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COURT: Tupperware, facing day-one conversion, dismissal, or foreclosure effort from lenders, stores contested matters for another day in initial Chapter 11 hearing

Tupperware Brands Corp cruised through its initial bankruptcy hearing today (19 September), keeping the contested leftover matters for another day amid an effort from its key lenders pursuing conversion, dismissal, or foreclosure.

Motions approved today included a limited form of cash management and one seeking the retention of claims agent Epiq. Contested matters pushed off generally amounted to anything that would involve money going out the door, such as cash collateral – contested by the ad hoc group of lenders – and employee wages.

Debtwire Live Blogged the hearing (access required)

The bulk of today’s hearing was taken up by on the record remarks from the various sides in the cases. Tupperware counsel Spencer Winters of Kirkland & Ellis said the company filed for bankruptcy after learning that an ad hoc group of lenders that bought the bulk of the company’s debt prepetition intended to force a foreclosure on the business after stymying a prepetition sale effort. The food and other items storage company now hopes to pursue a fulsome marketing process under the shelter of Chapter 11.

“The transfer of such an iconic asset should occur in broad daylight,” Winters said.

Countering, the ad hoc group said that the company has no hope of reorganization and no hope of achieving a sale that would improve upon the foreclosure, or a total liquidation. “The debtors just don’t belong here,” said Allan Brilliant of Dechert, representing those lenders. He also quipped that the only thing large about the debtors is their debt load, which exceeds USD 800m, and called the cases a two-party dispute.

The lenders already filed a Chapter 7 conversion motion but has said they would alternatively accept dismissal or stay relief permitting the foreclosure to go forward. The ad hoc group holds nearly USD 500m of the outstanding first lien debt, and includes Bank of AmericaAlden Global Opportunities Master FundStonehill Institutional Partners, and Strategic Investment Opportunities as members.

Separately, another secured lender which is affiliated with Wexford Capital argued that not all of Tupperware’s creditors are aligned against its bankruptcy filing. That lender accused the ad hoc group of freezing it out from the process to this point, and argued that this is not a two-party dispute, as previously claimed.

A hearing on the contested first day matters mentioned above was scheduled for next week, on 25 September. The second day hearing was set for 11 October.

The ad hoc group also argued in filings that the proposed sale process would strip it of its rights to credit bid for Tupperware’s assets. “It is irrefutable that the value of the Debtors and the Collateral, which comprises all of the Debtors’ material assets, is a fraction of the Prepetition Secured Debt,” they wrote.

 

Tupperware Brands Chapter 11 capital structure

The debtors filed for Chapter 11 protection late on Tuesday (17 September) with USD 811.8m in funded debt, the majority of it falling under a first lien credit facility with revolving and term loan tranches. Tupperware laid much of the blame for its financial strains at the feet of operational troubles brought on by the company’s emphasis on direct sales, coupled more recently with aggressive efforts by the ad hoc lender group to exercise remedies under debt agreements.