March 10, 2023

Filing Type:

Company Counsel: Cassels

Trustee: KSV

Trustee Counsel: Goodmans



LoyaltyOne, Co. (dba AIR MILES®), a Toronto, Ontario-headquartered company which operates the AIR MILES® Reward Program with its non-applicant subsidiary Travel Services Co., obtained CCAA protection on March 10. In conjunction with the CCAA filing, the company's US parent, Loyalty Ventures, Inc. ("LVI") and certain affiliated entities have filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code. The company operates in a competitive environment and is burdened by significant funded debt imposed on it by its former US parent company, Bread Financial Holdings, Inc. (“Bread”). In 2021, instead of investing in the business to adapt to emerging market trends, Bread undertook a spinoff transaction that moved its loyalty programs businesses, including AIR MILES®, to a newly-created public parent company, LVI. To effect the transaction, Bread required LVI to borrow, and the company and others to guarantee, US$675 million pursuant to a credit agreement with Bank of America N.A. as administrative agent on behalf of a group of lenders, and to transfer the proceeds to Bread. Bread also extracted US$100 million of cash from the balance sheets of the company and other LVI subsidiaries. In January 2023, LVI informed the company that it lacked sufficient funds to make payments under the credit agreement, and the company paid those amounts pursuant to its guarantee. LVI’s cash constraints created significant risks for the company, as it required significant support from LVI, including IT, legal, tax, HR, accounting and treasury services. Accordingly, on February 28, 2023, the company made an $18 million intercompany loan to LVI to permit it to pay fees, costs and expenses associated with developing a global transaction with the companies’ stakeholders. Extensive discussions have resulted in BMO agreeing to provide DIP financing and acting as stalking horse purchaser in the proposed SISP in the CCAA. Counsel/professional advisors are:
Cassels is counsel for the company in the CCAA, while A&M and PJT Partners are restructuring and financial advisors to the company, respectively;
KSV is the Monitor, represented by Goodmans;
Akin Gump is counsel for LVI in the Chapter 11 proceedings;
Torys and Sullivan & Cromwell are counsel for BMO as DIP lender and stalking horse purchaser,
Bennett Jones and Gibson Dunn are counsel for an Ad Hoc Group of Term B Lenders, while Piper Sandler is their financial advisor; and
BLG and Haynes and Boone are counsel for an Ad Hoc Group of Term A Lenders and Bank of America as administrative agent, while FTI Consulting is their financial advisor.

By Dina Milivojevic