EnviroSolutions Holdings Inc., a portfolio company of New York private-equity firm Investcorp, has filed its prepackaged Chapter 11 petition with the Southern District bankruptcy court in New York.

The Manassas, Va., company's assets and liabilities totaled between $100 million and $500 million, according to court documents. The company filed for bankruptcy protection on March 10.

EnviroSolutions manages three landfills, as well as transfer stations and garbage collection operations in the Mid-Atlantic and Northeastern U.S.

EnviroSolutions' largest unsecured claims include $41.6 million owed to NorthWestern Mutual Life Insurance Co., $5.1 million in deferred seller compensation for an individual named Harold Martin and $3 million for the McDowell County Economic Development Authority or McDowell County Waste Authority, according to its bankruptcy filing.

Moody's Investors Service downgraded EnviroSolutions' corporate rating to "Ca" from "Caa3"
as a result of the Chapter 11 filing. The credit rating agency said its corporate lenders could recover as much as 50% of what they're owed by the company.

Investcorp backed the creation of EnviroSolutions in 2003 and provided a $40 million commitment to the Virginia company, according to the private-equity firm's 2005 annual report. Since then, the firm invested additional equity in the company that brought its total investment to $155 million.

Investcorp, which owned a majority stake in EnviroSolutions, has written down its entire investment, according to sources familiar with the situation. It has also informed its investors of the decision to write down the investment, the sources added.

The loss, though, isn't indicative of the overall performance of Investcorp's private equity portfolio. Investcorp reported in an interim half-year financial report for 2010 that the value of companies in the portfolio had increased to $844 million by yearend from $769 million in June 2009.

Investcorp officials declined to comment on the matter.

Investcorp is the parent company of SourceMedia, which publishes the M&A Journal.

Judge Stuart Bernstein is overseeing EnviroSolutions' case, filed under No. 10-11236.

Willkie Farr & Gallagher attorneys John Longmire, Shaunna Jones and Jennifer Hardy are providing counsel to EnviroSolutions, which is relying on Barclays Capital and Alvarez & Marsal North America LLC for financial advice.

Restructuring