Cahill’s Joel Moss Discusses Amend-and-Extend of Distressed Companies’ Debt

By Harvard Zhang

The more challenging amend-and-extend transactions often resemble or take the form of liability management exercises revolving around discount capture, pricing, maturity and documentation, according to Joel Moss, chair of Cahill’s bankruptcy and restructuring group.

Meaningful differentials in exchange rates offered to larger holders relative to other holders in some distressed A&E deals balance the need of the sponsor to capture discount with the desire of steering committee creditors holding large debt positions to avoid giving up too much of their paper’s face value, Moss said in an interview with Octus. Co-ops that include features like carve-out premiums also facilitate and allow for such differentiated economics, he added.

Amend & extend & expand, when a company addresses its new-money need by adding debt as part of a transaction to push out its existing maturities, has been topical. The more new money invested by the sponsor, the more covenant flexibility may be granted by creditors to the company, while creditors putting in new money will often require significant document tightening for existing and new debt and structural protections, for example, first out or super senior status for new money, Moss said.

There has been an uptick in LME protections being included in documents recently, and even some non-distressed A&E deals more recently included “omniblocker” protections, according to Moss.

Moss said the ability to utilize flexibility in existing documents as a measure to limit holdouts is usually quite effective. Holdout creditors are often dealt with on a one-off basis, perhaps getting somewhat more favorable terms than certain participating lenders, he said.

At some point though, negotiations of a potential A&E or LME deal may have to pivot to one about restructuring. Trading prices, the overall enterprise value and the debt load a company can sustain dictate those conversations, Moss said.
 

First Brands Group

Octus’ legal team published an analysis of what’s next for First Brands Group after the auto parts supplier’s chapter 11 cases were officially converted to chapter 7 on Sept. 1. Judge Christopher M. Lopez denied confirmation of the debtors’ controversial liquidating plan on Aug. 24, finding it could not be amended to “provide a viable path” to confirmation, and granted the U.S. Trustee’s renewed request to convert the cases.

Chapter 7 conversion marks a new phase in what Judge Lopez has called one of the “most complex” chapter 11 proceedings ever filed. Conversion removes the complexity of the plan but introduces new complications, expenses, delays and likely decreases the chance that administrative creditors will see material recoveries. Octus’ coverage of First Brands is HERE.
 

Telesat

The Canadian satellite operator is weighing a chapter 11 filing as more than $1.7 billion of debt at its Telesat GEO Inc. subsidiary comes due Dec. 6, even as the Telesat Act, a Canadian act of Parliament, established the company as a Canadian Crown corporation, restricting its ability to seek insolvency protection. The company could avert a filing, and the company and lenders remain in discussion on out-of-court options. CEO Dan Goldberg said on the company’s August earnings call in response to a question regarding a potential chapter 11 process “that is not the case at all,” reiterating a focus on refinancing before year-end. Legal advisors are reportedly split on whether a U.S. filing is viable under the Telesat Act. Octus’ coverage of Telesat is HERE.

Cubic Corp.

The Veritas Capital-backed fare-payment and military-simulation technology provider reached a deal with lenders for $175 million in fresh capital, split between a $100 million lender commitment fronted by Barclays and $75 million from Veritas Capital Fund VII. The financing carries pricing as high as SOFR+8% during PIK periods, and Cubic is also weighing asset sales, including its training business as well as its transportation businesses. Liquidity must stay above $50 million monthly from September 2026 and is only allowed to go below that amount after the sale of either asset has been consummated. Octus’ coverage of Cubic Corp. is HERE.

Brightspeed

Gibson Dunn and Moelis as advisors to an ad hoc group of first-out lenders have signed nondisclosure agreements to engage with the broadband provider on a potential new-money raise, which may take the form of asset-backed securities. The Apollo Global Management-backed company burned through more than $1.2 billion of cash in the first half of 2026 and included a going-concern warning in its second-quarter results. Separately, Octus reported that the second-out lenders’ cooperation agreement is now closed to new joiners. Octus’ coverage of Brightspeed is HERE.

Oldcastle BuildingEnvelope

The KPS Capital Partners-backed building products maker has secured $300 million of new money and pushed its debt maturities to 2031 as part of an A&E transaction. The transaction has the support of 91% of the company’s term lenders and 93% of unsecured noteholders. The deal is expected to cut cash interest expense by $50 million. The company was being advised by Paul Weiss and Evercor while a group of its term lenders was working with Milbank and PJT Partners. Octus’ coverage of Oldcastle BuildingEnvelope is HERE.

Mercer International

The pulp and solid-wood producer and certain bondholders are in confidential talks over a potential liability management deal that could offer better economics to select lenders. This comes as the company faces a potential near-term liquidity shortfall tied to its ABL and revolving facilities coming due in 2027. Mercer has been working with Houlihan Lokey and Latham & Watkins while an ad hoc creditor group is being advised by Paul Weiss. Earlier, Octus noted Mercer’s flexibility for a broad LME under its debt documents. Octus’ coverage of Mercer International is HERE.

Peraton

The Veritas Capital-backed government defense contractor posted second-quarter adjusted EBITDA of about $222 million, up 2% year over year, as revenue slipped 1% and free cash flow came in at $105 million. The company’s $6 billion first lien term loan due February 2028 has climbed 10 points over six months to 95, with the company working with Kirkland & Ellis and Guggenheim Securities to evaluate balance-sheet options ahead of the maturity, while ad hoc group of first lien lenders has signed a cooperation agreement and is working with Gibson Dunn and Evercore. Octus’ coverage of Peraton is HERE.

PetSmart

The BC Partners-backed pet retailer paid an approximately $80 million dividend in the second quarter as its adjusted EBITDA rose about 16.1% year over year to $317 million from $273 million. The average price of the company’s $2 billion first lien term loan B due 2023 is roughly flat with three months ago. Octus’ coverage of PetSmart is HERE.

Staples

The Sycamore Partners-backed retailer told lenders it could lose $158 million in receivables, comprising $75 million of loan receivables and $83 million of trade receivables, owed by Essendant, the janitorial and sanitation products seller it helped finance in 2019. This comes as Essendant explores strategic alternatives and expects to cease all operations. On its investor call on Sept. 11, Staples raised its full-year EBITDA guidance to a range of $835 million to $865 million, from $810 million to $840 million previously, attributing the increase to a tariff refund. Octus’ coverage of Staples is HERE.

Alight

An ad hoc group of lenders to the employer solutions provider is working with PJT Partners as financial advisor. Alight reported a 3.22% revenue decline to $511 million and a 27.56% drop in adjusted EBITDA to $92 million for the second quarter, primarily due to lower net commercial activity. Octus previously reported in March that Alight was working with long-time counsel Simpson Thacher to evaluate options for its balance sheet, including an LME, as it faces disruption from advances in AI technology. Octus’ coverage of Alight is HERE.

Padagis

The Altaris Capital-backed generic drugmaker is sounding out investors on a refinancing of its debt due summer 2028 via JPMorgan. The bank has held calls with lenders about addressing the capital structure, and talks are in the price-discovery stage. Octus’ coverage of Padagis is HERE.

S&S Activewear

The CD&R-backed apparel distributor is seeking to raise new debt to refinance its upcoming 2028 maturity. The company is working with UBS to sound out investor appetite for refinancing its $750 million term loan due March 2028, which is trading at par. Octus’ coverage of S&S Activewear is HERE.
 

Air Baltic Corp. AS

Latvian airline Air Baltic Corp. AS filed chapter 11 in the Southern District of New York early this morning with €350 million in new-money DIP financing from third-party lenders after spurning an ad hoc group of 2029 bondholders’ and third-party lender Polus Capital’s offer to fund a U.K. part 26A scheme of arrangement. The company said that it intends to restructure its funded debt and right-size its fleet before emerging by June 11, 2027.

At a first day hearing on Sept. 15, Judge Lisa Beckerman granted interim approval of the Air Baltic debtors’ €350 million new-money DIP financing from Strategic Value Partners, Barclays, Hayfin Capital Management and Oaktree, overruling an objection from an ad hoc group of 2029 noteholders. The ad hoc group argued the funding would impair their collateral when it was used to exercise an option to acquire full title to eight aircraft and seven spare engines and otherwise repay existing debt for the financed equipment.

Judge Beckerman said the Latvian airline would face a “shutdown” if the DIP financing was not approved. She set a final DIP hearing for Oct. 9, warning the debtors that they may face a “big priming fight” from the ad hoc group. Octus’ coverage of Air Baltic is HERE.

TV Azteca

On Sept. 16, Spanish-language television producer and broadcaster TV Azteca filed a chapter 15 petition in the U.S. Bankruptcy Court for the SDNY seeking recognition of its Mexican concurso mercantil insolvency proceeding as a foreign main proceeding. The company seeks to shield itself from creditor recovery actions outside the Mexican insolvency proceeding – specifically, notes trustee Bank of New York Mellon’s breach of contract suit against the company – that TV Azteca says “threatens the fair treatment” of creditors.

The company’s Mexican insolvency proceeding is in the conciliación phase. As of July 6, the company’s total liabilities were approximately $1.47 billion and reflected negative equity of approximately 2.98 billion Mexican pesos (approximately $175 million). TV Azteca is seeking a chapter 15 recognition hearing on Oct. 9. Octus’ coverage of TV Azteca is HERE.

SVB Financial Group

On Sept. 11, U.S. District Judge Mary Kay Vyskocil affirmed a 2025 bankruptcy court decision denying standing to the joint official liquidators, or JOLs, for Silicon Valley Bank’s Cayman Islands Branch, or SVBCI, to assert almost $1 billion in claims against the SVB Financial Trust.

The JOLs originally sought standing to assert up to $944 million in claims against SVBFG, including a claim to claw back a $294 million bank-to-parent dividend paid months before the bank’s collapse and claims for mismanagement of SVB that led to its failure. On appeal, the JOLs narrowed the issues, only challenging denials of their request for a declaratory judgment to void the dividend and their claim to impose a constructive trust over dividend proceeds.

Judge Vyskocil found that the Financial Institutions Reform, Recovery and Enforcement Act strips the court of jurisdiction over the clawback claim and bars the JOLs from pursuing the claim outside of the Federal Deposit Insurance Corp.’s administrative claim process. Octus’ coverage of SVB Financial Group is HERE.

DISH DBS and DISH Wireless

On Sept. 12, the DISH Wireless debtors filed a stand-alone amended liquidating plan separate from the jointly administered DISH DBS debtors. The amended DISH Wireless plan removes two controversial provisions from prior iterations: DISH DBS noteholders would not be allowed to vote a disputed $8.8 billion intercompany claim and the debtors’ potential litigation claims against parent EchoStar would not be sold to EchoStar.

The new plan appears calculated to undermine the UCC’s motion to bring estate claims against EchoStar and request for appointment of a chapter 11 trustee or termination of exclusivity – though the committee does not yet support the latest plan. At a hearing on Sept. 14, the debtors, the UCC and large tower lessors confirmed their agreement to a two-week litigation truce for negotiations over the DISH Wireless plan, with a status conference on Oct. 2 to discuss next steps if an agreement is not reached. The court set a Sept. 29 confirmation hearing for the separate DISH DBS plan. Octus’ coverage of EchoStar is HERE.

Omnicare LLC

Judge Stacey Jernigan confirmed the Omnicare debtors’ combined chapter 11 reorganization and liquidation plan at a hearing on Sept. 17. The hearing was uncontested after the debtors filed a second amended plan “entirely” resolving the UST’s objection to the plan’s presumed acceptance, exculpation and injunction provisions.

The plan implements the debtors’ sale to stalking horse bidder GenieRx Holdings and two interlocking settlements with nondebtor parent company CVS Health, the U.S. Department of Justice and the UCC resolving a $948.8 million civil judgment that precipitated the debtors’ bankruptcy filing. Octus’ coverage of Omnicare is HERE.
 

California Seeks to Halt Corteva Seeds Spinoff

The state of California asked a court to block Corteva’s Oct. 1 spinoff of its seeds business, arguing the spinoff would eliminate a “massive source” of potential recovery per- and polyfluoroalkyl substances claimants and could result in New Corteva’s bankruptcy. Corteva maintains that the spun off seed business Vylor and New Corteva will remain “well-capitalized.” The South Carolina District Court denied California’s request, citing improper venue. California then filed an emergency injunction request with the U.S. Court of Appeals for the Fourth Circuit. Octus’ coverage of Corteva is HERE.

Congressional Highlights

Lawmakers on Capitol Hill worked to advance legislation affecting an array of industries before the midterm congressional elections.

The U.S. House of Representatives overwhelmingly approved a bill directing state utility regulators to consider making data center operators cover incremental electricity costs instead of passing those costs onto consumers, but it hit a snag in the U.S. Senate after a Democratic lawmaker blocked it from expedited consideration. Octus’ coverage is HERE.

In a blow to the crypto industry, legislation establishing a digital asset market structure failed a key procedural vote in the Senate. Octus’ coverage is HERE.

The House joined the Senate in approving a Russia sanctions bill that, among other things, authorizes the president to impose up to 100% tariffs on the five largest importers of Russian crude oil and natural gas, including potentially China, India and some European countries. Octus’ coverage is HERE.

The House Energy & Commerce Committee advanced legislation to streamline the Federal Communications Commission’s satellite licensing process. Octus’ coverage is HERE.

The House passed legislation that would require AM radio capabilities to be standard in all new passenger vehicles, a key legislative priority for the radio broadcasting industry. Octus’ coverage is HERE.