The Dolan Company (OTC:DOLN) and its subsidiaries (collectively, the
“Company”) announced that it, along with certain of its subsidiaries,
has agreed to a comprehensive balance-sheet restructuring with its
secured lenders that, among other things, will allow the Company to
continue honoring obligations of its employees, customers, and vendors
in the ordinary course of business. The proposed restructuring will
allow the Company to achieve a capital structure that will allow the
Company to grow its business into the future. To implement the
restructuring, the Company and certain of its subsidiaries intend to
file voluntary petitions for a prepackaged chapter 11 bankruptcy in the
U.S. Bankruptcy Court for the District of Delaware. The Dolan Company’s
e-discovery business, DiscoverReady LLC, will not file a chapter 11
petition and its operations will not be affected by the proposed chapter
11 process. The filing subsidiaries and DiscoverReady will continue to
operate their businesses as usual in all respects and the restructuring
is not expected to have a negative effect on the Company’s operations.
On Tuesday, March 18, 2014, the Company and its lenders and certain of
its swap counterparties executed a restructuring support agreement that
sets forth the material terms of the chapter 11 restructuring and
secures the support of the secured creditors for that process. In
accordance with the restructuring support agreement, the Company
commenced solicitation for votes on the chapter 11 plan from the
Company’s secured creditors, the only parties entitled to vote under the
plan of reorganization. Solicitation is expected to conclude at the end
of this week. Upon securing sufficient votes to accept the chapter 11
plan, the Company will seek relief under chapter 11. The chapter 11 plan
process will allow the filing subsidiaries of the Company to deleverage
its capital structure by reducing its projected secured debt obligations
from approximately $170 million to approximately $50 million. The
restructuring support agreement also secures support from the lenders to
refinance DiscoverReady’s capital structure with a $10 million unfunded
secured revolving facility. The existing preferred and common shares
will be cancelled and will not receive a recovery in the chapter 11
plan. Importantly, the Company will continue to provide its usual,
high-quality services and products to its customers through this process
and, as noted above, will continue to pay its vendors, employees, and
other ongoing obligations in the normal course of business, and none of
these parties should be materially affected by the chapter 11 filing or
process.
After emergence from bankruptcy, both The Dolan Company and
DiscoverReady LLC will be privately held companies.
“The Company remains well positioned in its core markets. This
reorganization step is necessary to unlock these current businesses from
the weight of debt principally associated with its previous mortgage
foreclosure processing businesses,” said Kevin Nystrom, the Company’s
chief restructuring officer. “The Company and its lenders are committed
to the customers, employees, and vendors and want to secure a bright
future through this process,” he said.
The plan of reorganization contemplates that the secured lenders will
become the owner of DiscoverReady and The Dolan Company upon the
completion of the restructuring process and each business will be
operated as separate and distinct entities. Investment funds managed by
Bayside Capital, Inc. will become the majority owner of DiscoverReady
and The Dolan Company. Bayside Capital is an affiliate of H.I.G.
Capital, a leading global private investment firm with more than $15
billion of equity capital under management.
The Company’s lenders are expected to provide a $10 million
debtor-in-possession (“DIP”) loan to fund the cash needs of the Company
and DiscoverReady through the reorganization process.
In connection with this process, James P. Dolan, the Company’s founder
and chief executive officer, and Scott Pollei, the Company’s long-time
chief operating officer, have resigned their positions with the Company,
with such resignations to be concurrent with the planned chapter 11
filing. Chief Financial Officer Vicki Duncomb and General Counsel Renee
Jackson will remain in their leadership positions with the Company and
will assist Chief Restructuring Officer Nystrom in managing the
Company’s operations.
Given the typical speed of a “pre-packaged” plan of reorganization, the
Company expects to emerge from bankruptcy within approximately two
months. The Company and DiscoverReady expect to continue to conduct
business as usual through the restructuring process and expect
day-to-day relationships with employees, vendors, and customers to
remain strong.
The Dolan Company is a leading provider of professional services and
business information to the legal, financial and real estate sectors.
The Company’s Professional Services Division provides specialized
outsourced services to the legal profession primarily through
subsidiaries DiscoverReady LLC and Counsel Press. Counsel Press is the
nation’s largest provider of appellate services to the legal community.
DiscoverReady LLC provides outsourced discovery management and document
review services to major companies and law firms. The Company’s Business
Information Division publishes business journals, court and commercial
media and other highly focused information products and services,
operates web sites and produces events for targeted legal and
professional audiences in each of the 19 geographic markets that it
serves across the United States.
Statement Regarding Forward Looking Information
This release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Statements that
are not historical or current facts are forward-looking statements. Such
forward-looking statements include statements using words such as
“anticipate,” “expect,” “believe,” “continue,” “will,” “may,”
“estimate,” “assume,” “presume,” “pursue,” “outlook,” “plan,” “goal,”
“milestone” and similar expressions. Forward-looking statements are
subject to risks, uncertainties and other factors that could cause the
actual results, performance, prospects or opportunities to differ
materially from those expressed in, or implied by, these forward-looking
statements. These risks, uncertainties and other factors include, but
are not limited to: our ability to successfully solicit consent to the
terms of the planned chapter 11 filings, the ultimate length and outcome
of the chapter 11 process, our ability to fund our ongoing operations,
repay our indebtedness, pay dividends on our preferred stock, fund
capital expenditures, make divestitures on acceptable terms, and make
any acquisitions; our ability to comply with covenants in our debt
instruments; our ability to obtain waivers from our lenders of any
failure to comply with covenants in our debt instruments or of events of
default; our ability to amend our debt instruments in the future; our
ability to retain key customers and develop new customer relationships
in our litigation support services segment; the possibility that we may
have to record significant charges to earnings as a result of impairment
of our intangible assets; our ability to retain key personnel; the
adverse resolution of a future lawsuit or claim against us; the failure
or disruption of our software systems, our document hosting, processing,
conversion and review systems, or our website and online networks; the
risk that our customers fail to timely pay us for our services, or at
all; and the other risk factors described under “Risk Factors” in Item
1A of our annual report on Form 10-K for the year ended December 31,
2012, which we filed with the SEC on March 8, 2013, and those
highlighted in our Form 10-Q for the quarter ended September 30, 2013,
which we filed with the SEC on November 12, 2013. We undertake no
obligation to update any forward-looking statements in light of new
information or future events.
Copyright Business Wire 2014