New Chapter 11 Filing - iHeartMedia Inc.

iHeartMedia Inc.

3/14/18

iHeartMedia Inc., a leading global media company specializing in radio, outdoor, mobile, social, live media, on-demand entertainment and more, has filed for bankruptcy -- finally succumbing to its $20 billion of debt ($16 billion funded) and $1.4 billion of cash interest in 2017. WOWSERS. The company purports to have "an agreement in principle with the majority of [its] creditors and [its] financial sponsors that reflects widespread support across the capital structure for a comprehensive plan to restructure...$10 billion..." of debt.

The company notes $3.6 billion of revenue and unparalleled monthly reach ((we'll have more to say about this in this Sunday's Members-only newsletter (3/18/18) - this claim deserves an asterisk)). 

Still, as it also notes, the company faces significant headwinds. It states in its First Day Declaration,

"Among other factors, the global economic downturn that began in 2008 resulted in a decline in advertising and marketing spending by the Debtors’ customers, which resulted in a corresponding decline in advertising revenues across the Debtors’ business. Then, as the economy recovered, the Debtors’ industry faced new and intense competition from the rapidly-growing internet and digital advertising industry and the entry of on-demand streaming services, both of which siphoned off the share of advertiser revenues allocated by agencies and brands to broadcast radio. The Debtors have taken various operational steps to stem the negative effect of these trends; among other initiatives, the Debtors have successfully developed emerging platforms including its industry-leading iHeartRadio digital platform and nationally-recognized iHeartRadio-branded live events that are audio and video streamed and televised nationwide."

The company ought to expect these trends to continue.

Large creditors include Cumulus Media Inc. (~$5.6 million...yikes) and Spotify (~$2 million).  

• Jurisdiction: S.D. of Texas
• Capital Structure:    

• Company Professionals:
  • Legal: Kirkland & Ellis LLP (James Sprayragen, Anup Sathy, Brian Wolfe, William Guerrieri, Christopher Marcus, Stephen Hackney, Richard U.S. Howell, Benjamin Rhode, AnnElyse Gibbons) & Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh, Jennifer Wertz)
  • Financial Advisor to the Company: Moelis & Co. 
    • Legal: Latham & Watkins LLP (Caroline Reckler, Matthew Warren)
  • Restructuring Advisor to the Company: Alvarez & Marsal LLC
  • Legal for the Independent Directors: Munger Tolles & Olson LLP (Kevin Allred, Seth Goldman, Thomas Walper, John Spiegel)
  • Financial Advisor to the Independent Directors: Perella Weinberg Partners LP
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Large Equity Holders: Bain Capital & Thomas H. Lee Partners
    • Legal: Weil Gotshal & Manges LLP (Matthew Barr, Christopher Lopez, Gabriel Morgan)
  • Potential Buyer: Liberty Media Corporation & Sirius XM Holdings Inc.
    • Legal: Weil Gotshal & Manges LLP (Stephen Karotkin, Ray Schrock, Alfredo Perez)
  • Successor Trustee for the 6.875% '18 Senior Notes and 7.25% '27 Senior Notes: Wilmington Savings Fund Society, FSB
    • Legal: White & Case LLP (Thomas Lauria, Jason Zakia, Erin Rosenberg, J. Christopher Shore, Harrison Denman, Michele Meises, Mark Franke, Michael Garza) & Pryor Cashman LLP (Seth Lieberman, Patrick Sibley, Matthew Silverman) & (local) Andrews Kurth Kenyon LLP (Robin Russell, Timothy A. Davidson II, Ashley Harper)
  • Successor Trustee for the 11.25% '21 Priority Guaranty Notes
    • Legal: Kelley Drye & Warren LLP (Eric Wilson, Benjamin Feder, Kristin Elliott)
  • Successor Trustee for the 14.00% Senior Notes due 2021
    • Legal: Norton Rose Fulbright (US) LLP (Jason Boland, Christy Rivera, Marian Baldwin Fuerst)
  • Term Loan/PGN Group
    • Legal: Jones Day (Thomas Howley, Bruce Bennett, Joshua Mester)
  • Ad Hoc Group of Term Loan Lenders
    • Legal: Arnold & Porter Kaye Scholer LLP (Michael Messersmith, Tyler Nurnberg, Sarah Gryll, Christopher Odell, Hannah Sibiski) 
  • TPG Specialty Lending Inc.
    • Legal: Schulte Roth & Zabel LLP (Adam Harris, David Hillman, James Bentley) & (local) Jones Walker LLP (Joseph Bain, Laura Ashley) 
  • Special Committees of the Board of Clear Channel Outdoor Holdings Inc.
    • Legal: Willkie Farr & Gallagher LLP (Matthew Feldman, Paul Shalhoub, Christopher Koenig, Jennifer Jay Hardy)
  • Ad Hoc Committee of 14% Senior Noteholders of iHeart Communications
    • Legal: Gibson Dunn & Crutcher LLP (Robert Klyman, Matt Williams, Keith Martorana, Matthew Porcelli) & (local) Porter Hedges LLP (John Higgins, Aaron Power, Samuel Spiers)
  • 9.00% Priority Guarantee Notes due 2019 Trustee: Wilmington Trust NA
    • Legal: Stroock & Stroock & Lavan LLP (Jayme Goldstein, Daniel Fliman, Brian Wells) & (local) Haynes and Boone, LLP (Charles Beckham Jr., Martha Wyrick, Kelsey Zottnick)
  • Citibank N.A.
    • Legal: Cahill Gordon & Reindel LLP (Joel Levitin, Richard Stieglitz Jr.) & (local) Locke Lord LLP (Berry Spears)
  • Delaware Trust Company
    • Legal: Quinn Emanuel Urquhart & Sullivan LLP (Benjamin Finestone, K. John Shaffer, Monica Tarazi, Victor Noskov)
  • Official Committee of Unsecured Creditors
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Ira Dizengoff, Philip Dublin, Naomi Moss, Charles Gibbs, Marty Brimmage)

Updated 3/30/18

New Chapter 11 Filing - Orexigen Therapeutics Inc.

Orexigen Therapeutics Inc. 

3/12/18

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

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

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

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

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

Updated March 30, 2018

New Chapter 22 Filing - SEGA Biofuels LLC

SEGA Biofuels LLC

3/11/18

SEGA Biofuels LLC, an industrial wood pellet manufacturer and distributor with a Georgia-based facility filed for bankruptcy to pursue a sale. This is the second bankruptcy in the last 5 years. In this instance, the debtor has been sitting on an idled plant since 2016, having marketed the asset on two separate occasions to no avail. In fact, the bankruptcies of other wood pellet manufacturers in Louisiana and Texas during the company's marketing process didn't help with the marketing. (Notably, Rentech Inc., another wood pellet manufacturer, filed for bankruptcy in December). 

Now, though, the company proposes to sell to Global Infrastructure Partners, an affiliate of the company's pre-petition secured lender and (now) DIP lender, GIP Genesis LLC, for the equivalent of a few dollars and some spitwads. Or, said another way, $4.2mm in the form of a combined credit bid + cash offer, cure amounts and some assumed liabilities. 

Really the only reason why we're even covering this filing is because it reflects the continued decimation of the wood pellet space. 

• Jurisdiction: S.D. of Georgia
• Capital Structure: $9.658 mm in 4 term loans (Heritage Bank), $26.6mm debt (GIP Genesis LLC)  
• Company Professionals:
  • Legal: Chipman Brown Cicero & Cole LLP (William Chipman Jr., Mark Olivere) & (local) Seyfarth Shaw LLP (John Mills III)
  • Financial Advisor/CRO: CRS Capstone Partners LLC (James Calandra)
  • Claims Agent: Garden City Group LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Buyer: Global Infrastructure Partners
      • Legal: Greenberg Traurig LLP (Matthew Hinker)

New Chapter 11 Filing - Harvey Gulf International Marine

Harvey Gulf International Marine

3/7/18

Texas-based offshore supply vessel operator qualified under the Jones Act has filed a prearranged bankruptcy with a deal in place with its lenders. The deal would give 97% of the reorganized equity and $350mm in take-back paper to the company's lenders, with management receiving the remaining 3% with warrants. 

What precipitated the bankruptcy? The company notes,

Beginning in 2014, as a result of severely depressed oil prices, exploration and production companies drastically cut the number of offshore exploration and drilling projects in the Gulf of Mexico, causing substantial drops in both vessel utilization and day rates. These cuts impacted the offshore supply boat and service sector by, among other things, contributing to a considerable vessel oversupply in the marketplace. Industry-wide oversupply granted substantial pricing power to exploration and production companies and deeply impacted all offshore supply boat and service market participants—including Harvey Gulf.

The only thing surprising out of this filing is that it took this long. 

• Jurisdiction: S.D. of Texas
• Capital Structure: $270mm RCF, $225mm '18 TLA, $875mm '20 TLB
• Company Professionals:
  • Legal: Vinson & Elkins LLP (Harry Perrin, Garrick Smith, David Meyer, Jessica Peet, Lauren Kanzer)
  • Restructuring Advisors: Postlethwaite & Netterville (Philip Gunn, Tuan Pham)
  • Investment Banker: Stephens Inc. (Lance Gurley, Joel Brown, Blake Woodall, Brad Neuneubel)
  • Claims Agent: Prime Clerk LLC (*click on company name for docket)
• Other Parties in Interest:
  • Private Equity Sponsor: The Jordan Company
  • Ad Hoc Group of Term Loan Lenders (ex-Black Diamond Capital Management)
    • Legal: Davis Polk & Wardwell LLP (Damian S. Schaible, Angela M. Libby, Benjamin M. Schak) & (local) Haynes and Boone LLP (Charles A. Beckham, Jr., Kelli S. Norfleet, Kelsey Zottnick)
    • Financial Advisor: PJT Partners Inc. 

Updated 3/30/18

New Chapter 11 Filing - 4 West Holdings LLC

4 West Holdings LLC

3/6/18 

Texas-based licensed operator or manager of 42 skilled nursing facilities in 7 states has filed a prearranged bankruptcy. The company blames "the performance of the current group of operating Facilities has been negatively impacted by industry headwinds, regulatory actions at certain Facilities, and an inefficient geographic footprint in certain regions in the United States" for its filing.

Similar to HCR Manorcare which filed for bankruptcy earlier this week, 4 West and its affiliates emanate out of a sale leaseback transaction with a publicly-traded REIT counterparty, Omega Healthcare Investors, Inc. ($OHI). And, similarly, this business suffers from many of the same problems, 

Since 2015, the Debtors have faced significant liquidity constraints caused principally by: (a) unfavorable commercial agreements and certain liabilities assumed as part of Merger, including regulatory and personal liability claims; (b) historical losses at certain of the Debtors’ previously-operated facilities, (c) a decline in performance within the current portfolio for a variety of industry-wide developments; and (d) significant capital expenditure needs. Further, the Debtors also faced rent payment obligations to the Omega Parties under the Master Leases, which were significantly higher than their operating income could support.

Consequently, the debtor has entered into a restructuring support agreement with Omega that is predicated upon two parts: (i) a transaction whereby certain unprofitable facilities will transition to a designee of Omega and (ii) a transfer of the more successful facilities to the Plan Sponsor, SC-GA 2018 Partners LLC, which is injecting the company with $225mm of new liquidity by way of $195mm in cash and $30mm note. The Omega Parties will provide a $30mm DIP credit facility to fund the cases. 

• Jurisdiction: N.D. of Texas (Judge Hale)

• Capital Structure: $14.2mm funded RCF (Sterling National Bank), secured Master Leases (Omega), $15mm funded LOC (OHI Asset RO, LLC), $6.2mm secured note (New Ark Mezz Holdings, LLC), $1.1mm unsecured promissory note (SA Mezz Holdings, LLC)

• Company Professionals:

  • Legal: DLA Piper (US) LLP (Thomas Califano, Daniel Simon, Dienna Corrado, Andrew Zollinger, David Avraham)

  • Financial Advisor: Crowe Horwath LLP

  • Restructuring Advisor/CRO: Ankura Consulting (Louis Robichaux, Ben Jones, Chris Hebard)

  • Investment Banker: Houlihan Lokey Capital Inc. (Andrew Turnbull, Ryan Sandahl, Angus Schaller, Adam Montague)

  • Independent Director: Drivetrain Advisors LLC (John Brecker)

  • Healthcare Ombudsman: Melanie Cyganowski

    • Legal: Otterbourg P.C. (Keith Costa)

  • Claims Agent: Rust Consulting/Omni Bankruptcy (*click on company name above for free docket access)

• Other Parties in Interest:

  • DIP Lender: OHI Asset RO, LLC

    • Legal: Bryan Cave LLP (Keith M. Aurzada, Michael P. Cooley, Mark Duedall, Leah Fiorenza McNeill, David Unseth)

  • Plan Sponsor: SC-GA 2018 Partners, LLC

    • Legal: Nelligan LLP (Patrick Nelligan, James Muenker)

  • Sterling National Bank

    • Legal: King & Spalding LLP (Arthur Steinberg, Scott Davidson, Bradley Giordano, Edward Ripley)

  • Official Committee of Unsecured Creditors (Pharmerica Corporation, Healthcare Services Group, Medline Industries, Alana Healthcare, Ominicare Inc., Joerns Healthcare LLC, Regional Ambulance

    • Legal: Pepper Hamilton LLP (Francis Lawall, Donald Detweiler, Joanna Cline) & (local) Norton Rose Fulbright US LLP (Louis Strubeck Jr., Ryan Manns, Elizabeth Boydston)

    • Financial Advisor: CohnReznick LLP (Clifford Zucker)

Updated 5/18/18

New Chapter 11 Bankruptcy - The Walking Company Holdings Inc.

The Walking Company Holdings Inc.

3/8/18 Recap: Another retailer - this time a repeat offender - will be walking into bankruptcy court (see what we did there?). Here, the California-based once-publicly-traded ($WALK) manufacturer of footwear like Birkenstock and ASICS has filed for bankruptcy with a plan on file and an equity sponsor in tow to the tune of $10mm. 

This is a story of staggered disruption. In the first instance, the company expanded via acquisition and grew from 2005-2008 to over 200 stores. To fund the expansion, the company issued $18.5mm of convertible notes and transferred the proceeds of the liquidation of its Big Dog entity to The Walking Company, the use of proceeds including the buildout of omni-channel distribution and vertical integration. But,

As a result of many factors including- among them, challenging negotiations with landlords which did not provide the Debtors with the rent relief they believe they needed, and the state of the national economy, by late 2008 TWC found that nearly 100 of the newer stores it opened during this expansion period were not generating the sales and profits expected.

Moreover, 

...by 2008, Big Dogs' business had collapsed more rapidly than the Debtors had anticipated. Big Dogs was in the business of selling moderately priced, casual apparel through a chain of specialty retail stores (Big Dogs stores) located around the country. The rapid growth of big-box, mass-market retailers during this period put great pricing pressure on retailers of moderately priced, casual apparel, putting many of them out of business.

Walmart ($WMT). Target ($TGT). Just say it broheims. Never understand the reluctance in these filings. Anyway, the upshot of all of this? Once the Great Recession hit, mall traffic fell off a cliff, revenue declines accelerated, landlords proved obstinate, and the company filed for bankruptcy in December 2009. 

In bankruptcy, the company reached accommodations with certain landlords and received a $10mm capital infusion from Kayne Anderson Capital Advisors LP. 

Subsequent to the bankruptcy, the company apparently thrived from 2013 through 2017. It had a better rent structure, it ceased expansion, and it focused on successful brands (e.g., ABEO) and the wholesaling and international licensing thereof. But then the realities of e-commerce struck. Per the company,

During this period, however, the increasing power of Internet retailers made traditional business of retail stores selling products manufactured by others increasingly difficult, and it also had an increasingly negative impact on customer traffic in shopping malls. 

Indeed, Deckers Outdoor Corporation ($DECK)(the manufacturer of UGG footwear) terminated its relationship with the company. The company couldn't replace those lost sales fast enough - through third party or private label sales - and the dominos started to fall. The company sought rent concessions and landlords, for the most part, told it to pound sand. Holiday sales declined. Appraisers reduced the valuation of inventory and, in turn, the company had diminished access to its bank credit line. Cue the Scarlet 22.

The company intends to use the bankruptcy to obtain "substantial rent relief by conforming their lease portfolio to market rents." Notably, two of the initial 5 leases that the company seeks to reject in the first instance are Simon Property Group locations in Dallas and Oklahoma City and one Taubman location. Other creditors appear to be your standard retail slate: Chinese manufacturers, trade vendors (ECCO, Rockport) and other landlords (General Growth Properties is a prominent one with locations listed as 9 of the top 30 creditors). 

The company otherwise has agreement with its large shareholders (including another $10mm equity infusion) and Wells Fargo to provide DIP and exit credit. 

• Jurisdiction: D. of Delaware 
• Capital Structure: $40.3mm RCF & $7.25mm TL (Wells Fargo Bank NA), $11.74mm 8.375% '19 convertible notes    
• Company Professionals:
  • Legal: Pachulski Stang Ziehl & Jones LLP (Jeffrey N Pomerantz, Jeffrey W Dulberg, Victoria A Newmark, James E ONeill) 
  • Financial Advisor: Consensus Advisors LLC
  • Claims Agent: KCC (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP Agent, DIP Term Agent, Prepetition Senior Agent: Wells Fargo Bank NA
    • Legal: Choate Hall & Stewart LLP (Kevin Simard) & (local) Womble Bond Dickinston (Matthew Ward)
  • Prepetition Subordinated Noteholders (Simon Property Group, Galleria Mall Investors LP)
    • Legal: Irell & Manella LLP (Jeffrey Reisner)

New Chapter 11 Filing - HCR Manorcare Inc.

HCR Manorcare

3/4/18 Recap: Ohio-based Carlyle-backed long-term care provider of 450 (i) skilled nursing and impatient rehab facilities, memory care facilities and assisted living facilities (the "Long-Term Care Business"), (ii) hospice and home health care agencies, and (iii) outpatient rehab clinics filed a prepackaged bankruptcy after months of back-and-forth with its REIT-parent and Master Lease counterparty, Quality Care Properties Inc. ($QCP). The bankruptcy will effectuate a transaction pursuant to which QCP will shed its REIT status and take on 100% of the stock in the reorganized HCR. 

Interestingly, retailers aren't the only businesses capitulating under the weight of their rent. Here, the revenues generated by the Long-Term Care Business weren't generating sufficient revenues to cover ordinary course operating expenses and monthly rent obligations to QCP. By way of illustration, 

"For the twelve months ended December 31, 2017, the Company had revenues of approximately $3.741 billion, 82% of which derived from the Long-Term Care Business, and reported a consolidated pre-tax loss from continuing operations of approximately $267.9 million. As of December 31, 2017, the Company had approximately $4.264 billion in total assets and approximately $7.118 billion in total liabilities, debt and financing obligations...."

Rough. In 2016, HCR paid approximately $442mm ($37mm a month) in minimum rent to QCP. In 2017, after extensive negotiations, the amount dipped to $290mm ($24mm a month). With amounts that staggering, no wonder the company struggled. 

The relationship between QCP and HCR emanates out of a 2011 sale-leaseback transaction. After said transaction, QCP became an independent publicly traded company. Significantly,

"At the time of the 2011 Transaction, the business environment in the post-acute/skilled nursing sector was favorable due to a number of factors, including an aging population, expected increases in aggregate skilled nursing expenditures, and supply constraints in the skilled nursing sector due to substantial barriers to entry. The parties negotiated the amount of rent payable under the MLSA against this background."

But, as we consistently point out here at PETITION, projections don't always pan out as planned. Indeed, after the consummation of the 2011 transaction, 

"...the operating environment for post-acute/skilled nursing facility operators has become significantly more challenging. Unfavorable trends for operators of skilled nursing facilities include (a) a shift away from a traditional fee-for-service model toward new managed-care models, which base reimbursement on patient outcome measures; (b) increased penetration of Medicare Advantage plans, which has reduced reimbursement rates, average length of stay and average daily census; (c) increased competition from alternative healthcare services such as home health agencies, life care at home, community-based service programs, senior housing, retirement communities and convalescent centers; and (d) reductions in reimbursement rates from government payors."

Obviously this is a bit of a problem when your have a month rent nut of $37mm. 

• Jurisdiction: D. of Delaware (Judge Gross)
• Capital Structure: $400mm '18 9.5% TL debt (RD Credit LLC), $150mm '19 9.5% RCF, $445mm guaranty obligations under the Master Lease.
• Company Professionals:
  • Legal: Sidley & Austin LLP (Larry Nyhan, Dennis M. Twomey, William A. Evanoff, Allison Ross Stromberg, Matthew E. Linder) & (local) Young Conaway Stargatt & Taylor LLP (Robert S. Brady, Edmon L. Morton, Justin H. Rucki, Ian J. Bambrick, Tara Pakrouh)
  • Financial Advisor/CRO: AlixPartners LLC (John Castellano)
  • Investment Banker: Moelis & Co.
  • Independent Directors: Sherman Edmiston, Kevin Collins
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
• Other Parties in Interest: TBD. 

Updated 3/5/18

New Chapter 11 Filing - Fallbrook Technologies Inc.

Fallbrook Technologies Inc. 

2/26/18 Recap: Texas-based inventor of and patent-holder in the NuVinci Technology, a potential gear replacement technology, has filed for bankruptcy to implement a balance sheet restructuring. The company's "game changer" NuVinci Technology purportedly "changes the way mechanical power is transmitted to improve the performance and efficiency of transmission systems" and can be incorporated in bicycles, automotive accessory drives, electric vehicles, lawn care equipment and small wind turbines. 

In addition to commercializing its technology, the company deploys a licensing and royalties model. Unfortunately, however, the company's licensees aren't selling product with the NuVinci Technology thus far and, consequently, royalty revenue is non-existent. As such, "the Debtors’ revenue streams do not currently provide sufficient liquidity necessary to satisfy their debt and operating expense obligations." Not quite a game changer, yet, it seems. Due to this, the company fell short of financial covenants protecting its lenders. 

After an attempted but failed prepetition sale process, the company secured a DIP credit facility from Kayne Credit Opportunities Fund (QP) LLP in support of a prearranged bankruptcy agreed to with certain supporting noteholders for the purposes of deleveraging. 

• Jurisdiction: D. of Delaware (Judge Walrath)
• Capital Structure: $49.6mm 12% '19 senior secured notes (inclusive of fees and PIK interest), $8.8mm secured bridge notes, $15.3mm '19 senior subordinated convertible notes     
• Company Professionals:
  • Legal: Shearman & Sterling LLP (Ned Schodek, Jordan Wishnew) & (local) Young Conaway Stargatt & Taylor LLP (Pauline K. Morgan, Kenneth J. Enos, Jaime Luton Chapman, Betsy L. Feldman)
  • Financial Advisor/CRO: Ankura Consulting (Roy Messing)
  • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP Lender: Kayne Credit Opportunities Fund (QP) LLP
    • Legal: Willkie Farr & Gallagher LLP (Rachel Strickland, Paul Shalhoub, Richard Choi) & (local) Richards Layton & Finger PA (Mark Collins, Michael Merchant, Joseph Barsalona)
  • Licensee: Dana Holding Corporation
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Aaron David) & (local) Cozen O'Connor (Mark Felger)

New Chapter 11 Filing - Jet Midwest Group LLC

Jet Midwest Group LLC

2/26/18

Kansas City-based seller and lessor of commercial aircraft and engines has filed for bankruptcy. 

• Jurisdiction: DofDelaware (Judge Carey)
• Capital Structure: $17.5mm debt     
• Company Professionals:
  • Legal: Polsinelli PC (Christopher Ward, Shanti Katona, Randye Soref)
  • Claims Agent: JND Corporate Restructuring (*click on company name above for free docket access)
• Other Parties in Interest:
  • Official Committee of Unsecured Creditors: None.
• Secured Lender: Jet Midwest International Co., Ltd.
  • Legal: Dorsey & Whitney LLP (Eric Lopez Shnabel, Robert Mallard, Alessandra Glorioso, Richard Silberberg, Geoffrey Sant, Eric Epstein)

New Chapter 11 Filing - Firestar Diamond Inc.

Firestar Diamond Inc.

2/26/18

Company of billionaire Nirav Modi has filed for bankruptcy in the United States. He is currently in the midst of India's biggest-ever bank scam. Indian state-run Punjab National Bank uncovered fraudulent transactions in one its branches and notes that the fraudulent transactions could be around $2 billion. 

• Jurisdiction: S.D. of New York
• Capital Structure: $mm debt     
• Company Professionals:
  • Legal: Klestadt Winters Jureller Southard LLP (Ian Winters, Sean Southard, Stephanie Sweeney)
  • Restructuring Advisor/CRO: Getzler Henrich & Associates LLC (Mark Samson)
  • Financial Advisor: Marks Paneth LLP (Howard Hoff) 
  • Claims Agent: Rust Consulting/Omni Bankruptcy (*click on company name above for free docket access)
• Other Parties in Interest:
  • Creditor: Israel Discount Bank of New York
    • Legal: Troutman Sanders LLP (Brett Goodman, Harris Winsberg, Matthew Brooks)
  • Creditor: Punjab National Bank
    • Legal: Cleary Gottlieb Steen & Hamilton LLP (Sean O'Neal, James Bromley)
  • Creditor: J.C. Penney Corporation
    • Legal: Polsinelli PC (Christopher Ward, Jeremy Johnson) 

New Chapter 11 Filing - Fibrant LLC

Fibrant LLC

• 2/23/18 Recap: Disrupted by cheap Asian production. Here, the Georgia-based producer and supplier of chemical performance products and services filed for bankruptcy to (i) winddown its business and operations, including (without limitation) the decommissioning of the ammonium sulfate assets, (ii) administer the sale of, and shipping, the remaining ammonium sulfate inventory, (iii) continue the environmental remediation relating to the the company's historic business operations, and (iv) sell remaining assets. 
• Jurisdiction: S.D. of Georgia
• Capital Structure: €50,000,000 Senior Facilities Agreement by and among CAP I, CAP II, Citigroup Global Markets Limited, Coöperatieve Centrale Raiffeisen Boerenleenbank B.A., as Agent and Security Agent (“RaboBank”)
• Company Professionals:
  • Legal: King & Spalding LLP (Paul Ferdinands, Jonathan W. Jordan, Sarah L. Primrose) & (local) Klosinski Overstreet LLP (James Overstreet)
  • Claims Agent: KCC (*click on company name above for free docket access)

New Chapter 11 Filing - Tops Holding II Corporation

Tops Holding II Corporation

• 2/21/18 Recap: When a company's "Overview" in its First Day Declaration basically leads with union metrics (12,300 unionized employees of 14,000 total employees) and collective bargaining agreement numbers (12 of them), you know there's gonna be a war with employees. The fact that the footprint is 169 stores-wide in three states almost seems like a footnote. As does the fact that the business started in the 1920s and seemingly thrived through 2007 when, naturally, private equity got involved and went on a debt-ridden acquisition spree. But hang on: we're getting ahead of our skis here. So, what happened here? Well, clearly, the company has to negotiate with its unions; it also seeks to deleverage its ballooning balance sheet and take care of some leases and supply agreements. The company has secured $265mm in DIP financing to fund the cases; it says that it "intend[s] to remain in chapter 11 for approximately six (6) months." We'll believe it when we see it. Anyway, WHY does it need to take all of these steps? Well, as we stated before: private equity, of course. "Despite the significant headwinds facing the grocery industry, over the past five years, the Company has experienced solid financial performance and has sustained stable market share. The vast majority of the Company’s supermarkets generate positive EBITDA and the Company generates strong operating cash flows. Transactions undertaken by previous private equity ownership, however, saddled the Company with an unsustainable amount of debt on its balance sheet. Specifically, the Company currently has approximately $715 million of prepetition funded indebtedness...." Ah, private equity = a better villain than even Amazon (though Amazon gets saddled with blame here too, for the record). But wait: don't forget about the pensions! "[T]he Company has been embroiled in a protracted and costly arbitration with the Teamsters Pension Fund concerning a withdrawal liability of in excess of $180 million allegedly arising from the Company’s acquisition of Debtor Erie Logistics LLC" from its biggest food supplier, C&S Wholesale Grocers Inc., the 10th largest private company in the US. Moreover, the company has been making monthly pension payments; nevertheless, the pension is underfunded by approximately $393mm. The company continues, "Utilizing the tools available to it under the Bankruptcy Code, the Company will endeavor to resolve all issues relating to the Teamsters Arbitration and address its pension obligations, and the Company will take reasonable steps to do so on a consensual basis." Oy. What a hot mess. We can't even read that without ominous music seemingly popping up out of nowhere. More to come.

• Jurisdiction: S.D. of New York

• Capital Structure: $112mm RCF (inclusive of a $10mm FILO and $34mm LCs, Bank of America NA), $560mm 8% '22 senior secured notes, $67.5mm 9% '21 opco unsecured notes, $8.6mm 8.75%/9.5% '18 holdco unsecured notes

• Company Professionals:

  • Legal: Weil Gotshal & Manges LLP (Ray Schrock, Stephen Karotkin, Sunny Singh)

  • Financial Advisor/CRO: FTI Consulting Inc. (Michael Buenzow, Armen Emrikian, Paul Griffith, Ronnie Bedway, Andy Kopfensteiner)

  • Investment Banker: Evercore (David Ying, Stephen Goldstein, Jeremy Matican, Elliot Ross, Jonathan Kartus, Andrew Kilbourne)

  • Real Estate Advisor: Hilco Real Estate LLC

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

• Other Parties in Interest:

  • Prepetition ABL Agent & DIP ABL Agent: Bank of America NA

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

  • Indenture Trustee for Senior Notes due 2018, notes due 2021 and Senior Secured Notes: U.S. Bank NA

    • Legal: Thompson Hine LLP (Irving Apar, Elizabeth Frayer, Derek Wright)

  • Ad Hoc Noteholder Group & DIP TL Lenders (Column Park Asset Management LP, Fidelity Management & Research Company, HG Vora Capital Management LLC, Signature Global Asset Management, Silver Point Capital LP)

    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Diane Meyers, Lauren Shumejda)

    • Financial Advisor: Lazard Freres & Co. LLC

  • DIP TL Agent: Cortland Capital Markets Services LLC

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

  • Southpaw Asset Management LP

    • Legal: Cooley LLP (Jeffrey Cohen, Steven Siesser, Sheila Sadighi, Andrew Behlmann)

  • Official Committee of Unsecured Creditors (PepsiCo, Inc., Valassis Direct Mail, Inc., Osterweis Strategic Income Fund, U.S. Bank N.A., the UFCW Local One Pension Fund, the Teamsters Local 264, and Benderson Development Company, LLC)

    • Legal: Morrison & Foerster LLP (Brett Miller, Dennis Jenkins, Jonathan Levine, Erica Richards)

    • Financial Advisor: Zolfo Cooper LLC

New Chapter 11 Filing - Apex Xpress, Inc.

Apex Xpress, Inc.

2/16/18

Provider of copy equipment installation, flatbed services, white glove delivery services, warehousing and transportation services filed for bankruptcy. The company filed for bankruptcy on account of increased competition in its various service spaces and a protracted litigation over the company's proposed withdrawal from a multiemployer pension fund. 

• Jurisdiction: D. of New Jersey (Judge Meisel)
• Capital Structure: $145,000 secured debt (Freedom Bank of New Jersey)     
• Company Professionals:
  • Legal: Saul Ewing Arnstein & Lehr (Dipesh Patel, Sharon Levine, Melissa Martinez)
  • Financial Advisor: Argus Management Corporation (Joseph Baum, Steve Norowitz)
  • Claims Agent: JND Corporate Restructuring (*click on company name above for free docket access)

New Chapter 11 Filing - Lucky Dragon Hotel & Casino LLC

Lucky Dragon Hotel & Casino LLC

2/16/18

Recap: See here. 

• Jurisdiction: D. of Nevada (Judge Nakagawa)
• Company Professionals:
  • Legal: Schwartz Flansburg PLLC (Bryan Lindsey, Samuel Schwartz)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Snow Covered Capital LLC
    • Legal: Snell & Wilmer (Bob Olson, Nathan Kanute)
  • EB-5 Investors
    • Legal: K&L Gates LLP (Philip Guess) & (local) Holland & Hart LLP (Lars Evensen)
  • Official Committee of Unsecured Creditors
    • Legal: Levene Neale Bender Yoo & Brill LLP (Eve Karasik, John-Patrick Fritz) & (local) Armstrong Teasdale LLP (James Patrick Shea)

New Chapter 11 Filing - Fieldwood Energy LLC

Fieldwood Energy LLC

• 2/15/18 Recap: Riverstone Holdings (12% owned by Goldman Sachs) attempted to keep Fieldwood Energy LLC out of bankruptcy back in the beginning of the oil & gas collapse but, alas, it appears the capital structure was too hefty to manage in a continued depressed oil and gas market. Today, the company filed a prepackaged plan of reorganization to slice its debt virtually in half (from $3.26b to $1.6b), implement a $525mm rights offering (use of proceeds = purchase Noble Energy's Gulf of Mexico assets), and secure a $60mm DIP credit facility. Existing RBL lenders will be paid in cash in full; first lien lenders will receive a $1.14b FILO TL and cash; holders of the prepetition FILO facility will receive a share of $518mm second lien term loan and cash; and the second lien lenders and Riverstone will receive 20.25% of the new equity plus rights to purchase the remainder via the rights offering. Translation: Riverstone will still own a significant percentage of this company. More to come...
• Jurisdiction: S.D. of Texas (Judge Jones)
• Capital Structure: $3.26b debt     
• Company Professionals:
  • Legal: Weil Gotshal & Manges LLP (Stephen Karotkin, Ray Schrock, Matthew Barr, Alfredo Perez, Jessica Liou, Daniel Gwen, Patrick Steel)
  • Financial Advisor: Opportune LLP
  • Investment Banker: Evercore Group LLC (David Ying)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Prepetition Reserves-Based Lending Facility Agent: Citibank NA
    • Legal: Willkie Farr & Gallagher LLP (Jennifer Hardy, Ana Alfonso, Debra McElligott)
  • Ad Hoc Group of First Lien Term Loan Lenders
    • Legal: O'Melveny & Myers LLP (George Davis, David Johnson, Evie Whiting and Daniel Shamah) & (local) Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh, Kristhy Peguero, Jennifer Wertz)
  • Prepetition Agent of the Second Lien Term Loan Facility: Cortland Capital Market Services LLC
    • Legal: Davis Polk & Wardwell LLP (Damian S. Schaible, Darren S. Klein, Natasha Tsiouris) & (local) Haynes and Boone LLP (Henry Flores, Kenric Kattner, Kourtney Lyda)
  • Noble Energy, Inc.
    • Legal: Bracewell LLP (William A. Wood III) 
  • Apache Corporation
    • Legal: Andrews Kurth Kenyon LLP (Robin Russell)
  • PE Sponsor
    • Riverstone V FW Holdings Sub LLC
      • Legal: Vinson & Elkins LLP (David Meyer, Jessica Peet)

Updated 4/2/18 (case confirmed)

New Chapter 11 Filing - Ascent Resources Marcellus Holdings, LLC

Ascent Resources Marcellus Holdings, LLC

• 2/6/18 Recap: Oklahoman producer of oil and natural gas in the Marcellus Shale basis filed for bankruptcy to effectuate a prepackaged bankruptcy in agreement with its major creditors. We've seen this movie before. Business is capital intensive...yada yada yada...natural gas prices rolled over...yada yada yada...production volume dropped...yada yada yada...over-levered balance sheet....zzzzz. Basically, you know the drill. The prepackaged plan envisions the term lenders equitizing their debt so that the company can be leaner and meaner; it also leaves open the option for a sale, but no such sale was suitable prior to filing. 
• Jurisdiction: D. of Delaware
• Capital Structure: $750mm first lien credit facility (Cortland Capital Market Services LLC), $450mm second lien secured term loan facility (Cortland)  
• Company Professionals:
  • Legal: Sullivan & Cromwell LLP (Andrew G. Dietderich, Brian D. Glueckstein, Alexa J. Kranzley) & (local) Young Conaway Stargatt & Taylor LLP (Pauline K. Morgan, Joel A. Waite, Kara Hammond Coyle)
  • Financial Advisor: D.R. Payne & Associates, Inc.
  • Investment Banker: PJT Partners (Steven Zelin)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Independent Co-Manager: Alan Carr
• Other Parties in Interest:
  • First Lien Credit Agent: Cortland Capital Market Services LLC
    • Legal: Davis Polk & Wardwell LLP
    • Financial Advisor: Moelis & Co. 
  • Second Lien Credit Agent: Cortland Capital Market Services LLC
• Members of the New Board: Jeffrey A. Fisher, Jeffrey A. Ball, Steven J. Pully, Eugene I. Davis, Barry McMahan

Updated: Effective 3/30/18 (no UCC)

New Chapter 11 Filing - The Bon-Ton Stores Inc.

The Bon-Ton Stores Inc.

• 2/4/18 Recap: See here. 
• Jurisdiction: D. of Delaware (Judge Walrath)
  • Capital Structure: $339mm Tranche A RCF (Bank of America), $150 Tranche A-1 Term Loan, $350mm second lien notes (Wells Fargo Bank NA)     
• Company Professionals:
  • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Kelley Cornish, Elizabeth McColm, Claudia Tobler, Alexander Woolverton, Michael Colarossi, Diane Meyers, Moses Silverman) & Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Sean Greecher, Andrew Magaziner, Elizabeth Justison)
  • Financial Advisor: AlixPartners LLC (Holly Etlin, Carrianne Basler, Jim Guglielmo, John Creighton, Ben Chesters, Jamie Strohl, Mitch Chubinsky, Thomas Cole, Daniel Law) 
  • Investment Banker: PJT Partners LP (Steven Zelin, James Baird, Jon Walter, Vinit Kothary, Sartag Aujla)
  • Real Estate Advisor: A&G Realty Partners LLC
  • Intellectual Property Disposition Consultant: Hilco IP Services (David Peress)
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest:
  • Bank of America NA
    • Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Robert A.J. Barry, Amelia Joiner) & Richards Layton & Finger PA (Mark Collins, Joseph Barsalona)
  • Second Lien Noteholders: Alden Global, LLC; B. Riley FBR, Inc.; Bennett Management Corporation; Brigade Capital Management, LP; Riva Ridge Master Fund, Ltd.; Cetus Capital LLC; Contrarian Capital Management LLC; and Wolverine Asset Management, LLC
    • Legal: Jones Day (Bruce Bennett, Joshua Mester, Sidney Levinson, Genna Ghaul, Charles Whittman-Todd) & (local) Cole Schotz PC (Norman Pernick, J. Kate Stickles)
  • Official Committee of Unsecured Creditors
    • Legal: Pachulski Stang Ziehl & Jones LLP (Jeffrey Pomerantz, Robert Feinstein, Bradford Sandler)
    • Financial Advisor: Zolfo Cooper LLC (David MacGreevey)
  • Prospective Buyer: DW Partners LP
    • Legal: DLA Piper LLP (Stuart Brown, R. Craig Martin, Jason Angelo, Richard Chesley, John Lyons, Oksana Rosaluk)

Updated 4/10/18

New Chapter 11 Bankruptcy - Cenveo Inc.

Cenveo Inc.

• 2/2/18 Recap: Publicly-traded ($CVO) large envelope and label manufacturer with roots tracing back 100 years filed for bankruptcy. Interestingly, you, our treasured PETITION readers, probably interact with Cenveo's products in your day-to-day life. Cenveo prints comic books you can buy at the bookstore, produces specialized envelopes used by JPMorgan Chase Bank ($JPM) and American Express ($AMEX) to deliver credit card statements, and manufactures point of sale roll receipts used in cash registers and prescription labels found on medication at national pharmacies. Why did it file for bankruptcy? Disruption. And debt. The company notes that its filing was necessary to tame its burdensome funded debt and corresponding annual $99.4mm debt payments (inclusive of cash and "principle" payments). In light of its leverage, the company apparently also suffered from other pressures on the business, including restrictive trade terms and/or the departure of business from vendors. But, wait! There's more. And its textbook disruption. Per the company, "In addition to Cenveo’s leverage issues, macroeconomic factors, including the introduction of new e-commerce, digital substitution for products, and other technologies, are transforming the industry. Consumers increasingly use the internet and other electronic media to purchase goods and services, pay bills, and obtain electronic versions of printed materials. Moreover, advertisers increasingly use the internet and other electronic media for targeted campaigns directed at specific consumer segments rather than mail campaigns." Ouch. To put it simply, every single time you opt-in for an electronic bank statement, you're f*cking over Cenveo. More from the company, "As society has become increasingly dependent on digital technology products such as laptops, smartphones, and tablet computers, spending on advertising and magazine circulation has eroded, resulting in an overall decline in the demand for paper products, and in-turn lowering reliance on certain of Cenveo’s print marketing business. In addition, there is generally a decline in supply of paper products in the industry, such that only a handful of paper mills control the majority of the paper supply. As a result, paper mills and other vendors that sell paper products have a large amount of leverage over their customers, including Cenveo. The overall decline in the paper industry combined with the diminished supply in paper products has led to overall decline in the industry, dramatically impacting Cenveo’s revenues." Consequently, the company has spent years trying to streamline operations and cut costs: it is not entirely clear from the company's filing, but this disruption clearly led to the "downsizing [of] its workforce," a reduction in its geographic footprint, and asset dispositions. But, ultimately, earnings couldn't manage the balance sheet. The company engaged its various parties in interest and was able to secure a (shaky?) restructuring support agreement and a commitment of financing in the amount of a $190 million ABL DIP Facility provided by the Prepetition ABL Lenders and a new $100 million DIP Term Facility backstopped by more than a majority of the holders of First Lien Notes. It will need to address its underfunded pensions (approximately $92.9mm). 
• Jurisdiction: S.D. of New York 
• Capital Structure: see below.
• Company Professionals:
  • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Jonathan Henes, Joshua Sussberg, Michael Slade, Gregory Pesce, Melissa Koss, George Klidonas, Natasha Hwangpo)
  • Financial Advisor: Zolfo Cooper LLC (Eric Koza)
  • Investment Banker: Rothschild Inc. (Neil Augustine, Dan Skolds, Matthew Chou, Philip Engel, Daniel Flanary, Thomas Galluccio, Trip Burke, Farhat Suvhanov)
  • Real Estate Consultants: VanRock Real Estate Consulting LLC
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • New Independent Director: Eugene Davis
• Other Parties in Interest:
  • Prepetition ABL Agent; $190mm ABL DIP Facility Agent: Bank of America NA
  • $100mm DIP Term Facility Agent: Wilmington Savings Fund Society FSB
  • FILO Notes Trustee/First Lien Notes Trustee/Second Lien Notes Trustee/Unsecured Notes Trustee: Bank of New York Mellon
    • Legal: Riker Danzig Scherer Hyland & Perretti LLP (Joseph Schwartz, Curtis Plaza, Tara Schellhorn)
  • FILO Noteholder: Allianz GI US High Yield Fund
  • First Lien and Second Lien Noteholder: Brigade Capital Management, LP
    • Legal: Akin Gump Strauss Hauer & Feld LLP (Michael Stamer, David Zensky, Stephanie Lindemuth, James Savin, Kevin Eide)
  • Ad Hoc Committee of First Lien Noteholders
    • Legal: Stroock & Stroock & Lavan LLP (Brett Lawrence, Erez Gilad, Matthew Garofalo, Gabriel Sasson)
    • Financial Advisor: Ducera Partners LLC
  • Examiner: Susheel Kirplani
    • Legal: Quinn Emanuel Urquhart & Sullivan
  • Official Committee of Unsecured Creditors
    • Legal: Lowenstein Sandler LLP (Kenneth Rosen, Mary Seymour, Bruce Buechler, Bruce Nathan)
    • Financial Advisor: FTI Consulting Inc. (Samuel Star)

Source: DIP Motion

Updated 4/2/18

New Chapter 11 Bankruptcy - Patriot National Inc.

Patriot National Inc.

• 1/30/18 Recap: Once publicly-traded ($PN, delisted) Florida-based tech and outsourcing solutions services provider to the insurance services space (primarily in the workers' compensation sector) has finally filed the prearranged bankruptcy it announced back at the end of November. This company's downfall is a lesson in making sure that a company's customer base is well-diversified. Here, one insurer, Guarantee Insurance Company, accounted for 55% of the policies serviced by the debtors and a similar percentage of the debtors' gross revenues. In November 2017, the Florida Office of Insurance Regulation notified the Florida Department of Financial Services of its determination that GIC ought to be in receivership. Which is what then happened. Whoops. The loss emanating out of this occurrence "was particularly severe." The company was also in default under its Financing Agreement with Cerberus Business Finance LLC. This perfect storm led to a negotiation and restructuring support agreement with Cerberus and TCW Asset Management Company, which will convert a portion of their claims under the financing agreement into 100% of the company's equity. The lenders will provide a $15.5mm DIP credit facility.
• Jurisdiction: D. of Delaware
• Capital Structure: $223mm debt (Cerberus Business Finance LLC)    
• Company Professionals:
  • Legal: Hughes Hubbard & Reed LLP (Kathryn Coleman, Christopher Gartman, Jacob Gartman) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, James O'Neill, Peter Keane)
  • CRO/Financial Advisor: Duff & Phelps LLC (James Feltman)
  • Financial Advisor: Conway MacKenzie Management Services LLC
  • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
• Other Parties in Interest: 
  • DIP Lender: Cerberus Business Finance LLC
• Official Committee of Unsecured Creditors
  • Legal: Kilpatrick Townsend & Stockton LLP (David Posner, Gianfranco Finizio, Kelly Moynihan) & (local) Morris James LLP (Carl Kunz III, Brenna Dolphin)
  • Financial Advisor: Province Inc. (Sanjuro Kietlinski)

Updated 4/2/18

New Chapter 11 Filing - Rand Logistics Inc.

Rand Logistics Inc.

• 1/28/18 Recap: NJ-based publicly-traded ($RLOG) bulk freight Jones Act shipper filed for bankruptcy to effectuate a balance sheet restructuring and sale pursuant to a prepackaged plan of reorganization. Lightship Capital LLC has agreed to acquire the company by converting all of the company's second lien debt into 100% of the equity. The deal eliminates approximately $90mm of debt. The company blames currency volatility (US vs. Canadian dollar) and increased maintenance/certification costs as factors necessitating a review of the capital structure. 
• Jurisdiction: D. of Delaware 
• Capital Structure: $235.9mm total funded debt; $149mm first lien debt (Bank of America) & $86.9mm second lien debt (Guggenheim Corporate Funding LLC)    
• Company Professionals:
  • Legal: Akin Gump Strauss Hauer & Feld LLP (Meredith Lahaie, Alexis Freeman, Kevin Zuzolo, Zach Lanier, Abid Qureshi) & (local) Pepper Hamilton LLP (David Stratton, David Fournier, Evelyn Fournier)
  • Financial Advisor: Conway MacKenzie Inc.
  • Investment Banker: Stifel Financial/Miller Buckfire & Co. LLC (Kevin Haggard)
  • Claims Agent: KCC (*click on company name above for free docket access)
• Other Parties in Interest:
  • First Lien Agent: Bank of America NA
    • Legal: Otterbourg P.C. (Daniel Fiorillo, Chad Simon) and (local) Womble Bond Dickinson (US) LLP (Matthew Ward, Nicholas Verna)
  • Second Lien Agent and Second Lien Lender: Lightship Capital LLC
    • Legal: White & Case LLP (Thomas Lauria, Andrew Zatz, Rashida Adams) & (local) Fox Rothschild LLP (Jeffrey Schlert, Carl Neff)
    • Financial Advisor: Houlihan Lokey Capital Inc.