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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.

The Default Notice will be off for the next two weeks for the holiday break and the next instalment will come on 10 January. We’re wishing you all a joyful holiday and much success in the coming 2025.

It has been an incredible 2024 for 9fin and particularly for 9fin’s US distressed and restructuring team, which before October 2023 did not even exist.

And there was no better way to cap off our weekly newsletter feature for this year than to admire the CommScope refinancing transaction (here) that somehow found a way to skirt around a co-op agreement and avoid adding any strict LME blockers — essentially leaving the door open to an infinite LME loop. The company wanted to preserve the possibility of a J. Crew-like dropdown in the future to capture discount and deleverage. CommScope could have potentially found a cheaper transaction that deleveraged the company further, but those would have come with stricter covenants.

CommScope’s ode to LMEs was undoubtedly reassuring to distressed companies — and of course their bankers and counsel — still hoping lenders will fear the potential for dropdowns in the coming year. The beginning of December cast doubt on this notion as two notable refinancing transactions, Hertz and Trinseo, both included comprehensive LME blockers in their new debt — including a blocker literally titled in the term sheet as an “Anti-Liability Management Provision.” It seemed as though the holiday spirit took hold and lenders were growing tired of the violence. The Hertz and Trinseo transactions left no doubt that these companies would not be able to pit creditors against their fellow creditors or move collateral in any creative and surprising ways in the years to come. The future menu of options will instead be limited to straight refinancing or bankruptcy — a scary thought to companies looking for a quick fix while hoping the market changes in their favor but hoping to maintain flexibility if it doesn't.

It feels only right that what is potentially the final notable refinancing of the year is signaling to the market that LMEs will be back.

This transaction also highlighted that cooperation agreements, perhaps the biggest trend of 2024, may not be enough to keep the lions (read: largest lenders) at bay. As 9fin reported, Apollo and Monarch, even after signing a cooperation agreement, retained counsel outside of the group and negotiated with the company directly. Only after reaching a deal did the funds bring the deal to the group and include all members. Although, in essence, the co-op worked — all lenders of the group were able to participate — this situation certainly raises questions about the specific restrictions and voting thresholds required to dissolve co-ops included in these agreements, and whether we may see some violence directed at exploiting co-op language in the year to come... but this all seems like a problem for next year.

With that, we’re wishing all of our readers happy holidays and the absence of any visits from the ghosts of LMEs past, present and future.

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.

Willkie Farr hired restructuring partner Robin Spigel from A&O Sherman in New York. Wachtell's restructuring and finance Richard Mason announced he would be stepping down as of the end of 2024 to remain of-counsel only to wind up current matters. Gibson Dunn elected 35 lawyers to its partnership, effective 1 January 2025, including Stephen Silverman in the restructuring group.

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)

Distressed Pitch List — In an update to our Distressed Pitch List, we added Alvaria, Hudson Pacific Properties, Mativ, Peraton and Xerox, and removed Anywhere Real Estate Lucky Strike Entertainment (fka Bowlero), Chemours, Electronics for Imaging, Newfold Digital and Tropicana. Electronics for Imaging, Newfold Digital and Tropicana will be a part of our regular coverage going forward.

MultiPlan — LME Breakdown — we predict how the company may approach an LME and dive into what is allowed under the credit documents and what returns lenders may expect.

BWIC co-op tracker — The latest BWIC revealed that six tranches of debt are being traded as co-op papers. The debts were issued by Astound Broadband, WeightWatchers, Cision, Altice France and Altice USA.

Allen Media — The TV network company released cleansing documents to private investors earlier this week after struggling to arrive at an agreement with its creditors.

CommScope — The company announced a refinancing transaction that paid off all maturities through 2026 and leaves open the possibility for a future LME.

Foundever — Certain lenders are considering joining a co-op draft presented by Gibson Dunn on 13 December, amid concerns around a possible future liability management exercise.

Global Switch — Certain bondholders are informally seeking advice from restructuring advisors after the data center provider reached an agreement to sell its Australian subsidiary.

Just Eat Takeaway — An ad hoc group of bondholders is considering signing a cooperation agreement, following the food delivery company’s recent announcement of selling US subsidiary Grubhub.

One Call — The healthcare coordinator is sounding out investors, including private credit firms, to refinance its existing debt.

Oregon Tool — Lenders to the Platinum Equity-backed company hired Perella Weinberg as the company’s loan has been quoted down into the 60s this week following poor earnings.

Springs Window Fashions — The Clearlake-backed window covering maker company raised a $350m super-priority first out term loan as part of a liability management exercise it completed 19 December.

Empire Today — The Charlesbank-backed company’s LME with existing lenders completed in November involved a new money raise, maturity extending discounted debt exchanges and a dropdown of IP, according to credit rating agencies.

Wellful — The Kainos Capital-backed health and wellness firm raised new money via a superpriority loan and completed an exchange of its existing debt, according to a Moody’s note.

Michaels Stores — Debt of the Apollo-backed craft retailer has rallied after the company bought back around $73m of unsecured notes in recent weeks, and reported Q3 24 earnings.

Ardagh — Two groups of bondholders of the Irish packaging company have elected to extend their cooperation agreements into the new year, but have excluded certain securities by recutting their agreements.

Thames Water — In its final determination, UK water regulator Ofwat upheld a previously threatened fine of £141m and levied a further £18.2m fine against the water company over two dividend payments. Meanwhile, in the courts, a Class B noteholder group announced the launch of a parallel restructuring plan to challenge the Class A‘s rescue loan proposal.

Veritas Technologies — According to an S&P note, the Carlyle-backed company on 10 December completed a $4.2bn debt exchange and raised a $140m superpriority revolver. 9fin had reported the near-final details of the deal in October.

Aimbridge Hospitality — The Advent-backed hotel manager is reported to be in talks with a lender group including KKR and CapitalRe for a debt restructuring. The company had earlier obtained a waiver from lenders that allows the company to file its Q3 24 financials after the original November-end deadline. It remains in talks with its lenders on a potential LME.

Trinseo — The company launched an exchange offer for its 2029 notes and took other actions, in accordance with the transaction support agreement it had recently entered into. The TSA envisages an LME will help the company deleverage slightly and extend maturities out to 2028, while improving creditor recoveries and creating the tightest covenants protecting creditors to date.

Party City — The party goods retailer, which emerged from bankruptcy in October 2023 with lenders including Silver Point Capital and Monarch gaining control, is reported to be planning to file again in December in order to wind down operations.

Lumen — After having completing a series of debt exchanges, the company is now reported to have launched a sale of its consumer fiber business, with Goldman Sachs’ support, to raise funds to pay down debt.

Medical Properties Trust — The troubled healthcare facility REIT announced a settlement with Viceroy Research for a defamation case it had filed against the investigative research group. Read 9fin’s deep-dive on the REIT here and a Q3 earnings review here.

Viasat — The satellite company announced the completion of a sale of its Energy Services Systems Integration business to MAG Capital Partners.

Big Lots — The proposed sale to Nexus Capital fell through, and the company has only limited access to use of cash collateral following a default on the terms of its DIP financing. The parties will reconvene on 30 December to provide an update on next steps to the court.

CareMax — Final approval of the company’s DIP facility and other requested relief was granted at an uncontested second-day hearing.

Express — The company received confirmation of its plan.

Franchise Group — The judge overseeing Franchise Group’s Chapter 11 case denied a motion by certain lenders of the company to terminate the exclusivity period for the debtors to file a plan.

Hearthside Food Solutions — After removing the roll-up feature of the DIP loan, the debtors were able to secure all second day approval requested without a hearing.

Incora — The company intended to move forward with a two-part confirmation and received approval of third-party releases contained in their current proposed plan at the first day of the confirmation hearing. The second day did not occur, and instead it received an ultimatum from the judge that if the company cannot get its plan confirmed at a 27 December hearing, the debtors will have to move forward with a plan C.

Intrum Justitia — A confirmation hearing scheduled for 16 December was adjourned after the debtors indicated that they had settled with the objecting ad hoc group. That settlement disappeared after the majority ad hoc group refused to consent to the settlement, leading to a two-day contested confirmation hearing and a hearing on the minority ad hoc group’s motion to dismiss.

Northvolt — The company received approval of all requested relief at an uncontested second-day hearing.

Purdue Pharma — The mediation process and preliminary injunction barring suits against non-debtor third parties was extended through 24 January.

Spirit Airlines — The debtors received approval for their DIP and scheduling motion which will allow the debtors to proceed with a combined plan and disclosure statement over.

Steward Health Care — The debtors held a status conference today where they announced they will be seeking an extension of the DIP facility through 31 January 2025, seeking an extension for the exclusivity period to file a plan, closing their operations at Sharon Hospital in Pennsylvania, and reviewing and reconciling their administrative claims. The debtors also requested another court hearing on 30 December, a day prior to their DIP facility maturing.

Vertex Energy — The company received confirmation of its plan of reorganization.

WOM — The company received approval of its plan sponsor agreement and backstop commitment agreement with an ad hoc group of WOM noteholders. The company will appear for approval of its disclosure statement on 23 January.

Wellpath — Senator Elizabeth Warren has urged the HIG Capital-backed prison healthcare provider to not abuse its Chapter 11 process by shortchanging incarcerated patients “harmed by medical malpractice,” according to Bloomberg. 9fin had earlier 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)

LME Trends — We continued our series on LMEs by publishing a follow-up piece on the trend toward friendlier or gentler deals in the restructuring world. This era, which practitioners call the “LM 2.0”, succeeds the “LM 1.0” version of non-pro-rata priming and asset-stripping transactions.

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.

Platinum and LMEs — We published another edition in our series of LME profiles of private equity companies, focusing on Platinum Equity and its investments. A review of the sponsor's portfolio found eight of its 57 current investments carry debt trading at distressed levels.

LME legal challenge evolution — LMEs have become a game of calculated and often times unequal inclusivity, making justifying the costs and risks of challenging one in court more difficult.

BWIC co-op tracker — A recent BWIC listed by an Oaktree CLO identifies as co-op paper certain debt issued by Hearthside Food Solutions, Sinclair Broadcast Group, WorldStrides, Anastasia Beverly Hills, Altice France, Altice USA and Cision. Other BWIC data that we tracked shows 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.

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.

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.

Altice France — The French telco’s latest round of negotiations with the ad hoc group weighted in the secured debt advised by Gibson Dunn and Rothschild is reported to have again failed.  See 9fin’s analysis of Altice France’s cleansing materials from November and the unconsolidation of Altice’s XpFibre stake here.

Altice International — The company remains in asset disposal mode. After selling its AdTech business, Teads earlier in 2024, the company announced an agreed disposal of the €15m Geodesia construction business to a related party, and a sale of assets in Portugal is on the cards. The company reported revenue and EBITDA declines in Q3 24 with Altice Portugal primarily responsible with the underperformance.

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

AMC Entertainment — The theater chain disclosed an agreement with Goldman Sachs for an ATM program for 50m shares of common stock, causing its stock to tank.

Anastasia Beverly Hills — The cosmetics company reported stronger than expected Q3 earnings, sources told 9fin, and accordingly saw indications on its term loan improve.

Bausch Health — The Blackstone-TPG joint bid for B+L is reported to be on the verge of failing, with Blackstone balking at the price demanded by Bausch Health. Both Bausch Health and B+L have subsequently issued statements which note that a sale process is ongoing but do not provide further details.

Better Health (fka Physician Partners) — A minority group of Better Health creditors has organized with White & Case to challenge any non-pro rata deal the company could be negotiating with a separate majority lender group. 9fin had earlier reported on the Kinderhook Industries-backed company having kicked off talks with a Blue Owl-led lender group.

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.

B. Riley Financial — The troubled financial services company amended its credit agreement to extend the springing maturity date of its term loans to February 2026 and to permit $10m in telecommunications financing if certain conditions are met. It continues to delay filing its 10-Q for Q3 24.

Cision — The Platinum Equity-backed PR software firm, which in November was reported to have told lenders that it had created a new holdco, is said to be getting advice from Houlihan Lokey and Milbank.

City Brewing — Following an LME in April, the beverage production and packaging company is again in talks with lenders to provide capital. The new money could be in the form of a $50m bridge financing with a more holistic transaction to follow.

Club Car — Unsecured debt of the Platinum Equity-backed golf cart manufacturer plunged into stressed territory after it privately reported sharp sales and EBITDA declines in Q3 24.

Congruex — According to an S&P note, the company completed a restructuring involving its revolver and first lien term loan which gives it temporary liquidity relief in the form of part PIK interest and an amortization holiday for seven quarters and some covenant relief through Q2 25.

The Container Store — The Container Store is reported to be preparing a bankruptcy filing with the help of Houlihan Lokey and FTI Consulting, as talks with lenders continue. Recently, the company disclosed that it does not expect a $40m funding from Beyond Inc to close.

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.

Del Monte Foods — Black Diamond’s lawsuit against Del Monte continues to advance. The lawsuit is in response to the liability management exercise the company completed earlier this year.

DISH/EchoStar — The ad hoc group of DISH DBS bondholders, advised by Milbank and Lazard, has engaged Elsberg Baker & Maruri for potential litigation involving recent financing transactions and the company stripping value away from bondholders.

Dodge Construction Network — The Clearlake-backed company was advised by Kirkland & Ellis and Moelis, and an ad hoc group of lenders advised by Davis Polk, on the recently concluded priming new money and distressed uptier exchange 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 the debt wall.

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.

EW Scripps  — The broadcasting company is working with Morgan Stanley to explore refinancing options, including potential securitization and amend and extend deals. Term loan lenders and unsecured creditors have organized separately.

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).

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.

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.

Foundever — The customer service firm has seen a rebound in its loans after calling in an EBITDA bump on last quarter in its Q3 24 results, according to sources, although numbers still lag 2023.

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

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

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.

GrafTech — GrafTech launched its previously announced exchanges.

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.

Hertz — To no one’s surprise, Hertz got the requisite consents under its previously announced consent solicitations to amend the indentures for its 12.625% first lien notes and 8% exchangeable second lien PIK notes due 2029. The amendments, which 9fin detailed here, will Hertz to an incremental $500m of secured debt (in addition to the $500m new first lien notes it raised under the deal), but will give key creditor Canso the sole ability to allow or block Hertz’s issuance of incremental pari passu notes under the first lien notes indenture.

Hunkemoller — A group of funds has filed a lawsuit in New York against the Dutch lingerie maker and US fund Redwood for an uptiering transaction that occurred in June, according to a complaint filed on 26 November.

iHeartMedia — A group of majority noteholders left out of iHeart’s dual-track LME were planning to challenge the Alternative Transaction option, and had taken the first step in commencing litigation by initiating the replacement of the indenture trustee. Then, the company tweaked terms to shoehorn the other option — the Comprehensive Transaction — which was earlier impossible to consummate without the objecting group’s support.

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.

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

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.

Ligado Networks — The satellite company and its creditors are reported to be discussing a debt restructuring after the company received the go-ahead from a federal court to proceed with its $39bn lawsuit against the US government for its “unlawful taking of Ligado’s constitutionally protected, exclusively licensed spectrum without compensation”.

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