💥New Chapter 11 Bankruptcy Filing - AFH Air Pros LLC💥
HVAC specialist operating in 8 states files BK to sell for parts.
On March 16, 2025, FL-based Air Pros Solutions LLC (“Air Pros” or the “company”) and 19 subsidiary affiliates (collectively with Air Pros, the “debtors”) filed chapter 11 bankruptcy cases in the suddenly sizzling 🔥 Northern District of Georgia (Judge Baisier).* The company is “…a professional home services provider offering a wide range of solutions for residential and commercial clients, specializing in HVAC (heating, ventilation, and air conditioning) installation, repair, maintenance, and air quality solutions…” operating in eight states after a string of footprint-expanding acquisitions over the past eight years.** Now, if you read that last sentence and caught yourself performing an epic eyeroll while lipping to yourself “another f*cking roll-up,” give yourself a cookie because that’s exactly what we’re dealing with here.
So synergies right? Isn’t that the basic premise behind roll-ups?
Oh. Our bad. We mean “efficiencies.” Anyway, generally, yes, whether its synergies or efficiencies, these pros failed to realize either. Per the first day declaration of Accordion Partners LLC’s (“Accordion”) Head of Turnaround & Restructuring and Senior Managing Director Andrew Hede:
“Since completing multiple acquisitions, the business has experienced a series of ongoing operational and integration challenges that have negatively impacted operations and financial performance. After acquiring several new business units in an approximately 15-month period, the Debtors have not been able to fully integrate its [sic] various business units. Many of the operating practices of the legacy Air Pros business have not been applied to acquired business units. Combined with other challenges, the businesses have underperformed. For example, each business unit has an individualized operating model, which leads to lack of controls, different operating philosophies and margins, and a lack of economies of scale.”
And of course there is the debt. Specifically there’s $250.4mm of pre-petition secured debt comprised of (i) a ~$196.9mm term loan, (ii) an initial ~$23.5mm revolving facility (which was subsequently upsized in November ‘24 by another $11mm) and (iii) an additional $2.5mm bridge loan funded the week before filing. Below that the debtors also owe general unsecured creditors ~$45mm (inclusive of $17.1mm in aggregate amount of contingent, unliquidated, and disputed obligations emanating out of the debtors’ various acquisitions). Mr. Hede wasn’t kind enough to provide us with pre-petition operational metrics but he does say that the debt was crushing — so much so that the debtors were unable to satisfy their obligations under the ‘22-placed credit facility and ultimately defaulted, leading to acceleration.
Before we talk some more about the debt and that ominous default, we wouldn’t want to leave you with the impression that all of this trouble struck suddenly, like lightening (⚡️). Nope, Jefferies LLC (“Jefferies”) started shopping this thing around to potential strategic buyers and sponsors in the summer of ‘23. That’s right, ‘23. Things merely got worse from there.
Which gets us back to that debt. On January 31, 2024, Alter Domus US LLC (“Alter Domus”), acting as pre-petition agent on behalf of the pre-petition lenders, (i) delivered a notice of default, (ii) exercised proxy rights under the credit agreement, (iii) sh*tcanned the company’s founder and CEO Anthony Perera,*** and (iv) installed bankruptcy (and board flip) veteran Lawrence Hirsh as independent manager.**** Accordion has been in there since March of ‘24 and Mr. Hede has been CRO since September ‘24.***** Jefferies got invited back to the party for a second bite at the apple in October ‘24. With a full roster of RX professionals,****** the debtors were ready to rock and roll and get things back on track.
So what track is that, exactly? More sale stuff! Here’s the mic Mr. Hede:
“After evaluating the alternatives, the Debtors concluded that the best path forward to maximize the value of the Debtors’ assets was a break-up sale of the businesses.”
Multiple sale stuff, actually!! Mr. Hede added:
“Through this most recent and ongoing process, the Debtors have received several formal offers that will serve as baseline, stalking horse bids for the Debtors’ assets, subject to higher and better bids pursuant to court-approved bidding procedures. The Debtors intend to file a motion seeking approval of proposed bidding and auction procedures within the first several days of these Chapter 11 Cases, which will, among other things, identify the stalking horse bidders and set forth the material terms of the stalking horse bids, including the specific assets being acquired.”
A sale process, of course, requires money and so, of course, there’s a proposed DIP and motion to seek the use of cash collateral. The headline number of the DIP is $20mm but only $10mm is new money ($4mm interim, roll-up dollar-for-dollar, multiple delayed draw term loan). The DIP carries a SOFR+11.5% interest rate and a 3% closing fee against the new money (PIK). The DIP terms include liens on avoidance actions (at final order stage) and other now-typical waivers that may benefit the secured lenders to the benefit of unsecured creditors. Moreover, the prepetition lenders preserved their right to credit bid. We’d previously mentioned that Mr. Hede wasn’t kind enough to regale us with pre-petition operating results but, naturally, we can see from the DIP budget where this company stands:
Yeah, sans a DIP stat, you can see how there’d be “immediate and irreparable harm.”
As for timing, this budget subsumes the entirety of the process. The debtors intend to have one or more auctions for the sale of all or substantially all of their assets by May 12, 2025, with a sale hearing to be held on May 19, 2025; they hope to have an order confirming a plan of liquidation by June 24, 2025. In other words, the events will, subject to an obstreperous official committee of unsecured creditors, transpire “suddenly, like lightening” (⚡️).
In addition to other relief, Judge Baisier entered an interim order authorizing the DIP and cash collateral use on an interim basis on March 18, 2025.
The debtors are represented by Greenberg Traurig LLP (David Kurzweil, Matthew Petrie) as legal counsel and the aforementioned Accordion and Jefferies (Jeffrey Finger) as restructuring advisor and investment banker, respectively. Alter Domus is represented by Seward & Kissell LLP (Gregg Bateman, John Ashmead) while lender, OC III LVS LXI LP, is represented by Latham & Watkins LLP (James Ktsanes, Ebba Gebisa, Nikhil Gulati) and Scoggins Williamson & Ray PC (J. Robert Williamson, Matthew Levin).
*Ok, fine, maybe this is a bit of hyperbole but, still, this is the second relatively sizable chapter 11 bankruptcy filing to occur in this district in ‘25, which, *checks notes*, is more than we can say about either New York or New Jersey. Yes, folks, this is the deal flow today.
**Florida, Georgia, Alabama, Mississippi, Louisiana, Texas, Colorado, and Washington. The debtors are, lol, the official AC Company of the Miami Dolphins and Florida Gators.
***This is an astonishing turn of events, really, given that Mr. Perera led the debtors to the prestigious number 868 slot on Inc. Magazine’s annual Inc. 5000 2024 list — ahead of Kim Kardashian’s Skims. Inc. Magazine cites 576% three-year growth which is, obviously, fake AF. “It is an honor to have earned our place in the top 1000 of the Inc. 5000 list,” Mr. Perera said to PHCP Pros, LOL, mere months before he got sh*tcanned … we mean … “stepped down.” For what it’s worth, Johnny is now feverishly scrubbing the list from number 869 on down to see what other future bankruptcy candidates may be waiting in the wings.
Mr. Perera initially remained as manager of the holdco entity, Air Pros Solutions Holdings, LLC (“Holdings”) but that status ceased in October ‘24. Afterwards, Mr. Perera remained on with the debtors as a consultant to help prepare these cases and aid the sale/marketing process but that, too, has since ceased, leaving Mr. Hirsh as the sole manager of Holdings and the next entity down, Air Pros Solutions, LLC, which, in turn, owns 100% of the membership interests in all but one of the remaining debtors.
****PETITION readers will remember Alvarez & Marsal LLC (“A&M”) alum Mr. Hirsh from his stints on the boards of Coach USA Inc. and Red Lobster Management LLC.
*****For those of you enamored with relationship science, Mr. Hede worked at A&M from March ‘03 through February ‘17. Mr. Hirsh was duly employed by A&M from June ‘02 through November ‘20. Overlap!
Mr. Hirsh is still listed as a “senior advisor” to A&M on his LinkedIn profile so the retention of Mr. Hede must be super well-received.
******It’s unclear when debtors’ counsel, Greenberg Traurig LLP — which didn’t even warrant a mention by Mr. Hede — hopped aboard.
Company Professionals:
Legal: Greenberg Traurig LLP (David Kurzweil, Matthew Petrie)
Manager: Lawrence Hirsh
Financial Advisor/CRO: Accordion Partners LLC (Andrew Hede)
Investment Banker: Jefferies LLC (Jeffrey Finger)
Communications Advisor: Joele Frank (Michael Freitag, Richard Goldman)
Claims Agent: Verita (Click here for free docket access)
Other Parties in Interest:
Prepetition + DIP Agent: Alter Domus US LLC
Legal: Seward & Kissell LLP (Gregg Bateman, John Ashmead)
Lender: OC III LVS LXI LP
Legal: Latham & Watkins LLP (James Ktsanes, Ebba Gebisa, Nikhil Gulati) and Scoggins Williamson & Ray PC (J. Robert Williamson, Matthew Levin)
East Coast Mechanical Home Services LLC
Legal: King & Spalding LLP (Jeffrey Dutson, Christopher Coleman)
Columbia Home Services LLC
Legal: Willkie Farr & Gallagher LLP (Jeffrey Pawlitz, Betsy Feldman) and Eversheds Sutherland US LLP (David Wender, Danielle Barav-Johnson)
Official Committee of Unsecured Creditors
Legal: Pachulski Stang Ziehl & Jones LLP (Bradford Sandler, Cia Mackle, Maxim Litvak, James Walker) and Small Herrin LLP
Financial Advisor: Province LLC (Paul Navid)