LIV Golf’s bankruptcy is moving forward with the league approved to access an initial $14 million of a nearly $50 million loan from the Saudi PIF to help facilitate the expedited Chapter 11 process.
The PIF is providing $49.6 million in debtor-in-possession (DIP) financing, the first portion of which was greenlit for LIV’s use after Wednesday’s initial hearing in the New Jersey District U.S. Bankruptcy Court. Judge Michael Kaplan, who is overseeing the case, has been known to be friendly to debtors and has become popular for companies seeking quick bankruptcies, multiple bankruptcy experts told Front Office Sports.
LIV only had $15 million in cash on hand coming into the bankruptcy process, so the DIP funding is key for beginning to pay out creditors and funding the overall litigation. However, the new money still won’t be enough to fully satisfy everyone LIV owes money to, as the league’s 30 largest creditors alone—revealed in Tuesday’s initial bankruptcy filing—are owed more than $64 million combined. LIV’s total liabilities are between $500 million and $1 billion, including some eight- and nine-figure sums likely still owed to players in future contract guarantees that the league is trying to void.
LIV’s Next Steps
The next court hearing for LIV is Oct. 7. There have been 80 filings made in the case’s docket (as of Friday), including the league’s biggest star, Bryson DeChambeau, hiring a lawyer to represent him throughout the bankruptcy, and Cam Smith doing the same. Other players are expected to follow suit.
LIV has various case milestones to meet over the next four months—related to its DIP financing and overall restructuring deal with BC Partners—to successfully emerge from bankruptcy as planned in January. The most prominent of those milestones is getting a “requisite number of players” to agree to new contracts by Oct. 13. If that doesn’t happen, the $300 million investment that BC Partners committed could be at risk. BC is also seeking affirmations from some top LIV sponsors of commitment to honor their existing contracts.
There hasn’t yet been a date selected for a formation meeting to choose a creditors committee, which is voluntary but typically made up of the case’s seven largest unsecured creditors—for LIV that’s Jon Rahm, DeChambeau, Dustin Johnson, Smith, Adrian Meronk, Tyrrell Hatton, and Bubba Watson.
“You might be able to sell tickets to this formation meeting,” Kaplan joked during Wednesday’s hearing. The committee will be tasked with consulting with and investigating LIV and its business operations and helping to develop a reorganization plan.
Breaking Down BC’s Proposed Deal
BC Partners has agreed to provide $300 million in funding should LIV emerge from bankruptcy, and the private credit firm could ultimately own 45% of the league. That money—a mix of debt and equity—is broken down into three distinct parts:
- A $127.5 million loan that gives BC the right to buy a 5% ownership stake in LIV, which will have to pay the loan back, with interest, within five years.
- An additional $147.5 million of senior preferred equity that comes with the right for BC to buy an additional 10% stake in LIV.
- A final $25 million of subordinated convertible preferred stock that BC can convert into a 30% stake.
The term sheet is in line with BC’s typical investment strategy and other fund structures, a source familiar with the situation told FOS, and also allows for the ability to bring in additional investors.
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