Invacare files for Chapter 11 bankruptcy

May 2023 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

May 2023 Issue

Amid a series of supply chain woes, US manufacturer and distributor of non-acute medical equipment Invacare Corporation has filed a financial restructuring plan to reorganise under Chapter 11 bankruptcy protection.

To facilitate the restructuring, Invacare has entered into a restructuring support agreement (RSA) – providing a $70m debtor-in-possession (DIP) term loan financing facility which includes new money funding of $35m – with substantially all of its debt holders, including its term loan lender, all of the holders of convertible senior secured notes, and holders of a majority of its convertible senior unsecured notes.

The RSA provides for a significant reduction of the company’s debt balance and a substantial new money investment, which will enhance the company’s liquidity, thereby enabling it to invest for future growth. Specifically, the transactions agreed to in the RSA contemplate a substantial reduction of the company’s funded debt by approximately $240m.

The RSA also includes a backstop for a rights offering to holders of claims on account of the company’s unsecured notes and holders of general unsecured claims, providing the company with $60m of equity capital to repay certain of its debt obligations and facilitate the company’s transformation plan.

Invacare’s other businesses throughout the rest of the world remain strong and are not included in these filings. Moreover, the company does not anticipate the Chapter 11 and RSA processes to impact its ability to manufacture and deliver products to its customers globally.

“These processes mark a big step forward for Invacare,” said Geoff Purtill, president and chief executive of Invacare. “Having the full support of our secured term loan lender and a majority of our convertible noteholders will enable the prearranged filings to proceed efficiently.”

“As a global company, we remain focused on continuing to execute actions to enhance service to our customers,” he continued. “By focusing on our core businesses, we anticipate driving improved financial performance over the short- and long-term.”

A leading manufacturer and distributor in its markets for medical equipment used in non-acute care settings, Invacare designs, manufactures and distributes medical devices that help people to move, rest and perform essential hygiene.

“Invacare has the right leadership, vision and the financial commitment from the sponsorship group to succeed,” said Steven Rosen, chief executive of Azurite Management, the largest shareholder of Invacare. “We are confident that this Chapter 11 process will result in a comprehensive recapitalisation transaction that will not only stabilise liquidity but also de-lever the balance sheet and better position Invacare for future growth.”

Serving as legal counsel to Invacare is Kirkland & Ellis LLP, McDonald Hopkins LLC and Jackson Walker LLP, with Miller Buckfire serving as investment banker and Huron Consulting Group serving as financial adviser. C Street Advisory Group, LLC is serving as strategic communications adviser.

Upon emergence from Chapter 11, Invacare expects to be financially positioned to seize opportunities and capitalise on a significant upward shift in market demand – delivering improved profitability and free cash flow in 2023 and beyond, while building on its legacy as a leader and innovator in the lifestyle and mobility and seating markets.

Mr Purtill concluded: “We have a clear vision for the future, and we are working expeditiously toward our goals.”

Fraser Tennant