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/raid1/www/Hosts/bankrupt/TCRLA_Public/221014.mbx T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, October 14, 2022, Vol. 23, No. 200 Headlines A R G E N T I N A ARCOR SAIC: Fitch Assigns 'B' Rating on 8.25% Sr. Unsecured Notes C A Y M A N I S L A N D S NAGACORP LTD: Moody's Cuts CFR & Sr. Unsec. USD Bond Rating to B2 SHEFFIELD CDO: S&P Raises Class C Notes Rating to 'CCC-(sf)' C O L O M B I A COLOMBIA: Central Bank Could Raise Benchmark Interest Rate Further D O M I N I C A N R E P U B L I C DOMINICAN REPUBLIC: Oil Determines Fuel Prices, Bisonó Says J A M A I C A JAMAICA: Concerns About Transition to Electric Vehicles JAMAICA: Government to Take on Major Buildout of Tax Offices P U E R T O R I C O PUERTO RICO: Taps Willke Farr to Advise on PREPA Debt Talks V E N E Z U E L A CITGO PETROLEUM: 6 Executives Released From Venezuela V I R G I N I S L A N D S ALL YEAR HOLDINGS: Wins Dismissal of Weiss Lawsuit - - - - - ================= A R G E N T I N A ================= ARCOR SAIC: Fitch Assigns 'B' Rating on 8.25% Sr. Unsecured Notes ----------------------------------------------------------------- Fitch Ratings has assigned a 'B' rating to Arcor S.A.I.C's new 8.25% senior unsecured notes due 2027. The proposed bonds will be issued as part of an exchange offer whereby Arcor bondholders can tender their current USD500 million 6% senior unsecured notes due 2023 to receive the new bonds and up to 30% of the outstanding principal in USD cash. The exchange offer is voluntary and subject to bondholder participation. Fitch believes a successful transaction would reduce Arcor's refinancing risks given the current capital controls in place in Argentina. Fitch does not expect leverage metrics to be affected by this operation. KEY RATING DRIVERS Strong Business Position: Arcor's 'B+' Local Currency Issuer Default Rating (IDR) reflects the company's strong business position as a leading Latin American producer of confectionary and cookie products. The company's vertical integration ensures the quality of supplies, as well as the availability of main inputs. Arcor's brand names and distribution platform support its leading market shares in chocolates, candies, cookies and packaging in Argentina, its main market. Argentina, including exports to third parties, contributed 72% of sales and 81% of EBITDA in 2021. The company's brands reach consumers in over 90 countries, but the majority of the other revenue and EBITDA came from the Andean region (12% and 10%, respectively) and Brazil (8% and 2%, respectively). Foreign Currency IDR Rated Above Country Ceiling: Arcor's 'B' Foreign Currency IDR is one notch higher than Argentina's 'B-' Country Ceiling rating. Fitch's criteria for rating Foreign Currency IDRs higher than an issuer's applicable Country Ceiling evaluates the relationship between 12 months of foreign currency debt service and cash held abroad, cash generated by exports, undrawn committed credit lines and cash flow from foreign operations. If the ratio derived from the sum of these factors covers debt service by more than 1.0x-1.5x for 12 months, the issuer's Foreign Currency IDR may be notched one level above the applicable Country Ceiling. For Arcor, Fitch projects the ratio will comfortably exceed this threshold in the next 12 months. Low Leverage: Fitch expects Arcor's debt/ EBITDA to stabilize at around 2.7x in 2022 (2.7x in 2021). Arcor's EBITDA improved to USD309 million from USD287 million in 2020. Much of this improvement was due to good performance outside Argentina, in particular in the Andean region where sales increased by 42% in USD terms and EBITDA margins improved from 2.2% in 2020 to 9.3% in 2021. Overall margins, nonetheless, were under pressure as raw materials and other production costs experienced the effects of inflation. These were partially mitigated by exchange rate gains and effective pricing strategies. Fitch expects the company's EBITDA margin in 2022 to remain pressured by cost inflation but stay between 10%-11%. Fitch expects Arcor will be able to refinance its USD500 million bond due in July 2023. Capex should remain moderate at about USD50 million (USD38 million in 2020). Arcor and Bagley Call Option: Arcor S.A.I.C. and Bagley Argentina, S.A. together own about 49% of the shares of Mastellone Hermanos Sociedad Anonima (CC), a leading dairy producer in Argentina, for a total investment of USD134 million. Arcor has a call option for Mastellone's outstanding corporate stock that started in 2020 and lasts until 2025. Mastellone also has a put option during the same period. Fitch sees Mastellone as strategic for Arcor in the long term. DERIVATION SUMMARY Arcor's 'B' Foreign Currency IDR is well-positioned in its rating, given the company's vertically integrated model as a leading Latin American producer of confectionary and cookie products, paired with the group's export capacity and presence in several Latin American countries outside of Argentina. A business profile constraint is Arcor's moderate size relative to other large consumer goods companies, such as Nestle SA (A+/Stable) or Grupo Bimbo, S.A.B. De CV (BBB/Stable), which have global presences. To increase its regional presence, Arcor has grown organically and non-organically and entered into partnerships. However, the company's operations remain significantly concentrated with Argentina representing 81% of EBITDA. Fitch estimates Arcor's Debt to EBITDA was around 2.7x in 2021 and expects it to trend towards 2.5x within the ratings horizon. This compares favorably to its investment-grade peers like Alicorp S.A.A.(BBB/Stable), Bimbo, and Nestle, which all have gross leverage ratios within similar ranges. Arcor has lower gross leverage than Kraft Heinz Corporation's (BBB-/Stable), which Fitch expects to be around 4x in 2022. In terms of profitability, Arcor's projected 2022 EBITDA margins compare to Alicorp's at around 10%. The company's margins lag the rest of its peers, which Fitch projects at approximately 12% for Bimbo, 19% for Nestle, and 22.7% for KHC in 2022. KEY ASSUMPTIONS - Revenue growth driven by inflation & real GDP growth; - EBITDA of approximately USD325 million in 2022; - Capex of about USD50 million for 2022 and 2023; - Dividends between USD50 million-USD55 million for 2022 and 2023; - Debt/EBITDA approximately 2.7x in 2022. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action: - An upgrade of Argentina's sovereign rating would lead to an upgrade of Arcor's Foreign Currency IDR, given the high level of cash generated from Argentine operations; - Gross debt/EBITDA below 2.5x on a sustained basis could lead to an Outlook revision or an upgrade of the Local Currency IDR. - Strong liquidity position and access to international markets to refinance the 2023 bond. Developments That May, Individually or Collectively, Lead to Negative Rating Action: - Inability to successfully refinance the 2023 bond by year end; - Debt/EBITDA above 4.0x on a sustained basis could lead to a downgrade of Arcor's Local Currency IDR; - Exports, cash abroad and committed bank lines not covering hard currency interest expense and debt amortization by 1.0x1.5x over 12 months could lead to a downgrade of the Foreign Currency IDR; - A downgrade of Argentina's Country Ceiling would likely lead to a negative action on the Foreign Currency IDR or Outlook. LIQUIDITY AND DEBT STRUCTURE Manageable Liquidity: As of YE 2021, Arcor had ARS19.4 billion of cash and cash equivalents and short-term debt of ARS25 billion, which is about 30% of total debt. Approximately 71% of total debt was in U.S. dollars. As of 2Q22, liquidity remained relatively stable with cash and cash equivalents at ARS26.6 million and short-term debt at ARS31.4 million or 30% of total debt. Most of the short-term debt is bank debt and local bonds. The company has strong access to bank lines to finance exports and local sources of financing to manage short-term debt. Arcor has just announced and exchange offer for its USD500 million senior unsecured note due in July 2023. Capital controls pose a risk to all Argentine companies seeking to refinance USD denominated bonds. Nevertheless, Argentinean companies have been able to refinance significant portions of their debt ahead of their maturities, and Fitch expects Arcor to be able to do the same through this transaction. ISSUER PROFILE Arcor is a leading Latin American producer of confectionary products and cookie products. The company operates industrial plants and distribution centers in Argentina, Brazil, Chile, Peru, Mexico, and Angola. Arcor is a leader in the Argentine market and has an extensive international sales network with offices around the world. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Debt Rating ---- ------ Arcor S.A.I.C. senior unsecured LT B New Rating =========================== C A Y M A N I S L A N D S =========================== NAGACORP LTD: Moody's Cuts CFR & Sr. Unsec. USD Bond Rating to B2 ----------------------------------------------------------------- Moody's Investors Service has downgraded the corporate family rating of NagaCorp Ltd. to B2 from B1. At the same time, Moody's has downgraded the senior unsecured rating of the company's US dollar bond to B2 from B1. The bond is unconditionally and irrevocably guaranteed by the major operating subsidiaries of NagaCorp. The outlook remains negative. "The downgrade reflects NagaCorp's slower-than-expected operational recovery such that the company will likely require external financing to repay its outstanding $545 million bond maturing in July 2024. The refinancing risk is exacerbated by tight funding conditions in the current economic environment and limited sources of liquidity for the company," says Yu Sheng Tay, a Moody's Analyst. "The negative outlook reflects NagaCorp's heightened refinancing risk. At the same time, it reflects ongoing uncertainties around the pace of recovery in the company's operating performance," adds Tay. Governance consideration was a key driver of the rating action. Moody's views that the company's concentrated debt structure and reliance on external funding have resulted in heightened refinancing risks. Consequently, Moody's has changed the governance issuer profile score to G-4 from G-3 and the ESG credit impact score to CIS-4 from CIS-3. RATINGS RATIONALE Moody's expects NagaCorp to generate EBITDA of around $252 million and $352 million in 2022 and 2023, respectively, compared with $16 million in 2021. The improvement is supported by the easing of pandemic-related restrictions in Cambodia, which has resulted in a gradual recovery in the country's tourism sector. Nonetheless, the company's earnings in 2022 and 2023 will remain well below that of 2019. The slower recovery is attributed to increasing regulatory scrutiny and clampdown on gaming promoters, which drove a significant portion of the revenues for NagaCorp historically. NagaCorp is also exposed to rising refinancing risks because of a debt maturity wall in July 2024. The company has a $545 million bond that forms its entire debt structure, excluding lease liabilities. Moody's believes the company's ability to raise external financing is challenged given the tight funding conditions in the current economic environment. At the same time, NagaCorp has limited sources of liquidity given its lack of bank facilities and divestible non-core assets. While NagaCorp can reduce both its development capital expenditure for Naga 3 and cash dividends to preserve liquidity, the company has continued to incur such cash outflows since 2020, despite operational disruptions because of the pandemic. As of June 30, 2022, NagaCorp had cash and cash equivalents of $213 million. Moody's expects the company to generate sufficient operating cash flow to meet its cash needs through June 2024. However, the company will likely require external financing to repay its US-dollar bond on July 6, 2024. NagaCorp's B2 ratings continue to reflect the dominant position of its integrated casino and hotel complex, NagaWorld, in Phnom Penh, Cambodia (B2 stable), underpinned by an exclusive right lasting until 2045 to operate casinos in and around the capital city of Phnom Penh. However, the ratings are constrained by its single-site operations as well as exposure to political risk and the evolving regulatory framework in Cambodia. NagaCorp's ESG credit impact score is highly negative (CIS-4). This largely reflects its heightened refinancing risks and concentrated ownership by the founder. At the same time, the company is exposed to physical climate risk arising from its asset concentration in Cambodia and very high social risks that are inherent to the gaming sector. NagaCorp has a highly negative credit exposure to governance risk (G-4) because its concentrated debt structure and reliance on external funding have resulted in heightened refinancing risks. At the same time, it also reflects the company's concentrated ownership by the founder, Dr. Chen Lip Keong. However, the risk is mitigated by the oversight exercised through the board consisting of majority independent directors and the demonstration of support by the controlling shareholder, who has funded the company's expansion by injecting equity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the negative outlook, an upgrade is unlikely over the next 12-18 months. However, the outlook could return to stable if NagaCorp addresses its refinancing risk while demonstrating an operational recovery. Moody's could downgrade NagaCorp's ratings if the operating environment deteriorates, resulting in protracted weakness in operating cash flow; the company fails to maintain its 100% ownership of Ariston Sdn. Bhd, which holds its Cambodian casino license, and 100% ownership of NagaWorld; or the company is unable to address its refinancing risk. Credit metrics indicative of a downgrade include adjusted debt/EBITDA exceeding 3.0x and adjusted retained cash flow/debt falling below 25% over the next 12-18 months. The principal methodology used in these ratings was Gaming published in June 2021. NagaCorp Ltd. was incorporated in the Cayman Islands in 2003 and listed on the Hong Kong Stock Exchange in 2006. The company owns and manages NagaWorld, the largest integrated casino and hotel complex in Phnom Penh, Cambodia. NagaCorp was founded by Tan Sri Dr. Chen Lip Keong, the company's chief executive officer and largest shareholder with an approximate 69% stake as of July 22, 2022. SHEFFIELD CDO: S&P Raises Class C Notes Rating to 'CCC-(sf)' ------------------------------------------------------------ S&P Global Ratings raised to 'CCC- (sf)' from 'CC (sf)' its credit rating on Sheffield CDO Ltd.'s class C notes. At the same time, S&P lowered to 'D (sf)' from 'CC (sf)' its rating on the class D notes. S&P will withdraw these ratings after 30 days. The rating actions follow its analysis of the transaction's performance using data from the trustee report dated July 13, 2022. S&P said, "Since our previous review, all assets have been sold and proceeds were used to make payments on the class C and D notes, in accordance with the interest priorities of payment. According to the July 2022 report, the interest proceeds were just sufficient to service the senior fees, class C interest, and partial payment of class D interest. At the same time, principal proceeds were used to completely pay down the class C notes and for partial payment of deferred interest on the class D notes, in accordance with the principal priorities of payment. "The class C non-deferrable notes were the controlling class and have paid timely interest. Given, this class has paid down in full (both the interest due and the outstanding principal), we raised its rating to 'CCC- (sf)' in line with our criteria. The 'CC (sf)' rating on this class of notes before today's rating action suggests this tranche was highly vulnerable to nonpayment. The 'CC (sf)' rating is used when a default has not yet occurred but S&P Global Ratings expects it to be a virtual certainty, regardless of the anticipated time to default (for further details, see "S&P Global Ratings Definitions", published on Nov. 10, 2021). Following the complete pay down of this class of notes and the deal unwinding with no assets remaining in the portfolio, we have raised our ratings to the lowest performing rating level of 'CCC- (sf)'. We will subsequently withdraw the ratings on these notes in 30 days. "The class D notes were not paid in full. We have therefore lowered our ratings to 'D (sf)' from 'CC (sf)' to reflect the default in payments in line with our criteria. We will subsequently withdraw the ratings on these notes in 30 days. "The transaction's counterparty, operational and legal risks are adequately mitigated in line with our criteria." =============== C O L O M B I A =============== COLOMBIA: Central Bank Could Raise Benchmark Interest Rate Further ------------------------------------------------------------------ globalinsolvency.com, citing Reuters, reports that further increases to Colombia's benchmark interest rate may be necessary in the coming months as the central bank tries to bring inflation in line with its 3% target, according to minutes from the bank's meeting. Colombia's central bank board raised its benchmark interest rate by 100 basis points to 10%, as inflation pressures and domestic consumption remain robust and central banks around the world boost rates, according to globalinsolvency.com. The country's 12-month inflation hit 10.84% in August and the market expects the figure to have risen to 11.25% in September, the report notes. As the bank tries to push inflation back towards the 3% target, these pressures could necessitate further interest rate rises this year, according to minutes from the meeting, the report says. "(The board) pointed out that additional increases to the benchmark rate could be necessary in the coming months, depending on the information available at any given time on the internal and external economic situation, and its prospects," the board said in the minutes. Six of the board's seven members voted to hike the interest rate by 100 basis points, with one board member voting to increase the rate by 50 basis points, which would have taken it to 9.5%, the report adds. =================================== D O M I N I C A N R E P U B L I C =================================== DOMINICAN REPUBLIC: Oil Determines Fuel Prices, Bisonó Says ------------------------------------------------------------ Dominican Today reports that Victor Ito Bisono, Minister of Industry, Commerce, and Mipymes (MICM), the price of oil is maybe "the least relevant portion" of the formula used to determine the price of hydrocarbons. Ramon Perez Fermn, the MICM's Vice Minister of Internal Trade, cited the fact that 70% of the fuels imported into the nation are already refined and cost more than WTI as the reason for this (which is taken from reference), according to Dominican Today. Costs associated with distribution and import must also be included, the report relays. As per Perez Fermin, just 30% of the fuel marketed in the Dominican Republic is processed at the Dominican Petroleum Refinery (Refidomsa), subjecting it to fluctuations in price on the world market, the report notes. As a result of the conflict between Russia and Ukraine, which led to a number of sanctions against Russia, it is now impossible to consistently operate to purchase Russian natural gas, which has increased demand for finished goods, the report relays. The deputy minister claimed that as a result, "European businesses and generators had to lean towards liquid products (gasoline and diesel)," resulting in a "pronounced" demand for which they were unprepared, the report discloses. This is the reason why the WTI, the Gulf Coast index, and the price of completed goods no longer behave similarly, as they did for more than 20 years, according to Fermin Perez, the report discloses. The deputy minister brought up the geopolitical issue during a brunch with economics writers, saying that it "disturbs all the laws of consumption and demand, and it is not simple to forecast when it will finish or properly return to normal," the report adds. About Dominican Republic The Dominican Republic is a Caribbean nation that shares the island of Hispaniola with Haiti to the west. Capital city Santo Domingo has Spanish landmarks like the Gothic Catedral Primada de America dating back 5 centuries in its Zona Colonial district. Luis Rodolfo Abinader Corona is the current president of the nation. TCRLA reported in April 2019 that the Dominican Today related that Juan Del Rosario of the UASD Economic Faculty cited a current economic slowdown for the Dominican Republic and cautioned that if the trend continues, growth would reach only 4% by 2023. Mr. Del Rosario said that if that happens, "we'll face difficulties in meeting international commitments." An ongoing concern in the Dominican Republic is the inability of participants in the electricity sector to establish financial viability for the system. Fitch Ratings, in December 2021, revised the Outlook on Dominican Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDRs at 'BB-'. The revision of the Outlook to Stable reflects the narrowing of Dominican Republic's government deficit and financing needs since Fitch's last review resulting in the stabilization of the government debt/GDP ratio, as well as the investment-driven economic momentum, reflected in the faster-than-expected economic recovery in 2021 that Fitch expects to carry into above-potential GDP growth during 2022 and 2023. Standard & Poor's, also in December 2021, revised its outlook on the Dominican Republic to stable from negative. S&P also affirmed its 'BB-' long-term foreign and local currency sovereign credit ratings and its 'B' short-term sovereign credit ratings. The stable outlook reflects S&P's expectation of continued favorable GDP growth and policy continuity over the next 12 to 18 months that will likely stabilize the government's debt burden, despite lack of progress with broader tax reforms, S&P said. A rapid economic recovery from the downturn because of the pandemic should mitigate external and fiscal risks. Moody's affirmed the Dominican Republic's long-term issuer and senior unsecured ratings at Ba3 and maintained the stable outlook in March 2021. ============= J A M A I C A ============= JAMAICA: Concerns About Transition to Electric Vehicles ------------------------------------------------------- RJR News reports that there are more concerns that Jamaica may not be ready to transition to electric vehicles (EVs). Valentine Fagan, Chairman of the Office of Utilities Regulation's Electric Vehicle Working Group, says a full implementation of EVs without proper planning can pose problems for electricity distribution, according to RJR News. He said data from Tax Administration of Jamaica show there are more than 500,000 vehicles in the country, but if just one per cent of those vehicles are EV, this would "bring a significant strain on the electricity grid," the report notes. However, he said the issue can be resolved with proper management and the implementation of additional infrastructure, the report relays. There has been a push for more Jamaicans to purchase electric vehicles, the report discloses. Cabinet recently approved a policy to incentivize the importation of EVs, the report relays. The government has also announced that it is making adjustments to the Motor Vehicle Import Policy to accommodate EV concessional rates, the report adds. As reported in the Troubled Company Reporter-Latin America in March 2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. JAMAICA: Government to Take on Major Buildout of Tax Offices ------------------------------------------------------------ RJR News reports that the Government of Jamaica is planning to increase the number of tax offices across the country over the next few years. Speaking at a graduation ceremony, Finance Minister Dr. Nigel Clarke said while some offices will be new, others will be renovated, according to RJR News. Among the offices that will be improved is the Cross Roads collectorate, the report notes. Dr. Clarke said the new Cross Roads office will have five storeys or more, and customer service will be bolstered to ensure the public is assisted in an improved and "meaningful way," the report says. He said the project will be the "largest buildout of tax offices in Jamaica's history," the report notes. As reported in the Troubled Company Reporter-Latin America in March 2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is Stable. ===================== P U E R T O R I C O ===================== PUERTO RICO: Taps Willke Farr to Advise on PREPA Debt Talks ----------------------------------------------------------- Michelle Kaske of Bloomberg News reports that Puerto Rico's financial oversight board is seeking Willkie Farr & Gallagher LLP to serve as special adviser to a mediation team that's steering negotiations between the island's bankrupt power utility and its creditors. The federally-appointed oversight board is also asking the court to allow former US Bankruptcy Judge for the Southern District of New York Shelley C. Chapman to continue in her role as lead mediator in the debt talks, according to court filings. Judge Chapman, who oversaw the Lehman Brothers Holdings bankruptcy, retired this year and rejoined Willkie as senior counsel. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. * * * The two Title III plans of adjustment have been confirmed to date, for the Commonwealth and COFINA debtors. ================= V E N E Z U E L A ================= CITGO PETROLEUM: 6 Executives Released From Venezuela ----------------------------------------------------- Adam Zuvanich at theleadernews.com reports that families of five oil executives, including two family members of a local resident, have been reunited with their families after being imprisoned abroad for nearly five years. President Joe Biden announced that five Citgo executives, including the father and uncle of a Heights resident, and two other men were on their way home after being jailed in Venezuela since shortly before Thanksgiving 2017, according to theleadernews.com. Heights resident Alexandra Forseth's father, Alirio Zambrano, and her uncle, Jose Luis Zambrano, were among those released, the report notes. Jorge Toledo, Tomeu Vadell, and Jose Pereira were the other Citgo executives who are coming home, while former U.S. Marine Corporal Matthew Heath and Florida man Osman Khan were also released, the report relays. One member of the "Citgo 6," as the executives came to be known, Gustavo Cardenas, was the first one released earlier this year, the report discloses. "Today, after years of being wrongfully detained in Venezuela, we are bringing home Jorge Toledo, Tomeu Vadell, Alirio Zambrano, Jose Luis Zambrano, Jose Pereira, Matthew Heath, and Osman Khan, the report relays. These individuals will soon be reunited with their families and back in the arms of their loved ones where they belong," Biden said in a statement, the report notes. Forseth could not be reached for comment. According to an article from CNN, the executives were released in exchange for the release of two Venezuelans imprisoned in the US for conspiring to smuggle cocaine into the country, both of whom are relatives of Venezuelan first lady Cilia Flores, the report says. The Citgo 6 were all executives at the Houston-based oil-and-gas company who were called to a business meeting in Caracas, Venezuela, a few days before Thanksgiving in 2017, when they were arrested by the government of Nicolas Maduro, the report notes. And so began a saga that would last for nearly five long years as the families have been separated, the report notes. But that is no more. The men are home, and their families are overjoyed, ther report relays. "The Zambrano family is thrilled that my dad, uncle, and the other innocent Americans are free," the Zambrano family said in a statement according to a report from Houston TV station ABC13, the report notes. Citgo is a subsidiary of PDVSA, an oil-and-gas company run by the Venezuelan government, and the men were arrested, accused of trying to make a deal that would financially inhibit PDVSA and convicted in November 2020 by a Venezuelan judge, the report discloses. Then-U.S. Secretary of State Mike Pompeo called the convictions "wrongful" and described the judicial proceeding as a "kangaroo court," the report says. Rallies were held at Candlelight Park locally, and in Washington, D.C., over the last several years as families urged federal government intervention to bring the men home, the report relays. Now, the families can now begin the process of putting the entire ordeal behind them, the report notes. "After almost five years, my dad and uncle are now able to get the much needed medical care they need in the United States and be reunited with us," the Zambrano family said according to ABC13, the report discloses. As reported in the Troubled Company Reporter-Latin America in June 2022, S&P Global Ratings affirmed its 'B-' long-term issuer credit ratings on CITGO Holding Inc. and core subsidiary CITGO Petroleum Corp. =========================== V I R G I N I S L A N D S =========================== ALL YEAR HOLDINGS: Wins Dismissal of Weiss Lawsuit -------------------------------------------------- Pending before the Court are two motions: (1) the Defendants All Year Holdings Limited, the debtor in the main Chapter 11 case, along with its wholly-owned subsidiary YG WV LLC and Wythe Berry Member LLC have moved to dismiss all claims in the amended complaint filed by the Plaintiff Zelig Weiss; and (2) Zelig Weiss has also moved for partial summary judgment on Claim III of its Complaint in opposition to the Motion to Dismiss. The U.S. Bankruptcy Court for the Southern District of New York grants the Defendants' Motion to Dismiss the Plaintiff's Complaint. Accordingly, the Court denies the Plaintiff's Motion for Partial Summary Judgment on Claim III. This action relates to a dispute between individuals and entities with direct and indirect ownership interests in the William Vale, a luxury hotel property and community space in Brooklyn (the "WV Complex"). The Plaintiff Zelig Weiss originally conceived of and developed the WV Complex. Weiss invited Yoel Goldman (a former principal of the Debtor) to join him in the venture, and the two became co-owners of Wythe Berry LLC ("WB LLC"). WB LLC operated and held title to the WV Complex. Weiss and Goldman each owned 50% of WB LLC. Weiss served as the managing member. According to Weiss, Goldman's only role in WB LLC was to provide and/or arrange for its funding. In approximately September 2016, WB LLC required a refinancing transaction as the WV Complex finished construction, and Goldman proposed raising the funds needed by issuing bonds on the Israeli market it entailed using and/or creating additional entities to execute the refinancing transaction. Weiss alleges that the Debtor then would cause the proceeds of the bond issuance to be used to pay off/refinance an existing mortgage on the WV Complex and debts of WB LLC. Next, the proposed transaction involved transferring title of the WV Complex to a new entity, Wythe Berry Fee Owner, LLC ("Fee Owner"), with Fee Owner leasing the WV Complex back to WB LLC. Finally, Member LLC was created to become the exclusive owner of Fee Owner, with Weiss and Goldman each owning 50% of Member LLC, either individually or through other entities. Claim I of the Complaint seeks a declaratory judgment that any direct or indirect transfer of all or any part of the Debtor's membership interests in YGWV without Weiss' express consent is prohibited by the Member LLC Agreement and shall be null and void. Weiss argues that the Debtor is bound by the Member LLC Agreement for two reasons: (1) YGWV is the Debtor's alter ego; and (2) the Debtors through its principal at the time, Goldman extensively negotiated the Member LLC Agreement as Weiss' true counterparty and, thereby, manifested the Debtor's intent to be bound by the agreement. The Court points out that the Debtor is not a signatory to the Member LLC Agreement. In addition, the Court finds that Weiss failed to state a claim under the alter ego theory and "intent to be bound" by the Agreement theory. As a result, Claim I must be dismissed. For Claim II, Weiss seeks a declaratory judgment that the Defendants are violating the covenant of good faith and fair dealing. This claim for breach is brought against both YGWV directly, as well as the Debtor, under Weiss' theories for alter ego and intent to be bound. However, Weiss fails to state a claim for the breach of implied covenant against both parties. The Court posits that with respect to the Debtor, Weiss cannot assert a claim for a breach of the implied covenant because the Debtor is not a party to the contract. Also, Weiss fails to make out a claim for breach of the implied covenant against YGWV, as the agreement in question already contains explicit (and no implicit) provisions that describe YGWV's obligations with respect to assignments of YGWV's interests, and only speaks to limitations on YGWV's not its parent organization'sability to transfer its interest. A change in the ownership interests on YGWV's side of the LLC was clearly foreseen by the parties. Weiss' argument for Claim III proceeds in two steps: first, Weiss argues that when the Debtor filed for bankruptcy, its membership in YGWV was terminated by operation of two independent sections of the New York LLC Law; and second, because the Debtor was the sole Member of YGWV, the termination of the Debtor's membership necessarily also caused the dissolution of YGWV under New York LLC Law. The Court finds Weiss' legal theories regarding the termination of All Year's membership under the first step incorrect, and thus, it fails to state a claim under Claim III. The Court explains that the Debtor's membership was not terminated by New York LLC Law because the obvious purpose of the statue is to provide a procedure to avoid dissolution if termination of a member occurs. The Court further explains that the events in New York LLC Law do not work an automatic termination of a member's interest, but instead, the statute empowers the LLC to define its own dissolution events "which the YGWV LLC Agreement does. In this case, bankruptcy is not a dissolution event in the Agreement. Claims IV and V of the Amended Complaint seek injunctive relief but are predicated on the same bases as Claims I through III for declaratory relief. Specifically, Claim IV seeks to enjoin Defendants from transferring All Year's interests in YGWV and Claim V seeks to enjoin All Year and YGWV from acting as managers of Member LLC. Because Weiss' other claims that support the basis for injunctive relief fail, the Court must dismiss the claims for permanent injunctions since it cannot stand. A full-text copy of the Memorandum Opinion and Order dated Oct. 4, 2022, is available at https://tinyurl.com/mva55fhh from Leagle.com. About All Year Holdings Limited All Year Holdings Limited is a real estate development company founded by American real estate developer Yoel Goldman. It operates as a holding company, which, through its direct and indirect subsidiaries, focuses on the development, construction, acquisition, leasing and management of residential and commercial income producing properties in Brooklyn, N.Y. The company's portfolio includes 1,648 residential units and 69 commercial units in Bushwick, Williamsburg, and Bedford-Stuyvesant. All Year Holdings sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 21-12051) on Dec. 14, 2021. At the time of the filing, the Debtor listed $1 billion to $10 billion in assets and liabilities. Judge Martin Glenn oversees the case. Weil, Gotshal & Manges LLP, led by Matthew Paul Goren, Esq., is the Debtor's bankruptcy counsel while Koffsky Schwalb, LLC and Bartov & Co. serve as special counsels. Donlin Recano & Company, Inc. Is the Debtor's administrative agent. On Dec. 16, 2021, the Debtor filed an application under the laws of the British Virgin Islands with the Eastern Caribbean Supreme Court in the High Court of Justice, Commercial Division Virgin Islands (the "BVI Court") seeking the appointment of Paul Pretlove and Charlotte Caulfield of Kalo (BVI) Limited as joint provisional liquidators under the applicable provisions of the BVI Insolvency Act 2003 (the "BVI Proceeding"). The BVI Court entered an order appointing the JPLs on December 20, 2021 (the "JPL Order"). In addition, on April 14, 2022, with the consent of the JPLs and the approval of the BVI Court, the Debtor commenced a proceeding in the District Court of Tel Aviv Yafo for recognition of the Chapter 11 Case as a foreign main proceeding under the applicable provisions of Chapter I, Part C of the Insolvency and Rehabilitation Law 5778-2018. The Israeli Court entered an order recognizing the Chapter 11 Case on May 4, 2022. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Latin America is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN 1529-2746. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Latin America subscription rate is US$775 per half-year, delivered via e-mail. 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