We’re midway through September and so far there’ve seen fewer than half a dozen filings with, in total, funded debt of less than $500mm. This year is choppy AF: this slow September comes after an uncharacteristically robust summer loaded with some large bankruptcy filings, e.g., Sunnova Energy International Inc., Marelli Automotive Lighting USA LLC, At Home Group Inc., Wolfspeed Inc., Del Monte Foods Corporation II Inc., Genesis Healthcare, Modivcare Inc., and Spirit Aviation Holdings Inc., the latter two of which led a surprisingly busy August.
But things definitely appear to be slow for restructuring pros heading into Q4’25 — first, because the economy appears to be humming along. Yesterday the US Commerce Department announced that retail sales rose for the third straight month, surpassing expectations. Some more tariff front-running and the wee little ones heading back to school certainly helped! Whatever the reason(s), consumers, despite waning confidence surveys, concerning labor figures, tariff-related cost increases, and even some recession indicators …
… continue to spend (knockout counterpoint to the latter👇).
Is this sustainable?
🤔
And, second, because Jerome POW-ell and the Fed are about to out-John Woo John Woo and get out the doves: one month ago the market priced in an 85% probability of a 25 bps rate cut; today it has the probability pegged at over 96%, with more to come. Does the Fed surprise “the market” on FOMC Day? Generally, no.
The market now expects three rate cuts by year end with three more in ‘26. That would put the Fed Funds Rate at nearly 100 bps lower than what the Fed itself was projecting merely three months ago, 🤔. “But, PETITION, what about that last inflation reading? Do you mean to tell us, your very astute readers, that the Fed doesn’t give a f*ck that inflation is trending upward, away from the Fed’s target rate?” Uh … *checks notes* …
It seems the Fed is more concerned about the floundering labor market; it hasn’t cut interest rates with inflation this high since … *checks notes again* … 2008. Anyone remember what happened then (spoiler alert: we just passed the 17th anniversary of something big filing for chapter 11)? We know Polymarket still isn’t legal in the United States but if it were, we’d place bets that POW-ell downplays the inflation reading and harps instead on labor weakness. We’d also place bets that President Trump will be wildly disappointed that the cut isn’t bigger and promptly trash POW-ell on Truth Social.
Yeah, yeah, not exactly going out on a limb over here.
Let’s get into some of those itty bitty September filings …
🇺🇸New Chapter 11 Bankruptcy Filing - US Magnesium LLC🇺🇸
Oooooooh. We’ve got ourselves one here that should be of interest to President Trump and is definitely of interest to another billionaire.
Just four minutes drive outside of Salt Lake City’s (“SLC”) airport you’ll find the headquarters of Utah-based and billionaire Ira Rennert’s The Renco Group Inc. (“Renco”)-owned US Magnesium LLC (“USM”) which was, once upon a time out of its facility ~40 miles west of SLC, the largest producer of primary magnesium in North America.* Its focus will now turn to Delaware: on September 10, 2025, USM filed a chapter 11 bankruptcy case in that district (Judge Shannon).
Generally speaking we wouldn’t pay much mind to a producer of (non-rare) minerals (yes, plural: USM pivoted to wildly unprofitable lithium carbonate at a certain point) in the middle of bumf*ck ‘Merica but Mr. Rennert’s involvement and this bit 👇 from the First Day Declaration of Ron Thayer, President and Manager of USM, caught our attention — especially considering the heightened focus on minerals, generally, in the context of relations with both China and Ukraine:
“There is no other significant producer of primary magnesium in the United States, and primary magnesium is a critical component to United States defense contractors. The cost to build a new primary magnesium production Facility in the U.S. is estimated to exceed $1 billion.”
That. Doesn’t. Sound. Good.
If that’s true, how could things have come to this? The debtor has a lot of blame to throw around.
What f*cked the magnesium business? The debtors point fingers at (i) the closure of an Allegheny Technologies Inc. ($ATI) facility in ‘16 (a major customer) and (ii) essential equipment failures in ‘21 (and covid-related materials sourcing issues that prevented remediation). The debtor dubs the latter the “Force Majeure Event” (disputed).
What f*cked the lithium carbonate business? A whole host of things but prices have plummeted due to lack of demand — it has lost 80% of its value over the last 2.5 years — and Chinese competition has been fueling the fierce price compression.
What f*cked the business, generally? Fights with everyone. The debtor is fighting with The State of Utah, which has been trying to terminate a “critical” mineral lease between the parties — purportedly to address decreased water levels in the Great Salt Lake, 😬 — without which the debtor cannot produce magnesium and lithium carbonate. The debtor is also fighting with the US Environmental Protection Agency (“EPA”) in connection with an old Consent Decree that the EPA alleges the USM hasn’t complied with (the site of the debtor’s facility is a Superfund site). Hold up. Someone dial up Lee Zeldin and President Trump. The federal government is helping … *checks notes* … CHIN-A … drive domestic minerals producers into bankruptcy?! No way they’ll like that!!
Due to all of these factors, operations are, per Mr. Thayer, currently “…limited to the production of dust suppressants, de-icing products, and raw sodium chloride from existing lease property material stocks, which USM sells to end users pursuant to supply agreements, and via spot sales in some instances….” Clearly this wasn’t sustainable and bankruptcy became necessary.
There’s also some debt to contend with. As of the petition date, the debtor has ~$67.1mm (exclusive of a $820k LC) in total funded debt obligations under its ‘02-originated credit agreement with Wells Fargo Bank NA ($WFC), split between ~$40.5mm due under revolving loans and ~$25.8mm due under a term loan tranche in which Renco holds a 100% participation interest.** The debtor also has ~$45.4mm due to Renco under a junior loan (secured by all of the same collateral as WFC, except owned real property). Renco was kind enough to put in an additional $2.5mm as a subordinated bridge loan with a junior lien on everything.*** Behind that is ~$37mm in trade claims, exclusive of judgment creditors including Kaiser Aluminum Warrick LLC, which recently obtained a judgment of ~$68mm (plus 9% interest) in connection with damages incurred from the Force Majeure Event and the debtor’s resultant inability to produce magnesium.
To fund the cases, WFC has stepped up with a $10mm DIP**** and the consensual use of cash collateral; it also gets a $10mm roll-up, an interest rate of 8.5%, a $200k exit fee, and liens on unencumbered assets including a SLC property, a commercial tort claim, and equity interests in something called the Skull Valley JV.
It’s not the only legacy player stepping up. The debtor indicated that Renco also wants another at-bat: it will, through an affiliate called LiMag Holdings LLC (“LiMag”),***** serve as stalking horse.
Per Thayer:
“The Stalking Horse APA contemplates, among other things, the assignment to Renco Purchaser of the Mineral Lease and Lithium MOU, and the assumption by Renco Purchaser of liabilities under the Consent Decree-conditioned upon agreement with EPA (and Utah Division of Water Quality) as to the plan for completing various projects under the Consent Decree.”
We’re certain the State of Utah and the EPA may have something to say about all of this.
The debtor obtained interim approval of its DIP and cash collateral use at a hearing held on September 12, 2025. A few days later, on September 15, 2025, the debtor filed its motion seeking approval of its bid procedures and the stalking horse arrangement. In addition to what Mr. Thayer mentioned, LiMag will be (i) credit bidding its prepetition and DIP participation interest amounts, (ii) assuming the debtor’s obligations under the Renco prepetition loan and sub loan, (iii) assuming the debtor’s obligations under the WFC loan and DIP, (iv) assuming the debtor’s pension plan obligations, and (v) paying $250k and certain cure costs.
The debtor is represented by Gellert Seitz Busenkell & Brown LLC (Michael Busenkell, Margaret Manning, Michael Van Gorder) as legal counsel, Carl Marks Advisory Group LLC as financial advisor and CRO (Ron Mayo), and SSG Advisors LLC (J. Scott Victor) as investment banker. WFC is represented by Otterbourg PC (Jonathan Helfat, Daniel Fiorillo, Matthew Breen) and Burr & Forman LLP (J. Cory Falgowski) and Renco is represented by McGuireWoods LLP (Mark Freedlander, Frank Guadagnino) and Saul Ewing LLP (Mark Minuti, Paige Topper). Kaiser Aluminum Warrick LLC is represented by McDermott Will & Schulte LLP (Darren Azman, Andrew Kratenstein, David Hurst). No surprise, the PBGC and the EPA have also made notices of appearance.
*It’s been producing magnesium out of the waters of the Great Salt Lake since ‘72! Magnesium’s uses? Alloys for auto, aero and electronics components, among other things.
**The agreement was originally put in place in connection with USM, as BuyerCo, taking the assets of predecessor Magnesium Corporation of America out of bankruptcy in ‘01. The agreement has been amended 42 times since then.
***Mr. Thayer makes a point of highlighting, early in his Declaration, that Renco hasn’t been a scumbag; he wrote:
“Over the course of the past 10 years, USM’s sole member, [Renco], and affiliated entities have provided in excess of $400 million of funding to USM, through debt, equity and credit support, which USM has used to fund capital investments, operating losses, modifications of operations and restructuring efforts. Over that same period, USM has not paid any dividends or distributions to Renco.”
****The DIP consists of two tranches of $5mm. Renco holds a 100% participation interest in the second tranche (Tranche B).
*****Real creative name guys, 🖕.
🚜New Chapter 11 Bankruptcy Filing - Worldwide Machinery Group, Inc.🚜
On September 11, 2025, Houston-based Worldwide Machinery Group, Inc. and three affiliates (collectively, the “debtors”) crashed into the Southern District of Texas (Judge Lopez). The debtors rent, buy, and sell heavy machinery. You know the stuff:
Since 1949, they’ve been owned by one family. Joe Greenberg founded the biz, and his grandsons, Adam and Evan Greenberg (they’re brothers), own a collective ~82.6% today.
And they’d like to keep it that way, notwithstanding a February ‘24-defaulted ABL facility agented by Key Equipment Financing (“KeyBank”) and ~$72.6mm in other secured debt.
Before we get there though, we’ll turn to CRO and first day declarant Scott Avila (of Paladin Management Group (“Paladin”)) to tell us what went wrong:
“The Debtors’ business was heavily impacted by COVID and a catastrophic decline in the pipeline industry.”
NOPE, that’s all he says. Followed by a general allegation of “… extensive efforts to restructure …,” which presumably involved that ‘22 and ‘23-issued debt ⬆️, and disclosure the debtors generated ~$67 million in revenue last fiscal year.
Anyway. By the late summer and early fall of ‘24, KeyBank started making demands, which brought about the debtors’ (i) appointment of independent directors John Young, Jr. and Robert Warshauer, who compose their restructuring committee, and (ii) hiring of Paladin and Mr. Avila to assist in righting the ship.
They then broke out their pencils and got to work on the optimal path forward.* For that path, let’s hand it back to Mr. Avila:
AKA the restructuring default — not exactly something that takes a half-trip around the sun to arrive at.
Anywho. Piper Sandler & Co. ($PIPR) then joined the crew and kicked off a 202-party-contacting sale process, which boiled down to two formal indications of interest (“IOIs”) in July ‘25. Here’s the low-down on the IOIs:
“One was not competitive.”
Take a wild guess at who submitted the other:
“The other was an IOI from [Diversified Holding, LLC (‘Diversified’)], an entity organized by the majority owners of the Company—the Greenberg family—but funded by [Macquarie Equipment Capital, Inc (‘Macquarie’)].”
Fun. An insider deal. The cash component of which, $52.5mm, is equal to ~44.6% of KeyBank’s senior claims. Assumed trade liabilities make up another $13.1mm.
That ain’t an outcome that KeyBank signed up for. Instead, it wanted to sell its claims to Gordon Brothers Commercial & Industrial, LLC (“Gordon Brothers”) and hit the road.
Here’s where things started pivoting in-court. During the sale process, the debtors also solicited liquidation bids and naturally one of ‘em came from none other than Gordon Brothers.** But to get the debtors’ confi info for that bid, Gordon Brothers had to execute an NDA that prevented it from “‘… enter[ing] into any arrangement with any creditor of [the Debtors] relating to their claims as such a creditor’ without the Debtors’ consent.”
KeyBank repeatedly asked for that consent in connection with future forbearances, but the White & Case LLP-repped debtors’ response was a familiar, market-rep-affirming tune:***
So the KeyBank forbearance expired and after Macquarie’s credit committee approved the Diversified deal, the debtors slammed into chapter 11 … without even giving KeyBank a heads-up … to pursue it.
And we mean slammed. The debtors want to close the sale within thirty days of the petition date, although a sale motion remains elusive and the mechanism to strip KeyBank’s lien ain’t spelled out.****
To add salt to the wounds, the debtors are funding the cases with KeyBank’s own cash collateral nonconsensually, at least for the initial budget’s four-week period. Their argument? Excluding sale proceeds, the debtors will be $830k in the good when it’s over, improving from $608k to ~$1.4mm in cash.
That’s actually true too. If you exclude every cent of restructuring-related expenses. Very reasonable, Mr. Avila:
Naturally, KeyBank objected, but at the September 15, 2025, 1.25-hour first-day hearing, Judge Lopez wasn’t keen to force a liquidation, observing that “… the budget … appears to be keeping the business running, quite frankly.” He approved cash collateral usage and scheduled a second “first day” hearing for this Friday, September 19, 2025 at 1pm CT for any motions the debtors file between now and then, and another cash collateral hearing for October 9, 2025 at 1pm CT.
The debtors are represented by White & Case LLP (David Turetsky, Samuel Hershey, Charles Koster, Roberto Kampfner, Patrick Wu, Fan He, Kristin Schultz, Gabriela Delgado) as legal counsel, Paladin Management Group (Scott Avila) as financial advisor and CRO, and Piper Sandler & Co. ($PIPR) as investment banker. Robert Warshauer is the debtors’ independent director. KeyBank is represented by Crowell & Moring LLP (Frederick Hyman, Randall Hagen. Caspian Capital L.P., the debtors’ prepetition term loan lender, is represented by Wachtell, Lipton, Rosen & Katz (Joshua Feltman, Benjamin Arfa, Angela Herring) as legal counsel. Diversified is represented by Porter Hedges LLP (Joshua Wolfshohl, Megan Young-John).
*In January ‘25, the Greenbergs – Adam Evan, and their dad Alan – resigned from the board.
**The debtors also received one from Hilco Commercial Industrial and Ritchie Brothers that was competitive with Diversified’s bid. But the debtors’ decided that the Diversified bid provided “slightly better” recoveries, as well as preserving the going concern, assuming trade liabilities, and reducing wind down costs.
***Why KeyBank and Gordon Brothers don’t sidestep the NDA is anyone’s guess. KeyBank ain’t bound by it. Does Gordon Brothers really not have another entity it could use to purchase the debt? A (good) legal team ought to be able to find a way.
****No doubt it’ll rely on Bankruptcy Code section 363(f)(5), which provides that “[t]he trustee may sell property … free and clear of any interest in such property … only if such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.” This motion is slated to be filed before September 19, 2025.
🎳New Chapter 11 Bankruptcy Filing - Pinstripes Holdings, Inc. ($PNST)🎳
You didn’t think we’d skip over this old PETITION fave, did you?
Back on September 8, 2025, Illinois-based Pinstripes Holdings, Inc. ($PNST) and four affiliates (collectively, the “debtors”) rolled a gutterball and filed chapter 11 sale cases in the District of Delaware (Judge Owens). We covered this “eatertainment” op, which pairs “from-scratch” “… Italian-American cuisine with bowling, bocce, and private events …,” including (allegedly) weddings, back in June.
In that piece, we noted that the debtors had appointed an interim CFO — Richard Abby — from AlixPartners LLP (“Alix”) in February ‘25 before signing up a debt-for-equity-swapping letter of intent (“LOI”) with 2L lender Oaktree Capital Management (“Oaktree”) a month later.
But three months after, the transaction hadn’t closed, which prompted us to query …
“Is Alix still in there? Is Oaktree going forward with the LOI? Or did it uncover something sketch and get cold feet?”
… and posit …
“If this does end up filing a chapter 11, we have a hard time imagining a company of this size will ultimately use Alix as its in-court financial advisor. Oaktree doesn’t typically enjoy incinerating its cash.”
Bang. On. Observations.
Because, no, Alix ain’t still there. Heck, it wasn’t there when Johnny pushed that piece ☝️ out. The debtors brought on CR3 Partners, LLC (“CR3”) in late April ‘25 (not that that was made public).
But that’s not to say Alix has no role in these cases. It absolutely does:
Enough to occupy spot 20 on the debtors’ top 30 GUC list, having departed from the debtors with $740.8k unpaid. Luckily, it’ll have some great company. It’s joined by Katten Muchin Rosenman LLP (owed ~$2.3mm, taking 4th place behind three landlords), which represented PNST in its ‘24 middle market deal of the year, as well as prior i-banker Piper Sandler & Co. ($PIPR) ($642.0k), which was snubbed for the filing in favor of Hilco Corporate Finance, LLC (“Hilco”).
As for Oaktree, aside from a lingering (and worthless) equity interest, it’s peaced out entirely. Per CRO and first day declarant James Katchadurian of the aforementioned CR3, on July 1, 2025, “… Oaktree [] exited its position for a fraction of the face amount of its debt by selling its debt to certain entities associated with …” senior lender Silverview Credit Partners LP (“Silverview”). Which is one “bankruptcy alternative” all right.**
Anyway, here’s the full petition date debt stack …
… but you can largely ignore the Granite facility. It has a priority claim to specific furniture, fixtures, and equipment (“FFE”) that’s utterly worthless to the go-forward enterprise. The debtors carved the FFE out of the DIP collateral, closed all locations that contained it, filed a motion to reject the leases for those locations on the petition date, aaaaaaand already agreed to stay relief so it can be disposed of.
We hear this is how the convo with Granite went down:
As a result, the debtors dipped from eighteen locations (with a few more under construction) to a grand total of eight. Folks whose interests intersect at Italian-American-bocce-and-bowling located in Chicagoland,* Maryland, Ohio, Minnesota, California, and DC are safe for now, but their brethren in Texas, Connecticut, Kansas, New Jersey, Florida, and Washington will have to find a new location for their special day.
So what’s the go-forward plan with the survivors? You already saw that Oaktree doesn’t want to own this sh*tco. Silverview, though, is game. It is credit bidding $15mm, paying $1.6mm in cash, taking on cure costs, and funding postpetition rent and Hilco’s banker fee of … $300k.*** Although it has another ~$106m of dry powder to up the price if needed.****
And Silverview wants to get the sale done FAST. The DIP’s milestones require bids to be submitted within 35 days of the petition date, an auction within 40, a sale hearing within 45, and a closing within 50 (i.e., October 28, 2025).*****
While on the topic, to fund the cases, Silverview is dropping in a $3.8mm DIP term loan, of which ~$3.2mm is new money and $540k is a roll-up of a late August ‘25 bridge loan. The DIP bears interest at 10% PIK and has zero other fees, including, strangely, payment of the Silverview’s professional fees.
The court held a first-day hearing on September 10, 2025, at which all requested relief was granted, and scheduled the second day hearing for October 7, 2025 at 2pm ET. In the interim, the court will take up bidding procedures on September 22, 2025 at 10am ET.
The debtors are represented by Young Conaway Stargatt & Taylor, LLP (Michael Nestor, Sean Beach, Elizabeth Justison, Shella Borovinskaya, Mariam Khoudari) as legal counsel, CR3 (James Katchadurian, Mike Juniper) as financial advisor and CRO, and Hilco as investment banker. Silverview is represented by Alston & Bird LLP (James Vincequerra, Stephen Blank) and Blank Rome LLP (John Lucian, Regina Stango Kelbon, Stanley Tarr, Lawrence Thomas III) as legal counsel. Landlord Federal Realty OP LP is represented by Ballard Spahr LLP (Leslie Heilman, Laurel Roglen, Margaret Vesper, Erin Williamson).
*Folks in Chicago burbs must really love this biz. It has three of the surviving locations, with every other location keeping just one.
**We wonder how much White & Case LLP charged Oaktree to navigate this sh*t show.
***No wonder PIPR got booted. Hilco is working for a 🥜.
****Each remaining location generates ~$7.4mm per year, 80% of which is from food and beverages and only 20% of which is from games. Regardless, based on the most recent financials available and with the caveat that the data includes now-exited locations, even after deducting out interest expense, the business operates at a loss.
*****The entire sale process falls within the Delaware-standard, 75-day challenge period, so we’re curious to see how it plays with the official committee of unsecured creditors (if appointed).
📚Resources📚
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. 💥You can find it here💥.
🍾Congratulations to…🍾
Dundon Advisers, LLC (Eric Reubel) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in Car Toys, Inc. bankruptcy case.
Morris James LLP (Jeffrey Waxman, Eric Monzo, Christopher Donnelly) for securing the legal mandate on behalf of the official committee of unsecured creditors in Walker Edison Holdco LLC bankruptcy cases.
Province, LLC (Sanjuro Kietlinski) for securing the financial advisor mandate on behalf of the official committee of unsecured creditors in Claire's Holdings LLC bankruptcy cases.