Wilmington Savings Fund Society FSB
      • Legal: Morrison & Foerster LLP (Jonathan Levine, James Newton) & (local) Morris James LLP (Eric Monzo) 
    • Term Lenders: Ascribe Capital LLC, Gates Capital Management Inc.
    • Official Committee of Unsecured Creditors
      • Legal: Kilpatrick Townsend & Stockton LLP (Todd Meyers, Paul Rosenblatt, Jonathan Polonsky, Michael Langford, Lindsey Simon) & (local) Landis Rath & Cobb LLP (Richard Cobb, Matthew McGuire, Travis Ferguson, Matthew Pierce)
      • Financial Advisor: Batuta Capital Advisors LLC (Alexandre Zyngier)

Updated 7/13/17 1:56 am CT

New Chapter 11 Filing - Ciber Inc.

Ciber Inc.

  • 4/10/17 Recap: Once publicly-traded Colorado-based IT staffing and consulting services company filed for bankruptcy to pursue a sale of its business to CapGemini S.A., as stalking horse bidder, for at least $50mm plus the assumption of certain liabilities. The sale is subject to a postpetition marketing process. Ciber lists Microsoft and Oracle as major corporate partners; it sells and supports both companies' product offerings. Ciber seems like the quintessential go-big-or-go-home kind of company. It fueled growth over the years with over 60 acquisitions at a cost of more than $1b, never fully integrating the new businesses. This failure to integrate led to some AWESOME results: like the time the company paid $14mm to European consultants for NEGATIVE PERFORMANCE. And we thought Wells Fargo had a monopoly on stupid bonus-based behavior. Speaking of Wells Fargo, it is the lender here and the straw that broke the camel's back was the company's inability to adhere to its Fixed Coverage Charge ratio, triggering a default under its asset-based loan. Now Wells Fargo is providing the DIP facility of $41mm to fund the cases which, by our simple mathematical calculations, amounts to $4.1mm per bankruptcy lawyer who has made a notice of appearance on behalf of the debtors already (see below).
  • Jurisdiction: D. of Delaware
  • Capital Structure: $60mm ABL (Wells Fargo Bank NA)     
  • Company Professionals:
    • Legal: Morrison & Foerster LLP (Brett Miller, Dennis Jenkins, Daniel Harris, Benjamin Butterfield, Steve Rappoport, Todd Goren) & (local) Polsinelli PC (Christopher Ward, Justin Edelson, Jarrett Vine)
    • Financial Advisor/CRO: Alvarez & Marsal LLC (Jonathan Goulding, Matt Covington, Glenn Gilmour)
    • Investment Banker: Houlihan Lokey Capital Inc. (Adam Dunayer, Michael Boone)
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Prepetition & DIP Lender: Wells Fargo Bank NA
      • Legal: Goldberg Kohn Ltd. (Jeremy Downs, Jacob Marshall)
    • Stalking Horse Bidder: CapGemini SA
      • Legal: Skadden Arps Slate Meagher & Flom LLP (Paul Leake, Mark McDermott, Raquelle Kaye)
    • Actual Buyer: HTC Global Ventures LLC
      • Legal: Plunkett Cooney PC (Scott Lites, David Lerner)
    • Official Committee of Unsecured Creditors
      • Legal: Perkins Coie LLP (John Penn, Schuyler Carroll, Tina Moos) & (local) Shaw Fishman Glantz & Towbin LLC (Thomas Horan)
      • Financial Advisor: BDO Consulting (David Berliner)
    • Ad Hoc Group of Non-Insider Employees
      • Legal: Blank Rome LLP (Josef Mintz, John Lucian)

Updated 5/21/17 

  

New Filing - Erickson Inc.

  • Erickson Inc.

  • 11/08/16 Recap: Portland-based aviation services company with ties to the oil and gas and defense industries files for bankruptcy to delever balance sheet pursuant to a prenegotiated bankruptcy agreement with its lenders. The Company seeks a $180mm DIP credit facility (with $60mm of new money) to fund operations over the course of the restructuring.
  • Jurisdiction: N.D. of Texas
  • Capital Structure: $140mm RCF (Wells Fargo), $355mm '20 senior secured notes (Wilmington Trust)    
  • Company Professionals:
    • Legal: Haynes & Boone LLP (Ian Peck, Kenric Kattner, Kourtney Lyda, Eli Columbus, Arsalan Muhammed)
    • Financial Advisor: Alvarez & Marsal LLC (Darrick Martin, Holden Bixler)
    • Investment Banker: Imperial Capital (Chris Shepard)
    • Claims Agent: KCC (*click on company name for docket)
  • Other Parties in Interest:
    • Ad Hoc Group of Senior Secured Noteholders
      • Legal: Akin Gump (Scott Alberino, Brad Kahn, Marty Brimmage)
      • Investment Banker: Houlihan (Matthew Neiman, Andrew Morrow, Geoffrey Coutts)
    • DIP Revolving Agent and ABL Agent (Wells Fargo)
      • Legal: Goldberg Kohn Ltd. (Randall Klein) & (local) K&L Gates LLP (David Weitman)
    • DIP Lenders: (Wayzata Investment Partners and MHR)
    • Wilmington Trust
      • Legal: Seyfarth Shaw LLP (Christopher Harney, Bret Harper)

Updated 12/30/16