⚓️New Chapter 11 Bankruptcy Filing - American Commercial Lines Inc.⚓️

American Commercial Lines Inc.

February 7, 2020

Indiana-based American Commercials Lines Inc. and ten affiliates (the “debtors”), large liquid and dry cargo shippers with an active fleet of approximately 3,500 barges, filed a prepackaged bankruptcy case in the Southern District of Texas to (i) effectuate a comprehensive restructuring of $1.48b of debt ($536mm RCF and $949mm term loan) and (ii) inject the debtors with much-needed new capital via a rights offering. Now, we know what you’re thinking: the debtors are just the latest victims of the oil and gas crash. While oil and gas do make up some small portion of the debtors’ revenues (10%), this is incorrect. Other factors complicated the debtors’ efforts to service their bulk of debt (see what we did there?). Hold on to your butts, people.

The company notes:

Beginning in early 2016, the inland barge industry entered a period of challenging conditions that have resulted in reduced earnings. These challenges were brought on by a variety of international trade, macroeconomic, industry capacity, and environmental factors. The industry has experienced a prolonged period of declining freight rates, grain volume volatility related to international competition and tariffs on U.S.-grown soybeans, and excessive operating costs incurred as a result of extreme flooding conditions. Freight rates during 2016 and 2017 were under continued downward pressure from reduced shipping demand for metals, grain, refined products, petrochemicals, chemicals and crude oil. These declines resulted in part from pressure on the U.S. steel industry linked to dumping of foreign steel into U.S. markets, increased international competition in grain exports, and the decline in North American crude oil production in response to an oversupply of global crude oil.

Wow. So much to unpack there. It’s as if the debtors’ diversified revenue streams all fell smack dab in the middle of each and every declining sector of the US economy. Reduced steel shipments due to Chinese dumping ✅. Distress in agriculture leading to less volume ✅. Oil and gas carnage ✅.

Compounding matters was increased barge supply (read: competition) due to an increase in coal shipments. That’s right, folks. We’re back to coal. Less coal production = redeployed ships looking for replacement cargo = more competition in the liquid and dry cargo space = decreased freight rates.

The debtors got a temporary reprieve in late 2017 when the Trump administration imposed steel tariffs. A short-lived recovery in steel prices combined with a temporary recovery in oil prices and, due to the above issues, a slowdown in barge construction, helped rates recover a tad.

It didn’t last. In mid-2018, China imposed tariffs on US-grown soybeans. Agricultural products constitute 36% of the debtors’ revenues. Combined with flooding that disrupted farming and navigable waterways, the debtors experienced approximately $86mm in increased operating costs. So, yeah, no bueno. As the debtors note with no intended irony, all of these factors amount to a “perfect storm” heightened mostly by an unsustainable and unserviceable debt load.

A few things to highlight here in terms of the process and trajectory of the cases:

  • This serves as yet another example where the pre-petition lenders used the debtors’ need for additional time to fund a short-term bridge and, in exchange, lock down a full rollup of the pre-petition debt into a $640mm DIP credit facility. The term lenders will also provide a $50mm DIP to fund the administration of the cases.

  • The term lenders are equitizing their $949mm term loan, getting 100% 7.5% “take back preferred equity” and “new common equity” in return. Their estimated recovery is 38%. Post-reorg, the major owners of the debtors, therefore, will be Contrarian Capital Management LLC, Finepoint Capital LP, and Invesco Ltd.

  • The company will get a $150mm of new money via a backstopped rights offering supported by certain holders of term loan claims. This new money infusion (in exchange for 10% junior preferred equity to that noted above and provided subject to a 7% backstop premium) will presumably give the debtors some additional runway should the market forces noted above persist.


  • Jurisdiction: S.D. of Texas (Judge Isgur)

  • Capital Structure: $536mm RCF and $949mm term loan

  • Professionals:

    • Legal: Milbank LLP (Dennis Dunne, Samuel Khalil, Parker Milender) & Porter Hedges LLP (John Higgins, Eric English) & Seward & Kissel LLP

    • Post-Reorg Independent Director: Scott Vogel

    • Financial Advisor: Alvarez & Marsal LLC

    • Investment Banker: Greenhill & Co. Inc.

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

  • Other Parties in Interest:

    • Prepetition ABL & DIP ABL Agent: Wells Fargo Bank NA

      • Legal: K&L Gates LLP (David Weitman, Christopher Brown)

    • Preptition Term Loan Agent: Cortland Capital Market Services LLP

    • Ad Hoc Group of Term Lenders: Contrarian Capital Management LLC, Finepoint Capital LP, and Invesco Ltd.

      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Darren Klein, Erik Jerrard) & Rapp & Krock PC (Henry Flores, Kenneth Krock)

      • Financial Advisor: Evercore Group LLC

    • Large Equityholder: Platinum Equity

New Chapter 11 & CCAA Filing - Payless Shoesource Inc.

Payless Shoesource Inc.

  • 4/4/17 Recap: Private equity backed Kansas-based discount footwear retailer with over 4000 stores filed for bankruptcy because, well, right, it's a private equity backed retailer. Golden Gate Capital and Blum Capital Partners are the sponsors and we've previously covered their methods, uh, we mean "value-add" proposition. We probably won't even bother to read the filing documents because we're 98.9% confident they say the same sh*t every other retail case has said, e.g., poor e-commerce...blah blah...Amazon...blah blah...mall-based retail...blah blah...bad weather...blah blah...Showtime's Billions sucks...wait, what?...whatever, it does (who cares if that's relevant?)...millennial shopping habits...blah blah...bleeding top line and depressed comp store sales...blah blah...dividend recaps...blah blah blah. Apparently the retailer is going to close nearly 400 stores while it attempts to reorganize around what remains - all in accordance to a plan support agreement that the company has entered into with 2/3 of its term loan lenders and with the support of a $385mm DIP facility (of which $80mm is new money). Meanwhile, we'll see what kind of cascading effect this will have on (a) China's manufacturing sector which, apparently, has seen significant stretching of payables (up to 100 days) - a fact evidenced by the top 50 creditors list, and (b) our lovely "A" malls (notably, Simon Property Group made a notice of appearance before the first day pleadings were even completely filed). Finally, the CEO dropped the fact that the new business plan will focus on, among other things, "omnichannel expansion" and since that is the retail buzzword/phrase of the moment, we guess there's really nothing to see here: all will be fine. 
  • 4/6/17 Update: We read the documents and, generally speaking, everything we said above applies. Two other factors apparently worth mentioning as causes for the filing: inventory management issues (compounded by the West Coast port strikes) and foreign exchange issues.
  • Jurisdiction: E.D. of Missouri
  • Capital Structure: $300 ABL ($187mm out - Wells Fargo), $520mm '21 TL ($506mm out), $145mm '22 second lien TL (Morgan Stanley Senior Funding Inc.)    
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (James Sprayragen, Nicole Greenblatt, William Guerrieri, Christine Pirro, Jessica Kuppersmith) & (local) Armstrong Teasdale LLP (Steven Cousins, Erin Edelman) & (Canadian counsel) Osler Hoskin & Harcourt LLP 
    • Legal to Independent Director: Munger Tolles & Olson LLP (Thomas Walper, Seth Goldman, Kevin Allred)
    • Financial Advisor: Alvarez & Marsal North America LLC (Robert Campagna)
    • Investment Banker: Guggenheim Securities LLC (Morgan Suckow)
    • Real Estate: RCS Real Estate Advisors (Ivan Friedman)
    • Liquidators: Great American Group LLC & Tiger Capital Group LLC
    • Claims Agent: Prime Clerk LLC (*click on company name above for free court docket)
  • Other Parties in Interest:
    • Ad Hoc Committee of First Lien Term Lenders (Alden Global Opportunities Master Fund, Credit Suisse Asset Management, GSO Capital Partners, Hawkeye Capital Management, Invesco Senior Secured Management, Octagon Credit Investors LLC, AIC Finance, Axar Capital Management)
      • Legal: King & Spalding LLP (Michael Rupe, Christopher Boies, Jeffrey Pawlitz, Austin Jowers, Michael Handler)
      • Financial Advisor: Houlihan Lokey Capital Inc.
    • DIP ABL Agent: Wells Fargo Bank NA
      • Legal: Choate Hall & Stewart LLP (Kevin Simard, Douglas Gooding, Jonathan Marshall) & (local) Thompson Coburn LLP (Mark Bossi)
    • First Lien Agent & DIP TL Agent: Morgan Stanley Senior Funding Inc. & Cortland Products Corp.
      • Legal: Norton Rose Fulbright US LLP (Stephen Castro, David Rosenzweig, Danielle Ledford, Tim Walsh)
    • Official Committee of Unsecured Creditors
      • Legal: Pachulski Stang Ziehl & Jones LLP (Robert Feinstein, Jeffrey Pomerantz, Bradford Sandler) & (local) Polsinelli PC (Matthew Layfield, Christopher Ward, Shanti Katona)
      • Financial Advisor: Province Inc.

Updated 4/18/17

New Filing - DACCO Transmission Parts (Transtar Holding Company)

DACCO Transmission Parts (Transtar Holding Company)

  • 11/20/16 Recap: Ohio-based global supplier of products related to transmissions and drivetrains files for Chapter 11 to effectuate a prepackaged case handing the company over to the first lien lenders. The cases will be funded by Silver Point Finance LLC as DIP lender ($55mm).
  • Jurisdiction: S.D. of New York
  • Capital Structure: $376.6mm first lien TL (RBC), $48mm RCF (RBC), $170mm second lien TL (Cortland Capital Markets)     
  • Company Professionals:
    • Replacement Legal: Jones Day LLP (Scott Greenberg, Carl E. Black, Daniel Merrett, Stacey Corr-Irvine)
    • Original Legal: Willkie Farr (Rachel Strickland, Christopher Koenig, Jennifer Hardy, Debra McElligott)
    • Financial Advisor: FTI Consulting LLC (Daniel Hugo, Dewey Imhoff, Stuart Gleichenhaus, Joe Lu, Carl Jones, Scott Hoffman, Luke McCrory, Patrick Rauh)
    • Investment Banker: Ducera Partners LLC (Agnes Tang)
    • Lease Consultant: Hilco Real Estate LLC (Ryan Lawlor)
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
  • Other Parties in Interest:
    • RBC
      • Legal: Paul Hastings LLP (Randal Palach, Alexander Bongartz)
    • Ad Hoc Committee of Second Lien Lenders
      • Legal: Latham & Watkins LLP (Richard Levy, Matthew Warren)
    • Silver Point Capital (as DIP Lender)
      • Legal: Chapman & Cutler LLP (Steven Wilanowsky, Aaron Krieger)
    • Friedman Fleisher & Lowe LLC (as Sponsor)
      • Legal: Young Conaway (Michael Nestor)
    • Examiner
      • Legal: Jenner & Block LLP (Richard Levin)
    • Octagon Credit Investors LLC and Invesco Ltd.
      • Legal: King & Spalding LLP (Michael Rupe, Jeffrey Pawlitz)

Updated 3/30/17