⛽️New Chapter 11 Bankruptcy Filing - Nine Point Energy Holdings Inc.⛽️

Nine Point Energy Holdings Inc.

Colorado-based Nine Point Energy Holdings Inc. (along with three affiliates, the “debtors”) is and independent oil and gas exploration and production company focused on the Williston Basin in North Dakota and Montana. It is the successor to Triangle USA Petroleum Corporation, which filed for chapter 11 bankruptcy in June 2016 and confirmed a plan in March 2017. Four years later, it’s back in bankruptcy court. 😬

Followers of E&P bankruptcies have become accustomed to disputes relating to E&P companies and their midstream gathering, transportation and processing providers. Here, Caliber Midstream Partners LP was the debtors’ largest midstream services provider — “was” being the operative word after the debtors terminated the long-term midstream services agreements on the eve of bankruptcy. The story, however, doesn’t end there.

The debtors are willing to enter into a new arrangement with Caliber going forward. It’s unclear how the new arrangement might differ from the existing arrangement because redaction, redaction, redaction. The economic terms of the contract have not been disclosed. 🤔

And so here we are with another potential “running with the land” scenario. If you’re unfamiliar with what this is, you clearly haven’t been paying attention to E&P bankruptcy cases. Just Google it and you’ll pull up probably 8928394829248929 law firm articles on the topic. As this will be a major driver in the case, it probably makes sense to refresh your recollection.

Why are the debtors in bankruptcy? All of the usual reasons, e.g., the big drop in oil prices thanks to COVID-19 and Russia/OPEC. Nothing really new there.

So what does this filing achieve? For starters, it will give the debtors an opportunity to address the Caliber contracts. Moreover, it will avail the debtors of a DIP facility from their pre-petition lenders in the amount of ~$72mm — $18mm in new money and $54mm on a rollup basis (exclusive of an additional $16.1mm roll-up to account for pre-petition secured swap obligations)(8% interest with 2% commitment fee). Finally, the pre-petition-cum-DIP-lenders have agreed to serve as the stalking horse purchaser of the debtors’ assets with a credit bid floor of $250mm.


Date: March 15, 2021

Jurisdiction: D. of Delaware (Judge Walrath)

Capital Structure: $256.9mm credit facility, $16.1mm swap obligations

Company Professionals:

  • Legal: Latham & Watkins LLP (Richard Levy, Caroline Reckler, Jonathan Gordon, George Davis, Nacif Taousse, Alistair Fatheazam, Jonathan Weichselbaum, Andrew Sorkin, Heather Waller, Amanda Rose Stanzione, Elizabeth Morris, Sohom Datta) & Young Conaway Stargatt & Taylor LLP (Michael Nestor, Kara Hammond Coyle, Ashley Jacobs, Jacob Morton)

  • Board of Directors: Patrick Bartels Jr., Dominic Spencer, Frederic Brace, Gary Begeman, Alan Dawes

  • Financial Advisor: AlixPartners LLP (John Castellano)

  • Investment Banker: Perella Weinberg Partners LP (John Cesarz)

  • Claims Agent: Stretto (Click here for free docket access)

Other Parties in Interest:

  • Pre-petition & DIP Agent: AB Private Credit Investors LLC

    • Legal: Proskauer Rose LLP (Charles Dale, David Hillman, Michael Mervis, Megan Volin, Paul Possinger, Jordan Sazant) & Landis Rath & Cobb LLP (Adam Landis, Kerri Mumford, Matthew Pierce)

  • Ad Hoc Group of Equityholders: Shenkman Capital Management, JP Morgan Securities LLC, Canyon Capital Advisors LLC, Chambers Energy Capital

    • Legal: Willkie Farr & Gallagher LLP (Jeffrey Pawlitz, Matthew Dunn, Mark Stancil) & Richards Layton & Finger PA (John Knight, Amanda Steele, David Queroli)

  • Midstream Counterparty: Caliber Measurement Services LLC, Caliber Midstream Fresh Water Partners LLC, and Caliber North Dakota LLC

    • Legal: Weil Gotshal & Manges LLP (Alfredo Perez, Brenda Funk, Tristan Sierra, Edward Soto, Lauren Alexander) & Morris Nichols Arsht & Tunnell LLP (Curtis Miller, Taylor Haga, Nader Amer)

🔥 New Chapter 11 Bankruptcy Filing - IMH Financial Corporation 🔥

IMH Financial Corporation

July 23, 2020

So this is a smaller one but it’s not retail and it’s not oil and gas and so, f*ck it, we’re digging in purely for the sake of diversification. So, what is it? IMH Financial Corporation is a real estate investment holding company with assets consisting of (i) the MacArthur Place Hotel & Spa in Sonoma California (which looks “lit” by the way…intentional word choice, read below), (ii) thousands of undeveloped acreage and related water rights outside of Albuquerque New Mexico (sounds super practical for, like, an apocalyptic scenario like, say, a global pandemic that kills tens of thousands of people), (iii) other real estate assets (discussed below) and (iv) a boat load of tax attributes due to years of money losing endeavors ($475mm and $280mm federal and state NOLs, respectively). The company has no funded secured or unsecured debt (outside of a small PPP loan that it believes qualifies for forgiveness). Other unsecured debt consists of mostly professional service providers (e.g., law firms). This case is primarily about …

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  • Jurisdiction: D. of Delaware (Judge Sontchi)

  • Capital Structure: No secured debt.

  • Professionals:

    • Legal: Snell & Wilmer LLP (Christopher Bayley, Steven Jerome, Benjamin Reeves, Jill Perella, James Florentine, Molly Kjartanson) & Ashby & Geddes PA (William Bowden, Gregory Taylor, Benjamin Keenan, Stacy Newman, Katharina Earle)

    • Special Committee Legal: Holland & Knight LLP (Lori Wittman, W. Keith Fendrick)

    • Investment Banker: Miller Buckfire (James Doak)

    • Claims Agent: Donlin Recano & Co., Inc. (*click on the link above for free docket access)

  • Other Parties in Interest:

    • Preferred Equity Holder, DIP Lender, Exit Lender & Post-Reorg EquityHolder: JPMorgan Chase Funding Inc.

      • Legal: Hahn & Hessen LLP (Jeffrey Schwartz, Joshua Divack) & Landis Rath & Cobb LLP (Adam Landis, Richard Cobb, Matthew Pierce)

    • Preferred Equity Holder: Juniper Realty Partners LLC

      • Legal: Munger Tolles & Olson LLP (David Lee)

🚗New Chapter 11 Bankruptcy Filing - Pace Industries LLC🚗

Pace Industries LLC

April 12, 2020

Arkansas-based Pace Industries LLC and ten affiliates (the “debtors”) — fully-integrated suppliers and manufacturers of aluminum, zinc, and magnesium die cast and finished products in service of several industries (auto, powersports, lawn & garden, lighting & electric, appliances & industrial motors etc.) — filed fully-accepted prepackaged chapter 11 bankruptcy cases in the District of Delaware over the holiday weekend. The plan features one impaired class which voted 100% to equitize pre-petition debt.

A quick digression before we delve into what happened here. COVID-19 provides the ultimate cover for any and all businesses that file for chapter 11 over the next several months. You’re going to see all kinds of companies “clean out the junk” over earnings reports. It will be important, therefore, to parse through company messaging to determine whether they’re just massaging matters or whether, on the other hand, there were fundamental problems confronting the business prior to COVID-19 rearing its ugly head and shutting down the US economy. Where a company discloses that problems existed prior to March, there is absolutely no reason NOT to believe them. So it’s important that the collective we — newsletters writers, journalists, the twitterverse — get things right when talking about the carnage created by COVID-19.

And this case is only partially a COVID-19 story. Given the rush to sensationalize headlines and tweets, this is something we now feel compelled to note with each new bankruptcy filing. While the debtors, like everyone else, have been affected by the virus, it was not the catalyst to the debtors’ filing. The debtors have been seeking new capital sources since the summer of 2018; they initially sought an equity investment but when that couldn’t get done, the debtors shifted towards a sale and marketing process. Any and all initial interest in the debtors’ assets dissipated, however, when the debtors suffered from a poor Q4 ‘19. Interestingly, the disappointing performance was attributable to lower demand in the lighting, BBQ grill and appliance markets. To make matters worse, General Motors Inc’s ($GM) employees went on strike further compressing decreasing automobile production volumes. Moreover, the company self-inflicted some wounds: production inefficiencies relating to new products also hurt performance. Bankruptcy lawyers and advisors were hired in January — long before COVID stormed through and complicated matters further.

The debtors solicited their plan prior to their filing making this a true prepackaged plan. In other words, old school. None of this new solicitation technology; no straddle stuff. The only impaired class, the pre-petition noteholders, voted to accept the plan pursuant to which they would swap $232.1mm in notes for (i) equity in a reorganized LLC (subject to dilution from a management incentive plan AND warrants issued to the debtors’ post-petition DIP term loan lenders) and (ii) take-back term loan paper. This means the new owners will be TCW and Cerberus.

The cases feature a roll-up DIP ABL (which will ultimately be refi’d out through an exit facility) and a post-petition DIP term loan that will be refi’d out via a new term loan exit facility. The aforementioned warrants could amount to 51% of the new post-reorg equity.

This should be a quick case. The DIP terminates in 90 days from the petition date. Given that acceptance was 100% and that general unsecured creditors will be paid in full, this case should, absent other crazy externalities, be in and out of bankruptcy relatively quickly.

  • Jurisdiction: D. of Delaware (Judge )

  • Capital Structure: $92.1mm ABL, $232.1mm pre-petition notes

  • Professionals:

    • Legal: Willkie Farr & Gallagher LLP (Matthew Feldman, Rachel Strickland, Debra Sinclair, Melany Cruz Burgos) & Young Conaway Stargatt & Taylor LLP (Robert Brady, Edmon Morton, Joseph Mulvihill)

    • Financial Advisor/CRO: FTI Consulting Inc. (Patrick Flynn, Johnathan Miller)

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

  • Other Parties in Interest:

    • DIP Revolver Agent ($125mm): Bank of Montreal

      • Legal: McGuireWoods LLP (Wade Kennedy, Alexandra Shipley, Brian Swett) & Richards Layton & Finger PA (John Knight, Amanda Steele, David Queroli)

    • DIP Term Agent ($50mm): TCW Asset Management Company LLC

      • Legal: Schule Roth & Zabel LLP (Adam Harris, Kelly Knight) & Landis Rath & Cobb LLP (Adam Landis)

📜New Chapter 11 Bankruptcy Filing - SFP Franchise Corp. (aka Papyrus)📜

SFP Franchise Corp.

January 23, 2010

Just last week someone from the PETITION team needed to get a card commemorating a family occasion and checked out the Papyrus store in Grand Central Station. It was jam-packed. She then went on to spent $7.99 on a frikken card — something that, it seems, was just $2.99 a few years ago. We suppose there’s a $4 premium for cards that look hand-created yet are mass-produced. Whatever. Anyway, inflation notwithstanding, Tennessee-based SFP Franchise Corp. and its affiliate Schurman Fine Papers filed for bankruptcy this week. Sure, sure, they sell $7.99 cards but at the time of filing, the debtors were down to their last $32k. 😬

This is NOT a story about disruption in the way some might expect. No, electronic cards that literally NOBODY ON THE PLANET OPENS did not destroy this business. At least significantly enough for the company to acknowledge it as a factor. People still dig physical acknowledgements. Instead, this is a story about over-expansion, poor timing, bad deals and over-reliance on one counterparty. In this case, American Greetings Corporation.

The debtors started in 1950 as a greeting card and stationary wholesaler. They expanded into franchise, retail and online over time and the expansion brought on some pain in 2008-2009 (shortly after the company re-purchased franchises). At that time, the debtors engaged with American Greetings as a strategic partner. The debtors sold American Greetings their wholesale business and brand and related trademarks. In turn, the debtors acquired the retail business previously operated by American Greetings — both in the US and Canada (PETITION Note: if you’re thinking, “I thought that brand and trademarks are really the only thing of value for retailers today, well, you’re not wrong.”). Score one for American Greetings here: it dumped its brick-and-mortar retail on the debtors right before the retail sh*tstorm hit. 👍

The deal is special in retrospect. American Greetings agreed to (i) supply the debtors product for an initial term of 7 years, and (ii) provide a royalty-free license of the trademarks for 10 years. In exchange, the debtors agreed to (i) provide fee-generating marketing services for 7 years and (ii) collect and provide point-of-sale data to American Greetings for an initial term of 7 years (for a fee). In essence, the debtors didn’t own or control the product and didn’t own or control the intellectual property. Said another way, this business was dead in 2009: the debtors just didn’t know it yet.

Well, it’s now 2020 and the debtors are, in fact, officially dead. American Greetings pulled the plug in December when it notified the debtors that it was terminating the agreements (citing default under the agreements). Instantaneously, the debtors lost access to product which, in turn, affected revenues.

All 254 stores in the US (178) and Canada (76) will close. 1,100 people are going to need to find new jobs. Trade creditors owed approximately $8mm are essentially screwed. And there will now be more empty boxes in malls. The ramifications of a liquidating retailer cannot be overstated.

The debtors will seek permission to use cash collateral to conduct, with the assistance of Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC, an orderly liquidation under chapter 11.

  • Jurisdiction: D. of Delaware (Judge )

  • Capital Structure: $6.675mm RCF (Wells Fargo Bank NA), $10mm LOC (PNC Bank NA), $38.7mm subordinated debt (AG, Carlton Cards Limited, Papyrus-Recycled Greetings Canada Ltd.)

  • Professionals:

    • Legal: Landis Rath & Cobb LLP (Adam Landis, Matthew McGuire, Nicolas Jenner)

    • Financial Advisor/CRO: Mackinac Partners LLC (Craig Boucher)

    • Liquidation Consultant: Gordon Brothers Retail Partners LLC & Hilco Merchant Resources LLC

      • Legal: Greenberg Traurig LLP (Jeffrey Wolf, Dennis Meloro)

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

  • Other Parties in Interest:

    • Prepetition Agent: Wells Fargo Bank NA

      • Legal: Riemer & Braunstein LLP (Donald Rothman, Steven Fox, Anthony Stumbo, Paul Bekker) & Womble Bond Dickinson US LLP (Matthew Ward, Morgan Patterson)

    • Subordinated Creditor: American Greetings Corporation

      • Legal: Baker & Hostetler LLP (Michael VanNiel, Adam Fletcher) & Saul Ewing Arnstein & Lehr LLP (John Demmy)

🙈New Chapter 11 Bankruptcy Filing - Avenue Stores LLC🙈

Avenue Stores LLC

August 16, 2019

Retail, retail, retail.

Brutal. Absolutely B.R.U.T.A.L.

Avenue Stores LLC, a speciality women’s plus-size retailer with approximately 2,000 employees across its NJ-based HQ* and 255 leased stores,** is the latest retailer to find its way into bankruptcy court. On Friday, August 16, Avenue Stores LLC filed for chapter 11 bankruptcy in the District of Delaware. Like Dressbarn, another plus-size apparel retailer that’s in the midst of going the way of the dodo, any future iteration of the Avenue “brand” will likely exist only on the interwebs: the company intends to shutter its brick-and-mortar footprint.

What is Avenue? In addition to a select assortment of national brands, Avenue is a seller of (i) mostly “Avenue” private label apparel, (ii) intimates/swimwear and other wares under the “Loralette” brand and (iii) wide-width shoes under the “Cloudwalkers” brand. The company conducts e-commerce via “Avenue.com” and “Loralette.com.” All of this “IP” is the crux of the bankruptcy. More on this below. 

But, first, a digression: when we featured Versa Capital Management LP’s Gregory Segall in a Notice of Appearance segment back in April, we paid short shrift to the challenges of retail. We hadn’t had an investor make an NOA before and so we focused more broadly on the middle market and investing rather than Versa’s foray into retail and its ownership of Avenue Stores LLC. Nevertheless, with the benefit of 20/20 hindsight, we can now see some foreshadowing baked into Mr. Siegel’s answers — in particular, his focus on Avenue’s e-commerce business and the strategic downsizing of the brick-and-mortar footprint. Like many failed retail enterprises before it, the future — both near and long-term — of Avenue Stores is marked by these categorical distinctions. Store sales are approximately 64% of sales with e-commerce at approximately 36% (notably, he cited 33% at the time of the NOA). 

A brand founded in 1987, Avenue has had an up-and-down history. It was spun off out of Limited Brands Inc. and renamed in 1989; it IPO’d in 1992; it was then taken private in 2007. Shortly thereafter, it struggled and filed for bankruptcy in early 2012 and sold as a going-concern to an acquisition entity, Avenue Stores LLC (under a prior name), for “about $32 million.” The sale closed after all of two months in bankruptcy. The holding company that owns 100% of the membership interests in Avenue Stores LLC, the operating company, is 99%-owned by Versa Capital Management. 

Performance for the business has been bad, though the net loss isn’t off the charts like we’ve seen with other recent debtors in chapter 11 cases (or IPO candidates filing S-1s, for that matter). Indeed, the company had negative EBITDA of $886k for the first five months of 2019 on $75.3mm in sales. Nevertheless, the loss was enough for purposes of the debtors’ capital structure. The debtors are party to an asset-backed loan (“ABL”) memorialized by a credit agreement with PNC Bank NA, a lender that, lately, hasn’t been known for suffering fools. The loan is for $45mm with a $6mm first-in-last-out tranche and has a first lien on most of the debtors’ collateral. 

The thing about ABLs is that availability thereunder is subject to what’s called a “borrowing base.” A borrowing base determines how much availability there is out of the overall credit facility. Said another way, the debtors may not always have access to the full facility and therefore can’t just borrow $45mm willy-nilly; they have to comply with certain periodic tests. For instance, the value of the debtors’ inventory and receivables, among other things, must be at a certain level for availability to remain. If the value doesn’t hold up, the banks can close the spigot. If you’re a business with poor sales, slim margins, diminishing asset quality (i.e., apparel inventory), and high cash burn, you’re generally not in very good shape when it comes to these tests. With specs like those, your liquidity is probably already tight. A tightened borrowing base will merely exacerbate the problem.

Lo and behold, PNC declared the debtors in default on July 22; in turn, they imposed default interest on the debtors and initiated daily cash sweeps of the debtors’ bank accounts. Like we said. Suffer. No. Fools.*** The debtors owe $15.2mm on the facility. 

The debtors also have outstanding a subordinated secured note to the tune of $37.8mm. The note pays interest at 15% but is paid in kind.**** The lender on the note is an affiliate of Versa, and per the terms of the note, Versa had continued, at least through April 2019, to fund the business (and letters of credit for the debtors’ benefit) with millions of dollars of capital. 

If this sounds like a hot mess, well, yeah, sure, kudos. You’re clearly paying attention. It’s a dog eat dog world out there. Per the company:

The Debtors operate in an extremely competitive retail environment, facing competition from other specialty-retail stores, including Lane Bryant, Ashley Stewart, and Torrid, and mass-market retailers such as Walmart and Target, many of which are located in close proximity to Avenue stores. In addition to long-standing, traditional competitors within the plussize segment, there has been a recent influx of many other iconic fashion retail brands expanding their range of size offerings into the plus-size range, as well as a proliferation of new entrants targeting this same plus-size fashion market. Due to increased competition, the Debtors have faced significant pressure to maintain market share, which has directly and negatively affected their profitability.

Not that this is anything new. We all know this by now: competition is fierce (Stitch Fix Inc. ($SFIX)Neiman MarcusKohl’s Corporation ($KSS)Macy’s Inc. ($M) and others are now going after it hard), B&M sucks because leases carry higher expenses, store traffic is down, blah blah f*cking blah. The company continues:

…changes in consumer spending habits have necessitated many retailers to increase promotional activities and discounting, leading to thinner profit margins. Onerous brick-and-mortar lease terms and increased operating costs, during a period of downturn in the retail sector and deep discounting, have intensified retail losses.

Interestingly, in the face of surging U.S. retail sales in July,***** the company also notes that “a review of historic customer data indicates that Avenue customers are shopping less frequently than they once were….” They blame this on a “[s]hifts in consumer preferences” and the debtors’ emphasis on “fashion basics.” DING DING DING. No wonder customers are shopping there less frequently. “Basic” is the antithesis of Instagram-based retail these days. Basics can be purchased at any big box retailer; basics are now available via Amazon’s private label. Basics don’t create an influencer and, on the flip side, no influencer will market “basic.” Maybe Avenue could get away with “fashion basics” if it had brand-equity like SUPREME and was perceived as a luxury brand. But far from it. 

Speaking of basic, that pretty much describes the go-forward game plan. We’ll lay it out for you:

  • Engage an independent director to explore strategic alternatives;

  • Engage professionals (Young Conaway is legal and Berkeley Research Group as restructuring advisor and CRO)******;

  • Consider whether there’s going concern value, conclude, like, basically, “nope,” and then hire a consultant******* to solicit bids from liquidators for the B&M piece and an investment banker (Configure Partners) for the IP and e-commerce business; 

  • Issue WARN notices, RIF employees, and start shuttering stores (with intent to file a rejection motion on day 1 of the bankruptcy); 

  • Select a stalking horse bidder for the B&M assets from the pool of interested liquidators (in this case, Gordon Brothers and Hilco Merchant Resources LLC); 

  • Continue to search for a stalking horse bidder for the IP and e-commerce (at filing, there wasn’t one yet); and

  • Secure DIP financing (here, $12mm from PNC) to fund the cases while the B&M liquidation transpires and the banker searches under every rock under an extremely compressed timeframe (by 9/24/19) for that e-commerce/IP buyer.******** 

So we’ll know in the next 60 days what the future is for Avenue.

If there is one.


*Let’s pour one out for NJ. The state’s larger retailers are having a rough go of things lately, see, e.g., Toys R Us. The 2,000 figure is updated to reflect a recent round of layoffs. 

**The debtors are located primarily in shopping malls and shopping centers, doing business in 35 states. They have a distribution center for brick-and-mortar merchandise in Troy, Ohio, and a third-party warehousing facility located in Dallas, Texas, which handles logistics for e-commerce. The Troy center is the subject of a wholly unoriginal PE-backed sale/leaseback transaction. The debtors sold the center for $11.3mm and subsequently entered into a 15-year lease with the buyer, RD Dayton LLC. We mention this because sale/leaseback transactions have been getting hyper-focus these days as a tactic-of-choice by private equity overlords to extract returns out of portfolio companies’ assets with any actual value: real property. If you’re wondering why there is very little asset value left for unsecured creditors in retail cases, sale/leaseback transactions are often a culprit. Here, it’s especially egregious because Avenue doesn’t own ANY of its stores: the entire footprint is leased.

The debtors recently closed the Ohio center and transitioned its inventory to Texas and the company already filed a motion seeking to reject this lease (Docket 15).

***This is not extraordinary. Banks do this all of the time when debtors default. A liquidity starved company is almost always toast (read: bankrupt) once this happens. 

****PIK interest means that the interest accrues in the form of additional notes and is not subject to scheduled cash payments. 

*****Per Reuters:

Retail sales increased 0.7% last month after gaining 0.3% in June, the government said. Economists polled by Reuters had forecast retail sales would rise 0.3% in July. Compared to July last year, retail sales increased 3.4%.

******Something tells us that the likes of FTI, A&M and AlixPartners are happy to cede the liquidating retailer market to Berkeley Research Group. 

*******This is one of the more ingenious things to come out of the restructuring market in recent years. These liquidator agreements are so unintelligible that they might as well be written in Dothraki. Hence the need for an intermediary to break out the secret decoder ring and figure out what is actually being contracted for. We don’t know: if something is so woefully incoherent that it requires a separate consultant just to interpret it, something tells us that obfuscation is a feature not a bug.

********If none is found, the liquidator will also get these assets as part of the agency agreement. 

  • Jurisdiction: D. of Delaware (Judge Silverstein)

  • Capital Structure:

  • Professionals:

    • Legal: Young Conaway Stargatt & Taylor LLP (Robert Brady, Andrew Magaziner, Ashley Jacobs, Allison Mielke, Betsy Feldman)

    • Financial Advisor/CRO: Berkeley Research Group (Robert Duffy)

    • Investment Banker: Configure Partners

    • Liquidators: Gordon Brothers and Hilco Merchant Resources LLC

    • Liquidation Consultant: Malfitano Advisors LLC

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

  • Other Parties in Interest:

    • Pre-petition & DIP Agent: PNC Bank NA

      • Legal: Blank Rome LLP (Regina Stango Kelbon)

    • Subordinated Lender: Versa Capital Management LP

      • Legal: Landis Rath & Cobb LLP (Adam Landis, Matthew McGuire)

⛽️New Chapter 22 Filing - Hilltop Energy LLC⛽️

Hilltop Energy LLC

May 16, 2019

Hilltop Energy LLC, a Dallas-based E&P company with assets in Texas, has filed for bankruptcy in the District of Delaware, its second bankruptcy in four years. The company also filed its wholly-owned subsidiary, Hilltop Asset LLC (together, the “Debtors”).

The company’s predecessor, Cubic Energy Inc., filed for bankruptcy in late 2015, confirmed a prepackaged plan of reorganization in February 2016 and never emerged from bankruptcy (due to an ongoing adversary proceeding involving the chapter 11 debtors’ CEO and prior operator). Nevertheless, pursuant to the confirmed plan, secured noteholders swapped their notes for membership interests in the reorganized Cubic Energy and 14% first priority senior secured takeback paper due 2021. This is how these chapter 22 Debtors came to be owned by Anchorage Capital Group LLC and Corbin Opportunity Fund LP. General unsecured creditors and equity otherwise got wiped out.

This is the company’s capital structure:

  • $5mm Superpriority Notes + $30mm 14% First Priority Senior Secured Notes

  • $$18.5mm Superpriority PIK Notes + First Priority PIK Notes

Why is the company in bankruptcy? Let’s break this down into its component parts:

The Company has been cash flow negative every year since its formation following the chapter 11 cases of Cubic and its affiliates, as the revenue generated by producing wells is not sufficient to cover operating expenses and "workover" expenses, which is maintenance capex to keep the wells flowing.

Ugh. Here we go again. Flashback to the finding in this Delaware order from February 2016:

“The valuation analysis contained in the Disclosure Statement (x) is reasonable, persuasive, credible, and accurate as of the date such analysis or evidence was prepared, presented, or proffered, (y) utilizes reasonable and appropriate methodologies and assumptions and (z) has not been controverted by other evidence.”

Source: Cubic Energy Disclosure Statement

Source: Cubic Energy Disclosure Statement

Ok, sure. The court finding may have been right — “as of the date.” But the assumptions proved to be dramatically askew. Take, for instance, the workover expense line-item. The company indicates an aggregate $600k hit there. What does the company have to say about this now?

Although production declines are expected in the oil and gas industry, the Debtors have faced several unanticipated challenges since emerging from the Cubic Chapter 11 Cases. Since emergence, over 20% of the Debtors’ producing gas wells have stopped producing due to downhole operational and/or technical issues. During this same time period, the Debtors also invested in production uplift projects—including an estimated $4 million on workover and/or recompletion projects for three wells—but the efforts to increase production from those wells were unsuccessful. The effects of these production problems on the Debtors’ revenue have been compounded by the weak natural gas market over the past few years.

That’s quite a miss. But it’s not the only one. Significantly, the company also notes:

The Debtors’ gross production has declined from approximately 10.5 million cubic feet per day ("mmcfd"), in March 2016 to roughly 5.0 mmcfd as of the date hereof. (emphasis added)

That is what it is but it begs the question: out of whose a$$ did the company pull the assumptions behind the company’s chapter 11 projections? Per the Disclosure Statement:

Daily Production of natural gas is forecast based upon anticipated January 2016 daily production of 15,500 mcf per day and calculated on a 1% month-over-month decline curve on existing drilled and producing wells.

So, uh, we’re not math experts, but a 1% decline month-over-month doesn’t get you to 10.5 mcf per day A MERE TWO MONTHS LATER. Which begs the question: were the projections actually accurate and credible “as of the date”? This certainly seems to indicate otherwise.

Consequently, the Debtors saw an impending maturity and were like, “oh sh*t”:

Although the Debtors have been able to service their debt obligations (primarily by paying interest in the form of additional notes), over time, the yield of the Debtors' producing oil and gas wells has been and may continue to be in constant decline.

This is top notch spin. Yeah, sure, we suppose issuing PIK debt is a form of debt “service” but c’mon. Really??

Consequently, the Debtors anticipate that they will generate less revenue and cash flow and, ultimately, be unable to satisfy their debt obligations before or at maturity.

Which is in 2021. So, here we are again: cue up the CHAPTER 22!!

The prepackaged plan will give 100% of the membership interests in the reorganized debtors and $1.47mm of cash to its senior secured noteholder, eliminating the $53mm of debt. The Debtors’ prepetition operator, Rivershore, will get 55% of the equity in the Hilltop Asset.

And we’re all left to wonder whether this is just a chapter 33 waiting in the wings. According to the new projections, that’s entirely up to Rivershore’s willingness to make an equity contribution in 2021:

Source: Chapter 22 Disclosure Statement

Source: Chapter 22 Disclosure Statement

  • Jurisdiction: D of Delaware (Judge Sontchi)

  • Capital Structure: $5mm superpriority senior secured notes, $30mm first priority senior secured notes, PIK notes (Wilmington Trust Company NA).

  • Professionals:

    • Legal: Cole Schotz PC (Norman Pernick, J. Kate Stickles, Katherine Monica Devanney)

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

  • Other Parties in Interest:

    • Senior Secured Noteholder: J.P. Morgan Securities LLC and Lender: Chase Lincoln First Commercial Corporation

      • Legal: Landis Rath & Cobb LLP (Adam Landis, Richard Cobb, Holly Smith)

    • Company Operator: Rivershore Operating LLC

      • Legal: Gray Reed & McGraw LLP (Jason Brookner, Ryan Sears)


⛽️New Chapter 11 Bankruptcy Filing - Edgemarc Energy Holdings LLC⛽️

Edgemarc Energy Holdings LLC

May 15, 2019

Pennsylvania-based Edgemarc Energy Holdings LLC and its eight affiliated debtor affiliates are the latest in a string of oil and gas related bankruptcy filings. Don’t let $73/barrel brent crude and $63/barrel West Texas Intermediate prices full you: this is one of many oil and gas filings on the near term horizon.

Edgemarc is a natural gas E&P company focused on the Appalachian Basin in Ohio and Pennsylvania; it and its affiliates control approximately 45k net acres and have drilled and developed 60 producing wells. Now, everyone knows that, right now, the Permian Basin in West Texas is the shizz and, therefore, hearing about the Appalachian Basin may put some of you on edge. But, here, there was an extraordinary externality that really helped push the company into bankruptcy, other more macro factors notwithstanding.

In September 2018, a pipeline and gathering system under construction by a third-party (ETC Northeast Pipeline LLC) exploded. This pipeline was meant to be the gathering and processing avenue for the debtors’ natural gas. Imagine spending a ton of time milking a farm full of cows only to have the production facility designed for processing and transporting the milk explode right as you were about to bring your product to market. Kinda hard to make money in that scenario, right? The same applies to drilling for natural gas: its hard to generate revenue when you can’t process, transport and sell it. And, unfortunately, repair hasn’t been easy: what was supposed to be a “within weeks” project now looks poised to push well into 2020.

According to the debtors, a subsequent dispute with ETC prevented the debtors from flowing their gas through alternative pipelines. Consequently, the debtors “had no other means of selling gas from the affected wells” and opted to “shut in” their Pennsylvania wells and pause all remaining Pennsylvania operations — a hit to 33% of the company’s production activity. Compounding matters, the debtors and ETC are now embroiled in litigation. 😬

Suffice it to say that any company that suddenly loses the ability to sell 33% of its product will struggle. Per the company:

The Debtors’ inability to sell gas from their Pennsylvania properties had a substantial negative impact on their liquidity and ability to satisfy their funded debt, contractual and other payment obligations.

Ya think?!?!? The debtors have approximately $77mm of funded debt; they also has fixed transportation services agreements pursuant to which they agreed to fixed amounts of transportation capacity with various counterparties that exposes the debtors to financial liability regardless of whether they actually transport nat gas. This is so critical, in fact, that the debtors have already filed motions seeking to reject transportation services agreements with Rover Pipeline LLC, Rockies Express Pipeline LLC, and Texas Gas Transmission LLC. Combined, those three entities constitute 3 of the top 4 creditors of the estate, to the tune of over $6mm. These obligations — along with a downward redetermination of the borrowing base under the debtors’ revolving credit facility — severely constrained the debtors’ ability to operate. The debtors have, therefore, filed for chapter 11 with the hope of finding a buyer; they do not have a stalking horse purchaser lined up (though they do have a commitment for a $107.79mm DIP from their prepetition lenders, of which $30mm is new money). The company generated consolidated net revenue of $116.9mm in fiscal 2018.

Significantly, the company is seeking to reject a “marketing service agreement” and “operational agency agreement” with BP Energy Company ($BP), pursuant to which BP agreed to purchase and receive 100% of the debtors’ nat gas capacity. We gather (see what we did there?) that it’s hard to perform under those agreements when you can’t transport your product: accordingly, BP is listed as the debtors’ largest unsecured creditor at ~$41mm. BP’s rights to setoff and/or recoupment (PETITION Note: Weil Gotshal & Manges LLP just happened to write about these two remedies this week here) will be a major facet of this case: if BP is able to exercise remedies, the debtors ability to operate post-restructuring will be threatened. Per the company:

Docket #17, Rejection Motion.

Docket #17, Rejection Motion.

The privately-held company is owned primarily by affiliates of Goldman Sachs and the Ontario Teachers’ Pension. Absent “holdup value,” we can’t imagine they’ll get any return on their investment given the circumstances.

  • Jurisdiction: D. of Delaware (Judge Shannon)

  • Capital Structure:

  • Professionals:

    • Legal: Davis Polk & Wardwell LLP (Darren Klein, Lara Samet Buchwald, Aryeh Falk, Jonah Peppiatt) & (local) Landis Rath & Cobb (Adam Landis, Kerri Mumford, Kimberly Brown, Holly Smith)

    • Directors: Patrick J. Bartels Jr., Scott Lebovitz, Sebastien Gagnon, Baird Whitehead, Zvi Orvitz, Romeo Leemrijse, Verlyn Holt, Jack Golden, George Dotson, Callum Streeter, Alan Shepard

    • Financial Advisor: Opportune LLC and Dacarba LLC

    • Investment Banker: Evercore Partners

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

  • Other Parties in Interest:

    • Prepetition & DIP Agent: Keybank NA

      • Legal: Hunton Andrews Kurth LLP (Timothy Davidson, Joseph Rovira) & (local) Connolly Gallagher LLP (Jeffrey Wisler)

    • Equityholders: Goldman Sachs & Ontario Teachers’ Pension Plan Board

      • Legal: Wachtell Lipton Rosen & Katz (Richard Mason, Emil Kleinhaus, Michael Cassel) & (local) Drinker Biddle & Reath LLP (Steven Kortanek, Patrick Jackson, Joseph Argentina Jr.)

    • ETC

      • Legal: Akerman LLP (John MItchell, David Parham, Yelena Archiyan) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, TImothy Cairns)

New Chapter 11 Bankruptcy Filing - Pernix Therapeutics/Pernix Sleep Inc.

Pernix Therapeutics/Pernix Sleep Inc.

February 18, 2019

In our January 30th Members’-only briefing entitled “😢Who Will Remember Things Remembered?😢 ,” we included a segment subtitled “Pharma Continues to Show Distress (Long Opioid-Related BK)” in which we discussed how Pernix Therapeutics Holdings Inc. ($PTX) looked like an imminent bankruptcy candidate. We noted how the company had previously staved off bankruptcy thanks to a refinancing transaction with Highbridge Capital Management. That refinancing now looks like a perfectly-executed loan-to-own strategy: Phoenix Top Holdings LLC, an affiliate of Highbridge, will serve as the stalking horse bidder of the company’s assets in exchange for $75.6mm plus the assumption of certain liabilities. Highbridge will also, after a competitive process pitted against other debtholders like Deerfield Management Company LP, provide the Debtors with a $34.1mm DIP facility — of which $15mm is new money, $5mm is an accordian facility, and the rest is a roll-up of the pre-petition ABL.

  • Jurisdiction: D. of Delaware (Judge [ ])

  • Capital Structure: see link above.

  • Professionals:

    • Legal: Davis Polk & Wardwell LLP (Marshall Huebner, Eli Vonnegut, Christopher Robertson) & (local) Landis Rath & Cobb LLP (Adam Landis, Kerri Mumford, Jennifer Cree, Nicolas Jenner)

    • Financial Advisor: Guggenheim Partners LLC (Stuart Erickson)

    • Investment Banker: Ernst & Young LLP

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

  • Other Parties in Interest:

    • Stalking Horse Purchaser: Phoenix Top Holdings LLC (a Highbridge Capital Management affiliate)

    • Large debtholder: Deerfield Management Company LP

      • Legal: Sullivan & Cromwell LLP

    • DIP Agent: Cantor Fitzgerald Securities

      • Legal: Skadden Arps Slate Meagher & Flom LLP (Sarah Ward)

Updated: 2/19/19 at 8:51 CT

New Chapter 11 Bankruptcy Filing - Things Remembered Inc.

Things Remembered Inc.

2/6/19

This has been a rough week for "out-of-court" restructurings in the retail space. On the heals of Charlotte Russe's collapse into bankruptcy after an attempted out-of-court solution, Things Remembered Inc. filed for bankruptcy in the District of Delaware on February 6, 2019. We recently wrote about Things Remembered here. Let's dig in a bit more. 

The 53-year old retailer filed with a stalking horse purchaser, Ensco Properties LLC, in line to purchase, subject to a tight 30-day timeframe, a subset of the company's store footprint and direct-sales business. The company writes in the most Trumpian-fashion imaginable:

"Although stores not acquired will need to close, the going-concern sale wills save hundreds of jobs and potentially many more and provide an improved, and significantly less risky, recovery to stakeholders." What does "potentially many more" mean? Don't they know how many people are employed at the locations being sold as well as corporate support? Seems like a Trumpian ad lib of corresponding inexactitude. But, whatever. 

What caused the need for bankruptcy?

"Like many other retailers, the Company has suffered from adverse macro-trends, as well as certain microeconomic operational challenges. Faced with these challenges, the Company initiated multiple go-forward operational initiatives to increase brick-and-mortar profitability, such as store modernization through elimination of paper forms and the addition of iPads to streamline the personalization and sale process, and by shuttering a number of underperforming locations. The Company also sought to bolster the Debtors’ online-direct sale business, including aggressive marketing to loyal customers to facilitate sales through online channels, attracting new customers via an expanded partnership with Amazon, and increasing service capabilities for the business-to-business customer segment."

Read that paragraph and then tell us that retail management teams (and their expensive advisors) have any real clue how to combat the ails confronting retail. Elimination of paper forms? Ipads? Seriously? Sure, the rest sounds sensible and comes right out of today's standard retail playbook, i.e., shutter stores, bolster online capabilities, leverage Amazon's distribution, tapping into "loyal customers," etc. We're surprised they didn't mention AR/VR, Blockchain, "experiential retail," pop-ups, advertising on scooters, loyalty programs, and all of the other trite retail-isms we've heard ad nauseum (despite no one actually proving whether any or all of those things actually drive revenue). 

The rest of the story is crazy familiar by this point. The "challenging operating environment" confronting brick-and-mortar and mall-based retail, specifically, led to missed sales targets and depressed profitability. Naturally there were operational issues that compounded matters and, attention Lenore Estrada (INSERT LINK), "…vendors have begun to place pressure on the supply chain cost structure by delaying or cancelling shipments until receiving payment." Insert cash on delivery terms here. Because that's what they should do when a customer is mid-flush. 

Anyway, shocker: negative cash flows persisted. Consequently, the company and its professionals commenced a marketing process that landed Enesco as stalking horse bidder. Enesco has committed to acquiring the direct-sales business (which constitutes 26% of all sales in 2018 and includes the e-commerce website, hq, fulfillment and distribution center in Ohio and related assets) and approximately 128 stores (subject to addition or subtraction, but a floor set at 50 store minimum). Store closings of approximately 220 stores and 30 kiosks commenced pre-petition. A joint venture between Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC is leading that effort (which again begs the question as to how Gymboree is the only recent retailer that required the services of four "liquidators"). The purchase price is $17.5mm (subject to post-closing adjustments). $17.5mm is hardly memorable. That said, the company did have negative $4mm EBITDA so, uh, yeeeeeaaaaah. 

$18.7mm '19 revolving credit facility (Cortland Capital Markets Services LLC); $124.9mm 12% '20 TL. 

The capital structure represents the result of an August 30, 2016 out-of-court exchange that, let's be honest here, didn't do much other than incrementally lessen the debt burden, kick the can down the road and get some professionals paid. If this sounds familiar, it's because it's not all that different than Charlotte Russe in those respects. 

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: $mm debt     

  • Company Professionals:

    • Legal: Kirkland & Ellis LLP (Christopher Greco, Derek Hunger, Angela Snell, Spencer Winters, Catherine Jun, Scott Vail, Mark McKane) & (local) Landis Rath & Cobb LLP (Adam Landis, Matthew McGuire, Kimberly Brown, Matthew Pierce)

    • Legal (Canada): Davies Ward Phillips & Vineberg LLP

    • Financial Advisor/CRO: Berkeley Research Group LLC (Robert Duffy, Brett Witherell)

    • Investment Bank: Stifel Nicolaus & Co. Inc. and Miller Buckfire & Co. LLC (James Doak)

    • Liquidators: Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC

      • Legal: Pepper Hamilton LLP (Douglas Herman, Marcy McLaughlin)

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

  • Other Parties in Interest:

    • Stalking Horse Purchaser: Enesco Properties LLC  (Balmoral Funds LLC)

      • Legal: Pachulski Stang Ziehl & Jones LLP (Jeffrey Pomerantz, Maxim Litvak, Joseph Mulvihill)

    • Lender: Cortland Capital Market Services LLC

      • Legal: Weil Gotshal & Manges LLP (David Griffiths, Lisa Lansio) & (local) Richards Layton & Finger PA (Daniel DeFranceschi, Zachary Shapiro)

    • Sponsor: KKR & Co.

    • Official Committee of Unsecured Creditors (Jewelry Concepts Inc., Gravotech Inc., Chu Kwun Kee Metal Manufactory, Brookfield Property REIT, Inc., Simon Property Group LP)

      • Legal: Kelley Drye & Warren LLP (Eric Wilson, Jason Adams, Kristin Elliott, Lauren Schlussel) & (local) Connolly Gallagher (N. Christopher Griffiths, Shaun Michael Kelly)

      • Financial Advisor: Province Inc. (Carol Cabello, Sanjuro Kietlinski, Jorge Gonzalez, Michael Martini)

New Chapter 11 Bankruptcy Filing - Catalina Marketing Corporation

Catalina Marketing Corporation

12/12/18

On September 16 in “🤖Tech Wants to Axe Lawyers🤖,” we wrote about Crossmark Holdings Inc.Acosta Inc., and Catalina Marketing (a unit of Checkout Holding Corp.) and noted that “[a]ll three are in trouble.” Catalina Marketing was the first domino to fall as it filed for bankruptcy in the District of Delaware.

In connection with our review of the three companies, we previously wrote:

Finally, Catalina Marketing finds itself paying restructuring fees these days too. The St. Petersburg Florida company is owned by Berkshire Partners and Hellman & FriedmanCrescent Capital is also a large equity holder. The company’s capital structure includes approximately:

$29mm April ‘19 L+3.5% Revolving Credit Facility

$1.05b April ‘21 L+3.5% Term Loan (~48.4 bid)

$460mm April ‘22 L+6.75% Second Lien Term Loan (~11.6 bid)

$230mm PIK Toggle unsecured notes

Carry the one, add the two, that’s over $5b of debt across all three companies. Gotta love private equity.

So, yes, yet another private equity-backed company is in bankruptcy court. Here, the company appears to have an agreement with 90% of its first lien lenders (Abry Advanced Securities Fund II and III, Alcentra Limited, Bain Capital Credit LP, Carlyle Investment Management LLC, Invesco Senior Secured Management Inc., and OppenheimerFunds Inc.), and 75% of its second lien lenders, the effect of which is purported to be a $1.6b — yes, $1.6 BILLION — debt reduction. An ad hoc group of first lien lenders has agreed to provide $275mm DIP credit facility (of which $125mm is new money) and committed to provide $40mm in exit financing.

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: see above.

  • Company Professionals:

    • Legal: Weil Gotshal & Manges LLP (Gary Holtzer, Ronit Berkovich, Jessica Liou, Kevin Bostel, Alexander Condon, Elizabeth Carens, Michael Godbe, Lisa Lansio, Leonard Yoo, Patrick Steel, David Zubkis, Theodore Tsekerides, Peter Isakoff) & (local) Richards Layton & Finger PA (Mark Collins, Jason Madron)

    • Financial Advisor: FTI Consulting Inc. (Robert Del Genio, Thomas Ackerman)

    • Investment Banker: Centerview Partners

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

  • Other Parties in Interest:

    • DIP Lenders and the Ad Hoc First Lien Lenders

      • Legal: Jones Day (Scott Greenberg, Michael J. Cohen, David Torborg, Stacey Corr-Irvine, Jeremy Evans, C. Lee Wilson) and (local) Pachulski Stang Ziehl & Jones LLP represent the DIP Lenders and the Ad Hoc First Lien Lenders. 

    • Ad Hoc Group of Second Lien Lenders

      • Paul Weiss Rifkind Wharton & Harrison (Brian Hermann, Robert Britton, Daniel Youngblut, Miriam Levi) and (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Andrew Magaziner)

    • Admin Agent of the First Lien Credit Agrement

      • Legal: Davis Polk & Wardwell LLP (Brian Resnick, David Schiff) and Landis Rath & Cobb LLP (Adam Landis, Kerri Mumford)

    • Admin agent under the Second Lien Credit Agreement

      • Legal: Wilmer Cutler Pickering Hale and Dorr (Andrew Goldman, Benjamin Loveland)

    • Ad Hoc Group of the PIK Toggle notes

      • Legal: Debevoise & Plimpton LLP

New Chapter 11 Bankruptcy Filing - LBI Media Inc.

LBI Media Inc.

November 21, 2018

Happy Thanksgiving y’all!! LBI Media Inc. and several affiliates FINALLY filed for bankruptcy today in the District of Delaware after years of questions about its financial health. The company is a privately held minority-owned Spanish-language broadcaster that owns or licenses 27 Spanish-language television and radio stations in the largest US markets; it services the largest media markets in the nation, including Los Angeles, New York City, Chicago, Miami, Houston and Dallas. It is also a victim of disruption.

The company notes that it has “faced the market pressures that have broadly affected U.S. television and radio broadcasters, including the 2008 recession and the diversion of advertising spend by companies to digital media.” Insert Facebook Inc. ($FB) here. That’s not all, though, of course: the company is also hampered by “a substantial debt load and corresponding interest expense obligations” which has stunted LBI’s financial performance, ability to invest and grow, and liquidity.

To address this situation, the company obtained an investment from its now-DIP lender, HPS Investment Partners, in April 2018 for a new first lien credit facility. This provided the company with much needed liquidity and, in turn, briefly extended the company’s runway out of bankruptcy court. The “make-whole” provision attached to the facility, however, became the subject of much controversy and an ad hoc group of second lien noteholders sued in New York state court for an injunction to hinder the transaction. Ultimately, the state court denied the noteholders.

But…but…the noteholders persisted. And this, apparently, left a bitter taste in the mouth’s of company management (and its counsel). Junior Noteholders, meet bus. 🚌🚌 The company notes:

Following the closing of the transaction, LBI sought to continue its growth efforts. However, such efforts were weakened by the Junior Noteholder Group, which continued to litigate against the Company, its founder and CEO, and HPS, the Company’s sole senior lender. The Junior Noteholder Group commenced multiple lawsuits, and threatened several more, distracting management from operations. These actions and threats not only hindered the Debtors’ efforts to improve their operations, but certain actions, including seeking to enjoin the first lien financing, risked pushing LBI into a precipitous freefall bankruptcy.

When coupled with the Debtors’ tightening liquidity (which was exacerbated by the expense of the Junior Noteholder Group litigation), the Junior Noteholder Group’s actions made it substantially more difficult for LBI to achieve the growth it had hoped for, and the Company determined that a comprehensive reorganization may be necessary.

Thereafter, settlement talks with the Junior Noteholders proved unsuccessful and, now, therefore, the company marches into bankruptcy court with a Restructuring Support Agreement (“RSA”) in hand with HPS whereby, subject to a “fiduciary out,” HPS will serve as (prearranged but hardly set in stone) Plan sponsor and swap its $233mm first lien senior secured notes for a majority equity interest in the company. The Plan — which at the time of this writing isn’t on the docket yet — reportedly provides for recoveries for other “supporting” constituencies. What’s that we hear? IT’S A (DEATH) TRAP!?!

(PETITION NOTE: for the uninitiated, a “death trap plan” is an inartful term for when the Debtor proposes and the senior lenders allows a recovery to trickle down the “priority waterfall” to junior lenders but only on account of said junior lenders’ support of, or vote for, the proposed Plan. In essence, its consideration for dispensing with “holdup value.” A “fiduciary out” gives the Debtor flexibility to, despite the RSA, agree to an alternative transaction that bests the HPS transaction without penalty or the need to pay a “break-up fee.”).

The plan provides the company with 75-day period to run a marketing process. While the company will market the company to potential strategic and financial investors, it is also making overtures to the Junior Noteholders to take out HPS’ claim(s) (without needing to satisfy the make-whole) and become the Plan sponsor such that it could walk away with 100% equity in the company.

All of which is to say: don’t let the terms “RSA” and “Plan” fool you. This is far from a consensual case being presented to the Bankruptcy Court Judge wrapped up in a shiny bow. The Junior Noteholders have been fighting the company and HPS for months: there is no reason to suspect that that will stop now merely because the company is a chapter 11 debtor.

  • Jurisdiction: D. of Delaware (Judge Lane)

  • Capital Structure: $233mm 10% ‘23 senior secured notes, $262mm 11.5/13.5 ‘20 PIK toggle second priority secured notes, $27.95mm 11% ‘22 PIK unsecured Intermediate senior Holdco notes (TMI Trust Company), $8.46mm 11% ‘17 unsecured Holdco notes (U.S. Bank NA)    

  • Company Professionals:

    • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Garrett Fail, David J. Cohen) & (local) Richards Layton & Finger PA (Daniel DeFranceschi)

    • Board of Directors: Jose Liberman, Lenard Liberman, Winter Horton, Rockard Delgadillo, Peter Connoy, Neal Goldman

    • Financial Advisor: Alvarez & Marsal North America LLC

    • Investment Banker: Guggenheim Securities LLC

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

  • Other Parties in Interest:

    • Prepetition First Lien & DIP Lender: HPS Investment Partners LLC ($38mm)

      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Paul Basta, Jeffrey Safferstein, Sarah Harnett) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, M. Blake Cleary)

    • First Lien Trustee: Wilmington Savings Fund Society FSB

      • Legal: Morrison & Foerster (Jonathan Levine) & (local) Ashby & Geddes PA (William Bowden)

    • Collateral Trustee for First Lien Notes: Credit Suisse AG

      • Legal: Locke Lorde LLP (Juliane Dziobak)

    • Ad Hoc Group of (Junior) Second Lien Noteholders

      • Legal: Willkie Farr & Gallagher LLP (Rachel Strickland)

    • Ad Hoc Group of Holdco Noteholders

      • Legal: Landis Rath & Cobb LLP (Matthew McGuire)

Updated 11/21/18 at 8:27 CT

🌮New Chapter 11 Filing - RM Holdco LLC (Real Mex)🌮

In April's piece entitled "🍟Casual Dining is a Hot Mess🍟" and then in a follow-up in July creatively and originally entitled "🍟Casual Dining Continues to = a Hot Mess🍟" we noted that...well...casual dining is a hot mess. As of today…A. Spicy. Hot. Mess. Actually.

Late last night, RM Holdco LLC, the owner of a portfolio of 69 company-operated and 11 franchised restaurants and contemporary taquerías including Chevy's Fresh Mex, Siniqual, El Torito Grill, Las Brisas and Alcapulco filed for bankruptcy to effectuate a "363 sale" of substantially all of its assets to an affiliate of one of its pre-petition equityholders, Z Capital Partners LLC for $46.75mm. Interestingly, this filing also marks the third — that’s right, THIRD — chapter 22 filing in the last week following Home Heritage Group Inc. and Brookstone Inc. This is how we previously described a “Chapter 22”:

For the uninitiated, Chapter 22 in bankruptcy doesn’t actually exist. It is a somewhat snarky term to describe companies that have round-tripped back into chapter 11 after a previous stint in bankruptcy court.

Real Mex previously filed for bankruptcy in October 2011 and sold to Z Capital and Tennenbaum Capital Partners LLC in March 2012. At the time of that previous chapter 11 filing, the company operated approximately 128 restaurants.

This time, the signs of an imminent bankruptcy filing were out there shining for all to see as the company has been sending smoke signals for months. Back in May, Bloombergreported that the company hired Piper Jaffray to pursue a sale — including one that could be consummated in bankruptcy. Thereafter, in June, the company filed a WARN Notice with the Department of Labor indicating that it intends to close its Times Square location and lay off 134 employees. Perhaps the signs were in place even earlier when the company hired the former CFO of Wet Seal, a retailer that, itself, found its way into bankruptcy court twice.

The company highlights various macro factors as reasons for this chapter 11 filing:

For the past six (6) years, the Debtors have struggled with certain industry-wide and company-specific pressures that have negatively impacted their operations. Trends in the greater restaurant industry, including increases to minimum wage and commodity costs, have created substantial pressure on the entire sector, as evidenced by the numerous brands that have filed for bankruptcy in recent years, including Ignite Restaurant Group (Brick House and Joe’s Crab Shack), Macaroni Grill, Garden Fresh, Bertucci’s, Crumbs, Cosi, and Buffets.

And:

In addition, increased competition, especially in the form of available, quality Mexican fast casual options, has had a significant impact on traffic in the Debtors’ restaurants.

For anyone keeping track of the “What Caused Bankruptcy” standings, this would be Amazon Inc. ($AMZN) 282,499,209 and (now) Chipotle Inc. ($CMG) 1.

Compounding matters here is (i) the company’s $200+ million in debt, (ii) an expensive workers’ compensation program, (iii) long-term lease burden (it leases all of its locations, the majority if which are in California), (iv) an expensive-yet-unconsummated-growth-strategy (the company attempted but failed to pursue expensive M&A processes with bankrupted Garden Fresh Restaurant Intermediate Holdings, among others), and (v) poor risk management procedures. On the latter point, it seems the company was a wee bit cavalier about not-at-all-serious matters like alcohol awareness, sexual harassment and food handling safety; therefore, it “experienced higher-than-normal litigation and enforcement-related expenses.” Yikes.

Now, back in October 2016 — in the context of Garden Fresh’s chapter 11 filing — we asked “Are Progressives Bankrupting Restaurants?” Therein we highlighted the following:

…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.

Points for PETITION’s bullseye?

Notably, here, the company also underscores that employee costs were a significant contributor to its liquidity constraints. It states:

While struggling with the specific issues discussed above, the Debtors have also suffered from rising employee wage costs, which are particularly high in California, where the vast majority of the Debtors’ restaurants are located. In an attempt to minimize these costs, the Debtors have implemented a scheduling program that has reduced employee hours and has optimized both front-of-house and back-of-house staffing.

Welcome to the party, Mr. Unintended Consequences.

The company seeks to use the bankruptcy process to effectuate the afore-mentioned sale to Z Capital. While the purchase price is a mere fraction of the debt on balance sheet, Z Capital’s proposed stalking horse asset purchase agreement also provides that it will “offer employment to all Company employees at purchased restaurants who are employed at the closing, and may offer employment to other Company employees as well.” In other words, this may be one of those instances where the funds lose on their investments but the (remaining) employees come out relatively okay. Z Capital and Tennenbaum are also providing the company with a $5.5mm DIP credit facility to finance operations during course of the cases.

  • Jurisdiction: D. of Delaware (Judge [ ])

  • Capital Structure: $41.7mm first lien credit facility (Wells Fargo Bank NA), $195.1mm second lien credit facility (Wells Fargo Bank NA), $17.53mm in secured reimbursement obligation loans (from Letters of Credit), $53.62mm unsecured subordinated convertible debt (Z Capital = large holder)    

  • Company Professionals:

    • Legal: Sidley Austin LLP (Vijay Sekhon, Christina Craige, Ariella Thal Simonds) & (local) Young Conaway Stargatt & Taylor LLP (Robert Brady, Elizabeth Justison, Andrew Magaziner, Edmon Morton, Michael Nestor)

    • Financial Advisor: Alvarez & Marsal LLC (Jonathan Tibus)

    • Investment Banker: Piper Jaffray & Co. (Jean Hosty, Terri Stratton, Michael Sutter) 

    • Claims Agent: KCC (*click on company name above for free docket access)

  • Other Parties in Interest:

    • Stalking Horse Bidder & DIP Lender: Z Capital Group LLC (Legal: Cleary Gottlieb Steen & Hamilton LLP & (local) Morris Nichols Arsht & Tunnell LLP)

    • DIP Lender: Tennenbaum Capital Partners (Legal: Schulte Roth & Zabel LLP & (local) Landis Rath & Cobb LLP)

    • DIP Agent: Wells Fargo Bank NA (Thompson & Hine LLP)

New Chapter 11 Filing - Bertucci's Holdings, Inc.

4/16/18

Bertucci's, the well-known Massachusetts-based restaurant chain with 59 casual family dining restaurants has filed for bankruptcy in order to effectuate sale to Right Lane Dough Acquisition, LLC. The company is owned by an affiliate of Levine Leichtman Capital Partners

As we discussed in a recent Members'-only write-up, the casual dining space has been under siege for some time. The company notes,

"With the rise in popularity of quick-casual restaurants and oversaturation of the restaurant industry as a whole, Bertucci’s – and the casual family dining sector in general – has been affected by a prolonged negative operating trend in an ever increasing competitive price environment. Consumers have more options than ever for spending discretionary income, and their preferences continue to shift towards cheaper, faster alternatives. Since 2011, Bertucci’s has experienced a year-over-year decline in sales and revenue."

To combat these trends, the restaurant implemented what seemingly every company selling a product is trying today: experiential something-or-other. It brought back its original executive chef and deployed quarterly food and wine pairings, specialty menus, express lunches and wine specials to draw and cultivate customers. Taking a page out of Domino's book, it also invested in and launched a mobile app. These measures -- along with attempts to streamline operational costs and re-negotiate leases -- were meant to help stop the bleeding. While millions of dollars of costs were taken out and 29 unprofitable leases identified (all of which the company intends to reject immediately), revenue could not support the company's debt and working capital needs. The company defaulted on its credit facility late last year. 

The company has determined that a sale of the remaining business is the best option for maximizing value to its stakeholders. What's that value, you ask? $1.7 million in cash, a credit bid against the DIP credit facility of no less than $4 million (which is the full principal amount of the DIP), and $14 million in new second lien notes. 

  • Jurisdiction: D. of Delaware 
  • Capital Structure: $37.9mm secured 1st lien term loan (CIT Bank), $29.6mm secured 2nd lien term loan (DV, an affiliate of Levine Leichtman Capital Partners), $42.9mm secured holdco first lien term loan (DV)  
  • Company Professionals:
    • Legal: Landis Rath & Cobb LLP (Adam Landis, Kerri Mumford, Kimberly Brown, Jennifer Cree) & (special counsel) Schulte Roth & Zabel LLP (Adam Harris) 
    • Investment Banker: Imperial Capital LLC
    • Real Estate Advisor: Hilco Real Estate LLC
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Stalking Horse Bidder: Right Lane Dough Acquisition, LLC
      • Legal: McDonald Hopkins LLC (David Agay)
    • 1st Lien Agent: CIT Bank
      • Legal: Holland & Knight LLP (Brent McIlwain) & (local) Young Conaway Stargatt & Taylor LLP (Robert Brady)

New Chapter 11 Filing - Peekay Acquisition LLC

Peekay Acquisition LLC

  • 8/10/17 Recap: The Auburn Washington-based specialty retailer of lingerie, sexual health and wellness products with 46 locations has filed for bankruptcy after failing to find an out-of-court buyer for its 5000 SKUs of lubes, $265 vibrators, sex toys and other fun stuff. This place sounds...liberated. And while the sex retail industry is allegedly gaining acceptance - at least according to the Company's own filing - it seems that Peekay was unable or incapable of capitalizing on it given its capital structure (PETITION Note: Agent Provocateur also filed for bankruptcy this year so query whether this really is a brick-and-mortar business or whether people would really rather discreetly order their sex toys on Amazon...our money is on the latter. Prior to the internet, options were a bit more limited, we gather.). Consequently, the company's Term Loan A Lenders have consented to the use of its cash collateral and are credit bidding $31mm of their debt to acquire the company after a long and failed attempt by the Company to explore other out-of-court options (which apparently included an IPO...WTF? What would the ticker be? "SEX"? "DIK"? "ASS"? We could do this all day.). 
  • Jurisdiction: D. of Delaware (Judge Shannon)
  • Capital Structure: $38.2mm first lien term loan ($27mm term loan A + $8.4mm interest/fees, $14.4mm term loan B + $1.98mm interest/fees), $19mm PIK seller notes    
  • Company Professionals:
    • Legal: Landis Rath & Cobb LLP (Adam Landis)
    • Financial Advisor/CRO: Traverse LLC (Albert Altro)
    • Investment Banker: SSG Advisors LLC (J. Scott Victor)
    • Claims Agent: Rust Consulting/Omni Bankruptcy (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Term A Lenders/TLA Acquisition Corp. (Alpine Associates, Alpine Heritage LP, Alpine Heritage II LP, Alpine Heritage Offshore Fund Ltd., Chatham Capital Management IV LLC, The K2 Principal Fund LP, Tor Capital LLC, Twin Haven Special Opportunities Fund IV LP)
      • Legal: Curtis Mallet-Provost Colt & Mosle LLP (Steven Reisman, Shaya Rochester, Joshua Geller) & (local) Richards Layton & Finger PA (Mark Collins, Amanda Steele, Brendan Schlauch)
    • Official Committee of Unsecured Creditors
      • Legal: Cullen and Dykman LLP (S. Jason Teele, Nicole Stefanelli) & (local) Whiteford Taylor & Preston LLP (Christopher Samis, L. Katherine Good, Aaron Stulman, Kevin Shaw)
      • Financial Advisor: The DAK Group (Sheon Karol, Ari Fuchs, Claudia Levine)

Updated 9/5/17

New Chapter 11 Filing - Takata Corporation

Takata Corporation

  • 6/25/17 Recap: The long-awaited chapter 11 (and Japanese Civil Rehabilitation Act) filing of the publicly-traded ($TKJP) airbag manufacturer is finally upon us after the Company endured a massive airbag recall (affecting 124mm automobiles that were deployed with non-desiccated PSAN Inflators, worldwide) and corresponding liability. The Company intends to consummate an agreement in principle with privately-held Key Safety Systems out of Sterling Heights Michigan for a sale of substantially all of the Company's assets for $1.588b. Use of proceeds include satisfying the requirements of a plea agreement with the US Department of Justice, paying administrative costs and expenses of the restructuring (cha-ching Weil, PwC, Lazard & Prime Clerk), and funding unsecured creditor recoveries. The Company has secured a $227mm revolving credit facility from Sumitomo Mitsui Banking Corporation to fund the cases; per its press release, it has also negotiated with its Japanese original equipment manufacturers ("OEMs") for valuable accommodations and liquidity enhancements and continues to negotiate with OEMs elsewhere. Every car manufacturer under the sun is listed as an "undetermined" general unsecured creditor including the likes of Toyota, FordTesla, Fisker, Ferrari, and, of course, the majors. 
  • Jurisdiction: D. of Delaware
  • Company Professionals:
    • Legal: Weil Gotshal & Manges LLP (Marcia Goldstein, Ronit Berkovich, Matthew Goren, Jessica Diab, Lauren Tauro) & (local) Richards Layton & Finger PA (Mark Collins, Michael Merchant, Amanda Steele, Brett Haywood)
    • Financial Advisor: PriceWaterhouseCoopers LLP (Bill Fasel, Stephen Hammond)
    • Investment Banker: Lazard Freres & Co. LLC
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Daimler Trucks North America LLC 
      • Legal: White & Case LLP (Thomas Lauria, Michael Shepard, Richard Graham)
    • General Motors Holdings LLC
      • Legal: O'Melveny & Meyers LLP (George Davis, Daniel Shamah, Andrew Sorkin, Gary Svirsky)
    • General Motors LLC
      • Legal: Honigman Miller Schwartz & Cohn LLP (Joseph Sgroi, Chauncey C. Mayfield II, Scott Kitai)
    • Key Safety Systems Inc.
      • Legal: Skadden Arps Slate Meagher & Flom LLP (Ron Meisler, Felicia Gerber Perlman, Christopher Dressel, Christine Okike, Esther Adzhiashvili)
    • Honda North America Inc.
      • Legal: Sidley Austin LLP (Michael Andolina, Jessica Knowles Boelter) & (local) Cole Schotz PC (Norman Pernick, J. Kate Stickles)
    • FCA US LLC
      • Legal: Sullivan & Cromwell LLP (Brian Glueckstein, Andrew Dietderich, Alexa Kranzley)
    • Ford Motor Company
      • Legal: McGuireWoods LLP (Mark Freedlander, Frank Guadagnino, John Thompson) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
    • Jaguar Land Rover North America LLC
      • Legal: Mayer Brown LLP (Richard Ziegler)
    • Subaru of America Inc.
      • Legal: Kramer Levin Naftalis & Frankel LLP (Adam Rogoff, Anupama Yerramalli, Philip Bentley, David Braun)
    • Toyota Motor Corporation
      • Legal: Frost Brown Todd LLC (Robert Sartin, Patrica Kirkwood Burgess, Ronald Gold) & (local) Landis Rath & Cobb LLP (Adam Landis, Kimberly Brown, Travis Ferguson)
    • BMW Manufacturing Co LLC
      • Legal: Norton Rose Fulbright US LLP (David Rosenzweig, Michael Parker) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
    • Nissan Motor Corporation
      • Legal: Jones Day (Pedro Jimenez)
    • Mitsubishi Motors North America Inc.
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Daniel Youngblut, Kevin O'Neill)
    • Tesla Inc.
      • Legal: Irell & Manella LLP (Jeffrey Reisner, Michael Strub, Kerri Lyman) & (local) Reed Smith LLP (Kurt Gwynne, Emily Devan)
    • Volkswagen Group of America, Inc.
      • Legal: Davis Polk & Wardwell LLP (Timothy Graulich, Elliott Moskowitz, Darren Klein)
    • Volvo Group North America LLC
      • Legal: Baker Hostetler LLP (Eric Goodman) & (local) Morris Nichols
    • Official Committee of Unsecured Creditors
      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Tyson Lomazow, Abhilash Raval, Bradley Scott Friedman) & (local) Whiteford Taylor & Preston LLP (Christopher Samis, L. Katherine Good, Kevin Shaw)
    • Committee of Unsecured Tort Claimant Creditors
      • Legal: Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, James Stang)

Updated 7/11/17 6 pm (CT)

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 - Halt Medical Inc.

Halt Medical Inc.

  • 4/12/17 Recap: Brentwood California medical device company filed for bankruptcy because Ares Capital HALTed funding (#dadjoke). The company owns an FDA-cleared proprietary and patented product that uses radiofrequency ablation to destroy uterine fibroids. Yeah, we have no idea what that means either but the use case is bada$$: it is a minimally-intrusive alternative to hysterectomies and myomectomies. The company has lined up a $4.16mm DIP credit facility to fund the cases while it seeks an asset sale to Murray Enterprises LLC as stalking horse bidder. 
  • Jurisdiction: D. of Delaware 
  • Capital Structure: $155.6mm debt (Ares Capital Ltd., as successor to American Capital Ltd.)    
  • Company Professionals:
    • Legal: Drinker Biddle & Reath LLP (Steven Kortanek, Patrick Jackson, Joseph Argentina Jr.) & (Special corporate counsel) Cooley LLP (Robert Eisenbach)
    • Investment Banker: Canaccord Genuity Group Inc. (Geoffrey Richards)
    • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
    • Other Parties in Interest:
      • Buyer: Acessa AssetCo LLC (affiliate of Murray Enterprises LLC)
        • Legal: Smith Gambrell & Russell LLP (Brian Hall) & Landis Rath & Cobb LLP (Adam Landis, Kerri Muford)

Updated 4/22/17 (note: no UCC appointed)

New Filing - American Gilsonite Company

 American Gilsonite Company

  • 10/25/16 Recap: "Gilsonite" miner, processor, and oilfield services provider files prepackaged chapter 11 to effectuate debt-for-equity deal with 2nd lien noteholders and sponsor, Palladium Partners.  
  • Jurisdiction: D. of Delaware
  • Capital Structure: $20mm RCF (Key Bank), $270mm '17 11.5% 2nd lien notes (Wilmington Trust)    
  • Company Professionals:
    • Legal: Weil (Matthew Barr, Sunny Singh, Jessica Diab, Prashant Rai) & (local) Richards Layton (Mark Collins)
    • Financial Advisor: FTI (Alan Boyko)
    • Investment Banker: Evercore (Stephen Hannon)
    • Claims Agent: Epiq Bankruptcy Solutions LLP (*click on company name for docket)
  • Other Parties in Interest:
    • Ad Hoc Noteholder and DIP Lender Group: Varde Partners, Axar Capital Management, PennantPark Investment Advisers, River Birch Capital, Tinicum Incorporated
      • Legal: Stroock Stroock & Lavan (Kris Hansen, Erez Gilad, Matt Garofalo) & (local) Young Conaway (Robert Poppiti Jr., Matthew Lunn)
      • Financial Advisor: Houlihan
    • Wilmington Trust
      • Legal: Pryor Cashman LLP (Seth Lieberman, Patrick Sibley, Matthew Silverman) & (local) Reed Smith LLP (Kurt Gwynne, Emily Devan)
    • Palladium Equity Partners
      • Legal: Simpson Thatcher (Elisha Graff, Ariana Watson Evarts) & (local) Landis Rath & Cobb (Richard Cobb)

Updated 12/30/16