We are advising the ad hoc lender group that is backstopping the restructuring

Davis Polk is advising an ad hoc group of lenders in connection with the partially prepackaged chapter 11 restructuring and recapitalization of Monitronics International, Inc. (together with its subsidiaries, “Monitronics”). The ad hoc lender group negotiated the terms of the restructuring, which will reduce the company’s leverage by approximately $500 million, and entered into a restructuring support agreement with the company and certain of its key shareholders on April 18, 2023. Monitronics commenced solicitation of votes on the plan on May 9, 2023, and filed its chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas on May 15, 2023. The restructuring has broad consensus support, with 90.79% of impaired creditors having already voted to accept the plan as of the time of filing.

In connection with the restructuring, the ad hoc lender group has agreed to backstop an approximately $400 million proposed postpetition debtor-in-possession financing facility, which will be used in part to fully repay the company’s prepetition senior secured credit facilities at closing. In addition, Monitronics will raise $100 million of new equity capital during the restructuring through an equity rights offering backstopped by members of the ad hoc lender group. Holders of the company’s prepetition second-out credit facility will receive a combination of new equity, debt and rights to participate in the new term loan facility financing and equity rights offering under the plan. Existing shareholders of the company will also receive a distribution of either cash or equity at their election.

Monitronics is one of the largest home security and alarm monitoring companies in North America. Headquartered in the Dallas-Fort Worth area, Monitronics provides platinum-grade protection to over 800,000 residential and commercial customers through highly responsive, simple security solutions backed by expertly trained professionals. The company has one of the nation’s largest networks of independent authorized dealers and agents – providing products and support to customers in the United States and Puerto Rico – as well as professionally installed products.

The Davis Polk restructuring team includes partners Brian M. Resnick and David Schiff and associates Stephanie Massman, Jinhe Hu and Paavani Garg. The finance team includes partner Kenneth J. Steinberg and associate Roxanne Walton. Partner Emily Roberts is providing capital markets advice. Partner Patrick E. Sigmon and associate Liang Zhang are providing tax advice. Partner Lee Hochbaum and associate Alex S. Burger are advising on corporate matters. Members of the Davis Polk team are based in the New York, Northern California and London offices.