Milbank successfully represented an ad hoc group of crossover lenders (the “Ad Hoc Group”) in the financial restructuring of GNC, a leading global health and wellness company. GNC obtained confirmation of its chapter 11 plan (the “Plan”) on October 14, 2020, and the Plan became effective on October 30, 2020, paving the way for distributions from the sale of the business as a going concern that was approved by the Court on September 18, 2020 and closed on October 7, 2020.
Milbank achieved this result, on behalf of the Ad Hoc Group, by reaching an agreement with GNC and other key stakeholders in June to pursue a dual-path process that would allow GNC to restructure its balance sheet and accelerate its business strategy through a chapter 11 restructuring. The agreement set forth the terms of both a prearranged plan of reorganization and an agreement in principle for the sale of GNC’s business to Harbin Pharmaceutical Group Holding Co., Ltd., an affiliate of GNC's largest shareholder, for a purchase price of $780 million. GNC commenced chapter 11 proceedings in Delaware on June 23, 2020, concurrent with a Canadian Companies' Creditors Arrangement Act (“CCAA”) recognition proceeding in Ontario.
The Ad Hoc Group also committed $100 million in "new money" debtor-in-possession (“DIP”) financing to provide critical liquidity to GNC through its restructuring process, which was paid back in full at the sale closing along with the additional $100 million roll-up of prepetition term debt. In addition to the $200 million DIP financing payment, the prepetition term lenders will receive a combination of cash and second lien loans issued by the buyer in the aggregate amount of $310 million when the Plan is expected to be consummated on October 30, 2020.
Milbank also led efforts to reach a global settlement with the Official Committee of Unsecured Creditors (the “Committee”), which was critical in resolving the Committee’s attack on the secured creditors’ recovery and clearing a path for a fully consensual confirmation of the Plan.
The Milbank team included Financial Restructuring partner Mark Shinderman, and associates Daniel Denny, Jordan Weber and Jeff Snyder; Global Corporate partner Brett Goldblatt, of counsel David Isenberg, and associate Anna Hunanyan; Alternative Investments special counsel Jennifer Harris, and associates Andrew Keller and Sakura Kato; Tax partner Russell Kestenbaum; Executive Compensation and Employee Benefits partner Joel Krasnow and associate James Beebe; and Litigation & Arbitration partner Jed Schwartz and associate Tess McLaughlin.
