🐬New Chapter 11 Bankruptcy Filing - Leisure Investments Holdings LLC (The Dolphin Company)🐬
Secured lenders perform a board flip, can management, and put the company into BK.
On March 31, 2025, Cancun, 🇲🇽-based Leisure Investments Holdings LLC (dba The Dolphin Company) (“LIH”) and 14 affiliates (collectively with LIH, the “debtors” and together with their non-debtor affiliates, the “company”) splashed into chapter 11 bankruptcy in the District of Delaware (Judge Silverstein). The company operates “recreational attractions focusing on dolphin and other live-animal encounters and habitats,” and as of 2023, ~2,400 animals, including 295 dolphins, 51 sea lions, 18 manatees, and 18 seals, spread across 6 countries on 3 continents called its facilities home.*
And what a home it’s been. While most dolphins engage in simple activities like chomping down on fish and chasing one another around, the company’s cetaceans do much more than that and have even learned to appreciate human-focused activities, like celebrating holidays. Why, here’s a picture of a Dolphin Co. dolphin having fun on St. Patrick’s Day weekend just a short while ago.
But don’t worry about the green because, per the debtors’ independent director (“ID”) Steven Strom, “[t]he safety and wellbeing of these majestic animals are of critical importance to the Company and its stakeholders.” In fact, animal safety and wellbeing were mentioned not less than five separate times at the debtors’ April 2, 2025 first-day hearing.
Here’s just one example of the copious amounts of “safety” and “wellbeing” these blubbery boys and girls have been treated to. Meet Jett, a spritely fourteen-year-old bottlenose dolphin that resides at the company’s Gulf World Marine Park in Florida.
Well, used to anyway, along with 3 others. Hit us with the deets, Mr. Strom:
“At Gulf World Marine Park in Florida, four dolphins have died prematurely in the last six months. Most recently, on March 1, 2025, a fourteen-year-old bottlenose dolphin, Jett, died from acute head trauma after hitting a shallow portion of the pool during a live show. An industry veteran who obtained information via a Freedom of Information Act request to the National Ocean and Atmospheric Association opined that the death may be attributable to several factors ‘including the poor visibility due to the filthy water, the nearby construction, an illness, or being malnourished[.]’”
Hmmm, if you think about it, 🤔, that doesn't sound too safe or healthy. Indeed, with living conditions like that, we’re curious if it was an accident or if Jett, a member of the smartest clade to inhabit the ocean, had simply had enough living in disgusting water and being sick and starved.
In fairness, though, to Mr. Strom and debtor counsel Young Conaway Stargatt & Taylor, LLP (Robert Brady, Sean Greecher, Allison Mielke, Jared Kochenash), the poor-living conditions aren’t their fault because they’re newcomers to the scene, with Mr. Strom first arriving on March 18, 2025, and we don’t doubt that taking care of the animals is actually on their minds.
Before they were dragged into the algae-infested waters, the company (i) had been facing challenges resulting from the Mexican peso living la vida loca and appreciating, inflation, lower consumer spending, and park underperformance – call us crazy but perhaps those last two were driven by visitor desire not to see a bunch of dirty, sick, underweight animals? – and (ii) was preoccupied with ignoring the requests of its 1L prepetition noteholders …
… which had been trying to address the company’s non-performance since it payment-defaulted the 1L notes in January ‘24 and the 2L notes back in September ‘23.
But try as those lenders might, their calls went unanswered for months. Until the 1Ls offered up $10mm in incremental funding in February ‘24, which prompted a company counteroffer for them to release their liens so that it could obtain a $12mm loan from a different third-party. In return, the company would give the lenders a healthy dose of jack sh*t.
Quite, but not enough. The lenders, of course, declined and spent the rest of ‘24 fighting tooth and nail with the company to give it a $25mm bridge loan that would get it back in compliance, provide for the sale of ancillary assets, and maybe even refill a tank or two of water. While that futile effort played out, the company racked up “more than seventeen defaults under the Prepetition First Lien Notes and the Prepetition Second Lien Notes,” incurred a $2.875mm judgment lien arising from contract breach arbitration, received an eviction notice for its Miami-based “Seaquarium” (apparently, there were “allegations” of inadequate animal welfare??), and failed to make payroll or pay taxes.
Unfortunately for Jett though, the financing never closed because former CEO Eduardo Albor protested paying lender counsel fees, suggesting instead that the lawyers “should work for free as a ‘donation’ to the Company.” But if that sounds off-market to you, we can assure you that (i) it is and (ii) the company’s former advisors fared no better — they also, lol, never got paid.
All-in, it took 18 months after first engaging for the noteholders to finally, FINALLY get tired of getting jerked around and exercise their bargained-for, secured creditor rights, which they did by “sweeping” LIH’s then-existing board and appointing Mr. Strom as its ID on March 18, 2025. In turn, Mr. Strom retained Riveron Management Services, LLC and Robert Wagstaff as, respectively, financial advisor and CRO. And ten days later, on March 28, 2025, the 1L noteholders and Mr. Strom cascaded the changes down the corporate structure at the Mexican and US subsidiaries.
As we sit here today, there’s more cascading to come, and YCST’s Jared Kochenash “expects several more debtors to file” as Mr. Strom figures out how to check all the right boxes in the other corporate jurisdictions.** Meanwhile, Mr. Wagstaff is “already on the ground in Cancún acting decisively to assert operational control over the parks and obtain control over and management of the Debtors’ bank accounts.”
And while we could josh about what “acting decisively” in Cancun actually looks like, we’ll refrain because we genuinely hope it’s the case. The animals certainly deserve better, and less doing-the-right-thing-focused, without access to bank accounts (heck, probably even with them), the debtors’ have a dire and ironic need for “liquidity.” To tide the company over while banking is hashed out, the 1L noteholders are pitching in a headline $24mm DIP term loan, composed of (i) $8mm in new money ($4mm interim) and (ii) a final order $16mm roll-up of the 1L notes. It carries a 11% PIK interest rate and includes a $200k PIK upfront fee (equal to 2.5% of the new money commitments, payable on entry of the interim order).
To aid in the intel gathering process, the debtors’ first day papers included atypical relief in the form of a motion to compel the debtors’ freshly-canned and less-than-thrilled officers and current employees to tell them just what the heck is going on at the business level. The US trustee had concerns about the appropriateness of that relief thirty seconds into a filing, including with respect to what exactly happens if someone decides to contest it in the interim period (or simply ignores it). But the court got comfortable under the circumstances and granted it and the rest of the straight-down-the-middle first-day relief at the aforementioned April 2, 2025 hearing. The court also scheduled a second-day hearing for May 5, 2025, and we’re looking forward to learning just how effective that order to compel was. After all, it’s a Mexico-based company — it’s one thing to get a US bankruptcy court order and quite another to enforce it abroad.
The debtors are represented by Young Conaway Stargatt & Taylor, LLP (Robert Brady, Sean Greecher, Allison Mielke, Jared Kochenash) as legal counsel and Riveron Management Services, LLC (Robert Wagstaff). Steven Strom is the debtors’ independent director. The DIP lenders are represented by Baker & McKenzie LLP (Paul Keenan Jr., John Dodd, Kevin Wittam, Blaire Cahn) and Lewis Brisbois Bisgaard & Smith LLP (Scott Cousins, Ann Kashishian). GLAS USA LLC, as DIP agent, and GLAS Americas LLC, as 1L and 2L collateral agent, are represented by Foley & Lardner LLP (Adrienne Walker) and Troutman Pepper Locke LLP (Evelyn Meltzer).
*The company operates in North America (the United States, Mexico, the Dominican Republic, Jamaica, Saint Kitts and Nevis, and the UK’s Grand Cayman), South America (Argentina), and Europe (Italy).
**Part of his and Riveron’s mandates also include seeking to dismiss a December ‘24 petition filed by debtor Controladora Dolphin SA de C.V. under Mexico’s Ley de Concursos Mercantiles, its business reorganization act. The proceeding, called a concurso mercantil, is “similar in some respects to chapter 11” and was allegedly filed without proper corporate approvals.
Company Professionals:
Legal: Young Conaway Stargatt & Taylor, LLP (Robert Brady, Sean Greecher, Allison Mielke, Jared Kochenash)
Financial Advisor and CRO: Riveron Management Services, LLC (Robert Wagstaff)
Independent Director: Steven Strom
Claims Agent: Verita (Click here for free docket access)
Other Parties in Interest:
DIP lenders: The Prudential Insurance Company of America, Prudential Legacy Insurance Company of New Jersey, and Cigna Health and Life Insurance Company
Legal: Baker & McKenzie LLP (Paul Keenan Jr., John Dodd, Kevin Wittam, Blaire Cahn) and Lewis Brisbois Bisgaard & Smith LLP (Scott Cousins, Ann Kashishian)
DIP agent: GLAS USA LLC
Legal: Foley & Lardner LLP (Adrienne Walker) and Troutman Pepper Locke LLP (Evelyn Meltzer)
1L and 2L collateral agent: GLAS Americas LLC
Legal: Legal: Foley & Lardner LLP (Adrienne Walker) and Troutman Pepper Locke LLP (Evelyn Meltzer)