TGI Fridays files for bankruptcy protection

BY Richard Summerfield

Citing financial challenges resulting from the coronavirus (COVID-19) pandemic and problems with the company’s wider capital structure, restaurant chain TGI Fridays Inc filed for Chapter 11 bankruptcy protection on Saturday in the Northern District of Texas.

In a filing with the court, the company listed both assets and liabilities in the range of $100m to $500m. TGI Fridays, which is privately owned by TriArtisan Capital Advisors, will use the Chapter 11 process to “explore strategic alternatives in order to ensure the long-term viability of the brand”.

Founded in 1965 as a bar in New York, TGI Fridays rapidly expanded over the decades, peaking in 2008 with 601 restaurants in the US and a $2bn business. Today, the company counts 163 restaurants in the US, down from 269 last year. It closed 36 in January and dozens more in the week prior to the filing. The company’s sales in the US were $728m in 2023, down 15 percent from the prior year, according to Technomic.

However, thanks to the company’s franchise model, TGI Fridays said it only owns and operates 39 restaurants in the US, which is just a fraction of the 461 TGI Fridays-branded restaurants around the world. A separate entity, TGI Fridays Franchisor, owns the company’s intellectual property and has franchised the brand to 56 independent owners in 41 countries. Those other locations remain open.

“The next steps announced today are difficult but necessary actions to protect the best interests of our stakeholders, including our domestic and international franchisees and our valued team members around the world,” said Rohit Manocha, executive chairman of TGI Fridays. “The primary driver of our financial challenges resulted from COVID-19 and our capital structure. This restructuring will allow our go-forward restaurants to proceed with an optimized corporate infrastructure that enables them to reach their full potential.”

In September, British restaurant operator Hostmore abandoned plans to buy TGI Fridays after it was removed as the manager of TGIF Funding, which owns the right to collect royalties from the restaurant chain franchise. Hostmore's shares plummeted 90 percent, eventually leading it to announce plans to enter administration due to overwhelming debt.

The US casual dining industry has endured a turbulent few months. In September, a US bankruptcy judge approved a reorganisation plan for seafood chain Red Lobster after years of mounting losses. Italian American food chain Buca di Beppo filed for bankruptcy protection in August.

News: TGI Fridays operator files for bankruptcy amid financial woes

Auto parts provider ATD files for Chapter 11

BY Fraser Tennant

In what is the latest auto parts provider to head to bankruptcy court, American Tire Distributors (ATD) has filed for Chapter 11 bankruptcy in order to implement a restructuring support agreement (RSA).

The Chapter 11 filing is the second time ATD has sought bankruptcy protection in six years – one of a number of auto parts retailers and distributors that have been battling financial distress in 2024 as they face headwinds from several industry challenges.

The RSA contemplates transitioning ownership of the company through a competitive sale process with certain lenders, including credit funds and accounts managed by Guggenheim Partners Investment Management, LLC, KKR, Monarch Alternative Capital LP, Sculptor Capital Management, Inc. and Silver Point Capital, L.P.

The contemplated transaction would eliminate a significant amount of debt and provide access to new capital, positioning the business as a stronger partner to manufacturers and customers who rely on ATD to improve their productivity, profitability and performance.

“For nearly 90 years, ATD has continuously evolved to meet the dynamic shifts and challenges facing the auto aftermarket,” said Michael Feder, interim chief executive of ATD. “We are now taking further steps to position ATD for our next phase as a stronger distribution partner to our manufacturers and customers as we return to our roots and hone our core value proposition as a wholesale distributor.

“Since being named interim chief executive, I have seen how impactful our business is to the manufacturer partners, customers, associates and communities we support, and this process will serve to reinforce those relationships,” he continued. “Our operations remain steady and, by moving forward with new owners on stronger financial footing.”

To ensure continued business operations, ATD has secured commitments for $250m in new financing from the aforementioned lender group, as well as access to $1.2bn in debtor in possession (DIP) financing from lenders under the company’s prepetition asset-based lending (ABL) facility , in the form of post-petition financing credit facilities. 

Upon court approval, the DIP financing, coupled with cash generated from the company’s ongoing operations, is expected to provide sufficient liquidity to support the business during the Chapter 11 and RSA processes.

Mr Feder said the company was confident that entering into these processes with the support of the lender group would enable ATD to execute its business strategy and achieve our long-term objectives.

News: American Tire Distributors lines up sale to lenders in bankruptcy

Truck parts maker Accuride files for Chapter 11

BY Fraser Tennant

A victim of the freight industry recession in the US, commercial-truck parts manufacturer Accuride, along with a number of its US entities, has filed for Chapter 11 bankruptcy in order to facilitate the restructuring of its North American business.

The company’s liabilities are estimated to be between $500m and $1bn, according to the filing.

Accuride is the latest company in the US transport sector to file for bankruptcy this year amid overcapacity in the freight industry that is hurting both truckers and parts suppliers.

The company’s proposed restructuring, the result of extended negotiations with its lenders, will facilitate economic improvements for operations and significantly reduce funded debt from its balance sheet.

Accuride’s Mexican, European and Asian subsidiaries are not included in the Chapter 11 filing.

To ensure that it continues conducting its business in the ordinary course without interruption, Accuride’s lenders have agreed to provide $30m in debtor-in-possession (DIP) financing, which is structured to provide sufficient liquidity to continue normal operations and meet post-petition obligations to employees, suppliers and customers as they come due.

The DIP financing is intended to provide peace of mind to Accuride’s customers and suppliers and allow the company to maintain or restore normal trade terms with suppliers.

“Accuride’s reorganisation efforts are designed to create a healthier capital structure that will allow the company to remain a leader in the global wheel market,” said Robin Kendrick, president and chief executive of Accuride. “We anticipate a quick emergence from Chapter 11, with a de-levered balance sheet and improved capital structure.”

A leading supplier of wheel-end systems to the global commercial vehicle industry, Accuride’s products include steel and aluminium commercial vehicle wheels and wheel-end components and assemblies, as well as steel wheels for the European automotive and global agricultural, construction and industrial equipment markets.

Accuride is hopeful that it will be able to emerge from bankruptcy on an expedited basis, anticipated to be 90-100 days from the Chapter 11 filing.

Mr Kendrick concluded: “I am confident this reorganisation will give Accuride the financial flexibility it needs to grow its business and support its employees, customers and suppliers.”

News: Wheel supplier Accuride files Chapter 11 papers for U.S. operations

Vertex Energy files for Chapter 11

BY Fraser Tennant

Largely as a result of low market demand for renewable diesel, environmental services company Vertex Energy has filed for Chapter 11 bankruptcy in order to facilitate transactions contemplated under a restructuring support agreement (RSA).  

With the overwhelming support of 100 percent of its term loan lenders, Vertex has filed customary first day motions and plans to operate its business in the ordinary course as it explores a holistic restructuring strategy pursuant to the terms of the RSA.

To fund this process and continue operating in the ordinary course, the term loan lenders have agreed to provide Vertex with an additional $80m debtor-in-possession financing facility subject to certain terms and the satisfaction of certain conditions. In addition, Vertex has also filed a Chapter 11 plan and bidding procedures, and anticipates confirming its Chapter 11 plan by the end of the year.

“As we enter this next phase of our restructuring process through a formal proceeding, we are appreciative of the continued support from our lenders,” said Benjamin P. Cowart, president and chief executive of Vertex. “Their confidence in our business, as demonstrated by this ongoing collaboration, reinforces the critical role Vertex plays in the specialty refinery space.”

A leading energy transition company that specialises in producing high-quality refined products, Vertex Energy’s innovative solutions are designed to enhance the performance of its customers and partners while also prioritising sustainability, safety and operational excellence.

In April 2022, Vertex completed the acquisition of Shell’s 90,000 barrels a day refinery for a cash consideration of $75m plus the value of the refinery’s hydrocarbon inventory and other accrued liabilities.

However, Vertex’s ambitions in the renewable space proved to be out of kilter with the current realities of market demand for renewable diesel and, in May 2024, the company announced it would be ‘pausing’ the production of this product.

Serving as restructuring counsel to Vertex is Kirkland & Ellis, with Bracewell LLP serving as restructuring co-counsel. Perella Weinberg Partners is serving as investment banker, and Alvarez & Marsal is serving as chief restructuring officer (CRO) and financial adviser.

Seth Bullock, a managing director at Alvarez & Marsal and Vertex’s CRO, concluded: “We have gained significant momentum with the partnership of Vertex’s lenders over the last several months and believe the restructuring support agreement and related milestones will allow the company to initiate a fresh start and improve long-term value as it singularly concentrates on strengthening its foundation for continued growth and stability.”

News: Vertex Energy files for bankruptcy, explores sale

J&J unit files for Chapter 11 to advance $8bn talc settlement

BY Fraser Tennant

In a bid to end tens of thousands of lawsuits alleging baby powder and other talc products caused cancer, a subsidiary of healthcare giant Jonson & Johnson (J&J) has filed for Chapter 11.

Red River Talc LLC, a unit of J&J, made the filing after it received the support of the overwhelming majority – approximately 83 percent – of current claimants for a proposed bankruptcy plan.

J&J faces lawsuits from more than 62,000 claimants who alleged that its baby powder and other talc products were contaminated with asbestos and caused ovarian and other cancers. J&J denies the allegations and has said that none of the talc-related claims against it have merit.

Such claims, states J&J, are premised on allegations that have been rejected by independent experts, as well as governmental and regulatory bodies, for decades.

However, following extensive negotiations with counsel for claimants who initially opposed the bankruptcy plan, Red River has agreed to increase its contribution to the settlement by $1.75bn to approximately $8bn. The unit has also agreed to commit an additional $1.1bn to the bankruptcy trust for distribution to claimants.

The support provided by the plan far exceeds the 75 percent approval threshold required by the US Bankruptcy Code to secure confirmation, which is also supported by the future claims representative, an attorney representing future claimants.

J&J has backed Red River’s commitments and also agreed to contribute an additional $650m to resolve the claims for legal fees and expenses sought by plaintiffs’ counsel for their leadership roles in the multidistrict litigation, where most of the filed ovarian claims are pending.

In aggregate, the contemplated settlement represents a present value of approximately $8bn to be paid over 25 years, totalling approximately $10bn – an agreement that constitutes one of the largest settlements ever reached in a mass tort bankruptcy case.

“The overwhelming support for the plan demonstrates the company’s extensive, good-faith efforts to resolve this litigation for the benefit of all stakeholders,” said Erik Haas, worldwide vice president of litigation at J&J. “This plan is fair and equitable to all parties and, therefore, should be expeditiously confirmed by the Bankruptcy Court.”

The bankruptcy plan enables a full and final resolution of the ovarian talc litigation, resolving 99.75 percent of all pending talc lawsuits against J&J and its affiliates in the US.

News: J&J unit files for bankruptcy to advance $10 billion talc settlement