Papa Gino’s & D’Angelo Enter Bankruptcy

PGHC Holdings, operator of New England-based Papa Gino’s and D’Angelo, filed for chapter 11 protection on Monday.  Not surprisingly, the case is pending in Delaware.

Reasons for the Bankruptcy? Same Old/Same Old

Also not surprising, the bankruptcy follows performance struggles faced by both Papa Gino’s and D’Angelo as a result of:

  • Evolving consumer dining preferences;
  • Increased labor costs; and
  • Increasing competition among national chains.

Remember Real Mex, for example? Or Bertucci’s? Restaurant growth is continuing to slim down, folks….

In addition to operational factors, Papa Gino’s and D’Angelo have a substantial debt load that they have been unable to service. This includes: $18.5 million in first-lien, secured debt; $34.2 million in second-lien, secured debt; $39.9 million in unsecured mezzanine debt; and $9 million in unsecured trade debt, lease obligations and repair obligations. And Pappa Ginos and D’Angelo are in default under both the first and second lien agreements while the 16% senior subordinated notes matured last June. Ouch.

What Happens to Papa Gino’s and D’Angelo’s Next?

Although Papa Gino’s may be a “New England original,” its bankruptcy plans are not.

The company intends to close roughly 92 locations (47 Papa Gino’s / 45 D’Angelo). In addition, they have secured a $13.8 million in post-petition financing from an existing, secured lender to keep the company afloat. And a credit bid by the lender’s designee, a Wynnchurch Capital portfolio company, serves as the “stalking horse,” opening offer to purchase both the Papa Gino’s and D’Angelo restaurants. The stalking horse credit bid is $20 million plus assumption of certain liabilities.  Ultimately, a bankruptcy auction will determine the highest and best bidder.

The sale timeline is:

  • Bid procedures shall be established by December 17, 2018;
  • The auction is to be held by January 28, 2019;
  • A hearing on the sale shall be held and sale order entered by January 31, 2019; and
  • The sale closing shall take place by January 31, 2019.

Papa Gino's

Papa Gino’s and D’Angelo have issued a press release. The proposed sale transaction, they say, will significantly strengthen their financial resources. This will allow the restaurants to remodel and modernize across MassachusettsNew HampshireRhode Island, and Connecticut. They also plan to open additional restaurants throughout New England.

Hungry? Look forward to enhanced on-line ordering capability as well.

Mette K.

Dixie Electric Seeks Bankruptcy Protection

Dixie Electric, LLC, d/b/a Expanse Energy Solutions, filed for chapter 11 protection in Delaware on Friday along with various affiliates. Dixie is a Houston-based, privately held electrical infrastructure materials and services provider in the energy and oil industry. Dixie filed with a restructuring support agreement in hand. And the company is on a fast-track to implement a pure balance sheet restructuring. Under the agreement, lenders will exchange $300 million in funded debt for equity in the company. Prepetition secured lenders have also agreed to provide $17.5 million in debtor-in-possession financing and $30 million in exit financing to the company. General unsecured claims are unimpaired and slated to be paid in full.

Dixie blames its bankruptcy filing on decreased drilling and well completion activity. A recent slump in oil and gas prices triggered this drop in business. And tightness in the skilled labor market and unprofitable lump-sum contracts exacerbated the company’s problems. As a result, Dixie’s adjusted EBITDA plummeted from a peak of over $71 million in 2014 to negative $6.5 million in 2017. The company’s credit ratings have also deteriorated as losses mounted.

Dixie’s “first day” motions have been approved by the bankruptcy court. The hearing on its combined plan and disclosure statement is scheduled for December 13, 2018 in Delaware. Additional information about the case is available here.

Mette K.

Ever Wish You Could Re-Live Your College Years? Here’s an Opportunity for a Great Cause!

Hello Linked In!

My son, Justin, along with most of his brothers, is participating in a charity event called St. Baldrics. (Yes, that’s right… in a surprise development, my wonky son has stopped studying long enough to join a frat! Now, it is a frat full of young RPI engineering students. So let’s not get carried away. But it is a frat. Hijinks and shenanigans are involved.)

I digress, though. The young men are fundraising to help promote research into childhood cancer. At the conclusion, they will then shave their heads to raise awareness.

Being a supportive mother, I have made my donation ($250) on the condition that my very camera-shy freshman provide before and after photos.

Now Justin has asked if I can also spread the word to all of you. And if I do that, it seems only fair that you should be able to join in the fun as well. So…. If my Linked In/Facebook community, collectively, matches my donation, I will post those before and after photos for everyone to share at the conclusion of the fundraiser. I mean, this is clearly the only possible response; right? (Diabolical laughter! My children will need so much therapy….)

As an added bonus, if you all double my donation, I will also share with you the very special cheer of the RPI Engineers football team. For perspective, I first bring you this video clip from my alma mater… the Trinity University Miracle Lateral Play.  Suffice it to say, nobody in my family will ever be playing football for USC. Or UCLA.

Seriously, please help Justin with this great cause!  You can donate here.

Mette K. (Proud Mother)

California Fires Taking a Heartbreaking Toll on Horses: How to Help

As I acclimate to eastern winters, the fires ravaging California’s canyon country put things in perspective. While my friends, family, and colleagues are all safe, the destruction is staggering and has left people, literally, running for their lives while scrambling to get horses and other animals to safety. 

Having lived in Southern California for 26 years, I have experienced the increasing heat and drought. I have been told to prepare to evacuate while at home with a newborn. And I have rushed with neighbors to put out fires and seen homes destroyed. There is nothing more unsettling than the pervasive smell of smoke, and no more primal fear than that of a fire.

Fleeing the Thomas Fire

To put things into perspective for people here on the east coast, one of my dearest friends, Wendy Gerard, lives in Ventura in the Scenic Drive neighborhood, which was overrun by the Thomas Fire. Picture a Category 1 hurricane barreling down on your community. Now replace rain with fire. Wendy and her family fled, landing first at a shelter, then bouncing from friend’s house to friend’s house as they searched for temporary housing. Everyone is safe.  Her house is still standing. They have insurance. But it could be months before she can return home. This is all that remains of her neighborhood.

Horses Killed and Displaced by Fast Moving Fires

Wendy is a brilliant attorney with a generous heart and passion for horses. Her own horse is safely stabled in Simi Valley. But Ventura and San Diego are horse country, and not everyone has been so lucky. Roughly 60 horses have perished in the Lilac and Creek Fires, trapped in stables that burned. Many more have been injured and displaced. But when fires strike, Californians pull together and put their lives on the line to help save our horses.

How You Can Help
animal-brown-horse

The Humane Society of Ventura County is one of many organizations that is on the front line.  It is working hard to care for more than 300 horses and other animals it has taken in since the fires began.  More are coming in daily. I spoke with Wendy, and they do excellent work. I can’t be there to help Wendy. But I have made a donation on her behalf to help the HSVC with hay, cat chow, rabbit food, water troughs, fruit, snacks, and other items that they urgently need for their new boarders. If you want to help as well, they have set up an Amazon registry wishlist or you can make cash donations on HSVC’s website.

I am still a Californian at heart.

Mette K.

A Question of Time, Specifically, Time to File Notice of an Appeal

Deadlines are critical. And when it comes to appellate-filing deadlines, the Supreme Court recently clarified they come in two flavors.

  • Rigid statutory deadlines are “jurisdictional” and cannot be forfeited or waived.
  • Their more flexible cousins, deadlines set by court rules, are mere “claim-processing rules” that can be forfeit or waived.

Hamer v. Neighborhood Housing

Specifically, Rule 4 of the Federal Rules of Appellate Procedure requires that a notice of appeal be filed within 30 days. In Hamer v. Neighborhood Housing, counsel obtained a two month extension from the district court. But when the plaintiff filed its notice of appeal, the Seventh Circuit questioned its timeliness.

The appellees seized on the opportunity, now arguing that the appeal was late. Relying on Bowles v. Russell, 551 U.S. 205 (2007), the Seventh Circuit agreed. It concluded that, although the appellant had relied on the extension order, the deadline under Rule 4 was “mandatory.” Thus, the extension impermissibly deprived the Court of Appeals of jurisdiction.

But the Supreme Court disagreed, stating that:

If a time prescription governing the transfer of adjudicatory authority from one Article III court to another appears in a statute, the limitation is jurisdictional . . . otherwise, the time specification fits within the claim-processing category [and is subject to forfeiture or waiver].

The statute corresponding to Rule 4, 28 U.S.C. § 2107, does not limit the length of an extension. The Supreme Court therefore concluded that the district court could extend the filing deadline.

What happens next is up in the air. The Supreme Court remanded the case. So it now falls to the lower court to decide whether the timeliness objections were forfeited or waived if not properly raised.

Citation

Hamer v. Neighborhood Housing Services of Chicago, Case No. 16-658.