Clover Technologies reaches restructuring agreement, files bankruptcy

By Caroline Salls

Pittsburgh, Dec. 17 – 4L Holdings Corp., which operates as Clover Technologies Group, filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the District of Delaware.

On Dec. 11, 4L announced that it and some of its affiliates entered into a restructuring support agreement with the majority of its equityholders and a group of lenders representing more than 67% of its outstanding long-term debt that will equitize all of the company’s $644 million in long-term debt.

In addition to the restructuring, the company said the agreement supports two recently announced strategic transactions, including Clover Wireless’ acquisition of Teleplan, which closed on Dec. 4, and the sale of Clover Imaging to Norwest Equity Partners, which is expected to close in mid-December.

The proceeds from the sale of Clover Imaging will be used to pay down a portion of 4L’s outstanding long-term debt.

“Collectively, these actions are important, positive steps forward for our company, and are designed to put our company on strong financial footing as we embark on our next chapter,” Clover Wireless chief executive officer Dan Perez said in the release.

“Once the restructuring support agreement and strategic transactions are finalized, we will be a nimbler and more focused company, and we will be well positioned for long-term success. We will have a right-sized balance sheet that supports our growth and further investment in our technology and capabilities.”

4L said its operations are expected to continue as normal throughout the restructuring process. 4L’s non-U.S. subsidiaries and affiliates, including Teleplan, are not expected to be included in the financial restructuring process. Clover Imaging is also not part of the Chapter 11 filing.

Under Clover’s pre-packaged plan of reorganization, holders of term loan secured claims will receive a share of 100% of the new common stock in the reorganized company, subject to dilution from a management incentive plan and new warrants, as well as take-back term loans and 100% of excess cash.

Existing equityholders will receive a share of new warrants.

Unless paid in full in advance, general unsecured claims will be reinstated.

Administrative claims, priority tax claims and other secured claims will be paid in full in cash.

In conjunction with the filing, the company requested court approval to use the cash collateral of its pre-bankruptcy secured parties to fund its operations while in bankruptcy.

The cash collateral use will expire three months after the bankruptcy filing date.

According to court documents, Clover has $100 million to $500 million in assets and $500 million to $1 billion in debt.

The company’s largest unsecured creditor is Rogers, based in Toronto, with a $1.04 million trade claim. No other unsecured creditors were listed with claims of $1 million or more.

Kirkland & Ellis LLP is serving as 4L’s legal counsel, Jefferies LLC is serving as its financial adviser, and Alvarez & Marsal is serving as restructuring adviser.

4L is a Hoffman Estates, Ill.-based collector and recycler of imaging supplies. The Chapter 11 case number is 19-12680.

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