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Law360 (June 2, 2020, 6:52 PM EDT) -- A Delaware judge on Tuesday gave glass tableware maker Libbey Glass Inc. the go-ahead to tap into $30 million in new post-petition financing in its Chapter 11 so the company can continue negotiating with creditors to restructure its roughly $500 million in debt.
During a hearing Tuesday, U.S. Bankruptcy Judge Laurie Selber Silverstein told Libbey's counsel she appreciated their efforts to resolve most tweaks to a debtor-in-possession financing order before the hearing.
"The financing was shopped [to other potential lenders]," the judge said. "These terms are the best, and the only at this point, available for the DIP financing."
Under an interim order, Libbey will be able to tap into $30 million of up to $60 million in new money term loan financing administered by Cortland Capital Market Services LLC to fund operations as the company moves forward with the Chapter 11.
Also, the DIP will include the roll-up of $100 million in prepetition asset-based loan debt, administered by JPMorgan Chase Bank NA, into the post-petition financing. Initially, the roll-up of debt will occur on a "creeping" basis, with the full amount set to be rolled up into the DIP facility upon consideration of a final financing order by the court at a later date.
Libbey attorney Keith A. Simon of Latham & Watkins LLP told the judge the company hit Chapter 11 without a restructuring support agreement in place with existing creditors, despite several months of negotiations.
"We see this case as a right-sizing of our balance sheet," Simon said. "Even before COVID[-19], we had a pure balance sheet issue."
The company said in a first-day declaration that its goal in Chapter 11 will be "reaching a consensual, value maximizing transaction with the creditor constituencies" so a restructured business can emerge from bankruptcy. The company aims to get a plan confirmed within 100 days of its Chapter 11 filing.
The Ohio-based glassware maker and multiple affiliates entered Chapter 11 on Monday, saying the COVID-19 outbreak worsened the company's already existing liquidity strain.
In a statement, Libbey said its "international subsidiaries in Canada, China, Mexico, the Netherlands and Portugal are not included in the Chapter 11 proceedings and are operating in the normal course of business."
The company also said it continues to discuss with "lenders and other stakeholders regarding the terms of a consensual financial restructuring plan and is focused on moving through the process as efficiently as possible."
Libbey's debt includes roughly $70 million owed under a secured asset-based facility administered by JPMorgan, about $378 million owed on a senior secured credit agreement administered by Cortland and $35 million in unsecured debt.
As the company veered closer to maturity dates on debt agreements, global market conditions continued to impact Libbey's revenues, with the company reporting a net loss of $69 million for 2019, according to the declaration.
The COVID-19 outbreak further worsened conditions, with production halted at Libbey's facilities in Ohio and Louisiana; the closure of two retail outlet stores in the U.S.; and operations at distribution centers in the U.S. and internationally either halted temporarily or cut back, the declaration said.
As its liquidity crisis worsened, the company also laid off or furloughed its U.S. workforce, cut salaries for its Mexican employees and suspended its pension matching program.
Founded in Massachusetts as the New England Glass Company in 1818, Libbey produces glass tableware in five countries and has customers in more than 100 countries, the declaration said. Its brands included "Libbey," "Libbey Signature," "Master's Reserve," "Crisa," "Royal Leerdam," "World Tableware," "Syracuse China" and "Crisal Glass."
In addition to glass tableware, the company makes ceramic dinnerware and metal flatware that is sold "primarily in the foodservice, retail and business-to-business channels of distribution," the declaration said.
Libbey is represented by John H. Knight, Russell C. Silberglied, Paul N. Heath and Zachary I. Shapiro of Richards Layton & Finger PA and George A. Davis, Keith A. Simon, David Hammerman, Anu Yerramalli and Madeleine C. Parish of Latham & Watkins LLP.
The case is In re: Libbey Glass Inc. et al., case number 1:20-bk-11439, in the U.S. Bankruptcy Court for the District of Delaware.
--Editing by Daniel King.
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