MD Helicopters Inc., an Arizona helicopter maker backed by financier Lynn Tilton, filed for bankruptcy protection, agreeing to sell itself out of chapter 11 to creditors of her bankrupt Zohar loan funds, WSJ Pro Bankruptcy reported. MD is among the dozens of businesses once run by Ms. Tilton that borrowed from the Zohar funds, collateralized loan obligations she created to channel $2.5 billion in investor capital into her turnaround efforts. Many of the businesses shut down, went bankrupt or fell behind on their debts to the Zohar vehicles, which she placed in chapter 11 in 2018 after they defaulted on their own obligations to investors. MD owes $357 million in first-lien secured debt, $332 million of it to the Zohars and $25 million to Ms. Tilton’s Patriarch Partners, according to court papers filed yesterday. Another $59.8 million in subordinated debt is also outstanding to the Zohars and Patriarch, MD’s Chief Financial Officer Barry Sullivan said in a sworn declaration. Bardin Hill and MB Global Partners have agreed to supply a $60 million loan to finance MD through its stay in chapter 11. MD’s operations will continue as normal during the sale process, the company said yesterday. MD enters chapter 11 as the Zohar funds are nearing a possible exit from bankruptcy. A liquidation plan proposed by their administrators would hand their remaining assets to her longtime legal adversaries MBIA, Bardin Hill and other fund investors.
