GigaMonster Networks files bankruptcy with plans to sell assets

By Sarah Lizee

Olympia, Wash., Jan. 17 – GigaMonster Networks, LLC and four affiliates filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware.

The company said in court documents that it made the filing to maximize value for stakeholders through one or more asset sales.

GigaMonster said it suffered recurring losses from operations and negative cash flows from operating activities for the past several years.

For the calendar year ending Dec. 31, 2021, the debtors generated a net operating loss of about $22 million on revenues of about $18.8 million.

The debtors’ circumstances did not improve during 2022. As of Oct. 31, they recorded a net loss of over $22.5 million.

GigaMonster said it determined that, absent a strategic transaction, it was no longer viable to conduct its business over a long period of time due to its financial constraints.

DIP financing

The company has lined up $5.8 million in debtor-in-possession financing from M/C Partners VIII, LP as agent and lender so that it can continue operating in Chapter 11 pending the sale process.

The facility is a multi-draw term loan set to mature 60 days from the petition date, or earlier depending on certain events.

The company is seeking interim access to $3.5 million of the facility.

Interest is 18%, payable in kind pending the maturity date. Default interest would be an additional 2%.

There is a 6% origination fee, payable in kind and earned upon entry of the interim order.

Sale process

Following a prebankruptcy marketing process, Bel Air Internet LLC and Everywhere Wireless, LLC, entities affiliated with the DIP lender, are acting as stalking horse buyer for most of the debtor’s operating assets.

The purchase price under the deal is $14 million.

The stalking horse deal is subject to higher or better offers under a court-supervised sale process.

Bid protections under the stalking horse agreement include a $390,000 breakup fee and a $390,000 expense reimbursement.

Under the proposed bid procedures, the bid deadline is 4 p.m. ET on Feb. 24, the auction would be held on Feb. 28, if needed, and s sale hearing would take place on March 2.

The assets that aren’t part of the stalking horse agreement are also up for sale.

Other details

In its petition, the company listed $50 million to $100 million in assets and $50 million to $100 million in liabilities.

No unsecured creditors were listed with claims of $1 million or more.

The company has about $44 million of principal outstanding on a credit agreement with Barings Asset-Based Income Fund (US), LP as agent. GigaMonster has defaulted several times on the credit agreement. The credit agreement is secured by first priority liens on substantially all of the debtors’ property and assets.

The debtor’s counsel is Pachulski Stang Ziehl & Jones LLP. Bank Street Group LLC is investment banker.

The Marietta, Ga.-based internet provider filed bankruptcy under Chapter 11 case number 23-10051.

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