November 1, 2022
63 Days: Lumileds Speeds through Chapter 11
Company’s fast-track restructuring plan comes to fruition. New CEO is announced.
On August 29, 2022, Lumileds Holding B.V., and nine of its affiliates filed petitions in the United States Bankruptcy Court for the Southern District of New York seeking relief under Chapter 11 of the United States Bankruptcy Code. Yesterday, after reshuffling $1.7 billion in debt, changing ownership and implementing some corporate structure changes, Lumileds emerged from bankruptcy protection.
Lumileds’ Chapter 11 filings were designed for quick restructuring
The bankruptcy filing by Lumileds was not a typical story of a company in financial distress that files for bankruptcy as a desperate last resort in hopes of keeping the company alive. The Chapter 11 proceedings exercised by Lumileds were seemingly not done under urgent duress. Instead, the proceedings were a financial lever that enabled Lumileds' largest lenders to receive a portion of the $1.7 billion due to them and receive the remaining balance due to them in equity.
The company implemented a prepackaged plan strategy that involved gaining the preapproval and buy-in of Lumileds’ equity stakeholders and creditors. Once the necessary consensus was achieved, Lumileds’ legal and finance teams worked to prepare reams of documents so that the company could speed through the Chapter 11 process at an unusually swift clip. Pre-petition legal services from one Netherlands law firm, Houthoff Coöperatief U.A., cost Lumileds $318,200.
In recent years, companies like Broadvision, Atlas Resource Partners and Chaparral Energy each went from Chapter 11 petition to plan approval in less than 60 days. In 2019, the prepackaged filing by FULLBEAUTY Brands Holdings sped through the process in just four days. Lumileds reportedly started planning the bankruptcy process in early 2022, which enabled them to accelerate through the bankruptcy process in just 63 days.
New CEO, new owners and Board of Directors Announced
Lumileds also announced that Steve Barlow, President of Lumileds’ Automotive Business Unit, will be appointed Chief Executive Officer and to its Board of Directors, succeeding Matt Roney. The appointment is effective on November 11, 2022. Roney shared, “We are pleased to have completed this process effectively and within the timeframe we originally projected thanks to the support and dedication of our employees, customers, vendors, suppliers, and our new owners.”
The equity ownership of Lumileds has been transferred from Royal Philips (19.9%) and Apollo Global Management (80.1%) to the new owners who previously held the lion’s share of company debt; primarily Anchorage Capital Group, Nut Tree Capital Management and Nuveen Asset Management. The new, interim Board of Directors includes individuals from each of the new ownership companies.
September revenues
As part of the bankruptcy proceedings, Lumileds was required to disclose financial information relating to all ten corporate entities involved in the Chapter 11 proceedings. Documents filed yesterday indicate that the largest affiliate, Lumileds LLC, generated $52.2 million in September revenue, but incurred $50.6 million in costs of goods sold for the same month.
Next steps:
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Approval of final allowance of compensation for counsel to Lumileds is expected to occur on or before December 23, 2022.
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Within 30 days after the estates are fully administered, Lumileds will file a closing report in accordance with Local Bankruptcy Rule 3022-1.
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Entry of a final decree closing each of Lumileds’ ten Chapter 11 cases is expected to occur on or before January 31, 2023.
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Lumileds will pay all United States Trustee quarterly fees.
