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Law360 (August 6, 2020, 8:16 PM EDT) -- A Delaware judge on Thursday approved global digital training and talent management company Skillsoft Corp.'s Chapter 11 debt-for-equity plan, paving the way for the company to reduce its debt load by $1.5 billion.
U.S. Bankruptcy Judge Mary F. Walrath signed off on Skillsoft's plan confirmation following a hearing that a court filing said left no unresolved issues to hash out. In a news release after the hearing, Skillsoft said it expects to "complete its financial restructuring process and emerge from Chapter 11 in the coming weeks with a right-sized capital structure, stronger balance sheet and significant additional liquidity."
The company said it will reduce its debt by roughly $1.5 billion and eliminate about $100 million in annual interest payments. Its secured debt will be reduced to $410 million from roughly $2 billion, and the reorganized company will be left with total debt of about $525 million, the statement said.
"We reached this milestone on an accelerated basis thanks to overwhelming support from our lenders, who will become the new owners of Skillsoft upon emergence," said Skillsoft's Chief Administrative Officer John Frederick. "The leadership team and I look forward to working closely with them as we continue expanding our suite of products, solutions and support resources and providing exceptional service to our customers."
Skillsoft said the financial restructuring will enable it "to continue its focus on investing in new products, solutions and content to drive value for its customers and growth in the business."
Skillsoft and multiple affiliates hit Chapter 11 in June, citing market changes and the COVID-19 pandemic as reasons for its trip into bankruptcy. The company, which counts 65% of the Fortune 500 as customers along with thousands of other businesses worldwide, said in an initial filing that it had been considering transformation or restructuring options for more than a year, citing overleveraged balance sheets, increased competition and changes to its markets.
At a prior hearing, Judge Walrath gave Skillsoft permission to continue exclusive talks with a potential buyer as it also pursued the prepackaged debt-for-equity plan with support from lenders. Skillsoft's counsel told the judge it had a "short window" of time to see if a sale deal could be reached to possibly provide a better recovery for creditors.
In the end, Skillsoft ended up finalizing a debt-for-equity swap that was set forth in a restructuring support agreement already in place with its senior and junior secured lenders when it hit Chapter 11. Under the prepackaged plan, secured lenders will get the reorganized company's equity while unsecured creditors will be paid in full under the plan. Existing equity holder claims will be wiped out.
Skillsoft Corp. and its affiliates are represented by Mark D. Collins, Amanda R. Steele and Christopher M. De Lillo of Richards Layton & Finger PA and Gary T. Holtzer, Robert J. Lemons and Katherine Theresa Lewis of Weil Gotshal & Manges LLP.
The case is In re: Skillsoft Corp. et al., case number 1:20-bk-11532, in the U.S. Bankruptcy Court for the District of Delaware.
--Additional reporting by Jeff Montgomery. Editing by Steven Edelstone.
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