New Chapter 11 Bankruptcy Filing - Tuesday Morning Corporation ($TUES)

Tuesday Morning Corporation

May 27, 2020

Dallas-based Tuesday Morning Corporation ($TUES) is 80% open now — just in time to start closing 230 of its brick-and-mortar locations (132 in a first phase and 100 more in a follow-up phase) and commence liquidations sales while in bankruptcy. This, in a nutshell, ladies and gentlemen, sums up the plight of retail today.

If you tune in to CNBC or Bloomberg, one could be forgiven for thinking that a retailer like TUES might actually do relatively well during shelter-in times. It specializes in upscale home furnishings, textiles and housewares for crying out loud. According to the talking heads, everyone is spending time at home judging the inadequacy of their living accommodations — a process that ought to serve as a real boost to home furnishing specialists ((e.g., Restoration Hardware Inc. ($RH)) and home improvement companies ((e.g., Home Depot Inc. ($HD) and Lowe’s Companies Inc. ($LOW)). Not so much for TUES, apparently: the total lack of online presence and the company’s 100% reliance on in-store sales certainly didn’t help matters. The pandemic and related fallout “…resulted in a near-total cessation of new revenue beginning in March 2020.” Repeat: Near. Total. Cessation. Yikes.

Indeed, the debtors’ website serves a very limited purpose: it has a store locator. One literally cannot transact on the site. That said, there does appear to be pent up demand: the company reports that since re-opening its stores on April 24, comp store sales for the reopened stores have been approximately 10% higher than the same period in fiscal ‘19. Perhaps people DID, in fact, identify a lot of things they wanted to remedy at home! And they’re clamoring for that “treasure hunt” experience, y’all!!

What’s somewhat sad about that is, looking at the debtors’ list of top 40 unsecured trade creditors, nearly every vendor they do business with is US-based. In fact, the debtors source 80% of their inventory from US vendors. These store closures and the attendant loss of volume will cascade through the economy. Sigh.

Anyway, we previously wrote about the company in February upon the company’s Q2 ‘20 earnings report. We noted:

Quick coverage of this Dallas-based off-price retailer because, well, it’s performing like dogsh*t. The company reported Q2 ‘20 numbers last week. They. Were. Not. Good.

Nope. Like, not at all. Here are some highlights:

- A 4.1% decrease in net sales YOY driven primarily by a 3% decrease in comp store sales;

- A 3.7% decrease in the size of the average ticket, offset only somewhat by a 0.7% increase in customer transactions (read: more people buying less stuff — not exactly a testament to inventory quality);

- Declining gross margin (down 1.9%);

- Operating income down $5.2mm for the Q and $6.3mm for the 1H of fiscal ‘20;

- Cash is burning, down $6.5mm from June 2019.

The company blamed this piss poor performance on the shortened holiday calendar (how predictable) and uber-competition within that period that resulted in heavy promotions.

We further noted that the company had 175 leases rolling off in the next 12 months and, therefore, “…this is more a lease story than a bankruptcy story.” Whoops. Our crystal ball didn’t pick up on COVID-19. We further noted:

The company has no maturities prior to 2024 and has significant room under its $180mm revolving credit facility ($91.4mm of availability). Still, this thing needs its performance to turn around or it will be dancing with several other distressed retailers soon enough.

“Soon enough” came quicker than we anticipated.

The problem is that not only did the shut-down completely shut the revenue spigot, it also led the debtors to default, as of March 2020, under their revolving credit facility (“RCF”). The RCF Credit Agreement had a provision prohibiting the debtors from “suspend[ing] the operation of its business in the ordinary course of business.” Ever since, they have been in a state of continued negotiation and forbearance with their RCF enders, JPMorgan Chase Bank NA ($JPM), Wells Fargo Bank NA ($WFC), and Bank of America NA ($BAC).

That negotiation has borne fruit. The debtors obtained a DIP financing commitment of $100mm which will consist of some new money as well as a “gradual” roll-up of pre-petition funded debt ($47.9mm + $8.8mm LOCs). The debtors will pay a 2% upfront fee, a 0.5% unused commitment fee and customary letter of credit fees. “The interest rate under the DIP Documents is, either (at the Debtors’ option), (a) a 3 month LIBO Rate (2.0% floor) + 3.00% per annum or (b) CBFR (2.0% floor) + 2.0% per annum, payable on each applicable Interest Payment Date, in cash, provided that no Interest Period may extend beyond the Maturity Date.”

So what now? The debtors main assets are their inventory, a Dallas distribution center and corporate office, and equipment; they also have upwards of $100mm in net operating losses. There isn’t a lot of debt on balance sheet: this is not an example of a private equity firm coming in and dividending all of the value out of the enterprise. Rather, the crux of this case in the near-term will be, as we noted back in February, about the rejection of hundreds of leases and the stream-lining of the debtors’ footprint to a leaner operation. The crux longer-term, however, will be whether there’s any reason for this business to exist. Will the lenders enter into an exit facility? Will there be a plan of reorganization that will allow the debtors to emerge as reorganized debtors? Will there be a sale of substantially all of the assets? The chapter 11 bankruptcy process will be used to hopefully find answers to these questions.

  • Jurisdiction: N.D. of TX (Judge Hale)

  • Capital Structure: $47.9mm funded RCF + $8.8mm LOCs

  • Professionals:

    • Legal: Haynes and Boone LLP (Ian Peck, Stephen Pezanosky, Jarom Yates)

    • Financial Advisor: AlixPartners LLP (Barry Folse, Ray Adams, Wilmer Cerda, JR Bryant)

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

    • Real Estate Advisor: A&G Realty Partners LLC

    • Liquidation Consultant: Great American Group LLC

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

  • Other Parties in Interest:

    • DIP Agent: JPMorgan Chase Bank NA

      • Legal: Vinson & Elkins LLP (William Wallander, Bradley Foxman)

    • Official Committee of Unsecured Creditors

      • Legal: Montgomery McCracken Walker & Rhoads LLP (Edward Schnitzer, Gilbert Saydah Jr., David Banker) & Munsch Hardt Kopf & Harr PC (Kevin Lippman, Deborah Parry)

💪 New Chapter 11 Bankruptcy Filing - GGI Holdings LLC (Gold's Gym) 💪

GGI Holdings LLC

May 4, 2020

As many talking heads pontificate about whether J.Crew is the canary in the coal mine for post-COVID retail, we have our first fitness-related chapter 11 bankruptcy filing. Is Gold’s Gym the canary in the coal mine for post-COVID gym-based fitness? GGI Holdings LLC and 14 affiliates (the “debtors”) are “…seeking relief under the provisions of chapter 11 of the Bankruptcy Code to facilitate the closing of certain locations, the rejection of the related leases and contracts and the sale of the remaining business operations on the terms proposed by [non-debtor holding company] TRT Gym Asset Holdings, LLC and its assigns through a confirmed chapter 11 plan.After recently (permanently) closing 30 locations, the debtors have ~700 remaining locations of which 63 are company-owned and operated. They are owned by TRT Holdings, a Texas-based private holding company that, in addition to Gold’s Gym, owns Omni Hotels. In turn, TRT Holdings is owned and run by Robert Rowling, an American billionaire who made his fortune by working for his father’s oil and gas company — a company that sold to Texaco in the late 80s for hundreds of millions of dollars. If only we could be so lucky.

This is as pure a COVID-19 story as we’ve seen yet. All of the debtors company-owned gyms are closed and a majority of its franchised gyms are too = no revenues and no franchising fees, respectively. The filing is meant to jam those 32 landlords who wouldn’t play ball by way of rent abatements/concessions. The debtors’ pre-petition lenders — big banks like JPMorgan Chase Bank NA, Bank of America NA, and Wells Fargo Bank NA — were unwilling to fund a DIP. The debtors’ pre-petition owner, however, wants to stay in the mix; TRT is offering a $20mm DIP and intends to purchase the company out of bankruptcy. The debtors indicate that they think TRT’s bid will satisfy the big banks, take care of admin expenses, cure defaults under leases the debtors intend to keep and “establish a settlement fund” for general unsecured creditors. The DIP requires a plan on file by mid-May and confirmation by August 1. The timing is predicated upon being ready to open up shop when COVID-exhausted Americans are just about ready to stream themselves back into fourth-tier gyms and take out their longing for “Freedom” on a deep stack of rusty weights. Get pumped b*tches.

  • Jurisdiction: N.D. of Texas (Judge )

  • Capital Structure: $51.3mm RCF

  • Professionals:

    • Legal: Dykema Gossett PLLC (Danielle Rushing, Aaron Kaufman, Ariel Snyder)

    • Financial Advisor:

    • Investment Banker:

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

  • Other Parties in Interest:

⛽️New Chapter 11 Bankruptcy Filing - Diamondback Industries Inc.⛽️

Diamondback Industries Inc.

April 21, 2020

Texas-based Diamondback Industries Inc. and two affiliates (the “debtors”) filed for bankruptcy in the Northern District of Texas; they are manufacturers and sellers of disposable setting tools, power charges, and igniters used in the completion of oil and gas wells. Their wares are patent and trademark protected and appear to enjoy use by oil and gas companies engaged in drilling and well services. The debtors have managed to weather the oil and gas downturn over the last several years but the recent perfect storm brought on by the calamitous drop in oil prices + COVID-19 was too much to bear. These factors alone would have been troubling but the debtors also ran into some crippling legal troubles.

On April 3, 2020, the District Court for the Western District of Texas entered a patent judgment against the debtors that instantly dumped a $39.9mm obligation on the debtors in favor of Repeat Precision LLC. Originally, Repeat Precision LLC was the defendant in a patent license agreement dispute pursuant to which the debtors claimed breach of contract, misappropriation of trade secrets and fraudulent inducement. Repeat Precision filed counterclaims for patent infringement and tortious interference. It appears the debtors weren’t prepared for the counter-punches. The judgment was the knockout punch.

And that punch created a domino effect. The judgment triggered an event of default under the debtors’ prepetition credit agreement. This was a double-whammy: just two days before, the debtors failed to make a principal payment and breached various financial covenants under the agreement. The debtors’ lender, UMB Bank NA, did enter into a forbearance agreement with the debtors but the debtors nevertheless determined that chapter 11 cases may afford them a “breathing spell” to get their business together (and perhaps pursue a sale process). The debtors secured a $5mm DIP commitment to fund their cases.

  • Jurisdiction: N.D. of Texas (Judge Morris)

  • Capital Structure: $20mm funded RCF (UMB Bank NA)

  • Professionals:

    • Legal: Haynes and Boone LLP (Ian Peck, David Staab, Matthew Ferris)

    • Financial Advisor/CRO: CR3 Partners LLC (Greg Baracato, Cade Kennedy)

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

  • Other Parties in Interest:

    • US Bank NA

      • Legal: Bryan Cave Leighton Paisner LLP (Kyle Hirsch, Tricia Macaluso)

    • Unsecured Creditor: Repeat Precision LLC

      • Legal: Munsch Hardt Kopf & Harr PC (Davor Rukavina, Thomas Berghman)

⛽️New Chapter 11 Bankruptcy Filing - Yuma Energy Inc.⛽️

Yuma Energy Inc.

April 15, 2020

Houston-based Yuma Energy Inc. and three affiliates, oil and gas producers focused on the Rocky Mountain, Mid-Continent, Gulf Coast and West Texas regions of the US, filed chapter 11 cases in the Northern District of Texas.

There ain’t much new here worth noting given that every oil and gas company is troubled and they all sing the same tune about commodity prices post-2015. But there was one striking admission in Yuma’s bankruptcy papers that is nearly as pervasive as commodity price effects. In the company’s own words, “…the decline in the financial health of the company stemmed not only from dropping commodity prices, but more importantly with a continuing high level of G&A for a company it’s [sic] size….” That’s right: bloated G&A. It’s as prevalent in Texas as oil itself.

This case is a liquidation.

  • Jurisdiction: N.D. of Texas (Judge Mullin)

  • Professionals:

    • Legal: FisherBroyles LLP (H. Joseph Acosta, Lisa Powell)

    • Financial Advisor: Ankura Consulting Group (Anthony Schnur)

    • Investment Banker: Seaport Gordian Energy LLC

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

  • Other Parties in Interest:

😷New Chapter 11 Filing - Tarrant County Senior Living Center Inc. 😷

Tarrant County Senior Living Center Inc.

November 5, 2019

Callback to earlier this year, in February, when we reported on the chapter 11 bankruptcy filing of SQLC Senior Living Center at Corpus Christi Inc. (d/b/a Mirador). Mirador — a Texas nonprofit — owned and operated a 228-unit CCRC, comprised of 125 independent living residences, 44 assisted living residences, 18 memory care residences, and 4 skilled nursing residences. It filed for bankruptcy because, among other things, it didn’t have the occupancy level — and, by extension, revenue — to satisfy its debts (owed to UMB Bank NA and others). The company used the bankruptcy process to effectuate a sale pursuant to Bankruptcy Code section 363.

We concluded our review of the situation as follows:

One last point here: considering that we now have two CCRC bankruptcies in the last two weeks and both are operated by SQLC, we’d be remiss if we didn’t highlight that SQLC also operates four other CCRCs: (a) Northwest Senior Housing Corporation d/b/a Edgemere; (b) Buckingham Senior Living Community, Inc. d/b/a The Buckingham; (c) Barton Creek Senior Living Center, Inc. d/b/a Querencia at Barton Creek; and (d) Tarrant County Senior Living Center, Inc. d/b/a The Stayton at Museum Way. With 33% of its CCRCs currently in BK, it seems that — for the restructuring professionals among you — these other SQLC facilities may be worth a quick look/inquiry.

You’re welcome. We called that from 9 months away.

Forth Worth Texas-based Tarrant County Senior Living Center Inc. filed a prepackaged bankruptcy case in the Northern District of Texas. The not-for-profit corporation has 188 independent living apartment-style residences, 42 residential-style assisted living suites, 20 memory support assist living suites and a skilled nursing facility with 46 beds. The facility is nearly completely occupied across the board with the weakest link being the independent living segment at 6.4% vacancy.

Pursuant to the Plan, only the holders of bond claims are impaired and entitled to vote. In other words, the bonds will take a haircut — and they’ve overwhelmingly voted in favor of said haircut — while general unsecured claimants and executory contract counter-parties ride through as if nothing even happened.

Nana won’t even notice this sucker filed for bankruptcy.

  • Jurisdiction: N.D. of Texas (Judge Jernigan)

  • Capital Structure:

  • Professionals:

    • Legal: DLA Piper LLP (Thomas Califano, Rachel Nanes, Andrew Zollinger)

    • Financial Advisor/CRO: Ankura Consulting (Louis Robichaux)

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

  • Other Parties in Interest:

    • UMB Bank NA

      • Legal: Mintz Levin Cohn Ferris Glovsky and Popeo PC (Daniel Bleck, Charles Azano)

New Chapter 11 Bankruptcy Filing - The LaSalle Group Inc.

The LaSalle Group Inc.

May 2, 2019

Short Nana.

Texas-based The LaSalle Group Inc., an owner of 40 memory care assisted living communities across 9 states, and a handful of affiliated debtors filed for bankruptcy on May 2, 2019 and things ain’t looking pretty for the unsecured creditors: the company is administratively insolvent. The company owes $3.7mm at the parent level and then has ~$27.8mm of opco level debt among four debtor LLCs that are all owned 52% by a third-party investor (“Realco Silverado Investor”). Realco Silverado Investor seeks to purchase the opcos for $29mm, just enough to clear the debt at the opco level. Per the company, “[i]n the event this sale closes…[the notes]…should all be paid in full, all employees will have continual job opportunity, and all residents will remain in the residence they and their loved ones have chosen.” The bright side? This sounds like a good result for those most in need of it.

Why is the company in bankruptcy? It states:

“A surge in construction of assisted living facilities in recent years has created a supply-demand imbalance resulting in greater competition for residents and lower rates. This market dynamic has significantly impacted LaSalle and its affiliated entities (collectively, the “Autumn Leaves Group”) from a cash flow perspective. The Autumn Leaves Group has struggled with occupancy rates in certain markets which has significantly impacted revenue and cash flow.”

Moreover, LaSalle is the guarantor of substantially all of the secured debt and lease obligations. Its cash flow constraints precluded it from servicing its debt, culminating in approximately 30 lawsuits currently pending against LaSalle. As if that wasn’t bad enough, LaSalle also suffered the brunt of a United States District Court for the Northern District of Illinois, Eastern Division Memorandum Opinion and Order granting a motion for conditional certification of a collective action against it related to alleged hourly rate wage claims. And as if THAT wasn’t bad enough, LaSalle also faces various suits from vendors and other creditors for disputed unpaid claims. They’re all about to get hosed. The assets that aren’t sold to Realco Silverado Investor will be liquidated.

  • Jurisdiction: N.D. of Texas (Judge Jernigan)

  • Professionals:

    • Legal: Crowe & Dunlevy PC (Vickie Driver, Christina Stephenson, Christopher Staine)

    • Financial Advisor/CRO: Harney Partners (Karen Nicolaou)

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

  • Other Parties in Interest:

🚁New Chapter 11 Bankruptcy Filing - PHI Inc.🚁

PHI Inc.

March 15, 2019

It’s pretty rare to see a company affected by macro factors in two industries. And, yet, Louisiana-based PHI Inc. ($PHI) and four affiliates filed for bankruptcy in the Northern District of Texas, marking the fourth bankruptcy fallout in the helicopter services space following Waypoint LeasingErickson Incorporated and CHC Group. The company is a leading provider of transportation services to both the oil and gas industry (including, for example, Shell Oil CompanyBP America Production CompanyExxonMobil Production Co.ConocoPhillips CompanyENI Petroleum and the recently-bankrupt Fieldwood Energyand the medical services industry. It operates 238 aircraft, 213 which are company-owned and 119 of which are dedicated to oil and gas operations and 111 of which are dedicated to medical services. The company generated $675mm in revenue in 2018 — with much of that revenue coming from fixed-term contracts.

The company strongly asserts that operational failures are not a cause of its bankruptcy — a clear cut message to the market which might otherwise be concerned about safety and reliability. The issue here, the company notes, is the balance sheet, especially a March 15 2019 maturity of the company’s $500mm in unsecured notes. Despite alleged efforts to address this maturity with the company’s (fresh out of the womb) secured term loan holder and an ad hoc group of unsecured noteholders, the company was unable to do so.

The broader issue, however, is that the industry may be ripe for consolidation. Back in 2017, the company acquired the offshore business of HNZ Group Inc. This transaction expanded the company’s capacity to more international geographies. But given the dearth of offshore oil and gas production activity of late and intense competition in the space, there might be a need for more industry-wide M&A. The company notes:

As a result of this prolonged cyclical downturn in the industry, oil and gas exploration projects have been reduced significantly by the Company’s customers. Indeed, many customers have significantly reduced the number of helicopters used for their operations and have utilized this time instead to drive major changes in their offshore businesses, which have in turn drastically reduced revenues to PHI’s O&G business segment in the Gulf of Mexico. And while the price of crude oil slowly began to recover in 2018, the volatility in the market continues to drive uncertainty and negatively impact the scope and volume of services requested from service providers such as PHI.

This is simple supply and demand:

The effect of the downturn in the oil and gas industry has been felt by nearly all companies in the helicopter service industry. The downturn created an oversaturation of helicopters in the market, significantly impacting service companies’ utilization and yields. Indeed, this domino effect on the industry has required helicopter operators, like their customers, to initiate their own cost-cutting measures, including reducing fleet size and requesting rental reductions on leased aircraft.

Had these issues been isolated to the oil and gas space, the company would not have been in as bad shape considering that 38% of its revenue is attributable to medical services. But that segment also experienced trouble on account of…:

…weather-related issues and delays, changes in labor costs, and an increase in patients covered by Medicare and Medicaid (as opposed to commercial insurers), which resulted in slower and reduced collections, given that reimbursement rates from public insurance are significantly lower than those from commercial insurers or self-pay.

Compounding matters are laws and regulations that prohibit the debtors from refusing service to patients who are unable to pay. This creates an inherently risky business model dynamic. And it hindered company efforts to sell the business line to pay down debt.

Taken together, these issues are challenging enough. Tack on $700mm of debt, the inability to refi out its maturity, AND the inability to corral lenders to agree on a consensual deleveraging (which included a failed tender offer) and you have yet another freefall helicopter bankruptcy. Now the company will leverage the bankruptcy “breathing spell” and lower voting thresholds provided by the Bankruptcy Code to come to an agreement with its lenders on a plan of reorganization.

*****

That is, if agreement can be had. Suffice it to say, things were far from consensual in the lead up to (and at) the first day hearing in the case. To point, the Delaware Trust Companyas trustee for the senior unsecured notes, filed an objection to the company’s CASH MANAGEMENT motion because…well…there is no DIP Motion to object to. “Why is that,” you ask? Good question…

The debtors levered up their balance sheet in the lead-up to PHI’s well-known maturity. The debtors replaced their ABL in September with the $130mm term loan provided by Al Gonsoulin, the company’s CEO, Board Chairman and controlling shareholder. Thereafter — and by “thereafter,” we mean TWO DAYS BEFORE THE BANKRUPTCY FILING — the company layered another $70mm of secured debt onto the company, encumbering previously unencumbered aircraft and granting Mr. Gonsoulin a second lien. This is some savage balance sheet wizardry that has the effect of (a) priming the unsecured creditors and likely meaningfully affecting their recoveries and (b) securing Mr. Gonsoulin’s future with the company (and economic upside). Making matters worse, the trustee argues that the company made no real effort to shop the financing nor actively engage with the ad hoc committee of noteholders on the terms of a financing or restructuring; it doesn’t dispute, however, that the company had $70mm of availability under its indenture.

So what happened next? Over the course of a two day hearing, witnesses offered testimony about the pre-petition negotiations and financing process (or lack thereof) — again, in the context of a cash management motion. We love when sh*t gets creative! The lawyers for the company and the trustee hurled accusations and threats, the CEO was called a “patriot” (how, even if true, that is applicable to this context is anyone’s guess), and, ultimately, the judge didn’t care one iota about any of the trustee’s witness testimony and blessed the debtors’ motion subject to the company providing the trustee with weekly financial reporting. In other words, while this routine first day hearing was anything but, the result was par for the course.

Expect more fireworks as the case proceeds. Prospective counsel to the eventual official committee of unsecured creditors is salivating as we speak.

  • Jurisdiction: N.D. of Texas (Judge Hale)

  • Capital Structure: $130mm ‘20 senior secured term loan (Thirty Two LLC), $70mm secured term loan (Blue Torch Capital LP), $500 million ‘19 unsecured 5.25% senior notes

  • Professionals:

    • Legal: DLA Piper US LLP (Daniel Prieto, Thomas Califano, Daniel Simon, David Avraham, Tara Nair)

    • Legal (corporate): Jones Walker LLP

    • Financial Advisor: FTI Consulting Inc. (Robert Del Genio, Michael Healy)

    • Investment Banker: Houlihan Lokey Capital Inc.

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

  • Other Parties in Interest:

    • Prepetition TL & DIP Lender: Blue Torch Capital LP

    • Ad Hoc Committee of unsecured noteholders & Delaware Trust Company as Trustee for Senior Notes

      • Legal: Milbank LLP (Andrew LeBlanc, Dennis Dunne, Samuel Khalil) & (local) Norton Rose Fulbright US LLP (Louis Strubeck Jr., Greg Wilkes)

      • Financial Advisor: PJT Partners LP (Michael Genereaux)

    • Indenture trustee under the 5.25% Senior Notes due 2019 (Delaware Trust Company)

    • Thirty Two LLC

    • Official Committee of Unsecured Creditors (Delaware Trust Company, Oaktree Capital Management LP, Q5-R5 Trading Ltd., Regions Equipment Finance Corp., Helicopter Support Inc.)

      • Legal:

    • Official Committee of Equity Security Holders

      • Legal: Levene Neale Bender Yoo & Brill LLP (David Golubnik, Eve Karasik) & (local) Gray Reed & McGraw LLP (Jason Brookner)

      • Financial Advisor: Imperial Capital LLC (David Burns)

New Chapter Bankruptcy Filing - SAS Healthcare Inc.

SAS Healthcare Inc. 

January 31, 2019

Dallas/Fort Worth-based mental health facilities operator filed for bankruptcy last week in the Northern District of Texas. The more we read about these healthcare bankruptcies, the less and less assured we feel about healthcare generally. Holy sh*t a lot of them have hair on them. 

Here, the debtors operate three mental health treatment facilities — in Arlington, Dallas, and Fort Worth. Therein, the debtors provided — and we mean, "provided" — in-patient and out-patient mental health care to children, adolescents and adults struggling with substance abuse and addiction, mental health disorders and behavioral and psychological disorders. Why the past tense? Because thanks to an investigation by the Tarrant County District Attorney and subsequent indictments, the debtors ceased operations in December 2018. 

The debtors —owned in in equal 1/3 parts by three individuals — has $8.26mm in secured debt (Ciera Bank), a $503k drawn secured revolving line of credit with Ciera Bank, a $4.3mm secured term loan with Southside Bank (exclusive of another $3mm in unpaid principal and interest), a $5.6mm construction loan with Southside Bank (exclusive of another $4.3mm in unpaid principal and accrued interest); a $850k secured loan with Southside, a $400k second lien secured bridge note with REP Perimeter Holdings LLC, and $1.325mm subordinated secured note from the owners. 

Back to those closures. The grand jury investigation led to a lot of negative publicity which, in turn, led to an abrupt end in patient referrals from the two largest referral sources. The end effect? Decimated revenue. The company secured its bridge loan and performed operational triage but the second indictment proved to be a death knell. Without ongoing operations and with all of that debt, the debtors had to file for chapter 11 to trigger the automatic stay and buy itself time to conduct a marketing and sale process to sell their assets to stalking horse purchaser and prepetition lender, REP Perimeter Holdings LLC. 

  • Jurisdiction: N.D. of Texas (Judge Mullin) 

  • Company Professionals:

    • Legal: Haynes and Boone LLP (Stephen Pezanosky, Jarom Yates, Matt Ferris)

    • Financial Advisor: Phoenix Management Services LLC (Brian Gleason)

    • Investment Banker: Raymond James & Associates Inc. (Michael Pokrassa)

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

  • Other Parties in Interest:

😷New Chapter 11 Bankruptcy Filing - Mayflower Communities Inc. (d/b/a The Barrington of Carmel)😷

Mayflower Communities Inc. (d/b/a The Barrington of Carmel)

January 30, 2019

Mayflower Communities, Inc. (d/b/a The Barrington of Carmel), a non-profit senior living retirement community of 271 units in the State of Indiana, filed for bankruptcy in the Northern District of Texas earlier this week. As a continuing care retirement community (“CCRC”), Barrington provides a battery of services to its residents ranging from recreational activities to assisted living, memory support, skilled nursing, and rehabilitation. Residents can get apartment homes on site.

The business model, however, is…well, interesting. Per the Company:

CCRCs, however, are often operationally and financially complex. More specifically, CCRCs can be challenging to operate because they require the maintenance of a broad range of services to seniors in varying stages of the aging process. Additionally, CCRCs require a steady flow of new residents in order to maintain day-to-day operations and to remain current on financial obligations, including, most importantly, obligations to current and former residents.

New residents = new revenue, which is also needed to meet debt obligations and comply with resident refund obligations.

Revenue comes from entrance fees ranging from approximately $316k to $650k, monthly serve fees from $2,800 to $7,600, and other per diem fees for skilled nursing, optional services fees and unit upgrade fees. In exchange, however, Barrington takes on a significant commitment. Per the company:

Unlike a pure rental retirement community, whereby a resident pays monthly fees for services (which fees may increase as the resident’s needs change), the Continuing Care Contract is a life care residency contract whereby a resident will pay an Entrance Fee and fixed monthly fees for Barrington’s commitment to provide life care services for the duration of the resident’s life, regardless of whether (i) the resident’s needs change over time which may require additional services to be provided by Barrington, or (ii) the costs of providing such services increase for Barrington. Significantly, Barrington’s commitment to provide life care services continue even if the resident’s financial condition deteriorates and is unable to continue to make its payments.

Non-profit, indeed. That sounds like a recipe for fiscal disaster.

The company reported $96.5mm in assets and $151.9mm in liabilities, including oversight fees owed to its management company, $52.4mm in resident refund obligations, $92.7mm (plus accrued interest) of long-term municipal bond obligations and $4.1mm of subordinated note obligations.

The aforementioned debt is a big problem. Compounding matters is the fact that the senior housing market in the geographic vicinity is “very competitive” which led to rental price and, by extension, margin, compression. Lower-than-projected revenues combined with the debt led to Barrington defaulting on its municipal bond obligations back in November. Consequently, the Bond Trustee commenced a receivership action. To forestall the Bond Trustee’s subsequent efforts to, among other things, displace the board and sole member, pursue a sale of the facility, and potentially reject continuing care contracts, the company filed for bankruptcy wherein it will leverage the “automatic stay” and “potentially pursue a sale of the Facility.”

  • Jurisdiction: N.D. of Texas

  • Company Professionals:

    • Legal: DLA Piper LLP (Thomas Califano, Rachel Nanes, Andrew Zollinger)

    • Financial Advisor/CRO: Ankura Consulting LLC (Louis Robichaux IV) & Larx Advisors Inc.

    • Investment Banker: Cushman & Wakefield U.S., Inc.

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

  • Other Parties in Interest:

New Chapter 11 Bankruptcy Filing - Senior Care Centers LLC

Senior Care Centers LLC

December 4, 2018

Ok, we take it back. We’ve been saying how healthcare distress was overhyped in the beginning of the year and now a mini-wave of healthcare-related bankruptcy filings has hit dockets across the country. It’s cool: we don’t take it personally.

Here, Senior Care Centers LLC and its bazillion affiliated debtors, filed for bankruptcy in the Northern District of Texas. The debtors are one of the largest skilling nursing services providers in the US, providing care for approximately 9k patients in Texas and Louisiana. They operate 97 skilled nursing facilities, 9 assisted living facilities and 6 hospice facilities. The company notes:

Like much of the healthcare sector, the operators of skilled nursing facilities (“SNFs”) are and have been experiencing significant challenges and financial distress in recent years. The challenges faced by the Debtors are similar to those experienced by other SNF operators and widespread within the skilled nursing industry. The Debtors faced increasing financial pressure in 2017 and 2018 cause by, among other things, declining reimbursement rates, difficulties in collecting accounts receivable, declining census, and occupancy rates, increasing lease obligations, tightening terms with various trade creditors, and a significantly reduced working capital loan facility. All of these factors have combined to negatively impact the Debtors’ operations.

Getting more specific, the company adds:

Since 2017, the Company experienced significant liquidity constraints caused by, among other things: (a) increasing rent and “above-market” leases with various Landlords; (b) declining performance within the current portfolio for a variety of industry-wide developments; (c) tightening terms with various trade creditors; and (d) declining census. The Company has struggled to respond to liquidity issues for several months. In July of 2018, Administrative Agent began establishing Borrowing Base reserves, resulting in reduced availability under the Credit Facility.

The immediate cause for the filing of these Chapter 11 Cases was due to liquidity issues resulting from reduced Borrowing Base availability. This problem was compounded when certain of the Debtors’ landlords issued termination and/or default notices (the “Landlord Notices”).

Certain vendors demanded modification to payment terms, which restricted or eliminated the Company’s trade credit. Moreover, relationships with current and prospective Employees and Patients have been affected by the uncertainty. For example, several recent candidates have rescinded their offers to join the Company and expressed concern regarding the Company’s financial stability.

That story should sound wildly familiar by now.

Of significance, however, is the company’s relationship with Sabra Health Care REIT Inc. ($SBRA), which is one of the major landlords who issued termination/default notices (over which there is some dispute as to whether they were subsequently withdrawn). Sabra owns CCP which is the debtors’ second lien lender. More importantly, Sabra is the landlord on approximately 40 of the debtors’ facilities. The debtors owe Sabra $31.78mm in unpaid rent, common area maintenance charges and taxes.

Interestingly, Sabra’s own commentary about the debtors’ situation probably didn’t help matters much. On its Q3 earnings call on November 6, Sabra said a number of things about the debtors’ inability to pay rent, a potential sale of the debtors, its efforts to obtain financing, and management’s skittishness about any go-forward transaction that would endanger their jobs. On that last point, Sabra indicated that it was discussing go-forward options directly with the debtors’ board as a result. The debtors’ various constituents could obvious see/hear these comments and react accordingly.

But the Sabra commentary also demonstrates how difficult the current environment is for SNFs right now. Some big takeaways from their earnings call:

  • It is reducing its exposure to Texas, its largest state, “which also happen to be the one state where there is an oversupply of skilled nursing beds in a number of markets due to new product. And Texas also has one of the weakest Medicaid systems in the country.” (PETITION Note: scour the Googles for other SNFs highly indexed to Texas for future distressed/bankruptcy candidates).

  • Skilled operators (read: private equity) are in acquisition mode and, therefore, pricing is high even for product that isn’t of the highest quality. (PETITION Note: “too much money chasing too few deals.” This should, theoretically, bode well for the debtors’ proposed sale, if so). Sabra’s CEO Rick Matros said, “we're not seeing much good skill product and I really believe that that's a function of the skilled operators are buying everything all of us are selling, but they're not putting reasonable assets on the market because everybody sees the light at the end of the tunnel both in terms of the demographic in terms of decreasing supply and in terms of the positive benefits of PDPM reimbursements system that’s going go into effect next October.

  • Smaller SNFs will succumb to bankruptcy. Matros added, “My guess is over the course of the next year particularly with the mom-and-pops, we'll probably see more products come to market as a number of the smaller providers determine that they don't have the wherewithal or the desire to go through the transition that is going to be required to go through to be successful post-PDPM.

In other words, there should be a healthy amount of M&A and distressed activity in the near future in the SNF space.

Anyway, back to the debtors: they hope to use the automatic stay provided by the filing to transition underperforming facilities to new operators in coordination with its landlords and sell their profitable facilities. They will use cash collateral to fund the cases.

  • Jurisdiction: N.D. of Texas (Judge Houser)

  • Funded Capital Structure: $33.06mm RCF, $9.53mm HUD RCF, $4.3mm CCP (second lien) Loan   

  • Company Professionals:

    • Legal: Polsnielli PC (Jeremy Johnson, Trey Monsour, Stephen Astringer, Nicholas Griebel)

    • Conflicts Legal: Huntons Andrews Kurth LLP

    • CRO & Financial Advisor: Newbridge Management LLC (Kevin O’Halloran) & BDO USA LLP

    • Communications Consultants: Sitrick and Company

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

  • Other Parties in Interest:

    • Large Creditor: Sabra Health Care Reit, Inc.

    • Sponsor: Silver Star Investments LLC

    • Admin Agent & Lender: CIBC Bank USA

      • Legal: Duane Morris LLP (John Weiss, Rosanne Ciambrone) & (local) Haynes and Boone LLP (Stephen Pezanosky, Matthew Ferris)

New Chapter 11 Bankruptcy Filing - Taco Bueno Restaurants, Inc.

Taco Bueno Restaurants, Inc.

November 6, 2018

Damn you Chipotle Mexican Grill Inc. ($CMG).

It’s been a rough several months for Mexican restaurants. Over the summer, Tennenbaum Capital and Z Capital-owned RM Holdco LLC (Real Mex) filed for bankruptcy in the District of Delaware and pursued a sale of its business. Now, Texas-based, TPG-owned Taco Bueno Restaurants, Inc., a Tex-Mex quick service restaurant (“QSR”) with 140 owned and 29 franchised locations, has filed a prepackaged bankruptcy that will convey ownership to Taco Supremo LLC, an affiliate of Sun Holdings Inc., which bought-out the debtors’ initial lenders in October. Taco Supremo subsequently signed a restructuring support agreement memorializing its intent to effectuate a debt-for-equity swap and provide the debtors with a DIP credit facility.

So, why is all of this necessary? The company noted:

…while Taco Bueno possesses a traditional brand with a loyal customer base and the potential for future growth under the leadership of its new management team, Taco Bueno’s existing capital structure is unsustainable and its financial performance fell significantly due to, among other things, historical mismatches between price and product value, a lack of product innovation, and deferred maintenance capital investment. In addition, competition in the Mexican food industry – including the rise in popularity of tacos at both QSRs and other types of restaurants – increased substantially in recent years, causing certain Taco Bueno stores to experience stagnant or reduced customer traffic and sales. Moreover, while Taco Bueno recently launched a process to close underperforming stores to better focus on core markets and high-value stores, Taco Bueno continues to suffer from a number of underperforming restaurants. Accordingly, Taco Bueno needs to continue to restructure its lease footprint and renegotiate existing leases to optimize profitability.

Even the “Buenoheads” — yes, that’s actually a thing, apparently — couldn’t save this thing from bankruptcy. The debtors’ EBITDA fell to approximately $17.2 million in 2017 with a projected EBITDA of approximately $5.9 million for 2018, compared to approximately $33 million in 2016 EBITDA and approximately $31 million in 2015 EBITDA. Of course, the $130mm of debt doesn’t help either.

Consequently, to salvage liquidity and allow its bankers to conduct a process, the debtors closed 20 locations in the last year (and are in the midst of negotiations with Spirit Realty Capital Inc. ($SRC), U.S Realty Capital, and Kamin Realty Co., the landlords of over 50% of the debtors’ leases). The management team has turned over and the company attempted a prepetition sale process. That process culminated in the above-noted RSA-based transaction that will attempt to flush the company in and out of bankruptcy court by the middle of December.

  • Jurisdiction: N.D. of Texas

  • Capital Structure: $130.9mm debt     

  • Company Professionals:

    • Legal: Vinson & Elkins (David Meyer, Jessica Peet, Paul Heath, Garrick Smith, Matthew Pyeatt, Andrew Geppert)

    • CRO/Financial Advisor: Berkeley Research Group LLC (Haywood Miller)

    • Investment Banker: Houlihan Lokey Capital Inc. (Adam Dunayer)

    • Real Estate Advisor: Jones Lang LaSalle Americas Inc.

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

  • Other Parties in Interest:

    • Initial Lender: Bank of America NA

    • Sponsor: TPG Growth III Management LLC

New Chapter 11 Filing - 4 West Holdings LLC

4 West Holdings LLC

3/6/18 

Texas-based licensed operator or manager of 42 skilled nursing facilities in 7 states has filed a prearranged bankruptcy. The company blames "the performance of the current group of operating Facilities has been negatively impacted by industry headwinds, regulatory actions at certain Facilities, and an inefficient geographic footprint in certain regions in the United States" for its filing.

Similar to HCR Manorcare which filed for bankruptcy earlier this week, 4 West and its affiliates emanate out of a sale leaseback transaction with a publicly-traded REIT counterparty, Omega Healthcare Investors, Inc. ($OHI). And, similarly, this business suffers from many of the same problems, 

Since 2015, the Debtors have faced significant liquidity constraints caused principally by: (a) unfavorable commercial agreements and certain liabilities assumed as part of Merger, including regulatory and personal liability claims; (b) historical losses at certain of the Debtors’ previously-operated facilities, (c) a decline in performance within the current portfolio for a variety of industry-wide developments; and (d) significant capital expenditure needs. Further, the Debtors also faced rent payment obligations to the Omega Parties under the Master Leases, which were significantly higher than their operating income could support.

Consequently, the debtor has entered into a restructuring support agreement with Omega that is predicated upon two parts: (i) a transaction whereby certain unprofitable facilities will transition to a designee of Omega and (ii) a transfer of the more successful facilities to the Plan Sponsor, SC-GA 2018 Partners LLC, which is injecting the company with $225mm of new liquidity by way of $195mm in cash and $30mm note. The Omega Parties will provide a $30mm DIP credit facility to fund the cases. 

  • Jurisdiction: N.D. of Texas (Judge Hale)

  • Capital Structure: $14.2mm funded RCF (Sterling National Bank), secured Master Leases (Omega), $15mm funded LOC (OHI Asset RO, LLC), $6.2mm secured note (New Ark Mezz Holdings, LLC), $1.1mm unsecured promissory note (SA Mezz Holdings, LLC)

  • Company Professionals:

    • Legal: DLA Piper (US) LLP (Thomas Califano, Daniel Simon, Dienna Corrado, Andrew Zollinger, David Avraham)

    • Financial Advisor: Crowe Horwath LLP

    • Restructuring Advisor/CRO: Ankura Consulting (Louis Robichaux, Ben Jones, Chris Hebard)

    • Investment Banker: Houlihan Lokey Capital Inc. (Andrew Turnbull, Ryan Sandahl, Angus Schaller, Adam Montague)

    • Independent Director: Drivetrain Advisors LLC (John Brecker)

    • Healthcare Ombudsman: Melanie Cyganowski

      • Legal: Otterbourg P.C. (Keith Costa)

    • Claims Agent: Rust Consulting/Omni Bankruptcy (*click on company name above for free docket access)

  • Other Parties in Interest:

    • DIP Lender: OHI Asset RO, LLC

      • Legal: Bryan Cave LLP (Keith M. Aurzada, Michael P. Cooley, Mark Duedall, Leah Fiorenza McNeill, David Unseth)

    • Plan Sponsor: SC-GA 2018 Partners, LLC

      • Legal: Nelligan LLP (Patrick Nelligan, James Muenker)

    • Sterling National Bank

      • Legal: King & Spalding LLP (Arthur Steinberg, Scott Davidson, Bradley Giordano, Edward Ripley)

    • Official Committee of Unsecured Creditors (Pharmerica Corporation, Healthcare Services Group, Medline Industries, Alana Healthcare, Ominicare Inc., Joerns Healthcare LLC, Regional Ambulance

      • Legal: Pepper Hamilton LLP (Francis Lawall, Donald Detweiler, Joanna Cline) & (local) Norton Rose Fulbright US LLP (Louis Strubeck Jr., Ryan Manns, Elizabeth Boydston)

      • Financial Advisor: CohnReznick LLP (Clifford Zucker)

Updated 5/18/18

New Chapter 11 Bankruptcy - Vasari LLC (d/b/a Dairy Queen)

Vasari LLC

  • 10/30/17 Recap: Texas-based large franchise operator of Dairy Queen brand restaurants operating approximately 70 locations across Texas, Oklahoma and New Mexico filed for bankruptcy. Burdened under the weight of its debt, its lease obligations, and franchise fees, the company struggled to generate revenue to offset its obligations. Why? Well, somewhat surprisingly, the company doesn't immediately dive into the "restaurant excuse bin" (air-quotes) with hackneyed narratives like "bad weather," "experiential desires" and "millennials don't SNAP upside-down frozen treats." Rather, the company notes, "[t]he difficulties faced by the Debtor can largely be traded to the much publicized decline in oil prices. The decline in oil prices has severely impacted the job market for oil related jobs in regions of west Texas and east Oklahoma and has thus resulted in cross-industry declines in revenues in areas heavily dependent on oil related jobs." The company continues, "Since bouncing from a 12 year low, oil prices have begun to rebound; however, oil-related jobs have not. Without oil-related jobs, certain DQ locations will likely continue to underperform, causing a drain on the Debtor's resources." Hurricane Harvey was the cherry on top, disrupting operations in 17 locations. Now, the company intends to use bankruptcy to continue to evaluate its store footprint, shed some stores, and pursue a sale of the remaining locations. 
  • Jurisdiction: N.D. of Texas (Judge Mullin)
  • Capital Structure: $10.8mm debt (Cadence Bank NA), $777k PIK subordinated promissory note.    
  • Company Professionals:
    • Legal: Husch Blackwell LLP (Vickie Driver, Christina Stephenson, Ryan Burgett, Alexander Terras)
    • Financial Advisor: Mastodon
    • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Prepetition/DIP Lender: Cadence Bank NA
      • Legal: Morris Manning & Martin LLP (Frank DeBorde, David Mayo) & (local) Gardere Wynne Sewell LLP (Holland O'Neil, Jason Binford)  
    • Official Committee of Unsecured Creditors
      • Legal: Gray Reed & McGraw LLP (Jason Brookner, Michael Bishop, Lydia Webb)

Updated 11/17/17

New Chapter 11 Filing - Foundation Healthcare Inc.

Foundation Healthcare Inc.

  • 6/22/17 Recap: Once publicly-traded owner ($FDNH) and manager of surgical facilities that, at its peak, owned and/or managed 5 surgical hospitals, 9 ambulatory surgical centers and 3 outpatient departments in the Southeastern United States filed for bankruptcy to liquidate. Boom, done. 
  • Jurisdiction: N.D. of Texas (Nelms)
  • Company Professionals:
    • Legal: Husch Blackwell LLP (Vickie Driver, Christina Stephenson)
    • Financial Advisor/CRO: Ankura Consulting Group LLC (Michael Miller)
    • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)

Updated 7/11/17

New Chapter 11 Filing - Adeptus Health Inc.

Adeptus Health Inc.

  • 4/19/17 Recap: Publicly-traded ($ADPT) Texas-based for-profit hospital operator filed for bankruptcy to effectuate a sale of the business to Deerfield Management Company. The company blames significant working capital needs, challenges with revenue cycle management, and reduced utilization and patient volume for its filing. Deerfield is providing the company a $45mm DIP credit facility. 
  • Jurisdiction: N.D. of Texas
  • Capital Structure: $212.75mm total debt. $61.9mm RCF (Bank of America), $132mm TL (A-1 and A-2, latter with Goldman Sachs Lending Partners), $13.09mm LOC (Bank of America), $7.5mm bridge loan (Deerfield Management Company)    
  • Company Professionals:
    • Legal: Norton Rose Fulbright LLP (Louis Strubeck Jr., Kristian Gluck, John Schwartz, Liz Boydston, Timothy Springer)
    • Financial Advisor/CRO: FTI Consulting (Andrew Hinkelman)
    • Investment Banker: Houlihan Lokey Capital Inc.
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Deerfield Management Company LP
      • Legal: Katten Muchin Rosenman LLP (Peter Siddiqui, Paige Barr)
    • MatlinPatterson Global Opportunities Master Fund LP
      • Legal: Ropes & Gray LLP (Mark Somerstein, Keith Woffard) & (local) Porter Hedges LLP (John Higgins, Joshua Wolfshohl)
    • Wexford Spectrum Investors LLC and Debello Investors LLC
      • Legal: Winstead PC (Phillip Lamberson, Rakhee Patel, Annmarie Chiarello)
    • Healthcare Ombudsman: Daniel McMurray
      • Legal: Neubert, Pepe & Monteith PC (Mark Fishman) & (local) Quilling Selander Lownds Winslett & Moser PC (Joshua Shephard)
      • Medical Operations Advisor: Focus Management Group USA (Daniel McMurray, James Grobmyer, Angeline Bernard, Sandra Casper)
    • Official Committee of Unsecured Creditors
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Sarah Link Schultz, Marty Brimmage, David Botter, Alexis Freeman)
      • Financial Advisor: CohnReznick LLP (Chad Shandler)
    • Official Committee of Equity Security Holders
      • Legal: Brown Rudnick LLP (Edward Weisfelner, Bennett Silverberg, Jeffrey Jonas) & Winstead PC (Rakhee Patel, Phil Lamberson)
      • Financial Advisor: Miller Buckfire & Co. LLC & Stifel Nicolaus & Co. (Richard Klein)

Updated 7/13/17

New Chapter 11 Filing - Goodman Networks Inc.

Goodman Networks Inc.

  • 3/13/17 Recap: Frisco Texas-based minority-business-enterprise (MBE) and wireless network and satellite television systems servicer filed a prepackaged chapter 11 case to de-lever its balance sheet by $212.5mm. This is a story, in many respects, about a concentrated revenue base and too much debt. 83% of the company's revenue is attributable to AT&T and "substantial completion of AT&T's 4G network build-out has diminished the associated demand for Goodman's services." Consequently, the company wasn't generating enough revenue to sustain its capital structure. Now, holders of the secured debt will receive cash, $112.5mm of new debt, PIK preferred stock and common stock. To preserve the MBE status, current equity will get PIK preferred stock and 50.1% of the common stock. Query whether that level of retained equity is a lesson to those who invested in this MBE structure. 
  • Jurisdiction: S.D. of Texas
  • Capital Structure: $25mm RCF (MidCap Financial Trust), $325mm '18 12.125 % secured notes (Wells Fargo)
  • Company Professionals: 
    • Legal: Kirkland & Ellis LLP (Patrick Nash, Joshua Sussberg, Joseph Graham, Laura Krucks, Alexander Cross) & (local) Haynes & Boone LLP (Stephen Pezanosky, Kelli Norfleet)
    • Financial Advisor: FTI Consulting (John Debus)
    • Investment Banker: June Creek Interests (Andy Jent)
    • Claims Agent: KCC (*click on company name for docket)
  • Other Parties in Interest:
    • Ad Hoc Committee of Second Lien Bondholders (Alden Global, AllianceBernstein Global LP, J.P. Morgan Investment Management Inc., J.P Morgan Chase Bank N.A., Phoenix Investment Advisor LLC, Principal Global Investors LLC, Invesco Senior Secured Management Inc., Sound Point Capital Management LP)
      • Legal: Akin Gump (Michael Stamer, Charles Gibbs, Meredith Lahaie, Sara Brauner)
      • Financial: Greenhill & Co. Inc.
  • Wells Fargo
    • Legal: Reed Smith LLP (Eric Schaffer, Lloyd Lim, Maura Nuno)
  • AT&T Corp.
    • Legal: Sidley Austin LLP (Brian Lohan)

Updated 3/28/17