New York-based architecture firm files for bankruptcy and seeks to sell assets

  • EYP has $67.7 million main offer from Ault Alliance
  • Litigation and complex debt pile led to financial difficulties

(Reuters) – Architecture and design firm EYP Inc filed for bankruptcy on Sunday to sell its assets amid litigation involving former shareholders and employees and after years of trying to reorganize its convoluted debt obligations .

The Albany, New York-based company filed for Chapter 11 protection in the US Bankruptcy Court for the District of Delaware with $149 million in debt. EYP has lined up a prime offer from private equity firm Ault Alliance Inc, its lead lender, to buy its assets for $67.7 million.

“EYP is a good candidate to utilize the protections provided by a Chapter 11 process,” interim CEO Kefalari Mason said in a statement.

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EYP has offices in 11 cities across the United States and projects in approximately 100 countries. Its clients include public and private colleges, the federal government, and medical centers, among others.

The company said its business remained healthy during the COVID-19 pandemic. Mason said in a written statement that the company’s recent financial troubles stemmed from complex debts to multiple groups of creditors and lawsuits filed by former employees over EYP’s prior debt transactions and restructuring efforts.

One of the lawsuits accused a former shareholder, Long Point Capital Inc, of tricking employees into selling their stake in the company to an employee stock ownership plan in exchange for worthless notes. Although EYP itself is not a defendant in the case, it is liable for “significant” indemnification obligations to former directors, who were also defendants in the lawsuit, and Long Point.

The company has received millions of dollars in compensation claims, most of which have not been able to pay because it needs the money it has to continue its business operations, Mason said in the statement. Additionally, EYP has spent years trying to restructure its debt without filing for bankruptcy, to no avail.

In addition to his cash and credit offer, Ault said he would offer to retain EYP’s 470 employees and take on the company’s property leases and contracts with consultants and vendors, documents show. judicial. Operations and project work are expected to continue throughout the sale process.

The case is In re EYP Group Holdings Inc, US Bankruptcy Court, District of Delaware, No. 22-10367.

For EYP: Craig Martin, Aaron Applebaum, Richard Chesley and Oksana Koltko Rosaluk of DLA Piper

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