Filing Alert: United Site Services Chapter 11

United Site Services, Inc. filed a prepackaged Chapter 11 in the U.S. Bankruptcy Court for the District of New Jersey on Dec. 29, 2025, under a Restructuring Support Agreement backed by an ad hoc group of lenders and sponsor Platinum Equity. The plan will eliminate over $2.4 billion of $2.8 billion in funded debt by equitizing second‑out term loans, and contemplates $300 million of committed exit financing, a fully backstopped $480 million equity rights offering and a $120 million new‑money DIP facility. The company reports assets and liabilities in the $1 billion–$10 billion range and indicates there will be distributable funds for unsecured creditors.

Analysis

Market structure: The RSA sharply reorders creditor claims—second‑out term lenders are the clear losers (their debt is being equitized) while the ad‑hoc lender group and Platinum Equity are the principal winners if the new equity retains value. Advisors (PJT, A&M, Milbank) pick up meaningful fees near term; regional competitors in portable sanitation stand to gain pricing power in local markets where United Site exits or shrinks, tightening supply of on‑site assets by a material but localized amount.

Risk assessment: Key tail risks include RSA failure or DIP liquidity stress (the $120m DIP is a short runway if cash burn is >$10–20m/month), creditor litigation that delays confirmation beyond 90–180 days, and potential latent environmental/indemnity claims that could convert creditor recoveries to cents on the dollar. Timeframe: immediate (days–weeks) is focused on DIP liquidity and RH filings; short term (1–4 months) is plan confirmation and rights offering execution; long term (6–18 months) is post‑emergence equity performance and market share shifts.

Trade implications: Event‑driven plays: (1) small tactical long in PJT (advisory fee recognition) over 1–3 quarters; (2) distressed‑debt bids for USS second‑out loans only if trading < $0.25 on dollar targeting equity upside post‑emergence; (3) hedge sector HY exposure via 3‑month put spreads on JNK/HYG sized 1–3% NAV to protect against contagion. Reduce exposure to highly‑levered construction/temporary‑services credits by 1–3% within 30 days.

Contrarian angles: Consensus assumes full creditor dilution; but a controlling lender group plus a backstoped $480m rights offering increases probability of meaningful equity value — if post‑money equity implies >$300–400m enterprise value, early equity/rights participation could outperform. Historical restructurings with sponsor continuity often return 20–100% to early equity holders over 6–18 months; the trade is timing‑sensitive and dilution‑dependent.

Key Decisions for Investors

• Establish a tactical long position in PJT (NYSE:PJT) equal to 1–2% of NAV within 2 weeks to capture advisory fee recognition and M&A advisory upside; target a 10–20% gain over 3–6 months, employ a 6% stop‑loss.
• Buy downside protection on US high‑yield via a 3‑month put spread on JNK sized 1.5–2% NAV (buy ~5% OTM put, sell ~2.5% OTM) to hedge contagion risk in the next 60–120 days; unwind on 50% P/L or at expiration.
• Distressed‑debt play: place bids for USS second‑out term loans only if available < $0.25 on the dollar, size positions to 0.5–1% NAV, and plan to convert to equity or sell post‑confirmation within a 6–18 month horizon; exit if plan confirmation not achieved within 120 days.
• Trim 1–3% of portfolio exposure to highly levered construction/temporary‑services credits within 30 days and reallocate to defensive cash/XLU (utilities ETF) or short HY exposure to lower cyclical default beta.
• For accredited opportunistic investors: only subscribe to the $480m backstopped rights offering if the implied post‑money equity valuation > $400m and dilution is <50% (confirm detailed pricing at launch within 30–60 days); otherwise pass to avoid immediate dilution risk.