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

Rite Aid emerges from bankruptcy protection

BY Richard Summerfield

US pharmacy chain Rite Aid Corporation has emerged from Chapter 11 bankruptcy protection after successfully completing its restructuring process.

The company has eliminated $2bn in debt and said it has “received approximately $2.5 billion in exit financing to support the business going forward.”

Following its emergence from Chapter 11, Rite Aid will operate as a privately held company owned by creditors, operating “more than 1700 retail pharmacy locations across 16 states with a workforce of more than 45,000 strong”, according to the company’s website. Rite Aid closed more than 500 stores during the bankruptcy proceedings.

Separately, Rite Aid has announced that Matt Schroeder, who most recently served as chief financial officer, has been appointed its new chief executive. He succeeds Jeffrey S. Stein, who joined the company as chief executive and chief restructuring officer to lead the court-supervised Chapter 11 process.

“Emergence is a pivotal moment in Rite Aid’s history, enabling it to move forward as a significantly transformed, stronger and more efficient company,” said Mr Stein. “We are grateful for the ongoing support of our customers, associates and partners, and we look forward to continuing to provide leading pharmacy services designed to improve health and wellness outcomes across the communities we serve. I am excited about Rite Aid’s future as it continues to focus on executing its strategy and delivering for its customers and stakeholders.”

“I am honored to lead Rite Aid on its journey as we continue serving our customers and communities,” said Mr Schroeder. “Thanks to the dedication of the entire organization, we are beginning our next phase as a transformed company. I see Rite Aid’s remarkable potential, and I look forward to working with the team as we remain committed to our purpose of helping our customers achieve whole health for life.”

Rite Aid filed for Chapter 11 bankruptcy in October 2023, in light of significant financial challenges. The company recorded $750m in losses against $24bn in revenue for the prior fiscal year. As part of the restructuring, in addition to closing hundreds of locations, the company agreed to sell its pharmacy benefit unit Elixir, and settle with key creditors, including McKesson.

The plan also allocates $47.5m to junior creditors involved in opioid-related litigation, addressing claims from individuals and local governments. Prior to its Chapter 11 filing, Rite Aid faced 1600 opioid lawsuits, including one by the federal government alleging that the company ignored potential concerns when filling suspicious prescriptions for addictive opioid pain medication.

News: US pharmacy chain Rite Aid to operate as a private company as it emerges from bankruptcy

Scandinavian airline SAS emerges from Chapter 11

BY Fraser Tennant

In what it hails as a new era for the company, Scandinavian airline SAS has successfully completed its restructuring proceedings and emerged from Chapter 11 bankruptcy in the US, in addition to a similar simultaneous reorganisation process in Sweden.  

The airline emerges from Chapter 11 as a financially robust company with a strengthened capital structure and substantial liquidity, having made significant progress with operational improvements and in building a competitive business.

Over the course of the restructuring proceedings – which were supported by nearly all creditors voting in the respective restructuring proceedings in the US and Sweden – SAS has successfully restructured more than $2bn of debt, adjusted its aircraft fleet and related costs and reached agreements with key stakeholders, creditors and vendors.

“We have successfully completed our restructuring proceedings and we are now entering a new era,” said Anko van der Werff, president and chief executive of SAS. “It has been a complex process and I am thankful for the constructive collaboration with creditors and partners, for the valuable support from the board, as well as impressive efforts, energy and enthusiasm throughout our organisation.”

The new principal owners of the reorganised company – Castlelake, Air France-KLM, Lind Invest and the Danish state – have agreed to appoint a new board of directors for SAS, which will be led by Kåre Schultz, as chairman of the board, replacing resigning chairman Carsten Dilling.

“I am honoured to be appointed as new chairman of SAS, and I look forward to leading the board’s work as SAS continues its proud legacy as Scandinavia’s leading airline,” said Mr Schultz. “SAS has done a truly impressive job in navigating through the restructuring proceedings, and in building a competitive business positioned for growth.”

This business includes a continued positive development for passenger demand with 18 million passengers traveling with SAS so far in 2024 – a 6.5 percent increase from the same period in 2023.

Mr Schultz concluded: “Together with SAS’ new investors, board and management, we will continue to collaborate with partners and customers to drive transformative changes in aviation.”

News: Scandinavian airline SAS hails 'new era' as it exits US bankruptcy process