Walter energy – restructuring options

Book a Consultation

The restructuring options for a company in financial distress are varied. In some cases the debtor company may know exactly what it will do to restructure its operations and what compromises it will ask creditors to make in order for the debtor company to continue in business. At other times there may be more uncertainty. The debtor company may need to invite interest in its business and assets. Walter Energy is a case in point.

Walter Energy, Inc., an Alabama-based producer of coal, coke, and natural gas, sought creditor protection under Chapter 11 of the United States Bankruptcy Code in July, 2015. In December, 2015, the Canadian subsidiary, Walter Energy Canada Holdings, Inc. and certain of its subsidiaries and affiliates (Walter Energy), sought protection under the Companies’ Creditors Arrangement Act (CCAA).

Within a month of that initial step, in a common trend in CCAA proceedings, Walter Energy obtained court approval for the first stage of a sale and investment solicitation process (SISP). The court indicated that:

By this process, bidders may submit a letter of intent or bid for a restructuring, recapitalization or other form of reorganization of the business and affairs … as a going concern, or a purchase of any or all equity interests held … . Alternatively, any bid may relate to a purchase of all or substantially all, or any portion of the … assets.

The court, in approving the SISP recognized that “the SISP represents the best opportunity for [Walter Energy] to successfully restructure as a going concern.” However, in parallel with the SISP, and to keep its options open, Walter Energy also sought asset liquidation proposals.

These parallel initiatives were successful as the first stage SISP generated a number of non-binding letters of intent allowing the SISP to progress to stage 2 where interested parties were invited to make bids with refundable cash deposits. In addition, a number of liquidation proposals were also received. These parties were requested to keep their proposals open for a longer period of time to allow stage 2 of the SISP to be completed and any bids evaluated.

Walter Energy’s plan to its creditors, whether based on a bid generated under the SISP, a proposal for liquidation, or on some other basis, is yet to be seen. Ultimately, whether any SISP bid or liquidation proposal is accepted is up to Walter Energy. However, the processes it has followed to date should assist in maximizing recoveries and thus the benefit to creditors.

Go to top

Book A Consultation

Thank you for contacting us. The information requested on our form is required to carry out a conflicts check to make sure that we do not already act for a party which would prevent us from acting for you. We will respond once we have confirmed there are no conflicts.

    Disclaimer: The use of the internet or this Form for communication with the firm or its lawyers and staff is not secure and does not establish a lawyer-client relationship. Do not send confidential or time-sensitive information through this Form. If you need to send this type of information please call us first.