Bankruptcy Debrief for the Week of April 30th


Gibson Brands faces the music, looks to lean business operations in chapter 11

Famous guitar maker Gibson Brands filed for chapter 11 seeking to restructure and refocus the company on its musical instrument business and professional audio products. The Gibson Global Innovation business is set to be wound down.

The proposed reorganization is outlined in a restructuring support agreement (RSA) entered with holders of about 70% in total amount of Gibson’s senior secured notes, including investment firms Silver Point Capital, Melody Capital Partners and KKR Credit Advisers. Under the RSA, if approved, the noteholders would receive equity in the reorganized company.

The noteholders have also agreed to provide up to $135 million to fund the businesses during the case. As of the filing, the company had about $500 million of funded debt, comprising $100 million of secured loans, $375 million of secured notes, $24 million Global Innovation loan and estimated $15 million in general unsecured claims.

Read Gibson’s restructuring advisor Brian J. Fox’s declaration in support of the first day motions here.

View the chapter 11 petition here.


Relativity Media can’t make the cut alone and resorts to a sale through chapter 11

Struggling Relativity Media has signed an agreement to sell the business to UltraV Holdings using the chapter 11 process only three years after filing for chapter 11 for the first time. The buyer is a joint venture of Sound Point Capital Management and RMRM Holdings, and the proposed sale will require court approval.

The sale is expected to close in less than 60 days, and UltraV intends to continue Relativity’s operations and to, provide funding to continue developing and distributing content through existing and future platforms, including Netflix.

As of the filing, the company listed liabilities of $500 million to $1 billion and assets of $100 million to $500 million.

View the chapter 11 petition here.


Iron Chef’s Garces Restaurant Group seeks bankruptcy protection to facilitate a sale

Garces Restaurant Group, which has seen its restaurant chain dwindle to 13 locations from as  as many as 30, filed for chapter 11 amid mounting financial challenges. The company will look to sell itself to Ballard Brands for $5 million, pending the court’s approval.

The company’s revenues reached as much as $40 million annually, but a crushing blow was delivered when the Atlantic City casino, The Revel, closed in chapter 11, immediately closing four restaurants that were bringing in $13 million a year.

Those closures are not the only issue that caused stress for Garces Restaurant Group. There are numerous investor lawsuits alleging that, among other things, Garces Restaurant Group was “in substance and operation a Ponzi scheme” and owed nearly $850k to one food distributor. Another lawsuit stated that founder Jose Garces secured a $9 million loan without investors’ knowledge and ignored investors’ requests to step down. At least seven lawsuits have been filed relating to his alleged mismanagement.

At the time of the filing, the assets were listed between $100,000 and $500,000 and liabilities of $1 million to $10 million, including a $7.5 million secured loan and $500,000 charge card debt, among other things.

Read CEO Jose Garces’ declaration in support of the first day motions here.

View the chapter 11 petition.



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