The idea that in the golden age of creditor-on-creditor violence, a short (or sometimes years long) reprieve of “cannibalistic” creditor behavior — as the non-participating lenders in Trimark’s LME so elegantly put it — could be considered an antitrust violation is especially insulting to frustrated creditors.

Creditors were always plagued in distressed structures with a plethora of prisoner’s dilemmas, like whether to put more money into a structure that may fail and whether the company is already making that deal with only a small subset of creditors in the class.

Now companies and the clever lawyers advising them are looking to challenge co-operation agreements — one of the most useful tools (or arguably the only tool) to have entered the market to combat these situations — by calling them anti-competitive.

9fin discussed how Section 1 of the Sherman Antitrust Act would be wielded in threats to current co-op groups by companies claiming their capital stack is a clearly defined market. They might also claim that co-op agreements are anti-competitive behavior by market participants, in this case the creditors.

Creditors’ counsel would argue, among other things, that the case supporting an argument as to why antitrust challenges would work, American Needle, Inc. v. NFL, 560 U.S. 183 (2010), doesn’t quite fit because the companies who would challenge their own creditors’ co-ops are not exactly sympathetic sports cap makers who were cut out of selling to the big leagues.

But then the traditional creditor defenses against Section 1 challenges such as the Noerr-Pennington doctrine doesn’t quite fit either. That case has mainly been used to defend creditors who have joined forces to enforce existing contract rights — not to enforce new agreements among themselves that were presumably created because their own credit documents lack sufficient protections.

Either way, to launch a lawsuit against creditors in a co-operation agreement could take as long or longer than just waiting out the co-op — or a company might even start cajoling creditors to break co-op agreements by lending against stripped assets or doing something expressly prohibited by the co-op anyways.

This debate raged during a week when co-ops seem to be either working well for creditors or at the very least being reinforced.

Most secured creditors to Altice France agreed to extend their co-op agreement until February 2026; crossholders in Anastasia Beverly Hills discussed renewing theirs, and DISH’s efforts to raise spectrum financing have ultimately roped in creditors across no less than three co-operation agreements. Bausch Health meanwhile is working on financing along with a potential sale of Bausch + Lomb, all of which would take out the most pressing maturities and pave the way for a holistic deal with any lenders remaining in Bausch’s groundbreaking cross-constituency co-operation agreement.

Antitrust claims are the debt market bogeyman — lurking in the shadows, but never directly seen. Part of the reason for that may be because in big capital structures, co-operation is necessary as the majority of a given class of loans or bonds typically must agree to any transaction.

Additionally, it is often hard to define who the competitors are and in what market they are competing. Is everyone who holds any piece of debt in a structure competing against everyone else? Are debtholders only competing against other classes of debtholders? Are debtholders competing against the company? There are no bright lines.

It is difficult to say that the complex, ever-evolving arrangements between creditors are an obvious violation of the antitrust act, which prohibits anti-competitive behavior that creates a restraint on trade. Companies will argue that all their creditors are teaming up against them and creditors will argue that this dynamic always existed, but the added transparency that comes from co-operation agreements is actually just another strategy to make the game more exciting and competitive.

People Moves

If you have any recent moves to announce, please send to one of our team’s emails below to include in our People Moves section.

Gibson Dunn has hired Ryan Kim at the partner level from Akin Gump to lead the firm’s private credit efforts. King Street Capital Management has hired Jeff Rosenbaum as a partner, where he’ll focus on the infrastructure and energy sectors.

This week’s news

Out-of-court

Altice France — Most of the secured creditors organized with Gibson Dunn and Rothschild have agreed to extend their co-op agreement until February 2026. The group earlier this week has also sent a counterproposal to Altice France.

CareMax — The value-based healthcare provider is laying the groundwork for a potential bankruptcy filing, which could happen as soon as next week.

AMC Entertainment — The 1L noteholders who were left out of the AMC’s recent LME have filed a complaint in New York State Court alleging AMC and its junior creditors violated the intercreditor agreement in effecting this transaction. We summarize the complaint here.

DISH Network — The company has been sounding out financing proposals from third parties to help support its parent company Echostar's potential merger with DirecTV. This move comes ahead of DISH’s $2bn of bonds coming due this November.  

Lumen Technologies — The company’s early tender deadline for its most recent debt exchange closed this week with participation rates already approaching amounts required to reach its cap on new issues.

OnTrac — Certain lenders of the package delivery company, formerly known as Lasership, are organizing with Gibson Dunn after it reported volume and earnings losses for Q2 2024, 9fin sources say.

Anastasia Beverly Hills — Crossholders are in talks to renew a cooperation agreement set to expire in the near-term, following weaker than expected second quarter earnings. The creditor group has been seeking advice from Milbank and there has not been any engagement between the parties so far.

Mavenir Systems  — Lenders are in confidential negotiations with the Texas-based software company as they try to find ways to increase its financial breathing room. The negotiations come after Mavenir entered into a brief grace period, which expired this week, after skipping a coupon payment due in late August. Subsequently, some lenders were reported to have provided the company $35m in what appears to be stopgap financing to fund interest payments and fund working capital needs.

Tropicana — The beverage company’s loan slipped several points after its management projected flat full-year 2024 EBITDA on a 16 September call.

Michaels Stores — The Apollo-owned arts and craft retailer reported a more than 20% decline in Q2 EBITDA due to weaker sales and margin pressure, sparking its bonds to edge down.

Bausch Health/Bausch + Lomb — Debt of the eye care products company and its parent rose on Monday following a report that it hired Goldman Sachs to explore a potential sale of Bausch + Lomb to resolve issues with a spinoff transaction. Bausch Health was also reported to be working with Jefferies in efforts to push out its debt maturities.

SI Group — Per an S&P report, the chemical additives company closed a debt refinancing transaction with a majority of its existing creditors, including first lien term loan and revolver lenders, as well as unsecured noteholders. A subsequent offer to exchange, on the same terms as the initial exchange transaction, has also commenced for the remaining creditors.

Allen Media — The company is reported to be planning deeper cost cuts as debt maturities near and has retained Moelis and Kirkland & Ellis as its legal advisors, after the creditors added Ducera Partners to their own advisory roster.

Carestream Dental — The company is reported to have secured $525m in financing through a debt restructuring deal, which will see investors take a stake in the company. 9fin had reported on negotiations in April.

ModivCare — The medical transportation provider revised its 2024 adjusted EBITDA guidance downwards primarily due to NEMT segment pricing accommodations made to strategically retain and expand key customer relationships, but also increased its forecast adjusted EBITDA growth to over 10% in 2025. ModivCare had earlier filed an S-3 as it looks to raise $200m of capital and amended financials to include a going concern warning in the midst of difficulties collecting on receivables.

B. Riley Financial — The company is reported to be in talks to sell its wealth management business to Stifel for over $100m. The talks come as B. Riley tries to raise funds after a second-quarter loss warning, negotiations with lenders, and pressure over its role in a management-led buyout of Franchise Group last year.

Hawaiian Electric — Central Pacific is reported to be discussing raising $1bn from Warburg Pincus, Centerbridge Partners and Atlas Merchant Capital to buy American Savings Bank from the company. This potential transaction comes after the utility owner saw huge losses in the aftermath of last year’s Maui wildfires.

Office Properties Income Trust — The company announced that it concluded a series of private exchange agreements, issuing common shares to retire $6.8m of its senior notes due 2025, chipping away at near term maturities remaining after a debt exchange concluded in June.

Sandvine — The company announced that it has been acquired by a group of lenders to the company, who have agreed to a significant writeoff of their debt and to provide new capital.

Sinclair Broadcast Group — The company announced that it is increasing its advertising guidance for the third quarter 2024 to account for stronger-than-expected political revenues. Recent retransmission agreement renewal activity has been in-line with expectations and the company reiterated its earlier forecast for net trans growth rate from 2023 through 2025.

Bankruptcy

Tupperware Brands — The company is seeking to sell its assets in its recently-commenced Chapter 11 case, but its case could be derailed by a disgruntled ad hoc group that does not support the company’s decision to file for bankruptcy protection.

Purdue Pharma — Citing substantial progress being made, the company is seeking an additional 35-day extension to its mediation and injunction prohibiting lawsuits against the Sacklers.

Steward Health Care — Steward received final approval of a global settlement with Medical Properties Trust and other parties but 9fin reported there are questions about possible undisclosed affiliated relationships with new hospital operators which includes the sale of its Louisiana-based Glenwood Regional hospital. MPT’s bonds saw an uptick in trading prices off the initial settlement news, then MPT announced around $600m of upcoming impairments from working capital loans and more due to the Steward bankruptcy.

SunPower — Sunpower revised its disclosure statement and confirmation timeline to support a potential sale transaction and reach a global deal.

Yellow Corp — The court overseeing Yellow’s Chapter 11 case addressed dueling summary judgment motions from the company and the PBGC with respect to withdrawal liability, siding primarily with the PBGC and dealing a blow to Yellow.

2U — The company announced it has successfully completed its financial restructuring and emerged from Chapter 11 as a privately held entity.

Red Lobster — The seafood chain operator announced it has exited Chapter 11 bankruptcy, with entity formed by affiliates of Fortress Investment Group, TCW Private Credit and Blue Torch gaining control.

Other active distressed and restructuring coverage

Distressed Pitch List — In an update to our Distressed Pitch List, we added Goodyear, Melco Resorts & Entertainment, Optiv, PENN Entertainment and Chemours and removed New Fortress Energy, which will be a part of our regular coverage going forward.

Out-of-court

Alkegen — The insulation products manufacturer is nearing a debt deal to address its 2025 maturities with the help of new money lenders including Apollo and Oak Hill Advisors, according to 9fin sources.

Allen Media — The company held its earnings call after lenders hired an FA in preparation of liability management talks with the company.

Altice International — After the company sold its first asset since announcing its strategic review and since Altice France’s ultimatum, listeners on the Q2 24 earnings call were keen to hear how the telco would apply the Teads sale proceeds. It’s fair to say management was slightly ambiguous. 9fin’s earnings review is available here.

Altice USA — 9fin explores the different options available to Altice USA and its creditors in our LME Breakdown.

American Rock Salt — The salt company amended its first lien credit agreement and delayed interest payments from 6 September to 24 September. 9fin had earlier reported that the company and its lenders had hired legal counsel to address elevated leverage and volatile demand.

Beasley Broadcast Group — The company launched a combined exchange and tender offer targeting $267m in debt maturing in 2026. Holders can participate through a combination of a cash tender, exchange debt with equity, and a super-priority piece of paper.

Better Health (fka Physician Partners) — The healthcare provider and lenders hired advisors ahead of potential negotiations with the company and sponsor Kinderhook Industries.

Beyond Meat — The producer of plant-based meat substitutes is reported to have engaged with a group of convertible noteholders on a restructuring.

CommScope — 9fin published the first of many LME Breakdowns, to answer questions around how CommScope could use sale proceeds to address almost $6bn in 2025 and 2026 maturities, after the announcement of the $2.1bn sale of assets to Amphenol.

Cox Media Group — A steering committee has kickstarted negotiations with Cox Media on ways to address its upcoming debt maturity.

Del Monte — The canned food company struck a deal to raise up to $240m of new money and exchange existing term loan debt into second and third out debt under different terms depending on lenders’ participation in the new money financing and whether they are in an exclusive ad hoc group. Excluded lenders are in talks potentially fighting the deal.

Drive DeVilbiss Healthcare — The CD&R-backed company has embarked on a sale process that could involve selling its assets piecemeal or as a single entity. Drive, which makes medical equipment, previously went through an out-of-court restructuring, in which the sponsor kicked in fresh cash and existing first and second lien lenders agreed to extend debt wall.

Emergent BioSolutions — The pharma company disclosed that it had raised a $250m first lien loan from Oak Hill to refinance debt due May 2025. The financing package gives Oak Hill $10m of common stock and warrants to purchase an additional 2.5m shares. The company’s stock declined 11% on the day.

Empire Today — Lenders are organizing with Paul Hastings as the to the Charlesbank Capital Partners-backed flooring company deals with weaker revenue and a free cash flow deficit.

EmployBridge — Certain lenders have organized as the company reported weaker performance with debt trading poorly and rumors of the company’s sponsor Apollo buying back debt in the secondary market.

Fossil Group — Following quarters of dismal results and with an operational restructuring ongoing, Fossil announced the resignation of its CFO and the appointment of Andy Skobe of Ankura to provide interim CFO services.

Franchise Group — A group of first lien lenders were reported to have agreed to waive some covenants in Franchise Group’s credit agreement and second lien lenders have agreed to defer cash interest. B. Riley Financial has a minority interest in Franchise Group which was written down recently. Franchise Group and its lenders have hired advisors.

FreshDirect — The grocery delivery company is set to get some rescue financing from its parent company, Getir, to help support its operational needs.

GPS Hospitality — The privately owned quick service restaurant franchisee disclosed poor quarterly numbers, and senior secured notes dropped 11 cents.

GrafTech International — Certain creditors have signed a cooperation agreement to bind their acts together in potential negotiations with the company.

Hearthside Food Solutions — The company reported Q2 24 earnings showing widening losses and warned that its ability to continue as a going concern depended on its efforts to address a raft of near-term debt maturities.

Hertz — The third circuit court of appeals issued a decision overturning the bankruptcy court to provide the unsecured noteholders postpetition interest at the contract rate, including a make whole.

iHeartMedia — iHeartMedia has yet to strike a deal with its largest creditor group.

Leslie’s — The swimming pool maintenance and supply company shared a bleak preview of the quarter and full year, sending its stock and term loan tumbling.

LifeScan — The Platinum Equity-backed medical device company reported year-over-year declines in revenue and EBITDA for the second quarter ending 30 June, but not by as much as the company had projected.

Magenta Buyer (dba Trellix and Skyhigh) — The Symphony Technology Group-backed company has garnered support from 99.9% of its lenders to participate in its liability management deal.

MultiPlan — A group of secured creditors was set to hold pitches to retain a financial advisor to engage in debt talks with the company.

P&L Development — This private label drug maker is discussing potential refinancing options with lenders as its $465m in secured notes and ABL facility come due in 2025, 9fin sources say.

Petrofac — The energy services company has defaulted on its senior secured notes after failing to convince lenders to extend the grace period on a missed interest payment.

Porter Airlines — The Canadian airline has gauged interest from private credit lenders in raising CA$250m in preferred equity to boost liquidity.

Radiate Holdco (aka Astound Broadband) — The company has received a new $50m loan from its private equity backer Stonepeak. It has been exploring restructuring options with a group of lenders, but the talks fell apart over certain terms of the proposed debt swap and new money offer.

Salem Media — Certain debtholders have banded together to negotiate a possible debt restructuring with the conservative Christian media company.

Screenvision — Certain lenders of the Abry Partners-backed company have organized with Gibson Dunn to negotiate ahead of its $201.5m in loans that are set to mature in 2025.

Spirit Airlines — The ultra low-cost carrier and its credit card processing agreement counterparty agreed to a month’s extension, with the new deadline 21 October, for the airline to refinance or extend a chunk of its secured notes due 2025. The company’s executives have had conversations with bondholders on upcoming maturities.

Springs Window Fashions — The Clearlake-backed window treatment company retained advisors to engage with creditors who have organized into two groups, both with cooperation agreements in place. One creditor group holds a majority of the company’s term loan debt, while the other holds upwards of 40% of the term loan debt plus over two-thirds of the company’s bonds, according to sources.

STG Logistics — 9fin reported that STG lenders signed a cooperation agreement, which would bind them together in potential negotiations with the company.

Sunnova Energy — The 2026 and 2028 bonds of the residential and commercial solar company rose after executives outlined a plan to raise cash through securitizations and asset sales to pay off existing debt. 9fin had reported in May on the company hiring advisors and agreeing to several funding deals.

TeamHealth — The healthcare staffing firm has completed its latest refinancing with the help of new money provided by firms including Ares, King Street, and its sponsor Blackstone.

Telegram — Convertible bonds issued by the messaging app company traded down around 11 points to the 85-87 cent range after founder and CEO, Pavel Durov, was arrested in France.

Telesat Canada — The Canadian satellite company posted expected declines in revenue, EBITDA and margins in Q2 24. Certain creditors were earlier reported to have hired advisors.

TGI Friday’s — The management of the restaurant chain is reported to have been replaced by FTI in relation to many day-to-day functions after the company failed to share certain documents with bondholders on time. 

The Container Store — Certain lenders are getting legal advice as the retailer faces a term loan maturity in 2026 and an uncertain earnings trajectory.

Thrive Pet Care — The company hired a financial advisor to examine options for its debt stack, 9fin reported. Meanwhile, a group of first lien lenders has retained counsel as they brace for potential negotiations with the TSG Consumer Partners-backed company, sources said.

Tosca Services — The plastic crate maker got 100% of lenders to participate in a private exchange deal by the 22 August deadline. Previously, 9fin reported that Tosca launched a deal to raise $100m and to extend debt maturities via an uptier liability management exercise-style transaction.

Trinseo — Lenders to the chemical company have again banded together with Gibson Dunn and Evercore, in the midst of continuing underperformance, cash burn and high leverage. Trinseo had completed a double-dip financing deal in September 2023.

United Site Services — The Platinum Equity-backed portable toilet rental posted an update on the LME it had unveiled earlier. The LME includes $300m in new money with an apparent double dip structure.

VeriFone — Lenders to the payment and commerce solutions company have organized as they prepare for negotiations ahead of the maturity of the company’s $250m revolver and over $2bn of term loans in 2025.

Veritas Technologies — 9fin reports on the Carlyle-backed data management firm and its creditor group attempting to revive restructuring talks, and on where the discussions stood when they stalled.

VistaJet — The private jet subscription company released Q4 23 results, with the company’s founder penning a letter announcing legal action against a “group of individuals” that has “disseminated half-truths, false rumors and lies”.

Volcan Compañía Minera — The Peruvian mining company completed its August announced exchange offer with 81% participation from lenders. The deal’s closure rounds out its greater restructuring efforts — including a refinancing of its bank debt — that will kick out debt maturities until 2029.

Wellness Pet Company — Certain lenders to the Clearlake Capital-backed company organized  as the quotes on the company’s loans are veering deeper into distressed territory.

Wellpath — The HIG-backed prison healthcare company is working with Lazard to explore options ahead of a revolver maturing and a first lien term loan becoming current in October. A group of lenders is said to have tapped counsel and have taken pitches from bankers.

WOM — It’s reported that the bonds of the bankrupt Chilean telecom company have jumped as it markets its assets for sale amid potential interest from Carlos Slim’s America Movil.

Workhorse — The electric vehicle company rescheduled its Q2 earnings call and delayed filing its 10-Q. It continues to raise capital through the issuance of convertible notes and warrants and employ cost-cutting measures to address cash flow pressures. 9fin had earlier reported that the company is working with an investment bank to help raise bridge financing.

WorldStrides — Lenders to the student trip company have retained a financial advisor in order to develop potential alternatives to the recently expired discounted exchange offer.

WW International — The weight management company is seeking advice from Simpson Thacher to help address its debt amid an operational turnaround. Certain lenders are hoping to get more clarity on WW's strategy and how that will impact debt repayments.

Xplore — The Canadian rural internet provider announced an agreement to raise new debt and equity financing, with sponsor Stonepeak and certain existing lenders leading the investment and other lenders to get the opportunity to participate on substantially similar terms. Xplore has commenced a proceeding under the Canada Business Corporations Act to implement the deal.

Zayo — Zayo was reported to have completed the carve-out of its European assets, with the parent receiving around $1bn in consideration through an intercompany loan and cash. 

Bankruptcy

Avon International — AIO filed for Chapter 11 protection to pursue a sales process anchored by its parent company and near-exclusive lender, Natura & Co. Its first-day hearing, while consensual, previewed battles to come with respect to legacy talc liabilities.

Big Lots — Big Lots commenced its Chapter 11 case on 9 September, backed by an agreement to sell all of its assets to Nexus Capital Management for $620m. The company received interim approval of its first-day motions at lengthy hearing.

Conn’s Inc — Final DIP approval was granted after the company was able to resolve numerous objections and reservation of rights, along with informal comments.

Diamond Sports — Diamond Sports received approval of the assumption of modified agreements with the NHL and NBA, as well as an amendment to the final DIP order. A status conference has been set for early October to keep all the parties informed as to the progress for the company to exit Chapter 11.

Digital Media Solutions — The company is Kirkland & Ellis’ first Chapter 11 case commenced in SDTX since 2023. The Chapter 11 is backed by a DIP facility and credit bid from certain of its prepetition lenders.

Enviva — The bankrupt wood pellet manufacturer filed its plan of reorganization and disclosure statement.

Express — The company’s disclosure statement hearing has been pushed to 29 October after the UCC objected to approval of the document and filed a cross-motion to terminate the debtors’ exclusivity.

Fisker — The defunct electric car maker received interim bankruptcy court approval of its disclosure statement and a global settlement for its Chapter 11 plan of liquidation.

Gol Airlines — Gol’s Abra bondholder group disclosed updated members and holders including distressed investors. The bankrupt airline has said it will evaluate all recapitalization or other transactions, including to raise capital while in bankruptcy. The UCC has objected to the debtors attempts to allow aircraft lessors to sell a participation interest in their unsecured claims, while retaining their voting rights on any potential Chapter 11 plan.

Hoonigan (Wheel Pros) — The aftermarket wheel and vehicle product manufacturer and distributor filed for bankruptcy with an RSA in place, after having completed a double-dip financing last September. The debtors received all first day relief, have begun solicitation for their prepackaged plan, and are targeting confirmation mid-October.

Incora — Judge Marvin Isgur agreed to sign off on Incora’s disclosure statement once it had been amended even as he raised concerns over the company’s proposed plan of reorganization.

Invitae — After hearing arguments on the UCC’s standing motion for litigation related to uptiers, and arguments over makewholes, Judge Michael Kaplan decided to issue a preliminary ruling denying the standing motion and reserved his ruling on the makewhole issue.

Rite Aid — Rite Aid notched a win when the judge overseeing the case ruled in favor of Rite Aid on a working capital dispute in the Elixir APA — an approximately $200m dispute, and then agreed to confirm the Chapter 11 plan. Rite Aid also received approval to sell $435m of a term loan issued by Elixir structured as a seller note held by Rite Aid. However, all is not resolved — MedImpact, Elixir’s purchaser, has appealed the Elixir ruling, and others have appealed confirmation.

Robertshaw — Judge Lopez approved Robertshaw’s plan of liquidation and found that Invesco’s Proof of Claim related to the debtors’ breach of the credit agreement was an unsecured claim.

Rubio’s Restaurants — Rubio’s filed Chapter 11 bankruptcy in order to sell itself.

Vyaire Medical — Sales of the company’s ventilator business and respiratory diagnostic business were approved, with the final sale price being only $90.5m. The sale orders also amended the final DIP order, a necessary change required by the company’s DIP lenders to allow the sales to move forward despite falling short of the required $140m minimum bid for the combined business.

Weekly declines

Top bond movers (link to full screener on 9fin)

Top loan movers (link to full screener on 9fin)

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