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November 16, 2020 – The Court hearing the RGN-Group Holdings cases has extended the periods during which the Debtors have an exclusive right to file a Plan and solicit acceptances thereof, through and including March 16, 2021 and May 17, 2021, respectively [Docket No. 694]. Absent the relief, the Plan filing and solicitation periods were scheduled to expire on November 27, 2020, and January 26, 2021, respectively.
According to the Debtors' requesting motion [Docket No. 654], the extra time is needed to complete "a comprehensive review of…unexpired real property leases."
On August 17, 2020, RGN-Group Holdings, LLC ("Holdings") and two affiliated Debtors (together with the earlier filers noted below, “RGN” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 20-11961. These three filers join four other Debtor affiliates who filed for bankruptcy protection in the same Court between July 30th and August 8th.
The Debtors collectively offer a network of on-demand office and co-working spaces, and ancillary services and support, to a variety of clients across a host of industries in over 1,000 locations in the United States and Canada; and from the outset these cases have been all about leases and efforts "to preempt both a potential 'run on the bank' by Landlords exercising their rights under the various guarantee agreements, and the inevitable 'race to the courthouse' that would follow."
The Debtors' exclusivity motion states, “The Debtors have made substantial progress advancing these cases in the three months since the initial Debtors commenced their cases. But additional work remains to be done. As such, each Debtor seeks an extension of its applicable Filing Exclusivity Period through and including March 16, 2021 to permit the Debtors to continue to build on the progress made to date in these cases without the distraction of competing chapter 11 plans.
The Debtors commenced these cases as a result of the acute and direct impact of the COVID-19 pandemic, which disrupted business plans and operations of various locations within the Debtors’ U.S. lease portfolio. To preserve and maximize the value of each Debtor’s estate, the Debtors have initiated and are conducting a comprehensive review of their unexpired real property leases to determine whether any such lease should be (a) rejected as unfavorable to the Debtors, (b) assumed or (c) assumed and assigned. In conjunction with these efforts, the Debtors continue to engage in good-faith, arm’s-length negotiations with their landlord constituents to obtain favorable lease amendments that confer substantial benefits on each Debtor’s estate. Collectively, these efforts and the resultant treatment of the leases will inform the contours of any chapter 11 plan as well as each Debtor’s post-emergence business plan. The Debtors’ deadlines to assume or reject leases, certain of which are imminent (absent extension), and decisions related thereto, will serve as the cornerstone of any chapter 11 plan in these cases.
Now the Debtors remain focused on, among other things: (a) further negotiating with all stakeholders with the ultimate goal of consummating a value-maximizing plan transaction that is broadly supported by key constituencies; (b) continuing to evaluate and make decisions regarding the assumption or rejection of their unexpired real property leases; (c) soliciting votes for and obtaining plan confirmation once a plan is developed and filed; and (d) establishing a process for the filing and resolution of outstanding claims.”
About the Debtors
The Debtors are direct or indirect subsidiaries of Regus Corporation, a Delaware corporation, that, together with its affiliates (collectively, ‘IWG’ or the ‘Company’), offers a network of on-demand office and co-working spaces, and ancillary services and support, to a variety of clients across a host of industries in over 1,000 locations in the United States and Canada.
IWG’s business model begins with entry into long-term non-residential real property leases (each, a ‘Lease’) with property owners (each, a ‘Landlord’) that provide the Company unoccupied office space (the ‘Centers’). Based on significant market research on potential client needs in local markets and the unique requirements of their existing clients, IWG engineers each of the Centers to meet the architectural style, service, space, and amenity needs of those individuals, companies, and organizations who will contract for use of subportions of the Centers. IWG markets its Centers under an umbrella of different brand names, each tailored to appeal to different types of clients and those clients’ specialized needs. These clients (the ‘Occupants’) enter into short-term licenses (each, an ‘Occupancy Agreement’) to use portions of the Centers, which are customizable as to duration, configuration, services, and amenities. When operating successfully, a Center’s Occupants’ license payments (‘Occupancy Fees’) will exceed the combined cost of the underlying long-term lease, management cost, and operating expenses of the Center.
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