New Look Financing files for Chapter 15 bankruptcy in New York

By Sarah Lizee

Olympia, Wash., Sept. 28 – New Look Financing plc filed for Chapter 15 bankruptcy on Monday in the U.S. Bankruptcy Court for the Southern District of New York.

Foreign representative Richard John Collyer said in a statement filed with the court that New Look is the subject of proceedings pending before the Business and Property Courts of the High Court of Justice of England and Wales concerning a scheme of arrangement.

“The ongoing Covid-19 pandemic has caused a rapid and unprecedented impact on the global retail industry and has significantly impacted the group’s business,” Collyer said in his statement.

The group is implementing a comprehensive recapitalization transaction that will extend its banking and operational facilities, deliver a new money investment of £40 million and significantly deleverage its balance sheet.

As part of its turnaround strategy, on Aug. 13, the debtor and its key constituents entered into a lock-up agreement under which creditors and other stakeholders agreed to support, implement and consummate the scheme.

The scheme of arrangement was originally with respect to the £525 million out of the £700 million 6½% senior secured notes due July 1, 2022 and €311 million out of the €415 million floating-rate senior secured notes due July 1, 2022.

In exchange for the notes, creditors would receive new sterling senior secured notes and subscription rights in the ordinary equity of the debtor’s indirect parent, representing 20% of its post-restructuring share capital on a fully diluted basis.

New Look is also the borrower on a £100 million revolving credit facility and up to £65 million of operating facilities.

All scheme creditors, extending to those that were not already party to the lock-up agreement, were given the opportunity to accede to the lock-up agreement. As of Monday’s filing, more than 92% of scheme creditors have consented to the financial restructuring.

The restructuring calls for the following:

• The exchange of the senior secured notes in consideration for the incurrence by a newly incorporated direct subsidiary of the parent and holding company (New Holdco) for the remaining members of the group of a £40 million nine-year subordinated shareholder loan on a cashless basis and the issuance by the parent of B ordinary shares representing 20% of the post-financial restructuring share capital of the parent on a fully diluted basis;

• A seven-year new-money term loan which will be cash funded in an amount equal to £40 million to be borrowed by New HoldCo and provided by senior secured noteholders who agreed to participate in the new money term loan, and to the extent that not all senior secured noteholders participate in the new money term loan, certain backstop parties that agreed to participate the new money term loan;

• The parent will issue ordinary shares representing 80% of the post-financial restructuring share capital of the parent on a fully diluted basis to the new money lenders ratably in proportion to their commitment under the new money term loan;

• The revolver will be converted into a term loan, and the termination date will be extended to June 30, 2024 from June 25, 2021;

• The operating facilities will be extended to June 30, 2023 and the aggregate commitment will be increased to £70 million, subject to certain step downs from June 30, 2021; and

• The existing management incentive plan will be replaced with a new management incentive plan.

New Look operates a fashion retail business based in the United Kingdom. The Chapter 15 case number is 20-12297.

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