New Chapter 11 Bankruptcy Filing - Pernix Therapeutics/Pernix Sleep Inc.

Pernix Therapeutics/Pernix Sleep Inc.

February 18, 2019

In our January 30th Members’-only briefing entitled “😢Who Will Remember Things Remembered?😢 ,” we included a segment subtitled “Pharma Continues to Show Distress (Long Opioid-Related BK)” in which we discussed how Pernix Therapeutics Holdings Inc. ($PTX) looked like an imminent bankruptcy candidate. We noted how the company had previously staved off bankruptcy thanks to a refinancing transaction with Highbridge Capital Management. That refinancing now looks like a perfectly-executed loan-to-own strategy: Phoenix Top Holdings LLC, an affiliate of Highbridge, will serve as the stalking horse bidder of the company’s assets in exchange for $75.6mm plus the assumption of certain liabilities. Highbridge will also, after a competitive process pitted against other debtholders like Deerfield Management Company LP, provide the Debtors with a $34.1mm DIP facility — of which $15mm is new money, $5mm is an accordian facility, and the rest is a roll-up of the pre-petition ABL.

  • Jurisdiction: D. of Delaware (Judge [ ])

  • Capital Structure: see link above.

  • Professionals:

    • Legal: Davis Polk & Wardwell LLP (Marshall Huebner, Eli Vonnegut, Christopher Robertson) & (local) Landis Rath & Cobb LLP (Adam Landis, Kerri Mumford, Jennifer Cree, Nicolas Jenner)

    • Financial Advisor: Guggenheim Partners LLC (Stuart Erickson)

    • Investment Banker: Ernst & Young LLP

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

  • Other Parties in Interest:

    • Stalking Horse Purchaser: Phoenix Top Holdings LLC (a Highbridge Capital Management affiliate)

    • Large debtholder: Deerfield Management Company LP

      • Legal: Sullivan & Cromwell LLP

    • DIP Agent: Cantor Fitzgerald Securities

      • Legal: Skadden Arps Slate Meagher & Flom LLP (Sarah Ward)

Updated: 2/19/19 at 8:51 CT

✈️New Chapter 11 Bankruptcy Filing - ONE Aviation Corporation✈️

ONE Aviation Corporation

10/9/18

ONE Aviation Corporation, a New Mexico-based OEM of twin-engine light jet aircraft (e.g., the Eclipse jet, a twin-turbofan very light jet or “VLJ”), filed a prepackaged bankruptcy case that will give 97-100% of the equity to its senior prepetition lender, Citiking International US LLC. Holders of senior secured notes will get 3% of the equity and warrants if they check the “yes” vote in the “death trap” plan of reorganization. General unsecured claimants will get a big fat zero and a bunch of court-mandated paper to throw into the recycling bin. Citiking is providing the company with a $17mm DIP credit facility that will roll into an exit facility upon emergence from chapter 11.

The company has $198.8mm of total funded debt, including approximately $53.2mm representing amounts owed to certain state and local governments in the form of development loans. Womp womp.

Why is there a bankruptcy here? The company pursued growth strategies that simply never came to fruition, including targeting the “air taxi” industry and development of new capital-intensive airplane models. The company notes:

That strategy ultimately proved unsuccessful in the near term because, in addition to the negative macro-factors, including the condition of the U.S. and global economies, ONE Aviation was unable to raise the capital needed to complete the new airplane programs. The VLJ market, a market dependent on luxury spending, simply had not recovered from its downturn in 2008.

Liquidity, therefore, became constrained as the company found itself caught between building for the future and sustaining today. After a considerable sales and marketing process conducted by multiple bankers (Guggenheim Securities, first, Duff & Phelps, second) both in the U.S. and internationally, the company had no luck finding strategic or financial buyers. Hence bankruptcy with a plan to convey the company over to the prepetition first lien lender.

  • Jurisdiction: D. of Delaware (Judge Sontchi)

  • Capital Structure: $58.6mm first lien RCF (Citiking), $43.3mm subordinated secured notes (Bank of New York Mellon Trust Company, N.A.), $20.5mm subordinated unsecured notes

  • Company Professionals:

    • Legal: Paul Hastings LLP (Chris Dickerson, Brendan Gage, Nathan Gimpel, Todd Schwartz, Stephen Bandrowsky) & (local) Young Conaway Stargatt & Taylor LLP (Robert Brady, M. Blake Cleary, Sean Beach, Jaime Lutan Chapman)

    • Financial Advisor: Ernst & Young LLP (Briana Richards, Brian Yano)

    • Investment Banker: Duff & Phelps Securities LLC (Vineet Batra)

    • Board of Directors: Michael Wyse, Jonathan Dwight, Alan Klapmeier, Kevin Gould, RJ Siegel

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

  • Other Parties in Interest:

    • Administrative Agent & Collateral Agent: Cantor Fitzgerald Securities

      • Legal: Richards Kibbe & Orbe LLP (Gregory Plotko, Christopher Jarvinen) & (local) Ashby & Geddes PA (Gregory Taylor, Stacy Newman)

    • Senior Prepetition Lender: Citiking International US LLC

      • Legal: Emmet Marvin & Martin LLP (Thomas Pitta) & (local) Ashby & Geddes PA (Gregory Taylor, Stacy Newman)

    • Senior Subordinated Secured Noteholders

      • Legal: Manning Gross + Massenburg LLP (Marc Phillips)

Updated 10/9/18 at 5:12pm CT

New Chapter 15 Filing - U.S. Steel Canada Inc.

U.S. Steel Canada Inc.

  • 6/2/17 Recap: Large steel producer files for Chapter 15 to satisfy a condition of its proposed plan in its 2014-originated CCAA case. 
  • Jurisdiction: S.D. of New York
  • Company Professionals:
    • Legal (Foreign Representative): Weil (Marcia Goldstein, Robert Lemons)
    • Legal (Debtor): McCarthy Tetrault LLP 
    • Monitor: Ernst & Young Inc. (Alex Morrison)
    • Legal: (Monitor): Bennett Jones LLP
    • DIP Lender: Brookfield Capital Partners Ltd.
    • Legal (DIP Lender): Osler Hoskin & Harcourt LLP

New Filing - Commonwealth of Puerto Rico

Commonwealth of Puerto Rico & Puerto Rico Sales Tax Financing Corporation ("COFINA")

  • 5/3/17 Recap: The Commonwealth of Puerto Rico filed a petition for relief under Title III of the the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). Much has been written on this situation and so we're going to keep this brief. We're also going to shed the snark. Why? Well, because this is truly a sad story. GNP in Puerto Rico has declined over 14% in the last decade. The unemployment rate is 12.1% as of 10/16. The labor participation rate plummeted to 40%. The population has declined by 10% over the last decade. 46.1% of PR's residents live below the federal poverty level: the national average is 14.7% and Detroit's poverty level at the time of filing for Chapter 9 was 36%. Brutal. All in, the Commonwealth has $74 billion of bond debt and $48 billion of unfunded pension liabilities. A total dumpster fire.
  • Jurisdiction: United States District Court for the District of Puerto Rico
  • Capital Structure:

 

  • Professionals:
    • Counsel to the Oversight Board: Proskauer Rose LLP (Martin Bienenstock, Scott Rutsky, Philip Abelson, Ehud Barak, Maja Zerjal, Timothy Mungovan, Steven Ratner, Paul Possinger) & O'Neill & Borges LLC (Hermann Bauer)
    • Strategic Consultant to the Oversight Board: McKinsey & Co.
    • Municipal Investment Banker to the Oversight Board: Citigroup Global Markets
    • Financial Advisor to the Oversight Board: Ernst & Young LLP
    • Counsel to the Puerto Rico Tax Agency and Financial Advisory Authority: O'Melveny & Myers LLP (John Rapisardi, Suzzanne Uhland, Peter Friedman)
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Ad Hoc Retiree Committee
      • Legal: Bennazar Garcia & Milian CSP (A.J. Bennazar-Zequeira) & Clark Hill PLC (Robert Gordon, Shannon Deeby, Jennifer Green)
    • National Public Finance Guarantee Corporation
      • Legal: Weil (Marcia Goldstein, Kelly DiBlasi, Gabriel Morgan)
    • Ambac Assurance Corporation
      • Legal: Milbank Tweed & McCloy LLP (Dennis Dunne, Andrew Leblanc, Atara Miller)
    • UBS Family of Funds
      • Legal: White & Case LLP (John Cunningham)
    • Oppenheimer Funds
      • Legal: Kramer Levin Naftalis & Frankel LLP (Thomas Mayer, Amy Caton, Douglas Buckley, David Blabey Jr., Phillip Bentley)
    • American Federation of State, County and Municipal Employees
      • Legal: Saul Ewing LLP (Dipesh Patel, Sharon Levine)
    • The Employees Retirement System of the Government of the Commonwealth of Puerto Rico
      • Legal: DLA Piper LLP (Richard Chesley, Rachel Albanese)
    • Goldman Sachs Asset Management LP
      • Legal: McDermott Will & Emery LLP (James Kapp, Megan Thibert-Ind, William Smith)
    • Trustee: Bank of New York Mellon 
      • Legal: Reed Smith LLP (Luke Sizemore, Eric Schaffer, Kurt Gwynne)

Updated 5/11/17

From the Commonwealth's petition.

From the Commonwealth's petition.

New Filing - Optima Specialty Steel LLC

Optima Specialty Steel

  • 12/15/16 Recap: Miami-based independent specialty steel products manufacturer files for bankruptcy in the District of Delaware, capitulating under the weight of debt-laden acquisitions predicated on synergies and efficiencies that, shockingly, couldn't counteract various macroeconomic headwinds. The company cites low oil prices, a strong US dollar, excess capacity, slowing growth in other parts of the world (read: China), and decreased demand for specialty steel products. Unable to pay its December 15 debt maturity, the company filed to take advantage of the automatic stay - funded by cash collateral initially and seeking a DIP by January - and try to reorganize as a going concern.
  • Jurisdiction: D. of Delaware
  • Capital Structure: $171.7mm 12.5% senior secured notes (Wilmington Trust), $87.5mm 12% senior unsecured note (Wilmington Trust; privately-placed with DDJ Capital Management LLC)     
  • Company Professionals:
    • Legal: Greenberg Traurig (Dennis Meloro, Nancy Mitchell, Paul Keenan, John Dodd, Ari Newman, Maria DiConza)
    • Financial Advisor: Ernst & Young LLP (Briana Richards)
    • Investment Banker: Miller Buckfire & Co., LLC (James Doak)
    • Claims Agent: Garden City Group (*click on company name for docket)
  • Parties in Interest:
    • Ad Hoc Group of Unaffiliated Holders of Senior Secured Notes
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Philip Dublin, Jason Rubin)
    • Official Committee of Unsecured Creditors
      • Legal: Squire Patton Boggs (US) LLP (Stephen Lerner, Norman Kinel, Nava Hazan, Elliot Smith) & (local) Whiteford Taylor & Preston LLP (Christopher Samis, L. Katherine Good, Chantelle McClamb)
    • Wilmington Trust
      • Legal: Morrison & Foerster LLP (Jonathan Levine, James Newton) & (local) Morris Nichols Arsht & Tunnell LLP (Eric Schwartz, Matthew Harvey)
    • DDJ Capital Management LLC
      • Legal: Latham & Watkins LLP (Richard Levy, Ted Dillman)

Updated 1/6/17