Sidley represented self-storage facility operator GVS Texas Holdings I, LLC, and its affiliates, in their Chapter 11 cases pending in the United States Bankruptcy Court for the Northern District of Texas. On March 16, 2022, the Court confirmed GVS’ Chapter 11 plan which provided for payment in full of all creditors, and a return to equity funded by a US$588 million asset sale.
The plan, approved by Judge Michelle V. Larson, provides for the sale of GVS’ assets to the stalking horse bidder CBRE WWG Storage Partners JV III, LLC; a joint venture of real estate company CBRE Investment Management and the self-storage provider William Warren Group, after an auction conducted by Houlihan Lokey that increased the stalking horse purchase price by US$130 million.
Judge Larson praised the “exceedingly good result.” The pivotal moment in the case occurred when, in the face of motions to appoint a Chapter 11 trustee filed by all several creditors and the Office of the United States Trustee, existing management and equity agreed to step aside and allow independent director Robert Albergotti to have sole management and control.
The confirmation hearing was largely uncontested after the debtors reached a comprehensive settlement shortly before the hearing with their ultimate parent World Class Holdings, which is owned and controlled by Nate Paul, the debtors’ 100% indirect equity owner. The settlement also provides for World Class to withdraw its appeals of Judge Larson’s orders approving the debtors’ US$380 million settlement of secured lenders’ claims.
The plan as confirmed provides to a 120 day post confirmation period for the Reorganized Debtors to resolve disputed claims. The Debtors have also been directed by the Court to conduct an investigation of suspicious post-petition transactions which occurred prior to the management change. After that period, Paul can ask the Court to allow him to take back control of the reorganized debtors and effect a 1031 exchange designed to avoid gains taxes.
The multidisciplinary Sidley team was led by Restructuring partners Thomas Califano and Charles Persons of Sidley’s Dallas office. The transaction involved a team working together across several practice areas and offices including: Sara Garcia Duran (Partner, Private Equity), Hannah Marshall (Managing Associate, M&A), Amanda Patterson (Associate, M&A), Ellen Heighten (Associate, M&A), Elizabeth K. McCloy (Partner, Real Estate), Will Otter (Associate, Real Estate), Heather M. Palmer (Partner, Environmental), Allen Braddock (Associate, Environmental), Richard Silverman (Partner, Tax), Zackary Pullin (Partner, Tax), Maegan Quejada (Managing Associate, Restructuring), Jeri Leigh Miller (Managing Associate, Restructuring), and Juliana Hoffman (Managing Associate, Restructuring).