New Chapter 11 Bankruptcy Filing - Synergy Pharmaceuticals Inc.

December 12, 2018

On November 11 and then, in a more fulsome manner in November 18’s “😬Biopharma is in Pain😬,” we noted that Synergy Pharmaceuticals Inc. ($SGYP) “appears to be on the brink of bankruptcy.” Looks like we were right on. This morning (12/12/18) at 4:37am (PETITION Note: remember that if you think that being a biglaw attorney is glamorous), the company and an affiliate filed for bankruptcy in the Southern District of New York.

Synergy is a biopharmaceutical company that develops and commercializes gastrointestinal therapies; its primary speciality revolves around uroguanylin, “a naturally occurring and ednogenous human GI peptide, for the treatment of GI diseases and disorders” Geez…bankers and lawyers have nothing on scientists when it comes to the vernacular. The company has one commercial product (TRULANCE) and one product in development. The company owns 33 patents.

We previously noted:

The company has a $200mm 9.5% ‘25 secured term loan with CRG (~$100mm funded plus PIK interest) that has been amended a bazillion times to account for the fact that its revenues suck, its market cap sucks, and that its on the verge of tripping, or has tripped, numerous covenants including, a “minimum market capitalization” covenant and a “minimum revenue covenant.” In its most recent 10-Q, the company noted:

To date the Company has been unable to further amend the agreement with respect to the financial and revenue covenants. The Company is continuing discussions with CRG and has received a temporary waiver on the minimum market cap covenant through November 12, 2018. The Company is currently pursuing alternatives that better align with its business, but there is no assurance that Synergy can secure CRG’s consent or otherwise achieve a transaction to refinance or otherwise repay CRG on commercially reasonable terms, in which case we could default under the term loan agreement. If CRG does not grant a further waiver beyond November 12, 2018 the Company will likely be in default of the minimum market cap covenant.

In its bankruptcy filing, however, the company takes a decidedly less aggressive posture vis-a-vis CRG (which makes sense…CRG is, after all, its proposed DIP lender) when explaining the factors leading to the commencement of its chapter 11 cases. While the company does highlight lack of access to capital markets (which, at least as far as we read it, is an implicit jab at CRG), the company primarily blames TRULANCE’s slow sales growth, market access, competitive landscape and a smaller-than-anticipated total addressable market for its travails.

For its part, Centerview Partners has been engaged in a less than ideal sellside process here. According to the company’s papers, Centerview has been trying to sell the company since 2015. Now, unless there is some crazy element to this engagement, most bankers are compensated on the basis of success fees. They want to a large purchase price and a short marketing process to get the best of both worlds: a huge payday without huge utilization. That does not appear to be the case here. 3 years!

Still, they located a buyer. Bausch Health Companies (“BHC”) has agreed to be the stalking horse purchaser of the company’s assets. BHC would get substantially all of the company’s assets — including its IP, certain customer and vendor contracts, A/R, and goodwill. In exchange, they would pay approximately $185mm in cash (minus certain deductions and adjustments) and $15mm in severance obligations.

CRG is the company’s proposed DIP lender with a $155mm facility, of which $45mm represents new money.

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

  • Capital Structure: $110mm 9.5% ‘25 secured term loan, $19mm 7.5% ‘19 senior convertible notes (Wells Fargo NA)

  • Company Professionals:

    • Legal: Skadden Arps Slate Meagher & Flom LLP (Ron Meisler, Lisa Laukitis, Christopher Dressel, Jennifer Madden, Christine Okike) & (special counsel) Sheppard Mullin Richter & Hampton LLP

    • Legal Conflicts Counsel: Togut Segal & Segal LLP (Albert Togut, Neil Berger, Kyle Ortiz)

    • Board of Directors

      • Legal: Davis Polk & Wardwell LLP

    • Independent Director: Joseph Farnan

      • Legal: Kirkland & Ellis LLP

    • Financial Advisor: FTI Consulting Inc. (Michael Katzenstein, Sean Gumbs, Heath Gray, Om Dhavalikar, Tom Sledjeski, John Hayes, Andrew Kopfensteiner)

    • Investment Banker: Centerview Partners Holdings LP (Samuel Greene, Josh Thornton, Ercument Tokat)

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

  • Other Parties in Interest:

    • Prepetition Agent & DIP Lender: CRG Servicing LLC

      • Legal: Venable LLP (Jeffrey Sabin, Lawrence Cooke)

    • Stalking Horse Bidder: Bausch Health Companies Inc.

      • Legal: Wachtell Lipton Rosen & Katz (Richard Mason, Michael Benn)

    • Ad Hoc Committee of Equity Holders

      • Legal: Cole Schotz PC (Ryan Jareck, Irving Walker, Norman Pernick, Mark Tsukerman)

    • Official Committee of Equity Security Holders

      • Legal: Gibson Dunn & Crutcher LLP (David Feldman, Matthew Kelsey, Alan Moskowitz, J. Eric Wise)

      • Financial Advisor: Houlihan Lokey Capital, Inc. (Christopher Di Mauro, Geoffrey Coutts)

    • Official Committee of Unsecured Creditors (Highbridge Capital Management, 1992 MSF International Ltd., 1992 Tactical Credit Master Fund LP)

      • Legal: Latham & Watkins LLP (Richard Levy, Jeffrey Mispagel, Matthew Warren, Blake Denton, Christopher Harris)

      • Financial Advisor: Alvarez & Marsal LLP (Mark Greenberg, Richard Newman, Jason Ivy, Martin McGahan, Allison Hoeinghaus, Seth Waschitz, Sean Skinner, Michael Sullivan)

      • Investment Bank: Jefferies LLC (Leon Szlezinger, Jeffrey Finger)

New Chapter 11 Filing - Brookstone Holdings Corp.

Wellness, Entertainment & Travel Retailer Now Bankrupt

Brookstone Holdings Corp.

8/2/16

Source: Brookstone.com

Source: Brookstone.com

Almost exactly a month ago we asked “Is Brookstone Headed for Chapter 22? and wrote the following:

Go to Brookstone’s website for “Gift Ideas” and “Cool Gadgets” and then tell us you have any doubt. We especially liked the pop-up asking us to sign up for promotional materials one second after landing; we didn’t even get a chance to see what the company sells before it was selling us on a flooded email inbox. Someone please hire them a designer.

On Friday, Reuters reported that the company has hired Gibson Dunn & Crutcher LLP(remember them?) to explore its restructuring options. What’s the issue? Well, retail. Need there be any further explanation?

The company has roughly 120 stores (20 are in airports), approximately $45mm of debt and a Chinese sponsor in Sanpower Group Co Ltd.

This is a big change from when it first filed for bankruptcy in April 2014. At the time of that filing, the company had 242 stores and approximately $240mm in debt. The company blamed its over-levered capital structure for its inability to address its post-recession challenges. It doesn’t appear to have the same excuse now.

Upon emergence, it reportedly still had 240 stores. Clearly the company ought to have used the initial bankruptcy for more of an operational fix in addition to its balance sheet restructuring. While this could be a costly mistake, the company’s sponsor is a bit of a wild card here: Chinese sponsors tend to be more disinclined to chapter 11 proceedings than American counterparts. Will they write an equity check then?

Well, we now have our definitive answers. Yes. The company filed for bankruptcy earlier today. And whether Sanpower was disinclined to file or not, well…it’s in bankruptcy. And, it will not, at least not as of now, be writing an equity check.

The New Hampshire-based company describes itself as “a product development company and multichannel retailer that offer a number of highly distinctive and uniquely designed products. The Brookstone brand is strongly associated with cutting-edge innovation, superior quality, and sleek and elegant design.” Which is precisely why we plastered a “videocassette” emoji in our title. Because that description comports 100% with the way we view the brand. But we digress.

The company has clearly engaged in some downsizing since emerging from bankruptcy a few years ago; it notes that it currently operates 137 retail stores across 40 states with 102 of those stores located in malls and 35 in airports; it also carries 700 SKUs, the majority of which fall in one of three product categories (wellness, entertainment and travel). It sells across four product channels: mall retail, airport retail, e-commerce (brookstone.com and Amazon.com), and wholesale (including TV shopping which, we believe, means home shopping network sort of stuff). For fiscal year 2017, the company had net sales of $264mm and negative EBITDA was $60mm. For the first half of 2018, net sales were $74mm and negative EBITDA was $29mm. Annualize that first number and you’re looking at a pretty precipitous drop in revenue!

The company highlights the juxtaposition between its mall and retail sales channels. Whereas the former generated ‘17 net sales of $137.9mm and negative EBITDA of $30mm, the latter generated net sales of $37.7mm and “adjusted” EBITDA of $1.4mm. We haven’t seen the numbers but we’re guessing the adjustment takes this statement into account:

Moreover, the net sales and adjusted EBITDA figures do not tell the whole story with respect to the productivity of the Airport retail outlets. As described further below, supply chain issues have limited the sales potential that would otherwise be captured with a healthy network of suppliers. The Debtors believe that through the bankruptcy they can correct the supply chain issues and allow the airport stores to greatly increase their profitability.

🤔🤔 Seeing a lot of adjustments on the basis of “belief” these days.

Likewise, the company claims that aberrational externalities affected its e-commerce operations as well. There, the company claims $55.2mm in net sales and negative adjusted EBITDA of $1mm. The company believes that the discontinuation of its catalog mailings had a detrimental impact on its e-commerce (and store retail) numbers. It notes:

As with the airport retail segment, the net sales and adjusted EBITDA associated with the Debtors’ ecommerce segment is not reflective of its true potential due to supply chain difficulties. In addition, and as described further below, technology issues and a turnover of senior level management at the e-commerce segment led to underperformance at a segment that should be performing at a significantly higher level. The Debtors believe that the bankruptcy filing will afford the Debtors the opportunity to right the operational defects that have artificially stymied the overall profitability that should be incumbent to the Debtors’ online presence.

Finally, the company claims its wholesale business has a lot of demand and has been under-utilized due to the same supply chain issues affecting its other channels.

In other words, when we said earlier that “[c]learly the company ought to have used the initial bankruptcy for more of an operational fix,” we hit the nail on the head. The company notes:

Following the 2014 Bankruptcy, sales continued to lag almost immediately. For the years ended 2014 and 2015, net sales were pegged at approximately $420 million and $389 million respectively, while adjusted EBITDA was booked at negative $38 million and negative $24 million respectively. While a number of factors contributed to the underperformance, sourcing of products and supply chain difficulties were the major drivers.

But of course there’s an overall macro overlay here too:

The drop in net sales in 2016 and 2017 was further exacerbated by the decline in the mall model as a means for consumers to buy products of the type sold by Brookstone. During this time, foot traffic at mall locations decreased drastically, as consumers continued to seek out products online as a replacement for traditional brick and mortar shopping.

The company’s e-commerce efforts could not pick up the slack. It blames leadership changes, a new platform (and a loss of data and indexing that resulted), and the discontinuation of the hard copy catalog for this. The company notes:

Because the catalogs were directly responsible for a significant portion of the web traffic on the Debtors’ e-commerce site, the negative impact on the Debtors’ online sales was dramatic.

Anyone who thinks that e-commerce can survive independent of paper mailings ought to re-read that sentence. It also explains the fifteen Bonobos catalogs we get every week and the 829-pound Restoration Hardware calalog we receive every quarter. Remember the buzzword of the year: “multi-channel.” Case and point.

To make this already (too) long story short, Sanpower kept sinking money into this sinking ship until it finally decided that it was just throwing good money after bad. Callback to July when we said they’re disinclined to chapter 11…well, lighting millions of dollars on fire will make you a little more inclined. 💥💥

Powered by a $30mm DIP credit facility (not all new money: some will be used to refi out the ABL) from its prepetition (read: pre-bankruptcy) lenders, the company intends to use the bankruptcy filing to execute an orderly store closing process and market and sell the business. This is clearly why it went to great lengths to pretty up its e-commerce, mall and wholesale businesses in its narrative. Still, the company has been marketing the business for a month and, thus far, there are no biters. Per the agreement with its DIP lenders, the company has until September 2018 to effectuate its sale process. You read that right: a company that bled out over a period of years has two months on life support.

Major creditors include Chinese manufacturers and, as you might expect, the usual array of landlords, General Growth Properties ($GGP)Simon Property Group Inc. ($SPG), and Macerich Co. ($MAC). Given the positioning of the respective businesses, we wouldn’t expect much of a mall business to survive here regardless of whether a buyer emerges.

  • Jurisdiction: D. of Delaware (Judge Shannon)

  • Capital Structure: $70mm ABL Revolver (Wells Fargo NA) & $15mm Term Loan (Gordon Brothers Finance Company), $10mm second lien notes (Wilmington Trust), $39.4mm Sanpower Secured Notes, $46.6mm Sanpower Unsecured Notes

  • Company Professionals:

    • Legal: Gibson Dunn & Crutcher LLP (David Feldman, Matthew Kelsey, Matthew Williams, Keith Martorana, Jason Zachary Goldstein) & (local) Young Conaway Stargatt & Taylor LLP (Michael Nestor, Sean Beach, Andrew Magaziner)

    • Financial Advisor: Berkeley Research Group LLC

    • Investment Banker: GLC Advisors & Co. (Soren Reynertson)

    • Liquidator Consultants: Gordon Brothers Retail Partners LLC & Hilco Merchant Resources LLC

    • Claims Agent: Omni Management Group (*click on company name above for free docket access)

  • Other Parties in Interest:

    • DIP Agent: Wells Fargo NA (Morgan Lewis & Bockius LLP, Glenn Siegel, Christopher Carter & Burr & Forman LLP, J. Cory Falgowski)

    • DIP Term Agent: Gordon Brothers Finance Company (Choate Hall & Stewart, Kevin Simard, Jonathan Marshall & Richards Layton & Finger PA, John Knight)

    • Indenture Trustee: Wilmington Trust NA

New Chapter 11 Filing - iHeartMedia Inc.

iHeartMedia Inc.

3/14/18

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

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

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

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

The company ought to expect these trends to continue.

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

  • Jurisdiction: S.D. of Texas
  • Capital Structure:    
Screen Shot 2018-03-15 at 2.28.26 PM.png

 

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

Updated 3/30/18

New Chapter 11 Bankruptcy - Woodbridge Group of Companies LLC

Woodbridge Group of Companies LLC

  • 12/4/17 Recap: Real estate finance and development company focused on buying, improving, and selling high-end luxury homes has filed for bankruptcy. It is a "group of companies" because there are literally scores of individual debtor properties that are set up in special purpose vehicles (Propcos) wholly-owned by other related special purpose vehicles (Holdcos). It's like Inception: an SPV within an SPV. 140 Propcos are debtors and 127 Holdcos are debtors. As you can imagine, there are a ton of intercompany transfers here. The company has been the subject of an SEC investigation since September 2016 on the basis of "potential securities law violations, including the alleged offer and sale of unregistered securities, the sale of securities by unregistered brokers, and the commission of fraud in connection with the offer, purchase and sale of securities." Indeed, the company allegedly raised over $200mm from retail investors. But, wait: there's more. The company has also received information requests from state securities regulators in "approximately" 25 states. PETITION NOTE: what do they mean by "approximately"? There are a finite number of states. Have the requests become SO VOLUMINOUS that they company has lost track of how many there've been? The company has secured a $100mm DIP credit facility from Hankey Capital LLC and attempts to have a plan of reorganization confirmed by the end of 2018. 
  • Jurisdiction: D. of Delaware (Judge Carey)
  • Capital Structure: $750mm seller financing.    
  • Company Professionals:
    • Current Legal: Klee Tuchin Bogdanoff & Stern LLP 
    • Previous Legal: Gibson Dunn & Crutcher LLP (Samuel Newman, Oscar Garza, Daniel Denny, J. Eric Wise, Matthew Kelsey, Matthew Porcelli) & (local) Young Conaway Stargatt & Taylor LLP (Sean Beach, Edmon Morton, Ian Bambrick, Allison Mielke)
    • Current Restructuring Advisor/CRO: Development Specialists Inc. (Bradley Sharp) 
    • Previous Restructuring Advisor: SierraConstellation Partners LLC (Larry Perkins, John Farrace, Robert Shenfeld, Reece Fulgham, Miles Staglik, Lissa Weissman)
    • Independent Manager of Affiliate: Beilinson Advisory Group LLC (Marc Beilinson)
    • Claims Agent: Garden City Group (*click on company name above for free docket access)
  • Other Parties in Interest:
    • DIP Lender: Hankey Capital LLC
      • Legal: Buchalter (William Brody, Paul Arrow) & (local) Richards Layton & Finger PA (John Knight, Christopher De Lillo)
    • Former CEO: Robert Shapiro
      • Legal: DLA Piper LLP (US) (Eric Goldberg, Stuart Brown)

Updated 3/24/18 9:45 CT

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 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 - Answers Holdings Inc.

Answers Holdings Inc.

  •  3/3/17 Recap: Apax Partners' backed website operator has filed for bankruptcy because it never evolved from Internet 1.0, has too much debt, its main site, Answers.com, is the red-headed step-child of Quora, and, quite frankly, not a single person receiving the PETITION newsletter has visited the site(s) since 2006. Yahoo, FacebookAmazon (AWS), Amex and Silicon Valley Bank are among the top 10 creditors. The debtors solicited a prepackaged plan and so all of the above will be unimpaired - somewhat ironic given that algorithmic changes by Google and Facebook - in addition to a mountain of debt - are the real root causes of the company's decline.
  • Jurisdiction: SD of New York
  • Capital Structure: $40mm revolver, $325mm '21 first lien TL, $180mm '22 second lien TL.   
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (James Sprayragen, Jonathan Henes, Christopher Greco, Melissa Koss, John Weber, Anthony Grossi)
    • Financial Advisor: Alvarez & Marsal LLC (Justin Schmaltz, Erin McKeighan)
    • Investment Banker: Rothschild (Steven Antinelli)
    • Claims Agent: Rust Bankruptcy/Omni Consulting (*click on company name for docket)
  • Other Parties in Interest:
    • Ad Hoc Group of Consenting First Lien Lenders
      • Legal: Jones Day LLP (Scott Greenberg, Michael Cohen, Bryan Kotliar)
      • Financial Advisor: Houlihan Lokey
    • First Lien Agent: Credit Suisse AG
      • Legal: Gibson Dunn & Crutcher LLP (David Feldman, J. Eric Wise)
    • Ad Hoc Group of Consenting Second Lien Lenders (Deerpath Capital Management LP, North Haven Credit Partners LP, Summit Partners Credit Advisors LP)
      • Legal: Akin Gump Strauss Haur & Feld LLP (David Botter, David Simonds)
        • Financial Advisor: FTI Consulting Inc.
    • Second Lien Agent: Wilmington Trust NA
      • Legal: Alston & Bird LLP (Jason Solomon, David Wender)
    • Sponsor Entities: Apax Partners LP, Clarity Holdco LP, Clarity GP LLC
      • Legal: Simpson Thacher & Bartlett LLP (Elisha Graff, Edward Linden)
    • Proposed Board of Directors of the Reorganized Entity: William Ruckelshaus, Eric Ball, Peter Daffern, Eugene Davis, John Federman, Lonne Jaffe, Brian Mulligan.

Updated 4/2/17

New Filing - Lensar Inc.

Lensar Inc.

  • 12/16/16 Recap: Florida-based medical technology company that manufacturers lasers deployed in cataract surgeries filed for bankruptcy to effectuate a debt-for-equity swap with its senior lender (and DIP lender), PDL BioPharma Inc., a publicly-traded company that manages a portfolio of biotech, pharma and med-device products. A main objective of the case will be to protect approximately $125mm of NOLs. 
  • Jurisdiction: D. of Delaware
  • Capital Structure: ~$60mm debt     
  • Company Professionals:
    • Legal: Ballard Spahr LLP (Matthew Summers, Vincent Marriott, Paul Harner)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for docket)
  • Other Parties in Interest:
    • DIP Lender: PDL BioPharma Inc.
      • Legal: Gibson Dunn & Crutcher LLP (Jeffrey Krause, Genevieve Weiner, Sam Newman)

Updated 1/20/17

New Filing - Channel Technologies Group LLC

Channel Technologies Group LLC

  • 10/17/16 Recap: Manufacturer of ceramics, transducers and sonar equipment sold to the US Navy and defense contractors like Northrop Grumman, Lockhead Martin and Raytheon files for chapter 11 to address onerous long-term contracts and attempt an expeditious sale of the business.  
  • Jurisdiction: Central District of California
  • Capital Structure: $2.86mm secured debt     
  • Company Professionals:
  • Other Parties in Interest:
    • Prepetition Secured Creditor/DIP Lender: Blue Wolf Capital Partners
    • Northrup Grunman
      • Legal: Gibson Dunn (Sam Newman, Daniel Denny)
    • Lockhead Martin
      • Legal: Hogan Lovells LLP (Christopher Donoho, M. Shane Johnson)

Updated 12/30/16.