Billing and marketing firm OSG Group files prepackaged Chapter 11 case

The word 'Bankruptcy' is seen painted on the side of a vacant building in Detroit, Michigan July 26, 2013. REUTERS/Rebecca Cook
  • OSG Group plans to trim $134 million in debt
  • Company cited rising print costs, reduced mail demand and malware as reasons for its bankruptcy
  • DOJ opposes OSG's rapid schedule for its bankruptcy case

(Reuters) - OSG Group Holdings Inc, a billing and marketing firm that operates in 19 countries, filed for Chapter 11 protection on Saturday with a plan to trim about $134 million in debt from its balance sheets.

OSG, which provides print, mail, digital communications and payment services to customers in a variety of industries and countries, cited high debt, increased printing costs and reduced demand for mail services as reasons for its bankruptcy, according to court documents filed in Wilmington, Delaware.

The New Jersey-based company entered bankruptcy with $824 million in debt, and has proposed a restructuring plan that would cut the overall debt load to $690.3 million and allow the company to emerge from Chapter 11 by the end of August.

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OSG Group secured creditor support for the plan before filing for bankruptcy, and it expects to seek approval of the restructuring at an Aug. 26 court hearing, according to court documents.

The company had attempted to address long-term business risks by investing in digital services, but those efforts took a hit after two malware attacks caused significant disruption in 2021, according to court documents.

The malware attacks prevented the company from meeting several clients' demands for weeks, and ultimately led to a $30 million decline in revenue as customers in Europe, the Middle East and Asia shifted their orders to other service providers, according to court documents.

OSG could not be reached for comment Monday.

According to court documents, the proposed restructuring would honor debts to junior creditors and turn over the company's equity to its lenders. OSG's current owner, private equity firm Aquiline Capital Partners LLC, would retain a portion of the company's equity as a result of loans it extended to the company before bankruptcy.

The company had about $2.3 million in cash when it filed for bankruptcy, and it will seek to fund its bankruptcy case with a $25 million loan from existing junior lenders. Part of the loan will be converted into equity shares rather than repaid in cash, according to court documents.

The U.S. Department of Justice's bankruptcy watchdog objected on Monday to OSG's proposed timeline, saying it did not give enough notice to creditors that may be affected by the bankruptcy, including equity shareholders and UK-based employees with pension plans funded by OSG.

OSG will appear in court Tuesday to seek approval of the proposed schedule and the $25 million bankruptcy loan.

The case is In Re OSG Group Holdings Inc, U.S. Bankruptcy Court for the District of Delaware, No. 22-10718.

For OSG Group: Gregg Galardi and Cristine Pirro Schwarzman of Ropes & Gray

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