Turnarounds, Restructurings & Distressed Investing

 One of Chicago's largest hotels, the Palmer House Hotel which is presently owned by Thor equities is in a foreclosure procedure.  https://www.wsj.com/articles/grand-chicago-hotel-in-foreclosure-making-it-one-of-covid-19s-biggest-victims-11600767000?st=m58vi3kvolst4n3&reflink=article_email_share Attached is a reference to a link to the Complaint and Motion to Appoint A Receiver which is common in these types of matters.  https://drive.google.com/drive/folders/1CYMBT84uvNLiBg8_JWAdzf0NAYFQXidE?usp=sharing In New York, the Martinique Hotel, one of the oldest hotels in the City filed this week as well.  https://therealdeal.com/2020/09/23/operator-of-martinique-hotel-in-manhattan-files-for-bankruptcy/

The podcast below pertains to distressed investment opportunities in the lower middle market (LMM), herein defined as businesses with up to $20 million in EBITDA: The New Normal for Distressed Investing: https://www.axial.net/forum/the-new-normal-for-distressed-investing/ Changes ma de to Subchapter V in the CARES Act have created an interesting opportunity in for unsecured credit investments in small businesses.  Importantly, Subchap ter V eliminates the “absolute priority rule” - this would ordinarily be a major credit negative. Despite the recent economic downturn, we are not seeing bankruptcy filings that are in-line with the numbers associated with larger businesses. This is especially interesting because subchapter V is intended to lower the  direct  cost of bankruptcy proceedings for small businesses.  So why aren't small businesses filing and what are the investment implications regarding subchapter V? There are significant disincentives associated with bankruptcy f

 New filing of a major auto parts supplier Garrett Asasco.  What's particularly interesting about the filing documents is that it includes an Asset Purchase Agreement with KPS Partners. The filing can be found at http://www.kccllc.net/garrettmotion.  Check out the petition and Asset Purchase Agreement. We listened in on the first day hearing today and the Court declined to approve the Debtor's request for DIP Financing because Honeywell argued that they have plenty of cash and there's no urgent need.

 As set forth in this article reporting about the deal cut between the lenders, the Bankruptcy Judge wants to make sure that the assets are properly marketed. NY Sports Club Owner's Ch. 11 Strategy Draws Court Concern By  Vince Sullivan Law360 (September 16, 2020, 4:48 PM EDT) -- The parent company of  New York Sports Club  told a Delaware bankruptcy judge Wednesday that it had reached a deal with warring creditors that would allow for a Chapter 11 sale process to commence, but the court voiced concerns over the proposed timeline in the case. During a hearing conducted virtually, Town Sports International attorney Nicole L. Greenblatt of  Kirkland & Ellis LLP  said the case began with discord among groups of senior lenders but that a deal had been reached where they will allow a third party to serve as a stalking horse bidder for the debtor's assets and provide post-petition financing. U.S. Bankruptcy Judge Christopher S. Sontchi said he was happy the parties had reached ag

  Century 21 Files Bankruptcy and plans to liquidate While its not surprising that Century 21 which is a 13 store, off-price, brands based retailer filed for Chapter 11 bankruptcy, it is unusual that from the get-go they announced they are liquidating.  https://nypost.com/2020/09/10/fashion-retailer-century-21-files-for-bankruptcy/ Click below to see a list of their petition and a list of their creditors.

Check out this story today about HFZ Capital junior debt which may be auctioned in November against four NYC buildings.  https://www.bloomberg.com/news/articles/2020-09-16/manhattan-condo-developer-may-face-foreclosure-on-four-projects?sref=h1rbw6GR