New Chapter 11 Filing - Open Road Films LLC

Open Road Films LLC

9/6/18

Rough year for movie production houses. After Relativity Media and The Weinstein Company filed chapter 11 cases earlier this year, Open Road Films LLC now finds itself in bankruptcy court. The company behind Jobs, Nightcrawler and other mostly forgettable films has had a dramatic fall from grace after being acquired by current equityholder TMP Holdings from Regal Entertainment Group and AMC Entertainment merely a year ago. Though contemplated at the time of acquisition, the company was unable to secure funding to, among other things, restructure the company (in the out-of-court sense) and streamline operations. The question is why? Why couldn't the company secure funding? 

The company notes:

Among other things, increased volatility in overall film performance exacerbated investor concerns regarding the probability and predictability of studio financial success, especially outside of the major studios. This overall volatility was exacerbated by the specific underperformance of certain of the Company’s recent motion picture releases, most of which were initiated by prior management. In addition, competitive options for consumers limit interest in theatrical distribution and the traditional film business model, imposing additional pressure on companies like the Debtors, and further fueling investor skepticism.

In other words, blame Reese Witherspoon ("Home Again" flopped), Jodie Foster ("Hotel Artemis" completely bombed) and Netflix ($NFLX). 

With no incoming funding and a resultant inability to obtain a "going concern" qualification, the company defaulted on its loan with Bank of America. BofA, therefore, limited access to certain deposit accounts, all the while vendors were seeking payments. Already this drama is more interesting than "Home Again." 

The company intends to use the chapter 11 process to market and sell its assets; it does not yet have a stalking horse bidder, though FTI reports that 11 parties have submitted indications of interest. 

The top 40 general unsecured creditors list is a who's who of media elites, including "old media" firms like Viacom Inc. (owed $7mm), The Walt Disney Company (owed $5.1mm), NBCUniversal (owed $4.4mm), Turner Broadcasting System (owed $3.5mm). Other top creditors include Google, Facebook, Snap, Twitter, Amazon, Spotify, and Pandora Media. And Latham & Watkins, which appears to be getting hosed on a half million dollar legal bill. 

• Jurisdiction: D. of Delaware (Judge Silverstein)
• Capital Structure: $90.75 mm secured debt (Bank of America NA)     
• Company Professionals:
  • Legal: Klee Tuchin Bogdanoff & Stern LLP (Michael Tuchin, Jonathan Weiss, Sasha Gurvitz, Whitman Holt) & (local) Young Conaway Stargatt & Taylor LLP (Michael Nestor, Sean Beach, Robert Poppiti Jr., Ian Bambrick)
  • Financial Advisor/CRO: FTI Consulting Inc. (Amir Agam)
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Prepetition Lender: Bank of America NA
    • Legal: Paul Hastings LLP (Andrew Tenzer, Shlomo Maza) & (local) Ashby & Geddes PA (William Bowden)
  • Prepetition Creditor: East West Bank
    • Legal: Akin Gump Strauss Hauer & Feld LLP (David Staber) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Aaron Stulman)
  • Prepetition Creditor: Bank Leumi USA
    • Legal: Reed Smith LLP (Marsha Houston, Christopher Rivas, Michael Sherman

New Chapter 11 Filing - EBH Topco LLC (a/k/a Element Behavioral Health Inc.)

EBH Topco LLC (a/k/a Element Behavioral Health Inc.)

5/23/18 

Behavioral health services and residential drug and alcohol addition treatment provider in 13 treatment centers across 8 states filed for bankruptcy. If that sounds boring: it's because it is. Which would explain why the Wall Street Journal felt compelled to drop in that its also the facility that treated Britney Spears and Lindsay Lohan. SEO just shot through the roof. Anyway, the company stated,

While the Company has had ongoing financial difficulties, the overall census of the facilities and revenue has declined since 2017. The decline in out-of-network admissions, lower reimbursement rates by insurance providers and the decline in the average length of stay were all contributing factors to the financial losses of the Company. While the Company attempted to increase census through ongoing marketing efforts of its in-house sales team and internet advertising, the increased cost of these efforts did not result in the increase in revenue to improve the financial results of the Company and offset the Company’s cash burn. Financial performance for the fiscal year 2017 was $103.7 million in revenue, $129.6 million in expenses, and EBITDA of $(25.9) million with a total net income/(loss) of $(51.2) million.

Given that the company started in 2008 and then pursued an acquisition-based growth strategy, it seems like they didn't underwrite to current conditions. Ouch. 

Just a few weeks ago, Project Build Behavioral Health, LLC purchased the first lien paper and after an initial buyer of the assets fell through, agreed to be the company' stalking horse bidder in bankruptcy subject to an expedited sale process (the sale hearing is slated for late June); it intends to credit bid its debt. The company has a proposed $14.2 million DIP credit facility lined up to fund the cases. 

• Jurisdiction: D. of Delaware (Judge Shannon)
• Capital Structure: $76mm '19 first lien term loan and revolver debt (Madison Capital Funding LLC), $29mm '20 second lien term loan (Cortland Capital Market Services LLC)
• Company Professionals:
  • Legal: Polsinelli PC (Christopher Ward, Shani Katona, Stephen Astringer, Jeremy Johnson)
  • CRO/Financial Advisor: Alvarez & Marsal LLC (Martin McGahan)
  • Investment Banker: Houlihan Lokey Capital Inc.
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP Lender/Stalking Horse Bidder: Project Build Behavioral Health, LLC
    • Legal: McDonald Hopkins LLC (David Agay, Scott Opincar, Michael Kaczka) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
  • Ad Hoc Group of Second Lien Lenders
    • Legal: Morrison & Foerster LLP (Jonathan Levine, Daniel Harris)
  • Equity sponsors: NEA, Frazier Healthcare Ventures, Formation Capital

New Chapter 11 Filing - AcuSport Corporation

AcuSport Corporation

5/1/18

AcuSport Corporation, an Ohio-based (i) distributor of outdoor and shooting sports products and (ii) consultant to independent retailers, has filed for bankruptcy. Why? #MAGA!! That's why. 

In the company's words,

At a time when the defense market experienced a downturn in demand, the civilian small arms and ammunition market of the firearms industry was doing well. Consumers were concerned about the possibility of stricter gun control laws, which led to increased sales. Many firearms manufacturers, retailers, and distributors, including AcuSport, understood that consumers anticipated Hillary Clinton would win the presidential election in 2016. The common belief shared by businesses in the firearms industry was that demand would increase if Clinton was elected as President because consumers expected the new administration to seek to implement gun-control legislation. As a result, AcuSport, along with other firearms businesses, prepared for a spike in demand by, among other things, purchasing substantial amounts of inventory.

This should sound familiar. Remington Outdoor Company had a similar narrative when it filed for bankruptcy. Hilary Clinton's election loss has apparently wreaked havoc on the gun industry. To put some numbers around this, AcuSport's revenue decreased 30% in fiscal 2017 YOY. And yet it apparently has substantial inventory -- a fact borne out by its who's who list of top creditors. Gun lovers will recognize some of the names: Sturm Ruger & Company Inc. ($RGR), Glock Inc., Sig Sauer Inc., and others. If you're not a gun lover and happen to be a bankruptcy professional, you should recognize two others: Remington Arms Co. and Colt's Manufacturing Co. The latter two know their way around a bankruptcy court.

This turn of events triggered a default under the company's Wells Fargo-provided credit facility. The company proposes to sell to Ellett Brothers LLC, which has executed a stalking horse asset purchase agreement for a purchase price of $7.75 million plus the value of AcuSport's inventory. Subject to AcuSport's option and an administrative fee, the purchaser will also collect any accounts receivable existing at the time of closing. 

All of the Trump/NRA lovefests in the world can't seem to prevent gun-related companies from going bankrupt. Ironic. #MAGA!!

• Jurisdiction: S.D. of Ohio (Judge Hoffman)
• Capital Structure: $17.5mm debt (Wells Fargo Bank NA)      
• Company Professionals:
  • Legal: Bryan Cave Leighton Paisner LLP (Jason Dejonker, Cullen Kuhn) & (local) Allen Kuehnle Stovall & Neuman LLP (Thomas Allen, Richard Stovall, Erin Gapinski)
  • Financial Advisor: Huron Consulting Services LLC (Daniel Wikel)
  • Investment Banker: Huron Transaction Advisory LLC (Geoffrey Frankel)
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • DIP Lender: Wells Fargo Bank NA
    • Legal: Goldberg Kohn Ltd. (Jacob Marshall, Jeremy Downs, Michael Tucker) & (local) Ulmer & Berne LLP (Reuel Ash)
  • Prospective Buyer: Ellett Brothers LLC
    • Legal: McDermott Will & Emery LLP (Timothy Walsh, Megan Preusker) & (local) Hahn Loeser & Parks LLP (Lawrence Oscar, Daniel DeMarco)

Updated 5/4 at 7:05 CT

New Chapter 11 Filing - Wachusett Ventures LLC

Wachusett Ventures LLC

March 26, 2018

Skilled nursing operator in Massachusetts and Connecticut has filed for bankruptcy. The company blamed legacy expenses, management distress and macro issues for its filing. Per the filing, 

"...the Debtors have not been immune to the macroeconomic and industry-wide economic issues impacting the skilled nursing industry. Like others in the industry, the Debtors face declining reimbursement rates, pressure from declining occupancy rates across the country caused by the increased use of home care and other factors, and wage pressure." 

Y'all had better get used to this rationale. 

• Jurisdiction: D. of Massachusetts (Judge Bailey)
• Capital Structure: ~$7mm of funded debt     
• Company Professionals:
  • Legal: Nixon Peabody LLP (RIchard Pedone, Christopher Desiderio, Christopher Fong)
  • Claims Agent: Donlin Recano (*click on company name above for free docket access)

New Chapter 11 Bankruptcy - PhaseRX Inc. ($PZRX)

PhaseRX Inc.

• 12/11/17 Recap: Seattle-based and once-VC-backed publicly-traded ($PZRX) biopharma company focused on therapeutics developed to treat enzyme deficiencies in the liver via intracellular enzyme replacement therapy (after a pivot from from focusing on the treatment of liver cancer) filed for bankruptcy. The company seeks a sale through bankruptcy. 
• Jurisdiction: D. of Delaware (Judge Sontchi)
• Capital Structure: $500k promissory note (Titan Multi-Strategy Fund Ltd.), $16.2mm 8% convertible notes, $4mm 5% term loan, $5.1mm secured loan (Hercules Capital Inc.)
• Company Professionals:
  • Legal: Polsinelli PC (Christopher Ward, Shanti Katona, Nicholas Griebel)
  • Investment Banker: Cowen & Company 
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Large Equityholders/Venture Capital: (Arch Venture Fund VII LP, 5AM Ventures, Savoy Therapeutics Corp., Versant Venture Capital III LP)
  • Hercules Capital Inc. 
    • Legal: Cole Schotz PC (Patrick Reilley, Stuart Komrower)

Updated 12/12/17

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 - 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 - 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 - 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 Bankruptcy - Exelco North America Inc.

Exelco North America Inc.

• 9/26/17 Recap: International diamond distributor has filed a chapter 11 bankruptcy to stay its bank lender KBC Bank's attempts to foreclose. A prior proceeding had been underway in Antwerp prior to being withdrawn.
• Jurisdiction: D. of Delaware (Judge Shannon)
• Company Professionals:
  • Legal: Hughes Hubbard & Reed LLP (Kathryn Coleman, Jeffrey Margolin, Dustin Smith) & Young Conaway Stargatt & Taylor LLP (Michael Nestor, Andrew Magaziner)
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
• Other Parties in Interest:

• Updated 11/8/17

New Chapter 11 Filing - Knight Energy Holdings LLC

Knight Energy Holdings LLC

• 8/8/17 Recap: We were starting to sleep on the oil and gas services space. This trainwreck - which had been kicking around for quite a while - is finally in bankruptcy court. We could bore you with the usual details about services companies sucking wind ever since gas prices imploded - what was it? nearly 24 months ago? - but why waste precious space when we can amuse you with stories of drug racketeering instead? After all, "People Make the Difference." Hahaha. Anyway, we guess it's our duty to, in fact, bore you with some more of the mundane restructuring facts so we will once we have more information. For now, we understand that the filing is pursuant to a restructuring support agreement and the debtors seek a multi-draw DIP credit facility of $10mm. More to come.
• Jurisdiction: W.D. of Louisiana (Judge Summerhays)
• Capital Structure: $mm debt     
• Company Professionals:
  • Legal: Heller Draper Patrick Horn & Dabney, LLC (Douglas Draper, William Patrick III, Tristan Manthey, Cherie Nobles)
  • Financial Advisor: Opportune LLP (Gary Pittman)
  • Investment Banker: Bayshore Partners (Michael Turner)
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Sponsor: Clearlake Capital Group LP
  • DIP Agent: Cantor Fitzgerald Securities
  • Official Committee of Unsecured Creditors
    • Legal: Baker Donelson Bearman Caldwell & Berkowitz PC (Jan M. Hayden, Edward H. Arnold III, Lacey Rochester, Susan Matthews)

Updated 9/21/17

New Chapter 11 Filing - Morehead Memorial Hospital

Morehead Memorial Hospital

• 7/10/17 Recap: North Carolina non-profit 108-bed general acute care community hospital and owner of a 121-bed skilled nursing facility filed for bankruptcy. The healthcare provider noted the following reasons for the bankruptcy filing: (i) decreased patient volume, net revenue and free cash flow due, in large part, to the delivery of medical services occurring increasingly in ambulatory and emergency room settings; (ii) low reimbursement rates for medical services; (iii) expensive and only partially-reimbursed service in fulfillment of its non-profit mission; (iv) rising costs and increased competition (including competition for physicians given the hospital's rural nature); and (v) debt and legacy pension liability. The hospital will use the bankruptcy period to undertake both an operational and balance sheet restructuring while contemporaneously seeking a potential strategic healthcare provider partner. 
• Jurisdiction: M.D. of North Carolina (Judge Kahn)
• Capital Structure: $34mm debt     
• Company Professionals:
  • Legal: Waldrep LLP (Thomas Waldrep Jr., Jennifer Lyday, Francisco Morales)
  • Financial Advisor: Grant Thornton LLP (Scott B. Davis)
  • Investment Banker: Hanlon Hammond Camp LLC (Michael Lane)
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)

Updated 7/13/17 6:36pm CT

First Day Declaration

New Chapter 11 Filing - Foundation Healthcare Inc.

Foundation Healthcare Inc.

• 6/22/17 Recap: Once publicly-traded owner ($FDNH) and manager of surgical facilities that, at its peak, owned and/or managed 5 surgical hospitals, 9 ambulatory surgical centers and 3 outpatient departments in the Southeastern United States filed for bankruptcy to liquidate. Boom, done. 
• Jurisdiction: N.D. of Texas (Nelms)
• Company Professionals:
  • Legal: Husch Blackwell LLP (Vickie Driver, Christina Stephenson)
  • Financial Advisor/CRO: Ankura Consulting Group LLC (Michael Miller)
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)

Updated 7/11/17

New Chapter 11 Filing - Wordsworth Academy

Wordsworth Academy

• 6/30/17 Recap: Loyal PETITION readers know that we love lending snarky editorial color to chapter 11 filings. But sometimes things go beyond the pale and just aren't funny. This is one of them. This entity is a Pennsylvania non-profit corporation that provides education, behavioral health and welfare services to nearly 5,000 children who have emotional, behavioral and academic challenges. Why did it file? The company claims it needs an operational restructuring but there is a critical overhang here: a resident of one of the facilities died while being restrained. On top of that, there were other "allegations of other serious problems" at the same facility where the death occurred. There is an ongoing wrongful death suit against the company. Litigation appears to have pushed this company into bankruptcy, plain and simple. Tragic, sad, and definitely not amusing.
• Jurisdiction: E.D. of Pennsylvania
• Capital Structure: $4.7mm debt (M&T Bank)    
• Company Professionals:
  • Legal: Dilworth Paxson LLP (Lawrence McMichael, Peter Hughes, Anne Aaronson)
  • Financial Advisor: Getzler Henrich & Associates LLC (William H. Henrich)
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Secured Lender: M&T Bank 
    • Legal: Reed Smith LLP (Peter Clark II, Jennifer Knox)

Updated 7/11/17

Chapter 11 Filing - Rooster Energy Ltd.

Rooster Energy Ltd.

• 6/2/17 Recap: Integrated oil and gas offshore exploration and production company with properties located in the outer continental shelf of Gulf of Mexico filed for bankruptcy because it was an offshore exploration and production company operating in the Gulf of Mexico. 
• Jurisdiction: W.D. of Louisiana
• Capital Structure: $53.1mm '18 debt (Angelo Gordon Energy Servicer LLC), $24mm subordinate secured debt (K2 Principal Fund LP)    
• Company Professionals:
  • Legal: Baker Donelson Bearman Caldwell & Berkowitz PC (Jan Hayden, Edward Arnold III, Lacey Rochester, Susan Mathews, Daniel Ferretti)
  • Financial Advisor: Opportune LLP (Sean Clements)
  • Investment Banker:
  • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Official Committee of Unsecured Creditors (Cochun Properties)
    • Legal: Heller Draper Patrick Horn & Dabney LLC (William Patrick III, Tristan Manthey)
  • Official Committee of Unsecured Creditors (Rooster)
    • Legal: Arent Fox LLP (George Angelich)

New Chapter 11 Filing - Halt Medical Inc.

Halt Medical Inc.

• 4/12/17 Recap: Brentwood California medical device company filed for bankruptcy because Ares Capital HALTed funding (#dadjoke). The company owns an FDA-cleared proprietary and patented product that uses radiofrequency ablation to destroy uterine fibroids. Yeah, we have no idea what that means either but the use case is bada$$: it is a minimally-intrusive alternative to hysterectomies and myomectomies. The company has lined up a $4.16mm DIP credit facility to fund the cases while it seeks an asset sale to Murray Enterprises LLC as stalking horse bidder. 
• Jurisdiction: D. of Delaware 
• Capital Structure: $155.6mm debt (Ares Capital Ltd., as successor to American Capital Ltd.)    
• Company Professionals:
  • Legal: Drinker Biddle & Reath LLP (Steven Kortanek, Patrick Jackson, Joseph Argentina Jr.) & (Special corporate counsel) Cooley LLP (Robert Eisenbach)
  • Investment Banker: Canaccord Genuity Group Inc. (Geoffrey Richards)
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Buyer: Acessa AssetCo LLC (affiliate of Murray Enterprises LLC)
      • Legal: Smith Gambrell & Russell LLP (Brian Hall) & Landis Rath & Cobb LLP (Adam Landis, Kerri Muford)

Updated 4/22/17 (note: no UCC appointed)

New Chapter 11 Filing - Rupari Holding Corp.

Rupari Holding Corp.

• 4/11/17 Recap: Private-equity owned Illinois-based manufacturer of pre-cooked and sauced pork ribs and other barbeque products under the Roma Products brand (sounds gnarley) filed for bankruptcy to effectuate a sale pursuant to Bankruptcy Code section 363 to Carl Buddig & Co. for $26 million. Love this bit: "Rupari began to encounter substantial headwinds shortly after WPP Group's investment in the business." NICE. Looks like the Wind Point Partners guys really earned that 2-and-20 with this beauty. But wait! There's more! We have the Chinese and a freaky-AF diarrhea virus to blame for the business difficulties as well. And, finally, "specific issues unrelated to its everyday operations exacerbated Rupari's challenges," - namely, a $1.2mm judgment against the company in favor of Danish Crown. This abstract description really lets the imagination run wild - we were having flashbacks to "Brick Top" from Snatch - but it was only this. Anticlimactic. 
• Jurisdiction: D. of Delaware
• Capital Structure: $67mm first lien secured debt ($23.3mm funded - Antares Capital LP), $34.9mm second lien secured debt (Wind Point Partners), $95.4mm unsecured mezzanine debt 
• Company Professionals:
  • Legal: DLA Piper (US) LLP (Richard Chesley, John Lyons, R. Craig Martin, Maris Kandestin)
  • Investment Banker: Kinetic Advisors (Sudhin Roy)
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name above for free docket access)
• Other Parties in Interest:
  • Antares Capital LP
    • Legal: Katten Muchin Rosenman LLP (John Sieger, Paul Musser) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill)
  • Official Committee of Unsecured Creditors
    • Legal: Lowenstein Sandler LLP (Bruce Nathan, Jeffrey Cohen, Wojciech Jung, MIchael Papandrea, Keara Waldron) & (local) Whiteford Taylor & Preston LLP (Christopher Samis, L. Katherine Good, Aaron Stulman)
    • Financial Advisor: CohnReznick LLP (Kevin Clancy, Jeff Manning, Roberta Probber, Mitchell Insero)

Updated 7/18/17

No, not creepy at all. 

New Chapter 11 Filing - Bostwick Laboratories Inc.

Bostwick Laboratories Inc.

• 3/15/17 Recap: Uniondale New York based "independent full-service anatomic pathology laboratory and specialty provider"...gulp...deep breath..."of diagnostic testing services for urologists and gynecologists" filed for bankruptcy to sell to a stalking horse bidder, Poplar Healthcare PLLC. In the filing declaration the company blames severe cuts in Medicare rates for the filing, making no mention of what's glaring in its petition, i.e., that the Department of Justice is the largest creditor holding an unsecured settlement claim against the company for the company's purported breach of the False Claims Act - a claim emanating from allegations of kickback payments to physicians in exchange for referrals. Not shady at all. That last bit is really the only reason why we're even highlighting this case. Well, and that this is Pepper Hamilton LLP's second recent filing (General Wireless Outfitters being the first).
• Jurisdiction: D. of Delaware
• Capital Structure: $12.5mm debt ($1.8mm funded - Healthcare Financial Solutions LLC, an affiliate of Capital One NA), $950k second lien notes, $40mm unsecured notes.     
• Company Professionals:
  • Legal: Pepper Hamilton LLP (David Stratton, Evelyn Meltzer, John Schanne II)
  • Investment Banker: Leerink Partners LLC (Jeff Danesis)
  • Chief Restructuring Officer: Carroll Services LLC (James Patrick Carroll)
  • Claims Agent: Donlin Recano & Co. Inc. (*click on company name for docket)
• Other Parties in Interest:
  • Metalmark Capital Holdings LLC
    • Legal: Ropes & Gray LLP (James A. Wright III, Stephen Moeller-Sally) & (local) Womble Carlyle Sandridge & Rice LLP (Mark Desgrosseilliers)
  • Healthcare Financial Solutions LLC
    • Legal: Quarles & Brady LLP (John Harris, Brian Sirower, Amelia Valenzuela)
  • Official Committee of Unsecured Creditors
    • Legal: Pachulski Stang Ziehl & Jones LLP & (local) Sheppard Mullin LLP

Updated 3/23/17

New Chapter 11 Filing - Gander Mountain Company

Gander Mountain Company

• 3/10/17 Recap: Preppers alert! The Minneapolis-based outdoor retailer that specializes in guns guns and more guns has run out of "dry powder" (score!) and finds itself in chapter 11. This comes around the same time that the Cabela's/Bass merger looks to be hanging by a thread. Tough time for outdoor retail. On the brightside, folks who are so scared by the recent election can now get a break on MREs and other survival gear as they go off-grid or to Canada. So, there's that.
• 5/3/17 Update: The company has sold to Camping World Inc. and, attendant to the sale, entered into an agency agreement with a JV of liquidating firms noted below to handle the assets left out of the sale. 
• Jurisdiction: D. of Minnesota
• Capital Structure: $390mm ABL (Wells Fargo Bank NA) & $35mm TL (Pathlight Capital LLC) debt
• Company Professionals: 
  • Legal: Fredrikson & Byron PA (Ryan Murphy, Clinton Cutler, Cynthia Moyer, James Brand, Sarah Olson, Steven Kinsella)
  • Financial Advisor: Lighthouse Management Group (Timothy Becker, James Bartholomew)
  • Investment Banker: Houlihan Lokey Capital Inc. (Stephen Spencer)
  • Real Estate Advisor: Hilco Real Estate LLC (Ryan Lawlor)
  • Liquidators: Tiger Capital Group LLC (Dan Kane, Michael McGrail), Great American Group LLC (Scott Carpenter, Alan Forman), Gordon Brothers Retail Partners LLC (Mackenzie Shea), Hilco Merchant Resources LLC (Ian Fredricks)
    • Legal for Liquidators: Wachtell Lipton Rosen & Katz (Scott Charles, Neil Snyder) & Riemer & Braunstein LLP (Steven Fox)
  • Claims Agent: Donlin Recano (*click on the company above for free docket)
• Other Parties in Interest:
  • Prepetition ABL & DIP Lender: Wells Fargo Bank NA
    • Legal: Choate Hall & Stewart LLP (Sean Monahan, Kevin Simard)
  • Term Loan Agent: Pathlight Capital LLC
    • Legal: Morgan Lewis & Bockius LLP (Mark Silva, Julia Frost-Davis, Amelia Joiner)
  • Official Committee of Unsecured Creditors
    • Legal: Lowenstein Sandler LLP (Jeffrey Cohen, Keara Waldron, Barry Bazian) & (local) Barnes & Thornburg LLP (Connie Lahn, Peter Clark, Christopher Knapp, Roger Maldonado)
    • Financial Advisor: FTI Consulting LLC (Steven Simms, Dewey Imhoff, Matt Diaz, Timothy Gaines, Jessica Jedynak, Clement Chiun)
  • Buyer: Camping World Inc.
    • Legal: Latham & Watkins LLP (Zachary Judd, Caroline Reckler, Matthew Warren, Jason Gott)

Updated 5/3/17

New Chapter 11 Filing - hhgregg Inc.

hhgregg Inc.

• 3/6/17 Recap: Indianapolis-based (and formerly publicly-traded - HGGG) brick-and-mortar retailer of appliances, consumer electronics, home products (read: all things that millennials don't buy) FINALLY filed for bankruptcy after an endless barrage of negative news stories, including reports of 88 store closures. The company's distress - brought on by trends afflicting the retail space generally and repeated to death in each and every retail bankruptcy filing, e.g., declining mall traffic, onerous leases, etc., - was exacerbated by its credit card program with Synchrony Bank and the need to post letters of credit to collateralize Synchrony's acquired receivables ($3mm paid, another $14mm owed). Note: there's a commentary here about consumer lending. The filing is intended to enable the company to continue with store closing sales and potentially find a buyer for its remaining locations.
• Jurisdiction: S.D. of Indiana
• Capital Structure: $300mm '21 credit facility ($56mm out)(Wells Fargo)     
• Company Professionals:
  • Legal: Morgan Lewis & Bockius LLP (Neil Herman, Rachel Jaffe Mauceri, Benjamin Cordiano, Katherine Lindsay, Matthew Ziegler, Michaela Dragalin) & (local) Ice Miller LLP (Jeffrey Hokanson, Sarah Fowler)
  • Financial Advisor: Berkeley Research Group (Robert Duffy)
  • Investment Banker: Stifel & Miller Buckfire & Co. (James Doak)
  • Liquidators: Hilco Merchant Resources LLC (Ian Fredericks) and Gordon Brothers Retail Partners LLC (Michael Chartock) 
    • Legal: Kirkland & Ellis LLP (Patrick Nash, Bradley Weiland, Timothy Bow)
  • Real Estate Advisor: Hilco Real Estate LLC (Ryan Lawlor)
  • Asset Disposition Advisor: Malfitano Advisors LLC (Joseph Malfitano)
  • Claims Agent: Donlin Recano (*click on company name for free docket)
• Other Parties in Interest:
  • Agent for Prepetition Secured Lender & DIP Lender: Wells Fargo
    • Legal: Choate Hall & Stewart LLP (John Ventola, Sean Monahan, Jonathan Marshall) & Faegre Baker Daniels LLP (Jay Jaffe, Terry Hall)
  • Official Committee of Unsecured Creditors
    • Legal: Cooley LLP (Cathy Hershcopf, Seth Van Aalten, Richelle Kalnit, Robert Winning, Melissa Boyd) & (local) Bingham Greenebaum Doll LLP (Whitney Mosby, Thomas Scherer, James Irving)
    • Financial Advisor: Province Inc. (Stilian Morrison)

Updated 4/3/17