August 16, 2018 – Cenveo announced in a press release that the U.S. Bankruptcy Court for the Southern District of New York has confirmed its Plan of Reorganization (the "Plan"), paving the way for the Company to emerge from Chapter 11 in the coming weeks. According to the press release, “The terms of the Plan will enable the Company to exit Chapter 11 with a substantially deleveraged balance sheet and increased liquidity, allowing the Company to focus on its operations and grow its businesses. Prior to filing for Chapter 11, the Company's liabilities included approximately $1.1 billion in funded debt. Upon emergence, the Company's funded debt will be reduced by over $800 million to approximately $325 million. The Company commenced solicitation of votes for approval of its Plan earlier this summer and Cenveo's Plan was approved by an overwhelming majority of its entire creditor body. Approximately 97% of Cenveo's first lien secured noteholders (the ‘First Lien Holders"’), 100% of its second lien noteholders, including the largest holder, Brigade Capital Management, and approximately 91% of general unsecured creditors all voted to approve Cenveo's Plan. These numbers represent overwhelming support from Cenveo's creditors for the Plan. The Plan was the result of the Company's global settlement with its various creditor groups and the Unsecured Creditors' Committee, including the Pension Benefit Guaranty Corporation, certain unions, and the indenture trustee for the unsecured noteholders. Upon its emergence from Chapter 11, the Company will be privately held with its largest shareholders comprised of institutional investors with tens of billions of dollars of capital under management. Additionally, the Company has entered into a commitment for a $175 million asset based revolving credit facility and is expected to only have approximately $68 million used upon emergence creating $65 million of liquidity when coupled with the expected cash on hand on the emergence date.”
August 16, 2018 – Gibson Brands filed with the U.S. Bankruptcy Court a monthly operating report for June 2018 [Docket No. 612]. For the month, the consolidated Debtors reported operating income of $2.9 million and a net loss of $6.3 million on $22.9 million in net sales, the net loss reflecting primarily (i) $6.1 million in restructuring costs and (ii) $2.6 million in interest expense. The restructuring costs included $2.7 million in professional fees, notably $1.25 million to Paul Weiss and and $0.95 million to White & Case. The Debtors further reported $25.1 million in cash disbursements and $18.1 million in cash receipts, the negative net cash flow of $7.1 million largely the result of the restructuring and interest related expenses noted above.
August 16, 2018 – The U.S. Trustee assigned to the Samuels Jewelers case appointed the following members to the Official Committee of Unsecured Creditors [Docket No. 108]: (i) Emily Warth of Asurion Services, (ii) Deepak Rao of Unique Designs, (iii) Mark Geller of M. Geller, Ltd, (iv) David Kirsten of Frederick Goldman, (v) Michael Indelicato of Rochester Diamonds and Gold Inc. and (vi) Ronald Tucker of Simon Property Group.
August 16, 2018 – Claire's Stores’ Ad Hoc First Lien Group filed an objection [Docket No. 786] to Oaktree Capital Management’s (“Oaktree”) July 19, 2018 motion seeking court authority to prosecute and settle claims on behalf of certain Debtors [Docket No. 649]. The objection asserts, “On September 17, the Debtors will ask this Court to consider a plan of reorganization embodying a global settlement negotiated at arms’ length by the Debtors, the official committee of unsecured creditors (the ‘Committee’) and the Ad Hoc First Lien Group. The global settlement is the culmination of months of negotiations and resolves a host of complex issues in these chapter 11 cases, including the release of all claims (the ‘Claims’) relating to the Debtors’ 2016 debt-for-debt exchange (the ‘2016 Exchange’). Crucially, under the global settlement’s terms, the first lien lenders have agreed to carve out $54 million from the proceeds of their collateral and deliver this value to unsecured creditors. Viewing the global settlement holistically, whether creditors are better off prosecuting or settling the CLSIP Claims is not an open question. Counsel to the Committee made that clear when stating only a ‘grand slam homerun’ could put unsecured creditors in a better position than the global settlement—a statement she made after being asked about the value of the estates’ avoidance actions.4 But, unlike the fiduciaries in these cases who negotiated the Plan in good faith, Oaktree is willing to sacrifice the consideration offered by the global settlement in favor of a protracted and costly litigation in the hopes that either (i) the Debtors dramatically increase the value of their enterprise in the interim, or, (ii) in the alternative, Oaktree extracts a hostage payment in exchange for their nuisance and hold up value, in both cases while the true fulcrum stakeholders—the Debtors’ first lien lenders—bear all of the risk associated with delay. Out of the money, Oaktree has little to lose. With over one hundred billion dollars under management, Oaktree can easily afford to gamble with the current settlement in hopes of achieving an increased recovery with delay tactics—all to the detriment of the estates. In that spirit of delay and obstruction, Oaktree now seeks standing to pursue the CLSIP Claims. But the Motion is devoid of merit and should be denied.”
August 16, 2018 – Claire's Stores filed an objection [Docket No. 784] to Oaktree Capital Management’s (“Oaktree”) July 19, 2018 motion seeking court authority to prosecute and settle claims on behalf of certain Debtors [Docket No. 649]. Oaktree’s motion argued that the Debtors’ 2016 debt exchange, pushed by Apollo Management Holding, L.P. (“Apollo,” described by Oaktree as “well known for the notorious zeal with which it ‘will aggressively protect[its] investments and defend [its] companies”), constituted a fraudulent transfer, noting: “This Motion concerns Apollo’s attempts to ‘aggressively protect’ its equity and debt investments in Claire’s Stores by requiring a Debtor, while it was insolvent, to undertake a complicated refinancing transaction (the ‘Affiliate Transaction’) pursuant to which Apollo and others exchanged distressed (and, in some cases, near worthless) debt in Claire’s Stores for new structurally senior debt.” The Debtor’s current objection, citing Apollo’s “further gamesmanship,” pushes back arguing that Oaktree’s motion threatens to unravel their heavily negotiated negotiation, “Oaktree cannot allege any basis by which the Global Plan Settlement should not be approved at confirmation. Oaktree does not explain how, if at all, the Global Plan Settlement fails to satisfy the standard for approval per Bankruptcy Rule 9019…Oaktree does not explain how, if at all, creditors would benefit by jettisoning a settlement that provides substantial and immediate cash recoveries to creditors and that is supported by the Creditors’ Committee, the Unsecured Notes Trustee, and the overwhelming majority of creditors. Oaktree does not make this case because it cannot make this case: as the Debtors will demonstrate at their confirmation hearing, the Global Plan Settlement fairly and appropriately resolves the claims raised by Oaktree’s Standing Motion as a part of a comprehensive restructuring that provides substantial recoveries to all creditors….Oaktree’s Standing Motion contradicts its stated views on enterprise value. Oaktree has repeatedly asserted that it is a fully secured creditor, and that the Debtors’ enterprise value materially exceeds the value of Oaktree’s Second Lien Notes. Oaktree has also stated that it will provide the Debtors with a bid that establishes this valuation and, presumably, Oaktree will submit an expert report on August 22, 2018, that adopts this valuation. How then can Oaktree demand to prosecute its Standing Motion that is predicated on a finding that Second Lien Notes are under-secured in whole or in part? If Oaktree is fully secured as it claims, Oaktree has no incentive or right to prosecute avoidance actions that, in Oaktree’s view, cannot improve Oaktree’s position in any way.”