Independent Pet Partners files bankruptcy, lines up sale to lenders

By Sarah Lizee

Olympia, Wash., Feb. 6 – Independent Pet Partners Holdings, LLC and its affiliates filed Chapter 11 bankruptcy on Sunday in the U.S. Bankruptcy Court for the District of Delaware, according to court documents.

The debtors’ prepetition capital structure includes secured funded debt with a total outstanding balance of $111.44 million in three credit facilities with Main Street Capital Corp., Newstone Capital Partners and CION Investment Corp.

The debtors have 159 stores in 12 states. Though the debtors had started a prepetition marketing process led by Houlihan Lokey Capital, Inc., they didn’t receive any offers that would repay their funded debt or satisfy the claims of the lenders.

After that, the debtors started looking for strategic alternatives and ultimately decided to enter into a stalking horse agreement for 66 of their stores in five states under the Chuck and Don’s and Kriser’s Natural Pet banners with IPP Buyer Acquisition, an entity formed by the prepetition lenders.

The purchase price under the stalking horse agreement includes a $60 million credit bid and some assumed liabilities.

The agreement is subject to higher or better offers. Under the proposed bid procedures, bids are due by 5 p.m. ET on March 15, an auction will take place on March 20, a sale hearing is set for March 24, and the deadline to close the sale is April 14.

A bid procedures hearing is set to take place on or before Feb. 21.

All remaining stores outside of Colorado, Kansas, Minnesota, Wisconsin and Illinois will eventually close – in addition to four additional stores in Colorado, two in Illinois, and one in Minnesota.

The debtors seek to finish the liquidation process by the end of February.

Independent Pet Partners said that to facilitate the success of the go-forward business, the debtors identified several immediate investment opportunities to drive revenue growth and margin expansion in addition to reducing their store count, including investing in the company’s private labels and semi-exclusive brands that saw significant growth in 2022 and continuing to grow the e-commerce platform.

DIP financing

The prepetition lender group has also agreed to fund a $27.26 million debtor-in-possession credit facility, which includes $9.56 million in new money commitments and a rollup of prepetition debt under an asset-based loan facility.

Acquiom Agency Services, LLC is administrative and collateral agent.

The DIP facility is set to mature on April 16 and bear interest at SOFR plus 1,000 basis points.

The initial draw and final draw will include a commitment fee payable to the DIP lenders for their own account of 5% of the new money loans provided, payable at the time of each draw.

The agent will receive $25,000 in fees.

The debtors are seeking court approval to access $5 million of the new money under the DIP facility.

They are also seeking court approval to access cash collateral.

Other details

In its petition, the company listed 200 to 999 creditors. The debtors have total assets of about $182 million and total liabilities of around $215 million.

Its largest unsecured creditors are ADMC, based in Cottage Grove, Minn., with a $4.09 million trade debt claim, and Pet Food Experts, based in Pawtucket, R.I., with a $3.09 million trade debt claim.

The company said funds will be available for distribution to unsecured creditors.

McDonald Hopkins LLC is bankruptcy counsel, Young Conaway Stargatt & Taylor, LLP is co-counsel, and Houlihan Lokey Capital is financial adviser and investment banker.

The multichain pet care business has headquarters in Woodbury, Minn. The Chapter 11 case number is 23-10153.

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