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

March 15, 2021 by PETITION in Chapter11

Nine Point Energy Holdings Inc.

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

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

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

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

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

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

Date: March 15, 2021

Jurisdiction: D. of Delaware (Judge Walrath)

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

Company Professionals:

Legal: Latham & Watkins LLP (Richard Levy, Caroline Reckler, Jonathan Gordon, George Davis, Nacif Taousse, Alistair Fatheazam, Jonathan Weichselbaum, Andrew Sorkin, Heather Waller, Amanda Rose Stanzione, Elizabeth Morris, Sohom Datta) & Young Conaway Stargatt & Taylor LLP (Michael Nestor, Kara Hammond Coyle, Ashley Jacobs, Jacob Morton)
Board of Directors: Patrick Bartels Jr., Dominic Spencer, Frederic Brace, Gary Begeman, Alan Dawes
Financial Advisor: AlixPartners LLP (John Castellano)
Investment Banker: Perella Weinberg Partners LP (John Cesarz)
Claims Agent: Stretto (Click here for free docket access)

Other Parties in Interest:

Pre-petition & DIP Agent: AB Private Credit Investors LLC
- Legal: Proskauer Rose LLP (Charles Dale, David Hillman, Michael Mervis, Megan Volin, Paul Possinger, Jordan Sazant) & Landis Rath & Cobb LLP (Adam Landis, Kerri Mumford, Matthew Pierce)
Ad Hoc Group of Equityholders: Shenkman Capital Management, JP Morgan Securities LLC, Canyon Capital Advisors LLC, Chambers Energy Capital
- Legal: Willkie Farr & Gallagher LLP (Jeffrey Pawlitz, Matthew Dunn, Mark Stancil) & Richards Layton & Finger PA (John Knight, Amanda Steele, David Queroli)
Midstream Counterparty: Caliber Measurement Services LLC, Caliber Midstream Fresh Water Partners LLC, and Caliber North Dakota LLC
- Legal: Weil Gotshal & Manges LLP (Alfredo Perez, Brenda Funk, Tristan Sierra, Edward Soto, Lauren Alexander) & Morris Nichols Arsht & Tunnell LLP (Curtis Miller, Taylor Haga, Nader Amer)

👖New Chapter 11 Bankruptcy Filing - True Religion Apparel Inc.👖

April 14, 2020 by PETITION in Chapter11, Chapter22

True Religion Apparel Inc.

4/14/20

TMI: we’ve had a hard enough time getting Johnny to even wear pants at all over the last few weeks let alone put on jeans. That one Zoom call where he spilled coffee on himself and jumped out of his chair emblazoned an image in our minds that we’ll need some real therapy to get over. We had to take out an enterprise Headspace account as a result. But enough about us.

To the topic at hand: True Religion Apparel Inc. Here’s the good news: True Religion and its four affiliates (the “debtors”) legged it out long enough to avoid PETITION’s dreaded Two-Year Rule violation. Any retailer that can stave off a chapter 22 bankruptcy filing for as long as True Religion did (30 months) has, in fact, achieved a “successful” restructuring in our book. That said, the brand is nevertheless back in bankruptcy court. If that logic strikes you as perverse well, yes, we admit it: the bar for bankrupted retailers is, in fact, that low.

Interestingly and somewhat counter-intuitively, there has been a dearth of retail restructuring activity during the COVID-19 strike. We went through some explanation for that here and the theme was subsequently picked up and expanded upon by the MSM: there were countless articles about how busy restructuring professionals are and yet very few filings (though there has been a lot of activity this week). Why? It’s hard for retailers to conduct GOB sales when stores aren’t open. DIP financing is harder to come by. Buyers are few and far between. Everyone is having trouble underwriting deals when it’s so difficult to gauge if and when things will return to “normal.”

True Religion couldn’t afford to wait. It has 87 retail stores. They’re closed. It’s wholesale business — dependent, of course, on other open brick-and-mortar shops — is also closed. This was an immediate 80% hit to revenue.* The company — which had posted a $50mm net loss for the TTM ended 2/1/20 (read: it was already pretty effed) — suddenly found itself facing an accelerated liquidity crisis. Stretching payables, stretching rent, furloughing employees. All of those measures were VERY short-term band-aids. A bankruptcy filing became absolutely necessary to gain access to much needed liquidity. This filing is about a DIP credit facility folks. Without it, they’d be looking at Chapter 7 liquidation. Per the debtors:

The Debtors must have access to the DIP Facilities to continue to pay essential expenses—including employee benefits, trust fund taxes and other critical operating expenditures—while they use the breathing spell provided by the Bankruptcy Code to wait out the effects of the COVID-19 pandemic and attempt to pursue a value-maximizing transaction for all stakeholders.

Critical operating expenditures? Yup, e-commerce maintenance and fulfillment, wholesale and restructuring expenses baby. The plan is to “mothball” the business and hope for a tiered reopening of stores “at the conclusion fo the COVID-19 pandemic.” In the meantime, the debtors intend to pull a Modell’s/Pier 1 and get relief from having to pay rent. This as pure of a “breathing spell” as you can get.

Back to the financing. The debtors have approximately $139mm of funded debt split between a $28.5mm asset-backed term loan (inclusive of LOCs) and a $110.5mm first lien term loan. The debtors also had access to a $28.5mm revolver subject to a “borrowing base,” as usual, but that facility wasn’t tapped. We’re guessing Crystal Financial ratcheted up reserves and didn’t leave much opportunity for drawing that money outside of a filing.

In March 2020 the debtors sought, in earnest, new financing, talking to their existing lenders and third-party lenders. They also considered the possibility of tapping funds via the recently-enacted CARES Act. They note:

In addition to the Debtors’ efforts in the private marketplace, the Debtors and their Restructuring Advisors evaluated the availability of government appropriations through the CARES Act. After careful consideration, the Debtors determined that they were not eligible for government funding, or to the extent that there was a possibility that they would be eligible, they would not be able to wait the time necessary to find out whether a loan would be available under the CARES Act. The Debtors are hopeful that future stimulus packages will target companies such as the Debtors – i.e. mid-market companies with 1000 employees that are currently in chapter 11, but that could utilize government financing when emerging from chapter 11.

New third-party financing didn’t come to fruition. Among other reasons, lenders cited “the timing, complexity and overall challenges in the retail industry in light of COVID-19.” It’s hard out there for an underwriter. Ultimately, the debtors settled on financing offered by some of its first lien term lenders.

Now, we don’t normally get too deep into DIP details but given the difficulty financing retailers today, we thought the structure merited discussion. Here’s what the debtors negotiated:

A $29mm senior secured super-priority asset-based revolver (rollup);
A $59.89mm senior secured super-priority delayed-draw term loan credit facility of which $8.4mm is new money, a bit over $3mm is for LOCs, and the rest constitutes a rollup of pre-petition debt.

Major equityholder and pre-petition lender Farmstead Capital Management LLC is a big player in the term loan. The DIP is subject to a “strict” 13-week budget based on a four-month case with an eye towards either a section 363 sale or a reorganization by mid-May. Seems ambitious. For obvious reasons. But Farmstead ain’t suffering no fools. Per the debtors:

…the Debtors’ lenders are unwilling to fund a contentious chapter 11 case and they have made this clear to the Debtors over the course of the negotiations. Any material delay or significant litigation during these cases will result in the Debtors’ default of its covenants and send the Debtors spiraling into a fire-sale liquidation.

Given that Farmstead is taking half of its DIP fee paid-in-kind, they may be looking to own this sucker on the backend via a credit bid. Hats off to those guys.

*The papers are not entirely clear but they appear to indicate that e-commerce “accounts for less than 26% of sales” out of $209mm or ~$54mm. Given layoffs across the country, we have to think that e-commerce fell off a cliff in February and March too. Said another way, there’s no way it could’ve generated enough revenue to keep the business afloat. Also, JP Morgan ($JPM) included the following chart in its earnings deck this week:

Screen Shot 2020-04-22 at 4.17.58 PM.png

**We’d be remiss if we didn’t note the financial performance here. Again, the debtors highlighted a $50mm net loss in the fiscal year that just closed on February 1, 2020. Here are the financial projections that True Religion filed as part of its disclosure statement during its first chapter 11 filing:

That’s a savage miss.

Jurisdiction: D. of Delaware (Judge Sontchi)
Capital Structure: $28.5mm Asset-Backed Term Loan (Crystal Financial LLC), $110.5mm First Lien TL (Delaware Trust Company)
Professionals:
- Legal: Cole Schotz PC (Justin Alberto, Seth Van Aalten, Michael Trentin, Kate Stickles, Patrick Reilley, Taylre Janak) & Akin Gump Strauss Hauer & Feld LLP (Arik Preis, Kevin Eide)
- Board of Directors: Eugene Davis, Lisa Gavales, Stephen Perrella, Robert McHugh
- Financial Advisor: Province Inc. (Michael Atkinson)
- Real Estate Advisor: RCS Real Estate Advisors
- Claims Agent: Stretto (*click on the link above for free docket access)
Other Parties in Interest:
- Pre-petition ABL & DIP ABL Agent: Crystal Financial LLC
  - Legal: Choate Hall & Stewart LLP (John Ventola, Jonathan Marshall) & Womble Bond Dickinson US LLP (Matthew Ward, Morgan Patterson)
- Pre-petition TL & DIP TL Lenders
  - Legal: Proskauer Rose LLP (Brian Rosen, Lucy Kweskin) & Young Conaway Stargatt & Taylor LLP (Jaime Luton Chapman)
- Major equityholders: Farmstead Capital Management LLC, Waddell & Reed, Towerbrook Capital Partners, Apex Credit Partners LLC, Credit Suisse, Goldman Sachs Asset Management

New Chapter 11 Bankruptcy Filing -- Fusion Connect Inc.

June 05, 2019 by PETITION in Chapter11

Fusion Connect Inc.

June 3, 2019

We previously wrote about Fusion Connect Inc. ($FSNN), providers of “Unified Communications-as-a-Service” and “Infrastructure-as-a-Service” in “⛈A Dark "Cloud" on the Horizon⛈.” Therein we marveled at how special Fusion must be…to fail SO SPECTACULARLY in today’s cloud here, cloud there, cloud everywhere, everyone’s gaga for cloud environment. Cloud is SO captivating that it wasn’t until the company filed a piss poor 8-K back in April that a B. Riley FBR ($RILY) analyst FINALLY had an epiphany and declared that the company’s stock ought to be downgraded from “buy” to “neutral” (huh?!?) with a price target of $0.75 — down from $9.75/share. This is despite the fact that the stock hadn’t traded anywhere in the vicinity of $9.75/share in ages — nowhere even close, actually — but whatevs. Clearly, his head was in the cloud(s). This, ladies and gentlemen, demonstrates, in a nutshell, the utter worthlessness of equity analyst reports.🖕

But this isn’t a story about shoddy analyst research. That would be wholly unoriginal. This is a story about synergies and burdensome debt. Because, like, that’s so super original that you won’t read of it again until…well…you scroll below to the next bit of content about FTD!! 🙄

Boiled down to its simplest form, this company is the product of an acquisition strategy (and reverse merger) gone wrong. Like, in a major, major way. Per the company:

The Company pursued the Birch Merger with a vision of leveraging its existing processes and structures to create synergies between Fusion’s and Birch’s joined customer bases, combine network infrastructure assets to improve operational efficiencies, and ultimately drive material growth in Fusion’s and Birch’s combined annual revenue. In connection with the Birch Merger and MegaPath Merger, the Company incurred $680 million in secured debt. (emphasis added)

That reverse merger closed at the end of Q2, 2018. Yet…

Unfortunately, due to underperformance compared to business projections, the Company found itself with limited liquidity and at risk of default under its debt documents by early 2019.

Wait, what? Limited liquidity and risk of default by “early 2019”?!? Who the f*ck diligenced and underwrote this transaction?!? This sitch is so bad, that the company literally didn’t have enough liquidity to make a recent $6.7mm amort payment under the first lien credit agreement and a $300k interest payment on its unsecured debt. This is the company’s pre-petition capital structure:

$20mm super senior L+10% June 2019 debt
$43.3mm Tranche A Term Loans L+6.0% May 2022 debt
$490.9mm Tranche B Term Loans L+8.5% May 2023 debt
$39mm Revolving Loans L+6.0% May 2022 debt
$85mm Second Lien L+10.5% November 2023 debt
$13.3mm Unsecured Debt

Back in April we summed up the situation as follows:

The company’s recent SEC reports constitute a perfect storm of bad news. On April 2, the company filed a Form 8-K indicating that (i) a recently-acquired company had material accounting deficiencies that will affect its financials and, therefore, certain of the company’s prior filings “can no longer be relied upon,” (ii) it won’t be able to file its 10-K, (iii) it failed to make a $7mm interest payment on its Tranche A and Tranche B term loan borrowings due on April 1, 2019, and (iv) due to the accounting errors, the company has tripped various covenants under the first lien credit agreement — including its fixed charge coverage ratio and its total net leverage ratio.

Again, who diligenced the reverse merger?!? 😡

So here we are. In bankruptcy. To what end?

The company is seeking a dual-path restructuring that is all the rage these days: everyone loves to promote optionality that will potentially result in greater value to the estate. In the first instance, the company proposes, as a form of “stalking horse,” a “reorganization transaction” backed by a restructuring support agreement with certain of its lenders. This transaction would slash $300mm of the company’s $665mm of debt and result in the company’s first lien lenders owning the company. That is, unless a buyer emerges out of the woodwork with a compelling purchase price. To promote this possibility, the company is filing a bid procedures motion with the bankruptcy court with the hope of an eventual auction taking place. If a buyer surfaces with mucho dinero, the company will toggle over to a sale pursuant to a plan of reorganization. This would obviously be the optimal scenario. Absent that (and maybe even with that), we’ve got a jaw-dropping example of value destruction. “Fail fast,” many in tech say. These cloud bros listened!! Nothing like deep-sixing yourself with a misguided poorly-diligenced acquisition. Bravo!!

The company has secured a commitment for a fully-backstopped $59.5mm DIP that subsumes the $20mm in super senior pre-petition bridge financing recently provided by the first lien lenders. Is this DIP commitment good for general unsecured creditors? Is any of this generally good for unsecured creditors? Probably not.

Major creditors include a who’s who of telecommunications companies, including AT&T Inc. ($T) (first Donald Trump and now THIS…rough week for AT&T), Verizon Communications Inc. ($VZ), XO Communications (owned by VZ), Frontier Communications Corp. ($FTR)(which has its own issues to contend with as it sells assets to sure up its own balance sheet), CenturyLink Inc. ($CTL), Level 3 Communications ($LVLT), Time Warner Inc. ($TWX), and….wait for it…bankrupt Windstream Communications ($WINMQ). Because the hits just keep on coming for Windstream….

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

Capital Structure: see above.
Professionals:
- Legal: Weil Gotshal & Manges LLP (Gary Holtzer, Sunny Singh, Natasha Hwangpo)
- Board of Directors: Matthew Rosen, Holcombe Green Jr., Marvin Rosen, Holcombe Green III, Michael Del Guidice, Lewis Dickey Jr., Rafe de la Gueronniere, Neil Goldman)
- Financial Advisor: FTI Consulting Inc. (Mark Katzenstein)
- Investment Banker: PJT Partners (Brent Herlihy, John Singh)
- Claims Agent: Prime Clerk LLC (*click on the link above for free docket access)
Other Parties in Interest:
- Ad Hoc First Lien Lender Group
  - Legal: Davis Polk & Wardwell LLP (Damian Schaible, Adam Shpeen)
  - Financial Advisor: Greenhill & Co. Inc.
- DIP Lender: Credit Suisse Loan Funding LLC
- DIP Agent, Prepetition Super Senior Agent & Prepetition First Lien Agent: Wilmington Trust NA
  - Legal: Arnold & Porter Kaye Scholer (Michael Messersmith, Sarah Grylll, Alan Glantz)
- Prepetition Second Lien Successor Agent: GLAS America LLC & GLAS USA LLC
- Ad Hoc Group of Tranche A Term Loan/Revolving Lenders
  - Legal: Simpson Thacher & Bartlett LLP (Sandeep Qusba, Soogy Lee, Edward Linden)
- Second Lien Lenders
  - Legal: Proskauer Rose LLP (Charles Dale, Jon English)
- Large Unsecured Creditor: AT&T
  - Legal: Norton Rose Fulbright US LLP (David Rosenzweig, Francisco Vazquez)

Updated 6/4/19 at 5:42am

🛌New Chapter 11 Bankruptcy & CCAA Filing - Hollander Sleep Products LLC🛌

May 20, 2019 by PETITION in Chapter11, CCAA

Hollander Sleep Products LLC

May 19, 2019

Florida-based private equity owned Hollander Sleep Products LLC and six affiliates (including one Canadian affiliate) have filed for chapter 11 bankruptcy in the Southern District of New York. The debtors are “the largest bed pillow and mattress pad manufacturer in North America.” The debtors produce pillows, comforters and mattress pads for the likes of Ralph Lauren, Simmons, Beautyrest, Nautica and Calvin Klein; their products are available at major retailers like Costco Wholesale Corporation ($COST), Kohl’s Corporation ($KSS), Walmart Inc. ($WMT) and Target Inc. ($TGT) and with the Marriott International Inc. ($MAR) chain of hotels; they have a main showroom in New York City, nine manufacturing facilities throughout the US and Canada, and a sourcing, product development and quality control office in China. Speaking of China, 60% of the debtors’ top 10 creditors are Chinese companies.

Why bankruptcy? Interestingly, the debtors colorfully ask, “How Did We Get Here?” And the answer appears to be a combination of (a) “[r]ecent substantial price increases on materials” like fiber, down and feathers, (b) acquisition integration costs, (c) too much competition in a low margin space, (d) employee wage increases “as a result of natural wage inflation and the tight job market” and (e) too much leverage. The debtors burned through $20mm in the last year on material cost increases alone (it opted NOT to pass price increases on to the consumer), straining liquidity to the point that, at the time of filing, the company had less than $1mm of cash on hand.

With the filing, the debtors seek to restructure approximately $166.5mm of term debt, effectuating a debt-for-equity swap in the new reorganized entity (plus participation in a $30mm exit facility). 100% of the debtors’ term lenders support the plan. As does lender and equity sponsor, Sentinel Capital Partners LLC. That doesn’t necessarily mean, however, that they truly want to own the post-reorg company. Indeed, the debtors have indicated that while they march towards plan confirmation (which they say will be in four months), they will also entertain the possibility of a sale of the company to a third-party. These dual-track chapter 11 cases are all the rage these days, see, e.g., Shopko.

If approved by the bankruptcy court, the bankruptcy will be funded by a $118mm DIP credit facility which will infuse the debtors with $28mm in incremental new money and roll-up the debtors’ prepetition asset-backed first priority credit facility.

The debtors note that “the sleep industry as a whole is both healthy and growing. Market trends favor healthy lifestyle sectors, and the basic bedding segment is generally recession resilient.” We have no quibble with either comment. The company believes that by, among other things, (i) delevering its balance sheet, (ii) gaining access to new capital, (iii) engaging in selective price increases, (iv) implementing material efficiencies, (v) streamlining manufacturing, and (vi) building out their e-commerce channel, it will have a more sustainable path forward. Whether that path will be taken at the direction of their lenders or a strategic buyer remains to be seen.

Jurisdiction: S.D. of New York (Judge Wiles)
Capital Structure: $125mm ABL ($43mm funded), $166.5mm term loan
Professionals:
- Legal: Kirkland & Ellis LLP (Joshua Sussberg, Christopher Greco, Joseph Graham, Andrew McGaan, Laura Krucks)
- Board of Directors: Eric Bommer, Michael Fabian, Steve Cumbow, Chris Baker
- Disinterested Director: Matthew Kahn
  - Legal: Proskauer Rose LLP
- Financial Advisor: Carl Marks Advisory Group LLC (Mark Pfefferle)
- Investment Banker: Houlihan Lokey Capital Inc. (Saul Burian)
- Claims Agent: Omni Management Group (*click on the link above for free docket access)
Other Parties in Interest:
- Prepetition and ($90mm) DIP ABL Agent: Wells Fargo Bank NA
  - Legal: Goldberg Kohn Ltd. (Randall Klein, Prisca Kim) & (local) Orrick Herrington & Sutcliffe LLP (Laura Metzger, Peter Amend)
- ($28mm) DIP Term Loan Agent:

5/2/19, #2

New Chapter 11 Filing - Nine West Holdings Inc.

April 06, 2018 by PETITION in Chapter11

Nine West Holdings Inc.

April 6, 2018

Nine West Holdings Inc., the well-known footwear retailer, has finally filed for bankruptcy. The company will sell its Nine West and Bandolino brands to Authentic Brands Group and reorganize around its One Jeanswear Group, The Jewelry Group, the Kasper Group, and Anne Klein business segments. The company has a restructuring support agreement in hand to support this dual-process.

New Chapter 11 Bankruptcy - Velocity Pooling Vehicle LLC

November 15, 2017 by PETITION in Chapter11

Velocity Pooling Vehicle LLC

11/15/17 Summary: A few weeks ago we questioned whether the restructuring industry ought to be focusing more on the automotive space, asking whether the bankruptcy of GST Autoleather Inc. was the canary in the coal mine. Now, here, Velocity Pooling Vehicle LLC (d/b/a Motorsport Aftermarket), an Indianapolis-based motorcycle aftermarket parts seller has filed for bankruptcy to address its balance sheet in the face of declining trends in the motorcycle market. The company has announced a consensual restructuring pursuant to which it will equitize its debt; it intends to fast-track the case and emerge from bankruptcy in Q1 '18. The company has secured a $135mm DIP credit facility. Term lenders Monomoy Capital Partners, BlueMountain Capital and Contrarian Partners are coming out with the equity in the company. More to come.
Jurisdiction: D. of Delaware (Judge Carey)
Capital Structure: $295mm '21 TL (Wilmington Trust NA), $85mm '22 second lien TL
Company Professionals:
- Legal: Proskauer Rose LLP (Jeff Marwil, Paul Possinger, Christopher Hayes, Jeramy Webb) & (local) Cole Schotz P.C. (Norman Pernick)
- Financial Advisor: AlixPartners LLP
- Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access once link appears)
Other Parties in Interest:
- Administrative Agent: Wells Fargo Bank, NA
  - Legal: Goldberg Kohn Ltd. (Randall Klein, Prisca Kim) & (local) Richards Layton & Finger PA (John Knight, Brett Haywood)
- Ad Hoc Group
  - Legal: Stroock & Stroock & Lavan LLP (Jayme Goldstein, Daniel Ginsberg, Matthew Garofalo) & (local) Young Conaway Stargatt & Taylor LLP (Edmon Morton, Matthew Lunn)

Updated 11/17/17 6:11 CT

New Filing - Commonwealth of Puerto Rico

May 03, 2017 by PETITION

Commonwealth of Puerto Rico & Puerto Rico Sales Tax Financing Corporation ("COFINA")

5/3/17 Recap: The Commonwealth of Puerto Rico filed a petition for relief under Title III of the the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). Much has been written on this situation and so we're going to keep this brief. We're also going to shed the snark. Why? Well, because this is truly a sad story. GNP in Puerto Rico has declined over 14% in the last decade. The unemployment rate is 12.1% as of 10/16. The labor participation rate plummeted to 40%. The population has declined by 10% over the last decade. 46.1% of PR's residents live below the federal poverty level: the national average is 14.7% and Detroit's poverty level at the time of filing for Chapter 9 was 36%. Brutal. All in, the Commonwealth has $74 billion of bond debt and $48 billion of unfunded pension liabilities. A total dumpster fire.
Jurisdiction: United States District Court for the District of Puerto Rico
Capital Structure:

Professionals:
- Counsel to the Oversight Board: Proskauer Rose LLP (Martin Bienenstock, Scott Rutsky, Philip Abelson, Ehud Barak, Maja Zerjal, Timothy Mungovan, Steven Ratner, Paul Possinger) & O'Neill & Borges LLC (Hermann Bauer)
- Strategic Consultant to the Oversight Board: McKinsey & Co.
- Municipal Investment Banker to the Oversight Board: Citigroup Global Markets
- Financial Advisor to the Oversight Board: Ernst & Young LLP
- Counsel to the Puerto Rico Tax Agency and Financial Advisory Authority: O'Melveny & Myers LLP (John Rapisardi, Suzzanne Uhland, Peter Friedman)
- Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
Other Parties in Interest:
- Ad Hoc Retiree Committee
  - Legal: Bennazar Garcia & Milian CSP (A.J. Bennazar-Zequeira) & Clark Hill PLC (Robert Gordon, Shannon Deeby, Jennifer Green)
- National Public Finance Guarantee Corporation
  - Legal: Weil (Marcia Goldstein, Kelly DiBlasi, Gabriel Morgan)
- Ambac Assurance Corporation
  - Legal: Milbank Tweed & McCloy LLP (Dennis Dunne, Andrew Leblanc, Atara Miller)
- UBS Family of Funds
  - Legal: White & Case LLP (John Cunningham)
- Oppenheimer Funds
  - Legal: Kramer Levin Naftalis & Frankel LLP (Thomas Mayer, Amy Caton, Douglas Buckley, David Blabey Jr., Phillip Bentley)
- American Federation of State, County and Municipal Employees
  - Legal: Saul Ewing LLP (Dipesh Patel, Sharon Levine)
- The Employees Retirement System of the Government of the Commonwealth of Puerto Rico
  - Legal: DLA Piper LLP (Richard Chesley, Rachel Albanese)
- Goldman Sachs Asset Management LP
  - Legal: McDermott Will & Emery LLP (James Kapp, Megan Thibert-Ind, William Smith)
- Trustee: Bank of New York Mellon
  - Legal: Reed Smith LLP (Luke Sizemore, Eric Schaffer, Kurt Gwynne)

Updated 5/11/17

New Chapter 11 Filing - Westinghouse Electric Company LLC

March 29, 2017 by PETITION in Chapter11

Westinghouse Electric Company LLC

3/29/17 Recap: File this under the most heavily leaked/discussed bankruptcy filing of all time: the Japanese government seemed to make an announcement about the proposed filing every hour. So...Pennsylvania-based nuclear power company filed for bankruptcy (30 debtors in total) after its parent, Toshiba, took a uuuuuuuuuge $6b+ write-down due to delayed and above-budget construction of plants in Georgia and South Carolina. The company secured a $800mm commitment for a DIP facility to fund the cases after a competitive DIP process with powerhouses like Goldman Sachs, Highbridge and Silver Point duking it out with Apollo. We've already covered this company a lot in previous weeks so suffice it to say that the upshot of this filing is that it will lead many to question the viability of nuclear as an alternative power source.
Jurisdiction: SD of New York
Company Professionals:
- Primary Legal: Weil (Gary Holtzer, Garrett Fail, Robert Lemons, David Griffiths, Charles Persons, David Cohen)
- Legal for Toshiba Nuclear Energy Holdings (UK) Limited: Togut Segal & Segal LLP (Albert Togut, Brian Moore, Kyle Ortiz)
- Financial Advisor: AlixPartners LLC (Lisa Donahue)
- Investment Banker: PJT Partners Inc. (Timothy Coleman, John Singh, Mark Buschmann, Harold Kim)
- Claims Agent: KCC (*click on company name for docket)
Other Parties in Interest:
- Toshiba Corporation
  - Legal: Skadden Arps Slate Meagher & Flom LLP (Van Durrer, Paul Leake, Annie Li)
- Prepetition Agent:
  - Legal: Latham & Watkins LLP (Zulfiqar Bokhari)
- Proposed DIP Lenders: Apollo Investment Corporation, AP WEC Debt Holdings LLC, Midcap Financial Trust, Amundi Absolute Return Apollo Fund PLC, Ivy Apollo Strategic Income Fund, Ivy Apollo Multi Asset Income Fund
  - Legal: Paul Weiss Rifkand Wharton & Garrison LLP (Jeffrey Saferstein, Claudia Tobler, Kevin O'Neill)
- Proposed DIP Agent: Citibank NA
  - Legal: Shearman & Sterling LLP (Fredric Sosnick, Ned Schodek)
- Competing (but losing) DIP Providers: Goldman Sachs Bank USA, HPS Investment Partners LLC, Silver Point Finance LLC
- Georgia Power Company, Oglethorpe Power Corporation, Municipal Electric Authority of Georgia and City of Dalton Georgia
  - Legal: Jones Day (Gregory Gordon, Dan Prieto, Amanda Rush, Anna Kordas, Jeffrey Ellman)
- Municipal Electric Authority of Georgia
  - Legal: Alston & Bird LLP (Dennis Connolly)
- South Carolina Electric & Gas Company and South Carolina Public Service Authority
  - Legal: Reed Smith LLP (Paul Singer, Derek Baker, Tarek Abdalla)
- Oglethorpe Power Corporation (An Electric Membership Corporation)
  - Legal: Dechert LLP (Michael Sage, Stephen Wolpert) & Parker Hudson Rainer & Dobbs LLP (C. Edward Dobbs)
- Exelon Generation Company LLC
  - Legal: Ballard Spahr LLP (Matthew Summers)
- Official Committee of Unsecured Creditors
  - Legal: Proskauer Rose LLP (Martin Bienenstock, Timothy Karcher, Vincent Indelicato)
  - Financial Advisor: Alvarez & Marsal LLC

Updated 5/31/17