New Chapter 11 Bankruptcy Filing - Avadim Health Inc.

North Carolina-based Avadim Health Inc. and four affiliates (together, the “debtors”) filed chapter 11 bankruptcy cases in the District of Delaware over the Memorial Day holiday. The “vertically integrated healthcare and wellness company” intends to “expeditiously complete a third-party sale of substantially all of the Company’s assets” to their pre-petition secured lenders (Hayfin Services LLP), who have agreed not only to serve as stalking horse purchaser but DIP lenders.

Historically, the debtors have sold topical products like pre-saturated towelettes, foaming, spray and other products B2B to acute care hospitals, nursing homes, and long-term care facilities. In 2016, nine years after their founding, the debtors expanded to B2C, unleashing their products in over 47k pharmacy locations and later adding its own website and an Amazon Inc. ($AMZN) presence to the mix. Between ‘17 and ‘19, the debtors’ annual net revenues popped from $10.8mm to $45.8mm.

On the liability side of the ledger, the debtors historically used debt, private placements of equity, convertible notes and revenues to fund ops. The capital structure includes:

  • $79.6mm term loan;

  • $22mm senior secured notes;

  • $6.4mm 6% unsecured convertible notes; and

  • $2.01mm 1% unsecured PPP loan due 4/22.

The company also owes $4.8mm pursuant to a settlement agreement tied to a patent dispute.

Remember those rising revenues? Yeah, well, that’s all fine and good unless it’s entirely offset by significant selling and marketing expenses and excess inventory build-up because not as many institutions want your product than you modeled out. This bit is brutal:

The Company’s sales related expenses resulted in limited free cash flow to fund other operating expenses, debt service, and investment in new products. In particular, the Company ramped up significant media/marketing expenditures and built up inventory in anticipation of its previously planned early 2020 IPO; however, that IPO never materialized.

Oh, wait, it gets worse:

Notwithstanding spending tens of millions of dollars over the past decade to build the Company’s brand, the Company has been unsuccessful in reaching profitability.

Ok, sorry, folks, but when we think of “brand” we think of LVMH, the parent company of luxury brands like Dior, Louis Vuitton, and Tiffany. In other words, a company with a market cap over 320b Euro which, earlier this month, made Bernard Arnault the richest person in the world (yes, over Jeff Bezos and Elon Musk). We DON’T think of “Theraworx Protect” (the debtors’ immune health line), Theraworx Protect U-Pak (the urinary health line) or Combat One (for soldier and first responder readiness). And we DEFINITELY don’t think of a company that lost $49.5mm $34.8mm and $53.6mm in ‘18, ‘19 and ‘20 respectively.

Apparently neither does the market. The IPO failed. Thereafter, the company initiated a strategic alternatives review that came up empty (with marketing taking place from March ‘20 through October ‘20 … poor timing). This is when the army of restructuring pros got involved, including independent directors on a “Restructuring Committee,” a CRO and some bankers for good measure. All roads, however, led back to the pre-petition secured lenders owed more than $102mm in principal amounts under the term loan and the secured notes. Apparently nobody else wanted to hop aboard a ship that (a) “[o]ver the past few years … [has] been perpetually distressed, constantly facing liquidity crunches and incurring defaults under the [term loan]” and (b) had to enter into “seven amendments to their [term loan] since June 2019, increasing the principal amount available to the Debtors, expanding interest obligations owed to the lenders, and extending maturities.

So, uh, why would anyone else want to get in on this?!?

As noted above, they don’t. The pre-petition lenders, on the other hand, are in a solid position to make a grab for valuable tax attributes and net operating losses!

MIDAVA HOLDINGS 3, INC. is the new entity formed by the pre-petition lenders to serve as stalking horse. The proposed DIP is $7.156mm at L+12%.

The debtors are represented by Chapman and Cutler LLP (Larry Halperin, Joon Hong) & Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, David Bertenthal, Timothy Cairns) as legal counsel, Carl Marks Advisors (Keith Daniels) as financial advisor and CRO, SSG Capital Advisors LLC as banker and Omni Agent Solutions as claims agent. Hayfin is represented by Weil Gotshal & Manges LLP (David Griffiths, Bryan Podzius, Rachael Foust) & Richards Layton & Finger PA (Paul Heath, Zachary Shapiro, Cavid Queroli).

The first day hearing is scheduled for later this morning at 11am ET.


Date: May 31, 2021

Jurisdiction: D. of Delaware (Judge Goldblatt)

Capital Structure: see above

Company Professionals:

  • Legal: Chapman and Cutler LLP (Larry Halperin, Joon Hong) & Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, David Bertenthal, Timothy Cairns)

  • Board of Directors: Dewey Andrew, Linda McGoldrick, Charles Owen III, Steven Panagos, Karan Rai, James Rosati, Stephen Woody

  • Financial Advisor/CRO: Carl Marks Advisors (Keith Daniels)

  • Investment Banker: SSG Capital Advisors LLC

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

Other Parties in Interest:

  • Term Loan Agent: Hayfin Services LLP

    • Legal: Weil Gotshal & Manges LLP (David Griffiths, Bryan Podzius, Rachael Foust) & Richards Layton & Finger PA (Paul Heath, Zachary Shapiro, Cavid Queroli)

📺New Chapter 11 Bankruptcy Filing - MobiTV Inc.📺

MobiTV Inc.

On Monday, Emeryville, California-based MobiTV, Inc. and an affiliated debtor filed for chapter 11 bankruptcy in the District of Delaware. MobiTV is “a creative thinking technology company making TV better.” Which is funny because we’re willing to bet that literally nobody thinks about MobiTV when they think about whether they enjoy their television-watching user experience. Anyway, what that actually means is MobiTV sells a white-label software application to cable providers that allows consumers to stream programming on (i) streaming devices like Roku, Apple TV, Amazon Fire TV, XBox or (ii) a smart TV, without the need for a set-top cable box. Key customers include T-Mobile USA Inc. ($TMUS) and over 120 cable/broadband television providers to deliver content to over 300k end user subscribers. In other words, if you’re streaming HBO via T-Mobile, your experience may very well be powered by MobiTV.

MobiTV has been around since 2000 and had gone through several shifts in its fortunes and business model. In 2020, MobiTV generated $13M in revenue with an operating loss of approximately $34M. That is a long fall from grace for a company that filed for an IPO in 2011 with reported 2010 sales of $67M. At the time, MobiTV was entirely focused on providing licensed TV programming to the personal devices of customers on wireless networks with AT&T Inc. ($T)Sprint, and T-Mobile accounting for almost all of the company’s revenues. MobiTV had raised over $110M from investors like Menlo VenturesRedpoint VenturesAdobe Ventures, and Hearst Ventures.

But despite its rosy trajectory, MobiTV withdrew its IPO filing a few months later citing unfavorable market conditions. In hindsight, there were obviously deeper problems with the business model. Broadcast TV viewing on mobile devices failed to take off in the way the company predicted and MobiTV pivoted away from serving wireless carriers.

Its new target customer was midsize cable providers. Set-top boxes have long been at the center of consumers interactions with cable providers. But these boxes have plenty of drawbacks:

Pay-TV providers (and their consumers) are looking for a way beyond set-top boxes, which can be expensive for consumers to buy, costly to maintain for the pay-TV providers and often limited in their functionality. Their clunkiness, in fact, has made them ripe for disruption, and many now opt for lighter options like Fire TV or Apple TV to bypass those services altogether. In other words, pay-TV providers need to find other routes to providing services to customers that can compete better with the newer generation of video services. (emphasis added)

MobiTV saw the shift towards streaming devices and smart TVs and aimed to position itself as a “television as a service provider” to midsized cable providers like C SpireDirectLink, and Citizens Fiber. These companies lack the R&D budgets of the likes of Comcast Corporation ($CMCSA) to invest in user interface and software applications in their set-top boxes. In 2017, MobiTV raised $21M from Oak Investment Partners and Ally Bank ($ALLY) (at a reported ~$400M valuation!) to develop its MobiTV ConnectTM Platform, “a product for pay TV and on-demand TV providers to stream broadcast TV and offer other services, like catch-up and recording, without the need of a set-top box.

The idea was to capture some of the “customer ownership” that was slipping from cable set-top boxes to streaming devices and services. In 2019, MobiTV raised $50M more from Oak Investment Partners and Ally Bank as well as Cedar Grove Partners to fund further growth. At the time, MobiTV had about 90 cable providers signed up as customers.

Middlemen can make good money and at first glance it seemed like MobiTV might have been able to carve out a position for itself. MobiTV offered cable providers a small way to stem the tide of cord cutting and the proliferation of streaming services like HBO MaxNetflix Inc ($NFLX)Hulu, and the rest. As TechCrunch laid out, “The pitch that MobiTV makes to pay TV providers goes something like this:”

…set-top-box-free pay TV services gives operators a wider array of channels and potentially more flexibility in how they are provisioned. At the same time, a solution like MobiTV’s potentially lowers the total cost of ownership for providers by removing the need for the set-top boxes.

That’s not to say that some of its customers are not using both, though: they can provide a certain set of channels directly through boxes, and the MobiTV service gives them the option of having another set that are offered on top of that.

By 2020, MobiTV’s customer base had grown to about 120 midsize cable TV operators as well as legacy T-Mobile customers. Revenue was growing and its subscribers and customers bases were both increasing. So what the hell happened here? 🤔

An agnostic software solution for cable providers to capture some of the shift towards streaming? Coupled with more people stuck at home from a pandemic? If this product were ever going to work, one would think it would have been during the last year. From the First Day Declaration:

That’s the entirety of section D. Maybe we are dense but it would be interesting to know what exactly about the COVID-19 pandemic and related stay-at-home orders materially impaired the Company’s growth opportunities. Seems like that should have been good for business, no?

But we can speculate.

As every content provider has rolled out their own streaming service over the last twelve months, MobiTV was probably in the worst position in the entire television streaming value chain. On the supply side, content providers are focused on promoting their own streaming services and have little reason to give any sort of pricing concessions to a niche service provider like MobiTV. This surely kept MobiTV’s licensing costs at an elevated level.

On the demand side, consumers likely were not calling in to their cable providers demanding MobiTV considering they could get the same content with a $30 Roku, their streaming subscriptions, and their broadband bill. Cable providers apparently were willing to pay for the service, but not enough to keep the company from losing money.

After 20 years of trying to figure out what its business model was, MobiTV finally threw in the towel and management took COVID cover.

The “tell” that the business issues were more elemental than COVID? The fact that the company has been operating under a series of 17 amendments and forbearance agreements.

At the time of its Ch. 11 filing, MobiTV had ~$25M of debt obligations, owed entirely to its sole pre-petition secured lender, Ally Bank.

In 2017 Ally Bank provided MobiTV a $10M term loan as well as a $5M revolving credit facility which was fully drawn. The original maturity of these loans was February 3, 2019, but following the aforementioned amendments and forbearance agreements, the maturity date was pushed back to January 2021. To fund the business in the interim, Oak Investment Partners threw good money after bad, underwriting three Subordinated Convertible Promissory Notes on August 6, 2020 ($4mm); December 14, 2020 ($1mm); and December 30, 2020 ($0.3mm). As a condition to one of Ally Bank’s credit amendments, MobiTV engaged FTI Capital Advisors LLC to evaluate strategic alternatives. A subsequent marketing effort came up empty: the “alternatives” were non-existent.

Consequently, on January 29, 2021, MobiTV and Ally Bank entered into another amendment and forbearance. T-Mobile — the customer most reliant upon the MobiTV’s services — provided $2.5mm in bridge financing lest they upset thousands of customers right around Super Bowl time. On February 12, 2021, T-Mobile agreed to provide an additional ~$2.3mm and Ally Bank agreed to forbear until February 26, 2021.

Following negotiations with Ally Bank and T-Mobile, the interested parties concluded that a sale process should be implemented through the filing of chapter 11. An affiliate of T-Mobile, TVN Ventures, LLC, has committed to a $15mm DIP credit facility (12%), junior to the pre-existing pre-petition Ally Bank position. As of this writing, management is still seeking a stalking horse bidder to backstop the sale process.

At $13mm of revenue with an operating loss that high, there’s a very good chance that T-Mobile knows it’s buying this thing with that DIP commitment.


Date: March 1, 2021

Jurisdiction: D. of Delaware (Judge Silverstein)

Capital Structure: $25mm funded debt

Company Professionals:

  • Legal: Pachulski Stang Ziehl & Jones LLP (Debra Grassgreen, Mary Caloway, Maxim Litvak, Nina Hong, Jason Rosell)

  • Financial Advisor: FTI Consulting Inc. (Chris LeWand, Catherine Moran, Chris Post, Chris Tennenbaum, Doug Edelman)

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

Other Parties in Interest:

  • DIP Lender: T-Mobile USA Inc. and TVN Ventures LLC

    • Legal: Alston & Bird LLP (William Sugden, Jacob Johnson) & Young Conaway Stargatt & Taylor LLP (Edmon Morton, Kenneth Enos)

  • Silicon Valley Bank

    • Legal: Morrison Foerster LLP (Alexander Rheaume, Benjamin Butterfield) & Ashby & Geddes LLP (Gregory Taylor, Katharina Earle)

  • Ally Bank

    • Legal: McGuireWoods LLP (Kenneth Noble, Kristin Wigness, Ha Young Chung) & Richards Layton & Finger PA (John Knight, David Queroli)

  • Official Committee of Unsecured Creditors:

    • Legal: Fox Rothschild LLP (Seth Niederman, Michael Sweet, Gordon Gouveia)

New Chapter 11 Bankruptcy Filing - Golden Eagle Entertainment $ENT

Golden Eagle Entertainment

July 22, 2020

Suffice it to say, high correlation to the airline and cruiseline industries is a credit negative these days. A few months ago Speedcast — a provider of information technology services and (largely satellite-dependent) communications solutions (i.e., cybersecurity, content solutions, data and voice apps, IoT, network systems) to customers in the cruise, energy, government and commercial maritime businesses — discovered this the hard way and free fell into bankruptcy court. There’s still no resolution of that case. Similarly, Global Eagle Entertainment Inc. ($ENT), a business that generates revenue by (i) licensing and managing media and entertainment content and providing related services to customers in the airline, maritime and other “away-from-home” nontheatrical markets, and (ii) providing satellite-based Internet access and other connectivity solutions to airlines, cruise ships and other markets, couldn’t avoid trouble once COVID-19 shutdown its core end users. No monthly recurring revenue model can save a company when its clients are effectively closed for business AND there’s $855.6mm of funded debt to service. Not to state the obvious.

Things may get worse before they get better. The company’s largest customer is Southwest Airlines Co. ($LUV) (21% of overall revenue) and it has a pretty bearish take on …

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  • Jurisdiction: D. of Delaware (Judge Dorsey)

  • Capital Structure: $85mm RCF, $503.3mm TL, $188.7mm second lien notes, $82.5mm unsecured convertible notes.

  • Professionals:

    • Legal: Latham & Watkins LLP (George Davis, Madeleine Parish, Ted Dillman, Helena Tseregounis, Nicholas Messana, Eric Leon) & Young Conaway Stargatt & Taylor LLP (Michael Nestor, Kara Hammond, Betsy Feldman)

    • Financial Advisor: Alvarez & Marsal LLC

    • Investment Banker: Greenhill & Co. Inc.

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

  • Other Parties in Interest:

    • Prepetition First Lien Admin Agent & DIP Agent: Citibank NA

      • Legal: Weil Gotshal & Manges LLP (David Griffiths, Bryan Podzius)

    • Ad Hoc DIP & First Lien Lender Group: Apollo Global Management, L.P., Eaton Vance Management, Arbour Lane Capital Management, Sound Point Capital Management, Carlyle Investment Management LLC, Mudrick Capital Management, BlackRock Financial Management, Inc.

      • Legal: Gibson Dunn & Crutcher LLP (Scott Greenberg, Michael Cohen, Jason Goldstein) & Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, TImothy Cairns)

    • Second Lien Agent: Cortland Capital Market Services LLC

    • Second Lien Noteholders: Searchlight Capital Partners LP

      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Michael Turkel, Irene Blumberg, Elizabeth Sacksteder) & Richards Layton & Finger PA (Daniel DeFranceschi, Zachary Shapiro)

    • Southwest Airlines Inc.

      • Legal: Vinson & Elkins LLP (William Wallander, Paul Heath, Robert Kimball, Matthew Struble) & Saul Ewing Arnstein & Lehr LLP (Lucian Murley)

    • AT&T Corp.

      • Legal: Arnold & Porter Kaye Scholer LLP (Brian Lohan) & Morris Nichols Arsht & Tunnell LLP (Derek Abbott, Brett Turlington)

    • Terry Steiner International

      • Legal: Loeb & Loeb LLP (Daniel Besikof, Geneva Shi)

    • Telesat International Limited

      • Legal: Hodgson Russ LLP (Garry Graber)

    • Nantahala Capital Management LLC

      • Legal: King & Spalding LLP (Arthur Steinberg, Scott Davidson) & The Rosner Law Group LLC (Frederick Rosner, Jason Gibson)

🍔 New Chapter 11 Bankruptcy Filing - Maines Paper & Food Service Inc. 🍔

Maines Paper & Food Service Inc.

June 10, 2020

Sooooooo…this is a different one. Maines Paper & Food Service Inc. and 12 affiliates (the “debtors”) filed for chapter 11 bankruptcy in the District of Delaware. For a company with a 100-year history — starting with the sale of “nickel candy” to local grocers on through an expansion into fountain supplies, toys and paper products in the 40s and then further expansion into foodservice in the 70s — it seems safe to say the last two years have been as active as any. Indeed, this bankruptcy filing marks the culmination of a two-year roller-coaster process.

Let’s talk about the foodservice business. The debtors operate in over 30 states; they have 10 distribution centers and 3 retail stores across the Northeastern, Midwestern and Southern regions of the US. They have two primary business units. First, their foodservice supply chains solutions unit (the “QSR Business”) provides centralized purchasing and distribution services for QSR (“quick service restaurant”) chains like Burger King ($QSR), Tim Hortons ($QSR), Wendy’s Co. ($WEN), Applebees ($DIN), IHOP ($DIN) and Chilis. For these clients, the debtors manage (i) sourcing and purchasing of food product, (ii) delivery to their distribution centers and (iii) from there, shipping to individual franchisees. They’re not a food producer; they’re not a food seller. They are as middle man as you can get.

The second segment is the logistics services business unit (the “Darden Business”) which services restaurants owned by Darden Restaurants Inc. ($DRI). This business is similar to the QSR Business but for the fact that Darden procures its own foodservice products and the debtors merely handle the logistical side of making sure that the food then gets to DRI’s many restaurant brands.

The restaurant space — as we’ve documented time and time again — has been very challenging for years. Long-time PETITION readers will recall that we’ve highlighted on multiple occasions how rising wages, labor shortages and trucking challenges were nibbling away at already-relatively-low margins. As a servicer to restaurants, the debtors, too, suffered from these issues. Per the debtors:

Even prior to the COVID-19 pandemic, the Debtors faced several years of significant operating pressures resulting from industry-wide truck driver and warehouse labor shortages. During 2018, the foodservice distribution industry specifically, and the distribution & logistics industries more generally, experienced a significant labor shortage, primarily due to the robust labor market. For the Company, these labor shortages caused delivery-related challenges and amplified expenses due to a greater reliance on independent contractors and increases in overtime and shrink cost. The Debtors took steps to identify and implement a number of cost-rationalization initiatives together with scheduled customer resignations in order to manage their costs and address these challenges. However, the cumulative effect of these operational challenges was severe: the Debtors experienced a $29.9 million pre-tax loss in 2018 and a $25.9 million pre-tax loss in 2019.

The debtors’ owners, the Maines Brothers, started waving the white flag in the summer of ‘18. They hired advisors and attempted to divest the company.

They weren’t successful. While a sale didn’t happen, the debtors and their advisors were able to recapitalize the business and otherwise shore up liquidity. At that point the company complemented its existing asset-backed revolving credit facility with a term loan (issued by a non-debtor and secured by certain real estate) and a promissory note issued to an affiliate of Darden. Moreover, the debtors were able to obtain price increases and a small cash infusion from two of its then-largest QSR Business customers (presumably QSR and DIN). These improvements set the company up for a second bite at the sale apple.

And, indeed, by February ‘20, the company received letters of intent that, combined, would have led to the sale of the business in parts. One buyer wanted the QSR Business; another the company’s NY-based corporate headquarters and the Darden Business. About a month and a half away from closing COVID-19 entered the mix.

To say that COVID-19 crushed the debtors’ business would be an understatement. Customer volumes instantly fell by up to 87%. All of the debtors’ end customers were shut down. This is the part of the aforementioned roller-coaster where the seat belt breaks and yet the car is riding up a monstrous ascent. The company’s proposed buyers balked and the PNC Bank NA ($PNC), as agent under the ABL, exercised control over the company’s cash and withdrew its support of the going concern transaction. To make matters worse, several large customers terminated their distribution agreements.

But that’s not all. Lineage Bluebird Debtco LLC, an affiliate of Lineage Foodservice Solutions LLC, saw an opportunity and seized it. Like, literally. They took out PNC in April ‘20 and commenced a partial strict foreclosure of the company’s assets. Get out those Article 9 textbooks folks. What this means is that they took title to the company’s primary assets, i.e., inventory and receivables, its corporate HQ, and other real estate. They then entered into a foreclosure agreement pursuant to which they forgave $80mm of senior secured debt under the ABL, contributed $7.5mm in cash to fund a post-foreclosure wind down in court and another $2mm to pay holders of general unsecured claims pursuant to a plan of liquidation (PETITION Note: trade debt totals over $100mm, exclusive of special first day relief). Lineage also made job offers to the ~850 Maines employees. Lineage is pushing for plan confirmation within the next 90 days which, no doubt, will include releases.

After this untimely sequence of events, it appears the releases are the best the Maines Brothers can hope for at this juncture.

*****

One other point here. In some respects this is a decent result because at least the employees get to keep their jobs. But it’s important to acknowledge the cascading effects stemming from the foreclosure of this business and subsequent consolidation into a competitor.

The most illustrative way to see this is via the debtors’ executory contract rejection motion. While it’s largely possible that a number of these contracts would not have been assumed and assigned in conjunction with the Feb ‘20 sale transactions, it’s equally plausible that many of them would have been. COVID-19 struck and all of that went out the window. In turn, now all of the business that the debtors’ contract counterparties had looks to follow. Most likely, that business is simply redundant to Lineage.

By way of illustration, the debtors are now rejecting, among other things:

  • Multiple retail store leases, undoubtedly contributing to the struggles that landlords already face;

  • Multiple distribution center leases … ditto above (though, we’d think distribution center leases may have a better rebound scenario);

  • Several other real estate leases (i.e., cold storage centers, nurseries, farms);

  • Recycling and waste treatment contracts; and

  • Vehicle lease and, separately, vehicle maintenance contracts.

Multiply this throughout the economy and it’s easier to understand why the market finally corrected a bit this week after a huge euphoric run.


  • Jurisdiction: D. of Delaware (Judge Owens)

  • Capital Structure: $10.329mm RCF (Lineage), $10mm promissory note (Darden Direct Distribution Inc.), $1.7mm unsecured term note (M&T Bank)

  • Professionals:

    • Legal: Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, David Bertenthal, Timothy Cairns, Maxim Litvak)

    • Director: James D. Decker

    • Financial Advisor/CRO: Huron Consulting Group (John DiDonato, Mark Western, David McCormack, Abhimanyu Gupta)

    • Investment Banker:

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

  • Other Parties in Interest:

    • Lineage Logistics Inc.

      • Legal: Latham & Watkins LLP (Peter Gilhuly, Nacif Taousse) & Young Conaway Stargatt & Taylor LLP (Michael Nestor)

    • Restaurant Brands International Inc.

      • Legal: Genovese Joblove & Battista PA & Chipman Brown Cicero & Cole LLP (William Chipman Jr., Mark Olivere) & Genovese Joblove & Battista PA

    • PLM Fleet LLC f/k/a MAC Trailer Leasing Inc.

      • Legal: McCarter & English LLP (Matthew Rifino)

New Chapter 11 Bankruptcy Filing - Neiman Marcus Group LTD LLC

Neiman Marcus Group LTD LLC

May 7, 2020

Dallas-based Neiman Marcus Group LTD LLC, Bergdorf Goodman Inc. and 22 other debtors filed for chapter 11 bankruptcy in the Southern District of Texas late this week. If anyone is seeking an explanation as to why that may be outside the obvious pandemic-related narrative, look no farther than this monstrosity:

Screen Shot 2020-05-08 at 4.51.32 PM.png

A quick reality check: that $5b capital structure isn’t attached to an international enterprise with hundreds or thousands of stores. You know, like Forever21. Rather, that horror show backs a 68 store business (43 Neiman Marcus, 2 Bergdorf, 22 Last Call). Ah….gotta love the good ol’ $5b leveraged buyout.

This case is all about “BIG.”

Big capital structure stemming from a big LBO by two big PE funds, Ares Capital Management and CPP Investment Board USRE Inc.

Big brands with big price tags. PETITION Note: top unsecured creditors include Chanel Inc., Gucci America, Dolce and Gabbana USA Inc., Stuart Weitzman Inc., Theory LLC, Christian Louboutin, Yves Saint Laurent America Inc., Burberry USA, and more. There is also a big amount allocated towards critical vendors: $42.5mm. Nobody messes with Gucci, folks. Here’s a live shot of a representative walking out of court confident that they’ll get their money:

Gucci.gif

Big fees. More on this below.

Big, complicated — and controversial — multi-year re-designation and asset stripping transactions that were part of the debtors’ (and now non-debtors’) elaborate strategy to restructure out-of-court by kicking the can down the road. This is undoubtedly going to stir a big fight in the case. More on this below too.

Big value destruction.

Here is what will happen to the pre-petition capital structure under the proposed term sheet and restructuring support agreement filed along with the chapter 11 papers — a deal that has the support of 78% of the term lenders, 78% of the debentures, 99% of the second lien notes, 70% of the third lien notes, and 100% of the private equity sponsors:

Screen Shot 2020-05-08 at 4.51.32 PM.JPG

The Asset-Based Revolving Credit Facility and FILO Facility will get out at par. There’ll be a $750mm exit facility. Beyond that? All that red constitutes heaps and heaps of value that’s now essentially an option. It’s a bet that there is a place in the future for brick-and-mortar luxury department stores. Pursuant to the deal, the “Extended Term Loans” will get the lion’s share of equity (87.5%, subject to dilution). The rest of the capital structure will get small slivers of reorganized equity. General unsecured creditors will get “their pro rata share of a cash pool.” The private equity sponsors will get wiped out but for their hoped-for liability releases.

Back to those big fees. The biggest issue for this week was the debtors’ proposed $675mm new money DIP credit facility (that comes in junior to the existing ABL in priority…in other words, no roll-up here). The DIP is essentially 13% paper chock full of fees (including a backstop fee payable in “NewCo equity” at 30% discount to plan value). One disgruntled party, Mudrick Capital Management, a holder of $144mm of the term loan, appears to have beef with Pimco and other DIP backstop parties — saying that the backstop agreement is inappropriate and the DIP fees are outrageous, likening the fee grab to a COVID hoarding mentality — and therefore felt compelled to cross-examine the debtors’ banker as to the reasonableness of it all. If you’ve ever imagined a kid suing other kids for not picking him for their dodgeball team, it would look something like this did.

And so Lazard’s testimony basically boiled down to this:

“Uh, yeah, dude, nobody knows when the economy will fully open up. The company only has $100mm of cash on the petition date. And IT’S NOT OPERATING. That money is enough for maybe 3 weeks of cash burn given that the debtors intend to continue paying rent (unlike most other retailers that have filed for bankruptcy lately). Damn pesky high-end landlords. Anyway, so we’ll burn approximately $300mm between now and when stores are projected to reopen in July/August. No operating cash flow + meaningful cash burn = risky AF lending environment. It’s unprecedented to lend into a situation with a cash burn that, while it pales in comparison to something like Uber, is pretty damn extreme. Look at the J.Crew DIP: it ain’t exactly cheap to lend in this market. There are no unencumbered assets; there certainly isn’t a way to get junior financing. And a priming fight makes no sense here given the impossibility of showing an equity cushion. So stop being an entitled little brat. There’s no obligation on anyone to cut you into the deal. And if you’re going to cry over spilled milk, take up your beef with Pimco and f*ck right off. Alternatively, you can subscribe to your pro rata portion of the DIP and enjoy all of the fees other than the backstop fee.”

The Judge was convinced that the above rationale constituted good business judgment and approved the DIP on an interim basis.

The hearing also foreshadowed another contentious issue in the case: the myTheresa situation. See, the Debtors’ position is the following: “The ‘17 MyTheresa designation as unrestricted subs + the ‘18 distribution of the myTheresa operating companies to non-debtor Neiman Marcus Group Inc. (a/k/a the “asset stripping” transaction) + a ‘19 wholesale amend-and-extend + cost-saving initiatives + comparable same store sales growth for 7 of 10 quarters + “significantly expanded margins” during the holiday period = rocket ship future growth but for the damn pandemic. On the flip side, Marble Ridge Capital LP takes the position that:

…the Debtors’ financial troubles were entirely foreseeable well before recent events. The Company has operated at leverage multiples more than twice its peers since at least 2018 (prior to the fraudulent transfers described herein). And last year’s debt restructuring increased the Company’s already unsustainable annual interest expense by more than $100 million while only reducing the Company’s debt load by $250 million leaving a fraction of adjusted EBITDA for any capital expenditures, principal repayment, taxes or one-time charges. Sadly, the Debtors’ financial distress will come as no surprise to anyone.

This ain’t gonna be pretty. Marble Ridge has already had one suit for fraudulent transfer dismissed with prejudice at the pleading stage. Now there are defamation and other claims AGAINST Marble Ridge outstanding. And subsequent suits in the NY Supreme Court. Have no fear, though, folks. There are independent managers in the mix now to perform an “independent” investigation into these transactions.

The debtors intend to have a plan on file by early June with confirmation in September. Until then, pop your popcorn folks. You can socially distance AND watch these fireworks.

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

  • Capital Structure: See above.

  • Professionals:

    • Legal: Kirkland & Ellis LLP (Anup Sathy, Chad Husnick, Matthew Fagen, Austin Klar, Gregory Hesse, Dan Latona, Gavin Campbell, Gary Kavarsky, Mark McKane, Jeffrey Goldfine, Josh Greenblatt, Maya Ben Meir) & Jackson Walker LLP (Matthew Cavenaugh, Jennifer Wertz, Kristhy Peguero, Veronica Polnick)

    • Independent Managers of NMG LTD LLC: Marc Beilinson, Scott Vogel

      • Legal: Willkie Farr & Gallagher LLP (Brian Lennon, Todd Cosenza, Jennifer Hardy, Joseph Davis, Alexander Cheney)

      • Financial Advisor: Alvarez & Marsal LLC (Dennis Stogsdill)

    • Independent Manager of Mariposa Intermediate Holdings LLC: Anthony Horton

      • Legal: Katten Muchin Rosenman LLP

    • Neiman Marcus Inc.

      • Legal: Latham & Watkins LLP (Jeffrey Bjork)

    • Financial Advisor/CRO: Berkeley Research Group LLC (Mark Weinstein, Kyle Richter, Marissa Light)

    • Investment Banker: Lazard Freres & Co. LLC (Tyler Cowan)

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

  • Other Parties in Interest:

    • Pre-petition ABL Agent: Deutsche Bank AG New York Branch

      • Legal: White & Case LLP (Scott Greissman, Andrew Zatz, Rashida Adams) & Gray Reed & McGraw LLP (Jason Brookner, Paul Moak, Lydia Webb)

    • FILO Agent: TPG Specialty Lending Inc.

      • Schulte Roth & Zabel LLP (Adam Harris, Abbey Walsh, G. Scott Leonard) & Jones Walker LLP (Joseph Bain)

    • Pre-petition Term Loan Agent: Credit Suisse AG Cayman Islands Branch

      • Legal: Cravath Swaine & Moore LLP (Paul Zumbro, George Zobitz, Christopher Kelly) & Haynes and Boone LLP (Charles Beckham, Martha Wyrick)

    • Second Lien Note Agent: Ankura Trust Company LLC

    • Third Lien Note Agent: Wilmington Trust NA

    • Unsecured Notes Indenture Trustee: UMB Bank NA

      • Legal: Kramer Levin Naftalis & Frankel LLP (Douglas Mannal, Rachael Ringer)

    • 2028 Debentures Agent: Wilmington Savings Fund Society FSB

    • Ad Hoc Term Loan Lender Group (Davidson Kempner Capital Management LP, Pacific Investment Management Company LLC, Sixth Street Partners LLC)

      • Legal: Wachtell Lipton Rosen & Katz (Joshua Feltman, Emil Kleinhaus) & Vinson & Elkins LLP (Harry Perrin, Kiran Vakamudi, Paul Heath, Matthew Moran, Katherine Drell Grissel)

      • Financial Advisor: Ducera Partners LLC

    • Ad Hoc Secured Noteholder Committee

      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Andrew Rosenberg, Alice Belisle Eaton, Claudia Tobler, Diane Meyers, Neal Donnelly, Patricia Walsh, Jeffrey Recher) & Porter Hedges LLP (John Higgins, Eric English, M. Shane Johnson)

      • Financial Advisor: Houlihan Lokey Capital Inc.

    • Large Creditor: Chanel Inc.

      • Legal: Sheppard Mullin Richter & Hampton LLP (Justin Bernbrock, Michael Driscoll)

    • Large Creditor: Louis Vuitton USA Inc.

      • Legal: Barack Ferrazzano Kirschbaum & Nagelberg LLP (Nathan Rugg)

    • Large Creditor: Moncler USA Inc.

      • Legal: Morrison Cohen LLP (Joseph Moldovan, David Kozlowski)

    • Marble Ridge Capital LP & Marble Ridge Master Fund LP

      • Legal: Brown Rudnick LLP (Edward Weisfelner, Sigmund Wissner-Gross, Jessica Meyers, Uchechi Egeonuigwe)

    • Mudrick Capital Management LP

      • Legal: Gibson Dunn & Crutcher LLP (Michael Rosenthal, Mitchell Karlan, David Feldman, Keith Martorana, Jonathan Fortney)

    • Sponsor: CPP Investment Board USRE Inc.

      • Legal: Debevoise & Plimpton LLP (Jasmine Ball, Erica Weisgerber) & Pillsbury Winthrop Shaw Pittman LLP (Hugh Ray, William Hotze, Jason Sharp)

    • Sponsor: Ares Capital Management

      • Legal: Milbank LLP (Dennis Dunne, Thomas Kreller)

    • Official Committee of Unsecured Creditors

      • Legal: Pachulski Stang Ziehl & Jones LLP (Richard Pachulski) & Cole Schotz PC (Daniel Rosenberg)

      • Financial Advisor: M-III Advisory Partners LP (Mohsin Meghji)

      • Valuation Expert: The Michel-Shaked Group (Israel Shaked)

🎢New Chapter 11 Bankruptcy Filing - TZEW Holdco LLC (a/k/a Apex Parks Group LLC)🎢

Apex Parks Group LLC

April 8, 2020

California-based TZEW Holdco LLC and six affiliates (including Apex Parks Group LLC, the “debtors”) filed for bankruptcy in the District of Delaware. The debtors are Carlyle-owned family entertainment centers located in California, Florida and New Jersey. Here’s what the debtors’ website says about their business prospects:

According to a 2011 International Association of Amusement Parks survey, 25% of Americans surveyed visited an amusement park within the last 12 months, with 43 percent of Americans indicating they plan to visit in the next 12 months. Consumers have a desire to get out of the house for fun, but want their entertainment dollars to represent a good value for the entire family. In America, people visit amusement parks nearly 300 million times each year and generate more than $12 billion in revenue.

Eesh. That’s a tough read these days. 😬😷

The purpose of the filing is to eliminate debt and sell the business to their pre-petition secured lenders. Troubles have been brewing here since 2019: indeed, the debtors have been “perpetually distressed.” Per the debtors:

The Company suffered from a number of challenges leading to these chapter 11 cases, including, among others, increased industry competition and consolidation, heavy operational expenditure requirements, the seasonal nature of the business, general litigation, and irregular management turnover. In the years and months leading up to the Petition Date, the Company initiated multiple go-forward operational initiatives to increase profitability, such as implementing strategic pricing and season pass sales, redesigning food and beverage offerings, optimizing operating calendars, and generally investing in the maintenance and improvement of its locations. Despite these efforts, the Company continued to experience negative cash flows and, ultimately, an unsustainable balance sheet. In the months leading up to the Petition Date, the Company faced rapidly dwindling liquidity and, in order to maintain day-to-day operations, needed to increasingly rely on discretionary disbursements under its prepetition financing agreement.

The Disney Effect!!

Indeed, the debtors blame Disney Inc. ($DIS) and Six Flags Entertainment Corporation ($SIX) for being bigger, better, and deep-pocketed. Well, and having much better IP. Anyone looking for a bullish reason to buy DIS stock — assuming COVID-19 is a short-term issue — can see here, in the words of a competitor, why DIS’ IP strategy over the years has been solid. Per the debtors:

For example, estimates suggest that Universal Studio Orlando's first Harry Potter attraction boosted attendance by 50% over the attraction's first three years. Similarly, Disney has recently constructed Star Wars themed attractions at Walt Disney World it Orlando, Florida and Disneyland in Anaheim, California, as part of a $2 billion investment Disney has made in its theme parks. This industry competition and consolidation by major corporations in recent years has been a key driver in a string of closures of small and middle market theme parks across the country.

The debtors were in the midst of parallel-tracking their marketing process while also talking to their lenders about additional sources of liquidity. COVID-19 didn’t help matters. The debtors shut down their parks and now that people are Amazon Priming their cotton candy, the revenue spigot is off.

As you well know, interest payments are, absent waivers/forbearance from lenders, still due. The debtors owe $79mm to lender, Cerberus Business Finance LLC. An affiliate thereof will serve as stalking horse purchaser of the debtors’ assets with an eye towards the EBITDA-rich June-September period — assuming people are allowed out and are willing to go to amusement parks by then. Cerberus is also providing the DIP. In other words, Cerberus is driving the bus here. The DIP commitment requires a sale hearing no later than May 11, 2020.

  • Jurisdiction: D. of Delaware (Judge Sontchi)

  • Capital Structure: $79mm (Cerberus Business Finance LLC)

  • Professionals:

    • Legal: Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, David Bertenthal, Timothy Cairns)

    • Independent Directors: Michael Short, Jeffrey Dane

    • Financial Advisor: Paladin Management Group LLC (Scott Avila, Jennifer Mercer)

    • Investment Banker: Imperial Capital

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

  • Other Parties in Interest:

    • Administrative Agent: Cerberus Business Finance LLC

      • Legal: KTBS Law LLP (Michael Tuchin, David Fidler, Jonathan Weiss, Sasha Gurvitz) & Young Conaway Stargatt & Taylor LLP (Michael Nestor, Robert Poppitti Jr.)

    • Stalking Horse Purchaser: APX Acquisition Company LLC

    • Largest Equityholders: Benefit Street Partners & Edgewater Growth Capital Partners

💵New Chapter 11 Filing - Highland Capital Management LP 💵

Highland Capital Management LP

October 16, 2019

Dallas-based Highland Capital Management LP filed for bankruptcy in the District of Delaware as a preemptive measure; it was expecting a legal judgment against it in an action emanating out of the closure of a related fund after the Great Recession. There’s more about that lawsuit by Bloomberg here.

  • Jurisdiction: D. of Delaware (Judge )

  • Capital Structure:

  • Professionals:

    • Legal: Pachulski Stang Ziehl & Jones LLP (James O’Neill)

    • Financial Advisor/CRO: Development Specialists Inc. (Bradley Sharp)

  • Other Parties in Interest:

💰New Chapter 11 Filing - Yueting Jia💰

Yueting Jia

October 14, 2019

So, we’re not used to seeing individuals file for chapter 11 listing $500mm-$1b in assets and $1b-$10b in liabilities. We’ll just throw that out there. But these are interesting times and since the private markets have become the new public markets, we suppose it’s not too outlandish to see private companies — and their backers — with extraordinary balance sheets (cough, WeWork). And, by extension, bankruptcy filings.

Indeed, Yueting Jia, is an exceptional case. A serial entrepreneur, Mr. Jia, is the founder of multiple businesses over the years — most notably the LeEco streaming service and Faraday Future, a much-hyped electric vehicle company that fashions itself as a would-be competitor to Elon Musk’s Tesla Inc. ($TSLA). Faraday is owned by Smart King Ltd., an entity in which Mr. Jia holds significant equity that backs personal guarantees he’s made over the years. It’s on account of those guarantees (and several direct loans) that Mr. Jia may now add the “debtor” designation to his resume. It’ll look nice next to his other recent labels: pariah and refugee. Like we said, this is an interesting “case.”

So about those personal guarantees and loans…uh…yeah, they’re pretty extensive. There’s $279mm to Shenzhen Yingda Capital Management Co. Ltd. and $233mm to China CITIC Bank Co. Ltd., followed by at least 18 other large creditors whose security is dramatically under-secured. In other words, Mr. Jia has earned that “debtor” status.

So, what’s the plan? Well, literally, Mr. Jia has already proffered a plan that would, in exchange for broad releases of he and his wife from any claims and liability, provide certain creditors with beneficial interests in a liquidating trust. As proposed, the liquidating trust assets will include “economic rights to 40.8% of the [Smart King’s] equity consisting of 147,048,823 Class B ordinary shares currently owned by FF Top, representing 10% of the [Smart King’s] equity interest” and “a preferred distribution right in connection with 30.8% of [Smart King’s] equity interest (owned through Pacific Technology Holding LLC…and collectively owned by [Mr. Jia] and the management through the Partnership Program…,which will entitle him to a priority distribution of up to US$815.7 million (subject to certain adjustments), right after the return of capital to the management, a special distribution of 10% of the remaining amounts and thereafter, a normal distribution of 20% of the balance owned by Pacific Technology.” Wait. What? What, exactly, will creditors be getting?

Let’s take a step back. Faraday Future is one of those “yogababble” companies that Scott Galloway has recently talked about — a company chock full of mission statement bullsh*t. Per Mr. Jia:

“The Company was founded with the vision to disrupt the traditional automotive industry and create a shared intelligent mobility ecosystem that empowers everyone to move, connect, breathe and live freely.”

Founded in 2014, so far Faraday Future has disrupted nothing other than the balance sheets of Mr. Jia and several other investors. It’s “pre-revenue” which is Silicon Valley bro-code for not making any f*cking money and it hasn’t delivered any cars yet. In terms of assets, the company is really just a bucket of intellectual property and some model pre-production prototypes of its signature FF 91. Suffice it to say, then, that it hasn’t changed the way anyone moves, connects, breathes or lives. At least not yet. We suppose the good thing is that burning cash ($1.7b) doesn’t negatively affect the environment. Small victories.

Anyway, back to the plan. It’s rather circular. Mr. Jia’s interest in the company “is his primary asset.” His primary asset requires new funding to survive. The only way it can get funding is, according to Mr. Jia, if his restructuring is consummated quickly, everyone just moves on, and the company can then hunt for liquidity. Otherwise, it will follow Mr. Jia into bankruptcy. He straight up says:

If, as a result of not being able to consummate the Restructuring in a timely manner, the Company's business is not able to once again pursue its business plan, it is likely that it will not be able to continue as a going concern, it may be forced to liquidate its remaining assets and/or initiate bankruptcy proceedings….

And then the value of the Mr. Jia’s assets will likely be nothing. So, he’s basically saying to his creditors, “agree to this restructuring to give the company a hope and prayer of raising money because without it, the company is screwed, I’m screwed, you’re screwed AND, as a cherry on top, the company’s other investors, employees and creditors are screwed.” Such a hot mess.

Hang on. Why would the company be screwed? Per Mr. Jia:

“As of July 31, 2019, the Company's current liabilities amounted to US$734.3 million, with outstanding note payables of US$402.1 million to related-party lenders and third-party lenders, respectively. The Company has defaulted on some of the notes, and is currently in negotiation with such lenders for extensions or conversion of notes into equity. Several other notes will mature by the end of 2019. For example, the Company's secured note of US$45.0 million issued to certain purchasers pursuant to the note purchase agreement with U.S. Bank National Association will become due on October 31, 2019, to which the Company is seeking an extension from the lender.”

It’s currently in default, that’s why. It needs the Series B financing to help restructure its existing debt.* Which makes this EVEN BETTER: he’s offering his creditors interests in a Trust funded by stock which is currently behind debt that is currently in default!!

So, naturally, the company is also subject to a severe working capital deficit. It has burned through $580.9mm since 2018 with a total accumulated loss of $2.15b as of July 2019. It has approximately $6.8mm of cash on hand.

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But, don’t worry. Entrepreneurial optimism remains nonetheless. Per the plan documents, Mr. Jia remains optimistic that a deal will get done, that a subsequent $850mm Series B financing will get done by January 2020, and that that will be enough to bridge the company to an IPO in 2021. This is, of course, after, the company (i) beta tests its product, (ii) builds out its CA-based manufacturing facility, (iii) firms up its supply chain, (iv) completes all testing and validation, AND (v) delivers its first 100 units of the FF 91 to the market in early Q2 ‘21. This is all great because then we can see where Professor Gallaway puts the company on this spectrum:

Screen Shot 2019-10-15 at 12.49.00 PM.png

As an inducement to voting in support of this plan, Mr. Jia provides “hypothetical figures” based on his and company management’s assumptions. Naturally, he caveats that “they may prove to have been incorrect or unfounded.” You bet your a$$ they might.

Screen Shot 2019-10-15 at 12.51.39 PM.png

By way of comparison, Nio Inc. ($NIO) actually ships cars already (3500 in Q2 ‘19) and has a 1.68b market cap (currently trading at $1.60/share). Tesla is at 46.4b. Both companies are also hemorrhaging cash.

Screen Shot 2019-10-15 at 12.57.24 PM.png

It’s good to see that the Adam Neumanns of the world haven’t sapped the world of hope.


*Notably, that $45mm piece reflects secured notes held by ex-Skadden attorney, Jack Butler, through his firm Birch Lake Holdings. The notes are secured by tangible and intangible assets (which, presumably, includes all of the IP, the only thing here that, as we writ this today, probably has any value whatsoever). An earlier $15mm term loan provided by Birch Lake was paid off in September. It had an impressive 15.5% interest rate (with a default rate of 21.5%).

  • Jurisdiction: D. of Delaware (Judge )

  • Capital Structure:

  • Professionals:

    • Legal: O’Melveny & Myers LLP (Suzzanne Uhland, Diana Perez) & Pachulski Stang Ziehl Jones LLP (Jeffrey Dulberg, Malhar Pagay, Richard Pachulski, James O’Neill)

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

  • Other Parties in Interest:




⛪️New Chapter 11 Bankruptcy Filing - The Diocese of Rochester⛪️

The Diocese of Rochester

September 12, 2019

Source: Official Form 204, The Diocese of Rochester Chapter 11 Filing

Source: Official Form 204, The Diocese of Rochester Chapter 11 Filing

If you haven’t seen the wonderful movie “Spotlight” yet, we highly suggest you do. It’s a compelling — and disturbing — movie about silenced and shamed claimants who were abused at the hands of the Catholic Church. There’s no more appropriate visual image for these people and what they’ve gone through than a black Sharpie line covering their existence. ⬆️

The Diocese of Rochester is the latest in a long line of dioceses that have now filed for bankruptcy as a means to manage the carnage of decades of abuse, neglect, and secrecy.

Earlier this year, the New York State Legislature passed the Child Victims Act (“CVA”) and Governor Cuomo signed the legislation into law in February. The CVA (i) opened a one-year “window” through which time-barred child sex abuse claimants could lodge claims and (ii) extended “the statute of limitations for claims that were not time-barred on its date of passage, permitting such child victims to commence timely civil actions until they reach 55 years of age.” The result? 46 lawsuits involving 61 plaintiffs (plus another 12 demand letters indicating future suits). Chilling numbers.

Here’s another chilling number: “[s]ince the mid-1980’s, the Diocese has settled 44 claims related to child sexual abuse.” No wonder people today have lost faith in our institutions.

Per the Diocese:

The Diocese does not seek Chapter 11 relief to shirk or avoid responsibility for any past misconduct by clergy or for any decisions made by Diocesan authorities when addressing that misconduct. The Diocese does not seek bankruptcy relief to hide the truth or deny any person a day in court. In fact, the Diocese is committed to pursuing the truth and has never prohibited any person from telling his/her story or speaking his/her truth in public. The Diocese has publicly disclosed perpetrators. The Diocese has made and requires criminal referrals to be made for all credible allegations of sexual abuse. The Diocesan Bishop, The Most Reverend Salvatore R. Matano, has apologized for the past misconduct of the personnel of the Diocese and meets with victims at every opportunity in an attempt to bring comfort to such individuals, as did his predecessor. 1'he Diocese has established standards for the training and background assessment of all employees, clerics and volunteers who will likely interact with children and young people.

The bankruptcy is intended to streamline a claims process to promote equal treatment of the claimants. The Diocese grossed $21.8mm in the fiscal year that just ended June 2019 and has insurance policies; it recognizes that it has a “moral obligation to compensate all victims of abuse by church personnel fairly and equitably.” It hopes to use the bankruptcy process to prevent a race to the courthouse and depletion of any and all available funds to the benefit of those whose trials are first to the detriment of those whose come later.

But this isn’t just about the claimants. Per the Diocese:

Beyond the Debtor's obligation to all of its creditors, the Diocese has a fundamental and moral obligation to the Catholic faithful it serves, and to the donors who have entrusted the Diocese with the material fruits of their life's labor, to continue the ministries of the Church in fulfillment of the Debtor's canonical and secular legal purposes. In order to do this, the Diocese must survive.

Some faithful may believe that, going forward, their charitable gifts to any Catholic entity will be diverted from their intended purpose and used to satisfy the claims of the Debtor's creditors rather than to fund the ongoing ministries of the Church that benefit the faithful and their community.

That, frankly, is a bit painful to read. Sure, we get it: the Diocese provides many valuable services to many people in need. But statements like that reek of corporate-speak and makes it sound like the bankruptcy is meant to ensure survival rather than promote justice. It’s a shame.

So, we suspect this case will follow the usual playbook. The Diocese will seek a channeling injunction and set up a trust to address all claims, letting the trustee see what, if anything, can be extracted from insurance proceeds. The claimants will get some small reparation and life will move on. Just more easily for some than others.

  • Jurisdiction: W.D. of New York (Judge Warren)

  • Professionals:

    • Legal: Bond Schoeneck & King PLLC (Stephen Donato, Charles Sullivan, Ingrid Palermo)

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

  • Other Parties in Interest:

    • Official Committee of Unsecured Creditors

      • Legal: Pachulski Stang Ziehl & Jones LLP

Updated: 9/25/19 #65

⛽️New Chapter 22 Bankruptcy Filing - PES Holdings LLC⛽️

PES Holdings LLC

July 21, 2019

Picture the private equity associate. He’s sitting at his desk, twiddling his thumbs, looking for something to do. All is good in the world: the portfolio is humming along, he hasn’t gotten roped into a lose/lose golf tournament with the senior partners in a while, and he just wants to lay low and ride out the summer if he can. Then, suddenly, on one fateful summer day in June, one of his portfolio companies just up -and-decides to randomly explode — or, as the company puts it, suffer a “historic, large-scale, catastrophic accident.” Suddenly he’s mopping the floor with his jaw.

This sudden turn of events is particularly stupefying when you consider that the portfolio company — PES Holdings LLC, aka Philadelphia Energy Solutions — happens to be a 150 year-old oil refining complex that also happens to be (i) the largest on the United States Eastern seaboard (representing approximately 28% of the crude oil refining capacity on the east coast), and (ii) an employer of 950 employees. What are the possible knee-jerk reactions here? Are they:

  1. “Oh sh*t, there goes our portfolio for the year!”

  2. “F******ck, did our investment literally just go up in smoke?”

  3. “Am I going to have a job tomorrow?”

Then there are likely the secondary considerations:

  1. “How will the Commonwealth of Pennsylvania and the City of Philadelphia fulfill their energy needs?”

  2. “Oh no! Did anyone die??!?”

That’s right: we’re cynical AF. After those two waves of initial thoughts and after a deep breath, we bet these were the next questions:

  1. “Do we have to file this thing for ANOTHER bankruptcy now?”

  2. “How robust is our insurance coverage? What are our insurance premiums and can we keep paying them to ensure coverage?”

  3. “Is this an opportunity? How do we transfer all of the risk and best position ourselves to drive equity value here?”

The latter two considerations — as heartless and lacking in empathy as they may be — are highly realistic. And highly relevant, considering the explosion and attendant fire on June 21 forced the company to shut down its plant. The timing couldn’t have been worse: the explosion took place mere days after the company finalized the implementation of a new intermediation facility. Now, though, all “momentum” is lost: the company is currently inoperable and will require an extensive rebuild: at limited capacity and with massive fixed operational costs, the company would have burned (pun most definitely intended) through $100mm in liquidity within a few weeks. Cue the chapter 22 bankruptcy filing.*

Of course, prior to the filing, the company engaged in dialogue with its insurers:

The Debtors also immediately began a process to engage with their insurers—as it relates to property and business interruption insurance claims for the losses caused by the Girard Point Incident—to advance a dialogue toward an immediate advance and a global resolution that will allow the Debtors to restore their operations. The Debtors have yet to obtain such an advance.

Show us an insurer who is ready and willing to fork over proceeds on a moments notice and we’ll show you a bridge we’re selling.

The Debtors’ goal in the near term remains continuing to preserve the safe operation of the Refining Complex while they seek to recover as quickly as possible on their property and business interruption insurance claims and pursue various transactions to preserve their operations and maximize value.

We’re not talking about peanuts here, folks:

The Debtors have $1.25 billion in property and business interruption insurance coverage to protect against these kinds of losses (in addition to other insurance policies that cover other aspects of the Girard Point Incident). The Debtors are working with the insurers under that program to make the Debtors whole for the physical loss of the refinery and the resulting interruption of the Debtors’ business. These insurance proceeds are the very heart of these chapter 11 cases: the sooner the Debtors can recover, the sooner the business can complete its recovery.

While the company waits for the insurers to cough up some cash, it, obviously, needs to focus on safety issues and fire-related cleanup. To that end, it secured a $100mm DIP commitment from certain of its term loan lenders and continues to engage in discussions with ICBC Standard Bank PLC about a dual-DIP structure that would avail the company of even more liquidity. Ultimately, the company hopes to reorganize as a going concern. The extent to which the insurers play ball will dictate whether that’s possible. Something tells us there are some risk analysts combing through those policies with a fine tooth looking for any and all exemptions that they can pull out of their a$$es.

*According to the company, the first chapter 11 filing: “(i) secured a capital infusion of approximately $260 million; (ii) extended the Debtors’ debt maturities through 2022; (iii) reduced the Debtors’ anticipated debt service obligations by approximately $35 million per year; (iv) provided the Debtors with access to a new intermediation facility; and (v) provided the Debtors with relief from certain regulatory obligations.

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: see below

  • Professionals:

    • Legal: Kirkland & Ellis LLP (Edward Sassower, Steven Serajeddini, Matthew Fagen, Michael Slade, Allyson Smith Weinhouse, Patrick Venter, Nacif Taousse, Whitney Becker) & Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, James O’Neill, Peter Keane)

    • CRO: Stein Advisors LLC (Jeffrey Stein)

    • Financial Advisor: Alvarez & Marsal LLC

    • Investment Banker: PJT Partners LP

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

  • Other Parties in Interest:

Screen Shot 2019-07-22 at 5.41.29 PM.png

😷New Chapter 11 Filing - Center City Healthcare LLC (d/b/a Hahnemann University Hospital)😷

Center City Healthcare LLC

June 30, 2019

We take a break from our regularly scheduled oil and gas distress to bring you some regularly scheduled healthcare distress. That’s right: more healthcare distress. Here, Philadelphia Academic Health System LLC and 12 affiliated debtors — including two major hospitals in Philadelphia, St. Christopher’s Hospital for Children (“STC”) and Hahnemann University Hospital (“HUH”) and related physician practices — have filed for bankruptcy in Pennsyl…strike that…in the District of Delaware.* Gotta love venue!

This bankruptcy case likely marks the end of HUH, an academic medical center that (a) is the primary teaching hospital for Drexel University and (b) has been providing healthcare services since 1848.

According to the debtors, their troubles can be traced back to an August 2017 acquisition — consummated in January 2018 — of the assets (i.e., operating entities, non-debtor entities owning the real estate upon which the hospital operate, and certain receivables) from Tenet Business Services Corporation. The debtors’ primary source of funding for the acquisition was a pre-petition credit facility from Midcap Funding IV Trust.

Immediately after the sale, the debtors realized that they bought a lemon. Per the debtors:

Disputes arose between the Debtors and Tenet with regards to, among other things, the “Net Working Capital Adjustment” provided for under the parties’ Asset Sale Agreement, most notably, for overstated amounts of accounts receivable totaling approximately $21 million. The Debtors also learned that approximately $5 million of amounts received by Tenet at closing in order for it to pay certain accounts payable was never in fact paid. These issues resulted in a significant liquidity shortfall that adversely affected the Debtors’ operations almost immediately after closing of the Acquisition.

The parties are now in litigation with Tenet asserting counterclaims. Gotta hate when that happens. And that’s not the end of it:

Disputes also arose between the parties regarding the financial condition of the Debtors’ businesses, wherein the Debtors asserted that they were led to believe during due diligence process for the Acquisition that the business, as a whole, was essentially breaking even through November 2017 on an EBITDA basis. In fact, the business lost more than $6 million during its first full operational month in February 2018, and continues to experience substantial losses. The Debtors and their affiliates have asserted indemnity and fraud claims against Tenet on these grounds, which Tenet disputes.

Basically this is a hot mess. Coupled with (i) disputes with Drexel, (ii) delays in, and reduction of, payments of supplemental payments from the Commonwealth of Pennsylvania, (iii) decreased patient volumes in 2018, (iv) increased losses by certain of the physician groups, (v) material declines in outpatient procedures and surgeries; and (vi) reductions in average daily census, partly due to a reduction in average length of stay and reduced direct admissions, HUH encountered a maelstrom of negative operational issues to the tune of a pre-tax 2018 loss of approximately $69mm. STC is profitable; it, however, is dragged down by the rest of the enterprise. All in, the debtors pre-tax losses in 2018 exceeded $85mm and have not abated in 2019. Due to this piss poor financial performance, the debtors defaulted on their MidCap credit facility.

The debtors intend to use the chapter 11 process to pursue an orderly wind down of HUH while, contemporaneously, pursuing a sale of STC and the related physician practices. No stalking horse bidder is currently lined up. The debtors do, however, have a commitment from Midcap for $65mm of DIP financing, of which it appears less than $7mm will be new money.

Now is an occasion for Philly to, once again, show how tough it can be.

*SCH, HUH and their corporate parent, Philadelphia Academic Health System LLC, are all DE LLCs.

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: $38.6mm RCF & $20mm TL (Midcap Funding IV Trust)

  • Professionals:

    • Legal: Saul Ewing Arnstein & Lehr LLP (Monique Bair DiSabatino, Mark Minuti, Jeffrey Hampton, Adam Isenberg, Aaron Applebaum, Jeremiah Vandermark) & Klehr Harrison Harvey Branzburg LLP

    • Financial Advisor/CRO: EisnerAmper LLP (Allen Wilen)

    • Investment Banker: SSG Advisors LLC

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

  • Other Parties in Interest:

    • Prepetition & DIP Lender ($65mm): MidCap Funding IV Trust

    • Tenet Business Services Corp.

      • Legal: Kirkland & Ellis LLP (Gregory Pesce) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones)

New Chapter 11 Bankruptcy Filing - Kona Grill Inc. ($KONA)

Kona Grill Inc.

April 30, 2019

Let’s be honest: we’ve given this sh*t stain of a company far too much coverage given its size. Yet, it’s part of a broader casual dining narrative that is important to follow and, significantly, we took it upon ourselves to highlight how this thing was SO CLEARLY headed towards bankruptcy a year ago considering the company is (somewhat inexplicably) publicly-traded ($KONA). We first mentioned it in this Members’-only piece in April 2018. We dug deeper in this Members’-only briefing on August 2018. Additional mentions came here, here, here (“…there is no way this thing DOESN’T end up in bankruptcy court soon. It just blew out its board. It is on to its umpteenth CEO in a matter of years. Revenues fell 15.7% in the most recent reported quarter. Same-store sales fell 14.1%. 14.1%!!!! It’s just a matter of ‘when’ at this point.”), and, finally, as recently as April 28, 2019, here, wherein we wrote “[s]tick a fork in it.

Well, stick a fork in it, indeed. The company and several affiliated companies are now chapter 11 debtors in the District of Delaware.

To refresh your recollection, the company is a casual dining restaurant chain with 27 locations (down from 40+ locations when we first started discussing the company over a year ago). “The restaurants feature contemporary American favorites, award-winning sushi and an extensive selection of alcoholic beverages.” Award winning sushi, huh? We did some googling and were unable to ascertain which fine organization conferred upon Kona Grill Inc. an award for its fine sushi. But we digress.

As you might expect from such a long-time-coming sh*t show, the debtors’ first day filing papers are pure comedy chock full of hyperbolic bull sh*t. It’s amusing what the debtors say and it’s laughable what they don’t say. The first day declaration reads like marketing materials: it states that the company offers “an upscale contemporary ambience” with an “exceptional” dining experience and a “legendary” happy hour. The fact that this company is in bankruptcy belies the claim that the experience is exceptional. As for legend, Arya Stark is a legend; Tony Stark is a legend. Michael Jordan is a legend. Kona Grill has a bar that serves drinks. We can assure you with 100% certainty that there is absolutely nothing legendary about it. Indeed, revenues in fiscal ‘18 were $156.9mm, down 12.4% YOY, and, as of the petition date, the company had a meaningfully non-legendary $1.2mm of cash on hand. Legendary, our a$$es.

The company is party to a $33.2mm credit agreement split between a revolving loan and a term loan and has been in a state of perpetual amendment since Q1 2017. The company also owes unsecured trade creditors $8mm.

Why is the company in bankruptcy? Here’s where we get comedy by omission. Yes, sure, they acknowledge that they doubled their restaurants between ‘13 and ‘17, spent a ton on marketing to reverse negative same-store sale trends, and then engaged in an ill-advised stock repurchase program in 2016/2017, further draining much needed liquidity. Thereafter, the company was forced to deploy the standard playbook: cease opening new locations, shutter some underperforming stores (PETITION Note: the company filed a motion seeking to reject 18 leases already), fire people, cut back on training and staffing, etc. G-d help the people who actually ate there during this period: we can only imagine what happened to the food quality. What the company doesn’t say, though, is that there has been a revolving door of CEOs. We suppose the debtors ought to be commended for not completely throwing prior management teams under the bus. This may have something to do with active lawsuits between the company and a former CEO.

What’s crazy is that the company didn’t hire a banker until March 2019. This is a company that should have been marketed long ago. Notably, there’s no stalking horse buyer lined up. And while the company does have a commitment from KeyBank for $39.2mm of DIP financing (of which only $6mm is new money), the company also has a hard deadline of August 9, 2019 to avoid a default. Will it be able to find a buyer now?

We suppose we’ll find out how “legendary” things are after all.

  • Jurisdiction: D. of Delaware (Judge )

  • Capital Structure: $33.2mm

  • Professionals:

    • Legal: Pachulski Stang Ziehl & Jones LLP (James O’Neill, John Lucas, Jeremy Richards)

    • Financial Advisor/CRO: Alvarez & Marsal LLC (Christopher Wells, Jonathan Tibus)

    • Investment Banker: Piper Jaffrey

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

  • Other Parties in Interest:

    • DIP Agent: KeyBank National Association

      • Legal: Buchanan Ingersoll & Rooney PC (Mary Caloway)

🎥New Chapter 11 Bankruptcy Filing - Fuse LLC (a/k/a Fuse Media)🎥

Fuse LLC

April 22, 2019

California-based Fuse LLC, a multicultural media company composed principally of the cable networks Fuse and FM, filed a prepackaged chapter 11 along with 8 affiliated debtors in the District of Delaware to effectuate a swap of $242mm of outstanding secured debt for $45mm in term loans (accruing at a STRONG 12% interest and maturing in five years), new membership interests in the reorganized company and interests in a litigation trust. General unsecured creditors will recover nothing despite being owed approximately $10mm to $25mm.

The company is well known to millions of US homes: approximately 61mm homes get Fuse, an independent cable network that targets young multicultural Americans and Latinos. FM’s music-centric content reached approximately 40.5mm homes “at its peak.” The company has three principal revenue streams: (a) affiliate fees; (b) advertising; and (c) sponsored events; it generated $114.7mm in net revenue for the fiscal year ended 12/31/18 and “had projected affiliate fees of approximately $495 million through 2020.

Why is it in bankruptcy? In a word, disruption. Disruption of content suppliers (here, Fuse) and content distributors (the traditional pay-tv companies). Compounding the rapid changes in the media marketplace is the company’s over-levered balance sheet, an albatross that hindered the company’s ability to innovate in an age of “peak TV” characterized by endless original and innovative content.

The company illustrates all of this nicely:

“…the overall pay-TV industry is in a period of substantial transformation as the result of the introduction into the marketplace in recent years of high quality and relatively inexpensive and consumer friendly content alternatives (e.g., Netflix, Hulu and others). The ongoing marketplace changes have resulted in, and will continue to cause, a material decline in pay-tv subscribers and related affiliate fee revenue as a result of a declining number of new subscribers, "cord-cutting" (the cancellation of an existing pay-tv subscription), and "cord-shaving" (the downgrading of a pay-tv subscription from a higher priced package to a lower priced package). Each quarter the Company receives less revenue from its traditional pay-tv distribution partners as the result of the decline in subscribers receiving the Company's networks. And new sources of revenue for the Company, although developing and in progress, have not grown sufficiently to offset revenue declines in the legacy business. As a result of these trends, the refinancing of the Company's debt was not viable.”

Said another way, on a macro level, Netflix Inc. ($NFLX), Amazon Inc’s ($AMZN) Prime service, Hulu ($DIS) and various other OTT services have taken a huge chunk out of conventional bundlers and now victims are shaking from the tree. On a more micro level, the company is subject to distribution agreements with pay-TV operators. The majority of agreements were guaranteed through 2020, representing contracted revenue estimated at approximately $495mm through 2020. But the company’s debt, however, prevented it from investing in programming, marketing and original content at the same pace as its rivals. Consequently, Comcast and Verizon Fios ($VZ)— which represent significant percentages of the debtors’ subscriber base and, in turn, revenue — stopped distributing Fuse at the end of 2018. Compounding matters, DirecTV recently notified the company that it, too, intended to terminate its distribution agreement with the debtors — which is now subject to litigation in California. Talk about a hat trick!!

The company intends to use cash collateral to finance its cases. If successful, the company will emerge from bankruptcy with a substantially reduced balance sheet, having cut its debt by approximately 80%. After de-levering, the company believes it…

“… will be better able to effectively support its core linear networks business, as well as pursue growth areas, such as virtual multichannel video programming distribution (e.g., YouTube TV and Hulu Live), advertising supported distribution (AVOD), and complementary areas such as live events and music festivals. The Company also will be well-positioned post-emergence to explore strategic transactions that can accelerate greater growth in new areas for stakeholders.”

We suspect Fuse won’t be the last content supplier to shake out from this evolution in the media space.

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: $242mm 10.375% Senior Secured Notes due 2019

  • Company Professionals:

    • Legal: Pachulski Stang Ziehl & Jones LLP (Richard Pachulski, Ira Kharasch, Maxim Litvak, James O’Neill)

    • Financial Advisor: FTI Consulting Inc. (Michael Katzenstein)

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

  • Other Parties in Interest:

    • Supporting Noteholders

      • Legal: Fried Frank Harris Shriver & Jacobson LLP (Brad Scheler, Peter Siroka, Emil Buchman, Andrew Minear) & (local) Richards Layton & Finger PA (Michael Merchant)

🏠New Chapter 11 Bankruptcy Filing - Decor Holdings Inc.🏠

Decor Holdings Inc.

February 12, 2019

Source: https://www.robertallendesign.com

Source: https://www.robertallendesign.com

Privately-owned New York-based Decor Holdings Inc. (d/b/a The RAD Group and The Robert Allen Duralee Group) and certain affiliates companies filed for bankruptcy earlier this week in the Eastern District of New York. The debtors state that they are the second largest supplier of decorative fabrics and furniture to the design industry in the U.S., designing, manufacturing and selling decorative fabrics, wall coverings, trimmings, upholstered furniture, drapery hardware and accessories for both residential and commercial applications. All of which begs the question: do people still actually decorate with this stuff?!? In addition to private label product lines, the company represents six other furnishing companies, providing tens of thousands of sku options to design professionals and commercial customers. The company maintains a presence via showrooms in large metropolitan cities in the US and Canada as well as an agent showroom network in more than 30 countries around the world. In other words, for a company you’ve likely never heard of, they have quite the reach.

The debtors’ problems derive from a 2017 merger between the Duralee business and the Robert Allen business. Why? Well, frankly, it sounds like the merger between the two is akin to a troubled married couple that decides that having a kid will cure all of their ills. Ok, that’s a terrible analogy but in this case, both companies were already struggling when they decided that a merger between the two might be more sustainable. But, “[l]ike many industries, the textile industry has been hard hit by the significant decrease in consumer spending and was severely affected by the global economic downturn. As a result, the Debtors experienced declining sales and profitability over the last several years.” YOU MEAN THE PERCEIVED SYNERGIES AND COMBINED EFFICIENCIES DIDN’T COME TO FRUITION?!? Color us shocked.

Ok, we’re being a little harsh. The debtors were actually able to cut $10-12mm of annual costs out of the business. They could not, however, consolidate their separate redundant showroom spaces outside of bankruptcy (we count approximately 32 leases). Somewhat comically, the showroom spaces are actually located in the same buildings. Compounding matters was the fact that the debtors had to staff these redundant spaces and failed to integrate differing software and hardware systems. In an of themselves, these were challenging problems even without a macro overhang. But there was that too: “…due to a fundamental reduction of market size in the home furnishings market, sales plummeted industry wide and the Debtors were not spared.” Sales declined by 14% in each of the two years post-merger. (Petition Note: we can’t help but to think that this may be the quintessential case of big firm corporate partners failing to — out of concern that management might balk at the mere introduction of the dreaded word ‘bankruptcy’ and the alleged stigma attached thereto — introduce their bankruptcy brethren into the strategy meetings. It just seems, on the surface, at least, that the 2017 merger might have been better accomplished via a double-prepackaged merger of the two companies. If Mattress Firm could shed leases in its prepackaged bankruptcy, why couldn’t these guys? But what do we know?).

To stop the bleeding, the debtors have been performing triage since the end of 2018, shuttering redundant showrooms, stretching payables, and reducing headcount by RIF’ing 315 people. Ultimately, however, the debtors concluded that chapter 11 was necessary to take advantage of the breathing spell afforded by the “automatic stay” and pursue a going concern sale. To finance the cases, the debtors obtained a commitment from Wells Fargo Bank NA, its prepetition lender, for a $30mm DIP revolving credit facility of which approximately $6mm is new money and the remainder is a “roll-up” or prepetition debt (PETITION Note: remember when “roll-ups” were rare and frowned upon?). The use of proceeds will be to pay operating expenses and the costs and expenses of being in chapter 11: interestingly, the debtors noted that they’re administratively insolvent on their petition. 🤔

Here’s to hoping for all involved that a deep-pocked buyer emerges out of the shadows.

  • Jurisdiction: E.D. of New York (Judge Grossman)

  • Capital Structure: $23.7mm senior secured loan (Wells Fargo Bank NA), $5.7mm secured junior loan (Corber Corp.)

  • Professionals:

    • Legal: Hahn & Hesson LLP (Mark Power, Janine Figueiredo)

    • Conflicts Counsel: Halperin Battaglia Benzija LLP (Christopher Battaglia)

    • Financial Advisor: RAS Management Advisors LLC (Timothy Boates)

    • Investment Banker: SSG Capital Advisors LLC (J. Scott Victor)

    • Liquidator: Great American Group LLC

    • Claims Agent: Omni Management Group Inc. (*click on the link above for free docket access)

  • Other Professionals:

    • DIP Agent: Wells Fargo Bank NA

      • Legal: Otterbourg P.C. (Daniel Fiorillo, Jonathan Helfat)

    • Subordinated Noteholder: Corber Corp.

      • Legal: Pachulski Stang Ziehl & Jones LLP (John Morris, John Lucas)

New Chapter 11 Bankruptcy Filing - Things Remembered Inc.

Things Remembered Inc.

2/6/19

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

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

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

What caused the need for bankruptcy?

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

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

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

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

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

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

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: $mm debt     

  • Company Professionals:

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

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

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

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

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

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

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

  • Other Parties in Interest:

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

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

    • Lender: Cortland Capital Market Services LLC

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

    • Sponsor: KKR & Co.

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

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

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

New Chapter 11 Bankruptcy Filing - Catalina Marketing Corporation

Catalina Marketing Corporation

12/12/18

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

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

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

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

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

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

$230mm PIK Toggle unsecured notes

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

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

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: see above.

  • Company Professionals:

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

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

    • Investment Banker: Centerview Partners

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

  • Other Parties in Interest:

    • DIP Lenders and the Ad Hoc First Lien Lenders

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

    • Ad Hoc Group of Second Lien Lenders

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

    • Admin Agent of the First Lien Credit Agrement

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

    • Admin agent under the Second Lien Credit Agreement

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

    • Ad Hoc Group of the PIK Toggle notes

      • Legal: Debevoise & Plimpton LLP

😷New Chapter 11 Bankruptcy Filing - Promise Healthcare Group LLC😷

Promise Healthcare Group LLC

November 5, 2018

Most professionals predicted at the start of 2018 that healthcare would be an active industry for restructuring activity. Instead, there’s only been a few cases here and there — nothing to really stand out from the crowd in terms of volume. And, so just when we’re on the verge of declaring that prediction utterly and emphatically wrong, here is Promise Healthcare Group LLC and its affiliated debtors — another short-term and long-term acute care and nursing facility operator in bankruptcy court (with DLA Piper and FTI Consulting in tow, a seemingly regular occurrence these days in sizable healthcare matters).

Why is another large acute care operator in bankruptcy? The debtors blame the usual deplorables, i.e., reimbursement rate declines, capital-intensive and ultimately-abandoned new business projects, underperforming facilities, and an “unsustainable balance sheet.” Consequently, it undertook performance improvement measures, including the closure of two facilities and the sh*tcanning of 147 full-time equivalent employees. This, collectively, freed up a total of $13.5mm but vendors had begun squeezing the company in such a way that this amount, alone, wasn’t enough to cash flow to sustain the debtors.

The debtors intend to (i) sell non-core assets and real estate to payoff certain secured creditors (including one in Silver Lake, Los Angeles, to the L.A. Downtown Medical Center for $84.15mm) and (ii) otherwise market and sell substantially all of the rest of their assets or, if an equity sponsor emerges, restructure. They intend to do this within six months (anyone want to take the under?). The company has a $85mm DIP commitment ($20mm new money) to fund the process.

  • Jurisdiction: D. of Delaware

  • Capital Structure: $61.6mm Revolver, $15mm TL debt, $200mm intercompany debt (two loans)

  • Company Professionals:

    • Legal: Waller Lansden Dortch & Davis LLP (John Tishler, Katie Stenberg, Blake Roth, Tyler Layne) & (local) DLA Piper LLP (Stuart Brown, Kaitlin MacKenzie Edelman, Erik Stier, Matthew Sarna)

    • CRO/Financial Advisor: FTI Consulting Inc. (Andrew Hinkelman, Jennifer Byrne, Chris Goff)

    • Investment Banker: Houlihan Lokey Capital Inc. (Andrew Turnbull, Matthew Ryan, Scott Kremeier, Moyo Mamora, Brian Marks, Marc Epstein, Conor Dorgan) and MTS Health Partners LP (Jay Shiland)

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

  • Other Parties in Interest:

    • Prepetition Administrative Agent: Wells Fargo Bank NA

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

    • Healthcare Services Group Inc.

      • Legal: Stevens & Lee P.C. (Joseph Huston Jr., Evan Coren, Robert Lapowsky)

    • Stalking Horse Purchaser: Select Medical Corporation

      • Legal: Dechert LLP (Brian Greer, Stephen Leitzell, Jonathan Stott) & (local) Young Conaway Stargatt & Taylor LLP (Robert Brady, Sean Greecher)

    • Official Committee of Unsecured Creditors (HEB Ababa, Ronaldoe Guiterrez and Yolanda Penney, Cardinal Health, Wound Care Management LLC d/b/a MEDCENTRIS, Freedom Medical Inc., Morrison Management Specialists Inc., Efficient Management Resources Systems Inc., Surgical Program Development)

      • Legal: Sills Cummis & Gross P.C. (Andrew Sherman, Boris Mankovetskiy, Rachel Brennan) & (local) Pachulski Stang Ziehl & Jones LLP (Jeffrey Pomerantz, Alan Kornfeld, Bradford Sandler, Maxim Litvak, Colin Robinson)

      • Financial Advisor: Province Inc. (Edward Kim, Paul Huygens, Carol Cabello, Jorge Gonzalez, Carlos Lovera, Paul Navid)

Updated 3/9/18

🚗New Chapter 11 Bankruptcy Filing - ATD Corporation🚗

ATD Corporation

10/4/18

Recap: Please see here.

  • Jurisdiction: D. of Delaware (Judge Carey)

  • Capital Structure: See below.

  • Company Professionals:

    • Legal: Kirkland & Ellis LLP (James Sprayragen, Anup Sathy, Chad Husnick, Spencer Winters, Joshua Greenblatt, Jacob Johnston, Mark McKane, Jaimie Fedell, Andre Guiulfo) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Jones, Timothy Cairns, Joseph Mulvihill)

    • Financial Advisor: AlixPartners LLP (James Mesterharm)

    • Investment Banker: Moelis & Co. (Adam Keil)

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

  • Other Parties in Interest:

    • Term Lender Committee

      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Brian Hermann, Aidan Synnott, Jacob Adlerstein, Michael Turkel, David Giller, Oksana Lashko, Eugene Park, Jacqueline Rubin) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Joel Waite, Andrew Magaziner)

      • Financial Advisor: Houlihan Lokey

    • DIP Agent and Pre-Petition ABL Agent (Bank of America)

      • Legal: Parker Hudson Rainer & Dobbs LLP (C. Edward Dobbs, Eric W. Anderson, James S. Rankin Jr., Jack C. Basham) & (local) Richards Layton & Finger PA (John Knight, Amanda Steele, Brendan Schlauch)

    • DIP FILO Lenders & Consenting Noteholders

      • Legal: Akin Gump Strauss Hauer & Feld LLP (Ira Dizengoff, Philip Dublin, Naomi Moss) & (local) Pepper Hamilton LLP (Evelyn Meltzer, Kenneth Listwak)

      • Financial Advisor: PJT Partners

    • Indenture Trustee: Ankura Trust Company LLC

      • Legal: King & Spalding LLP (Jeffrey Pawlitz, David Zubricki, Jared Zajec) & (local) Chipman Brown Cicero & Cole, LLP (William E. Chipman, Jr., Mark D. Olivere)

    • Michelin North America Inc.

      • Legal: Nelson Mullins Riley & Scarborough LLP (George B. Cauthen, Jody A. Bedenbaugh, Shane Ramsey) & (local) Bayard PA (Justin Alberto, Evan Miller)

    • Cooper Tire & Rubber Company

      • Legal: Jones Day (Timothy Hoffmann) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, D. Ryan Slaugh)

    • Sponsor: Ares Management

      • Legal: Milbank Tweed Hadley & McCloy LLP (Paul Aronzon, Thomas Kreller, Adam Moses)

    • Sponsor: TPG Capital

      • Legal: Weil Gotshal & Manges LLP (Ryan Dahl, Natasha Hwangpo)

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👗New Chapter 11 Filing - J&M Sales Inc./National Stores Inc.👗

Another day, another retailer in bankruptcy. Today, J&M Sales Inc., a “leading discount retailer” with $5-average-price goods in 344 stores in 22 states — operating under the names Fallas, Fallas Paredes, Fallas Discount Stores, Factory 2-U, Fallas and Anna’s Linen’s by Fallas — finds itself in bankruptcy court. The company offers value-priced merchandise, including apparel, bedding, household supplies, decor items and more; it generally supports underserved, low-income communities and can be found in power strip centers, specialty centers and downtown areas. All of its locations are leased.

The company blames (i) general retail pressures, (ii) bad weather (specifically hurricanes Harvey and Maria), (iii) a data breach (and a attendant $2mm reserve account set up by the credit card companies) and (iv) poor integration of growth acquisitions (e.g., Conway’s) for its chapter 11 filing. These company-specific factors may help explain why this company is apparently bucking the national trend of discount retail success (see, e.g., Dollar Tree).

The company intends to use the chapter 11 process to shop itself as a going concern and close at least 74 stores. The company makes no mention, however, of the extent of the sale process and there is no stalking horse bidder currently lined up. The company will seek approval of a (no new money?) $57mm DIP credit facility as well as credit support from certain “Critical Vendors” on a second and third lien basis.

  • Jurisdiction: D. of Delaware (Judge Silverstein)

  • Capital Structure: $57mm ABL (Encina Business Credit LLC/Israel Discount Bank of New York), $30mm term loan (Gordon Brothers Finance Company), $13.4mm Letters of Credit, $10mm Fallas Loan

  • Company Professionals:

    • Legal: Katten Muchin Roseman LLP (WIlliam Freeman, Karen Dine, Jerry Hall) & (local) Pachulski Stang Ziehl & Jones LLP (Richard Pachulski, Peter Keane)

    • Financial Advisor: SierraConstellation Partners LLC (Curt Kroll)

    • Investment Banker: Imperial Capital LLC

    • Real Estate Advisor: RCS Real Estate Advisors

    • Liquidation Agent: Hilco Merchant Resources LLC

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

  • Other Parties in Interest:

    • DIP Agents: Encina Business Credit LLC (Legal: Choate Hall & Stewart LLP, Kevin Simard) & Discount Bank of New York (Legal: Otterbourg PC, Daniel Fiorillo)

New Chapter 11 Filing - Tintri Inc.

Tintri Inc.

7/10/18

On June 23 in "#BustedTech (Short Busted IPOs…cough…DOMO), we wrote the following: 

Tintri Inc., a publicly-traded ($TNTR) Delaware-incorporated and Mountain View California based provider of enterprise cloud and all-flash and hybrid storage systems appears to be on the brink of bankruptcy. There's no way any strategic buyer agrees to buy this thing without a 363 comfort order. 
In an SEC filing filed on Friday, the company noted:

"The company is currently in breach of certain covenants under its credit facilities and likely does not have sufficient liquidity to continue its operations beyond June 30, 2018."

Furthermore, 

"Based on the company’s current cash projections, and regardless of whether its lenders were to choose to accelerate the repayment of the company’s indebtedness under its credit facilities, the company likely does not have sufficient liquidity to continue its operations beyond June 30, 2018. The company continues to evaluate its strategic options, including a sale of the company. Even if the company is able to secure a strategic transaction, there is a significant possibility that the company may file for bankruptcy protection, which could result in a complete loss of shareholders’ investment."

And yesterday the company's CEO resigned from the company. All of this an ignominious end for a company that IPO'd almost exactly a year ago. Check out this chart:
Source: Yahoo! Finance

Source: Yahoo! Finance

Nothing like a $7 launch, a slight post-IPO uptick, and then a crash and burn. This should be a warning sign for anyone taking a look at Domo — another company that looks like it is exploring an IPO for liquidity to stay afloat. But we digress. 
The company's capital structure consists of a $15.4mm '19 revolving credit facility with Silicon Valley Bank, a $50mm '19 facility with TriplePoint Capital LLC, and $25mm of 8% convertible notes. Revenues increased YOY from $86mm in fiscal 2016 to $125.1mm in fiscal 2017 to $125.9mm in fiscal 2018. The net loss, however, also moved up and right: from $101mm to $105.8mm to $157.7mm. The company clearly has a liquidity ("net cash") covenant issue (remember those?). Accordingly, the company fired 20% of its global workforce (~90 people) in March (a follow-on to a 10% reduction in Q3 '17). The venture capital firms that funded the company — Lightspeed Venture Partners among them — appear to be long gone. Silver Lake Group LLC and NEA Management Company LLC, unfortunately, are not; they still own a good amount of the company.
"Isn't cloud storage supposed to be all the rage," you ask? Yeah, sure, but these guys seem to generate product revenue largely from sales of all-flash and hybrid storage systems (and stand-alone software licenses). They're mainly in the "intensely competitive IT infrastructure market," sparring with the likes of Dell EMCIBM and VMware. So, yeah, good luck with that.
*****

Alas, the company has filed for bankruptcy. This bit about the company's financial position offers up an explanation why -- in turn serving as a cautionary tale for investors in IPOs of companies that have massive burn rates:

"The company's revenue increased from $86 million in fisca1 2016 to $125.1 million in fiscal 2017, and to $125.9 million in fiscal 2018, representing year-over-year growth of 45% and 1 %, respectively. The company's net loss was $101.0 million, $105.8 million, and $157.7 million in fiscal 2016, 2017, and 2018, respectively. Total assets decreased from $158.1 million as of the end of fiscal 2016 to $104.9 million as of the end of fiscal 2017, and to $76.2 million as of the end of fiscal 2018, representing year-over-year change of 34% and 27%, respectively. The company attributed flat revenue growth in fiscal 2018 in part due to delayed and reduced purchases of products as a result of customer concerns about Tintri's financial condition, as well as a shift in its product mix toward lower-priced products, offset somewhat by increased support and maintenance revenue from its growing installed customer base. Ultimately, the company's sales levels have not experienced a level of growth sufficient to address its cash burn rate and sustain its business."

With trends like those, it's no surprise that the IPO generated less capital than the company expected. More from the company:

"Tintri's orders for new products declined, it lost a few key customers and, consequently, its declining revenues led to the company's difficulties in meeting day-to-day expenses, as well as long-term debt obligations. A few months after its IPO, in December 2017, Tintri announced that it was in the process of considering strategic options and had retained investment bank advisors to assist it in this process."

As we previously noted, "[t]here's no way any strategic buyer agrees to buy this thing without a 363 comfort order." And that is precisely the path that the company seeks to take. In its filing, the company indicated that it plans to file a motion seeking approval of the sale of its assets and bid procedures shortly. The filing is meant to provide the company with a chance to continue its efforts to sell the company as a going concern. Alternatively, it will look to sell its IP and liquidate. Triplepoint has agreed to provide a $5.4mm DIP credit facility to fund the process.  Savage.  

Meanwhile, today's chart (at time of publication):

Source: Yahoo! Finance

 

  • Jurisdiction: D. of Delaware (Judge Carey)
  • Capital Structure: $4.7mm RCF (Silicon Valley Bank), $56mm term loan (TriplePoint Capital LLC), $25mm '19 convertible notes.     
  • Company Professionals:
    • Legal: Pachulski Stang Ziehl & Jones LLP (Henry Kevane, John Fiero, John Lucas, Colin Robinson)
    • Financial Advisor: Berkeley Research Group LLC (Robert Duffy)
    • Claims Agent: KCC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • First Lien Lender: Silicon Valley Bank
      • Legal: Riemer & Brownstein LLP (Donald Rothman, Paul Samson, Alexander Rheaume, Steven Fox) & (local) Ashby & Geddes PA (Gregory Taylor)
    • Second Lien Lender: TriplePoint Capital LLC
      • Legal: McDermott Will & Emery LLP (TImothy Walsh, Riley Orloff, Gary Rosenbaum) & (local) Polsinelli PC (Christopher Ward, Jeremy Johnson, Stephen Astringer)
    • Proposed Purchaser: DataDirect Networks Inc.
      • Legal: Manatt Phelps & Phillips LLP (Blase Dillingham, Alan Noskow) & (local) Richards Layton & Finger PA (John Knight)

Updated 7/12/18 at 2:09 CT