Delaware Bankruptcy Litigation
Contec Holdings Files for Bankruptcy in Delaware
On August 29, 2012, Contec Holdings, Ltd ("Contec") and various related entities filed chapter 11 petitions for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Simultaneous with filing its bankruptcy petitions, Contec also filed with the Bankruptcy Court a declaration of the company's Chief Restructuring Officer in support of its first day motions (the "Declaration"). Contec was started in 1978 and provides repair services for cable and broadband operators. The company services equipment such as cable set-tops, modems and satellite receivers. See Declaration at *2.
Contec operates repair centers in New Jersey, Washington and Mexico. The company employs 177 employees in the U.S. and 2,134 employees through a Mexican subsidiary. In 2008, Bain Capital Partners, LLC acquired a controlling share of Contec. Decl. at *4-5.
Contec attributes its bankruptcy "to fast-paced and drastic technological and economic changes" which in turn has resulted in a decline in demand for cable services. Decl. at *8. Contec's revenues and profits have been on a continual decline in recent years. Contec services the cable and satellite industry - an industry that has undergone rapid consolidation as cheaper alternatives to cable come on to the market. As the number of cable providers shrinks, competition has increased among set top repair providers. Decl. at *9. Greater competition, shrinking demand and substantial debt ultimately led Contec to file for bankruptcy.
In late August Contec and certain of its creditors entered into a "Plan Support Agreement." Under the Support Agreement, Contec sought support for a prepackaged plan of reorganization. According to Contec, its senior lender supports the prepackaged plan and the company expects to receive similar support from other prepetition lenders. Decl. at *10. Under the proposed plan, Contec's senior secured debt will convert to equity. The company's lenders have also made a carve out so that unsecured trade claims receive a "full recovery." Decl. at *10-11.
The Contec bankruptcy is before Judge Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware. Contec is represented by the law firm Pepper Hamilton.
Jason Cornell is a bankruptcy attorney with the law firm Fox Rothschild LLP. Jason practices before the Delaware Bankruptcy Court. You can reach Jason at 302 252 5833 or email@example.com.