[Just filed. Developing story] August 23, 2022 – Carestream Health, Inc. and eight affiliated debtors (together “Carestream” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case No. 22-10778 (Judge TBD). The Debtors, a worldwide provider of medical imaging systems, are represented by Laura Davis Jones of Pachulski Stang Ziehl & Jones LLP. Further board-authorized engagements include: (i) Kirkland & Ellis LLP as general bankruptcy counsel, (ii) AlixPartners, LLP as restructuring advisors, (iii) Houlihan Lokey Capital, Inc. as financial advisors and (iv) Kurtzman Carson Consultants LLC as claims agent.
Additional engagements include Akin Gump Strauss Hauer & Feld LLP and GLC Advisors & Co., LCC which are serving as legal counsel and financial advisor, respectively, to a group of the Company’s first lien and second lien lenders.
The Debtors’ lead petition notes between 5,000 and 10,000 creditors; estimated assets between $1.0bn and $10.0bn; and estimated liabilities between $1.0bn and $10.0bn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Auriga Polymer Inc ($2.7mn trade claim), (ii) Innocare Optoelectronics ($2.0 trade claim) and (iii) SKC Inc. ($1.9mn trade claim).
In a press release announcing the filing, Carestream advised that: “it is taking the planned next step to implement the previously announced recapitalization process with its lenders by voluntarily filing for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company’s lenders have overwhelmingly voted in favor of a 'prepackaged' restructuring plan, which contemplates implementing the agreed recapitalization that has been filed with the Court. The recapitalization contemplated by the prepackaged plan will eliminate approximately $470 million of debt, representing a total debt reduction of $250 million more than the Company’s previously announced recapitalization agreement. This process will significantly strengthen Carestream’s balance sheet and position the Company for continued success.
With the overwhelming support of its lenders, the Company expects to move through this process on an expedited basis and complete the recapitalization in approximately 35-45 days. Carestream entities outside the United States are not part of the Chapter 11 process and are operating as normal."
The Debtors’ Chairman, President and CEO David C. Westgate commented further: “We are commencing the final stage of our recapitalization process, which will significantly enhance our ability to navigate a dynamic market. Since announcing our recapitalization process in April, our lenders have remained overwhelmingly supportive, and we have worked constructively with them to complete the transaction. As our talks evolved, we determined the best course of action was to implement the agreement through an expedited court-supervised process. With a clear path to completion, we expect to emerge from this process as a stronger partner to our customers, with significantly reduced debt and new owners who also continue to believe in the future of Carestream.”
The Debtors press release provides: "Certain of the Company’s existing lenders have committed to provide a $80 million debtor-in-possession financing facility to reinforce the Company’s liquidity and fund the costs of the process."
About the Debtors
According to the Debtors: “Carestream is a worldwide provider of medical imaging systems; X-ray imaging systems for non-destructive testing; and precision contract coating services for a wide range of industrial, medical, electronic and other applications—all backed by a global service and support network."
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