Michael Freitag of Joele Frank Discusses Constants, Changes in Strategic Communications in Last 30+ Years; Kloeckner Pentaplast, Pine Gate Renewables File for Chapter 11

Introducing the Special Sits and Distressed Weekly, a merger between Octus’ Americas Weekly and Cleansing Materials. The Special Sits and Distressed Weekly dives into recent trends in the world of chapter 11 and prebankruptcy and highlights the most topical work from Octus’ editorial teams on stressed and distressed topics.
 

By Harvard Zhang

After serving as strategic communications counsel on more than 300 in-court deals and close to 500 total restructuring transactions in his 30-plus-year career, Michael Freitag, a partner at Joele Frank, believes the core objective and foundation of restructuring communications has remained constant, even though new technologies have emerged to help reach the relevant constituencies more effectively and efficiently.

“The main objective really is very simple: It’s helping our clients, who are almost always the companies, explain what the transaction process means to all of their audiences in a very clear, credible and impactful way,” Freitag said in an interview with Octus. “We now have the ability to use data analysis, digital marketing and social media tools to identify, isolate and target key audiences that may have specific questions and communications needs, which is very different from sending out blast faxes and hosting audio conference calls decades ago. Specialty publications like yours have also changed the way people get their information.”

Another rule of thumb that has stood the test of time is the power of direct communication, according to Freitag. “Especially for executives of companies that file for chapter 11 – people want to look you in the eye, hear from you as a leader, see your body language and know that you believe in what you are saying and that you have conviction,” he said. “I often advocate for CEOs to do town hall meetings, visit major customers, get on phone calls with critical suppliers and even show up in court early in the case.”

Because of that communication over the years, the general public is more familiar with restructuring, and bankruptcy is less of a taboo. “I was deeply involved in the automotive industry’s restructuring in 2009, when companies like General Motors and Chrysler filed for bankruptcy, and we had to explain to the American people what going into chapter 11 means. I’ve been through this in multiple rounds with airlines, from Pan American World Airways to Delta Airlines, and we helped to explain to consumers that chapter 11 doesn’t have to mean liquidation or going out of business, because many businesses come through these processes with stronger balance sheets and live to fight another day,” Freitag said.

On the state of the market, Freitag said the Joele Frank team is very busy right now. “There is a lot of activity, and it really is across the full spectrum of the restructuring space, with a steady stream of LME work and an increase in bankruptcy filings,” he said. “From the window that I have to a wide variety of deal matters, I am seeing that positions are hardening in the LME world. Sophisticated parties are getting more aggressive in how they interpret documents and more assertive in defending against those interpretations. This may make it harder for people to see eye to eye, which concerns me, because ultimately the process is about compromise and getting to a good outcome. There is usually a debtor or a company at the end of the line where people’s livelihoods are affected.”

In this age of an AI boom, Freitag, a former New York Times reporter, is not worried about robots replacing humans in strategic communications. “Our business involves serving as the gray-haired advisor – the senior counselors who can talk to a CEO and senior management team and help them navigate the challenges of this process,” Freitag said. “There is still human judgment and experience that we draw upon when we provide senior-level counsel to clients at a really crucial time.”
 

 

Trinseo

Octus published a detailed organizational structure for Trinseo after its January 2025 transactions involving its pari-plus term lenders, which increased their claims on the existing term lenders’ collateral by approximately $500 million, totaling an initial claim of $1.443 billion, along with receiving full secured guarantees on certain foreign subsidiaries, which had previously provided only “limited” guarantees. The transactions also included the designation of subsidiaries Aristech Surfaces LLC and Altuglas LLC, which were previously guarantors under the existing and incremental intercompany term loans, as unrestricted subsidiaries with regard to that debt, allowing them to become secured guarantors of the pari-plus debt. Octus’ Trinseo coverage is HERE.

KIK Consumer Products

Large lenders in KIK Consumer Products are in the process of getting restricted with the Centerbridge-owned pool product manufacturer to commence balance-sheet talks, according to sources. An ad hoc group of lenders has banded in a cooperation agreement as the company wrestles with operational and liquidity pressures in the wake of a September 2024 fire at its BioLab plant in Conyers, Ga. Octus’ KIK Consumer Products coverage is HERE.

Advantage Solutions

Advisors to Advantage Solutions and its lender group have signed nondisclosure agreements to prepare a transaction that will address the advertising company’s 2027 debt maturities, according to sources. The parties went restricted about a month ago, sources said. Octus’ Advantage Solutions coverage is HERE.

Alkegen

Alkegen disclosed to investors this week that it has appointed two Alvarez & Marsal managing directors with extensive restructuring experience to roles as CEO and chief transformation officer, sources said. Octus’ Alkegen coverage is HERE.

Groupe Solmax

Lenders to Groupe Solmax are in touch with lawyers specializing in liability management and restructuring as they move toward potential organization, sources said. The company has suffered a cash burn ahead of a revolver expiration in May 2027 and the maturity of its SOFR+475 bps term loan B in May 2028. Octus’ Groupe Solmax coverage is HERE.

Kloeckner Pentaplast

Global packaging manufacturer Kloeckner Pentaplast filed a prepack chapter 11 in the Southern District of Texas on Nov. 4 with a restructuring support agreement that would eliminate approximately €1.3 billion of the debtors’ €2.32 billion in funded debt and provide €215 million in new-money DIP financing from first lien creditors to fund operations during and after emergence. Solicitation of the plan began Nov. 4, and the debtors aim to emerge by early February 2026. The RSA parties hold more than two-thirds of prepetition bridge loan claims, SFA credit agreement claims and first and second lien notes.

Under the plan, the proposed €984 million DIP (which would include a €635 million rollup of first lien claims and €134 million to refinance a prepetition bridge loan) would roll into an exit facility. At a first day hearing on Nov. 5, Judge Christopher Lopez approved the DIP on an interim basis, providing the debtors with access to €264 million of new-money DIP loans.

The plan also provides that first lien creditors would receive 100% of reorganized equity, subject to dilution by a management incentive plan funded with an unspecified percentage of reorganized equity. Second lien creditors would share €17.5 million in additional exit financing loans or notes. General unsecured creditors would be unimpaired, and existing equity interests would be canceled. Octus’ Kloeckner Pentaplast coverage is HERE.

Pine Gate Renewables

Renewable energy project developer Pine Gate Renewables filed chapter 11 in Houston on Nov. 6, targeting a 45-day marketing and sale process. The debtors target sale closings by year-end and plan confirmation in January. Pine Gate secured a $412 million financing package from their three primary corporate lenders – Brookfield, Carlyle and Fundamental Renewables – made up of $208 million in out-of-court bridge financing (already funded prepetition) and $204 million in DIP financing commitments, plus any undrawn bridge amounts.

Under Pine Gate’s proposed bid procedures, each of the bridge/DIP lenders would serve as stalking horse for their respective collateral portfolios: Brookfield for 22 projects, Carlyle for nine projects and Fundamental for 131 projects. A first day hearing before Judge Christopher Lopez is scheduled for Monday, Nov. 10. Octus’ Pine Gate coverage is HERE.
 

First Brands Group LLC

After a two-day hearing, today Judge Christopher Lopez granted final approval of the First Brands debtors’ $4.4 billion DIP financing. The judge said he will sign the final DIP order once it is submitted under certification of counsel, calling the debtors’ efforts to resolve the numerous objections “remarkable.” The DIP financing, provided by an ad hoc group of first lien cross-holders, includes $1.1 billion of new money and a $3.3 billion “creeping” 3:1 rollup of certain prepetition first lien term loan debt.

The DIP financing was initially opposed by the official committee of unsecured creditors, lenders to the debtors’ special purpose vehicles, factoring agents and landlords, but the debtors resolved several major objections, reaching agreements with the UCC, ABL lenders, inventory lenders Evolution and Onset, and the Carnaby secured lenders.

On Nov. 3, the debtors sued founder and former CEO Patrick James, accusing him of fraudulent conduct that siphoned “hundreds of millions (if not billions) of dollars” from the company. The debtors allege that James fraudulently secured billions of dollars in financing for the auto-parts supplier, then misappropriated the funds to enrich himself and his family. Octus’ First Brands Group coverage is HERE.

Office Properties Income Trust

At a first day hearing on Nov. 3, Judge Lopez approved the Office Properties Income Trust debtors’ $125 million nonpriming new-money junior DIP financing on an interim basis. Interim approval unlocks the debtors’ access to $10 million in DIP financing and authorizes the facility’s 10% anchor capital commitment aka backstop fee, which would be payable in cash or reorganized equity (subject to dilution by a 2% management incentive plan).

However, Judge Lopez limited interim DIP relief to the next 30 days, as opposed to the debtors’ proposed six-week interim period. Additionally, Judge Lopez ordered the debtors and the 2027 notes ad hoc group to mediation while putting the debtors’ adversary proceeding seeking disallowance of any unamortized original issue discount associated with the March 2027 notes “on ice” for the next 30 days. Octus’ Office Properties Income Trust coverage is HERE.

Azul

At a hearing on Nov. 4, Judge Sean Lane approved the Azul debtors’ disclosure statement and $650 million equity rights offering backstop agreement. The judge largely overruled the U.S. Trustee’s objection to the plan’s nondebtor releases, exculpation, management incentive plan and payment of indenture trustee fees, saying these arguments should be raised at confirmation. Debtors’ counsel said Azul aims to finalize investment agreements with strategic investors United Airlines and American Airlines and present final forms of the strategic investment agreements at the next hearing, scheduled for Nov. 25. Octus’ Azul coverage is HERE.

Rite Aid

On Nov. 3, Judge Michael Kaplan issued an opinion in a dispute between the Rite Aid debtors and one of their former landlords. In so doing, the judge answers important questions for chapter 11 lease matters, including: (i) When must “stub rent” be paid under the Bankruptcy Code? And (ii) In what circumstances is a landlord entitled to late fees or reimbursements for attorneys fees? Judge Kaplan holds that even though stub rent is an administrative priority expense, there is no date certain by which the rent must be paid. The stub rent simply must be paid “prior to plan confirmation,” the judge wrote. Octus’ Rite Aid coverage is HERE.
 

EquipmentShare Litigation

The Texas Business Court on Nov. 5 denied Romulus Capital and Neil Chheda’s request for a temporary injunction reinstating Chheda to EquipmentShare’s board of directors after his purportedly improper removal in September following the board’s termination of its voting agreement. Chheda and Romulus sued EquipmentShare last month, arguing that the injunction is necessary to prevent irreparable harm, in particular because EquipmentShare is making “critical decisions about an imminent IPO” without Chheda’s input on the board. Chheda also said he was dismissed after raising concerns about questionable secondary transfers of the company’s stock and “sweetheart contracts” involving EquipmentShare’s founders. EquipmentShare counters that Chheda “abused his position as a Board member” and currently faces multiple investor lawsuits alleging fraud, self-dealing and forgery. Octus’ coverage of EquipmentShare is available HERE.

Supreme Court Tariff Case

The U.S. Supreme Court heard oral argument challenges to President Donald Trump’s use of the International Emergency Economic Powers Act, or IEEPA, to impose global reciprocal tariffs as well as “fentanyl trafficking” tariffs on China, Canada and Mexico. Several of the conservative justices expressed skepticism toward the president’s assertion that IEEPA’s language empowering the president to “regulate import” extends to the ability to impose sweeping tariffs. In the event of adverse ruling, the administration could still pursue its tariff policies under other statutes, although most impose additional procedural requirements. Octus’ coverage of Tariff Policy & Impact is available HERE.