New Chapter 11 Bankruptcy - Global Brokerage Inc. ($GLBR)

Global Brokerage Inc.

• 12/11/17 Recap: Holding company which holds, as its primary asset, an interest in a non-debtor online forex trading company filed a prepackaged bankruptcy to restructure its balance sheet. Troubles for the company began in early 2015 when "unprecedented volatility" in the euro-to-franc currency rate led the Swiss National Bank to eliminate its 1.2 france per euro floor. Instantly, the company was in breach of certain regulatory capital requirements and had to cease operations. After getting rescue financing from Leucadia National Corp. - bridging the company back into regulatory compliance - the company knew that the short term bridge would become an issue. A looming NASDAQ delisting triggered a "fundamental change" call provision on the notes which, of course, the company couldn't pay. The company's plan, solicited prior to filing, is basically an amend-and-extend. The term loan maturity is pushed one year and the converts will get (secured) take-back paper in the same nominal amount with maturity extended five years (with an interest rate uptick from 2.25% to 7%...PIK Toggle, of course). 
• Jurisdiction: S.D. of New York (Judge Wiles)
• Capital Structure: $300mm secured term loan (Leucadia National Corp), $172.5mm 2.25% convertible notes (Bank of New York Mellon)    
• Company Professionals:
  • Legal: King & Spalding LLP (Arthur Steinberg, Michael Handler, Sarah Borders, Thaddeus Wilson, Elizabeth Dechant)
  • Financial Advisor: Perella Weinberg Partners
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Ad Hoc Group of Convertible Noteholders (683 Capital Partners LP, Lazard Asset Management LLC, Penderfund Capital Management Ltd., Phoenix Investment Advisor LLC, Wolverine Flagship Fund Trading Limited)
    • Legal: Vinson & Elkins LLP (Steven Abramowitz, David Meyer, Lauren Kazer, Eric Hilmo)
  • Leucadia National Corp.
    • Legal: Skadden Arps Slate Meagher & Flom LLP (Eric Ivestor, Gregory Fernicola)
  • Significant Equityholder: Franklin Resources Inc. 

New Chapter 11 Bankruptcy - Herald Media Holdings Inc.

Herald Media Holdings Inc.

• 12/8/17 Recap: Boston-based 170-year old legacy print news media company that owns and publishes (i) the Boston Herald and (ii) the bostonherald.com digital media site has filed for bankruptcy to effectuate an expedited 363 sale to Gatehouse Media Massachusetts I, Inc for "an all-in value of not less than $5,000,000." In a sign of the times known to literally everyone, the Company notes in its filing that "there has been an increase in news source and advertising alternatives that has continued to erode traditional print media sources of revenue. Incremental digital revenue has not been sufficient to offset the decline in print revenue." Interestingly - given that there is a lot of discussion today about the state of media and the push-pull of advertising dollars vs. subscription revenue - the company derives approximately 67% of its revenue from paid circulation (single copy sales and subscription sales) and approximately 33% from print and online advertising. Nevertheless, the company's projections reflect a nearly $3mm loss for fiscal year 2018. In an effort to combat declining revenues, the Company pursued cost-cutting initiatives (e.g., headcount reductions, outsourcing, etc.,) but no more levers remained available to pull. Indeed, "[g]iven the general economic climate for the newspaper industry and the company’s significant pension and retirement liabilities, no financing options are available for the company to continue with its current capital structure." Note that the company's top list of creditors reflects various unions under four different collective bargaining agreements (CBAs): those fixed costs aren't easy to shed outside of bankruptcy. Employee-related expenses including payroll, benefits and pension/retirement contributions account for 58% of operating expenses while production and distribution of the paper accounts for 23% of total operating expenses. Looking at those numbers, it becomes pretty obvious why this business became unsustainable. Notably, the propose sale is conditioned upon the Company rejecting all CBAs in bankruptcy so that the asset transfer is free and clear of those obligations. Gatehouse is offering a $500k DIP credit facility to fund the administration of the case.
• Jurisdiction: D. of Delaware (Judge Silverstein) 
• Company Professionals:
  • Legal: Brown Rudnick LLP (William Baldiga, Sunni Belville, Tristan Axelrod) & (local) Morris Nichols Arsht & Tunnell LLP (Curtis Miller, Tamara Minott, Jose Bibiloni)
  • Investment Banker: Dirks Van Essen & Murray
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
• Other Parties in Interest:

Updated 12/9/17 10:20 am CT

New Chapter 11 Bankruptcy - Woodbridge Group of Companies LLC

Woodbridge Group of Companies LLC

• 12/4/17 Recap: Real estate finance and development company focused on buying, improving, and selling high-end luxury homes has filed for bankruptcy. It is a "group of companies" because there are literally scores of individual debtor properties that are set up in special purpose vehicles (Propcos) wholly-owned by other related special purpose vehicles (Holdcos). It's like Inception: an SPV within an SPV. 140 Propcos are debtors and 127 Holdcos are debtors. As you can imagine, there are a ton of intercompany transfers here. The company has been the subject of an SEC investigation since September 2016 on the basis of "potential securities law violations, including the alleged offer and sale of unregistered securities, the sale of securities by unregistered brokers, and the commission of fraud in connection with the offer, purchase and sale of securities." Indeed, the company allegedly raised over $200mm from retail investors. But, wait: there's more. The company has also received information requests from state securities regulators in "approximately" 25 states. PETITION NOTE: what do they mean by "approximately"? There are a finite number of states. Have the requests become SO VOLUMINOUS that they company has lost track of how many there've been? The company has secured a $100mm DIP credit facility from Hankey Capital LLC and attempts to have a plan of reorganization confirmed by the end of 2018. 
• Jurisdiction: D. of Delaware (Judge Carey)
• Capital Structure: $750mm seller financing.    
• Company Professionals:
  • Current Legal: Klee Tuchin Bogdanoff & Stern LLP 
  • Previous Legal: Gibson Dunn & Crutcher LLP (Samuel Newman, Oscar Garza, Daniel Denny, J. Eric Wise, Matthew Kelsey, Matthew Porcelli) & (local) Young Conaway Stargatt & Taylor LLP (Sean Beach, Edmon Morton, Ian Bambrick, Allison Mielke)
  • Current Restructuring Advisor/CRO: Development Specialists Inc. (Bradley Sharp) 
  • Previous Restructuring Advisor: SierraConstellation Partners LLC (Larry Perkins, John Farrace, Robert Shenfeld, Reece Fulgham, Miles Staglik, Lissa Weissman)
  • Independent Manager of Affiliate: Beilinson Advisory Group LLC (Marc Beilinson)
  • Claims Agent: Garden City Group (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP Lender: Hankey Capital LLC
    • Legal: Buchalter (William Brody, Paul Arrow) & (local) Richards Layton & Finger PA (John Knight, Christopher De Lillo)
  • Former CEO: Robert Shapiro
    • Legal: DLA Piper LLP (US) (Eric Goldberg, Stuart Brown)

Updated 3/24/18 9:45 CT

New Chapter 11 Bankruptcy - Walter Investment Management Corp.

Walter Investment Management Corp. 

• 11/30/17 Recap: Mortgage banking firm focused primarily on the servicing and origination of loans, including forward and reverse loans, has filed a much-anticipated prepackaged bankruptcy with the intention of shedding nearly $800mm of debt from its balance sheet. The company originates "conventional conforming loans eligible for securitization by government-sponsored enterprises, such as Fannie Mae and Freddie Mac, or eligible for guarantees by government agencies, such as Ginnie Mae MBSs." If that was painful reading, imagine how the lawyers felt drafting that. Even more painful is understanding that this bankruptcy is directly attributable to decisions the company made in the aftermath of the financial crisis. From 2010 through 2015, the company went on a debt-ridden acquisition spree (including once bankrupt Residential Capital LLC) which just goes to show that, while one's crisis is another's opportunity, one's crisis could be one's crisis. With this deleveraging transaction, the company hopes to be more competitive in the market going forward.

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

• Capital Structure: $100mm '18 RCF, $1.4b '20 TL (Credit Suisse AG), $540mm 7.875% '21 senior unsecured notes (Wilmington Savings Fund Society FSB), $242mm '19 senior subordinated convertible notes (Wells Fargo Bank NA)(public equity: $WAC)

• Company Professionals:

  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Matthew Barr, Sunny Singh)

  • Financial Advisor: Alvarez & Marsal North America LLC (David Coles)

  • Investment Banker: Houlihan Lokey Capital Inc. (Reid Snellenbarger, Jeffrey Levine, Jeffrey Lewis, James Page, Daniel Martin, Derek Kuns)

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

• Other Parties in Interest:

  • Administrative Agent: Credit Suisse AG

    • Legal: Davis Polk & Wardwell LLP (Brian Resnick, Michelle McGreal)

  • Consenting Term Lenders (Carlson Capital LP, TAO Fund LLC, Credit Suisse Asset Management LLC, Marathon Asset Management LP, Nuveen, Symphony Asset Management LLC, Eaton Vance Management)

    • Legal: Kirkland & Ellis LLP (Patrick Nash, Gregory Pesce)

    • Financial Advisor: FTI Consulting Inc.

  • Consenting Senior Noteholders (Canyon Capital Advisors LLC, CQS UK LLP, Deer Park Road Management Company LP, Lion Point Capital LP, Oaktree Capital Management LP, Omega Advisors Inc.)

    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Gregory Bray, Haig Maghakian, Rachel Franzoia)

    • Financial Advisor: Moelis & Co.

  • Prepetition Indenture Trustee: Wilmington Savings Fund Society FSB

    • Legal: Pryor Cashman LLP (Patrick Sibley, Seth Lieverman, Matthew Silverman)

  • Prepetition Convertible Notes Indenture Trustee: Wells Fargo Bank NA

    • Legal: Thompson Hine LLP (Curtis Tuggle)

  • Administrative Agent for DIP Warehouse Facilities: Credit Suisse First Boston Mortgage Capital LLC

    • Legal: Alston & Bird LLP (Gerard Catalanello, Karen Gelernt, James Vincequerra)

  • Fannie Mae

    • Legal: O'Melveny & Myers LLP (Darren Patrick, Steve Warren, Jennifer Taylor)

  • Freddie Mac

    • Legal: McKool Smith (Paul Moak, Kyle Lonergan)

First Day Declaration

Updated 11/30/17 10:05 CT

New Chapter 11 Bankruptcy - Shiekh Shoes LLC

Shiekh Shoes LLC

• 11/29/17 Recap: More retail in bankruptcy. Here, the retailer of footwear, apparel and accessories aimed at the urban subculture has filed for bankruptcy. Of note, the company has 124 specialty retail store locations across ten states; it also owns "e-tailer" Karmaloop, which, itself, was in bankruptcy a few years ago. Interestingly, the Karmaloop transaction is now riddled in controversy and serves as a cautionary tale to any purchaser of distressed retail assets like customer lists which, as we've seen from a variety of retail bankruptcies of late, is often one of the more "valuable" assets a retailer has. Data, baby, data! Of course, the data needs to be current and relevant as opposed to technologically engineered and enhanced. Which, the company alleges, is exactly what Comvest Partners did with Karmaloop's customer lists. The company notes, "The Debtor’s decision to acquire Karmaloop was based on Comvest’s representation that it had accumulated approximately 6 million unique customer email addresses, 3.7 million of which were alleged to be responsive/active consumers. After the acquisition was finalized in March of 2016, however, the Debtor found out that more than 80% of these emails were no longer valid and the overall health status of the Karmaloop email database/system was in very poor condition." The company continues, "The evidence discovered by the Debtor’s CTO and E-Commerce Director further indicated a concerted effort by Comvest/Karmaloop executives, and third party email ecommerce marketer, Klaviyo, to conceal the poor condition of the email list to give the appearance to prospective buyers that Comvest had “stabilized” losses and “grown” the business since taking over after Karmaloop’s prior bankruptcy in 2015 (out of which Comvest purchased Karmaloop). This was achieved by, among other means, constantly switching IP addresses so the company would not be blacklisted, as well as changing the code on both the Karmaloop and PLNDR sites to double-count traffic on the websites. Interestingly, the “double-pixel” (the means through which Karmaloop was doublecounting traffic on the websites to create the appearance the websites were experiencing increased traffic) was removed from Karmaloop’s website shortly before the Debtor took over and site traffic quickly nosedived. Thus, the Debtor has reason to believe Comvest knew the representations it made in the offering memoranda were false and it took affirmative steps to cover it up." As if this wasn't enough, the company also discovered that its "confidential" email list was in the possession of another business, the result of a previously-undisclosed pre-acquisition settlement between Karmaloop and a vendor. On account of these issues, it looks like the company and Comvest are primed for a bankruptcy court battle royale. Compounding matters is the company's reliance on Nike Inc. ($NKE) for product. Nike, the company notes, refused to ship product to the company without cash in advance payment; it also didn't support the company's attempted Midwest expansion. Unfortunately, that lack of support came after the company had already committed the capital to pursue said expansion. Whoopsies. Now, the company is unwinding those efforts. The company is also planning to close 31 stores. Yay #retailapocalypse! The company has no plan in bankruptcy other than to leverage the appropriate provisions of the bankruptcy code to pursue a restructuring of leases and its debt. Liquidation isn't out of the realm of possibility which, naturally, isn't great Christmas news for the company's 1,743 employees. One final note: the company noted soft sales in men's shoes (Nike and Brand Jordan): this seems consistent with the broader footwear narrative that specialty footwear and Adidas are eating into Nike's market share. 
• Jurisdiction: C.D. of California (Judge Zurzolo)
• Capital Structure: $20mm RCF (State Bank and Trust Company & Comvest Capital II LP), $15mm unsecured LOC    
• Company Professionals:
  • Legal:  SulmeyerKupetz PC (David Kupetz, Asa Hami, Steven Werth)
  • Financial Advisor:  KGI Advisors Inc.
  • Real Estate Advisors: Gordon Brothers Retail Partners LLC
• Other Parties in Interest:
  • Comvest Partners II LP
    • Legal: Goldberg Kohn Ltd. (Randall Klein, Dimitri Karcazes) & (local) Robins Kaplan LLP (Scott Gautier, Kevin Meek)

Updated 11/30/17

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 Chapter 11 Bankruptcy - Maurice Sporting Goods Inc.

Maurice Sporting Goods Inc.

• 11/20/17 Recap: Another retailer with a deep legacy in this country has filed for bankruptcy. The plan is to sell to Middleton Management Company LLC, which has entered into a letter of intent with the company. We bet its for a fire sale price. But, first, let's take a step back: here, an Illinois-based manufacturer and distributor of 60,000 SKUs of outdoor sporting goods (fishing products, terminal tackle products, shooting sports accessories, etc.) has filed for bankruptcy, potentially leaving its relationship with its single largest customer, Walmart ($WMT), in limbo. The company blamed its debt (some of which was taken on to fund an acquisition spree from 2004-2011), a cost-overrun investment in a new state-of-the-art combined distribution center, the general retail environment, and dominoes. Wait, what? Dominoes? From the First Day Declaration, "The Debtors have also faced losses as a result of the recent bankruptcies of several retailers, including The Sports Authority, MC Sports (also known as Michigan Sporting Goods Distributors), Gander Mountain and Sport Chalet, and a generally challenging retail environment." We'd start the funeral dirge for sporting goods, generally, but earlier this week Hibbett Sports Inc. ($HIBB) reported earnings and surprised to the upside. Today, alone, the stock was up 13.74%. And Dick's Sporting Goods Inc. ($DKS) was up 1%. So have no fear kids: there are still gonna be physical places where you can check out some tackle products and, gulp, maybe shooting sports accessories...??
• Jurisdiction: D. of Delaware (Judge Sontchi)
• Capital Structure: $45mm debt (BMO Harris)    
• Company Professionals:
  • Legal: Young Conaway Stargatt & Taylor LLP (Robert Brady, Michael Nestor, Justin Rucki, Ashley Jacobs, Tara Pakrouh)
  • Financial Advisor: Portage Point Partners
  • Investment Banker: Livingstone Partners
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • BMO Harris
    • Legal: Vedder Price PC (Douglas Lipke) & (local) Pepper Hamilton LLP (David Stratton)

Updated 11/23/17

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

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

New Chapter 11 Bankruptcy - Velocity Pooling Vehicle LLC

Velocity Pooling Vehicle LLC

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

Updated 11/17/17 6:11 CT

New Chapter 11 Bankruptcy - B. Lane Inc. (d/b/a Fashion to Figure)

Fashion to Figure (@FTFSnaps)

• 11/13/17 Recap: Another retailer finds its way to bankruptcy. Here, the New York-based plus-size women's specialty retailer with 26-mall-and-outlet-center-based locations has filed for bankruptcy in New Jersey. The company appears to be suffocating under the weight of its brick and mortar locations but purports to have successful e-commerce and wholesale channels. It intends to pursue a sale of all of its assets "to be consummated as soon as possible given the upcoming critical holiday shopping season commencing on 'Black Friday'...." Wait, huh? The company is filing NOW to get out AHEAD of Black Friday? No wonder this company is bankrupt. Of course, the company is also considering vacating locations and "expeditiously conducting going out of business" sales. To this end, the company has filed a bid procedures motion with a joint venture of liquidators, SB Capital Group LLC and 360 Merchant Solutions LLC, lined up as stalking horse bidder for the assets; it also intends to continue to pursue a sale to "one of the largest department store chains in the United States," which apparently expressed some interest pre-petition. Meanwhile, no background on a bankrupt retailer is complete without some private equity shop getting thrown under the bus. Here, the company states (without overtly identifying the PE fund for whatever reason), "In 2012, prompted by a [$15mm] private equity investment, the Company embarked on a rapid expansion of the business. The expansion, however, proved ill-fated and ill-timed, coming at a time when traditional brick and mortar retail was on the decline. Specifically, the Company over-expanded into the shopping mall retail space at a time when market trends were shifting away from traditional brick and mortar stores and towards online retail." Ah, private equity. Speaking of private equity, a fund affiliated with Perella Weinberg Partners is listed as the primary equityholder with a 20.5% position. Curious. Otherwise, it looks like a slate of "friends and family" type investors got burned here. Speaking of getting burned, the list of top creditors reflects a who's who of landlords that the distressed world has become accustomed to seeing at the top of the "Top 30 Creditors" list: Washington Prime Group Inc. ($WPG)(listed once), Westfield Corp. ($WFD)(twice), Simon Property Group Inc. ($SPG)(six times), and Macerich Co. ($MAC)(listed twice). Nothing to see here.
• Jurisdiction: D. of New Jersey (Judge Sherwood)
• Capital Structure: $1.0mm secured debt (ACM Capital Fund I LP), $250k (Cowen Overseas Investment LP)
• Company Professionals:
  • Legal: Lowenstein Sandler LLP (Kenneth Rosen, Bruce Buechler, Philip Gross, Keara Waldron, Michael Papandrea)
  • Prepetition Investment Banker: Cowen and Company LLC
  • Claims Agent: Prime Clerk LLC (*click on the company name above for free docket access)
  • Other Parties in Interest:
    • ACM Capital Partners LLC
      • Legal: Shraiberg Landua & Page (Bradley Shraiberg)
    • Official Committee of Unsecured Creditors
      • Legal: Hahn & Hessen LLP (Mark Powers, Alison Ladd) & (local) Fox Rothschild LLP (Richard Meth, Paul Labov)
      • Financial Advisor: EisnerAmpner LLP (Edward Phillips)

Updated 5/5/18

New Chapter 11 Filing - Pacific Drilling S.A.

Pacific Drilling S.A.

• 11/12/17 Recap: Another offshore driller finds its way into bankruptcy and, boy!, does its filing attempt to paint one rosy optimistic picture of its particular "competitive strength[]" in the offshore drilling space. But, first, let's take a step back: here, Pacific Drilling ($PACDF), an offshore drilling company formed in 2011 under Luxembourg law, filed bankruptcy in the Southern District of New York after over a year - and we mean YEAR - of speculation that this would end up where it now is. After all, when oil prices are where they are and you provide global ultra-deepwater drilling and complex well construction services to the oil and natural gas industry with high-specification drillships generally stationed in the Gulf of Mexico, the Federal Republic of Nigeria and the Islamic Republic of Mauritania, well, we'd venture an educated guess that the math simply ain't gonna add up. Certainly not at "day rates" averaging an estimated $155k. And so the company has three drillships contracted currently: two on short term agreements and, luckily, one at a well-above market contractual dayrate through September 2019. The others sit "smart-stacked." Choice quote, "My view in light of over 20 years in the industry is that recovery in the market for drilling contracts is a question of “when” not “if”. Pacific Drilling continues to have advantages over competitors with older fleets, as high-specification drilling units are generally better suited to meet the requirements of customers for drilling in deepwater, complex geological formations with challenging well profiles or remote locations. Furthermore, the uniformity and mobility of the Company’s fleet allow a Smart Stacking strategy that will continue to yield cost savings and flexibility if the downturn is prolonged." Clearly those advantages weren't so clear as to form consensus around the negotiating table with the various parties in interest as there is no restructuring support agreement in place here. Nothing like a good old-fashioned free fall into bankruptcy court, an increasingly-rare occurrence these days. 
• Jurisdiction: S.D. of New York
• Capital Structure: $3.188b total debt. Ship Group A Debt: $475mm RCF (Citibank NA), $750mm '20 5.375% Notes (Deutsche Bank Trust Company Americas), $718mm Term Loan B Credit Facility (Citibank NA). Ship Group B Debt (SSCF): $492.5mm 3.75% commercial tranche and $492.5mm (Wilmington Trust NA), combined post-amort equaliing $661.5mm outstanding. Ship Group C Debt: $438.4mm '17 7.25% senior secured notes (Deutsche Bank Trust Company Americas)
• Company Professionals:
  • Legal: Sullivan & Cromwell LLP (Andrew Dietderich, Brian Glueckstein, John Hardiman, Noam Weiss) & Togut Segal & Segal LLP (Albert Togut, Frank Oswald, Scott Ratner)
  • Financial Advisor: Evercore Partners International LLP 
  • Investment Banker: AlixPartners LLP (James Mesterharm)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • RCF Agent: Citibank NA
    • Legal: Shearman & Sterling LLP (Fredric Sosnick)
    • Financial Advisor: PJT Partners LP
  • Ad Hoc Group of RCF Lenders
    • Legal: White & Case LLP
  • SSCF Agent: Wilmington Trust NA
    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Tyson Lomazow, Matthew Brod)
    • Financial Advisor: Moelis & Company LLC
  • Ad Hoc Group of Ship Group C Debt, 2020 Notes and Term Loan B
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Andrew Rosenberg, Elizabeth McColm, Christopher Hopkins)
    • Financial Advisor: Houlihan Lokey
  • 2017 and 2020 Notes Indenture Trustee(s): Deutsche Bank Trust Company Americas
    • Legal: Moses & Singer LLP
  • Large Equityholder: Quantum Pacific (Gibraltar) Limited
    • egal: Skadden Arps Slate Meagher & Flom LLP (Jay Goffman, George Howard)

Updated 11/15/17 at 5:09 pm CT

New Chapter 11 Bankruptcy - Styles for Less Inc.

Styles for Less Inc.

• 11/6/17 Recap: Another retailer finds its way in bankruptcy court. Here, the company has 93 retail women's clothing stores in California, Nevada, Texas, Arizona and Florida. The company claims, in its bankruptcy papers, to "offer the hottest trendy clothing, shoes, accessories and more at discounted prices...." Which, naturally, begs the question: well then why the hell did it file for bankruptcy? Well, naturally, the company answers this question in its bankruptcy papers and its the now-typical litany of retail excuses: (i) "increased industry discounting" (read: price and margin compression), (ii) "online penetration" (read: e-commerce), and (iii) "shifts in consumer spending away from 'fast fashion' and toward services and experiences (read: Snapchat...okay, maybe NOT Snapchat...but...millennials!) - all of which have contributed to cash flow pressures and liquidity problems. We make light but this story really is becoming pandemic. And the story includes the closure of 55 brick-and-mortar locations, 311 lost jobs, and decreased pay for those who kept their jobs. To stay alive, the company continues to negotiate with landlords and pursue operational expense reductions. The company will operate using Wells Fargo Bank's cash collateral while it tries to figure out a reorganization plan. Notably, the service list includes representatives of General Growth Properties Inc. ($GGP) and Simon Property Group ($SPG). Nothing to see here.
• Jurisdiction: C.D. of California (Judge Wallace)
• Capital Structure: $915k secured debt (Wells Fargo Bank NA)
• Company Professionals:
  • Legal: Winthrop Couchot Golubow Hollander LLP (Marc Winthrop, Garrick Hollander)

Updated 11/7/17

New Chapter 11 Filing - ExGen Texas Power LLC

ExGen Texas Power LLC

• 11/7/17 Recap: The last 12 months haven't been friendly to companies in the power space. The following have filed for bankruptcy: Panda Temple Power LLC, Westinghouse Electric Company LLC, GenOn Energy Inc., Illinois Power Generating Co., and La Paloma Generating Company LLC. Here, the owner of five natural-gas-fired power generation projects in the great state of Texas filed for bankruptcy in the face of significant headwinds. Literally. In its bankruptcy papers, the company primarily blames decreased demand and, in turn, decreased revenue, on an increase in wind production. And mild weather. Indeed, unlike retailers who incessantly blame weather for poor performance, this is actually believable. The company notes, "public policy initiatives and incentives continue to promote the development of additional wind capacity, placing downward pressure on wholesale power prices. Such additional capacity, coupled with low natural gas prices and mild and windy weather, have exacerbated the Debtors' financial struggles. By way of example, the cost per megawatt hour in 2008 was more than $70; in 2016, it was less than $25, and just prior to the Petition Date, it was approximately $25. These factors have persisted, as additional wind and other capacity is being added to the grid, which has driven down prices in light of relatively flat demand, thereby further constricting the Debtors' revenues and cash flow." In light of these issues, the company hired a banker to market the assets and only non-Debtor Exelon Generation Company LLC bit on one of the five debtor projects to the tune of $60mm (plus various forms of other consideration). The debt in the other four projects will be equitized and the term lenders will now be owners of power generation projects, subject to approval of a plan of reorganization. Interestingly, this all comes in the same week that a proposed tax overhaul bill by the House Republicans seeks to significantly curtail wind energy production tax credits. 
• Jurisdiction: D. of Delaware (Judge Shannon)
• Capital Structure: $660mm first lien TL (funded, ex-interest)(Bank of America NA)     
• Company Professionals:
  • Legal: Richards Layton & Finger PA (Daniel DeFranceschi, Paul Heath, Zachary Shapiro, Joseph Barsalona)
  • Financial Advisor/CRO: FTI Consulting (David Rush)
  • Investment Banker: Scotia Capital (USA) Inc.
  • Independent Board of Director: Alan Carr
  • Claims Agent: KCC (*click on company name for docket)
• Other Parties in Interest: 
  • Asset Purchaser: Exelon Generation Company LLC
    • Legal: DLA Piper (US) LLP (Richard Chesley, Daniel Simon)
  • TL Agent: Bank of America NA
    • Legal: Norton Rose Fulbright US LLP (Louis Strubeck, Greg Wilkes) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
  • Commodity Hedge Counterparty: Merrill Lynch Commodities Inc.
    • Legal: Davis Polk & Wardwell LLP (Marshall Heubner, Angela Libby) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)

Updated: 11/8/17 at 1:00pm CT (No UCC)

New Chapter 11 Bankruptcy - Bestwall LLC

Bestwall LLC

• 11/2/17 Recap: Nothing like a big juicy asbestos case. Here, the company filed for bankruptcy to establish an asbestos trust to deal with current and future asbestos claimants on a permanent and equitable basis. It has been dealing with litigation for nearly 40 years - over the course of hundreds of thousands of cases - and because it thinks it will be the target of continued litigation "through at least 2050," it thought it best to file and take advantage of the Bankruptcy Code's scheme for dealing with asbestos-related claims. 
• Jurisdiction: W.D. of North Carolina (Judge Beyer) 
• Company Professionals:
  • Legal: Jones Day (Gregory Gordon, Daniel Prieto, Jeffrey Ellman, Amanda Rush, Brad Erens) & (local) Robinson Bradshaw & Hinson PA (Garland Cassada, David Schilli, Andrew Tarr)
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Creditor: Georgia-Pacific LLC
      • Legal: Debevoise & Plimpton (Natasha Labovitz, Mark Goodman)

Updated 11/8/17

New Chapter 11 Bankruptcy - Armstrong Energy Inc.

Armstrong Energy Inc.

• 11/1/17 Recap: What a week or so for coal. #MAGA! While oil and gas post-reorg equities have, despite some recent upward movement, had middling results, coal has fared well. Last week Peabody Energy Inc. ($BTU) reported solid numbers and saw its stock pop above $30/share and Arch Coal Inc. ($ARCH) has also enjoyed a nice run. It's up nearly 4% today. While Contura Energy (f/k/a Alpha Natural Resources Inc.) remains in limbo with a pulled-IPO, Armstrong Energy now joins the aforementioned companies as a bankruptcy filer, with the hopes of effectuating a restructuring support agreement-based debt-for-equity transaction that will effectively turn the keys over to a joint venture comprised of the holders of the company's first lien senior secured notes and Knight Hawk Holdings LLC. More to come once the filing is complete.
• Jurisdiction: E.D. of Missouri (Judge Surratt-States)
• Capital Structure: $200mm 11.75% '19 first lien senior secured notes (Wells Fargo Bank NA)
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (James Sprayragen, Jonathan Henes, Ross Kwasteniet, William Guerrieri, Travis Bayer, Timothy Bow) & (local) Armstrong Teasdale LLP (Richard Engel Jr., Erin Edelman, John Willard)
  • Financial Advisor: MAEVA Group LLC (Harry J. Wilson)
  • Restructuring Advisor/CRO: FTI Consulting Inc. (Alan Boyko, Brian Martin, Christopher Marshall)
  • Financial Advisor: Houlihan Lokey Capital Inc.
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Indenture Trustee: Wells Fargo Bank NA
    • Legal: Loeb & Loeb LLP (Walter Curchack, Vadim Rubinstein) & (local) Spencer Fane LLP (Eric Peterson, Ryan Hardy)
  • Ad Hoc Group of Senior Secured Noteholders (BlueMountain Capital Management LLC, Caspian Capital LP, GoldenTree Asset Management LP, Marathon Asset Management LP, Panning Master Fund LP, Teachers Insurance and Annuity Association of America)
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Brian Hermann, Elizabeth McColm, Diane Meyers, Adam Denhoff, Daniel Youngblut) & (local) Carmody MacDonald PC (Christopher Lawhorn, Thomas Riske)
  • Large Creditors: Thoroughbred Holdings GP LLC, Thoroughbred Resources, L.P., Western Mineral Development, LLC, and Ceralvo Holdings, LLC
    • Legal: Willkie Farr & Gallagher LLP (Matthew Feldman, Debra McElligott) & (local) Husch Blackwell LLP (Marshall Turner)
  • Creditor: Kenergy Corp.
    • Legal: Jones Day (Scott Greenberg, Kyle Patrick Lane)
  • Official Committee of Unsecured Creditors
    • Legal: Morrison & Foerster LLP (Lorenzo Marinuzzi, Jennifer Marines, Daniel Harris, Rahman Connelly) & (local) Affinity Law Group LLC (J. Talbot Sant Jr.)

Updated 11/17/17

New Chapter 11 Bankruptcy - Vasari LLC (d/b/a Dairy Queen)

Vasari LLC

• 10/30/17 Recap: Texas-based large franchise operator of Dairy Queen brand restaurants operating approximately 70 locations across Texas, Oklahoma and New Mexico filed for bankruptcy. Burdened under the weight of its debt, its lease obligations, and franchise fees, the company struggled to generate revenue to offset its obligations. Why? Well, somewhat surprisingly, the company doesn't immediately dive into the "restaurant excuse bin" (air-quotes) with hackneyed narratives like "bad weather," "experiential desires" and "millennials don't SNAP upside-down frozen treats." Rather, the company notes, "[t]he difficulties faced by the Debtor can largely be traded to the much publicized decline in oil prices. The decline in oil prices has severely impacted the job market for oil related jobs in regions of west Texas and east Oklahoma and has thus resulted in cross-industry declines in revenues in areas heavily dependent on oil related jobs." The company continues, "Since bouncing from a 12 year low, oil prices have begun to rebound; however, oil-related jobs have not. Without oil-related jobs, certain DQ locations will likely continue to underperform, causing a drain on the Debtor's resources." Hurricane Harvey was the cherry on top, disrupting operations in 17 locations. Now, the company intends to use bankruptcy to continue to evaluate its store footprint, shed some stores, and pursue a sale of the remaining locations. 
• Jurisdiction: N.D. of Texas (Judge Mullin)
• Capital Structure: $10.8mm debt (Cadence Bank NA), $777k PIK subordinated promissory note.    
• Company Professionals:
  • Legal: Husch Blackwell LLP (Vickie Driver, Christina Stephenson, Ryan Burgett, Alexander Terras)
  • Financial Advisor: Mastodon
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Prepetition/DIP Lender: Cadence Bank NA
    • Legal: Morris Manning & Martin LLP (Frank DeBorde, David Mayo) & (local) Gardere Wynne Sewell LLP (Holland O'Neil, Jason Binford)  
  • Official Committee of Unsecured Creditors
    • Legal: Gray Reed & McGraw LLP (Jason Brookner, Michael Bishop, Lydia Webb)

Updated 11/17/17

New Chapter 11 Filing - M&G USA Corporation

M&G USA Corporation

• 10/24/17 Recap: Disruption via cliche and foreign competition. Here, the plastics maker and indirect subsidiary of petrochemical giant Mossi Ghisolfi Group filed for bankruptcy. The company had begun construction on a vertically-integrated plant in Corpus Christi Texas back in 2013 but then they ran headfirst into the single-most common construction cliche out there: delays and cost overruns. And that was before Hurricane Harvey compounded matters. The plant remains incomplete and, consequently, the company has "severe liquidity constraints" that it intends to address in bankruptcy - specifically, through a significant deleveraging. The company highlighted several other causes for its state of affairs: (i) higher raw material costs due to supply shortages, (ii) a recent wave of competing low-priced imports that flooded the US market (note: the company has outstanding petitions with the US Department of Commerce and the US International Trade Commission alleging that imports of polyethylene terephthalate resin from Brazil, Indonesia, South Korea, Pakistan and Taiwan are being "dumped" in the US market), and (iii) price-compression due to a competitors GOB sale. The company seeks approval of a $100mm DIP credit facility to fund its cases. 
• Jurisdiction: D. of Delaware (Judge Shannon)
• Capital Structure: $1.7b outstanding principal amount of debt (see below)   
• Company Professionals:
  • Legal: Jones Day (Scott Greenberg, Carl Black, Stacey Corr-Irvine, Michael Cohen, Nicholas Morin, Peter Saba, James Sottile IV, Daniel Merrett, Oliver Zeltner) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, James O'Neill, Joseph Mulvihill)
  • Financial Advisor/CRO: Alvarez & Marsal North America LLC (Dennis Stogstill)
  • Investment Banker: Rothschild Inc. (Neil Augustine)
  • Board of Directors: Alan Carr, Frederick Brace
  • Claims Agent: Prime Clerk LLC (*click on link above for free docket access)
• Other Parties in Interest:
  • DAK Americas LLC 
    • Legal: Weil Gotshal & Manges LLP (Alfredo Perez, Christopher Lopez) & (local) Morris Nichols Arsht & Tunnell LLP (Curtis Miller)
  • Equity Holders: Magnate S.a r.l.
    • Legal: Kirkland & Ellis LLP
  • DIP Lender: Banco Inbursa S.A., Institucion De Banca Multiple, Grupo Financiero Inbursa
    • Legal: Cleary Gottlieb Steen & Hamilton LLP
  • Large Unsecured Creditor: Indorama Ventures Montreal LP
    • Legal: Lowenstein Sandler LLP (Paul Kizel, Nicole Fulfree)
  • Official Committee of Unsecured Creditors:
    • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Abhilash Raval, Lauren Doyle) & (local) Cole Schotz P.C. (J. Kate Stickles, David Hurst)

Updated 11/19/17

Source: First Day Declaration

New Chapter 11 Filing - Think Finance LLC

Think Finance LLC

• 10/23/17 Recap: Here, Fort Worth Texas-based Think Finance LLC, "a leading provider of financial technology services" (think online consumer lending) alleges that Victory Park Capital Advisors LLC, through an affiliate, prevented said affiliate from paying tens of millions of dollars for services Think rendered. This sparked a cascade of horribles as the company then didn't have money to make payroll, had to lay people off, and then, in turn, incurred severance payables. Insert adversary proceeding between the company and Victory Park Capital here. It doesn't help that the company is the defendant in a variety of other lawsuits that it needs funding for. Indeed, the Wall Street Journal highlights that the company is the subject of a variety of "predatory lending" suits. Sounds like a dramatic bankruptcy. Popping popcorn.
• Jurisdiction: S.D. of Texas (Judge Hale)
• Company Professionals:
  • Legal: Hunton & Williams LLP (Gregory Hesse, Tyler Brown, Jason Harbour)
  • Financial Advisor: Alvarez & Marsal LLC
  • Claims Agent: American Legal Claims Services LLC
• Other Parties in Interest:
  • Victory Park Capital Advisors LLC
    • Legal: Kirkland & Ellis LLP (Ryan Blaine Bennett, Justin Bernbrock)

Updated 10/26/17

New Chapter 11 Filing - MAC Acquisition LLC (aka Romano's Macaroni Grill)

MAC Acquisition LLC (aka Romano's Macaroni Grill)

• 10/18/17 Recap: Back in 2015, Ignite Restaurant Group offloaded Romano's Macaroni Grill to RedRock Partners LLC in an attempt to bolster its liquidity and avoid bankruptcy. It failed: the company filed for bankruptcy earlier this year (case summary here). Perhaps that had something to do with the fact that the sale was for a measly $8mm, "a price akin to dumping your unwanted junk on Craigslist." Now, Romano's Macaroni Grill has filed for bankruptcy to restructure its balance sheet and further an operational restructuring, including dealing with lessor damage claims arising out of terminated leases (the company closed 37 company-operated locations in 2017; it has 93 company-owned restaurants remaining exclusive of non-debtor franchises). The company blames its chapter 11 filing on (i) the inability to generate sufficient cashflow, sales and margin to cover operating expenses let alone service its debt (TTM EBITDA as of 8/17 was -$12mm), and (ii) increased costs for both commodities and labor. We note that this provision in the company's bankruptcy papers is indicative of a larger trend befalling the casual dining segment: "The Debtors’ operations and financial performance have been adversely affected by a number of economic factors, but perhaps most notably by an overall downturn for the casual dining industry. The preferences of such customers have shifted to cheaper, faster alternatives. On the other end of the spectrum, there is a trend among younger customers to spend their disposable income at non-chain “experience-driven” restaurants, even if slightly more expensive." In other words, this bankruptcy is partly Evan Spiegel (Snapchat, $SNAP) and Kevin Systrom's (Instagram, $FB) fault. The company has a restructuring support agreement with its major stakeholders to pursue a dual-track bankruptcy via a plan of reorganization and a potential sale upon the hiring of an investment banker (heads up: bankers!!). The company has secured a junior $5mm DIP credit facility from Raven Capital Management LLC. P.S. Nothing to see here for the REITS: Simon Property Group has made a notice of appearance in the matter. 
• Jurisdiction: D. of Delaware (Judge Walrath)
• Capital Structure: $12mm RCF (Bank of Colorado), $2.5mm TL (Bank of Colorado), $3.5mm LOC (Bank of Colorado), $5mm Funding Loan 
• Company Professionals:
  • Legal: Gibson Dunn & Crutcher LLP (Jeffrey Krause, Michael Neumeister, Emily Speak, Brittany Schmeltz) & (local) Young Conaway Stargatt & Taylor LLP (Michael Nestor, Edmon Morton, Ryan Bartley, Elizabeth Justison)
  • Financial Advisor/Chief Restructuring Officer: Mackinac Partners LLC (Nishant Machado, Pasquale Maturo)
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP Lender: Raven Capital Management LLC
    • Legal: Winston & Strawn LLP (Justin Rawlins, Carey Schreiber, Eric Sagerman) & (local) Ashby & Geddes PA (Gregory Taylor, Stacy Newman)
  • Bank of Colorado
    • Legal: Shaw Fishman Glantz & Towbin LLC (Thomas Horan, Johnna Darby, Brian Shaw) & (local) Markus Williams Young & Zimmermann LLC (James Markus)
  • Official Committee of Unsecured Creditors
    • Legal: Kelley Drye & Warren LLP (Eric Wilson, Jason Adams, Lauren Schlussel) & (local) Bayard PA (Justin Alberto, Gregory Flasser)

Updated 11/8/17

New Chapter 11 Filing - Castex Energy Partners LP

Castex Energy Partners LP

• 10/17/17 Recap: People have been saying that there is still more oil and gas distress to work its way through the system, particularly offshore-related companies. Well, here, Castex Energy Partners LP, a Houston-based onshore and offshore oil and natural gas exploration and production company located primarily on the coasts of Louisiana and Texas filed for bankruptcy to effectuate a restructuring support agreement with its major parties in interest. The company owns interests in approximately 375 wells (predominantly onshore); it also holds interests in certain seismic interests and specific lands. Like most other oil and gas E&P companies, Castex faced "intense financial pressure" due to the decrease in price of oil and gas and consequent decrease in demand for drilling. The company's EBITDA declined 70% from 2014 to 2016. Yes, you read that right: 70%. Of course, it didn't help that the company made an inopportune decision to invest heavily in offshore development in 2014, outlaying $259mm "in anticipation of future developmental drilling." Timing couldn't have been worse, it seems. Also, the company simply forgot to hedge, apparently; it "was mildly hedged and was exposed to [a massive nat gas] drop." Given all of that, the playbook is pretty un-extraordinary: strapped with a nice chunk of bank debt, the company attempted to make operational cuts to help sustain cash flow while simultaneously running a sales process through Evercore Partners Inc. That process failed. So, now, the company has $4mm of cash on hand and a $15mm DIP credit facility commitment from its prepetition lenders and a restructuring support agreement between it, Capital One Bank, Castex Energy Inc., and the RBL Lenders. The company plans to equitize certain prepetition lenders' debt and emerge from bankruptcy in Q1 of '18. 
• Jurisdiction: S.D. of Texas (Judge Isgur)
• Capital Structure: $400mm debt (Capital One Bank (USA) NA)    
• Company Professionals:
  • Legal: Kelly Hart & Pitre LLP (Louis Phillips, Peter Kopfinger, Amelia Bueche, Patrick Shelby)
  • Restructuring Advisor: Alvarez & Marsal LLC (Ryan Omohundro)
  • Financial Advisor: Evercore Partners Inc.
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Castex Energy Inc.
    • Legal: Norton Rose Fulbright LLP (Kristian Gluck, Gregory Wilkes, Shivani Shah)
  • Prepetition & DIP Admin Agent: Capital One Bank (USA) NA & Consenting Lenders (Amegy Bank, Whitney Bank, IberiaBank, Frost Bank, Cross Ocean, Comerica Bank, Citibank NA, Bank of America Credit Products Inc., Capital One NA)
    • Legal: O'Melveny & Myers LLP (George Davis, Michael Lotito, Daniel Shamah) & (local) Porter Hedges LLP (John Higgins, Amy Geise)
    • Financial Advisor: RPA Advisors LLC
  • Riverstone V Castex 2005 Intermediate Holdings LLC
    • Legal: Vinson & Elkins LLP (Bradley Foxman, Paul Heath)

Updated 10/26/17