UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of
1934
(Amendment No. 2)*
KATY INDUSTRIES, INC.
(Name of Issuer)
Common Stock, par value $1.00 per share
(Title of Class of Securities)
486026107
(CUSIP Number)
Scott R. Zemnick, Esq.
Victory Park Capital Advisors, LLC
227 W. Monroe Street, Suite 3900
Chicago, Illinois 60606
(312) 705-2786
Copy to:
Mark R. Grossmann, Esq.
Katten Muchin Rosenman LLP
525 West Monroe Street
Suite 1900
Chicago, Illinois 60661
(312) 902-5200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 14, 2017
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e),
240.13d-1(f) or 240.13d-1(g), check the following box. ☐
Note
: Schedules filed in paper format shall include a
signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to
be sent.
*
The remainder of this cover page shall be filled
out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”)
or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
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Cusip No.
486026107
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13D
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Page
2 of 12 Pages
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1
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NAME OF REPORTING PERSONS
VPC SBIC I, LP
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
OO
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4
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SOURCE OF FUNDS
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
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7
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SOLE VOTING POWER
0
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8
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SHARED VOTING POWER
18,859,183 (1)
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9
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SOLE DISPOSITIVE POWER
0
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10
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SHARED DISPOSITIVE POWER
18,859,183 (1)
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,859,183 (1)
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
70.3% (2)
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14
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TYPE OF REPORTING PERSON
OO
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(1) Consists of shares of common stock issuable upon conversion
of 1,131,551 shares of the issuer’s convertible preferred stock held by VPC SBIC I, LP.
(2) Based on 7,951,176 outstanding shares as of October 28,
2016, as set forth in the issuer’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016.
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Cusip No.
486026107
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13D
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Page 3
of 12 Pages
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1
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NAME OF REPORTING PERSONS
VPC SBIC GP, LLC
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
OO
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4
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SOURCE OF FUNDS
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
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7
|
SOLE VOTING POWER
0
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|
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8
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SHARED VOTING POWER
18,859,183 (3)
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9
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SOLE DISPOSITIVE POWER
0
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10
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SHARED DISPOSITIVE POWER
18,859,183 (3)
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,859,183 (3)
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
70.3% (4)
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14
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TYPE OF REPORTING PERSON
OO
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(3) Consists of shares of common stock issuable upon conversion
of 1,131,551 shares of the issuer’s convertible preferred stock held by VPC SBIC I, LP.
(4) Based on 7,951,176 outstanding shares as of October 28, 2016, as set forth in the issuer’s
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016.
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Cusip No.
486026107
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13D
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Page 4
of 12 Pages
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1
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NAME OF REPORTING PERSONS
Victory Park Management, LLC
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
OO
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
|
|
8
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SHARED VOTING POWER
370,748,441 (5)
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9
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SOLE DISPOSITIVE POWER
0
|
|
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10
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SHARED DISPOSITIVE POWER
370,748,441 (5)
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
370,748,441 (5)
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
97.9% (6)
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14
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TYPE OF REPORTING PERSON
OO
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(5) Consists of shares issuable to lenders upon conversion of
certain term loans (the “Term Loans”) made pursuant to the issuer’s Second Lien Credit Facility (as defined below).
Victory Park Management, LLC, as administrative agent and collateral agent for the lenders under the Second Lien Credit Facility,
has the right, at any time, to convert the outstanding principal amount of, and interest on, the Term Loans into common stock,
provided that the Term Loans may not be converted into common stock until the Issuer has reduced the par value of its common stock.
(6)
Based on 7,951,176 outstanding
shares as of October 28, 2016, as set forth in the issuer’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2016.
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Cusip No.
486026107
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13D
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Page 5
of 12 Pages
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1
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NAME OF REPORTING PERSONS
Victory Park Capital Advisors, LLC
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
OO
|
|
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4
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SOURCE OF FUNDS
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|
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
|
|
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
|
7
|
SOLE VOTING POWER
0
|
|
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8
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SHARED VOTING POWER
389,607,624 (7)
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9
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SOLE DISPOSITIVE POWER
0
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10
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SHARED DISPOSITIVE POWER
389,607,624 (7)
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
389,607,624 (7)
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
98.0% (8)
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14
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TYPE OF REPORTING PERSON
OO
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(7) Consists of (i) shares of common stock issuable upon conversion
of 1,131,551 shares of the issuer’s convertible preferred stock held by VPC SBIC I, LP. and (ii) 370,748,441shares issuable
to lenders upon conversion of the Term Loans (see footnote 5).
(8)
Based on 7,951,176 outstanding
shares as of October 28, 2016, as set forth in the issuer’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2016.
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Cusip No.
486026107
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13D
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Page 6
of 12 Pages
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1
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NAME OF REPORTING PERSONS
Jacob Capital, L.L.C.
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
OO
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
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7
|
SOLE VOTING POWER
0
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|
|
8
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SHARED VOTING POWER
389,607,624 (9)
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9
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SOLE DISPOSITIVE POWER
0
|
|
|
10
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SHARED DISPOSITIVE POWER
389,607,624 (9)
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
389,607,624 (9)
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|
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12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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☐
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|
13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
98.0% (10)
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14
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TYPE OF REPORTING PERSON
OO
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(9) Consists of (i) shares of common stock issuable upon conversion
of 1,131,551 shares of the issuer’s convertible preferred stock held by VPC SBIC I, LP. and (ii) 370,748,441shares issuable
to lenders upon conversion of the Term Loans (see footnote 5).
(10)
Based on 7,951,176 outstanding
shares as of October 28, 2016, as set forth in the issuer’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2016.
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Cusip No.
486026107
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13D
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Page 7
of 12 Pages
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1
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NAME OF REPORTING PERSONS
Richard Levy
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
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(a) ☐
(b) ☒
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS
OO
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5
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
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☐
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
USA
|
|
|
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
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7
|
SOLE VOTING POWER
0
|
|
|
8
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SHARED VOTING POWER
389,607,624 (11)
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|
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9
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SOLE DISPOSITIVE POWER
0
|
|
|
10
|
SHARED DISPOSITIVE POWER
389,607,624 (11)
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|
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
389,607,624 (11)
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|
|
12
|
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
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☐
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
98.0% (12)
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14
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TYPE OF REPORTING PERSON
IN
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(11) Consists of (i) shares of common stock issuable upon conversion
of 1,131,551 shares of the issuer’s convertible preferred stock held by VPC SBIC I, LP. and (ii) 370,748,441shares issuable
to lenders upon conversion of the Term Loans (see footnote 5).
(12)
Based on 7,951,176 outstanding
shares as of October 28, 2016, as set forth in the issuer’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2016.
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Cusip No.
486026107
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13D
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Page 8
of 12 Pages
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This Amendment No. 2 (this “
Amendment
”)
to Schedule 13D amends the Schedule 13D (as previously amended, the “
Schedule 13D
”) filed by (i) VPC SBIC I,
LP (the “
SBIC Fund
”); (ii) Victory Park Capital Advisors, LLC (“
Capital Advisors
”); (iii)
Jacob Capital, L.L.C., (“
Jacob Capital
”); (iv) Victory Park Management, LLC (“
Victory Park Management
”)
and (v) Richard Levy (collectively, the “
Reporting Persons
”), with respect to the securities of Katy Industries,
Inc. (the “
Issuer
”), on August 22, 2016, as amended by Amendment No. 1 filed on April 28, 2017.
Capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed to them in the Schedule 13D.
Item 4.
Purpose of Transaction
Item 4 of the Schedule 13D is hereby amended by adding the
following:
On May 14, 2017, the SBIC Fund contributed
its rights as a lender under the Second Lien Credit Facility to Jansan Acquisition, LLC (“Jansan”), a newly formed
Delaware limited liability company co-owned with an affiliate of Highview Capital, LLC and Centrex Plastics, LLC, in exchange for
common interests in Jansan and, among other things, the right to designate a manager of Jansan. Victory Park Management remains
the administrative agent and collateral agent under the Second Lien Credit Facility.
On May 14, 2017, the Issuer and certain
of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). In connection with such filing, Jansan
intends to provide up to $7.5 million of debtor-in-possession financing (the “DIP Financing”), subject to approval
by the Bankruptcy Court. The DIP Financing would be provided on a secured, super-priority basis pursuant to a credit agreement
containing customary covenants and other provisions. The DIP Financing would mature on October 11, 2017, subject to any earlier
event of default thereunder.
In connection with the Issuer’s
bankruptcy case, Jansan intends to bid for certain assets of the Issuer and certain of its subsidiaries. To that end, on May 14,
2017, Jansan, the Issuer, Continental Commercial Products, LLC, Fort Wayne Plastics, Inc. and FTW Holdings, Inc. entered into
an Asset Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, Jansan agreed to purchase
substantially all of the assets and properties of the Issuer and certain of its subsidiaries, other than excluded assets described
in the Purchase Agreement (such assets, subject to such exclusions, the “Purchased Assets”), and to assume certain
liabilities of the Issuer and its subsidiaries, including obligations under the Issuer’s senior credit facility, certain
cure costs, certain liabilities relating to employees of the Issuer and its subsidiaries and other liabilities specified in the
Purchase Agreement (collectively, the “Assumed Liabilities”). The aggregate purchase price (the “Purchase Price”)
for the Purchased Assets would be an amount equal to (i) the assumption the Encina Obligations (as defined in the Purchase Agreement),
less the amount of any prepayments thereof; plus (ii) a credit bid in the amount outstanding under the DIP Financing at the time
of the closing; plus (iii) a credit bid in the amount of the indebtedness under the Second Lien Credit Facility; plus (iv) the
Assumed Liabilities; plus (v) the Wind Down Reserve (as defined in the Purchase Agreement).
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Cusip No.
486026107
|
13D
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Page 9
of 12 Pages
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The foregoing transaction would be accomplished
through the sale, transfer and assignment of the Purchased Assets by the Issuer and applicable subsidiaries to Jansan (or its assigns)
in a sale undertaken pursuant to Section 363 of the Bankruptcy Code. It is expected that the Issuer and its subsidiaries will concurrently
conduct a competitive bidding process pursuant to bidding procedures to be approved by the Bankruptcy Court, seeking higher and
better qualified bids for a sale at auction of all or substantially all of the Issuer’s and such subsidiaries’ assets
pursuant to Section 363 of the Bankruptcy Code. The Purchase Agreement provides for a breakup fee in the amount of $1,750,000 and
expense reimbursement for fees incurred in connection with the transaction up to $350,000, if Jansan is not selected as the prevailing
bidder in the Section 363 sale process.
The closing of the transactions contemplated
by the Purchase Agreement is subject to customary conditions, including the entry by the Bankruptcy Court of a bidding procedures
order and sale order, in each case, reflecting the terms set forth in the Purchase Agreement. The Purchase Agreement may be terminated
following certain termination events set forth therein.
There can be no assurance that the Bankruptcy
Court will approve the Purchase Agreement, the proposed sale order or proposed bidding procedures order. Nor can there be any assurance
that the transaction contemplated by the Purchase Agreement will be consummated in accordance with its terms. In connection with
the Section 363 sale process, Jansan and the Reporting Persons may propose to modify the transactions contemplated by the Purchase
Agreement in response to competing bids, if required by the Bankruptcy Court or otherwise.
The description of the Purchase Agreement
set forth above in this Item 4 does not purport to be complete and is qualified in its entirety by reference to the full text of
the Purchase Agreement, a copy of which is attached as Exhibit 5 to this Schedule 13D and is incorporated herein by reference.
Item
6.
Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
Item 6 of the Schedule 13D is hereby
amended by adding the following:
The description of the Purchase Agreement
set forth in Item 4 of this Amendment is incorporated herein by reference.
Item 7.
Material to Be Filed as Exhibits
Item
7 of the Schedule 13D is hereby amended by adding the following:
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Exhibit
5
|
Asset Purchase Agreement, dated as of May 14, 2017, among Jansan Acquisition, LLC, Katy Industries, Inc., Continental Commercial
Products, LLC, Fort Wayne Plastics, Inc. and FTW Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Issuer’s
Current Report on Form 8-K filed on May 18, 2017).
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Cusip No.
486026107
|
13D
|
Page 10
of 12 Pages
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After reasonable inquiry and to the best
of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: May 19, 2017
VPC SBIC I, LP
By: VPC SBIC GP, LLC, its General Partner
By: Jacob Capital L.L.C., its manager
By:
/s/ Richard Levy
Name: Richard Levy
Its: Sole Member
VPC SBIC GP, LLC
By: Jacob Capital L.L.C., its manager
By:
/s/ Richard Levy
Name: Richard Levy
Its: Sole Member
VICTORY PARK MANAGEMENT, LLC
By:
/s/ Scott R. Zemnick
Name: Scott R. Zemnick
Title: Manager
VICTORY PARK CAPITAL ADVISORS, LLC
By:
/s/ Scott R. Zemnick
Name: Scott R. Zemnick
Title: General Counsel
JACOB CAPITAL, L.L.C.
By:
/s/ Richard Levy
Name: Richard Levy
Title: Sole Member
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Cusip No.
486026107
|
13D
|
Page 11
of 12 Pages
|
/s/ Richard Levy
Richard Levy
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Cusip No.
486026107
|
13D
|
Page
12 of 12 Pages
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Exhibit Index
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Exhibit 5
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Asset Purchase Agreement, dated as of May 14, 2017, among Jansan Acquisition, LLC, Katy
Industries, Inc., Continental Commercial Products, LLC, Fort Wayne Plastics, Inc. and FTW Holdings, Inc. (incorporated by reference
to Exhibit 2.1 to the Issuer’s Current Report on Form 8-K filed on May 18, 2017).
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