• USD 533m new equity investment from Getty Family Entities and KED
• Prepackaged Chapter 11 case planned with USD 143m DIP loan from KED
• Plan distributions include accrued interest, new notes, and USD 170.2m unsecured noteholder recovery

 

Getty Images announced on 12 October that it entered into a restructuring support agreement (RSA) that would take the global visual content creator and marketplace private, with certain Getty Family Entities,[1] through certain of their affiliated entities, and affiliates of Koch Equity Development (KED), owning 100% of the company upon emergence from a prepackaged Chapter 11 case. Under the agreement, members of the Getty family and KED, as consenting shareholders, agreed to invest up to USD 533m of new equity. However, the ECL provides that KED will not be obligated to contribute cash exceeding approximately USD 158.2m, and Getty Family Entities’ obligations will be capped at USD 162m.

Funded debt holders are also RSA parties. Holders of 83.5% of the company’s unsecured bonds have agreed to retire USD 270m of outstanding senior unsecured notes, and holders of approximately 89% of the company’s secured bonds and term loans, and 100% of revolving credit facility lenders will reduce interest obligations and extend maturities on Getty’s secured debt.

Getty plans to implement these transactions through a plan of reorganization. It will commence Chapter 11 cases for certain of the company’s US entities and begin soliciting plan votes in the coming days. It will then commence a prepackaged Chapter 11 case in the coming weeks. According to the company, the requisite majority of creditors have agreed to vote to accept the plan.

 

Postpetition financing and exit capital structure

The cases will be funded with a USD 143m DIP loan provided by KED and/or its affiliates to Getty Images Holdings, as borrower. The other Chapter 11 debtors will guarantee the DIP loans, which will bear PIK interest at Term SOFR + 5%. On the plan’s effective date, the DIP loans will be deemed equity infusions and treated as interests in the reorganized Getty Images (New Interests). The RSA provides that consenting shareholders will make approximately USD 433.2m in equity investments (minus the amount of the DIP loans). To the extent any of the USD 30m delayed-draw DIP loans are outstanding on the restructuring effective date, KED will (and will cause its affiliates to) contribute, exchange, surrender, equitize, and discharge such claims in exchange for 100% of new preferred interests.

In terms of the reorganized entities’ capital structure, JPMorgan Chase Bank will be the administrative agent on an exit credit agreement, with the amounts borrowed under that agreement dependent on plan distributions, discussed below. Also, the applicable reorganized company party, referred to as the “New Issuer”[2] will issue USD 580m in new notes due April 2032. Interest on those notes will be determined as follows:

Source: Restructuring Support Agreement

The New Issuer will also issue EUR 313.9m in new EUR term loans due April 2032, with interest to be calculated as follows

Source: Restructuring Support Agreement

In addition, the New Borrower will enter into a new USD 150m revolving credit facility that will mature in January 2031. Interest rates under that facility will be set as follows:

Source: Restructuring Support Agreement

 

Distributions on prepetition claims

In terms of plan distributions, Getty has grouped USD and EUR term loan lenders and secured noteholders in a single class. The plan will generally propose that accrued interest be paid in full, in cash, with differing treatments for the principal portion of the secured claims. Holders of the 11.25% secured notes and USD term loans will receive new notes in an equal principal amount. However, USD term loan lenders that do not consent to receive new notes, will instead receive USD term loans on terms to be negotiated among the company RSA parties, consenting shareholders, and required consenting secured lenders.

Holders of the EUR term loans, on account of the principal amount of their claims, will receive new EUR term loans in an equal principal amount except that consenting shareholders, such as KED, will receive their pro rata share of interests in the new Getty Images (New Interests) in accordance with a “Final Allocation Schedule,” to be filed with the bankruptcy court and subject to up to 10% dilution under the management incentive plan (MIP).

Unsecured noteholders will receive their pro rata share of approximately USD 170.2m (Unsecured Notes Recovery) and the debtors will pay up to USD 200,000 of the trustee’s fees and expenses. Revolver lenders will receive accrued interest in full, in cash and their pro rata share of new revolving loans for principal.

General unsecured creditors will not be entitled to vote on the plan as their claims will be left unimpaired. Holders of equity interests will be wiped out and shareholders will be deemed to reject the plan.

Getty also plans to use Chapter 11 to wipe out a USD 62.5m state court judgment entered against it on 25 September. In July 2024, Funicular Funds and other plaintiffs sued Getty asserting that it failed to permit the conversion of warrants into publicly traded shares, while transferring that value to Getty and its insiders. The warrants were issued through the 2020 initial public offering of an affiliated special purpose acquisition company. The largest awards granted through the judgment, inclusive of interest were USD 11.9m to Highbridge Tactical Credit Master Fund, USD 10.7m to PW Aero, and USD 7.7m to Highbridge SPAC Opportunity Fund. Over two dozen plaintiffs received awards under the judgment. Getty has since appealed.

Section 510(b) of the Bankruptcy Code generally subordinates certain claims arising from the purchase or sale of securities. According to Getty, the plaintiffs’ claims are therefore entitled to the same priority as shareholders and will not receive any distribution under the plan. Reducing claims subject to section 510(b) of the Bankruptcy Code to a judgment does not alter their subordination under section 510(b).

 

Additional plan provisions

The plan will provide typical non-debtor releases, covering the parties to the RSA, US Bank Trust Company as trustee and collateral agent on the prepetition secured notes, JPMorgan Chase Bank as agent on the prepetition credit agreement, and the DIP agent.which has yet to be identified.

 

Prior to joining Debtwire, Sara was a law clerk to two judges in the United States Bankruptcy Court, S.D.N.Y. and practiced in the Financial Restructuring Group at Clifford Chance, where she represented financial institutions (as secured and unsecured creditors, defendants in adversary proceedings, and participants in DIP financings) in high-profile restructurings. She also represented foreign representatives in Chapter 15 cross-border cases.

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[1] Getty Family Entities are defined in the equity commitment letter (ECL) attached to the RSA as including the Cheyne Walk Master Fund, Cheyne Walk Master Fund 2 LP, Cheyne Walk Trust, and Mark Getty.

[2] The RSA provides that the “New Issuer” will be designated in restructuring transaction steps and that the identity of the new issuer must be acceptable to the consenting shareholders.