Britishvolt calls in administrators

BY Richard Summerfield 

Britishvolt, the battery startup company which had planned to build a giant factory to make electric car batteries in Blyth, Northumberland, has collapsed into administration. 

The company has appointed EY as administrators after failing to raise enough funding. The firm described the move as “disappointing”, and said all impacted staff were being offered support. The majority of Britishvolt’s 232 staff have been made redundant, with just 26 being kept on to assist with the sale of the company’s business and assets. 

Dan Hurd, joint administrator and partner at EY, said the firm had offered “a significant opportunity to create jobs and employment, as well as support the development of technology and infrastructure needed to help with the UK’s energy transition. It is disappointing that the company has been unable to fulfil its ambitions and secure the equity funding needed to continue. Our priorities as joint administrators are now to protect the interests of the company’s creditors, explore options for a sale of the business and assets, and to support the impacted employees.” 

The collapse of Britishvolt came after funding talks failed, leaving a string of disappointed backers ranging from FTSE 100 companies Glencore and Ashtead to property investor Tritax, owned by investment group abrdn, which had committed to fund a battery ‘gigafactory’ in Northumberland. 

Plans for the £3.8bn factory were part of a long-term vision to boost UK manufacturing of electric vehicle batteries and create around 3000 skilled jobs. The factory was expected to produce over 300,000 lithium-ion batteries a year by 2027.  

However, the company has been on shaky ground for some time. Britishvolt consistently pushed back its construction plans. It was expected that the first lithium-ion batteries would roll off the production line by the end of 2023, with the firm partnering with Siemens to make that a reality. That date was later pushed to mid-2025 due to a factory redesign, as well as “rampant inflation and rising interest rates”.

In November 2022, the company secured a short-term investment to stay in business and announced that its staff had agreed to take a temporary pay cut while the company attempted to secure longer-term funding for its planned gigafactory project in northern England. As of summer 2022, Britishvolt had only raised around £200m of funding, and £100m of promised government funding was delayed due to key targets for the investment being missed.

“As part of our efforts to see British companies succeed in the industry, we offered significant support to Britishvolt through the Automotive Transformation Fund on the condition that key milestones – including private sector investment commitments – were met,” said a department for Business, Energy and Industrial Strategy spokesman. “We remained hopeful that Britishvolt would find a suitable investor and are disappointed to hear that this has not been possible, and therefore no ATF grant has been paid out. Our thoughts are with the company’s employees and their families at this time, and we stand ready to support those affected. The UK is one of the best locations in the world for automotive manufacturing, and we want to ensure the best outcome for the site. We will work closely with the local authority and potential investors to achieve this.” 

News: Britishvolt: UK battery start-up collapses into administration

Forma Brands files for Chapter 11

BY Fraser Tennant

Following a string of supply chain issues and store closures, global multi-brand beauty company Forma Brands, the parent company of cosmetics manufacturer Morphe, has filed for Chapter 11 bankruptcy protection.

In addition to the filing, Forma Brands’ holding company FB Debt Financing Guarantor has entered into a definitive asset purchase agreement with a group of secured lenders, which will acquire all of Forma Brands’ assets.  

The proposed transaction is expected to significantly strengthen Forma Brands' financial position and provide additional support for the execution of its long-term growth strategy, which will focus largely on the company's global wholesale and e-commerce operations.

“Over the last year, Forma Brands has been implementing initiatives to stabilise our business and reposition our organisation for long-term growth,” said Simon Cowell, president of Forma Brands. “This agreement is a testament to the strength of our brands most meaningful to our consumers, including Morphe and Morphe 2.”

Moreover, Forma Brands has received a commitment for approximately $33m in debtor-in-possession (DIP) financing from the investor group, which, subject to court approval, will be available to support the business and its operations throughout the court-supervised sale process. The agreement with the investor group includes Forma Brands' wholesale operations, online platforms and international Morphe retail stores.

“We will have additional financial resources available to invest in our multi-category portfolio, product launches and innovative brand and marketing strategy as we advance our vision to inspire creativity, promote inclusivity and connect with consumers around the world through beauty,” continued Mr Cowell. “We are excited to reinforce our focus on opportunities and to continue bringing our thoughtfully selected beauty products to consumers through our individual online brand platforms, retail partners and Morphe stores outside the US.”

Throughout the Chapter 11 and sales process, Forma Brands’ customers can continue to shop the company’s portfolio of brands through the brands' online platforms, at leading specialty retailers and through the company's international Morphe retail stores.

Mr Cowell concluded: “We appreciate the continued support of our financial partners and believe this is the best path forward for Forma Brands as we position the business for the long term.”

News: Forma Brands Enters Into Agreement To Be Acquired By Group Of Secured Lenders

GTT exits Chapter 11 bankruptcy

BY Richard Summerfield

Following its collapse in late 2021, GTT Communications has finally exited its Chapter 11 bankruptcy and restructuring processes, having removed $2.8bn from its debt pile and brought in new investors.

The company, which filed for Chapter 11 bankruptcy in October 2021, has agreed a deal with key creditors to amend its reorganisation plan in light of current macroeconomic challenges. As part of the Chapter 11 plan, GTT sold its infrastructure division to I Squared Capital for $2.1bn. That gave the company a head-start on paying off its debts. Now GTT has reduced its debt by approximately 80 percent, according to a statement from the company.

“Today marks the beginning of an important new chapter for GTT,” said Ernie Ortega, chief executive of GTT. “Over the past two years, we have concentrated relentlessly on transforming our business into a customer-focused, managed services provider with a culture of continuous improvement. As we begin 2023 on a new path, I’m tremendously excited about the opportunities ahead.

“We have more exciting developments to share in the coming weeks, but right now I want to thank our employees, customers, and partners, whose confidence in GTT has underpinned our commitment to realizing this Company’s incredible potential. Thanks to these stakeholders, GTT has succeeded in completing its financial restructuring with a renewed focus on customer experience, operational efficiency, and providing the best of what our industry can offer to customers and partners across the globe,” Mr Ortega said.

As part of the company’s restructuring, GTT had previously announced a new board of directors, including a new chairman of the board, Tony Abate. With GTT’s completion of its financial restructuring process, Beau Harbour, managing director at Lone Star, and Alex Grau, managing director at Hudson Advisors L.P., an investment adviser to Lone Star, have joined GTT’s board. Affiliates managed by Lone Star Funds, Anchorage Capital Group, Fidelity Management & Research Co. and Cheyne Capital, collectively, comprise the new investor leadership and own a majority of GTT’s reorganised equity, according to a company statement.

“The Company’s Board and new owners are looking forward to working with Ernie and the entire GTT team to build on the Company’s momentum and our shared vision to serve businesses with network, security and communications needs across multiple locations globally,” said Mr Abate. “GTT is well-positioned to capture the growing demand for bandwidth, cyber-security and managed services as enterprises optimize the performance of their own SaaS and cloud-based applications anywhere in the world.”

Prior to its bankruptcy filing, GTT spent extravagantly on other business, buying companies such as Hibernia Express and Interoute.

News: Chapter 11 Bankruptcy Concluded, GTT Communications Eyes 2023

FedNat files for Chapter 11 bankruptcy protection

BY Fraser Tennant

Three months after the liquidation of FedNat Insurance Company, regional insurance holding company FedNat and certain of its wholly-owned subsidiaries have filed for Chapter 11 bankruptcy.

The Florida-based FedNat filed for bankruptcy after an increase in severe weather events in the state weighed on its balance sheet. In 2021, catastrophe losses cost FedNat $800m on a gross basis, although reinsurance and other recoveries reduced that loss to $86m, according to bankruptcy court papers.

Listing $33.8m of assets and $171m of debts in its petition in the United States Bankruptcy Court for the Southern District of Florida, FedNat’s bankruptcy filing underscores Florida’s deepening home insurance crisis, where average premiums are nearly triple the national average.

As an industry, the Florida property insurance industry lost over $1.6bn in 2020 and over $1.5bn in 2021, thanks to losses from catastrophes, higher reinsurance costs and litigation abuse. In addition, at least five other Florida insurers have been put into receivership by the state’s regulator in 2022.

As part of the Chapter 11 process, the company has stated that it will evaluate all strategic alternatives to maximise value for stakeholders, whether that be a reorganisation of its business or a sale of its assets.

FedNat has approximately $6.5m of cash on hand, which will provide liquidity to support day to day operations during the Chapter 11 process, enabling the company to operate business uninterrupted, including the timely payment of employee wages and benefits and continued servicing of customers.

Additionally, the company will file customary “First Day” motions to allow it to maintain operations in the ordinary course. The company intends to pay its employees in the usual manner and continue their primary benefits and certain customer programmes without disruption.

FedNat expects to receive court approval for all these routine requests.

To manage the restructuring process, FedNat has engaged GGG Partners, LLC as financial advisers and Nelson Mullins Riley & Scarborough LLP as legal advisers.

FedNat is an insurance holding company that controls substantially all aspects of the insurance underwriting, distribution and claims processes through its subsidiaries, equity investments and contractual relationships with independent agents and general agents.

News: Three Months After Liquidation, FedNat Holding Co. Files Chapter 11 Bankruptcy

Cryptocurrency exchange FTX files for Chapter 11 protection

BY Richard Summerfield

Cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy protection in the district of Delaware, the company said in a statement on Twitter. In addition to FTX, its affiliated crypto trading firm Alameda Research and about 130 of its other companies are also included in the filing.

In addition, the company’s founder Sam Bankman-Fried resigned has chief executive, but will “remain to assist in an orderly transition”, the company said. John J. Ray III has been named the company’s new chief executive. Mr Ray said bankruptcy protection will give FTX the chance to “assess its situation and develop a process to maximize recoveries for stakeholders”.

The company’s collapse came shortly after rival cryptocurrency exchange Binance walked away from a proposed acquisition of FTX, a move which left the company scrambling to raise about $9.4bn from investors and rivals amid a rush of customers withdrawing funds from the exchange.

FTX, a top five cryptocurrency exchange before its implosion, is reported by the Financial Times to have $9bn of liabilities and $900m in liquid assets.

The collapse of the company will likely have repercussions for the wider crypto industry, with growing calls for greater regulation of the space.        

FTX’s collapse has been as fast as it has shocking. Last week, crypto news website CoinDesk published an article based on a leaked financial document from Mr Bankman-Fried’s hedge fund, Alameda Research, which suggested that Alameda’s business was on unsure financial footing; namely, that the bulk of its assets are held in FTT, a digital token minted by Alameda’s sister firm, FTX. This was alarming for investors, as the companies were, on paper at least, separate. Alameda’s disproportionate holdings of the token, however, suggested the two were much more closely linked. Binance then announced it was liquidating $580m worth of FTX holdings, a move which sparked a rush of drawdowns that FTX did not have the cash to facilitate.

There will be implications for investor groups, such as the Ontario Teachers’ Pension Plan, which said it invested $95m in both FTX International and its US entity “to gain small-scale exposure to an emerging area in the financial technology sector”. In a statement Thursday, the plan noted that any loss on its investment would have “limited impact” as it represents less than 0.05 percent of its total net assets.

The collapse of the company will also be felt elsewhere in the crypto space. FTX, prior to its filing, had performed a lender-of-last-resort role for crypto firms that were struggling after a marked decline in the digital asset market since November last year – a period over which the collective value of crypto assets fell from $3 trillion to less than $1 trillion.

News: FTX to file for U.S. bankruptcy protection, CEO Bankman-Fried resigns