Phoenix Services Topco LLC, an international provider of services to steel producers, has filed for Chapter 11 bankruptcy in an effort to renegotiate contracts for customers it says have become unprofitable due to recent economic pressures.
The Radnor, Pa.-based company, which employs 2,600 people worldwide, filed for Chapter 11 protection in U.S. Bankruptcy Court for the District of Delaware on Tuesday with an agreement to borrow $50 million in new financing from its existing lenders and refinance $150 million in pre-bankruptcy debt.
Phoenix is controlled by a subsidiary of
Phoenix specializes in the removal and handling of molten slag that has been separated from steel. The company, which operates at 39 customer sites, also prepares and transports scrap metal, raw materials and finished products. It went bankrupt with $587 million in funded debt.
Phoenix’s contract portfolio recently became “unsustainable” due to “inflationary pressures and rising fuel costs, coupled with suboptimal contract terms,” the company said in court documents. Phoenix has also encountered operational difficulties at customer sites, including equipment failures and management turnover, he said.
“Contracts and operational challenges, in turn, put significant pressure on accounts receivable liquidity, which was further weakened by capital lease payments, rising interest rates and increased capital expenditures. capital,” the company said.
The company has developed a strategy to renegotiate or terminate unprofitable contracts and emerge from bankruptcy in March 2023 “as a going concern with a sustainable and profitable contract portfolio,” he said.
To facilitate the process, Phoenix has retained legal counsel from Weil Gotshal & Manges LLP and Richards, Layton & Finger PA. The company has also hired AlixPartners LLP as financial advisor and PJT Partners LP as investment banker.
The deal is In re Phoenix Services Topco LLC, Banker. D. Del., No. 22-10906, petition filed 09/27/22.