RSL Communications
November 18, 2003
Compass Advisers, LLP ("Compass") acted as financial advisor and investment banker to the Official Committee of Unsecured Creditors (the "Creditors Committee") in the Chapter 11 bankruptcy restructuring of RSL COM PrimeCall, Inc. and RSL COM USA, Inc. and certain of their wholly-owned subsidiaries, (collectively, "RSL"). At the time of the filing, the business consisted of a privately-held company that served as a national/international provider of data and voice telecommunications and information management services, with U.S. operations based in Pittsburgh, Pennsylvania.
RSL was a significant part of the international telecommunications company built by Ronald S. Lauder and other principals of RSL's parent companies, RSL Communications, Ltd. ("LTD") and RSL Communications plc ("PLC") – entities that filed their own insolvency proceedings in the United Kingdom and in Bermuda, respectively. Partners of PricewaterhouseCoopers had been appointed as Joint Provisional Liquidators ("JPLs") or administrators, respectively, of LTD and PLC. The JPLs commenced, on behalf of LTD, a Section 304 ancillary proceeding in the United States Bankruptcy Court for the Southern District of New York. LTD and PLC had many other subsidiaries besides those filed under the RSL cases, and there were numerous pre-petition intercompany transactions between all of the various affiliated entities (totaling approximately $500 million dollars) as well as intertwined ownership of various assets.
Compass advised the Creditors Committee and its professionals of RSL's financial condition and the conduct of its business affairs; helped the Creditors Committee evaluate the effect of RSL's guarantee of parent company obligations (an amount in excess of $1.6 billion dollars); participated in negotiations regarding the sale of assets, including business segments; and assisted in the settlement of intercompany claims, cure claims and various other settlement discussions. Compass worked closely with RSL and its professionals, negotiating certain key changes to the sale and bid procedures motion that improved and clarified the terms by which certain confidential and competitive information could be shared with potential buyers.
In addition, Compass reviewed proposed compensation arrangements and employee retention plans for RSL management and employees, helping to formulate the CEO's retention agreement, and financial terms that would be dependent upon maximizing creditor recoveries. Compass helped prepare the compensation package for the Joint Trustees winding down the bankruptcy matters, creating a description of the Trustees' duties, reviewing and commenting on their employment agreements, and designing the Trustees' compensation package to encourage the maximization of returns to unsecured creditors.
Compass focused RSL and representatives of LTD on issues of crucial importance to unsecured creditors – namely, the identification and maximization of sale values for assets, the analysis of claims against the estate, the minimization, where possible, of intercompany claims, and the performance of business operations. As a result of Compass' efforts, the unsecured creditors of the RSL estates retained a significant portion of the originally negotiated price for the sale of the enterprise business, despite the purchaser's assertion that a material adverse effect adjustment was necessary due to the deteriorating reserve base of the underlying business. The plan of reorganization and disclosure statement were approved by the bankruptcy court, and RSL exited Chapter 11 on November 18, 2003.