BJ Services files for Chapter 11 bankruptcy

BY Richard Summerfield

Fracking pioneer BJ Services has filed for Chapter 11 bankruptcy protection in the US, amid a severe downturn in oilfield services demand. The company had been in discussions to sell its cementing business, and a portion of its fracking operations.

As part of the bankruptcy process, the company will now look to wind down its operation. BJ Services’ executive team has spent the past few weeks working to avert the bankruptcy and wind down, and the company is still in talks with lenders trying to secure funding for the Chapter 11 process, according to a press release announcing the filing.

Regardless of the company’s efforts, it filed for Chapter 11 in the bankruptcy court for the Southern District of Texas, listing assets and liabilities in the range of $500m to $1bn. The company also said it is seeking additional funding to see it through the asset sale and wind-down process. Meanwhile, it is working to minimise the disruption to current projects and reaching out its clients to cover various options.

“The industry continues to face unprecedented uncertainty caused by volatile commodity markets and significantly reduced demand due to the COVID-19 pandemic. Despite maintaining a leading market position and strong client support, the severe downturn in activity and subsequent lack of liquidity resulted in an unmanageable capital structure,” said Warren Zemlak, president and chief executive of BJ Services.

He continued: “After exhausting every possible alternative to address these issues and improve our liquidity, we have made the very difficult decision to proceed with a Chapter 11 process. Our Board of Directors and the entire management team worked diligently over the course of the past several weeks to avoid this outcome. Having said that, we are pleased to be in discussions with interested bidders for our cementing business and for certain portions of our fracturing business and technology.”

BJ Services was a leading provider of hydraulic fracturing services in the formative days of the US shale revolution. It was acquired in 2010 by Baker Hughes for $6.8bn. In 2017, Baker Hughes formed a joint venture to operate BJ Services’ pressure-pumping and cementing businesses. The deal involved selling 53 percent of the company to oil-services-focused CSL Capital Management and an energy division of Goldman Sachs for $325m.

News: Oil firm BJ Services files for Chapter 11 bankruptcy

GNC to close 1200 stores as part of Chapter 11 bankruptcy

BY Fraser Tennant

Due to coronavirus (COVID-19)-related impacts on its business, global health and wellness brand GNC Holdings, Inc. is to pursue a dual-path process that will allow it to restructure its balance sheet and accelerate its business strategy through Chapter 11 bankruptcy.

The Chapter 11 filing allows the retailer to keep operating, although hundreds of underperforming stores – approximately 800 to 1200 – will be closed. GNC’s US and international franchise partners and all corporate operations in Ireland are separate legal entities and are not a part of the Chapter 11 process.

“The COVID-19 pandemic created a situation where we were unable to accomplish our refinancing and the abrupt change in the operating environment had a dramatic negative impact on our business,” said GNC in a statement.

With the support of its lenders and key stakeholders, GNC expects to confirm a standalone plan of reorganisation or consummate a sale that will enable the business to exit from this process later this year. To this end, the company has secured approximately $130m in additional liquidity – $100m debtor-in-possession (DIP) financing and $30m from modifications to an existing credit agreement.

GNC is confident that between financing and cash flow from normal operations, and with the continued support of the International Vitamin Corporation (IVC), its largest vendor, GNC will meet its go-forward financial commitments as it works to achieve its financial objectives.

Headquartered in Pittsburgh, PA, GNC is a leading global specialty retailer of health and wellness products, including vitamins, minerals and herbal supplement products, as well as sports nutrition products and diet products. The company has been led by chief executive Ken Martindale since September 2017.

Furthermore, GNC has a diversified, multichannel business model and derives revenue from product sales through company-owned retail stores, domestic and international franchise activities, third-party contract manufacturing, e-commerce and corporate partnerships.

However, like many retailers, the Pittsburgh-based company has struggled in recent years, clawing its way out of difficulty in February 2018 when it refinanced its loans and negotiated a $300m investment with Chinese health food group Harbin. Despite this, over the past 12 months, the company has reduced its store-count.

GNC concluded: “This reduction will allow GNC to invest in appropriate areas to evolve for the future, and better position the company to meet current and future consumer demand around the world.”

News: GNC parent company files for bankruptcy protection, plans to permanently close up to 1,200 stores

Online learning company Skillsoft files for Chapter 11

BY Fraser Tennant

In an attempt to reduce its approximately $1.5bn debt and position itself for long-term growth, US educational technology company Skillsoft and a number of its affiliates has filed for Chapter 11 bankruptcy.

The voluntary, pre-packaged Chapter 11 cases have been filed in order for Skillsoft to implement a restructuring support agreement (RSA) with many of its lenders – an agreement which is expected to result in a reduction of the company’s balance sheet to $410m from approximately $2bn.

Furthermore, the RSA is expected to provide Skillsoft with significant additional liquidity – while minimising operational disruptions – by ensuring all holders of general unsecured claims, including vendors, suppliers and other trade creditors, are paid in full. Additionally, there are no planned changes to Skillsoft’s leadership team or organisational structure as a result of the restructuring.

“This agreement marks an important step forward in significantly strengthening Skillsoft’s capital structure and positioning the company for long-term success,” said John Frederick, chief administrative officer at Skillsoft. “This is an exciting time for digital learning, and Skillsoft provides best-in-class learning solutions to thousands of customers around the world, including 65 percent of companies in the Fortune 500.”

Indeed, Skillsoft has stated that it remains focused on providing its customers with state-of-the-art corporate learning solutions, best-in-class performance support resources, as well as live events.

“While our core business remains strong, with attractive profitability and cash flow characteristics, our debt levels are too high,” added Mr Frederick. “We need to invest further and that requires our debt levels to come down to free up cash to further enhance our offerings. We look forward to benefitting from a stronger balance sheet and enhanced financial flexibility.“

In conjunction with the court-supervised process, Skillsoft has received a commitment for $60m in debtor-in-possession (DIP) financing from some of its first lien lenders. This financing, together with cash generated from ongoing operations, is expected to provide ample liquidity to support Skillsoft’s operations during the restructuring process.

“We appreciate the broad support of our lenders, who will become the new owners of the Company and recognise the inherent value in the Skillsoft brand,” concluded Mr Frederick. “We also thank the entire Skillsoft team for their ongoing hard work and commitment to our company and our customers and are grateful to our vendors and business partners for their continued support.”

News: E-learning company Skillsoft files for Chapter 11 bankruptcy

Commercial bankruptcy filings surge

BY Richard Summerfield

Commercial bankruptcy filings in the US increased by 48 percent in May from earlier in the year, according to the American Bankruptcy Institute (ABI).

Chapter 11 filings rose 28 percent in May from April, the ABI said, citing data from Epiq Systems. May saw a number of notable filings, including major retail chains such as J.C. Penney and Neiman Marcus.

“Companies that tried to shore up their balance sheets at the beginning of the year represent the initial wave of Chapter 11s due to the economic crisis brought about by the COVID-19 pandemic,” said Amy Quackenboss, executive director of the ABI. “The CARES Act and other swift government measures have been successful in keeping consumers afloat during the crisis. As this relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy.”

May’s commercial Chapter 11 filings represented a 29 percent increase from the 562 filings in April 2020. Total commercial filings were up 12 percent over the April 2020 commercial filing total of 2293. Total bankruptcy filings in May represented a 4 percent increase over the 38,444 total filings recorded the previous month. Total non-commercial filings for May represented a 3 percent increase from the April 2020 non-commercial filing total of 36,151.

The average nationwide per capita bankruptcy filing rate in May was 1.98 (total filings per 1000 per population), a decrease from the 2.09 filing rate during the first four months of the year. Average total filings per day in May 2020 were 1998, a 36 percent decrease from the 3130 total daily filings in May 2019.

There were 39,969 total bankruptcy filings in May, down 42 percent from the 68,860 total filings in May 2019. Total consumer filings decreased 43 percent in May, as the 37,391 filings fell from the 65,302 consumer filings registered in May 2019.

News: May Commercial Chapter 11s Increase 48 Percent over Last Year, Total Filings Down 42 Percent

Shattered finances: glassmaker Libbey files for Chapter 11

BY Fraser Tennant    

In a bid to restructure its balance sheet following plunging demand for its products, glassware manufacturer Libbey and its US-based subsidiaries have filed for Chapter 11 bankruptcy.

Like many retailers, Libbey – which operates manufacturing plants in the US, Mexico, China, Portugal and the Netherlands – has been hit especially hard by the outbreak of the coronavirus (COVID-19) pandemic and its crippling impact on global economies. The Chapter 11 process is expected to strengthen Libbey’s balance sheet and help it to navigate the effects of COVID-19.

Moreover, a number of Libbey's existing lenders have agreed to provide up to $160m in debtor-in-possession (DIP) financing, including a $100m revolving credit facility and a $60m term loan. Following court approval, Libbey expects this financing, together with cash flow from operations, to support the business during the court-supervised process.

"While we entered 2020 with positive momentum from our strong finish in 2019, the dramatic and prolonged impact of COVID-19 on the demand for our products and on our business is truly unprecedented in Libbey's more than 200-year history,” said Mike Bauer, chief executive of Libbey. “As a result, entering this process is a necessary step to address our liquidity, strengthen our balance sheet and better position Libbey for the future.”

Libbey is continuing to serve customers and end users globally throughout the Chapter 11 process, and will continue to evaluate the operating environment and make adjustments, as necessary, to adapt to the impact of COVID-19.

“We believe this process will help Libbey become an even stronger, more influential partner to our customers, vendors and end users, and ensure we continue to create the most rewarding experiences with our extensive line of high-quality glassware and other tabletop products."

One of the largest glass tableware manufacturers in the world, Libbey supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's international subsidiaries in Canada, China, Mexico, the Netherlands and Portugal are not included in the Chapter 11 proceedings and are operating in the normal course of business.

Mr Bauer concluded: “As we navigate the current environment, we remain focused on providing end users with products that are environmentally sustainable, beautiful and durable.”

News: Libbey Commences Chapter 11 Reorganization with $160 Million in Agreed Financing