4/10/17 Recap: Once publicly-traded Colorado-based IT staffing and consulting services company filed for bankruptcy to pursue a sale of its business to CapGemini S.A., as stalking horse bidder, for at least $50mm plus the assumption of certain liabilities. The sale is subject to a postpetition marketing process. Ciber lists Microsoft and Oracle as major corporate partners; it sells and supports both companies' product offerings. Ciber seems like the quintessential go-big-or-go-home kind of company. It fueled growth over the years with over 60 acquisitions at a cost of more than $1b, never fully integrating the new businesses. This failure to integrate led to some AWESOME results: like the time the company paid $14mm to European consultants for NEGATIVE PERFORMANCE. And we thought Wells Fargo had a monopoly on stupid bonus-based behavior. Speaking of Wells Fargo, it is the lender here and the straw that broke the camel's back was the company's inability to adhere to its Fixed Coverage Charge ratio, triggering a default under its asset-based loan. Now Wells Fargo is providing the DIP facility of $41mm to fund the cases which, by our simple mathematical calculations, amounts to $4.1mm per bankruptcy lawyer who has made a notice of appearance on behalf of the debtors already (see below).
Jurisdiction: D. of Delaware
Capital Structure: $60mm ABL (Wells Fargo Bank NA)
Company Professionals:
Legal: Morrison & Foerster LLP (Brett Miller, Dennis Jenkins, Daniel Harris, Benjamin Butterfield, Steve Rappoport, Todd Goren) & (local) Polsinelli PC (Christopher Ward, Justin Edelson, Jarrett Vine)
4/4/17 Recap: Private equity backed Kansas-based discount footwear retailer with over 4000 stores filed for bankruptcy because, well, right, it's a private equity backed retailer. Golden Gate Capital and Blum Capital Partners are the sponsors and we've previously covered their methods, uh, we mean "value-add" proposition. We probably won't even bother to read the filing documents because we're 98.9% confident they say the same sh*t every other retail case has said, e.g., poor e-commerce...blah blah...Amazon...blah blah...mall-based retail...blah blah...bad weather...blah blah...Showtime's Billions sucks...wait, what?...whatever, it does (who cares if that's relevant?)...millennial shopping habits...blah blah...bleeding top line and depressed comp store sales...blah blah...dividend recaps...blah blah blah. Apparently the retailer is going to close nearly 400 stores while it attempts to reorganize around what remains - all in accordance to a plan support agreement that the company has entered into with 2/3 of its term loan lenders and with the support of a $385mm DIP facility (of which $80mm is new money). Meanwhile, we'll see what kind of cascading effect this will have on (a) China's manufacturing sector which, apparently, has seen significant stretching of payables (up to 100 days) - a fact evidenced by the top 50 creditors list, and (b) our lovely "A" malls (notably, Simon Property Group made a notice of appearance before the first day pleadings were even completely filed). Finally, the CEO dropped the fact that the new business plan will focus on, among other things, "omnichannel expansion" and since that is the retail buzzword/phrase of the moment, we guess there's really nothing to see here: all will be fine.
4/6/17 Update: We read the documents and, generally speaking, everything we said above applies. Two other factors apparently worth mentioning as causes for the filing: inventory management issues (compounded by the West Coast port strikes) and foreign exchange issues.
Jurisdiction: E.D. of Missouri
Capital Structure: $300 ABL ($187mm out - Wells Fargo), $520mm '21 TL ($506mm out), $145mm '22 second lien TL (Morgan Stanley Senior Funding Inc.)
Real Estate: RCS Real Estate Advisors (Ivan Friedman)
Liquidators: Great American Group LLC & Tiger Capital Group LLC
Claims Agent: Prime Clerk LLC (*click on company name above for free court docket)
Other Parties in Interest:
Ad Hoc Committee of First Lien Term Lenders (Alden Global Opportunities Master Fund, Credit Suisse Asset Management, GSO Capital Partners, Hawkeye Capital Management, Invesco Senior Secured Management, Octagon Credit Investors LLC, AIC Finance, Axar Capital Management)
Legal: King & Spalding LLP (Michael Rupe, Christopher Boies, Jeffrey Pawlitz, Austin Jowers, Michael Handler)
Financial Advisor: Houlihan Lokey Capital Inc.
DIP ABL Agent: Wells Fargo Bank NA
Legal: Choate Hall& Stewart LLP (Kevin Simard, Douglas Gooding, Jonathan Marshall)& (local) Thompson Coburn LLP (Mark Bossi)
First Lien Agent & DIP TL Agent: Morgan Stanley Senior Funding Inc. &Cortland Products Corp.
Legal: Norton Rose Fulbright US LLP (Stephen Castro, David Rosenzweig, Danielle Ledford, Tim Walsh)
Official Committee of Unsecured Creditors
Legal: Pachulski Stang Ziehl & Jones LLP (Robert Feinstein, Jeffrey Pomerantz, Bradford Sandler) & (local) Polsinelli PC (Matthew Layfield, Christopher Ward, Shanti Katona)
4/3/17 Recap: Thanks Obama! Alpharetta Georgia based provider of linens to the healthcare industry filed for bankruptcy to effectuate a sale to KKR Credit Advisors (US) LLC for $125mm (including a $17.4mm credit bid) - exclusive of liabilities emanating out of certain collective bargaining agreements because, well, why should anyone care about low-earning laundry employees, right? Not when you've got slicked back hair and a sick new Hamptons house to party in this Summer, right, bro? The company pointedly cites ObamaCare as a major source of pricing pressure as healthcare providers "became ever more cost-conscious to mitigate lower expected reimbursements from insurance companies." Reacting to the legislation, private customers joined forces via Group Purchasing Organizations, using strength in numbers as leverage to drive discounts with companies like Angelica. This, coupled with hospital consolidation - also apparently resultant from ObamaCare - led the company to suffer from significant revenue declines. The company has secured a $65mm DIP from certain ABL lenders to fund the bankruptcy case.
Jurisdiction: S.D. of New York
Capital Structure: $50.5mm ABL (funded, Wells Fargo Capital Finance LLC) & $85mm TL debt (Cortland Capital Market Services LLC)
Company Professionals:
Legal: Weil (Matthew Barr, Jill Frizzley, Kevin Bostel, Joshua Apfel, Prashant Rai, Matthew Skrzynski)
Financial Advisor: Alvarez & Marsal LLC (John Makuch, Joel Rogers, Paul Kinealy, Bryan Fleming)
Investment Banker: Houlihan Lokey Capital Inc. (Bradley Jordan)
Claims Agent: Prime Clerk LLC (*click on company name for docket)
Other Parties in Interest:
ABL Agent: Wells Fargo Capital Finance LLC
Legal: Greenberg Traurig LLP (David Kurzweil, Nathan Haynes, John Dyer, Michael Leveille)
3/29/17 Recap: File this under the most heavily leaked/discussed bankruptcy filing of all time: the Japanese government seemed to make an announcement about the proposed filing every hour. So...Pennsylvania-based nuclear power company filed for bankruptcy (30 debtors in total) after its parent, Toshiba, took a uuuuuuuuuge $6b+ write-down due to delayed and above-budget construction of plants in Georgia and South Carolina. The company secured a $800mm commitment for a DIP facility to fund the cases after a competitive DIP process with powerhouses like Goldman Sachs, Highbridge and Silver Point duking it out with Apollo. We've already covered this company a lot in previous weeks so suffice it to say that the upshot of this filing is that it will lead many to question the viability of nuclear as an alternative power source.
Jurisdiction: SD of New York
Company Professionals:
Primary Legal: Weil (Gary Holtzer, Garrett Fail, Robert Lemons, David Griffiths, Charles Persons, David Cohen)
Legal for Toshiba Nuclear Energy Holdings (UK) Limited: Togut Segal & Segal LLP (Albert Togut, Brian Moore, Kyle Ortiz)
Proposed DIP Lenders: Apollo Investment Corporation, AP WEC Debt Holdings LLC, Midcap Financial Trust, Amundi Absolute Return Apollo Fund PLC, Ivy Apollo Strategic Income Fund, Ivy Apollo Multi Asset Income Fund
Legal: Paul Weiss Rifkand Wharton & Garrison LLP (Jeffrey Saferstein, Claudia Tobler, Kevin O'Neill)
Proposed DIP Agent: Citibank NA
Legal: Shearman & Sterling LLP (Fredric Sosnick, Ned Schodek)
Competing (but losing) DIP Providers: Goldman Sachs Bank USA, HPS Investment Partners LLC, Silver Point Finance LLC
Georgia Power Company, Oglethorpe Power Corporation, Municipal Electric Authority of Georgia and City of Dalton Georgia
Legal: Jones Day (Gregory Gordon, Dan Prieto, Amanda Rush, Anna Kordas, Jeffrey Ellman)
Municipal Electric Authority of Georgia
Legal: Alston & Bird LLP (Dennis Connolly)
South Carolina Electric & Gas Company and South Carolina Public Service Authority
Legal: Reed Smith LLP (Paul Singer, Derek Baker, Tarek Abdalla)
Oglethorpe Power Corporation (An Electric Membership Corporation)
Legal: Dechert LLP (Michael Sage, Stephen Wolpert) & Parker Hudson Rainer & Dobbs LLP (C. Edward Dobbs)
Exelon Generation Company LLC
Legal: Ballard Spahr LLP (Matthew Summers)
Official Committee of Unsecured Creditors
Legal: Proskauer Rose LLP (Martin Bienenstock, Timothy Karcher, Vincent Indelicato)
3/28/17 Recap: Designer and manufacturer of machined parts, fabricated components and tooling for commercial aerospace and defense markets filed for bankruptcy to effectuate a 363 sale to a strategic competitor, Harlow Aerostructures LLC, which, prepetition, purchased the distressed senior secured debt held by Comerica Bank and Fifth Third Bank. Harlow will provide DIP financing and serve as the stalking horse for the company's assets. This appears to be a story about poor strategic acquisitions, reliance on two big projects that were ultimately cancelled (Lockheed Martin F-22 fighter jet and the Airbus A380) and reductions in military spending (which may or may not be related to the cancellations).
3/19/17 Recap: Colorado-based privately held acquirer, manager, and collector of charged-off U.S. and Canadian consumer and commercial accounts-receivable filed a prepackaged plan of reorganization seeking to split the company into an acquired-co and "wind down co", with Resurgent Holdings LLC putting in approximately $264mm of new money in exchange for 100% equity in the acquired co. This is on the heels of a prior recapitalization that provided for the exchange of second lien notes for a 1.5 Lien Term Loan & preferred stock (enter Apollo and KKR here). Under the proposed plan of reorganization, the lenders holding claims under the first lien credit facilities will get paid in full; the holders of claims under the 1.5 Lien Term Loan will get a pro rata share of remaining cash; Resurgent will own the remaining business (with the rest liquidated); and the remaining creditors - including the second lien holdouts and the Pennsylvania Public School Employees' Retirement System (?!?!) - will get a big fat donut. Because who gives a sh*t about public school teachers anyway: what have they ever done for folks who work at Apollo and KKR?
Jurisdiction: S.D. of New York
Capital Structure: $60mm first lien RCF ($41mm out) & $105mm first lien Term Loan (Cerberus Business Finance LLC), $15mm 1.25 Lien Term Loan (plus $1.3mm interest) & $176.1 mm 1.5 Lien Term Loan (plus $15.4mm interest) (Cortland Capital Market Services LLC), $1.9 mm second lien notes (unexchanged in prior recapitalization)(U.S. Bank National Association)
3/18/17 Recap: Publicly-traded investment holding company for a group of integrated offshore solutions providers for the oil and gas industry filed for bankruptcy after its primary assets decidedly returned less than expected given the distress in oil field services. Notably, a primary asset included an investment in bankruptcy filer EMAS Chiyoda Subsea Limited.
Jurisdiction: S.D. of New York
Capital Structure: $130mm secured debt, $272mm (DBS Bank Limited), $184.5mm (Oversea-Chinese Banking Corporation Limited), $108.5mm HSBC International Trust Services (Singapore) Limited, ~$39mm additional funded debt
3/15/17 Recap: Uniondale New York based "independent full-service anatomic pathology laboratory and specialty provider"...gulp...deep breath..."of diagnostic testing services for urologists and gynecologists" filed for bankruptcy to sell to a stalking horse bidder, Poplar Healthcare PLLC. In the filing declaration the company blames severe cuts in Medicare rates for the filing, making no mention of what's glaring in its petition, i.e., that the Department of Justice is the largest creditor holding an unsecured settlement claim against the company for the company's purported breach of the False Claims Act - a claim emanating from allegations of kickback payments to physicians in exchange for referrals. Not shady at all. That last bit is really the only reason why we're even highlighting this case. Well, and that this is Pepper Hamilton LLP's second recent filing (General Wireless Outfitters being the first).
Jurisdiction: D. of Delaware
Capital Structure: $12.5mm debt ($1.8mm funded - Healthcare Financial Solutions LLC, an affiliate of Capital One NA), $950k second lien notes, $40mm unsecured notes.
Company Professionals:
Legal: Pepper Hamilton LLP (David Stratton, Evelyn Meltzer, John Schanne II)
3/13/17 Recap: Oakland California-based designer of residential and commercial solar energy systems in the US, UK and Europe filed for bankruptcy after a failed merger and an inability to service its capital structure. Large equity holders include Apollo Investment Corporation and Lowe's Corporation. The company secured a $20mm DIP facility to pursue a sale to a stalking horse bidder.
4/17/17 Update: The company received no competitive qualified bids and, therefore, sought approval of the sale to the stalking horse bidder.
Jurisdiction: D. of Delaware
Capital Structure: $145.6mm of funded debt (Hercules Capital Inc. - $55mm, MMA Energy Capital LLC - $10mm, MHA Trust LLC - $5mm, Wilmington Savings Fund Society - $9.5mm bridge loan, Atalaya Special Opportunities Fund VI LP - $32mm, $34.1mm convertible notes
Company Professionals:
Legal: Morrison & Foerster LLP (Jonathan Levine, Jennifer Marines, Melissa Hager, Erica Richards, Todd Goren, Rahman Connelly, Andrew Kissner, Stacy Molison) & (local) Young Conaway Stargatt & Taylor LLP (M. Blake Cleary, Jamie Lutonn Chapman, Kenneth Listak)
Financial Advisor: AlixPartners LLC (Randall Eisenberg, Stephen Spitzer, James Guglielmo, Raju Patel, Allen Wong)
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.
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)
3/13/17 Recap: Clearly Warren Buffett doesn't own this dog. The Omaha, NE-based publicly-traded (GMAN) specialty retailer (apparel and home fashions) with 72 stores in 16 states (according to PE sponsor Sun Capital Partners) or 106 stores in 22 states (according to the company) filed bankruptcy to continue the 5-month long evisceration of Sun Capital Partners' retail portfolio. Oh, and liquidate. Choice quote: "It is likely that other retailers may commence chapter 11 cases in the near term, as retail is set to replace the troubled oil and gas industry as the most distressed sector this year." Just in case anyone is scratching their heads as to how this liquidation could possibly be happening, note that e-commerce made up less than 1-percent of the Company's sales. This REALLY begs the question: what value was Sun Capital Partners bringing to the table? Do they not have operating partners? Sheesh.
Jurisdiction: D. of Nebraska
Capital Structure: $68.75mm RCF (Wells Fargo) + $31.25mm RCF (PNC Bank NA) of which $29mm in total outstanding, $30mm TL (Wells Fargo - $15mm, Pathlight - $7.5mm & Gordon Brothers Finance - $7.5mm)($27.9mm outstanding).
Company Professionals:
Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Patrick Nash, Brad Weiland, Jamie Netznik, Alexandra Schwarzman) & Kutak Rock LLP (Lisa Peters, Jeffrey Wegner)
Financial Advisor: Clear Thinking Group LLC (Joseph Marchese)
3/10/17 Recap: Preppers alert! The Minneapolis-based outdoor retailer that specializes in guns guns and more guns has run out of "dry powder" (score!) and finds itself in chapter 11. This comes around the same time that the Cabela's/Bass merger looks to be hanging by a thread. Tough time for outdoor retail. On the brightside, folks who are so scared by the recent election can now get a break on MREs and other survival gear as they go off-grid or to Canada. So, there's that.
5/3/17 Update: The company has sold to Camping World Inc. and, attendant to the sale, entered into an agency agreement with a JV of liquidating firms noted below to handle the assets left out of the sale.
Jurisdiction: D. of Minnesota
Capital Structure: $390mm ABL (Wells Fargo Bank NA) & $35mm TL (Pathlight Capital LLC) debt
Company Professionals:
Legal: Fredrikson & Byron PA (Ryan Murphy, Clinton Cutler, Cynthia Moyer, James Brand, Sarah Olson, Steven Kinsella)
Financial Advisor: Lighthouse Management Group (Timothy Becker, James Bartholomew)
Investment Banker: Houlihan LokeyCapital Inc. (Stephen Spencer)
Real Estate Advisor: Hilco Real Estate LLC (Ryan Lawlor)
Liquidators: Tiger Capital Group LLC (Dan Kane, Michael McGrail), Great American Group LLC (Scott Carpenter, Alan Forman), Gordon Brothers Retail Partners LLC (Mackenzie Shea), Hilco Merchant Resources LLC (Ian Fredricks)
Legal for Liquidators: Wachtell Lipton Rosen & Katz (Scott Charles, Neil Snyder) & Riemer & Braunstein LLP (Steven Fox)
Claims Agent: Donlin Recano (*click on the company above for free docket)
Other Parties in Interest:
Prepetition ABL & DIP Lender: Wells Fargo Bank NA
Legal: Choate Hall & Stewart LLP (Sean Monahan, Kevin Simard)
Term Loan Agent: Pathlight Capital LLC
Legal: Morgan Lewis & Bockius LLP (Mark Silva, Julia Frost-Davis, Amelia Joiner)
Official Committee of Unsecured Creditors
Legal: Lowenstein Sandler LLP (Jeffrey Cohen, Keara Waldron, Barry Bazian) & (local) Barnes & Thornburg LLP (Connie Lahn, Peter Clark, Christopher Knapp, Roger Maldonado)
3/8/17 Recap: We're exasperated. Let's revisit history. In February 2015, Radio Shack filed for bankruptcy. The bankruptcy court confirmed the plan of reorganization in October 2015 and it went effective just five days later. So...six...wait, carry the one...yeah, sixteen months later the successor entity General Wireless Operations is now in bankruptcy looking to shut the lights and/or pass this toad on to another sucker as Standard General pulls the chute. Why did this all happen? Well, because Sprint sucks, apparently ("[w]hile the retail business progressed, the Sprint relationship did not yield the benefits that the Debtors expected"). The arrangement out of bankruptcy was for the reinvented Radio Shack to have co-branded stores with Sprint for the purpose of selling Sprint mobile devices that nobody wants (note: 78+mm Apple iphones were sold last quarter). Sprint was obligated to pay rent for the space it occupied as well as commissions above a certain threshold level of sales ($60mm). Hahahaha...above a threshold level of sales? Yeah, never got there (wait what? erroneous projections? you don't say!). Absent that cash inflow, the company had insufficient funds to continue to operate as a going concern. Hence, the Scarlet 22.
Jurisdiction: D. of Delaware
Capital Structure: $75mm revolver and term loan debt ($25.5mm funded) (Royal Bank of Canada & GACP Finance Co. LLC) & $88mm second lien revolver and term loan debt ($39.7mm funded)(Standard General Master Fund LP, Cortland Capital Market Services LLC, Prisma Capital Partners LP) & $23mm IP term loan (Kensington Technology Holdings LLC)
Company Professionals:
Legal: Jones Day LLP (Scott Greenberg, Mark Cody) & Pepper Hamilton LLP (David Fournier, Evelyn Meltzer, Michael Custer, Kay Kress)
Financial Advisor: Loughlin Management Partners & Company Inc.
Liquidation Consultant: Tiger Capital Group LLC
Claims Agent: Prime Clerk LLC (*click on company name for docket)
Other Parties in Interest:
Sprint
Legal: McGuire Woods LLP (David Swan, James Van Horn) & (local) K&L Gates LLP (Steven Caponi)
Kensington Technology Holdings LLC
Legal: Honigman Miller Schwartz and Cohn LLP (Joseph Sgroi)
GACP Finance Co. LLC
Legal: Paul Hastings LLP (Andrew Tenzer, Leslie Plaskon, Michael Comerford) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Justin Rucki, Allison Mielke)
3/8/17 Recap: The Pittsburgh-based manufacturer of saltwater batteries used for energy storage has filed for bankruptcy after burning through tens of millions of dollars. The goal is to explore an asset sale. Prepetition efforts by Citi Global Markets Inc. to attract a buyer or raise capital for the company fell short (something tells us their engagement letter and tail payment are going to be in the rejection bin). The privately-owned company received $180mm of venture capital money from high profile investors like Bill Gates (labeled the "kiss of death in energy storage" here and conveniently omitted from mention in the filing declaration), top venture capital fund Kleiner Perkins Caufield & Byers, and corporate venture capital units of Total, Exelon Corporation and Royal Dutch Shell. This case is generally smaller than what we cover but it is representative of the fact that, despite widespread adoption of renewable energy sources, storage solutions are very expensive to deploy.
Capital Structure: $20mm TL (~$5.2mm funded)(Trinity Capital Fund II LP)
Jurisdiction: D. of Delaware
Company Professionals:
Legal: Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, David Bertenthal, Joseph Mulvihill, Maxim Litvak) & (special counsel) Morgan Lewis & Bockius LLP (Julia Frost-Davies)
Financial Advisor: Protiviti Inc. (Suzanne Roski)
Claims Agent: KCC (*click on company name for docket)
3/6/17 Recap: Indianapolis-based (and formerly publicly-traded - HGGG) brick-and-mortar retailer of appliances, consumer electronics, home products (read: all things that millennials don't buy) FINALLY filed for bankruptcy after an endless barrage of negative news stories, including reports of 88 store closures. The company's distress - brought on by trends afflicting the retail space generally and repeated to death in each and every retail bankruptcy filing, e.g., declining mall traffic, onerous leases, etc., - was exacerbated by its credit card program with Synchrony Bank and the need to post letters of credit to collateralize Synchrony's acquired receivables ($3mm paid, another $14mm owed). Note: there's a commentary here about consumer lending. The filing is intended to enable the company to continue with store closing sales and potentially find a buyer for its remaining locations.
Jurisdiction: S.D. of Indiana
Capital Structure: $300mm '21 credit facility ($56mm out)(Wells Fargo)
Company Professionals:
Legal: Morgan Lewis & Bockius LLP (Neil Herman, Rachel Jaffe Mauceri, Benjamin Cordiano, Katherine Lindsay, Matthew Ziegler, Michaela Dragalin) & (local) Ice Miller LLP (Jeffrey Hokanson, Sarah Fowler)
Financial Advisor: Berkeley Research Group (Robert Duffy)
Investment Banker: Stifel & Miller Buckfire & Co. (James Doak)
Liquidators: Hilco Merchant Resources LLC (Ian Fredericks) and Gordon Brothers Retail Partners LLC (Michael Chartock)
3/3/17 Recap: Apax Partners' backed website operator has filed for bankruptcy because it never evolved from Internet 1.0, has too much debt, its main site, Answers.com, is the red-headed step-child of Quora, and, quite frankly, not a single person receiving the PETITION newsletter has visited the site(s) since 2006. Yahoo, Facebook, Amazon (AWS), Amex and Silicon Valley Bank are among the top 10 creditors. The debtors solicited a prepackaged plan and so all of the above will be unimpaired - somewhat ironic given that algorithmic changes by Google and Facebook - in addition to a mountain of debt - are the real root causes of the company's decline.
Jurisdiction: SD of New York
Capital Structure: $40mm revolver, $325mm '21 first lien TL, $180mm '22 second lien TL.
Company Professionals:
Legal: Kirkland & Ellis LLP (James Sprayragen, Jonathan Henes, Christopher Greco, Melissa Koss, John Weber, Anthony Grossi)
Legal: Simpson Thacher & Bartlett LLP (Elisha Graff, Edward Linden)
Proposed Board of Directors of the Reorganized Entity: William Ruckelshaus, Eric Ball, Peter Daffern, Eugene Davis, John Federman, Lonne Jaffe, Brian Mulligan.
3/1/17 Recap: The San Diego-based proton radiation treatment center is the latest treatment center to file for bankruptcy. It opened in February '14 and managed to be very successful...at bleeding cash from the get-go. Now, the company hopes to achieve a sale in bankruptcy with the help of a $32mm DIP credit facility (of which only half is new money).
Jurisdiction: D. of Delaware
Capital Structure: ~$180mm first lien debt (ORIX Capital Markets)
Company Professionals:
Legal: Locke LordeLLP (David Wirt, Aaron Smith, Phillip Nelson, Brian Raynor) & (local) Polsinelli PC (Christopher Ward, Justin Edelson)
Financial Advisor: Carl Marks Advisory Group (J. Jette Campbell)
3/1/17 Recap: As malls empty out across the country, the dominoes are starting to fall. If there is nothing but vacancy and tumbleweed around you, foot traffic will stall. If foot traffic stalls, revenue stalls. If revenues stall, landlords can't get paid. And if landlords can't get paid, well, say hello to the Grim Reaper. Okay, that's a little dramatic, but, to be fair, this does generally describe mall-based retail these days. And the latest chapter in this sad story is the liquidation of Vanity Shop's 137 stores - the affect of which in smaller geographies like North Dakota can't be underestimated (not to mention any ripple effect: 60% of the company's inventory came from US suppliers). In addition to the (now) regular laundry list of prior companies who have had a similar fate in the retail space, e.g., The Limited Brands, THIS was probably the most interesting disclosure in the company's filing: "The Debtor initially contemplated soliciting a bid from Hilco Merchant Resources, LLC (who has routinely performed inventory appraisals and liquidation analyses of Debtor's assets every six months) but was advised that Hilco is currently unavailable to take on another liquidation project at this time." (emphasis added). Now THAT is telling.
Jurisdiction: D. of North Dakota
Capital Structure: $4.3mm debt (Wells Fargo), $5mm subordinated debt
Company Professionals:
Legal: Vogel Law (Jon Brakke, Caren Stanley)
Liquidator: Tiger Capital Group LLC
Legal: Cohen Tauber Spievack & Wagner PC (Robert Boghosian)
Claims Agent: KCC (*click on company name for docket)
Other Parties in Interest:
Wells Fargo
Legal: Riemer Braunstein LLP (Donald Rothman, Alexander Rheaume)
Official Committee of Unsecured Creditors (Washington Prime Group Inc., GGP Limited Partnership, Simon Property Group Inc.)
Legal: Fox Rothschild LLP (Mette Kurth, Paul Labov, Ellie Barragry, L. John Bird)
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)
2/28/17 Recap: Some offshore blood here. The Houston-based deepwater subsea construction service company (which sounds pretty bada$$ btw) suffered from declining revenue and cash flow (read: declining demand), high costs and increasingly limited access to credit. Hence, bankruptcy. With the benefit of a $90mm dual-tranche DIP, the Company will sell its marine base in Texas and otherwise use bankruptcy to restructure the balance sheet.
Jurisdiction: S.D. of Texas
Capital Structure: $480mm secured debt & $175mm unsecured debt
