VER announced that it is restructuring its debt and has entered into an agreement to merge with PRG as part of a pre-negotiated plan of reorganization which the company is planning on effectuating through Chapter 11.
The company has raised financing to provide up to $64.7 million in new liquidity so it can operate successfully during the transition period.
VER intends to restructure its current debt through the Chapter 11 process, which will provide a platform for stability and growth.
We expect that VER and PRG will merge as part of the Chapter 11 process, giving employees, customers and supplier even more opportunity.
Until the restructuring process is complete, however, we will continue to operate as two separate companies and it will be business as usual.
What is Chapter 11?
Chapter 11 of the U.S. Bankruptcy Code is a legal mechanism that allows companies to implement financial and operational restructurings through a court-supervised proceeding while continuing to operate their businesses.
Chapter 11 in the United States is a well-established legal process whereby companies reorganize their financial obligations and emerge as stronger organizations, while operating in the normal course.
A U.S. Chapter 11 restructuring is NOT necessarily a liquidation and it is designed to be different from bankruptcy proceedings in many other parts of the world. In our case, it is a means for us to continue to operate in a business as usual mode while we restructure our debt obligations and potentially effectuate a merger.
Most importantly, we do not expect this action to affect the Company’s operations.
What is a pre-negotiated plan under Chapter 11?
Prior to commencing our Chapter 11 case, the company and its advisors negotiated an agreement with PRG, wherein PRG will support a plan of reorganization that contemplates a merger agreement and combines PRG and VER.
A “pre-negotiated plan” generally allows a company to navigate Chapter 11 in a timely manner, versus going into Chapter 11 with no agreement with lenders or other parties.
As a result, we anticipate that the Chapter 11 process will take approximately 4-6 months.
Why did VER file Chapter 11?
Despite increasing revenue, a record number of new customers, and continued customer loyalty, VER has struggled due to its current debt load.
VER plans to emerge from the restructuring process with a more appropriate capital structure, sufficient cash to fund operations and the ability to access capital to fund new growth initiatives.
Is VER going out of business?
No. We expect our business to continue without interruption.
We are reducing the level of our debt through the Chapter 11 process and strengthening our delivery capabilities through a merger with PRG.
Employees will be paid their normal wages and benefit programs will continue in the ordinary course of business during Chapter 11. We will maintain our commitment to providing extraordinary service to our customers.
VER remains a strong business. Since 2014, we have added 5,000 new customers. In addition, our customer satisfaction is the highest in the industry. This restructuring is necessary due to current debt on the company’s balance sheet.
If VER has reached agreement with its banks and PRG, why file for Chapter 11?
Although our ownership has reached agreement with our banks and PRG, we need to go through the Chapter 11 process to implement the agreement.
Does the Company have enough cash to stay in business during the process?
Absolutely. VER has raised financing to provide up to $64.7 million in new liquidity so it can operate successfully during the transition period. This will provide for continued investment in our rental inventory, fund day-to-day operations, and enable the Company to purchase and pay for goods and services.
When does the Company expect to emerge from Chapter 11 and complete the merger?
We intend to move through this process with the support of our key financial stakeholders as expeditiously as possible.
We anticipate that the restructuring process will take approximately 4-6 months.
We will keep you informed of important milestones as we move forward.
When will VER merge with PRG?
We will not merge with PRG until the Chapter 11 process is complete. Until then, the two companies will operate as separate entities.
Why PRG?
This combination will create a long-term platform for stability and growth for our companies. PRG and VER have the most well-respected employees in the industry and complementary service capabilities. Further, we are trusted with many of the highest-profile jobs in entertainment and live events. By uniting, we leverage our 60+ years of combined experience, scale, and unsurpassed resources to create even more opportunity for employees and clients.
Does VER have the liquidity to meet its obligations to vendors?
Yes. We intend to continue to order and pay for goods and services in the normal course of business during the restructuring period.
The additional financing received in connection with the restructuring process will supplement our liquidity and fund day-to-day operations during the restructuring process, and enable the Company to purchase and pay for goods and services during the restructuring period.
Will I be paid for goods and services delivered prior to the filing date?
Although the company’s operations will continue throughout the process, U.S. bankruptcy law mandates that unpaid debts for goods and services provided to VER prior to the filing cannot be paid without specific Court approval.
Any prepetition claims will be addressed as part of the Chapter 11 process. If you have a prepetition claim for goods and services, you may be required to file a proof of claim with the U.S. Bankruptcy Court for the District of Delaware to be eligible for payment on your claim.
You may obtain additional information and the appropriate forms from the company’s proposed notice and claims agent, KCC at www.kccllc.net/VER.
Additional information will be provided once a deadline for filing claims has been set.
What about goods that were shipped to VER before the filing date? Are these considered prepetition?
If the company received goods prior to the filing, any resulting claims for those goods would be considered prepetition claims and the company is not authorized to pay those invoices absent specific Court authorization.
What determines whether an invoice is a pre-petition or post-petition claim?
Goods and services delivered prior to VER’s filing date of April 5, 2018 are considered pre-petition and will be addressed through the Chapter 11 process.
Goods and services delivered after our filing date are considered post-petition and will be paid in the ordinary course of business.
In making this distinction, the key factor is not the invoice date but when the goods or services were delivered and VER became legally responsible for payment.
Why should I sell you goods and services now?
Goods and services provided after the petition date are typically entitled to “administrative priority,” and the company intends to pay for these goods and services in the ordinary course of business.
We expect our business to continue without interruption.
We have ample liquidity to pay for post-petition goods and services in the normal course.
We are reducing the level of our debt through the Chapter 11 process and strengthening our delivery capabilities through a merger with PRG.
VER remains a strong business. Since 2014 we have added 5,000 new customers. In addition, our customer satisfaction is the highest in the industry.
Will there be a critical vendor motion?
Yes, the company filed a critical vendor motion in connection with the Chapter 11 filing.
Will there be a foreign vendor motion?
Yes, the company filed a foreign vendor motion in connection with the Chapter 11 filing.
Can I take back my goods?
No. It is against the law to take back goods from a company that has filed for Chapter 11 without following the applicable procedures provided for under the governing laws.
How do I file a proof of claim?
Proof of claim forms and other information about the claims process will be available on a dedicated website at the appropriate time, www.kccllc.net/VER.
Vendors with questions regarding goods and services delivered prior to April 5, 2018 can contact the hotline maintained by our claims agent, KCC, at 877-634-7163 (toll free) or 424-236-7219 (if outside of the United States or Canada).
