Below is our initial take on recent bankruptcy-related developments:
Tupperware cancels auction, agrees to lender takeover | Reuters
On Tuesday, bankrupt Tupperware Brands concurred to sell its company for $23.5 million in and over $63 million in debt relief to a group of lenders, canceling its intention for an open-market auction of its assets.
S&K Take: There appears to be a resolution of a gaggle of issues in the Tupperware case, with the Debtors, the ad hoc group of lenders and the UCC coming together on a settlement. You might recall from last week that the lenders were disillusioned with the filing and the sale, and were seeking a conversion or dismissal (as well as validation of their right to credit bid in a sale). The UCC interjected, raising Fisker 1.0 issues with the ad hoc group’s right to credit bid and noting that the lenders leading the group bought their debt at extremely discounted prices. The resolution will sell Tupperware’s assets to the lenders, but not solely in exchange for debt. The sale contemplates $23.5 million in cash with a $63.8 million credit bid (as well as some partial satisfaction of the PBGC claim, which is purportedly one of the largest unsecured claims). UCC counsel stated that this could result in a 10% recovery for GUCs, which would be a feat considering the $818 mm in secured debt at the outset of the cases. The settlement contemplates that the sale process would be canceled. Judge Shannon has scheduled a hearing for next Tuesday to consider what he characterized as a transaction that is “hardly typical but responsive to the needs of the case”.
American Tire Distributors lines up sale to lenders in bankruptcy | Reuters
American Tire Distributors has filed for bankruptcy for the second time in six years. The company is proposing a sale to its lenders due to financial struggles and limited liquidity in the post-pandemic market.
S&K Take: Little chapter 22 action coming in this one. American Tire last filed in 2018 (although it doesn’t feel like that long ago) but finds itself back in bankruptcy, this time in front of Judge Goldblatt in Delaware. The Judge approved a $1.12 bn DIP facility on Thursday with a massive roll-up component (only $250 million in new money) noting that such a financing is “what the market would bear.” Stop me if you have heard this—the lender group will serve as stalking horse in a potential credit bid for the company’s assets. The company filed with $1.9 bn in funded debt and $600 million in trade. Not much acrimony in this one to date, although we will keep our eyes peeled.
TGI Friday’s Seeks New Financing in Preparation for Bankruptcy | Bloomberg
TGI Friday's is exploring bankruptcy options due to financial struggles. The company is seeking financing to continue operations during the bankruptcy process and emerge as a viable business.
S&K Take: Another casual dining chain on the bankruptcy horizon, this time TGI Friday’s. TGIF joins a host of other similar names like Red Lobster (currently emerging) and Hooters (also on the restructuring radar) as financially distressed. Based on the reporting, lenders are in talks about providing a DIP. Fast casual (think Chipotle) and the pandemic have had an adverse impact on the entire space, although the loss of Brian Flanagan and Doug Coughlin has also assuredly contributed to TGIF’s distress.
