My Alarm Center to restructure via Chapter 11 bankruptcy

July 2021 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

July 2021 Issue

In a blow to the US residential security industry, home security system company My Alarm Center has filed for Chapter 11 bankruptcy protection and will restructure under a prepackaged plan of reorganisation.

According to its bankruptcy filing, My Alarm Center, which was previously known as Alarm Capital Alliance, has a list of creditors numbering in the hundreds, with total liabilities between $100m and $500m.

Among the company’s largest creditors are Goldman Sachs, which it owes nearly $34m, and Invesco Credit Partners, owed almost $15m. My Alarm Center’s filing also lists a $6.8m Paycheck Protection Program (PPP) loan it received through Woodforest National Bank as one its largest unsecured claims.

The company stated that 100 percent of its senior lenders and other key stakeholders have agreed to support its restructuring, which provides for the elimination of approximately $235m in legacy debt obligations, strengthens its financial structure and supports its long-term growth plans – a plan that will allow it to focus on core competencies without servicing significant debt levels.

The remaining debt is expected to be converted to equity and a new capital structure will be put in place to support the needs of the company going forward.

My Alarm Center is one of a number of high-profile home security companies to have filed for bankruptcy in recent years, many of which fell victim to the devastating impact of the coronavirus (COVID-19) pandemic.

“The residential security industry faced numerous challenges over the last year, including multiple long-time industry lenders deciding to exit the space,” said Amy Kothari, chief executive of My Alarm Center. “This shift in the debt market was further exacerbated by the unprecedented COVID-19 pandemic resulting in significant pressure on cash flow and liquidity.”

“As a result, we took decisive action to address these challenges and deleverage our balance sheet to position us for future growth and sustainable success,” she continued. “We are grateful for the support from our lenders and advisers throughout this process and especially thankful for the incredible patience, hard work and dedication of our employees.”

The company has also stated that it will continue to operate in the ordinary course of business during the restructuring and that it had secured $15m from its senior lenders to continue providing service to customers as well as meet financial obligations to its vendors and employees.

Founded in 2000, My Alarm Center gained widespread attention across the industry in recent years for its hybrid approach to the market, which combines acquisitions, dealer programmes and direct-to-consumer sales. In 2015, the company ranked fifth on an annual ranking of the industry’s fastest-growing integration firms.

Representing My Alarm Center in the bankruptcy and restructuring process are Skadden, Arps, Slate, Meagher & Flom, LLP, Chipman Brown Cicero & Cole, LLP, M3 Partners LLC and Raymond James.

Ms Kothari concluded: “We are highly confident that the work we have done and the path we have chosen will result in a much stronger capital structure and bright future for our company, our partners and our employees, allowing us to continue to provide superior support and service to our customers.”

Fraser Tennant