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The Dolan Company to Restructure Debt in Prepack Chapter 11 Filing

March 21, 2014, 07:20 AM
Filed Under: Bankruptcy

The Dolan Company and its subsidiaries (collectively, the “Company”) announced that it, along with certain of its subsidiaries, has agreed to a comprehensive balance-sheet restructuring with its secured lenders that, among other things, will allow the company to continue honoring obligations of its employees, customers, and vendors in the ordinary course of business. The proposed restructuring will allow the company to achieve a capital structure that will allow the company to grow its business into the future. To implement the restructuring, the company and certain of its subsidiaries intend to file voluntary petitions for a prepackaged chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. The Dolan Company’s e-discovery business, DiscoverReady LLC, will not file a chapter 11 petition and its operations will not be affected by the proposed chapter 11 process. The filing subsidiaries and DiscoverReady will continue to operate their businesses as usual in all respects and the restructuring is not expected to have a negative effect on the company’s operations.

The plan of reorganization contemplates that the secured lenders will become the owner of DiscoverReady and The Dolan Company upon the completion of the restructuring process and each business will be operated as separate and distinct entities. Investment funds managed by Bayside Capital, Inc. will become the majority owner of DiscoverReady and The Dolan Company. Bayside Capital is an affiliate of H.I.G. Capital, a leading global private investment firm with more than $15 billion of equity capital under management.

The company’s lenders are expected to provide a $10 million debtor-in-possession (“DIP”) loan to fund the cash needs of the company and DiscoverReady through the reorganization process.

On Tuesday, March 18, 2014, the company and its lenders and certain of its swap counterparties executed a restructuring support agreement that sets forth the material terms of the chapter 11 restructuring and secures the support of the secured creditors for that process. In accordance with the restructuring support agreement, the company commenced solicitation for votes on the chapter 11 plan from the company’s secured creditors, the only parties entitled to vote under the plan of reorganization. Solicitation is expected to conclude at the end of this week. Upon securing sufficient votes to accept the chapter 11 plan, the company will seek relief under chapter 11. The chapter 11 plan process will allow the filing subsidiaries of the company to deleverage its capital structure by reducing its projected secured debt obligations from approximately $170 million to approximately $50 million. The restructuring support agreement also secures support from the lenders to refinance DiscoverReady’s capital structure with a $10 million unfunded secured revolving facility. The existing preferred and common shares will be cancelled and will not receive a recovery in the chapter 11 plan. Importantly, the company will continue to provide its usual, high-quality services and products to its customers through this process and, as noted above, will continue to pay its vendors, employees, and other ongoing obligations in the normal course of business, and none of these parties should be materially affected by the chapter 11 filing or process.

After emergence from bankruptcy, both The Dolan Company and DiscoverReady LLC will be privately held companies.

In connection with this process, James P. Dolan, the company’s founder and chief executive officer, and Scott Pollei, the company’s long-time chief operating officer, have resigned their positions with the company, with such resignations to be concurrent with the planned chapter 11 filing. Chief Financial Officer Vicki Duncomb and General Counsel Renee Jackson will remain in their leadership positions with the company and will assist Chief Restructuring Officer Nystrom in managing the company’s operations.

Given the typical speed of a “pre-packaged” plan of reorganization, the company expects to emerge from bankruptcy within approximately two months.

The Dolan Company is a leading provider of professional services and business information to the legal, financial and real estate sectors. The company’s Professional Services Division provides specialized outsourced services to the legal profession primarily through subsidiaries DiscoverReady LLC and Counsel Press. Counsel Press is the nation’s largest provider of appellate services to the legal community. DiscoverReady LLC provides outsourced discovery management and document review services to major companies and law firms. The company’s Business Information Division publishes business journals, court and commercial media and other highly focused information products and services, operates web sites and produces events for targeted legal and professional audiences in each of the 19 geographic markets that it serves across the United States.

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