Bankruptcy/Restructuring

Purdue Pharma files for Chapter 11 to settle opioid lawsuits

BY Fraser Tennant

Accused of fuelling the opioid crisis which claimed the lives of almost 70,000 people in the US last year, drug maker Purdue Pharma has filed for Chapter 11 bankruptcy protection in a bid to settle the opioid litigation the company faces.

To finalise and implement the settlement agreement, the court-supervised Chapter 11 process will facilitate a resolution of all claims against Purdue and its subsidiaries, while preserving the value of the company’s assets.

Furthermore, the settlement is estimated to provide more than $10bn to address the opioid crisis, including contributing millions of doses of life-saving opioid overdose reversal medications – treatment that has the potential to reverse overdoses from powerful synthetic opioids, such as fentanyl.

The key elements of the settlement, which is subject to court approval, include: (i) the owners of Purdue contributing all of its assets to a trust or other entity established for the benefit of claimants; (ii) the new entity being governed by a new board selected by claimants and approved by the bankruptcy court; (iii) the new entity potentially contributing tens of millions of doses of opioid overdose reversal and addiction treatment medications at no or low cost; and (iv) the new entity agreeing to be bound permanently by injunctive relief, including marketing restrictions on the sale and promotion of opioids.

“This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public,” said Steve Miller, chairman of Purdue’s board of directors. “This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis.”

Across the US, more than 130 people die every day after overdosing on opioids. The misuse of and addiction to opioids – which includes prescription pain relievers, heroin and synthetic opioids, such as fentanyl – is a crisis that affects public health, as well as social and economic welfare.

Mr Miller concluded: “We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible.”

News: Purdue Pharma files for bankruptcy in the US

PG&E files Chapter 11 exit plan

BY Richard Summerfield

Californian energy provider PG&E Corp has filed a reorganisation plan which proposes to cap the wildfire liabilities that forced it into bankruptcy at about $18bn — less than half of what victims and insurers have said they are owed.

The plan, which was filed in US Bankruptcy Court in San Francisco, includes payments capped at $8.4bn for wildfire victims, payments capped at $8.5bn for reimbursing insurers that had paid victims and a $1bn settlement with local governments. The company was forced to file for Chapter 11 bankruptcy in January to deal with an estimated $30bn in liabilities related to devastating wildfires that its equipment ignited in 2017 and 2018. In its filing, the company listed $51.69bn in debts and $71.39bn in assets.

However, the exit plan may prove controversial as lawyers for fire victims said the company’s liabilities may top $40bn. Furthermore, insurance companies claim PG&E owes them approximately $18bn.

“This is outrageous,” said Gerald Singleton, a lawyer representing around 5500 wildfire victims. “PG&E is short changing the wildfire victims and is attempting to evade its responsibility.”

“Under the Plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California's clean energy goals,” said Bill Johnson, PG&E’s chief executive and president. “Throughout this process, we remain focused on the guiding principles of safely and reliably delivering energy to our customers, further reducing the risk of wildfires, and continuing to support the state’s clean energy goals. I am confident that we can, and will, provide better service to our customers and communities, and our Plan of Reorganization is another step in this process.”

Prior to the filing of its restructuring plan, the company has fended off a number of potential takeover and equipment offers. Last week, the city of San Francisco is believed to have offered $2.5bn for the company’s electrical equipment. The city’s offer is 35 times PG&E’s estimated 2019 earnings for the assets and described it as “a very attractive premium valuation” considering the company’s bankruptcy and other recent utility takeovers.  However, this offer was rebuffed.

Going forward, PG&E said it would employ a combination of debt and stock to raise the cash to help finance its exit from bankruptcy.

News: PG&E proposes reorganization plan with $17.9 billion for wildfire claims

Two-month turnaround sees Monitronics emerge from Chapter 11

BY Fraser Tennant

A little over two months since it filed, Monitronics International, the second-largest residential security provider in the US, has eliminated approximately $885m of its debt to successfully emerge from Chapter 11 bankruptcy protection.

Upon emergence, Monitronics gained access to $295m of additional liquidity under new exit financing – consisting of a $150m term loan facility and a $145m revolving facility – to support its continued growth and ensure it can continue to execute its strategic plan.

Moreover, as a result of its financial recapitalisation, which involves a merger with Ascent Capital Group, Inc., Monitronics’ largest shareholders will be EQT Partners, a global investment firm with around €40bn in assets under management (AUM), and Brigade Capital Management, a global investment management firm.

Additionally, Monitronics has appointed a new board of directors to provide critical expertise and experience as it enters the next phase of its growth.

“This is an exciting day for Monitronics as we have emerged as a stronger, more focused organisation,” said Jeffery Gardner, president and chief executive of Monitronics. “With renewed balance sheet strength, a strong subscriber portfolio and recurring revenue base, and the support of EQT and Brigade, two highly regarded financial sponsors, we are well-positioned to be a leader in the accelerating home security market and to execute on the vast growth opportunities ahead.”

One of the largest home security and alarm monitoring companies in the US, Monitronics secures approximately 900,000 residential and commercial customers through security solutions backed by trained professionals. The company has the nation’s largest network of independent authorised dealers – providing products and support to customers in the US, Canada and Puerto Rico.

“We are pleased to have worked collaboratively with Monitronics and its stakeholders to facilitate a balance sheet recapitalisation that optimally positions the company for success,” said Stephen Escudier, a partner at EQT Partners. “As Monitronics largest shareholder, we look forward to partnering with the company’s management team as they execute on their strategic vision and continue to build Monitronics’ position as an industry leader.”

Mr Gardner concluded: “I want to thank our dedicated team of employees as well as our dealers, customers and suppliers, who continued to believe in our company and worked with us to achieve this successful balance sheet recapitalisation.”

News: Monitronics emerges from Chapter 11, merges with Ascent Capital

 

Doors closing: Barneys New York files for Chapter 11

BY Fraser Tennant

In a move which threatens its almost 100-year history, US luxury department store operator Barneys New York filed for reorganisation under Chapter 11 of the US Bankruptcy Code.

As a part of the Chapter 11 process, Barneys New York will close its physical store locations in Chicago, Las Vegas and Seattle, in addition to five smaller concept stores and seven warehouse locations.

Alongside the bankruptcy process, the company has secured $75m in new capital which, combined with operating cash flow, will help it to meet its go-forward financial commitments, as well as facilitate a going concern sale process.

Well known for its high-end designer collection, Barneys New York has struggled in recent years with high rents and changing consumer tastes.

"For more than 90 years, Barneys New York has been an iconic luxury specialty retailer, renowned for its edit, strong point of view, creativity and representation of the world's best designers and brands," said Daniella Vitale, chief executive of Barneys New York. “Like many in our industry, Barneys New York's financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand.”

“In response to these obstacles, the Barneys New York board and management team have taken decisive action by entering into a court-supervised process, which will provide the company the necessary tools to conduct a sale process, review our current leases and optimise our operations,” she continued. “While doing that we are receiving new capital to help support the business.”

Despite the store closures, Barneys New York will continue to serve customers in five flagship locations. In addition, Barneys.com and BarneysWarehouse.com will continue serving customers without disruption.

Serving as Barneys New York’s legal adviser is Kirkland & Ellis LLP. Houlihan Lokey is financial adviser, while M-III Partners, L.P. is restructuring adviser.

Ms Vitale concluded: "I would like to express my deep appreciation and profound gratitude for the continued support of our employees, vendor community and customers – truly the lifeblood of Barneys New York. We are unwavering in our commitment to executing our forward thinking vision on what retail should look like today."

News: New York retail icon Barneys files for bankruptcy

Oil and natural gas firm Exco emerges from Chapter 11

BY Fraser Tennant

With enhanced financial flexibility to support long-term growth, US oil and natural gas exploration firm Exco Resources has successfully completed its financial restructuring and emerged from Chapter 11.

As a result of the Chapter 11 process, the company has reduced its leverage by more than $1.1bn and is moving forward with approximately $325m in committed exit financing from a new credit facility.

Exco originally filed for Chapter 11 in January 2018 due to a sustained downturn in commodity prices and uncertainty in the energy market.

“This is an exciting day for Exco and marks the beginning of the next chapter as an even stronger, more competitive company,” said Hal Hickey, chief executive and president of Exco. “Through the restructuring process, we have significantly improved our capital structure and reduced our debt, and our operations have progressed uninterrupted.”

Headquartered in Dallas, Exco’s principal operations are located in Texas, North Louisiana and the Appalachia region. Following its emergence from Chapter 11, the firm has stated that it will now continue to engage in the exploration, acquisition, development and production of onshore US oil and natural gas properties.

“Our successful emergence from this process is a testament to our former board and talented employees, whose continued focus on our operational initiatives enabled us to execute on our drilling and completion activities while maintaining an exemplary safety record throughout this process,” added Mr Hickey. “I also want to thank our customers, business partners and lenders for their ongoing support. I am honoured to be part of this team and confident our new board will be an asset to Exco as we enter our next stage of business development.”

Now privately-owned, Exco’s shares are no longer available for trading on a public exchange. In accordance with the restructuring plan, Exco’s new five-member board includes representatives from the holders of the firm’s newly issued common stock. The current management team remains in place.

Serving as Exco’s legal adviser during the Chapter 11 process was Kirkland & Ellis LLP. Alvarez & Marsal North America, LLC served as restructuring adviser, with PJT Partners LP serving as financial adviser.

Mr Hickey concluded: “Exco is now better positioned to capitalise on our strong asset base and operational expertise, as we continue enhancing our business and serving our customers, partners and other stakeholders.”

News: US firm Exco Resources emerges from Chapter 11 bankruptcy

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