Lucky Bucks: Prepackaged Chapter 11, Holdings Converted to Chapter 7

Lucky Bucks, LLC and two affiliates filed prepackaged chapter 11 petitions on June 9, 2023 in the U.S. Bankruptcy Court for the District of Delaware, lead case number 23-10758 before Hon. Karen B. Owens. The largest Class B Master License Holder in Georgia's coin-operated amusement machine market entered chapter 11 with approximately $904 million in funded debt split across two distinct credit silos — a $610 million senior secured facility at the OpCo level and a separate $250 million PIK note facility at Holdings — and an executed Restructuring Support Agreement signed the day before filing by lenders holding roughly 86% of the prepetition first-lien claims.

The two-silo capital structure produced the case's defining intercreditor fight. The OpCo Debtors moved on a 49-day prepackaged track to confirmation, with the Joint Chapter 11 Plan and Disclosure Statement filed on the petition date and the Confirmation Order entered July 28, 2023. Holdings, by contrast, held only the equity interest in OpCo plus the PIK notes themselves, and an Ad Hoc Group of Holdings PIK Noteholders — represented by Proskauer Rose LLP and including BC Partners, CION Investment Corporation, First Trust Capital Management, Hamilton Lane Advisors, Marathon Asset Management LP, and Monarch Alternative Capital LP — moved on day three of the case to convert the Holdings filing to chapter 7. The OpCo plan went effective on October 2, 2023, the company emerged as Arc Gaming and Technologies under LB NewHoldCo, LLC, and the court ordered Holdings into chapter 7 three weeks later, handing control of approximately $237.7 million in alleged fraudulent-transfer dividend claims to an independent trustee.

Debtor(s)	Lucky Bucks, LLC (3 jointly administered entities)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	23-10758
Petition Date	June 9, 2023
Confirmation Date	July 28, 2023
Effective Date	October 2, 2023 (OpCo); chapter 7 conversion October 23, 2023 (Holdings)
Judge	Hon. Karen B. Owens
DIP Facility	$82 million OpCo facility ($20.5M new money / $61.5M roll-up) backstopped by the TL Ad Hoc Group, with WSFS as DIP agent; separate $4 million Holdings DIP
Funded Debt at Filing	Approximately $904 million
Claims Agent	Epiq Corporate Restructuring, LLC

Trive Buyout, 90 Acquisitions, and the Class B COAM Footprint

Lucky Bucks operated as a Class B Master License Holder regulated by the Georgia Lottery Corporation, placing skill-based gaming machines in convenience stores, gas stations, and similar retail locations across Georgia. Under the Georgia statutory split, 45% of net hold flows to the operator, 45% to the location owner, and 10% to the GLC, with winnings redeemable only for non-cash merchandise or lottery tickets. Founder Anil Damani sold a 51% stake to Southern Star Gaming LLC — a subsidiary of Seven Aces Limited — in October 2016, and Trive Capital Management took the parent private in August 2020 by acquiring all of Seven Aces' equity. As of the petition date Southern Star held approximately 70% of Lucky Bucks, with the remainder split among TCFIII Luck Acquisition LLC, TCFIII Luck SPV LP, and Lucky Bucks Ventures Inc.

Between October 2016 and March 2023, Lucky Bucks completed more than 90 COAM acquisitions, building a portfolio of roughly 2,800 machines as of December 31, 2022. By May 31, 2023 — nine days before filing — the machine count had declined to approximately 2,300 across roughly 345 locations, and the company employed about 37 hourly and salaried employees plus 7 consultants or independent contractors. The dominant operator position was reported in industry coverage as the largest Class B operator in the state.

The acquisition-driven growth strategy was financed with floating-rate senior debt, and in October 2021 the senior facility was upsized to $610 million in aggregate commitments — a transaction the company tapped on the eve of the November 2021 PIK note issuance that would seed the eventual two-silo dispute.

GLC Enforcement, SOFR Rate Shock, and the June 2023 Liquidity Exhaustion

The First Day Declaration of CRO James Boyden identifies a converging set of operating and financial pressures that exhausted liquidity in the first half of 2023. The most case-specific pressure was regulatory: the GLC intensified enforcement of the so-called 50 Percent Rule — which prohibits a location owner from deriving more than 50% of total gross monthly retail receipts from COAMs — and tightened enforcement of the prohibition on cash redemptions. GLC enforcement actions removed approximately 360 COAMs in 2022 and an additional approximately 65 COAMs through May 31, 2023, each removal directly shrinking the company's revenue-generating footprint. Smaller competitors compounded the licensing pressure with what management characterized as "predatory" location-switching inducements, producing significant contract churn that Lucky Bucks could not retain or replace fast enough.

The macroeconomic layer was driven by floating-rate exposure. Interest expense surged from $19.4 million to $45.3 million between 2021 and 2022 — an increase of approximately 134% year-over-year — as Term SOFR climbed alongside the company's revenue compression. Concurrently, the rollback of federal COVID-19 stimulus depressed gaming activity. The weighted-average win per unit per day declined from $203.90 in 2020 to $184.01 in 2021 to $164.24 in 2022, an 11% drop in the final year, with revenue down approximately 3% and adjusted EBITDA down approximately 5% in 2022 versus 2021.

To bridge debt-service obligations in early 2023, Lucky Bucks entered short-term A/R facilities with a Trive affiliate in February and March 2023; those A/R facilities had been fully repaid by the petition date. By early June 2023, liquidity was exhausted and the company could no longer service its scheduled interest and amortization payments.

Two-Silo Capital Structure and the $237.7 Million Holdings Distributions

The capital stack was bifurcated by entity, and the bifurcation drove the case architecture. At the OpCo level, the $610 million senior secured facility was originally issued in connection with the 2020 Trive acquisition and upsized in October 2021. As of the petition date, approximately $554 million was outstanding under the term loan facility and approximately $56 million was outstanding under the revolving credit facility. The facility carries a Term SOFR-based floating rate, with Wilmington Savings Fund Society, FSB serving as administrative and collateral agent, and includes a springing first-lien funded-debt-to-EBITDA financial-maintenance covenant. The TL Ad Hoc Group — represented by Akin Gump Strauss Hauer & Feld LLP — held approximately 86% of the prepetition first-lien claims and signed the Restructuring Support Agreement on June 8, 2023. Trade payables at filing totaled approximately $1.174 million.

At Holdings, Lucky Bucks Holdings, LLC issued $250 million of unsecured 12.5% PIK notes due 2028 in two tranches: $195 million in November 2021 and $55 million in January 2022. With PIK accretion, approximately $294 million was outstanding at filing. The Holdings PIK Ad Hoc Group included BC Partners, CION Investment Corporation, First Trust Capital Management, Hamilton Lane Advisors, Marathon Asset Management LP, and Monarch Alternative Capital LP, all represented by Proskauer Rose LLP.

The PIK noteholders' core grievance — and the engine of the contested matters that followed — was the use of the 2021 senior facility upsize and the PIK note issuances to fund a series of equity distributions totaling approximately $237.7 million across 2021 and 2022. The PIK noteholders alleged that approximately $185.2 million was distributed in November 2021 contemporaneously with the first PIK tranche, and approximately $52.5 million was distributed in January 2022 contemporaneously with the second PIK tranche, with insiders receiving substantially all of the proceeds and leaving Holdings with no operating assets.

$82 Million OpCo DIP and the Akin Gump Term Lender Backstop

The OpCo Debtors obtained an $82 million DIP credit facility backstopped by members of the TL Ad Hoc Group, with the same first-lien lender group both backstopping the DIP and consenting to the prepackaged plan. The facility consisted of $20.5 million in new money and $61.5 million in roll-up of prepetition first-lien obligations — a roll-up-to-new-money ratio of roughly 3:1. WSFS continued as DIP agent, and pricing was set at Adjusted Term SOFR plus 10.00% per annum. Maturity was the earliest of 120 days after the petition date (with a 30-day debtor extension option), substantial consummation of a confirmed plan, conversion to chapter 7, or acceleration on event of default.

DIP fee construction front-loaded compensation to the backstop parties. The Backstop Premium was 5.00% of aggregate new-money commitments, the Commitment Premium was 4.00% of aggregate new-money commitments, the Exit Premium was 3.00% of each funded new-money draw, and a Redemption Premium of 10.00% of new-money loans applied if the facility was repaid via asset sale. Adequate protection for the prepetition first-lien secured parties consisted of (i) liens junior only to the DIP liens and carve-out, (ii) superpriority administrative-expense claims, and (iii) PIK interest at the contractual default rate during the chapter 11 cases. The debtors were also authorized to pay the documented fees of the TL Ad Hoc Group, RC Ad Hoc Group, and the prepetition first-lien agent's professionals.

The interim draw of $58 million ($14.5 million new money plus $43.5 million roll-up) was authorized by the Interim DIP Order entered June 13, 2023, and the final draw of $24 million ($6 million new money plus $18 million roll-up) was authorized by the Final DIP Order entered July 14, 2023. On a separate track, Holdings obtained a $4 million DIP facility to fund Holdings-level professional fees, any creditors' committee expenses, and reimbursement of OpCo for restructuring expenses paid on Holdings' behalf, with an "OpCo Holdings DIP Tranche" satisfied through consulting-fee arrangements.

Prepackaged OpCo Plan, the 99% Class 3B Vote, and First-Lien Equity Distribution

The OpCo Plan was a prepackaged reorganization paired with a parallel liquidating Holdings Plan. The First Amended Joint Chapter 11 Plan governed at confirmation, and the operative class structure ran through eight OpCo classes plus the Holdings PIK class. Class 3B (Prepetition OpCo First Lien Claims) was the only voting class at OpCo, and ballots were certified at approximately 99% acceptance by count and approximately 95% by amount before the combined hearing on July 27, 2023.

Under the Stand-Alone scenario, 100% of the New Reorganized OpCo Equity was issued to Class 3B holders on a pro rata basis, subject to dilution for (i) the Lender Equity Allocation — 35% of new equity allocated pro rata to participants in the First-Out Priority Exit Term Loans under the OpCo Exit Facility, (ii) any equity allocated to Rolled Term Loans, and (iii) the Management Incentive Plan pool. In effect, lenders providing exit-facility new money received a 35% equity allocation while remaining first-lien holders received the balance as part of their Class 3B distribution. Existing OpCo equity (Class 8B) received no recovery, and Section 510(b) claims (Class 5B) were similarly extinguished.

The plan authorized payment in full in cash to all holders of allowed general unsecured claims (Class 4B), reflecting the debtors' stated intent to pay trade creditors in the ordinary course. The MIP pool and Emergence Awards for key hires were reserved for the reorganized debtors' board to size and vest post-emergence.

The Holdings Plan was a plan of liquidation. Class 1A (Holdings PIK Note Claims), held entirely by the Ad Hoc PIK Noteholder Group, was the sole impaired voting class on the Holdings side, and projected recovery was approximately 4% — contingent on approval of the Holdings Settlement Agreement. That settlement, negotiated by an independent manager of Holdings and supported by the Goldman Declaration, provided an aggregate $15 million payment to the Holdings estate in exchange for a release of constructive fraudulent-transfer and unlawful-distribution claims arising from the 2021–2022 distributions. The Holdings Board unanimously approved the settlement on June 7, 2023.

PIK Noteholders' Conversion Motion, the GLC Damani Objection, and the Holdings Chapter 7

Three days after the petition, the Ad Hoc Group of Holdings PIK Noteholders moved to convert Holdings to chapter 7. The conversion motion (Docket 50) advanced four arguments: that Holdings had no business operations, employees, or assets other than equity in OpCo and the prospective fraudulent-transfer claims; that the Holdings Plan was a liquidation lacking any genuine reorganization purpose; that the sole impaired class had unanimously rejected the plan, eliminating the cramdown path; and that the chapter 11 filing had been undertaken solely to facilitate an insider settlement of the dividend-clawback claims at the expense of Holdings' creditors. The motion alleged that approximately $237.7 million distributed across three transactions in 2021–2022 constituted actual or constructive fraudulent transfers that a chapter 7 trustee could pursue.

Holdings opposed the motion, and the TL Ad Hoc Group and Trive-affiliated entities filed responses in opposition (Dockets 118 and 119). On June 30, 2023, Judge Owens indicated the PE settlement was unlikely to be approved and held the conversion motion in abeyance pending the effectiveness of the OpCo Plan. The PIK noteholders also filed a reservation of rights and limited objection (Docket 172) and a supplemental objection (Docket 190) to the plan itself, focused on the treatment of Holdings claims and the adequacy of the Holdings Settlement.

The Georgia Lottery Corporation filed a limited objection on July 17, 2023 directed primarily at the proposed Consulting Agreement included in the Plan Supplement. The GLC objected on three grounds: that the Consulting Agreement would allow founder Anil Damani to regain operational control of Lucky Bucks in violation of a June 2, 2020 GLC Executive Order requiring his resignation as a condition of GLC approval; that the agreement proposed to grant management control to individuals (Sekhri and Ijaz) who had not provided proof of lawful presence as required under Georgia COAM licensing law; and that the proposed consultants were already officers, directors, or employees of the debtors and could not simultaneously serve as independent contractors. The GLC and the debtors negotiated a resolution before confirmation, and the Confirmation Order entered July 28, 2023 was entered without a continuation of the GLC objection on the record.

The Confirmation Order included an explicit Holdings carve-out preserving all Holdings estate claims and clarifying that the OpCo Plan releases did not affect or release Holdings or its creditors' claims. After the OpCo Plan went effective on October 2, 2023, the PIK noteholders renewed their conversion arguments. Holdings sought to extend its exclusivity period and requested mediation, which the noteholders opposed. Following a hearing on October 23, 2023, the court converted Holdings to chapter 7, placing the dividend-clawback claims under an independent trustee rather than management-appointed Holdings fiduciaries.

Effective Date, ARC Gaming Rebrand, and the Dividend Clawback Litigation

The OpCo Debtors emerged from chapter 11 on October 2, 2023 — 49 days after the Confirmation Order — under the Notice of Effective Date filed at Docket 253. The reorganized parent operates as LB NewHoldCo, LLC, and the operating subsidiary was rebranded as Arc Gaming and Technologies, f/k/a Lucky Bucks, LLC. A Second Amendment to the Plan Supplement was filed September 28, 2023 ahead of the effective date, and BDC marks on the senior facility were upgraded post-emergence as the reorganized capital structure took hold.

The dividend-clawback litigation that the PIK noteholders' conversion motion forecast unfolded across multiple proceedings. In January 2024, the reorganized debtors filed a RICO action in Fulton County primarily targeting recovery of stolen COAM machines and diverted location contracts, with one fraudulent-transfer count tied to the approximately $200 million OpCo dividend distributed in July 2021. The complaint named former senior management among the defendants.

In September 2024, the chapter 7 trustee for Holdings filed a separate Holdings Dividend Litigation alleging intentional fraudulent transfers, improper dividends, common-law fraud, and Georgia RICO violations relating to the November 2021 ($185.2 million) and January 2022 ($52.5 million) distributions. The trustee also filed an adversary proceeding seeking to revoke the OpCo Confirmation Order; on August 16, 2024 the reorganized debtors and the Holdings trustee settled that adversary, with the reorganized debtors agreeing to pay $2.75 million plus 40% of net proceeds recovered from the Georgia Action defendants. The court approved the Revocation Settlement Agreement on September 4, 2024 and the adversary was dismissed with prejudice on October 8, 2024. Earlier, the Holdings creditors had won a discovery order against the dividend recipients advancing the trustee's investigation. As of December 2025, shareholders moved to dismiss the $240 million Ch. 7 dividend suit, and the dividend litigation remained active without a global resolution.

Professional retentions. Milbank LLP served as lead debtor counsel and Richards, Layton & Finger, P.A. as Delaware co-counsel. Evercore Group L.L.C. acted as investment banker, and M3 Advisory Partners, LP served as financial advisor. Epiq Corporate Restructuring, LLC was retained as claims and noticing agent under an order entered at Docket 114. Compensation requested across the case included approximately approximately $4.18 million in fees plus $37,206 in expenses across Milbank's first four monthly applications, $5.89 million for Evercore's final fee application, and $2.45 million for M3's final fee application. Total professional fees through the post-confirmation reporting period reached approximately $12.24 million, including $11.77 million in bankruptcy-related fees.

Key Timeline

Frequently Asked Questions

Who is the claims agent for Lucky Bucks?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent under an order entered at Docket 114. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

Why did the Lucky Bucks chapter 11 case split into a reorganization and a liquidation?

The capital structure was bifurcated by entity. The OpCo Debtors held the operating COAM business and the $610 million senior facility. Lucky Bucks Holdings, LLC held only the equity in OpCo and the $250 million PIK note debt. The Restructuring Support Agreement signed by 86% of first-lien lenders supported a prepackaged OpCo reorganization, while Holdings filed a parallel plan of liquidation that the PIK noteholders ultimately defeated, leading to chapter 7 conversion.

What did Class 3B first-lien lenders receive under the OpCo Plan?

Under the Stand-Alone scenario, Class 3B holders received pro rata 100% of the New Reorganized OpCo Debtor Equity, subject to dilution for the 35% Lender Equity Allocation tied to the First-Out Priority Exit Term Loans, plus Second-Out Priority Exit Term Loans. Projected recovery was 44%–71%. Class 3B voted to accept at approximately 99% by count and 95% by amount.

What happened to existing Lucky Bucks equity?

Existing OpCo Equity Interests (Class 8B) received no recovery and were extinguished under the confirmed plan. Trive Capital's pre-filing equity stake — held through Southern Star Gaming and the TCFIII vehicles — was cancelled.

What is the status of the dividend clawback litigation?

The chapter 7 trustee for Holdings filed the Holdings Dividend Litigation in September 2024 seeking to recover the November 2021 and January 2022 distributions totaling approximately $237.7 million across the three Holdings-level distributions, on theories including intentional fraudulent transfer and Georgia RICO violations. The reorganized debtors and the Holdings trustee settled the related revocation adversary in August 2024, with the reorganized debtors paying $2.75 million plus 40% of any net proceeds from the Georgia Action. As of December 2025, shareholders had moved to dismiss the underlying $240 million Ch. 7 suit, and the litigation remained active.

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