January 14, 2020

Willkie advised a majority group of bondholders, including Anchorage and Hayfin Capital, on the third restructuring of the Vivarte group, resulting in the complete cancellation of its debt.

Willkie Farr & Gallagher LLP advised an ad hoc group of new money bondholders (including the investment funds Anchorage and Hayfin Capital) on the third restructuring of French fashion retailer Vivarte group and implemented the takeover of the group by the bondholders through an innovative trust (fiducie) that was put in place in 2017. December 17, 2019 marked the end of a complex process that lasted several months, following which Willkie’s clients, and more generally all bondholders, have now become the sole shareholders of the group (prorata their holdings in the bond debt) and the entire residual debt of which has been wiped out.

It also marks the end of the financial restructuring of one of the largest LBOs in the French market. The Vivarte group wiped out nearly €3.3 billion of debt within five years and after two previous restructurings that were carried out in 2014 and 2017, in which Willkie also had a key role.

In 2014, €2 billion out of the €2.8 billion of LBO debt (including €1.6 billion of senior first lien debt and €400 million of second lien debt) was converted into equity, while some of the investment funds involved in the restructuring injected €500 million of new money in the form of bonds. In 2017 and although bondholders had first proposed to take control of the group by converting their bonds, an alternative solution was finally implemented and the entire residual senior debt, i.e. approximately €850 million (including interest), was converted into equity while the bond debt issued in 2014 was rescheduled. This substantial effort was conditioned on establishing a trust (fiducie) on the group’s holding company’s securities, Novartex, and was intended to prevent a third lengthy and costly restructuring in the event of subsequent financial difficulties, which would have been detrimental to the group. The trust (fiducie) was designed to either allow the sale of the group to pay off creditors or an innovative solution leading to the takeover of the group by the bondholders through a pre-incorporated vehicle and with a pre-negotiated governance. Bondholders chose the latter option.

The implementation of the attribution process provided for in the fiducie agreement allowed (i) the transfer of Novartex shares to a company incorporated by the bondholders as of 2017 for this purpose, (ii) the transfer of the bond debt amounting to circa. €500 million (face value) to this company and its conversion into equity, making the bondholders the new group’s shareholders, (iii) the incorporation of almost all of the intra-group debt into Novartex and Vivarte equity, and (iv) the set-up of a new governance structure.

Operationally and given the absence of residual debt and the complete strengthening of its balance sheet, the group will now be able to efficiently enhance the value of its various brands, in particular La Halle, Caroll, and Minelli.

The Willkie team was led by partner Alexandra Bigot and associate Thomas Doyen, and included partners Grégoire Finance and Dominique Mondoloni, and Special European Counsel Igor Kukhta and Philippe Grudé.