Bankruptcy Debrief for the Week of March 5th

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PacerMonitor's look back on this week's most compelling bankruptcies.

Shoe seller walks into chapter 11 for the second time

Shoe retailer The Walking Company filed for chapter 11 for the second time in 10 years after the loss of a major contract with Decker Outdoor Corp., maker of UGGs. The contract expiration pulled UGGs from the retailer in late 2016, and the company struggled in 2017. It was unable to recover from the lost revenue, leading to a reduction in available credit from lender Wells Fargo.

The Walking Company comes to bankruptcy court with a prenegotiated plan that includes a $10 million cash injection in exchange for the reorganized company’s stock. The funding will come from a group that includes Kayne Anderson Capital Advisors, which also was involved in the 2009 chapter 11 case. Additionally, the group will provide a $50 million loan to fund the cases and provide liquidity when the company emerges.

The company will use the chapter 11 process to right-size the balance sheet, renegotiated leases on stores and emerge with a leaner capital structure. At the time of the filing, the company had about $40.4 million of senior loans and $11.7 million of bonds outstanding.

Read President and CEO Andrew D. Feshbach’s declaration in support of the first-day motions

View the chapter 11 petition 

 

Marine transportation company Harvey Gulf files prepackaged chapter 11 cases

Harvey Gulf International Marine, provider of offshore supply and support vessels for deep-water operations in the Gulf of Mexico, filed a chapter 11 petition in conjunction with a plan that would eliminate roughly $1 billion in debt in exchange for equity in the reorganized company. Under the plan, trade creditors would be paid in full.

The company attributes its financial hardships to the decline in oil prices, which prompted energy and production companies to greatly cut the number of exploration and drilling projects starting in 2014. By 2017, many of the company’s long-term vessel-use contracts were expiring, and the company has struggled to replace the contracts.

As of the filing, the company had about $1.22 billion of funded debt and listed total assets of more than $1 billion.

Read Chairman and CEO Shane J. Guidry’s declaration in support of the first-day motions

View the chapter 11 petition

 

Nursing-home chain Orianna to be sold through chapter 11 process

Orianna Health Systems, operator of 42 nursing homes across seven states, filed for chapter 11 protection to effectuate a sale of its facilities as outlined in a restructuring support agreement (RSA) the company entered with its landlord, Omega Healthcare Investors. Under the RSA, the company will transfer 23 facilities to a new operator and conduct a sale of the 19 remaining facilities. The plan sponsor, identified as SC-GA 2018 Partners, will contribute $195 million in cash and a $30 million note in exchange for all equity in the reorganized company.

Many factors led to the filing, with the company noting Orianna went through a merger in 2013 with Ark Holding Co., doing business as Covenant Dove, under which it assumed additional liabilities including about 40 lawsuits that brought $6.5 million in costs. Additionally, the assumed contracts from the merger did not contain favorable pricing and cost the company time and money to exit contracts, among other things.

Omega Healthcare Investors is set to provide Orianna with up to $30 million to fund the chapter 11 cases. As of the filing, the company listed $50 million-$100 million in liabilities including: $14.2 million outstanding under prepetition loans, $52 million in outstanding rent and a $15 million loan to Omega Healthcare Investors, among other things. The company lists assets between $10 million and $50 million.

Read Chief Restructuring Officer Louis E. Robichaux’s declaration in support of the first-day motions

View the chapter 11 petition 

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