Coyne Files Chapter 11 Bankruptcy
Coyne Textile Services, Syracuse, NY, filed Chapter 11 bankruptcy on July 31 to allow the company to restructure its balance sheet and divest its operations in three parts, according to a news release.
“The filing was necessary to preserve the value of Coyne’s business and allow us to complete our asset sales,” said Coyne CEO Mark Samson. “All our efforts are focused on concluding this process in an efficient and successful manner. Coyne intends to work with all of our stakeholders to maximize the value of our assets.”
The three planned sales include:
- Clean Uniforms and More! will purchase Coyne’s customer routes, but not its real estate or equipment, in New Bedford, MA, for $4 million.
- Prudential Overall Supply will purchase Coyne’s facility in Richmond, VA, and its customer routes and equipment at its facility in Greenville, SC, for $7 million.
- Coyne’s existing senior management team will acquire the remaining plants and service centers in Bristol, TN; Buffalo, NY; Cleveland; London, KY; Syracuse, NY; and York, PA, for $22.5 million, subject to adjustment.
Pending the completion of the sales, Coyne will continue to operate under the supervision of the U.S. Bankruptcy Court for the Northern District of New York in Syracuse. Coyne’s current management team will continue to lead the company throughout this process, the release said. Coyne currently employs approximately 620 people at its nine locations. Under the three proposed sales, seven of Coyne’s nine locations will remain open and roughly 525 jobs will be saved.
For fiscal year 2014 (which ends on Oct. 31) and fiscal year 2013, Coyne had revenues of $66.2 million and $77.4 million, respectively, the release said. Coyne owed NXT Capital LLC, Chicago, its senior secured lender, roughly $34 million when it filed for Chapter 11 protection. Coyne owed Medley Opportunity Fund II LP, its junior secured lender, approximately $20 million.
Coyne will ask the court to set rules for determining whether there are any higher and better offers for the three asset sales. If no other bidders emerge, Coyne will ask the court to approve the sales, the release said. Since Coyne marketed these assets for approximately a year prior to the Chapter 11 filing to prospective industry and financial buyers, Coyne has asked the court to fast track approval of the sales, and Coyne hopes to close the sales within 90 days of the filing.
“Coyne regards its planned sales as the best possible result for its key stakeholders under difficult circumstances,” Samson said. “Coyne hopes to make a very fast trip through Chapter 11. For customers, the prompt sale of Coyne’s routes and facilities will ensure a seamless transition to the buyers with no interruption of the high-quality service on which they rely. For suppliers, the sale means the continuing existence of a steady customer, one that will be, in each case, better capitalized and more able to fulfill its obligations.”
To finance its operations while in Chapter 11, Coyne received $3.5 million in debtor-in-possession (DIP) financing from NXT. “We view NXT’s willingness to make a DIP loan as an important vote of confidence from our senior lender and we look forward to working with NXT to complete this restructuring,” Samson said.