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

Centric Brands Inc.

May 18, 2020

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

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

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

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

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

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

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

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

• $163.9mm RCF,

• $20mm ‘20 term loan bridge,

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

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

• $200.3mm securitization facility, and

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

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

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

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

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

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

• Professionals:

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

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

  • Investment Banker: PJT Partners LP (James Baird)

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

• Other Parties in Interest:

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

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

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

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

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

    • Legal: Nixon Peabody LLP (Catherine Ng)

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

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

  • Receivables Purchase Agreement Agent

    • Legal: Mayer Brown LLP (Brian Trust)

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

🚚 New Chapter 11 Filing - Comcar Industries Inc. 🚚

Comcar Industries Inc.

May 17, 2020

Florida-based Comcar Industries Inc. and 31 affiliates (the “debtors”) filed for chapter 11 bankruptcy in the District of Delaware — the latest trucking company to end up in bankruptcy court (Callback to “🚛 Dump Trucks 🚛 ,” a PETITION deep dive into the industry which included a review of Celadon Group Inc.’s chapter 11 bankruptcy filing). Comcar is a holding company with four stand-alone trucking business units ((as well as (a) logistics services, (b) supplies, parts and repairs, and (c) fleet maintenance services)). Through the bankruptcy filing, the debtors intend to effectuate a sale of all four units.

Each unit services a different part of the trucking market:

• CCC Transportation LLC (“CCC”) is a bulk bulk carrier that primarily handles construction materials;

• CT Transportation LLC (“CT”) is a flatbed carrier that specializes in construction materials;

• CTL Transportation LLC (“CTL”) is a liquid bulk chemical transporter; and

• MCT Transportation LLC (“MTL”) is a refrigerated and dry van commodities transporter.

Formed in the 1950s, the debtors grew over the years in order to provide all of these offerings. To do so, they, naturally, took on debt. Funded debt stands at $64.8mm including an ABL, a term loan, and various real estate-backed loans. Servicing the debt has been a challenge going as far back as 2014.

Trucking industry struggles have compounded matters. Per the debtors:

The trucking industry has experienced significant headwinds starting in 2019. During the first half of 2019, the $800 billion American trucking industry began to experience a recession and a reported 640 trucking companies went bankrupt. By mid-2019, the trucking freight market continued to soften. The combination of a decline in overall freight tonnage and excessive truck capacity in the market led to a significant decline in freight rates, and customers began to take bids at lower freight rates. Compared to the year immediately prior, 2019 showed a steady decline in freight rates, including spot freight rates and contractual rates.

Rates weren’t the only problem. Volumes also declined.

During 2019, truck volumes decreased for nine consecutive months and the trucking industry braced itself for a decrease in demand through the third quarter of 2020. As a result, spot and contract prices, which increased thirty percent (30%) in 2018, decreased twenty percent (20%) in 2019. The decrease in truckload linehaul rates was driven by (1) spot rates that were below contract rates by unsustainably larger margins than, (2) capacity additions and (3) stalled growth in the consumer and industrial economy.

All of this hit the the top and bottom lines. In 2019, the debtors suffered a 26% YOY revenue decrease across all units. CCC got hit the most, down 44.2%. CT got hit the least. Yet even that was down 19.7%. In total, the debtors lost $25mm in 2019 and $6mm through March 27, 2020.

Luckily, as with Celadon Group Inc. previously, there is a market for these trucks. The debtors have a buyer lined up for the CT and CTL businesses for $9mm and $8.6mm, respectively. Similarly, the debtors have a buyer for the MCT business. They would like to proceed with private sales of each of these businesses stating that “…the terms offered … are materially superior to the terms that the Debtors could hope to achieve at any auctions….” Pursuant to the proposed DIP, these sales need to be consummated by the end of July.

The debtors pre-petition ABL and Term Loan lenders (which includes an affiliate of PIMCO) have committed to funding a $15mm DIP — some of which will pay down pre-petition debt, some of which ($1.33mm) will roll-up pre-petition term loans, and the rest for liquidity to fund the cases.

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• Jurisdiction: D. of Delaware (Judge Dorsey)

  1. Capital Structure: $14mm ABL (Sterling National Bank), $25.3mm Term Loan (B2 FIE VIII LLC as lender, US Bank NA as agent), $6.2mm secured real estate loan (CenterState Bank NA), $7mm CWI Real Estate Loan (Commercial Warehousing Inc.),

  2. Professionals:

     • Legal: DLA Piper US LLP (Stuart Brown, Jamila Justine Willis, Tara Nair)

     • Independent Manager: Tobias Keller

     • Financial Advisor/CRO: FTI Consulting Inc. (Andrew Hinkelman)

     • Investment Banker: Bluejay Advisors LLC

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

  3. Other Parties in Interest:

     • Prepetition ABL Agent: Sterling National Bank

       • Legal: Greenberg Traurig LLP

     • Prepetition Term Loan Agent and DIP Agent: US Bank NA

       • Legal: Seward & Kissel LLP

     • Prepetition Term Loan Lender & DIP Lender: B2 FIE VIII LLC (Pimco)

       • Legal: Latham & Watkins LLP (Jason Bosworth)

🚗 New Chapter 11 Bankruptcy Filing - Techniplas LLC 🚗

Techniplas LLC

May 6, 2020

Wisconsin-based Techniplas LLC and seven affiliates (the “debtors”), producers and manufacturers of plastic components used primarily in the automotive and transportation industries, filed for bankruptcy in the District of Delaware. “The Company produces, among other things, automotive products, such as fluid and air management components, decorative and personalization products, and structural components, as well as nonautomotive products, such as power utility and electrical components and water filtration products.” After cobbling together acquisitions over the course of the decade, the debtors’ business is now global in scale and its main customers are the leading OEMs in the US, Europe and Asia; it had net sales of $475mm and a net loss of $21mm in fiscal ‘19.

A bit more about the business. The debtors’ primary operating unit, “Techniplas Core,” acts “…as a manufacturer of technically complex, niche products across a wide range of applications and end markets, including the automotive and truck, industrial, and commercial markets.” This is roughly 83% of the business. In addition, the debtors have “Techniplas Prime,” which, aside from sounding like a Transformer that may or may not have it out for the human race, acts as a matchmaker between excess manufacturing capacity and customers in need of manufacturing. Per the debtors:

Serving as a nexus between customers, including OEMs, and other manufacturing companies, Techniplas Prime acts as an extension of Techniplas Core by delivering to customers the manufacturing capabilities of its Prime Partners. This makes Techniplas Prime asset-light and creates a “win-win” scenario for customers and Prime Partners.

Interestingly, this business segment was once dubbed “The Airbnb of Auto Manufacturing,” a moniker that makes almost zero sense and completely misunderstands the Airbnb model but, yeah sure, cheap “by-association” points, homies! Per Forbes:

[Founder George] Votis saw Techniplas Prime as an e-manufacturing platform from which customers could order parts electronically according to their own specifications, and have them built by local factories with unused capacity.

Except it’s not a platform. Like, at all. Airbnb is a digital two-sided platform that brings hosts and travelers together and seemlessly connects them. Techniplas Prime…well…

…well…page not found. Airbnb may be struggling in this COVID environment but we can assure you that you’re not EVER getting a 404 when going to their site. Platform…pssssfft. The Forbes article later contradicts itself saying:

…they focused on 3-D printing and advanced manufacturing technology companies that had spare capacity available for contract operations, for which Techniplas Prime is essentially the broker.

Right. Being a broker is different than being a platform y’all. But we digress.

The debtors have a simple capital structure consisting of a $17.59mm ABL, $175mm in 10% ‘20 notes, and a $6.77mm interim financing agreement for total funded debt around $200mm. The debtors, primarily due to this capital structure, began pursuing strategic alternatives in early 2017. Both an attempted sale process and debt refinancing failed. Thereafter, the debtors explored in 2018 a term loan refinancing of the preptition notes and/or a public equity listing in London. Those, too, failed. For this, the debtors blame a downturn in the automotive market and uncertainty from Brexit (PETITION Note: we’ve been foreshadowing that declining production capacity by the major OEMs was going to rattle through the supply chain so nobody should be surprised by this revelation).

In mid-’19, an attempted sale to a strategic buyer, private equity firm The Jordan Company, kicked off but that, despite some forward-moving progress involving a note purchase agreement and an unexercised call option for 100% of the membership interests in the debtors, ultimately fell through due to the inability to refi out the pre-petition notes. Subsequent attempts — now involving ad hoc group of noteholders and Jordan — also came close but ultimately failed due to deteriorating operating performance that pre-dated OOVID. COVID merely exacerbated things. Per the debtors:

Many customers suspended or drastically reduced production, resulting in a swift drop in demand for the Debtors’ products. Additionally, many of the locations where the Company had offices and manufacturing plants worldwide issued lockdown orders and permitted only essential business to remain open in an effort to control the outbreak and protect the health and safety of the public.

All of this was too much to handle: Jordan peaced out. Liquidity increasingly became an issue and so the debtors obtained a $6.7mm super senior priority bridge financing from the ad hoc group. Indeed, the ad hoc group is stepping up big here: in addition to providing the liquidity the debtors needed to get in chapter 11, they’ve agreed to provide a DIP ($20-25mm new money with a $100mm roll-up) and serve as stalking horse bidder — offering $105mm to purchase the debtors’ international operations and three remaining US-based manufacturing facilities. The debtors hope to close the sale within 44 days of the petition date.

• Jurisdiction: D. of Delaware (Judge Silverstein)

• Capital Structure: See above.

• Professionals:

  • Legal: White & Case LLP (David Turetsky, Andrew Zatz, Fan He, Robbie Boone Jr., John Ramirez, Sam Lawand, Thomas MacWright) & Fox Rothschild LLP (Jeffrey Schlerf, Carl Neff, Johnna Darby, Daniel Thompson)

  • Financial Advisor/CRO: FTI Consulting Inc. (Peter Smidt, Andrew Hinkelman)

  • Investment Banker: Miller Buckfire & Co. LLC (Richard Klein)

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

• Other Parties in Interest:

  • Stalking Horse Purchaser: Techniplas Acquisition Co. LLC

  • Pre-Petition ABL & DIP ABL Agent: Bank of America NA

    • Legal: Sidley Austin LLP (Dennis Twomey, Elliot Bromagen) & Richards Layton & Finger PA (Mark Collins, Amanda Steele, David Queroli)

  • DIP Term Agent: Wilmington Savings Fund Society FSB

    • Legal: Cole Schotz PC (Daniel Geoghan, J. Kate Stickles, Patrick Reilley)

  • Indenture Trustee: US Bank NA

    • Legal: Dorsey & Whitney LLP (Eric Lopez Schnabel, Alessandra Glorioso)

  • Ad Hoc Noteholder Group ‘20 10% Senior Secured Notes

    • Legal: Arnold & Porter Kaye Scholer LLP (Jonathan Levine, Brian Lohan, Jeffrey Fuisz, Gerardo Mijares-Shafai)

👕 New Chapter 11 Bankruptcy Filing - Chinos Holdings Inc. (J.Crew) 👕

Chinos Holdings Inc. (J.Crew)

May 4, 2020

If you’re looking for a snapshot of the pre-trade war and pre-COVID US economy look no farther than J.Crew’s list of top 30 unsecured creditors attached to its chapter 11 bankruptcy petition. On the one hand there is the LONG list of sourcers, manufacturers and other middlemen who form the crux of J.Crew’s sh*tty product line: this includes, among others, 12 Hong Kong-based, three India-based, three South Korea-based, two Taiwan-based, and two Vietnam-based companies. In total, 87% of their product is sourced in Asia (45% from mainland China and 16% from Vietnam). On the other hand, there are the US-based companies. There’s Deloitte Consulting — owed a vicious $22.7mm — the poster child here for the services-dependent US economy. There’s the United Parcel Services Inc. ($UPS)…okay, whatever. You’ve gotta ship product. We get that. And then there’s Wilmington Savings Fund Society FSB, as the debtors’ pre-petition term loan agent, and Eaton Vance Management as a debtholder and litigant. Because nothing says the US-of-f*cking-A like debt and debtholder driven litigation. ‘Merica! F*ck Yeah!!

Chinos Holdings Inc. (aka J.Crew) and seventeen affiliated debtors (the “debtors”) filed for bankruptcy early Monday morning with a prearranged deal that is dramatically different from the deal the debtors (and especially the lenders) thought they had at the tail end of 2019. That’s right: while the debtors have obviously had fundamental issues for years, it was on the brink of a transaction that would have kept it out of court. Call it “The Petsmart Effect.” (PETITION Note: long story but after some savage asset-stripping the Chewy IPO basically dug out Petsmart from underneath its massive debt load; J.Crew’s ‘19 deal intended to do the same by separating out the various businesses from the Chino’s holding company and using Madewell IPO proceeds to fund payments to lenders).

Here is the debtors’ capital structure. It is key to understanding what (i) the 2019 deal was supposed to accomplish and (ii) the ownership of J.Crew will look like going forward:

Late last year, the debtors and their lenders entered into a Transaction Support Agreement (“TSA”) with certain pre-petition lenders and their equity sponsors, TPG Capital LP and Leonard Green & Partners LP, that would have (a) swapped the $1.33b of term loans for $420mm of new term loans + cash and (b) left general unsecured creditors unimpaired (100% recovery of amounts owed). As noted above, the cash needed to make (a) and (b) happen would have come from a much-ballyhooed IPO of Madewell Inc.

Then COVID-19 happened.

Suffice it to say, IPO’ing a brick-and-mortar based retailer — even if there were any kind of IPO window — is a tall order when there’s, like, a pandemic shutting down all brick-and-mortar business. Indeed, the debtors indicate that they expect a $900mm revenue decline due to COVID. That’s the equivalent of taking Madewell — which earned $602m of revenue in ‘19 after $614mm in ‘18 — and blowing it to smithereens. Only then to go back and blow up the remnants a second time for good measure.* Source of funds exit stage left!

Fun facts. In fiscal 2019, Chino's revenues were:

👕J.Crew - $1.7b (67.2%)
👖Madewell - $602m (23.7%)
🏷Wholesale - $230m (9.1%)

Remember: Madewell is the crown jewel here. According to its S-1, it had $614m of revenue in fiscal '18. Its growth was declining pre-COVID.😬 pic.twitter.com/5jpNnJ5zoR

— 💥PETITION💥 (@petition) May 4, 2020

The post-COVID deal is obviously much different. The term lenders aren’t getting a paydown from Madewell proceeds any longer; rather, they are effectively getting Madewell itself by converting their term loan claims and secured note claims into approximately 82% of the reorganized equity. Some other highlights:

• Those term loan holders who are members of the Ad Hoc Committee will backstop a $400mm DIP credit facility (50% minimum commitment) that will convert into $400mm of new term loans post-effective date. The entire plan is premised upon a $1.75b enterprise value which is…uh…interesting. Is it modest considering it represents a $1b haircut off the original take-private enterprise value nine years ago? Or is it ambitious considering the company’s obvious struggles, its limited brand equity, the recession, brick-and-mortar’s continued decline, Madewell’s deceleration, and so forth and so on? Time will tell.

• Syndication of the DIP will be available to holders of term loans and IPCo Notes (more on these below), provided, however, that they are accredited institutional investors.

• The extra juice for putting in for a DIP allocation is that, again, they convert to new term loans and, for their trouble, lenders of the new term loans will get 15% additional reorganized equity plus warrants. So an institution that’s in it to win it and has a full-on crush for Madewell (and the ghost of JCrew-past) will get a substantial chunk of the post-reorg equity (subject to dilution).

Query whether, if asked a mere six months ago, they were interested in owning this enterprise, the term lenders would’ve said ‘yes.’ Call us crazy but we suspect not. 😎

General unsecured creditors’ new deal ain’t so hot in comparison either. They went from being unimpaired to getting a $50mm pool with a 50% cap on claims. That is to say, maybe…maybe…they’ll get 50 cents on the dollar.

That is, unless they’re one of the debtors’ 140 landlords owed, in the aggregate, approximately $23mm in monthly lease obligations.** The debtors propose to treat them differently from other unsecured creditors and give them a “death trap” option: if they accept the TSA’s terms and get access to a $3mm pool or reject and get only $1mm with a 50% cap on claims. We can’t imagine this will sit well. We imagine that the debtors choice of venue selection has something to do with this proposed course of action. 🤔

We’re not going to get into the asset stripping transaction at the heart of the IPCo Note issuance. This has been widely-covered (and litigated) but we suspect it may get a new breath of life here (only to be squashed again, more likely than not). In anticipation thereof, the debtors have appointed special committees to investigate the validity of any claims related to the transaction. They may want to take up any dividends to their sponsors while they’re at it.

Both Neiman and J. Crew are PE-backed and who each tried cute maneuvers with creditor collateral in order to kick the can but were not able to forestall the inevitable ch 11s. https://t.co/9PV6KxgS4A

— Sujeet Indap (@sindap) May 4, 2020

Both might have succeeded with said maneuvers if it weren’t for the pandemic.

— Miriam Gottfried (@miriamgottfried) May 4, 2020

The debtors hope to have this deal wrapped up in a bow within 130 days. We cannot even imagine what the retail landscape will look like that far from now but, suffice it to say, the ratings agencies aren’t exactly painting a calming picture.

.@jcrew's bankruptcy filing lifts the retail loan default rate to 9%, from 7%. "@fitchratings forecasts the loan retail default rate to reach 19% by year end 2020, far exceeding the overall 5%-6% rate."

— Kelsey Butler (@itskelseybutler) May 4, 2020

Per Moody's, distressed retail and apparel names with a Caa1 rating or lower hit 23 as of 4/24, up from 17 in mid-March. "The number will only grow in coming months."

— 💥PETITION💥 (@petition) May 3, 2020

*****

*Curiously, there are some discrepancies here in the numbers. In the first day papers, the debtors indicate that 2018 revenue for Madewell was $529.2mm. With $602mm in ‘19 revenue, one certainly walks away with the picture that Madewell is a source of growth (13.8%) while the J.Crew side of the business continues to decline (-4%). This graph is included in the First Day Declaration:

Source: First Day Declaration

The Madewell S-1, however, indicates that 2018 revenue was $614mm.

With $268mm of the ‘18 revenue coming in the first half, this would imply that second half ‘18 revenue was $346mm. With ‘19 revenue coming in at $602mm and $333mm attributable to 1H, this would indicate that the business is declining rather than growing. In the second half, in particular, revenue for fiscal ‘19 was $269mm, a precipitous dropoff from $333mm in ‘18. Even if you take the full year fiscal year ‘18 numbers from the first day declaration (529.2 - 268) you get $261mm of second half growth in ‘18 compared to the $269mm in ‘19. While this would reflect some growth, it doesn’t exactly move the needle. This is cause for concern.

**To make matters worse for landlords, the debtors are also seeking authority to shirk post-petition rent obligations for 60 days while they evaluate whether to shed their leases. We get that the debtors were nearing a deal that COVID threw into flux, but this bit is puzzling: “Beginning in early April 2020, after several weeks of government mandated store closures and uncertainty as to the duration and resulting impact of the pandemic, the Debtors began to evaluate their lease portfolio to, among other things, quantify and realize the potential for lease savings.” Beginning in early April!?!?

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

• Capital Structure: $311mm ABL (Bank of America NA), $1.34b ‘21 term loan (Wilmington Savings Fund Society FSB), $347.6 IPCo Notes (U.S. Bank NA)

• Professionals:

  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Ryan Preston Dahl, Candace Arthur, Daniel Gwen) & Hunton Andrews Kurth LLP (Tyler Brown, Henry P Long III, Nathan Kramer)

  • JCrew Opco Special Committee: D.J. (Jan) Baker, Chat Leat, Richard Feintuch, Seth Farbman

  • Financial Advisor: AlixPartners LLP

  • Investment Banker: Lazard Freres & Co.

  • Real Estate Advisor: Hilco Real Estate LLC

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

• Other Parties in Interest:

  • Pre-petition ABL Agent: Bank of America NA

    • Legal: Choate Hall & Stewart LLP (Kevin Simard, G. Mark Edgarton) & McGuireWoods LLP (Douglas Foley, Sarah Boehm)

  • Pre-petition Term Loan & DIP Agent ($400mm): Wilmington Savings Fund Society FSB

    • Legal: Seward & Kissel LLP

  • Ad Hoc Committee

    • Legal: Milbank LLP (Dennis Dunne, Samuel Khalil, Andrew LeBlanc, Matthew Brod) & Tavenner & Beran PLC (Lynn Tavenner, Paula Beran, David Tabakin)

    • Financial Advisor: PJT Partners Inc.

  • Large common and Series B preferred stock holders: TPG Capital LP (55% and 66.2%) & Leonard Green & Partners LP (20.7% and 24.8%)

    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Paul Basta, Jacob Adlerstein, Eugene Park, Irene Blumberg) & Whiteford Taylor & Preston LLP (Christopher Jones, Vernon Inge Jr., Corey Booker)

  • Large Series A preferred stock holders: Anchorage Capital Group LLC (25.6%), GSO Capital Partners LP (26.1%), Goldman Sachs & Co. LLC (15.5%)

🇲🇽New Chapter 22 Bankruptcy Filing - Maxcom USA Telecom Inc.🇲🇽

Maxcom USA Telecom Inc.

August 19, 2019

We’re all for a reprieve from retail and energy distress but, sheesh, couldn’t have been more interesting than this?

Maxcom USA Telecom Inc. is a telecommunications provider deploying “smart-build” approaches to “last mile” connectivity (read: modems, handsets and set-up boxes) for enterprises, residential customers and governmental entities in Mexico — which is really just a fancy way of saying that it provides local and long-distance voice, data, high speed, dedicated internet access and VoIP tech, among other things, to customers.* It purports to be cutting edge and entrepreneurial, claiming “a history of being the first providers in Mexico to introduce new services,” including (a) the first broadband in 2005, (b) the first “triple-play” (cable, voice and broadband) in 2005, and (c) the first paid tv services over copper network using IP…in 2007. That’s where the “history” stops, however, which likely goes a long way — reminder, it’s currently the year 2019 — towards explaining why this f*cker couldn’t generate enough revenue to service its ~$103.4mm in debt.** Innovators!!

And speaking of that debt, it’s primarily the $103.4mm in “Old Notes” due in 2020 that precipitated this prepackaged bankruptcy filing (in the Southern District of New York).***

The Old Notes derive from a prior prepackaged bankruptcy — in 2013 (PETITION Note: not a “Two-Year Rule” violation) — and were exchanged for what were then outstanding 11% senior notes due in 2014. These Old Notes have a “step-up interest rate,” which means that, over time, the interest rate…uh…steps up…as in, increases upward/up-like. The rate currently stands at 8%. Unfortunately, the company doesn’t have revenue step-ups/upwardness/upseedayzee to offset the interest expense increase; rather, the company “…incurred losses of $4.9 million for the three months ended June 30, 2019, as compared to losses of $2.9 million for the three months ended June 30, 2018, and losses of $16 million for the year ended December 31, 2018, compared to losses of $.8 million for the year ended December 31, 2017….” Compounding matters are, among other things, the negative effects of decreased interest income and foreign currency exchange rates (the dollar is too damn strong!).**** The closure of the residential segment also, naturally, affected net revenue.

To make matters worse, the company’s debt actually has limitations (remember those?). Per the company:

In order to expand its network and strengthen its market share, the Debtors require additional capital. But, the Old Notes Indenture prohibits Maxcom Parent from incurring additional indebtedness (other than permitted indebtedness) unless certain leverage coverage ratios are satisfied, and the increased interest burden under the Old Notes seriously constrains the Debtors’ ability to take the actions required under its business plan to strengthen and expand their operations.

The purpose of this bankruptcy filing, therefore, is to effectuate a consent solicitation and exchange offer whereby the Old Notes will be swapped (and extinguished) for new “Senior Notes,” new “Junior PIK Notes” and cash consideration. The cash consideration will be covered by a new equity injection of $15mm. This transaction will bolster the company’s liquidity and shed approximately $36mm of debt from the balance sheet (PETITION Note: carry the one, add the two, that’s roughly $2.88mm in annual interest savings before taking into account the PIK notes, which won’t be cash-pay, obviously).

Prior to the bankruptcy filing, the company obtained the requisite amount of support to jam non-consenting creditors (PETITION Note: in bankruptcy, a debtor needs 2/3 in amount and half in number of a particular class of debt to bind a class. Here, the company nailed down acceptances of the plan from 84.75% of the holders of Old Notes holding 66.73% of principal amount in Old Notes). And there is one large group of non-consenting holders, apparently. Cicerone Advisors LLC, a financial advisor to three holders of the Old Notes, Moneda Asset Management, Megeve Investments and UBS Financial Services, Inc., attempted to engage the company on better terms than that offered under the plan. It did not, however, ultimately provide a proposal; instead, it demanded terms, including confidentiality and an agreement to pay fees and expenses of financial and legal advisors. Here’s the thing, though: they miscalculated their leverage: with only 30% of Old Notes represented, they don’t have a “blocking position” that could thwart the company’s proposal. Absent an additional 4%, these guys are dead in the water.

This should be…should be…a very quick trip through bankruptcy.*****

---

*The company is shutting down its residential segment, which “involves the gradual closure of residential clusters and mass disconnection of residential customers.” Apparently, people don’t need the company’s services anymore. At least not when they’re carrying $1,000 telecommunications systems in their pants pockets? 🤔

The disruption is real. Indeed, the company’s residential segment operates through an outdated copper network that doesn’t comport with the latest in fiber network technology.

**U.S. Bank NA is the indenture trustee under the Old Notes.

***Oh man, the venue on this one is just quaint. There are two debtors, Maxcom Telecomunicaciones, S.A.B. DE C.V., a Mexican entity and Maxcom USA Telecom Inc., which is 100% owned by the former. What does the latter do? According to Exhibit A of the First Day Declaration it does “[Assorted services in the USA].” Hahaha. This sh*t is so suspect that nobody even bothered to remove the brackets. It might as well say, “[Kinda sorta maybe some random sh*t within US borders and down the street from the SDNY for purposes of ginning up venue”]. Is it a guarantor on the notes? “[Yes].” HAHAHA. Like, is it, or not?? The listed highlight? “Recently created.” Damn straight it was. This year. The service address? “c/o United Corporate Services, Inc., Ten Bank Street, Suite 560, White Plains, NY 10606.” Conveniently happens to fall right in Judge Drain’s lap.

We mean, seriously, folks? People AREN’T EVEN TRYING to be slick about manufacturing venue anymore.

Apropos to the point, Duane Morris LLP’s Frederick Hyman highlights the trend of foreign borrowers with little to no assets in the U.S. filing for chapter 11 to take advantage of the automatic stay here, describing the slippery-slope-creating case of TMT Shipping (which established venue by funding professional retainers in the US).

****Interestingly, people have been voicing concerns about the foreign exchange rates and US-dominated debt in emerging markets. It seems those concerns may be warranted:

…from 2013 to date, the value of the Mexican Peso, as compared to the U.S., has decreased by 53%. Because of such devaluation, Maxcom Parent’s repurchase of the $74.3 million in principal amount of the Old Notes did not decrease the amount that Maxcom Parent’s books and records reflect is owed to the holders of the Old Notes given that Maxcom Enterprise’s revenues are mostly in Mexican Pesos. In other words, while the amount that Maxcom Parent owes on account of the Old Notes has decreased in U.S. Dollars, because the majority of Maxcom Enterprise’s revenues are in Mexican Pesos and the Old Notes are denominated in U.S. Dollars, Maxcom Parent’s liability on account of the Old Notes remains roughly the same on its books and records.

Ruh roh. 🙈 We expect to see many more mentions of exchange-related issues going forward. Mark our words.💥

*****Small victories. The dissenting bondholders were able to successfully push the debtors’ timeline by a week or so at the first day hearing.

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

• Capital Structure: $103.4mm old notes

• Professionals:

  • Legal: Paul Hastings LLP (Pedro Jimenez, Irena Goldstein)

  • Financial Advisor: Alvarez & Marsal Mexico

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

• Other Parties in Interest:

  • Indenture Trustee: US Bank NA

    • Legal: Thompson Hine LLP (Jonathan Hawkins, Curtis Tuggle)
      

🚁New Chapter 11 Bankruptcy Filing - Bristow Group Inc.🚁

Bristow Group Inc.

May 11, 2019

Nothing like being late to the party. Following in the footsteps of fellow helicopter transportation companies Erickson Inc., CHC Group, Waypoint Leasing* and PHI Inc., Bristow Group Inc. ($BRS) and its eight affiliated debtors are the latest in the space to find their way into bankruptcy court. The company enters bankruptcy with a restructuring support agreement and a $75mm DIP financing commitment with and from its senior secured noteholders.

While each of the aforementioned companies is in the helicopter transportation space, they don’t all do exactly the same business. PHI, for instance, has a fairly large — and some might say, attractive — medical services business. Bristow, on the other hand, provides industrial aviation and charter services primarily to offshore energy companies in Europe, Africa, the Americas and the Asian Pacific; it also provides search and rescue services for governmental agencies, in addition to the oil and gas industry. Like the other companies, though: it is not immune to (a) the oil and gas downturn and (b) an over-levered balance sheet.

At the time of this writing, the debtors’ chapter 11 filing wasn’t complete and so details are scant. What we do know, however, is that the company does have a restructuring support agreement executed with “the overwhelming majority” of senior secured noteholders and a $75mm DIP commitment.

*Waypoint Leasing is listed as the 14th largest creditor, owed nearly $104k. Sheesh. These businesses can’t catch a break.

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

• Capital Structure:

• Professionals:

  • Legal: Baker Botts LLP (James Prince, Omar Alaniz, Ian Roberts, Kevin Chiu, Emanuel Grillo, Chris Newcomb)

  • Financial Advisor: Alvarez & Marsal LLC

  • Investment Banker: Houlihan Lokey Capital Inc.

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

• Other Parties in Interest:

  • ABL Facility Agent: Barclays Bank PLC

  • 2019 Term Loan Agent: Ankura Trust Company LLC

  • Indenture Trustee for the 8.75% ‘23 Senior Secured Notes: U.S. Bank NA

  • Indenture Trustee for the 6.25% ‘22 Senior Notes and 4.5% ‘23 Convertible Senior Notes: Wilmington Trust NA

  • Ad Hoc Group of Secured Notes and Term Lenders (Blackrock Financial Management Inc., DW Partners LP, Highbridge Capital Management LLC, Oak Hill Advisors LP, Whitebox Advisors LLC)

    • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Natasha Tsiouris) & (local) Haynes and Boone LLP (Charles Beckham, Kelli Norfleet, Martha Wyrick)

  • Ad Hoc Group fo Unsecured Noteholders

    • Legal: Kramer Levin Naftalis & Frankel LLP

New Chapter 11 Filing - Hexion Holdings LLC

Hexion Holdings LLC

April 1, 2019

What we appreciate that and, we hope thanks to PETITION, others will eventually come to appreciate, is that there is a lot to learn from the special corporate law, investment banking, advisory, and investing niche labeled “restructuring” and “distressed investing.” Here, Ohio-based Hexion Holdings LLC is a company that probably touches our lives in ways that most people have no knowledge of: it produces resins that “are key ingredients in a wide variety of industrial and consumer goods, where they are often employed as adhesives, as coatings and sealants, and as intermediates for other chemical applications.” These adhesives are used in wind turbines and particle board; their coatings prevent corrosion on bridges and buildings. You can imagine a scenario where, if Washington D.C. can ever get its act together and get an infrastructure bill done, Hexion will have a significant influx of revenue.

Not that revenue is an issue now. It generated $3.8b in 2018, churning out $440mm of EBITDA. And operational performance is on the upswing, having improved 21% YOY. So what’s the problem? In short, the balance sheet is a hot mess.* Per the company:

“…the Debtors face financial difficulties. Prior to the anticipated restructuring, the Debtors are over nine times levered relative to their 2018 adjusted EBITDA and face annual debt service in excess of $300 million. In addition, over $2 billion of the Debtors’ prepetition funded debt obligations mature in 2020. The resulting liquidity and refinancing pressures have created an unsustainable drag on the Debtors and, by extension, their Non-Debtor Affiliates, requiring a comprehensive solution.”

This is what that capital structure looks like:

(PETITION Note: if you’re wondering what the eff is a 1.5 lien note, well, welcome to the party pal. These notes are a construct of a frothy high-yield market and constructive readings of credit docs. They were issued in 2017 to discharge maturing notes. The holders thereof enjoy higher priority on collateral than the second lien notes and other junior creditors below, but slot in beneath the first lien notes).

Anyway, to remedy this issue, the company has entered into a support agreement “that enjoys the support of creditors holding a majority of the debt to be restructured, including majorities within every tier of the capital structure.” The agreement would reduce total funded debt by $2b by: (a) giving the first lien noteholders $1.45b in cash (less adequate protection payments reflecting interest on their loans), and 72.5% of new common stock and rights to participate in the rights offering at a significant discount to a total enterprise value of $3.1b; and (b) the 1.5 lien noteholders, the second lien noteholders and the unsecured noteholders 27.5% of the new common stock and rights to participate in the rights offering. The case will be funded by a $700mm DIP credit facility.

*Interestingly, Hexion is a derivative victim of the oil and gas downturn. In 2014, the company was selling resin coated sand to oil and gas businesses to the tune of 8% of sales and 28% of segment EBITDA. By 2016, segment EBITDA dropped by approximately $150mm, a sizable loss that couldn’t be offset by other business units.

• Jurisdiction: D. of Delaware (Judge Gross)

• Capital Structure: See above.

• Professionals:

  • Legal: Latham & Watkins LLP (George Davis, Andrew Parlan, Hugh Murtagh, Caroline Reckler, Jason Gott, Lisa Lansio, Blake Denton, Andrew Sorkin, Christopher Harris) & (local) Richards Layton & Finger PA (Mark Collins, Michael Merchant, Amanda Steele, Brendan Schlauch)

  • Managers: Samuel Feinstein, William Joyce, Robert Kaslow-Ramos, George F. Knight III, Geoffrey Manna, Craig Rogerson, Marvin Schlanger, Lee Stewart

  • Financial Advisor: AlixPartners LLP

  • Investment Banker: Moelis & Company LLC (Zul Jamal)

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

• Other Parties in Interest:

  • Ad Hoc Group of First Lien Noteholders (Angelo Gordon & Co. LP, Aristeia Capital LLC, Barclays Bank PLC, Beach Point Capital Management LP, Capital Research and Management Company, Citadel Advisors LLC, Contrarian Capital Management LLC, Credit Suisse Securities USA LLC, Davidson Kempner Capital Management LP, DoubleLine Capital LP, Eaton Vance Management, Federated Investment Counseling, GoldenTree Asset Management LP, Graham Capital Management LP, GSO Capital Partners LP, Heyman Enterprise LLC, Hotchkis and Wiley Capital Management LLC, OSK VII LLC, Pacific Investment Management Company LLC, Silver Rock Financial LP, Sound Point Capital Management LP, Tor Asia Credit Master Fund LP, UBS Securities LLC, Whitebox Advisors LLC)

    • Legal: Akin Gump Strauss Hauer & Feld LLP (Ira Dizengoff, Philip Dublin, Daniel Fisher, Naomi Moss, Abid Qureshi)

    • Financial Advisor: Evercore Group LLC

  • Ad Hoc Group of Crossover Noteholders (Aegon USA Investment Management LLC, Aurelius Capital Master Ltd., Avenue Capital Management II LP, Avenue Europe International Management, Benefit Street Partners LLC, Cyrus Capital Partners LP, KLS Diversified Asset Management LLC, Loomis Sayles & Company LP, Monarch Alternative Capital LP, New Generation Advisors LLC, P. Schoenfeld Asset Management LP)

    • Legal: Milbank LLP (Samuel Khalil, Matthew Brod)

    • Financial Advisor: Houlihan Lokey Capital Inc.

  • Ad Hoc Group of 1.5 Lien Noteholders

    • Legal: Jones Day (Sidney Levinson, Jeremy Evans)

  • Pre-petition RCF Agent & Post-petition DIP Agent ($350mm): JPMorgan Chase Bank NA

    • Legal: Simpson Thacher & Bartlett LLP

  • Trustee under the First Lien Notes: U.S. Bank NA

    • Legal: Kelley Drye & Warren LLP (James Carr, Kristin Elliott) & (local) Dorsey & Whitney LLP (Eric Lopez Schnabel, Alessandra Glorioso)

  • Trustee of 1.5 Lien Notes: Wilmington Savings Fund Society FSB

    • Legal: Arnold & Porter Kaye Scholer LLP

  • Trustee of Borden Indentures: The Bank of New York Mellon

  • Sponsor: Apollo

  • Official Committee of Unsecured Creditors: Pension Benefit Guaranty Corporation; Agrium US, Inc.; The Bank of New York Mellon; Mitsubishi Gas Chemical America; PVS Chloralkali, Inc.; Southern Chemical Corporation; Wilmington Trust; Wilmington Savings Fund Society; and Blue Cube Operations LLC

    • Legal: Kramer Levin Naftalis & Frankel LLP (Kenneth Eckstein, Douglas Mannal, Rachael Ringer) & (local) Bayard PA (Scott Cousins, Erin Fay, Gregory Flasser)

    • Financial Advisor: FTI Consulting Inc. (Samuel Star)

Updated:

New Chapter 11 Bankruptcy Filing - LBI Media Inc.

LBI Media Inc.

November 21, 2018

Happy Thanksgiving y’all!! LBI Media Inc. and several affiliates FINALLY filed for bankruptcy today in the District of Delaware after years of questions about its financial health. The company is a privately held minority-owned Spanish-language broadcaster that owns or licenses 27 Spanish-language television and radio stations in the largest US markets; it services the largest media markets in the nation, including Los Angeles, New York City, Chicago, Miami, Houston and Dallas. It is also a victim of disruption.

The company notes that it has “faced the market pressures that have broadly affected U.S. television and radio broadcasters, including the 2008 recession and the diversion of advertising spend by companies to digital media.” Insert Facebook Inc. ($FB) here. That’s not all, though, of course: the company is also hampered by “a substantial debt load and corresponding interest expense obligations” which has stunted LBI’s financial performance, ability to invest and grow, and liquidity.

To address this situation, the company obtained an investment from its now-DIP lender, HPS Investment Partners, in April 2018 for a new first lien credit facility. This provided the company with much needed liquidity and, in turn, briefly extended the company’s runway out of bankruptcy court. The “make-whole” provision attached to the facility, however, became the subject of much controversy and an ad hoc group of second lien noteholders sued in New York state court for an injunction to hinder the transaction. Ultimately, the state court denied the noteholders.

But…but…the noteholders persisted. And this, apparently, left a bitter taste in the mouth’s of company management (and its counsel). Junior Noteholders, meet bus. 🚌🚌 The company notes:

Following the closing of the transaction, LBI sought to continue its growth efforts. However, such efforts were weakened by the Junior Noteholder Group, which continued to litigate against the Company, its founder and CEO, and HPS, the Company’s sole senior lender. The Junior Noteholder Group commenced multiple lawsuits, and threatened several more, distracting management from operations. These actions and threats not only hindered the Debtors’ efforts to improve their operations, but certain actions, including seeking to enjoin the first lien financing, risked pushing LBI into a precipitous freefall bankruptcy.

When coupled with the Debtors’ tightening liquidity (which was exacerbated by the expense of the Junior Noteholder Group litigation), the Junior Noteholder Group’s actions made it substantially more difficult for LBI to achieve the growth it had hoped for, and the Company determined that a comprehensive reorganization may be necessary.

Thereafter, settlement talks with the Junior Noteholders proved unsuccessful and, now, therefore, the company marches into bankruptcy court with a Restructuring Support Agreement (“RSA”) in hand with HPS whereby, subject to a “fiduciary out,” HPS will serve as (prearranged but hardly set in stone) Plan sponsor and swap its $233mm first lien senior secured notes for a majority equity interest in the company. The Plan — which at the time of this writing isn’t on the docket yet — reportedly provides for recoveries for other “supporting” constituencies. What’s that we hear? IT’S A (DEATH) TRAP!?!

(PETITION NOTE: for the uninitiated, a “death trap plan” is an inartful term for when the Debtor proposes and the senior lenders allows a recovery to trickle down the “priority waterfall” to junior lenders but only on account of said junior lenders’ support of, or vote for, the proposed Plan. In essence, its consideration for dispensing with “holdup value.” A “fiduciary out” gives the Debtor flexibility to, despite the RSA, agree to an alternative transaction that bests the HPS transaction without penalty or the need to pay a “break-up fee.”).

The plan provides the company with 75-day period to run a marketing process. While the company will market the company to potential strategic and financial investors, it is also making overtures to the Junior Noteholders to take out HPS’ claim(s) (without needing to satisfy the make-whole) and become the Plan sponsor such that it could walk away with 100% equity in the company.

All of which is to say: don’t let the terms “RSA” and “Plan” fool you. This is far from a consensual case being presented to the Bankruptcy Court Judge wrapped up in a shiny bow. The Junior Noteholders have been fighting the company and HPS for months: there is no reason to suspect that that will stop now merely because the company is a chapter 11 debtor.

• Jurisdiction: D. of Delaware (Judge Lane)

• Capital Structure: $233mm 10% ‘23 senior secured notes, $262mm 11.5/13.5 ‘20 PIK toggle second priority secured notes, $27.95mm 11% ‘22 PIK unsecured Intermediate senior Holdco notes (TMI Trust Company), $8.46mm 11% ‘17 unsecured Holdco notes (U.S. Bank NA)    

• Company Professionals:

  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Garrett Fail, David J. Cohen) & (local) Richards Layton & Finger PA (Daniel DeFranceschi)

  • Board of Directors: Jose Liberman, Lenard Liberman, Winter Horton, Rockard Delgadillo, Peter Connoy, Neal Goldman

  • Financial Advisor: Alvarez & Marsal North America LLC

  • Investment Banker: Guggenheim Securities LLC

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

• Other Parties in Interest:

  • Prepetition First Lien & DIP Lender: HPS Investment Partners LLC ($38mm)

    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Paul Basta, Jeffrey Safferstein, Sarah Harnett) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, M. Blake Cleary)

  • First Lien Trustee: Wilmington Savings Fund Society FSB

    • Legal: Morrison & Foerster (Jonathan Levine) & (local) Ashby & Geddes PA (William Bowden)

  • Collateral Trustee for First Lien Notes: Credit Suisse AG

    • Legal: Locke Lorde LLP (Juliane Dziobak)

  • Ad Hoc Group of (Junior) Second Lien Noteholders

    • Legal: Willkie Farr & Gallagher LLP (Rachel Strickland)

  • Ad Hoc Group of Holdco Noteholders

    • Legal: Landis Rath & Cobb LLP (Matthew McGuire)

Updated 11/21/18 at 8:27 CT

New Chapter 11 Bankruptcy Filing - Aegean Marine Petroleum Network Inc.

Aegean Marine Petroleum Network Inc.

November 6, 2018

On Sunday, November 4, 2018, we wrote the following in our “Fast Forward” segment:

Aegean Marine Petroleum Network Inc. ($ANW) is now subject to a fraud probe by international auditors. This thing will be in a bankruptcy court near you before too long.

We didn’t expect that prediction to come to fruition so quickly!

Admittedly, Aegean, one of the world’s largest independent marine fuel logistics companies with 57 owned and chartered vessels, has been a slow moving train towards bankruptcy for some time. The recent revelation of fraud — yes, fraud — is just the cherry on top. (PETITION Note: in frothy times come desperate shenanigans. This won’t be the last bankruptcy filed in the near-term that, in part, will have an element of fraud in the story.) And, alas, earlier, Aegean Marine Petroleum Network Inc. and 74 affiliated debtors filed for bankruptcy in the Southern District of New York. The more immediate trigger? The maturity of its 4% convertible unsecured notes.

Aegean blames an over-saturated market, limitations imposed by its lenders under the credit facilities, and…wait for it…the fraud…as reasons for its bankruptcy filing. Wait. Why are we describing the debtors’ ails in words when they’ve provided us with some crafty graphics to illustrate, in part, the “perfect storm of circumstances” that have plagued them:

Source: First Day Declaration

Aegean intends to use the bankruptcy process to address its capital structure (namely the maturity), stabilize operations and sell to Mercuria Energy Group Limited, a private company that, back in August, became the sole lender under both the debtors’ US and Global credit facilities. Mercuria also provided a DIP proposal that consists of a $160mm US credit facility, a $300mm global credit facility, and a $72mm term loan that the debtors deemed better than a proposed facility from an ad hoc group of unsecured convertible noteholders. The question will be to what degree a more robust and competitive sale process emerges now that this thing is finally in bankruptcy court.

• Jurisdiction: S.D.N.Y. (Judge Wiles)

• Capital Structure: $131.7mm US credit facility (ABN AMRO Bank NV), $249.6mm global credit facility (ABN AMRO Bank NV), $206.6mm aggregated across ten secured term loans, $172.5mm 4.25% convertible unsecured notes due 2021 (U.S. Bank NA), $94.55mm 4.00% convertible unsecured notes due 2018 (Deutsche Bank Trust Company Americas)  

• Company Professionals:

  • Legal: Kirkland & Ellis LLP (James Sprayragen, Jonathan Henes, Marc Kieselstein, Ross Kwasteniet, Cristine Pirro Schwarzman, Adam Paul, Benjamin Winger, Christopher Hayes, Bryan Uelk)

  • Independent Directors: Donald Moore, Raymond Bartoszek, Tyler Baron)

  • Audit Committee of the Board of Directors

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

  • Financial Advisor: EY Turnaround Management Services LLC (Andrew Hede)

  • Investment Banker: Moelis & Company LLC (Zul Jamal)

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

• Other Parties in Interest:

  • Prepetition Agent: ABN AMRO Capital USA LLC

    • Legal: Willkie Farr & Gallagher LLP (Ana Alfonso)

  • Prepetition Agent: Aegean Baltic Bank SA

    • Legal: White & Case LLP (Scott Greissman, Elizabeth Feld, Mark Franke)

  • Indenture Trustee for the 4% ‘18 Convertible Senior Notes

    • Legal: Ropes & Gray LLP (Mark Somerstein, Patricia Chen)

  • Largest Equity Holder/Stalking Horse Buyer: Mercuria Energy Group Limited

    • Legal: Norton Rose Fulbright US LLP (Marc Ashley, Robert Kirby)

  • Official Committee of Unsecured Creditors (Deutsche Bank Trust Company Americas, U.S. Bank National Association, American Express Travel Related Services Company Inc.)

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

    • Financial Advisor: AlixPartners LLP

Source: First Day Declaration

Updated 11/17/18

New Chapter 11 Filing - Nine West Holdings Inc.

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. 

More on the situation here. 

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

• Capital Structure: See below.

Source: First Day Declaration

• Company Professionals:

  • Legal: Kirkland & Ellis LLP (James Sprayragen, James Stempel, Joseph Graham, Angela Snell, Anna Rotman, Jamie Aycock, Justin Alphonse Mercurio, Alyssa Russell)

  • Financial Advisor: Alvarez & Marsal North America LLC (Ralph Schipani III, Julie Hertzberg, Holden Bixler, Amy Lee, Richard Niemerg, Theodore Langer, Stuart Loop, Thomas Koch, Michael Dvorak)

    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Andrew Leblanc, Alexander Lees)

  • Investment Banker: Lazard Freres & Co. LLC (David Kurtz, Ari Lefkovits, David Hales, Mike Weitz, Nikhil Angelo, Okan Kender, Abigail Gay, Drew Deaton) & Consensus Advisory Services LLC

  • Authorized Officers: Stefan Kaluzny, Peter Morrow, Harvey Tepner, Alan Miller

  • Legal to the Authorized Officers: Munger Tolles & Olson LLP (Seth Goldman, Kevin Allred, Thomas Walper)

  • Financial Advisor to the Authorized Officers: Berkeley Research Group LLC (Jay Borow)

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

• Other Parties in Interest:

  • Stalking Horse Bidder/Buyer: Authentic Brands Group

    • Legal: DLA Piper LLP (Richard Chesley, Ann Lawrence, Rachel Ehrlich Albanese)

  • Prepetition ABL and FILO Agent: Wells Fargo NA

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

  • Administrative Agent for the prepetition secured and unsecured Term Loan Facilities: Morgan Stanley Senior Funding Inc.

  • Indenture Trustee for 3 series of Unsecured Notes: US Bank NA

    • Legal: White & Case LLP (J. Christopher Shore, Philip Abelson) & Seward & Kissel LLP (John Ashmead, Arlene Alves)

  • Ad Hoc Group of Secured Lenders (Farmstead Capital Management LLC, KKR Credit Advisors (US) LLC)

    • Legal: Davis Polk & Wardwell LLP (Marshall Huebner, Darren Klein, Adam Shpeen)

    • Financial Advisor: Ducera Partners LLC

  • Ad Hoc Group of Crossover Lenders (Alden Global Capital LLC, Carlson Capital LP, CVC Credit Partners LLC, Silvermine Capital Management LLC, Trimaran Advisors)

    • Legal: King & Spalding LLP (Michael Rupe, Jeffrey Pawlitz, Michael Handler, Bradley Giordano)

    • Financial Advisor: Guggenheim Securities LLC

  • Brigade Capital Management, LP

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

    • Financial Advisor: Moelis & Company

  • Ad Hoc Group of 2019 Unsecured Noteholders (Whitebox Advisors LLC, Scoggin Management LP, Old Bellows Partners LP, Wazee Street Opportunities Fund IV)

    • Legal: Willkie Farr & Gallagher LLP (Rachel Strickland)

  • Ad Hoc Group of 2034 Unsecured Noteholders

    • Legal: Jones Day

    • Financial Advisor: Houlihan Lokey

  • Administrative Agent for $247.5mm DIP ABL Facility

  • Administrative Agent for $50mm DIP TL Facility

  • Sponsor: Sycamore Partners LP

    • Legal: Proskauer Rose LLP (Mark Thomas, Peter Young, Michael Mervis, Jared Zajac, Chantel Febus, Alyse Stach)

  • KKR Asset Management

    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Andrew Leblanc)

  • Morgan Stanley & Co. LLC and Morgan Stanley Senior Funding Inc.

    • Legal: Ropes & Gray LLP (Gregg Galardi, Gregg Weiner)

  • Official Committee of Unsecured Creditors (Aurelius Capital Master Ltd., GLAS Trust Company LLC, PBGC, Simon Property Group, Stella International Trading (Macao Commercial Offshore) Ltd., Surefield Limited, U.S. Bank NA)

    • Legal: Akin Gump Strauss Hauer & Feld LLP (Daniel Golden, David Zensky, Deborah Newman, Arik Preis, Jason Rubin, Anthony Loring, Michael Byun, Patrick Chen)

    • Legal Conflicts Counsel: Kasowitz Benson Torres LLP (David Rosner, Howard Schub)

    • Financial Advisor: Protiviti Inc. (Guy Davis, Suzanne Roski, Heather Williams, John Eldred, Justin Koehler, Brian Taylor, Russell Brooks, Matthew Smith, Blake Parker, Lee Slobodien, Omkar Vale, Lok Lam, Sean Sterling) & Province Inc. (Michael Atkinson, Jason Crockett, Eunice Min, Byron Groth)

    • Investment Banker: Houlihan Lokey Capital Inc. (Saul Burian, Surbhi Gupta, Chris Khoury, Tejas Kullarwar, Matt Ender, Brendan Wu)

Updated 11/3/18 at 6:42 am CT

New Chapter 11 Filing - Orexigen Therapeutics Inc.

Orexigen Therapeutics Inc. 

3/12/18

Orexigen Therapeutics is a publicly-traded ($OREX) biopharmaceutical company with one FDA-approved product - "Contrave" - an adjunct to a reduced-calorie diet and exercise for chronic weight management in certain eligible adults. (Before we continue, please take a minute to appreciate the exquisite creativity these folks deployed with the name, "Contrave." Control + crave = Contrave. We hope they didn't shell out too much cash money to the brand consultants for that one). 

Anyway, the drug could theoretically service the 36.5% of adults the Center for Disease Control & Prevention has identified as obese, a potential market of 91-93 million people in the United States alone. And that number is predicted to rise to 120 million people in the next several years. Yikes: that's 33% of the U.S. population. Apropos, the drug is the number one prescribed weight-loss brand in the US with over 1.8 million prescriptions written to date, subsuming 700,000 patients. The drug is also approved in Europe, South Korea, Canada, Lebanon, and the UAE. 

All of that surface-level success notwithstanding, the company has lost approximately $730 million since its inception. This is primarily because it has been spending the last 16 years burning cash on R&D, clinical studies for FDA approval, recruitment, manufacturing, marketing, etc., both in and outside the U.S. And people wonder why drugs are so expensive. The company believes it could be profitable by 2019 under its existing operating model and revenue forecasts; it enjoys a patent until 2030. 

Obviously the patent is critical because the company, through its banker, attempted a sale prior to the bankruptcy filing but proved unsuccessful. The goal of the bankruptcy filing, therefore, is to effectuate a sale with the benefit of "free and clear" status. While no stalking horse bidder is lined up, The Baupost Group LLC, is leading a group of secured noteholders (including Ecori Capital, Highbridge Capital and UBS O'Connor) to provide a $35 million DIP credit facility and buy the company some time. Will they end up owning it? 

• Jurisdiction: D. of Delaware 
• Capital Structure: $165mm 0% '20 convertible notes (The Baupost Group LLC), $115mm 2.75% '20 convertible notes ($25 million outstanding, Wilmington Trust NA), $49.6mm 2.75% '20 convertible exchange senior notes ($38.9 million outstanding, US Bank NA) 
• Company Professionals:
  • Legal: Hogan Lovells LLP (Christopher Donolo, Eric Einhorn, Christopher Bryant, Jon Beck, Sean Feener) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Andrew Remming, Jose Bibiloni)
  • Financial Advisor: E&Y
  • Investment Banker: Perella Weinberg Partners 
  • Claims Agent: KCC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Prepetition Collateral Agent & Prepetition Trustee: U.S. Bank NA
    • Legal: Kelley Drye & Warren LLP (James Carr, Benjamin Feder)
  • DIP Lenders
    • Legal: Quinn Emanuel Urquhart & Sullivan LLP (Eric Winston)
  • DIP Administrative Agent: Wilmington Trust Company
    • Legal: Arnold & Porter (Tyler Nurnberg)
  • DIP Lender: Highbridge Capital Management LLC
    • Legal: Brown Rudnick LLP (Robert Stark, Stephen Levine, Uchechi Egeonuigwe) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Aaron Stulman)
  • Official Committee of Unsecured Creditors
    • Legal: Elliott Greenleaf PC (Rafael Zahralddin-Aravena, Eric Sutty) & (local) Irell & Manella LLP (Jeffrey Reisner, Michael Strub Jr., Kerri Lyman)

Updated March 30, 2018

New Chapter 11 Bankruptcy - Cumulus Media Inc.

Cumulus Media Inc.

• 11/29/17 Recap: It has become routine for a company to tout the synergistic benefits of an acquisition. But synergies only come from solid execution and integration of the new properties into the existing franchise. As we often see, that's a pipe dream that often fails to come to fruition. Take, Cumulus Media, for instance, which from 1998 through 2013, "completed approximately $5 billion worth of acquisitions to grow its network and station businesses," including two large recent acquisitions (Citadel Broadcasting in 2011 and Westwood One in 2013). Notably, "[t]he Company struggled to develop the management and technology infrastructure required to integrate the acquired assets and to support and manage its expanding portfolio. Additionally, certain of the acquisition projections proved erroneous and a number of subsequent management decisions failed to achieve their desired results. The Company was thus unable to achieve the cash flow projections it had made to support the prices paid for those acquisitions...." Projections didn't translate to reality? Color us shocked. Combine these operational challenges with "industry challenges" and you've got a recipe for decreased YOY trends in ratings, revenue and EBITDA. Since 2012. Yikes. But like most bankruptcies, this is a storm of multiple elements. Clearly, the above-noted transactions led to a tremendous amount of incurred debt, capex for integration, and interest expense on that debt. But, in addition, "advertiser and listener demand for radio overall has been negatively impacted by the availability of content and advertising opportunities in growing digital streaming and web-based digital formats, resulting in declines in radio industry revenue and listenership. As a result of these general industry pressures, high acquisition prices and subsequent poor performance, Cumulus Media found itself with an excessive level of debt relative to its earnings and rapidly approaching maturities on its funded debt." So, in other words, blame the debt, Facebook ($FB), Google ($GOOGL), Netflix ($NFLX), Amazon ($AMZN), podcasts, etc., for the decline in radio consumption. So, now the company is in bankruptcy with a restructuring support agreement in place to equitize the term loan. The term loan lenders will get take-back paper and 83.5% percent of the reorganized company. The noteholders will get 16.5% of the equity subject to management incentive plan. Shareholders will get bupkis. 
• Jurisdiction: S.D. of New York (Judge Chapman)
• Capital Structure: $1.73b TL (JP Morgan Chase Bank NA), $637mm 7.75% senior notes (U.S. Bank NA)   
• Company Professionals:
  • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Paul Basta, Lewis Clayton, Jacob Adlerstein, Claudia Tobler)
  • Financial Advisor: Alvarez & Marsal North America LLC (David Miller)
  • Investment Banker: PJT Partners LP
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Board of Directors: Mary Berner, Jill Bright, Ralph Everett, Jeffrey Marcus, Ross Oliver, Jan Baker
• Other Parties in Interest:
  • Ad Hoc Group of Term Loan Lenders (Eaton Vance Management and Boston Management & Research, Franklin Mutual Advisors, Highland Capital Management LP, JP Morgan Chase Bank NA, Silver Point Finance LLC, Symphony Asset Management LLC and Nuveen Fund Advisors, Voya Investment Management Co. LLC, Beach Point Capital Management LP)
    • Legal: Arnold & Porter Kaye Scholer LLP (Michael Messersmith, Michael Solow, Seth Kleinman)
    • Financial Advisor: FTI Consulting LLC
  • Ad Hoc Senior Noteholder Group (Angelo Gordon & Co. LLP, Brigade Capital Management, Capital Research and Management Co., Greywolf Capital Management LP, Waddell & Reed Investment Corporation)
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Michael Stamer, Meredith Lahaie, Abid Qureshi, Kate Doorley)
  • Administrative Agent: JP Morgan Chase Bank NA
    • Legal: Simpson Thacher & Bartlett LLP (Elisha Graff, Nicholas Baker)

Updated 11/30/17

New CBCA Proceeding - Concordia International Group

Concordia International Group

• 10/20/17 Recap: Canadian-based pharmaceutical company filed for a stay under the Canada Business Corporations Act (CBCA) to effectuate a plan to de-lever its balance sheet. The company has a portfolio of 200+ "off-patient" skus with sales all across the world. The company blamed the need for the filing on (i) the proliferation of competitive generic products, (ii) the introduction of new products that treat the same ailments Concordia addresses, (iii) drug pricing pressures (including regulatory pressures in the UK), and its highly-levered balance sheet. The company intends to deploy its "DELIVER" strategy - not to be confused with what should be an obvious DELEVER strategy, but we digress. This acronym stands for a bunch of trite stuff like "Drive growth, "Expand," "Level-set the U.S. Business," "Increase the Product Pipeline," blah blah boring blah blah. In other words, effectively operate a pharma business - the EOPB strategy. Fine, not quite the same ring to it. 
• Jurisdiction: Superior Court of Ontario
• Capital Structure: $1.068b secured term loan, £485.63mm secured term loan. $350mm 9% '22 senior secured first lien notes, $135mm 9.5% '22 extended unsecured bridge loan ($100.83 funded ex-interest), $45mm 9.5% '17 equity unsecured bridge loan ($33.61mm ex-interest), $735mm 7% '23 unsecured notes (ex-interest), and $790mm 9.5% '22 unsecured notes (ex-interest)(US Bank NA). Public equity ($CXR).     
• Company Professionals:
  • Legal: Skadden Arps Meagher & Flom LLP (Paul Leake, Shana Elberg) & (Canadian) Goodmans LLP (Robert Chadwick, Brendan O'Neil, Caroline Descours, Ryan Baulke)
  • Financial Advisor: Perella Weinberg Partners LP
• Other Parties in Interest:
  • Secured Term Loan Agent: Goldman Sachs Bank USA
    • Legal: Davis Polk & Wardwell LLP (Damian Schaible)
  • Secured Debtholders Committee
    • Legal: White & Case LLP & (Canadian) Osler Hoskin & Harcourt LLP (Marc Wasserman, Martino Calvaruso)
  • Trustee for Secured and Unsecured Notes: US Bank NA
  • Unsecured Debtholders Committee
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP & (Canadian) Bennett Jones LLP (Kevin Zych, Sean Zweig)

Updated 10/26/17

New Chapter 11 Bankruptcy - Appvion Inc.

Appvion Inc.

• 10/2/17 Recap: The 100+-year old Appleton Wisconsin-based manufacturer of specialty coated paper has filed for bankruptcy. The company operates in two segments, the thermal paper segment and the carbonless paper segment. The thermal paper segment, on the surface, seems like it would be the most susceptible segment to technological disruption. It is used in four principal end markets: 1) point-of-sale for retail receipts and coupons (PETITION Note: you could understand why this would seemingly be in decline with Square and other P.O.S. stations now emailing receipts - not to mention more and more retail being done online); 2) label products for shipping, warehousing, medical and clean-room supplies (PETITION Query: perhaps the shipping labels offsets the paper receipts?); 3) tags and tickets for airline/baggage applications, events and transportation tickets, lottery and gaming applications (PETITION Note: one of us bought a baseball a scannable paperless ticket the other day from Stubhub...hmmm); and 4) printer, calculator and chart paper for engineering, industrial and medical diagnostic charts. The thermal paper segment is 60% of the company's net sales and has enjoyed annual average growth rates between 1-3%. Somewhat shockingly. PETITION Note: We would have liked to have seen those four sub-segments separated out. Meanwhile, the carbonless paper segment accounts for the other 40% of net sales; it produces coated paper products for design and print applications. The paper is used in a variety of end markets including government, retail, financial, insurance and manufacturing. This segment has been in structural decline since 1994, down approximately 7-11% annually due to the rise of new technologies in digital laser, inkjet and thermal printers. Oh, and electronic communications: the company just throws that in their bankruptcy papers like it's an afterthought. In other words, government and corporations are relying more on email than on the printed page which, duh, obviously impacts this segment. The company owns there manufacturing plants and leases three warehouses; it also has 915 union employees - owed $112.6mm in obligations - who probably ought to get ready to get bent (they are represented by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (the “USW”). The company blames the chapter 11 filing on negative industry trends, an unsustainable degree of balance sheet leverage, inability to adequately address near-term maturities and rapidly deteriorating liquidity. Liquidity became even more of an issue after the company issued a "going concern" warning and received an S&P credit downgrade - two things that obviously made suppliers skittish and resulted in demands for disadvantageous trade terms. Recognizing decreased liquidity, the company appears to have taken as much cost out of the business as it can which, from the looks of the company's papers, may be artificially inflating the numbers on the thermal side in the face of technological innovation. PETITION Note: the assumptions the bankers concoct for this side of the business ought to be watched very carefully. Somewhat surprisingly, despite a full slate of advisors and months of lead-up to the filing, this is a classic free-fall into bankruptcy: there doesn't appear to be any restructuring support agreement with the lenders whatsoever. There is, however, a proposed $325.2mm DIP credit facility which would include $85mm of new money and a $240.2mm rollup of pre-petition money (in other words, the full amount of pre-petition TL & RCF monies outstanding, ex-interest). Nothing like being senior in the cap stack. Final PETITION Note: anyone think this will be the last paper-related bankruptcy in, say, the next 12 months? This is starting to look like 2007 all over again...
• Jurisdiction: D. of Delaware
• Capital Structure: $335mm first lien TL & $100 RCF ($240.8mm outstanding included accrued/unpaid interest), $250mm '20 9% second lien senior notes, $24mm A/R securitization, $6mm Industrial Development Bonds, $500k TL with the State of Ohio
• Company Professionals:
  • Legal: DLA Piper (US) LLP (Richard Chesley, Stuart Brown, Jamila Willis, Kaitlin Edelman)
  • Financial Advisor/CRO: AlixPartners LLP (Alan Holtz, Pilar Tarry, Nathan Kramer)
  • Investment Banker: Guggenheim Securities LLC (Ronen Bojmel)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Strategic Communications Consultant: Finsbury LLC
• Other Parties in Interest:
  • DIP Admin Agent: Wilmington Trust, NA
    • Legal: Covington & Burling LLP (Ronald Hewitt) & (local) Pepper Hamilton LLP (David Fournier)
  • DIP Lenders
    • Legal: O'Melveny & Myers LLP (George Davis, Daniel Shamah, Matthew Kremer, Jennifer Taylor) & (local) Richards Layton & Finger P.A. (Mark Collins, Michael Merchant, Brett Haywood)
  • Prepetition Credit Agreement Admin Agent: Jefferies Finance LLC
    • Legal: Jones Day (Scott Greenberg, Brad Erens) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Timothy Cairns)
  • Key Bank National Association
    • Legal: Reed Smith LLP (Peter Clark II, Jennifer Knox, Emily Devan)
  • Fifth Third Bank
    • Legal: Vedder Price PC (Michael Eidelman, Michael Edelman) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)
  • Ad Hoc Committee of Holders of the 9% '20 Second Lien Senior Secured Notes (ADK Capital LLC, ALJ Capital Management LLC, Archer Capital Management LP, Armory Advisors LLC, Barings LLC, Mackenzie Investments, MAK Capital One LLC, Nomura Corporate Research and Assset Management, Riva Ridge Master Fund Ltd., Rotation Capital Management LP, Scott's Cove Management LLC)
    • Legal: Stroock Stroock & Lavan LLP (Jayme Goldstein, Samantha Martin) & (local) Young Conaway Stargatt & Taylor LLP (Edmon Morton, Matthew Lunn)
  • Second Lien Senior Secured Notes Indenture Trustee: US Bank NA
    • Legal: Foley & Lardner LLP (Richard Bernard, Derek Wright, Mark Prager)
  • Official Committee of Unsecured Creditors
    • Legal: Lowenstein Sandler LLP (Kenneth Rosen, Jeffrey Prol, Wojciech Jung) & (local) Klehr Harrison Harvey Branzburg LLP (Michael Yurkewicz, Morton Branzburg, Sally Veghte)

Updated 10/26/17

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

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

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

Updated 7/11/17 6:22 pm

Source: First Day Declaration.

New Chapter 11 Filing - Gulfmark Offshore Inc.

Gulfmark Offshore Inc.

• 5/17/17 Recap: Everyone has been waiting for the offshore action and it's finally here. Except, its fairly anticlimactic. Here, the publicly-traded Houston-based offshore oil and gas logistics services provider filed for bankruptcy to effectuate a financial restructuring pursuant to a Restructuring Support Agreement signed with holders of its unsecured senior notes. The noteholders will get approximately 36% of the equity in the newly reorganized company along with rights to purchase an additional 60% equity slug pursuant to a backstopped $125mm rights offering. Existing equity will get a small equity "kiss" and some warrants. This is so boring that EVEN WE can't really find much to make fun of. 
• Jurisdiction: D. of Delaware
• Capital Structure: $100mm RCF ($72mm funded)(Royal Bank of Scotland), NOK600mm Norwegian Facility ($44.3mm funded)(DNB Bank ASA), $430mm '22 6.375% unsecured senior notes (funded)(US Bank NA)    
• Company Professionals:
  • Legal: Weil (Gary Holtzer, Ronit Berkovich, Debora Hoehne) & (local) Richards Layton & Finger PA (Mark Collins, Zachary Shapiro, Brett Haywood, Christopher De Lillo)
  • Financial Advisor: Alvarez & Marsal LLC (Brian Fox, Kevin Larin, RIchard Niemerg, Don Koetting, Lacie Melasi, Robert Country)
  • Investment Banker: Evercore Group LLC (Stephen Hannan, David Andrews, Sachin Lulla, Pranav Goel, Arth Patel)
  • Claims Agent: Prime Clerk LLC (*click on company name above for access to free docket)
• Other Parties in Interest:
  • Indenture Trustee: US Bank NA
    • Legal: Foley & Lardner LLP (Derek Wright, Mark Prager)
  • Ad Hoc Group of Unsecured Noteholders
    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Evan Fleck, Nelly Almeida) & (local) Morris Nichols Arsht & Tunnell LLP (Gregory Werkheiser, Robert Dehney)
      • Financial Advisor: Houlihan Lokey Capital Inc.
  • Prepetition Multicurrency RCF Lender: Royal Bank of Scotland
    • Legal: Sullivan & Cromwell LLP (Michael Torkin, Brian Glueckstein, David Zylberberg) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Joseph Barry, Ian Bambrick)
    • Financial Advisor: FTI Consulting Inc.
  • Prepetition NOK Lender: DNB Bank ASA
    • Legal: Hughes Hubbard & Reed LLP (Christopher Kiplok, Anson Frelinghuysen, Erin Diers) & (local) Bayard PA (Erin Fay)
    • Financial Advisor: Guggenheim Securities LLC
  • Gulfmark Rederi AS
    • Legal: Norton Rose Fulbright US LLP (Jason Boland, William Greendyke) & (local) Womble Carlyle Sandridge & Rice LLP (Matthew Ward)

Updated 7/12/17 9:301 am CT

New Chapter 15 Filing - Ocean Rig UDW Inc.

Ocean Rig UDW Inc.

• 3/28/17 Recap: Offshore drilling contractor files for bankruptcy under Chapter 15 to EFF the "vulture investors." Seriously. The Company has secured a TRO to block creditors from obstreperously vulturing their way through a potential debt restructuring. While we're somewhat serious about the foregoing, the Company is also in the midst of four interrelated schemes of arrangement and the Chapter 15 is meant to give the Company breathing room to effectuate a debt-for-equity swap thereunder - exchanging $3.7b of debt for new equity, $450mm of new secured notes, and $288mm of cash. The cause of impairment is the obvious: an "unprecedented decline in recent years in petroleum prices and exploration and development activity," which made interest coverage and refinancing difficult.  
• Jurisdiction: S.D. of New York
• Capital Structure: $1.83b '20 TLB, $1.27b '21 TLB, $460mm '17 6.5% DRH secured notes (U.S. Bank NA), $423mm '19 7.25% unsecured notes .     
• Company Professionals:
  • Legal: Orrick Herrington & Sutcliffe LLP (Evan Hollander, Raniero D'Aversa Jr., Monica Perrigno, Ayanna Lewis-Gruss)
  • Financial Advisor: AlixPartners LLC (Eleanor Fisher, Simon Appell)
  • Investment Banker: Evercore
  • Information Agent: Prime Clerk LLC
• Other Parties in Interest:
  • Highland Floating Rate Opportunities Fund, Highland Global Allocation Fund, Highland Opportunistic Credit Fund, Highland Loan Master Fund LP, NexPoint Credit Strategies Fund 
    • Legal: Venable LLP (Jeffrey Sabin, Konstantinos Katsiris, Carol Weiner Levy)
  • Ad Hoc Group of TL Lenders
    • Legal: Milbank Tweed Hadley & McCloy LLP (Gerard Uzzi, Mark Shinderman, James Behrens, Brian Kinney)
  • Ad Hoc Group of Holders of 6.5% DRH Secured Notes
    • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Edward Sassower, Brian Schartz, Patrick Nash)
  • Indenture Trustee: US Bank, NA
    • Legal: Kelley Drye & Warren LLP (James Carr, Benjamin Feder)

Updated 3/31/17 3:53 pm