Hallmark Financial Services, Inc., a Dallas-based property and casualty insurance holding company, is pursuing a prepackaged Chapter 11 restructuring in the Northern District of Texas before Judge Michelle V. Larson, launched on June 15, 2026 under a pre-negotiated plan supported by its largest creditor, Hildene Capital Management Voluntary PetitionDkt. 1. The filing followed a 2023 arbitration loss to DARAG that triggered covenant violations and credit rating downgrades, which in turn prevented interest payments on the debtor's junior subordinated debt and pushed the company toward a consensual balance-sheet fix. William Snyder was appointed Chief Restructuring Officer on June 11, 2026, four days before the petition.
The debtor is a non-operating holding company that serves as the administrative hub for non-debtor insurance subsidiaries, and it entered bankruptcy with approximately $133.8 million of funded debt across three unsecured instruments: $50.0 million of 6.25% Senior Unsecured Notes due 2029, $30.9 million of 2035 Junior Subordinated Debt Securities, and $25.8 million of 2037 Junior Subordinated Debt Securities. Hildene-managed funds hold majority positions across all three tranches, and the debtor represents that its cash is unencumbered and that it requires no DIP financing or cash-collateral relief First Day DeclarationDkt. 15.
The restructuring follows a dual-track framework memorialized in an April 3, 2026 Restructuring Support Agreement with Hildene. A "go-shop" process markets the debtor's non-cash assets subject to a minimum bid equal to the Initial Plan Value; if no superior bid emerges, the prepackaged plan proceeds with Hildene as stalking horse. The plan, disclosure statement, and combined confirmation scheduling motion were filed concurrently with the petition, and the case is structured around milestone deadlines of 30 days for bidding-procedure approval, 45 days for a qualified bid, and 60 days for a confirmation order.
At the June 18, 2026 first-day hearing, the court entered interim and final orders authorizing payment of prepetition wages and benefits, continuation of the insurance program, payment of prepetition and postpetition taxes, and payment of trade claims up to $313,000 Trade Claims OrderDkt. 72. The combined disclosure statement and confirmation hearing is set for July 16, 2026, with the plan and disclosure statement statutorily due by October 13, 2026.
