Mobileum: Prepackaged Chapter 11 and $530M Debt Reduction

Mobileum entered chapter 11 on July 23, 2024 with a prepackaged deal already backed by 88% of first lien lenders and 77% of second lien lenders. That support let the Cupertino telecommunications software provider run a short Southern District of Texas case built around a debt-for-equity swap, a litigation trust, and a DIP-to-exit financing package rather than a long operating turnaround.

The First Day Declaration says the filing followed the 2023 discovery of historical accounting irregularities that had inflated revenue recognition, EBITDA, and projections after H.I.G. Capital's 2022 acquisition. By the petition date, the debtors said they carried about $690.5 million of funded secured debt, while the restructuring target was to leave the business with roughly $160 million of debt after emergence. Mobileum reached confirmation on September 11, 2024 and filed its Notice of Effective Date the next day.

Debtor(s)	Mobileum, Inc. (11 jointly administered debtors)
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	24-90414
Petition Date	2024-07-23
Confirmation Date	2024-09-11
Judge	Hon. Christopher M. Lopez
DIP Facility	$60 million of new money plus a $100 million roll-up of prepetition first lien debt

How Mobileum Structured a Prepackaged Chapter 11

The debtors filed their original chapter 11 plan and disclosure statement on the petition date, which is the core feature of a prepackaged case. The same filing package described support from H.I.G. Capital as consenting sponsor, the first lien ad hoc group, the crossholder ad hoc group, and the prepetition first lien noteholders. According to the restructuring announcement, the company expected to emerge within 60 days and keep products and services running through the case.

The First Day Declaration describes Mobileum as a telecom analytics vendor with more than 1,000 customers in 150-plus countries, about 1,800 employees and contractors across roughly 60 countries, and operations spanning roaming, fraud and risk management, testing, and customer engagement. The declaration also says the U.S. chapter 11 filings did not place the company's non-U.S. subsidiaries into bankruptcy. That distinction mattered because management was trying to preserve a global operating platform while restructuring a U.S. holding-company debt stack.

Why Mobileum Filed

Mobileum tied the filing to accounting problems discovered in late May 2023. The First Day Declaration says those irregularities materially overstated historical revenue recognition, EBITDA, and projected performance, which then contributed to reputational damage, customer slowdown, management turnover, and lender scrutiny. External reporting on the pre-bankruptcy dispute adds context: H.I.G.'s 2022 acquisition for about $915 million became the subject of later litigation between H.I.G. and Audax over whether Mobileum's financial performance had been misrepresented.

The debt load was also heavy for a company already dealing with those operational problems. The First Day Declaration breaks the funded debt into roughly $414.8 million of first lien term loans, $57.1 million on the first lien revolver, $34.7 million of first lien notes, and $183.9 million of second lien term loans. The debtors said the restructuring would cut total debt from about $628 million to approximately $160 million after emergence.

DIP Financing and the $530 Million Debt Reduction

The DIP motion proposed a financing package with $60 million of new-money term loans and a $100 million roll-up of prepetition first lien debt. The facility carried pricing of Term SOFR plus 6.00% or base rate plus 5.00%, with a 3.0% premium on certain prepayments or on plan effectiveness. The court first approved that structure in the interim DIP order and then entered the final DIP order on August 15, 2024, which unlocked the remaining new-money tranche and approved the related adequate protection package.

That financing was paired with a debt-for-equity plan. The confirmation order approved treatment under which first lien claims received 96.5% of new common equity, subject to management incentive plan and Tranche B dilution, while second lien claims received 3.5% of new common equity. Existing parent equity interests were canceled, and general unsecured claims were left unimpaired.

Mobileum's post-emergence messaging tracked the court documents closely. The company's emergence announcement said the restructuring eliminated approximately $530 million of prepetition debt, preserved $60 million of new financing, and added another $100 million through a first lien roll-up. Trade coverage of the exit also reported that H.I.G. was no longer an owner after emergence and that the new owners were drawn from the lender group.

What Creditors Received Under the Confirmed Plan

The acceptance results in the Kroll voting declaration show how consensual the case was by the time it reached confirmation. Class 3 first lien claims voted 98.53% in amount to accept, and Class 4 second lien debt claims voted 100% in amount to accept. Those classes were the economic fulcrum of the plan.

The confirmation order and the first amended plan set out the headline recoveries. First lien creditors were projected to recover about 43% through their equity allocation, and second lien creditors were projected to recover about 3%. General unsecured claims were treated as unimpaired and paid in the ordinary course, while existing parent equity interests received nothing. The debtors also established a management incentive plan for the reorganized business, which diluted the lender equity package at the margin rather than changing overall control.

Post-confirmation reporting gives a partial look at how those economics were implemented. The Q3 2024 post-confirmation report says the reorganized debtors transferred $201 million of non-cash securities on account of secured claims, paid about $6.38 million on general unsecured claims, and funded a professional fee escrow with $10.3 million on the effective date.

The Litigation Trust and the Audax-H.I.G. Dispute

One of the more case-specific features of Mobileum's restructuring was the decision to push litigation assets into a trust rather than leave them entirely with the reorganized company. The plan supplement and third amended plan supplement transferred to the litigation trust the Delaware Superior Court claims against Audax-related parties, related claims held by H.I.G. and consenting creditors arising from the same facts, and the proceeds of the representations and warranties insurance policy tied to the 2022 transaction.

That structure let the chapter 11 plan separate operating emergence from the long-running fraud dispute over the sale process. External reporting before the filing had already described lender scrutiny over Mobileum's accounting and Audax overstatement allegations. The confirmed plan preserved those disputes for trust administration instead of trying to resolve them inside the bankruptcy case.

Audax still had to protect its own position in confirmation. In its reservation of rights, Audax entities opted out of the proposed third-party releases and objected to any suggestion that the bankruptcy court could impair their positions in the Delaware litigation. The confirmation order reflects the negotiated result: Audax's reserved claims were carved out, and confirmation proceeded without derailing the broader restructuring.

The Case Moved Fast and Closed Fast

The court entered the combined hearing scheduling order one day after the petitions, putting disclosure statement approval and plan confirmation on the same track. That schedule, plus the pre-solicited votes, explains why Mobileum moved from filing to confirmation in 50 days and from filing to effective date in 51 days.

The docket closed quickly after emergence as well. The first final decree closed 10 of the 11 jointly administered cases on October 29, 2024, and the second final decree closed the remaining case on December 4, 2024. For a capital structure with nearly $700 million of secured debt, a cross-border operating footprint, and pending sponsor litigation, Mobileum's chapter 11 timeline was unusually compressed.

Frequently Asked Questions

When did Mobileum file for bankruptcy?

Mobileum and 10 affiliates filed chapter 11 petitions on July 23, 2024 in the Southern District of Texas. The lead case number is 24-90414.

Was Mobileum's case a prepackaged chapter 11?

Yes. The debtors filed a plan and disclosure statement on the petition date and entered the case with broad support from the key secured creditor classes.

How much debt did Mobileum eliminate in chapter 11?

Mobileum said its restructuring eliminated about $530 million of prepetition debt.

What financing supported the case?

The debtors used a DIP-to-exit package with $60 million of new money and a $100 million roll-up of prepetition first lien debt.

Who owned Mobileum after emergence?

Post-emergence ownership shifted to the lender group that received the new common equity under the confirmed plan, and H.I.G. ceased to be an equity owner.

More case coverage is available on the ElevenFlo bankruptcy blog.