As the saying goes, March came “in like a lion, out like a lamb,” as the elevated
pace of early March chapter 11 filings dissipated this week. The week’s coverage includes two cloud communications service providers, collab9 and Futurum Communications Corp, extending March’s uptick in communications sector filings to six, and breaking the record for communications sector chapter 11s filed in a single month. The week also had another real estate company filing: Ninety-Five Madison Co., a 16-story commercial building on Madison Avenue in New York built in 1912 that is known as the Emmett Building. Together, the communications and real estate sectors account for 12 of March’s 29 chapter 11 filings. Also filing a chapter 11 this week was Greensill Capital, which served as the U.S. sales arm for U.K.-based supply chain financing company Greensill Capital Management (UK) Ltd., which is owned by Australian company Greensill Capital Pty. Ltd. For access to the relevant documents above as well as our First Day by Reorg team's coverage of all U.S. chapter 11 cases filed since 2012 with over $10 million in liabilities Request a Trial here.
Despite the week’s tepid chapter 11 filing frequency, March still holds up against last year’s numbers for the month, surpassing March 2020’s count through the 26th by one case. Since this January, one of First Day’s slowest months on record, chapter 11s have increased significantly in February and March, not just in frequency but with respect to sector diversity:
Cloud security company collab9
, which has U.S. public sector and U.S. commercial customers, filed facing a “severe liquidity crisis” pinned primarily on contract party Avaya, who the debtor says deceived it in an attempt to “sabotage” its business. The company seeks to run a sale process saying it has “built a valuable business and platform.” The sale process would be funded with $1.2 million in DIP financing from SecureComm.LLC, whose members, Dollab, LLC and Dinco, Inc. are also members of the debtor. SecureComm purchased a $200,000 loan issued by Dollab in February, and funded an additional $380,000 to the debtor earlier this month in the lead-up to the bankruptcy filing, which prepetition debt is proposed to be rolled up. As “collab9 and Avaya were poised to secure a position as a leader in the federal marketplace,” the debtor says, “Avaya notified collab9 that it was winding down its relationship with collab9 and immediately beginning the process to transition all joint business opportunities and its existing customers hosted by collab9.” Ultimately, Avaya’s $10 million convertible note would be used as a “weapon” to prevent collab9 from obtaining the capital necessary to keep its doors open and ensure continuity of operations,” the debtor says.
Since 2016, the communications sector has accounted for roughly 4% of all chapter First Day chapter 11 filings (i.e. all chapter 11s with more than $10 million in liabilities), averaging just under 15 cases per year for the sector. With six so far in March and one in January (Alpha Media Holdings), Q1 2021 has hosted nearly half the number of communications chapter 11s filed across all 12 months of 2020.
While collab9’s ailments were closely tied to its relationship with Avaya, radio broadcaster Alpha Media blamed its struggles on the Covid-19 pandemic, which curbed ad spending by companies. Cloud gaming services provider Blade Global Corporation cited high server infrastructure and datacenter costs, while satellite television services provider Orby TV pointed to vague operating losses. Sito Mobile, which provides consumer behavior-based data services to businesses and filed chapter 11 toward the end of 2020, was hurt more uniquely by the pandemic, as the efficacy of its consumer location data insights became limited as consumers stayed at home.
2020 hosted five billion-dollar communications sector cases, including Global Eagle Entertainment, whose in-flight consumer entertainment services were compromised by the downturn in the aviation industry due to the pandemic; global satellite comms company Intelsat was similarly hindered by the pandemic as one of the largest providers of broadband services to the airline and cruise ship industries; and digital and print media company McClatchy, which pointed to “serious challenges” for the print and digital journalism industries.
Since 2016, the telecom services industry has made up almost a third of all communications sector chapter 11 filings, followed by the entertainment industry, which accounts for 22% of the total:
Greensill Capital Inc.
filed for chapter 11 protection on Thursday, as its affiliates are in U.K. and Australian administration proceedings. After terminating substantially all employees earlier this month, debtor seeks to sell its equity interests in Finacity Corp., which it acquired in 2019. The debtor filed for chapter 11 to “best insulate the Debtor from the distress affecting the Company elsewhere in the world.” The sale process would be funded by $2 million in DIP financing from the Peter Greensill Family Trust, an affiliate of Alexander (Lex) D. Greensill, the ultimate shareholder of Greensill Capital Pty. Ltd. and its affiliates and subsidiaries, including the debtor.
Below is a recap of the sale-related events for this week’s cases:
|Collab9 is a cloud security and unified communications services provider.
|Seeks to run a sale process.
|Greensill served as the U.S. sales arm for U.K.-based supply chain financing company Greensill Capital Management (UK) Ltd.
|Seeks to pursue a sale of its equity interests in Finacity Corp., an asset-backed working capital financing company that it acquired in 2019.
Below is a recap of filing alerts and case summaries from this review period, all of which can also be found on the First Day website
Case data, such as advisors and DIP financing terms, including for filings discussed above, can be found in the First Day Database
, which includes all U.S. chapter 11 cases filed since 2012 with over $10 million in liabilities.