Delaware Chapter 11: TZEW Holdco LLC
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All Documents Can Be Accessed by Clicking the Case Title Immediately Above
INTRODUCTION
Link: Petition Joint Administration Motion
On April 8, 2020 (the “Petition Date”), TZEW Holdco LLC (“TZEW”, or the “Company”) and six of its affiliates (collectively, the “Debtors”) each filed a voluntary petition 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 Pachulski Stang Young & Jones LLP. The case has been assigned to the Honorable Christopher S. Sontchi.
ABOUT THE DEBTORS
Link: Affidavit in Support
Founded in 2014, the Company is a privately held owner-operator of amusement parks, resorts, and family entertainment centers. As of the Petition Date, the Debtors operate twelve parks in California, Florida, and New Jersey, under the Boomers!, SpeedZone, Sahara Sam’s, and Big Kahuna’s brands. The parks offer a range of rides, attractions, games, events, and dining options. The Company maintains an online presence through its websites, where customers can purchase tickets, season passes, and food/beverage packages, as well as reserve space for group events.
In the years and months leading up to the Petition Date, the Company suffered from a number of challenges including increased industry competition and consolidation, heavy operational expenditure requirements, the seasonal nature of the business, general litigation, and irregular management turnover. The Company initiated multiple operational initiatives to increase profitability, but continued to experience negative cash flows. As it faced rapidly dwindling liquidity, the Company found itself increasingly relying on discretionary disbursements under a prepetition financing agreement to maintain day-to-day operations. Anticipating that operations were not sustainable, the Debtors commenced a solicitation process in early 2019 but were unable to proceed with a transaction. The Company’s challenges were then exacerbated by the COVID-19 pandemic, which necessitated operational shut down and cut off virtually all of the Company’s revenue streams, requiring it to rely exclusively on funding from its lender. The Debtors have determined that a sale of the Company provides the most value-maximizing path forward.
As of the Petition Date, the Debtors have approximately fifty full-time employees. Prior to the Petition Date, the Debtors employed more than 1,100 individuals and supplemented with seasonal staff. On March 19, 2020, the Company laid off all part-time employees. On March 20, 2020, it furloughed most of its full-time employees.
FINANCIAL CONDITION
As of the Petition Date, the Debtors’ capital structure consists of outstanding funded-debt obligations in the aggregate principal amount of approximately $79 million from Cerberus Business Finance, LLC (“Cerberus”) and its affiliated lenders, including revolving credit facilities of $25,263,287 and a term loan commitment of $53,647,000. The Debtors also have at least $6.8 million in outstanding claims owed to various vendors, suppliers, and service providers. Additionally, the Debtors are party to various litigation matters, the claims associated with which are disputed, contingent, and/or unliquidated as of the Petition Date.
DIP/CASH COLLATERAL MOTION
Links: DIP Motion DIP Budget
The Debtors are seeking a super-priority priming-secured debtor-in-possession financing facility with Cerberus and affiliated lenders in the amount of $11,500,000, consisting of a revolving loan facility to be used for general working capital and liquidity purposes. For purposes of the interim order, the Debtors’ borrowing authority will be capped at the interim amount of $11 million. The Debtors seek an agreement authorizing use of cash collateral in accordance with a five-week cash flow budget.
Related First-Day Motions Can Be Accessed by Clicking on the Links Below
SUMMARY OF FIRST DAY MOTIONS (Excel chart)
EMPLOYEE WAGES AND BENEFITS MOTION