⛽️ New Chapter 11 Bankruptcy Filing - Templar Energy LLC ⛽️

Templar Energy LLC

May 31, 2020

Templar Energy LLC (and six affiliates, the “debtors”), an Oklahoma City-based independent oil and gas exploration and production company that operates primarily in the Greater Anadarko Basin of Western Oklahoma and the Texas Panhandle, filed a prepackaged plan of liquidation early Monday morning — the culmination of a multi-year effort to stave off the inevitable.

A quick flashback. Four years ago oil and gas companies were collapsing into bankruptcy left and right. After oil and gas prices fell hard, the oil and gas tide rolled out and left a lot of investors stranded naked on the beach. Most funds were of the view that this was just a hiccup. One fund after another raised billions after billions of dollars thinking that energy was “where it’s at.” We now know how off-kilter that thesis was.

Some companies back then were luckier than others. Thanks in large part to its relatively simple and highly concentrated capital structure and a clear demarcation of value based on prevailing commodity prices of the time, in September 2016, Templar Energy was able to consummate an out-of-court restructuring that extinguished $1.45b of second lien debt. Repeat: $1.45 BILLION of second lien debt — a tremendous amount of value destruction a mere four years after the company’s formation. Of course, as with all things there are nuances here. “Value destruction” is a relative phrase that applies to the par holders of the debt when originally issued. Certain second lien lenders who participated in the out-of-court restructuring may very well have purchased the paper for cents on the dollar once the par guys had to pull the ripcord. Destruction there, therefore, is a function of price. There’s no way to know (from publicly available information) whether any of the original holders of second lien paper came out ahead upon receiving $133mm in cash and 45% of the equity in exchange for their second lien paper. It’s certainly possible that some did.

It’s also highly probable that some didn’t. Take Ares Management LLC, Bain Capital and Paulson & Co. Inc. for instance; they each participated in a rights offering for participating preferred equity in the company in exchange for $220mm dumped into this turd (plus $145mm placed by legacy equity holders). Given that the RBL IS NOW IMPAIRED here, clearly that equity check hasn’t borne fruit. It was also used to pay the aforementioned $133mm of cash recovery so … suffice it to say … this does not seem like one that the aforementioned funds will be referencing in future LP-oriented marketing materials.

Emanating out of that ‘16 transaction is the debtors’ current $600mm RBL. This time around, it is the fulcrum security. The debtors note, “Critically the claims under the RBL Facility are deeply impaired.” And the RBL lenders have no intention of owning the assets — predominantly leases with various oil and gas mineral owners covering non-exclusive working interests in approximately 2,165 oil and gas wells over approximately 273,400 continuous acres of property. Let’s be clear here: first lien lenders generally aren’t in the business of horizontal drilling and hydraulic fracking. Of course, right now, the debtors aren’t really in the business of horizontal drilling and hydraulic fracking. At least technically speaking. Given where oil and gas prices are — thanks Putin/MBS on the supply side, COVID-19 on the demand side — the debtors aren’t even conducting any drilling. Typically they operate anywhere up to 13 rigs at a time. All of which is to say that the lenders’ position explains why this is a sale + plan of liquidation case rather than a second debt-for-equity play.*

To aid the debtors’ attempts to continue pre-petition sale efforts post-petition, certain of the RBL Lenders have committed to a $37.5mm DIP (with a 0.5-to-1 $12.5mm rollup). Pursuant to a restructuring support agreement, the RBL lenders have agreed to receive their pro rata share of any net sale proceeds and all remaining cash held by the debtors’ estates as of the plan effective date minus (i) cash needed to repay the DIP, (ii) wind down funds, and (iii) monies placed into a professional fee escrow. Royalty owners, materialman and mechanics’ lienholders will be paid in full. General unsecured claimants and equity will get wiped.

*We should note — to hammer home the point — that one of the events that hammered the debtors’ liquidity position was the RBL lenders’ April 1, 2019 redetermination down of the RBL borrowing base to $415mm. This regularly scheduled redetermination analysis created an immediate $22mm “deficiency payment” liability for the debtors as it had $437mm borrowed at the time. The debtors stopped making those payments in November 2019. They’ve been in a state of forbearance with the RBL lenders ever since.

$37.5mm DIP with $12.5 rollup

• Jurisdiction: D. of Delaware (Judge )

• Capital Structure:

• Professionals:

  • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Paul Basta, Robert Britton, Sarah Harnett, Teresa Li) & Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Jaime Luton Chapman, Tara Pakrouh)

  • Financial Advisor: Alvarez & Marsal LLC

  • Investment Banker: Guggenheim Securities LLC (Morgan Suckow)

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

• Other Parties in Interest:

  • DIP Agent ($37.5mm): Bank of America NA

  • Consenting RBL Lenders

    • Legal: Morgan Lewis & Bockius LLP (Amy Kyle, Andrew Gallo) & Richards Layton & Finger PA

    • Financial Advisor: RPA Advisors LLC

  • Large Class A equityholders: Ares Management LLC, Paulson & Co. Inc., Bain Capital, Lord Abbett, Archview Investment, Bank of America, Seix Advisors, Bardin Hill/Halcyon Loan Invest Management, Oppenheimer Funds

New Chapter 11 Bankruptcy Filing - Centric Brands Inc. ($CTRC)

Centric Brands Inc.

May 18, 2020

New York-based Centric Brands Inc. ($CTRC)(f/k/a Differential Brands Group Inc., Joe’s Jeans Inc., and Innovo Group Inc.) and 34 affiliates (the “debtors”) filed for chapter 11 bankruptcy earlier this week after COVID-19 ripped through the economy and disrupted retail operations all over the country. You’ve likely never heard of Centric Brands Inc. (unless you happened to have a soft spot for esoteric brand stocks). But there is a very good chance that you’ve purchased one of its licensed products or one of its privately-owned brands. They’re ubiquitous. And they’re ubiquitous because the company’s reach has expanded aggressively over the years.

The company started in 1987, acquired Joe’s Jeans in 2007, acquired Hudson Brand in 2013, merged with Robert Graham in 2015, acquired SWIMS in 2016 and then acquired Global Brands Group Holding Limited in 2018 for $1.2b. The majority of the company’s $1.7b of funded debt emanates out of that last transaction. More on this in a moment.

In addition to the aforementioned private brands, the company designs, produces, merchandises, manages and markets approximately 100 brands pursuant to various licenses. These brands include AllSaints, Calvin Klein, Disney, Jessica Simpson, Kenneth Cole, Tommy Hilfiger and many more. The company sells its licensed and private-brands in one of three categories: kids, accessories, and men’s and women’s apparel. The former two grew from ‘18 to ‘19. The latter…well…not so much. All of the company’s product is made in Asia or Mexico.

For distribution, the company sells wholesale to, among others, bigbox retailers like Walmart Inc. ($WMT) and Target Inc. ($TGT), to department stores like Macy’s Inc. ($M), Kohls Corporation ($KSS) and J.C. Penney Corporation ($JCPQ), to off-price retailers like TJX Companies ($TJX) and Ross Stores ($ROST), and on Amazon Inc. ($AMZN). It also has brick-and-mortar stores for its private label brands Robert Graham (33 stores) and SWIMS (one store) as well as certain licensed brands like BCBG (46 stores), Joe’s Jeans (13), and Herve Leger (one). Finally, the company operates partner shop-in-shops for BCBG with big department stores.

Bankruptcy aficionados are familiar with the BCBG brand. BCBG filed for bankruptcy itself back in March 2017. Marquee Brands LLC later acquired the entire portfolio of brands from BCBG Max Azria Global Holdings — including BCBGMAXAZRIA, BCBGeneration and Herve Leger — for $108mm later that year. Marquee’s licensing partner? Global Brands Group Holding Limited, which, as noted above, is now part of Centric Brands. Through license agreements entered into back in July 2017, Centric has the right to manufacture and distribute certain licensed BCBG product; it also has the right to use certain intellectual property for retail and e-commerce sales.

Back in April, BCBG and the company started getting after it. BCBG was pissed because the company owed it $3mm in royalty payments. After the company continued not to pay, BCBG terminated the agreement. Now the parties have a settlement. The company is rejecting the licensing agreements, agreeing to let BCBG setoff $3mm against its pre-petition claim (which is capped at $20mm and pledged in support of the plan), and agreeing to pay ongoing royalties on the goods to be supplied to wholesale partners. Marquee Brands LLC is taking the licenses back and intends to add BCBG to its e-commerce portfolio.*

Soooooo…what happens to those brick-and-mortar locations we mentioned earlier? The debtors filed a motion already seeking to reject nonresidential real property leases effective as of the petition date. The debtors seek approval to reject seven Robert Graham leases, 42 BCBG leases and one Joe’s Jeans lease. Of those rejected leases 25 are in locations managed by Simon Property Group ($SPG). But, sure, the “A” malls are juuuuuuuust fine folks. Nothing to see here.

Well, except the capital structure. It’s so large it’s kinda hard to miss. The company has:

• $163.9mm RCF,

• $20mm ‘20 term loan bridge,

• $631.9mm ‘23 first lien term loan (HPS Investment Partners, Ares Capital Corporation)

• $719.8mm second lien term loan (GSO Capital Partners LP and Blackstone Tactical Opportunities Fund),

• $200.3mm securitization facility, and

• $28.7mm unsecured convertible notes plus $10mm modified convertible notes.

Luckily the holdings are concentrated among the above-noted funds. Accordingly, HPS, Ares and Blackstone will end up lenders in an exit first lien term loan and own the reorganized equity on the backend of this restructuring. HPS and Ares will own 30% of the equity and Blackstone will own 70% (subject to dilution). Your kids’ favorite licensed casualwear powered by private equity!**

*It is unclear what Marquee Brands LLC will do with the BCBG wholesale business. This article suggests they’ll do something and then goes on to emphasize only the e-commerce approach.

**The case will be powered by a $435mm DIP credit facility of which $275mm will be provided by the revolving lenders (and will rollup the pre-petition facility) and roll into an exit facility. The remaining $160mm will be a DIP term loan provided by Blackstone which will role into the exit first lien term loan with the first lien term lenders. The debtors will also extend its existing Securitization Facility.

• Jurisdiction: S.D. of New York (Judge )

• Capital Structure: $163.9mm RCF, $20mm ‘20 term loan bridge, $631.9mm ‘23 first lien term loan, $719.8mm second lien term loan, $200.3mm securitization facility, $28.7mm unsecured convertible notes, $10mm modified convertible notes

• Professionals:

  • Legal: Ropes & Gray LLP (Gregg Galardi, Christine Pirro Schwarzman, Daniel Egan, Emily Kehoe)

  • Financial Advisor/CRO: Alvarez & Marsal LLC (Joseph Sciametta)

  • Investment Banker: PJT Partners LP (James Baird)

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

• Other Parties in Interest:

  • Prepetition First Lien Revolver & DIP Agent ($275mm): ACF Finco I LP

    • Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Laura McCarthy)

  • First Lien Lenders: HPS Investment Partners, Ares Capital Corporation

    • Legal: Latham & Watkins LLP (Richard Levy, James Ktsanes)

  • Preptition Second Lien TL & DIP TL Agent ($160mm): US Bank NA

    • Legal: Nixon Peabody LLP (Catherine Ng)

  • Second Lien Lenders and DIP TL Lenders: GSO Capital Partners LP and Blackstone Tactical Opportunities Fund

    • Legal: Akin Gump Strauss Hauer & Feld LLP (Ira Dizengoff, Philip Dublin, Brad Kahn)

  • Receivables Purchase Agreement Agent

    • Legal: Mayer Brown LLP (Brian Trust)

  • Major equityholders: Cede & Co., GSO Capital Opportunities Fund III LP, GSO CST III Holdco LP, TCP Denim LLC, Tengram Capital Partners Fund II LP, Ares Capital Corporation

New Chapter 11 Bankruptcy & CCAA Filing - Pier 1 Imports Inc. ($PIR)

Pier 1 Imports Inc.

February 17, 2020

Fort Worth, Texas-based Pier 1 Imports Inc. and seven affiliates (the “debtors”) have fulfilled their obvious destiny and finally fallen into bankruptcy court in the Eastern District of Virginia. Contemporaneously, the debtors filed a CCAA proceeding in Canada to effectuate the closure of all Canadian operations. Color us pessimistic but we’re not feeling so great about the debtors’ go-forward chances in the US either.

We’ve covered the debtors ad nauseum in previous editions of PETITION. Here — supported by an ode to “Anchorman” — we described the debtors’ recent HORRIFIC financial performance and noted how a bankruptcy would be sure to confuse a peanut gallery accustomed to spouting regular (and sometimes inaccurate) hot takes about how private equity is killing retail.* We wrote:

The reaction to this surely-imminent bankruptcy (and, if we had a casino near us, liquidation) is going to be interesting. It is sure to flummox the “Private Equity is Killing Retail” camp because, well, it’s not PE-backed. Similarly it’ll confuse the “You Shouldn’t Put So Much Debt on Retail” cohort because, well, there really isn’t that much debt on the company’s balance sheet. Chuckling in the corner will be “The US is Over-Stored” team … And “The Millennials Aren’t Buying Homes and Furnishing Them With Chinese-Made Tchotchkes” gang (thanks a ton, Marie Kondo) … And the “Management Has Blown Chunks, The Assortment Sucks” bunch … And, finally, “The Amazon Effect” squad….

Over the weekend, The New York Times ran a piece from Austan Goolsbee, an economics professor at the University of Chicago’s Booth School of Business, that — no disrespect to the professor — says many of the same things PETITION has been saying for a LONG LONG time. That is, “The Amazon Effect” is overstated. He argues that “three major economic forces have had an even bigger impact on brick-and-mortar retail than the internet has”: (1) big box stores, (2) income inequality, and (3) the preference shift away from goods towards services. It’s fair to say that these three forces affected the debtors in a big big way.**

Who’s actually surprised #Pier1 is closing when they charge like $100 for a decorative pillow? $60 for a vanilla candle that’s also at Walmart for $5? PASS. People still shopping at a Pier 1 clearly haven’t heard of Home Goods or TJ Maxx

— Nicole (@Choley2007) February 17, 2020

Surely, e-commerce has a lot to do with it too. As one PETITION advisor said about the debtors’ wares yesterday:

“You can just order that sh*t online. You don’t need to try it on.”

It’s a fair point.

Another fair point that Mr. Goolsbee omits from his analysis is the role of management. It’s safe to say that the US is suffering from an epidemic of retail ineptitude.

Also management sucks

— TheHappySoul Goddess (@Yahiness11) February 17, 2020

And like the coronavirus, it keeps spreading from one retailer to the next.***

This has to be one of the most under-covered aspects of the #retailapocalypse: just a revolving door of execs moving from one troubled retailer to the next and everyone hoping and praying that that person can suddenly conjure up an answer. $ASNA $FRANhttps://t.co/5lmoMJFEAE

— 💥PETITION💥 (@petition) February 14, 2020

But we digress.

The business has clearly suffered:

From fiscal years 2014 to 2018, the company’s net income dropped from $108 million to about $11.6 million and in fiscal year 2019 Pier 1 experienced a $198.8 million loss.

So, what’s the upshot here? The debtors announced a plan support agreement and intend to use the chapter 11 bankruptcy process to (a) continue to shutter the previously announced ~450 stores (read: get ready for a lot of lease rejections) and (b) pursue a sale pursuant to a chapter 11 plan of reorganization of what remains of the debtors’ business. Frankly, this was masterful messaging: the announcement relating to a plan support agreement and potential plan of…wait for it…”reorganization”(!) head-faked the entire market into thinking this thing might actually be salvageable. That’s where the fine print comes in.

The debtors have dubbed this an “all weather” chapter 11 plan because it provides for either a sale or the equitization of the term loan at the term lenders’ election. This begs the question: will Pathlight Capital LP want to own this thing?🤔 This bit was eye-catching:

“To be clear, the term loan lenders have made no decision at this point, but instead support the process as outlined in the plan support agreement.”

Yeah, we bet they do. Qualified bids will be due on or before March 23 and the lenders have until March 27 to make their election. Which way will the winds blow?

Note that “the process” isn’t currently supported by a stalking horse purchaser. 🤔

Note further that the debtors are required under the DIP to distribute informational packages and solicitations for sale of the debtors’ assets on a liquidation basis to liquidators by March 9.🤔 🤔

It seems reasonably clear from the Pier 1 bankruptcy papers that none of the Debtors, the professionals nor the lenders expect this turd to actually find a buyer outside of the liquidator type.

— 💥PETITION💥 (@petition) February 18, 2020

It looks like we’ll know the answer very soon.

To finance the cases, the debtors obtained a committed for a $256mm DIP credit facility. The facility includes a $200mm revolving loan commitment and a $15mm first in last out term loan, each provided 50/50 by Bank of America N.A. and Wells Fargo National Association, and a $41.2mm term loan from Pathlight. This was the pre-petition capital structure:

The DIP effectively just rolls up much of the pre-petition debt. There is no new money. The messaging here, then, is also critical: the DIP facility ought to provide customers, vendors and employees comfort that there is access to liquidity if needed. Cash collateral usage, however, is the main driver here: the debtors believe that operating cash flow will suffice to handle working capital needs and bankruptcy expenses.

To summarize, we have another distressed retailer that is scratching and clawing to live. They’ve taken all of the usual steps to extend runway: cost cuts, footprint minimalization, new management. Bankruptcy is a last-ditch effort to survive: the debtors take pains to try and convince some prospective buyer that there is life left in the debtors’ brick-and-mortar business:

The remaining go-forward stores achieved superior sales and customer metrics in the last twelve months compared to the closing stores, including approximately 15% greater sales per square foot on average.

And if that doesn’t do it, there’s the argument that there’s an e-commerce play here. The debtors similarly go to great lengths to state OVER AND OVER AGAIN that e-commerce represents 27% of total sales. They’re practically screaming, “Look at me, look at me! We can be interesting to you [Insert Authentic Brands Group here]!”

Pathlight is sure as hell hoping someone bites.

---

*Kirkland & Ellis…uh…we mean, the “debtors” appear to agree, stating, in reference to private equity, that “[t]oo many pundits have sought to point in too many wrong directions,” citing pieces in RetailDive and The Wall Street Journal. THAT ladies and gentlemen, is client advocacy!

**It’s also fair to say that Professor Goolsbee does his readers a disservice by neglecting the overall picture which, no doubt, also includes over-expansion, too much retail per capita, private equity and over-levered balance sheets. These cowboys are closing 400+ stores for a reason.

Of course, long time PETITION readers know that we’ve been arguing for a LOOOOONG time that the “perfect storm” hitting retail is a confluence of factors that cannot just be lazily summarized as “private equity” or “The Amazon Effect.” It’s good to see that the folks at Kirkland & Ellis agree:

In the face of the longest bull run in U.S. history (close to 3,000 days and counting), a myriad of factors have collectively changed the ways in which consumers and retailers interact—creating for retailers what is tantamount to a perfect storm—and directly contributing to the struggles retailers face in a shifting marketplace.5

Then it’s as if they lifted this footnote straight out of previous PETITION briefings:

***Not to cast aspersions, but the resume of the current PIR CEO is…uh…interesting: prior experience includes FullBeauty Brands, HHGregg, and Marsh Supermarkets. Any of those names sound familiar to bankruptcy professionals?

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• Jurisdiction: E.D. of Virginia (Judge Huennekens)

• Capital Structure: $140mm RCF + $47.3mm LOC, $189mm Term Loan (Wilmington Savings Fund Society FSB), $9.9mm industrial revenue bonds

• Professionals:

  • Legal: Kirkland & Ellis LLP (Joshua Sussberg, Emily Geier, AnnElyse Scarlett Gains, Joshua Altman) & Kutak Rock LLP (Michael Condyles, Peter Barrett, Jeremy Williams, Brian Richardson)

  • Canadian Legal: Osler Hoskin & Harcourt LLP

  • Independent Directors: Steven Panagos & Pamela Corrie

  • Financial Advisor: AlixPartners LLP (Holly Etlin)

  • Investment Banker: Guggenheim Securities LLC (Durc Savini)

  • Real Estate Advisor: A&G Realty Partners LLC

  • Liquidation Consultant: Gordon Brothers Retail Partners LLC

    • Legal: Riemer & Braunstein LLP (Steven Fox, Anthony Stumbo)

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

• Other Parties in Interest:

  • DIP ABL Agent: Bank of America NA

    • Legal: Morgan, Lewis & Bockius LLP, Hunton Andrews Kurth LLP, and Norton Rose Fulbright Canada LLP

  • DIP ABL Term Agent: Pathlight Capital LP

    • Legal: Choate Hall & Stewart LLP (John Ventola, Jonathan Marshall) and Troutman Sanders LLP (Andrew Buxbaum)

  • Ad Hoc Term Lender Group: Eaton Vance Management, Insight North America LLC, Marathon Asset Management LP, MJX Asset Management LLC, Whitebox Advisors LLC, ZAIS Group LLP

    • Legal: Brown Rudnick LLP (Robert Startk, Uchechi Egeonuigwe, Steven Pohl, Sharon Dwoskin) & Whiteford Taylor & Preston LLP (Christopher Jones, Vernon Inge, Corey Booker)

    • Financial Advisor: FTI Consulting Inc.

  • Large Equityholders: Charles Schwab Investment Management, Dimensional Fund Advisors LLP

  • Official Committee of Unsecured Creditors: Bhati & Company, Synergy Home Furnishings LLC, United Parcel Services Inc., Brixmor Operating Partnership LP, Brookfield Property REIT Inc.

    • Legal: Foley & Lardner LLP (Erika Morabito, Brittany Nelson, Timothy Mohan) & Cole Schotz PC (Seth Van Aalten)

    • Financial Advisor: Province Inc. (Paul Huygens, Sanjuro Kietlinski, Walter Bowser, Paul Navid, Shane Payne, Courtney Clement)

🍸New Chapter 11 Bankruptcy Filing - BL Restaurants Holding LLC (Bar Louie)🍸

BL Restaurants Holding LLC

January 27, 2020

Another day, another Sun Capital Partners’ portfolio company* in bankruptcy. Texas-based BL Restaurants Holding LLC — known to most as Bar Louie — and 3 affiliated entities filed for bankruptcy in the District of Delaware. Bar Louie is a gastrobar concept that operates 110 owned locations plus 24 franchises across 26 states and the District of Columbia. In 2019, it did $252mm of sales, down 3.7% YOY.

We hate to feed into the private-equity-destroys-everything-it-touches-trope but, well, judge for yourself…

The company notes:

Over the past several years, the opening of new locations was the primary driver for sales and profit growth for the Company. This growth was partially funded through new debt, but also utilized cash flow from operations, which ultimately over time restricted liquidity otherwise needed for store refreshes and equipment maintenance and modernization, resulting in inconsistent delivery of the brand promise across the system. This inconsistent brand experience, coupled with increased competition and the general decline in customer traffic visiting traditional shopping locations and malls, resulted in less traffic at the Company’s locations proximate to shopping locations and malls and contributed to sales falling short of forecast. These customer declines were also driven by major changes in consumer behavior, including the general national trend away from casual dining. The combination of these factors had a particularly major impact on a significant segment of the Company’s footprint.

Indeed, all of that growth — coupled with disruptive trends confronting both malls and casual dining — took its toll. Indeed, 38 locations, in particular, really saddled the company. Apparently it’s a bad sign when a third of your footprint has negative same store sale comps of 10.9%. 😬 This brought down the rest of the enterprise (which “only experienced a 1.4% SSS decline.”). Only. The debtors closed the aforementioned 38 locations pre-filing.

What of the debt? The company has $87mm of funded debt, $8mm of trade debt and approximately $6mm of other unsecured debt excluding lease termination claims. Things aren’t looking so great for the trade. The pre-petition lenders have agreed to place a $22mm DIP.

So now the debtors will use that DIP to give themselves time to attempt a sale in bankruptcy. The debtors’ first lien secured lenders and the pre-petition first lien secured agent will serve as a stalking horse via a credit bid. They are owed approximately $56.4mm. Pursuant to the sale motion filed with the court, they seek a 3% breakup fee in connection with the agreement to be the stalking horse which, if you asked us, seems a bit ridiculous under the circumstances. Why do they need a breakup fee at all when they’re trying to shed this turd? Do they really want to own this business? A multi-month pre-petition marketing campaign would seem to indicate otherwise. This reeks of greed and ought to spark an objection from creditors who will be hoping there’s some buyer who comes out of the wood work and overbids for this thing.

We wouldn’t bet on it.

*The debtors’ first day declaration only refers to its private equity sponsors as “its current owners”. While it’s not entirely clear from the bankruptcy papers, it appears that Sun Capital may also be the second lien lender agent here (and lenders) — a presumption that is bolstered by the appearance of Morgan Lewis & Bockius LLP as counsel. Morgan Lewis has represented Sun Capital portfolio companies in a number of recent chapter 11 bankruptcy filings. Curious how, with one exception, there was virtually no mention of Sun Capital’s involvement in any of the papers.

• Jurisdiction: D. of Delaware (Judge Walrath)

• Capital Structure: $42mm Term Loan + $14.4mm RCF (Antares Capital LP), $23.6mm second lien debt (BL Restaurants Group Holding Corp.)

• Professionals:

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

  • Financial Advisor/CRO: Carl Marks Advisory Group LLC (Howard Meitiner)

  • Investment Banker: Configure Partners LLC (Vin Batra)

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

• Other Parties in Interest:

  • Prepetition First Lien Secured Agent and DIP Agent: Antares Capital LP

    • Legal: Latham & Watkins LLP (James Ktsanes, Jeremy Webb) & Young Conaway Stargatt & Taylor LLP (Michael Nestor, Andrew Magaziner)

  • DIP Lenders: Midcap Funding XVI Trust, Midcap Funding XXX Trust, Midcap Financial Trust, Woodmont 2017-2 Trust, Woodmont 2017-3 LP, Woodmont 2018-4 Trust

  • Prepetition Second Lien Agent:

    • Legal: Morgan Lewis & Bockius LLP (Barbara Shander)

  • Purchaser: BLH Acquisition Co., LLC

New Chapter 11 Bankruptcy Filing - Charlotte Russe Holding Inc.

Charlotte Russe Holding Inc.

February 3, 2019

San Diego-based specialty women’s apparel fast-fashion retailer Charlotte Russe Holding Inc. is the latest retailer to file for bankruptcy. The company has 512 stores in 48 U.S. states. The company owns a number of different brands that it sells primarily via its brick-and-mortar channel; it has some brands, most notably “Peek,” which it sells online and wholesale to the likes of Nordstrom.

The company’s capital structure consists of:

• $22.8mm 6.75% ‘22 first lien revolving credit facility (ex-accrued and unpaid interest, expenses and fees)(Bank of America NA), and

• $150mm 8.5% ‘23 second lien term loan ($89.3mm funded, exclusive of unpaid interest, expenses and fees)(Jefferies Finance LLC). The term loan lenders have first lien security interests in the company’s intellectual property.

The company’s trajectory over the last decade is an interesting snapshot of the trouble confronting the brick-and-mortar retail space. The story begins with a leveraged buyout. In 2009, Advent International acquired the debtors through a $380mm tender offer, levering up the company with $175mm in 12% subordinated debentures in the process. At the time, the debtors also issued 85k shares of Series A Preferred Stock to Advent and others. Both the debentures and the Preferred Stock PIK’d interest (which, for the uninitiated, means that the principal or base amounts increased by the respective percentages rather than cash pay interest or dividends being paid over time). The debtors later converted the Preferred Stock to common stock.

Thereafter, the debtors made overtures towards an IPO. Indeed, business was booming. From 2011 through 2014, the debtors grew considerably with net sales increased from $776.8mm to $984mm. During this period, in May of 2013, the debtors entered into the pre-petition term loan, used the proceeds to repay a portion of the subordinated debentures and converted the remaining $121.1mm of subordinated debentures to 8% Preferred Stock (held by Advent, management and other investors). In March 2014, the debtors and its lenders increased the term loan by $80mm and used the proceeds to pay a one-time dividend. That’s right folks: a dividend recapitalization!! WE LOVE THOSE. Per the company:

In May 2014, the Debtors paid $40 million in dividends to holders of Common Stock, $9.8 million in dividends to holders of Series 1 Preferred Stock, which covered all dividends thus far accrued, and paid $65.7 million towards the Series 1 Preferred Stock principal. The Debtors’ intention was to use a portion of the net proceeds of the IPO to repay a substantial amount of the then approximately $230 million of principal due on the Prepetition Term Loan.

In other words, Advent received a significant percentage of its original equity check back by virtue of its Preferred Stock and Common Stock holdings.

Guess what happened next? Well, after all of that money was sucked out of the business, performance, CURIOUSLY, began to slip badly. Per the company:

Following fifteen (15) consecutive quarters of increased sales, however, the Debtors’ performance began to materially deteriorate and plans for the IPO were put on hold. Specifically, gross sales decreased from $984 million in fiscal year 2014 with approximately $93.8 million in adjusted EBITDA, to $928 million in fiscal year 2017 with approximately $41.2 million in adjusted EBITDA. More recently, the Debtors’ performance has materially deteriorated, as gross sales decreased from $928 million in fiscal year 2017 with approximately $41.2 million in adjusted EBITDA, to an estimated $795.5 million in fiscal year 2018 with approximately $10.3 million in adjusted EBITDA.

Consequently, the company engaged in a year-long process of trying to address its balance sheet and/or find a strategic or financial buyer. Ultimately, in February 2018, the debtors consummated an out-of-court restructuring that (i) wiped out equity (including Advent’s), (ii) converted 58% of the term loan into 100% of the equity, (iii) lowered the interest rate on the remaining term loan and (iv) extended the term loan maturity out to 2023. Advent earned itself, as consideration for the cancellation of its shares, “broad releases” under the restructuring support agreement. The company, as part of the broader restructuring, also secured substantial concessions from its landlords and vendors. At the time, this looked like a rare “success”: an out-of-court deal that resulted in both balance sheet relief and operational cost containment. It wasn’t enough.

Performance continued to decline. Year-over-year, Q3 ‘18 sales declined by $35mm and EBITDA by $8mm. Per the company:

The Debtors suffered from a dramatic decrease in sales and in-store traffic, and their merchandising and marketing strategies failed to connect with their core demographic and outpace the rapidly evolving fashion trends that are fundamental to their success. The Debtors shifted too far towards fashion basics, did not effectively reposition their e-commerce business and social media engagement strategy for success and growth, and failed to rationalize expenses related to store operations to better balance brick-and-mortar operations with necessary e-commerce investments.

In the end, bankruptcy proved unavoidable. So now what? The company has a commitment from its pre-petition lender, Bank of America NA, for $50mm in DIP financing (plus $15mm for LOCs) as well as the use of cash collateral. The DIP will roll-up the pre-petition first lien revolving facility. This DIP facility is meant to pay administrative expenses to allow for store closures (94, in the first instance) and a sale of the debtors’ assets. To date, however, despite 17 potential buyers executing NDAs, no stalking horse purchaser has emerged. They have until February 17th to find one; otherwise, they’re required to pursue a “full chain liquidation.” Notably, the debtors suggested in their bankruptcy petitions that the estate may be administratively insolvent. YIKES. So, who gets screwed if that is the case?

Top creditors include Fedex, Google, a number of Chinese manufacturers and other trade vendors. Landlords were not on the top 30 creditor list, though Taubman Company, Washington Prime Group Inc., Simon Property Group L.P., and Brookfield Property REIT Inc. were quick to make notices of appearance in the cases. In total, unsecured creditors are owed approximately $50mm. Why no landlords? Timing. Despite the company going down the sh*tter, it appears that the debtors are current with the landlords (and filing before the first business day of the new month helps too). Not to be cynical, but there’s no way that Cooley LLP — typically a creditors’ committee firm — was going to let the landlords be left on the hook here.

And, so, we’ll find out within the next two weeks whether the brand has any value and can fetch a buyer. In the meantime, Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC will commence liquidation sales at 90+ locations. We see that, mysteriously, they somehow were able to free up some bandwidth to take on an new assignment sans a joint venture with literally all of their primary competitors.

• Jurisdiction: D. of Delaware (Judge Silverstein)

• Capital Structure: $22.8mm 6.75% ‘22 first lien revolving asset-backed credit facility (ex-accrued and unpaid interest, expenses and fees)(Bank of America NA), $150mm 8.5% ‘23 second lien term loan ($89.3mm funded, exclusive of unpaid interest, expenses and fees)(Jefferies Finance LLC)

• Company Professionals:

  • Legal: Cooley LLP (Seth Van Aalten, Michael Klein, Summer McKee, Evan Lazerowitz, Joseph Brown) & (local) Bayard PA (Justin Alberto, Erin Fay)

  • Independent Director: David Mack

  • Financial Advisor/CRO: Berkeley Research Group LLC (Brian Cashman)

  • Investment Banker: Guggenheim Securities LLC (Stuart Erickson)

  • Lease Disposition Consultant & Business Broker: A&G Realty Partners LLC

  • Liquidating Agent: Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC

  • Liquidation Consultant: Malfitano Advisors LLC

  • Claims Agent: Donlin Recano & Company (*click on company name above for free docket access)

• Other Parties in Interest:

  • DIP Lender ($50mm): Bank of America NA

    • Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Christopher Carter) & (local) Richards Layton & Finger PA (Mark Collins)

  • Prepetition Term Agent: Jefferies Finance LLC

    • Legal: King & Spalding LLP (Michael Rupe, W. Austin Jowers, Michael Handler)

  • Official Committee of Unsecured Creditors (Valueline Group Co Ltd., Ven Bridge Ltd., Shantex Group LLC, Global Capital Fashion Inc., Jainson’s International Inc., Simon Property Group LP, Brookfield Property REIT Inc.)

    • Legal: Whiteford Taylor & Preston LLP (Christopher Samis, L. Katherine Good, Aaron Stulman, David Gaffey, Jennifer Wuebker)

    • Financial Advisor: Province Inc. (Edward Kim)

Updated 2/14/19 at 1:41 CT

New Chapter 11 Filing - Mission Coal Company LLC

Mission Coal Company LLC

October 14, 2018

For a recap, please see here.

• Jurisdiction: N.D. of Alabama (Judge Mitchell)

• Capital Structure: See below

• Company Professionals:

  • Legal: Kirkland & Ellis LLP (Stephen Hessler, Brad Weiland, Melissa Koss, Travis Bayer, Anne Gilbert Wallace, Francis Petrie, Ciara Foster, Michael Esser) & (local) Christian & Small LLP (Daniel Sparks, Bill Bensinger)

  • CRO/Financial Advisor: Zolfo Cooper LLC (Kevin Nystrom)

  • Investment Banker: Jefferies LLC

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

• Other Parties in Interest:

  • First Lien Lenders and DIP Lenders

    • Legal: Akin Gump Strauss Hauer & Feld LLP (Martin Brimmage, Lisa Beckerman, Lacy Lawrence, Allison Miller, Erik Preis, Jason Rubin) & (local) Burr & Forman LLP (Michael Leo Hall, D. Christopher Carson, Heather Jamison)

    • Financial Advisor: Houlihan Lokey Capital

  • United Mine Workers of America

    • Legal: Rumberger Kirk & Caldwell PC (R. Scott Williams, Frederick Darrell Clarke III, Robert Adams)

  • The United Mine Workers of America 1974 Pension Plan and the United Mine Workers of America 1993 Benefit Plan

    • Legal: Morgan Lewis & Bockius LLP (Rachel Mauceri, John Goodchild III) & (local) Quinn Connor Weaver Davies & Rouco LLP (Glen Connor, George Davies)

Source: First Day Declaration

🛌New Chapter 11 Bankruptcy Filing - Mattress Firm Inc.🛌

Mattress Firm Inc.

10/05/18

Recap: See our recap here.

• Jurisdiction: D. of Delaware (Judge Sontchi)

• Capital Structure: See below.

• Company Professionals:

  • Legal: Sidley Austin LLP (Bojan Guzina, Michael Fishel, Gabriel MacConaill, Matthew Linder, Blair Warner) & (local) Young Conaway Stargatt & Taylor LLP (Edmon Morton)

  • Financial Advisor: AlixPartners LLP

  • Investment Banker: Guggenheim Securities LLC (Durc Savini)

  • Liquidator: Gordon Brothers Group LLC

    • Legal: Katten Muchin Rosenman LLP (Steven Reisman, Cindi Giglio) & (local) Saul Ewing Arnstein & Lehr LLP (Mark Minuti, Lucian Murley)

  • Real Estate Advisors: A&G Realty Partners

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

• Other Parties in Interest:

  • Barclays Bank PLC

    • Legal: Paul Hastings LLP (Andrew Tenzer, Michael Comerford) & (local) Richards Layton & Finger PA (Mark Collins, Jason Madron)

  • Citizens Bank NA

    • Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Marc Leduc, Laura McCarthy) & (local) Richards Layton & Finger PA (Mark Collins, Jason Madron)

  • Steinhoff International Holdings N.V

    • Legal: Linklaters LLP (Robert Trust, Christopher Hunker, Amy Edgy) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott, Andrew Remming, Joseph C. Barsalona II)

  • Exit term loan financing backstop group (the “Backstop Group”): Attestor Capital LLP, Baupost Group, Centerbridge Partners LP, DK Capital Management Partners, Farrallon Capital Management L.L.C., KKR & Co. Partners LLP, Monarch Alternative Capital LP, Och-Ziff Capital Management, Silverpoint Capital

    • Legal: Latham & Watkins LLP (Mitchell Seider, Adam Goldberg, Hugh Keenan Murtagh, Marc Zelina, Adam Kassner) & (local) Ashby & Geddes PA (William Bowden, Karen Skomorucha Owens, F. Troupe Mickler IV)

New Chapter 11 Filing - Brookstone Holdings Corp.

Wellness, Entertainment & Travel Retailer Now Bankrupt

Brookstone Holdings Corp.

8/2/16

Source: Brookstone.com

Almost exactly a month ago we asked “Is Brookstone Headed for Chapter 22?” and wrote the following:

Go to Brookstone’s website for “Gift Ideas” and “Cool Gadgets” and then tell us you have any doubt. We especially liked the pop-up asking us to sign up for promotional materials one second after landing; we didn’t even get a chance to see what the company sells before it was selling us on a flooded email inbox. Someone please hire them a designer.

On Friday, Reuters reported that the company has hired Gibson Dunn & Crutcher LLP(remember them?) to explore its restructuring options. What’s the issue? Well, retail. Need there be any further explanation?

The company has roughly 120 stores (20 are in airports), approximately $45mm of debt and a Chinese sponsor in Sanpower Group Co Ltd.

This is a big change from when it first filed for bankruptcy in April 2014. At the time of that filing, the company had 242 stores and approximately $240mm in debt. The company blamed its over-levered capital structure for its inability to address its post-recession challenges. It doesn’t appear to have the same excuse now.

Upon emergence, it reportedly still had 240 stores. Clearly the company ought to have used the initial bankruptcy for more of an operational fix in addition to its balance sheet restructuring. While this could be a costly mistake, the company’s sponsor is a bit of a wild card here: Chinese sponsors tend to be more disinclined to chapter 11 proceedings than American counterparts. Will they write an equity check then?

Well, we now have our definitive answers. Yes. The company filed for bankruptcy earlier today. And whether Sanpower was disinclined to file or not, well…it’s in bankruptcy. And, it will not, at least not as of now, be writing an equity check.

The New Hampshire-based company describes itself as “a product development company and multichannel retailer that offer a number of highly distinctive and uniquely designed products. The Brookstone brand is strongly associated with cutting-edge innovation, superior quality, and sleek and elegant design.” Which is precisely why we plastered a “videocassette” emoji in our title. Because that description comports 100% with the way we view the brand. But we digress.

The company has clearly engaged in some downsizing since emerging from bankruptcy a few years ago; it notes that it currently operates 137 retail stores across 40 states with 102 of those stores located in malls and 35 in airports; it also carries 700 SKUs, the majority of which fall in one of three product categories (wellness, entertainment and travel). It sells across four product channels: mall retail, airport retail, e-commerce (brookstone.com and Amazon.com), and wholesale (including TV shopping which, we believe, means home shopping network sort of stuff). For fiscal year 2017, the company had net sales of $264mm and negative EBITDA was $60mm. For the first half of 2018, net sales were $74mm and negative EBITDA was $29mm. Annualize that first number and you’re looking at a pretty precipitous drop in revenue!

The company highlights the juxtaposition between its mall and retail sales channels. Whereas the former generated ‘17 net sales of $137.9mm and negative EBITDA of $30mm, the latter generated net sales of $37.7mm and “adjusted” EBITDA of $1.4mm. We haven’t seen the numbers but we’re guessing the adjustment takes this statement into account:

Moreover, the net sales and adjusted EBITDA figures do not tell the whole story with respect to the productivity of the Airport retail outlets. As described further below, supply chain issues have limited the sales potential that would otherwise be captured with a healthy network of suppliers. The Debtors believe that through the bankruptcy they can correct the supply chain issues and allow the airport stores to greatly increase their profitability.

🤔🤔 Seeing a lot of adjustments on the basis of “belief” these days.

Likewise, the company claims that aberrational externalities affected its e-commerce operations as well. There, the company claims $55.2mm in net sales and negative adjusted EBITDA of $1mm. The company believes that the discontinuation of its catalog mailings had a detrimental impact on its e-commerce (and store retail) numbers. It notes:

As with the airport retail segment, the net sales and adjusted EBITDA associated with the Debtors’ ecommerce segment is not reflective of its true potential due to supply chain difficulties. In addition, and as described further below, technology issues and a turnover of senior level management at the e-commerce segment led to underperformance at a segment that should be performing at a significantly higher level. The Debtors believe that the bankruptcy filing will afford the Debtors the opportunity to right the operational defects that have artificially stymied the overall profitability that should be incumbent to the Debtors’ online presence.

Finally, the company claims its wholesale business has a lot of demand and has been under-utilized due to the same supply chain issues affecting its other channels.

In other words, when we said earlier that “[c]learly the company ought to have used the initial bankruptcy for more of an operational fix,” we hit the nail on the head. The company notes:

Following the 2014 Bankruptcy, sales continued to lag almost immediately. For the years ended 2014 and 2015, net sales were pegged at approximately $420 million and $389 million respectively, while adjusted EBITDA was booked at negative $38 million and negative $24 million respectively. While a number of factors contributed to the underperformance, sourcing of products and supply chain difficulties were the major drivers.

But of course there’s an overall macro overlay here too:

The drop in net sales in 2016 and 2017 was further exacerbated by the decline in the mall model as a means for consumers to buy products of the type sold by Brookstone. During this time, foot traffic at mall locations decreased drastically, as consumers continued to seek out products online as a replacement for traditional brick and mortar shopping.

The company’s e-commerce efforts could not pick up the slack. It blames leadership changes, a new platform (and a loss of data and indexing that resulted), and the discontinuation of the hard copy catalog for this. The company notes:

Because the catalogs were directly responsible for a significant portion of the web traffic on the Debtors’ e-commerce site, the negative impact on the Debtors’ online sales was dramatic.

Anyone who thinks that e-commerce can survive independent of paper mailings ought to re-read that sentence. It also explains the fifteen Bonobos catalogs we get every week and the 829-pound Restoration Hardware calalog we receive every quarter. Remember the buzzword of the year: “multi-channel.” Case and point.

To make this already (too) long story short, Sanpower kept sinking money into this sinking ship until it finally decided that it was just throwing good money after bad. Callback to July when we said they’re disinclined to chapter 11…well, lighting millions of dollars on fire will make you a little more inclined. 💥💥

Powered by a $30mm DIP credit facility (not all new money: some will be used to refi out the ABL) from its prepetition (read: pre-bankruptcy) lenders, the company intends to use the bankruptcy filing to execute an orderly store closing process and market and sell the business. This is clearly why it went to great lengths to pretty up its e-commerce, mall and wholesale businesses in its narrative. Still, the company has been marketing the business for a month and, thus far, there are no biters. Per the agreement with its DIP lenders, the company has until September 2018 to effectuate its sale process. You read that right: a company that bled out over a period of years has two months on life support.

Major creditors include Chinese manufacturers and, as you might expect, the usual array of landlords, General Growth Properties ($GGP), Simon Property Group Inc. ($SPG), and Macerich Co. ($MAC). Given the positioning of the respective businesses, we wouldn’t expect much of a mall business to survive here regardless of whether a buyer emerges.

• Jurisdiction: D. of Delaware (Judge Shannon)

• Capital Structure: $70mm ABL Revolver (Wells Fargo NA) & $15mm Term Loan (Gordon Brothers Finance Company), $10mm second lien notes (Wilmington Trust), $39.4mm Sanpower Secured Notes, $46.6mm Sanpower Unsecured Notes

• Company Professionals:

  • Legal: Gibson Dunn & Crutcher LLP (David Feldman, Matthew Kelsey, Matthew Williams, Keith Martorana, Jason Zachary Goldstein) & (local) Young Conaway Stargatt & Taylor LLP (Michael Nestor, Sean Beach, Andrew Magaziner)

  • Financial Advisor: Berkeley Research Group LLC

  • Investment Banker: GLC Advisors & Co. (Soren Reynertson)

  • Liquidator Consultants: Gordon Brothers Retail Partners LLC & Hilco Merchant Resources LLC

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

• Other Parties in Interest:

  • DIP Agent: Wells Fargo NA (Morgan Lewis & Bockius LLP, Glenn Siegel, Christopher Carter & Burr & Forman LLP, J. Cory Falgowski)

  • DIP Term Agent: Gordon Brothers Finance Company (Choate Hall & Stewart, Kevin Simard, Jonathan Marshall & Richards Layton & Finger PA, John Knight)

  • Indenture Trustee: Wilmington Trust NA

New Chapter 11 Filing - VER Technologies Holdco LLC

VER Technologies Holdco LLC

4/4/18

VER Technologies, a Los Angeles-based provider of for-rent production equipment and engineering support for live and taped television, cinema, live events and broadcast media has filed for chapter 11 bankruptcy in the District of Delaware. We hadn't heard of these guys before and we're guessing that, unless you live in Los Feliz or Silverlake, you haven't either. Suffice it to say that they're they guys behind the guy, so to speak. Recent broadcast work included the 2018 Super Bowl broadcast (eat it Brady); they also serve over 350 live music customers per year including the Biebs and the band-formerly-known-as-Coldplay-now-called-the-Chainsmokers. 

In some respects, this is a story about attempted avoidance of disruption leading to disruption. The company initially specialized in rentals with no equipment customization but, with time, opted to expand its product and service offerings to include customization. This endeavor, however, proved capital intensive to the point where the company exceeded $270 million on its prepetition asset-backed lending facility. This triggered cash sweeps to the company's bank which proved to further constrain liquidity. This sparked a need for an operational and balance sheet restructuring to maximize cash and get the company to the point of a potential transaction.

In other respects, this is another leveraged buy-out that saddled the target company with a wee bit too much debt. Moreover, the company seems to have undertaken a number of ill-advised or ill-executed operational initiatives that, ultimately, undercut revenue. It happens. 

Now the company -- supported by a restructuring support agreement with its lenders (including funds managed by GSO Capital Partners) -- hopes to facilitate a pre-negotiated merger with an entity controlled by Production Resource Group LLCl ("PRG"). PRG is a Jordan Company-owned provider of entertainment and event technology solutions. Naturally, the term lenders will also own a portion of the reorganized company. Per the term sheet, PRG will get 72% preferred and 80% common; the term lenders will get the delta. The reorganized company will still have a meaningful amount of debt on its balance sheet with a proposed new (unquantified) first lien term loan and a $435 million new second lien term loan. 

The company has secured a proposed $364.7 million DIP credit facility ($300mm ABL, $64.7mm Term Loan, of which $50mm is new money) to support its time in bankruptcy. The company seeks to be in and out of bankruptcy court in approximately 115 days. 

• Jurisdiction: D. of Delaware (Judge Gross)
• Capital Structure: $296.3mm ABL Facility (Bank of America NA), $424.2mm term loan (GSO Capital Partners LP/Wilmington Trust NA), $14mm FILO loan, $18.75mm New FTF Inc. Note, $7.5mm Catterton Notes.  
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (Joshua Sussberg, Ryan Blaine Bennett, Christine Pirro, Jamie Netznik) & (local) Klehr Harrison Harvey Branzburg LLP (Domenic Pacitti, Morton Branzburg)
  • Financial Advisor/CRO: AlixPartners LLC (Lawrence Young, Stephen Spitzer, Bradley Hunter, Christopher Blacker, James Guyton, Brad Hall)
  • Investment Banker: PJT Partners LP (Nick Leone)
  • Strategic Communications: Joele Frank
  • Independent Director: Eugene Davis
    • Legal: Kramer Levin Naftalis Frankel LLP (Philip Bentley)
  • Claims Agent: KCC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Prepetition ABL Agent and DIP ABL Agent:
    • Legal: Skadden Arps Slate Meagher & Flom LLP (Shana Elberg, Christopher Dressel, Anthony Clark, Robert Weber, Cameron Fee)
    • Financial Advisor: Perella Weinberg Partners
  • DIP Term Loan Agent: Wilmington Trust NA
    • Legal: Alston & Bird LLP (Jason Solomon)
  • Supporting Term Loan Lenders: GSO Capital Partners, ABR Reinsurance Ltd., Consumer Program Administrators Inc., Irving LLC
    • Legal: Morgan Lewis & Bockius LLP (Frederick Eisenbeigler, Andrew Gallo, Christopher Carter) & Richards Layton & Finger PA (Mark Collins, Amanda Steele, Joseph Barsalona)
  • 12% Subordinated Noteholder:
    • Legal: King & Spalding LLP (Jeffrey Pawlitz, Michael Handler)
  • Indenture Trustee FTF Note:
    • Legal: Robins Kaplan LLP (Howard Weg, Michael Delaney)
  • Production Resource Group LLC
    • Legal: Greenberg Traurig LLP (Todd Bowen) & Morrison Cohen LLP (Joseph Moldovan, Robert Dakis)
  • Wells Fargo NA
    • Legal: Otterbourg PC (Andrew Kramer)
  • Official Committee of Unsecured Creditors
    • Legal: SulmeyerKupetz PC (Alan Tippie, Mark Horoupian, Victor Sahn, David Kupetz) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Aaron Stulman, Kevin Hroblak)
    • Financial Advisor: Province Inc. (Carol Cabello) 

Updated 5/19/18

New Chapter 11 Filing - Tops Holding II Corporation

Tops Holding II Corporation

• 2/21/18 Recap: When a company's "Overview" in its First Day Declaration basically leads with union metrics (12,300 unionized employees of 14,000 total employees) and collective bargaining agreement numbers (12 of them), you know there's gonna be a war with employees. The fact that the footprint is 169 stores-wide in three states almost seems like a footnote. As does the fact that the business started in the 1920s and seemingly thrived through 2007 when, naturally, private equity got involved and went on a debt-ridden acquisition spree. But hang on: we're getting ahead of our skis here. So, what happened here? Well, clearly, the company has to negotiate with its unions; it also seeks to deleverage its ballooning balance sheet and take care of some leases and supply agreements. The company has secured $265mm in DIP financing to fund the cases; it says that it "intend[s] to remain in chapter 11 for approximately six (6) months." We'll believe it when we see it. Anyway, WHY does it need to take all of these steps? Well, as we stated before: private equity, of course. "Despite the significant headwinds facing the grocery industry, over the past five years, the Company has experienced solid financial performance and has sustained stable market share. The vast majority of the Company’s supermarkets generate positive EBITDA and the Company generates strong operating cash flows. Transactions undertaken by previous private equity ownership, however, saddled the Company with an unsustainable amount of debt on its balance sheet. Specifically, the Company currently has approximately $715 million of prepetition funded indebtedness...." Ah, private equity = a better villain than even Amazon (though Amazon gets saddled with blame here too, for the record). But wait: don't forget about the pensions! "[T]he Company has been embroiled in a protracted and costly arbitration with the Teamsters Pension Fund concerning a withdrawal liability of in excess of $180 million allegedly arising from the Company’s acquisition of Debtor Erie Logistics LLC" from its biggest food supplier, C&S Wholesale Grocers Inc., the 10th largest private company in the US. Moreover, the company has been making monthly pension payments; nevertheless, the pension is underfunded by approximately $393mm. The company continues, "Utilizing the tools available to it under the Bankruptcy Code, the Company will endeavor to resolve all issues relating to the Teamsters Arbitration and address its pension obligations, and the Company will take reasonable steps to do so on a consensual basis." Oy. What a hot mess. We can't even read that without ominous music seemingly popping up out of nowhere. More to come.

• Jurisdiction: S.D. of New York

• Capital Structure: $112mm RCF (inclusive of a $10mm FILO and $34mm LCs, Bank of America NA), $560mm 8% '22 senior secured notes, $67.5mm 9% '21 opco unsecured notes, $8.6mm 8.75%/9.5% '18 holdco unsecured notes

• Company Professionals:

  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Stephen Karotkin, Sunny Singh)

  • Financial Advisor/CRO: FTI Consulting Inc. (Michael Buenzow, Armen Emrikian, Paul Griffith, Ronnie Bedway, Andy Kopfensteiner)

  • Investment Banker: Evercore (David Ying, Stephen Goldstein, Jeremy Matican, Elliot Ross, Jonathan Kartus, Andrew Kilbourne)

  • Real Estate Advisor: Hilco Real Estate LLC

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

• Other Parties in Interest:

  • Prepetition ABL Agent & DIP ABL Agent: Bank of America NA

    • Legal Counsel: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Amelia Joiner, Matthew Ziegler)

  • Indenture Trustee for Senior Notes due 2018, notes due 2021 and Senior Secured Notes: U.S. Bank NA

    • Legal: Thompson Hine LLP (Irving Apar, Elizabeth Frayer, Derek Wright)

  • Ad Hoc Noteholder Group & DIP TL Lenders (Column Park Asset Management LP, Fidelity Management & Research Company, HG Vora Capital Management LLC, Signature Global Asset Management, Silver Point Capital LP)

    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Diane Meyers, Lauren Shumejda)

    • Financial Advisor: Lazard Freres & Co. LLC

  • DIP TL Agent: Cortland Capital Markets Services LLC

    • Legal: Arnold & Porter Kaye Scholer LLP (Tyler Nurnberg, Alan Glantz)

  • Southpaw Asset Management LP

    • Legal: Cooley LLP (Jeffrey Cohen, Steven Siesser, Sheila Sadighi, Andrew Behlmann)

  • Official Committee of Unsecured Creditors (PepsiCo, Inc., Valassis Direct Mail, Inc., Osterweis Strategic Income Fund, U.S. Bank N.A., the UFCW Local One Pension Fund, the Teamsters Local 264, and Benderson Development Company, LLC)

    • Legal: Morrison & Foerster LLP (Brett Miller, Dennis Jenkins, Jonathan Levine, Erica Richards)

    • Financial Advisor: Zolfo Cooper LLC

New Chapter 11 Filing - The Bon-Ton Stores Inc.

The Bon-Ton Stores Inc.

• 2/4/18 Recap: See here. 
• Jurisdiction: D. of Delaware (Judge Walrath)
  • Capital Structure: $339mm Tranche A RCF (Bank of America), $150 Tranche A-1 Term Loan, $350mm second lien notes (Wells Fargo Bank NA)     
• Company Professionals:
  • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Kelley Cornish, Elizabeth McColm, Claudia Tobler, Alexander Woolverton, Michael Colarossi, Diane Meyers, Moses Silverman) & Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Sean Greecher, Andrew Magaziner, Elizabeth Justison)
  • Financial Advisor: AlixPartners LLC (Holly Etlin, Carrianne Basler, Jim Guglielmo, John Creighton, Ben Chesters, Jamie Strohl, Mitch Chubinsky, Thomas Cole, Daniel Law) 
  • Investment Banker: PJT Partners LP (Steven Zelin, James Baird, Jon Walter, Vinit Kothary, Sartag Aujla)
  • Real Estate Advisor: A&G Realty Partners LLC
  • Intellectual Property Disposition Consultant: Hilco IP Services (David Peress)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Bank of America NA
    • Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Robert A.J. Barry, Amelia Joiner) & Richards Layton & Finger PA (Mark Collins, Joseph Barsalona)
  • Second Lien Noteholders: Alden Global, LLC; B. Riley FBR, Inc.; Bennett Management Corporation; Brigade Capital Management, LP; Riva Ridge Master Fund, Ltd.; Cetus Capital LLC; Contrarian Capital Management LLC; and Wolverine Asset Management, LLC
    • Legal: Jones Day (Bruce Bennett, Joshua Mester, Sidney Levinson, Genna Ghaul, Charles Whittman-Todd) & (local) Cole Schotz PC (Norman Pernick, J. Kate Stickles)
  • Official Committee of Unsecured Creditors
    • Legal: Pachulski Stang Ziehl & Jones LLP (Jeffrey Pomerantz, Robert Feinstein, Bradford Sandler)
    • Financial Advisor: Zolfo Cooper LLC (David MacGreevey)
  • Prospective Buyer: DW Partners LP
    • Legal: DLA Piper LLP (Stuart Brown, R. Craig Martin, Jason Angelo, Richard Chesley, John Lyons, Oksana Rosaluk)

Updated 4/10/18

New Chapter 11 Bankruptcy - Charming Charlie Holdings Inc.

Charming Charlie Holdings Inc.

• 12/11/17 Recap: A mere two weeks before Christmas, another retailer falls into bankruptcy, capping a 2017 retail bloodbath. Here, the Houston-based specialty retailer focused on colorful fashion jewelry, handbags, apparel, gifts, and beauty products follows a long line of retailers into bankruptcy court. In doing so, it demonstrates that the "treasure hunt" experienced often touted as a plus for discount retailers like T.J. Maxx ($TJX), doesn't always hold; it also shows that the difficulties apparent in women's specialty retail are demography-agnostic (here, the core audience is women ages 35-55 - in contrast to, say, rue21). The company blames (i) "adverse macro-trends" and (ii) operational shortfalls, e.g., merchandising miscalculations, lack of inventory, an overly broad vendor base), for its underperformance and reduced sales. EBITDA declined 75% "in the last several fiscal years." 75-effing-percent! With a limited amount of money available under its revolving credit facility and even less cash on hand, "Charming Charlie is out of cash to responsibly operate its business." Ouch. Rough timing. Only subject to a restructuring would lenders support the company; accordingly, the company has entered into a restructuring support agreement with 80% of the term lenders which includes a $20mm new-money cash infusion via a DIP credit facility (the facility includes, in total, a $35mm ABL and a $60mm TL...so yes, a proposed roll-up of $75mm of prepetition debt into a DIP). The company has also commenced the closure of 100 of its 370 stores, a meaningful reduction in its brick-and-mortar footprint (PETITION NOTE: the usual array of landlords, i.e., General Growth Properties ($GGP), have made a notice of appearance). Note the carefully crafted language the company deploys in its initial filing, "The Debtors anticipate 276 go-forward locations following the first round of store closures." Key words, "FIRST ROUND." In other words, the ~100 stores the company notes that it is closing (and that it seeks to retain Hilco for) may just be the beginning. While the company leaves the door open for a sale, the current agreement contemplates the equitization of the term loan (with added equity weight to those providing DIP financing) and a post-emergence debt load of $85mm. 
• Some other takeaways:
  • (1) the fashion industry has suffered a 15% downturn in fashion jewelry sales (and the company experienced a disproportionate 22% decline itself),
  • (2) vendors and factorers continue to be aggressive with constrictive trade terms and protect their turf (similar here to Toys R Us),
  • (3) Kirkland & Ellis LLP appears to effectively deploy its network to populate Boards of Directors (here, one of the independents appointed to the Board in July 2017 has ties to Gymboree and Toys R Us, two Kirkland clients),
  • (4) Guggenheim's efforts to sell this hot mess were unsuccessful pre-petition (query whether they'll have better luck post-petition...we doubt it),
  • (5) recall the words "first round" when you consider that even landlords for locations that remain open will be squeezed as the company seeks "to amend lease terms to reduce occupancy costs and obtain rent abatements for the first quarter of 2018," 
  • (6) this restructuring will lead to some supply chain pain as the company streamlines the vendor base down to 80 from 175, and
  • (7) its hard out there for a pimp (in this case: Charlie Chanaratsopon "vacated" his role as CEO and an interim CEO has taken the helm). 
• Jurisdiction: D. of Delaware (Judge Sontchi)
• Capital Structure: $22mm '20 ABL (Bank of America NA), $132mm '19 TL (Wilmington Savings Trust)  
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (James Sprayragen, Joshua Sussberg, Christopher Greco, Aparna Yemamandra, Rebecca Blake Chaikin, Michael Esser, Anna Rotman) & (local) Klehr Harrison Harvey Branzburg LLP (Dominic Pacitti, Michael Yurkewicz, Morton Branzburg)
  • Financial Advisor: AlixPartners LLC
  • Investment Banker: Guggenheim Securities LLC (Stuart Erickson)
  • Liquidation Agent: HIlco Merchant Resources LLC (Ian Fredericks)
  • Real Estate Advisor: A&G Realty Partners LLC
  • Claims Agent: Rust Consulting/Omni Bankruptcy (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP ABL Agent/Prepetition ABL Agent: Bank of America NA
    • Legal: Morgan Lewis & Bockius LLP (Robert Barry, Julia Frost-Davies, Amelia Joiner) & (local) Richards Layton & Finger PC (Mark Collins, David Queroli)
  • Ad Hoc Group of Term Loan Lenders
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Jeffrey Saferstein, Adam Denhoff, Sharad Thaper) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, M. Blake Cleary, Shane Reil)

12/13/17

New Chapter 11 Filing - Seadrill Ltd.

Seadrill Ltd.

• 9/12/17 Recap: Cash rich offshore oil and gas extraction company with global reach filed a prearranged bankruptcy to effectuate a balance sheet restructuring because...well...it was over-levered AF. The company purports to have a deal with its major creditors with secured creditors kicking the can down the road, and $2.3b worth of unsecured bondholders and other unsecured claims converting into approximately 15% of the post-reorg equity (with participation rights in the new secured notes and equity noted below). The company will get $1.06b of new capital by combination of new secured notes ($860mm) and equity ($200mm). Holders of $NADL stock will get a big fat donut.  
• Jurisdiction: S.D. of Texas (Judge David Jones)
• Capital Structure: A. Lot. Of. Debt. Like $5.7mm of bank debt and $2.3mm of unsecured bonds.

First Day Declaration.

• Company Professionals:
  • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Anup Sathy, Ross Kwasteniet, Adam Paul, Brian Schartz, Anna Rotman, Jeffrey Zeiger, Anthony Grossi, Spencer Winters) & (local) Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh, Rachel Biblo Block)
  • Restructuring Advisor: Alvarez & Marsal LLC (Jeffrey Stegenga, Ed Mosley)
  • Financial Advisor: Houlihan Lokey (David Hilty, Gavin Kagan, Dimitar Voukadinov, Drew Talarico, David Wang, Brian Keenan, Varun Desai, Daniel McManus) & Morgan Stanley
  • Claims Agent: Prime Clerk LLC (*click on company name for docket)
• Other Parties in Interest:
  • Conflicts Committee of Board of Directors of North Atlantic Drilling Limited and to the Conflicts Committee of the Board of Directors of Sevan Drilling Limited
    • Legal: Willkie Farr & Gallagher LLP (Jennifer Hardy, Andrew Mordkoff, Derek Osei-Bonsu)
    • Financial Advisor: Baker Tilly Virchow Krause LLP (Susan Seabury)
  • Conflicts Committee of Seadrill Partners LLC
    • Legal: Orrick Herrington & Sutcliffe LLP (Katherine Treistman, Raniero D'Aversa, Laura Metzger, Debra Felder)
  • New Money: Hemen Holding Ltd., Centerbridge Partners LP
    • Legal: Cadwalader Wickersham & Taft LLP (Greg Petrick, Yushan Ng, Nicholas Vislocky) & Fried Frank Harris Shriver & Jacobson LLP (Brad Scheler, Jennifer Rodburg, Andrew Minear) & (local) Dykema Cox Smith (Deborah Williamson, Patrick Huffstickler, Aaron Kaufman)
  • Consenting Lender Group
    • Legal: White & Case LLP (Scott Greissman, Philip Abelson, Andrew Katz) & (local) Andrews Kurth Kenyon LLP (Robin Russell, Timothy A. Davidson II, Joseph Rovira)
  • Aristeia Capital L.L.C., GLG Partners LP, Saba Capital Management LP and Whitebox Advisors LLC
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Philip Dublin, Ira Dizengoff, David Staber, Abid Qureshi, Sara Brauner)
  • ARCM Master Fund III, Ltd.
    • Legal: Paul, Weiss, Rifkind, Wharton & Garrison, LLP (Elizabeth McColm, Andrew Rosenberg, Catherine Goodall)
  • Indenture Trustee: Deutsche Bank Trust Company Americas
    • Legal: Morgan, Lewis & Bockius LLP (Chad Steward, Glenn Siegel, Crystal Axelrod, Rachel Jaffe Mauceri)
  • Daewoo Shipbuilding & Marine Engineering
    • Legal: Pachulski Stang Ziehl & Jones LLP (Shirley Cho, Bradford Sandler, Steven Golden)
  • Samsung Heavy Industries Co., Ltd.,
    • Legal: Hogan Lovells US LLP (Robin E. Keller, Ronald J. Silverman, Christopher R. Bryant, Michael Shane Johnson) & (local) 
  • Official Committee of Unsecured Creditors (Nordic Trustee AS, Deutsche Bank Trust Company Americas, Computershare Trust Company NA, Daewoo Shipbuilding & Marine Engineering Co. Ltd., Samsung Heavy Industries Co. Ltd., Pentagon Freight Services Inc., Louisiana Machinery Co. LLC)
    • Legal: Kramer Levin Naftalis & Frankel LLP (Thomas Moers Mayer, Douglas Mannal, Jennifer Sharret) & (local) Cole Schotz PC (Michael Warner, Benjamin Wallen)

Updated 10/5/17 12:03 pm CT

New Chapter 11 Filing - True Religion Apparel Inc.

True Religion Apparel Inc.

• 7/5/17 Recap: Another private equity backed retailer files for bankruptcy. Here, the "brand that is globally recognized for innovative, trendsetting denim jeans and apparel" has a fast-tracked prepackaged deal with its lenders and private equity sponsor to shed approximately 72% of its debt and continue its operational restructuring (read: more store closures). The Manhattan Beach California 128-store retailer (down after closing 30 stores worldwide) blamed a (i) "a macro consumer shift away from brick-and-mortar to online retail channels," (ii) a decline in the premium denim market segment in the fashion industry and corresponding rise of athleisure, (iii) fast fashion, (iv) the rise in competitive discounting to make up for lost foot traffic and sales, and (v) an over-levered balance sheet. We believe that the decline is primarily attributable to cheesy AF bedazzled and bejeweled jeans with heinous a$$-designs and stitching that no one other than the cast of the Jersey Shore would want to be caught dead in. Its initial claim-to-fame is its "iconic and trademarked" horsesh*t symbol...we mean, "iconic and trademarked horseshoe symbol." Seriously, how is True Religion ONLY #15 on this list of "50 Men's Fashion Trends That Never Should Have Happened"? We're truly asking. Anyway, the de-levered and operationally stream-lined company hopes to restructure around a business plan predicated upon a global e-commerce expansion, increased licensing, deployment of pop-up outlet stores, an expansion of its "Last Stitch" line, and other shenanigans in an attempt to keep this ugly brand from filing for Chapter 22 after the holiday season. On an aside, the pop-up strategy is interesting: the company notes that the outlet concept has been profitable, primarily because they are based on short-term 18-month-or-less leases with "little downside" for the company. Yikes, landlords. The company further noted that the conversion of True Religion locations to "Last Stitch" branded locations has been successful. Curious. Doesn't this signal that the True Religion brand is, uh, kinda worth f*ck all and the company's success is dependent upon shying away from it? Hmmm. 
• Jurisdiction: D. of Delaware (Sontchi)
• Capital Structure: $60mm ABL (Deutsche Bank AG New York Branch), $400mm first lien TL (Delaware Trust Company, as successor to Deutsche Bank AG New York Branch), $85mm second lien TL (Wilmington Trust National Association, as successor to Deutsche Bank AG New York Branch)
• Company Professionals:
  • Legal: Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, David Bertenthal, James O'Neill)
  • Financial Advisor: Maeva Group LLC (Harry Wilson)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Sponsor: Towerbrook Capital Partners LP
    • Legal: Wachtell Lipton Rosen & Katz LLP (Joshua Feltman, Emil Kleinhaus) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott, Daniel Butz)
  • Ad Hoc Group of Lenders (Apex Credit Partners LLC, Farmstead Capital Management LLC, Goldman Sachs Asset Management LP, Investcorp Credit Management US LLP, Palmer Square Capital Management LLC, Southpaw Asset Management LP, Waddell & Reed Investment Management Company and Ivy Investment Management Company, 
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Arik Preis, Allison Miller, Jason Rubin, Yochun Katie Lee) & (local) Ashby & Geddes PA (Karen Skomorucha Owens, Stacy Newman)
    • Financial Advisor: Moelis & Company LLP
    • DIP Lender: Citizens Bank NA 
      • Legal: Morgan Lewis & Bockius LLP (Robert A.J. Barry, Julia Frost-Davies, Christopher Carter) & (local) Reed Smith LLP (Kurt Gwynne, Emily Devan)
    • Official Committee of Unsecured Creditors
      • Legal: Cooley LLP (Jay Indyke, Cathy Hershcopf, Seth Van Aalten, Max Schlan, Lauren Reichardt) & (local) Klehr Harrison Harvey Branzburg LLP (Michael Yurkewicz, Sally Veghte)
      • Financial Advisor: Province Inc. (Peter Kravitz)

Updated 8/8/17

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

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

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

Updated 7/11/17 6:22 pm

Source: First Day Declaration.

New Chapter 11 Filing - The Gymboree Corporation

The Gymboree Corporation

• 6/12/17 Recap: Yawn...another private equity owned retailer in bankruptcy. Why? Standard fare for everyone following the retail story at this point: a substantial brick-and-mortar presence (1300 stores) in need of rightsizing, higher expenses than web-based competitors, an underdeveloped wholesale operation, an underdeveloped web presence, insufficient "omnichannel" capabilities (the go-to buzzword for retailers these days), and more debt than competitors like Children's Place and the Gap. In other words, private equity, that's why (here, Bain Capital Private Equity LP). Notably, "[a]pproximately 35% of their domestic real estate space is concentrated with Simon Property Group, Inc. and GGP Inc. (previously General Growth Properties, Inc.)" ($SPG, $GGP) and, in the first instance, the company is seeking to close 450 stores. Hmmm. The Company will operate under a $105mm DIP term loan credit facility ($35mm new money) and a $273.5mm DIP revolving credit facility; it will also seek to avail itself of $80mm in new equity capital by way of a fully-backstopped rights offering. The upshot of all of this financial mumbo-jumbo is that the term lenders will own the majority of the company. 
• Jurisdiction: E.D. of Virginia
• Capital Structure: $81mm '17 ABL RCF (Bank of America NA), $47.5mm '17 ABL Term Loan (Pathlight Capital LLC), 788.8mm '18 TL (Credit Suisse), $171mm '18 unsecured notes (Deutsche Bank Trust Company Americas)    
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (James Sprayragen, Anup Sathy, Joshua Sussberg, Steven Serajeddini, Matthew Fagen, Laura Elizabeth Krucks, Timothy Bow, Gabor Balassa, Ben Tyson) & (local) Kutak Rock LLP (Michael Condyles, Peter Barrett, Jeremy Williams)
  • Legal (Special Committee): Munger Tolles & Olson LLP (Thomas Wolper, Seth Goldman, Kevin Allred)
  • Financial Advisor: AlixPartners LLC (James Mesterharm, Liyan Woo)
  • Investment Banker: Lazard Freres & Co. LLC (David Kurtz, Christian Tempke)
  • Real Estate Consultant: A&G Realty Partners LLC (Andrew Graiser)
  • Liquidators: Tiger Capital Group LLC and Great American Group LLC
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Consenting Term Loan Lenders & DIP Term Loan Agent: Credit Suisse AG, Cayman Islands Branch
    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Evan Fleck) & (local) McGuireWoods LLP (Dion Hayes, Sarah Boehm, K. Elizabteh Sieg)
    • Financial Advisor: Rothschild & Co.
  • DIP ABL Administrative Agent
    • Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Robert A.J. Barry, Amelia Clark Joiner) & (local) Hunton & Williams LLP (Tyler Brown, Justin Paget)
  • DIP ABL Term Agent
    • Legal: Choate Hall & Stewart LLP (Kevin Simard, Jennifer Fenn) & (local) Whiteford Taylor Preston LLP (Christopher Jones)
  • Sponsor: Bain Capital Private Equity LP 
    • Legal: Weil Gotshal & Manges LLP (Matthew Barr, Robert Lemons) & (local) Wolcott Rivers Gates (Cullen Speckhart)
  • Ad Hoc Group of Senior Unsecured Noteholders
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Daniel Golden, Jason Rubin)
  • Pathlight Capital
    • Legal: Choate Hall & Stewart LLP (Kevin Simard, Jonathan Marshall) & (local) Whiteford Taylor & Preston LLP (Christopher Jones)
  • Indenture Trustee: Deutsche Bank Trust Company Americas
    • Legal: Moses & Singer LLP (Alan Gamza, Kent Kolbig, Jessica Boneque) & (local) Hirschler Fleischer PC (Robert Westermann, Rachel Greenleaf)
  • Official Committee of Unsecured Creditors
    • Legal: Hahn & Hessen LLP (Mark Power, Mark Indelicato, Janine Figueiredo, Alison Ladd) & (local) Tavenner & Beran PC (Lynn Tavenner, Paula Beran, David Tabakin)

Updated 7/11/17 at 7:25 pm CT

New Chapter 11 Filing - Katy Industries Inc.

Katy Industries Inc.

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

Updated 7/12/17