Vertellus Specialties Inc. files for Chapter 11 Bankruptcy

Vertellus Specialties Inc. files for Chapter 11 Bankruptcy

Vertellus Specialties Inc., a major U.S. chemical manufacturer, recently announced that it had filed for Chapter 11 bankruptcy protection for its domestic operations. According to The Wall Street Journal, the company reached an agreement with its term lenders to seek an auction sale for the majority of its remaining assets.

In its bankruptcy documents, Vertellus Specialties stated that its decision to file its bankruptcy petition came after it failed to make a recent loan repayment and received a downgrade from several ratings firms. The Journal noted that Moody’s had recently downgraded the company’s credit rating due to “significant earnings deterioration” in the agriculture industry, emerging environmental liabilities risks and stiffening competition from Chinese competitors.

As a result of its recent struggles, Vertellus Specialties has $576 million in total assets, but more than $710 million in total liabilities with an additional $25 million debt total. These liabilities include a $455 million senior secured first lien term loan.

The opening bid from lenders at the pending auction sale will be for $453.8 million in the form of a credit bid. This lender bid will offer to cancel the debt rather than providing cash into the company, which will be part of a term loan of a $546 million load of funded debt.

In the meantime, The Journal reported that the company has also secured $110 million in debtor-in-possession financing from Black Diamond Capital Management, BlackRock, BlueBay Asset Management, Brightwood Capital Advisors and TPG Special Situations Partners to maintain normal operations throughout the auction.

This court-supervised auction sale will be part of the company’s plan to emerge from the reorganization process as a viable business.

Are you a creditor in a bankruptcy?  Have you been sued by a bankrupt?  If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.