ConvergeOne’s Bankruptcy Path
The IT solutions company filed for bankruptcy in April 2024 with $1.8 billion in secured debt. It struck an RSA with second-lien lenders and 81% of its first-lien lenders to quickly push through a $1.6 billion debt-for-equity swap.
Under the plan, ConvergeOne raised $245 million in exit funding, with $86 million of discounted equity earmarked for its private equity sponsor and RSA lenders who agreed to backstop the deal. Dissenting lenders, however, were excluded from the lucrative backstop pool.
U.S. Bankruptcy Judge Christopher M. Lopez originally overruled objections and confirmed the plan in May 2024, but Thursday’s reversal puts the restructuring back on the drawing board.
Representation
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ConvergeOne: White & Case LLP
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Majority lenders: Porter Hedges LLP, Gibson Dunn & Crutcher LLP
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Minority lenders: Gray Reed, Proskauer Rose LLP
The ruling on the ConvergeOne Chapter 11 plan now forces a reset—one that could reverberate across future bankruptcies where majority lenders wield backstop deals as weapons.
