Delaware Chapter 11: RentPath Holdings, Inc.

On February 12, 2020 (the “Petition Date“), RentPath Holdings, Inc. and eleven affiliated debtors (collectively, the “Debtors”) each filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

 

The Debtors are represented by Weil, Gotshal & Manges LLP, as lead counsel, and Richards, Layton & Finger, P.A. as Delaware counsel. The case has been assigned to the Honorable Brendan Linehan Shannon. A hearing on the Debtors’ first day motions was held on February 13, 2020. A meeting to form the unsecured creditors’ committee has not yet been scheduled.

 

Headquartered in Atlanta, Georgia, the Debtors are a digital marketing solutions company that maximizes the return on property managers’ marketing spend by linking property managers with prospective renters and simplifying the residential rental experience. Through its lead generation business, Debtors provide websites that feature an easy-to-use search experience for rental apartments and homes. The Debtors also provide a full suite of products to help property management companies acquire, retain, and communicate with tenants. The Debtors employ approximately seven hundred seventy people, including a sales force of approximately three hundred with a presence in forty-seven states.

 

Despite some turnaround in the Debtors’ lead generation business and growth in their modest Digital Marketing Solutions business, the overall lead generation and digital marketing landscape remain challenging due to a number of factors, especially for a highly-levered company like RentPath. The Debtors operate in a highly competitive marketplace in which declining revenues mandated additional investments in paid search marketing, which has had a corresponding impact on the Debtors’ liquidity. The Debtors do not believe their current balance sheet is sustainable over the long term (See Richard Martin Declaration in Support).

 

Sale and Restructuring Support Agreement

 

CoStar Group Inc. entered into a stalking horse asset purchase agreement with CSGP Holdings, LLC, an affiliate of CoStar,  through a prepetition sale process for the going concern sale of substantially all of the Company’s assets for an aggregate purchase price equal to $587.5 million in cash, plus the assumption of certain liabilities.  The Debtors have also reached an agreement with a significant number of their first-lien lenders, second lien lenders, and equity sponsors to support the confirmation of a plan per terms detailed in a restructuring support agreement (“RSA”), which includes the sale of the company.  The first-lien secured lenders (who also hold significant second liens in addition to their first liens) have also agreed to backstop the sales process by submitting a binding credit bid of $492.7 million.  If the credit bid is the successful bid, then the RSA provides $71 million of exit financing from the first lien lenders.  The RSA contemplates approval of a disclosure statement and final DIP order by March 23, 2020, entry of a confirmation order by sixty-five days from the approval of a disclosure statement, and an effective date and DIP maturity by no later than August 31, 2020.

 

As of the Petition Date, Royal Bank of Canada is owed approximately $517.70 million. Wilmington Savings Fund Society, FSB is owed approximately $170 million. As of the Petition Date, the Debtors estimate that there is approximately $17.1 million in general unsecured claims.

 

The Debtors have obtained debtor-in-possession financing in an aggregate principal amount of approximately $74.1 million, with $27 million available on an interim basis. The DIP facility is being provided by members of the Crossholder Ad Hoc Committee (as defined in the DIP Motion). The Debtors are also seeking cash collateral for a thirteen-week budget for a total amount of $34,710,000.