Online learning company Skillsoft files for Chapter 11

BY Fraser Tennant

In an attempt to reduce its approximately $1.5bn debt and position itself for long-term growth, US educational technology company Skillsoft and a number of its affiliates has filed for Chapter 11 bankruptcy.

The voluntary, pre-packaged Chapter 11 cases have been filed in order for Skillsoft to implement a restructuring support agreement (RSA) with many of its lenders – an agreement which is expected to result in a reduction of the company’s balance sheet to $410m from approximately $2bn.

Furthermore, the RSA is expected to provide Skillsoft with significant additional liquidity – while minimising operational disruptions – by ensuring all holders of general unsecured claims, including vendors, suppliers and other trade creditors, are paid in full. Additionally, there are no planned changes to Skillsoft’s leadership team or organisational structure as a result of the restructuring.

“This agreement marks an important step forward in significantly strengthening Skillsoft’s capital structure and positioning the company for long-term success,” said John Frederick, chief administrative officer at Skillsoft. “This is an exciting time for digital learning, and Skillsoft provides best-in-class learning solutions to thousands of customers around the world, including 65 percent of companies in the Fortune 500.”

Indeed, Skillsoft has stated that it remains focused on providing its customers with state-of-the-art corporate learning solutions, best-in-class performance support resources, as well as live events.

“While our core business remains strong, with attractive profitability and cash flow characteristics, our debt levels are too high,” added Mr Frederick. “We need to invest further and that requires our debt levels to come down to free up cash to further enhance our offerings. We look forward to benefitting from a stronger balance sheet and enhanced financial flexibility.“

In conjunction with the court-supervised process, Skillsoft has received a commitment for $60m in debtor-in-possession (DIP) financing from some of its first lien lenders. This financing, together with cash generated from ongoing operations, is expected to provide ample liquidity to support Skillsoft’s operations during the restructuring process.

“We appreciate the broad support of our lenders, who will become the new owners of the Company and recognise the inherent value in the Skillsoft brand,” concluded Mr Frederick. “We also thank the entire Skillsoft team for their ongoing hard work and commitment to our company and our customers and are grateful to our vendors and business partners for their continued support.”

News: E-learning company Skillsoft files for Chapter 11 bankruptcy

Commercial bankruptcy filings surge

BY Richard Summerfield

Commercial bankruptcy filings in the US increased by 48 percent in May from earlier in the year, according to the American Bankruptcy Institute (ABI).

Chapter 11 filings rose 28 percent in May from April, the ABI said, citing data from Epiq Systems. May saw a number of notable filings, including major retail chains such as J.C. Penney and Neiman Marcus.

“Companies that tried to shore up their balance sheets at the beginning of the year represent the initial wave of Chapter 11s due to the economic crisis brought about by the COVID-19 pandemic,” said Amy Quackenboss, executive director of the ABI. “The CARES Act and other swift government measures have been successful in keeping consumers afloat during the crisis. As this relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy.”

May’s commercial Chapter 11 filings represented a 29 percent increase from the 562 filings in April 2020. Total commercial filings were up 12 percent over the April 2020 commercial filing total of 2293. Total bankruptcy filings in May represented a 4 percent increase over the 38,444 total filings recorded the previous month. Total non-commercial filings for May represented a 3 percent increase from the April 2020 non-commercial filing total of 36,151.

The average nationwide per capita bankruptcy filing rate in May was 1.98 (total filings per 1000 per population), a decrease from the 2.09 filing rate during the first four months of the year. Average total filings per day in May 2020 were 1998, a 36 percent decrease from the 3130 total daily filings in May 2019.

There were 39,969 total bankruptcy filings in May, down 42 percent from the 68,860 total filings in May 2019. Total consumer filings decreased 43 percent in May, as the 37,391 filings fell from the 65,302 consumer filings registered in May 2019.

News: May Commercial Chapter 11s Increase 48 Percent over Last Year, Total Filings Down 42 Percent

Shattered finances: glassmaker Libbey files for Chapter 11

BY Fraser Tennant    

In a bid to restructure its balance sheet following plunging demand for its products, glassware manufacturer Libbey and its US-based subsidiaries have filed for Chapter 11 bankruptcy.

Like many retailers, Libbey – which operates manufacturing plants in the US, Mexico, China, Portugal and the Netherlands – has been hit especially hard by the outbreak of the coronavirus (COVID-19) pandemic and its crippling impact on global economies. The Chapter 11 process is expected to strengthen Libbey’s balance sheet and help it to navigate the effects of COVID-19.

Moreover, a number of Libbey's existing lenders have agreed to provide up to $160m in debtor-in-possession (DIP) financing, including a $100m revolving credit facility and a $60m term loan. Following court approval, Libbey expects this financing, together with cash flow from operations, to support the business during the court-supervised process.

"While we entered 2020 with positive momentum from our strong finish in 2019, the dramatic and prolonged impact of COVID-19 on the demand for our products and on our business is truly unprecedented in Libbey's more than 200-year history,” said Mike Bauer, chief executive of Libbey. “As a result, entering this process is a necessary step to address our liquidity, strengthen our balance sheet and better position Libbey for the future.”

Libbey is continuing to serve customers and end users globally throughout the Chapter 11 process, and will continue to evaluate the operating environment and make adjustments, as necessary, to adapt to the impact of COVID-19.

“We believe this process will help Libbey become an even stronger, more influential partner to our customers, vendors and end users, and ensure we continue to create the most rewarding experiences with our extensive line of high-quality glassware and other tabletop products."

One of the largest glass tableware manufacturers in the world, Libbey supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's international subsidiaries in Canada, China, Mexico, the Netherlands and Portugal are not included in the Chapter 11 proceedings and are operating in the normal course of business.

Mr Bauer concluded: “As we navigate the current environment, we remain focused on providing end users with products that are environmentally sustainable, beautiful and durable.”

News: Libbey Commences Chapter 11 Reorganization with $160 Million in Agreed Financing

Latam the latest airline to file for bankruptcy protection

BY Richard Summerfield

Latam Airlines Group SA, Latin America’s largest air carrier, has filed for Chapter 11 bankruptcy protection in New York after the COVID-19 pandemic grounded flights across the region.

“Latam entered the COVID-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future,” said Roberto Alvo, chief executive of Latam.

He continued: “We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option to lay the right foundation for the future of our airline group. We are looking ahead to a post-COVID-19 future and are focused on transforming our group to adapt to a new and evolving way of flying, with the health and safety of our passengers and employees being paramount.”

The airline will continue to fly while it is in bankruptcy protection. Its affiliates in Argentina, Brazil and Paraguay were not included in the Chapter 11 filing, though affiliates in Chile, Peru, Colombia, Ecuador and the US were.

To help fund its continued operations throughout the bankruptcy period, the company has secured funding from a number of its major shareholders, including the Cueto and Amaro families and Qatar Airways. In total, the company has secured around $900m in debtor-in-possession (DIP) financing.

However, the company has given no indication whether its largest shareholder, Delta Air Lines, which holds 20 percent of the company, will help. The airline noted in its statement: “To the extent permitted by law, the group would welcome other shareholders interested in participating in this process to provide additional financing.” The airline also noted that it had about $1.3bn in cash on hand.

Latam has struggled since the outbreak of the COVID-19 pandemic. In mid-March, it cut 90 percent of its flights and by April was down to just five routes. Earlier this month, Latam confirmed that it would lay off 3 percent of its workforce, some 1400 employees.

Of course, the company is not the only airline to suffer. Fellow South American airline Avianca has already filed for Chapter 11 bankruptcy, while Virgin Australia entered voluntary administration last month.

News: Latam Air Files Chapter 11 Bankruptcy, Stymied by Lockdowns

JCPenney files for bankruptcy protection

BY Richard Summerfield

JCPenney, one of the largest and most historic clothing and homeware retailers in the US, has filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District of Texas.

JCPenney had about 846 stores, an e-commerce site and about 95,000 employees around the world, prior to the filing. In response to the COVID-19 outbreak, in March, the company announced the temporary closure of its stores and business offices. Though some of its locations recently reopened, the majority are still closed. Under the terms of the company’s business plan, which was filed with the US Securities and Exchange Commission (SEC), JCPenney plans to permanently close 242 stores, about 30 percent. It has yet to disclose which locations will be shuttered.

The company has reached an agreement with most of its lenders on the turnaround plan that will allow it to stay in business as a more financially healthy company. In a statement announcing the filing, JCPenney confirmed it had approximately $500m in cash on hand as of the Chapter 11 filing date. The company has also received commitments for $900m in debtor-in-possession (DIP) financing from its existing first lien lenders, which includes $450m of new money.

Though the company cited the COVID-19 outbreak for its filing, in reality JCPenney has suffered many years of mismanagement and decline. The company’s most recent profitable year was 2010, and its net losses since have totalled $4.5bn. In 2019, JCPenney suffered a 5.5 percent decline in first quarter sales and was forced to close 27 stores across the country.

“The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country,” said Jill Soltau, chief executive of JCPenney. “As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company.

She continued: “Until this pandemic struck, we had made significant progress rebuilding our company under our Plan for Renewal strategy – and our efforts had already begun to pay off. While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt.”

JCPenney became the fourth national retailer to file for bankruptcy in the US in May, following J.Crew Neiman Marcus and Stage Stores (SSI).

News: JCPenney files for bankruptcy