New Chapter 11 Filing - Open Road Films LLC

Open Road Films LLC

9/6/18

Rough year for movie production houses. After Relativity Media and The Weinstein Company filed chapter 11 cases earlier this year, Open Road Films LLC now finds itself in bankruptcy court. The company behind Jobs, Nightcrawler and other mostly forgettable films has had a dramatic fall from grace after being acquired by current equityholder TMP Holdings from Regal Entertainment Group and AMC Entertainment merely a year ago. Though contemplated at the time of acquisition, the company was unable to secure funding to, among other things, restructure the company (in the out-of-court sense) and streamline operations. The question is why? Why couldn't the company secure funding? 

The company notes:

Among other things, increased volatility in overall film performance exacerbated investor concerns regarding the probability and predictability of studio financial success, especially outside of the major studios. This overall volatility was exacerbated by the specific underperformance of certain of the Company’s recent motion picture releases, most of which were initiated by prior management. In addition, competitive options for consumers limit interest in theatrical distribution and the traditional film business model, imposing additional pressure on companies like the Debtors, and further fueling investor skepticism.

In other words, blame Reese Witherspoon ("Home Again" flopped), Jodie Foster ("Hotel Artemis" completely bombed) and Netflix ($NFLX). 

With no incoming funding and a resultant inability to obtain a "going concern" qualification, the company defaulted on its loan with Bank of America. BofA, therefore, limited access to certain deposit accounts, all the while vendors were seeking payments. Already this drama is more interesting than "Home Again." 

The company intends to use the chapter 11 process to market and sell its assets; it does not yet have a stalking horse bidder, though FTI reports that 11 parties have submitted indications of interest. 

The top 40 general unsecured creditors list is a who's who of media elites, including "old media" firms like Viacom Inc. (owed $7mm), The Walt Disney Company (owed $5.1mm), NBCUniversal (owed $4.4mm), Turner Broadcasting System (owed $3.5mm). Other top creditors include Google, Facebook, Snap, Twitter, Amazon, Spotify, and Pandora Media. And Latham & Watkins, which appears to be getting hosed on a half million dollar legal bill. 

  • Jurisdiction: D. of Delaware (Judge Silverstein)
  • Capital Structure: $90.75 mm secured debt (Bank of America NA)     
  • Company Professionals:
    • Legal: Klee Tuchin Bogdanoff & Stern LLP (Michael Tuchin, Jonathan Weiss, Sasha Gurvitz, Whitman Holt) & (local) Young Conaway Stargatt & Taylor LLP (Michael Nestor, Sean Beach, Robert Poppiti Jr., Ian Bambrick)
    • Financial Advisor/CRO: FTI Consulting Inc. (Amir Agam)
    • Claims Agent: Donlin Recano & Company Inc. (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Prepetition Lender: Bank of America NA
      • Legal: Paul Hastings LLP (Andrew Tenzer, Shlomo Maza) & (local) Ashby & Geddes PA (William Bowden)
    • Prepetition Creditor: East West Bank
      • Legal: Akin Gump Strauss Hauer & Feld LLP (David Staber) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Aaron Stulman)
    • Prepetition Creditor: Bank Leumi USA
      • Legal: Reed Smith LLP (Marsha Houston, Christopher Rivas, Michael Sherman

New Chapter 11 Filing - Hobbico Inc.

Hobbico Inc.

1/10/18

Chicago-based designer, manufacturer and distributor of hobby products like radio-control toys filed for bankruptcy after struggling from (i) too much debt, (ii) lack of investment in product innovation and in its core ecommerce platform, (iii) a systemic shift in the drone market (wherein Asian suppliers started competing by selling direct-to-consumer), (iv) the bankruptcy of a key supplier of racing products, and (v) disruption to its Asian supply chain. The company defaulted on its secured debt and is using the chapter 11 process in order to attempt to sell its business as a going-concern. 

  • Jurisdiction: D. of Delaware
  • Capital Structure: $74.5mm revolver and term loan (Wells Fargo Bank NA), $41.2mm subordinated secured note (Cyprium Investors IV AIV I LP)     
  • Company Professionals:
    • Legal: Neal Gerber & Eisenberg LLP (Mark Berkoff, Nicholas Miller, Thomas Wolford) & (local) Morris Nichols Arsht & Tunnell LLP (Robert Dehney, Curtis Miller, Matthew Talmo, Andrew Golden)
    • Financial Advisor: CR3 Partners LLC (Tom O'Donoghue, Douglas Flannery, Chris Creger, Layne Deutscher) & Keystone Consulting Group LLC (Louis Brownstone)
    • Investment Banker: Lincoln International LLC (Alexander Stevenson)
    • Claims Agent: JND Corporate Restructuring (*click on company name above for free docket access)
  • Other Parties in Interest:
    • DIP Agent: Wells Fargo Bank NA
      • Legal: Goldberg Kohn Ltd. (Randall Klein, Zachary Garrett, Prisca Kim, Jacob Marshall) & (local) Burr & Forman LLP (J. Cory Falgowski)
    • Lender: Cyprium Investors IV AIV I LP
      • Legal: Cahill Gordon & Reindel LLP (Joel Levitin, Richard Stieglitz Jr.)
    • Official Committee of Unsecured Creditors
      • Legal: Cullen and Dykman LLP (S. Jason Teele, Nicole Stefanelli, Michelle McMahon, Bonnie Pollack) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Stephen Gerald, Kevin Shaw)
      • Financial Advisor: Emerald Capital Advisors (John Madden)

New Chapter 11 Filing - The Gymboree Corporation

The Gymboree Corporation

  • 6/12/17 Recap: Yawn...another private equity owned retailer in bankruptcy. Why? Standard fare for everyone following the retail story at this point: a substantial brick-and-mortar presence (1300 stores) in need of rightsizing, higher expenses than web-based competitors, an underdeveloped wholesale operation, an underdeveloped web presence, insufficient "omnichannel" capabilities (the go-to buzzword for retailers these days), and more debt than competitors like Children's Place and the Gap. In other words, private equity, that's why (here, Bain Capital Private Equity LP). Notably, "[a]pproximately 35% of their domestic real estate space is concentrated with Simon Property Group, Inc. and GGP Inc. (previously General Growth Properties, Inc.)" ($SPG, $GGP) and, in the first instance, the company is seeking to close 450 stores. Hmmm. The Company will operate under a $105mm DIP term loan credit facility ($35mm new money) and a $273.5mm DIP revolving credit facility; it will also seek to avail itself of $80mm in new equity capital by way of a fully-backstopped rights offering. The upshot of all of this financial mumbo-jumbo is that the term lenders will own the majority of the company. 
  • Jurisdiction: E.D. of Virginia
  • Capital Structure: $81mm '17 ABL RCF (Bank of America NA), $47.5mm '17 ABL Term Loan (Pathlight Capital LLC), 788.8mm '18 TL (Credit Suisse), $171mm '18 unsecured notes (Deutsche Bank Trust Company Americas)    
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (James Sprayragen, Anup Sathy, Joshua Sussberg, Steven Serajeddini, Matthew Fagen, Laura Elizabeth Krucks, Timothy Bow, Gabor Balassa, Ben Tyson) & (local) Kutak Rock LLP (Michael Condyles, Peter Barrett, Jeremy Williams)
    • Legal (Special Committee): Munger Tolles & Olson LLP (Thomas Wolper, Seth Goldman, Kevin Allred)
    • Financial Advisor: AlixPartners LLC (James Mesterharm, Liyan Woo)
    • Investment Banker: Lazard Freres & Co. LLC (David Kurtz, Christian Tempke)
    • Real Estate Consultant: A&G Realty Partners LLC (Andrew Graiser)
    • Liquidators: Tiger Capital Group LLC and Great American Group LLC
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Consenting Term Loan Lenders & DIP Term Loan Agent: Credit Suisse AG, Cayman Islands Branch
      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Evan Fleck) & (local) McGuireWoods LLP (Dion Hayes, Sarah Boehm, K. Elizabteh Sieg)
      • Financial Advisor: Rothschild & Co.
    • DIP ABL Administrative Agent
      • Legal: Morgan Lewis & Bockius LLP (Julia Frost-Davies, Robert A.J. Barry, Amelia Clark Joiner) & (local) Hunton & Williams LLP (Tyler Brown, Justin Paget)
    • DIP ABL Term Agent
      • Legal: Choate Hall & Stewart LLP (Kevin Simard, Jennifer Fenn) & (local) Whiteford Taylor Preston LLP (Christopher Jones)
    • Sponsor: Bain Capital Private Equity LP 
      • Legal: Weil Gotshal & Manges LLP (Matthew Barr, Robert Lemons) & (local) Wolcott Rivers Gates (Cullen Speckhart)
    • Ad Hoc Group of Senior Unsecured Noteholders
      • Legal: Akin Gump Strauss Hauer & Feld LLP (Daniel Golden, Jason Rubin)
    • Pathlight Capital
      • Legal: Choate Hall & Stewart LLP (Kevin Simard, Jonathan Marshall) & (local) Whiteford Taylor & Preston LLP (Christopher Jones)
    • Indenture Trustee: Deutsche Bank Trust Company Americas
      • Legal: Moses & Singer LLP (Alan Gamza, Kent Kolbig, Jessica Boneque) & (local) Hirschler Fleischer PC (Robert Westermann, Rachel Greenleaf)
    • Official Committee of Unsecured Creditors
      • Legal: Hahn & Hessen LLP (Mark Power, Mark Indelicato, Janine Figueiredo, Alison Ladd) & (local) Tavenner & Beran PC (Lynn Tavenner, Paula Beran, David Tabakin)

Updated 7/11/17 at 7:25 pm CT