Davis Polk is advising an ad hoc group of lenders under VIP Cinema Holding, Inc.’s first-lien term loan facility and first-lien revolving credit facility in the chapter 11 restructuring of VIP Cinema Holdings, Inc. and certain of its affiliates andsubsidiaries (collectively, “VIP Cinema”). On February 14, 2020, the ad hoc group, second-lien lenders, the majority shareholder, and VIP Cinema enteredinto a restructuring support agreement, which contemplates a balance sheet restructuring pursuant to which VIP Cinema will seek confirmation of its prepackaged plan of reorganization, which embodies a debt-to-equity transaction. On February 18, 2020, VIP Cinema filed its voluntary chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware.
Under the terms of the plan, the first-lien lenders will receive their pro rata share of $60 million of preferred stock and 10% of the common stock of reorganized VIP Cinema (prior to dilution by a management incentive plan) on account of their first-lien claims. In addition, (a) the majority shareholder will receive both preferred stock with an initial stated value of $7 million and 51% of the common stock (prior to dilution by a management incentive plan) in exchange for providing $7 million in equity financing and entering into a new management services agreement with reorganized VIP Cinema following emergence from bankruptcy; (b) the second-lien lender will receive preferred stock with an initial stated value of $2 million and 25% of the common stock (prior to dilution by a management incentive plan) on account of $2 million of new money term loans. The restructuring support agreement is supported by more than 70%of the prepetition first-lien lenders, the sole voting class under the proposed plan. Pursuant to the restructuring support agreement, the ad hoc group of lenders also backstopped VIP Cinema’s debtor-in-possession financing facility in the aggregate principal amount of $11 million, which consists of $13 million of new money term loans and $20 million of roll-up term loans.
VIP Cinema is a pioneer and one of the largest manufacturers of luxury seating products for movie theaters. VIP Cinema also offers an array of movie-theatre services, including seat cleaning and reupholstering, seat and slipcover installation, and the provision of replacement parts. With headquarters, offices and services across the United States, the United Kingdom and Dubai, and its provision of goods and services to many of the leading movie theatres across the world, including AMC theaters, VIP Cinema has a broad domestic and global reach.
The Davis Polk restructuring team includes partner Damian S. Schaible, counsel Jon Finelli and associates Adam L. Shpeen and Gene Goldmintz. The finance team includes partner Jinsoo H. Kim and associate William Son. The tax team includes partner Patrick E. Sigmon and associate Elina Khodorkovsky. The mergers and acquisitions team includes partner Harold Birnbaum and associate Doug Howell. Counsel Stephen I. Brecher provided executive compensation advice. All members of the Davis Polk team are located in the New York office.