New MACH Gen seeks quick restructuring with prepackaged plan
New MACH Gen, owner and manager of three natural gas-fired electric generating facilities, filed for chapter 11 with a prepackaged restructuring plan. The company aims to have a quick trip through chapter 11, with emergence targeted for the second half of 2018.
The plan, outlined in a restructuring support agreement entered with the first-lien lender and equity owner, proposes that New MACH Gen will transfer ownership of its Harquahala facility to the first-lien lender in exchange for a reduction of about $150 million of its debt as well as amend and extend the first-lien credit facility. The equity owner will provide additional capital to New MACH Gen to fund business operations
Prior to filing, 100% of the first-lien lenders voted in favor of the plan.
As of the filing, the company lists outstanding funded debt of roughly $700 million, comprising $490 million of first-lien loan claims and $166.5 million of first-lien revolver claims, among others. The facilities were completely drawn at the time of the filing.
New MACH Gen’s parent company, Old MACH Gen, was purchased in 2015 by Talen Energy for about $1.175 billion but is not a debtor in the case.
Read CFO John Chesser’s declaration in support of the first-day motions here.
ABT Molecular, manufacturer and distributor of the world’s only small-footprint biomarker generator, filed for chapter 11 after difficult financial conditions that left it with a net loss of $5.5 million that exceeded total sales of $5.4 million in 2017. Additionally, the company listed a net book value of only $2.5 million for the business against $30.5m in liabilities.
ABT Molecular does not have a firm direction for the case yet but indicates it would either target an adjusting of the balance sheet or sell the business.
As of the filing, the funded debt included two secured term loans agented by SWK Funding and multiple unsecured loans from two shareholders, Intersouth Partners VII and Ronald Nutt. More specifically $9.683 million outstanding under the first-lien term loan, $16.161m under the second-lien term loan, $1.136m of Intersouth notes, $1.879 of Nutt notes and $180,000 of trade debt.
Read CEO and President Peter Kingma’s declaration in support of the first-day motions here.
In 2005, Jack Johnson was the No. 3 pick in the National Hockey League draft. At the close of the 2007-2008 season, he was named Best Newcomer and Outstanding Defenseman for the Los Angeles Kings. In 2010, he played on the Team USA that clinched the silver medal at the Olympics. And then in 2014, the Columbus Blue Jackets player filed for Chapter 11 bankruptcy in Ohio Southern Bankruptcy Court.
That’s an unexpected penalty box for a player who was bringing home over $400,000 per month at the time of filing, according to court documents. How does bankruptcy unfold with that kind of salary? According to a 2009 Sports Illustrated article, Johnson is far from an outlier. Within five years of retirement, the article notes, roughly 60 percent of former National Basketball Association players end up broke, and nearly 80 percent of former National Football League players go bankrupt after two years of retirement.
Johnson’s parents have come under fire for taking out loans in Johnson’s name against his future earnings from the NHL after he granted them power of attorney. Johnson’s total debt at the time of filing rang up to $21,343,723.64. Now, some four years and 986 docket items later (at the time of this writing), the case appears to be winding down. But the road getting there wasn’t smooth.
After Johnson filed for Chapter 11 bankruptcy in October 2014, he attempted to convert the case to Chapter 7 in March 2015. In court documents, Johnson’s lawyers argue that the conversion to liquidate Johnson’s assets “is necessary and equitable because it protects the estate from being dissipated by contentious and extensive litigation threatened by those who have asserted specious claims. Several creditors have informed Debtor that they intend to pursue such tactics, leading to this conversion.”
A group of creditors asserting claims that totaled about $14 million objected to the motion, and in February 2016, the motion to convert the case was denied. The order hints at the complications in the case. “If the Debtor commenced this bankruptcy case intending to comply with his fiduciary duties and use his income to provide creditors with a meaningful recovery,” the order reads, “at some point he went astray.” The order goes on to imply that Johnson’s attorneys were perhaps pushing for the Chapter 7 conversion in order to block the creditors from access to any of Johnson’s future high-dollar NHL earnings.
Furthermore, while Johnson argues that the objecting creditors refused to accept any less-than-full payments and therefore intentionally blocked his ability to successfully reorganize, the objecting creditors asserted that Johnson exhibited “bad faith,” “neglected to take other steps that are necessary to reorganize his financial affairs,” and made “unnecessary and excessive expenditures” that were “consistent with his pre-bankruptcy laissez-faire approach to his finances” and not in keeping with the goal of conserving the value of his estate. (Readers can assess Johnson’s monthly operating reports for themselves.)
One amended Chapter 11 plan was filed, and then came another. Finally, towards the end of August 2016, the plan settlement was filed, and confirmed three months later. Under the plan, Johnson is required to use his post-filing assets as well as his future earnings to pay off the creditors. In addition, once Johnson’s contract is terminated, he will need to hand over his earnings (except living expenses) for the next five years after the confirmation order—a contract through the 2020-2021 NHL season. The deal also involved the sale of Michigan and California residences, two BMW vehicles valued at a total of roughly $30,000, as well as a 2011 Ferrari valued at $125,000.
While certain rumblings—like one of the creditors objecting to the plan—still may force the case into extra minutes, Johnson appears to be exiting the Chapter 11 penalty box, even if his earnings will stay on ice for years to come.
Live plant distributor and grower Color Spot filed for chapter 11 with the goal of selling substantially all of its assets as a going concern. The company proposed a timeline that would put a sale in July.
Color Spot cited market share and revenue that have been on the decline since 2014, hurt by a drought from 2011 to 2017 in California, where the company has a substantial portion of its nurseries, and extreme weather events in Texas during 2015 and 2017.
Despite falling revenue—$248 million in 2017 versus $268 million the year prior—the company says it is well-positioned to succeed. Some of its long-term customers include Home Depot, Lowe’s, Costco, Target and Walmart as well as other retail stores, supermarkets and independent garden centers.
As of the filing, the company had a total of about $148 million of debt, which comprises $117.5 million of funded debt and $20.7 million of unsecured trade debt, among other things. More specifically, the $117.5 million of funded debt includes $83.4 million from a Wells Fargo credit agreement, $20.5 million from a Capital Farm Credit (CFC) credit agreement and $14.9 million loan from Black Diamond Commercial Finance.
Elements Behavioral Health pursues a sale using chapter 11
Elements Behavioral Health (EBH) filed for chapter 11 to conduct a sale of the company to Project Build Behavioral Health (PBBH). Prior the filing, EBH was negotiating a sale with PBBH but did not come to terms of a sale that could be completed outside chapter 11. PBBH purchased the first-lien debt and is now the current first-lien lender.
EBH and PBBH reached terms of a proposed sale with PBBH acting as the stalking horse bidder with a floor bid of $65 million, subject to higher and better offers. As part of the terms, PBBH will also be providing funding, subject to court approval, up to $9.5 million.
As of the filing, EBH had about $207 million of debt outstanding, which included, among other things, $128.7 million of first-lien debt held by PBBH and $44.2 million of second-lien debt.
Read Chief Restructuring Officer Martin McGahan’s declaration in support of the first day motions here.
Colorado hydroponic supply company Way to Grow sought chapter 11 protections, along with its parent company, Pure Agrobusiness. Way to Grow operates seven retail stores and an online store in Colorado, while an affiliated debtor runs one retail store in California. In aggregate, the companies brought in about $41 million in annual revenue.
As of the filing, the companies listed $500 million to $1 billion of debt and $500 million to $1 billion of assets but did not provide any breakdown of the figures.
Owner Corey Inniss is identified as the only party that has a claim to the company’s inventory and accounts receivable. At this point, the company has not identified a specific path for the chapter 11 process.
Read CEO Rick Byrd’s declaration in support of the first day motions here.
Rockport walks into Bankruptcy Court after split from Adidas.
Major shoe company Rockport Group filed for chapter 11 just months behind Nine West and Payless ShoeSource. Rockport intends to use the chapter 11 process to facilitate a sale of the company. Rockport cited one of the leading events that contributed to the chapter 11 filing was the sale of Rockport by Adidas in 2015 to a new entity created by New Balance and Berkshire Partners.
At the time of the filing, Rockport had roughly $287 million of debt, which included $57 million under the an asset-based lending facility, $188.3 million of senior notes, $11.9 million of subordinated notes and $29.6 million of trade debt.
Rockport is proposing a sale at auction, with an affiliate of Marathon Asset Management acting as the stalking horse bidder with a bid of $150 million in cash, assumption of liabilities and other considerations. The auction is targeted for July 10.
Arecont Vision seeks files chapter 11 to pursue sale of business.
Surveillance camera manufacturer Arecont Vision filed for chapter 11 as part of a prearranged sale process. The proposed sale, which is subject to higher and better offers, identifies an affiliate of Turnspire Capital as the stalking horse bidder.
Arecont Vision said a flood of Chinese competition has had a grave impact on its sales, with revenue dropping to $41.7 million in 2017 from $72.7 million in 2016. The drop in revenue also caused the workforce to be reduced to 90 from 175 the year prior.
Arecont Vision provides products to the likes of Wells Fargo, Apple, Google, Facebook, Citibank and others. As of the filing, the privately held company had total debt of about $73.2 million owed to certain secured senior lenders.
Rex Energy pursues sale in bankruptcy after failing to reach a settlement with lenders out of court.
Oil and gas exploration and production company Rex Energy sought chapter 11 protection after the expiration of the forbearance period with its senior lenders. The company faced numerous financial challenges and spent over six months in negotiations with lenders.
Rex Energy secured a commitment of $100 million to continue operations during the chapter 11 case while it works to sell the company. The company’s previously arranged restructuring support agreement is supported by 100% of its first-lien lenders and 72% of its second-lien lenders.
The chapter 11 petition lists assets of over $1 billion and debt of over $1 billion as well.
Videology advertises its own business for sale in chapter 11 auction
Video advertising firm Videology filed for chapter 11 to facilitate the sale of the business in an auction. Tech marketing firm Amobee has already signed an agreement to act as the stalking horse bidder with a bid of $45 million, pending the court’s approval.
Videology says that a sale through chapter 11 is the best route for the company to proceed and is in the best interest of its shareholders. As of the filing, the company listed over $100 million of liabilities and total assets of just under $90 million.
The chapter 11 case is proposed to be a quick one, with a timeline that outlines the approval of a sale just two months after filing for chapter 11.
Read CFO Kenneth Tarpey’s declaration in support of the first day motions here.
YMCA of Greater Pittsburgh looks to firm up balance sheet, operations in chapter 11
Greater Pittsburgh’s ninth-largest health and social service nonprofit, the YMCA of Greater Pittsburgh, filed for chapter 11 after mounting financial difficulties. The company intends to close a downtown facility next month and President and CEO Kevin Bolding said it will use the chapter 11 process to “adjust our finances and align our resources to build a Y of the future that is reflective of how services are needed and delivered in the 21st century.”
At the time of the filing, the YMCA of Greater Pittsburgh listed over 200 creditors with total liabilities of $10 million to $50 million and total assets of $50 million to $100 million.
Read President and CEO Kevin Bolding’s declaration in support of the first day motions here.
Operator of over 150 Applebee’s seeks protection under chapter 11
RMH Holdings, one of the largest Applebee’s franchisees, representing almost 10% of the country’s locations with 159 locations in 15 states, filed for chapter 11. The company spent the year prior to the filing attempting to improve liquidity by renegotiating leases and closing underperforming locations. The company was unsuccessful in reaching an agreement with franchisor Applebee’s, and the franchisor indicated it would issue a notice of termination of the company’s franchise rights in Arizona and Texas.
After that notification, RMH Holdings decided to file for protection under chapter 11. At the time of the filing, the company had $68.5 million of outstanding debt due to senior creditors, over $30 million of unsecured loans, and an unspecified amount of unsecured trade claims. The company listed its total assets at over $100 million.
Read CFO Mitchell S. Blocher’s declaration in support of the first day motions here.
Gibson Brands faces the music, looks to lean business operations in chapter 11
Famous guitar maker Gibson Brands filed for chapter 11 seeking to restructure and refocus the company on its musical instrument business and professional audio products. The Gibson Global Innovation business is set to be wound down.
The proposed reorganization is outlined in a restructuring support agreement (RSA) entered with holders of about 70% in total amount of Gibson’s senior secured notes, including investment firms Silver Point Capital, Melody Capital Partners and KKR Credit Advisers. Under the RSA, if approved, the noteholders would receive equity in the reorganized company.
The noteholders have also agreed to provide up to $135 million to fund the businesses during the case. As of the filing, the company had about $500 million of funded debt, comprising $100 million of secured loans, $375 million of secured notes, $24 million Global Innovation loan and estimated $15 million in general unsecured claims.
Read Gibson’s restructuring advisor Brian J. Fox’s declaration in support of the first day motions here.
Relativity Media can’t make the cut alone and resorts to a sale through chapter 11
Struggling Relativity Media has signed an agreement to sell the business to UltraV Holdings using the chapter 11 process only three years after filing for chapter 11 for the first time. The buyer is a joint venture of Sound Point Capital Management and RMRM Holdings, and the proposed sale will require court approval.
The sale is expected to close in less than 60 days, and UltraV intends to continue Relativity’s operations and to, provide funding to continue developing and distributing content through existing and future platforms, including Netflix.
As of the filing, the company listed liabilities of $500 million to $1 billion and assets of $100 million to $500 million.
Iron Chef’s Garces Restaurant Group seeks bankruptcy protection to facilitate a sale
Garces Restaurant Group, which has seen its restaurant chain dwindle to 13 locations from as as many as 30, filed for chapter 11 amid mounting financial challenges. The company will look to sell itself to Ballard Brands for $5 million, pending the court’s approval.
The company’s revenues reached as much as $40 million annually, but a crushing blow was delivered when the Atlantic City casino, The Revel, closed in chapter 11, immediately closing four restaurants that were bringing in $13 million a year.
Those closures are not the only issue that caused stress for Garces Restaurant Group. There are numerous investor lawsuits alleging that, among other things, Garces Restaurant Group was “in substance and operation a Ponzi scheme” and owed nearly $850k to one food distributor. Another lawsuit stated that founder Jose Garces secured a $9 million loan without investors’ knowledge and ignored investors’ requests to step down. At least seven lawsuits have been filed relating to his alleged mismanagement.
At the time of the filing, the assets were listed between $100,000 and $500,000 and liabilities of $1 million to $10 million, including a $7.5 million secured loan and $500,000 charge card debt, among other things.
U.S.-based energy company Erin Energy seeks chapter 11 protection to find a way to restructure
Erin Energy Corp. filed for chapter 11 without any set plan but with an overall goal to restructure the company. Headquartered in Houston, Erin Energy operates an independent oil and gas exploration and production company focused on resources in Africa. The company also looks for strategic partnerships that can help its business.
The company’s funded debt at the end of 2017 was roughly $312 million, which comprised $81.3 million outstanding under a credit facility with Zenith Bank, $66.5 million outstanding under a financing facility with Mauritius Commercial Bank, a $27.3 million promissory note with Allied, $61.4 million of 2014 convertible subordinated notes, $55.8 million under 2015 convertible notes with Allied and $19.1 million of notes with James Street Capital Partners.
Erin Energy’s assets comprise five licenses across Nigeria, Ghana and The Gambia, for a total of about 1.5 million acres.
No interim debtor-in-possession loan was requested along with the filing and the trajectory of the case remains unsure.
Read CEO Sakiru Adefemi’s declaration in support of the first day motions here.
ECS Refining seeks bankruptcy protection as defense mechanism against secured lender
E-scrap processor ECS Refining filed for chapter 11 to avoid a forced takeover by an investment partner, Summit Bridge Capital. ECS Refining said that years ago the company took out a multimillion-dollar loan from Bank of America that subsequently was sold to Summit Bridge Capital in 2017. ECS Refining says that Summit Bridge Capital has been attempting to take over the company. After a year of negotiations, no agreement could be reached, so ECS Refining filed for chapter 11 as a defense.
As of the filing, the company listed $32.888 million of funded debt, $25.927 million of which is secured and $6.96 million of unsecured debt. The total assets were listed as $1 million to $10 million. The company’s case is to be funded by a loan from Sundance LLC.
Read President Jack Rockwood’s declaration in support of the first day motions here.
Northeastern pizza chain Bertucci’s files chapter 11 to pursue asset sale, slice debt
Brick oven pizza restaurant Bertucci’s filed for chapter 11 amid declining sales and subpar financial results. Facing a high debt load, the company made numerous attempts to improve its finances by lease concessions and job cuts over the last year and a half.
The company has about 60 stores operating and has indicated that some stores are set to be closed, while others will be sold at auction with Right Lane Dough Acquisitions acting as the stalking horse bidder. Right Lane Dough Acquisitions will be providing a $4 million loan to fund Bertucci’s operations and court costs during the case.
Bertucci’s cited the consumer’s shift to quick-casual restaurants as well as the increasing saturation of the restaurant industry in the filing.
As of the filing date, the company’s $120 million of debt, comprising $110.4 million in secured loans and about $9 million owed to vendors, landlords and other unsecured creditors.
Read CFO and Senior Vice President Brian Connell’s declaration in support of the first day motions here.
Debt-saddled Keast Enterprises steers into chapter 11, will focus on equipment sales
Iowa-based Keast Enterprises, a company which includes Hatswell Farms and Cyclone Cattle, filed for chapter 11 to provide for a restructuring of part of the business and a sale of part. The company was initially founded in 1980 as two farms, Keast Enterprises and Hatswell Farms, with just under 1,000 acres of land and 500 head of feeder cattle. Over the years, the business expanded to what it is today, including 4,000 acres of farmland, a 4,000-head cattle feedlot and an equipment-sales business.
Through the bankruptcy process, the company intends to continue operating Keast Sales, which focuses on the sale of farm equipment, while selling its cattle feedlot, Cyclone Cattle, and discontinuing farm operations of Hatswell Farms and leasing out the farm ground.
As of the filing, the company listed $10 million to $50 million of both assets and liabilities.
Read President Russel A. Keast’s declaration in support of the first day motions here.
Nine West files for Chapter 11 to effectuate a sale and reorganization.
Nine West Holdings, parent company of brands that include Anne Klein and Gloria Vanderbilt, filed for chapter 11 to facilitate a sale of the Nine West and Bandolino brands. Authentic Brands Group will act as the stalking horse bidder, pending the court’s approval, with a bid valued at $200 million for the intellectual property.
Additionally, Nine West has signed a restructuring support agreement (RSA) with certain creditors. The RSA proposes paying the term secured term loan lenders in full, providing the unsecured term loan lenders with 100% of the reorganized company’s equity.
Nine West cited the general downward trend that has plagued many other retailers, a decline in its l.e.i. brand’s sales and lastly the Nine West Group’s waning operating performance.
As of the filing, Nine West had roughly $1.578 billion of funded debt outstanding and listed assets as $500 million to $1 billion. The bankruptcy case will be funded by two loans, totaling $300 million loan from prepetition lenders.
Read CEO Ralph Schipani’s declaration in support of the first day motions here.