FTI Consulting is serving as financial advisor, Evercore is serving as investment advisor and Kirkland & Ellis is serving as legal advisor to iQor, which filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas to implement an agreement between a majority of its secured lenders to recapitalize its funded debt.
The debtors commenced these Chapter 11 cases with a prepackaged plan of reorganization that includes the requisite stakeholder support in favor of the plan. The plan has the support of iQor’s lenders, with holders of 97% of iQor’s first lien notes and 84% of its second lien notes already voting to approve the plan. iQor has not received any votes to reject the plan.
iQor’s Chapter 11 cases are limited to the company’s U.S. entities and operations. International operations in the Philippines, India, Mexico, Poland, Canada, Panama, Trinidad and Hong Kong are not included in the filing. All of iQor’s businesses, whether included in the filing or not, are operating in the ordinary course and anticipate continuing to do so throughout the duration of the Chapter 11 process, from which iQor expects to emerge within approximately 45 days.
“Over the past year, iQor has explored strategic initiatives to reduce our debt load and right-size our capital structure following an ambitious acquisition that ultimately underperformed,” Gary Praznik, president and CEO of iQor, said. “The recent steps we have taken toward achieving and executing our BPO platform strategy have moved us forward, as has our efficient response to COVID-19 disruptions. While we have made progress in rapidly expanding our end-to-end customer strategy, our capital structure remains over-levered relative to the current size of our operations. Accordingly, we determined that additional measures were necessary and in the company’s long-term best interest as we work to reach our goals and capitalize on new opportunities.
“Our guiding principle in making the decision to pursue an in-court restructuring is to provide iQor with the best path forward to achieve long-term stability, growth and profitability. With the support of our lenders, today’s action is a meaningful, strategic step and the right choice to realize the full benefit of our efforts and best position iQor for future success.”
To support continuity, iQor filed a motion seeking bankruptcy court approval of $130 million of debtor-in-possession financing, consisting of a $80 million A/R facility and $50 million term loan, which will be available to support the company’s ongoing operations through the restructuring process. iQor expects the DIP financings to be refinanced with a new $80 million exit A/R facility and a new exit term loan of up to $97.5 million upon emergence from Chapter 11.
Additionally, iQor filed a series of other first day motions that, subject to court approval, will allow the company to continue to operate in the ordinary course of business while it works to reshape its capital structure. According to the first day motions, iQor has sought authority to allow it to continue to satisfy employee-related claims, obtain access to additional financing under the proposed post-petition financing agreement, pay vendors for all post-petition obligations in the ordinary course, and perform other critical functions and processes necessary for the company to continue operations.
iQor is a managed services provider of customer engagement and technology-enabled BPO solutions.
