🌑New Chapter 11 Bankruptcy Filing - Murray Energy Holdings Co.🌑

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Ohio-based Murray Energy Holdings Co. and its 90+ affiliated debtors are now part of a not-so-exclusive club: the Bankrupted Coal Company Club (the “BCCC”)! Unlike some more recent small(er) coal bankruptcy filings, this one is a behemoth: the debtors own and operate 13 active mines in Ohio, West Virginia, eastern and western Kentucky, Alabama, Illinois, and Utah*; their primary product is thermal coal used for electricity (though, with recent acquisitions, the debtors are also now in the steel-making business). To give you a sense of the magnitude of this company, here are some key figures:

  • Produced 53mm tons of bituminous coal in 2018;

  • Employs 5,500 people, including 2,400 active union members EXCLUSIVE of folks employed through the debtors’ partnership with soon-to-be-BCCC-member Foresight Energy LP ($FELP);

  • Generated $2.5b in coal sales and $542.3mm of EBITDA in 2018; and

  • Carries $2.7b of funded debt on balance sheet, $298mm of annual interest and amort expenses, AND $8b+ in actual or potential liability obligations under various pension and benefit plans. In 2018, the debtors’ statutory or CBA-related employee and retiree obligations totaled approximately $160mm. These are key factors that explain why, ultimately, despite every effort to hold out, this company capitulated into bankruptcy.

This is a story of unfettered expansion and spending, hubris, misplaced trust in new Washington on the part of Robert Murray, and utterly savage disruption.

The disruption side of the equation is compelling. Per the company:

“The thermal coal markets that Murray traditionally serves have been meaningfully challenged over the past three to four years, and deteriorated significantly in the last several months. This sector-wide decline has been driven largely by (a) the closure of approximately 93,000 megawatts of coal-fired electric generating capacity in the United States, (b) a record production of inexpensive natural gas, and (c) the growth of wind and solar energy, with gas and renewables, displacing coal used by U.S. power plants.”

Interestingly, this one statement ties together so much of what we’ve all been seeing in the restructuring space. Over the last several years, there have been a number of power company bankruptcies and through bankruptcy or otherwise, capacity has been cut considerably (indeed, FirstEnergy is a recipient of Murray Energy coal and undoubtedly took measures to cut back on coal supply). Fracking across the US has led to a deluge of natural gas — so much so that producers are flaring excess natural gas due to a lack of pipe infrastructure with which to transport it. Despite structural challenges, natural gas exports are on the rise. From the U.S. Energy Information Administration just yesterday:

“From January through June of 2019, U.S. net natural gas exports averaged 4.1 billion cubic feet per day (Bcf/d), more than double the average net exports in 2018 (2.0 Bcf/d), according to data in the U.S. Energy Information Administration’s (EIA) Natural Gas Monthly. The United States became a net natural gas exporter (exported more than it imported) on an annual basis in 2017 for the first time in almost 60 years.”

And as this odd illustration shows, the US is becoming increasingly dependent — in large part due to federal and state emissions standards — upon solar and wind for its electricity needs. The debtors highlight:

“…coal-fired installed capacity as a percentage of total installed capacity has fallen from 26 percent in 2013 to 20 percent in 2019, with coal-fired generation as a percentage of total generation falling from 35 percent in 2013 to 27 percent in early 2019. Natural gas and renewables installed electricity generation capacity in the United States as a percentage of total installed capacity has increased from 59 percent in 2013 to 67 percent in 2019, and natural gas and renewables generation as a percentage of total generation increased from 42 percent in 2013 to 48 percent in early 2019.”

YIKES. That is a DRAMATIC change. They continue:

“During its peak in 2007, coal was the power source for half of electricity generation in the United States and by early 2019, coal-fired electricity generation fell to approximately 27 percent. These challenges have intensified recently as (i) certain electric utility companies have filed for bankruptcy protection and others have sought, and received, subsidies for their nuclear generation capacity to avoid bankruptcy, at the expense of coal-fired facilities, (ii) domestic natural gas prices hit 20-year lows this past summer, and (iii) overall demand for electricity in the United States has declined two percent in 2019, further depleting demand for coal at domestic utilities.”

MAGA!!

The international story, though, ain’t much better, with the company noting a “perfect storm of negative forces” that includes:

“…low liquefied natural gas prices; a recent trade war driving Russia to increase exports; mild weather across the Northern Hemisphere led to a reduction in demand for heating in both Europe and Asia; higher freight costs; and a prolonged monsoon season in India which kept demand depressed while conditions cleared for a record eight months.”

As if all of that isn’t bad enough, the competitive landscape has been horrific and while we suppose its admirable to try and holdout to avoid the embarrassment and stigma of bankruptcy, that strategy clearly becomes untenable when literally every other competitor in the US has already joined the BCCC and stripped themselves of burdensome debt and pension obligations. The company acknowledges as much:

“…while Murray has historically been able to navigate the challenges of the coal marketplace, these rapidly deteriorating industry conditions have caused more than 40 coal companies to file for bankruptcy since 2008, with more than half a dozen major operators filing in the last year alone. These bankruptcies have affected thousands of workers across the United States, and they have left their mark on Murray. Competitors have used bankruptcy to reduce debt and lower their cost structures by eliminating cash interest obligations and pension and benefit obligations, leaving them better positioned to compete for volume and pricing in the current market, while Murray continued to satisfy its significant financial obligations required by the weight of its own capital structure and legacy liability expenses. As a result, Murray generated little cash after satisfying debt service obligations, paying employee health and pension benefits, and maintaining operations.”

That’s a quaint narrative but it’s also a bit misleading.

While every other company was falling apart, Mr. Murray went on a shopping spree, snapping up Consolidation Coal CompanyForesight Energy LP (coming soon to a bankruptcy court near you), Mission Coal Company LLCArmstrong Energy Inc., and certain Colombian assets. This undoubtedly led to increased integration costs and debt. During that time, the debtors deployed every capital structure trick in the book to extend maturities and kick the can down the road. That road has come to an end at the bankruptcy court doors.

Here is that sweet clean capital structure:

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Man, that’s a beaut.

Rounding out the company’s extensive liabilities are the obligations to employees under CBAs and pension and benefit plans.

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Pursuant to these CBAs, Murray contributes to three multi-employer retirement plans. If you want a sense of how employer-employee relations have changed since the 1970s, look no farther than the debtors’ obligations under what they’ve dubbed the “1974 Pension Plan.” Per the debtors:

“Following the large wave of chapter 11 filings in 2015 and 2016, more than half a dozen large U.S. coal companies collapsed into bankruptcy over the last several years and withdrew from the 1974 Pension Plan. When an employer withdraws, its vested beneficiaries remain in the 1974 Pension Plan and are referred to as “orphan” beneficiaries. The remaining contributing employers become responsible for the benefits of these orphaned participants who were never their employees. As a result, approximately 95 percent of beneficiaries who currently receive benefits from the 1974 Pension Plan last worked for employers that no longer contribute to the Plan. As of January 2019, 11 employers contribute to the 1974 Pension Plan, compared to over 2,800 in 1984. This has placed significant stress on the 1974 Pension Plan and the small number of contributing employers—Murray most of all. If Murray withdraws from the 1974 Pension Plan, the withdrawal liability could be $6.4 billion or more, with annual estimated payments of approximately $32 to $35 million in perpetuity.”

Whoa. And that’s just one plan: the company is also on the hook for others, not to mention $1.9b in other federally-mandated post-employment benefits, asset retirement obligations and environmental obligations.

“Likely”?!?

The company has a restructuring support agreement with 60% of its “consenting superpriority lenders” and “consenting equityholders” (read: Robert Murray) that outlines the general terms of a path forward: a sale with the superpriority lenders as stalking horse bidder, DIP lender, and funder of administrative expenses. Those lenders committed to provide a $350mm DIP commitment. From here, the clock is ticking.

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The debtors hope to have an auction within 135 days and plan confirmation within 195 days. And within 106 days the debtors want to have a solution their CBA/retiree problem or file a motion seeking to reject those agreements and modify those benefits.

There is, as with most cases, a “cooler talk” aspect to this filing: there’s the Kirkland-is-dominating-with-yet-another-coal-bankruptcy-representation-post-westmoreland-and-mission-coal-and-armstrong-energy-which-means-that-A&M-is-dominating-which-means-that-Prime-Clerk-is-dominating-and-what-the-f*ck-happened-to-Jones-Day-which-used-to-crush-coal-filings-with-Peabody-and-Alpha-Natural-but-now-seems-to-be-unraveling-narrative, but putting aside that inside baseball crap and how much frikken cash this case is going to print for all of the above, it’s the miners themselves — those guys who were in the depths of the earth (as distinct from the white-collar professionals who always talk about “the trenches” and “hard fought” negotiations) — who are very likely to get completely and utterly shafted here. As if getting misled or lied to by Mr. Murray — however good his intentions may have been — and Mr. Trump wasn’t enough, they’re now facing the very real possibility of losing the benefits that they worked especially hard to get. All while the professionals are billing $1650/hour. Bankruptcy is vicious.

To point here is the UMWA’s statement about the bankruptcy:

“Today’s filing by Murray Energy for Chapter 11 bankruptcy reorganization comes as no surprise. This day has been coming for some time.

Coal production in this country continues to decline, due to the glut of natural gas on the market and continued government preference for gas and renewable energy to replace coal-fired power generation. Combined with a recent severe reduction in coal exports, these factors delivered a one-two punch that an over-extended Murray Energy could not withstand.

Now comes the part where workers and their families pay the price for corporate decision-making and governmental actions. Murray will file a motion in bankruptcy court to throw out its collective bargaining agreement with the union. It will seek to be relieved of its obligations to retirees, their dependents and widows. We have seen this sad act too many times before.”

Let’s pour one out for the little guys.

*This number is contradicted in the bankruptcy papers. In one instance, the company’s new CEO indicates that there are 13 owned and operated mines; in another he says 18. Whatevs. What are 5 mines in the scheme of things (we’re kidding…WTF, y’all?). The company also owns and operates a mine in Colombia, South America.

  • Jurisdiction: S.D. of Ohio (Judge Hoffman Jr.)

  • Capital Structure: See Above

  • Professionals:

    • Legal: Kirkland & Ellis LLP (James Sprayragen, Nicole Greenblatt, Ross Kwasteniet, Joseph Graham, Alexander Nicas, Mark McKane, Tricia Schwallier) & Dinsmore & Shohl LLP (Kim Martin Lewis, Alexandra Horwitz)

    • Financial Advisor: Alvarez & Marsal LLC (Robert Campagna)

    • Investment Banker: Evercore Group LLC

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

  • Other Parties in Interest:

    • Prepetition ABL Agent: Goldman Sachs Bank USA

    • Prepetition FILO and DIP FILO Lender: GACP Finance Co. LLC

      • Legal: Sidley Austin LLP (Jennifer Hagle, Leslie Plaskon, Anna Gumport) & Frost Brown Todd LLC (Ronald Gold, Erin Severini

    • Prepetition Superpriority Agent: GLAS Trust Company LLC; DIP Administrative Agent: GLAS USA LLC; DIP Collateral Agent: GLAS Americas LLC

      • Legal: Wilmer Cutler Pickering Hale and Dorr LLP (Andrew Goldman, Benjamin Loveland) & Frost Brown Todd LLC (Douglas Lutz, A.J. Webb, Bryan Sisto)

    • Term Loan Agent: Black Diamond Commercial Finance LLC

      • Legal: Ropes & Gray LLP (Gregg Galardi) & Keating Muething & Klekamp PLLC (Robert Sanker)

    • 1.5L Notes Indenture Trustee: U.S. Bank N.A.

    • 2L Notes Indenture Trustee (‘20 and ‘21): The Bank of New York Mellon Trust Company N.A.

    • Ad Hoc Group of Superpriority Lenders

      • Legal: Davis Polk & Wardwell LLP (Damian Schaible, Adam Shpeen, James McClammy) & Frost Brown Todd LLC (Douglas Lutz, A.J. Webb, Bryan Sisto)

      • Financial Advisor: Houlihan Lokey Capital Inc.

    • Equityholders (Robert Murray)

      • Legal: Willkie Farr & Gallagher (Brian Lennon, Matthew Feldman)

    • Official Committee of Unsecured Creditors (Bank of NY Mellon Trust Company NA, CB Mining Inc., Joy Global, RM Wilson Co., UMWA 1974 Pension Trust, United Mine Workers of America International Union, Wheeler Machinery Co.)

New Chapter 11 Filing - Nine West Holdings Inc.

Nine West Holdings Inc.

April 6, 2018

Nine West Holdings Inc., the well-known footwear retailer, has finally filed for bankruptcy. The company will sell its Nine West and Bandolino brands to Authentic Brands Group and reorganize around its One Jeanswear Group, The Jewelry Group, the Kasper Group, and Anne Klein business segments. The company has a restructuring support agreement in hand to support this dual-process. 

More on the situation here

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

  • Capital Structure: See below.

Source: First Day Declaration

Source: First Day Declaration

  • Company Professionals:

    • Legal: Kirkland & Ellis LLP (James Sprayragen, James Stempel, Joseph Graham, Angela Snell, Anna Rotman, Jamie Aycock, Justin Alphonse Mercurio, Alyssa Russell)

    • Financial Advisor: Alvarez & Marsal North America LLC (Ralph Schipani III, Julie Hertzberg, Holden Bixler, Amy Lee, Richard Niemerg, Theodore Langer, Stuart Loop, Thomas Koch, Michael Dvorak)

      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Andrew Leblanc, Alexander Lees)

    • Investment Banker: Lazard Freres & Co. LLC (David Kurtz, Ari Lefkovits, David Hales, Mike Weitz, Nikhil Angelo, Okan Kender, Abigail Gay, Drew Deaton) & Consensus Advisory Services LLC

    • Authorized Officers: Stefan Kaluzny, Peter Morrow, Harvey Tepner, Alan Miller

    • Legal to the Authorized Officers: Munger Tolles & Olson LLP (Seth Goldman, Kevin Allred, Thomas Walper)

    • Financial Advisor to the Authorized Officers: Berkeley Research Group LLC (Jay Borow)

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

  • Other Parties in Interest:

    • Stalking Horse Bidder/Buyer: Authentic Brands Group

      • Legal: DLA Piper LLP (Richard Chesley, Ann Lawrence, Rachel Ehrlich Albanese)

    • Prepetition ABL and FILO Agent: Wells Fargo NA

      • Legal: Morgan Lewis & Bockius LLP (Matthew Ziegler, Julia Frost-Davies, Amelia Joiner)

    • Administrative Agent for the prepetition secured and unsecured Term Loan Facilities: Morgan Stanley Senior Funding Inc.

    • Indenture Trustee for 3 series of Unsecured Notes: US Bank NA

      • Legal: White & Case LLP (J. Christopher Shore, Philip Abelson) & Seward & Kissel LLP (John Ashmead, Arlene Alves)

    • Ad Hoc Group of Secured Lenders (Farmstead Capital Management LLC, KKR Credit Advisors (US) LLC)

      • Legal: Davis Polk & Wardwell LLP (Marshall Huebner, Darren Klein, Adam Shpeen)

      • Financial Advisor: Ducera Partners LLC

    • Ad Hoc Group of Crossover Lenders (Alden Global Capital LLC, Carlson Capital LP, CVC Credit Partners LLC, Silvermine Capital Management LLC, Trimaran Advisors)

      • Legal: King & Spalding LLP (Michael Rupe, Jeffrey Pawlitz, Michael Handler, Bradley Giordano)

      • Financial Advisor: Guggenheim Securities LLC

    • Brigade Capital Management, LP

      • Legal: Kramer Levin Naftalis & Frankel LLP (Douglas Mannel, Rachael Ringer)

      • Financial Advisor: Moelis & Company

    • Ad Hoc Group of 2019 Unsecured Noteholders (Whitebox Advisors LLC, Scoggin Management LP, Old Bellows Partners LP, Wazee Street Opportunities Fund IV)

      • Legal: Willkie Farr & Gallagher LLP (Rachel Strickland)

    • Ad Hoc Group of 2034 Unsecured Noteholders

      • Legal: Jones Day

      • Financial Advisor: Houlihan Lokey

    • Administrative Agent for $247.5mm DIP ABL Facility

    • Administrative Agent for $50mm DIP TL Facility

    • Sponsor: Sycamore Partners LP

      • Legal: Proskauer Rose LLP (Mark Thomas, Peter Young, Michael Mervis, Jared Zajac, Chantel Febus, Alyse Stach)

    • KKR Asset Management

      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Andrew Leblanc)

    • Morgan Stanley & Co. LLC and Morgan Stanley Senior Funding Inc.

      • Legal: Ropes & Gray LLP (Gregg Galardi, Gregg Weiner)

    • Official Committee of Unsecured Creditors (Aurelius Capital Master Ltd., GLAS Trust Company LLC, PBGC, Simon Property Group, Stella International Trading (Macao Commercial Offshore) Ltd., Surefield Limited, U.S. Bank NA)

      • Legal: Akin Gump Strauss Hauer & Feld LLP (Daniel Golden, David Zensky, Deborah Newman, Arik Preis, Jason Rubin, Anthony Loring, Michael Byun, Patrick Chen)

      • Legal Conflicts Counsel: Kasowitz Benson Torres LLP (David Rosner, Howard Schub)

      • Financial Advisor: Protiviti Inc. (Guy Davis, Suzanne Roski, Heather Williams, John Eldred, Justin Koehler, Brian Taylor, Russell Brooks, Matthew Smith, Blake Parker, Lee Slobodien, Omkar Vale, Lok Lam, Sean Sterling) & Province Inc. (Michael Atkinson, Jason Crockett, Eunice Min, Byron Groth)

      • Investment Banker: Houlihan Lokey Capital Inc. (Saul Burian, Surbhi Gupta, Chris Khoury, Tejas Kullarwar, Matt Ender, Brendan Wu)

Updated 11/3/18 at 6:42 am CT

New Chapter 11 Filing - Global A&T Electronics Ltd.

Global A&T Electronics Ltd. 

  • 12/17/17 Recap: Singapore-based provider of semiconductor assembly and test services for integrated circuits for use in analog, mixed-signal and logic, and memory products across the globe filed for prepackaged bankruptcy...finally. The company had skipped its $56mm interest payment and let its 30-day grace period expire; it has also been the subject of litigation after issuing new notes back in 2014 in exchange for junior debt. The company blames the litigation, an over-levered balance sheet, underspending on capex, and liquidity constraints for its need to reorganize. The company seeks to confirm the case in FOUR DAYS which may be a new record for a bankruptcy of this size. 
  • Jurisdiction: S.D. of New York (Judge Drain)
  • Capital Structure: $1.13b 10% '19 first lien notes ($625mm Initial Nots, $502mm Additional Notes)(Citicorp International Limited)
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (Marc Kieselstein, Patrick Nash, Gregory Pesce, Michael Slade)
    • Financial Advisor: Alvarez & Marsal LLC (Robert Caruso)
    • Investment Banker: Moelis & Company LLC
    • Disinterested Director: Eugene Davis
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Ad Hoc Group of Initial Senior Secured Noteholders (GSO Capital Partners LP, IP All Seasons Asian Credit Fund, Brigade Capital Management LP, Southpaw Credit Opportunity Master Fund LP)
      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Abhilash Raval, Brian Kinney, Michael Price)
      • Financial Advisor: PJT Partners LP
    • Ad Hoc Committee of Additional Senior Secured Noteholders (Taconic Capital Advisors LP, Marble Ridge Master Fund LP, KLS Diversified Asset Management)
      • Legal: Dechert LLP (Michael Sage, Brian Greer, Janet Doherty)
    • Ad Hoc Committee of Additional Senior Secured Noteholders
      • Legal: Ropes & Gray LLP (Gregg Galardi, Stephen Moeller-Sally, Daniel Anderson)
    • TPG
      • Legal: Cleary Gottlieb Steen & Hamilton LLP (James Bromley, Benjamin Beller)

Chapter 11 Bankruptcy Filing - Aerosoles International Inc.

Aerosoles International Inc.

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

Updated 10/5/17 11:17 am CT 

New Chapter 11 Filing - GenOn Energy Inc.

GenOn Energy, Inc.

  • 6/14/17 Recap: NRG Energy Inc. ("$NRG") owned deregulated wholesale power generation corporation and operator of 32 power plants in 8 states (Mid-Atlantic & California) filed a bankruptcy case with a restructuring support agreement agreed to by NRG and holders of 90% of the funded debt. The plan for the restructuring is to delever the company by $1b with the holders of the unsecured senior notes obtaining equity in the reorganized entity from NRG (and the right to participation in rights offering for $900mm in exit financing). This is another in a line of recent power cases including Panda Temple Power, Homer City Generation LP, Illinois Power Generating Co., La Paloma Generating Company LLC. And it probably won't be the last. The company cited the following causes - in addition to its over-levered capital structure - for the bankruptcy filing: (i) flat demand for power over the past five years, (ii) excess capacity (in part due to insufficient power plant retirements), (iii) lower cost structure for competitors, and (iv) significantly depressed natural gas prices. "This combination has caused energy and capacity prices to fall. So has the Debtors' profitability as a result." In the mid-Atlantic, electricity cleared $100 per megawatt hour in early 2014 and now the price hovers around $30 per megawatt hour. And nat gas isn't predicted to recover to industry price highs at least until 2030. So, looks like the merger that created this combined mid-Atlantic/California entity and levered this sucker up to the sky was a bit ill-timed, hey? 
  • Jurisdiction: S.D. of Texas (Judge Jones)
  • Capital Structure: $ '18 RCF (NRG Energy Inc. & U.S. Bank NA), $691mm '17 7.875% Senior Notes & $649mm '18 9.50% Senior Notes & $490mm '20 9.875% Senior Notes (Wilmington Trust Company NA), $366mm '21 8.50% Senior Notes & $329mm '31 9.125% Senior Notes (Wilmington Savings Fund Socieity FSB)    
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (James Sprayragen, David Seligman, Steven Serajeddini, W. Benjamin Winger, Christopher Hayes, AnnElyse Scarlett Gibbons) & (local) Zack A. Clement PLLC (Zach Clement)
    • Financial Advisor: McKinsey Recovery & Transformation Services U.S., LLC (Kevin Carmody, Tanner MacDiarmid, Sam Jacobs)
    • Investment Banker: Rothschild & Co. (Todd Snyder)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Ad Hoc Committee of GenOn Note and GAG Notes
      • Legal: Ropes & Gray LLP (Keith Woffard, Stephen Moeller-Sally, Marc Roitman, Meredith Parkinson) & (local) Porter Hedges LLP (John Higgins, Joshua Wolfshohl, Rachel Thompson)
    • Ad Hoc Steering Committee of GAG Notes
      • Legal: Quinn Emanuel Urquhart & Sullivan LLP (David Gerger, Emily Smith, Benjamin Firestone, Daniel Holzman)
    • NRG Energy Inc.
      • Legal: Baker Botts LLP (Emanuel Grillo, Ian Roberts, Christopher Newcomb)
    • Wilmington Trust Company
      • Legal: Covington & Burling LLP (Ronald Hewitt, Dianne Coffino)
    • Issuing Bank: Citibank NA
      • Legal: Latham & Watkins LLP (Richard Levy, David Hammerman)

Updated 7/11/17 6:47 pm 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 Filing - Unilife Corporation

Unilife Corporation

  • 4/12/17 Recap: Publicly-traded ($UNIS) manufacturer and B2B supplier of injectable drug delivery systems (including wearables) to pharmaceutical and biotechnology customers filed for bankruptcy to attempt a 363 sale of the business. This is kind of like a bad episode of Shark Tank. The Company appears to manufacture pretty innovative drug delivery systems - innovative in that the devices seem to be unobtrusive and, if we understand this correctly, help patients receive treatments without the need for multiple needles. But this is one of those episodes where the Sharks start asking about the numbers and they ain't pretty: the company is post-revenue and has some patents but it is pre-FDA approvals and pre-delivery (of medicine) to end users. Its limited revenue source is through negotiated supply agreements. It has a lot of debt (see below) and an expensive facility lease. It also had - in a very Kevin O'Leary-like fashion - a royalty agreement with its senior secured lender (ROS) which entitled ROS to a 4.52% royalty on the first $50mm of net sales (with ratchets for higher sales). So sharky. Of course, this isn't really that relevant when your incurred net losses are $100.8mm like they were in '16 (but we really enjoyed playing with the analogy). Now, ROS is providing a $7.5mm DIP credit facility to fund the cases for 90 days so that the company can attempt to find a buyer (note: there is no stalking horse bidder). Reminder: this was a PUBLICLY-TRADED company so, surely, there are some angry shareholders somewhere. 
  • Jurisdiction: D. of Delaware
  • Capital Structure: $70mm secured term loan (ROS Acquisition Offshore LP), $45.7mm senior secured convertible note (Amgen Inc.), $12.1mm mortgage (First National Bank), $1.9mm financing authority loan (Keystone Redevelopment Group LLC/Commonwealth of Pennsylvania Financing Authority)     
  • Company Professionals:
    • Legal: Cozen O'Connor (Mark Felger, Keith Kleinman, Eric Scherling, Frederick Schmidt) 
    • Financial Advisor: Protiviti Inc. (Guy Davis)
    • Investment Banker: SSG Capital Advisors LLC (J. Scott Victor)
    • Claims Agent: Rust Consulting/Omni Bankruptcy (*click on company name above for free docket access)
  • Other Parties in Interest:
    • DIP Lender: ROS Acquisition Offshore LP
      • Legal: Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Jeffrey Davidson, Henry Kevane, Debra Grassgreen)
    • Senior Secured Convertible Noteholder: Amgen Inc.
      • Legal: Ropes & Gray LLP (James Wilton, Patricia Chen) & (local) Cole Schotz PC (Norman Pernick, Katharina Earle)
    • Large General Unsecured Creditor: Sanofi Winthrop Industrie
      • Legal: DLA Piper (US) LLP (Stuart Brown, Kaitlin Edelman)
    • Official Committee of Unsecured Creditors
      • Legal: Lowenstein Sandler LLP (Michael Etkin, David Banker, Barry Bazian, Gerald Bender) & (local) Schnader Harrison Segal & Lewis LLP (Richard Barkasy)

Updated 7/17/17

New Chapter 11 Filing - Bostwick Laboratories Inc.

Bostwick Laboratories Inc.

  • 3/15/17 Recap: Uniondale New York based "independent full-service anatomic pathology laboratory and specialty provider"...gulp...deep breath..."of diagnostic testing services for urologists and gynecologists" filed for bankruptcy to sell to a stalking horse bidder, Poplar Healthcare PLLC. In the filing declaration the company blames severe cuts in Medicare rates for the filing, making no mention of what's glaring in its petition, i.e., that the Department of Justice is the largest creditor holding an unsecured settlement claim against the company for the company's purported breach of the False Claims Act - a claim emanating from allegations of kickback payments to physicians in exchange for referrals. Not shady at all. That last bit is really the only reason why we're even highlighting this case. Well, and that this is Pepper Hamilton LLP's second recent filing (General Wireless Outfitters being the first).
  • Jurisdiction: D. of Delaware
  • Capital Structure: $12.5mm debt ($1.8mm funded - Healthcare Financial Solutions LLC, an affiliate of Capital One NA), $950k second lien notes, $40mm unsecured notes.     
  • Company Professionals:
    • Legal: Pepper Hamilton LLP (David Stratton, Evelyn Meltzer, John Schanne II)
    • Investment Banker: Leerink Partners LLC (Jeff Danesis)
    • Chief Restructuring Officer: Carroll Services LLC (James Patrick Carroll)
    • Claims Agent: Donlin Recano & Co. Inc. (*click on company name for docket)
  • Other Parties in Interest:
    • Metalmark Capital Holdings LLC
      • Legal: Ropes & Gray LLP (James A. Wright III, Stephen Moeller-Sally) & (local) Womble Carlyle Sandridge & Rice LLP (Mark Desgrosseilliers)
    • Healthcare Financial Solutions LLC
      • Legal: Quarles & Brady LLP (John Harris, Brian Sirower, Amelia Valenzuela)
    • Official Committee of Unsecured Creditors
      • Legal: Pachulski Stang Ziehl & Jones LLP & (local) Sheppard Mullin LLP

 

Updated 3/23/17

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 Chapter 15 Filing - Tervita Corporation

Tervita Corporation