Thu, Aug 20, 2020

Duff & Phelps Acting as Restructuring Advisor and Responsible Officer to Regus Corporation in Chapter 11 Filing

Duff & Phelps is acting as restructuring advisor and Responsible Officer for Regus Corporation in a Chapter 11 filing in the Bankruptcy Court for the District of Delaware filed on behalf of parent company RGN-Group Holdings. RGN-Group Holdings, a Texas-based share working space business with more than 1,000 locations in the U.S. and Canada, reported $1 billion to $10 billion in assets and $500 million to $1 billion in liabilities. The company’s prepetition capital structure includes approximately $433 million of secured debt owed to its non-debtor parent, Regus Corporation, $1.2 million of lease obligations, $1.4 million owed to non-debtor affiliate Regus Management Group, LLC and $671,681 owed to non-debtor affiliate Franchise International GmbH. 

The debtors attribute the bankruptcy primarily to the COVID-19 pandemic, citing “near universal adoption of work-from-home policies (either voluntarily, or government-mandated) by U.S. businesses during the early months of the pandemic” and “the dramatic contraction of the overall economy during the second and third quarters of 2020,” resulting in the inability or unwillingness of the debtors’ occupants to timely pay their occupancy fees.

James S. Feltman, Managing Director in the Disputes Consulting practice who was retained by Regus, indicated that the debtors commenced the Chapter 11 cases to prevent the forfeiture of their operating leases. “I expect that the ‘breathing spell’ from Landlords’ collection efforts that will be afforded by the chapter 11 process will allow the Debtors, and the Company more broadly, to more fully explore the possibility of restructuring their various contractual obligations in order to put the Company’s North American portfolio on a surer footing going forward, so as to allow the Debtors to emerge from this process stronger and more viable than when they went in,” he says. He adds that, if these restructuring efforts prove unsuccessful, “the Lease Holder Debtors intend to utilize the procedures available to them under the Bankruptcy Code to (i) orderly wind down the operation of the applicable Centers (including, to the extent necessary, the removal of the FF&E from the leased premises, and to the extent possible, transition of the Occupants to other locations), (ii) liquidate the amounts due to the Landlords under their respective Leases and guarantees, as well as amounts due to the Debtors’ affiliates under their respective agreements, and (iii) to make distributions to creditors in accordance with their respective priorities under the Bankruptcy Code and applicable law.”

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