Riverbed Technology nets approval of $1bn debt-cutting plan

Signage is seen at the United States Bankruptcy Court for the Southern District of New York in Manhattan, New York City, U.S., August 24, 2020. REUTERS/Andrew Kelly

(Reuters) – Riverbed Technology, a San Francisco-based information technology company, secured bankruptcy court approval on Friday of its reorganization plan that reduces its debt by $1.1 billion.

U.S. Bankruptcy Judge Craig Goldblatt in Wilmington, Delaware, signed off on the plan just 17 days after the company filed for Chapter 11 protection with $2 billion in debt. Riverbed, represented by Kirkland & Ellis, entered bankruptcy with a prearranged plan backed by its senior lenders and owners, private equity fund Thoma Bravo and the Ontario Teachers’ Pension Plan.

Riverbed, which offers products and services that assist companies with IT infrastructure like cloud technologies, said its financial troubles stemmed from COVID-19 pandemic-related global supply chain issues and labor shortages as factories closed and stay-at-home orders were instituted. Additionally, the company saw a decline in one of its key markets, the wide area network optimization market, due to a shift to alternative computing technologies.

Under the plan, holders of $799 million in junior debt, including Apollo Capital Management, will take over the reorganized company for recoveries of 40%. Senior lenders will see full recoveries in the form of new debt and equity. The plan also provides for $100 million in new equity capital.

Unsecured noteholders who initially opposed the plan dropped their objections ahead of Friday’s hearing after Riverbed said it would set aside $2.88 million for them, which amounts to recoveries of about 30%.

Prearranged and “prepackaged” restructuring plans have gained popularity in corporate Chapter 11 debtors of late, allowing the company to save time and money by conducting negotiations and creditor voting before formally filing for bankruptcy protection. Kirkland has been especially active in these fast-track cases, including some like department store retailer Belk and Muzak maker Mood Media that were completed in one day.

The case is In re Riverbed Technology Inc., U.S. Bankruptcy Court, District of Delaware, No. 21-11503.

For Riverbed: Patrick Nash, Chris Koenig and Christine Okike of Kirkland & Ellis, and Laura Davis Jones and Timothy Cairns of Pachulski Stang Ziehl & Jones

For the first and second lien lender group: Thomas Lauria, Fan He, Andrew Zatz and Andrea Amulic of White & Case and Daniel DeFranceschi, Kevin Gross and David Queroli of Richards Layton & Finger