Generation Brands Files Prepackaged Chapter 11 Cases
On Friday, Generation Brands Holdings, Inc. and 13 affiliates filed prepackaged chapter 11 cases in the United States Bankruptcy Court in Delaware. The lead debtor case under which all 14 cases are to be jointly administered is the case of QHB Holdings LLC. According to the declaration of their Chief Financial Officer filed with the bankruptcy court, the companies are "a leading manufacturer, importer, marketer and supplier of decorative, functional, and specialty indoor and outdoor lighting products, ceiling fans, low-voltage and line-voltage track lighting systems and other home decor products." The companies' products are sold primarily through home centers and hardware stores, such as Lowe's, Menards, Home Depot, and Ace Hardware, under the following brand names:
- Sea Gull Lighting
- Murray Feiss
- Tech Lighting
- LBL Lighting
- Monte Carlo Fan Company
- Royce Lighting
- Ambiance Lighting Systems
- Light Process Company
- tiella
- 2thousand degrees
- T~trak
- ELEMENT
- Wilmette Lighting
- Martha Stewart Lighting
The companies required and received relief from certain financial covenants under their $320 million first lien credit facility and their $100 million second lien credit facility beginning in July 2008. The companies required additional covenant relief in the first quarter of this year; however, it was again insufficient and the companies determined in September that they were "unlikely" to remain in compliance with the financial covenants under the first lien credit agreement. As a result, they sought and received a temporary waiver through November 25th "to continue discussions regarding the final terms and ultimate solicitation of a proposed restructuring."
As a result, the companies reached an agreement with their lenders on the terms of a prepackaged restructuring. The key terms of the proposed restructuring include:
- the satisfaction of the first lien debt through the use of certain cash-pay term
loans and PIK term loans - the satisfaction of the second lien debt through the issuance of new common
Stock of New QHB sufficient to result in an aggregate common equity ownership of New QHB at closing of 91.75% - the satisfaction of $35 million in notes held by Apollo Investment Corporation through the issuance of New Common Stock of New QHB sufficient to result in an aggregate common equity ownership of New QHB at closing of 7.50%
The proposed plan would leave all other creditors unimpaired. Pursuant to a pre-filing solicitation, the terms of the plan were accepted by a majority of holders of the first lien debt (75% in number and over 80% in amount) and holders of the second lien debt (81% in number and 97% in amount).
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