My Alarm Center, a provider in home security, announced that 100 percent of its senior lenders and other key stakeholders have agreed to support the company’s prepackaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code.
The reorganization provides for elimination of approximately $235 million of legacy debt obligations. This will allow the company to focus on core competencies without the burden of servicing significant debt levels.
All operations will continue as usual without interruption and the Chapter 11 process is expected to conclude within approximately 60 days. My Alarm Center will continue to operate in the ordinary course of business during the restructuring process. The company has received commitments from its senior lenders for $15 million of fresh capital to continue providing service to its customers during the period of the financial restructuring while also meeting its financial obligations to vendors and employees.
This transaction will provide a capital structure to ensure the company’s long‐term viability and set the foundation for My Alarm Center’s next phase of growth.
“The residential security industry faced numerous challenges over the last year, including multiple long‐time industry lenders deciding to exit the space,” said Amy Kothari, My Alarm Center’s CEO. “This shift in the debt market was further exacerbated by the unprecedented COVID‐19 pandemic resulting in significant pressure on cash flow and liquidity. As a result, we took decisive action to address these challenges and deleverage our balance sheet to position us for future growth and sustainable success. We are grateful for the support from our lenders and advisors throughout this process and especially thankful for the incredible patience, hard work and dedication of our employees. We are highly confident that the work we have done and the path we have chosen will result in a much stronger capital structure and bright future for our company, our partners, and our employees, allowing us to continue to provide superior support and service to our customers.”
With the significant support of its lenders and other stakeholders, implementation of the reorganization plan, which remains subject to approval by the Bankruptcy Court and final consummation, will enable the company to recapitalize its balance sheet with no material impact on the majority of its creditors. Upon the effective date, the remaining debt will be converted to equity and a new capital structure will be put in place to support the needs of the company going forward.
The company is seeking customary approvals from the court overseeing its Chapter 11 case.
The company’s vendor and partner relationships will remain unimpaired during the restructuring.