Picture People files bankruptcy; lender affiliate agrees to buy assets

By Caroline Salls

Pittsburgh, Sept. 2 – TPP Acquisition, Inc., which does business as the Picture People, filed Chapter 11 bankruptcy on Friday in the U.S. Bankruptcy Court for the Northern District of Texas.

“After several years of financial distress, the debtor has determined that a bankruptcy sale process provides the surest path to salvage the business as a going concern, save employee jobs, reject burdensome leases, free the business from a challenging balance sheet and obtain the necessary capital to implement a leaner, more focused business strategy,” chief restructuring officer Stuart Noyes said in a statement filed with the court.

In order to obtain the highest and best price for its business and attract interest from potential buyers, Noyes said TPP’s goal is to close the sale “on the eve of the debtor’s peak sale season, the months of November and December.”

Purchase agreement

Noyes said the company entered into a stalking horse purchase agreement with an affiliate of its pre-bankruptcy lenders. Under the stalking horse bid, the lender affiliate submitted a credit bid for $41.16 million of TPP’s pre-bankruptcy credit agreement obligations and the total amount of the company’s debtor-in-possession financing obligations on the closing date.

The stalking horse bidder has also agreed to assume some of TPP’s liabilities.

Under the proposed asset sale procedures, competing bids would be due by 1 p.m. ET on Oct. 24, and an auction would be held on Oct. 26, if necessary. The company asked the court to schedule the sale hearing for Oct. 28.

The minimum overbid amount is $150,000. Bids at auction must be made in minimum increments of $25,000.

If the stalking horse bidder is not ultimately the high bidder for the assets, TPP will pay it a 1% break-up fee and reimburse up to $75,000 of its sale-related expenses.

DIP financing

In conjunction with the bankruptcy filing, TPP obtained a commitment for $46.8 million of DIP financing from Monroe Capital Corp. and Monroe Capital Partners Fund, LP.

Monroe Capital Management Advisors, LLC is the DIP facility agent.

The financing will mature on the earliest of Dec. 31, the closing date of the company’s asset sale and the effective date of a Chapter 11 plan.

Interest on DIP term loans will be Libor plus 600 basis points. The company said some specified Libor loans will accrue interest at a rate of Libor plus 1,100 bps. Interest on Base rate DIP loans will accrue at the Base rate plus 500 bps.

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

The company’s largest unsecured creditor is General Growth Properties, Inc., based in Chicago, with a $1.36 million landlord claim. TPP did not list any other unsecured creditors with claims of $1 million or more.

The company is represented by Haynes and Boone, LLP.

The Picture People is an operator of professional portrait studios. The Chapter 11 case number is 16-33437.

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