Getty Images to File Chapter 11, Go Private With Up to $533 Million From Getty Family and Koch

Getty Images plans to file for Chapter 11 bankruptcy and exit as a privately held company under a restructuring support agreement backed by affiliates of the Getty family and Koch Equity Development, according to The Hollywood Reporter and Hindustan Times, both citing Reuters. The two groups have committed up to $533 million in new equity and will own 100% of the reorganized company once the process is completed, the outlets reported.

Terms of the Restructuring

Under the restructuring support agreement, holders of $270 million in unsecured bonds have agreed to retire their notes, while secured lenders have agreed to reduce interest costs and extend the timeline for Getty to repay its debt, per Hindustan Times' sourcing from Reuters. Koch Equity Development is not a new entrant to Getty's capital structure: the firm has backed the company since 2018, when it made a $500 million preferred equity investment, The Hollywood Reporter noted.

Getty has said the restructuring will not affect operations, employees, partners or vendors, according to The Hollywood Reporter. A company spokesperson reiterated to the outlet that layoffs are not part of the plan.

Mark Getty, co-founder and chairman of the board, said the deal is "underpinned by the strength of the business and the significant growth potential we see ahead," adding that he was "pleased to continue our strong partnership with Koch Equity Development and the lender groups to provide capital structure improvements that will enable us to build on our solid foundation and seize new growth opportunities," according to statements reported by The Hollywood Reporter. Mike Harris, senior managing director and co-head at Koch Equity, said in the same statements that the firm remains "confident in the company's future and fully support[s] this transaction alongside the Getty family," and that the equity investment will provide Getty Images with "a firm financial foundation and greater flexibility to continue investing in its employees, customers, contributors, and future growth."

The Collapsed Shutterstock Deal

The restructuring follows Getty's decision in late June to abandon a $3.7 billion merger with rival stock-imagery provider Shutterstock. According to Octus, Getty's board unanimously resolved to terminate the merger on June 30 after the U.K. Competition and Markets Authority conditioned its approval on the sale of Shutterstock's editorial business.

The failed deal was costly. On Getty's August earnings call, CEO Craig Peters said the company had spent more than $100 million across professional fees and financing costs pursuing what it had believed would be a strategic transaction, as reported by The Hollywood Reporter and Octus. Octus separately reported that after 18 months of pursuit, Getty walked away following regulatory pushback and uncertainty over execution.

Mounting Financial Pressure

The months leading up to the bankruptcy announcement showed a company under increasing strain. Octus reported that Getty ended the second quarter with $51.6 million in cash after burning $123 million during the quarter on warrant litigation payments and interest tied to the merger financing. On Aug. 31, Getty disclosed it would use the 30-day grace period for interest payments due Sept. 1 on its 9.75% notes due 2027 and 14% notes due 2028. Following the missed payments, Moody's Ratings and S&P Global Ratings downgraded the company to Caa3 and CCC, respectively, according to Octus.

Octus had reported on Sept. 23 that Getty was preparing to file for Chapter 11 as soon as the end of that month, citing a liquidity crunch, elevated leverage following the failed merger, and payment obligations tied to litigation.

Getty also disclosed underlying business pressures in a Monday investor presentation cited by The Hollywood Reporter, saying its iStock eCommerce business has seen "declining agency demand and disruption," while projecting growth in its core editorial unit. CFO Jennifer Leyden had said in August that annual subscribers fell from 321,000 to 241,000 over the prior year, attributing the decline to a "deliberate strategy to deemphasize lower-value acquisition channels, including the discontinuation of our iStock free trial program."

Advisers on Both Sides

Following the failed merger, Getty retained Simpson Thacher and Guggenheim to explore capital structure alternatives, according to Octus. Term loan creditors organized with Gibson Dunn and Houlihan Lokey, while unsecured noteholders worked with Akin Gump and Perella Weinberg, Octus reported.

Bottom Line

Getty Images is pursuing Chapter 11 with creditor support already negotiated: the Getty family and Koch Equity Development have committed up to $533 million to fund the reorganized, privately held company, holders of $270 million of unsecured bonds have agreed to retire their notes, and secured lenders have agreed to lower interest costs and extend repayment timelines, per the Reuters-sourced reporting carried by Hindustan Times and The Hollywood Reporter. The deal caps a difficult stretch that included the collapsed Shutterstock merger, more than $100 million in costs tied to that failed transaction, missed bond interest payments and credit downgrades. The company has said the restructuring is not expected to disrupt day-to-day operations. One interpretation of the reported terms — that the Getty family and Koch affiliates will own 100% of the reorganized company — is that current equity holders would not retain ownership once the process concludes, though the reporting reviewed does not spell out the treatment of existing shares.