NBG Home files bankruptcy; stalking horse bid from KKR, Silver Point

By Sarah Lizee

Olympia, Wash., Feb. 9 – Nielsen & Bainbridge, LLC, which does business as NBG Home, filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the Southern District of Texas to implement a prearranged Chapter 11 plan that aims to reduce long-term debt by about $350 million from $413 million.

“The ongoing effects of the pandemic have impacted companies across all sectors, including home decor,” Hope Margala, president and chief executive officer of the company, said in a press release.

“For us, supply chain disruption led to our key customers having too much inventory, which meant lower than anticipated demand for our product. In addition, we had to incur freight costs over three times historical averages.”

The company has entered into a restructuring support agreement and stalking horse agreement with lenders holding the majority of its debt, comprised of credit funds and accounts managed by KKR Credit Advisors (US) LLC and funds managed by Silver Point Capital, LP.

Under the agreement, the company will receive a $60 million debtor-in-possession facility via KKR and Silver Point. The facility consists of $30 million in new money and a $30 million rollup of prepetition loans.

The DIP facility matures in two months and bears interest at SOFR plus 1,000 basis points, payable in kind and subject to a SOFR floor of 1%. Default interest would be an additional 2% above the interest rate.

There is a PIK commitment premium of 5% on the new money.

The company is seeking interim access to $10 million of the new money under the facility.

As sponsors of the restructuring plan, KKR and Silver Point will acquire the company through a credit bid against the DIP and amounts outstanding under a $57.7 million asset-based lending facility, unless a higher or better bid emerges during the process.

Under the company’s proposed bid procedures, the bid deadline is 6 p.m. ET on March 19, an auction will be held on March 21, and a sale hearing will be held on March 24.

NBG said it expects to complete its restructuring within 60 days and intends to continue operating in the ordinary course of business throughout the process, without disruption to its customers, vendors and employees.

Creditor treatment

Under the plan, administrative claims and priority tax claims will be paid in full.

Other secured claims and other priority claims are unimpaired.

If KKR and Silver Point are the plan sponsors, holders of DIP claims will receive payment in full in cash on account of the rollup loans, and a pro rata share of an equal amount of the exit term loans or cash on account of the new money loans. If any other party is the plan sponsor, DIP lenders will receive payment in full in cash.

If KKR and Silver Point are the plan sponsors, ABL lenders will receive either their pro rata share of a new ABL credit facility or payment in full in cash. If any other party is the plan sponsor, ABL lenders will receive payment in full in cash.

The first-lien term loan lenders, second-lien term loan lenders and general unsecured creditors will receive their pro rata share of additional value, if any, from a higher or better bid than what KKR and Silver Point currently offer.

Intercompany claims and interests will be reinstated, set off, settled, distributed, contributed, canceled or released, or otherwise addressed.

Section 510(b) claims will be discharged with no distribution.

Interests will be canceled with no recovery.

Other details

In its petition, the company listed 5,001 to 10,000 creditors, $100 million to $500 million in assets and $500 million to $1 billion in liabilities.

Its largest unsecured creditors are Wangbin Decorative Material Co., based in Yiwu City, China, with a $5.59 million trade payable claim, Lamplux Co., Ltd., based in Guangdong Province, China, with a $3.91 million trade payable claim, Litesun Lighting Co., Ltd., based in Dongguan City, China, with a $3.23 million trade payable claim, Minhou Beite Home Decor Co., Ltd., based in Fuzhou, China, with $3.22 million trade payable claim, Dongguan City General Success, based in Dongguan, China, with a $2.91 million trade payable claim, New Joyce Art Supply, Inc., based in Wuxi, China, with a $2.39 million trade payable claim, and Zhang Zhou Ailaili Furniture, based in Zhangzhou City, China, with a $2.04 million trade payable claim.

NBG Home’s legal adviser is Kirkland & Ellis LLP. The company's investment banker is Guggenheim Securities, LLC, and its restructuring adviser is Alvarez & Marsal North America LLC.

The home decor company is based in Austin, Tex. The Chapter 11 case number is 23-90071.

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