iQor, a customer support and business solutions company headquartered in St. Petersburg, has filed a voluntary Chapter 11 petition for bankruptcy.
The company has an agreement with its lenders to recapitalize its debt and expects to emerge from the bankruptcy proceedings financially stronger within about 45 days, it said in a news release.
iQor, with its principal offices at 200 Central downtown, relocated its headquarters to St. Petersburg from New York about five years ago, after acquiring the aftermarket service business previously owned by Jabil (NYSE: JBL). iQor is among the larger companies based in St. Pete. It has 35,000 employees in nine countries, and had $940 million in revenue for the 12 months ended March 31, according to a report from Moody’s Investors Service.
iQor provides aftermarket product and customer support, including product diagnostics and repair services, as well as receivables management and business process improvement services. The company said operations would continue without interruption during the bankruptcy proceeding, with no impact expected for customers, vendors or workers.
The bankruptcy filing was anticipated earlier this year by Moody’s and by S&P Global. The two credit agencies wrote in separate reports in June that iQor had secured a short-term $35 million bridge loan to provide the company with liquidity while it negotiated its capital structure with lenders. The credit agencies cited the impact of the Covid-19 pandemic.
“Since iQor is a customer support and outsourcing solutions provider, the impact of Covid-19 has exacerbated the company’s profitability, given its meaningful exposure to consumer electronics, retail and original equipment manufacturer business customers, which contribute significantly to total revenues,” S&P wrote on June 10 in a report that also cited restricted access to IQor’s call center facilities in the Philippines.
“Over the past year, iQor has explored strategic initiatives to reduce our debt load and right-size our capital structure following an ambitious acquisition that ultimately underperformed,” Gary Praznik, president and CEO of iQor, said in the news release. “The recent steps we have taken toward achieving and executing our BPO [busines process outsourcing] platform strategy have moved us forward, as has our efficient response to Covid-19 disruptions. While we have made progress in rapidly expanding our end-to-end customer strategy, our capital structure remains over-levered relative to the current size of our operations. Accordingly, we determined that additional measures were necessary and in the company’s long-term best interest as we work to reach our goals and capitalize on new opportunities.”
The restructuring will provide iQor the best path forward for long-term stability, growth and profitability, Praznik said.
The company filed for bankruptcy in the southern district of Texas in Houston. iQor is seeking court approval for a $130 million debtor-in-possession financing to support ongoing operations through the restructuring process. The company also is asking to be allowed to satisfy employee claims, pay vendors and obtain access to additional financing.
It said it has between $1 billion and $10 billion in assets and lists the same range for its liabilities. It also said it has between 10,001 and 25,000 creditors. The 30 creditors with the largest unsecured claims are listed in the bankruptcy petition, and they include Eagle Business Solutions in St. Petersburg, which is owed $312,500.
iQor listed several advisors in the bankruptcy process, including FTI Consulting as financial advisor, Evercore as investment banking advisor and Kirkland & Ellis LLP as legal advisor.