On 16 June 2025, At Home Group and several affiliates entered Chapter 11 with a restructuring support agreement (RSA) providing for a prearranged Chapter 11 plan that would hand almost all of the equity in the reorganized company to a group of DIP lenders who are also holders of the debtors’ prepetition first lien debt. The RSA does not specify the recoveries for general unsecured creditors. However, it is clear that holders of existing equity would receive no recovery.

Company background and prepetition capital structure

At Home Group is a big box home décor and furnishings retailer. As of the petition date, the company had approximately USD 1.998bn in funded debt consisting of obligations assumed in connection with equity sponsor Hellman & Freidman’s acquisition of the company in July 2021 and debt issued in connection with a “double dip” liability management exercise (LME) in May 2023.

The merger-related debt comprises USD 378m in ABL debt, USD 579m outstanding under a term loan facility, USD 300m in senior secured notes, and USD 58m in senior unsecured notes. The ABL credit facility is secured by a first-priority lien on all prepetition ABL collateral[1] and a second-priority lien on all non-prepetition ABL collateral. In turn, the term loan facility and senior secured notes are secured by a first priority lien on all non-prepetition ABL collateral and a second priority lien on prepetition ABL collateral. Bank of America is the agent on the ABL facility, Wilmington Trust is the agent on the term loan facility, and US Bank Trust Company is the trustee for the secured and unsecured notes.

The LME-related debt comprises USD 200m in private placement notes issued by At Home Cayman, a non-debtor newly formed foreign restricted subsidiary of the company, which then lent the proceeds to debtor At Home Group Inc pursuant to an intercompany note. The Cayman notes were also guaranteed by At Home Group Inc and other affiliates. The holders of the Cayman notes therefore have two claims on the notes against the assets of At Home Group Inc – a direct claim under the guarantee and an indirect claim on the intercompany loan, hence the “double dip.” In addition, as part of the LME transaction, holders of a majority of the company’s senior unsecured notes traded them for “exchange notes,” which were new cash/payment-in-kind toggle senior secured notes, the outstanding principal amount of which is USD 483m. Wilmington Trust serves as trustee for the Cayman notes and the exchange notes, and Delaware Trust Company is the agent for the intercompany note.

The chart below summarizes the company’s prepetition capital structure.

Chapter 11 filing and operations in bankruptcy

On 16 June, the debtors, an ad hoc group of consenting term loan lenders and noteholders (comprising Redwood Capital Management, Farallon Capital Advisors, Anchorage Capital Advisors, Silver Rock Financial, Aryeh Capital Management, and Glendon Capital Management), other debt holders, and private equity firm Hellman & Friedman, entered into an RSA that provides for a debt-for-equity swap and the elimination of USD 1.62bn of the company’s USD 1.998bn in debt. According to the first day declaration of Jeremy Aguilar, the debtors’ chief financial officer, the RSA is supported by holders of 96% of first lien debt holders. The RSA further provides for commitments of up to USD 600m in DIP financing. In addition, upon exit from bankruptcy, the company’s prepetition ABL facility will be refinanced with an exit asset-based lending facility.

The restructuring support agreement provides for the USD 600m DIP facility to be backstopped by the ad hoc group. The DIP facility has two components – a USD 200m new money first-out delayed draw term loan and a USD 400m roll-up of prepetition first lien claims into Tranche B DIP loans. The ad hoc group comprises holders of certain of the debtors’ pari first lien obligations, that is, the term loan, the senior secured notes, the Cayman notes, the exchange notes, and the intercompany note. The fronting lender will be Barclays Bank, which will assign the Tranche A DIP loans to the backstop lenders per their allocated shares, the amounts of which the RSA does not disclose. GLAS USA will act as the administrative and collateral agent on the DIP loan. For DIP lenders holding Tranche A DIP loan commitments on the closing date following the initial syndication, and for all other DIP lenders upon the completion of the syndication, up to USD 400m of pari first lien obligations will be automatically deemed rolled-up into Tranche B DIP loans on a cashless basis.[2]

The RSA also provides a glimpse into the look of the reorganized debtors. On the plan’s effective date, the ABL facility will be replaced with an exit ABL facility. The RSA contemplates a right-sizing of the debtors, stating that the debtors will continue working with Hilco Global during the bankruptcy cases to evaluate their real estate portfolio and to identify which leases to assume or reject. In addition, according to the RSA, the debtors’ new board of directors will consist of seven directors, including the CEO and four directors selected by Redwood, one director selected by Anchorage, and one director selected by Farallon. On the plan’s effective date, the debtors will authorize the issuance of up to 10% of the reorganized equity (on a fully diluted basis) for management and the new board.

Recoveries

Under the term sheet, the DIP facility will either be (i) paid on the plan’s effective date with the DIP equity conversion (98% of the common stock of the reorganized debtors), (ii) paid in full with cash, or (iii) given other agreed upon treatment.

The RSA provides for a plan that places each of the prepetition pari first lien obligations in a separate class – Classes 4 through 8.[3] Holders of claims in each of these classes will receive the same treatment, the distribution of 100% of the equity of the reorganized debtors, subject to dilution by the DIP equity conversion to be given to the DIP lenders and the management incentive plan.

The plan is notable because it acknowledges the double dip by creating separate classes for both of the double dip claims – Class 4 for the Cayman notes claims and Class 5 for the intercompany notes claims. Holders of intercompany notes claims will only receive reorganized equity interests until the Cayman notes are repaid in full, thus ensuring that those noteholders don’t get more than a 100% recovery on their combined Class 4 and Class 5 claims. However, since the plan contemplated by the RSA gives the holders of the Cayman notes two claims and distributions on their debt, it provides for a superior recovery to other first lien creditors if all of those creditors do not receive a 100% recovery. This could give rise to challenges to the double dip transaction by holders of other first lien debt, whose recoveries would be correspondingly diluted. However, the fact that 96% of the first lien debt holders are purportedly on board with the restructuring greatly reduces the likelihood of any such challenge.

The RSA is more cryptic on what general unsecured creditors stand to recover. It states only that unsecured creditors, which include the unsecured noteholders and holders of first lien deficiency claims, will receive their pro rata share of some undefined distribution. On the other hand, holders of existing equity interests of debtor Ambience Parent, Inc will have their interests canceled and receive no distribution.

The proposed treatment of claims in the restructuring term sheet is summarized below:

Other restructuring features

The RSA contemplates broad third-party consensual, opt-out releases for various bankruptcy constituencies, including the members of the ad hoc group, the DIP and ABL lenders and agents, and the debtors’ sponsor, Hellman & Freidman. The chart below lists the proposed released and releasing parties.

Comparison with other recent big box restructurings

At Home Group is the latest in a wave of big box restructurings, including Bed, Bath & Beyond, Big Lots, and JOANN. Those Chapter 11 cases have had varying, and mostly disappointing, results. JOANN initially entered bankruptcy in March 2024 with a prepackaged plan that handed the company to its term loan lenders. That plan was swiftly confirmed and went effective little more than one month after the bankruptcy filing. However, less than one year later, the company found itself back in bankruptcy with a stalking horse agreement from Gordon Brothers Retail Partners that gave the latter the right to liquidate the company’s assets. Ultimately, the company sold its assets in a combination credit bid and cash necessary to pay the company’s prepetition ABL and FILO facilities to a subsidiary of GA Group, a provider of asset disposition services, and term loan agent Wilmington Savings Fund Society. The company’s Chapter 11 plan, which provides for a wind-down of the company, is scheduled for a July confirmation hearing.

In contrast to JOANN, Bed Bath and Beyond filed for Chapter 11 in free fall. However, the ultimate outcome was the same. The debtors used their bankruptcy cases to liquidate, selling leases, intellectual property and other assets to generate recoveries for creditors. The company’s confirmed Chapter 11 plan similarly provided for the wind-down of the company.

Big Lots represents a more successful recent big box bankruptcy. The company entered Chapter 11 with a stalking horse offer from Nexus Capital Management. Although that sale fell through, the debtors quickly negotiated another deal with Gordon Brothers Retail Partners to avoid a full-blown liquidation amidst concerns of administrative insolvency and a potential Chapter 7 conversion. Ultimately, the deal was anticipated to preserve at least 200 of the company’s stores. The company has yet to file and solicit a plan.

Of these three cases, the At Home Group case, at least as of the outset, appears to be most similar to the first JOANN bankruptcy. Here, as in JOANN, the company entered bankruptcy with the support of most of its lenders. In the case of At Home Group, this support is very strong, with over 96% of the first lien debt holders supporting the reorganization. As evidenced by the proposed work with Hilco, the company seems to be seeking to engage in an operational restructuring in addition to a financial restructuring. However, as JOANN demonstrated, a restructuring with the support of lenders doesn’t guarantee success, so it remains to be seen whether At Home Group’s restructuring, even if completed, will succeed.

Paul Gunther is a former practicing restructuring and litigation attorney. Prior to joining Debtwire as a Legal Analyst, Paul practiced in the New York offices of Dentons US LLP, Salans LLP and Mayer Brown LLP. He has represented various constituencies in high-profile restructurings.

This report should not be relied upon to make investment decisions. Furthermore, this report is not intended and should not be construed as legal advice. ION Analytics does not provide any legal advice, and clients should consult with their own legal counsel for matters requiring legal advice. All information is sourced from either the public domain, ION Analytics data or intelligence, and ION Analytics cannot and does not verify or guarantee the adequacy, accuracy or completeness of any source document. No representation is made that it is current, complete or accurate. The information herein is not intended to be used as a basis for investing and does not constitute an offer to buy or sell any securities or investment strategy. The information herein is for informational purposes only and ION Analytics accepts no liability whatsoever for any direct or consequential loss arising from any use of the information contained herein.

——————

Endnotes

[1] According to the debtors’ DIP motion, the ABL collateral consists of substantially all of the assets of At Home Group Inc. and the other guarantors under the Prepetition ABL Credit Agreement and a pledge of the equity interests of At Home Group Inc. for Ambience Intermediate, Inc.

[2] The DIP term sheet provides that any pari first lien secured party that is also a Cayman notes holder will roll up 100% of the Cayman note obligations before any roll up of their other pari first lien obligations (which will not affect the order of priority).

[3] The debtors reserve the right to classify all first lien claims (Classes 4 through 8) in one class with the reasonable consent of the required consenting stakeholders. The required consenting stakeholders are the stakeholders with at least 50.01% of the voting amounts held by all consenting stakeholders that are party to the RSA.