GC Services parent company makes pre-packaged Chapter 11 filing

By Sarah Lizee

Olympia, Wash., Nov. 8 – ORG GC Midco, LLC, the parent company of GC Services LP, made a pre-packaged Chapter 11 bankruptcy filing Monday in the U.S. Bankruptcy Court for the Southern District of Texas, according to a press release from GC Services.

ORG GC Midco has entered into a restructuring support agreement with 100% of its secured term lenders. The plan of reorganization is intended to substantially de-lever the company by reducing its funded debt to about $130.5 million from $210.3 million.

GC Services and the secured term lenders agreed to pursue a consensual balance sheet restructuring through a prearranged plan of reorganization, under which the secured term lenders will become the new indirect owners of the company.

The company said that 100% of the secured term lenders have already voted to accept the plan, which also has the support of ORG GC Midco’s shareholders.

According to the disclosure statement, the restructuring provides that existing term loans of about $210.3 million will be canceled and discharged in exchange for about $71 million of takeback first-lien term loans, about $29 million of takeback second-lien term loans, and preferred and common equity of the reorganized company.

Each holder of an allowed existing term loan claim affiliated with Benefit Street Partners LLC will receive its pro rata share of initial new first-lien loans, second-lien loans, new junior holdco preferred equity and 100% of the new holdco common equity.

Each holder of an allowed existing term loan claim affiliated with Goldman Sachs Bank USA will receive its pro rata share of initial new first-lien loans, less the amount of term debtor-in-possession claims outstanding immediately prior to the effective date rolled into initial new first-lien loans, its pro rata share of new second-lien loans, and 100% of the new midco equity.

As a result of receiving 100% of the new midco equity, Goldman Sachs will acquire an indirect interest in 100% of the new holdco senior preferred equity and its pro rata share of new holdco junior preferred equity, both of which will be issued to the reorganized debtor; provided that prior to the effective date, Goldman Sachs may elect to have its pro rata share of the initial first-lien loans, less the amount of term DIP claims outstanding immediately prior to the effective date rolled into initial new first-lien loans, and/or its pro rata share of the new second0lien loans issued to the reorganized debtor.

Holders of existing asset-based lending facility claims are unimpaired and, on the effective date, will be either paid in full or converted on a dollar-for-dollar basis into an exit ABL facility.

Existing equity interests in the debtor will be cancelled on the effective date.

Goldman Sachs, as one of the company’s existing term lenders, has agreed to provide up to $6 million in senior secured DIP financing to fund the costs of implementing the restructuring.

The company’s existing ABL lenders have agreed to allow GC Services to continue to access the existing ABL facility during the pendency of the Chapter 11 case.

The pre-packaged plan provides for the payment of all general unsecured claims in full in the ordinary course of business.

ORG GC Midco has requested that the plan be approved and the process completed within the next 30 days.

"While GC Services is financially sound, the consolidated group has been hindered by an over-levered balance sheet,” GC Services' president and chief executive officer, Mark Schordock, said in the release.

“The restructuring will result in a meaningful reduction in debt and allow management to focus on further strengthening the consolidated balance sheet and capitalize on new growth opportunities in the future."

As GC Services is not a party to the filing, during the restructuring process, all day-to-day operations for GC Services will be unimpacted and continue as normal. This includes service offerings, uninterrupted continuation of its contracts with its clients, payment of employee salaries and benefits, and payment of vendor obligations.

ORG GC Midco is advised in this process by Weil, Gotshal & Manges LLP as legal adviser and Riveron RTS, LLC as financial adviser.

In its petition, ORG GC Midco listed $100 million to $500 million in both estimated assets and estimated liabilities.

Houston-based GC Services is a provider of business process outsourcing and accounts receivable management solutions. The Chapter 11 case number is 21-90015.

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