Monitronics International makes expected Chapter 11 bankruptcy filing

By Sarah Lizee

Olympia, Wash., May 15 – Monitronics International, Inc. filed its previously announced Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of Texas, according to documents filed Monday.

As reported on May 9, the company, also known as Brinks Home, announced that it has entered into a restructuring support agreement with lenders holding about 78% of its outstanding funded debt and holders of a majority of its equity.

The restructuring aims to reduce the company’s debt by roughly $500 million and provide increased financial flexibility to the company as it continues to deliver profitable growth, Monitronics said in a press release.

The current lenders under the company’s 2019 takeback term loan facility, including funds managed by Monarch Alternative Capital LP and Invesco Senior Secured Management, Inc. as the largest lenders, will become the new principal equity owners of Monitronics, providing the company with additional support to execute on its business plan.

The company has already obtained the requisite support from its stakeholders to confirm the plan of reorganization and expects to achieve bankruptcy court approval of the plan and emerge from Chapter 11 within about 46 days of filing.

“We are pleased to have reached an agreement with our lenders and shareholders to create a capital structure that is right sized for our business model,” chief executive officer William Niles had said in a press release.

“Our new balance sheet will provide sufficient liquidity to grow our subscriber base at attractive returns and generate levered free cash flow.”

Monitronics has received commitments for about $387 million in new money financing during the Chapter 11 cases from existing lenders, including $90 million in new money to fund the process and provide cash to the balance sheet as well as $297 million to refinance the company’s existing super-priority revolving credit facility and term loan.

The financing will fund Monitronics’ operations during the Chapter 11 proceedings, including the payment of employee wages and benefits, suppliers, partners and vendors in the ordinary course of business.

The company will emerge with about $600 million in exit financing.

Under the plan, other secured claims, 2019 exit facility claims, general unsecured claims, intercompany claims and affiliate equity interests in any Monitronics subsidiary are unimpaired and not entitled to vote.

The 2019 takeback term loan claims and Monitronics equity interests are impaired and may vote on the plan.

This is the group’s second round in Chapter 11. It filed its first case on June 30, 2019 in the Southern District of Texas, and received confirmation of a plan of reorganization on Aug. 7, 2019. The plan went effective on Aug. 30, 2019.

To ensure its ability to continue operating in the ordinary course during the Chapter 11 cases, Monitronics filed customary first-day motions with the court seeking a variety of relief, including authority to maintain operations in accordance with pre-petition practices and to pay pre-petition claims in the ordinary course of business.

In its petition, the company listed 1,000 to 5,000 creditors, $1 billion to $10 billion in liabilities and $1 billion to $10 billion in liabilities.

Its top three largest unsecured claimholders are Cortland Capital Markets Services LLC, based in Chicago, and Encina Private Credit SPV, LLC, based in Norwalk, Conn., each with credit facility claims, and Sunnova Energy Corp., based in Houston, with a trade claim. The amount of each of these claims is listed as undetermined.

Next in line is Alarm.com, based in Tysons, Va., with a $21.38 million trade claim, and Skyline Security Management, Inc., based in Downey, Calif., with an $8.87 million purchase agreement claim.

PJT Partners LP, Alvarez & Marsal and Latham & Watkins LLP are acting as lead advisers to the company. Evercore Group, LLC and Davis Polk & Wardwell LLP are acting as lead advisers for the informal group of lenders.

The home security and alarm monitoring services provider is based in Dallas. The Chapter 11 case number is 23-90332.

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