RentPath in settlement with CoStar, to get $52 million of break-up fee

By Sarah Lizee

Olympia, Wash., Feb. 23 – RentPath Holdings, Inc. is seeking court approval of a settlement with CoStar Group, Inc. relating to the termination of a stalking horse asset purchase agreement and the related $58.75 million break-up fee, according to a motion filed Monday with the U.S. Bankruptcy Court for the District of Delaware.

The debtors and CoStar had entered into the agreement on Feb. 11, 2020, under which CoStar agreed to purchase substantially all the assets of RentPath for $587.5 million in cash, plus assumed liabilities.

Ultimately, the Federal Trade Commission determined that it opposed the transaction with CoStar, and began litigation to block the transaction and obtained a temporary restraining order enjoining the parties from consummating the sale.

“In light of the FTC’s opposition to the transaction, the parties faced months of litigation with the FTC and, at best, an uncertain outcome,” the company said.

RentPath said it had incurred over $7 million in antitrust-related legal fees and expenses, on top of several additional months of Chapter 11 costs due to the FTC process prolonging the cases.

On Dec. 29, the debtors delivered a termination notice to CoStar and requested that the stalking horse bidder deliver to the escrow agent an executed joint written instruction to release the funds constituting the break-up fee to an account designated by the debtors.

CoStar initiated an adversary proceeding and petitioned the court for a declaratory judgment that the debtors’ alleged termination of the stalking horse asset purchase agreement was ineffective and that the debtors are not entitled to the break-up fee.

The parties engaged in arm’s-length negotiations and, on Feb. 19, entered into a stipulation regarding settlement of the break-up fee litigation.

The settlement will result in the debtors’ receipt of at least $52 million, or 88.5%, of the break-up fee.

The amounts received by the debtors will benefit holders of first- and second-lien claims, increasing their recoveries under the company’s plan.

As previously reported, RentPath announced that it has entered into a new asset purchase agreement with Redfin, under which Redfin will acquire the company for $608 million. The new asset purchase agreement is subject to court approval.

RentPath is an Atlanta-based vertical search company for apartment and home renters. The company filed bankruptcy on Feb. 12, 2020 under Chapter 11 case number 20-10312.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.