Delivery Agent files Chapter 11 bankruptcy, gets lead bid for assets

By Caroline Salls

Pittsburgh, Sept. 15 – Delivery Agent, Inc. filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware.

Chief financial officer James Jeffrey Hagan said in a statement filed with the court that, with liquidity pressure increasing, the company projected by August that obtaining a firm purchase or financing commitment before exhausting its remaining liquidity was unlikely.

Since no buyer or lender emerged from an asset sale process, Hagan said Delivery Agent asked Hillair Capital Investments LP to serve as a stalking horse bidder and debtor-in-possession financing lender in connection with a Chapter 11 filing.

On Sept. 8, Hillair agreed to advance $1.43 million in emergency funding, which allowed the company to pay expenses and vendors and meet payroll. Hillair also agreed to provide a $5.43 million DIP term loan and enter into an asset purchase agreement.

Asset sale agreement

Specifically, Hillair agreed to buy the company’s assets for a purchase price consisting of an $18.91 million credit bid and up to $250,000 in cash to cover Delivery Agent’s post-closing wind-down costs.

If Hillair is not the high bidder for the assets, Delivery Agent will pay it a $500,000 break-up fee and reimburse up to $350,000 of its sale-related expenses.

Competing bids are due by 3 p.m. ET on Oct. 31 and must at least equal the amount of the stalking horse bid, plus the break-up fee and expense reimbursement and a $100,000 minimum overbid amount.

The auction will be held on Nov. 4. Bids at auction must be made in minimum increments of $100,000.

The company asked the court to schedule the sale hearing for Nov. 8.

DIP loan terms

Hillair Capital Management LLC is the DIP loan agent, and Hillair Capital Investments is the lender.

In addition to the term loan, the DIP facility includes a roll up of $13.49 million.

Interest will accrue at a rate of 12%.

The financing will mature on the earliest of notice of an event of default, conversion or dismissal of the Chapter 11 cases, appointment of a trustee or examiner for the cases, the unacceptable modification of the interim order, the effective date of a Chapter 11 plan, the approval by the court of an alternative transaction, the closing of the sale and the first business day on or after Dec. 1.

The company is seeking interim access to $3.5 million of the DIP financing.

Debt details

According to court documents, Delivery Agent has $10 million to $50 million in assets and $50 million to $100 million in debt.

The company’s largest unsecured creditors are:

• Rising Tide of Menlo Park, Calif., with a $4.48 million convertible bridge note claim;

• AT&T Advanced Ad Solutions of New York, with a $4.07 million trade debt claim;

• Live Nation Merchandise of San Francisco, with a $3.67 million trade debt claim;

• Worldview Partners of San Mateo, Calif., with a $3.42 million convertible bridge note claim;

• Cox Media – West of Atlanta, with a $2.89 million trade debt claim;

• Bessemer Venture Partners of Larchmont, N.Y., with a $2.89 million convertible bridge note claim;

• Dish of Chicago, with a $2.49 million trade debt claim;

• NBC Universal Inc., based in New York, with a $2.38 million trade debt claim;

• Blue Grape Merchandising of New York, with a $2.34 million trade debt claim; and

• Charter of Stamford, Conn., with a $2.2 million trade debt claim.

Worldview Technology Partners and its affiliates own more than 10% of the company’s equity interests.

The company is represented by Pachulski Stang Ziehl & Jones LLP.

Delivery Agent is a San Francisco-based entertainment content solutions company. The Chapter 11 case number is 16-12051.

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