Multi-Color Corporation - Chapter 11 Case Summary

Business Description

Headquartered in Atlanta, GA, Multi-Color Corporation, along with its Debtor and non-Debtor affiliates (collectively, "MCC" or the "Company"), is the world's leading manufacturer of prime label solutions, providing customers with customized labeling and high-impact brand support.

• Prime labels refer to the primary label on any product intended to showcase the product and underlying brand.
• MCC commands a global presence across more than 25 countries, operating over 90 facilities worldwide, including 39 in North America.
• The Company employs approximately 12,800 individuals globally, with approximately 4,870 based in the United States.

MCC serves a diversified client roster, ranging from iconic food and beverage companies to highly recognizable home and beauty products, as well as blue-chip customers in the automotive and pharmaceutical industries. The Company's success has been driven by its commitment to developing new print technologies and service offerings.

MCC offers comprehensive services from concept to commercialization, earning approximately $3.1 billion in revenue in 2025. The Company's business is comprised of six key product label solutions:

• Pressure Sensitive Labels (45% of revenue): Cost-efficient labels offering premium-brand appeal with sharp, bright colors applicable to glass, plastic, and metal surfaces.
• Cut & Stack Labels (19% of revenue): Cost-effective solutions for high-volume products, designed for efficient application with minimal waste.
• In-Mold Labels (13% of revenue): 100% recyclable labels for decorating plastic containers through injection molding, blow molding, and thermoforming.
• Roll-Fed Labels (9% of revenue): Durable labels providing 360 degrees of branding, most commonly applied to plastic bottles and beverage packaging.
• Shrink & Stretch Sleeve Labels (8% of revenue): Labels manufactured as sleeves that conform precisely to container contours when heated, providing 360-degree graphics.
• RFID-Enhanced Labeling (2% of revenue): Labels enabling real-time inventory tracking, product authenticity validation, and regulatory compliance.

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Corporate History

Originally known as Franklin Development Company, MCC was founded in 1916 in Cincinnati, OH, with a mission to be the premier label printing company. Over the past century, the Company has been at the forefront of developing industry-changing technology, becoming the go-to label solution for the world's most iconic brands across industries, including beverage, food, healthcare, home care, beauty, and wine and spirits.

Acquisition-Driven Growth

Through a series of mergers and acquisitions, MCC has established itself as the global leader in prime label manufacturing. MCC as it stands today is comprised of over 50 acquisitions spanning the past 15 years, forming the world's largest prime label provider.

• 2017: Acquired the labels division of Constantia Flexibles GmbH, leveraging Constantia's European operational footprint and assets.
• 2019: Merged with W/S Packaging Group, Inc., allowing the Company to develop a more comprehensive suite of label solutions.
• 2021: Acquired by CD&R and merged with Fort Dearborn Company. Later that year, MCC acquired Hexagon Label Group and seven facilities from Skanem Group, enhancing the Company's presence in multiple geographic markets.
• 2022: Acquired Flexcoat Autoadesivos S.A., expanding offerings to South America, and LUX Global Label to expand capabilities in home and personal care and pharmaceutical markets.
• 2023: Completed acquisitions of Korsini Packaging and Karydakis to strengthen its leading position in the In-Mold Labels market, complementing its portfolio in Europe, the Middle East, and Africa.
• 2024: Acquired Starport Technologies, a foremost provider of RFID-Enhanced Labeling, and Eximpro, a leading provider in the fast-growing Shrink & Stretch Sleeve Labels market, to further expand into emerging markets, including Latin America.

Equity Structure

As of the Petition Date, Labels Buyer, LLC had two series of common stock issued and outstanding:

• Approximately 14,100,000 Series A units held by the Sponsor and certain of the Company's management and directors.
• Approximately 172,000 Series B units held by LUX Global Label.

The Common Units are not listed on a national securities exchange.

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Operations Overview

MCC's business is structured around leveraging its core technologies, offering a full, diverse suite of labeling solutions to a broad range of clientele. The Company holds a leading market position by providing comprehensive services from concept to commercialization.

Label Solutions Portfolio

• Pressure Sensitive Labels: Similar to stickers, these labels use pressure to form the bond between the product and adhesive without any solvent, water, or heat. The labels typically consist of a substrate, release coating, adhesive, and backing material. MCC's innovative features include promotional neckbands, peel-away coupons, resealable labels, see-through window graphics, and holographic foil enhancements. MCC is one of the world's largest producers of top-tier Pressure Sensitive Labels, the largest category in the overall label market.
• Cut & Stack Labels: Printed on large sheets or rolls, then cut into the applicable product shape. These labels can be produced on a wide variety of substrates and accommodate embellishments including foil stamping, embossing, metallics, and unique varnish finishes.
• In-Mold Labels: Applied to a plastic container as the container is being formed in the mold cavity, providing superior graphic reproduction compared to other labeling technologies. MCC uniquely manufactures In-Mold Labels on rotogravure, flexographic, and lithographic printing presses.
• Roll-Fed Labels: Delivered on a roll without release liners or adhesives, highly resistant to tearing and moisture. Labels can be printed in various colors and accompanied with special effects via thermochromic inks and interactive technologies.
• Shrink & Stretch Sleeve Labels: Manufactured as sleeves, slid over containers, and heated to conform to container contours. This process optimizes printable label area while accommodating extreme container contours and serving as an affordable solution for multi-product packs.
• RFID-Enhanced Labeling: Faster than reading barcodes, these labels present an opportunity to expand horizontally across many markets.

Print Technologies

The Company utilizes a wide range of print technologies to ensure responsiveness to customer needs and make its label products broadly accessible to varying demands:

• Flexography: Utilizes pliable relief or raised image plates as well as rubber or polymer plastic plates. This less expensive process can print on almost any substrate, including paper, metallic or holographic films and foils, and plastics. Popular for printing large areas with solid colors and adapts well to irregular repeat lengths and a comprehensive array of ink.
• Gravure: Engraved cylinders carry ink in tiny cells and apply them directly to the substrate, allowing for a speedy and reliable process with a long tooling lifespan.
• Offset/Lithography: Known for extremely high graphic reproduction, this process relies on the immiscibility of water and oil. Offers superior image quality and is primarily used for stacked, banded, or cut materials.
• Digital: The fastest growing print technology, relying on computer-monitored color calibration for pantone matching and target reproduction. Provides users the ability to produce short-run labels with variable content strategies for market differentiation.
• Rotary Screen: Combines screen printing with the flexographic process, specializing in tactile and high-opacity ink on a variety of substrates using a squeegee that pushes ink through holes of a stencil attached to a fine mesh.

Equipment Solutions

MCC has become a turnkey partner for brands' most challenging demands. The Company's equipment solutions department engineers and builds optimal application systems to consistently present labeling solutions for clients.

• MCC has developed some of the automation industry's most sophisticated and reliable labeling applicators and systems.
• The Company's equipment innovation and development of state-of-the-art systems for product identification, tracking, and line automation differentiates it in the industry.

Research & Development

MCC has a dedicated research and development team that collaborates directly with brands to develop consumer-driven solutions. Industry-leading innovations generally fall under three main categories: sustainability, functionality, and premiumization.

• Over 70% of MCC's innovation work is directly linked to developing sustainable solutions for customers.
• Through the Company's CARE Collection, MCC offers labels intended for containers to be reused or recycled, including the "recycLABEL" shrink sleeve.
• The Company offers a variety of substrate options that can reduce a customer's environmental impact.

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Prepetition Obligations

As of the Petition Date, MCC reports approximately $5.9 billion in aggregate outstanding principal debt obligations. The Company's prepetition capital structure comprises approximately $4.8 billion in secured debt and $1.15 billion in unsecured notes.

ABL Facility

• Approximately $445 million is outstanding under an asset-based revolving credit facility with Barclays Bank PLC as administrative agent and collateral agent.
  • The ABL Facility provides aggregate commitments of up to $590 million, consisting of a $400 million U.S. sub-facility, a $15 million French sub-facility, and a $175 million global sub-facility.
  • Interest rates vary by currency denomination, with U.S. dollar loans bearing SOFR plus an applicable margin ranging from 1.25% to 1.75%, adjusted quarterly based on average daily excess availability.
  • The facility matures on October 8, 2029, subject to a springing maturity 91 days prior to the maturity of certain other debt if outstanding amounts exceed specified thresholds.
  • Obligations are secured by first-priority liens on ABL Priority Collateral (primarily accounts receivable and inventory) and second-priority liens on Cash Flow Priority Collateral.

Cash Flow Facilities

• The Debtors maintain three facilities under the Cash Flow Credit Agreement with Barclays as administrative agent:
  • Cash Flow Revolving Facility: Approximately $200 million drawn under a $200 million revolving facility bearing interest at SOFR plus 3.50% to 4.00% for U.S. dollar loans, maturing October 8, 2029.
  • U.S. Term Loan Facility: Approximately $1.598 billion outstanding, bearing interest at SOFR plus a 0.10% credit spread adjustment plus 5.00%, maturing October 29, 2028.
  • European Term Loan Facility: Approximately $569 million outstanding (denominated in Euros), bearing interest at Adjusted EURIBOR plus 5.00%, maturing October 29, 2028.
• The Cash Flow Facilities are secured by first-priority liens on Cash Flow Priority Collateral (pari passu with the Secured Notes) and second-priority liens on ABL Priority Collateral.

Secured Notes

• The Company has $1.75 billion in aggregate principal outstanding across three series of senior secured notes issued under an indenture with Wilmington Trust as trustee:
  • 2028 5.875% Secured Notes: $500 million issued October 2021.
  • 2028 9.500% Secured Notes: $300 million issued April 2023.
  • 2031 8.625% Secured Notes: $950 million issued October 2024.
• The Secured Notes are guaranteed by Holdings and each wholly owned U.S. restricted subsidiary of the Parent, secured by first-priority liens on Cash Flow Priority Collateral (pari passu with the Cash Flow Facilities) and second-priority liens on ABL Priority Collateral.

Unsecured Notes

• Approximately $1.15 billion remains outstanding under two series of senior unsecured notes:
  • 2027 Unsecured Notes: $690 million in 10.50% Senior Notes due 2027, originally issued by LABL Escrow Issuer, LLC.
  • 2029 Unsecured Notes: $460 million in 8.250% Senior Notes due 2029, issued by the Parent.
• Both series are guaranteed by each wholly owned U.S. restricted subsidiary of the Parent, subject to certain exceptions.

Finance Leases and Other Funded Debt

• The Company carries approximately $226 million in finance leases and other funded debt obligations, consisting of:
  • Equipment Finance Leases: Approximately $56 million owed under various equipment leases with banks and finance companies. These leases typically provide options to purchase at fair market value, nominal buyout amounts, or early buyout provisions.
  • Building Finance Leases: Approximately $66 million owed under building leases with banks and real estate companies, generally including fair market value purchase options and early buyout provisions.
  • Sale-Leaseback Financing: Approximately $104 million in aggregate obligations arising from two sale-leaseback transactions:
    • First Master Lease Agreement (June 2025): ~$32 million outstanding.
    • Second Master Lease Agreement (September 2025): ~$72 million outstanding.
• Both sale-leaseback transactions were accounted for as failed sale-leasebacks under U.S. GAAP, with the underlying assets remaining on the Company's balance sheets at historical net book value.

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Events Leading to Bankruptcy

Industry Volatility and Macroeconomic Headwinds

• Although the prime label industry has historically enjoyed long-term stability, significant short-term volatility beginning in 2021 triggered a cascade of setbacks for MCC:
  • Following a period of heightened demand at the outset of the COVID-19 pandemic, MCC—like others in the label industry—experienced rapid, unanticipated cost inflation and significant raw material and labor constraints between 2021 and 2022 due to market and supply chain disruptions.
  • Key input costs surged dramatically: the price of pages per inch (PPI) increased by 50% in 2020 alone, while polypropylene resin—an adhesive commonly used in bottle production—spiked 150%.
  • As supply chain pressures began to subside, a sustained period of customer destocking caused significant and unanticipated volume declines in demand for MCC's products.
  • These industry headwinds were further compounded by a challenging macroeconomic environment, including uncertainty around tariffs and customer demand.

Company-Specific Operational Challenges

• MCC's efforts to navigate industry volatility overlapped with ongoing integration challenges following its acquisition of Fort Dearborn Company in October 2021, as well as subsequent business segment acquisitions.
• The Company implemented pricing increases between 2022 and 2023 and initiated deep reductions to headcount and inventory in response to hyperinflation. However, these pricing actions were implemented late, contributing to market share losses as raw material costs subsequently declined.
• Between 2021 and 2022, OTIF (On-Time In-Full) service levels dropped significantly in response to supply and labor constraints:
  • Management was forced to prioritize certain customer segments, leading to significant share losses with others.
  • The full consequences continue to manifest due to the inherently lengthy timeline of customer transitions in the prime labels industry—often requiring 12 to 24 months for customer onboarding.
• Ongoing management turnover and a lack of quality, data-driven insights further hampered the Company's ability to respond effectively, contributing to a 14% decrease in revenue from 2022 through year-end 2025.

Financial Performance Deterioration

• The confluence of macroeconomic shocks, operational challenges, and declining customer demand led to severe financial deterioration:
  • Revenue fell from approximately $3.6 billion in 2022 to $3.3 billion in 2023, $3.2 billion in 2024, and $3.1 billion in 2025.
  • Adjusted EBITDA dropped by $44 million between 2022 and 2023, followed by an additional decline of $130 million between 2024 and 2025, with further deterioration expected in 2026.
  • As of the Petition Date, the Company had approximately $67 million in cash on hand.
• The Company's capital structure became unsustainable given tightening liquidity and downward cash flow forecasts through 2026, with upcoming maturities on funded debt obligations creating an untenable mismatch between cash flows and debt service requirements.

Operational Turnaround Initiatives—Project Optimus

• Since January 2024, MCC's current management has implemented a series of corrective actions through a holistic transformation plan dubbed "Project Optimus":
  • The initiative involves a comprehensive operational and commercial restructuring focused on eliminating inefficiencies and bolstering customer loyalty by improving key metrics such as lead times and OTIF performance.
  • The Company achieved over 95% OTIF status across all customers in 2025—an eight-point improvement over 2024.
• MCC enhanced its leadership and talent across key commercial, finance, and operations roles:
  • The Company transitioned its headquarters to Atlanta, Georgia with greater emphasis on collaborative work and in-office requirements.
  • A Transformation Management Office was created, reporting directly to the CEO, to assist in execution support.
• The Company identified more than $200 million in total net cost-saving opportunities across procurement, manufacturing, and SG&A expenses, with approximately $178 million expected on a run-rate basis and benefits phasing in over 2026–2028.

Advisor Engagement and Governance Enhancements

• To navigate the macroeconomic and operational challenges, the Company engaged restructuring professionals:
  • Kirkland & Ellis LLP was formally engaged as restructuring counsel in April 2025.
  • AlixPartners, LLP was engaged as financial advisor in July 2025.
  • Evercore Group, L.L.C. was engaged as investment banker in October 2025.
• On July 18, 2025, the Board appointed Roger Meltzer and Peter Laurinaitis as disinterested and independent directors and established a Special Committee:
  • The Special Committee was delegated exclusive authority to review, analyze, and approve transactions involving potential conflicts of interest.
  • Quinn Emanuel Urquhart & Sullivan, LLP was retained as independent counsel to the Special Committee.
  • The Special Committee has been conducting an ongoing investigation into potential claims or causes of action against certain insiders and affiliated entities.

Stakeholder Negotiations and Marketing Process

• Starting around September 2025, MCC commenced discussions with its secured and unsecured creditors, as well as CD&R in its capacity as both a creditor and equity sponsor, concerning potential strategic and financial alternatives.
• By late October 2025, the holders of MCC's funded debt had organized into three groups:
  • A group of ABL Lenders;
  • The Secured Ad Hoc Group, consisting primarily of secured first lien debt holders; and
  • The Crossover Ad Hoc Group, consisting primarily of unsecured noteholders.
• Simultaneously, Evercore launched a marketing process for potential new money financing from third-party institutions:
  • Six potential institutions were contacted; all signed NDAs, received access to non-public information, and conducted due diligence.
  • Five institutions submitted proposals, with two proposals further advanced.
  • After consultation with advisors and the Special Committee, no third-party proposal was deemed superior to that offered by the Crossover Ad Hoc Group due to the latter's ability to deliver consent from the 2027 Unsecured Notes holders and offer more favorable economic terms on a holistic basis.

Liquidity Crisis and Missed Interest Payment

• Against the backdrop of ongoing negotiations and mounting liquidity pressures from continued negative business performance, MCC faced a pending event of default under its 2027 Unsecured Notes Indenture:
  • Following discussion with the Special Committee, LABL, Inc. elected not to make an approximately $36.2 million interest payment due January 15, 2026.
  • If the payment is not made within the 30-day grace period expiring February 14, 2026, the non-payment would constitute a formal event of default and trigger cross-defaults under the ABL Credit Agreement and Cash Flow Credit Agreement.
• Acceleration of indebtedness could result in significant negative consequences, including termination of commitments, acceleration of all outstanding obligations, sweeping of cash proceeds, and potential exercise of remedies by secured parties.
• In the weeks leading up to the Petition Date, market noise around the Company's financial performance, missed interest payment, and prospective Chapter 11 proceedings prompted certain customers and suppliers to seek assurances regarding MCC's ability to continue meeting obligations in the ordinary course.

Dual-Track Negotiations and Transaction Selection

• From November 2025 through January 2026, MCC engaged in robust, competitive negotiations with each constituency to find a solution addressing the Company's anticipated liquidity shortfall and maximizing value for all stakeholders:
  • The Company pursued a dual-track process, working through details and complexities of each potential transaction.
  • In the days preceding the filing, negotiations involved near-daily communications with the Secured Ad Hoc Group, Crossover Ad Hoc Group, CD&R, and ABL Lenders to bridge critical terms—including complex tax and structural issues and go-forward governance.
• Near-final terms exchanged with the Crossover Ad Hoc Group in late January 2026 contemplated approximately $450 million of net debt deleveraging and a two-year liquidity and maturity runway through the end of 2028:
  • Despite the Crossover Ad Hoc Group's willingness to accept the Debtors' most recent proposal, material and adverse tax consequences related to that transaction remained unresolved.
• On January 25, 2026, following execution of the Restructuring Support Agreement, the Company received a DIP financing proposal from the Crossover Ad Hoc Group contemplating $350–500 million in new money:
  • The proposal was ultimately deemed unactionable because it lacked support from the Secured Ad Hoc Group and, most critically, was not coupled with a viable Chapter 11 plan.
  • Proceeding with that proposal would have delayed commencement of the Chapter 11 Cases, sent negative signals to customers and vendors, and left the Company "stranded in bankruptcy" without a clear path forward.

Restructuring Support Agreement and Plan Terms

• On January 25, 2026, the Debtors, Consenting First Lien Lenders (holding approximately 72.3% of secured first lien obligations), and CD&R executed the Restructuring Support Agreement to effectuate a recapitalization through prepackaged Chapter 11 Cases.
• The Plan provides for transformative deleveraging and liquidity:
  • $3.9 billion reduction of net debt—7.3 times the deleveraging available under the next best alternative.
  • Over $550 million of liquidity at closing.
  • Cash savings of approximately $350 million in debt service obligations annually.
  • Seven-year maturity runway on new debt.
  • Approximately $889 million in new money for the business.
• All general unsecured creditors—encompassing trade, customer, employee, vendor, and supplier claims—will be left unimpaired under the Plan.

DIP Financing and Path Forward

• The Restructuring Support Agreement provides for up to a $657.5 million DIP financing facility:
  • $250 million in new money commitments;
  • A 1:1 "roll up" of First Lien Secured Claims;
  • A $7.5 million DIP Backstop Premium; and
  • Up to $150 million in incremental new money loans.
• With approximately $67 million in cash on hand as of the Petition Date, the DIP Facility is critical to signal business continuity to MCC's over 9,000 vendors, extensive foreign operations, and recently re-won customers.
• On January 27, 2026, the Debtors commenced solicitation of votes on the Plan, proceeding on a proposed 48-day timeline to minimize time in bankruptcy and limit potential impact on the business and customer relationships.
• The transactions contemplated by the Plan advance MCC's pursuit of Project Optimus, returning the core focus of the business to developing consumer-driven innovations and sustainable solutions for a loyal, diverse customer base.