Weil is consistently at the forefront of innovative out-of-court restructurings as well as prepackaged or prenegotiated chapter 11 cases. Weil’s significant experience counseling financially-distressed entities as well as creditors and other parties in interest has enabled Weil to achieve consensus among disparate groups of parties to achieve value-maximizing outcomes. Restructuring attorneys work closely with PE, M&A, tax, finance, regulatory, and other attorneys at Weil, all of whom have extensive experience in this area.
Weil provides superior support and skill in negotiations between a financially-distressed entity and its lenders, bondholders, major suppliers, and other major parties in interest, including governmental agencies. Weil works closely with financial advisors, investment banks, and investors to develop various restructuring proposals as well as negotiate and implement restructured loan documentation, exchange offers, tender offers, and/or consent solicitations.
Prepackaged and Prearranged Chapter 11 Cases
Weil has pioneered the use of prepackaged and prearranged chapter 11 cases, which is a hybrid of an out-of-court restructuring and a traditional chapter 11 case. Under both structures, debt refinancing terms are worked out prior to the filing of a chapter 11 petition, thus significantly shortening the time a debtor spends in chapter 11 as well as the impact of the bankruptcy on the business. Weil has significant experience advising entities on the advantages and disadvantages of these hybrid models and implementing the restructuring in a cost-efficient manner, including counseling and guiding debtors through the initial negotiations and out-of-court restructuring through the solicitation of votes, the filing of the chapter 11 petition, and the confirmation process.
Representation of American Capital Ltd., an investment firm with approximately $12 billion in assets, in an out-of-court restructuring of $2.4 billion of unsecured indebtedness, which reduced the debt by $1.03 billion. The transaction involved the conversion of American Capital’s revolving line of credit facility into a term loan facility and the exchange or repayment of outstanding public and private notes without disruption to the ongoing business.
AIG, an international insurance and financial services organization, in connection with potential courses of action related to AIG’s credit default swap positions and the development of strategies addressing challenges presented by the financial crisis, including the sale of a $9 billion preferred interest in American Life Insurance Company (ALICO), a subsidiary of AIG, to the Federal Reserve Bank of New York (FRBNY) in exchange for a $9 billion reduction in debt owed by AIG to FRBNY.
Representation of the Mashantucket Pequot Tribal Nation (MPTN), owner of Foxwoods Resort Casino, in its out-of-court restructuring of $2.3 billion in debt obligations. As a Native American Tribe, MPTN faced two primary hurdles in restructuring negotiations: eligibility for chapter 11 and the ability to issue equity to noteholders in a debt-for-equity swap. Weil successfully negotiated with multiple classes of creditors and interested parties, resulting in 99% of bondholders voting to approve the comprehensive restructuring.
Representation of The Ontario Teachers’ Pension Plan Trust in the out-of-court restructuring of its portfolio company, Aquilex Holdings LLC, a service provider to the chemical and energy industries. The restructuring was effected through (i) an amendment and partial paydown of a first lien credit agreement, (ii) a debt to equity exchange offer for its senior notes, coupled with a rights offering, which was backstopped by an ad hoc group of noteholders, and (iii) cancelation of equity interests. The exchange offer was coupled with a prepack backstop. Because the minimum condition was achieved, a chapter 11 filing became unnecessary.
Representation of Pyramid Management Group, an affiliate of the Pyramid Companies, a large, privately-owned shopping center owner and developer, in the out-of-court restructuring of a matured $550 million securitized mortgage. On behalf of Pyramid, Weil assisted in preventing the exercise of remedies and negotiating an extension of the maturity dates restructured with payment terms.
Representation of Security Capital Assurance (now Syncora Holdings, Ltd.), the operating subsidiaries of which issued financial guarantee insurance, reinsurance, and other credit enhancement for debt obligations, in its restructuring and ongoing legal strategy. The restructuring marked the first substantial monoline insurance restructuring.
Prepackaged or Prearranged Chapter 11 Cases
Representation of oilfield services company Basic Energy Services Inc. in its recently filed prepackaged chapter 11 bankruptcy, which listed $1.1 billion in debt.
Representation of Chassix Holdings, Inc. and its domestic subsidiaries, in connection with the prearranged chapter 11 restructuring of their $700 million capital structure. Chassix employs more than 4,500 people world-wide and is one of the world’s leading manufacturers of chassis and other safety-critical components to the world’s leading car makers, including BMW, Chrysler, Ford, General Motors and Nissan.
Representation of Dallas Stars, LP, owner of the Dallas Stars National Hockey League Club, and certain subsidiaries in their prepackaged chapter 11 cases. Weil negotiated a chapter 11 plan that would effectuate a sale of the Dallas Stars and its hockey-related assets in an NHL-supported auction with Vancouver-based businessman Tom Gagliardi agreeing to serve as the "stalking horse" bidder. Two months later, the Bankruptcy Court approved the sale and confirmed the prepackaged plan, with the sale closing and the plan becoming effective that same day.
Representation of Electrical Components International, Inc., a leading designer, manufacturer, and marketer of wire harnesses and provider of value-added assembly services to North American, European, and Asian “white goods” appliance manufacturers, in its prepackaged chapter 11 case. The prepackaged plan of reorganization provided for a comprehensive financial restructuring of the company’s capital structure and was supported by a majority of its first and second lien lenders and equity holders. With Weil’s assistance, the plan was confirmed approximately 45 days after the commencement of the chapter 11 case, reducing outstanding prepetition indebtedness of $435 million by approximately 50% and enabling Electrical Components to emerge from chapter 11 with up to $45 million in a new cash infusion.
Representation of Endeavour International Corp., an oil and gas exploration and production company and certain of its domestic and international subsidiaries (“EIC”) in their chapter 11 case with approximately $1.2 billion in liabilities. Weil advises EIC on the refinancing of its international debt and simultaneous negotiation of a pre-negotiated chapter 11 plan with domestic debtholders. Additionally, the Firm successfully negotiated and settled an alleged $110 million breach of contract litigation with SM Energy Company on behalf of the Company in spring 2014.
Representation of Express Energy Services Operating, LP, a leading provider of services to the US oil and gas exploration and production industry, and 23 affiliated debtors in their prenegotiated chapter 11 cases. Prior to commencing the chapter 11 cases, with Weil’s assistance, Express Energy negotiated a restructuring plan with a majority of its largest secured creditors. The plan, which provided senior secured creditors with 98% of the equity in the reorganized company, was confirmed less than six weeks after the commencement of the chapter 11 cases.
Representation of leading NYC-area supermarket operator Fairway Group Holdings, Inc. in its chapter 11 bankruptcy. The prepackaged plan, which was accepted by all creditors entitled to vote and was subsequently confirmed by the Court, provided for a substantial reduction of Fairway’s existing funded debt by approximately $140 million and a reduction of Fairway’s annual debt service obligations by up to approximately $8 million. The plan right-sized Fairway’s balance sheet and set it on the path to emerge from bankruptcy as a leaner, healthier enterprise positioned to thrive and grow its iconic New York City brand. The reorganization is notable for its execution and efficiency: Fairway emerged from chapter 11 in July 2016, after just 63 days.
Representation of Houston onshore oil and natural gas company Halcón Resources Corporation in its prepackaged chapter 11 plan, which listed $2.85B in assets and $3.15B in liabilities. In addition to cutting its debt by approximately $1.8 billion, the prepackaged reorganization plan will eliminate $222M in preferred equity and reduce the company’s annual interest expense by more than $200M. Halcón’s bankruptcy was reported in The Wall Street Journal and elsewhere as Halcón was a pioneer of the shale oil and gas boom.
Representation of Hawkeye Renewables, LLC, a subsidairy of Hawkeye Energy Holdings LLC, an Iowa-based producer of ethanol and distillers grains, in its prepackaged chapter 11 case. Prior to commencing the case, Weil assisted Hawkeye in negotiating a plan of reorganization with its first lien lenders that restructured $761 million of indebtedness and included a debt-to-equity conversion. The plan was confirmed approximately six months after the commencement of the case and was consummated less than two weeks later.
Representation of Key Plastics L.L.C. and Key Plastics Finance Corp., a leading supplier of a broad range of highly engineered plastic components and functional assemblies to automotive manufacturers, in their prepackaged chapter 11 cases. Prior to commencing the cases, Weil assisted Key Plastics in negotiating a restructuring agreement and chapter 11 plan with a majority of its senior noteholders to implement a comprehensive financial restructuring of its equity and debt structures by converting senior secured debt into equity or retiring it with a total reduction of indebtedness of more than $121 million. The plan, which was accepted by 100% of the senior noteholders, went effective approximately two months after the chapter 11 filing.
Representation of LodgeNet Interactive Corporation, the leading provider of interactive media and connectivity services to the hospitality and healthcare industries in the United States, and certain subsidiaries in their prepackaged chapter 11 cases. Prior to filing the chapter 11 case, Weil facilitated the signing of an investment agreement by multiple stakeholders, which set the stage for the prepackaged bankruptcy. This transaction, which involved the sale of 100% of the new common stock of the reorganized LodgeNet for $68 million, was the basis for the plan of reorganization, which also provided for the payment in full of LodgeNet’s prepetition lenders and general unsecured creditors, and was confirmed less than two months after the cases were filed.
Representation of Nortek, Inc. and 37 of its affiliates, global manufacturers of residential and commercial ventilation, HVAC, and home technology convenience and security products, in their prepackaged chapter 11 cases, involving approximately $2.25 billion in funded indebtedness. Prior to the commencement of the cases, with Weil’s assistance, Nortek negotiated a transaction with a majority of its creditors that eliminated approximately $1.25 billion of debt. Before and during the chapter 11 cases, Weil assisted in developing a transaction and legal strategy to achieve consensus among different creditor groups with conflicting interests, minimize litigation risk, and minimize Nortek’s time in chapter 11. Weil succeeded in securing confirmation of the chapter 11 plan approximately six weeks after the case was commenced, with Nortek emerging from chapter 11 approximately two weeks later.
Representation of PRC, LLC and certain affiliates, leading providers of complex consultative services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry, in their prenegotiated chapter 11 cases. Weil obtained confirmation of the prenegotiated plan, which was unanimously supported by PRC’s first and second lien lenders and, after significant negotiations, was supported by the vast majority of general unsecured creditors, approximately five months after commencement of the cases. Through the chapter 11 process, Weil assisted PRC in (i) restructuring approximately $180 million in prepetition secured debt, (ii) securing postpetition financing of $30 million and exit financing of $20 million, (iii) selling a significant number of assets in West Virginia and real estate in Florida, and (iv) resolving significant claims held by former equity holders.
Representation of RDA Holding Co. and certain subsidiaries, including The Reader’s Digest Association, Inc., a global, multibrand and multiplatform media and direct marketing company, in their prenegotiated chapter 11 cases. RDA relied on Weil’s unique expertise to negotiate a restructuring support agreement with its senior lenders and a majority of the holders of RDA’s senior secured notes, resulting in the successful emergence from chapter 11. The benefits of the restructuring support agreement included the consensual conversion of approximately $475 million of debt to equity, the conversion of $105 million debtor in possession financing to exit financing, an 80% reduction of prepetition debt burden post-emergence, and continued execution of key transformational initiatives.
Representation of Recycled Paper Greetings, Inc., the then-leading greeting card company, in its prepackaged chapter 11 case. The case was filed in connection with an acquisition agreement pursuant to which American Greetings purchased Recycled Paper for approximately $151 million. The plan was confirmed approximately six weeks after the commencement of the case.
Representation of Regal Cinemas, a cinema chain, in its out-of-court restructuring negotiations and implementation of its plan in a prepackaged chapter 11 case.
Representation of Simmons Bedding Company, one of the largest manufacturers and marketers of bedding products, in its prepackaged chapter 11 case. Weil assisted in negotiating the prepackaged plan, pursuant to which Simmons sold substantially all of its assets to Ares Management and Ontario Teachers’ Pension Plan. The plan reduced Simmons’s total debt obligations from $1 billion to $450 million. Weil successfully obtained confirmation of the plan less than two months after commencing the chapter 11 cases and consummated the sale less than three weeks later. As a result, the Turnaround Management Association presented Weil with the 2010 “Transaction/Turnaround of the Year” Award in its “Large Company” category.
Representation of Texas Rangers Baseball Partners, the owner and operator of the Texas Rangers Major League Baseball Club, in its prepackaged chapter 11 case. The chapter 11 case was commenced to consummate a sale of substantially all assets, including the Texas Rangers MLB team, to Rangers Baseball Express, an entity whose principals included Hall of Fame MLB pitcher Nolan Ryan. By seeking an expedited auction process and confirmation hearing, Weil minimized the impact of the chapter 11 case on the Texas Rangers MLB team, as evidenced by the team’s on-the-field success, which helped the team clinch the American League Pennant and its first trip to the World Series.
Representation of U.S. Shipping Partners L.P., one of the leading providers of long-haul marine transportation services between ports in the United States, in its prearranged chapter 11 restructuring of approximately $430 million of debt. Weil advised U.S. Shipping Partners in the successful restructuring of its first and second lien debt, with U.S. Shipping continuing to provide long-haul marine transportation services upon exiting chapter 11.
Representation of offshore drilling company Vantage Drilling Company, (formerly a publicly traded company) in its official ongoing liquidation proceedings before the Grand Court of the Cayman Islands and Vantage Drilling International (F/K/A Offshore Group Investment Limited) and certain of its affiliated debtors in their chapter 11 cases filed in the U.S. Bankruptcy Court for the District of Delaware to effectuate the deleveraging of approximately $2.7billion of debt through a prepackaged plan of reorganization. Vantage exited chapter 11 in February 2016.
Representation of Vertis Holdings, Inc., one of the leading printers of advertising inserts, in its highly complex and revolutionary prepackaged chapter 11 case. This case involved the merger, through simultaneous chapter 11 filings, of two distressed companies – Vertis and American Color Graphics (ACG), into a single merged company, with the creditors of the two companies obtaining debt and equity of the reorganized merged entity through the restructuring. Weil assisted in generating consensus among numerous creditor groups that were situated at different levels in Vertis’s complex capital structure, which involved months of contentious negotiations and creative issue solving, ultimately leading to an agreement regarding the restructuring of $1.7 billion in liabilities. Simultaneously, because the prepackaged plan contemplated the merger of Vertis with ACG, Weil assisted Vertis in negotiating with ACG’s constituencies to produce a prepackaged plan supported by all parties. To implement the merger, in a closely choreographed manner, ACG simultaneously filed for chapter 11 protection with its own accompanying prepackaged plan of reorganization. This “double prepack merger” – the first of its kind – resulted in the combination of two of the largest printing companies in North America and a joint restructuring of the companies’ debt obligations.