Western Global Airlines exits Chapter 11

BY Fraser Tennant   

Having struggled under a heavy debt load and weak market conditions, US cargo airline Western Global Airlines has exited the Chapter 11 bankruptcy process following the completion of a comprehensive financial restructuring plan.

Under the plan, the carrier has reduced its debt by more than $460m and infused significant new capital into the company, while preserving its workforce and long-term relationships with customers and suppliers.

The company, which operates chartered cargo jets for the US military and other customers, filed for Chapter 11 in August 2023, stating that it would restructure with the help of $77m in financing from creditors.

Over the course of 100 days, the company restructured its debt through an in-court process while continuing to operate without disruption. The restructuring included a cash award retention programme for nearly its entire workforce that drew upon $77.5m of debtor in possession (DIP) financing provided by its owners, Jim and Sunny Neff.

The owners also funded equity and exit financing, and waived nearly $100m of secured and unsecured prepetition debt held by them in order to provide recovery to all creditors.

"My top priority has always been to preserve the long-term viability of our company and protect our people,” said Jim Neff, founder and chief executive of Western Global Airlines. “I am pleased our restructuring process has achieved that. It continues to be a privilege to lead our team, especially as Western Global Airlines has emerged stronger and ready to thrive again as it has historically done.”

Headquartered in Estero, Florida, in only 10 years Western Global Airlines has become a leading, global logistics powerhouse, safely and reliably flying to over 400 airports in 135 countries on six continents on behalf of its diverse, blue chip client base in the logistics industry.

“As always, I am immensely grateful to our employees, customers and partners for their enduring support as we navigated the Chapter 11 process,” concluded Mr Neff. “I look forward to sharing the company's successes with our loyal employees and to continue to serve as a critical partner for our customers.”

News: US's Western Global Airlines exits Chapter 11

WeWork files for Chapter 11

By Fraser Tennant

In a major collapse for an organisation once valued at $47bn, office-sharing company WeWork Inc. has filed for Chapter 11 bankruptcy in order to strengthen its balance sheet and streamline its real estate footprint.

The Chapter 11 process allows WeWork to implement a restructuring support agreement (RSA) with holders representing approximately 92 percent of its secured notes to drastically reduce the company’s existing funded debt and expedite the restructuring process.

The filing, which is limited to WeWork’s locations in the US and Canada, lists the company’s total debts as $18.65bn against total assets of $15.06bn. As part of the filing, the company has requested the ability to reject the leases of certain locations, which are largely non-operational, and all affected members have received advanced notice.

“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” said David Tolley, chief executive of WeWork. “We defined a new category of working, and these steps will enable us to remain the global leader in flexible work.”

During the RSA process, the company has pledged to further rationalise its commercial office lease portfolio while focusing on business continuity and delivering best-in-class services to its members. Global operations are expected to continue as normal.

“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the RSA,” continued Mr Tolley. “We remain committed to investing in our products, services, and world-class team of employees to support our community.”

Founded in 2010, WeWork’s vision was to create environments where people and companies come together and do their best work. Since then, the company became the leading global flexible space provider committed to delivering technology-driven turnkey solutions, flexible spaces and community experiences.

“It is the WeWork community that makes us successful,” concluded Mr Tolley. “Our more than half-million members around the world turn to us for the best-in-class spaces, hospitality and technology that our 2500 dedicated employees and valued partners provide. WeWork has a strong foundation, a dynamic business and a bright future.”

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Air Methods files for Chapter 11

BY Fraser Tennant

In a move intended to restructure its business operations and reduce its total debt, private equity-owned air medical helicopter company Air Methods and certain of its affiliates has filed for Chapter 11 bankruptcy protection.

The Chapter 11 filing allows the company to implement a restructuring support agreement (RSA) with its first lien lenders (including commitments for $80m of debtor-in-possession (DIP) financing), bondholders and its equity sponsor under which such key stakeholders have agreed to support an expedited balance sheet restructuring.

Additionally, the restructuring contemplated by the RSA – which aims to reduce the company’s total debt by approximately $1.7bn – provides for vendors and suppliers to be paid in full, and for teammates to continue receiving their pay and benefits without interruption.

As it moves through the court-supervised process, Air Methods is operating normally and without service interruptions, continuing to serve partner hospitals, healthcare systems and customers.

“We are pleased to have reached this agreement with our key stakeholders, which will enable us to continue supporting patients with lifesaving care and serving as an integral link between the nation’s top healthcare facilities and people in rural and remote communities,” said JaeLynn Williams, chief executive of Air Methods. “Over the past year, we have made meaningful progress optimising our field operations, going in-network with leading commercial insurers and improving our cost structure.”

“We have also seen record numbers of transports, and we have opened several new bases across the country this year as there is a great demand for air medical services. By strengthening our balance sheet, we are taking an important step forward in delivering on our transformation plan while answering every call with the highest level of service and patient care.”

With more than 40 years of air medical experience, Air Methods is the preferred partner for hospitals and one of the US’ largest community-based providers of air medical services. The company’s fleet of owned, leased and maintained aircraft includes approximately 390 helicopters and fixed-wing aircraft.

Air Methods expects to complete the restructuring process on an expedited basis and emerge from Chapter 11 with an optimal capital structure by the end of the year.  

Ms Williams concluded: “With increased financial flexibility and access to additional capital, we will be better positioned to continue opening new greenfield bases, accelerate our talent acquisition initiatives, execute on our growth initiatives and equip more emergency personnel with the expertise needed to safely deliver the highest quality air medical care for generations to come.”

News: Medical helicopter company Air Methods files for bankruptcy

Shift Technologies files for Chapter 11 bankruptcy

BY Fraser Tennant

Following multiple years of losses, omnichannel used-car dealer Shift Technologies, Inc. and its subsidiaries has filed for Chapter 11 bankruptcy in order to implement a systematic closure of its business.

According to the filing, the company’s deteriorating cash position and inability to obtain further financing drove it to file for bankruptcy and begin the process of closing down the business and liquidating assets.

To facilitate the Chapter 11 process, Shift intends to utilise cash on hand and cash generated by the liquidation of inventory through wholesale channels to provide the necessary liquidity to support the wind down and closure of operations – a decision taken after months of efforts to navigate through the challenges it faced.

Thus, the company’s two physical Californian locations in Oakland and Pomona, CA, as well as its website, have ceased operations. In addition, Shift has terminated 80 percent of its employees, leaving 24 to wind down operations. The company estimates the process will cost between $4.1m and $5m.

Founded in 2014 in an attempt to disrupt the traditional dealership model, Shift enjoyed significant success in the used car market, particularly during the height of the pandemic, before inflationary concerns, a cooling market, higher interest rates, tighter capital markets and overall economic uncertainty severely impacted activity.

A previous attempt to remain afloat, in July 2023, saw the company reduce its headcount by approximately 34 percent – a reduction aimed at restructuring and better aligning the company’s people and responsibilities with its omnichannel sales strategy.

“We deeply value our employees, customers, partners and the communities in which we have operated,” said Ayman Moussa, chief executive of Shift Technologies. “This was not the outcome we had expected or hoped to achieve. Ultimately, the extensive efforts of our senior leadership team and advisers were not successful. We want to thank all our dedicated employees, customers, and vendors who have supported us over the years.”

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Mallinckrodt files for Chapter 11 bankruptcy protection

BY Richard Summerfield

Specialist pharmaceutical company Mallinckrodt plc, including several of its subsidiaries, has filed for voluntary prepackaged Chapter 11 proceedings in the US Bankruptcy Court for the District of Delaware.

The filing, Mallinckrodt’s second bankruptcy proceeding in three years, will see the company cut $1bn from what it owes to victims of the US opioid crisis. The company’s restructuring plan will hand ownership to its lenders in exchange for a $1.9bn reduction in debt and would wipe out existing equity shares.

The company originally filed for Chapter 11 in 2020 to address its high debt load, litigation over its marketing of highly addictive generic opioids and disputes over its drug pricing. Its original restructuring plan saw the company, which denied any wrongdoing, agree to pay $1.7bn to settle around 3000 lawsuits alleging it used deceptive marketing tactics to boost opioid sales.

However, declining sales for its key branded drugs, including its most valuable drug, Acthar Gel, left Mallinckrodt unable to manage scheduled payments. In June, the company missed a $200m payment, a move which began negotiations around a second bankruptcy filing. To date, Mallinckrodt has only made one payment of $450m under the original agreement.

The company expects to exit its latest bankruptcy in the fourth quarter of 2023 with the support of its key stakeholders. If the court approves the restructuring, Mallinckrodt will have more than $450m in available liquidity, including $250m in new credit and its existing cash.

The plan, if it wins approval, will cancel the majority of the $1.25bn that Mallinckrodt still owes under the original settlement agreement, in exchange for a final payment of $250m.

“We are moving forward with the anticipated next steps for our financial restructuring plan and appreciate the significant support of our key stakeholders to reach this milestone,” said Siggi Olafsson, president and chief executive of Mallinckrodt. “Implementing this agreement will meaningfully enhance Mallinckrodt’s financial foundation and better position the business for the future. We expect to complete this process on an expedited basis and emerge as a stronger organization that will continue to help improve outcomes for patients with severe and critical conditions.

“I would like to thank the Mallinckrodt team for their resilience and dedication to our company’s mission. We also thank our customers, vendors, suppliers and other partners for their ongoing support as we work together to meet our patients’ needs. As we move forward, we are continuing to deliver the important therapies that patients depend on us to provide,” he added.

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