Bankruptcy Debrief for the Week of March 23rd


Time’s up as The Weinstein Company finally ends up in chapter 11

No stranger to headlines, The Weinstein Company filed for chapter 11 to facilitate a sale of the company after numerous deals fell through prior to the filling. The company faced stress and scrutiny after co-founder Harvey Weinstein was fired amidst countless sexual misconduct allegations. The Weinstein Company has said that Lantern Capital Partners, a Texas-based private equity firm, will act as the stalking horse bidder for the company’s assets.

Additionally, the company released all parties that “suffered or witnessed any form of sexual misconduct by Harvey Weinstein” from any nondisclosure agreements, a move that could open the doors for further allegations and lawsuits. While individual civil and criminal suits against Harvey Weinstein will proceed, the filing does pause multiple suits filed against the company, meaning that those plaintiffs will be subordinate to the secured creditors, who will be paid pennies on the dollar, making the likelihood of the plaintiffs being paid is slim.

The company’s main assets include a film library of 277 feature films that generated over $2 billion in box office receipts, its television business, an unreleased film portfolio containing four distribution-ready films and other projects in process.

As of the filing, the company listed $500 million to $1 billion in assets and debt, $350 million of which was cited as funded debt. Secured lender Union Bank will be providing financing for the company during the case.

Read Chief Restructuring Officer Robert Del Genio’s declaration in support of the first day motions here.

View the chapter 11 Petition here.


As mall retail loses its luster, Claire’s Stores files chapter 11 to reorganize

Shopping mall staple Claire’s Stores filed for chapter 11 to restructure the company with the support of the private equity sponsor Apollo Global Management. Claire’s asserts that their ear piercing experience is something that cannot be duplicated by retailers biggest threats, the internet.

Despite the differentiation of Claire’s, a leading specialty retailer of jewelry, accessories and beauty products for kids and teenagers, it is not immune from declining retail traffic and sales. Just within the last week Toys R Us, also in chapter 11, indicated it will close all stores as it is unable to compete.

Prior to the filing, the company entered a Restructuring Support Agreement (RSA) with holders of 72% of the first-lien debt, 8% of the second-lien notes and 83% of the unsecured notes. The agreement, if approved by the court, would slash a significant portion of the company’s debt, and cancel existing equity and give equity in the reorganized Claire’s to the first-lien lenders, which coincidentally include Apollo, which holds the majority of the prepetition equity to be cancelled.

The company is aiming for a quick trip through chapter 11, but the proposed plan is likely to face opposition from creditors that did not partake in the RSA. As of the filing, the debtors had about $1.878 billion of funded debt and $245 million of non-debtor obligations.

Read CFO Scott E. Huckins’s declaration in support of the first-day motions.

View the chapter 11 Petition here.


Steel City Media tunes into chapter 11 to address debt

MGTF Radio Company, d/b/a Steel City Media, ended up in chapter 11 after the market softening caused issues with its loan facility. The company operates major radio stations Q92.9 and BOB-FM 96.9 in Pittsburgh and KFK Country 94.1, KC 102.1, Mix 93.93 and Q104 in Kansas City.

The company intends to use the chapter 11 process to reorganize the company. Steel City Media states it remains profitable and will generate enough cash from operations to meet the expenses during the case. More specifically, Steel City is looking to address its senior lender’s loan, which despite being paid down over 35% still ended up in technical noncompliance because of the slowing market.

At the time of the filing, the company cited about $61.5 million of debt, $37 million of which is secured. The petition lists assets of $50 million to $100 million.

Read VP Michael J. Frishling’s declaration in support of the first day motions here.

View the chapter 11 Petition here.

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