Bankruptcy Management Solutions agrees to debt-for-equity exchange

By Caroline Salls

Pittsburgh, July 30 - Bankruptcy Management Solutions, Inc., BMS Holdings, Inc. and their affiliates have reached an agreement on the key terms of a consensual debt-for-equity exchange with BMS' lenders and floating-rate senior PIK noteholders, according to a company news release.

Specifically, lenders representing a majority of the company's outstanding first-lien and second-lien bank debt and holders of more than 90% of its floating-rate senior PIK notes due 2012 have agreed to the exchange.

Bankruptcy Management said the agreement calls for a partial paydown of BMS' first-lien debt and a series of debt-for-equity exchanges.

The exchanges are expected to reduce BMS' outstanding debt to $233 million from $536 million, increase Bankruptcy Management's liquidity by providing for $15 million of new capital and by reducing annual interest expense by about $16 million and position BMS for future financial stability and operating growth.

According to the release, the debt-for-equity exchange is in addition to the $366 million paydown of BMS' investment line completed in March, marking a cumulative 75% reduction in the total debt outstanding at the beginning of 2010.

"In conjunction with the earlier repayment of our investment line, this contemplated transaction will leave the company well capitalized, allowing BMS to remain a dominant force and market leader in Chapter 7 bankruptcy case administration services," BMS chief executive officer Steve Coffey said in the release.

The company is a bankruptcy services provider with headquarters in Irvine, Calif.

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