TowerBrook tangles with GTCR in bankruptcy battle

TowerBrook has its sights on forcing the bankruptcy of a floundering portfolio company, Wilton Holdings, in which GTCR and co-investor Martha Stewart have some $200m in equity.

TowerBrook Capital Partners is trying to push Wilton Holdings, a maker of equipment for decorating foods owned by GTCR Golder Rauner, into involuntary bankruptcy.

A TowerBrook affiliate, JGF Credit, filed the involuntary petition with bankruptcy court. JGF holds an unsecured claim against Wilton for $104 million, debt which it acquired this year, according to a bankruptcy filing. Deutsche Bank, which is administrative agent for another roughly $104 million in debt, joined the petition.

JGF and Deutsche Bank did not explain the involuntary bankruptcy filing in court documents.

Reuters reports that Standard & Poor’s cut Wilton’s debt rating to CCC+ in April. S&P then withdrew the rating at Wilton’s request, Reuters said. S&P warned last year Wilton was highly leveraged and vulnerable to a slowing economy, according to Reuters.

The debt was part of the financing package used for GTCR’s acquisition of Wilton in 2007. GTCR bought Wilton and scrapbook and paper craft company, Dimension Holdings, for about $1 billion, including $200 million in equity and $800 million in debt. Martha Stewart Living Omnimedia co-invested with GTCR, committing $10 million in equity.

TowerBrook, the former private equity firm of George Soros, has also been embroiled in a restructuring battle of French roofing business Monier Group. The firm, along with Apollo Global Management and York Capital Management, led a group of lenders that created a debt-for-equity swap plan that made the firms the largest shareholders in the company. The company’s owner, PAI Partners, had its restructuring plans rejected by lenders.

Under the plan, lenders extended a €150 million credit line to the business, reduced its cash debt by more than half and reduced its interest payments by about 80 percent.