Appliance Component Manufacturer Robertshaw Files for Chapter 11 Bankruptcy
Seeking to Cut Debt and Resolve Litigation Between Lenders
Appliance component manufacturer Robertshaw U.S. Holdings has filed for Chapter 11 bankruptcy protection in an effort to resolve its financial woes. The company, owned by One Rock Capital Partners, aims to reduce its debt by $670 million and address ongoing litigation between its lenders. This move comes as rising interest rates and supply chain challenges during the COVID-19 pandemic have made it difficult for Robertshaw to sustain its high debt level.
Based in Itasca, Illinois, Robertshaw produces various components such as thermostats, valves, switches, and timers for household and commercial appliances, including refrigerators, dishwashers, and laundry machines. The company's restructuring plan is supported by a majority of its lenders and includes the exploration of a bankruptcy sale as an alternative to debt restructuring.
Litigation Prompts Bankruptcy Filing
The litigation between Robertshaw's lenders in 2023 played an influential role in the company's bankruptcy decision. A minority group of lenders filed a lawsuit against Robertshaw and some of its lenders, alleging that the company violated existing loan agreements by taking on new debt in 2023. The lawsuit further claimed that this debt dilution negatively impacted the value of their loans' collateral. In an attempt to resolve this ongoing dispute, Robertshaw plans to pursue mediation or litigation in bankruptcy court.
Financing and Future Plans
As part of its bankruptcy proceedings, Robertshaw has secured a $56 million bankruptcy loan provided by its majority lender group. The company intends to seek bankruptcy court approval for this loan at a later date. With documents filed in Houston, Texas bankruptcy court, the manufacturer aims to restructure its debt and find a sustainable path forward. Despite its current financial challenges, Robertshaw reported a gross profit of $58.8 million in the last nine months of 2023.
As the company navigates through bankruptcy, it remains committed to its customers and strives to continue providing high-quality appliance components. The future of Robertshaw will heavily depend on the successful resolution of its debt and litigation issues.
Analyst comment
Neutral news. The bankruptcy filing and debt restructuring could result in the sale of Robertshaw. Market impact will depend on the success of the restructuring and potential buyer interests.
