A Kohlberg Kravis Holding Files Bankruptcy Petition

A company owned by leveraged buyout specialists filed for Chapter 11 bankruptcy protection Wednesday after bondholders rejected a restructuring plan.

Hillsborough Holdings Corp.’s filing in U.S. Bankruptcy Court in Tampa marks the first Kohlberg Kravis private holding to seek bankruptcy protection, and was closely watched in the junk-bond market that has financed such costly takeovers.

New York-based Kohlberg Kravis formed Hillsborough last year as part of its $2.4-billion takeover of Jim Walter Corp., a building materials company. Jim Walter, which is not involved in the bankruptcy filing, was later sold by Kohlberg Kravis.

Hillsborough is expected to file bankruptcy petitions for its 31 subsidiaries, said bankruptcy court clerk Chuck Kilcoyne. By 8 p.m. Wednesday, Kilcoyne had received Hillsborough’s petition and those of nine subsidiaries. Hillsborough’s bankruptcy petition did not list creditors and reported assets of $304.2 million and liabilities of $347.6 million, he said.

Earlier this month, Hillsborough officials said they would file for bankruptcy if an exchange offer for $624 million worth of the company’s bonds was not accepted by at least 80% of the company’s bondholders. Hillsborough said it could not repay its bonds in full.