Curo files for Chapter 11 protection

June 2024 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

June 2024 Issue

In a move intended to eliminate $1bn in debt and hand control of the company to its lenders, consumer finance company Curo Group and certain subsidiaries have filed for Chapter 11 bankruptcy protection.

Chicago-based Curo owes $2.1bn to a group of investment funds that include Oaktree Capital Management, Caspian Capital and Empyrean Capital Partners. The company also intends to file recognition proceedings in Canada under part IV of the Companies’ Creditors Arrangement Act.

The filing will allow Curo to implement the terms of a restructuring support agreement (RSA) with its first lien lenders – three quarters of whom support the RSA. Given this broad support, Curo expects to complete its bankruptcy restructuring within 120 days.

The RSA sets forth terms for a consensual restructuring plan that is expected to reduce Curo’s debt by approximately $1bn – saving the company approximately $75m in cash interest annually and enabling it to invest in long-term growth.

The company has also received a commitment of up to $70m of new capital in the form of debtor-in-possession (DIP) financing from certain of the company’s prepetition stakeholders, subject to satisfaction of certain customary conditions.

The DIP financing, which is subject to court approval, is expected to support Curo’s ongoing operations during the court-supervised process.

Operating an omnichannel platform providing comprehensive credit solutions to help customers achieve their financial goals, Curo’s decades of experience with alternative data power the underwriting and scoring engine, mitigating risk across the full spectrum of credit products. The company operates under a number of brands in the US and in Canada.

Throughout the course of the Chapter 11 process, Curo branches will remain open and continue to operate as usual and serve customers in the US and Canada. Customer loans are also unaffected by the bankruptcy filing.

“Implementing this restructuring through a court-supervised process is the most efficient path to enable us to make changes to our capital structure that will allow us to continue to grow responsibly, execute with excellence and solidify the foundation of the company,” said Doug Clark, chief executive of Curo. “The significant support we have received from our lenders and stakeholders will allow us to move forward expeditiously as we continue to provide our customers with a variety of convenient, easily accessible financial services.”

Serving as legal counsel to Curo is Akin Gump Strauss Hauer & Feld LLP, with Cassels Brock & Blackwell LLP serving as Canadian legal counsel and Oppenheimer & Co. Inc., serving as investment banker. Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP are serving as legal counsel to the investment funds, with Houlihan Lokey Capital, Inc. serving as financial adviser.

“We are confident in our ability to successfully exit the Chapter 11 process as a stronger company with significantly less debt and we will be better positioned to achieve long-term profitable growth,” concluded Mr Clark. “We are grateful for the ongoing support of our vendors, landlords and business partners, and with the changes that will result from the Chapter 11 process, our future is bright.”

Fraser Tennant