Katy Industries and 13 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 17-11101. The Company, which manufacturers, imports and distributes cleaning and storage products, is represented by Stuart M. Brown of DLA Piper.
The Company also announced an agreement with a newly-created entity co-owned by Highview Capital and affiliates of Victory Park Capital Advisors, pursuant to which the Company would sell substantially all of its assets for a combined cash and credit bid offer. Pursuant to Section 363 of the U.S. Bankruptcy Code, Katy Industries also will be filing a motion for the implementation of bidding procedures to allow other companies the opportunity to submit bids through a Court-supervised process to purchase the assets being sold. The Company anticipates the sale transaction, which is subject to customary closing conditions, will be completed within 60 to 90 days. Lincoln International is being retained to conduct a sale process under the bid procedures, pursuant to which Lincoln International will seek higher or better offers from prospective bidders interested in purchasing the business as a whole or any of its component parts.
Robert Guerra, Katy Industries president and C.E.O., comments, “Our goal is to put the Company on the proper financial footing, de-lever our balance sheet and use the influx of new funding to recover the business and position our operations for future growth while, at the same time, providing a mechanism to address the liquidity constraints and legacy liabilities that have impacted our ability to operate efficiently and effectively. By utilizing the Chapter 11 process, we are able to ensure an expedited and orderly sale transaction.”
In addition to the availability of cash collateral under its current first lien facility, Katy Industries also announced it has received a commitment for up to $7.5 million in debtor-in-possession financing from the newly-created entity co-owned by Highview Capital and affiliates of Victory Park Capital Advisors, subject to Court approval. The DIP financing will be used to maintain uninterrupted service and delivery of products to Katy customers during the completion of the sale transaction, and to ensure payment to vendors for post-petition purchases in the ordinary course.
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