Ropes & Gray Completes Consensual Out-of-Court Restructuring of Pro Bono Client CERO Cooperative, Inc.

On June 5, Ropes & Gray completed a consensual out-of-court restructuring of pro bono client CERO Cooperative, Inc. (CERO), an award-winning commercial composting company.

CERO (Cooperative Energy, Recycling, and Organics) provides food waste pickup and diversion services for a wide range of commercial clients in the metro Boston area, and transports compostables to local farms where they are recycled into rich soil products used to support the local agricultural economy. CERO’s mission is simple: keep food waste out of landfills, save money for its clients, and provide good green jobs for Boston’s hard working communities. CERO was brought to life by a passionate group of black and brown women and men from Boston neighborhoods who believe the way to a more equitable and healthy society must be through a worker-owned solidarity economy.

The restructuring transactions included a debt-for-equity swap and other loan modifications as well as entry into new financing.  As a result of these transactions, CERO eliminated $430,000 of indebtedness, emerged with a streamlined capital structure and successfully raised approximately $365,000 in fresh capital from investors including the Boston Impact Initiative Fund, the Ujima Fund, the Cooperative Fund of New England (CFNE) and the Local Enterprise Assistance Fund (LEAF). 

The Ropes & Gray team helped CERO negotiate a forbearance agreement and restructuring support agreement, raise new capital in the form of an expanded revolving facility and new first lien term loans, amend other debt terms, and convert existing indebtedness into a combination of preferred equity and contingent value rights.  Ropes & Gray also helped CERO access funds under the CARES Act and related programs, as well as navigate tax, employment and other issues.  This particular restructuring was a symbolic and important transaction for the impact investor community and the Community Development Financial Institutions (CDFIs) that have championed the worker-owned cooperative model. 

The core team included business restructuring finance associate Max Silverstein (New York) and tax, employment and benefits partner Pamela Glazier (Boston) and counsel Sara Clevering (Boston).

Click here for the official press release, recognizing Ropes & Gray’s contribution to the restructuring.