Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Rand Logistics, Inc. (1294250) 10-Q published on Feb 15, 2018 at 9:32 am
Reporting Period: Dec 30, 2017
The RSA contains certain covenants on the part of the Company and the Second Lien Lender, including that the Second Lien Lender will vote in favor of the Plan and otherwise facilitate the restructuring transaction, in each case subject to certain terms and conditions in the RSA. Prior to filing the Bankruptcy Cases, the Company received a ballot from the Second Lien Lender, the only creditor impaired under the Plan and entitled to vote to accept or reject the Plan, voting in favor of the Plan. Under the RSA, the Company has agreed, among other things, to (i) support the restructuring and the Plan in accordance with the timelines set forth in the RSA, (ii) act in good faith and take all actions reasonably necessary, or as may be required by the Bankruptcy Court, to support and achieve the restructuring, (iii) provide reasonable access to the Company’s books and records, (iv) use commercially reasonable efforts to obtain any and all regulatory and/or third party approvals necessary to consummate the restructuring, and (v) take no actions inconsistent with the RSA. Pursuant to an order of the Bankruptcy Court, the ballot submitted by the Second Lien Lender now is irrevocable. The consummation of the Plan will be subject to customary conditions and other requirements.
In connection with the Bankruptcy Cases, the Debtors entered into a $25,000 “debtor in possession” financing facility (the “DIP Facility”) with the Second Lien Lender upon the commencement of (in such capacity, the “DIP Lender”). The Debtors have obtained interim approval from the Bankruptcy Court to borrow up to $15,000 under the DIP Facility and additional funding will be available to the Company upon final approval from the Bankruptcy Court and in accordance with the budget agreed between the Company and the DIP Lender. The DIP Facility is being provided to the Company for the purposes of financing the Company’s administrative expenses relating to the Bankruptcy Cases (subject to Court approval) to ensure and other working capital needs. The DIP Facility is anticipated to provide the Company with adequate liquidity to fund their operations effectively operate its business during the Bankruptcy Cases. The Debtors have also received a commitment for exit financing to replace the Debtors’ existing revolving credit facility and enable them to emerge from Chapter 11 with adequate liquidity upon consummation of the Plan.
The RSA contains certain covenants on the part of the Company and the Second Lien Lender including that the Second Lien Lender will vote in favor of the Plan and otherwise facilitate the restructuring transaction, in each case subject to certain terms and conditions in the RSA. Prior to filing the Bankruptcy Cases, the Company received a ballot from the Second Lien Lender, the only creditor impaired under the Plan and entitled to vote to accept or reject the Plan, voting in favor of the Plan. Under the RSA, we have agreed, among other things, to (i) support the restructuring and the Plan in accordance with the timelines set forth in the RSA, (ii) act in good faith and take all actions reasonably necessary, or as may be required by the Bankruptcy Court, to support and achieve the restructuring, (iii) provide reasonable access to the Company’s books and records, (iv) use commercially reasonable efforts to obtain any and all regulatory and/or third party approvals necessary to consummate the restructuring, and (v) take no actions inconsistent with the RSA. Pursuant to an order of the Bankruptcy Court, the ballot submitted by the Second Lien Lender now is irrevocable. The consummation of the Plan will be subject to customary conditions and other requirements.
The RSA may be terminated upon the occurrence of certain events and in the event of certain breaches by the parties under the RSA. There can be no assurance that the transactions contemplated by the RSA, the Term Sheet and the Plan will be consummated in a timely manner, or at all.
During the pendency of the Bankruptcy Cases, we expect our financial results to continue to be volatile as restructuring activities and expenses, contract assumptions, terminations and rejections, and claims assessments significantly impact our consolidated financial statements. As a result, our historical financial performance is likely not indicative of our financial performance after the date of the bankruptcy filing. In addition, if we emerge from Chapter 11, the amounts reported in subsequent consolidated financial statements may materially change relative to historical consolidated financial statements, including as a result of revisions to our operating plans pursuant to the Plan. We also may be required to adopt fresh start accounting, in which case our assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets. Our financial results after the application of fresh start accounting also may be different from historical trends.
As a result of the Bankruptcy Cases, we may experience increased levels of employee attrition, and our employees likely will face considerable distraction and uncertainty. A loss of key personnel or material erosion of employee morale could adversely affect our business and results of operations. Our ability to engage, motivate and retain key employees or take other measures intended to motivate and incent key employees to remain with us through the pendency of the Bankruptcy Cases is limited by restrictions on implementation of incentive programs under the Bankruptcy Code. The loss of services of members of our senior management team could impair our ability to execute our strategy and implement operational initiatives, which would be likely to have a material adverse effect on our business, financial condition and results of operations. As previously disclosed, Mark S. Hiltwein, our Chief Financial Officer, has resigned from his position to be effective upon the consummation of the Plan. We may be unable to hire a successor as Chief Financial Officer in a timely manner and this may negatively impact our business, financial condition and results of operations.
If we are not able to obtain confirmation of the Plan, or if current financing is insufficient or exit financing is not available, we could be required to seek a sale of the Company or certain of its material assets pursuant to Section 363 of the Bankruptcy Code or liquidate under Chapter 7 of the Bankruptcy Code.