iStock_000016406958SmallAltegrity Inc. filed for Chapter 11 bankruptcy protection Sunday, in a bid to implement a restructuring agreed with its leading creditors.  Altegrity President Jeffrey Campbell said the debt-trimming plan has “support from the overwhelming majority of our lenders.”

Altegrity blamed its financial problems largely on a massive cyberattack last year on a division of its business that provided background checks to U.S. federal government agencies. Reports of the incident say it exposed information about some 25,000 employees of the Department of Homeland Security. The business that was hacked, US Investigations Services LLC, is being shut down and will be liquidated in bankruptcy, court papers say.

Some Altegrity lenders, including funds managed by Third Avenue Management, Litespeed Management LLC and Mudrick Capital Management LP, have agreed to provide $90 million in bankruptcy financing to the company, according to the release.

The bankruptcy filing was expected, as Altegrity has publicly discussed its need for a financial restructuring, and its negotiations with top-ranking creditors. In the news release, the company said it has support from holders of first, second and third-lien secured debt for a deal aimed at cutting some $700 million in debt from its balance sheet.

Three issues of unsecured bonds totaling in the aggregate nearly $53 million top the list of unsecured debts filed as part of the bankruptcy petition.  In court papers, Altegrity said it has $1.8 billion of funded debt. About $1.6 billion of the total is secured debt and $138.4 million is unsecured.

Altegrity sought protection along with 37 affiliates in the U.S. Bankruptcy Court in Wilmington, Del. Operations at HireRight and Kroll will continue without interruption throughout the process, the company said in the news release announcing the filing. USIS, the division that is being shut down, accounted for 39% of the company’s total net revenue in the 12-month period ending June 2014.

Source:  Wall Street Journal