New Chapter 11 Bankruptcy Filing -- Fusion Connect Inc.

June 3, 2019

We previously wrote about Fusion Connect Inc. ($FSNN), providers of “Unified Communications-as-a-Service” and “Infrastructure-as-a-Service” in “⛈A Dark "Cloud" on the Horizon⛈.” Therein we marveled at how special Fusion must be…to fail SO SPECTACULARLY in today’s cloud here, cloud there, cloud everywhere, everyone’s gaga for cloud environment. Cloud is SO captivating that it wasn’t until the company filed a piss poor 8-K back in April that a B. Riley FBR ($RILY) analyst FINALLY had an epiphany and declared that the company’s stock ought to be downgraded from “buy” to “neutral” (huh?!?) with a price target of $0.75 — down from $9.75/share. This is despite the fact that the stock hadn’t traded anywhere in the vicinity of $9.75/share in ages — nowhere even close, actually — but whatevs. Clearly, his head was in the cloud(s). This, ladies and gentlemen, demonstrates, in a nutshell, the utter worthlessness of equity analyst reports.🖕

But this isn’t a story about shoddy analyst research. That would be wholly unoriginal. This is a story about synergies and burdensome debt. Because, like, that’s so super original that you won’t read of it again until…well…you scroll below to the next bit of content about FTD!! 🙄

Boiled down to its simplest form, this company is the product of an acquisition strategy (and reverse merger) gone wrong. Like, in a majormajor way. Per the company:

The Company pursued the Birch Merger with a vision of leveraging its existing processes and structures to create synergies between Fusion’s and Birch’s joined customer bases, combine network infrastructure assets to improve operational efficiencies, and ultimately drive material growth in Fusion’s and Birch’s combined annual revenue. In connection with the Birch Merger and MegaPath Merger, the Company incurred $680 million in secured debt(emphasis added)

That reverse merger closed at the end of Q2, 2018. Yet…

Unfortunately, due to underperformance compared to business projections, the Company found itself with limited liquidity and at risk of default under its debt documents by early 2019.

Wait, what? Limited liquidity and risk of default by “early 2019”?!? Who the f*ck diligenced and underwrote this transaction?!? This sitch is so bad, that the company literally didn’t have enough liquidity to make a recent $6.7mm amort payment under the first lien credit agreement and a $300k interest payment on its unsecured debt. This is the company’s pre-petition capital structure:

  • $20mm super senior L+10% June 2019 debt

  • $43.3mm Tranche A Term Loans L+6.0% May 2022 debt

  • $490.9mm Tranche B Term Loans L+8.5% May 2023 debt

  • $39mm Revolving Loans L+6.0% May 2022 debt

  • $85mm Second Lien L+10.5% November 2023 debt

  • $13.3mm Unsecured Debt

Back in April we summed up the situation as follows:

The company’s recent SEC reports constitute a perfect storm of bad news. On April 2, the company filed a Form 8-K indicating that (i) a recently-acquired company had material accounting deficiencies that will affect its financials and, therefore, certain of the company’s prior filings “can no longer be relied upon,” (ii) it won’t be able to file its 10-K, (iii) it failed to make a $7mm interest payment on its Tranche A and Tranche B term loan borrowings due on April 1, 2019, and (iv) due to the accounting errors, the company has tripped various covenants under the first lien credit agreement — including its fixed charge coverage ratio and its total net leverage ratio.

Again, who diligenced the reverse merger?!? 😡

So here we are. In bankruptcy. To what end?

The company is seeking a dual-path restructuring that is all the rage these days: everyone loves to promote optionality that will potentially result in greater value to the estate. In the first instance, the company proposes, as a form of “stalking horse,” a “reorganization transaction” backed by a restructuring support agreement with certain of its lenders. This transaction would slash $300mm of the company’s $665mm of debt and result in the company’s first lien lenders owning the company. That is, unless a buyer emerges out of the woodwork with a compelling purchase price. To promote this possibility, the company is filing a bid procedures motion with the bankruptcy court with the hope of an eventual auction taking place. If a buyer surfaces with mucho dinero, the company will toggle over to a sale pursuant to a plan of reorganization. This would obviously be the optimal scenario. Absent that (and maybe even with that), we’ve got a jaw-dropping example of value destruction. “Fail fast,” many in tech say. These cloud bros listened!! Nothing like deep-sixing yourself with a misguided poorly-diligenced acquisition. Bravo!!

The company has secured a commitment for a fully-backstopped $59.5mm DIP that subsumes the $20mm in super senior pre-petition bridge financing recently provided by the first lien lenders. Is this DIP commitment good for general unsecured creditors? Is any of this generally good for unsecured creditors? Probably not.

Major creditors include a who’s who of telecommunications companies, including AT&T Inc. ($T) (first Donald Trump and now THIS…rough week for AT&T), Verizon Communications Inc. ($VZ)XO Communications (owned by VZ), Frontier Communications Corp. ($FTR)(which has its own issues to contend with as it sells assets to sure up its own balance sheet), CenturyLink Inc. ($CTL)Level 3 Communications ($LVLT)Time Warner Inc. ($TWX), and….wait for it…bankrupt Windstream Communications ($WINMQ). Because the hits just keep on coming for Windstream….

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Jurisdiction: S.D. of New York (Judge Bernstein)

  • Capital Structure: see above.

  • Professionals:

    • Legal: Weil Gotshal & Manges LLP (Gary Holtzer, Sunny Singh, Natasha Hwangpo)

    • Board of Directors: Matthew Rosen, Holcombe Green Jr., Marvin Rosen, Holcombe Green III, Michael Del Guidice, Lewis Dickey Jr., Rafe de la Gueronniere, Neil Goldman)

    • Financial Advisor: FTI Consulting Inc. (Mark Katzenstein)

    • Investment Banker: PJT Partners (Brent Herlihy, John Singh)

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

  • Other Parties in Interest:

    • Ad Hoc First Lien Lender Group

      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Adam Shpeen)

      • Financial Advisor: Greenhill & Co. Inc.

    • DIP Lender: Credit Suisse Loan Funding LLC

    • DIP Agent, Prepetition Super Senior Agent & Prepetition First Lien Agent: Wilmington Trust NA

      • Legal: Arnold & Porter Kaye Scholer (Michael Messersmith, Sarah Grylll, Alan Glantz)

    • Prepetition Second Lien Successor Agent: GLAS America LLC & GLAS USA LLC

    • Ad Hoc Group of Tranche A Term Loan/Revolving Lenders

      • Legal: Simpson Thacher & Bartlett LLP (Sandeep Qusba, Soogy Lee, Edward Linden)

    • Second Lien Lenders

      • Legal: Proskauer Rose LLP (Charles Dale, Jon English)

    • Large Unsecured Creditor: AT&T

      • Legal: Norton Rose Fulbright US LLP (David Rosenzweig, Francisco Vazquez)

Updated 6/4/19 at 5:42am


Copy of New Chapter 11 Filing - Waypoint Leasing Holdings Ltd.

Waypoint Leasing Holdings Ltd.

November 25, 2018

“Get to the Choppa!” - Arnold Schwarzenegger

It has been a tough couple of years for companies in the helicopter business (see, e.g., Erickson Aircrane and CHG Group, not to mention PHI Inc. and Bristow Group, both of which restructuring professionals continue to watch and salivate over). So tough, in fact, that even Thanksgiving weekend wasn’t sacrosanct and even some big name sponsors couldn’t keep this thing out of court. Over the weekend, helicopter leasing company, Waypoint Leasing Holdings Ltd., “facing imminent liquidity constraints and potential defaults under their secured loan facilities,” filed for bankruptcy with a goal of…

…TO READ THE REST OF THIS SUMMARY — WHICH INCLUDES DISCUSSION OF THE COMPANY’S CAPITAL STRUCTURE AND A ROSTER OF THE PLAYERS AND PROFESSIONALS INVOLVED IN THE MATTER — YOU MUST BE A MEMBER. BECOME ONE HERE.

New Chapter 11 Filing - 4 West Holdings LLC

4 West Holdings LLC

3/6/18 

Texas-based licensed operator or manager of 42 skilled nursing facilities in 7 states has filed a prearranged bankruptcy. The company blames "the performance of the current group of operating Facilities has been negatively impacted by industry headwinds, regulatory actions at certain Facilities, and an inefficient geographic footprint in certain regions in the United States" for its filing.

Similar to HCR Manorcare which filed for bankruptcy earlier this week, 4 West and its affiliates emanate out of a sale leaseback transaction with a publicly-traded REIT counterparty, Omega Healthcare Investors, Inc. ($OHI). And, similarly, this business suffers from many of the same problems, 

Since 2015, the Debtors have faced significant liquidity constraints caused principally by: (a) unfavorable commercial agreements and certain liabilities assumed as part of Merger, including regulatory and personal liability claims; (b) historical losses at certain of the Debtors’ previously-operated facilities, (c) a decline in performance within the current portfolio for a variety of industry-wide developments; and (d) significant capital expenditure needs. Further, the Debtors also faced rent payment obligations to the Omega Parties under the Master Leases, which were significantly higher than their operating income could support.

Consequently, the debtor has entered into a restructuring support agreement with Omega that is predicated upon two parts: (i) a transaction whereby certain unprofitable facilities will transition to a designee of Omega and (ii) a transfer of the more successful facilities to the Plan Sponsor, SC-GA 2018 Partners LLC, which is injecting the company with $225mm of new liquidity by way of $195mm in cash and $30mm note. The Omega Parties will provide a $30mm DIP credit facility to fund the cases. 

  • Jurisdiction: N.D. of Texas (Judge Hale)

  • Capital Structure: $14.2mm funded RCF (Sterling National Bank), secured Master Leases (Omega), $15mm funded LOC (OHI Asset RO, LLC), $6.2mm secured note (New Ark Mezz Holdings, LLC), $1.1mm unsecured promissory note (SA Mezz Holdings, LLC)

  • Company Professionals:

    • Legal: DLA Piper (US) LLP (Thomas Califano, Daniel Simon, Dienna Corrado, Andrew Zollinger, David Avraham)

    • Financial Advisor: Crowe Horwath LLP

    • Restructuring Advisor/CRO: Ankura Consulting (Louis Robichaux, Ben Jones, Chris Hebard)

    • Investment Banker: Houlihan Lokey Capital Inc. (Andrew Turnbull, Ryan Sandahl, Angus Schaller, Adam Montague)

    • Independent Director: Drivetrain Advisors LLC (John Brecker)

    • Healthcare Ombudsman: Melanie Cyganowski

      • Legal: Otterbourg P.C. (Keith Costa)

    • Claims Agent: Rust Consulting/Omni Bankruptcy (*click on company name above for free docket access)

  • Other Parties in Interest:

    • DIP Lender: OHI Asset RO, LLC

      • Legal: Bryan Cave LLP (Keith M. Aurzada, Michael P. Cooley, Mark Duedall, Leah Fiorenza McNeill, David Unseth)

    • Plan Sponsor: SC-GA 2018 Partners, LLC

      • Legal: Nelligan LLP (Patrick Nelligan, James Muenker)

    • Sterling National Bank

      • Legal: King & Spalding LLP (Arthur Steinberg, Scott Davidson, Bradley Giordano, Edward Ripley)

    • Official Committee of Unsecured Creditors (Pharmerica Corporation, Healthcare Services Group, Medline Industries, Alana Healthcare, Ominicare Inc., Joerns Healthcare LLC, Regional Ambulance

      • Legal: Pepper Hamilton LLP (Francis Lawall, Donald Detweiler, Joanna Cline) & (local) Norton Rose Fulbright US LLP (Louis Strubeck Jr., Ryan Manns, Elizabeth Boydston)

      • Financial Advisor: CohnReznick LLP (Clifford Zucker)

Updated 5/18/18

New Chapter 11 Filing - ExGen Texas Power LLC

ExGen Texas Power LLC

  • 11/7/17 Recap: The last 12 months haven't been friendly to companies in the power space. The following have filed for bankruptcy: Panda Temple Power LLC, Westinghouse Electric Company LLC, GenOn Energy Inc., Illinois Power Generating Co., and La Paloma Generating Company LLC. Here, the owner of five natural-gas-fired power generation projects in the great state of Texas filed for bankruptcy in the face of significant headwinds. Literally. In its bankruptcy papers, the company primarily blames decreased demand and, in turn, decreased revenue, on an increase in wind production. And mild weather. Indeed, unlike retailers who incessantly blame weather for poor performance, this is actually believable. The company notes, "public policy initiatives and incentives continue to promote the development of additional wind capacity, placing downward pressure on wholesale power prices. Such additional capacity, coupled with low natural gas prices and mild and windy weather, have exacerbated the Debtors' financial struggles. By way of example, the cost per megawatt hour in 2008 was more than $70; in 2016, it was less than $25, and just prior to the Petition Date, it was approximately $25. These factors have persisted, as additional wind and other capacity is being added to the grid, which has driven down prices in light of relatively flat demand, thereby further constricting the Debtors' revenues and cash flow." In light of these issues, the company hired a banker to market the assets and only non-Debtor Exelon Generation Company LLC bit on one of the five debtor projects to the tune of $60mm (plus various forms of other consideration). The debt in the other four projects will be equitized and the term lenders will now be owners of power generation projects, subject to approval of a plan of reorganization. Interestingly, this all comes in the same week that a proposed tax overhaul bill by the House Republicans seeks to significantly curtail wind energy production tax credits
  • Jurisdiction: D. of Delaware (Judge Shannon)
  • Capital Structure: $660mm first lien TL (funded, ex-interest)(Bank of America NA)     
  • Company Professionals:
    • Legal: Richards Layton & Finger PA (Daniel DeFranceschi, Paul Heath, Zachary Shapiro, Joseph Barsalona)
    • Financial Advisor/CRO: FTI Consulting (David Rush)
    • Investment Banker: Scotia Capital (USA) Inc.
    • Independent Board of Director: Alan Carr
    • Claims Agent: KCC (*click on company name for docket)
  • Other Parties in Interest: 
    • Asset Purchaser: Exelon Generation Company LLC
      • Legal: DLA Piper (US) LLP (Richard Chesley, Daniel Simon)
    • TL Agent: Bank of America NA
      • Legal: Norton Rose Fulbright US LLP (Louis Strubeck, Greg Wilkes) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
    • Commodity Hedge Counterparty: Merrill Lynch Commodities Inc.
      • Legal: Davis Polk & Wardwell LLP (Marshall Heubner, Angela Libby) & (local) Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)

Updated: 11/8/17 at 1:00pm CT (No UCC)

New Chapter 11 Filing - Castex Energy Partners LP

Castex Energy Partners LP

  • 10/17/17 Recap: People have been saying that there is still more oil and gas distress to work its way through the system, particularly offshore-related companies. Well, here, Castex Energy Partners LP, a Houston-based onshore and offshore oil and natural gas exploration and production company located primarily on the coasts of Louisiana and Texas filed for bankruptcy to effectuate a restructuring support agreement with its major parties in interest. The company owns interests in approximately 375 wells (predominantly onshore); it also holds interests in certain seismic interests and specific lands. Like most other oil and gas E&P companies, Castex faced "intense financial pressure" due to the decrease in price of oil and gas and consequent decrease in demand for drilling. The company's EBITDA declined 70% from 2014 to 2016. Yes, you read that right: 70%. Of course, it didn't help that the company made an inopportune decision to invest heavily in offshore development in 2014, outlaying $259mm "in anticipation of future developmental drilling." Timing couldn't have been worse, it seems. Also, the company simply forgot to hedge, apparently; it "was mildly hedged and was exposed to [a massive nat gas] drop." Given all of that, the playbook is pretty un-extraordinary: strapped with a nice chunk of bank debt, the company attempted to make operational cuts to help sustain cash flow while simultaneously running a sales process through Evercore Partners Inc. That process failed. So, now, the company has $4mm of cash on hand and a $15mm DIP credit facility commitment from its prepetition lenders and a restructuring support agreement between it, Capital One Bank, Castex Energy Inc., and the RBL Lenders. The company plans to equitize certain prepetition lenders' debt and emerge from bankruptcy in Q1 of '18. 
  • Jurisdiction: S.D. of Texas (Judge Isgur)
  • Capital Structure: $400mm debt (Capital One Bank (USA) NA)    
  • Company Professionals:
    • Legal: Kelly Hart & Pitre LLP (Louis Phillips, Peter Kopfinger, Amelia Bueche, Patrick Shelby)
    • Restructuring Advisor: Alvarez & Marsal LLC (Ryan Omohundro)
    • Financial Advisor: Evercore Partners Inc.
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Castex Energy Inc.
      • Legal: Norton Rose Fulbright LLP (Kristian Gluck, Gregory Wilkes, Shivani Shah)
    • Prepetition & DIP Admin Agent: Capital One Bank (USA) NA & Consenting Lenders (Amegy Bank, Whitney Bank, IberiaBank, Frost Bank, Cross Ocean, Comerica Bank, Citibank NA, Bank of America Credit Products Inc., Capital One NA)
      • Legal: O'Melveny & Myers LLP (George Davis, Michael Lotito, Daniel Shamah) & (local) Porter Hedges LLP (John Higgins, Amy Geise)
      • Financial Advisor: RPA Advisors LLC
    • Riverstone V Castex 2005 Intermediate Holdings LLC
      • Legal: Vinson & Elkins LLP (Bradley Foxman, Paul Heath)

Updated 10/26/17

New Chapter 11 Filing - Takata Corporation

Takata Corporation

  • 6/25/17 Recap: The long-awaited chapter 11 (and Japanese Civil Rehabilitation Act) filing of the publicly-traded ($TKJP) airbag manufacturer is finally upon us after the Company endured a massive airbag recall (affecting 124mm automobiles that were deployed with non-desiccated PSAN Inflators, worldwide) and corresponding liability. The Company intends to consummate an agreement in principle with privately-held Key Safety Systems out of Sterling Heights Michigan for a sale of substantially all of the Company's assets for $1.588b. Use of proceeds include satisfying the requirements of a plea agreement with the US Department of Justice, paying administrative costs and expenses of the restructuring (cha-ching Weil, PwC, Lazard & Prime Clerk), and funding unsecured creditor recoveries. The Company has secured a $227mm revolving credit facility from Sumitomo Mitsui Banking Corporation to fund the cases; per its press release, it has also negotiated with its Japanese original equipment manufacturers ("OEMs") for valuable accommodations and liquidity enhancements and continues to negotiate with OEMs elsewhere. Every car manufacturer under the sun is listed as an "undetermined" general unsecured creditor including the likes of Toyota, FordTesla, Fisker, Ferrari, and, of course, the majors. 
  • Jurisdiction: D. of Delaware
  • Company Professionals:
    • Legal: Weil Gotshal & Manges LLP (Marcia Goldstein, Ronit Berkovich, Matthew Goren, Jessica Diab, Lauren Tauro) & (local) Richards Layton & Finger PA (Mark Collins, Michael Merchant, Amanda Steele, Brett Haywood)
    • Financial Advisor: PriceWaterhouseCoopers LLP (Bill Fasel, Stephen Hammond)
    • Investment Banker: Lazard Freres & Co. LLC
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Daimler Trucks North America LLC 
      • Legal: White & Case LLP (Thomas Lauria, Michael Shepard, Richard Graham)
    • General Motors Holdings LLC
      • Legal: O'Melveny & Meyers LLP (George Davis, Daniel Shamah, Andrew Sorkin, Gary Svirsky)
    • General Motors LLC
      • Legal: Honigman Miller Schwartz & Cohn LLP (Joseph Sgroi, Chauncey C. Mayfield II, Scott Kitai)
    • Key Safety Systems Inc.
      • Legal: Skadden Arps Slate Meagher & Flom LLP (Ron Meisler, Felicia Gerber Perlman, Christopher Dressel, Christine Okike, Esther Adzhiashvili)
    • Honda North America Inc.
      • Legal: Sidley Austin LLP (Michael Andolina, Jessica Knowles Boelter) & (local) Cole Schotz PC (Norman Pernick, J. Kate Stickles)
    • FCA US LLC
      • Legal: Sullivan & Cromwell LLP (Brian Glueckstein, Andrew Dietderich, Alexa Kranzley)
    • Ford Motor Company
      • Legal: McGuireWoods LLP (Mark Freedlander, Frank Guadagnino, John Thompson) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
    • Jaguar Land Rover North America LLC
      • Legal: Mayer Brown LLP (Richard Ziegler)
    • Subaru of America Inc.
      • Legal: Kramer Levin Naftalis & Frankel LLP (Adam Rogoff, Anupama Yerramalli, Philip Bentley, David Braun)
    • Toyota Motor Corporation
      • Legal: Frost Brown Todd LLC (Robert Sartin, Patrica Kirkwood Burgess, Ronald Gold) & (local) Landis Rath & Cobb LLP (Adam Landis, Kimberly Brown, Travis Ferguson)
    • BMW Manufacturing Co LLC
      • Legal: Norton Rose Fulbright US LLP (David Rosenzweig, Michael Parker) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
    • Nissan Motor Corporation
      • Legal: Jones Day (Pedro Jimenez)
    • Mitsubishi Motors North America Inc.
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Daniel Youngblut, Kevin O'Neill)
    • Tesla Inc.
      • Legal: Irell & Manella LLP (Jeffrey Reisner, Michael Strub, Kerri Lyman) & (local) Reed Smith LLP (Kurt Gwynne, Emily Devan)
    • Volkswagen Group of America, Inc.
      • Legal: Davis Polk & Wardwell LLP (Timothy Graulich, Elliott Moskowitz, Darren Klein)
    • Volvo Group North America LLC
      • Legal: Baker Hostetler LLP (Eric Goodman) & (local) Morris Nichols
    • Official Committee of Unsecured Creditors
      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Tyson Lomazow, Abhilash Raval, Bradley Scott Friedman) & (local) Whiteford Taylor & Preston LLP (Christopher Samis, L. Katherine Good, Kevin Shaw)
    • Committee of Unsecured Tort Claimant Creditors
      • Legal: Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, James Stang)

Updated 7/11/17 6 pm (CT)

New CCAA Filing - Sears Canada Inc.

Sears Canada Inc.

  • 6/22/17 Recap: No one saw this dumpster fire coming. That's sarcasm, ya'll. Riddled with debt, a burdensome $267mm pension liability, a pattern of declining earnings (see below), and a 1950s sensibility that nobody is interested in, this penny stock ($SCRC) was bound to end up in bankruptcy court. Negative net cash flows have ranged from $30-$100mm per month for the past five months. Hence the "dumpster fire" comment: that's some serious cash burn. Yiiiikes. So, what, in addition to filing for bankruptcy, do you do when your company has sh*t the bed so badly that its brand equity is strongest as a punchline? You step up the marketing game by shunning the term "restructuring" and deploying the flashier descriptor "reinvention" instead. Or toss some pixie dust in the air and come up with "Sears 2.0". Because nobody will know the wiser. Anyway, Sears Holdings ($SHLD) notably holds 12% of SRSC so presumably that 12% is now worth 0% but we wouldn't put it past Eddie Lampert to pull a bunny out of a hat. Somehow. But what do we know: we've never even stepped foot in Ontario. Ps. SHLD traded up nearly 3% on the news. Pss. The Company intends to close at least 59 of 200 locations and layoff 2900 people - all pursuant to a $450mm cumulative DIP credit facility. 
  • Jurisdiction: Ontario Superior Court of Justice
  • Capital Structure: $300mm '19 senior secured debt (Wells Fargo)($170mm funded inc. LOCs), $94mm TL (funded)(GACP Finance Co. LLP, KKR Capital Markets LLC, TPG Specialty Lending Inc.); major shareholders (ESL Investments Inc., Fairholme Capital Management Inc.)    
  • Company Professionals:
    • Monitor: FTI Consulting Canada Inc. (Greg Watson, Paul Bishop, Jim Robinson, Steven Bissell, Linda Kelly, Kamran)
    • Monitor Legal: Norton Rose Fulbright Canada LLP (Orestes Pasparakis, Virginie Gauthier, Alan Merskey, Evan Cobb, Alexander Schmitt, Catherine Ma)
    • Company Legal: Osler Hoskin & Harcourt LLP (Marc Wasserman, Jeremy Dacks, Michael De Lellis, Tracy Sandler, Shawn Irving, Martino Calvaruso, Karin Sachar)
    • Financial Advisor: BMO Nesbitt Burns Inc.
  • Other Parties in Interest:
    • $300mm DIP ABL Agent: Wells Fargo Capital Finance Corporation Canada
      • Legal: Cassels Brock & Blackwell LLP (Ryan Jacobs, Jane Dietrich, R. Shayne Kukulowicz, Tim Pinos, Lara Jackson, Ben Goodis)
      • Financial Advisor: Alvarez & Marsal (Doughas McIntosh, Al Hutchens, Joshua Nevsky)
    • $150mm DIP Term Agent: GACP Finance Co. LLP
      • Legal: Goodmans LLP (Joe Latham, Jean Anderson, Dan Dedic, Graham Smith, Jason Wadden, Ryan Baulke)
    • Board of Directors
      • Legal: Bennett Jones LLP (Gary Solway, Raj Sahni, Sean Zweig)
    • Active Employees and Retirees
      • Legal: Koskie Minsky LLP (Andrew Hatnay, Mark Zigler)

Updated 7/11/17 6:11 pm

New Chapter 11 Filing - CST Industries Holdings Inc.

CST Industries Holdings Inc.

  • 6/9/17 Recap: So this is a soap opera. Kansas City-based manufacturer of (i) industrial containers used to store architectural and agricultural products, water, dry bulk and oil and gas and (ii) domes, filed for bankruptcy due to its unsustainable capital structure and seemingly strained relationship with its senior subordinated noteholders. According to the company's first day declaration, the company sought a prepetition sale that would pay off its BNP Paribas' loan and make a "substantial payout" to its unsecured creditors. But one obstreperous unsecured creditor rejected the sale overtures and demanded that the company pay to hire advisors "that in turn charged CST substantial fees and expenses" to the tune of $8-10mm (inclusive of its own pros fees). Welcome to the party pal. These fees, coupled with downturns in the oil and gas and Middle Eastern water markets, led to a precipitous drop in EBITDA and a liquidity crisis. Now the company hopes to use Chapter 11 to sell itself (pursuant to a $15mm DIP credit facility).
  • Jurisdiction: D. of Delaware
  • Capital Structure: $57.5mm TL (funded, BNP Paribas), $114.3mm senior subordinated notes (The Northwestern Mutual Life Insurance Company & OCM Mezzanine Fund II LP).     
  • Company Professionals:
    • Legal: Hughes Hubbard & Reed LLP (Kathryn Coleman, Christopher Gartman, Jacob Gartman, Anson Frelinghuysen) & Potter Anderson & Corroon LLP (Jeremy Ryan, R. Stephen McNeill, D. Ryan Slaugh)
    • Financial Advisor/Investment Banker: CDG Group LLC (Robert Del Genio)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • TL Agent: BNP Paribas
      • Legal: Chadbourne & Parke LLP (Howard Beltzer, James Copeland, Joseph Giannini) & Norton Rose Fulbright US LLP (Louis Strubeck Jr.) & (local) Young Conaway Stargatt & Taylor LLP (Kara Hammond Coyle)
    • Official Committee of Unsecured Creditors
      • Legal: Lowenstein Sandler LLP (Jeffrey Prol, David Banker, Wojciech Jung, Bruce Nathan) & (local) Shaw Fishman Glantz & Towbin LLC (Thomas Horan, Ira Bodenstein, Christina Sanfelippo)
      • Financial Advisor: Teneo Restructuring and Teneo Capital LLC (Christopher Wu)
    • OCM Mezzanine Fund II, L.P.
      • Legal: Goldberg Kohn Ltd. (William Meyers)
    • Private Equity Sponsor: The Sterling Group

Updated 7/11/17

New Chapter 11 Filing - Gulfmark Offshore Inc.

Gulfmark Offshore Inc.

  • 5/17/17 Recap: Everyone has been waiting for the offshore action and it's finally here. Except, its fairly anticlimactic. Here, the publicly-traded Houston-based offshore oil and gas logistics services provider filed for bankruptcy to effectuate a financial restructuring pursuant to a Restructuring Support Agreement signed with holders of its unsecured senior notes. The noteholders will get approximately 36% of the equity in the newly reorganized company along with rights to purchase an additional 60% equity slug pursuant to a backstopped $125mm rights offering. Existing equity will get a small equity "kiss" and some warrants. This is so boring that EVEN WE can't really find much to make fun of. 
  • Jurisdiction: D. of Delaware
  • Capital Structure: $100mm RCF ($72mm funded)(Royal Bank of Scotland), NOK600mm Norwegian Facility ($44.3mm funded)(DNB Bank ASA), $430mm '22 6.375% unsecured senior notes (funded)(US Bank NA)    
  • Company Professionals:
    • Legal: Weil (Gary Holtzer, Ronit Berkovich, Debora Hoehne) & (local) Richards Layton & Finger PA (Mark Collins, Zachary Shapiro, Brett Haywood, Christopher De Lillo)
    • Financial Advisor: Alvarez & Marsal LLC (Brian Fox, Kevin Larin, RIchard Niemerg, Don Koetting, Lacie Melasi, Robert Country)
    • Investment Banker: Evercore Group LLC (Stephen Hannan, David Andrews, Sachin Lulla, Pranav Goel, Arth Patel)
    • Claims Agent: Prime Clerk LLC (*click on company name above for access to free docket)
  • Other Parties in Interest:
    • Indenture Trustee: US Bank NA
      • Legal: Foley & Lardner LLP (Derek Wright, Mark Prager)
    • Ad Hoc Group of Unsecured Noteholders
      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Evan Fleck, Nelly Almeida) & (local) Morris Nichols Arsht & Tunnell LLP (Gregory Werkheiser, Robert Dehney)
        • Financial Advisor: Houlihan Lokey Capital Inc.
    • Prepetition Multicurrency RCF Lender: Royal Bank of Scotland
      • Legal: Sullivan & Cromwell LLP (Michael Torkin, Brian Glueckstein, David Zylberberg) & (local) Young Conaway Stargatt & Taylor LLP (Pauline Morgan, Joseph Barry, Ian Bambrick)
      • Financial Advisor: FTI Consulting Inc.
    • Prepetition NOK Lender: DNB Bank ASA
      • Legal: Hughes Hubbard & Reed LLP (Christopher Kiplok, Anson Frelinghuysen, Erin Diers) & (local) Bayard PA (Erin Fay)
      • Financial Advisor: Guggenheim Securities LLC
    • Gulfmark Rederi AS
      • Legal: Norton Rose Fulbright US LLP (Jason Boland, William Greendyke) & (local) Womble Carlyle Sandridge & Rice LLP (Matthew Ward)

Updated 7/12/17 9:301 am CT

New Chapter 11 Filing - Adeptus Health Inc.

Adeptus Health Inc.

  • 4/19/17 Recap: Publicly-traded ($ADPT) Texas-based for-profit hospital operator filed for bankruptcy to effectuate a sale of the business to Deerfield Management Company. The company blames significant working capital needs, challenges with revenue cycle management, and reduced utilization and patient volume for its filing. Deerfield is providing the company a $45mm DIP credit facility. 
  • Jurisdiction: N.D. of Texas
  • Capital Structure: $212.75mm total debt. $61.9mm RCF (Bank of America), $132mm TL (A-1 and A-2, latter with Goldman Sachs Lending Partners), $13.09mm LOC (Bank of America), $7.5mm bridge loan (Deerfield Management Company)    
  • Company Professionals:
    • Legal: Norton Rose Fulbright LLP (Louis Strubeck Jr., Kristian Gluck, John Schwartz, Liz Boydston, Timothy Springer)
    • Financial Advisor/CRO: FTI Consulting (Andrew Hinkelman)
    • Investment Banker: Houlihan Lokey Capital Inc.
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Deerfield Management Company LP
      • Legal: Katten Muchin Rosenman LLP (Peter Siddiqui, Paige Barr)
    • MatlinPatterson Global Opportunities Master Fund LP
      • Legal: Ropes & Gray LLP (Mark Somerstein, Keith Woffard) & (local) Porter Hedges LLP (John Higgins, Joshua Wolfshohl)
    • Wexford Spectrum Investors LLC and Debello Investors LLC
      • Legal: Winstead PC (Phillip Lamberson, Rakhee Patel, Annmarie Chiarello)
    • Healthcare Ombudsman: Daniel McMurray
      • Legal: Neubert, Pepe & Monteith PC (Mark Fishman) & (local) Quilling Selander Lownds Winslett & Moser PC (Joshua Shephard)
      • Medical Operations Advisor: Focus Management Group USA (Daniel McMurray, James Grobmyer, Angeline Bernard, Sandra Casper)
    • Official Committee of Unsecured Creditors
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Sarah Link Schultz, Marty Brimmage, David Botter, Alexis Freeman)
      • Financial Advisor: CohnReznick LLP (Chad Shandler)
    • Official Committee of Equity Security Holders
      • Legal: Brown Rudnick LLP (Edward Weisfelner, Bennett Silverberg, Jeffrey Jonas) & Winstead PC (Rakhee Patel, Phil Lamberson)
      • Financial Advisor: Miller Buckfire & Co. LLC & Stifel Nicolaus & Co. (Richard Klein)

Updated 7/13/17

New Chapter 11 & CCAA Filing - Payless Shoesource Inc.

Payless Shoesource Inc.

  • 4/4/17 Recap: Private equity backed Kansas-based discount footwear retailer with over 4000 stores filed for bankruptcy because, well, right, it's a private equity backed retailer. Golden Gate Capital and Blum Capital Partners are the sponsors and we've previously covered their methods, uh, we mean "value-add" proposition. We probably won't even bother to read the filing documents because we're 98.9% confident they say the same sh*t every other retail case has said, e.g., poor e-commerce...blah blah...Amazon...blah blah...mall-based retail...blah blah...bad weather...blah blah...Showtime's Billions sucks...wait, what?...whatever, it does (who cares if that's relevant?)...millennial shopping habits...blah blah...bleeding top line and depressed comp store sales...blah blah...dividend recaps...blah blah blah. Apparently the retailer is going to close nearly 400 stores while it attempts to reorganize around what remains - all in accordance to a plan support agreement that the company has entered into with 2/3 of its term loan lenders and with the support of a $385mm DIP facility (of which $80mm is new money). Meanwhile, we'll see what kind of cascading effect this will have on (a) China's manufacturing sector which, apparently, has seen significant stretching of payables (up to 100 days) - a fact evidenced by the top 50 creditors list, and (b) our lovely "A" malls (notably, Simon Property Group made a notice of appearance before the first day pleadings were even completely filed). Finally, the CEO dropped the fact that the new business plan will focus on, among other things, "omnichannel expansion" and since that is the retail buzzword/phrase of the moment, we guess there's really nothing to see here: all will be fine. 
  • 4/6/17 Update: We read the documents and, generally speaking, everything we said above applies. Two other factors apparently worth mentioning as causes for the filing: inventory management issues (compounded by the West Coast port strikes) and foreign exchange issues.
  • Jurisdiction: E.D. of Missouri
  • Capital Structure: $300 ABL ($187mm out - Wells Fargo), $520mm '21 TL ($506mm out), $145mm '22 second lien TL (Morgan Stanley Senior Funding Inc.)    
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (James Sprayragen, Nicole Greenblatt, William Guerrieri, Christine Pirro, Jessica Kuppersmith) & (local) Armstrong Teasdale LLP (Steven Cousins, Erin Edelman) & (Canadian counsel) Osler Hoskin & Harcourt LLP 
    • Legal to Independent Director: Munger Tolles & Olson LLP (Thomas Walper, Seth Goldman, Kevin Allred)
    • Financial Advisor: Alvarez & Marsal North America LLC (Robert Campagna)
    • Investment Banker: Guggenheim Securities LLC (Morgan Suckow)
    • Real Estate: RCS Real Estate Advisors (Ivan Friedman)
    • Liquidators: Great American Group LLC & Tiger Capital Group LLC
    • Claims Agent: Prime Clerk LLC (*click on company name above for free court docket)
  • Other Parties in Interest:
    • Ad Hoc Committee of First Lien Term Lenders (Alden Global Opportunities Master Fund, Credit Suisse Asset Management, GSO Capital Partners, Hawkeye Capital Management, Invesco Senior Secured Management, Octagon Credit Investors LLC, AIC Finance, Axar Capital Management)
      • Legal: King & Spalding LLP (Michael Rupe, Christopher Boies, Jeffrey Pawlitz, Austin Jowers, Michael Handler)
      • Financial Advisor: Houlihan Lokey Capital Inc.
    • DIP ABL Agent: Wells Fargo Bank NA
      • Legal: Choate Hall & Stewart LLP (Kevin Simard, Douglas Gooding, Jonathan Marshall) & (local) Thompson Coburn LLP (Mark Bossi)
    • First Lien Agent & DIP TL Agent: Morgan Stanley Senior Funding Inc. & Cortland Products Corp.
      • Legal: Norton Rose Fulbright US LLP (Stephen Castro, David Rosenzweig, Danielle Ledford, Tim Walsh)
    • Official Committee of Unsecured Creditors
      • Legal: Pachulski Stang Ziehl & Jones LLP (Robert Feinstein, Jeffrey Pomerantz, Bradford Sandler) & (local) Polsinelli PC (Matthew Layfield, Christopher Ward, Shanti Katona)
      • Financial Advisor: Province Inc.

Updated 4/18/17

New Chapter 11 Filing - Vanguard Natural Resources

Vanguard Natural Resources

  • 2/2/17 Recap: Houston-based oil and gas producer files chapter 11 pursuant to a restructuring support agreement that, if implemented, will permit the company to cut over $700mm of debt. The company has secured a $50mm DIP. 
  • Jurisdiction: SD of Texas
  • Capital Structure: $1.372b '18 L+250 RBL (Citibank N.A.), $76mm '20 7% second lien notes, $51'm '19 8.375% unsecured notes (Wilmington Trust), $382mm '20 7.875% unsecured notes (UMB Bank)    
  • Company Professionals:
    • Legal: Paul Hastings LLP (Chris Dickerson, James Grogan, Todd Schwartz, Alexander Bongartz, Brendan Gage)
    • Financial Advisor: Opportune LLP (Scott Anchin)
    • Investment Banker: Evercore Partners (Daniel Aronson, Marco Acerra)
    • Claims Agent: Prime Clerk (*click on company name for docket)
  • Other Parties in Interest:
    • Ad Hoc Group of 2L noteholders (Fir Tree Inc., Wexford Capital LP, York Capital Management Global Advisors)
      • Legal: Morrison & Foerster LLP (Jonathan Levine, John Pintarelli, Daniel Harris) & (local) Jackson Walker LLP (Monica Blacker, Matthew Cavenaugh)
    • Ad Hoc Committee of Senior Noteholders & UMB Bank NA
      • Legal: Milbank (Dennis Dunne, Andrew LeBlanc, Samuel Khalil) & (local) Porter Hedges LLP (John Higgins, Eric English)
      • Investment Bank: PJT Partners Inc.
    • RBL Lender: Citibank NA
      • Legal: Weil (Stephen Karotkin, Joseph Smolinsky, Blaire Cahn, Christopher Lopez)
    • UMB Bank
      • Legal: Kelley Drye & Warren LLP (Eric Wilson, Benjamin Feder, T. Charlie Liu)
    • Wilmington Trust
      • Legal: Pryor Cashman LLP (Seth Lieberman, Patrick Sibley, Matthew Silverman) & (local) Cole Schotz PC (Michael Warner, Benjamin Wallen)
    • Independent Directors of the Board
      • Legal: Andrews Kurth Kenyon LLP (Robin Russell, Tad Davidson, Joseph Buoni)
    • Unsecured Noteholder & Preferred Unitholder: Panning Capital Management 
      • Legal: Munger Tolles & Olson LLP (Thomas Wolper, Seth Goldman) & (local) Norton Rose Fulbright US LLP (William Greendyke, Jason Boland, Bob Bruner, Louis Strubeck) 
    • Ad Hoc Equity Committee
      • Legal: Gardere Wynne Sewell LLP (John Melko, Sharon Beausoleil, Michael Riordan, Sean Wilson, Holland O'Neil)
    • Official Committee of Unsecured Creditors
      • Legal: Akin Gump (Charles Gibbs, Michael Stamer, Abid Qureshi, Meredith Lahaie, Kevin Zuzolo)
      • Financial Advisor: FTI Consulting

Updated 3/22/17

 

New Filing - Forbes Energy Services Ltd.

Forbes Energy Services Ltd.

  • 01/22/17 Recap: Texas-based oil field services provider files bankruptcy to effectuate a prepackaged plan of reorganization pursuant to which noteholders will take 100% equity and a cash distribution. 
  • Jurisdiction: S.D. of Texas 
  • Capital Structure: $90 mm ABL (Regions Bank), $277mm '19 9% senior notes (Wells Fargo)
  • Company Professionals:
    • Legal: Pachulski Stang Ziehl & Jones LLP (Richard Pachulski, Ira Kharasch, Maxim Litvak, Joshua Fried) & (local) Snow Pence Green LLP (Phil Snow, Kenneth Green)
    • Financial Advisor: Alvarez & Marsal LLC (Marc Leibman, Gary Barton)
    • Investment Banker: Jefferies Group Inc. (Robert White)
    • Claims Agent: KCC (*click on name above for link to docket)
  • Other Parties in Interest:
  • Ad Hoc Group of Senior Unsecured Noteholders: Ascribe Capital, Solace Capital Partners LP, Courage Capital Management LLC, Pacific Investment Management Co., Phoenix Investment Advisor LLC
    • Legal: Fried Frank Harris Shriver & Jacobson LLP (Brad Scheler, Matthew Roose) & (local) McKool Smith PC (Hugh Ray, Christopher Johnson)
    • Financial Advisor: FTI Consulting Inc.
  • Regions Bank
    • Legal: Norton Rose Fulbright (William Greendyke) & Parker Hudson Rainer & Dobbs LLP (Eric Anderson)
  • Wells Fargo
    • Legal: Loeb & Loeb LLP (Bernard R. Given, Walter Curchack, Vadim Rubinstein)

Updated 1/30/17

New CCAA Filing - Rubicon Minerals Corporation

Rubicon Minerals Corporation

  • 10/24/16 Recap: Ontario-based gold exploration company files CCAA to equitize debt and raise new equity.
  • Jurisdiction: Canada
  • Capital Structure: $50mm TL (CPPIB Credit Investments), $99.6mm (RGLD Gold)    
  • Company Professionals:
    • Legal: Goodmans (Robert Chadwick, Caroline Descours, Charlie Pettypiece)
    • Financial Advisor: BMO Capital Markets & TD Securities
    • Monitor: E&Y (Alex Morrison, Simone Carvalho)
      • Legal: Norton Rose Fulbright (Orestes Pasparakis, Alexander Schmitt)
  • Other Parties in Interest:
    • CPPIB Credit Investments
      • Legal: Torys (Tony DeMarinis, Lee Casey)
    • RGLD Gold
      • Legal: McCarthy Tetrault LLP (James Gage, Heather Meredith
    • Chubb Insurance Company of Canada
      • Legal: Borden Ladner (Roger Jaipargas, James MacLellan)

 

New Chapter 15 Filing - Tervita Corporation

Tervita Corporation

New Filing - Connect Transport LLC

Connect Transport, LLC

  • 10/4/16 Recap: private integrated midstream oil and gas services provider files for chapter 11 to re-invigorate and effectuate a failed (363) sale process prior to filing.  
  • Jurisdiction: Northern District of Texas
  • Capital Structure: $66mm funded debt     
  • Company Professionals:
  • Other Parties in Interest:
    • Revolving Credit Facility Agent: Bank of America
    • Official Committee of Unsecured Creditors
      • Legal: McCathern PLLC (Eric Van Horn, Nicholas Zugaro)
      • Financial Advisor: GlassRatner Advisory & Capital Group LLC (Michael Thatcher)
    • Creditor: Trinity River Resources LP 

Updated 12/30/16