Bankruptcy News

Claire's Stores Chapter 11 Petition Filed

Claire's Stores and 12 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 18-10584. The Company, which retails specialty jewellery and accessories, is represented by Daniel J. DeFranceschi of Richards, Layton & Finger. According to documents filed with the Court, "The Debtors do not believe that their current balance sheet is sustainable over the long term. Indeed, the Debtors have approximately $1.4 billion in funded debt that will mature in approximately one year or less. The Debtors' levered balance sheet has had a corresponding impact on the Debtors' liquidity and growth." The Company enters Chapter 11 having executed a restructuring support agreement (RSA) with members of an ad hoc first lien group and its equity sponsor, Apollo Global Management. The RSA includes a term sheet outlining the material terms of a pre-negotiated plan of reorganization. Claire's Stores notes, "Among other things, the transactions contemplated by the Plan Term Sheet will substantially deleverage the Debtors' capital structure and bring the Debtors' otherwise healthy business into alignment with its operating environment." The pre-negotiated plan provides for the following: (i) a new money investment of up to $575 million, comprised of (a) a $75 million new exit ABL revolving credit facility, (b) a $250 million new exit first lien term loan and (c) up to $250 million of preferred stock or equity interests in the reorganized Debtors; and (ii) a substantial reduction of the Company's existing funded debt. The Company notes, "The transactions contemplated by the Plan Term Sheet provide for a comprehensive balance-sheet restructuring, effort to right-size the Debtors' footprint, preserve the going-concern value of the Claire's Group's businesses, and protect the jobs of thousands of the Debtors' employees."

Orion Healthcorp Chapter 11 Petition Filed

Orion Healthcorp and 20 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Eastern District of New York, lead case number 18-71748. The Company, which provides outsourced business services to physicians, is represented by Thomas R. Califano of DLA Piper. According to a corporate release, the filing was initiated in order to "facilitate an orderly and efficient sale of its businesses." The Company is in active discussions with several interested parties, is working to finalize terms and expects to announce asset purchase agreement(s) in the near term. Businesses included in the Chapter 11 filings and related sale process are as follows: Allegiance and Orion Healthcorp, the Company's two revenue cycle management businesses; Integrated Physician Solutions, which contains both physician practice management and group purchasing capabilities; and the holding company for New York Network Management (NYNM). The NYNM independent practice association and management company that collectively provide contracting and credentialing services to independent New York physicians are not included in the filings, although they will be included in the sale process. "After evaluating a range of possible alternatives, Constellation has determined that our various business divisions will be better positioned for long-term growth and success under new ownership with the financial strength necessary to invest in their offerings and opportunities," said interim C.E.O. Timothy J. Dragelin. Orion Healthcorp has secured a commitment for $7.5 million in debtor in possession financing from Bank of America to support its ongoing operations during the sale process. A corporate release explains, "When the Board of Directors became aware that there were discrepancies in the Company's stated and actual earnings, it took immediate action, including removing a number of executives who participated in these activities and retaining outside legal and forensic accounting counsel to conduct an investigation of the matter."

China Fishery Group Objection Filed

China Fishery Group's ad hoc committee of senior noteholders filed with the U.S. Bankruptcy Court an objection to the Company's notice of sale of a non-debtor vessel. The committee asserts, "The Court should not sanction the Chapter 11 Trustee's proposed sale of the Damanzaihao because the proposed sale violates the Indenture and would provide a windfall to the Chapter 11 Trustee and CFG Peru Singapore's other stakeholders at the expense of the Senior Noteholders, which are SFR's only funded debt claim holders. Furthermore, to the extent that the Court does permit the Chapter 11 Trustee to sell the Damanzaihao, the Court should require the Chapter 11 Trustee to cause SFR to hold any resulting cash sale proceeds in a segregated account for the benefit of the Senior Noteholders, pending further order of the Court….The Chapter 11 Trustee has not demonstrated the ability or the intention to repay SFR any funds transferred to CFG Peru Singapore on account of the Damanzaihao sale. (defining fraudulent transfers as including transfers where 'the debtor would incur debts that would be beyond the debtor's ability to pay'). To the extent that the Chapter 11 Trustee seeks to transfer the Damanzaihao sale proceeds to CFG Peru Singapore pursuant to the Financing Order or otherwise, the Court should not sanction such value leakage and should instead require any such proceeds to be held in a segregated account for the benefit of the Senior Noteholders."

Real Industry Extension Sought

Real Industry filed with the U.S. Bankruptcy Court a motion to extend the exclusive period during which the Debtors have the exclusive right to file a Chapter 11 plan and solicit acceptances thereof through and including July 15, 2018 and September 13, 2018, respectively. The motion explains, "During the upcoming weeks and months, Real Industry will continue to work with major stakeholders to confirm its chapter 11 plan. Similarly, the Real Alloy Debtors will sell their assets and dissolve their estates pursuant to a resolution strategy that has the support of key creditor constituencies. Terminating exclusivity for either Real Industry or the Real Alloy Debtors risks disrupting the delicate status quo that the Debtors have worked so hard to achieve." The Court scheduled an April 26, 2018 hearing to consider the extension motion, with objections due by March 30, 2018.

Orexigen Therapeutics Bid Procedures Approval Sought

Orexigen Therapeutics filed with the U.S. Bankruptcy Court a motion for an order approving bidding procedures and protections for the sale of substantially all assets of Debtor; approving procedures for the assumption, assignment and rejection of designated executory contracts and unexpired leases; scheduling an auction and sale hearing; approving forms and manner of notice of respective dates, times and places in connection therewith and approving the sale of the Debtors' assets free and clear of claims, liens and encumbrances. The motion explains, "Any such Stalking Horse Purchase Agreement shall include a minimum cash purchase price for the Purchased Assets of not less than $75,000,000. Break-Up Fee of up to 5% of its Stalking Horse Bid as set forth in its Stalking Horse Purchase Agreement and reimbursement of its reasonable and documented out-of-pocket expenses and disbursements not to exceed $2,000,000. Includes a minimum cash purchase price for the Purchased Assets of not less than $75,000,000." The following dates are fixed: bidding procedures hearing on April 5, 2018; bid deadline on May 21, 2018; auction on May 24, 2018; sale and assignment objection deadline on April 30, 2018; sale hearing on June 5, 2018 and deadline to close proposed sale transaction on July 2, 2018.

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