Transactional
Liability Management and Special Situations
Overview
As a primary component of our market leading ad hoc creditor focused Business Restructuring and Reorganization practice, our Liability Management and Special Situations practice benefits from the vast insight gained through our ad hoc group representations and allows us to drive the market in both proactive and defensive liability management solutions and special situations strategies.
Our Liability Management and Special Situations group is the industry leader in liability management transactions focused on creating and executing tailored solutions for the most complex liability management transactions and special situations on behalf of ad hoc groups of debt holders and other debt and credit investors. Our team operates at the intersection of distressed finance and restructuring to understand the nuances and challenges of each transaction delivering novel and creative strategies that can only be developed based on our years of experience with the most complex and unconventional situations.
Our multi-disciplinary team has extensive experience advising distressed credit and special situations clients in structuring and implementing complex liability management and alternative capital solutions, including priming transactions and other uptiering structures, non-loan party/non-guarantor and unrestricted subsidiary drop-downs, “double dip” and “triple dip” structures, exchange transactions, amend-and-extend transactions, direct lending transactions, including first and second-lien, unitranche and mezzanine loans, rescue financings, DIP, tender and exchange offers, rescue financing or recapitalizations, exit financings and out-of-court restructurings. Regardless of the challenge at hand, our team responds with creative, strategic and comprehensive advice, allowing our clients to successfully navigate the varied complexities that may arise in troubled credits or other event-driven and opportunistic situations.
Every liability management transaction or special situation opportunity lends itself to innovative solutions requiring comprehensive and creative advice. The combination of our market leading ad hoc group restructuring practice and the unparalleled expertise of our multi-disciplinary team consisting of debt finance, capital markets, tax, M&A and litigation, our Liability Management and Special Situations practice is uniquely positioned to consistently develop and implement creative and market driving solutions to address our clients’ needs in these complex situations.
Experience
Recent representations include:
- Serta: Advised an ad hoc group of first lien and second lien term lenders in connection with a game-changing priming and open market purchase transaction. The Serta Simmons transaction re-defined liability management transactions, combining a new money priming facility with non-pro rata open market purchases to facilitate liquidity enhancement and material de-leveraging. The Serta Simmons transaction consisted of, among other things, (i) a $200 million first out new money term loan facility backstopped by certain members of the ad hoc group and (ii) deleveraging purchases of existing first lien and second lien debt in exchange for new second out loans at discounted exchange ratios. Gibson Dunn further advised the ad hoc group in connection with Serta Simmons’ subsequent bankruptcy filing, obtaining a sweeping victory in the United States Bankruptcy Court for the Southern District of Texas which upheld the validity of the Serta Simmons transaction.
- Envision Healthcare: Advised an ad hoc group of first lien term lenders in connection with their sponsorship of, and participation in, an innovative priming and uptier transaction. The Envision Healthcare transaction, the second in a series of liability management transactions, consisted of, among other things, (i) a $300 million first out new money term loan facility backstopped by certain members of the ad hoc group and (ii) a tiered deleveraging exchange into certain second out and third out facilities at variable exchange ratios. Gibson Dunn further advised the ad hoc group in connection with Envision Healthcare’s subsequent bankruptcy filing, pursuant to which the company restructured $7.4 billion in liabilities and successfully separated its physician services and ambulatory surgical center units into standalone businesses.
- Rackspace: Advised an ad hoc group of first lien term lenders and noteholders in connection with their sponsorship of, and participation in a cutting edge non-Loan Party transaction. The Rackspace transaction consisted of, among other things, (i) a $275 million first out new money term loan facility backstopped by certain members of the ad hoc group, (ii) tiered deleveraging exchanges into certain second out facilities at variable exchange ratios, and (iii) discounted repurchases of certain outstanding unsecured notes. The Rackspace transaction was the first liability management transaction of its kind in entailing a movement of all or substantially all of the Company’s value to a structurally senior entity in order to facilitate debt incurrence and material discount capture.
- Eyecare Partners: Advising an ad hoc group of first lien term lenders to EyeCare Partners. In connection with our engagement, we structured, negotiated and implemented a comprehensive liquidity enhancing and deleveraging transaction, which was anchored by the ad hoc group and consisted of, among other things, (i) the incurrence of a $275 million super senior first out new money term loan facility funded by certain participating lenders, including each member of the ad hoc group, (ii) uptier exchanges of consenting first lien term loans into a second out priming position, and (iii) uptier exchanges of consenting second lien term loans into a mix of second out and third out priming indebtedness, in each case at variable exchange ratios.
- City Brewing: Advised an ad hoc group of first lien term lenders to City Brewing in connection with the Company’s novel “triple-dip” non-Loan Party drop-down financing, which consisted of, in principal part, $115 million of first out new money backstopped by the ad hoc group and deleveraging exchanges of consenting term loans into a mix of pari first out indebtedness and second out indebtedness at certain disparate exchange ratios. Credit and collateral support for the new money and exchange indebtedness was maximized through (i) an effective transfer of certain existing collateral and previously unencumbered assets to the non-Loan Party borrower, (ii) a pari first lien cross-guarantee from “remainco”, and (iii) a pari first lien intercompany note.