Ascena Lenders Object to Rescue Plan in Latest Creditor Spat
Ascena Lenders Object to Rescue Plan in Latest Creditor Spat
(Bloomberg) -- A group of lenders to Ascena Retail Group Inc., owner of the Ann Taylor and Lane Bryant clothing chains, is objecting to the company’s plan for a rescue financing package to see it through bankruptcy, according to people with knowledge of the matter.
The group is working with law firm King & Spalding as it resists a debt proposal put forward by another set of term loan holders, said the people, who asked not to be identified discussing a private matter. The objecting group includes Z Capital Credit Partners, Marathon Asset Management and Man GLG, the people said.
It’s the latest in a series of creditor brawls that have broken out as the pandemic triggers a wave of bankruptcies. Rising corporate distress is pitting beleaguered companies, their sponsors and lenders against each other in fights many say are uglier, dirtier and more vicious than ever before.
Representatives for Ascena, Z Capital Credit and Man GLG declined to comment, while a spokesperson for Marathon didn’t have an immediate comment. King & Spalding didn’t respond a request seeking comment.
In the case of Ascena, the objection relates to the debtor-in-possession loan proposed as part of a restructuring support agreement when the company filed for bankruptcy in July. The RSA had the support of 68% of the term loan lenders and the DIP includes $150 million of new money, though creditors had to hold at least $20 million to be part of the group.
Under the terms of the RSA, the supporting lenders get exclusive rights to provide half of the new money loan, raising the ire of those who objected because they weren’t able to participate. The remaining half is available on a pro-rata basis, allowing the supporting lenders to be involved in that financing, too, the people said.
The RSA group includes Monarch Alternative Capital and Eaton Vance Corp. It’s working with Milbank LLP and Greenhill & Co., according to the people.
Representatives for Monarch, Eaton Vance, Milbank and Greenhill didn’t respond to requests for comment placed late Friday.
Feuds between creditors of the same ranking have erupted as companies seek to tame their debt loads during the outbreak. Sinclair Broadcast Group Inc., SM Energy Co. and Revlon Inc. have all seen battles emerge as they sought to restructure borrowings.
Objections have already been raised to Ascena’s DIP loan by the U.S. trustee in the bankruptcy case, a step that delayed a hearing to approve the financing. The hearing is now slated to take place on Aug. 20.
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