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May 5, 2020 – The Debtors filed a motion requesting each of a bidding procedures order and a sale order. The bidding procedures order would approve bidding procedures for the sale of substantially all of the assets (the “Sale”) and the sale order would authorize the Sale [Docket No. 564]. The Debtors have yet to designate a stalking horse although they indicate that a sale process has advanced to the point where (on April 22nd) they "notified a select group of…parties that they were invited to submit final round bids pursuant to the proposed Bidding Procedures." This bidding procedures motion continues to be part of a dual-track process (ie, a sale or a debt-for-equity restructuring involving prepetition lenders) and continues to be driven by milestones agreed amongst key stakeholders and memorialized in the Debtors' cash collateral order.
In a motion requesting an exclusivity extension filed on May 4th [Docket No. 561], the Debtors flagged that they had an obligation to file this present motion by May 5th (now done) and also to file a Plan and Disclosure Statement by the same date. Presumably we will see that shortly.
That extension motion stated: "On March 4, 2020, after several weeks of negotiations between the Debtors and their agent and secured lenders…the Court entered its Final Order…Authorizing Use of Cash Collateral….The Cash Collateral Order established milestones negotiated by the parties for the Debtors to pursue a sale of assets and/or a chapter 11 plan. The Debtors have since pursued those alternatives in tandem, and are in compliance with the milestones.
The next milestone is May 5, 2020, by which the Debtors are required to file (i) proposed bidding procedures and related documents to continue the process of soliciting bids from potential buyers and/or plan investors, (ii) a plan, disclosure statement and solicitation motion, or (iii) in the event that the documents proposed to satisfy either of the foregoing clauses (i) or (ii) are not acceptable to the Lenders, a motion for the sale of all of the Assets. Accordingly, by the time this Motion is heard in late May, the Debtors will have met the required milestone and should be well on their way to consummating a sale and/or confirming a plan to exit these cases.”
The Sale Process
The present motion states, “On March 16, 2020, with the assistance of PJT Partners LP (‘PJT’), the Debtors’ investment banker, the Debtors commenced a marketing process for the sale of the Assets. PJT contacted over 95 potential bidders, representing both financial and strategic buyers/investors, with the aim of attracting multiple proposals to sell substantially all of the Debtors’ assets or their equity. In connection with this solicitation, the Debtors and their advisors prepared, among other things, a confidential information memorandum (‘CIM’) to provide potential investors and bidders with adequate information upon which to make a proposal. The Debtors executed confidentiality agreements with multiple parties, who were subsequently granted access to the CIM and a virtual data room containing additional diligence from the Debtors. By the April 17, 2020 deadline to submit indications of interest, the Debtors received indications of interest from several parties. On April 22, 2020, the Debtors, in consultation with the Agent, the Lenders, and the Committee, notified a select group of these parties that they were invited to submit final round bids pursuant to the proposed Bidding Procedures. The Debtors’ management team and PJT continue to facilitate further diligence of the Assets and negotiate with the remaining bidders to obtain the highest bid for the Assets.
Simultaneous with the sale process, the Debtors continue to explore a consensual restructuring with their prepetition lenders. Among the possible restructuring alternatives being explored with the Debtors’ prepetition lenders is a debt-to-equity recapitalization transaction. While the Debtors continue to explore with their prepetition lenders potential structures of a consensual restructuring, no agreement exists thus far. As such, after evaluating all available alternatives, the Debtors, in consultation with their legal and financial advisors, have made the decision to pursue parallel sale and reorganization processes, whereby the Debtors will be able to ensure the preservation and maximization of value for the benefit of all stakeholders. This dual-track process is structured to allow the Debtors to pursue a value-maximizing transaction regardless of whether it is pursuant to a sale transaction or a reorganization transaction.”
Proposed Key Dates (all keyed off of milestones agreed pursuant to cash collateral order):
- Bidding Procedures Hearing: May 22, 2020
- Bid Procedures Objection Deadline: May 15, 2020
- Sale Objection Deadline: May 28, 2020
- Bid Deadline: June 1, 2020
- Auction: June 3, 2020
- Post-Auction Objection Deadline: June 3, 2020
- Sale Hearing: June 4, 2020
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