BHCosmetics
FILING ALERT: BHCosmetics Files Chapter 11 in Delaware to Run Sale Process With $4.3M Stalking Horse for IP and Inventory
Sat 01/15/2022 09:49 AM
Relevant Documents:
Voluntary Petition
First Day Declaration
Cash Collateral Motion
Bid Procedures Motion
BHCosmetics Holdings LLC, a North Hollywood, Calif.-based beauty brand specializing in clean, vegan and cruelty-free cosmetics and other beauty products sold by ecommerce and wholesale, filed for chapter 11 protection on Friday, Jan. 14 in the Bankruptcy Court for the District of Delaware. The company reports $50 million to $100 million in both assets and liabilities. The debtors are represented by Young Conaway Stargatt & Taylor in Wilmington, Del. as counsel, Riveron Management Services as financial advisor, SB360 Capital Partners as agent for conducting the sale and liquidation of the debtors’ wholesale and ecommerce inventory and Hilco IP Services dba Hilco Streambank as agent for conducting the sale and liquidation of the debtors’ intellectual property. The company is also working with Traverse, to provide a controller and other accounting personnel. Spencer Ware of Riveron Management Services is the CRO. Epiq is the claims agent. The jointly administered case number is 22-10050.
The debtors seek to run a sale process with RBI Acquisition Holdings LLC as stalking horse for a substantial portion of the debtors’ assets (certain unexpired contracts, inventory and intellectual property) for $4.3 million. The contact information for RBI Acquisition in the APA refers to Zeus Capital Ltd. “At the outset of these proceedings, the Debtors seek authority to continue the Sale Process, including the Inventory Sales and the IP Sale, with the assistance of SB360 and Hilco Streambank, respectively,” adding that they also seek to conduct an auction process to run for approximately 36 days. The debtors have closed their overflow warehouse and headquarters. In addition, the debtors would assign certain accounts receivable under a factoring agreement with SB360.
The debtors’ prepetition capital structure includes a credit facility including $9.6 million owed on a term loan and $13.9 million owed on a revolving loan. The debtors also have $14.9 million in unsecured debt including amounts owed to the debtors’ landlords for past due rent.
The case would be funded through the use of cash collateral, with the consent of the debtors’ prepetition secured lenders.
From January through November 2021, the debtors generated approximately $18.6 million in net sales and had negative adjusted EBITDA of approximately $14.4 million.
The list of largest unsecured creditors consists entirely of trade debt, and the four largest creditors are shown below:
“In the fourth quarter of 2017, the Debtors and/or their predecessors in interest commenced a series of transactions to effectuate the acquisition by MidOcean Partners V-BH, L.P. (‘MidOcean’) of 63% of the equity interests in Holdings from BH Bonfire, Inc.,” and subsequently MidOcean funded capital infusions of $5.5 million and $4.5 million in exchange for preferred Series A units in Holdings. In 2020, MidOcean funded $19 million of preferred Series B units, increasing its ownership interests in Holdings to 74.4%. In 2021, MidOcean funded $3.5 million of preferred Series B units further increasing its ownership interests to a total of 85.85% of the company’s total membership units. BHCosmetics Holdings’ equityholders are as follows:
A list of debtors follows:
The company’s corporate organizational structure is below:
Reorg First Day will provide a full summary once the first day briefing is complete.
Voluntary Petition
First Day Declaration
Cash Collateral Motion
Bid Procedures Motion
BHCosmetics Holdings LLC, a North Hollywood, Calif.-based beauty brand specializing in clean, vegan and cruelty-free cosmetics and other beauty products sold by ecommerce and wholesale, filed for chapter 11 protection on Friday, Jan. 14 in the Bankruptcy Court for the District of Delaware. The company reports $50 million to $100 million in both assets and liabilities. The debtors are represented by Young Conaway Stargatt & Taylor in Wilmington, Del. as counsel, Riveron Management Services as financial advisor, SB360 Capital Partners as agent for conducting the sale and liquidation of the debtors’ wholesale and ecommerce inventory and Hilco IP Services dba Hilco Streambank as agent for conducting the sale and liquidation of the debtors’ intellectual property. The company is also working with Traverse, to provide a controller and other accounting personnel. Spencer Ware of Riveron Management Services is the CRO. Epiq is the claims agent. The jointly administered case number is 22-10050.
The debtors seek to run a sale process with RBI Acquisition Holdings LLC as stalking horse for a substantial portion of the debtors’ assets (certain unexpired contracts, inventory and intellectual property) for $4.3 million. The contact information for RBI Acquisition in the APA refers to Zeus Capital Ltd. “At the outset of these proceedings, the Debtors seek authority to continue the Sale Process, including the Inventory Sales and the IP Sale, with the assistance of SB360 and Hilco Streambank, respectively,” adding that they also seek to conduct an auction process to run for approximately 36 days. The debtors have closed their overflow warehouse and headquarters. In addition, the debtors would assign certain accounts receivable under a factoring agreement with SB360.
The debtors’ prepetition capital structure includes a credit facility including $9.6 million owed on a term loan and $13.9 million owed on a revolving loan. The debtors also have $14.9 million in unsecured debt including amounts owed to the debtors’ landlords for past due rent.
The case would be funded through the use of cash collateral, with the consent of the debtors’ prepetition secured lenders.
From January through November 2021, the debtors generated approximately $18.6 million in net sales and had negative adjusted EBITDA of approximately $14.4 million.
The list of largest unsecured creditors consists entirely of trade debt, and the four largest creditors are shown below:
“In the fourth quarter of 2017, the Debtors and/or their predecessors in interest commenced a series of transactions to effectuate the acquisition by MidOcean Partners V-BH, L.P. (‘MidOcean’) of 63% of the equity interests in Holdings from BH Bonfire, Inc.,” and subsequently MidOcean funded capital infusions of $5.5 million and $4.5 million in exchange for preferred Series A units in Holdings. In 2020, MidOcean funded $19 million of preferred Series B units, increasing its ownership interests in Holdings to 74.4%. In 2021, MidOcean funded $3.5 million of preferred Series B units further increasing its ownership interests to a total of 85.85% of the company’s total membership units. BHCosmetics Holdings’ equityholders are as follows:
A list of debtors follows:
The company’s corporate organizational structure is below:
Reorg First Day will provide a full summary once the first day briefing is complete.
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