💥New Chapter 11 Bankruptcy Filing - Trinseo PLC💥
Twice-LME'd plastics company enters bankruptcy with a "prepackaged" plan
Welp, it’s time. After announcing entry into a restructuring support agreement (the “RSA”) earlier in the month, on May 26, 2026, Pennsylvania-based Trinseo PLC ($TSEOF) and twelve affiliates (collectively, the “debtors” and together with their non-debtor affiliates, the “company”) filed “prepackaged” chapter 11 bankruptcy cases in the Southern District of Texas (Judge Lopez). The company is a chemical manufacturer that makes plastics and latex binders used in everyday products and, since January ‘24, reports across three segments: (i) engineered materials, (ii) latex binders, and (iii) polymer solutions.*
The last few years, though, have been going the wrong direction … 📉:
Which is also reflected in the share price:
Overcapacity, fluctuating demand, tariffs, geopolitical conflict, rising interest rates, and energy pricing volatility are the company’s chosen culprits. Um … sure, that’s fine — we’ve read it all before and don’t really care tbh; the excuses ain’t interesting.
You know what is? This, per CRO Alan Boyko’s first day declaration:
“Although it was formerly a member of the ad hoc group of 2028 OpCo Term Loan holders that executed the RSA, CastleKnight Management LP (‘CastleKnight’), a holder of 2028 OpCo Term Loans and 2L 2029 Notes, has not executed the RSA and has advised that it will object to plan confirmation.”
In the first day dec no less.
But why CastleKnight be beefing?** For that, let’s jump into the debt stack 👇:
Which is the result of two separate LMEs*** … creating a messy, messy capital structure:
The first LME occurred in September ‘23 when debtors Trinseo Luxco Finance SPV S.à r.l and Trinseo NA Finance SPV LLC (collectively, the “super holdco borrowers”) borrowed ~$1.1b and immediately on-lent ~$948mm of it via a double-dipping secured intercompany loan (the “interco opco TL”) to Trinseo Holding S.à r.l and Trinseo Materials Finance, Inc. (collectively, the “opco borrowers”), which sits pari with the already-issued ‘28 opco term loans noted above (the “‘28 opco TL,” and together with the interco opco TL, the “opco TLs”). The opco borrowers used the proceeds to (i) repay a then-existing $600mm term loan, (ii) pay down $385mm of $500mm (77%) of unsecured notes due September ‘25, and (iii) take care of professionals (💰).
The next came ~1.25 years later. In January ‘25, the company (i) refinanced its revolver into the one ☝️, allegedly elevating it above the opco TL in the process, (ii) redeemed the opco borrowers’ stub ‘25 notes left out in the earlier LME, which was financed by increasing the interco opco TL by $115mm, and (iii) exchanged ~$446.5mm in then-existing unsecured notes due ‘29, issued by the opco borrowers, for ~$379.5mm in new second-lien secured notes ‘due 29, issued by the super holdco borrowers (the “2L notes”).
Hahahaha, lotta good the lien did. Here are the recoveries under the RSA, corresponding chapter 11 plan, and corresponding disclosure statement (the “DS”):
0% for the “unsecured funded debt” 2L notes. Adding insult to injury, junior GUCs go fully unimpaired. All ~$32.4mm of them.
Setting CastleKnight, which owns ~$271.8mm of the ‘28 opco TL and ~$93.5mm of the 2L notes, aside though, the RSA enjoys a sh*tload of support — 100% of the RCF, ~99.9% of the super holdco claims, and ~86% of the opco TLs, inclusive of ~57% of the ‘28 opco TLs — and provides:
📍DIP Financing. The funding of the cases through two DIP facilities. The first is a $157.5mm facility issued by the super holdco borrowers, composed of $52.5mm in new money ($35mm interim) and a 2:1, $105mm roll-up of the super holdco 1L term loans held by the DIP’s lenders.**** The second is a $270mm facility to be incurred by the opco borrowers, composed of $90mm in new money ($60mm interim) and a 2:1, $180mm roll-up of the prepetition RCF claims held by the DIP’s lenders.*****
📍Replacement of Securitization Program. The debtors create liquidity by selling A/R under a securitization program, and under the RSA, certain of the RSA parties agreed to refinance it, although the debtors did leave in the option for it to convert into an exit facility.
📍Equity Rights Offering. The economic main event. The debtors will offer $450mm in an equity rights offering (the “ERO”). 36.99% of it will go to super holdco TL claims, for an aggregate all-in price of $209.25mm, while 10.74% of it will go to opco TL creditors — including RSA-signing super holdco lenders via the double-dip — for $60.75mm.
Meanwhile, RSA parties — i.e., not CastleKnight — will have the opportunity to backstop their respective slice of the ERO. For that service, (i) super holdco backstoppers will receive $5mm in takeback loans, an aggregate 6.66% of the reorg equity, and have 24.66% of the ERO reserved exclusively for them at a $139.5mm purchase price and, and (ii) opco backstop parties will receive an aggregate 3.79% of the reorg equity and have dibs on 7.16% of the ERO at a $40.50mm purchase price.
📍Plan Recovery. If you mathed above, you’d notice those figures only add up to 90% of the go-forward equity. The lingering 10% is in the super holdco creditors’ plan recovery, along with ~$810mm in take-back paper and, of course, their subscription rights. Meanwhile, alongside their respective ERO options, opco TL lenders will receive $35mm in take-back paper … provided that any allotment on account of the interco opco TL will be “gifted” to RSA parties on account of their ‘28 opco TL claims.
📍Exit Financing. The takeback debt will be incurred under a $850mm exit term loan facility and a post-exit revolver providing at least $200mm.
📍Intercompany Settlement. The legal big one. No double-dipping, double-LME case would be complete without a settlement of the interco opco TL and the two years of financial shenanigans. For that, you need *wink wink* independents, which for the opco obligors meant Elizabeth Abrams and Alan Carr and for the super holdco meant Jill Frizzley and Carol Flaton. Anyway, the settlement allows the interco opco LT claim, which flows through to the super holdco lenders, in the amount of ~$1.5b and grants releases all around. Well mostly. CastleKnight is explicitly carved out, lol. What a 🖕.
📍Milestones. The RSA requires entry of the final DIP order by June 30, 2026, entry of the confirmation order by July 25, 2026, and emergence by November 22, 2026.
All of which, if it goes off without a hitch, will wipe ~$2b of debt off the debtors’ balance sheet.
But it won’t, and it’s definitely enough time for CastleKnight and the other “excluded lenders” represented by Pallas Partners (US) LLP and Gray Reed (the “excluded AHG”) to start a fight. In fact, they already have. Late on the petition date, the excluded AHG filed its objection to DS approval, accompanied by an adversary proceeding (the “AP”). From the objection:
“The Excluded OpCo Term Lenders have commenced the Adversary Proceeding, taking direct aim at each one of these prepetition transactions that underpin the proposed Plan. If any one of them is found invalid, the proposed Plan falls apart.”
The AP is where the real action will take place. The excluded AHG seeks to unwind the two LMEs, recharacterize or equitably subordinate the interco opco TLs, and subordinate the “elevated” RCF.
For their part, the debtors will argue the loser-lenders are prohibited from objecting under various, LME-concocted intercreditor agreements, but hot damn, these cases are about to be contentious. And we all know Johnny is just here for the fireworks.
The first ones will go off later today. The first day hearing is scheduled for 1pm CT.
The debtors are represented by Latham & Watkins LLP (Ray Schrock, Ryan Preston Dahl, Benjamin Rhode, George Klidonas, Jonathan Weichselbaum, Jennifer Zhang, Brian Herskowitz, Sarah Burack, Hayden Cresson, James Scavone, Mitchell Levy, Margaret-Ann Toms) and Hunton Andrews Kurth LLP (Timothy “Tad” Davidson II, Philip Guffy) as legal counsel, FTI Consulting, Inc. ($FCN) (Alan Boyko) as CRO and financial advisor, and Centerview Partners LLC (Karn Chopra) as investment banker. The opco independent managers are Elizabeth Abrams and Alan Carr and are represented by Quinn Emanuel Urquhart & Sullivan, LLP as legal counsel and Portage Point Partners LLC as financial advisor. The super holdco independent managers are Jill Frizzley and Carol Flaton and are represented by McDermott Will & Schulte LLP (Bradley Giordano, James Kapp III, Julia M. Beskin, Charles Gibbs) as legal counsel. Deutsche Bank AG New York Branch, as RCF agent, is represented by White & Case LLP (Scott Greissman, Joseph Brazil, Rob Bennett, Andrew Zatz) as legal counsel. GLAS USA LLC and GLAS Americas LLC, as the securitization program agent, is represented by Reed Smith LLP (Nicholas Vislocky, Richard Solow, Paul Moak, Tristan Sierra) as legal counsel. The securitization programs’ lenders, Angelo, Gordon & Co., L.P. and Oaktree Capital Management, L.P., are represented by Orrick Herrington & Sutcliffe LLP (Robert Trust, Jacob Herz, Nicholas Sabatino) as legal counsel. An ad hoc group of senior secured lenders is represented by Paul Hastings LLP (Kristopher Hansen, Christopher Guhin, Matthew Garofalo, Jason Pierce, Charles Persons, Schlea Masanz) as legal counsel and PJT Partners as investment banker. An ad hoc group of term lenders is represented by Gibson, Dunn & Crutcher LLP (Stephen Silverman, Keith Martorana, Jonathan Dunworth, Adeola Adeyosoye) and Howley Law LLP (Tom Howley, Eric Terry) as legal counsel and Lazard Frères & Co. as investment banker. An ad hoc group of 2L noteholders is represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal counsel and Perella Weinberg Partners LP as investment banker. Finally, the excluded AHG is represented by Pallas Partners (US) LLP (Duane Loft, Jill Forster, Brianna Simopoulos) and Gray Reed (Jason Brookner, Lydia Webb) as legal counsel.
*Through non-Debtor Trinseo NA Holding LLC, the company also owns a 50% stake in AmSty, a joint venture co-owned with Chevron Phillips Chemical Company LP and “… leading …” producer of styrene and polystyrene. That stake, which per CastleKnight produced “… average adjusted EBITDA of approximately $100 million per year and [paid] average annual dividends of $85 million …” is tied up in the LMEs too.
**Not just here. CastleKnight beefed from minority positions in this year’s United Site Services, Inc. and The LYCRA Company LLC too.
***In between the two LMEs, in July ‘24, certain of the debtors started selling their A/R to a non-debtor third party under the securitization program.
****The super holdco DIP bears interest at term SOFR + 9% (new money) or term SOFR + 8.5% (roll-up) and features a 3.5% PIK commitment fee and a 7.5% PIK put-option premium.
*****The opco DIP bears interest at term SOFR + 9% (new money) or term SOFR + 2.25% (RCF roll-up) and also features a 3.5% PIK commitment fee and a 7.5% PIK put-option premium.
Company Professionals:
Legal: Latham & Watkins LLP (Ray Schrock, Ryan Preston Dahl, Benjamin Rhode, George Klidonas, Jonathan Weichselbaum, Jennifer Zhang, Brian Herskowitz, Sarah Burack, Hayden Cresson, James Scavone, Mitchell Levy, Margaret-Ann Toms) and Hunton Andrews Kurth LLP (Timothy “Tad” Davidson II, Philip Guffy)
Financial Advisor/CRO: FTI Consulting, Inc. ($FCN) (Alan Boyko)
Investment Banker: Centerview Partners LLC (Karn Chopra)
OpCo Independent Managers: Elizabeth Abrams and Alan Carr
Legal: Quinn Emanuel Urquhart & Sullivan, LLP
Financial Advisor: Portage Point Partners LLC
Super HoldCo Independent Managers: Jill Frizzley and Carol Flaton
Legal: McDermott Will & Schulte LLP (Bradley Giordano, James Kapp III, Julia M. Beskin, Charles Gibbs)
Claims Agent: Kroll (Click here for free docket access)
Other Parties in Interest:
RCF Agent: Deutsche Bank AG New York Branch
Legal: White & Case LLP (Scott Greissman, Joseph Brazil, Rob Bennett, Andrew Zatz)
Securitization Program Agent: GLAS USA LLC and GLAS Americas LLC
Legal: Reed Smith LLP (Nicholas Vislocky, Richard Solow, Paul Moak, Tristan Sierra)
Securitization Program Lenders: Angelo, Gordon & Co., L.P. and Oaktree Capital Management, L.P.
Legal: Orrick Herrington & Sutcliffe LLP (Robert Trust, Jacob Herz, Nicholas Sabatino)
Ad Hoc Group of Senior Secured Lenders
Legal: Paul Hastings LLP (Kristopher Hansen, Christopher Guhin, Matthew Garofalo, Jason Pierce, Charles Persons, Schlea Masanz)
Investment Banker: PJT Partners
Ad Hoc Group of Term Lenders
Legal: Gibson, Dunn & Crutcher LLP (Stephen Silverman, Keith Martorana, Jonathan Dunworth, Adeola Adeyosoye) and Howley Law LLP (Tom Howley, Eric Terry)
Investment Banker: Lazard Frères & Co.
2L 2029 Notes Ad Hoc Group
Legal: Paul, Weiss, Rifkind, Wharton & Garrison LLP (Andrew Rosenberg, Sung Pak, Karen Zeituni, Gary Kavarsky, Lindsay Wasserman) and Porter Hedges LLP (John Higgins, Megan Young-John, James Keefe, Joanna Caytas)
Investment Banker: Perella Weinberg Partners LP
Ad Hoc Group of Excluded OpCo Term Lenders:
Legal: Pallas Partners (US) LLP (Duane Loft, Jill Forster, Brianna Simopoulos) and Gray Reed (Jason Brookner, Lydia Webb)