More Arizona agency conduit debt lands in bankruptcy court

Another bankruptcy involving bonds issued through the Arizona Industrial Development Authority was filed Tuesday along with a pre-packaged exit plan that would result in bondholder ownership of a reorganized company.

Restoration Forest Products Group, which brought the Chapter 11 case in U.S. Bankruptcy Court in Delaware, sold $112.8 million of taxable Series A senior and $86.8 million of taxable Series B subordinate sustainability-linked revenue bonds through the authority in 2022 under its former name NewLife Forest Restoration.

The filing comes as Legacy Cares’ 2023 bankruptcy case, which involved $284 million of defaulted debt sold through AZIDA in 2020 and 2021 for a participant sports venue in Mesa, , according to a disclosure on the Municipal Securities Rulemaking Board’s EMMA website. By September, the company defaulted on the bonds and on a June bridge loan credit agreement with Invesco, whose affiliates own the Series A bonds, the court filing said.

Under a proposed plan of reorganization, recoveries for Series A bondholders would be 20% to 35% and an unspecified percentage for Series B bonds, which were bought by affiliates of Lateral Investment Management. If the plan receives court approval, Invesco would become the majority owner of the reorganized company in partnership with Lateral.