Troika Media Group files bankruptcy, eyes sale to lender Blue Torch

By Sarah Lizee

Olympia, Wash., Dec. 7 – Troika Media Group, Inc. filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the Southern District of New York, according to a press release.

The company plans to implement a restructuring support agreement with funds managed by Blue Torch Finance LLC, the company's senior secured lenders, through which Blue Torch will acquire substantially all of the assets of the company via a stalking horse credit bid.

The bid will be subject to competing bids via a court-supervised auction.

The company said its secured lenders are supportive of the transaction and have committed to provide $11 million of debtor-in-possession financing. Troika is seeking interim access to $7.5 million of the facility.

The facility has a 90-day maturity and bears interest at SOFR plus 1,000 basis points.

The financing, as well as cash generated from ongoing operations, will fund the company’s business operations through the sale process, which it expects to conclude within the next few months.

“We expect that the process will be relatively short and that the company will have adequate liquidity to operate the Converge business normally throughout the process,” Grant Lyon, interim chief executive officer of Troika, said in the release.

“We anticipate that the company will emerge from Chapter 11 as a private company with a stronger balance sheet and with Michael Carrano and Maarten Terry, two long term leaders of the Converge business, in leadership roles.”

Converge, a data- and audience-centric media buying agency that Troika acquired for $125 million in 2022, is the debtors’ core asset.

The company said Converge’s performance has been impacted by a more competitive marketplace, disputes arising out of the acquisition, the financial liabilities imposed on Troika through the acquisition, management departures, and the expense of operating as a public company.

Prior to the acquisition, neither company had any long-term debt, but Troika financed the purchase with a $75 million loan from Blue Torch and $50 million in series E preferred equity from institutional investors.

By June 2022, Troika was requiring regular covenant relief from Blue Torch.

On Sept. 30, the company didn’t pay Blue Torch the principal and interest owed at that time, requiring additional waivers from the lender through the filing of the Chapter 11 cases, Troika said.

The company has filed a number of customary first-day motions with the bankruptcy court seeking authorization to support its operations during the court-supervised sale process, including the continued payment of employee wages and benefits without interruption and continued payments to key vendors and suppliers for goods and services.

In its petition, the company listed $86.5 million in assets and $130.7 million in debt.

Its largest unsecured creditors are Tom Marianacci, Maarten Terry, Michael Carrano and Sadiq Toama, based in New York, with a $9.35 million alleged acquisition obligations and related litigation claim, Valassis, based in San Antonio, Tex., with a $5.77 million trade claim, Google, based in Mountain View, Calif., with a $5.42 million trade claim, Mspark – MailSouth, based in Helena, Ala., with a $2.16 million trade claim, and Kyle Kill, based in Irvine, Calif., with a $1.89 million alleged severance obligations and related litigation claim.

Willkie Farr & Gallagher LLP is serving as the company's legal counsel. Jefferies LLC and Arete Capital Partners are serving as the company's investment banker and financial adviser, respectively.

King & Spalding LLP and Ankura Consulting Group, LLC are serving as legal counsel and financial adviser, respectively, to Blue Torch as collateral agent and administrative agent and to its affiliated secured lenders.

Troika is a brand consultancy and marketing company based in New York. The Chapter 11 case number is 23-11969.

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