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 15 Filing - Odebrecht Oleo E Gas S.A.

Odebrecht Oleo E Gas S.A.

  • 11/3/17 Recap: The disruption to the oil and gas energy that shot through the United States in 2015-2016 also captured some international victims. In this instance, the Brazilian operator of offshore drilling rigs filed for Extrajudicial Reorganization in Brazil back in May, 2017. In October, the Brazilian Court entered an order approving a reorganization plan approved by the necessary percentages of interested parties. To further bind said parties, the company filed for Chapter 15 to help effectuate the plan approved by the Brazilian court. 
  • Jurisdiction: S.D. of New York (Judge Garrity)
  • Capital Structure: $1.09b 6.35% '21 notes, $1.9b 6.75% '22 notes, $1.68b 6.625% notes.      
  • Company Professionals:
    • Legal: Davis Polk & Wardwell LLP (Eli Vonnegut)
  • Other Parties in Interest:
    • Ad Hoc Group of Bondholders
      • Legal: Cleary Gottlieb Steen & Hamilton LLP (Richard Cooper, Luke Barefoot)

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

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 CBCA Proceeding - Concordia International Group

Concordia International Group

  • 10/20/17 Recap: Canadian-based pharmaceutical company filed for a stay under the Canada Business Corporations Act (CBCA) to effectuate a plan to de-lever its balance sheet. The company has a portfolio of 200+ "off-patient" skus with sales all across the world. The company blamed the need for the filing on (i) the proliferation of competitive generic products, (ii) the introduction of new products that treat the same ailments Concordia addresses, (iii) drug pricing pressures (including regulatory pressures in the UK), and its highly-levered balance sheet. The company intends to deploy its "DELIVER" strategy - not to be confused with what should be an obvious DELEVER strategy, but we digress. This acronym stands for a bunch of trite stuff like "Drive growth, "Expand," "Level-set the U.S. Business," "Increase the Product Pipeline," blah blah boring blah blah. In other words, effectively operate a pharma business - the EOPB strategy. Fine, not quite the same ring to it. 
  • Jurisdiction: Superior Court of Ontario
  • Capital Structure: $1.068b secured term loan, £485.63mm secured term loan. $350mm 9% '22 senior secured first lien notes, $135mm 9.5% '22 extended unsecured bridge loan ($100.83 funded ex-interest), $45mm 9.5% '17 equity unsecured bridge loan ($33.61mm ex-interest), $735mm 7% '23 unsecured notes (ex-interest), and $790mm 9.5% '22 unsecured notes (ex-interest)(US Bank NA). Public equity ($CXR).     
  • Company Professionals:
    • Legal: Skadden Arps Meagher & Flom LLP (Paul Leake, Shana Elberg) & (Canadian) Goodmans LLP (Robert Chadwick, Brendan O'Neil, Caroline Descours, Ryan Baulke)
    • Financial Advisor: Perella Weinberg Partners LP
  • Other Parties in Interest:
    • Secured Term Loan Agent: Goldman Sachs Bank USA
      • Legal: Davis Polk & Wardwell LLP (Damian Schaible)
    • Secured Debtholders Committee
      • Legal: White & Case LLP & (Canadian) Osler Hoskin & Harcourt LLP (Marc Wasserman, Martino Calvaruso)
    • Trustee for Secured and Unsecured Notes: US Bank NA
    • Unsecured Debtholders Committee
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP & (Canadian) Bennett Jones LLP (Kevin Zych, Sean Zweig)

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

New Chapter 11 Filing - GST AutoLeather Inc.

GST AutoLeather Inc.

  • 10/3/17 Recap: Disruption, illustrated. The automobile industry is at the beginning of a downturn marked by auto price reductions and a drop in new vehicle production. Automobile output is down 4% over the past year as automobile dealers are placing fewer manufacturing orders and dealing with excess supply. Moreover, auto OEMs are decreasing the leather content in certain new vehicles. Finally, automobiles are lasting longer and "the climbing popularity of ride-sharing services, such as Uber and Lyft...diminish consumers' needs for their own cars." Put simply, there is a demand side decline. Consequently, here, the Southfield Michigan-based supplier of leather interiors filed a freefall bankruptcy with the hope of consummating an expedited (approximately 2-month timeframe) 363 asset sale. The company has secured a $40mm DIP credit facility to fund its bankruptcy; it continues talks with its senior lenders about a stalking horse bid to purchase the company. In addition to the aforementioned macro factors, the company blames its deteriorated financial performance on (i) issues associated with certain new customer launches in Europe, (ii) supply chain issues with a critical Chinese supplier who is using leverage to extract out-of-contract economics from the company and (iii) constraints imposed by significant working capital investments to mitigate supply chain disruption to its customers (which include the likes of major auto OEMs, e.g., Audi, BMW/Mini, Daimler, Fiat Chrysler, Ford, General Motors, Hyundai, Honda, Porsche, PSA, Nissan, Kia, Toyota and Volkswagen).
  • Jurisdiction: D. of Delaware (Judge Silverstein)
  • Capital Structure: $24mm '19 RCF, $140mm '20 TL-B (Royal Bank of Canada), $32mm mezz debt (Triangle Capital Corp./Alcentra Capital Corp.)
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (James Sprayragen, Ryan Blaine Bennett, Michael Slade, Alexandra Schwarzman, Timothy Bow, Benjamin Rhode, Luke Ruse) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Timothy Cairns, Joseph Mulvihill)
    • Financial Advisor/CRO: Alvarez & Marsal North America LLC (Jonathan Hickman, Jay Herriman)
    • Investment Banker: Lazard Middle Market (Jason A. Cohen)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Sponsor: Advantage Partners
    • Lender Group (Royal Bank of Canada, as DIP Admin Agent)
      • Legal: Paul Hastings LLP (Andrew Tenzer, Michael Comerford, Shlomo Maza) & Young Conaway Stargatt & Taylor LLP (Pauline Morgan, M. Blake Cleary, Justin Rucki)
      • Financial Advisors: FTI Consulting
    • Mezzanine Lenders:
      • Legal: McGuireWoods LLP (Anne Croteau, Douglas Foley) & (local) Benesch Friedlander Coplan & Aronoff LLP (Jennifer Hoover, William Alleman Jr.)
    • Official Committee of Unsecured Creditors
      • Legal: Foley & Lardner LLP (Erika Morabito, Brittany Nelson, John Simon, Richard Bernard, Leah Eisenberg) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Kevin Shaw, Christopher Jones, David Gaffey)
      • Financial Advisor: Berkeley Research Group LLC (Christopher Kearns, Peter Chadwick, Michelle Tran, Kevin Beard, Jay Wu)
      • Investment Banker: Configure Partners LLC (Jay Jacquin)

Updated 11/15/17 7:55 am CT

New Chapter 11 Bankruptcy - Appvion Inc.

Appvion Inc.

  • 10/2/17 Recap: The 100+-year old Appleton Wisconsin-based manufacturer of specialty coated paper has filed for bankruptcy. The company operates in two segments, the thermal paper segment and the carbonless paper segment. The thermal paper segment, on the surface, seems like it would be the most susceptible segment to technological disruption. It is used in four principal end markets: 1) point-of-sale for retail receipts and coupons (PETITION Note: you could understand why this would seemingly be in decline with Square and other P.O.S. stations now emailing receipts - not to mention more and more retail being done online); 2) label products for shipping, warehousing, medical and clean-room supplies (PETITION Query: perhaps the shipping labels offsets the paper receipts?); 3) tags and tickets for airline/baggage applications, events and transportation tickets, lottery and gaming applications (PETITION Note: one of us bought a baseball a scannable paperless ticket the other day from Stubhub...hmmm); and 4) printer, calculator and chart paper for engineering, industrial and medical diagnostic charts. The thermal paper segment is 60% of the company's net sales and has enjoyed annual average growth rates between 1-3%. Somewhat shockingly. PETITION Note: We would have liked to have seen those four sub-segments separated out. Meanwhile, the carbonless paper segment accounts for the other 40% of net sales; it produces coated paper products for design and print applications. The paper is used in a variety of end markets including government, retail, financial, insurance and manufacturing. This segment has been in structural decline since 1994, down approximately 7-11% annually due to the rise of new technologies in digital laser, inkjet and thermal printers. Oh, and electronic communications: the company just throws that in their bankruptcy papers like it's an afterthought. In other words, government and corporations are relying more on email than on the printed page which, duh, obviously impacts this segment. The company owns there manufacturing plants and leases three warehouses; it also has 915 union employees - owed $112.6mm in obligations - who probably ought to get ready to get bent (they are represented by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (the “USW”). The company blames the chapter 11 filing on negative industry trends, an unsustainable degree of balance sheet leverage, inability to adequately address near-term maturities and rapidly deteriorating liquidity. Liquidity became even more of an issue after the company issued a "going concern" warning and received an S&P credit downgrade - two things that obviously made suppliers skittish and resulted in demands for disadvantageous trade terms. Recognizing decreased liquidity, the company appears to have taken as much cost out of the business as it can which, from the looks of the company's papers, may be artificially inflating the numbers on the thermal side in the face of technological innovation. PETITION Note: the assumptions the bankers concoct for this side of the business ought to be watched very carefully. Somewhat surprisingly, despite a full slate of advisors and months of lead-up to the filing, this is a classic free-fall into bankruptcy: there doesn't appear to be any restructuring support agreement with the lenders whatsoever. There is, however, a proposed $325.2mm DIP credit facility which would include $85mm of new money and a $240.2mm rollup of pre-petition money (in other words, the full amount of pre-petition TL & RCF monies outstanding, ex-interest). Nothing like being senior in the cap stack. Final PETITION Note: anyone think this will be the last paper-related bankruptcy in, say, the next 12 months? This is starting to look like 2007 all over again...
  • Jurisdiction: D. of Delaware
  • Capital Structure: $335mm first lien TL & $100 RCF ($240.8mm outstanding included accrued/unpaid interest), $250mm '20 9% second lien senior notes, $24mm A/R securitization, $6mm Industrial Development Bonds, $500k TL with the State of Ohio
  • Company Professionals:
    • Legal: DLA Piper (US) LLP (Richard Chesley, Stuart Brown, Jamila Willis, Kaitlin Edelman)
    • Financial Advisor/CRO: AlixPartners LLP (Alan Holtz, Pilar Tarry, Nathan Kramer)
    • Investment Banker: Guggenheim Securities LLC (Ronen Bojmel)
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
    • Strategic Communications Consultant: Finsbury LLC
  • Other Parties in Interest:
    • DIP Admin Agent: Wilmington Trust, NA
      • Legal: Covington & Burling LLP (Ronald Hewitt) & (local) Pepper Hamilton LLP (David Fournier)
    • DIP Lenders
      • Legal: O'Melveny & Myers LLP (George Davis, Daniel Shamah, Matthew Kremer, Jennifer Taylor) & (local) Richards Layton & Finger P.A. (Mark Collins, Michael Merchant, Brett Haywood)
    • Prepetition Credit Agreement Admin Agent: Jefferies Finance LLC
      • Legal: Jones Day (Scott Greenberg, Brad Erens) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Timothy Cairns)
    • Key Bank National Association
      • Legal: Reed Smith LLP (Peter Clark II, Jennifer Knox, Emily Devan)
    • Fifth Third Bank
      • Legal: Vedder Price PC (Michael Eidelman, Michael Edelman) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)
    • Ad Hoc Committee of Holders of the 9% '20 Second Lien Senior Secured Notes (ADK Capital LLC, ALJ Capital Management LLC, Archer Capital Management LP, Armory Advisors LLC, Barings LLC, Mackenzie Investments, MAK Capital One LLC, Nomura Corporate Research and Assset Management, Riva Ridge Master Fund Ltd., Rotation Capital Management LP, Scott's Cove Management LLC)
      • Legal: Stroock Stroock & Lavan LLP (Jayme Goldstein, Samantha Martin) & (local) Young Conaway Stargatt & Taylor LLP (Edmon Morton, Matthew Lunn)
    • Second Lien Senior Secured Notes Indenture Trustee: US Bank NA
      • Legal: Foley & Lardner LLP (Richard Bernard, Derek Wright, Mark Prager)
    • Official Committee of Unsecured Creditors
      • Legal: Lowenstein Sandler LLP (Kenneth Rosen, Jeffrey Prol, Wojciech Jung) & (local) Klehr Harrison Harvey Branzburg LLP (Michael Yurkewicz, Morton Branzburg, Sally Veghte)

Updated 10/26/17

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 Bankruptcy & CCAA - Toys "R" Us Inc.

Toys "R" Us Inc.

  • 9/19/17 Recap: So. Much. To. Unpack. Here. We've previously discussed the run-up to this massive chapter 11 bankruptcy filing here and here. Still, suffice it to say that, unlike many of the other retailers that have predictably filed for bankruptcy thus far in 2017, this one was different. This one seemingly came out of nowhere - particularly given the proximity to the holiday shopping season. Before we note what this case is, lets briefly cover what it isn't and clear the noise that is pervasive on the likes of Twitter: this is NOT "RIP" Toys "R" Us. We don't get overly sentimental usually but the papers filed with the bankruptcy court were well-written and touching: this is a store, a brand, that means a lot to a lot of people. And it's not going anywhere (the company will have its challenges to assure people that this is the case). This is a financial restructuring not a liquidation: the company simply hasn't been able to evolve while paying $400mm in annual interest expense on over $5b of private equity infused debt. Plain and simple. Yes, there are other challenges (blah blah blah, Amazon), but with that debt overhang, it appears the company hasn't been able to confront them (PETITION side note: an ill-conceived deal with Amazon 18 years ago is mind-blowing when viewed from the perspective of Amazon's long game). With this filing, the company is signaling that the time for short term band-aids to address its capital structure is over. Now, "[t]he time for change, and reinvestment in operations, has come." Decisive. Management isn't messing around anymore. With a reduction in debt, the company will be unshackled and able to focus on "general upkeep and the condition of...stores, [its] inability to provide expedited shipping options, and [its] lack of a subscription-based delivery service." Indeed, the company intends to use a $3.1b debtor-in-possession credit facility to begin investing in modernization immediately.
  • Interesting Facts:
    • Toy Manufacturers: Mattel ($MAT)(approx $136mm), Hasbro ($HAB) (approx $59mm) & Lego (approx $31.5mm) are among the top general unsecured creditors of the company. Mattel and Hasbro's stock traded down quite a bit yesterday on the rampant news of this filing. Query whether any of the $325mm of requested critical vendor money will apply to these companies.
    • The Power of the Media (read: NOT "fake news"): This CNBC piece helped push the company into bankruptcy. Bankruptcy professionals were retained in July (or earlier in the case of Lazard) to pursue capital structure solutions. In August the company engaged with some of its lenders. But then "...a news story published on September 6, 2017, reporting that the Debtors were considering a chapter 11 filing, started a dangerous game of dominos: within a week of its publication, nearly 40 percent of the Company’s domestic and international product vendors refused to ship product without cash on delivery, cash in advance, or, in some cases, payment of all outstanding obligations. Further, many of the credit insurers and factoring parties that support critical Toys “R” Us vendors withdrew support. Given the Company’s historic average of 60-day trade terms, payment of cash on delivery would require the Debtors to immediately obtain a significant amount—over $1.0 billion—of new liquidity." 
    • Revenue. The company generates 40% of its annual revenue during the holiday season.
    • Footprint. The company has approximately 1,697 stores and 257 licensed stores in 38 countries, plus additional e-commerce sites in various countries. The company has been shedding burdensome above-market leases and combining its Babies and Toys shops under one roof; it intends to continue its review of its real estate portfolio. Read: there WILL be store closures.
    • Eff the Competition. Toys has some choice words for its competition embedded in its bankruptcy papers; it accuses Walmart ($WMT) and Target ($TGT)(the "big box retailers") of slashing prices on toys and using toys as a loss leader to get bodies in doors; it further notes that "retailers such as Amazon are not concerned with making a profit at this juncture, rendering their pricing model impossible to compete with..." ($AMZN). Yikes. 
    • Experiential Retail. The company intends to invest in the "shopping experience" which will include (i) interactive spaces with rooms to use for parties, (ii) live product demonstrations put on by trained employees, and (iii) the freedom for employees to remove product from boxes to let kids play with the latest toys. And...wait for it...AUGMENTED REALITY. Boom. Toysrus.ar and Toysrus.ai here we come. 
  • Jurisdiction: E.D. of Virginia (Judge Phillips)
  • Capital Structure: see below     
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (Jamie Sprayragen, Anup Sathy, Edward Sassower, Chad Husnick, Joshua Sussberg, Robert Britton, Emily Geier) & (local) Kutak Rock LLP (Michael A. Condyles, 
      Peter J. Barrett, Jeremy S. Williams) & (Canadian counsel) Goodmans LLP
    • Legal to the Independent Board of Directors: Munger, Tolles & Olson LLP
    • Financial Advisor: Alvarez & Marsal North America LLC (Jeffrey Stegenga, Jonathan Goulding, Tom Behnke, Cari Turner, Jim Grover, Arjun Lal, Doug Lewandowski, Bobby Hoernschemeyer, Scott Safron, Kara Harmon, Nick Cherry, Adam Fialkowski)
    • Investment Banker: Lazard Freres & Co., LLC (David Kurtz)
    • Real Estate Consultant: A&G Realty Partners LLC (Andrew Graiser)
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
    • Communications Consultant: Joele Frank Wilkinson Brimmer Katcher
  • Other Parties in Interest:
  • ABL/FILO DIP Admin Agent: JPMorgan Chase Bank NA
    • Legal: Davis Polk & Wardwell LLP (Marshall Heubner, Brian Resnick, Eli Vonnegut, Veerle Roovers) & (local) Hunton & Williams LLP (Tyler Brown, Henry (Toby) Long III, Justin Paget)
  • DIP Admin Agent (Toys DE Inc). NexBank SSB & Ad Hoc Group of B-4 Lenders (Angelo Gordon & Co LP; Franklin Mutual Advisors LLC, HPS Investment Partners LLC, Marathon Asset Management LP, Redwood Capital Management LLC, Roystone Capital Management LP, and Solus Alternative Asset Management LP)
    • Legal: Wachtell Lipton Rosen & Katz (Joshua Feltman, Emil Kleinhaus, Neil Chatani) & (local) McGuireWoods LLP (Dion Hayes, Sarah Bohm, Douglas Foley)
  • Ad Hoc Group of Taj Noteholders.
    • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Brian Hermann, Samuel Lovett, Kellie Cairns) & (local) Whiteford Taylor & Preston LLP (Christopher Jones, Jennifer Wuebker)
  • Steering Committee of B-2 and B-3 Lenders (American Money Management, Columbia Threadneedle Investments, Ellington Management Group LLC, First Trust Advisors L.P., MJX Asset Management LLC, Pacific Coast Bankers Bank, Par-Four Investment Management LLC, Sound Point Capital Management, Taconic Capital Advisors LP).
    • Legal: Arnold & Porter Kaye Scholer LLP (Michael Messersmith, D. Tyler Nurnberg, Sarah Gryll, Rosa Evergreen)
  • 12% ’21 Senior Secured Notes Indenture Trustee: Wilmington Trust, National Association.
    • Legal: Kilpatrick Townsend & Stockton LLP (Todd Meyers, David Posner, Gianfranco Finizio) & (local) ThompsonMcMullan PC (David Ruby, William Prince IV)
  • Bank of America NA
      • Legal: Skadden Arps Slate Meagher & Flom LLP (Paul Leake, Shana Elberg, George Howard) & (local) Troutman Sanders LLP (Jonathan Hauser)
    • Private Equity Sponsors: Bain Capital Private Equity LP, Kohlberg Kravis Roberts & Co. L.P. ($KKR), and Vornado Realty Trust ($VNO)
  • Large Creditor: Mattel Inc.
    • Legal: Jones Day (Richard Wynne, Erin Brady, Aaron Gober-Sims) & (local) Michael Wilson PLC (Michael Wilson)
  • Large Creditor: LEGO Systems Inc.
    • Legal: Weil Gotshal & Manges LLP (Matthew Barr, Kelly DiBlasi) & (local) Walcott Rivers Gates (Cullen Speckhart)
  • Large Creditor: American Greetings Corporation.
    • Legal: Baker & Hosteler LLP (Benjamin Irwin, Eric Goodman)
  • Creditor: River Birch Capital
    • Legal: Andrews Kurth & Kenyon LLP (Paul Silverstein)
  • Creditor: Owl Creek Asset Management
    • Legal: Stroock Stroock & Lavan LLP (Samantha Martin)
  • TRU Trust 2016-TOYS, Commercial Mortgage Pass-Through Certificates, Series 2016-TOYS acting through Wells Fargo Bank NA
    • Legal: Dechert LLP (Allan Brilliant, Brian Greer, Stephen Wolpert, Humzah Soofi) & (local) Troutman Sanders LLP (Jonathan Hauser)
  • Trustee: Tru Taj DIP Notes (Wilmington Savings Fund Society FSB)
    • Legal: Porter Hedges LLP (Eric English) & (local) Spotts Fain PC (James Donaldson)
  • Committee of Unsecured Creditors (Mattel Inc., Evenflo Company Inc., Simon Property Group, Euler Hermes North America Insurance Co., Veritiv Operating Company, Huffy Corporation, KIMCO Realty, The Bank of New York Mellon, LEGO Systems Inc.)
First Day Declaration

First Day Declaration

First Day Declaration

First Day Declaration

Updated 10/5/17 11:40 am

Chapter 11 Bankruptcy Filing - Aerosoles International Inc.

Aerosoles International Inc.

  • 9/15/17 Recap: Remember that once-popular trope that footwear was impervious to Amazon and e-commerce? People want to go to stores to try on shoes, we've been told. Lost in that, however, is that free returns make it THAT much easier to try/err with sizing via delivery. And, so, not-so-shockingly, another private equity (Palladin Partners LP) owned specialty retailer is in bankruptcy court. The New Jersey based company has "approximately 78 stores" (PETITION Note: how does it not know the exact number?) in the United States that cater towards providing women with "feel good" footwear. The stores are located in malls, lifestyle centers, street locations and outlet centers. This 78-count footprint is down dramatically: the company has already reduced its store count by over 30 stores in the last year or so. The company also generates revenue through its (i) direct e-commerce business (which, seemingly, is fairly well built out with 1.4mm visitors a month...note, pretty good sales right now!), (ii) wholesale business, (iii) "first cost business" (which sounds like a middleman situation where the company aids other companies in the design and production of their own separately branded footwear, and (iv) international licensing. The company blames a highly competitive women's footwear market, a large sourcing disruption (to the tune of $4mm of lost EBITDA), shifting trends from bricks to clicks and other operationally-specific reasons for the chapter 11 filing. Like what? Glad you asked. First, the company had a hard time servicing its debt while also making the significant cash outlays needed to inventory-up for the critical spring and fall seasons. Second, the company - in a showing of REALLY FRIKKEN HORRIBLE TIMING - expanded its retail store footprint considerably in 2012 and 2013, subjecting itself to onerous leases in the process. Third, the company lost its Asian sourcing agent in spring 2016 and has subsequently had difficulty restoring lost customer confidence and maintaining order load. MAGA! And so now what? Ready for this shocker? The company intends to refocus its efforts towards the non-brick-and-mortar aspects of its business. Remember those "approximately 78" stores we noted above? Well, the company is saying "PEACE" to 74 of them in bankruptcy. Finally, the company intends to use the bankruptcy process to find a buyer for the company (and its new business plan). 
  • Jurisdiction: D. of Delaware 
  • Capital Structure: $72.3mm of total debt. $22.9mm ABL (Wells Fargo Bank NA), $19.7mm TL (THL Corporate Finance Inc.), $19.1mm senior notes, $8.9mm sub notes, and $1.7mm sub loan. 
  • Company Professionals:
    • Legal: Ropes & Gray LLP (Gregg Galardi, Mark Somerstein, William Alex McGee) & Bayard PA (Scott Cousins, Erin Fay, Gregory Flasser)
    • Financial Advisor: Berkeley Research Group LLC (Mark Weinsten)
    • Investment Banker: Piper Jaffray & Co.
    • Liquidation Agent: Hilco Merchant Resources LLC 
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • ABL Agent: Wells Fargo Bank NA
      • Legal: Choate Hall & Stewart LLP (Kevin Simard, Jonathan Marshall) & (local) Womble Carlyle Sandridge & Rice LLP (Mark Desgrosseilliers, Matthew Ward)
    • TL Agent: THL Corporate Finance Inc.
      • Legal: Paul Hastings LLP (Matthew Murphy) & Young Conaway Stargatt & Taylor LLP (M. Blake Cleary)
    • Prepetition Senior Noteholders & Subordinated Noteholders (ORIX Funds Corp., Palladin Partners LP)
      • Legal: Weil Gotshal & Manges LLP (Jacqueline Marcus) & (local) Richards Layton & Finger PA (Mark Collins, Paul Heath, Joseph Barsalona II)
    • Official Committee of Unsecured Creditors (ICB Asia Co. Ltd., Rival Shoe Design Ltd., Moveon Componentes E Calcado SA, Simon Property Group, GGP Limited Partnership)
      • Legal: Cooley LLP (Michael Klein, Sarah Carnes) & (local) Gellert Scali Busenkell & Brown LLC (Michael Busenkell, Ronald Gellert, Shannon Dougherty Humiston)

Updated 10/5/17 11:17 am CT 

New Chapter 11 Filing - Seadrill Ltd.

Seadrill Ltd.

  • 9/12/17 Recap: Cash rich offshore oil and gas extraction company with global reach filed a prearranged bankruptcy to effectuate a balance sheet restructuring because...well...it was over-levered AF. The company purports to have a deal with its major creditors with secured creditors kicking the can down the road, and $2.3b worth of unsecured bondholders and other unsecured claims converting into approximately 15% of the post-reorg equity (with participation rights in the new secured notes and equity noted below). The company will get $1.06b of new capital by combination of new secured notes ($860mm) and equity ($200mm). Holders of $NADL stock will get a big fat donut.  
  • Jurisdiction: S.D. of Texas (Judge David Jones)
  • Capital Structure: A. Lot. Of. Debt. Like $5.7mm of bank debt and $2.3mm of unsecured bonds.
First Day Declaration.

First Day Declaration.

 

  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (Jayme Sprayragen, Anup Sathy, Ross Kwasteniet, Adam Paul, Brian Schartz, Anna Rotman, Jeffrey Zeiger, Anthony Grossi, Spencer Winters) & (local) Jackson Walker LLP (Patricia Tomasco, Matthew Cavenaugh, Rachel Biblo Block)
    • Restructuring Advisor: Alvarez & Marsal LLC (Jeffrey Stegenga, Ed Mosley)
    • Financial Advisor: Houlihan Lokey (David Hilty, Gavin Kagan, Dimitar Voukadinov, Drew Talarico, David Wang, Brian Keenan, Varun Desai, Daniel McManus) & Morgan Stanley
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Conflicts Committee of Board of Directors of North Atlantic Drilling Limited and to the Conflicts Committee of the Board of Directors of Sevan Drilling Limited
      • Legal: Willkie Farr & Gallagher LLP (Jennifer Hardy, Andrew Mordkoff, Derek Osei-Bonsu)
      • Financial Advisor: Baker Tilly Virchow Krause LLP (Susan Seabury)
    • Conflicts Committee of Seadrill Partners LLC
      • Legal: Orrick Herrington & Sutcliffe LLP (Katherine Treistman, Raniero D'Aversa, Laura Metzger, Debra Felder)
    • New Money: Hemen Holding Ltd., Centerbridge Partners LP
      • Legal: Cadwalader Wickersham & Taft LLP (Greg Petrick, Yushan Ng, Nicholas Vislocky) & Fried Frank Harris Shriver & Jacobson LLP (Brad Scheler, Jennifer Rodburg, Andrew Minear) & (local) Dykema Cox Smith (Deborah Williamson, Patrick Huffstickler, Aaron Kaufman)
    • Consenting Lender Group
      • Legal: White & Case LLP (Scott Greissman, Philip Abelson, Andrew Katz) & (local) Andrews Kurth Kenyon LLP (Robin Russell, Timothy A. Davidson II, Joseph Rovira)
    • Aristeia Capital L.L.C., GLG Partners LP, Saba Capital Management LP and Whitebox Advisors LLC
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Philip Dublin, Ira Dizengoff, David Staber, Abid Qureshi, Sara Brauner)
    • ARCM Master Fund III, Ltd.
      • Legal: Paul, Weiss, Rifkind, Wharton & Garrison, LLP (Elizabeth McColm, Andrew Rosenberg, Catherine Goodall)
    • Indenture Trustee: Deutsche Bank Trust Company Americas
      • Legal: Morgan, Lewis & Bockius LLP (Chad Steward, Glenn Siegel, Crystal Axelrod, Rachel Jaffe Mauceri)
    • Daewoo Shipbuilding & Marine Engineering
      • Legal: Pachulski Stang Ziehl & Jones LLP (Shirley Cho, Bradford Sandler, Steven Golden)
    • Samsung Heavy Industries Co., Ltd.,
      • Legal: Hogan Lovells US LLP (Robin E. Keller, Ronald J. Silverman, Christopher R. Bryant, Michael Shane Johnson) & (local) 
    • Official Committee of Unsecured Creditors (Nordic Trustee AS, Deutsche Bank Trust Company Americas, Computershare Trust Company NA, Daewoo Shipbuilding & Marine Engineering Co. Ltd., Samsung Heavy Industries Co. Ltd., Pentagon Freight Services Inc., Louisiana Machinery Co. LLC)
      • Legal: Kramer Levin Naftalis & Frankel LLP (Thomas Moers Mayer, Douglas Mannal, Jennifer Sharret) & (local) Cole Schotz PC (Michael Warner, Benjamin Wallen)

Updated 10/5/17 12:03 pm CT

New Chapter 11 Bankruptcy - Vitamin World Inc.

Vitamin World Inc.  

  • 9/11/17 Recap: As previously foreshadowed, the Holbrook NY-based specialty retailer in the vitamins, minerals, herbs, and supplements market with 334 mall and outlet center retail locations filed for bankruptcy to disentangle itself from legacy operational ties to prior owner NBTY Inc. and terminate various leases (52 identified so far; 45 locations have already been shuttered). Some of the locations are within malls owned by REITS, Simon Property Group, General Growth Properties, and Vornado Realty Trust. The company blames the bankruptcy filing on liquidity constraints caused by supply chain and ingredient availability issues, the struggling retail market, above market rents, and underperforming retail stores. Prepetition lender, Wells Fargo Bank NA, is providing credit during the bankruptcy cases. 
  • Jurisdiction: D. of Delaware 
  • Capital Structure: $14.4mm debt (Wells Fargo Bank NA), $9.5mm "Seller Note" (RE Holdings)
  • Company Professionals:
    • Legal: Katten Muchin Rosenman LLP (Paige Barr, Peter Siddiqui, Allison Thompson) & (local) Saul Ewing LLP (Monique DiSabatino, Mark Minuti)
    • Financial Advisor: RAS Management Advisors LLC
    • Real Estate Advisor: RCS Real Estate Advisors
    • Claims Agent: JND Corporate Restructuring (*click on company name above for free docket access)
  • Other Parties in Interest:
  • DIP Lender: Wells Fargo Bank NA
    • Legal: Riemer Braunstein LLP (Donald Rothman) & (local) Ashby & Geddes PA (Gregory Taylor) 
  • Official Committee of Unsecured Creditors (incl. Simon Property Group, General Growth Properties):
    • Legal: Lowenstein Sandler LLP (Jeffrey Cohen, Bruce Buechler, Mary Seymour) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Kevin Shaw)
    • Financial Advisor: Berkeley Research Group LLC

Updated 9/24/17

New Chapter 11 Bankruptcy Filing - WYNIT Distribution LLC

WYNIT Distribution LLC

  • 9/8/17 Recap: Minnesota-based technology wholesaler filed for bankruptcy to pursue a sale process. The company seeks approval of a $15mm DIP credit facility to finance the cases. Major customers include Best Buy, Amazon, Costco, Walmart and Target. Fitbit and Symantec are listed among the companies largest creditors. 
  • Jurisdiction: D. of Minnesota
  • Capital Structure: $76.7mm RCF (Wells Fargo)    
  • Company Professionals:
    • Legal: Stinson Leonard Street LLP (Robert Kugler, Edwin Caldie, Phillip Ashfield, Andrew Glasnovich)
    • Financial Advisor: Conway MacKenzie Inc. (Peter A. Richichi)
    • Claims Agent: JND Corporate Restructuring (click on the case name above for free docket access)
  • Other Parties in Interest:
    • Prepetition Lender/DIP Lender: Wells Fargo
      • Legal: Greenberg Traurig LLP (David Kurzweil, John Dyer, DeWitt Perkins) & (local) Lindquist & Vennum LLP (Charles Perkins)
    • Prepetition Creditor: Fitbit Inc.
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Arik Preiss, Deborah Newman, Kevin Zuzolo) & (local) Maslon LLP (Clark Whitmore, Jason Reed)
    • Official Committee of Unsecured Creditors
      • Legal: Lowenstein Sandler LLP (Jeffrey Cohen) & (local) Barnes & Thornburg LLP (Connie Lahn)

Updated 9/21/17

New Chapter 11 Filing - Portrait Innovations Inc.

Portrait Innovations Inc.

  • 9/1/17 Recap: Remember professional portrait studios? Yeah, we don't either. Mostly because we haven't stepped foot in a mixed-use commercial location or traditional retail park since we got linked up to the internet 20 years ago. And that is predominantly where you'd find a Portrait Innovations studio: there are 119 of them in 31 states (including 3 studios in Walmart Supercenters). You know the story by now: with a significant decline of brick-and-mortar retail visitors comes decreased revenue...blah blah blah, bankruptcy. Here, management attempted to stave off the inevitable by negotiating rent forgiveness, closing underperforming locations (63, to be exact), and pursuing the positive, i.e., more Walmart studios. In the absence of flex by the landlords, management lacked the capital, however, to accomplish these goals. The bankruptcy filing is meant to effectuate a sale of the equity to a buyer and further reconcile leases. The company has secured a stalking horse bid from prepetition creditor, CapitalSouth Partners, and a $5mm DIP credit facility to fund the cases. 
  • Jurisdiction: W.D. of North Carolina (Judge Whitley)
  • Capital Structure: $15mm senior secured debt (CapitalSouth Partners SBIC Fund III LP)     
  • Company Professionals:
    • Legal: Rayburn Cooper & Durham PA (John Miller Jr., Paul Baynard, Benjamin Shook)
    • Investment Banker: Piper Jaffray & Co.
    • Real Estate Advisor: Hilco Real Estate LLC
    • Claims Agent: Rust Consulting/Omni Bankruptcy (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Secured Creditor/DIP Lender/Bidder: CapitalSouth Partners SBIC Fund III LP
      • Legal: K&L Gates LLP (Charles A. Dale III, Aaron Rothman, Margaret Westbrook)

Updated 9/18/17 5:15 pm CT

New Chapter 11 Filing - Model Reorg Acquisition LLC (aka Perfumania Inc.)

Model Reorg Acquisition LLC (Perfumania Inc.)

  • 8/26/17 Recap: New York-based vertically-integrated specialty retailer (226 retail locations, mostly mall-based) and wholesale distributor of perfumes and fragrances (to the likes of Sears, Target, Walmart and Walgreens) filed for bankruptcy pursuant to a prepackaged plan of reorganization. The company is seeking approval of a $83,750,000 Wells Fargo DIP facility ("DIP") which will roll into an exit facility. What caused the filing? The overall retail bloodbath, naturally. Since 2015, the company has lost tens of millions of dollars, closed 105 retail locations, decreased the pace of brick-and-mortar openings and focused efforts - like the rest of the retail world - on e-commerce expansion. This way you could buy your one gallon bottle of CK One online rather than in a crappy mall stall. Awesome. The structure of this case is as follows: the DIP requires a completed case within 90 days to ensure that the reorganized (and newly private) company can take advantage of Q4 seasonality. The prepackaged plan leaves general unsecured creditors unimpaired and reinstates the unsecured notes. It also provides a $2/share recovery for shareholders who opt-in to a release of principals (notably, the shares were trading at $1.33/share at Friday's market close). The stockholder consideration will be paid via a $14.26mm equity infusion, which also serves as consideration for 100% of the reorganized equity. The transaction also preserves approximately $40mm of net operating losses and other tax attributes that will inure to the benefit of the owners. 
  • Jurisdiction: D. of Delaware (Judge Sontchi)
  • Capital Structure: $175mm senior credit facility ($18.78mm funded)(Wells Fargo Bank), $125.4mm unsecured debt +$54.8mm accrued and unpaid interest (3 different notes). Public equity ($PERF).     
  • Company Professionals:
    • Legal: Skadden Arps Slate Meagher & Flom LLP (J. Gregory Milmoe, Lisa Laukitis, Raquelle Kaye, Anthony Clark)
    • Financial Advisor: Ankura Consulting Group LLC (Stephen Marotta)
    • Investment Banker: Imperial Capital LLC (Robert Warshauer)
    • Real Estate Advisor: A&G Realty Partners LLC (Andrew Graiser)
    • Liquidators: Hilco Merchant Resources LLC & Gordon Brothers Retail Partners LLC
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Agent to Senior Credit Facility: Wells Fargo Bank
      • Legal: Otterbourg P.C. (Daniel Fiorillo)
    • CIII Holdings LLC
      • Legal: Nastasi Partners PLLC (Ancela R. Nastasi, Marshall E. Tracht, Moshie Solomon, William S. Katchen, Andrew Gottesman) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller)

Updated 9/18/17

First Day Declaration filed 8/26/17

First Day Declaration filed 8/26/17