Starry files for Chapter 11 bankruptcy

BY Richard Summerfield

Boston-based internet service provider Starry Group Holdings Inc. has filed for pre-packaged Chapter 11 bankruptcy protection in an attempt to reduce its debt load while maintaining customer and network operations in five cities.

The company, which filed for Chapter 11 restructuring in the US Bankruptcy Court for the District of Delaware, has filed various motions with the Court, including one for approval of a $43m debtor-in-possession (DIP) financing facility to give it the liquidity to continue operations throughout the process. Starry has approximately $270m in assets versus $310m in total debt, according to a court document.

The bankruptcy filing comes on the back of a bruising period for the company. In January, Starry announced its decision to pull out of one of its markets – Columbus, Ohio – and lay off staff. 2022 was a challenging year as the company defaulted on the opportunity to pick up government funding and found itself the subject of endless speculation on its financial position. In October 2022, Starry laid off around half of its workforce - about 500 people - as the company did not “have the capital to fund our rapid growth”, according to Chet Kanojia, chief executive of Starry. As such, the company was going to focus on its core business of serving multitenant buildings in bigger urban markets.

“Over the last several months, we’ve taken steps to conserve capital and reduce costs in order to put Starry in the best position to explore various financing paths for the company,” said Mr Kanojia. “Our next step in this journey is to continue to strengthen our balance sheet through a Chapter 11 restructuring process. With the support of our lenders, we feel confident in our ability to successfully exit this process as a stronger company, well-positioned to continue delivering an affordable, high-quality broadband experience to our customers.

“The Restructuring Support Agreement provides us with the funding needed to continue operating as normal, through this restructuring process and as we guide the company to profitability. We have a strong and experienced team in place and look forward to moving through this process quickly so that we can continue expanding essential broadband access and #HappyInterneting to more communities across the country,” he added.

Starry currently operates in Boston, New York City, Los Angeles, Denver and Washington, DC, and reported nearly 91,300 customers at the end of September - an increase of 66 percent year-on-year.

News: Starry’s troubles continue as it files for Chapter 11

Second time around: Avaya files for Chapter 11

BY Fraser Tennant

Following months of speculation, American multinational technology company Avaya Holdings Corp. along with its US subsidiaries has filed for Chapter 11 bankruptcy and entered into a restructuring support agreement (RSA).

The filing in the US Bankruptcy Court for the Southern District of Texas is the second time in six years the North Carolina-based Avaya has sought bankruptcy protection.

The Chapter 11 process will help Avaya to implement the RSA and accelerate its ongoing business transformation, significantly enhance its ability to invest in its innovative cloud-based communications portfolio and position the company for long-term success.

Completing the RSA will reduce Avaya’s total debt by more than 75 percent, from approximately $3.4bn to approximately $800m. In addition, it will substantially increase Avaya’s cash and strengthen its liquidity position.

“Strengthening Avaya’s capital structure is a critical step to fully realize our transformation,” said Alan Masarek, chief executive of Avaya. “We are excited to move ahead as a well-capitalised company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success.”

“I joined Avaya to help unlock the power of its iconic brand, global customer footprint, massive partner ecosystem, large-scale communications deployments and outstanding team,” he continued. “Building on this tremendous foundation, we have made significant progress pioneering an ambitious business model transformation, establishing a competitive product strategy for our subscription and cloud-delivered services and implementing operational efficiencies to better serve the Avaya ecosystem.”

Avaya has stated that it will continue serving its customers and partners without interruption and providing them with outstanding communications solutions, service and support.

Moreover, due to the overwhelming support of its financial stakeholders, Avaya expects to implement the RSA on an expedited basis and complete this comprehensive balance sheet deleveraging within 60 to 90 days. These actions will not impact the company’s customers, channel and strategic partners, suppliers, vendors or employees.

“We appreciate the strong support from our investors, who recognise the incredible value in Avaya’s business, brand and opportunities ahead,” concluded Mr Masarek. “With this additional financial strength, we will be ideally positioned to accelerate innovation and advance our cutting-edge, long-range product roadmaps for the benefit of our customers.”

News: Avaya files for Chapter 11 bankruptcy

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