New Chapter 11 Filing - Arecont Vision Holdings LLC

in

Arecont Vision Holdings LLC

5/14/18

Arecont Vision Holdings LLC, a California-based manufacturer of high-performance IP cameras and video surveillance solutions, has filed for bankruptcy to effectuate a sale to an affiliate of Turnspire Capital Partners. 

The company sells its products to a variety of industries including data centers, government, retail, financial, sports, and healthcare. End user customers include big names like Wells Fargo, Apple, Google, Facebook, Microsoft and others. In addition to holding several patents, the company counts a litigation claim against a once-secured-but-ultimately-failed-buyer, NetPosa, in the amount of $50 million among its assets. NetPosa signed a share purchase agreement in early 2017 for the purchase of Arecont for $170 million but the deal fell through while awaiting regulatory review. Apropos to the current international trade environment, NetPosa is a publicly-traded Chinese company. 

Speaking of China, the company notes, "The Debtors' performance has been negatively impacted by increased competition from Chinese manufacturers who are able to produce and sell products at lower price points." This combined with other factors, stemmed the company's previously demonstrated compound double-digit growth from 2007 through 2016; it then experienced a dramatic EBITDA decline in 2017 from $72.7 million to $41.7 million. 

To address this decline, the company engaged in a number of cost-reduction initiatives including shedding employees and outsourcing component and subassembly work to Asia from the US. Contemporaneously, Imperial Capital initiated a sale process. Enter Turnspire Capital. 

  • Jurisdiction: D. of Delaware (Judge Sontchi)
  • Capital Structure: $73.2mm secured debt (AIG)    
  • Company Professionals:
    • Legal: Pachulski Stang Ziehl & Jones LLP (Ira Kharasch, Joshua Fried, Maxim Litvak, James O'Neill)
    • CRO/Financial Advisor: Armory Group LLC (Scott Avila, Allen Soong)
    • Investment Banker: Imperial Capital LLC 
    • Claims Agent: Omni Management LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Stalking Horse Buyer: Turnspire Capiral LLC
    • DIP Agent: Cortland Capital Market Services LLC
    • ($4mm) DIP Lenders: American General Life Insurance Company, American Home Assurance Company, The United States Life Insurance Company in the City of New York, The Variable Annuity Life Insurance Company, American Home Assurance Company and United Guaranty Residential Insurance Company