Bankruptcy Debrief- Week of January 29th

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Philadelphia Energy Solutions blames government regulations as it files for chapter 11 bankruptcy.

Oil refining complex operator PES Holding, otherwise known as Philadelphia Energy Solutions, filed for chapter 11 with a prepackaged plan. The plan includes the equitization of certain secured debt and about $260 million of new capital through a sale of all the company’s assets that will leave behind over $300 million worth of government compliance liabilities. The company is poised to emerge still under the ownership of private equity firm Carlyle Group and Energy Transfer Partners subsidiary Sunoco. The bankruptcy filing and plan is supported by an overwhelming majority of the secured lenders.

The company attributed its financial difficulties to the Clean Air Act’s renewable-fuel standard program, which it said unfairly penalizes independent merchant refiners, and other downturns in the energy sector.

At the time of the filing, the company listed over $1 billion of assets and liabilities, including $679 million of secured debt.  

Declaration

 Petition

Interactive advertising firm Ensequence fails to keep customers engaged, resulting in chapter 11.

Television advertising service provider Ensequence was pushed into chapter 11 after a key partner ended a contract at the end of 2017, leaving it unable to pay secured lender Myrian Capital Fund. The company will continue operations during the cases and conduct a sale process for the business. At the filing, the company listed assets of $1 million to $10 million and liabilities of $10 million to $50 million.

Declaration

Petition

Rand Logistics aims for quick trip through bankruptcy court with prepackaged plan.

Bulk shipping company Rand Logistics is aiming for a quick reorganization with the filing of a prepackaged chapter 11 plan. The company cited a variety of factors in its filing, including the weakening of the Canadian dollar and increased costs of repairing, maintaining and operating the company’s fleet of ships.

The prepackaged plan would eliminate $92 million of second-lien debt through a debt-for-equity swap and pay all trade vendors in full. The existing shares of the company are set to be canceled. The plan was circulated prior to the filing and received support of a majority of the creditors. Roughly $149 million of first-lien debt will be reinstated as the exit facility. Overall, the company listed roughly $236 million of funded debt and $50 million to $100 million of assets.

Declaration

Petition

Facing tough times, reinsurance company Scottish Holdings seeks to restructure and sell all equity of reorganized company.

Scottish Holdings, which engages in reinsurance of life insurance, annuity and annuity-type products, filed for chapter 11 after suffering continued losses because of adverse mortality experience on the yearly renewable term segment of the business. The company is owned by the non-debtor parent Scottish Re Group Limited. Prior to the filing, the company hired an investment bank to sell the business, but it was unable to find any potential buyers. Therefore, the company is using the chapter 11 process to restructure and right-size the balance sheet with hopes of a transaction in the future.

On the date of the filing, investment firm HSCM Bermuda Fund executed a stock purchase agreement. HSCM intends to seek to purchase all shares of the reorganized company issued under the reorganization plan.

Parent company Scottish Re Group Limited is seeking similar relief in the Cayman Islands Court, where the business is incorporated. Scottish Holdings listed total assets of $1 billion to $10 billion and liabilities of $1 billion to $10 billion at the time of the filing.

Declaration

Petition

West Virginia’s Charleston Gazette-Mail targets sale of business during chapter 11.

The family-owned business that operates the Charleston Gazette-Mail opted to file for chapter 11 after facing the same challenges as other newspapers such as reduced advertising spending and competition with internet outlets. The company is seeking to sell the business as a going concern at auction with a stalking horse bid valued at $11.261 million from Wheeling Newspapers.

At the filing, the company listed total liabilities of $10 million to $50 million, comprising secured debt of $15.6 million and retirement liabilities of about $12 million.

Declaration

Petition


Patriot Services’ loss of major client sparks full restructuring in chapter 11.

Insurance service provider Patriot National sought chapter 11 protection to effectuate a restructuring supported by certain lenders after the loss of its biggest client, Guarantee Insurance Co. The company entered a restructuring plan support agreement before the filing that contemplates an equitization of the secured lenders claims and extinguishing existing shares. Under the plan, Patriot National anticipates payments will be made to certain vendors and third-party insurance agents to minimize the impact on day-to-day operations.

Patriot National listed secured debt of roughly $223 million and unsecured debt of about $27 million against assets of $100 million to $500 million.

Declaration

Petition

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