Restructure This! Podcast Ep. 27

What You Always Wished You Knew About Assignments for the Benefit of Creditors with David M. Johnson and Molly Froschauer of Resolution Financial Advisors

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Sheppard Mullin's Restructure THIS! podcast explores the latest trends and controversies in Chapter 11 bankruptcy, commercial insolvency and distressed investing. In this week's episode, David Johnson and Molly Froschauer of Resolution Financial Advisors join host Justin Bernbrock to discuss Assignments for the Benefit of Creditors (ABCs), including advantages and disadvantages compared to traditional bankruptcy options, the various ways an ABC can be leveraged and the acquisition opportunities they offer potential buyers.

About the Guests and Host:

David M. Johnson, CFA

David M. Johnson, CFA, is an accomplished executive with more than 25 years of experience in financial advisory and business restructuring roles. He has honed his skills advising startups, venture-backed companies and established businesses through complex crises, guiding over 400 companies toward recovery and resilience.

Before co-founding Resolution, David served as Senior Managing Director at a middle-market advisory firm, guiding distressed companies for 17 years. He also spent four years with Alvarez & Marsal, Inc., a global turnaround management firm, providing interim management and forensic accounting services for clients that included a national healthcare organization. His expertise spans corporate turnarounds, insolvency management, sales and acquisitions, financial modeling, and valuations.

Molly Froschauer

Molly Froschauer is an experienced insolvency professional who has been advising on bankruptcy and distressed corporate situations for over a decade. Before joining Resolution, she spent seven years with middle-market professional services firms, specializing in corporate distress. Molly’s career also includes practicing as a bankruptcy attorney and serving as a general manager for an out-of-court insolvency service provider and liquidation agent. Her work has spanned managing creditor meetings, advocating for business debt solutions and educating trade creditors on navigating debt resolution.

As an editor for the National Association for Credit Management’s Manual of Credit and Commercial Laws, Molly oversaw more than 50 Assignments for the Benefit of Creditors, out-of-court workouts and engagements through the bankruptcy courts.

About Justin Bernbrock

Justin Bernbrock is a partner in the Finance and Bankruptcy Practice Group in Sheppard Mullin's Chicago office, where he focuses on all aspects of corporate restructuring, bankruptcy and financial distress. He represents clients across a wide range of matters, including debtor and creditor representations. He has substantial experience in out-of-court and in-court restructurings, primarily in the Southern District of New York, Eastern District of Virginia, District of Delaware and Southern District of Texas.

Transcript:

Justin Bernbrock:

Welcome back to another episode of Restructure This!. After a long hiatus, we're back and plan to put out new episodes in the coming weeks and months. Today we're joined by David Johnson and Molly Froschauer of Resolution Financial Advisors, to talk about what you always wish you knew about assignments for the benefit of creditors. When we think about the options and paths that a company in distress can or should pursue, an ABC, or assignment for the benefit of creditors, doesn't always come to mind. ABCs are a creature of state law, and that may be one reason why federal bankruptcy practitioners at least don't always know what it is, how it works, or why they don't readily think about it as a tool in their toolkit. ABCs are an alternative to a Chapter 7 liquidation, sometimes a preferred alternative. And as the economy currently faces uncertainty and unknown future, more distress is predicted certainly, and the interest in ABCs has gone up due to several features that make it an attractive strategy, short timeline, lots of flexibility, and a lower price tag than a typical bankruptcy filing.

As always, stay tuned after the interview for a rundown of current restructuring news and notable stories. Welcome back to another episode of Restructure This!. Today we have the distinct pleasure of being joined by David Johnson and Molly Froschauer of Resolution Financial Advisors. Molly, David, so great to have you, thank you very much for joining. We're here to talk about ABCs or assignments for the benefit of creditors, and first, as we like to start most of our interviews and episodes, just want to get each of your respective backgrounds and hear what brought you to Resolution, what brought you to doing what you're doing now?

Molly Froschauer:

Well, thanks for having us first of all. I'm obviously Molly, not David, but I started in ABCs after a short career as a bankruptcy attorney. I always say I'm an attorney in recovery. Then I started doing ABCs at an organization that historically was the thought leader, I guess, in the ABC world since 1883. So yeah, began with a historical perspective and then went to another firm that we left about a year ago, and we started Resolution.

David Johnson:

This is David. Good morning. Thrilled to be here. Thank you very much. I started my career in distress a long time ago back at Alvarez and Marsal when they were a very small firm, which they are not anymore, so that was a great pedigree. I've done some entrepreneurial things in the interim but spent 17 of the past years with another professional services firm, as Molly alluded to, Molly and I, and our two other partners, a team of four, spun out from that company in April of 2024.

Justin Bernbrock:

I appreciate, Molly, your description of yourself as a recovering bankruptcy lawyer. I someday hope to be that. And certainly-

Molly Froschauer:

It's possible.

Justin Bernbrock:

Yeah.

Molly Froschauer:

You can dream it, you can do it.

Justin Bernbrock:

Yeah. David, I've worked quite extensively with our friends at A&M, and so know that firm quite well. So let's get into just the meat of ABCs, or assignments for the benefit of creditors. I'll confess that I have never actually done one as counsel to a company. I've been tangentially involved on behalf of some creditors or some lenders in certain circumstances, but it's always an interesting option when I hear it raised. What is it or why should a company that's in distress consider this? What are some of the hallmarks? Maybe sketch just sort of broadly what it is that we're talking about when we say ABC, or assignment for the benefit of creditors.

Molly Froschauer:

So a general assignment for the benefit of creditors, call it by its full name, is an assignment of all of your assets to a trustee, similar to a bankruptcy, wherein the trustee liquidates the assets and distributes the funds to creditors. An ABC is actually a device from common law England, it's as ancient as the hills. So it's been historically an alternative to a business bankruptcy for as long as we've had the bankruptcy code. It is a device for liquidating assets in a more business-like streamlined way, and it essentially, in a lot of states, is run out of court, and represents a cheaper, quicker, easier way of liquidating business assets and maximizing the value for creditors.

David Johnson:

I would say it is an analogous to a Chapter 7 bankruptcy. It is a liquidation device, not a restructuring device, but as Molly alluded to, an ABC is not done under the federal bankruptcy code, it's done under various state jurisdictions. And it's said that it's a bankruptcy where you get to choose your own trustee. Now, I mean it is an alternative to a bankruptcy process, but it's one of several tools that a distressed company or a distressed lender has to choose from. There's the bankruptcy code, there's the foreclosure under Article 9, there are informal wind downs, there are receiverships. An ABC is a great tool in the right circumstances, but it's not the only tool we have or that lenders or companies have to choose from.

Justin Bernbrock:

Okay, so understanding what you just explained, what are some of the advantages or disadvantages, I guess, thinking comparatively about an ABC process versus a Chapter 7 process, or Chapter 11, or even Article 9, as you mentioned?

Molly Froschauer:

Traditionally, one is going to compare an ABC to a bankruptcy to Chapter 7, where there's no chance of reorganizing and re-emerging as the same company with that plan and a way to get debt holders paid. So in that traditional reorganization sense, an ABC is not that. It is a voluntary assignment, so it's not like you can do an involuntary ABC the way you could a bankruptcy. And it is an action taken by, with the consent of the shareholders, which is a key difference, often. And again, the choice of the trustee is pretty key. A difference, obviously, is the parties when thinking about doing a receivership or a foreclosure.

An ABC often streamlines the operational processes of a business. So as opposed to a bankruptcy where you have to do a lot of motion work and things like that, an ABC is fairly streamlined in terms of keeping a business operating and keeping the lights on. So often when you do a straight wind down, you're not continuing to operate, you're simply making sure that facilities are exited, that claims are sought from the creditors, and creditors are noticed, administrative wind down happens. But as opposed to a bankruptcy where you'll have a Chapter 7 trustee who is managing the situation, and having hearings, and having court appointed dates, there's really none of that. The creditors get notified right away, everything happens a lot more quickly, and so that's kind of the key difference when you're talking about a complete straight shut down.

David Johnson:

So I would say when we go into an assignment for the benefit of creditors, and assume for a moment it's a simple, hard shutdown, where the business ceases, we as assignee have two real functions. Number one, monetize the assets. That is inventory, machinery and equipment, collect receivables. For our client base, it's primarily intellectual property. That's patent portfolios, trademarks, customer lists, proprietary software, all of those things may have some value, even if the business itself couldn't survive for one reason or another. So our first job is to try to capture value and capture value quickly, while the employees may still be available to speak, while the technology is still hosted in the cloud, and before we run out of cash. That's our first job. Our second job as assignee, is to do the administrative wind down of the company. Move out of the facilities, terminate the employees, get the final tax returns prepared, store the books and records. All of the things that a board of directors generally cares about but doesn't have the time or skillset to do. They hand that off to us as the assignee, and then the board can resign.

Molly Froschauer:

And one piece to add, as somebody that started my career at a creditor's organization, our primary and most important job, I would often argue, is to work for the creditors. So we are there as fiduciaries for them, and often are an easier place for them to come and ask questions and deal with a party without having to secure counsel or doing anything, essentially, very formal to understand where they are and what their potential recovery is. I always act as a voice for the creditors who need to know what's going on, I tell them, "Look, I work for you, if you need to call me, call me." And so often, it's a better forum for those creditors just to get an update and understand exactly what's happening.

David Johnson:

And when I referred a moment ago to monetizing the assets, the end game, of course, is to take the cash, hold it in our trust account for ultimate distribution to those creditors.

Justin Bernbrock:

So if a distressed company or a board of directors, as you mentioned, is considering the various options, what are some of the cost comparisons or venue considerations? Can you talk a bit about just the nuts and bolts of the relative proceedings or options that are available?

David Johnson:

I would describe it as this, a Chapter 11 bankruptcy can be very expensive, but let's assume that that's unnecessary. The next cost level would be down to an assignment for the benefit of creditors, which would be magnitudes less than a Chapter 11, yet still provides the company with some control. They choose their trustee, they can do some planning ahead of time. The third level down would be a Chapter 7 filing, which is generally very inexpensive, but you lose all control. You hand all of your assets over to a bankruptcy trustee who is not identified ahead of time. Who may not have the skills to monetize esoteric assets. So I would put an ABC sandwich between an expensive Chapter 11, an inexpensive Chapter 7, but with those offsetting benefits.

Molly Froschauer:

A lot of times with the Chapter 7, you are almost completely out of cash. You have complicated issues as a result of being out of cash. Maybe you don't have access to your facility, or the assets, or something like that. In an ABC, we're going to be approached ahead of time and it's going to be a bit more costly because we're ensuring a more orderly environment. So we would want to make sure that we can pay rent, so we can occupy the office to continue to keep the lights on. Then we can pay payroll of anybody that we want to retain, so we can keep them around to monetize assets. So if you're truly out of cash, an ABC isn't going to work, not only because of the fees, but because the aim is to provide a more orderly process, or at least to the extent possible.

I can add a little bit to the jurisdiction discussion, and just that saying that ABCs historically have predated bankruptcy code, and they were a primary force for liquidating businesses in a more business-like manner for many, many years. Many states have not modernized those statutes, and so often you will see ABCs taking place in probate court with a probate judge deciding which assets can be sold or something like that. So many of the state statutes render an assignment for benefit of creditors under that state's law impractical. And so when you go to slight jurisdiction, there are often certain jurisdictions people will gravitate toward because the statute works in the modern era.

David Johnson:

That makes sense. So for example, California has a famously flexible and skinny statute that allows a lot of freedom for an assignee, so California is often a form of choice. Traditionally, Delaware has also been a good venue for assignments for the benefit of creditors in the Chancery Court, although that's getting more challenging.

Molly Froschauer:

It's reflected in Delaware even that the statute is designed to pertain to a business that doesn't really exist anymore. So doing inventory and setting that as the valuation, for example, when we're doing complicated technology companies, it doesn't make a whole lot of sense, but California is one of the ones that has at least modernized its statute in my lifetime. I think the only one I know.

Justin Bernbrock:

So we talked a little bit about sort of the shutdown example, but something I didn't, and I guess I'll confess don't fully appreciate, is the opportunity to use an ABC for an operating company, or some sort of going concern sale, or even perhaps a pre-packaged ABC? Would you talk a bit about those?

David Johnson:

Yes, I'll address a pre-packaged assignment for the benefit of creditors is one of our favorite outcomes. Although, we're talking about a liquidation device in an ABC, that doesn't mean there can't be a going concern sale. What we do in many cases, if we have a business that is operating and has employees, perhaps has customers, has inventory, and is really running as a going concern, we don't want to turn that off any sooner than we have to. So what could be done is, ahead of the ABC, a sales process could be run, a mini-investment banking process if you will. If one or more buyers is identified to operate in the normal course, negotiate an asset purchase agreement with that buyer for the transition of the business. So assuming we can come to an agreement and a purchase price, we would set up a closing day, let's say two weeks out, three weeks out, and on closing day two things will happen.

First, the assignor, the target company, will enter into an assignment for the benefit of creditors with resolution. Upon signing that contract and funding a budget, the assets become titled into the name of the ABC trust, and now I'm in possession of them. That same day, I can turn around and execute on that pre-negotiated asset purchase agreement and sell the assets to the new buyer. In that way, there's continuity of operations. The employees are terminated but rehired on the same day. One need not move out of the facility, one need not interrupt the business operations at all, it'll simply be under a new owner. At the same time, the assignee would just continue its functions. It would address creditors from OldCo, it would address all the administrative issues we talked about earlier, yet the new owner of the assets gets to continue the business in the normal course.

Molly Froschauer:

I can talk too a little bit about what it looks like when you're continuing operations, when you don't have a pre-negotiated sale. And I would say that we do a lot of this kind of thing, where say we have some technology and the technology has enterprise customers who would constitute some of the creditor body maybe because of unearned revenue, or prepaid subscriptions, or something like that. And the idea is that we have to keep the company operating while we're trying to find potential strategic buyers. And say the company doesn't have a lot of cash, that's why they're not in Chapter 11. And they're trying to preserve cash because it's a duty when insolvent. And so one of the things we might be able to do is look at the cost to operate, cost to keep the lights on for six to eight weeks while we negotiate a sale and run a process.

Often we might not have that, and so we might have to come up with creative ways, operationally, to raise money to get to the end of the sales process. As a bankruptcy practitioner, I'm sure you can imagine what that would look like in a Chapter 11. We're talking DIP loans, we're talking different types of priming actions, liability management. In an ABC, it could be as simple as me going to enterprise customers whose mission-critical operations are dependent on this software, and saying, "For me to keep the lights on and to pay the AWS bill, I need this much money in a couple days." And the potential damage creditors and customers can contribute to keeping the lights on to finding a buyer, and thus not having their software operations suspended.

This is something I've done a few times in my career, basically raise money from alternative parties in order to keep operating to find a buyer. When we think we have a good chance of finding a buyer, we can mitigate a lot of damage that way. You can find alternative ways to fund the process. You can keep the tech people employed because they're key when you're planning a tech acquisition. And you can transition off some of the less desirable parts of the business, for example. Maybe a product that nobody wants to buy, you can assist in that wind down. Maybe there's no regulatory part of it that you want to handle. So a buyer sees this and says, "Hey, you've kept the customers live, basically salivating for a new owner, and you've gotten rid of the more complex parts."

David Johnson:

That's something that a lot of people don't realize, is that you can actually continue to operate the company, even after you've entered into the assignment for the benefit of creditors. Molly just described that as an operating ABC. So there are really three, what we call flavors, of ABCs. First, we described a few minutes ago what we call a hard shutdown, where operations cease, employees are terminated, and everything is simply liquidated. The second example is what I discussed a moment ago, is a prepackaged ABC, whereby the ABC is entered into simultaneously with the sale of the assets to a buyer. And the third, again, is the operating ABC, where we enter the ABC, and then we, as the assignee, continue to oversee the operations of the business until such time as a buyer can be found, if at all.

Justin Bernbrock:

So if we change the perspective a bit here, because I do a fair amount of representing buyers of distressed assets in the context of bankruptcy cases, and yeah, I think it's common that I hear from friends, and colleagues, and clients wanting to know whenever I hear about or see some sort of distressed opportunity. And I can't think of an instance in which I was aware of an acquisition opportunity through an ABC, and so how can buyers plug into or otherwise find out when there are these opportunities?

David Johnson:

Of course one of our primary functions is to try to generate value from the sale of assets, and so our outreach process is key. Again, the company may have valuable assets, maybe hard assets, but very often in our business intellectual property. And those assets may be attractive to a competitor or private equity firm that's already in this space. They may want to use this technology as an add-on. So we want to make sure we get in front of everybody who's tangentially related to the industry in question, and make sure they are aware of the opportunity. We'll create the marketing document and design a sale process that's designed to elicit bids and diligence over a period of just a few weeks, and have a very quick sale closure. Again, we don't have large budgets, we don't have large timelines.

I have a great story about a deal I did a while back that illustrates the advantage for buyers, and a company called me with an emergency when they realized they were out cash. The CEO had been borrowing money from hard moneylenders, weeks at a time, trying to fund a company through a planned acquisition, but unfortunately he ran out of cash and got exposed to the board for his actions prior to the transaction being able to complete. So the company had to shut down in an ABC very quickly. However, the acquirer was still at the table. He was originally planning to purchase the company for about $50 million, but now that the company went into an insolvency process, and most of the employees were gone, and there was a bit of disruption, they were no longer willing to pay that price, but they were still very interested in the technology, and he purchased the technology assets for only $15 million, one five.

Now, he bought the technology and he didn't buy a going concern. He had to put Humpty Dumpty back together again. But he paid a significant amount less than he expected to pay, yet the sale price was sufficient enough for we, the assignee, to pay the secured creditors in full. So it was a disaster of a situation from the company's board standpoint. The company had emergency basis for shutting down and potentially losing the sale. Yet at the end of the day, through this vehicle, in cooperation with an opportunistic buyer, we were able to do the right thing and get the secured creditors paid in full.

Molly Froschauer:

I will say also that there are many reasons that companies prefer to acquire assets out of an ABC, and one of the primary reasons is, gets back to what you were talking about, Justin, in that sometimes it's hard to find out about the opportunity. We try to get it out as much as we can, and it isn't a situation where they control the docket to see if there's something for sale that they're interested in. So I would say that if you do have buyers that are interested in this area, have them contact the three or four largest assignees and have them in the contact database for receiving opportunities.

Oftentimes in an ABC, you'll get the dreaded buyer question and everyone will ask, "Well, what about success or liability?" That's what we really care about here. We want to make sure that if we're buying these assets, we're not taking all of the mess with us. And they will contrast that maybe to some prior experience in a 363 sale. And I can't give a perfect answer here. I can tell you what we've seen over hundreds and hundreds of ABCs over the last 20 years, and I can tell you that success or liability is very rare and has a lot to do with the actions of the buyer afterward, and to maintain the strict separation and things like that.

But there are other reasons why experience in the 363 sale might not translate into an ABC. One example we see a lot of is licenses, for example. In intellectual property transactions, you often have a bit licensed from another, maybe a university for their patents or some piece of someone else's technology. It's pretty vital to the package. We can't do an assumption of the license and a transfer in the 363 sale. We have to reach an agreement in a more collegial manner. And we can obviously facilitate communications amongst the different parties and try to have to reach an accord when it gets more difficult. And we don't have that strong arm hammer of the 363 sale order, where these contentious issues can be mandated by the court.

David Johnson:

There are certainly trade-offs. Everybody would love to get a judge's order on a 363 sale, but the cost savings and the time savings through an ABC is very often the prevailing factor.

Justin Bernbrock:

Are there specific instances, or perhaps companies, or industries that are just not well suited for an ABC? I know it's perhaps a difficult question to try to prove a negative, but I'm just curious whether if a company has got multinational connections or other aspects that just sort of funnel the situation into a more formal proceeding versus an ABC.

Molly Froschauer:

I would say that the first one that comes to a lot of people's minds when they think about when an ABC isn't appropriate is due to the private nature. So as David's mentioned several times, you can choose your own trustee. Many lawyers who would be listening to this and will realize that that's problematic in certain situations, and so that's not the kind of situation an ABC would be appropriate for. You want to make sure that assignee is ethical, and that any sort of trading of promises or anything like that, say that you just don't want to get involved in that situation. On the other hand, say the board has recently replaced some D's and O's from some inappropriate behavior that might lead to a claim on an insurance policy, you can do that in an ABC. But if those people are going to be the ones you're working with, an assignee should really pause before they've engaged in that situation.

Another one, as fiduciaries for creditors, we all have to talk about preemption. There is a decision out of the Ninth Circuit that says that the bankruptcy code preempts the seeking of preferences. If there's a huge preference, I don't think it's fiduciaries that says assignee's, we should take on that matter with the ambiguity about whether we can actually recover our preference of a substantial size in federal court. So that's one example. There's also regulatory reasons, say there's a lot of hazmat, certain kinds of difficult situations. You're a quarry and you've got asbestos or something like that. A lot of product liability. Class actions, I think about Corinthian Colleges, is you've got so many students that are constituents, you've got creditors, you've got different lean holder levels, that might get too complex for an ABC.

David Johnson:

Remember, the assignor has to find an assignee to take on the job, and an assignee may be reluctant if there are unquantifiable risks, if there are large payroll tax liabilities, if there are, as Molly said, environmental liabilities and it's not clear how those liabilities might transfer to an assignee. You do need to find an assignee willing to take on the assignment, and if it's complex, that could be problematic.

Justin Bernbrock:

That's helpful. That's helpful certainly to think about as another potential option for companies that are in distress.

David Johnson:

Now, Justin, you did ask about foreign jurisdictions. Let me talk about that for a moment. It is often the case that a US parent or even a US subsidiary may want to go through an assignment for the benefit of the creditors, but that doesn't address any foreign entities that are related. Of course, an ABC is nonbinding overseas, and so if we have subsidiaries in, say, Poland, as we did last month, that takes a different set of professionals to wind that down. So we, as assignee, can cooperate with the appropriate professionals in foreign jurisdictions to file whatever kind of insolvency a process may be appropriate in that jurisdiction. In fact, I have even served as a director temporarily on the foreign companies for the purposes of signing documents, terminating employees, filing for insolvencies. So we don't handle that directly, but we do facilitate the wind down indirectly.

Justin Bernbrock:

Yeah, that's helpful. So just as we wind down here, what high level message should listeners take away from our discussion here? What would you want to leave folks with?

Molly Froschauer:

As I've mentioned before, I've come from this with a kind of deep historical perspective, and I will say that, as Californians, that ABCs are kind of an integral part of our history. They're an integral part of the business operational history in California, especially if you think about the Wild West and population explosions, the idea that business needed a solution before the court and law provided one was pretty paramount. And so throughout the 20th century, as these prophecies developed, the idea was, from the business community, that this was bankruptcy for the businessman. It was a business solution to a legal problem. So the idea is that you choose people who understand the business challenges the best. If the challenge that you're facing is going to be one that's primary commercial about operationalizing a business, about making sure that the business judgments are the best, that's why you would choose an ABC.

David Johnson:

Our mantra at Resolution is, know your options. We want to make sure that all of our prospective clients know all of the tools that are at their disposal, and sometimes bankruptcy is the appropriate tool. We do bankruptcy work. But for most of the people with whom we do business, an out-of-court process is most efficient, whether that's an assignment for the benefit of creditors, or foreclosure process, a receivership, or an informal insolvency process, knowing your options and doing contingency planning with us ahead of time is where we add value.

Justin Bernbrock:

Great. Great. Well, thank you both again. I certainly have learned a lot and I'm sure that our listeners will as well. So one final question that we like to ask our guests. If you weren't doing what you're currently doing at Resolution, what would be your dream job?

David Johnson:

I've always wanted to be an entrepreneur, and this role gives me the best of all of those worlds. We'll handle multiple projects at a time. We handle every dimension from investment banking, to illegal work, to marketing. I wear a lot of hats. And so if I couldn't run a standalone business, which I think would make me bored at this point, I can't imagine what else I'd be doing.

Molly Froschauer:

I love this job and it's constantly interesting, and if you have that kind of brain where you need that stimulation, as David and I both do, this is perfect. However, you're never going to high five your team members after a project and say, "We really won that one." Because somebody's losing. And so that is, I would say, the hardest element. It would be nice to be part of a situation where we were able to come out of it with resounding success, not just a seamless mitigation of damage.

David Johnson:

But a soft landing is an achievement in itself. We do preserve jobs, preserve value, and we do fill a niche, so that is rewarding.

Molly Froschauer:

We get the audits from the teams too, it's not all very dark. And I would say that with Resolution, I got a little bit of that team trying to head for success feeling that I've been searching for, but we're not in the business of making successes.

Justin Bernbrock:

Sounds like you guys just need to institute daily high-fives, team high-fives on account of Molly.

Molly Froschauer:

Yeah, that's a good idea.

Justin Bernbrock:

Well, thank you both again very much. Really, really appreciate this. And I'm sure that we will see you out there in the interesting world of distress.

David Johnson:

Thank you very much, Justin.

Catherine Jun:

In current restructuring news, on June 20th, Purdue Pharma got court approval to solicit votes on its 7.4 billion deal to settle opioid claims. This comes almost a year after the Supreme Court threw out Purdue's prior Chapter 11 plan. The settlement contemplated in Purdue's current plan includes a contribution from the Sacklers of $6.5 billion, in exchange for a release of fraudulent conveyance claims held by the debtor's estate and the thousands of opioid injury claims against the Sacklers themselves. Earlier last week, attorneys general of 55 US states and territories had announced their support for the deal.

On June 16th, home decor retailer At Home Group Incorporated filed Chapter 11 in the District of Delaware. The Texas-based retailer and 42 affiliates want to reduce their $2 billion of debt. The retailer has faced declining customer demand and uncertainty following the imposition of tariffs on imports from China, where the company sources most of its merchandise. The company entered the bankruptcy with a restructuring support agreement that had backing by 96% of its first lien lenders. Those lenders also gave 600 million in DIP financing, which includes a 200 million new money component. That's it for current news and notable stories. This is Restructure This! by Sheppard Mullin. See you next time.

Contact Information

David M. Johnson, CFA

Molly Froschauer

Justin Bernbrock

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