June 5: Swine flu has now claimed
a corporate victim. So says a partner in a Dallas private equity firm
(Richmont Capital Partners) who is also the CEO of one of its portfolio
companies, Nukote International Inc., a manufacturer and recycler of
commercial printer cartridges that on June 3 filed for bankruptcy a
second time. -- Mike Schoeck
June 1: HSF Holding Inc. (Hawaiian Superferry), which is 69% owned by PE firm J.F. Lehman & Co., was
forced
to file for bankruptcy protection following a Hawaii Supreme Court
decision that found that the ferry operator could not stay in business
without completing an environmental impact study. --
Jamie Mason
May 29: Consolidated Bedding Inc.: The Tampa, Fla. mattress maker filed for Chapter 7, listing assets of less than $50,000 and debt of $100 million to $500 million.
May 28: Canadian commercial printing manufacturer Gandi Innovations Holdings LLC has filed Chapter 15. TA Associates Inc. acquired a minority stake in the company in September 2007. -- Kevin Fung
May 27: Sun Capital Partners Inc.-backed clothing chain Anchor Blue Retail Group Inc.
will sell 73 of its Most Purchasing Corp. stores back to Levi Strauss & Co. after filing for bankruptcy. --
Mike Shoeck
Meanwhile, Plymouth, Mich., auto parts manufacturer Metaldyne Corp. has filed
for Chapter 11 and turned to its indirect shareholder, RHJ
International SA, and Carlyle Group to buy up most of its assets. -- Jonathan Braude
May 19: JLL Partners Inc.-backed finance company J.G. Wentworth LLC, of Bryn Mawr, Pa., has fashioned a prepackaged restructuring and filed for bankruptcy. -- Ben Fidler
And is Clear Channel
hearing bankruptcy's song?
May 13: Bankrupt Roma Foods of Oklahoma Inc., which has
suffered more than $7 million in losses since December 2007 operating two restaurant chains, will seek final approval to access $2.5 million in debtor-in-possession financing on June 1. Roma Foods has been owned by Hestia Holdings LLC since December 2006, while Cingale LLC took over management of the company in April. --
Ben FidlerMay 7: PE-backed Riviera Group Pty Ltd., a Gold Coast, Australia-based manufacturer of speed boats, has been placed
into receivership by creditors. The company is owned by Ironbridge Pty
Ltd., based in Sydney, and Gresham Private Equity, of London.
Meanwhile, White Energy Inc., an ethanol power generator, filed
for bankruptcy. White Energy was taken private in August 2006 by Los
Angeles private equity firm Ares Management LLC and New York-based
Columbus Nova.
May 6: Crunch Fitness' parent
gets a workout: AGT Crunch Acquisition LLC, the New York owner of the Crunch Fitness chain and 21 affiliates, filed
prepackaged Chapter 11 petitions to carry out a sale to senior lenders.
May 1: Mortgage cos. Thornburg, Accredited fail:
Mortgage lenders Thornburg Mortgage Inc. and Accredited Home Lenders
Holding Co., long on the brink of collapse, both filed for Chapter 11
protection on May 1 with the intention of winding down. -- John Blakeley and Carolyn Okomo
April 30: Chrysler LLC files. Dealscape wonders "Is Chrysler PE's worst deal ever?"
Meanwhile, another fairly large company in the automotive sector was allowed to squeak into
Chapter 11 protection without much fuss. Mark IV Industries Inc., a Sun
Capital Partners Inc.-backed maker of engines, transmissions and other
products, also filed for Chapter 11. - Ben Fidler
April
29: Bankrupt Victor Oolitic Stone Co., which supplied the new Yankee
Stadium with limestone for its Great Hall and Legends suites boxes,
will seek access to its cash collateral. Its parent company is majority owned by Audax Management Co. LLC. affiliates. - Jamie Mason
April 28: Source Interlink rides bankruptcy bandwagon
It's a terrible time to be in the magazine/newspaper industry. Just ask
magazine publisher Source Interlink Cos. (NASDAQ:SORC), which filed for
a lender approved prepackaged Chapter 11 bankruptcy to get out from
underneath $1.9 billion in debt. - Gerald Magpily
April 22: Broder exchange offer faces severe test:
It seems that private equity-backed Broder Bros. Co. has gotten its
underwear in a bunch, warning of a possible Chapter 11 filing looming
in its future. The company, majority-owned by buyout firm Bain Capital
Inc. after a May 2000 equity purchase, was laid bare in May 2007 when
S&P had a negative outlook on the company. - Carolyn Okomo
April 21: PE-backed tomato producer Eurofresh Inc. made
a prenegotiated bankruptcy filing that gives holders of outstanding
senior debt the option of swapping it for equity in the reorganized
company. New York private equity firm Bruckmann, Rosser, Sherrill &
Co. LLC owns about 30.4% of Eurofresh's Series A preferred stock. - Michael Schoeck
Meanwhile, Buffets Inc.'s reorg plan has been confirmed, Masonite Corp. has won its disclosure statement OK, Six Flags Inc. is riding a debt exchange offer to skirt a bankruptcy filing, Bruno's Supermarkets LLC has hung a big sale sign in its window, and Hines Horticulture Inc. cultivates a new future. Elsewhere, G.I. Joe's Holding Corp. surrenders to reality, Indalex Holdings Finance Inc. wins its interim DIP, and Milacron Inc. wins final cash OK on DIP. See more on these distressed situations and bankruptcies, below.
April 19: Unable to crack the credit markets to refinance debt and confronted by lenders, concrete maker Dayton Superior Corp. filed
for bankruptcy. New York private equity firm Odyssey Investment
Partners Fund LP acquired Dayton in January 2000 and took the company
public in 2006. - Ben Fidler
Meanwhile, distressed and turnaround private equity firm Sun Capital Partners Inc. has taken on a new role
as a DIP lender to a few portfolio companies, though it maintains it's
not getting into the DIP business. See this Deal magazine feature for more. Also in The Deal's April 20 issue, Alvarez & Marsal's Jeff Feinberg takes up the issue of how PE portfolio companies can weather the storm. And Moody's Investors Service is revisiting the issue of whether dividend recaps can help sink sponsor-backed companies into bankruptcy.
April 16: Determining that a successful reorganization under Chapter 11 won't be possible,
convenience store chain Appalachian Oil Co. will be selling
its assets in a bankruptcy auction. Richardson, Texas, private equity
firm Titan Global Holdings Inc. acquired the company in September 2007. - Kevin Fung
Elsewhere, British bingo hall and gaming arcade operator Riva Gaming Group Ltd. proved to
be the gamble that fizzled for Hermes Private Equity Ltd., when a debt restructuring agreed to by Riva's lenders cost
the midmarket buyout shop almost all its equity. - Jonathan Braude
April 14: Following the fate of former relatives in the U.K. and U.S., private
equity-backed German discount chain DWW Deutsche Woolworth GmbH & Co. OHG has run for cover from creditors. - Andrew Bulkeley
Meanwhile, PE-backed cosmetics company Jane & Co. LLC won interim approval to tap $1.1 million of its DIP loan.
Elsewhere, Weisenbach, Germany-based Katz International Coasters GmbH, a manufacturer of beverage coasters primarily for beer producers, has been placed into insolvency protection. Katz is a portfolio company of German private equity firm CBR Management GmbH.
April 3: Greenville, Pa., aluminum fabricator Signature Aluminum Inc., filed for
bankruptcy citing declining aluminum prices and falling sales. The
company is owned by private equity firm H.I.G. Capital LLC.
Meanwile, overleveraged Zohar Waterworks LLC unveiled plans
to auction its assets with the aid of a $3.4 million
debtor-in-possession loan. Private equity firm Patriarch Partners LLC
is the ultimate owner. - Carolyn Okomo
Elsewhere, building insulation and shell contractor USI Senior Holdings Inc. can tap
its cash collateral on an interim basis. The Edina, Minn.-based debtor,
which is 75.8%-owned by private equity firm Wind Point Partners, filed
for Chapter 11 on March 31. - Jamie Mason
April 2: Big 10 Tire Stores Inc. filed
for bankruptcy in hopes of treading water long enough to sell a
debt-free version of itself to current private equity owner Sun Capital
Partners Inc. - Ben Fidler
Meanwhile, Quantum Equity Partners LLC-owned bulk trucking company F.T. Silfies Inc. has loaded up on some postpetition cash as the motor carrier works to haul itself out of bankruptcy. - Ben Fidler
ROUNDING OUT THE FIRST QUARTER
March 31: Sao Paulo-based freight airline company Varig Logistica SA filed
for Chapter 15. Varig Logistica and New York private equity firm Matlin
Patterson Global Advisors LLC purchased Brazil's ex-flagship carrier,
Viacao Aerea Rio-Grandense SA, out of bankruptcy in 2006.
March 25: German prefab home manufacturer Kampa AG is on the block.
The company, backed by Frankfurt PE firm Triton Beteiligungsberatung
GmbH, stopped all payments to creditors March 11 and announced it would apply to the courts for insolvency administration for itself and its subsidiaries. - Jonathan Braude
Meanwhile, Rileys Ltd., which operators billiard and poker game clubs in the U.K., was placed
into a prepackaged administration by its private equity owners,
Greenhill Capital Partners Europe and J.O. Hambro Capital Management.
March 24: Bankrupt Sportsman's Warehouse Inc. will seek interim
approval to tap a $85 million debtor-in-possession loan from General
Electric Capital Corp. as it moves to liquidate its inventory.
Sportsman's largest shareholder is Seidler Equity Partners. - Carolyn Okomo
March 22: Morton, Ill.-based MMC Precision Holdings Corp.
will have use of a $20 million debtor-in-possession loan as the bankrupt metal fabricating company searches for a buyer.
The company, which is backed by Dallas-based PE firm Brazos Private Equity Partners LLC
filed for Chapter 11 March 22 with seven affiliates. -
Jamie Mason
March 20: Sun Capital Partners Inc.-backed Indalex Holdings Finance
Inc. wants approval to use its cash collateral so that the bankrupt
aluminum extruder can reorganize. The Lincolnshire, Ill. company
filed for Chapter 11 March 20 with four affiliates. -
Jamie MasonMarch 18: Drug Fair Group Inc. and parent CDI Group Inc.
have filed
for bankruptcy with plans to sell 32 locations to Walgreen Co. Sun
Capital Partners Inc. acquired CDI, then the 22nd-largest drugstore
chain in the U.S., in December 2005, according to the firm's Web site. -
David ElmanMarch 10: Bayside Capital Inc.-backed Milacron Inc., a plastics processing technologies and industrial fluids supplier, filed for bankruptcy and plans to sell itself to its senior noteholders. - Jamie Mason
March
5: Designer handbag maker Lambertson Truex LLC, majority owned by
Samsonite Corp. itself a CVC Capital Partners Ltd. portfolio company, filed for Chapter 11. - Ben Fidler
Meanwhile, Nordic Capital-owned Swedish automotive plastics group Plastal Holding AB sought cover from creditors. - Andrew Bulkeley
March
4: Gryphon Investors portfolio company G.I. Joe's Holding Corp., which
operates 31 Joe's Sports outlets in three Pacific Northwest states, filed for Chapter 11. - Ben Fidler
And wedding jeweler Robbins Bros. Corp. has
filed
for Chapter 11 bankruptcy protection roughly four years after selling a
minority stake to private equity firms Weston Presidio and Dorset
Capital Management LLC. -
Christine Idzelis
Feb. 25: Orlando, Fla.-based swimwear retailer Everything But Water LLC filed for Chapter 11 with plans to sell its assets, most-likely to D.B. Zwirn Special Opportunities Fund LP, one of its hedge fund backers. - Ben Fidler
Feb. 19: Deflated by the steady decline of the automotive and
housing markets, Media, Pa. foam products maker Foamex International
Inc. has made its bed
in bankruptcy for the second time since 2005. MatlinPatterson Global
Opportunities Partners III LP is in negotiations on an asset purchase
agreement. - Ben Fidler
Feb. 17: Detour energy bar maker Forward Foods LLC filed
for Chapter 11. Days later, a Delaware judge granted the company access
to a $4 million debtor-in-possession loan from private equity owner
Emigrant Capital Corp. - John Blakeley
Feb. 12: A steep drop in demand for its products and liquidity constraints
have flattened
Aleris International Inc. TPG-Capital-backed Aleris became Feb. 12 the
largest private equity-owned company this year to tumble into
bankruptcy. -
David Elman
Feb. 6: Fortunoff returns to Chapter 11: Less than one year after buying Fortunoff Holdings LLC out of
bankruptcy for $80 million in cash, NRDC Equity Partners LLC has placed
the high-end retailer back under Chapter 11 protection. - John Blakeley
Meanwhile, Sun Capital Partners Inc.'s Fluid Routing Solutions Inc. landed in Chapter 11 Feb.6.
Feb. 5:
Bruno's Supermarkets LLC; Feb. 3:
Right Start Acquisition Co. (Hancock Park Associates); Feb. 2:
Edscha AG (Carlye Group); Jan. 28:
Blooming Marvellous Ltd. (Arev Securities hf).
By PEhub's count, 11 companies
went down in the first month of the year. Meanwhile, The Deal took up the issue of PE-backed bankruptcies Jan. 26, concluding worst may be
yet to come.
Jan. 23: Marine Drive Properties Ltd. hopes a ($2 million) DIP loan will help it sail out of restructuring proceedings.
Financial difficulties forced the British Columbia real estate
developer and Wyndansea Hotel Inc. to file for protection Jan.
15. Wyndansea is a joint venture between Marine Drive and private
equity firm Starwood Capital Group LLC. - Jamie Mason
Jan. 19: Wall Homes Inc. (Warburg Pincus LLC, Jen Partners LLC);
Jan. 16: Specialty Motors Group Holding Corp., or Von Weise Corp. (Sun
Capital Partners Inc.)
Jan. 15: Meanwhile, the publisher of the Minneapolis Star Tribune filed for Chapter 11,
done in the paper reported, by heavy debt and print advertising
declines. Avista Capital Partners bought Star Tribune Co. two years ago
for $530 million, less than half what McClatchy paid for it in 1998. -
Carolyn Murphy
Elsewhere, things seemed to have soured for Merisant Worldwide Inc., the company behind Equal sweetener. The Pegasus Capital Advisors LP portfolio company filed for bankruptcy Jan. 9.
Rounding out 2008, American Greetings Corp. said it planned to acquire Chicago rival Recycled Paper Greetings Inc. as part of a prepackaged Chapter 11. Cambridge, Mass.-based Monitor Clipper Partners Inc. acquired Recycled Paper in 2005 in a recapitalization whose estimated value was more than $250 million. Last year, Monitor Clipper invested another $15 million following the initial $130 million outlay in the recap, Moody's said. - Vyvyan Tenorio
Recycled Paper's investors, however, are miffed.
Meanwhile, CDX Gas LLC, and auto parts companies PPI Holdings Inc., Special Devices Inc. and Key Plastics LLC were among the latest PE-backed companies to file in mid-December.
Kicking off December, Carlyle Group portfolio company Hawaiian Telcom Communications Inc. filed for bankruptcy protection Dec. 1. Carlyle bought the company from Verizon Communications Inc. for $1.6 billion in 2005, including nearly $430 million in equity, and the filing followed months of negotiations with creditors, The Deal's Chris Nolter wrote.
Also early in the month, NWL Holdings Inc., the parent of National Wholesale Liquidators, got liquidators of its own. In 1998, Madison Dearborn Partners LLC acquired a 60% equity stake in the company.
Dallas-based trucking company Greatwide Logistics Services Inc. landed in Chapter 11 Oct. 20 after defaulting on payments earlier in the year. Investcorp and Hicks Holdings LLC had put nearly $275 million of equity in a $730 million leveraged recap of the company in December 2006, The Deal's David Carey noted.
Comfort Co. kicked off October with a bankruptcy filing to implement a debt-for-equity swap with senior lenders led by J.P. Morgan Chase Bank NA, The Deal's John Blakeley pointed out. Comfort, a Catterton Partners portfolio company, filed for Chapter 11 Oct. 3 alongside 10 affiliates. Meanwhile, another Catterton investment, Archway & Mother's Cookie Co., filed for bankruptcy Oct. 6. The news came days after Capricorn Holdings portfolio company Mrs. Fields Famous Brands LLC's prepackaged reorganization plan was confirmed. (Mrs. Fields filed in August. See more below.)
Meanwhile, rounding out September, Washington Mutual Inc. filed for bankruptcy protection. The Deal's Jamie Mason wrote:
"The Federal Deposit Insurance Corp. took control of WaMu's Washington Mutual FSB unit on Sept. 25 and sold it to J.P. Morgan Chase & Co. for $1.9 billion, leaving the Seattle-based bank holding company with little left in the way of operations. According to court papers, private equity firm TPG Capital has 5% or more of the voting securities in WaMu. TPG invested $2 billion in WaMu in April with co-investors. TPG's investment at that time was $1.3 billion. That investment has been wiped away."
Kicking off September, Mervyn's
sued its former private equity owners, Cerberus Capital Management LP and Sun Capital Partners, alleging its 2004 buyout structure drove it into Chapter 11.
Mervyn's filed for bankruptcy on July 29 and planned to tap its cash collateral and a $465 million debtor-in-possession financing. Cerberus, Sun and Lubert-Adler/Klaff Partners LP
acquired the Hayward, Calif., retailer in a $1.2 billion deal back in 2004. The retailer was done in by that toxic combination of lenders pulling financing and vendors ceasing shipments, which has put the choke on many retailers today.
Rounding out August, Cadence Innovation LLC
was the latest filing. Yucaipa Cos. has a 13.5% stake and another 52.7% owned by affiliates of hedge funds Black Diamond Capital Management LLC and Harbert Management Corp. For the auto parts maker, it's its second filing in five years.
Meanwhile, nearly three months after saying it was considering a prepack filing, Mrs. Fields on Aug. 24
filed for bankruptcy protection. The Salt Lake City-based cookie company, which is majority owned by Capricorn Holdings,
disclosed in a regulatory filing Aug. 15 it was facing a restructuring after
unveiling June 5 it was weighing the option.
Plastic pump maker
ContinentalAFA Dispensing Co. was among the latest Chapter 11 filings Aug. 7. The company, which is owned by Harbinger Capital Partners, won interim approval to tap its $20 million DIP loan the next day.
On July 21, auto parts maker DynAmerica Manufacturing LLC prepared to head to court for interim approval to tap its debtor-in-possession loan. The company has been backed by Chicago PE shop TMB Industries LLC since 2005, The Deal's Mike Schoeck wrote. DynAmerica won approval July 22.
Meanwhile, the U.K.'s largest wood and laminates retailer, Floors-2-Go Ltd. was placed into administration, the U.K. form of bankruptcy protection, The Deal's Jonathan Braude noted July 24. Alchemy Partners LLP took the Birmingham, England-based company private in 2007 for £52.4 million. Weeks later, its founders bought it back.
Back in the U.S., three more PE-backed companies filed the week of July 14. Pierre Foods Inc., which Madison Dearborn Partners LLC acquired in a 2004 deal worth between $150 million and $175 million, defaulted on its bank agreement and on July 15 filed for Chapter 11, securing a commitment for $35 million in debtor-in-possession financing. The news comes a day after Western Nonwoven Inc., which makes materials used in mattress manufacturing, filed for Chapter 11 with plans to sell most of its textile holdings to SBC Manufacturing Co. LLC for $4 million. Western is owned by a Cerberus Capital Management LP unit. Meanwhile, printing companies Vertis Inc. and American Color Graphics Inc. on July 15 made good on the first phase of their plan to file for bankruptcy and then merge. Nolter noted: "Equity stakes, including Vertis positions held by Thomas H. Lee Capital, Evercore Partners Inc. and Metalmark Capital LLC's stake in ACG, will be eliminated. Metalmark is a New York private equity firm spun out of Morgan Stanley in 2004, and later acquired by Citigroup Inc."
The anticipated Chapter 11 of retailer Steve & Barry's LLC, which is 50% owned by Boston's TA Associates, came July 9. Despite overall rising sales and comparable same-store revenue increases, it's possible the filing stemmed from the discount retailer felt victim to a liquidity shortfall.
Meanwhile, truck transporter JHT Holdings Inc. filed for Chapter 11 June 24 in the U.S. Bankruptcy Court for the District of Delaware. (Stonehouse Capital Partners, a fund managed by Goldman Sachs & Co., D.B. Zwirn & Co. and Spectrum Investment Partners acquired control of JHT from private equity firm American Industrial Partners in 2006, The Deal's Christine Idzelis wrote in 2007.)
To reorganize, the company has secured a $25 million debtor-in-possession loan from lender GE Capital Corp., as well as lenders and stockholders D.B. Zwirn and Spectrum, The Deal's Ben Fidler wrote June 25. For exit financing, JHT tapped Highland Capital Management LP, Spectrum and D.B. Zwirn for a $35 million first-lien revolver. It is unclear, Fidler wrote, who is providing a $60 million second-lien term loan.
Whitehall Jewelers, which is backed by Prentice Capital Management LP,
filed for Ch. 11 protection June 23. Thomas H. Lee Partners LP portfolio company Progressive Moulded Products Ltd., a Canadian auto parts maker
filed for bankruptcy protection June 20 and is seeking a cross-border restructuring, Fidler noted.
Whitehall is owned by hedge funds Prentice and Millennium Partners LP and Holtzman Opportunity Fund LP. Whitehall plans to finance its Chapter 11 stay with cash collateral and an $80 million DIP financing led by prepetition lenders Bank of America NA and Wells Fargo Retail Finance LLC, Mason wrote.
TH Lee is Progressive's majority owner, having paid $528 million for a majority stake in the company in 2004. Oak Hill Capital Partners was its previous owner. TH Lee holds 92% of Progressive's common stock and 87.5% of preferred shares, Fidler noted, citing court papers.
Elsewhere, Gemini Air Cargo Inc. flew into Chapter 11 June 18 for the second time. Gemini emerged in August 2006 controlled by an affiliate of Bayside Capital LLC and HIG Capital. The company said in a letter to employees it is seeking investors and hopes a deal will come together this summer.
Meanwhile, as some expected, Knoxville, Tenn.-based Goody's Family Clothing Inc. filed for bankruptcy protection June 9. The company, which is owned by New York hedge fund Prentice Capital Management LP, won approval for a $210 million debtor-in-possession loan. Prentice and GMM Capital LLC roped the company with a $318 million deal for Goody's in October 2005. It's familiar territory for Prentice.
Hammered by a nationwide decline in freight volumes, trucking company Jevic Holding Corp. on May 20 filed for Chapter 11 with a $60 million DIP loan from prepetition lender CIT Group/Business Credit Inc. and plans to liquidate. Jevic is a Sun Capital Partners portfolio company.
Meanwhile, BHM Technologies Holdings Inc.'s attorneys won approval May 21 for the company's $45 million DIP loan. New York buyout shop First Atlantic Capital Ltd. acquired BHM in 2006 and remains its majority owner.
Earlier in May, Solar Cosmetic Labs Inc., which makes Walt Disney Co. licensed skincare products and is backed by New England Capital Partners, filed for Chapter 11 May 6 and won approval to use $2.4 million in postpetition funding from lender KeyBank NA June 5. The Newton, Mass., private equity firm and Vigour Holdings SA Trust House were the only investors listed with at least a 10% stake in the debtor.
Meanwhile, Apollo Management LP's Linens 'n Things Inc. finally filed for Chapter 11 May 2, following weeks of anticipation. The Clifton, N.J.-based home goods retailer, which Leon Black's buyout shop took private in 2006 through a $1.3 billion LBO, won approval later that day to use its cash collateral and its $700 million debtor-in-possession loan from prepetition lender GE Capital Corp. New York-based Apollo, which owns 99.59% of the company, is expected to take a big hit on its investment.
Eos Airlines Inc. was for a short time in April the latest U.S.-based airline to go bankrupt, having filed for Chapter 11 April 11. Eos, which is backed by Golden Gate Capital, Sutter Hill Ventures and Maveron LLC, filed for Chapter 11 April 26 and ceased operations April 27. Golden Gate, Sutter Hill and Maveron took stake in the company, which offered business-class service between New York and London, in 2005 with $85 million to help get it off the ground.
The EOS filing came the day after Washington, Mo.-based boat maker Challenger Powerboats Inc. filed for Chapter 7 liquidation April 25, in a move that will enable unsecured creditors to recoup some of their claims. The company was kept afloat by Dutchess Private Equities Fund Ltd., which pumped more than $20 million into the company between 2003 and 2007.
Challenger and Eos' news also came nearly three weeks after another PE-backed bankruptcy made news April 8. Electric power plant operator North Carolina Power Holdings LLC, which was placed in involuntary Chapter 11 on March 17 by its private equity owner Vulcan Capital Management, saw two of the firm's affiliates call for the immediate appointment of a trustee. But the company's secured lender Del Mar Onshore Partners LP moved to block the request and dismiss the bankruptcy entirely, calling the request "premature." A hearing had been set for April 10. Judge A. Thomas Small was expected to enter an order April 9 to postpone the hearing until May 1, the New York firm's counsel told Blakeley.
Kicking off April, Denver-based restaurant chain operator Vicorp Restaurants Inc., which Wind Point Partners and other co-investors closed a $225.5 million leveraged buyout of in 2003, filed for Chapter 11. Vicorp owns and operates the Village Inn and Bakers Square restaurants. Fairmont Capital took the company private in a $174 million deal in 2001. The company plans to close 56 restaurants and is reviewing underperforming assets. It has secured an agreement with lenders for a $60 million debtor-in-possession loan, according to a statement April 3.
March 17 marked another PE-backed bankruptcy filing date, when Powermate Corp., an Aurora, Ill.-based portable electric generator maker, filed for Chapter 11 in hopes of selling its assets through a speedy Section 363 sale. The company was at the time the latest in Sun Capital Partners portfolio to go belly-up.
Leiner Health Products Inc. filed for bankruptcy March 10, six years after its initial Chapter 11 filing, and said it would receive $74 million in DIP financing. The company's petition indicates Golden Gate Capital and North Castle Partners affiliates each own 46.82% of preferred shares. After emerging from bankruptcy protection, Leiner again fell on tough times last year. The Deal's David Carey explained that upon the 2002 filing:
"North Castle led a $20 million bailout financing. The firm wound up with a profit on its $100 million investment when Leiner was recapitalized in April 2004.
"In the recap, North Castle cashed out its existing stake and tapped capital from a second recently raised fund to reinvest. San Francisco-based Golden Gate came in as a co-sponsor.
"Each firm invested $131.5 million of equity in 2004 and owns slightly less than 50% of Leiner."
Meanwhile, kicking off March, Willis Stein & Partners LLC-backed Ziff Davis Media Inc. filed for bankruptcy March 5, nearly seven months after hiring restructuring firm Alvarez & Marsal LLC to help restructure its debt. The company emerged, silently, July 1.
Rounding out February, Warburg Pincus-backed Wellman Inc., a Fort Mill, S.C., resins maker, filed for Chapter 11 on Feb. 22 amid a heavy debt load. The filing came two days after Sun Capital Partners-owned Lillian Vernon Corp.'s. The direct-mail and online retailer filed for bankruptcy Feb. 20. Sun Capital bough Lillian Vernon from Direct Holdings Worldwide LLC, an entity formed by Ripplewood Holdings LLC and ZelnickMedia, in June 2006 for undisclosed terms. Direct Holdings took the company private in 2003 in a $60 million deal after years of losses. (Sun Capital is also an investor in Sharper Image Corp., which filed Feb. 19.) That news came just days after Victor Plastics Inc., which is majority owned by Minneapolis private equity firm Spell Capital Partners LLC, found Feb. 15 a stalking-horse bidder in River Bend Industries, which also produces plastics for original equipment manufacturers. North Liberty, Iowa-based Victor filed for bankruptcy Jan. 15.
Before Lillian Vernon, the last PE-backed company to hit the skids was BWAS Holdings Inc., a KPS Special Situations Funds portfolio company and maker of thermoplastic assemblies (tubes used for flow ducts and fender liners), which filed for bankruptcy protection Feb. 12. The company hopes a $30 million DIP loan will help it reorganize. The news came a day after carburetor and fuel injection systems maker Holley Performance Products Inc. of Bowling Green, Ky., filed for protection. Too much leverage forced the company, which is largely owned by private equity firm Kohlberg & Co., into Chapter 11. (For more on private equity-backed, transportation-related companies that have found themselves in bankruptcy, see below.)
The Deal's John Morris took up the issue of PE-backed companies going under Feb. 4. PEHub's Dan Primack also did so Feb. 6.
HOUSING DOWNTURN'S TO BLAME
- Fortunoff Fine Jewelry and Silverware LLC went the way of bankruptcy Feb. 4, filing for protection and agreeing to a $100 million bailout by NRDC Equity Partners LLC. In November 2004, Trimaran Capital Partners LLC and K Group acquired a majority stake in Fortunoff for undisclosed terms.(The company found itself seeking bankruptcy protection again, a year later.)
- The same day, Wickes Holdings LLC's Wickes Furniture, (another Sun Capital holding, which it picked up in 2002) filed for protection and has a $30 million DIP loan from Wells Fargo Retail Finance.
- Morris on Feb. 4 also pointed to other companies suffering indirectly from the housing downturn, like Propex Inc., which filed for bankruptcy protection in January. Sterling Group LP, Genstar Capital LLC, Laminar Direct Capital LP and BNP Paribas SA bought the carpet backing and fabrics company in 2004 for $349.3 million.
- In early November, Hoboken Wood Flooring LLC fell victim to a slowdown in home construction, Morris noted, and the Wayne, N.J., company taken-private by Chicago's Code Hennessy & Simmons LLC in 2005 when it had more than $500 million in revenue, filed for liquidation, claiming it didn't have the finances to reorganize. Its case was dismissed Nov. 16.
TRANSPORTATION COS. SPUTTER
- Performance Transportation Services Inc. won final approval of its $15 million debtor-in-possession financing Jan. 18. The Allen Park, Mich.-based auto transporter filed for Chapter 11 alongside 13 affiliates on Nov. 19, only 10 months after emerging from an earlier Chapter 11 case. Los Angeles private equity firm Yucaipa Cos. LLC got a majority stake in the company when it emerged from its first bankruptcy in January 2007.
- Omaha-based Heartland Automotive Holdings Inc. sought protection Jan. 7, citing increasing fuel prices and a dispute with Jiffy Lube International Inc. Quad-C Partners VI LP is its majority shareholder, having put $39 million in equity into the company in 2002. Heartland operates 438 Jiffy Lube stores across 20 states. It estimated $334 million in assets and $396 million in debts as of Nov. 29.
- Patriarch Partners-backed emergency vehicle company American LaFrance LLC filed Jan. 29. Patriarch Partners Agency Services LLC, which is its postpetition lender, has now made a $150 million credit bid for the company, making it a stalking-horse bidder.
- Clayton, Dubilier & Rice-backed moving van group Sirva filed for protection to refinance its debt. As The Deal's Ben Fidler and Lou Whiteman noted of Sirva's past:
"Sirva has long been a blemish on the portfolio of New York buyout firm Clayton, Dubilier & Rice Inc. The buyout firm completed its $350 million acquisition of Allied Van Lines and merged it with North American Van Lines to create Allied Worldwide in November 1999. NAVL was renamed Sirva in February 2002.
"CD&R took Sirva public in November 2003, only to see it struggle to get its books in order as a public entity. Sirva said in March 2005 that its 2004 results would be delayed and that it would restate its profits from 2001 to 2003. Sirva finally produced results for 2004 in September 2005, but later revised those statements and warned annual financial statements from 2002 and 2003 couldn't be trusted.
"Besides CD&R, which owns 31.88% of Sirva, ValueAct Capital Master Fund LP is also a major shareholder in the debtor with a 20.9% stake."
- Further, Eagan, Minn.-based buffet-style restaurant chain Buffets Inc. got interim approval on Jan. 23, for a $385 million postpetition loan with units of Credit Suisse Group, a day after filing for bankruptcy protection alongside 11 affiliates to restructure its debt after defaulting on the $321 million in 12.5% notes. New York private equity firm Caxton-Iseman Capital LLC owns a 77% stake in the company.
Others, which peHUB's Dan Primack pointed to, include:
- Silver State Helicopters, which filed for Chapter 7 five months after selling a 60% stake in itself for nearly $30 million to Eos Parnters, and, more immediately, after Citigroup Inc. stopped providing loans to the flight school's students.
- Outsourced sales and consumer management services provider PRC LLC, filed for bankruptcy protection Jan. 23 and was subsequently allowed to access a $30 million DIP from its senior lenders. Diamond Castle Holdings LLC took the company private in November 2006, buying it from IAC/InterActiveCorp for $286.5 million.
THE ROLE OF RATINGSBut which companies tumble into bankruptcy may have something to do with their private equity backers as much as the companies' doings themselves.
Morris noted in February:
"In a report last month, Moody's Investors Service surveyed buyouts to see which sponsors milked their holdings for dividends early on in the investment's life. ... Moody's singled out TH Lee and Apollo for drawing dividends from one-third of their companies in the first year post-LBO. Both firms have a high proportion of distressed-level debt for their deals. By contrast, four firms that were much less prone to suck cash out of their portfolio companies-Cerberus Capital Management LP, Goldman Sachs Capital Partners, TPG and Warburg Pincus-all did better in the distressed rankings."
