🌑New Chapter 11 Filing - Cloud Peak Energy Inc.🌑

In what ought to come as a surprise to absolutely no one, Cloud Peak Energy Inc. ($CLD) and a slate of affiliates FINALLY filed for bankruptcy.

Let’s take a moment of silence for coal country, shall we? If this is what MAGA looks like, we’d hate to see what happens when a global downturn eventually hits. There’s gonna be blood in the water.

Sounds like hyperbole? Note that since 2016, there have been a slate of coal-related bankruptcies, i.e., Westmoreland Coal CompanyMission Coal Company LLC, and now Cloud Peak Energy Inc. Blackhawk Mining LLC appears to be waiting in the wings. We suppose it could be worse: we could be talking about oil and gas country (and we will be, we certainly will be…and SOON.).

Cloud Peak is an impressive company. Since its formation in 2008, it has become one of the largest (subbituminous thermal coal) coal producers in the US — supplying enough coal to satisfy approximately 2% of the US’ electricity demand. Its three surface mines are located in the Powder River Basin in Wyoming and Montana; it sold approximately 50mm tons of coal in 2018 to 46 domestic and foreign end users.*

In the scheme of things, Cloud Peak’s balance sheet isn’t overly complicated. We’re not talking about billions of dollars of debt here like we saw with Walter EnergyPeabody Energy, Arch Coal, Patriot Coal or Alpha Natural Resources. So, not all coal companies and coal company bankruptcies are created equal. Nevertheless, the company does have $290.4mm of ‘21 12% secured notes (Wilmington Trust NA) and $56.4mm of ‘24 6.375% unsecured notes (Wilmington Trust NA as successor trustee to Wells Fargo Bank NA) to contend with for a total of $346.8mm in funded debt liability. The company is also party to a securitization facility. And, finally, the company also has reclamation obligations related to their mines and therefore has $395mm in third-party surety bonds outstanding with various insurance companies, backed by $25.7mm in letters of credit. Coal mining is a messy business, homies.

So why bankruptcy? Why now? Per the company:

The Company’s chapter 11 filing, however, was precipitated by (i) general distress affecting the domestic U.S. thermal coal industry that produced a sustained low price environment that could not support profit margins to allow the Company to satisfy its funded debt obligations; (ii) export market price volatility that caused decreased demand from the Company’s customers in Asia; (iii) particularly challenging weather conditions in the second quarter of 2018 that caused spoil failure and significant delays in coal production through the remainder of 2018 and into 2019, which reduced cash inflows from coal sales and limited credit availability; and (iv) recent flooding in the Midwestern United States that has significantly disrupted rail service, further reducing coal sales.

To summarize, price compression caused by natural gas. Too much regulation (which, in turn, favors natural gas over coal). Too much debt. And, dare we say, global warming?!? Challenging weather and flooding must be really perplexing in coal country where global warming isn’t exactly embraced with open arms.

Now, we may be hopping to conclusions here but, these bits are telling — and are we say, mildly ironic in a tragic sort of way:

In addition to headwinds facing thermal coal producers and export market volatility, the Company’s mines suffered from unusually heavy rains affecting Wyoming and Montana in the second quarter of 2018. For perspective, the 10-year average combined rainfall for May, June, and July at the Company’s Antelope Mine is 6.79 inches. In 2018, it rained 10.2 inches during that period. While certain operational procedures put in place following heavy flooding in 2014 functioned effectively to mitigate equipment damage, the 2018 rains interrupted the Company’s mining operations considerably.

It gets worse.

The problem with rain is that the moisture therefrom causes “spoil.” Per the company:

Spoil is the term used for overburden and other waste rock removed during coal mining. The instability in the dragline pits caused wet spoil to slide into the pits that had to be removed by dragline and/or truck-shovel methods before the coal could be mined. This caused significant delays and diverted truck-shovel capacity from preliminary stripping work, which caused additional production delays at the Antelope Mine. The delays resulting from the spoil failure at the Antelope Mine caused the Company to have reduced shipments, increased costs, and delayed truck-shovel stripping in 2018. Consequently, the reduced cash inflows from coal sales limited the Company’s credit availability under the financial covenants in the Amended Credit Agreement prior to its termination, and limited access to any new forms of capital.

But, wait. There’s more:

Additionally, the severe weather affecting the Midwest region of the United States in mid-March 2019 caused, among other things, extensive flooding that damaged rail lines. One of Cloud Peak’s primary suppliers of rail transportation services – BNSF – was negatively impacted by the flooding and has been unable to provide sufficient rail transportation services to satisfy the Company’s targeted coal shipments. As of the Petition Date, BNSF’s trains have resumed operations, but are operating on a less frequent schedule because of repairs being made to rail lines damaged by the extensive flooding. As a result, the Company’s coal shipments have been materially impacted, with cash flows significantly reduced through mid-June 2019.

Riiiiiiiight. But:

More about Moore here: the tweet, as you might expect, doesn’t tell the full story.

Anywho.

The company has been burning a bit over $7mm of liquidity a month since September 2018. Accordingly, it sought strategic alternatives but was unable to find anything viable that would clear its cap stack. We gather there isn’t a whole lot of bullishness around coal mines these days.

To buy itself some time, therefore, the company engaged in a series of exchange transactions dating back to 2016. This enabled it to extinguish certain debt maturing in 2019. And thank G-d for the public markets: were it not for a February 2017 equity offering where some idiot public investors hopped in to effectively transfer their money straight into noteholder pockets, this thing probably would have filed for bankruptcy sooner. That equity offering — coupled with a preceding exchange offer — bought the company some runway to continue to explore strategic alternatives. The company engaged J.P. Morgan Securities LLC to find a partner but nothing was actionable. Ah….coal.

Thereafter, the company hired a slate of restructuring professionals to help prepare it for the inevitable. Centerview Partners took over for J.P. Morgan Securities LLC but, to date, has had no additional luck. The company filed for bankruptcy without any prospective buyers lined up.

Alas, the company filed for bankruptcy with a “sale and plan support agreement” or “SAPSA.” While this may sound like a venereal disease, what it really means is that the company has an agreement with a significant percentage of both its secured and unsecured noteholders to dual track a sale and plan process. If they can sell the debtors’ assets via a string of 363 sales, great. If they have to do a more fulsome transaction by way of a plan, sure, that also works. These consenting noteholders also settled some other disputes and support the proposed $35mm DIP financing

*Foreign customers purchased approximately 9% of ‘18 coal production.

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure: $290mm 12% ‘21 secured debt (Wilmington Trust NA), $56.4mm unsecured debt (BOKF NA)

  • Professionals:

    • Legal: Vinson & Elkins LLP (Paul Heath, David Meyer, Jessica Peet, Lauren Kanzer, Matthew Moran, Steven Zundell, Andrew Geppert, Matthew Pyeatt, Matthew Struble, Jeremy Reichman) & (local) Richards Layton & Finger PA (Daniel DeFranceschi, John Knight)

    • Financial Advisor: FTI Consulting Inc. (Alan Boyko)

    • Investment Banker: Centerview Partners (Marc Puntus, Ryan Kielty, Johannes Preis)

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

  • Other Parties in Interest:

    • Major shareholders: Renaissance Technologies LLC, The Goldman Sachs Group Inc., Dimensional Fund Advisors LP, Kopernik Global Advisors, Blackrock Inc.

    • DIP Agent: Ankura Trust Company LLC

      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Aryeh Ethan Falk, Christopher Robertson) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller, Paige Topper)

      • Financial Advisor: Houlihan Lokey

    • Prepetition Secured Noteholder Group (Allianz Global Investors US LLC, Arena Capital Advisors LLC, Grace Brothers LP, Nomura Corporate Research and Asset Management Inc. Nuveen Alternatives Advisors LLC, Wexford Capital LP, Wolverine Asset Management LLC)

      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Aryeh Ethan Falk, Christopher Robertson) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller, Paige Topper)

    • Indenture Trustee: BOKF NA

      • Legal: Arent Fox LLP (Andrew Silfen, Jordana Renert) & (local) Womble Bond Dickinson US LLP (Matthew Ward)

    • Official Committee of Unsecured Creditors (BOKF NA, Nelson Brothers Mining Services LLC, Wyoming Machinery Company, Cummins Inc., ESCO Group LLC, Tractor & Equipment Co., Kennebec Global)

      • Legal: Morrison & Foerster LLP (Lorenzo Marinuzzi, Jennifer Marines, Todd Goren, Daniel Harris, Mark Lightner) & Morris James LLP (Carl Kunz III, Brya Keilson, Eric Monzo)

      • Investment Banker: Jefferies LLC (Leon Szlezinger)

Update: 7/7/19 #379

😷New Chapter 11 Filing - Astria Health😷

Astria Health

May 6, 2019

Astria Health, a large non-profit healthcare system based in Eastern Washington, has filed for bankruptcy along with a dozen or so affiliates. The company blames its chapter 11 filing on regulatory approval processes that stunted expansion plans, poor collections on accounts receivable, and charitable care that, despite best efforts, hadn’t been offset by charitable contributions. All of these issues have squashed cash flow and triggered issues with the debtors’ secured debt, part of which is uber-expensive. The debtors intend to use their DIP credit facility to take out their expensive “high cost of capital” MidCap Financial Trust-provided (and other) debt; they also hope to use the “breathing spell” provided by the automatic stay to remedy their collections problems and march towards a plan of reorganization within 150 days.

  • Jurisdiction: E.D. of Washington (Judge Kurtz)

  • Capital Structure: $72mm secured debt

  • Professionals:

    • Legal: Dentons US LLP (Samuel Maziel) & (local) Bush Kornfeld LLP (James Day)

    • Claims Agent: KCC (*click on the link above for free docket access)

  • Other Parties in Interest:

    • DIP Lender: JMB Financial Advisors

      • Legal: Arent Fox LLP (Robert Hirsh, Jordana Renert) & (local) Southwell & O’Rourke (Kevin O’Rourke)

New Chapter 11 Bankruptcy Filing - New Cotai Holdings LLC

New Cotai Holdings LLC

May 1, 2019

New Cotai Holdings LLC and three affiliated debtors filed for bankruptcy in the Southern District of New York on the basis of New Cotai Ventures LLC, a NY LLC, having cash held in a bank account in White Plains New York (as of when, we wonder). The debtors were formed for the purpose of investing in Studio City International Holdings Limited, have no employees, and are otherwise managed by sponsor, Silver Point Capital LP. The declarant supporting the debtors’ chapter 11 filing is an independent director who was put into place literally 2 days before the filing. Yup, 2 whole days.

Studio City International Holdings Limited is a wretched hive of scum and villany. Sorry, that’s not right. That’s us trying to make this more interesting than it is. In truth, its an “integrated resort comprising entertainment, retail, hotel and gaming facilities” located in Macau (that’s China, people). The project has made it past Phase I of construction but has stalled out there: the rest of the project will require several more years. In October 2018, the company IPO’d 28.75mm American Depository Shares at $12.50/share.

To further capitalize the project, two of the debtors, as co-issuers, issued $380mm of 10.625% PIK Notes in 2013 due May 2019. Curious to know how 10.625% PIK adds up? The current principal balance of the notes is now $856mm.

Now, not to state the obvious, but to paydown Notes on maturity, you kinda need to have some moolah. And considering that the project is only past Phase I with much more work to do…well, you see where we are going here. The company notes:

The Debtors’ ability to satisfy their obligations under the Notes is directly tied to the development and success of the Studio City project. Due to delays in the development of the Studio City project, a reduced allocation of gaming tables from the government, and some unanticipated declines in the Macau gaming market, the Investment has not yet achieved sufficient market value in light of the highly illiquid and unreliable market conditions that have developed following the IPO, making a refinancing impracticable. Therefore, through no fault of their own, the Debtors were unable to satisfy the Notes obligations by their maturity.

Listen guys: you ain’t getting Matt Damon, George Clooney and other whales at your tables if you don’t have VIP tables. Obvi. Second, it sounds like the project hired the quintessential New York City-based general contractor. “Yeah, sure, the project will cost $30mm and take 1 month” only to cost “an additional $300 million” and take literally years. Of course “[c]onstruction costs came in greater than expected.” Isn’t that par for the course in hotel development? The company now has until 2021 to finish Phase II of the project. It sounds like it will need it.

Of course, you have to admire the entrepreneurial enthusiasm:

Notwithstanding the aforementioned challenges, the Debtors believe that the Investment continues to represent a significant economic opportunity—the value of which is not accurately represented in the current market prices of the ADS. Indeed, should the Studio City project continue to develop on its currently anticipated timeframe, the Debtors expect the Investment to generate sufficient value to repay the Notes in full.

The debtors must NOT be expecting a downturn. Gaming usually doesn’t fare too well during one of those. And Chinese growth hasn’t exactly been at levels enjoyed over the last decade or so. But, fingers crossed.

The debtors are negotiating with an Ad Hoc Group of noteholders in an effort to address this state of affairs. They have latitude: Silver Point has committed to a $6.25mm DIP with, among other favorable terms to the debtors, no milestones and a 12-month maturity (with an option to extend a subsequent 12 months). This DIP was not marketed and so the early part of the case will be spent presumably searching for alternatives. Because lenders surely love the idea of providing a DIP, the main purpose of which is to pay Skadden Arps’ and the Ad Hoc Group’s fees.

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

  • Capital Structure: $856mm (Wells Fargo Bank NA)

  • Professionals:

    • Legal: Skadden, Arps, Slate, Meagher & Flom LLP (Jay Goffman, Mark McDermott, Evan Hill)

    • Managing Member: Drivetrain Advisors LLC (John Brecker)

    • Financial Advisor: Houlihan Lokey Capital Inc.

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

  • Other Parties in Interest:

    • Wells Fargo Bank NA

      • Legal: Arent Fox LLP (Andrew Silfen, Beth Brownstein)

    • Sponsor: Silver Point Capital LP

New Chapter 11 Bankruptcy Filing - F+W Media Inc.

F+W Media Inc.

March 10, 2019

WAAAAAAY back in September 2018, we highlighted in our Members’-only piece, “Online Education & ‘Community’ (Long Helen Mirren),” that esteemed author and professor Clayton Christensen was bullish about the growth of online education and bearish about colleges and universities in the US. We also wrote that Masterclass, a SF-based online education platform that gives students “access” to lessons from the likes of Helen Mirren(acting), Malcolm Gladwell (writing) and Ken Burns (documentary film making) had just raised $80mm in Series D financing, bringing its total fundraising to $160mm. Online education is growing, we noted, comporting nicely with Christensen’s thesis.

But we didn’t stop there. We counter-punched by noting the following:

Yet, not all online educational tools are killing it. Take F+W Media Inc., for instance. F+W is a New York-based private equity owned content and e-commerce company; it publishes magazines, books, digital products like e-books and e-magazines, produces online video, offers online education, and operates a variety of e-commerce channels that support the various subject matters it specializes in, e.g., arts & crafts, antiques & collectibles, and writing. Writer’s Digest is perhaps its best known product. Aspiring writers can go there for online and other resources to learn how to write.

For the last several years F+W has endeavored to shift from its legacy print business to a more digital operation; it is also beginning to show cracks. Back in January, the company’s CEO, COO and CTO left the company. A media and publishing team from FTI Consulting Inc. ($FTI) is (or at least was) embedded with new management. The company has been selling non-core assets (most recently World Tea Media). Its $125mm 6.5% first lien term loan due June 2019 was recently bid at 63 cents on the dollar (with a yield-to-worst of 74.8% — yields are inversely proportional to price), demonstrating, to put it simply, a market view that the company may not be able to pay the loan (or refinance the loan at or below the current economics) when it comes due.

Unlike MasterClass and Udacity and others, F+W didn’t start as an all-digital enterprise. The shift from a legacy print media business to a digital business is a time-consuming and costly one. Old management got that process started; new management will need to see it through, managing the company’s debt in the process. If the capital markets become less favorable and/or the business doesn’t show that the turnaround can result in meaningful revenue, the company could be F(+W)’d(emphasis added)

Nailed it.

On March 10, 2019, F+W Media Inc., a multi-media company owning and operating print and digital media platforms, filed for chapter 11 bankruptcy in the District of Delaware along with several affiliated entities. We previously highlighted Writer’s Digest, but the company’s most successful revenue streams are its “Crafts Community” ($32.5mm of revenue in 2018) and “Artist’s Network” ($.8.7mm of revenue in 2018); it also has a book publishing business that generated $22mm in 2018. In terms of “master classes,” the bankruptcy papers provide an intimate look into just how truly difficult it is to transform a legacy print business into a digital multi-media business.

The numbers are brutal. The company notes that:

“In the years since 2015 alone, the Company’s subscribers have decreased from approximately 33.4 million to 21.5 million and the Company’s advertising revenue has decreased from $20.7 million to $13.7 million.”

This, ladies and gentlemen, reflects in concrete numbers, what many in media these days have been highlighting about the ad-based media model. The company continues:

Over the past decade, the market for subscription print periodicals of all kinds, including those published by the Company, has been in decline as an increasing amount of content has become available electronically at little or no cost to readers. In an attempt to combat this decline, the Company began looking for new sources of revenue growth and market space for its enthusiast brands. On or around 2008, the Company decided to shift its focus to e-commerce upon the belief that its enthusiast customers would purchase items from the Company related to their passions besides periodicals, such as craft and writing supplies. With its large library of niche information for its hobbyist customers, the Company believed it was well-positioned to make this transition.

What’s interesting is that, rather than monetize their “Communities” directly, the company sought to pursue an expensive merchandising strategy that required a significant amount of upfront investment. The company writes:

In connection with this new approach, the Company took on various additional obligations across its distribution channel, including purchasing the merchandise it would sell online, storing merchandise in leased warehouses, marketing merchandise on websites, fulfilling orders, and responding to customer service inquiries. Unfortunately, these additional obligations came at a tremendous cost to the Company, both in terms of monetary loss and the deterioration of customer relationships.

In other words, rather than compete as a media company that would serve (and monetize) its various niche audiences, the company apparently sought to use its media as a marketing arm for physical products — in essence, competing with the likes of Amazon Inc. ($AMZN)Walmart Inc. ($WMT) and other specialty hobbyist retailers. As if that wasn’t challenging enough, the company’s execution apparently sucked sh*t:

As a consequence of this shift in strategic approach, the Company was required to enter into various technology contracts which increased capital expenditures by 385% in 2017 alone. And, because the Company had ventured into fields in which it lacked expertise, it soon realized that the technology used on the Company’s websites was unnecessary or flawed, resulting in customer service issues that significantly damaged the Company’s reputation and relationship with its customers. By example, in 2018 in the crafts business alone, the Company spent approximately $6 million on its efforts to sell craft ecommerce and generated only $3 million in revenue.

Last we checked, spending $2 to make $1 isn’t good business. Well, unless you’re Uber or Lyft, we suppose. But those are transformative visionary companies (or so the narrative goes). Here? We’re talking about arts and crafts. 🙈

As if that cash burn wasn’t bad enough, in 2013 the company entered into a $135mm secured credit facility ($125mm TL; $10mm RCF) to fund its operations. By 2017, the company owed $99mm in debt and was in default of certain covenants (remember those?) under the facility. Luckily, it had some forgiving lenders. And by “forgiving,” we mean lenders who were willing to equitize the loan, reduce the company’s indebtedness by $100mm and issue a new amended and restated credit facility of $35mm (as well as provide a new $15mm tranche) — all in exchange for a mere 97% of the company’s equity (and some nice fees, we imagine). Savage!

As if the spend $2 to make $1 thing wasn’t enough to exhibit that management wasn’t, uh, “managing” so well, there’s this:

The Company utilized its improved liquidity position as a result of the Restructuring to continue its efforts to evolve from a legacy print business to an e-commerce business. However, largely as a result of mismanagement, the Company exhausted the entire $15 million of the new funding it received in the six (6) months following the Restructuring. In those six (6) months, the Company’s management dramatically increased spending on technology contracts, merchandise to store in warehouses, and staffing while the Company was faltering and revenue was declining. The Company’s decision to focus on e-commerce and deemphasize print and digital publishing accelerated the decline of the Company’s publishing business, and the resources spent on technology hurt the Company’s viability because the technology was flawed and customers often had issues with the websites.

What happened next? Well, management paid themselves millions upon millions of dollars in bonuses! Ok, no, just kidding but ask yourself: would you have really been surprised if that were so?? Instead, apparently the board of directors awoke from a long slumber and decided to FINALLY sh*tcan the management team. The board brought in a new CEO and hired FTI Consulting Inc. ($FTI) to help right the ship. They quickly discovered that the e-commerce channel was sinking the business (PETITION Note: this is precisely why many small startup businesses build their e-commerce platforms on top of the likes of Shopify Inc. ($SHOP) — to avoid precisely the e-commerce startup costs and issues F+W experienced here.).

Here is where you insert the standard operational restructuring playbook. Someone built out a 13-week cash flow model and it showed that the company was bleeding cash. Therefore, people got fired and certain discreet assets got sold. The lenders, of course, took some of those sale proceeds to setoff some of their debt. The company then refreshed the 13-week cash flow model and…lo and behold…it was still effed! Why? It still carried product inventory and had to pay for storage, it was paying for more lease space than it needed, and its migration of e-commerce to partnerships with third party vendors, while profitable, didn’t have meaningful enough margin (particularly after factoring in marketing expenses). So:

Realizing that periodic asset sales are not a long-term operational solution, the Company’s board requested alternative strategies for 2019, ranging from a full liquidation to selling a significant portion of the Company’s assets to help stabilize operations. Ultimately, the Company determined that the only viable alternative, which would allow it to survive while providing relief from its obligations, was to pursue a sale transaction within the context of a chapter 11 filing.

Greenhill & Co. Inc. ($GHL) is advising the company with respect to a sale of the book publishing business. FTI is handling the sale of the company’s Communities business. The company hopes both processes are consummated by the end of May and middle of June, respectively. The company secured an $8mm DIP credit facility to fund the cases.

And that DIP ended up being the source of some controversy at the First Day hearing. Yesterday morning, Judge Gross reportedly rebuked the lenders for seeking a 20% closing fee on the $8mm DIP; he suggested 10%. Per The Wall Street Journal:

Judge Gross said he didn’t want to play “chicken” with the lenders, but that he didn’t believe they should use the bankruptcy financing to recoup what they were owed before the chapter 11 filing.

Wow. Finally some activist push-back on excessive bankruptcy fees! Better late than never.

  • Jurisdiction: D. of Delaware (Judge Gross)

  • Capital Structure:

  • Professionals:

    • Legal: Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Kenneth Enos, Elizabeth Justison, Allison Mielke, Jared Kochenash)

    • Financial Advisor: FTI Consulting Inc. (Michael Healy)

    • Investment Banker: Greenhill & Co.

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

  • Other Parties in Interest:

    • Prepetition & Postpetition DIP Agent ($8mm): Fortress Credit Co. LLC)

      • Legal: Halperin Battaglia Benzija LLP (Alan Halperin, Walter Benzija, Julie Goldberg) & (local) Bielili & Klauder LLC (David Klauder)

    • DIP Lenders: Drawbridge Special Opportunities Fund LP, New F&W Media M Holdings Corp LLC, PBB Investments III LLC, CION Investment Corporation, Ellington Management Group, or affiliates thereof to be determined.

    • Official Committee of Unsecured Creditors (LSC Communications US, Inc. and Palm Coast Data LLC)

      • Legal: Arent Fox LLP (Robert Hirsh, Jordana Renert) & (local) Morris James LLP (Eric Monzo, Brya Keilson)

      • Financial Advisor: B. Riley FBR (Adam Rosen)

Updated 4/23

New Chapter 11 Bankruptcy Filing - DIESEL USA, Inc.

DIESEL USA, Inc.

March 5, 2019

Three things immediately occurred to us when we saw the news that Diesel USA Inc. filed for bankruptcy in the District of Delaware:

  1. That makes perfect sense — Jersey Shore went off the air a long time ago;

  2. This is “The Mattress Firm Effect” in action — a retailer using a quick trip in bankruptcy to, on an expedited basis, flush out some burdensome leases and otherwise leave parties in interest unimpaired; and

  3. More surprising than the company filing for bankruptcy is the law firm filing it for bankruptcy. Arent Fox LLP, while a fine firm for sure, isn’t exactly known for its debtor-side chops. Just saying.

The numbers around this one are…well…interesting. The company’s brick-and-mortar retail operations consist of 28 retail store locations in 11 states, comprised of 17 full-price retail stores and 11 factory outlet stores. Net sales were:

  • In 2014: $83mm for full-price retail and $42mm for outlet (Total: $125mm); and

  • In 2018: $38mm for full-price retail and $34.5mm for outlet (Total: $72.5mm).

In terms of percentages:

  • In 2014: brick and mortar represented 64% of net sales; and

  • In 2018: brick and mortar represented 70% of net sales.

We see a couple of significant problems here.

Despite the superlatives that the company’s CRO generously uses to describe the company, i.e., “cutting-edge,” and “cultural icon,” the numbers reflect a BRAND — let alone the business — in significant trouble. Sure, net sales are down generally, but the distribution has gotten wildly askew. The numbers reflect a bare reality: Diesel simply isn't a brand people will pay full price for anymore. This couldn’t be more stark. And that’s a big problem when the company is (or was) party to expensive height-of-the-real-estate-market leases in prime locations like Manhattan’s Fifth Avenue. Diesel, quite simply, isn’t “Fifth Avenue,” let alone “Madison Avenue.”* We’re not convinced the company is being realistic when it says that it has “retained a loyal customer base.” The numbers plainly say otherwise. Moreover, in an age where digital sales are increasingly more important, the business has become MORE dependent on brick-and-mortar as opposed to its wholesale and e-commerce channels.**

But don’t take our word for it. Here’s the company’s CRO:

…in 2015 prior management implemented a strategic initiative that was focused on repositioning Diesel stores and products in premium locations and with premium customers so as to place them side-by-side with other premium fashion brands across the retail, online, and wholesale platforms. Unfortunately, since its implementation, the Debtor’s net sales have significantly decreased while its losses have significantly increased.

The market has spoken: Diesel is, according to the market, simply not “premium.”

And by “market” we also mean wholesalers. The company opted to stop distributing its products to wholesale partners “that were deemed not to fit the premium image.” Now, we can only imagine that included discount retailers. Basically, SOME OF THE RETAILERS WHO HAVE PERFORMED THE BEST OVER THE LAST SEVERAL YEARS. But wait: it gets even worse: the wholesale customers the company DID retain pursued voluminous “chargebacks.” Per the company:

As is common in the retail industry, the Debtor provides certain customers with allowances for markdowns, returns, damages, discounts, and cooperative marketing programs (collectively, the “Chargebacks”). If the Debtor’s customers fail to sell the Debtor’s products, they generally have the right to return the goods at cost or issue Chargebacks, which are netted against the Debtor’s accounts receivable. Due to mounting Chargebacks from wholesale customers, the Debtor was forced to significantly reduce its wholesale activities in recent years.

Basically, nobody is buying this sh*t. Not in stores. Not in wholesale.

And, yet, the company holds premium leases:

The primary means of implementing the 2015 strategy was to reposition the Debtor’s full-price retail and outlet stores to “premium”, high-profile, and high-visibility locations, which was executed by opening certain new stores and relocating others to “premium” locations while closing others deemed not to fit the new strategic positioning model. The result was, despite the losses suffered in connection with the Fifth Avenue store, management’s negotiation and entry into several expensive, long-term leases for certain of the Debtor’s retail locations, such as the Debtor’s “Flagship” store on Madison Avenue, which do not expire by their terms until 2024-2026. Of course, it was then (and remains today) an inopportune time to make long-term commitments to costly retail leases and the significantly increased lease expenses have not been offset by increased sales, which, in fact, have dropped precipitously.

…numerous of the Debtor’s stores are producing heavy losses. The Debtor’s unprofitable stores combined to produce negative EBITDA of approximately $10.7 million in 2018, nearly all of which flowed from full-price retail stores. The Debtor’s profitable stores are not enough to off-set the losses, as the 17 fullprice stores combined to produce negative EBITDA of approximately $8.7 million in 2018.

Now, the company does indicate that certain (seemingly outlet) stores remain profitable, as do the wholesale and e-commerce operations.*** So, there’s that. New management is in place and their plan includes (a) using the BK to negotiate with landlords, shutter some locations, shutter and relocate others, opening new smaller stores and refit existing locations; (b) deploying influencer marketing generally and aiming more efforts towards females (and hoping and praying that athleisure — a term we didn’t see ONCE in the entire first day declaration — doesn’t continue to hold sway and steer people away from jeans, generally);**** (c) growing e-commerce; and (d) revitalizing the wholesale business with key selective wholesale partners. This plan is meant to take hold in the next three years and “will require significant capital investments.” (PETITION Note: cue the chapter 22 preparation). The company intends to effectuate its new business plan via a plan of reorganization pursuant to which it will reject certain executory contracts. All in, the company hopes to be confirmed in roughly 5 weeks. Aggressive! But, like Mattress Firm, trade creditors are “current” and there’s no debt otherwise, so the schedule isn’t entirely out of the realm of possibility.

But this is the part that REALLY gets us. If you’ve been reading PETITION long enough — particularly our “We Have a Feasibility Problem” series — you know by now that you ought to be AWFULLY SKEPTICAL of management team’s rosy projections. Per the company:

The Debtor’s projections indicate that the Reorganization Business Plan will return the Debtor to stand-alone profitability by 2021 assuming successful store closures through this Chapter 11 Case, thereby ensuring its ability to continue operating as a going-concern, saving over 300 jobs, and creating new ones through the new store openings.

Generally, we’ll take the under. Though, we have to say: at least they’re not audaciously projecting a miraculous profit in 2019.

How will they achieve all of these lofty goals? The company’s foreign parent will invest $36mm over the three-year period of the business plan because…well…why the hell not? Everyone loves a Hail Mary.


*The company suffered from an ill-advised and poorly-timed real estate spending spree. Between 2008 and 2015, right as brick-and-mortar really started to decline and e-commerce expand, the company expended $90mm on leases. As for Fifth Avenue, per the company, “the Debtor’s store on Fifth Avenue in Manhattan, which opened in 2008 and closed in 2014, by itself received approximately $18 million in capital expenditures during its tenure while generating substantial losses.

**The company doesn’t appear to have put much into its e-commerce growth. While e-commerce now represents 12% of net sales, sales are only incrementally higher in absolute numbers (from $8mm in 2014 to $12mm in 2018). The wholesale channel, on the other hand, has gone in the opposite direction. Net sales went from $61mm (2014) to $19mm (2018) and now represent only 19% of net sales (down from 32%).

***It seems, though, that outlet stores, wholesale and e-commerce resulted in negative $2mm EBITDA if the math from the above quote is correct. Curious.

****Score for Facebook Inc. ($FB)!


  • Jurisdiction: D. of Delaware (Judge Walrath)

  • Professionals:

    • Legal: Arent Fox LLP (George Angelich, David Mayo, Phillip Khezri) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Kenneth Enos, Travis Buchanan)

    • Claims Agent: Bankruptcy Management Solutions d/b/a Stretto (*click on the link above for free docket access)

  • Other Parties in Interest:



New Chapter 11 Filing - R.E. Gas Development LLC (a/k/a Rex Energy)

R.E. Gas Development LLC

5/18/18

Pennsylvania-based R.E. Gas Development LLC and its affiliates are independent publicly-traded ($REXX) oil and gas companies operating in the Appalachian Basin with a focus on drilling and exploration activity in the Marcellus Shale, Utica Shale and Upper Devonian Shale, mostly throughout Western Pennsylvania. Like most other exploration and production companies that have found their way in bankruptcy court over the last several years, the sudden steep decline in crude oil and nat gas prices that began in 2014 significantly affected the company's liquidity and ability to manage its balance sheet. After all, this company isn't operating in the Permian. Revenues for 2017 were $205.3 million. 

After months and months of foreplay, the company enters bankruptcy court with a restructuring support agreement ("RSA") in tow: it provides for a dual path pursuant to which the company will, in agreement with its secured lenders, pursue a sale of substantially all assets or, in the absence of qualified bids, pursue a plan process pursuant to which the first lien lenders (i.e., Angelo Gordon) will swap (DIP) debt for equity in the reorganized company. The RSA purportedly has the support of 100% of the first lien lenders and 71.8% of the outstanding second lien notes.

To fund the company throughout the dual process, the company seeks a $411 million DIP credit facility, the proceeds of which will be used to (i) roll up $261 million of prepetition loans and (ii) settle the "makewhole provision" under the first lien credit agreement to the tune of $50 million. The makewhole was put into place at the time of the issuance of the first lien loan just short of a year ago.  For the uninitiated, the makewhole entitles the lender to certain economics in the event the lenders are "repaid in whole or in part prior to the maturity date or the outstanding indebtedness under the facility is accelerated for any reason." The economics are calculated "based on the sum of remaining interest payments and certain fees due on all loans for the remainder of the make whole period, which terminates on October 28, 2019." In other words, Angelo Gordon structured this to give themselves the utmost economics in the (highly likely) case of an event of default and eventual bankruptcy. Solid planning on their part -- assuming, in particular, that the assets fetch a purchase price that will clear the first lien debt and makewhole amount. Respect. 

So, lo and behold, there was an event of default called in February for failure to deliver quarterly financial statements (which led to other defaults as well). In April, the lenders, after a short forbearance period, issued a notice of acceleration. Cha ching! Makewhole!!

The DIP credit agreement imposes fairly expedited -- but not wholly unreasonable (relative to other recent cases) -- timing on the company, including closing of any sale or confirmation of a plan 170 days after the filing date. 

  • Jurisdiction: W.D. of Pennsylvania (Judge Deller)
  • Capital Structure: see below.
  • Company Professionals:
    • Legal: Jones Day (Scott Greenberg, Tom Howley, Michael Cohen, Anna Kordas, Rachel Biblo Block) & (local) Buchanan Ingersoll and Rooney PC (James Newell, Timothy Palmer, Tyler Dischinger)
    • Financial Advisor: FTI Consulting Inc. (Albert Conly)
    • Investment Banker: Perella Weinberg Partners (Alexander Tracy)
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Prepetition First Lien Admin Agent: Angelo Gordon Energy Servicer
      • Legal: Simpson Thacher & Bartlett LLP (Michael Torkin) & (local) Duane Morris LLP
      • Financial Advisor: PJT Partners
    • Informal Group of 1%/8% Senior Secured Second Lien Notes due 2020 of Rex Energy Corporation
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Michael Stamer, Meredith Lahaie, Stephen Kuhn, Kevin Zuzolo) and (local) Reed Smith LLP (Eric Schaffer, Maura McIntyre)
      • Financial Advisor: Stephens Inc.
    • Wilmington Savings Fund Society FSB
      • Legal: Morrison & Foerster LLP (Jonathan Levine, Daniel Harris) & (local) Reed Smith LLP (Eric Schaffer, Maura McIntyre)
    • BOKF, National Association
      • Legal: Arent Fox LLP (Andrew Silfen, George Angelich, Jordana Renert) & (local) Federic Dorwart, Lawyers PLLC (Samuel Ory)
    • Official Committee of Unsecured Creditors
      • Legal: Brown Rudnick LLP (Robert Stark, Chelsea Mullarney, Sigmund Wissner-Gross, Brian Rice, Steven Pohl, Andrew Carty, Bennett Silverberg, Chelsea Mullarney, Emily Koruda, Justin Cunningham) & (local) Leech Tishman Fuscaldo & Lampl LLC (Patrick Carothers, David Lampl, John Steiner)
      • Financial Advisor: Conway MacKenzie Inc. (John Young Jr.)
Source: First Day Declaration

Source: First Day Declaration

New Chapter 11 Filing - Videology Inc.

Videology Inc. 

5/10/18

In what could amount to a solid case study in #BustedTech and the up/down nature of entrepreneurship, Videology Inc., a Baltimore based software ad-tech company that generated $143.2 million in revenue in fiscal 2017 has filed for bankruptcy.

The company has two principal business lines: (i) legacy media sales, a demand side (advertisers) platform that Videology would leverage to procure ad inventory to sell to advertising agencies (the supply side); and (ii) its long-tail "core use case," which included "long term planning, management, and execution of a company's entire portfolio of advertising campaigns or advertising inventory with complex, overlapping targets, objections...across multiple delivery channels." We're going to pretend we understand what that means; we think it has something to do with assisting ad agencies target ads effectively. What we do understand is that revenue generation for the more lucrative "core use case" segment involved a long sales pipeline that didn't support timely enough revenues to offset the liquidity draining legacy segment. Ruh roh.

But let's take a step back. This company was founded in February 2007. It raised its $15.1 million Series A round of funding in July 2008, securing Valhalla Partners II as a lead investor. It then secured its $16.4 million Series B round in Q4 2009. Comcast Ventures LP was the lead investor. Thereafter it nailed down its $30.4 million Series C round in May 2011 with New Enterprise Associates 12. Finally, in June of 2013, the company closed its $68.2 million Series D round with Catalyst Investors QP III as lead. Lots of funding. No down rounds. Everything seems to be on the right track.

Except it wasn't. The legacy segment was bleeding cash as early as 2012. The company had to tap the venture debt market in July 2017 to refi-out its bank line of credit. It obtained a $40-45 million 8.5% asset-backed credit facility (secured against virtually everything, including IP) with Fast Pay Partners LLC as agent and Tennenbaum Capital Partners LLC ("TCP"), as documentation agent and investment manager. It also obtained a second $20 million 10% asset-backed "UK" credit facility with FPP Sandbox LLC and TCP, which was secured by the same collateral. Both loans came with exit fees, charge 3% default interest and the larger facility has a 3% end-of-term premium attached to it.

At the same time the company took out the venture debt, it issued $17.1 million of convertible notes from board members and existing major investors (elevating them in the cap table) AND raised an additional $4.7 million in a subsequent rights offering to smaller legacy investors. What do you think will happen to that money? We'll come back to that.

In Q3 2017, the company also sought to find a strategic buyer. It didn't. It then started doing what every distressed company does: it stretched payables while it tried to formulate an out-of-court solution -- in the form of a restructuring or a refinancing. Certain vendors became skittish and withheld payments to the company. The resultant cash squeeze precipitated the prepetition lenders issuance of a notice of default. Thanks to a cash control agreement, they then seized control of the main operating accounts and paid down amounts owing with the company's cash and accounts receivable. And, yes, they applied the default interest rate. This is why they say what they say about possession. Savage. Consequently nothing is due under the larger facility; over $11.2 million remains due on the UK facility. 

The company now has a potential buyer, Amobee Inc., and has filed for bankruptcy to effectuate a sale. The company hasn't yet filed papers indicating the sale price but The Wall Street Journal reports that the purchase price may be $45 million -- or 1/3 of '17 revenues. The WSJ also reports that the company has nailed down a $25 million DIP credit facility which will be used to pay down the UK facility and fund the cases. Presumably the sale price will pay off the DIP and the $20 million that remains will be left for unsecured creditor recoveries. Back of the envelope, that will be about a 25% recovery. 

As for the equity holders? In the absence of bumping up by way of the convertible note, they'll be wiped out. That's venture capital for you. The venture debt providers, however, did well. 

  • Jurisdiction: D. of Delaware (Judge Shannon)
  • Capital Structure: $11.2mm UK Loan Facility (FPP Sandbox LLC and Tennenbaum Capital Partners LLC), $17.1 million convertible promissory note.

  • Company Professionals:
    • Legal: Cole Schotz PC (Irving Walker, Patrick Reilley)
    • Financial Advisor: Berkeley Research Group LLC
    • Claims Agent: Omni Management Group (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Prospective Buyer: Amobee Inc.
      • Legal: Goodwin Proctor LLP (Gregory Fox, Alessandra Simons) & (local) Womble Bond Dickinson (US) LLP (Matthew Ward, Morgan Patterson)
    • Secured Lenders: FastPay Partners LLC & FPP Sandbox LLC
      • Legal: Buchalter (William Brody, Ariel Berrios) & (local) Richards Layton & Finger PA (John Knight, Christopher De Lillo)
    • DIP Lender: Draper Lending LLC
      • Legal: Arent Fox LLP (Robert Hirsh, Jordana Renert) & (local) Bayard PA (Justin Alberto, Daniel Brogan)

New Chapter 9 Filing - The Kennewick Public Hospital District

The Kennewick Public Hospital District (aka Trios Health)

  • 6/30/17 Recap: Now this is a different kind of healthcare bankruptcy filing. The District, which does business as Trios Health, was established in Benton County Washington by state statute in 1948 and is governed by a seven-member publicly-elected Board of Commissioners; it is one of the largest multi-specialty medical groups in Eastern Washington comprised of 2 hospitals and 10 urgent/outpatient care centers. To "remain competitive and retain market share," the District expanded and invested in improvements. This included a new hospital facility in a "relatively affluent" area, as well as the construction of complementary medical office space. This was all state-of-the-art. Which of course costs a boatload of dough (see capital structure info below). And so the Board issued revenue bonds secured by gross revenues and a subsequent bond secured by taxes. Of course, all of the foregoing was predicated upon a feasibility study that baked in revenue projections. And counted on revenue from HMO and PPO plans offered by Group Health. Want to guess how that all played out? Well, let us tell you. The projections were inflated. Shocker right? To be fair, the District's competitor, Kadlec, negotiated for the exclusion of the District from the Group Health Plans; it also opened a competitive emergency room nearby. So revenues failed to live up to expectations while secured obligations lived up to expectations. Creditors weren't happy and the District felt forced into action. Hence, Chapter 9. 
  • Jurisdiction: E.D. of Washington (Corbit)
  • Capital Structure: see below.     
  • Company Professionals:
    • Legal: Foster Pepper PLLC (Jack Cullen, Bryan Glover, Andy Morton, Ella Vincent)
    • Claims Agent: Garden City Group LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Official Committee of Unsecured Creditors
      • Legal: Arent Fox LLP (Andrew Silfen, George Angelich, Jordana Renert) & (local) Hillis Clark Martin & Peterson P.S. (Bradley Duncan, Josh Rataezyk)
    • Creditor: Kennewick Holdings LLC
      • Legal: Gibson Dunn & Crutcher LLP (Jeffrey Krause, Matthew Kelsey, Jason Goldstein) & (local) Davis Wright Tremaine LLP (Ragan Powers, Hugh McCullough)
Page 5 of First Day Declaration

Page 5 of First Day Declaration

Updated 10/5/17

New Chapter 11 Filing - The Original Soupman Inc.

The Original Soupman, Inc.

  • 6/13/17 Recap: Bankruptcy for you! Company that licensed the name and recipes of the chef who inspired the "Soup Nazi" on Seinfeld has filed for bankruptcy with a $2mm DIP credit facility to fund the case. The CFO had been indicted for tax evasion. We wonder whether the prison he goes to will have soup that lives up to the Soupman standard. Anyway, we digress. The company sells soups to and through grocery chains (6500 of them) and club stores throughout the United States; it also provides soup to the New York City School System and has six franchised restaurants, the largest of which resides on the Upper West Side. So a Nazi serves the school system. Awesome. 
  • Jurisdiction: D. of Delaware (Silverstein).
  • Capital Structure: $3.66mm secured debt (Hillair Capital Investments LP), $3.3mm unsecured notes.
  • Company Professionals:
    • Legal: Polsinelli PC (Christopher Ward, Jarrett Vine, Jeremy Johnson)
    • Financial Advisor/CRO: Wyse Advisors LLC (Michael Wyse) 
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • DIP Lender: Soupman Lending LLC
      • Legal: Arent Fox LLP (Robert Hirsh, Beth Brownstein) & (local) Bayard PA (Justin Alberto, Erin Fay)

Updated 6/17/17

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 & CCAA Filing - SquareTwo Financial Services Corporation

SquareTwo Financial Services Corporation

  • 3/19/17 Recap: Colorado-based privately held acquirer, manager, and collector of charged-off U.S. and Canadian consumer and commercial accounts-receivable filed a prepackaged plan of reorganization seeking to split the company into an acquired-co and "wind down co", with Resurgent Holdings LLC putting in approximately $264mm of new money in exchange for 100% equity in the acquired co. This is on the heels of a prior recapitalization that provided for the exchange of second lien notes for a 1.5 Lien Term Loan & preferred stock (enter Apollo and KKR here). Under the proposed plan of reorganization, the lenders holding claims under the first lien credit facilities will get paid in full; the holders of claims under the 1.5 Lien Term Loan will get a pro rata share of remaining cash; Resurgent will own the remaining business (with the rest liquidated); and the remaining creditors - including the second lien holdouts and the Pennsylvania Public School Employees' Retirement System (?!?!) - will get a big fat donut. Because who gives a sh*t about public school teachers anyway: what have they ever done for folks who work at Apollo and KKR?
  • Jurisdiction: S.D. of New York
  • Capital Structure: $60mm first lien RCF ($41mm out) & $105mm first lien Term Loan (Cerberus Business Finance LLC), $15mm 1.25 Lien Term Loan (plus $1.3mm interest) & $176.1 mm 1.5 Lien Term Loan (plus $15.4mm interest) (Cortland Capital Market Services LLC), $1.9 mm second lien notes (unexchanged in prior recapitalization)(U.S. Bank National Association)    
  • Company Professionals:
    • Legal: Willkie Farr & Gallagher LLP (Matthew Feldman, Paul Shalhoub, Robin Spigel, Debra McElligott, Gabriel Brunswick) & (Canadian counsel) Thornton Grout Finnigan LLP (D.J. Miller, Leanne Williams, Asim Iqbal, Mitch Grossell)
    • Financial Advisor: AlixPartners LLC (Mark Thorson)
    • Investment Banker(s): Keefe Bruyette & Woods Inc. & Miller Buckfire & Co. (John McKenna)
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Prepetition Agent & DIP Agent: Cerberus Business Finance LLC
      • Legal: Schulte Roth & Zabel LLP (Frederic Ragucci, Adam Harris)
    • Ad Hoc Group of 1.25 lien and 1.5 lien Lenders (Apollo Capital Management LP, KKR Credit Advisors LLC)
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Elizabeth McColm, Michael Turkel)
    • Prepetition 1.25 Lien and 1.5 Lien Agent: Cortland Capital Market Services LLC
      • Legal: Holland & Knight LLP (Barbra Parlin, Joshua Spencer)
    • U.S. Bank National Association
      • Legal: Dorsey & Whitney LLP (Eric Lopez Schnabel, Alessandra Glorioso) & (local) Maslon LLP (Clark T. Whitmore)
    • Preferred Stock Holders: Apollo Investment Corporation & KKR Financial CLO 2007-1 Ltd.
    • Majority Common Stock Holders: Norwest Mezzanine Partners II LP & Pennsylvania Public School Employees' Retirement System
    • New Money Investor: Resurgent Holdings LLC
      • Legal: Foley & Lardner LLP (Patricia Lane, Michael Small, Benjamin Rikkers, Jack Haake)
    • Official Committee of Unsecured Creditors
      • Legal: Arent Fox LLP (Robert Hirsh, George Angelich, Jordana Renert)
      • Financial Advisor: Gavin/Solmonese LLC (Ted Gavin)

Updated 5/31/17

New Filing: Bonanza Creek Energy Inc.

Bonanza Creek Energy Inc.

  • 1/4/17 Recap: The company filed a prepackaged bankruptcy to eliminate $850mm of debt from its balance sheet and infuse the company with $200mm of new equity.
  • Jurisdiction: D. of Delaware
  • Capital Structure: $475mm '17 1.5-2.5% RCF (Key Bank), $500mm '21 6.75% senior unsecured notes, $300mm '23 5.75% senior unsecured notes (Delaware Trust Company).      
  • Company Professionals:
    • Legal: Davis Polk & Wardwell LLP (Marshall Huebner, Brian Resnick, Elliot Moskowitz, Adam Shpeen, Lara Samet Buchwald) & (local) Richards Layton & Finger PA (Mark Collins, Amanda Steele, Brendan Schlauch)
    • Financial Advisor: Alvarez & Marsal LLC (Seth Bullock)
    • Investment Banker: Perella Weinberg Partners (Kevin Cofsky, Jacob Czarnick)
    • Claims Agent: Prime Clerk LLC (*click name above for docket link)
  • Other Parties in Interest:
    • RBL Agent: Key Bank
      • Legal: Bracewell LLP (Trey Wood, Jennifer Feldshur, Dewey Gonsoulin)
    • Ad Hoc Committee of Noteholders (Apollo Energy Opportunity Mgmt, Continental Casualty, Credit Suisse Asset Mgmt, DE Shaw Galvanic Portfolios, Gen IV Investment Opportunities LLC, Lord Abbett & Co., Luxor Capital Group LP, Mangrove Partners, Nomura Corporate Research & Asset Mgmt, Oaktree Capital Management LP, Paloma Partners Management Company, Par-Four Investment Management LLC, Perry Creek Capital Fund I, Socratic Fund Management LP, Whitebox Advisors). Added subsequent to the case filing (Aristeia Capital LLC, Barclays Bank PLC, Continental Casualty Company, Venor Capital Management LP, Wells Fargo Securities LLC); Subtracted subsequent to the case filing (Credit Suisse Asset Mgmt).
      • Legal: Kirkland & Ellis LLP (Edward Sassower, Steven Serajeddini, John Luze, Stephen Schwarzbach Jr.) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Peter Keane)
      • Investment Bank: Evercore
    • Ad Hoc Committee of Equity Security Holders (Fir Tree Inc., HHC Primary Fund, CVI Opportunities Fund I, Silver Point Capital, MatlinPatterson Global Opportunities Master Fund)
      • Legal: Brown Rudnick LLP (Edward Weisfelner, Bennett Silverberg, D. Cameron Moxley) & (local) Chipman Brown Cicero & Cole LLP (William Chipman Jr.)
      • Financial Advisor: Miller Buckfire & Co. (Richard Klein, Matthew Rodrigue)
    • Delaware Trust Company (as successor trustee to Wells Fargo)
      • Legal: Haynes and Boone LLP (Charles Beckham Jr., Keith Sambur) & (local) The Rosner Law Group LLC (Frederick Rosner, Scott Leonhardt)
    • Silo Energy LLC
      • Legal: Arent Fox LLP (George Angelich, Jackson Toof, Andrew Silfen) & (local) Polsinelli PC (Justin Edelson)
    • Senior Unsecured Noteholders: GMO Credit Opportunities Fund LP and Global Credit Advisors LLC
      • Legal: Ropes & Gray LLP (D. Ross Martin, Andrew Devore) & (local) Pepper Hamilton LLP (David Stratton)

Updated 4/2/17

New Filing - Gracious Home LLC

Gracious Home LLC

  • 12/15/16 Recap: New York based consumer products retailer of home furnishings (i.e., china, glassware, metalware, and all kinds of other things that millennials scoff at buying) files for bankruptcy to salvage what's left of its liquidating business after failing to renegotiate with its lender and landlords. This is its second bankruptcy filing in 6 years.
  • Jurisdiction: S.D. of New York 
  • Debt: $6.5mm secured debt (Signature Bank)
  • Company Professionals:
    • Legal: Trenk DiPasquale Della Fera Sodono (Joseph DiPasquale, Irena Goldstein)
    • Financial Advisor: B. Riley & Co. (Perry Mandarino, Adam Rosen, Daniel Golynskiy)
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
    • Other Parties in Interest:
      • Official Committee of Unsecured Creditors:
        • Legal: Seward & Kissel LLP (John Ashmead, Robert Gayda, Catherine LoTempio, Michael Tenenhaus) 
        • Financial Advisor: Wyse Advisors LLC (Michael Wyse)
      • Gracious Home Lending LLC
        • Legal: Arent Fox LLP (Robert Hirsh)

Updated 5/12/17

New Filing - Shoreline Energy LLC

Shoreline Energy LLC

  • 11/02/16 Recap: Privately-owned Gulf of Mexico and Louisiana focused energy and exploration company files for bankruptcy backed by a $50mm DIP from Morgan Stanley Energy Capital (of which $32mm represents a rollup) and an RSA to sell the company to an affiliate of Highbridge Capital LLC, a second lien lender.  
  • Jurisdiction: S.D. of Texas
  • Capital Structure: $150mm RBL (Morgan Stanley), $160mm second lien TL, $71mm unsecured note (Sankaty Advisors LLC)    
  • Company Professionals:
    • Legal: Jones Day (Thomas Howley, Paul Green, Jonathan Fisher, Cassie Suttle) & (conflicts counsel) Jackson & Walker LLP (Patricia Tomasco)
    • Financial Advisor: Imperial Capital LLC (Robert Warshauer, Justin Byrne, Kyle Anderson, John Radigan)
    • Claims Agent: Prime Clerk (*click on company name for docket)
  • Other Parties in Interest:
    • DIP Lender: Morgan Stanley Energy Capital
      • Legal: Simpson Thacher (Nicholas Baker)
      • Financial Advisors: FTI Consulting
    • Second Lien Lender: Highbridge Capital/HPS Investment Partners LLC
      • Legal: Vinson & Elkins (William Wallander, Bradley Foxman, Reese O'Connor)
    • Unsecured Creditors' Committee
      • Legal: Arent Fox LLP (Robert Hirsh, George Angelich, Jordana Renert) & (local) Royston Rayzor Vickery & Williams LLP (Kevin Walters, Eugene Barr)
      • Financial Advisor: Conway MacKenzie LLC (John Young)

Updated 12/30/17