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Welcome to 9fin’s weekly newsletter dedicated to US distressed debt, restructuring and special situations news and developments. Check out what else we do for distressed and restructuring here.

9fin clients can see full details here, and here is a shortcut to the Spirit Docket: Spirit Airlines.

Editor’s Note: The Default Notice will be off 29 November for the Thanksgiving weekend and will resume on 6 December.

It’s almost winter, and in the restructuring world, that means plenty of holiday parties, booze, and a deluge of filings. Indeed, 9fin’s Docket Rocket is just in time for the combination of the increasing frequency of DIP drama happening with challenges mounting to the increasingly pricy debtor-in-possession financings — see the dockets for American Tire Distributors, The Franchise Group and Wellpath — as well as four mega bankruptcies in the past seven days for Caremax, Northvolt AB, Intrum Justicia, and Spirit Airlines.

In Texas, the US Trustee objected to the Wellpath debtors’ DIP which provided for a 3.95:1 rollup. Ultimately the debtors and their DIP lenders agreed to reduce the rollup on an interim basis to 2:1 on the interim amounts provided.

And we might be charging inevitably toward year-end winter holidays, but the Franchise Group DIP was more suited to Halloween if White & Case partner Thomas Lauria’s comments at the first day hearing are to be believed: “The 1L went into their laboratory and formulated a DIP which is a concoction of elements stitched together to create a real monster,” Lauria said, speaking on behalf of second lien lenders, “One that like Frankenstein’s monster, if unchecked by the bankruptcy court, will wreak havoc on the fundamentals of the bankruptcy code in these cases.”

Judge John Dorsey ended up adjourning the first day hearing without granting any substantial relief, noting that if he had been aware of the objections parties had with the DIP, he wouldn’t have allowed the hearing to take place virtually (presumably putting a premium on in-person diplomacy). He ended up approving the DIP after lenders agreed to a series of concessions including limiting the rollup to a 1:1 basis that made the DIP more palatable to the judge and other parties.

The Franchise DIP kerfuffle was nothing compared to that of ATD’s, which marked the first example of a Serta-blocker effectively blocking an in-court DIP workaround. The majority term loan lenders wanted to provide a DIP with a rollup feature, which the minority lenders argued would violate the prepetition credit agreement’s Serta-blocker using the DIP rollup to pay down only certain prepetition term loans on a non-pro rata basis. Judge Craig Goldblatt said that any other read seems like a “preposterous overreach.” With that insight, the debtors and majority term loan lenders decided to remove the rollup from the DIP.

Date: 11 December 2024 | Time: 4:30 PM - 7:00 PM ET: Join 9fin for an evening of networking, insights, and canapés at our private credit networking drinks. This in-person event will be held at Corkbuzz, New York, and offers a great chance to learn more about the ever-evolving private credit market (See invite here).

The Beard Group’s 31st Annual Distressed Investing Conference

Date: 4 December 2024 Held In-Person at The Harmonie Club, New York City. Register Here

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.

This week the big law musical chairs was marked by an exodus of restructuring and litigation partners from Weil Gotshal, with none other than Weil restructuring co-head and part of its senior leadership Ray Schrock leaving for Latham & Watkins, joined by two other Weil restructuring partners Candace Arthur and Alexander Welch. Schrock will serve as Global Chair of Latham’s Restructuring & Special Situations Practice. Meanwhile, Andrew Parlen has left Paul Weiss to join the team at Latham as well to serve as head of US restructuring. Then on the litigation side, Elizabeth Stotland Weiswasser, co-chair of Weil’s litigation department and like Schrock, also a member of Weil’s management committee, is headed to Paul Weiss as co-head of Paul Weiss' litigation department, and Anish Desai, co-head of Weil’s patent litigation practice, will also join Paul Weiss.

The Default Notice is produced by 9fin’s distressed and restructuring team: Max Frumes | max.frumes@9fin.com, Rachel Butt | rachel@9fin.com, Max Reyes | max.reyes@9fin.com, Kartikeya Dar | kartik@9fin.com, Catherine Corey | catherine@9fin.com, Jane Komsky | jane.komsky@9fin.com, Ayden Crosby | ayden.crosby@9fin.com, Swapnil Sawant | swapnil.sawant@9fin.com, and Segun Olakoyenikan | segun.olakoyenikan@9fin.com, along with legal intern Michael Evrard-Vescio | michael.evrard-vescio@9fin.com

This week’s news (from articles published in the last seven days)

US Distressed/Restructuring Tracker Report — We published our monthly report covering notable situations/transactions in our restructuring tracker that are on our watchlist, are expected to materialize, are in progress or were recently completed. The tracker is a work in progress and, in the coming months, 9fin will roll out many user-friendly updates to the tracker and will complete a backfill exercise. Meanwhile, we welcome any suggestions for improvements.

AMC Entertainment — AMC responded to the 1L noteholders litigation complaint with a motion to dismiss, arguing the Intercreditor Agreement that was allegedly breached was actually not in effect during company’s LME transaction, and even if it was, no breach occurred.

DISH/Echostar — The ad hoc group of DISH DBS bondholders advised by Milbank and Lazard has moved to amend its lawsuit related to the sale of the pay TV business to DIRECTV, specifically the proposed amended complaint filed in the Southern District of New York, to include DISH Network and to add fraudulent conveyance claims stemming from the recent series of transactions. DIRECTV also officially terminated its acquisition of DISH after DBS bondholders rejected the terms of parent company EchoStar’s revised debt exchange offer.

Newfold Digital — The web hosting provider has been topical this week after bonds traded down from last week’s numbers.

Empire Today — The flooring company announced that it had entered into a new credit facility with lenders holding approximately 82% of its existing term loans and 100% of its existing revolving commitments which provides it with significant liquidity and extends its debt maturities from 2028 to 2029.

FinThrive — The healthcare software provider raised $155m in fresh capital and extended the maturity on its revolving credit facility in an LME supported by “substantial majority” of holders of its existing first lien term loans due 2028 and second lien term loan maturing in 2029. The new funds will be used to delever its balance sheet and improve liquidity.

Frontier Communications — 9fin takes a deep dive into the company’s turnaround from bankruptcy, the fate of its pre-bankruptcy creditors, and why — despite being considered a win — the deal nevertheless faced pushback from some shareholders here

GrafTech — GrafTech launched its previously announced exchanges.

Hertz — S&P revised the car rental company’s outlook to negative from stable on weak credit metrics. The move comes after the company’s Q3 24 results were below expectations, with revenue down 4.7% YoY and EBITDA down 143.7% YoY and continued troubles related to its fleet transformation plan.

iHeart Media — iHeart Media announced a debt exchange offer that postponed most of its debt maturities to 2030 and beyond. The exact allocations are subject to creditor participation.

Lifepoint Health — The Apollo backed hospital operator is looking to shave close to 50bps of spread from its $499m term loan B due May 2031 to 350bps-375bps from 400bps as it continues its turnaround following above-expectation Q3 24 results.

New Fortress Energy — New Fortress Energy has hired Lazard and Intrepid Financial Partners to explore potential asset sales as the company continues to struggle with ballooning debt and several project delays that have hampered its cash flows.

Trinseo — The specialty material solutions provider announced a sale of its polycarbonate assets in Germany to Deepak Chem Tech along with the technology licenses as part of its restructuring plan. Trinseo expects to record a total pre-tax restructuring charges of $76m-$97m and the total process is expected to be completed by end of 2027.

The Container Store — The Container Store said it does not expect a $40m funding deal with Beyond Inc to close as it attempts to negotiate a new money deal with term lenders, according to a regulatory filing on 20 November. The company also retained FTI Consulting for operational assistance.

VistaJet — VistaJet is working with Jefferies on a potential preferred equity raise, 9fin reported exclusively, which would help improve the company’s cash flow profile and broaden its access to capital markets in the future. The size of the potential deal is expected to be around $600m-$1bn and proceeds will be used among other things, to help fund amortization payments on the company’s aircraft leases.

Wolfspeed — The chipmaker recently terminated its CEO Gregg Lowe and appointed Thomas H Werner as the new Executive Chair following the collapse in the company’s stock price. The company also recently laid off 20% of its headcount following below expectation Q3 24 results.

Xerox — According to a complaint filed in the US District Court for the Southern District of New York, Xerox and two top executives misguided investors about the company’s turnaround plans and did not reveal the exact impact of workforce reduction on the company’s performance. The company also announced that it has completed the acquisition of ITsavvy Holdings as of 20 November.

American Tire Distributors — At the debtors’ DIP hearing this week, the judge stated he believed that the proposed term loan rollup feature violated the prepetition credit agreement and any other read seemed like “preposterous overreach.” After revising the order to remove the term loan rollup the DIP was approved.

AIO — AIO dodged a hearing on the UCC’s motion to dismiss until after the court holds a three-day hearing to address the company’s proposed settlement with Natura, as well as the sale of its assets to Natura.

CareMax — CareMax filed for Chapter 11 on 17 November intending to sell its management services organization as well as its core centers assets via a prepackaged plan supported and funded by 100% of its secured lenders.

Intrum — The company commenced a prepackaged Chapter 11 case on 15 November, but it faces objections from an ad hoc group of holdings of Intrum notes due 2025. The group is seeking to lift the stay to pursue an action commenced prepetition, as well as to have the case dismissed.

Northvolt — The Sweden-based electric car battery manufacturer, filed for Chapter 11 in the hopes of partnering with one or more long-term strategic or financial investors to develop a comprehensive going-concern recapitalization or sale.

Spirit Airlines — After filing for Chapter 11 this week, Spirit lamented the need to file at all given the consensual nature of the deal at its first day hearing, where it obtained all first day relief.

TGI Friday’s — The company bidding procedures were approved at this weeks hearing.

Vertex Energy — The disclosure statement for the company’s proposed plan was approved after the debtors, DIP lenders and UCC reached a global settlement.

Wellpath — The bankrupt prison healthcare company received approval for its bidding procedures, paving the way for a sale of its behavioral health operations to an ad hoc lender group, and an auction process for its prison operations. 9fin also reported on the automatic stay’s impact on a large number of pending medical malpractice lawsuits against the company.

Other active distressed and restructuring coverage (from articles prior to the past seven days)

BWIC Data — A recent BWIC data that we tracked show nine CLO-owned credit facilities of at least eight companies are either governed by a cooperation agreement or restructuring support agreement.

24 Hour Fitness — The fitness chain is working with Piper Sandler to explore strategic and refinancing options ahead of $300m in debt coming due 2025.

Aimbridge Hospitality — The hotel manager and its lenders have kicked off discussions to potentially raise new capital and orchestrate an out-of-court debt restructuring, with an LME an option.

Alacrity Solutions — 9fin reported on restructuring talks with lenders following liquidity issues and customer churn. The company currently has roughly $1.6bn in debt, around $1bn of which is in a first lien loan.

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.

Alkegen — The insulation products manufacturer closed an Oak Hill-led refinancing of its revolver and term loans due 2025 and a private exchange for its notes with a subset of holders, and launched a public exchange for the remaining notes.

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.

Ardagh — A crossholder group of the packaging company’s bondholders has extended a co-op agreement from October to mid-December, two sources told 9fin. The group is being advised by Gibson Dunn and Perella Weinberg Partners. Management faced a tense Q&A on its Q3 24 earnings call after it cut its FY 24 EBITDA guidance.

Aventiv — Following a deal with lenders to either sell the business or equitize outstanding loans to hand control to lenders, the Platinum Equity-backed prison telephone company is said to have told investors that multiple parties have expressed interest in a buyout.

Bausch Health — The company reported meaningful Q3 24 revenue and EBITDA growth across segments, hiked its full-year guidance, and stock rallied. BHC and Bausch + Lomb management said little about rumors of an impending sale of BHC’s B+L stake.

Better Health — A group of lenders led by Blue Owl have started talks with the primary care service provider as Medicare Advantage focused providers face earnings pressures after the Centers for Medicare & Medicaid services changed how it risk scores some patients.

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

Brightspeed — Some bank lenders are reported to have begun trying to unload the long hung debt (presumably the debt recently exchanged into) of the Apollo-backed internet provider.

Cision — The Platinum Equity-backed PR software firm is reported to have told lenders that it had created a new holdco, and some lenders believe this step could be followed by an asset sale or collateral transfer. Its debt is trading at deeply distressed levels.

CommScope — The network infrastructure company saw an uptick in sales and meaningful improvements in EBITDA and free cash flow in Q3 24 (press release; 10-Q; presentation; transcript). Along with its earnings release, the company disclosed (with details of the terms discussed) that talks with an ad hoc group of creditors on refinancings and exchanges of 2025 and 2026 maturities had failed. Common stock has fallen over 30% since.

Cox Media — According to an S&P note, The Apollo-backed media company’s maturity-extending exchanges of its term loan, unsecured notes and revolver have been partly completed.

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 the debt wall.

Del Monte Foods — Asset manager Black Diamond is suing Del Monte Foods in an attempt to force the removal of the food company’s board of directors following a liability management exercise earlier this year.

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.

Finance of America — The retirement financing solutions provider completed an exchange of its 2025 unsecured notes, and reported Q3 24 earnings (press release; presentation; transcript).

Forward Air — The troubled freight transportation company is reported to have ceded to activist investor demands, hiring investment bankers to sell itself.

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.

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

GoHealth — The health insurance marketplace company disclosed in its 10-Q for Q3 24 and the earnings call that it had completed a refinancing using $510m in expensive credit facilities from Blue Torch, PSP Investments and Redwood with terms akin to rescue financing.

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

Hawaiian Electric — The utility company executed settlement agreements for tort litigation arising from the Maui wildfires. Under the settlements, the company is required to contribute a total of $1.99bn towards two separate funds. It also published quarterly results (press release), which note that a going concern warning in its Q2 financials has been resolved.

Hearthside Food Solutions — The company is reported to be preparing to hand control over to its creditors, potentially through bankruptcy.

Ingenovis Health — Lenders to the Cornell and Trilantic Capital Partners backed healthcare staffing company are working with Gibson Dunn as post-pandemic demand for travel nurses slows.

KIK Consumer Products — The company’s bonds plunged after news of a fire broke out at its facility in Atlanta. In a message to private lenders, KIK said the fire and resulting damage was limited to an insured warehouse and its production areas can restart once the area is safe to re-enter.

KLDiscovery — The data management software company’s debt restructuring in August saw lender MGG and shareholder Ontario Teacher’s Pension Plan take control of most of the company.

LifeScan — Per an S&P note, the Platinum Equity-backed medical device company skipped principal and interest payments on its third lien term loan and entered into a forbearance agreement through 29 October with its first and second lien lenders.

LOGIX Fiber Networks — The fiber-based voice and data company hired Houlihan Lokey to advise it ahead of an upcoming maturity wall.

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.

Medical Properties Trust — 9fin’s second deep-dive and Q3 earnings review of MPT aims to provide an outlook on MPT’s financial position and the challenges ahead in relation to its maturity wall. Read the deep-dive here and the earnings review here.

Medical Solutions — Certain lenders of the travel nursing company have engaged Gibson Dunn as its performance is impacted by lower demand for temporary staffing, 9fin sources say.

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.

MultiPlan — The company has entered into private discussions with its creditors, with one proposal involving an uptier of some of its junior debt. Meanwhile, Q3 24 earnings suggested continued deterioration in MultiPlan’s underlying business.

Office Properties Income Trust — The company’s Q3 24 results exhibited continuing deterioration in performance, and $456.7m of its unsecured notes due 2025 mature in February. As a result, the REIT issued a going concern warning in its filings, after previously disclosing details of negotiations with creditors to push out the 2025 maturity.

Oriflame — The Swedish-Swiss multi-level marketing company has added Kirkland & Ellis to its advisory roster for refinancing discussions with lenders, after it set up for a potential LME and bondholders signed a co-op. The company has a €100m RCF, €250m senior secured FRNs and $550m senior secured notes maturing in the next two years.

P&L Development — The family owned OTC drug manufacturer completed its exchange offer, launched in October, issuing $368.5m in PIK-toggled notes due 2029 for $350m in 7.75% senior secured notes due 2025. Also, certain creditors committed to purchasing an additional $131.5m of new notes.

Packers Sanitation — The sanitation company was downgraded to CCC- on the increasing principal outstanding on its mezzanine facility due 2025 potentially complicating refinancing efforts.

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

Pure Fishing — The Sycamore-backed company has raised a $750m credit facility due 2029 from investors including Monarch Alternative Capital and Silver Point Finance, with proceeds to tackle its term loan and asset-backed loans. 9fin caught wind of the financing raise prior to the company’s announcement.

Quest Software — Trading desks have begun publishing quotes on the Clearlake-backed software company’s debt distinguished between co-op and non-co-op paper, with its term loans in distressed territory.

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

Sandvine — Following its announced acquisition by a group of lenders, the company has announced the commencement of a restructuring under the Canadian CCAA to implement the restructuring that will hand control to lenders and will net it new money.

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.

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.

System1 — We delve into the asset stripping LME the marketing company completed earlier this year in conjunction with a merger under section 251 of the Delaware General Corporation Law.

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.

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 LME-style transaction.

Trinseo — The chemical company reported neutral Q3 24 earnings and provided an update on progress on organizational restructuring initiatives aimed at saving costs and improving profitability. 9fin had earlier reported that lenders had again banded together with Gibson Dunn and Evercore in the midst of continuing underperformance, cash burn and high leverage.

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

United Site Services — The Platinum Equity-backed portable toilet rental company announced that it had closed the LME it unveiled in August.

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.

Viasat — The satellite company’s debt continues to trade down, with Intelsat’s Boeing-made satellite’s recent failure and Qatar Airways’ launch of Starlink internet on an initial flight cited by sources as the latest potential catalysts.

Loans — (link to full screener on 9fin)

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