🌑New Chapter 11 Bankruptcy Filing - Blackjewel LLC🌑

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Blackjewel LLC

July 1, 2019

The macro environment has been largely unforgiving to coal country.

Blackjewel LLC and three affiliates are the latest in a long string of coal companies to file for bankruptcy. The debtors mine and process metallurgical, thermal and other specialty and industrial coals; they operate 32 properties and hold over 500 mining permits — “more than any other enterprise in the country.” Their operations are in the Central Appalachian Basin in Virginia, Kentucky and West Virginia and the Powder River Basin in Wyoming; they employee 1,700 people (1,100 in the east and 600 in the west).

The debtors blame the usual macro factors for their descent into bankruptcy court: (i) declining commodity prices, (ii) reduced domestic demand for met and thermal coal, (iii) compliance costs, (iv) the rise of natural gas, (v) the increased adoption of renewables, and (vi) decreased coal-fired power generation. This is a telling stat, per the debtors:

Thermal coal demand in the domestic electric power sector has declined from 935 million tons in 2011 to 636 million tons in 2018 and coal has seen its share of the domestic electricity generation market reduce from 43% in 2011 to 31% in 2017.

On a micro level, the debtors suffered from company-specific issues including (a) the termination of a major contract with Nobel Group, (b) a major roof collapse at a particular mine that shut down production, (c) changes to Kentucky’s workers’ compensation laws that increased insurance rates, (d) poorly timed hedging agreements, and (e) interestingly, bad weather. Yes, that’s right: it isn’t just retailers who blame weather for poor performance. Per the debtors:

Various flooding events across the midwest in 2019 have severely impacted rail shipments from the Debtors’ Western Division mining operations. Starting in March 2019, the Debtor started to experience a material reduction in shipments by rail due to severe damage to the rail lines used to move the Debtors’ coal. The impact from the flooding is ongoing, with an estimated $30 million in lost sales directly attributable to it.

PETITION Note: There’s no way to know whether these “flooding events” are the result of man-made global warming but, if so…well, you know where we’re going with this. Irony to the utmost!

All of these factors — and some recent mine acquisitions from previously bankrupted coal companies — combined to seriously constrain liquidity and, after a little refinancing foreplay, term lender Riverstone Credit Partners decided it wanted out and pulled the plug from discussions. The debtors had no choice but to file for bankruptcy.

We were on a brief July 4-related break at the time of the debtors’ filing but suffice it to say that the filing was a sh*tshow. The company filed with a $20mm DIP commitment from company CEO Jeff A. Hoops Sr. and Clearwater Investment Holdings LLC, at an interest rate of LIBOR + 6% per annum, but that DIP fell apart prior to the debtors’ first day hearing putting the company on the brink of liquidation. Per The Wall Street Journal:

But the company learned before its debut appearance in West Virginia bankruptcy court that his bank froze funds Mr. Hoops believed would provide the necessary credit for the proposed financing, according to Blackjewel lawyer Stephen Lerner.

“It’s frankly a disaster,” Mr. Lerner said during the hearing in the U.S. Bankruptcy Court in Charleston, W.Va.

While this surely sucked for the professionals involved, we especially feel for the 1,700 employees whose lives were altered over night — right on the eve of July 4th. Compounding matters is the fact that, apparently, the debtors cut checks to their employees prior to the filing that are not being accepted or are being dishonored by Commonwealth banks. WHAT. A. SH*TSHOW. 🙈The court held a separate hearing on this subject on Saturday, July 6.

Ultimately, Riverstone jumped in and — oddly enough considering its role in precipitating this whole bankruptcy dance to begin with — offered a lifeline. In what may be the shortest interim DIP financing order we’ve seen ever (3 pages), the bankruptcy court approved a $5mm super-priority senior secured DIP facility ($4.25mm from Riverstone, $750k from United Bank) at LIBOR + 8.5%. The use of proceeds? To ensure security measures are in place at the mines to preserve and protect property and equipment; to pay firefighting personnel needed to extinguish active fires at the mines; to fund a $500k professional fee escrow; and to pay for other essential emergency expenses. We presume the latter would include making sure employees — who, to be clear, were abruptly sent home — get paid. Other conditions of the DIP facility? Mr. Hoops got the heave-ho and FTI’s David Beckman was appointed Chief Restructuring Officer with CEO-esque authority. Savage move by Riverstone but we all know that old adage about money talking.

But why though?

Among other things coming to light, the Hoops-controlled debtors apparently floated cashier’s checks to their 600 Wyoming employees rather than follow typical direct deposit practices. Per the Gillette News Record, the bankruptcy court judge was pissed:

“I know this may be interfering with the holiday plans for some of you, but I’m sure you’d agree it’s minimal (compared) to what these employees are dealing with,” Volk scolded during an emergency hearing he called on the Fourth of July after he began hearing reports of people not being paid.

To make matters worse, in a liquidity exercise to the extreme, the debtors apparently also deducted $1.2mm of employee money from paychecks for 401(k) contributions but those amounts were never deposited into the appropriate accounts. SHEESH.

The human element of this cannot be overstated. More from the Gillette News Record (which you ought to read — it really puts this bankruptcy filing in perspective):

“I just hope these people can find jobs here and don’t have to leave,” said [Mayor Louise Carter-King], referring to the 2016 bust that saw the city’s population dip by about 2,000 as people left for work elsewhere. “That’s a big concern, but I also realize they’ve got to go where they can get jobs.”

She’s also worried for the small, local businesses and contractors that rely on performing work at the mines, especially those that might have to cut staff or shut their doors because they haven’t been paid by Blackjewel.

“Losing 600, 700 jobs has quite a trickle-down effect,” she said.

Shockingly, Fortune notes that coal mining jobs have actually “held steady under Trump”:

…per the Bureau of Labor Statistics: the number of coal workers rose from 50,500 in Nov. 2016 to 52,900 (preliminary) in May 2019. The rise has largely been attributed to demand from Europe and Asia—though overall demand has been steadily falling with exports down 7.4% in first quarter of 2019 year-over-year.

But in the long term, the trend of falling coal jobs expected to continue as the commodity comes under pressure against cheaper options such as natural gas.

“I can’t overstate the extreme competition between coal and natural gas,”  Hans Daniels, CEO of Doyle Trading Consultants said last year.

Indeed, take a look at the BLS numbers:

Screen Shot 2019-07-08 at 11.02.18 AM.png

This is, despite the fact that, per the Wall Street Journal:

Blackjewel is at least the fifth coal company to file for bankruptcy within the past 12 months and third to file chapter 11 since May. Cloud Peak Energy Inc. and Cambrian Holding Co. filed for chapter 11 protection in the previous two months. Westmoreland Coal Co. and Mission Coal Co. filed for bankruptcy last fall.

This is, despite the fact that, per the Wall Street Journal:

Blackjewel is at least the fifth coal company to file for bankruptcy within the past 12 months and third to file chapter 11 since May. Cloud Peak Energy Inc. and Cambrian Holding Co. filed for chapter 11 protection in the previous two months. Westmoreland Coal Co. and Mission Coal Co. filed for bankruptcy last fall.

Curious.

As for the Powder River Basin, generally? Things aren’t so peachy. Per E&E News, the Blackjewel bankruptcy portends more pain to come:

"To me, it's a real sign there is something fundamentally wrong with the economics of PRB coal," said Clark Williams-Derry, an analyst who tracks the coal industry at the Sightline Institute, which advocates for a transition to clean energy. "The new normal is not stasis. It is contraction and disappointment."

It wasn't always that way. In the 1970s, a newly strengthened Clean Air Act prompted a westward expansion of the U.S. coal industry. The coal found in the Powder River Basin of Montana and Wyoming does not pack as much energy as the varieties buried in Appalachia. But its low sulphur content made it popular with power companies searching for ways to comply with America's new air quality laws.

Today, the Powder River Basin accounts for roughly 40% of U.S. coal output, by far the most of any basin. Yet production there has plunged, falling from 462 million tons in 2011 to 324 million tons last year, according to federal figures.

What is the cause of this decline?

The decline has been driven by stiff competition from natural gas and renewable energy. Wind, in particular, has eroded the Powder River Basin's market in the Great Plains, a major outlet for the basin's coal.

"Wind power has caused a lot of these coal plants to be uneconomical and be shut down," said John Hanou, a coal consultant who produces an annual study on the Powder River Basin. "Then on top of that you have the cheap natural gas from fracking."

The fact that PRB coal’s primary use is electricity had largely insulated it from the coal downturn of a few years ago. The bankruptcies of Arch Coal Inc. ($ARCH), Peabody Energy ($BTU) and Alpha Natural Resources largely revolved around over-expansion and too much debt as these companies dove into met coal for purposes of steal production. Electricity-producing coal of the sort produced in the PRB wasn’t as affected. Until now.

The problem: U.S. power companies consumed 687 million tons of coal in 2018, the lowest amount since 1978.

The decline has prompted upheaval in a region that long prided itself on stability. Cloud Peak Energy Inc., which operates three mines in the region, declared bankruptcy in May….

Last month, Arch and Peabody announced plans to form a joint venture, effectively combining their mining operations in the Powder River Basin in an attempt to cut costs. 

President Trump promised to save coal.

In reality, the cancer has spread farther than it had ever before.

Pour one out for the PRB.

  • Jurisdiction: S.D. of West Virginia (Judge Folk)

  • Capital Structure: $28mm term loan (15% interest)(Riverstone Credit Partners) + $6mm from Jeff A. Hoops Sr. and Lime Rock Partners, ~$6mm RCF and TL (United Bank Inc.), $23.8mm (Caterpillar Financial Services Corporation), $25.5mm Fifth Third Bank Loan, $1.7mm Javelin Commodities Security Agreement, $4.9mm Uniper Security Agreement, $11mm Hoops’ Prepetition unsecured loans

  • Professionals:

    • Legal: Squire Patton Boggs (Stephen Lerner, Nava Hazan, Maura McIntyre, Travis McRoberts, Kyle Arendsen) & (local) Supple Law Office PLLC (Joe Supple)

    • Financial Advisor: FTI Consulting Inc. (David Beckman)

    • Investment Banker: Jefferies LLC (Robert White)

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

  • Other Parties in Interest:

    • Official Committee of Unsecured Creditors (Walker Machinery Company, Jennmar Corporation of Virginia, CAM Mining LLC, United Central Industrial Supply Company LLC, Kentucky River Properties LLC)

      • Legal: Whiteford Taylor & Preston LLP (Michael Roeschenthaler, Brandy Rapp, Daniel Schimizzi)

Updated 7/7/19 #88

🌑New Chapter 11 Bankruptcy Filing - Cambrian Holding Company Inc.🌑

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Cambrian Holding Company Inc.

June 16, 2019

Pour one out for the fine folks of eastern Kentucky and western Virginia. They can’t seem to catch a break.

Earlier this week, Cambrian Holding Company Inc. (and its affiliate debtors) joined a long line of coal producers/processors (e.g., Cloud Peak Energy, Westmoreland Coal, Mission Coal) who have recently filed for bankruptcy. The company employees approximately 660 people, none of whom are members of a labor union (in contrast to bigger, more controversial, coal filings, i.e., Westmoreland) and most of whom must be fretting over their futures. They must really be getting tired of all of the post-election “winning” that’s going on in coal country.

The company’s problems appear to start in 2015, at the time the company acquired TECO Coal LLC and assumed $40mm of workers’ compensation and black lung liabilities that TECO had previously self-insured. The company sought to leverage its broader scale to increase production but it failed to raise the working capital it needed to live up to its obligations and sustain production at levels necessary to service the company’s balance sheet. Post-acquisition, the company doubled revenues, but it couldn’t sustain that progress and nevertheless recorded net losses from 2015 through 2018. In turn, the company triggered financial covenant and other defaults under its ABL Revolver and Term Loan.

In other words, the company has been in a state of emergency ever since the acquisition. Almost immediately, the company “undertook various efforts to return to a positive cashflow,” which, as you might expect, meant idling or closing certain mining operations, stretching the usable life of equipment, and laying off employees.* Its efforts proved fruitless. Per the company:

Notwithstanding these efforts, the Debtors have been unable to overcome the pressures placed on their profit margins from steadily declining coal prices (along with burdensome regulations and the accompanying decline in demand for coal), all of which have contributed to the Debtors’ substantial negative cashflow and inability to consummate a value-enhancing transaction.

So, what now? The company, with assistance from Jefferies LLC, will attempt to find a buyer willing to catch a falling knife: the plan is to “commence an expeditious sale and marketing process” of the company’s assets (call us crazy, but shouldn’t it be the other way around?). To fund this process, the company has a DIP commitment from affiliates of pre-petition lenders for $15mm.**

*Interestingly, it was in March 2016 when Hilary Clinton infamously stated, “Because we're going to put a lot of coal miners and coal companies out of business.” At the time, Cambrian was already struggling, laying off people in an attempt to generate positive cashflow. That message really must’ve struck a chord down in coal country. WHOOPS.

**The Term Lenders swiftly objected to the terms of the DIP and the use of cash collateral.

  • Jurisdiction: D. of Kentucky (Judge Schaaf)

  • Capital Structure: $48mm ABL Revolver (Deutsche Bank AG New York Branch), $78mm Term Loan (Deutsche Bank Trust Company Americas)

  • Professionals:

    • Legal: Frost Brown Todd LLC (Ronald Gold, Douglas Lutz, Patrica Burgess)

    • Financial Advisor: FTI Consulting Inc. (Bertrand Troiano)

    • Investment Banker: Jefferies LLC (Leon Szlezinger)

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

  • Other Parties in Interest:

    • Term Lenders: Deutsche Bank AG, London Branch, Tennenbaum Opportunities Partners V, LP and Tennenbaum Opportunities Fund VI, LLC

      • Legal: Davis Polk & Wardwell LLP (Brian Resnick, Christopher Robertson, Elliot Moskowitz) & (local) Bingham Greenbaum Doll LLP (Christopher Madden)

    • DIP & Bridge Lender: Richmond Hill Capital Partners, LP

🌑New Chapter 11 Filing - Cloud Peak Energy Inc.🌑

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In what ought to come as a surprise to absolutely no one, Cloud Peak Energy Inc. ($CLD) and a slate of affiliates FINALLY filed for bankruptcy.

Let’s take a moment of silence for coal country, shall we? If this is what MAGA looks like, we’d hate to see what happens when a global downturn eventually hits. There’s gonna be blood in the water.

Sounds like hyperbole? Note that since 2016, there have been a slate of coal-related bankruptcies, i.e., Westmoreland Coal Company, Mission Coal Company LLC, and now Cloud Peak Energy Inc. Blackhawk Mining LLC appears to be waiting in the wings. We suppose it could be worse: we could be talking about oil and gas country (and we will be, we certainly will be…and SOON.).

Cloud Peak is an impressive company. Since its formation in 2008, it has become one of the largest (subbituminous thermal coal) coal producers in the US — supplying enough coal to satisfy approximately 2% of the US’ electricity demand. Its three surface mines are located in the Powder River Basin in Wyoming and Montana; it sold approximately 50mm tons of coal in 2018 to 46 domestic and foreign end users.*

In the scheme of things, Cloud Peak’s balance sheet isn’t overly complicated. We’re not talking about billions of dollars of debt here like we saw with Walter Energy, Peabody Energy, Arch Coal, Patriot Coal or Alpha Natural Resources. So, not all coal companies and coal company bankruptcies are created equal. Nevertheless, the company does have $290.4mm of ‘21 12% secured notes (Wilmington Trust NA) and $56.4mm of ‘24 6.375% unsecured notes (Wilmington Trust NA as successor trustee to Wells Fargo Bank NA) to contend with for a total of $346.8mm in funded debt liability. The company is also party to a securitization facility. And, finally, the company also has reclamation obligations related to their mines and therefore has $395mm in third-party surety bonds outstanding with various insurance companies, backed by $25.7mm in letters of credit. Coal mining is a messy business, homies.

So why bankruptcy? Why now? Per the company:

The Company’s chapter 11 filing, however, was precipitated by (i) general distress affecting the domestic U.S. thermal coal industry that produced a sustained low price environment that could not support profit margins to allow the Company to satisfy its funded debt obligations; (ii) export market price volatility that caused decreased demand from the Company’s customers in Asia; (iii) particularly challenging weather conditions in the second quarter of 2018 that caused spoil failure and significant delays in coal production through the remainder of 2018 and into 2019, which reduced cash inflows from coal sales and limited credit availability; and (iv) recent flooding in the Midwestern United States that has significantly disrupted rail service, further reducing coal sales.

To summarize, price compression caused by natural gas. Too much regulation (which, in turn, favors natural gas over coal). Too much debt. And, dare we say, global warming?!? Challenging weather and flooding must be really perplexing in coal country where global warming isn’t exactly embraced with open arms.

Now, we may be hopping to conclusions here but, these bits are telling — and are we say, mildly ironic in a tragic sort of way:

In addition to headwinds facing thermal coal producers and export market volatility, the Company’s mines suffered from unusually heavy rains affecting Wyoming and Montana in the second quarter of 2018. For perspective, the 10-year average combined rainfall for May, June, and July at the Company’s Antelope Mine is 6.79 inches. In 2018, it rained 10.2 inches during that period. While certain operational procedures put in place following heavy flooding in 2014 functioned effectively to mitigate equipment damage, the 2018 rains interrupted the Company’s mining operations considerably.

It gets worse.

The problem with rain is that the moisture therefrom causes “spoil.” Per the company:

Spoil is the term used for overburden and other waste rock removed during coal mining. The instability in the dragline pits caused wet spoil to slide into the pits that had to be removed by dragline and/or truck-shovel methods before the coal could be mined. This caused significant delays and diverted truck-shovel capacity from preliminary stripping work, which caused additional production delays at the Antelope Mine. The delays resulting from the spoil failure at the Antelope Mine caused the Company to have reduced shipments, increased costs, and delayed truck-shovel stripping in 2018. Consequently, the reduced cash inflows from coal sales limited the Company’s credit availability under the financial covenants in the Amended Credit Agreement prior to its termination, and limited access to any new forms of capital.

But, wait. There’s more:

Additionally, the severe weather affecting the Midwest region of the United States in mid-March 2019 caused, among other things, extensive flooding that damaged rail lines. One of Cloud Peak’s primary suppliers of rail transportation services – BNSF – was negatively impacted by the flooding and has been unable to provide sufficient rail transportation services to satisfy the Company’s targeted coal shipments. As of the Petition Date, BNSF’s trains have resumed operations, but are operating on a less frequent schedule because of repairs being made to rail lines damaged by the extensive flooding. As a result, the Company’s coal shipments have been materially impacted, with cash flows significantly reduced through mid-June 2019.

Riiiiiiiight. But:

More about Moore here: the tweet, as you might expect, doesn’t tell the full story.

Anywho.

The company has been burning a bit over $7mm of liquidity a month since September 2018. Accordingly, it sought strategic alternatives but was unable to find anything viable that would clear its cap stack. We gather there isn’t a whole lot of bullishness around coal mines these days.

To buy itself some time, therefore, the company engaged in a series of exchange transactions dating back to 2016. This enabled it to extinguish certain debt maturing in 2019. And thank G-d for the public markets: were it not for a February 2017 equity offering where some idiot public investors hopped in to effectively transfer their money straight into noteholder pockets, this thing probably would have filed for bankruptcy sooner. That equity offering — coupled with a preceding exchange offer — bought the company some runway to continue to explore strategic alternatives. The company engaged J.P. Morgan Securities LLC to find a partner but nothing was actionable. Ah….coal.

Thereafter, the company hired a slate of restructuring professionals to help prepare it for the inevitable. Centerview Partners took over for J.P. Morgan Securities LLC but, to date, has had no additional luck. The company filed for bankruptcy without any prospective buyers lined up.

Alas, the company filed for bankruptcy with a “sale and plan support agreement” or “SAPSA.” While this may sound like a venereal disease, what it really means is that the company has an agreement with a significant percentage of both its secured and unsecured noteholders to dual track a sale and plan process. If they can sell the debtors’ assets via a string of 363 sales, great. If they have to do a more fulsome transaction by way of a plan, sure, that also works. These consenting noteholders also settled some other disputes and support the proposed $35mm DIP financing

*Foreign customers purchased approximately 9% of ‘18 coal production.

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: $290mm 12% ‘21 secured debt (Wilmington Trust NA), $56.4mm unsecured debt (BOKF NA)

  • Professionals:

    • Legal: Vinson & Elkins LLP (Paul Heath, David Meyer, Jessica Peet, Lauren Kanzer, Matthew Moran, Steven Zundell, Andrew Geppert, Matthew Pyeatt, Matthew Struble, Jeremy Reichman) & (local) Richards Layton & Finger PA (Daniel DeFranceschi, John Knight)

    • Financial Advisor: FTI Consulting Inc. (Alan Boyko)

    • Investment Banker: Centerview Partners (Marc Puntus, Ryan Kielty, Johannes Preis)

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

  • Other Parties in Interest:

    • Major shareholders: Renaissance Technologies LLC, The Goldman Sachs Group Inc., Dimensional Fund Advisors LP, Kopernik Global Advisors, Blackrock Inc.

    • DIP Agent: Ankura Trust Company LLC

      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Aryeh Ethan Falk, Christopher Robertson) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller, Paige Topper)

      • Financial Advisor: Houlihan Lokey

    • Prepetition Secured Noteholder Group (Allianz Global Investors US LLC, Arena Capital Advisors LLC, Grace Brothers LP, Nomura Corporate Research and Asset Management Inc. Nuveen Alternatives Advisors LLC, Wexford Capital LP, Wolverine Asset Management LLC)

      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Aryeh Ethan Falk, Christopher Robertson) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller, Paige Topper)

    • Indenture Trustee: BOKF NA

      • Legal: Arent Fox LLP (Andrew Silfen, Jordana Renert) & (local) Womble Bond Dickinson US LLP (Matthew Ward)

    • Official Committee of Unsecured Creditors (BOKF NA, Nelson Brothers Mining Services LLC, Wyoming Machinery Company, Cummins Inc., ESCO Group LLC, Tractor & Equipment Co., Kennebec Global)

      • Legal: Morrison & Foerster LLP (Lorenzo Marinuzzi, Jennifer Marines, Todd Goren, Daniel Harris, Mark Lightner) & Morris James LLP (Carl Kunz III, Brya Keilson, Eric Monzo)

      • Investment Banker: Jefferies LLC (Leon Szlezinger)

Update: 7/7/19 #379

New Chapter 11 Bankruptcy Filing - Synergy Pharmaceuticals Inc.

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December 12, 2018

On November 11 and then, in a more fulsome manner in November 18’s “😬Biopharma is in Pain😬,” we noted that Synergy Pharmaceuticals Inc. ($SGYP) “appears to be on the brink of bankruptcy.” Looks like we were right on. This morning (12/12/18) at 4:37am (PETITION Note: remember that if you think that being a biglaw attorney is glamorous), the company and an affiliate filed for bankruptcy in the Southern District of New York.

Synergy is a biopharmaceutical company that develops and commercializes gastrointestinal therapies; its primary speciality revolves around uroguanylin, “a naturally occurring and ednogenous human GI peptide, for the treatment of GI diseases and disorders” Geez…bankers and lawyers have nothing on scientists when it comes to the vernacular. The company has one commercial product (TRULANCE) and one product in development. The company owns 33 patents.

We previously noted:

The company has a $200mm 9.5% ‘25 secured term loan with CRG (~$100mm funded plus PIK interest) that has been amended a bazillion times to account for the fact that its revenues suck, its market cap sucks, and that its on the verge of tripping, or has tripped, numerous covenants including, a “minimum market capitalization” covenant and a “minimum revenue covenant.” In its most recent 10-Q, the company noted:

To date the Company has been unable to further amend the agreement with respect to the financial and revenue covenants. The Company is continuing discussions with CRG and has received a temporary waiver on the minimum market cap covenant through November 12, 2018. The Company is currently pursuing alternatives that better align with its business, but there is no assurance that Synergy can secure CRG’s consent or otherwise achieve a transaction to refinance or otherwise repay CRG on commercially reasonable terms, in which case we could default under the term loan agreement. If CRG does not grant a further waiver beyond November 12, 2018 the Company will likely be in default of the minimum market cap covenant.

In its bankruptcy filing, however, the company takes a decidedly less aggressive posture vis-a-vis CRG (which makes sense…CRG is, after all, its proposed DIP lender) when explaining the factors leading to the commencement of its chapter 11 cases. While the company does highlight lack of access to capital markets (which, at least as far as we read it, is an implicit jab at CRG), the company primarily blames TRULANCE’s slow sales growth, market access, competitive landscape and a smaller-than-anticipated total addressable market for its travails.

For its part, Centerview Partners has been engaged in a less than ideal sellside process here. According to the company’s papers, Centerview has been trying to sell the company since 2015. Now, unless there is some crazy element to this engagement, most bankers are compensated on the basis of success fees. They want to a large purchase price and a short marketing process to get the best of both worlds: a huge payday without huge utilization. That does not appear to be the case here. 3 years!

Still, they located a buyer. Bausch Health Companies (“BHC”) has agreed to be the stalking horse purchaser of the company’s assets. BHC would get substantially all of the company’s assets — including its IP, certain customer and vendor contracts, A/R, and goodwill. In exchange, they would pay approximately $185mm in cash (minus certain deductions and adjustments) and $15mm in severance obligations.

CRG is the company’s proposed DIP lender with a $155mm facility, of which $45mm represents new money.

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

  • Capital Structure: $110mm 9.5% ‘25 secured term loan, $19mm 7.5% ‘19 senior convertible notes (Wells Fargo NA)

  • Company Professionals:

    • Legal: Skadden Arps Slate Meagher & Flom LLP (Ron Meisler, Lisa Laukitis, Christopher Dressel, Jennifer Madden, Christine Okike) & (special counsel) Sheppard Mullin Richter & Hampton LLP

    • Legal Conflicts Counsel: Togut Segal & Segal LLP (Albert Togut, Neil Berger, Kyle Ortiz)

    • Board of Directors

      • Legal: Davis Polk & Wardwell LLP

    • Independent Director: Joseph Farnan

      • Legal: Kirkland & Ellis LLP

    • Financial Advisor: FTI Consulting Inc. (Michael Katzenstein, Sean Gumbs, Heath Gray, Om Dhavalikar, Tom Sledjeski, John Hayes, Andrew Kopfensteiner)

    • Investment Banker: Centerview Partners Holdings LP (Samuel Greene, Josh Thornton, Ercument Tokat)

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

  • Other Parties in Interest:

    • Prepetition Agent & DIP Lender: CRG Servicing LLC

      • Legal: Venable LLP (Jeffrey Sabin, Lawrence Cooke)

    • Stalking Horse Bidder: Bausch Health Companies Inc.

      • Legal: Wachtell Lipton Rosen & Katz (Richard Mason, Michael Benn)

    • Ad Hoc Committee of Equity Holders

      • Legal: Cole Schotz PC (Ryan Jareck, Irving Walker, Norman Pernick, Mark Tsukerman)

    • Official Committee of Equity Security Holders

      • Legal: Gibson Dunn & Crutcher LLP (David Feldman, Matthew Kelsey, Alan Moskowitz, J. Eric Wise)

      • Financial Advisor: Houlihan Lokey Capital, Inc. (Christopher Di Mauro, Geoffrey Coutts)

    • Official Committee of Unsecured Creditors (Highbridge Capital Management, 1992 MSF International Ltd., 1992 Tactical Credit Master Fund LP)

      • Legal: Latham & Watkins LLP (Richard Levy, Jeffrey Mispagel, Matthew Warren, Blake Denton, Christopher Harris)

      • Financial Advisor: Alvarez & Marsal LLP (Mark Greenberg, Richard Newman, Jason Ivy, Martin McGahan, Allison Hoeinghaus, Seth Waschitz, Sean Skinner, Michael Sullivan)

      • Investment Bank: Jefferies LLC (Leon Szlezinger, Jeffrey Finger)

New Chapter 11 Filing - Mission Coal Company LLC

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Mission Coal Company LLC

October 14, 2018

For a recap, please see here.

  • Jurisdiction: N.D. of Alabama (Judge Mitchell)

  • Capital Structure: See below

  • Company Professionals:

    • Legal: Kirkland & Ellis LLP (Stephen Hessler, Brad Weiland, Melissa Koss, Travis Bayer, Anne Gilbert Wallace, Francis Petrie, Ciara Foster, Michael Esser) & (local) Christian & Small LLP (Daniel Sparks, Bill Bensinger)

    • CRO/Financial Advisor: Zolfo Cooper LLC (Kevin Nystrom)

    • Investment Banker: Jefferies LLC

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

  • Other Parties in Interest:

    • First Lien Lenders and DIP Lenders

      • Legal: Akin Gump Strauss Hauer & Feld LLP (Martin Brimmage, Lisa Beckerman, Lacy Lawrence, Allison Miller, Erik Preis, Jason Rubin) & (local) Burr & Forman LLP (Michael Leo Hall, D. Christopher Carson, Heather Jamison)

      • Financial Advisor: Houlihan Lokey Capital

    • United Mine Workers of America

      • Legal: Rumberger Kirk & Caldwell PC (R. Scott Williams, Frederick Darrell Clarke III, Robert Adams)

    • The United Mine Workers of America 1974 Pension Plan and the United Mine Workers of America 1993 Benefit Plan

      • Legal: Morgan Lewis & Bockius LLP (Rachel Mauceri, John Goodchild III) & (local) Quinn Connor Weaver Davies & Rouco LLP (Glen Connor, George Davies)

Source: First Day Declaration

Source: First Day Declaration

New Chapter 11 Filing - Gibson Brands Inc.

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Gibson Brands Inc.

5/1/18

After months of speculation (which we have covered here and elsewhere), the famed Nashville-based guitar manufacturer has finally filed for Chapter 11. We're old enough to remember this:

Late Tuesday, GIbson Brands CEO Henry Juszkiewicz denied all of the reports and indicated via press release that a plan was underway to salvage the brand.

What Mr. Juszkiewicz didn't say was that "a plan" actually meant a "plan of reorganization." Which is okay: nobody believed him anyway. 

And here's why: in the company's First Day Declaration, the company proudly boasts,

The Debtors' strength, rooted in their iconic Gibson, Epiphone, KRK, and other brands that have shaped the music industry for over 100 years, have been the brands of choice for countless musicians and recording artists, including some of the most legendary guitarists in history such as Muddy Waters, BB King, Elvis Presley, Pete Townsend, Keith Richards, Duane Allman, Elvis Costello, Lenny Kravitz, Slash, Dave Grohl, Joe Bonamassa, and Brad Paisley, among others. 

Anyone else see an issue with this lineup? Legends, sure, but not exactly a group of artists you see listed on Coachella posters. Even in a publicly-available document, this company doesn't know how to market itself to the masses. Case and point, after Guitar Center got its out-of-court deal done last week, we wrote the following:

Gibson may want to embrace the present. But we digress. 

Unbeknownst to many, however, Gibson is more than just its legendary guitars. No doubt, guitars are a big part of its business. According to the company's First Day Declaration (which, for the record, is one of the more jumbled incoherent narratives we've seen in a First Day Declaration in some time), 

Gibson has the top market share in premium electric guitars, selling over 170,000 guitars annually in over eighty (80) countries worldwide and selling over 40% of all electric guitars priced above $2,000.

But the company also expanded to include a "Professional Audio" segment, its musical instrument and pro-audio segment ("MI," which is positive cash flow), and a "Gibson Innovations" business ("GI"), which stems from a 2014 leveraged transaction. The latter business has been a drag on the overall enterprise ever since the transaction eventually leading to breaches of certain financial covenants under the company's senior secured bank debt financing agreements. The company was forced to pay down the debt to the tune of $60 million since the Fall of 2017, a cash drain which severely accentuated liquidity issues within that business. It came to this brutal reality: 

...the GI Business became trapped in a vicious cycle in which it lacked the liquidity to buy inventory and drive sales while at the same time it lacked the liquidity to rationalize its workforce to match its diminished operations.

That's rough. Even rougher is that on April 30, 2018, the GI business initiated formal liquidation proceedings under the laws of at least 8 different countries. Looks like Mr. Juszkiewicz' previous expansion "plan" was an utter disaster. 

⚡️Warning: Geeky stuff to follow ⚡️:

Now, the company is left with restructuring around the EBITDA- positive MI business with the hope of maximizing recovery for stakeholders. The holders of 69% of the principal amount of notes (PETITION NOTE: for the uninitiated, this satisfies the 2/3 in amount requirement of the bankruptcy code; unknown whether they satisfy the second prong of 1/2 in number) have entered into a Restructuring Support Agreement which would effectively equitize the notes and transfer ownership of MI to the noteholders. The company has also entered into a $135 DIP credit facility backstopped by an ad hoc group of noteholders to finance the company's trip through bankruptcy (the mechanic of which effectively rolls up some of the prepetition debt into the postpetition facility, giving the noteholders higher distribution priority). 

The RSA envisions a transaction whereby the company will exit bankruptcy with an untapped asset-backed lending facility and enough exit financing to pay off the DIP facility. So, the noteholders will collect some nice fees for about 9 months. The lenders under the DIP facility will have the option to cover the DIP monies into equity in the reorganized company at a 20% discount to the plan's valuation. 

⚡️Geeky Stuff Over. Now Back to Regularly Scheduled Snark ⚡️:

Naturally, current management has somehow convinced the new owners, i.e., the funds converting their notes into equity, that they're so invaluable that they should receive millions in "transition"-based compensation and warrants for upside preservation. Makes total sense. David Berryman, who runs Epiphone, will get a one year employment agreement paying $3.35 million, 5 year-warrants, and health benefits; Mr. Juszciewicz will get a one year "consulting agreement" paying $2.1 million, 5 year-warrants and health benefits (plus other profit-sharing incentives). It sure pays to run a company into bankruptcy these days. Naturally, they'll also get releases from any liability. Because, you know, bankruptcy!!

One final note: Thomas Lauria and White & Case LLP are listed as the 22nd highest creditor. Popping popcorn. 

  • Jurisdiction: D. of Delaware 
  • Capital Structure: $17.5 million ABL (Bank of America NA)/ $77.4 million Term Loan (GSO Capital Solutions Fund II AIV-I LP), $375 million '18 8.875% senior secured notes (Wilmington Trust NA), $60 million ITLA loan (GI Business only)
  • Company Professionals:
    • Legal: Goodwin Proctor LLP (Michael H. Goldstein, Gregory W. Fox, Barry Z. Bazian) & (local) Pepper Hamilton LLP (David Stratton, David Fournier, Michael Custer, Marcy McLaughlin)
    • Financial Advisor/CRO: Alvarez & Marsal North America LLC (Brian Fox) 
    • Investment Banker: Jefferies LLC (Jeffrey Finger)
    • Independent Directors: Alan Carr & Sol Picciotto
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • DIP Agent: Cortland Capital Market Services LLC
      • Legal: Arnold & Porter Kaye Scholer (D. Tyler Nurnberg, Steven Fruchter, Sarah Gryll) & (local) Young Conaway (same four names as below)
    • Prepetition ABL Agent: Bank of America NA
      • Legal: Winston & Strawn LLP (Jason Bennett, Christina Wheaton)
    • Indenture Trustee: Wilmington Trust NA
      • Legal: Shipman & Goodwin LLP (Marie Hofsdal, Patrick Sibley, Seth Lieberman, Eric Monzo)
    • Ad Hoc Group of Noteholders
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Brian Hermann, Robert Britton, Adam Denhoff, Kellie Cairns) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Sean Greecher, Andrew Magaziner, Betsy Feldman)
    • Ad Hoc Minority Noteholders Committee (Lord Abbett & Co. LLC, Wilks Brothers LLC)
      • Legal: Brown Rudnick LLP (Robert Stark, Steven Levine, Brian Rice) & (local) Ashby & Geddes PA (William Bowden)
    • Equity Holder: GSO Capital Partners LP
      • Legal: White & Case LLP (J. Christopher Shore, Andrew Zatz, Richard Kebrdle) & (local) Fox Rothschild LLP (Jeffrey Schlerf, Carl Neff, Margaret Manning)

Updated 5/2 5:12 pm CT

New Chapter 11 Bankruptcy - REAL ALLOY (Real Industry Inc.)

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REAL ALLOY - Real Industry Inc.

  • 11/17/17 Recap: This one is going to be a snorer for those of you who don't like to geek out over the technical intricacies of commodities businesses. Here, REAL ALLOY is a publicly-traded holding company ($RELY) that leverages its substantial net operating losses to improve the free cash flow position of various undervalued businesses that it acquires. The company acquired Real Industry in 2015 from Aleris Corporation (formerly bankrupt) for $554.5mm, substantially leveraging its balance sheet in the process. Post-acquisition, Real Alloy became one of the largest aluminum recyclers in North America and Europe with products and services availed to wrought alloy processers, automotive original equipment manufacturers (read: big car companies), foundries and casters. In other words, the company serves the automotive, consumer packaging, aerospace, building and construction, steel and durable goods industries by processing new scrap, old scrap, and various aluminum byproducts. All of this puts the company squarely into the aluminum recycling supply chain. The company blames the filing on weakness in the steel industry, the strong U.S. dollar creating arbitrage opportunity, operational setbacks (heightened, to some degree, by Hurricane Harvey), and a reduction in credit insurance and tightening supplier terms. The company is seeking approval of a $365mm DIP credit facility to facilitate the case wherein it hopes to preserve the value of its NOLs and pursue a transaction with a new strategic partner.  
  • Jurisdiction: D. of Delaware 
  • Capital Structure: $96mm ABL (Bank of America, NA), $305mm '19 10% senior secured notes (Wilmington Trust, NA)  
  • Company Professionals:
    • Legal: Morrison & Foerster LLP (Gary Lee, Todd Goren, Mark Lightner, Benjamin Butterfield, J. Alexander Lawrence, Geoffrey Peck) & (local) Saul Ewing Arnstein & Lehr LLP (Mark Minuti, Monique Bair DiSabatino, Sharon Levine)
    • Financial Advisor: Berkeley Research Group LLC
    • Investment Banker: Jefferies LLC
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Ad Hoc Noteholder Group
      • Legal: Latham & Watkins LLP (Richard Levy, Jason Gott, Ted Dillman) & (local) Young Conaway Stargatt & Taylor LLP (MIchael Nestor, Kara Hammond Coyle)

Updated 11/17/17

Out-of-Court Restructuring - Iracore International

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Iracore International

  • 4/17/17 Recap: Private equity-owned Iracore was able to consummate an out-of-court deal whereby its noteholders obtained substantially all of the equity in the company. The company, a Minnesota-based supplier of pipe and wear materials utilized in oil sands and mining applications, had $125mm of debt stemming from an LBO. 
  • Capital Structure: $20mm RCF, $125mm '18 9.5% notes   
  • Company Professionals:
    • Legal: Willkie Farr & Gallagher LLP
    • Investment Banker: Jefferies LLC

New Chapter 11 Filing - Goodman Networks Inc.

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Goodman Networks Inc.

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

Updated 3/28/17

New Chapter 11 Filing - BCBG Max Azaria Global Holdings LLC

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BCBG Max Azaria Global Holdings LLC

  • 3/1/17 Recap: Fashion powerhouse founded in 1989 filed for bankruptcy yesterday with a plan to optimize optionality: within the next six months, the company will dual track a potential debt-for-equity transaction (its second in 2 years) and a sales process to allow the business to continue as a going concern. This process comes on the heels of an operational restructuring which dramatically decreased the company’s brick-and-mortar footprint, with ~120 of ~550 stores already closed and attendant headcount reductions initiated. This is another sad retail story: macro retail headwinds (read: Amazon and decreased brand loyalty), too much debt, poor wholesale and IP licensing strategies, and too much unjustifiable stateside and global growth. Make no mistake: Amazon is a big story in all of this recent retail bloodshed but these bankruptcies wouldn’t be happening if that story wasn’t compounded by tunnel vision and poor strategy - here, marked, notably, by no recognizable online presence. Now, the restructuring professionals are going to earn their keep, devising a fast-track multi-tier process to try and keep this thing out of the liquidation bin. On an aside, we'd like to point out that, again, Simon Property Group and GGP Limited Partnership have made notices of appearances in this case so anyone who says that the A Mall operators are unharmed by the recent bloodbath in retail is smoking crack. Footnote: neither Twitter nor Sears can catch a break; they are both owed hundreds of thousands of dollars.
  • Jurisdiction: S.D. of New York
  • Capital Structure: ~$460mm debt. $82mm ABL Facility (Bank of America), $35mm TL Tranche A, $4.2mm TL Tranche A-1, $48.5mm Term Loan Tranche A-2, $0 (undrawn) Term Loan Tranche A-3, $289.4mm Term Loan Tranche B (Guggenheim Corporate Funding LLC).     
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Christopher Marcus, Joshua Sussberg, Benjamin Rhode, John Luze)
    • Financial Advisor: AlixPartners LLC (Holly Feder Etlin, Deborah Reiger-Paganis)
    • Investment Banker: Jefferies LLC (Jeffrey Finger)
    • Liquidators: Hilco Merchant Resources LLC & Gordon Brothers Retail Partners LLC
      • Legal: Malfitano Partners (Joseph Malfitano)
    • Claims Agent: Donlin Recano (*click on company name for docket)
  • Other Parties in Interest:
    • Bank of America (as ABL DIP Agent and Prepetition ABL Agent)
      • Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Christopher Carter, Robert Barry, Matthew Ziegler)
    • Guggenheim Corporate Funding LLC (as TL DIP Agent and Prepetition Tranche B TL Lenders)
      • Legal: Weil (Matthew Barr)
    • Allerton Funding LLC
      • Legal: Winston & Strawn LLP (Daniel McGuire, Gregory Gartland)
    • Silvereed (Hong Kong) Limited
      • Legal: Kramer Levin Naftalis & Frankel LLP (Robert Schmidt, Jonathan Wagner)
    • Official Committee of Unsecured Creditors (GGP Inc. & Simon Property Group)
      • Legal: Pachulski Stang Ziehl & Jones LLP (Robert Feinstein, Bradford Sandler, Jeffrey Pomerantz, Maria Bove)
      • Financial Advisor: Zolfo Cooper LLC

Updated 3/28/17

New Filing - Forbes Energy Services Ltd.

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Forbes Energy Services Ltd.

  • 01/22/17 Recap: Texas-based oil field services provider files bankruptcy to effectuate a prepackaged plan of reorganization pursuant to which noteholders will take 100% equity and a cash distribution. 
  • Jurisdiction: S.D. of Texas 
  • Capital Structure: $90 mm ABL (Regions Bank), $277mm '19 9% senior notes (Wells Fargo)
  • Company Professionals:
    • Legal: Pachulski Stang Ziehl & Jones LLP (Richard Pachulski, Ira Kharasch, Maxim Litvak, Joshua Fried) & (local) Snow Pence Green LLP (Phil Snow, Kenneth Green)
    • Financial Advisor: Alvarez & Marsal LLC (Marc Leibman, Gary Barton)
    • Investment Banker: Jefferies Group Inc. (Robert White)
    • Claims Agent: KCC (*click on name above for link to docket)
  • Other Parties in Interest:
  • Ad Hoc Group of Senior Unsecured Noteholders: Ascribe Capital, Solace Capital Partners LP, Courage Capital Management LLC, Pacific Investment Management Co., Phoenix Investment Advisor LLC
    • Legal: Fried Frank Harris Shriver & Jacobson LLP (Brad Scheler, Matthew Roose) & (local) McKool Smith PC (Hugh Ray, Christopher Johnson)
    • Financial Advisor: FTI Consulting Inc.
  • Regions Bank
    • Legal: Norton Rose Fulbright (William Greendyke) & Parker Hudson Rainer & Dobbs LLP (Eric Anderson)
  • Wells Fargo
    • Legal: Loeb & Loeb LLP (Bernard R. Given, Walter Curchack, Vadim Rubinstein)

Updated 1/30/17

New Chapter 11 Filing - Avaya Inc.

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Avaya Inc.

  • 1/19/17 Recap: Late in its transition from a hardware-based business model to a software model, Santa Clara California based communications services provider filed a freefall bankruptcy to address its $6b+ balance sheet and ~$1.45b of pension/OPEB liabilities with the help of a proposed $725mm DIP Facility. 
  • Jurisdiction: S.D. of New York
  • Capital Structure: $55mm domestic ABL credit facility (Citigroup USA Inc.), $3.235b prepetition cash flow credit facility (Citigroup USA Inc.), $1b 7% '19 first priority note, $290mm 9% '19 second priority note, $1.384b 10.5% '21 second priority notes (Bank of New York Mellon Trust Company N.A.).   
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Jonathan Henes, Patrick Nash, Ryan Preston Dahl, Bradley Giordano, Justin Bernbrock, Kan Asimacopoulos, Bern Meyer-Loewy, Carl Pickerill, Asif Attarwala, Ameneh Bordi, Robert Britton, Jeremy Evans, Natasha Hwangpo, Stephen Iacovo, George Klidonas, Christopher Kochman, Justin Mercurio)
    • Financial Advisor: Zolfo Cooper LLC (Eric Koza, Charlie Carnaval, Jesse DelConte, Denise Lorenzo, Conor McShane, Fred Jelks, Andrew Ralph, Adam Searles, Jeff Wooding, Howard Gou, Eugene Lavrov, Rohan Joseph, Chris Baydar)
    • Investment Banker: Centerview Partners (John Bosacco)
    • Claims Agent: Prime Clerk (*click on company name for docket)
  • Other Parties in Interest:
    • DIP Agent: Citigroup Global Markets Inc.
      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Natasha Tsiouris, Aryeh Falk)
    • Ad Hoc First Lien Noteholders' Group (400 Capital Management LLC, Aegon USA Investment Management LLC, Alta Fundamental Advisors LLC, Anchorage Capital Group LLC, Apollo Management LP, Auburn Mesa LLC, Bain Capital Credit LP, Bank of America NA, Barclays Capital Inc., Benefit Street Partners LLC, Bennett Restructuring Fund Inc., Blackrock Financing Management Inc., Blackrock Advisors LLC, Blackrock Institutional Trust Company NA, BlueCrest Capital Management, Candlewood Group Investment Group LP, Canyon Capital Advisors LLC, Carlson Capital LP, Centerbridge Capital LP, Cetus Capital LLC, Columbia Management Investment Advisors LLC, Continental Casualty Company, CQS (US) LLC, Crescent Capital Group LP, CRG Financial LLC, Cyrus Capital Partners LP, Deutsche Bank AG Cayman Islands Branch, Driehaus Capital Management LLC, DW Catalyst Master Fund Ltd., Empyrean Investments LLC, Farallon Capital Partners LP, Farallon Capital Institutional Partners LP, Farallon Capital Institutional Partners V LP, Farallon Capital Institutional Partners II LP, Farallon Capital Offshore Investors II LP, Farallon Capital F5 Master I LP, Farallon Capital (AM) Investors LP, Farallon Capital Institutional Partners III LP, Noonday Offshore Inc., GLG LLC, Graham Capital Management, GSO Capital Partners LP, HG Vora Capital Management LLC, HPS Investment Partners LLC, Investcorp Credit Management US LLC, ISL Loan Trust, ISL Loan Trust II, J.H. Lane Partners LP, JPMorgan Chase Bank NA, JP Morgan Investment Management LLC, Lord Abbett & Co. LLC, Mariner Glen Oaks LP, Medtronic Holding Switzerland GMBH, Merced Capital LP, Merrill Lynch Pierce Fenner & Smith Inc., Midtown Acquisitions LP, MJX Asset Management LLC, Monarch Alternative Capital LP, Napier Park Global Capital, Newfleet Asset Management LLC, New Mexico State Investment Council, Nut Tree Capital Management LP, NYL Investors LLC, OZ Management LP, OZ Management II LP, OFI Global Asset Management Inc., Onex Credit Partners LLC, OSK V LLC, Par-Four Investment Management LLC, P. Schoenfeld Asset Management LP, Putnam Investments, Redwood Capital Management LLC, Sentinel Dome Partners LLC, Shenkman Capital Management Inc., Silver Point Capital LP, Standard General LP, Taconic Capital Advisors LP, Talamod Asset Management LLC, Telos Asset Management LLC, THL Credit, Voya CLO, Wayzata Opportunities Fund III, Wayzata Opportunities Fund Offshore III LP, Wells Fargo Bank NA, Whitebox Advisors LLC, Wolverine Flagship Fund Trading Limited, Z Capital Credit Partners)
      • Legal: Akin Gump Straus Hauer & Feld LLP (Ira Dizengoff, Philip Dublin)
      • Financial Advisor: PJT Partners LP 
    • Ad Hoc Crossover Noteholders' Group (Alden Global Capital LLC, AllianceBernstein LP, Avenue Capital Management II LLP, Benefit Street Partners, Susquehanna Advisors Group Inc., Franklin Mutual Advisors LLC, Greenlight Capital Inc., Highland Capital Management LP, PGIM Inc., Symphony Asset Management LLC)
    • Updated Ad Hoc Crossover Noteholders' Group (Less: Benefit Street Partners)
      • Legal: Stroock Stroock & Lavan LLP (Kris Hansen, Sayan Bhattacharyya, Gabriel Sasson)
      • Financial Advisor: Rothschild
    • Communications Workers of America
      • Legal: Saul Ewing LLP (Sharon Levine)
    • Successor Indenture Trustee: Wilmington Savings Fund Society FSB
      • Legal: Wilmer Cutler Pickering Hale & Doerr LLP (Andrew Goldman, Nancy Manzer)
    • First Lien Notes Trustee: Bank of New York Mellon Trust Company
      • Legal: Morgan Lewis & Bockius LLP (Glenn Siegel, Joshua Dorchak, Rachel Jaffe Mauceri)
    • Official Committee of Unsecured Creditors
      • Legal: Morrison & Foerster LLP (Lorenzo Marinuzzi, Todd Goren, Erica Richards, Benjamin Butterfield, Rahman Connelly, Andrew Kissner, James Newton)
      • Financial Advisor: Alvarez & Marsal LLC (David Miller, Byron Smyl, Marc Alms, Laureen Ryan, Rich Newman, Andrea Gonzalez, Hamish Allanson, Leslie Lambert, Vance Yudell, Jeff Gunsel, Steve Coverick)
      • Investment Banker: Jefferies LLC (Leon Szlezinger)

Updated 5/31/17

New Filing - Violin Memory Inc.

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Violin Memory Inc.

  • 12/14/16 Recap: Marc Andreeson of A16Z once famously said that software would eat the world. Case and point: Violin Memory Inc. The publicly-traded Santa Clara California-based flash-drive hardware and (only recently) software services provider files for bankruptcy after software providers cannibalized its product, two failed attempts to sell the company, and a failed attempt to secure DIP financing. The objective of the filing is a "value-maximizing sale" of the assets: hey, its three strikes and you're out, not two. 
  • Jurisdiction: D. of Delaware
  • Capital Structure: $10mm '17 5% RCF (Silicon Valley Bank - terminated as of petition date), $120mm '19 4.25% convertible notes (Wilmington Trust)
  • Company Professionals:
    • Legal: Pillsbury & Winthrop LLP (Deryck Palmer, David Forsh, Cecily Dumas) & (local) Bayard PA (Scott Cousins, Justin Alberto, Gregory Flasser)
    • Financial Advisor & Investment Banker: Houlihan Lokey [(Andrew Turnbull, Ryan Sandahl, Randall Tatman, Angus Schaller, Brendan Wolf, Derek Kuns)
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Ad Hoc Group of Convertible Noteholders (Jefferies Group LLC, Nokota Management LP, Pine River Capital Management LP, Silverback Asset Management LLC, Soros Fund Management LLC)
      • Legal: Weil (Gary Holtzer, David Griffiths)
    • Wilmington Trust
      • Legal: Brown Rudnick LLP (Daniel Saval) & (local) Drinker Biddle & Reath LLP (Steven Kortanek)
    • Unsecured Creditors' Committee
      • Legal: Cooley LLP (Lauren Reichardt, Robert Winning, Jay Indyke, Eric Haber, Michael Klein) & (local) Elliott Greenleaf PC (Eric Sutty, Rafael Zahralddin-Aravena)
      • Financial Advisor: The DAK Group (Sheon Karol, Ari Fuchs, Claudia Levine)

Updated 3/21/17

New Filing - La Paloma Generating Company LLC

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La Paloma Generating Company LLC

  • 12/06/16 Recap: California-based (NW of LA) nat-gas fired merchant power provider that services SoCal files for bankruptcy citing a litany of reasons: (i) adverse market for nat-gas fired electricity given the rise of wind and solar power in CA; (ii) the regulatory environment; (iii) cap and trade; (iv) its unsustainable debt load; and (v) the army of O'Melveny lawyers servicing the deal. Okay, not the last part but see below: that sure is a surge of (man)power. 
  • Jurisdiction: D. of Delaware
  • Capital Structure: $524mm of total funded debt. $35mm '20 1st lien (BofA), $292mm '20 1st lien TL (BofA), $110mm '20 second lien TL (Sun Trust), $87mm '19 LPAC TL, $34mm LOCs (SunTrust)     
  • Company Professionals:
    • Legal: O'Melveny & Meyers LLP (John Rapisardi, George Davis, Peter Friedman, Diana Perez, Andrew Sorkin, Matthew Kremer, Valerie Cohen) & (local) Richards Layton & Finger PA (Mark Collins, Jason Madron, Andrew Dean) & (conflicts counsel) Curtis Mallet-Prevost Colt & Mosle LLP (Steven Reisman, Turner Smith, Peter Behmke, Cindi Giglio)
    • Financial Advisor: Alvarez & Marsal LLC (Emmett Bergman)
    • Investment Banker: Jefferies LLC (Jeffrey Finger)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Sponsor: EIG Global Partners LLC (Niranjan Ravindran)
    • First Lien Lender: Bank of America
      • Legal: Moore & Van Allen (David Eades, Glenn Huether) & (local) Buchanan Ingersoll & Rooney PC (Mary Caloway, Kathleen Murphy)
    • Ad Hoc Group of Second Lien Noteholders
      • Legal: Morgan Lewis & Bockius LLP (Glenn Siegel, Joshua Dorchak, Elaine Fenna, Jody Barillare)
    • Second Lien Lender: Sun Trust Bank
      • Legal: King & Spalding LLP (Sara Borders, Thaddeus Wilson) & (local) Morris James LLP (Stephen Miller)
    • 1st Lien Debtholder: Beal Bank USA (LNB)
      • Legal: White & Case LLP (Thomas Lauria, Christopher Shore) & (local) Fox Rothschild LLP (Jeffrey Schlerf)
    • Collateral Agent: Bank of New York Mellon
      • Legal: Bryan Cave LLP (Stephanie Wickouski, Michelle McMahon)

Updated 12/29/16