New Chapter 11 Filing - The NORDAM Group, Inc.

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The NORDAM Group, Inc.

7/22/18

A promising contract can sometimes prove to be an albatross. Here, The Nordam Group Inc., an Oklahoma-based aircraft component manufacturing and repair company, has filed for bankruptcy after a long-term development and manufacturing agreement ("LTPA") with Pratt & Whitney Canada Corporation ("P&WC") to develop, manufacture, and support an FAA-approved nacelle system for the Gulfstream G500 aircraft proved overly burdensome. Per the company:

"The Debtors currently estimate that their expenses incurred under the LTPA exceed $200 million. These expenses have, in turn, challenged overall financial performance, with EBITDA declining from approximately $88 million in fiscal year 2008 to approximately $50 million in fiscal year 2017. These financial challenges have further impacted the Debtors’ balance sheet and available liquidity, including with respect to the Debtors’ revolving credit facility, which matured on June 18, 2018 with approximately $266.5 million outstanding."

Harsh. After failing to successfully negotiate a resolution to these issues with both its bank group and P&WC, the company has filed for bankruptcy to leverage the Bankruptcy Code's "breathing spell" and, presumably, contract rejection provisions under section 365. The company seeks access to a $45mm DIP credit facility to fund its cases. 

  • Jurisdiction: D. of Delaware (Judge Walrath)
  • Capital Structure: $266.5mm RCF (JPMorgan Chase Bank NA), $19.2mm unsecured promissory notes   
  • Company Professionals:
    • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Ryan Preston Dahl, Jill Frizzley) & (local) Richards Layton & Finger PA (Daniel DeFranceschi, Paul Heath, Brett Haywood, Megan Kenney)
    • Financial Advisor: Huron Consulting Group Inc. (John DiDonato, Matthew Fisher)
    • Investment Banker: Guggenheim Securities LLC (Ronen Bojmel)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
    • Independent Directors: David Eaton, Thomas Allison
  • Other Parties in Interest:
    • Prepetition Agent & DIP Agent: JPMorgan Chase Bank NA
      • Legal: Simpson Thatcher & Bartlett LLP 
    • P&WC
      • Legal: Wachtell Lipton Rosen & Katz (Philip Mindlin, Douglas Mayer) & (local) Stevens & Lee PC (Joseph Huston Jr.)

Updated: 7/23 at 2:09 CT

New Chapter 11 Filing - AcuSport Corporation

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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