Cypress Environmental Partners LP
FILING ALERT: Cypress Environmental Partners Files Chapter 11 in the Southern District of Texas Pursuant to RSA Contemplating Debt-for-Equity Transaction with Argonaut Private Equity
Mon 05/09/2022 08:32 AM
Relevant Documents:
Voluntary Petition
Press Release
First Day Declaration
DIP Financing Motion
Plan of Reorganization
Disclosure Statement
Continue reading for more analysis on chapter 11 cases from our First Day team, and request a trial to access more of Reorg's products.
Cypress Environmental Partners, a Tulsa, Okla.-based inspection services and water and environmental services business, filed for chapter 11 protection on Sunday, May 8, in the Bankruptcy Court for the Southern District of Texas. The company reports $97 million in assets and $62.4 million in liabilities. The debtors are represented by Paul Hastings as counsel, FTI Consulting as financial advisor and Piper Sandler as investment banker. KCC is the claims agent. The jointly administered case number is 22-90039.
According to the first day declaration of Peter Boylan III, the debtors’ chairman and chief executive officer, the debtors commenced chapter 11 to implement the terms of an RSA, which “contemplates eliminating nearly $60 million in prepetition secured debt, paying substantially all of the unsecured creditors in full, and is supported by the Debtors’ prepetition lender.” Boylan says that the debtors entered into the RSA because they have been unable to refinance their sole funded debt obligation with $58.9 million owed as of the petition with Deutsche Bank AG, New York Branch as collateral agent, Deutsche Bank Trust Company Americas as administrative agent and lender, and the “six other banks and other financial institutions or entities from time to time parties to this Agreement, as lenders.” These former lenders sold their interests in the loan to Argonaut Private Equity on April 22. The RSA with Argonaut provides for a debt-to-equity recapitalization transaction, pursuant to which Argonaut would receive 100% of the new equity of the reorganized company, subject to dilution by a management incentive plan, in exchange for extinguishing the obligations remaining under the loan agreement. The company’s press release adds that “the Plan provides for the payment in full of priority and trade claims and an equity commitment from Argonaut to provide working capital to the Reorganized Company upon emergence.” Argonaut would also provide $5 million in DIP financing.
The RSA provides for the following milestones:
Other than the prepetition secured credit agreement that Argonaut purchased prepetition, the debtors have $250,048 in trade claims, and $74,000 in other general unsecured debt. The debtors have $3.6 million in cash on hand as of the petition date.
The company attributes its filing in part to litigation arising in connection with the Fair Labor Standards Act, which it says had a “material adverse impact,” as well as market downturn and the onset of the Covid-19 pandemic.
Cypress Environmental Partners LP is a publicly traded company. The company’s corporate organization chart is HERE.
Cypress’ press release says that “Given the amount of Cypress’ outstanding senior secured debt, which currently totals $58.1 million, Cypress continues to expect that the Reorganization Transaction will result in its outstanding common units (‘Common Units’) and Series A preferred units (including accrued and unpaid distributions) having no value. Bankruptcy Court approval is required to engage or retain professional services firms including independent registered public accounting firms, and consequently, Cypress will be unable to file its Quarterly Report on Form 10-Q for the three months ended March 31, 2022 prior to the SEC filing deadline on May 16, 2022.”
The first day hearing is set for today, Monday, May 9 at 2:30 p.m. ET.
A list of affiliated debtors is below:
Reorg First Day will provide a full summary once the first day briefing is complete.
Voluntary Petition
Press Release
First Day Declaration
DIP Financing Motion
Plan of Reorganization
Disclosure Statement
Continue reading for more analysis on chapter 11 cases from our First Day team, and request a trial to access more of Reorg's products.
Cypress Environmental Partners, a Tulsa, Okla.-based inspection services and water and environmental services business, filed for chapter 11 protection on Sunday, May 8, in the Bankruptcy Court for the Southern District of Texas. The company reports $97 million in assets and $62.4 million in liabilities. The debtors are represented by Paul Hastings as counsel, FTI Consulting as financial advisor and Piper Sandler as investment banker. KCC is the claims agent. The jointly administered case number is 22-90039.
According to the first day declaration of Peter Boylan III, the debtors’ chairman and chief executive officer, the debtors commenced chapter 11 to implement the terms of an RSA, which “contemplates eliminating nearly $60 million in prepetition secured debt, paying substantially all of the unsecured creditors in full, and is supported by the Debtors’ prepetition lender.” Boylan says that the debtors entered into the RSA because they have been unable to refinance their sole funded debt obligation with $58.9 million owed as of the petition with Deutsche Bank AG, New York Branch as collateral agent, Deutsche Bank Trust Company Americas as administrative agent and lender, and the “six other banks and other financial institutions or entities from time to time parties to this Agreement, as lenders.” These former lenders sold their interests in the loan to Argonaut Private Equity on April 22. The RSA with Argonaut provides for a debt-to-equity recapitalization transaction, pursuant to which Argonaut would receive 100% of the new equity of the reorganized company, subject to dilution by a management incentive plan, in exchange for extinguishing the obligations remaining under the loan agreement. The company’s press release adds that “the Plan provides for the payment in full of priority and trade claims and an equity commitment from Argonaut to provide working capital to the Reorganized Company upon emergence.” Argonaut would also provide $5 million in DIP financing.
The RSA provides for the following milestones:
Other than the prepetition secured credit agreement that Argonaut purchased prepetition, the debtors have $250,048 in trade claims, and $74,000 in other general unsecured debt. The debtors have $3.6 million in cash on hand as of the petition date.
The company attributes its filing in part to litigation arising in connection with the Fair Labor Standards Act, which it says had a “material adverse impact,” as well as market downturn and the onset of the Covid-19 pandemic.
Cypress Environmental Partners LP is a publicly traded company. The company’s corporate organization chart is HERE.
Cypress’ press release says that “Given the amount of Cypress’ outstanding senior secured debt, which currently totals $58.1 million, Cypress continues to expect that the Reorganization Transaction will result in its outstanding common units (‘Common Units’) and Series A preferred units (including accrued and unpaid distributions) having no value. Bankruptcy Court approval is required to engage or retain professional services firms including independent registered public accounting firms, and consequently, Cypress will be unable to file its Quarterly Report on Form 10-Q for the three months ended March 31, 2022 prior to the SEC filing deadline on May 16, 2022.”
The first day hearing is set for today, Monday, May 9 at 2:30 p.m. ET.
A list of affiliated debtors is below:
Reorg First Day will provide a full summary once the first day briefing is complete.
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