Bankruptcy/Restructuring

Breitburn completes Chapter 11 to emerge as Maverick

BY Fraser Tennant

Following a near two-year bankruptcy, struggling energy company Breitburn Energy Partners LP has  emerged from Chapter 11 reorganisation and begun operations as Maverick Natural Resources, LLC – a newly-formed company owned and operated by private equity (PE) firm EIG Global Energy Partners.

Despite being a major acquirer, explorer and developer of oil and gas properties in the US, Breitburn was among the dozens of energy companies that filed for bankruptcy in 2016 after a lingering slump in commodity prices that began in late 2014. Now having successfully completed Chapter 11 reorganisation, Breitburn has returned as a new EIG-backed company, Maverick.

As a result of the Chapter 11 restructuring process, Maverick has an approximate debt of $105m, substantially lower than Breitburn’s $2.96bn debt balance prior to initiating the restructuring process. Furthermore, Maverick has approximately $295m of additional borrowing capacity under a new bank credit facility, and its balance sheet provides it with significant financial flexibility and positions the organisation for long-term success.

Specialising in private investments in energy and energy-related infrastructure on a global basis, EIG has been one of the leading providers of institutional capital to the global energy industry since 1982.

“We are pleased to close this chapter and focus on generating value for the Maverick platform,” said Clayton Taylor, managing director of EIG. “Maverick will emerge with low leverage, a simple balance sheet and sufficient liquidity to remain adaptive to the ever-changing market conditions. Following a judicious review of the asset portfolio and cost structure, we believe Maverick is well-positioned to capitalise on cost reduction initiatives, to deploy capital to high growth prospects and to potentially build the platform through strategic acquisitions.”

A portfolio company majority-owned and controlled by funds and accounts managed by EIG, Maverick is focused on the development and production of long-lived oil and gas reserves throughout the US.

“The Chapter 11 reorganisation marks a new beginning for our company and all of our stakeholders and the end of a difficult period managing through the steep and sustained decline in oil and natural gas prices,” said Halbert S. Washburn, Maverick’s chief executive. “Throughout the extended restructuring process, we remained focused on our key goals of managing production and reducing costs to preserve the value of our diverse and long-lived portfolio, substantially reducing debt and dramatically improving our liquidity position, and achieving a consensual plan of reorganisation among our key creditor groups.”

News: Breitburn Energy Partners Successfully Completes Chapter 11 Reorganization Emerges As Newly Formed Maverick Natural Resources LLC

Power generator FirstEnergy Solutions files for Chapter 11

BY Fraser Tennant

In a move designed to improve the viability of its operations and restructure more than $1bn of debt, power generator FirstEnergy Solutions (FES) has filed for voluntary petitions under Chapter 11 of the Federal Bankruptcy Code.

The filing by FES with the US Bankruptcy Court in the Northern District of Ohio also includes FirstEnergy Nuclear Operating Company (FENOC) which, like FES, is a subsidiary of parent company FirstEnergy Corp. However, FirstEnergy Corp. and its other subsidiaries are not part of the Chapter 11 process.

"The six million customers of our regulated utilities will continue to receive the same reliable service, while our regulated generation facilities will continue normal operations, with the same longstanding commitment to safety and the environment,” said Charles E. Jones, president and chief executive of FirstEnergy Corp. “We will remain focused on creating long-term value for customers, employees and shareholders."

Collectively, Chapter 11 filers FES and FENOC own and operate two coal-fired plants, one dual fuel gas/oil plant, one pet-coke fired plant and three nuclear power plants in the competitive, or non-regulated, power-generation industry. Furthermore, FES and FENOC believe that the $550m-plus they have is sufficient liquidity to continue normal operations and meet post-petition obligations to employees, suppliers and customers.

In addition, FES has stated that it will continue seeking legislative and regulatory relief at the state and federal level. The relief is being sought under Section 202(c) of the Federal Power Act, which gives the secretary extraordinary powers to address emergencies.

"Given the prospective timing of federal and state review and our ongoing cash needs and debt service obligations, the FES and FENOC boards of directors determined that the Chapter 11 filing represents our best path forward as we continue to pursue opportunities for restructuring, asset sales and legislative and regulatory relief,” said Donald R. Schneider, President of FES.

Serving as legal counsel to FES and FENOC is Akin Gump Strauss Hauer & Feld LLP. Lazard Freres & Co. is serving as investment banker and Alvarez & Marsal North America, LLC is serving as restructuring adviser. Chief restructuring officer for both entities is Charles Moore.  

Mr Schneider concluded: “We believe that the decision to facilitate an orderly financial restructuring under Chapter 11 will best serve our customers, employees and business partners."

News: Coal Generator That Trump Tried to Save Files for Bankruptcy

Drugmaker Orexigen plans assets sale through Chapter 11

BY Fraser Tennant

Following years of battling to bring its finances into the black, biopharmaceutical company Orexigen Therapeutics, well-known for its focus on the treatment of obesity, has filed a voluntary petition under Chapter 11 of the US Bankruptcy Code.

In addition to the Chapter 11 filing, Orexigen also intends to file a motion seeking authorisation to pursue an auction and sale process. The proposed bidding procedures, if approved by the court, would require interested parties to submit binding offers to acquire substantially all of Orexigen's assets, which would be purchased free and clear of the company's debt. 

According to Orexigen, bids from strategic and financial buyers are expected to be submitted by 21 May 2018, with a structured auction targeted to commence no later than 24 May 2018 and a sale to be concluded by 2 July 2018.

"The board and management team have thoroughly assessed all of our strategic options and believe that this process represents the best possible solution for Orexigen, taking into account our financial needs," said Michael Narachi, president and chief executive of Orexigen. "While we have been working closely with our noteholders and have the support of a controlling number of senior secured noteholders, our debt covenant requirements and near-term cash flow needs have necessitated the protection afforded by a court-driven process."

Focused on the treatment of weight loss and obesity, Orexigen’s first product, Contrave, was approved in the US in September 2014 and has since become the number one prescribed weight loss brand in the US. However, Orexigen has struggled to market the obesity drug (known as Mysimba in Europe), resulting in weak sales and massive debt. 

Orexigen is seeking to continue normal operations throughout the Chapter 11 process and has the support of a controlling number of its senior secured noteholders, who have made a $35m financing commitment in order to fund the process (including the sale of assets), and meet its operational and financial obligations.

Mr Narachi concluded: “Orexigen’s mission is to help improve the health and lives of patients struggling to lose weight. Since the launch of Contrave, nearly 800,000 patients in the US have benefited, and through a successful transaction process, we intend that this growing patient demand will continue to be served." 

News: U.S. drugmaker Orexigen files for Chapter 11 bankruptcy

Beleaguered Bon-Ton files for Chapter 11

BY Fraser Tennant

Debt ridden and struggling to grow sales, Bon-Ton Stores, Inc. (Bon-Ton), one of the largest regional department store chains in the US, has filed for Chapter 11 bankruptcy protection.

Having filed a number of customary motions with the US Bankruptcy Court for the District of Delaware, Bon-Ton, along with its subsidiaries, is currently engaged in constructive discussions with potential investors and its debt holders regarding the terms of a financial restructuring plan.

The beleaguered retailer intends to use this court-supervised process to explore potential strategic alternatives to maximise value for the benefit of its stakeholders, which may include a sale of the company or certain of its assets as part of the plan of reorganisation.

In addition, Bon-Ton has received a commitment from its existing ABL lenders for up to $725m in debtor-in-possession (DIP) financing which, subject to court approval, is expected to support its operations during the financial restructuring process. Bon-Ton has also requested court approval to pay wages and provide health and other employee benefits, as well as pay vendors in the ordinary course for all goods and services provided on or after the Chapter 11 filing date.

“The actions we are taking are intended to give us additional time and financial flexibility to evaluate options for our business,” said Bill Tracy, president and chief executive of Bon-Ton Stores. “Bon-Ton has seven well-loved brands and associates that have remained committed to delivering excellent service to our customers for decades. During this court-supervised process, we plan to continue operating in the normal course and executing on our key initiatives to drive improved performance.”

Headquartered in York, Pennsylvania and Milwaukee, Wisconsin, Bon-Ton operates 256 stores, which includes nine furniture galleries and four clearance centres. The stores offer a broad assortment of national and private brand fashion apparel and accessories for women, men and children, as well as cosmetics and home furnishings.

Acting as Bon-Ton’s legal counsel during the restructuring process is Paul, Weiss, Rifkind, Wharton & Garrison LLP. AlixPartners LLP is serving as restructuring adviser and PJT Partners, Inc. is acting as financial adviser.

Mr Tracy concluded: “We appreciate the ongoing dedication of our associates, whose hard work in serving our loyal customers is critical to our success and the future of our company. Importantly, we look forward to continuing to provide our customers with quality merchandise and an exceptional shopping experience in our stores and across e-commerce and mobile platforms as we move through this financial restructuring process.”

News: U.S. department store chain Bon-Ton files for bankruptcy

Carillion collapse could cause supply chain woes

BY Richard Summerfield

With debts of around £1.5bn – including a £600m pension deficit – construction powerhouse Carillion Plc has entered liquidation, threatening the jobs of around 43,000 people worldwide, including 20,000 in the UK, and thousands more in the firm’s global supply chain.

Critics have suggested that Carillion’s expansion plans in recent years were too ambitious and its overreliance on debt were the two the most telling elements of its collapse. According to Bloomberg data, net debt to equity doubled between 2012 and 2016, from 15 to 30. While Carillion did attempt to cut costs and dividends, the company’s efforts were too late, beginning in earnest in 2017.

The liquidation of the UK’s second biggest construction company on Monday has created a crisis in the UK’s construction industry, with the future of major projects, including as yet unfinished hospitals, currently in doubt.

Carillion’s collapse came after talks between the firm, its lenders and the government came to conclusion with no deal in place to save it. Companies working for the firm on purely private sector deals will only have two days of government support, according to Cabinet Office Minister David Lidington. In 2016 Carillon spent £952m working with local suppliers, and according to the trade body Build UK, anywhere between 25,000 and 30,000 small businesses are owed money by the company.

Carillion is responsible for hundreds of public sector projects in the UK and is a provider of a number of key public services, including the management of military bases for the Ministry of Defence, providing facilities management for hospitals, courts and schools, and is a key partner in a number of nationally important infrastructure projects, such as the new HS2 railway line.

The company had hoped to receive a bailout from the government in the region of £20m, a sum which it hoped would encourage banks to follow suit. However, the government was unwilling to intervene. As a result, Carillion was plunged into liquidation, rather than administration, as it had very few sellable assets.

PwC will be providing six ‘special managers’ to advise David Chapman, a civil servant working for the Insolvency Service, who has been appointed as the company’s liquidator. The company’s shareholders will receive nothing as a result of the collapse.

Carillion ran into financial difficulties last year after issuing three profit warnings in five months and writing down more than £1bn on the dwindling value of contracts in the UK, the Middle East and Canada. Yet, despite these warnings, the company continued to receive lucrative contracts from the government, prompting some serious questions of the government’s sourcing practices.

News: Britain's Carillion collapses

©2001-2025 Financier Worldwide Ltd. All rights reserved. Any statements expressed on this website are understood to be general opinions and should not be relied upon as legal, financial or any other form of professional advice. Opinions expressed do not necessarily represent the views of the authors’ current or previous employers, or clients. The publisher, authors and authors' firms are not responsible for any loss third parties may suffer in connection with information or materials presented on this website, or use of any such information or materials by any third parties.