Modular Space Files Bankruptcy with $1 Billion Debt

by San Antonio Attorney

Modular Space Corporation filed for bankruptcy in the United States and Canada on Dec. 21, 2016.  The filing includes its affiliated companies, to execute a plan to restructure its $1 billion debt.


Modular Space, which manufactures, leases and sells mobile offices, portable storages units, modular office units, office trailers and provisional classrooms, said it is going to maintain its operations while the restructuring is being carried out.


A debt restructuring that is going to trade around $400 million in liabilities for equity was discussed ahead of the U.S. bankruptcy filing and the start of restructuring in Toronto, Canada.


The deceleration in the gas, oil and mining sectors negatively affected the sales of Modular Space, according to court papers filed.  With a sudden fall in the numbers of construction in the nonresidential sector, the company suffered from decreased demand and pricing stress that munched into its margins.


Modular Space talked about restructuring options with eight noteholders that control a total of 72% of the $410 million secured notes.


Senior lenders approved a standalone restructuring of Modular Space, an arrangement that provides them a large stake in a new business, which would possible increase if they put in a $90 million fresh capital.


The existing equity owners are going to have a smaller stake in the reorganized company, together with warrants allowing them to share in revival if the business does well in emerging from bankruptcy.


Senior lenders are still going to be at the pinnacle of the capital structure, guaranteeing that the firm has almost $720 million in funding for its departure from bankruptcy, according to court papers.


Modular Space has a couple of operating divisions in the United States, which is the greater part of its company, and 82 branches in Canada with a total of 639 workers.

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