According to language in a recent sample co-op agreement viewed by 9fin, lenders agree they will not “engage in, enter into, exchange or participate in, support, vote for or consent to any… financings, solicitations, tenders, refinancings, replacements, extensions, liability management transactions or restructurings” involving the issuer or any affiliated entities. This sounds like a good deal for co-op members!

And there are some success stories for co-ops getting creditors seemingly better deals, like Travelport and Cumulus, and Sonrava Health, possibly the first par, pro rata LME ever. Still, there have been some criticisms (mostly subjective, of course) that professionals are taking into account as they continue to tweak the language in these agreements and compete for mandates. Sometimes co-ops are forming too early and impacting liquidity (trader runs are a nightmare when they have to give different quotes for “CO-OP” and “NON-CO-OP” paper of the same security). Sometimes they get creditors locked in too early with counsel that is not their choice, or a better deal for all parties could have been cut sooner but not for the co-op agreement. Additionally, there are still permissions in many of them that allow a select group of creditors, often a “Steering Group”, to cut a deal around other creditors – or at the very least, to terminate the cooperation agreement. The language could include a higher threshold of “Requisite Majority” to prevent any amendment, variation or waiver without at least 75% of the subject debt.

Bausch, interestingly, solved some of these issues by creating a longer lock-up, while non-co-op paper acquired by co-op members can continue to freely trade as non-co-op paper — a departure from other co-ops where any paper purchased by co-op members becomes co-op paper as well. Additionally, in Bausch, any creditor who sells co-op paper remains subject to transfer restrictions and even if they sell out all of their co-op paper, they remain party to the co-op until it terminates, prohibiting any member from engaging with the company in third-party financings without approval of the requisite majorities.

We shall see if the evolution of co-ops is to be more comprehensive, sooner — or perhaps the trend goes in the opposite direction if they become less effective. Indeed, some law firms normally associated with sponsor and company-side mandates – who generally deride co-ops – are increasingly making arguments that the co-ops are likely not even legal or at the very least not legally enforceable.

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.

Pillsbury recruited Michael Burke, a corporate restructuring lawyer with aviation sector experience, from Sidley. Willkie Farr hired bankruptcy and restructuring lawyers Jörn Kowalewski, Ulrich Klockenbrink and Hendrik Hauke from Latham in Germany. Arnold & Porter brought Matthew Micheli on to its restructuring practice in Chicago from Paul Hastings. Ted Murphy has joined JPMorgan as executive director on the distressed and loan trading desk from Morgan Stanley.

This week’s news

Pluralsight — 9fin reported on how the company is in talks with its sponsor Vista Equity and lenders on ways to overhaul its debt, according to sources.

iHeartMedia — Creditors led by Pimco and holding the requisite majorities across all the right securities to perform the whole suite of liability management exercises, formed this week organized with Davis Polk, 9fin 9fin reported. The law firm was one of four jockeying for a position to lead lenders in negotiations with the company.

CareMax — The value-based healthcare provider disclosed on Friday it had appointed Paul Rundell from Alvarez & Marsal as chief restructuring officer. 9fin previously reported the company’s investment bank after it announced repeated waivers of default under its credit agreement through 17 June — this coming Monday.

Alkegen — The Clearlake Capital-backed company lenders formed a co-op, 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.

Thrive Pet Care — The company hired Evercore to examine options for its debt stack, 9fin reported. Meanwhile, a group of first lien lenders is seeking advice from Akin Gump as they brace for potential negotiations with the TSG Consumer Partners-backed company, sources said.

American Rock Salt — The salt company hired legal counsel to address elevated leverage and volatile demand, according to sources.

Zayo — 9fin broke the news this week that Zayo is working with banks to help gauge investor interest in raising new debt at its recently carved out Europe subsidiary.

Enviva — 9fin covered the unfolding drama this week after the decision in the EDVA to reject the retention application of Vinson & Elkins to be employed as Enviva’s debtors’ counsel primarily because of the firm’s disclosed relationship with equity sponsor Riverstone Investment Group on unrelated matters. Friday’s hearing on V&E’s motion to reconsider was anything but predictable.

Steward Health — The struggling hospital operator this week gained approval for additional DIP financing on an interim basis from a group of FILO lenders as it approached the end of its cash runway. Steward and certain parties also received the green light to commence mediation proceedings with Judge Marvin Isgur to settle certain disputes with Medical Properties Trust over the allocation of real estate proceeds. ABL lenders to Steward also signaled the potential need for additional financing beyond the FILO DIP, with 9fin’s analysis of Steward’s updated DIP budget showing increased monthly cash burn.

Hertz — Concerns around the struggling rental car company and its widely held status among CLOs, along with its constituency in the CDX HY index, have come into focus as investors prepare for additional ratings downgrades. Bloomberg also reported today that Hertz is looking to raise $500m in secured debt with a 12% coupon, along with $200m in convertible bonds, in a deal as soon as next week.

Spirit Airlines — The troubled ultra low-cost airline delayed a recently-scheduled analyst day, which could suggest the execution of its standalone plan and creditor negotiations are not on track. Read our three-part series on the stressed ultra low-cost airline and its Loyalty Notes: Part 1, Part 2 and Part 3.

Vyaire Medical — Vyaire, a breathing technology company, commenced Chapter 11 this week after post-pandemic macroeconomic challenges led to a liquidity crisis. Backed by an RSA with a first lien ad hoc group, the company intends to continue to pursue a prepetition marketing process. The company also received interim approval of its $180m DIP facility at its first-day hearing.

Red Lobster — Red Lobster reached a global settlement with its prepetition lenders and UCC, paving the way for a sale process followed by a Chapter 11 liquidating plan. The resolution provides for the establishment of a plan/GUC trust that will pursue possible claims and causes of action against prepetition equity holders. In addition, the company was able to receive final approval of its DIP facility under the settlement.

Thrasio — The Amazon aggregator’s Chapter 11 plan was confirmed, following months of investigations by Thrasio’s disinterested directors and the UCC, a delayed confirmation hearing, and a last-minute settlement with the UCC.

Office Properties Income Trust — The REIT announced a deal with long-dated holders that should bring near to completion an exchange launched in May.

Invitae — The company disclosure statement and exclusivity motions were approved over the objections of the committee of unsecured creditors.

Mold-Rite — 9fin reported the terms of MRP’s deal with its lenders to swap its debt into new debt spread across four tranches, as well as to raise $113m of new money. The deal will “drastically improve” things for the Clearlake Capital-backed company.

Express — Express received permission to move forward with its sale process, and rapidly concluded the process, announcing that Phoenix Retail — a JV owned by WHP Global (majority owner of the entity holding Express’ IP), Simon Property Group, Brookfield Properties and Centennial Real Estate — emerged as the winning bidder for substantially all its assets.

Intrum Justitia — A group of creditors across the capital structure in the Swedish debt collection company went restricted, 9fin reported.

For more information, click here

Other active distressed and restructuring coverage

Distressed Pitch List — We have published the second edition of our Distressed Pitch List. We have added Forward Air, Skillsoft, and Viasat, and removed Petco, Trinseo, and US LBM. To view the full report, click here.

Altice France (SFR) — The distressed telco’s Q1 24 results came with a surprise. It has contributed its shares in its valuable FibreCo, XpFibre, and some of its receivables against XpFibre to an unrestricted holding company, setting the structure up for a potential priming transaction. 9fin’s analysis suggests the new HoldCo could have commercial debt capacity between €1.05bn-€1.75bn, which owner Patrick Drahi could use alongside asset sale proceeds to achieve his 4.0x leverage goal.

Altice USA — As part of the heavily indebted Drahi empire that has come into focus after the hardball tactics taken with creditors to Altice France, creditors of the USA business of Altice are said to have organized with Akin Gump and PJT Partners while the company is reportedly working with Moelis.

Anthology — Nearly 100% of the first lien loans of the Veritas-backed ed-tech company are said to have agreed to exchange under a liability management deal that 9fin had reported was launched after negotiations with an ad hoc group of first lien lenders. The deal also extends the company’s revolver to early-2028.

Ardagh Group — Two creditor groups continue to prepare for subsequent debt negotiations with the glass and metal packaging company after an aggressive third-party financing transaction. Meanwhile, Ardagh announced a redemption of its 5.25% SSNs due 2025.

Astound Broadband — A group of lenders started confidential talks with the Stonepeak-backed internet and cable provider. While the company has far-dated debt maturities, it is grappling with a cash flow squeeze.

Bausch Health — Two creditor groups have banded together to implement one of the largest — and most unique — cooperation agreements to date, amid growing concerns over the company’s pursuit of one-off exchanges and the potential spin off of valuable eye care subsidiary Bausch & Lomb.

Belk — Lenders to the department store chain have been speaking with the company about a restructuring that could exchange much of its debt into equity.

Cano Health — Cano Health’s disclosure statement was approved after having to continue the hearing two times to allow for more time to negotiate terms of a settlement with its UCC. The plan, a dual-track plan at petition date, now contemplates a restructuring transaction, after no actionable bids were received for the company’s assets. A hearing on confirmation is scheduled for 28 June.

Careismatic Brands — The confirmation of Careismatic’s Chapter 11 plan was appealed by the UCC. The plan provides for a debt for equity swap for the company’s first priority debt, and the creation of a GUC trust to potentially pursue certain claims and causes of action. The judge had ruled that the GUC trust is responsible to pay any quarterly US Trustee fees for disbursements made after monetizing those assets.

Carestream Dental — The CD&R and CareCapital Advisors-backed company has been working with Jefferies to address its revolver and term loan maturities this year.

CommScope — The company reported Q1 24 results, with continuing declines across segments and significant cash burn, though the CCS and OWN segments have shown signs of recovery. Management noted that CommScope was continuing to evaluate all alternatives, including using flexibilities in credit documents (9fin analyses here), to address debt maturities. More recently, the company was selected as the winning bidder for Casa Systems’ cable business assets under a Section 363 auction.

Cox Media Group — Certain holders of Cox Media Group’s term loan and bonds organized driven by concerns around the Apollo-backed TV broadcasting and radio company issuing dividends when the business is struggling and facing a high debt burden.

Del Monte Foods — A group of lenders has hired Houlihan Lokey to help kickstart negotiations with the company, which is struggling to gain traction on a capital raise.

Diamond Sports Group — During a status conference on 4 June, the company outlined that it remained at an “impasse” with Comcast and would seek potential alternatives for distribution, as the Regional Sports Network operator’s major league team partners foreshadowed objections to the current go-forward plan. A hearing on plan confirmation is currently scheduled for 29 July.

Dynata — The struggling market research company filed a prepack in the US Bankruptcy Court for the District of Delaware that would see first lien lenders receive 95% of reorg equity, with a confirmation hearing set for 2 July. The company was also granted all relief requested at its first-day hearing. The first lien and second lien term loan treatments under the plan have caused divergent reactions in the secondary market.

EchoStar/DISH — DISH is reported to be in talks with holders of its convertible debt for new financing backed by spectrum held at an unrestricted subsidiary. 9fin had earlier reported that a DISH DBS noteholder lawsuit concerning the spectrum had been moved to federal court. Earlier, EchoStar posted dismal Q1 24 results, while still not having stated plans to manage its debt obligations, the most conspicuous of which is $1.98bn in outstanding senior notes due in November.

Emergent BioSolutions — Holders of Emergent’s 3.875% SUNs due 2028 stand to receive a high potential recovery amid a stabilization of earnings, per 9fin analysis, as our illustrative waterfall outlines a scenario-based recovery of between 92% and 93% with the bonds quoted near 60 cents.

EyeCare Partners — The vision care network completed its liability management deal involving $275m of new money and a discounted debt exchange that offered better terms to lenders who participated early and were involved in confidential talks with the company.

Fisker — The troubled EV company disclosed that CVI Investments/Heights Capital, holder of its senior secured notes due 2024, called an event of default and accelerated the notes after a forbearance agreement expired on 17 May. Our coverage of Fisker and the dual track process set by Heights Capital can be found here.

FreshDirect — The grocery delivery company has hired restructuring advisors and has been reaching out to potential investors for rescue financing. The development marks a rapid downfall for FreshDirect, which enjoyed strong demand during the pandemic and was acquired by Turkish company Getir late last year.

Gol Airlines — Gol’s Abra bondholder group recently 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. In recent days 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.

Hearthside Food Solutions — Some par holders have sold their positions in Hearthside’s loan to Apollo Global Management, which is leading the steering committee of an ad hoc group of lenders.

Incora — The long-running adversary trial playing out in Texas bankruptcy court is lurching toward a close, with the last scheduled witness testimony taking place recently.

Lionsgate — Bondholders left out of an earlier exchange have reportedly started to explore legal action, after the film and TV media company completed an exchange where its 2029 SUNs indenture was amended to strip certain covenants and events of default.

Medical Properties Trust — The healthcare REIT filed its delayed 10-Q for Q1 24 along with an updated quarterly supplement and disclosed additional subsequent write-downs on its investment in PHP Holdings of $140m. It had recently secured a 6.9%, 10-year £631m non-recourse financing secured by certain properties in its UK portfolio.

Red River Talc (J&J) — Johnson & Johnson is facing a class action complaint alleging that its prior attempts at using Chapter 11 to resolve its alleged talc liabilities contain multiple fraudulent transfers. 9fin’s summary of the J&J’s third attempt at resolving claims pertaining to its talcum baby powder through Chapter 11 is available here.

Rite Aid — Rite Aid’s confirmation hearing is now scheduled for 27 and 28 June as set by the judge overseeing the case. The company is also involved in a dispute with MedImpact, the company that purchased the Elixir assets from Rite Aid, over the proper calculation of post-closing net working capital purchase price adjustments.

Robertshaw — We’re awaiting a verdict from Judge Christopher Lopez after the adversary proceeding trial came to an end.

Rubio’s Restaurants — The restaurant chain famous for its fish tacos filed a Chapter 22 before the US Bankruptcy Court for the District of Delaware, intending to conduct a 363 sale of its assets. The first day hearing is scheduled for 1 pm ET on 10 June before Judge Goldblatt. 9fin had earlier reported that Rubio’s was considering a possible Chapter 11 bankruptcy filing in order to sell itself.

rue21 — The Blue Torch-controlled fashion retailer filed a Chapter 33 before Judge Brendan Shannon of the US Bankruptcy Court for the District of Delaware. The company aims to close all stores, conduct wind-down sales, and market its IP and intangibles for a sale. The docket is available here.

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

SI Group — The chemical additives company shared preliminary 2023 results, which left some investors questioning the sustainability of its capital structure, even as its business shows signs of recovering.

Sinclair Broadcast Group — Investment firm Chatham Asset Management sent a letter to Sinclair urging the broadcaster to pursue a traditional financing rather than dividing up existing collateral.

SIRVA — The moving services company was downgraded by S&P from B- to CCC. The S&P note states that on 25 April, SIRVA’s first and second-lien credit agreements were “modified to pledge more equity from subsidiaries as collateral to lenders, to 100% from 65%, which we view as lenders' concerns over the company's performance and ability to manage its obligations in a difficult operating environment.” This comes after it raised a new money priming loan (per S&P a $84m delayed-draw term loan) in order to bridge the company to a broader debt restructuring.

Sound Inpatient Physicians — The hospital staffing company launched an exchange offer with approximately 90% of its existing lenders on board. Its sponsors, Summit Partners and UnitedHealth have also agreed to inject $49m of equity into the company.

Sonrava Health (fka Western Dental) — The New Mountain-backed dental care company — advised by Ropes & Gray and Greenhill — launched a liability management deal involving new money raised via a drop down of assets and a priority exchange offered at par to the existing term loan. Exchanging lenders will receive step-ups in coupon, while an ad hoc group of lenders represented by Paul Hastings and Lazard will receive a backstop fee.

Sunnova Energy — The residential and commercial solar company has hired AlixPartners to help boost liquidity and Moelis to explore restructuring options. Earlier, it has agreed on several funding deals, including a new tax equity agreement with JP Morgan and a lease securitization deal with owners of home security firm Brinks Home, and more recently a DoE-guaranteed loan.

Telesat Canada — The Canadian satellite company posted expected declines in revenue, EBITDA and margins in Q1 24, and reaffirmed guidance for the full year. Backlog and cash generation for the legacy business declined as Telesat continues to lose GEO customers and focuses on Lightspeed. Certain creditors are reported to have hired Evercore and Lincoln International for advice. 9fin earlier provided a comprehensive analysis of the company’s disappointing FY 23 earnings and FY 24 guidance.

2U — The education tech company has started confidential negotiations with creditors on ways to overhaul its debt. Once a high-flying online education startup, 2U is facing an upcoming debt wall and heightened regulatory scrutiny of its revenue-sharing business model.

United Site Services — The portable toilet rental company is set to tap a $115m commitment from sponsor Platinum Equity as it battles weaker earnings amid an inflationary and higher rate environment.

TGI Friday’s — The restaurant chain has engaged an FA to raise roughly $200m of new funding to pay down debt.

VeriFone — Lenders to the payment and commerce solutions company have organized with Gibson Dunn 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 — A group of creditors has begun confidential talks with the Carlyle-backed data management firm on ways to address its debt due 2025.

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”.

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 Akin Gump and have taken pitches from bankers, with Houlihan Lokey in the pole position.

WOM — WOM and its ad hoc group of unsecured noteholders’ sparred over discovery issues involving the group’s motion to dismiss or, in the alternative, to appoint a Chapter 11 trustee. The debtors had objected to certain of the group’s discovery requests, but the judge backed the group and ordered the debtors to respond to the requested discovery. A trial on the motion to dismiss and the company’s second day hearing will be held on the 20 and 21 of June.

Workhorse — The electric vehicle company 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 Stifel to help raise bridge financing.

WorldStrides — The student trip company’s recently launched exchange offer to Holdco term loan holders at 40 cents on the dollar has failed after the company launched the exchange with no notice or support from existing or third-party lenders.

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.  

Zachry Group — The family-owned EPC company filed for Chapter 11 protection in SDTX after facing defaults under its EPC contract for a mega LNG project in Texas while also battling cost issues and supply chain disruptions. The project is owned by Qatar Energy and ExxonMobil. Zachry has filed an adversary proceeding to pursue multiple claims against the project and its owners. Parties will attempt to mediate the disputes with Judge Christopher Lopez presiding.

Weekly declines

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

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