/raid1/www/Hosts/bankrupt/TCR_Public/220523.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, May 23, 2022, Vol. 26, No. 142
Headlines
78-80 ST. MARKS: Bankruptcy Trustee to Oversee NY Theater Sale
808 B STREET LLC: Files for Chapter 11 Protection
85 FLATBUSH: TH Holdco Responds to Disclosure Objections
85 FLATBUSH: TH Holdco Says Rival Plan Superior to Debtors' Plan
A & C TIMBER: Starts Chapter 11 Subchapter V Case
AGELESS SERUMS: Starts Chapter 11 Subchapter V Case
AGM GROUP: Swings to $3.6 Million Net Income in 2021
AGUILA INC: Committee Amends Unsecured Claims Pay Details in Plan
ALUMINUM SHAPES: Unsecureds to Recover Up to 60% of Claims in Plan
AMBADA LLC: Napa Pizza Starts Chapter 11 Subchapter V Case
AMERICAN FLAMINGO: Files for Chapter 11 Bankruptcy Protection
ANCHOR PACKAGING: Moody's Affirms 'B2' CFR, Outlook Remains Stable
AREVALO LC: Unsecureds Will Get 14.24% of Claims over 36 Months
BARRERA FAMILY: Gets OK to Hire Allan D. NewDelman as Counsel
BASA INVESTMENTS: Amends Amy Stanley Claims Pay Details
BETZ HEATING: Unsecureds to Get Share of Distribution Fund
BFCD PROPERTIES: July 12 Plan Confirmation Hearing Set
BIOSTAGE INC: Incurs $2.2 Million Net Loss in First Quarter
BLUE JAY COMMUNICATIONS: Wins Cash Collateral Access Thru July 25
BOY SCOUTS OF AMERICA: Bankruptcy Costs At Least $245 Million
C.H.I. OVERHEAD: Moody's Puts 'B2' CFR on Review for Upgrade
CENTURY 21: Returns to New York After Bankruptcy, Pandemic Closure
CHURCHILL DOWNS: Moody's Rates Amended Credit Facility 'Ba1'
CITE LLC: Reaches Settlement Agreement with Evangeline Gouletas
COATESVILLE AREA SD: Moody's Lowers Issuer & GOLT Ratings to B1
COEUR MINING: Moody's Lowers CFR to B3 & Alters Outlook to Stable
COLLEGE DUDES: Wins Cash Collateral Access Thru June 15
CREATD INC: Incurs $6.9 Million Net Loss in First Quarter
CRECHALE PROPERTIES: Court Confirms Modified Plan
CYPRESS ENVIRONMENTAL: May Tap $3MM of APE V DIP Loan
DALEX DEVELOPMENT: June 21 Plan Confirmation Hearing Set
DAVID BARTENWERFER: SCOTUS to Review Fraud Exception to Discharge
DERBY MOBILE: Wins Cash Collateral Access Thru May 31
DERRICK'S SPORTS: Unsecureds Will Get 10% in Subchapter V Plan
DIOCESE OF CAMDEN: Tells Court Chapter 11 Plan Is Best Option
ELI & ALI: Unsecured Creditors Will Get 14.3% of Claims in Plan
FBN TRANSPORTATION: Case Summary & Three Unsecured Creditors
FLEXIBLE FUNDING: Unsecureds' Recovery in Sale Plan "TBD"
FLOOR-TEX COMMERCIAL: Wins Cash Collateral Access Thru June 6
GHX ULTIMATE: S&P Alters Outlook to Negative, Affirms 'B' ICR
GOPHER COURIER: Wins Cash Collateral Access Thru May 26
HACIENDA HOLDINGS: Unsecureds to Get What's Left of $201K Cash
HAYWARD HOLDINGS: S&P Ups ICR to 'BB' on Reduced Sponsor Ownership
HEALTHIER CHOICES: Incurs $1.3 Million Net Loss in First Quarter
HEALTHMYNE INC: Has Deal on Cash Collateral Access
HELLO LIVING: Plan Has Fatal Issues, Mezz Lender Says
INLAND BOAT: Case Summary & 12 Unsecured Creditors
INVEPA INTERNATIONAL: June 2 Hearing on Disclosures and Plan
ISABEL ENTERPRISES: UST Appoints Mitchell as Subchapter V Trustee
JEFFERSON-11TH: Seeks Continuance of Hearing to Appoint Trustee
K. ANTHONY INC: Unsecureds Will Get 2% of Claims over 60 Months
KDR SUPPLY: Has Deal on Cash Collateral Access
LATAM AIRLINES: White & Case Gives 7th Update on LATAM Bondholders
LIMETREE BAY: Unsecureds Will Get 0% to 2% in Liquidating Plan
LOGOS INC: Wins Interim Cash Collateral Access
MATHESON FLIGHT: USPS Contractor Files for Chapter 11 Protection
MD HELICOPTERS: Arizona Law Supports Netherlands Chapter 11 Lien
MIAMI JEWISH: Fitch Affirms 'BB+' IDR, Outlook Stable
MIAMI-DADE COUNTY IDA: Moody's Rates 2022A/B Revenue Bonds 'Ba2'
MULLEN AUTOMOTIVE: Incurs $32.6 Million Net Loss in Second Quarter
PARKLAND CORPORATION: DBRS Confirms BB Issuer Rating
PHOENIX SERVICES: Moody's Lowers CFR to Caa1, Outlook Remains Neg.
POPPA CONSTRUCTION: 3 Entities Hit Chapter 11 Bankruptcy
PROJECT ALPHA: Moody's Affirms B3 CFR & Alters Outlook to Positive
PROMETHEUS HEALTH: Case Summary & Four Unsecured Creditors
PROVENCROWN BUILDERS: Seeks Access to JPMorgan's Cash Collateral
RED RIVER: Lender Seeks Appointment of Ch. 11 Trustee or Examiner
RITE AID: S&P Downgrades ICR to 'CCC+' on Weakening Performance
ROCKALL ENERGY: EPA, U.S. Govt. Want Revisions to Bankruptcy Plan
ROYAL BLUE REALTY: May Use $14,479 of Cash Collateral Thru June 30
RYAN ENVIRONMENTAL: Returns to Chapter 11 Bankruptcy
SEDGWICK CLAIMS: Moody's Affirms 'B3' CFR, Outlook Stable
SENIOR CARE LIVING: Wins Cash Collateral Access Thru June 2
SERVICE ONE: Trustee Seeks to Hire Operational Consultant
SERVICE ONE: Trustee Taps Lain, Faulkner & Co. as Accountant
SIMPKINS & THOMPSON: Wins Interim Cash Collateral Access
SM WELLNESS: Moody's Affirms 'B3' CFR & Alters Outlook to Negative
STONERIDGE PARKWAY: Property Sale Proceeds to Fund Plan Payments
TALEN ENERGY: They Need to End Coal Plant Fight, Say Utilities
TELINTEL LTD: Wins Continued Cash Collateral Access Thru May 31
TNBI INC: May Tap $120,000 of DIP Loan from Aisling
TUMBLEWEED TINY: Seeks OK of Cash Collateral Deal Thru June 30
UDP LABS: Case Summary & Three Unsecured Creditors
WESCO AIRCRAFT: Moody's Rates New First Lien Notes Due 2026 'Caa2'
ZOTEC PARTNERS: S&P Alters Outlook to Stable, Affirms 'B-' ICR
[^] BOND PRICING: For the Week from May 16 to 20, 2022
*********
78-80 ST. MARKS: Bankruptcy Trustee to Oversee NY Theater Sale
--------------------------------------------------------------
A bankruptcy judge ruled that the process to sell a historic
Manhattan property that houses an off-Broadway theater venue should
be overseen by an independent bankruptcy trustee instead of its
owner.
The property owner, 78-80 St. Marks Place LLC, sought chapter 11
protection from creditors in December, before the expiration of a
forbearance agreement on a defaulted loan.
Under the Forbearance Agreement, if the Debtor failed to repay in
less than 4 months, the Debtor was required to list the Property
for sale at $11,000,000 with the price decreasing each month
through July 15, 2021, to a final listing price of $8,500,000. If
the Property was not sold by Aug. 15, 2021, the Prepetition Lender
would have the right to foreclose without opposition.
The lender, Mark's Mixed Use LLC, in April 2022 filed a motion
seeking an order (i) converting the Chapter 11 case of 78-80 St.
Marks Place, LLC to a case under Chapter 7, or, alternatively (ii)
appointing a Chapter 11 trustee for the Debtor. The Lender is the
assignee of a loan made by 80 St. Marks Place Funding LLC to the
Debtor on or about November 12, 2019, in the principal amount of
$6,100,000.
The Property is a mixed-use property that holds three residential
units, a meeting and storage space, and four operating businesses
including Theatre 80 LLC, William Barnacle Tavern, and Exhibition
of the American Gangster, Inc.
Lawrence V. Otway wholly owns the Debtor and the businesses. Mr.
Otway is a debtor in another case pending before the Court (In re
Lawrance v. Otway, Bankr. S.D.N.Y. Case No. 21-12140).
At a Hearing in May 2022, the Court took the Motion under
submission and gave the Debtor and Mr. Otway until May 17, 2022 to
attempt to reach a consensual agreement with the Lender and the
United States Trustee regarding the process of selling the
Property.
On May 11, 2022, the Lender filed a status letter stating that "the
parties are nowhere near resolution" and requesting that the Court
grant the Motion.
"Here, the Court finds that it is in the best interests ofthe
Debtor's creditors and estate to order the appointment of a Chapter
11 trustee. The Court expects that a Chapter 11 Trustee will
market the Debtor's Property through a broker in an orderly Chapter
11 sale process. Such sale process is the most likely to achieve
the highest and best value for the Property for the benefit of the
Debtor's creditors and the estate. Further, the United States
Trustee agrees that the appointment of a Chapter 11 trustee would
be in th e best interest of the creditors at this time," Judge
Martin Glenn said in a ruling May 17, 2022.
Attorneys for Lender St. Mark's Mixed Use LLC:
Steven H. Newman, Esq.
Robert A. Abrams, Esq.
Katsky Korins LLP
605 Third Avenue
New York, New York 10158-0038
Telephone: (212) 953-6000
Facsimile: (212) 953-6899
E-mail: snewman@katskykorins.com
rabrams@katskykorins.com
About 78-80 St Mark's Place
78-80 St Mark's Place, LLC, filed a petition for Chapter 11
protection (Bankr. S.D.N.Y. Case No. 21-12139) on Dec. 29, 2021,
listing $15,012,427 in assets and $8,128,713 in liabilities.
Lawrence V. Otway, sole member, signed the petition. Judge Martin
Glenn oversees the case. The Debtor tapped Andrew R. Gottesman,
Esq., at Mintz & Gold, LLP as legal counsel.
808 B STREET LLC: Files for Chapter 11 Protection
-------------------------------------------------
808 B Street, LLC, filed for chapter 11 protection in the Southern
District of West Virginia.
According to court documents, 808 B Street estimates between 1 and
49 unsecured creditors. The petition states that funds will be
available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Sec. 341(a) is slated for
June 9, 2022 at 02:00 p.m. at the U.S. Trustees Meeting Room.
About 808 B Street LLC
808 B Street LLC is a West Virginia-based domestic limited
liability company.
808 B Street LLC sought Chapter 11 bankruptcy protection (Bankr.
S.D. W.Va. Case No. 22-20075) on May 6, 2022. In the petition
filed by Steven M. Newton, as manager, 808 B. Street estimated
assets between $500,000 and $1 million and liabilities between $1
million and $10 million.
This case has been assigned to Judge B. McKay Mignault.
Andrew S. Nason, of Pepper & Nason, is the Debtor's counsel.
85 FLATBUSH: TH Holdco Responds to Disclosure Objections
--------------------------------------------------------
TH Holdco LLC responded to (a) the objection filed by 85 Flatbush
RHO Mezz LLC, et al., and (b) the objection filed by 85 Flatbush
Mezz LLC (the "Mezz Lender"), both of which oppose TH Holdco's
continued motion seeking, inter alia, approval of the adequacy of
TH Holdco's Second Amended Disclosure Statement filed on April 26,
2022.
TH Holdco pointed out that:
* This is a relatively straight forward real estate case which
has now been pending for 17 months. While the Debtors and their
insiders continue to want yet more time for an insider transaction,
and while the Mezz Lender is hoping to extract hold-up value, the
market has spoken. Jones Lang LaSalle and the Debtors have
conducted an extensive marketing process and have been unable to
ascertain an offer in excess of TH Holdco's secured claim. If a
better offer is available, such an offer can be presented at the
Auction. But TH Holdco's Plan is a viable one, and it proposes to
pay unsecured creditors in full. TH Holdco's Plan can be confirmed
by June of 2022 and can go effective by late July or early August
2022. Given the facts and circumstances of this case, any further
delay in getting creditors paid is unwarranted and unproductive.
* After the hearing on the Motion held on April 6, 2022, TH
Holdco promptly addressed the Court's comments and the objections
raised by the Debtors and the Mezz Lender, and then provided two
rounds of updated drafts to the Debtors, the Mezz Lender, and other
parties in interest before filing the Disclosure Statement on April
26, 2022. Despite TH Holdco's demonstrated intent to move
full-speed ahead, neither the Debtors nor the Mezz Lender have
moved forward with an alternative plan or shown any ability or
willingness to fund a feasible and confirmable alternative plan.
* Specifically, the Debtors have not filed any amendments in
response to the Court's comments at the hearing on April 6, 2022 to
the Debtors' plan or disclosure statement, nor have they addressed
TH Holdco's objections to the same (see the Original Reply).
Instead, in the Debtors' Objection, they state that they are still
"working to secure" a long-term lease from the New York City
Department of Homeless Services ("DHS") and do not state anything
about where the Debtors stand on obtaining a financing commitment
letter or commitments for the proposed new value under the Debtors'
Plan. The Debtors' counsel has stated this week to TH Holdco's
counsel that the Debtors are not ready to move forward with the
Debtors' Plan but "have not given up on it".
* TH Holdco has shared a revised version of the Disclosure
Statement and Plan with the Debtors in response to the Debtors'
latest objection and then had meet and confer calls with the
Debtors' counsel and received further comments by email from
Debtors' counsel, which seem to have resolved most of the Debtors'
Objections to the TH Holdco Disclosure Statement. A current version
of that Disclosure Statement and Plan, including redlines of the
further minor changes since the currently filed versions, is being
filed separately today.
* The Mezz Lender's Objection, which was filed late, is a clear
violation of its obligations under the Intercreditor Agreement and
should be stricken or disregarded. The Mezz Lender's argument, that
the Adversary Proceeding must be fully resolved with a final,
non-appealable order before the Auction can commence, is an attempt
to use the Adversary Proceeding to enjoin TH Holdco from going
effective on its Plan and implementing its credit bid for months
and perhaps years. The Mezz Lender should not get a free injunction
or free stay pending appeal.
* Although the Mezz Lender has made numerous statements that it
intends to prosecute the Adversary Proceeding with haste, the Mezz
Lender's pace has been anything but speedy. Moreover, although the
Mezz Lender's position in its original objection was that
resolution of the Adversary Proceeding was a gating issue to
approval of the Motion, which the Court summarily rejected, the
Mezz Lender has since refused to move forward promptly, and has
maintained that the Adversary Proceeding must be resolved by a
final, non-appealable order before an Auction can take place. The
Mezz Lender's position is baseless and solely intended to extract
hold-up value from TH Holdco, in violation of the Intercreditor
Agreement. TH Holdco, therefore, requests the Court approve the
Disclosure Statement, including the proposed timeline for voting,
confirmation, and the Auction set forth in the proposed Bid
Procedures. TH Holdco will continue to work diligently to resolve
the Adversary Proceeding, but it cannot be underscored more: at
this point, the delay has been solely caused by the Mezz Lender.
Based on the Mezz Lender's actions to date, there is a real
potential for the Mezz Lender to drag out the Adversary Proceeding
for many months and perhaps years, which is obviously untenable and
does not benefit the Debtors' Estates or its many creditors besides
the Mezz Lender.
* Additionally, it must be noted that the Mezz Lender sat on its
purported rights for almost two years before commencing the
Adversary Proceeding, and only did so as TH Holdco sought to move
forward with confirmation of the Plan. If there is insufficient
time prior to an Auction to resolve the Mezz Lender's claims, that
is solely of the Mezz Lender's own doing. Further, to the extent
that there are other forms of relief available to the Mezz Lender,
nothing prevents the Mezz Lender from pursuing such relief after
the Auction.
* The Debtors' Objection argues that TH Holdco's Disclosure
Statement fails to contain adequate information under ยง 1125 of
the Bankruptcy Code related to: (a) the timeline for the auction
process; (b) the basis for TH Holdco's Plan providing that the
treatment, i.e., payment, of the TH Holdco Secured Claim (Class 3)
may potentially apply against the Mezz Debtor; (c) whether TH
Holdco intends to "confirm the Mezz component of the Plan"; (d) the
basis for TH Holdco asserting any unsecured deficiency claim
against the Debtors or contributing any amount it would receive on
account of its deficiency claim "if TH is taking title to the
Property subject to its mortgage"; and (e) whether TH Holdco has
the financial wherewithal to ensure plan funding obligations are
met. TH Holdco has addressed each of these issues with the Debtors'
counsel and has made changes to the Disclosure Statement and the
Plan to accommodate each issue. To the extent the Debtors continue
to object on any of these points, they should be overruled.
Additionally, TH Holdco asserts that the Court should overrule the
Mezz Lender's Objection. The Mezz Lender argues that: (i) the
Auction cannot proceed before a final, non-appealable order is
issued in the Adversary Proceeding, and (ii) TH Holdco is required
to include a discussion of the "repercussions" of losing the
Adversary Proceeding.
TH Holdco notes that:
* First, the Mezz Lender's position that the Auction cannot
move forward until after a final, non-appealable order is entered
in the Adversary Proceeding is based on a misinterpretation of the
Court's statement at the April 6, 2022 hearing. In a discussion on
the timing for the Adversary Proceeding, the Court commented that
"I think that it can be dealt with, as Mr. Nash says, in the
auction process so -- ". TH Holdco interpreted this to mean that
the Adversary Proceeding could likely be resolved in conjunction
with the Auction process and believes that the Court's comment was
premised on the Mezz Lender's affirmative statement that it
intended to move quickly to resolve the Adversary Proceeding, which
the Mezz Lender has not done. The Court's statement did not appear
to be a mandate that the Auction could not proceed until after
resolution of the Adversary Proceeding, as such a mandate would
essentially give the Mezz Lender a free injunction and a free stay
pending appeal. Indeed, in April, counsel for the Mezz Lender
confirmed with counsel for TH Holdco that the discovery process
could be completed within 60 days (by mid-June, 2022). However,
while TH Holdco has clearly demonstrated its interest in moving the
Adversary Proceeding along at a quick pace (e.g., TH Holdco
answered the complaint and issued notices of deposition and
discovery requests to the Mezz Lender on April 4, 2022, the latter
of which were never answered by the Mezz Lender, forcing TH Holdco
to adjourn the aforementioned depositions (see May 11, 2022 letter
to the Mezz Lender's counsel attached hereto as Exhibit A), the
Mezz Lender's failure to reciprocate (e.g., the Mezz Lender failed
to issue discovery requests until May 4, 2022) shows that the Mezz
Lender's promises to "litigate[] expeditiously so as to not
unnecessarily delay the process" are hollow and that the Mezz
Lender is simply interested in extracting hold-up value from TH
Holdco.
* Not only is this untenable and in violation of the
Intercreditor Agreement, but it also delays and endangers
distributions to the taxing authorities, the Chapter 11
Administrative Expenses, and the General Unsecured Claims. There is
no other current viable plan that pays those Claims and there is no
assurance there will be any such rival plan in the future that pays
those Claims. If the current Plan as proposed by TH Holdco is not
permitted to proceed to a prompt confirmation and closing, TH
Holdco reserves the right to pursue a modified Plan or other relief
such as a lift stay motion or a motion to convert or dismiss.
* Likewise, the Mezz Lender wrongfully attempts to
disincentivize voters and thereby jeopardizes TH Holdco's chances
at a successful Plan confirmation through the insertion of certain
language in the Disclosure Statement discussing the "potential
repercussions of the Adversary Proceeding." TH Holdco should not be
required to insert the proposed "repercussions" language, which is
clearly not supported by and indeed is contrary to the terms of the
Intercreditor Agreement. This language, and the other Mezz Lender's
remaining comments, are unacceptable and violate the Intercreditor
Agreement.
* It is TH Holdco's Plan, and the Mezz Lender cannot amend it
by fiat. TH Holdco is not willing to accept the Mezz Lender's
changes to the TH Holdco Plan. The Mezz Lender can raise whatever
confirmation objections it has (to the extent they do not violate
the Intercreditor Agreement) and those confirmation objections do
not need to be resolved at the adequacy of the Disclosure Statement
hearing. Thus, the Mezz Lender's Objection should be overruled
altogether.
As such, TH Holdco asks that the Court overrule all objections,
grant the Motion, allow TH Holdco to proceed with solicitation of
its Plan now and set a confirmation hearing date or June 2022.
Counsel to the TH Holdco LLC:
Lauren Macksoud, Esq.
Sarah M. Schrag, Esq.
DENTONS US LLP
1221 Avenue of the Americas, 25th Floor
New York, New York 10020
Telephone: (212) 768-6700
Facsimile: (212) 768-6800
Email: lauren.macksoud@dentons.com
sarah.schrag@dentons.com
Robert Richards, Esq.
DENTONS US LLP
233 S. Wacker Drive, Suite 5900
Chicago, IL 60606
Telephone: (312) 876-8000
Facsimile: (312) 876-7934
Email: robert.richards@dentons.com
About 85 Flatbush RHO Mezz
85 Flatbush RHO Mezz LLC is the 100% owner of 85 Flatbush RHO Hotel
LLC and 85 Flatbush RHO Residential LLC. RHO Hotel and RHO
Residential collectively own the property located at 85 Flatbush
Extension, Brooklyn, N.Y.
The property is a 132,641-square-foot, 12-story, mixed use property
consisting of a 174-room boutique hotel on the first six floors
known as the Tillary Hotel Brooklyn, a 58,652-square-foot 64-unit
luxury multi-family building and a 5,642-square-foot parking
garage. The residential component of the property has nine studios,
26 one-bedroom units and 29 two-bedroom units.
85 Flatbush RHO Mezz and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
20-23280) on Dec. 18, 2020. In its petition, 85 Flatbush RHO Mezz
disclosed between $50 million and $100 million in both assets and
liabilities.
Judge Robert D. Drain oversees the cases.
Fred B. Ringel, Esq., at Robinson Brog Leinwand Greene Genovese &
Gluck P.C., is the Debtor's legal counsel.
85 FLATBUSH: TH Holdco Says Rival Plan Superior to Debtors' Plan
----------------------------------------------------------------
TH Holdco, LLC, filed a Second Amended Plan and a corresponding
Second Amended Disclosure Statement for debtors 85 Flatbush RHO
Mezz LLC, et al.
TH Holdco, LLC, currently holds debt secured by the assets of 85
RHO Hotel and 85 RHO Residential, which debt was acquired on
January 28, 2022.
TH Holdco is indirectly owned by Ohana related entities. Ohana is
a vertically integrated investment firm focused on full-service
hotels. Ohana invests in both equity and credit opportunities
through dedicated commingled fund vehicles. Founded in 2009, Ohana
is currently headquartered in Redwood City, California and has
approximately $2.0 billion under management (including $0.7 billion
in regulatory assets under management).
Ohana has available cash, liquid investments and/or available lines
of credit more than sufficient to fund the Plan and is prepared to
provide all of the funding required by TH Holdco to confirm this
Plan.
TH Holdco Plan vs. Debtors' Amended Plan
TH Holdco asserts that its Plan is better than the Debtors' Amended
Plan and the Debtors' Original Plan. With respect to the Debtors'
Amended Plan, in TH Holdco's view, the TH Holdco Plan is better for
various reasons.
A. TH Holdco asserts that the Debtors Amended Plan will not meet
the feasibility requirement for confirmation.
For instance, the Agreed Final Cash Collateral Order agreed to by
the Debtors on notice and an opportunity to object and entered by
the Bankruptcy Court in March 2021 acknowledges in Paragraph 14 of
that Order that post-petition interest on the "Lender's claim will
continue to accrue and additional charges pursuant to the Loan
Documents, subject to the next sentence. The extent to which the
Lender Claim is a Secured Claim will be determined by the Court
based on the value of the Lender's Collateral, and is subject to
section 506(a) and (b) of the Bankruptcy Code, and to applicable
non-bankruptcy law, provided, however, that the Debtor acknowledges
and agrees that the Lender has a valid and enforceable lien on the
Property." TH Holdco asserts that the Debtors' Amended Plan,
however, is predicated on no post-petition interest being paid to
TH Holdco.
Furthermore, the Debtors' Amended Plan is subject to financing in
the amount of $78 million. No financing commitment has been filed
to date and if and when any such financing commitment is filed, TH
Holdco asserts that it may be subject to material contingencies or
delays in closing and there is no assurance that such financing
will ultimately close.
Furthermore, the Debtors' Amended Plan is subject to entry into a
long-term agreement with the New York City Department of Homeless
Services ("DHS") which has not been filed of public record nor
approved by the Bankruptcy Court.
Furthermore, the Debtors' Amended Plan is also contingent on an new
value equity contribution of not less than $9,611,096.
B. If TH Holdco is the successful bidder, pursuant to its proposed
plan, TH Holdco will pay Allowed General Unsecured Claims in
Classes 6 (85 Flatbush RHO Hotel General Unsecured Claims) and 8
(85 Flatbush RHO Residential General Unsecured Claims) in full in
Cash with interest.
Unlike the Debtors Amended Plan, TH Holdco is funding an initial
distribution pool for those unsecured creditors of $1.25 million so
there will be an immediate and substantial distribution to those
unsecured creditors. The remaining amount will be paid with
interest within 12 months of the Effective Date including by
funding from TH Holdco's ownership if needed to make sure there is
sufficient funds to make that payment which payment will be
guaranteed by a credit worthy affiliate of Ohana. Moreover, the
Mezz Lender asserts that TH Holdco's ability to pursue an Auction
will ultimately be negated by a successful challenge under the
parties' Intercreditor Agreement in the Adversary Proceeding. TH
Holdco disagrees with the Mezz Lender's assertion and further
asserts that the Mezz Lender continues to violate the Intercreditor
Agreement.
In contrast, the Debtors Amended Plan has no immediate payment to
Allowed General Unsecured Claims in Classes 6 (85 Flatbush RHO
Hotel General Unsecured Claims) and 8 (85 Flatbush RHO Residential
General Unsecured Claims) and provides that "Cash from the rental
income generated by the DHS Lease allocable to the [applicable
Property] . . . will be payable on the later of one (1) year from
the Effective Date and the date on which such . . . General
Unsecured Claim becomes an [Allowed Claim] . . ." [Debtors Amended
Plan, Sections 4.6 and 4.8]. TH Holdco asserts that there is no
assured funding from Debtors' ownership in the event that the
income from any DHS Lease is insufficient to pay those unsecured
claims in full with interest or if the Debtors' breach the DHS
Lease in any manner.
C. Chapter 11 Administrative Expenses and Priority Claims to the
extent ultimately Allowed need to be paid in order to meet the
standards to confirm a Chapter 11 plan.
TH Holdco's Plan provides additional cash consideration in addition
to the TH Holdco Credit Bid in order to pay those expenses. TH
Holdco asserts that the Debtors expected Plan Fund of
$88,612,000.00 is not only insufficient to pay the TH Holdco's
Secured Claim (including post-petition interest and costs) in full
but is also not sufficient to pay priority tax claims and expected
Chapter 11 administrative expenses. TH Holdco has not agreed to
any funding or carve out from its lien on the Hotel Property and
Residential Property or cash proceeds of its collateral to pay
those Chapter 11 Administrative Expense or Priority Claims under
the Debtors' Plan beyond what is set forth in the Agreed Final Cash
Collateral Order. Therefore, TH Holdco asserts that the Debtors
Amended Plan is not feasible and does not meet other Chapter 11
confirmation standards.
85 Flatbush RHO Hotel Unsec. Claims
85 Flatbush RHO Residential scheduled a total of $766,664 in
nonpriority unsecured claims. Together with filed proofs of claim,
there are a total of $1,175,320 nonpriority unsecured claims
against 85 Flatbush RHO Residential.
Under the Plan, Class 6 85 Flatbush RHO Hotel General Unsecured
Claims totaling $1,174,928. Each such holder shall receive Cash in
an amount equal to the amount of the Allowed Claim, together with
interest at the federal judgment rate, as follows: (i) an initial
Cash distribution on or about the Effective Date of such Claim's
Pro Rata share of the $1.25 million TH Holdco Unsecured Claim
Dedicated Fund, (ii) quarterly distributions thereafter of such
Claim's Pro Rata share of 50% of the excess cash flow from
operations of the Hotel Property and the Residential Property until
such claim is paid in full in Cash together with interest at the
federal judgment rate on such Claim and (iii) if any amounts remain
unpaid on such Claim as of the 12 month anniversary of the
Effective Date, a final Cash payment in an amount sufficient to pay
the remaining unpaid amount of such Claim in full in Cash together
with interest at the federal judgment rate on such Claim from the
TH Holdco Unsecured Claim Additional Funding. Class 6 is impaired.
TH Holdco reserves its rights on its remaining claim as to all
guarantors and all non-Debtor parties.
In the event that a Purchaser other than TH Holdco closes the Sale
Transaction, payments to Class 6 General Unsecured Claims shall be
paid by such Purchaser or the cash proceeds of such Purchaser's bid
as provided in such Purchaser's purchase agreement.
85 Flatbush RHO Residential Unsecured Claims
Class 8 85 Flatbush RHO Residential General Unsecured Claims total
$204,815. Each such holder shall receive Cash in an amount equal to
the amount of the Allowed Claim, together with interest at the
federal judgment rate, as follows: (i) an initial Cash distribution
on or about the Effective Date of such Claim's Pro Rata share of
the $1.25 million TH Holdco Unsecured Claim Dedicated Fund, (ii)
quarterly distributions thereafter of such Claim's Pro Rata share
of 50% of the excess cash flow from operations of the Hotel
Property and the Residential Property until such Claim is paid in
full in Cash together with interest at the federal judgment rate on
such Claim and (iii) if any amounts remain unpaid on such Claim as
of the 12 month anniversary of the Effective Date, a final Cash
payment in an amount sufficient to pay the remaining unpaid amount
of such Claim in full in Cash together with interest at the federal
judgment rate on such Claim from the TH Holdco Unsecured Claim
Additional Funding. Class 8 is impaired.
TH Holdco reserves its rights on its remaining claim as to all
guarantors and all non-Debtor parties.
In the event that a Purchaser other than TH Holdco closes the Sale
Transaction, payments to Class 8 General Unsecured Claims shall be
paid by such Purchaser or the cash proceeds of such Purchaser's bid
as provided in such Purchaser's purchase agreement.
85 Flatbush Mezz General Unsecured Claims
Class 13 85 Flatbush Mezz General Unsecured Claims totaling
$171.59. After payment is made in full to holders of Allowed
Administrative Claims, Allowed Priority Tax Claims, Allowed Fee
Claims, and Allowed Claims in Classes 1, 2, 3, 4, 5, 10, 11 and 12,
in to the extent there is any remaining Cash in the Plan Fund, on
the Closing Date and except to the extent that a holder of an
Allowed General Unsecured Claim agrees to less favorable treatment
of such Allowed General Unsecured Claim or has been paid before the
Effective Date, each holder of an Allowed General Unsecured Claim
shall receive, in full and final satisfaction of such Claim, its
Pro Rata share of the remaining Cash from the Plan Fund up to the
full amount of their Allowed Claim. If Class 13 Allowed Claims are
de minimis, TH Holdco with additional funding from its direct or
indirect owners may elect to pay such Claims in full on or about
the Effective Date. Class 13 is impaired.
Insider Claims
Class 14 Insider General Unsecured Claims totaling $1,708,629.
After payment is made in full to holders of Allowed Administrative
Claims, Allowed Priority Tax Claims, Allowed Fee Claims, and
Allowed Claims in Classes 1, 2, 3, 4, 5, 10, 11, 12 and 13, in to
the extent there is any remaining Cash in the Plan Fund, on the
Closing Date and except to the extent that a holder of an Allowed
General Unsecured Claim agrees to less favorable treatment of such
Allowed General Unsecured Claim or has been paid before the
Effective Date, each holder of an Allowed General Unsecured Claim
shall receive, in full and final satisfaction of such Claim, its
Pro Rata share of the remaining Cash from the Plan Fund up to the
full amount of their Allowed Claim. Class 14 is impaired.
The Plan Fund shall be funded by (i) the TH Holdco Additional
Consideration, (ii) the Sale Proceeds (if any), which shall be
allocable to the Hotel Property and/or the Residential Property as
set forth in the Purchase Agreement and (iii) the Debtors'
Available Cash and shall be established upon the Closing Date.
Creditor distributions to be made separate from or later than the
Closing Date shall be made by the Disbursing Agent under the Plan.
Counsel to the TH Holdco LLC:
Lauren Macksoud, Esq.
Sarah M. Schrag, Esq.
DENTONS US LLP
1221 Avenue of the Americas, 25th Floor
New York, New York 10020
Telephone: (212) 768-6700
Facsimile: (212) 768-6800
Email: lauren.macksoud@dentons.com
sarah.schrag@dentons.com
Robert Richards, Esq.
DENTONS US LLP
233 S. Wacker Drive, Suite 5900
Chicago, IL 60606
Telephone: (312) 876-8000
Facsimile: (312) 876-7934
Email: robert.richards@dentons.com
A copy of the Disclosure Statement dated May 13, 2022, is available
at https://bit.ly/3Nh5Wk8 from PacerMonitor.com.
About 85 Flatbush RHO Mezz
85 Flatbush RHO Mezz LLC is the 100% owner of 85 Flatbush RHO Hotel
LLC and 85 Flatbush RHO Residential LLC. RHO Hotel and RHO
Residential collectively own the property located at 85 Flatbush
Extension, Brooklyn, N.Y.
The property is a 132,641-square-foot, 12-story, mixed use property
consisting of a 174-room boutique hotel on the first six floors
known as the Tillary Hotel Brooklyn, a 58,652-square-foot 64-unit
luxury multi-family building and a 5,642-square-foot parking
garage. The residential component of the property has nine studios,
26 one-bedroom units and 29 two-bedroom units.
85 Flatbush RHO Mezz and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
20-23280) on Dec. 18, 2020. In its petition, 85 Flatbush RHO Mezz
disclosed between $50 million and $100 million in both assets and
liabilities.
Judge Robert D. Drain oversees the cases.
Fred B. Ringel, Esq., at Robinson Brog Leinwand Greene Genovese &
Gluck P.C., is the Debtor's legal counsel.
A & C TIMBER: Starts Chapter 11 Subchapter V Case
-------------------------------------------------
A&C Timber Inc. filed for chapter 11 protection in the Northern
District of Alabama. According to court filing, A & C Timber
estimates between 1 and 49 unsecured creditors. The petition
states that funds will be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Sec. 341(a) is slated for
June 8, 2022 at 11:00 A.M.
About A&C Timber Inc.
A&C Timber Inc. is a licensed and bonded freight shipping and
trucking company running freight hauling business from Bremen,
Alabama.
A&C Timber Inc. filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ala. Case No.
22-01051) on May 5. 2022. In the petition filed by Chris Peed, as
president, A&C Timber estimated assets between $500,000 and $1
million and estimated liabilities between $500,000 and $1 million.
The case is assigned to Honorable Bankruptcy Judge Tamara O
Mitchell.
Steven D Altmann, of Nomberg Law Firm, is the Debtor's counsel.
AGELESS SERUMS: Starts Chapter 11 Subchapter V Case
---------------------------------------------------
Ageless Serums LLC filed for chapter 11 protection in Houston,
Texas.
The Debtor is in the business of designing, developing, and selling
high-quality serums for use with hydradermabrasion systems, a
skincare product commonly used by aestheticians and at skincare
clinics. Hydradermabrasion is a dermatological procedure that
cleans, exfoliates, moisturizes, and protects the skin, and is
often applied to patients' faces at medical spas. The Debtor sells
its products directly to consumers through its Web site.
According to court filings, Ageless Serums estimates between 1 and
49 unsecured creditors. The petition states that funds will be
available to unsecured creditors.
A teleconference meeting of creditors under 11 U.S.C. Sec. 341(a)
is slated for June 9, 2022 at 2:00 p.m. at the Office of U.S.
Trustee.
About Ageless Serums LLC
Ageless Serums LLC -- https://www.agelessserums.com/index.html --
offers premium serums for hydrafacial, silk peel and all dermal
infusion devices.
Ageless Serums LLC filed a petition for relief under Subchapter V
of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No.
22-31259) on May 5, 2022. In the petition filed by CEO Rene
Chlumecky, Ageless Serums estimated assets between $50,000 and
$100,000 and liabilities between $500,000 and $1 million.
The case is assigned to Honorable Bankruptcy Judge Eduardo V
Rodriguez.
Neligan LLP, led by partner John D. Gaither, is the Debtor's
counsel. The Debtor originally retained Pachulski Stang Ziehl &
Jones LLP as its proposed bankruptcy counsel, but shortly after the
Petition Date, the Debtor determined that PSZJ's rate structure was
not sustainable given the size of the Debtor's estate. Fox
Rothschild LLP is the Debtor's special litigation counsel.
AGM GROUP: Swings to $3.6 Million Net Income in 2021
----------------------------------------------------
AGM Group Holdings Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 20-F disclosing net income of
$3.55 million on $36.71 million of total revenues for the year
ended Dec. 31, 2021, compared to a net loss of $1.07 million on
$53,305 of total revenues for the year ended Dec. 31, 2020.
As of Dec. 31, 2021, the Company had $88.02 million in total
assets, $62.97 million in total liabilities, and $25.05 million in
total shareholders' equity.
Flushing, New York-based JLKZ CPA LLP, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
April 22, 2021, citing that the Company had incurred substantial
losses during the year, which raises substantial doubt about its
ability to continue as a going concern.
A full-text copy of the Form 20-F is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001705402/000121390022027279/f20f2021_agmgrouphold.htm
About AGM Group Holdings
Headquartered in Wanchai, Hong Kong, AGM Group Holdings Inc. is
asoftware company, currently providing fintech software and trading
education software and website service.
AGUILA INC: Committee Amends Unsecured Claims Pay Details in Plan
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors in debtor Aguila
Inc.'s case submitted a First Amended Plan of Liquidation and a
corresponding First Amended Disclosure Statement for the Debtor on
May 17, 2022.
The Committee believes that even if the Debtor were able to procure
one or more new contracts, the revenue generated from them will not
come close to covering the cash that will be required by the Debtor
to maintain its current overhead expenses while it submits bids for
new contracts and the ongoing expenses after it obtains any such
new contracts. This cash would otherwise be available to fund an
orderly liquidation, including collection of governmental
receivables, potential litigation claims, objections to invalid and
overstated claims and then distributions to creditors.
The Committee believes that the Debtor is no longer able to confirm
a plan of reorganization and that an orderly liquidation is in the
best interest of creditors. To date, the Debtor has not been
awarded any new contracts with DHS. The first bid it submitted on
December 28, 2022 was not selected, a second bid was also not
selected, and for the 3 other contracts for which it recently
submitted bids, several well-established and capable providers,
including those currently providing services at the sites, have
also submitted proposals.
The Committee therefore believes it would be futile to forbear the
liquidation that appears imminent. Accordingly, the Committee is
pursuing confirmation of the Plan to provide for a liquidation of
the Debtor's assets and an orderly wind down the Debtor's affairs.
The Plan provides a means by which the remaining portion of the
Debtor's Accounts Receivable and other assets will be liquidated.
The Plan further provides that the proceeds of such liquidation,
together with the Debtor's Cash, will be distributed under Chapter
11 of the Bankruptcy Code, and sets forth the treatment of all
Claims against the Debtor.
The Plan provides for payments on Allowed Claims in accordance with
the priorities for claims as set forth under the Bankruptcy Code.
The Plan will primarily be funded with the Debtor's Cash and
collection of the Accounts Receivable. The Plan may also be funded
with Litigation Proceeds, if any, and the net proceeds from the
liquidation of any other assets of the Debtor.
Class 2 consists of General Unsecured Claims. Holders of General
Unsecured Claims that are Allowed as defined in the Plan will
receive a Pro Rata Distribution from Available Cash after payment
of the Allowed Unclassified Claims and Allowed Class 1 Claims in
one or more Distributions as determined by the Plan Administrator.
The allowed unsecured claims total $11,273,981.92.
The Debtor has informed the Committee that it anticipates shortly
filing objections to additional claims that will reduce claims by
approximately an additional approximately $630,000. There are also
additional claims scheduled as disputed, contingent or unliquidated
for which no proof of claim was timely filed. These reductions
leave an estimated $11,273,981.92 in alleged General Unsecured
Claims against the Estate.
Although the Debtor has made significant cuts in overhead
throughout the Chapter 11 case, it continues to operate at a
deficit. The Debtor has accumulated approximately $400,000 of
deficits during its Chapter 11 Case and continues to operate at a
deficit as detailed in the Debtor's February and March 2022 Monthly
Operating Report. The Debtor is currently generating operating
deficits of approximately $65,000 per month and similar losses are
expected to continue.
The Plan shall be funded with: (a) the Debtor's Cash on hand at the
Effective Date; (b) the Accounts Receivable Proceeds, (c) the
Litigation Proceeds; and (d) the proceeds of amounts realized from
the liquidation and/or turnover of any other assets of the Debtor.
All Distributions shall be made by the Plan Administrator.
A full-text copy of the First Amended Disclosure Statement dated
May 17, 2022, is available at https://bit.ly/3yUAvIv from
PacerMonitor.com at no charge.
Counsel to the Official Committee of Unsecured Creditors:
Thomas Slome, Esq.
Amanda Tersigni, Esq.
Cullen and Dykman, LLP
100 Quentin Roosevelt Boulevard
Garden City, NY 11530
Tel: (516) 357-3700
Email: tslome@cullenllp.com
atersigni@cullenllp.com
Michelle McMahon, Esq.
44 Wall Street
New York, New York 10005
(212) 510-2296
Email: mmcmahon@cullenllp.com
About Aguila Inc.
Aguila Inc., a nonprofit homeless services organization in New
York, filed a petition for Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 21- 11776) on Oct. 15, 2021, listing as much as $10
million in both assets and liabilities. Judge Martin Glenn
oversees the case.
The Debtor tapped Robert Leslie Rattet, Esq., at Davidoff Hutcher &
Citron, LLP as legal counsel.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors in the Debtor's Chapter 11 case on Dec. 14,
2021. The committee is represented by Cullen and Dykman, LLP.
ALUMINUM SHAPES: Unsecureds to Recover Up to 60% of Claims in Plan
------------------------------------------------------------------
The Official Committee of Unsecured Creditors of debtor Aluminum
Shapes, L.L.C., filed with the U.S. Bankruptcy Court for the
District of New Jersey a Disclosure Statement for the Plan of
Liquidation.
The business of the Debtor involves extrusion and other processing
of aluminum. The predecessor of the Debtor acquired 55 acres of
land at its then-current location in Delair, New Jersey, upon which
it developed and built its aluminum processing facilities.
As required by the DIP Order, on September 14, 2021, the Debtor
filed a motion seeking approval of (i) certain bid procedures and
(ii) the sale of substantially all of the Debtor's assets (the
"Sale Motion"). Pursuant to the order approving the Sale Motion, as
amended, the Debtor set out to conduct an auction that was
originally to take place on October 25, 2021.
At the conclusion of the auction, VV9000 (the "Purchaser"),
prevailed as the highest and best bidder for all of the Debtor's
Assets. The Purchaser's winning bid resulted in proceeds of
$31,987,000. On November 19, 2021, the Court entered an order
approving the Sale to the Purchaser (the "Sale Order"). In
accordance with the Sale Order, the Debtor successfully closed on
the sale of the Assets to the Purchaser on November 24, 2021. After
the payment of closing costs, charges required to clear title to
the real estate, and all of the Debtor's outstanding obligations to
Tiger, the Estate of the Debtor received net proceeds of
15,057,858.84.
The Plan Proponent submits that the HYG/Wells Settlement should be
approved because it is within the range of reasonable litigation
possibilities, avoids risky and costly litigation and reduces the
necessary administrative expenses that would be required to resolve
this issue, including experts necessary to value the forklifts. In
light of the size of the claims, the HYG/Wells Settlement is in the
best interest of the settling creditors, all other creditors and
the estate.
The Holders of Class 3 Allowed General Unsecured Claims shall
receive a Pro Rata share of the net proceeds of the Liquidating
Trust Assets transferred to the Liquidating Trust. The Plan
Proponent estimates that the aggregate amount of Allowed Class 3
Claims is approximately $17,820,181.50 (including the PPP loans
which total $6,870,015.00 and are anticipated to be forgiven) and
that Holders of such Claims will receive a recovery of up to 60%.
Class 3 is comprised of Holders of General Unsecured Claims not
provided for in Class 4, 5 or 6. Each Holder of an Allowed General
Unsecured Claim in Class 3 shall receive a Pro Rata share of the
net proceeds of the Liquidating Trust Assets after the payment of
all Allowed Administrative Claims, Allowed Fee Claims, Allowed
Priority Tax Claims, Allowed Other Priority Claims, Allowed Other
Secured Claims, and the payment of all costs and expenses of the
Liquidating Trust. Class 3 is impaired by the Plan and is entitled
to vote on the Plan.
Class 4 is comprised of Holders of General Unsecured Worker's
Compensation Claims. In exchange for a grant of relief from the
automatic stay conditioned by this Plan, any holder of a Class 4
Claim shall be limited to recovery from the Debtor's applicable
insurance policies and shall not receive a disbursement from the
Liquidating Trust. Class 4 is impaired by the Plan and is entitled
to vote on the Plan.
Class 5 is comprised of the United States of America Damage Claim.
The vast majority of the claimed $70,258,760.08 in damages are a
fine or penalty and not compensation for any actual pecuniary loss,
and the Debtor or Liquidating Trustee may seek such a determination
via an objection or adversary proceeding. The Debtor and the
Committee object to this Claim. To the extent the Court determines
that this Claim is an Allowed Claim, this Class shall be
subordinated to all General Unsecured Claims. Each Holder of a
Class 5 Claim shall receive a Pro Rata share of the net proceeds of
the Liquidating Trust Assets after the payment of all Allowed
Administrative Claims, Allowed Fee Claims, Allowed Priority Tax
Claims, Allowed Other Priority Claims, Allowed Other Secured
Claims, Allowed Class 3 Claims and the payment of all costs and
expenses of the Liquidating Trust.
Class 6 is comprised of the United States of America Penalty Claim.
The Debtor and the Committee object to this Claim. To the extent
the Court determines that this Claim is an Allowed Claim, this
Class shall be subordinated to all General Unsecured Claims. Each
Holder of a Class 6 Claim shall receive from time to time, a Pro
Rata share of the net proceeds of the Liquidating Trust Assets
after the payment of all Allowed Administrative Claims, Allowed Fee
Claims, Allowed Priority Tax Claims, Allowed Other Priority Claims,
Allowed Other Secured Claims, Allowed Class 3 Claims, Allowed Class
5 Claims and the payment of all costs and expenses of the
Liquidating Trust.
Class 7 is comprised of all Holders of Interests. On the Effective
Date, all Interests shall be retained by existing holders. Holders
of Interests shall receive no distribution under the Plan on
account of their interests, unless and until all other Classes of
Claims are paid in full. Class 7 is impaired under the Plan.
On the Effective Date, the Liquidating Trust Assets, including the
Estate Funds and all Causes of Action, will be assigned and
delivered to and vest in the Liquidating Trust and will be managed
by the Liquidating Trustee.
Except as otherwise provided in this Plan or the Confirmation
Order, all Cash necessary for the payments pursuant to this Plan
shall be obtained from the Liquidating Trust Assets or the proceeds
of the Liquidating Trust Assets.
Counsel to the Official Committee of Unsecured Creditors:
FOX ROTHSCHILD LLP
Joseph J. DiPasquale, Esquire
Michael J. Viscount, Jr., Esquire
Martha B. Chovanes, Esquire
1301 Atlantic Avenue
Midtown Building, Suite 400
Atlantic City, NJ 08401
Telephone: (609) 572-2227
Facsimile: (609) 348-6834
E-mail: jdipasquale@foxrothschild.com
mviscount@foxrothschild.com
mchovanes@foxrothschild.com
About Aluminum Shapes
Aluminum Shapes, L.L.C., is presently engaged in the business of
fabrication and processing of aluminum by extrusion and is the
owner of certain commercial/industrial real estate located at 9000
River Road, Delair, New Jersey.
Jacky Cheung, an Australian national and resident of Vietnam, owns
100% of the membership interests and is the sole member of the
Company.
Aluminum Shapes filed a Chapter 11 bankruptcy petition (Bankr.
D.N.J. Case No. 21-16520) on August 15, 2021, with a deal to sell
the business to Reich Brothers, LLC.
The Debtor estimated $10 million to $50 million in assets and
liabilities as of the bankruptcy filing.
Obermayer Rebmann Maxwell & Hippel LLP, led by Edmond M. George, is
the Debtor's bankruptcy counsel. Riveron Consulting's Winter
Harbor, LLC, is the interim management provider. Cowen and
Company, LLC, is the investment banker. Berwyn Capital Interests
is the restructuring agent.
AMBADA LLC: Napa Pizza Starts Chapter 11 Subchapter V Case
----------------------------------------------------------
AMBADA, LLC, d/b/a Napa Wood Fired Pizza, filed for chapter 11
protection in the Western District of New York.
The Petition states funds will be available to Unsecured
Creditors.
A telephonic meeting of creditors under 11 U.S.C. Sec. 341(a) is
slated for June 9, 2022 at 2:00 p.m. Proofs of claim are due July
14, 2022.
About Ambada LLC
Ambada LLC -- http://napawoodfired.com/-- doing business as Napa
Wood Fired Pizza and Napa Wood Fired Pizzeria, is a restaurant that
offers wood fired pizza varieties.
AMBADA LLC sought relief under Subchapter V of Chapter 11 of the
Bankruptcy Code (Bankr. W.D.N.Y. Case No. 22-20215) on May 5, 2022.
In the petition filed by Richard D. Reeder, as member, Amabada
estimated assets up to $50,000 and liabilities between $50,000 and
$100,000. Ronald S. Goldman, Esq., is the Debtor's counsel.
Mike Brummer is the Subchapter V trustee.
AMERICAN FLAMINGO: Files for Chapter 11 Bankruptcy Protection
-------------------------------------------------------------
Single Asset Real Estate American Flamingo LLC filed for chapter 11
protection in the District of Puerto Rico.
According to court filings, American Flamingo estimates between 1
and 49 unsecured creditors. A telephonic meeting of creditors
under 11 U.S.C. Sec. 341(a) is slated for June 13, 2022 at 11:00
a.m.
About American Flamingo
American Flamingo LLC is a Single Asset Real Estate (as defined in
11 U.S.C. Sec. 101(51B).
American Flamingo sought Chapter 11 bankruptcy protection (Bankr.
D.P.R. Case No. 22-01290) on May 5, 2022. In the petition filed by
John Hanratty, as member, American Flamingo estimated assets
between $500,000 and $1 million and estimated liabilities between
$500,000 and $1 million. Hector Eduardo Pedrosa Luna, of The Law
Offices of Hector Eduardo Pedrosa Luna, is the Debtor's counsel.
ANCHOR PACKAGING: Moody's Affirms 'B2' CFR, Outlook Remains Stable
------------------------------------------------------------------
Moody's Investors Service affirmed Anchor Packaging, LLC's
corporate family rating at B2 and its probability of default rating
at B2-PD. Moody's also affirmed the B2 rating on the first lien
senior secured credit facilities. The outlook remains stable.
"The affirmation reflects our expectation that Anchor Packaging
will generate improved profit and limit capital spending, which
will support free cash flow generation and deleveraging in 2022
relative to 2021," said Motoki Yanase, VP-Senior Credit Officer at
Moody's.
Affirmations:
Issuer: Anchor Packaging, LLC
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured Bank Credit Facility, Affirmed B2 (LGD3) from
(LGD4)
Outlook Actions:
Issuer: Anchor Packaging, LLC
Outlook, Remains Stable
RATINGS RATIONALE
Anchor Packaging's leverage increased to 7.7x in 2021, reflecting
flat total debt and lower EBITDA, and surpassing Moody's 6.0x
down-trigger. However, leverage came down to 6.3x for the twelve
months ending March 2022, with progress in cost pass-throughs.
Moody's expects the leverage to further improve to 5.4x in 2022,
assuming a restrained level of EBITDA in the second half of 2022,
similar to the same period in 2021.
Despite meaningful recovery in profit, free cash flow remained
close to break even for the twelve months ending March 2022. This
was affected by negative working capital, driven by an increase in
account receivables with higher sales and the company building up
inventories to prepare for the summer selling period. Moody's
expects receivables and inventories to return to more normal level
by year-end 2022.
For 2022, Moody's expects free cash flow to recover, supported by
higher profit and continued progress in cost pass throughs, as well
as lower level of capital spending relative to 2021. However,
uncertainty still remains for resin prices towards the second half
of 2022. If resin prices increase sharply, it could drive up
working capital and affect the degree of FCF recovery.
Anchor Packaging, LLC's B2 CFR reflects the company's small scale
with around $595 million in revenue for the twelve months ending
March 2022, high leverage and weak cash flow generation with a lag
to pass through increases in input costs, high debt load under the
private equity ownership, and ongoing acquisition risk to
supplement growth.
These credit weaknesses are counterbalanced by the company's credit
strengths including steady growth in packaging demand for food
delivery and take-out, which supported sales volume since the
pandemic. The CFR is also supported by a fairly diverse customer
base and ability to pass through resin costs on the majority of its
business, albeit with time lag.
For the 12-18 months from December 2021, Moody's expects Anchor
Packaging to have good liquidity, supported by $8.6 million of cash
on hand at the end of 2021, Moody's expectation of positive free
cash flow generation, and full availability under its $60 million
revolving facility due in 2024. Annual amortization payments are
$5.4 million and the credit agreement includes a free cash flow
sweep. The revolving credit facility includes a springing first
lien net leverage ratio covenant of 8x if availability is below
40%. There are no covenants on the term loan. Both the revolver and
the term loan are secured by substantially all assets of the
borrower and guarantors. The company has a majority ownership in a
film manufacturing facility in Argentina, which could be sold, but
it only contributes about 5% of sales and Moody's does not view it
as a meaningful source of alternative liquidity.
The stable outlook reflects Moody's expectation that free cash flow
will improve for the next 12-18 months due to increase in profit
and limited capital spending.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the rating if the company expands its scale
and product offering, while maintaining strong EBITDA margins above
20% and improving credit metrics. Specifically, an upgrade would
require debt/EBITDA sustained below 5.0x, EBITDA/Interest above
3.75x and free cash flow /debt approaching 5%.
Moody's could downgrade the rating if volumes and operating
performance decline with debt/EBITDA rising above 6.0x,
EBITDA/Interest declining below 3x and free cash flow/debt below
3%.
Headquartered in St. Louis, Missouri, Anchor Packaging, LLC is a
manufacturer of polypropylene (PP) and polyethylene terephthalate
(PET) containers for hot and cold food as well as flexible food
wrap film. The company generated sales of $595 million for the
twelve months ending March 2022. The Jordan Company, a private
equity firm, acquired a controlling stake in Anchor Packaging in
July 2019. The minority stake is owned by privately-held Hermann
Companies, Inc.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
AREVALO LC: Unsecureds Will Get 14.24% of Claims over 36 Months
---------------------------------------------------------------
Arevalo LC Farm, LLP, filed with the U.S. Bankruptcy Court for the
Eastern District of Virginia a Plan of Reorganization under
Subchapter V dated May 17, 2022.
The Debtor is a limited liability partnership organized and
chartered under the laws of the State of Maryland. It was
established in 2016, and its principal place of business is located
in Fairfax County, Virginia.
The Debtor's business was stable and profitable until late 2019,
when it decided to branch into Asian produce. Unfortunately, this
was a catastrophic decision, as the Debtor was unable to sell much
of the produce before it spoiled and it lost over $1,000,000.00 in
the venture. Shortly after, the Covid Emergency struck, and the
Debtor's regular business slowed dramatically.
As the Debtor's revenue decreased, it fell behind on its rent and
on its payment to it suppliers. Finally, the Debtor was forced to
file a petition Under Subchapter V of Chapter 11 on February 17,
2022, when its landlord filed a Writ for Unlawful Detainer (an
eviction action). Since the filing, the debtor has been current on
its rent and has purchased its supplies by C.O.D.
The Debtor's Plan proposes a payments of $7,000.00 each month for
thirty-six months, or $252,000.00. The secured creditor, BMO Harris
Bank will receive payments in the Plan totaling $19,459.80, the
priority creditor. Reyco, LLC will receive payments of $42,153.48,
and the landlord, VF III-Fleet, LLC, will be paid $44,715.21 in
priority pre-petition arrearages on its assumed lease.
This leaves potentially $145,671.51 available for distribution to
the unsecured creditors, whose scheduled and filed claims total
$1,022,402.19. Thus, unsecured creditors may receive a distribution
equaling as much as 14.24% of their claims, whereas under a Chapter
7 they would receive none.
Class 8 includes all other general unsecured creditors without
priority not otherwise classified. The Class 8 claimants will
receive a pro rata distribution (without interest) over thirty-six
months from the monthly Plan payments not needed to pay the claims
of Classes 2, 3(b) and 6. The Debtor anticipates, but cannot
guarantee, that based on the best information available to it at
the time this Plan is filed, that the Class 8 creditors will
receive a distribution of approximately 14.24% of their claims.
Class 9 included the Debtor's equity security holders, Nicolosa
Claros and Luis Ramos Claros. This class is comprised of the equity
security holders, who shall retain their equity interest in the
Debtor.
The term of the Plan shall be 36 consecutive months from the
effective date of the Plan. It is anticipated that the debtor's
income shall be sufficient to make all payments required. The
Debtor shall act as its own disbursing agent.
A full-text copy of the Plan of Reorganization dated May 17, 2022,
is available at https://bit.ly/3yNXk0n from PacerMonitor.com at no
charge.
Counsel for Debtor:
Richard G. Hall, Esq.
Law Office of Richard G. Hall
601 King Street, Suite 301
Alexandria, VA 22314
Tel: (703)256-7159
Fax: 703-941-0262
E-mail: Richard.Hall33@verizon.net
About Arevalo LC Farm
Arevalo LC Farm, LLP is a merchant wholesaler of grocery and
related products in Alexandria, Va.
Arevalo LC Farm filed its voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va.
Case No. 22-10174) on Feb. 17, 2022, listing up to $50,000 in
assets and up to $10 million in liabilities. Luis Ramos, a partner
at Arevalo Lc Farm, signed the petition.
Judge Klinette H. Kindred oversees the case.
The Debtor tapped The Law Office of Richard G. Hall as legal
counsel and Arthur Lander, CPA, PC as accountant.
BARRERA FAMILY: Gets OK to Hire Allan D. NewDelman as Counsel
-------------------------------------------------------------
Barrera Family Transport, LLC received approval from the U.S.
Bankruptcy Court for the District of Arizona to hire Allan D.
NewDelman, P.C. to serve as legal counsel in its Chapter 11 case.
The firm's hourly rates are as follows:
Allan D. NewDelman, Esq. $475
Roberta J. Sunkin, Esq. $395
Paralegals $150 to $200
NewDelman will also be reimbursed for out-of-pocket expenses
incurred.
Allan NewDelman, Esq., disclosed in a court filing that his firm is
a "disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached at:
Allan D. NewDelman, Esq.
Allan D. Newdelman, P.C.
80 East Columbus Avenue
Phoenix, AZ 85012
Tel: (602) 264-4550
Email: anewdelman@adnlaw.net
About Barrera Family Transport
Barrera Family Transport, LLC filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D. Ariz. Case No.
22-02872) on May 6, 2022, listing up to $100,000 in assets and up
to $500,000 in liabilities. Dawn M. Maguire, Esq., serves as
Subchapter V trustee.
Judge Brenda K Martin presides over the case.
Allan D. Newdelman, Esq., at Allan D. Newdelman P.C. serves as the
Debtor's counsel.
BASA INVESTMENTS: Amends Amy Stanley Claims Pay Details
-------------------------------------------------------
Basa Investments, LLC, Shepherd Realty Investments, Inc. and Damaca
Investments, LLC submitted a Second Amended Joint Sub-chapter V
Plan of Reorganization.
The Plan will be funded from the rents generated from the
Properties as well net proceeds from the sale of the property
located at 2324 South Congress which the Debtors believe will net
approximately $98,000.00.
The Debtors project that all payments shall be funded by the
Debtor's cash on hand and operating income from the remaining
properties. The Debtors believe that they will have five-year
aggregate. The Debtors have estimated that counsel for the Debtor
will be paid $110,000.00 and the Sub-Chapter V Trustee will be paid
$10,000.00.
Class 7 consists of the Claim of A. Stanley against Basa. Amy
Stanley filed as a secured claim in the total amount of
$2,604,122.92. Approximately $276,962 of the moneys gifted to Mr.
Banegas by A. Stanley were used with respect this Debtor. As the
moneys were gifts to A. Banegas, they are not recoverable against
Basa. Moreover, there is no support for the additional amounts
claimed by A. Stanley either in law or in equity. Basa will object
to A. Stanley's claim as filed.
Class 12 consists of the Claim of A. Stanley against Shepherd. Amy
Stanley filed as a secured claim in the total amount of
$2,604,122.92. Shepherd disputes this claim in its totality.
Creditor does not have a secured claim. Approximately $238,030 of
the moneys gifted to Mr. Banegas by A. Stanley were used with
respect this Debtor. As the moneys were gifts to A. Banegas, they
are not recoverable against Shepherd. Moreover, there is no support
for the additional amounts claimed by A. Stanley either in law or
in equity. Shepherd will object to A. Stanley's claim as filed.
Class 19 consists of the Claim of A. Stanley against Damaca. Amy
Stanley filed as a secured claim in the total amount of
$2,604,122.92. Damaca disputes this claim in its totality. Creditor
does not have a secured claim. Approximately $388,792 of the moneys
gifted to Mr. Banegas by A. Stanley were used with respect this
Debtor. As the moneys were gifts to A. Banegas, they are not
recoverable against Damaca. Moreover, there is no support for the
additional amounts claimed by A. Stanley either in law or in
equity. Damaca will object to A. Stanley's claim as filed.
A full-text copy of the Second Amended Joint Plan dated May 17,
2022, is available at https://bit.ly/3wEOWh3 from PacerMonitor.com
at no charge.
Attorney for Debtors:
Laudy Luna, Esq.
Cuneo, Reyes & Luna, LLC
2655 S. Le jeune Rd., Suite 804
Coral Gables, FL 33134
Tel: (786) 332-6787
Fax: (786) 204-0687
Email: ll@crllawgroup.com
About Basa Investments
Basa Investments, LLC, is the owner of two real properties and a
commercial property in Florida, having a total current value of
$1.07 million. The company is based in Lake Worth, Fla.
Basa Investments sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-10741) on Jan. 31,
2022, listing $1.07 million in assets and $1.50 million in
liabilities. Ariel Banegas, managing member, signed the petition.
Judge Erik P. Kimball oversees the case.
Laudy Luna, Esq., at Cuneo, Reyes & Luna, LLC serves as the
Debtor's legal counsel.
BETZ HEATING: Unsecureds to Get Share of Distribution Fund
----------------------------------------------------------
Betz Heating & Air, LLC, filed with the U.S. Bankruptcy Court for
the Eastern District of Texas an Original Plan of Reorganization
under Subchapter V dated May 17, 2022.
The Debtor is an HVAC contractor in the Wylie and Murphy, Texas
area.
Foxbriar Inc. was incorporated in 2015, and began business at that
time. Foxbriar was owned by David and Amy Betz ("Mr. and Mrs.
Betz"). Foxbriar acquired the business of Air Today in 2015 under
an agreement secured by substantially all tangible assets of the
business, which was guaranteed by Mr. and Mrs. Betz. Foxbriar
ceased operations in 2018 due to its inability to generate positive
cash flow, given its overall debt service obligations (including
those owed to Air Today).
On May 27, 2021, a lawsuit styled as Air Today A/C & Heating, Inc.
v. Betz Heating & Air, LLC, No. DC-21-06788 (the "Lawsuit") was
filed in the 14th District Court of Dallas County, Texas by Air
Today asserting claims against the Debtor for alleged fraudulent
transfers. In the Lawsuit, Air Today asserted that the Foxbriar had
fraudulently transferred the goodwill and other intangible property
to the Debtor when the Debtor began operations at approximately the
same time that Foxbriar closed. The Debtor could not absorb the
costs of defense associated with the Lawsuit, and filed for
bankruptcy relief on the Petition Date.
Class 1 consists of Any Allowed General Unsecured Claims. Each
holder of an Allowed General Unsecured Claim against the Debtor
shall be paid its Pro Rata Share of the Distribution Fund in equal
quarterly payments beginning on the 1st day of the month following
the Effective Date and on the same day of each successive month for
the duration of the Term. Provided however, that no holder of an
Allowed General Unsecured Claim against the Debtor shall be paid an
amount which exceeds the amount of such holder's Allowed General
Unsecured Claim against the Debtor.
Class 2 consists of Interests in the Debtor. Holders of interests
in the Debtor shall retain such Interests.
On the Effective Date, all real and personal property of the estate
of the Debtor, including but not limited to all causes of action of
the Debtor, and any avoidance actions of the Debtor, under
applicable non bankruptcy law or the Bankruptcy Code, shall vest in
the Debtor as Reorganized Debtor and shall not be assertable by any
party other than the Reorganized Debtor on behalf of its creditors
subject to those Claims, Liens, and encumbrances as Allowed and
restructured in this Plan.
The liability for and obligations under the Plan shall be assumed
by and become obligations of the Reorganized Debtor.
A full-text copy of the Plan of Reorganization dated May 17, 2022,
is available at https://bit.ly/3sQ1scC from PacerMonitor.com at no
charge.
Counsel for the Debtor:
Howard Marc Spector, Esq.
Spector & Cox, PLLC
12770 Coit Road, Suite 850
Dallas, TX 75251
Phone: (214) 365-5377
Fax: (214) 237-3380
Email: hspector@spectorcox.com
About Betz Heating & Air
Betz Heating & Air, LLC, sought protection for relief under Chapter
11 of the Bankruptcy Code (Bankr. E.D. Tex. Case No. 22-40198) on
Feb. 16, 2022, listing up to $100,000 in assets and up to $1
million in liabilities. Judge Brenda T. Rhoades oversees the case.
Howard Marc Spector, Esq., at Spector & Cox, PLLC, is the Debtor's
legal counsel.
BFCD PROPERTIES: July 12 Plan Confirmation Hearing Set
------------------------------------------------------
On April 14, 2022, BFCD Properties, LLC, filed with the U.S.
Bankruptcy Court for the Middle District of Pennsylvania a
Disclosure Statement along with a Plan of Reorganization.
On May 17, 2022, Judge Henry W. Van Eck approved the Disclosure
Statement and ordered that:
* June 21, 2022, is fixed as the last day for submitting
written acceptances or rejections of the plan to Kara Gendron,
Debtor's counsel.
* June 21, 2022, is fixed as the last day for filing and
serving written objections to confirmation of the plan.
* June 28, 2022, is fixed as the last day to file with the
Court a tabulation of ballots accepting or rejecting the plan.
* July 12, 2022, at 9:30 AM in the Bankruptcy Courtroom, Third
Floor, The Ronald Reagan Federal Building, Third and Walnut
Streets, Harrisburg, Pennsylvania, is fixed for the hearing on
confirmation of the plan.
A copy of the order dated May 17, 2022, is available at
https://bit.ly/3LADuZp from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Brett Weiss, Esq.
THE WEISS LAW GROUP, LLC
8843 Greenbelt Road, Suite 299
Greenbelt, Maryland 20770
Tel: (301) 924-4400
Fax: (240) 627-4186
E-mail: lawyer@brettweiss.com
- and -
Kara Katherine Gendron, Esq.
MOTT & GENDRON LAW
125 State Street
Harrisburg, Pennsylvania 17101
Tel: (717) 232-6650
Fax: (717) 232-0477
E-mail: karagendron@gmail.com
About BFCD Properties
BFCD Properties, LLC, sought protection for relief under Chapter 11
of the Bankruptcy Code (Bankr. M.D. Pa. Case No. 21-01127) on May
18, 2021, listing $100,001 to $500,000 in both assets and
liabilities. Judge Henry W. Van Eck oversees the case. The Weiss
Law Group, LLC and Mott & Gendron Law serve as the Debtor's legal
counsel.
BIOSTAGE INC: Incurs $2.2 Million Net Loss in First Quarter
-----------------------------------------------------------
Biostage, Inc. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $2.18
million on zero revenue for the three months ended March 31, 2022,
compared to a net loss of $874,000 on zero revenue for the three
months ended March 31, 2021.
The $1.3 million quarter-over-quarter increase in net loss was due
primarily to a $1.4 million increase in general and administrative
costs from higher legal and related costs relating to the wrong
death compliant settlement and $0.1 million of lower grant income
for qualified expenditures from our SBIR grant. These changes were
offset, in part, by a $0.2 million decrease in research and
development costs.
As of March 31, 2022, the Company had operating cash on-hand of
$0.7 million. The Company used net cash in operations of $0.5
million during the quarter ended March 31, 2022.
As of May 16, 2022, the Company has received aggregate proceeds of
approximately $5.1 million from the private placement. Based on
the Company's current operating plan and given consideration to
this cash infusion, the Company expects that its current cash will
be sufficient to fund its operating expenses and capital
expenditure requirements through the first quarter of 2023.
As of March 31, 2022, the Company had $4.17 million in total
assets, $9.14 million in total liabilities, and a total
stockholders' deficit of $4.97 million.
The Company has incurred operating losses since inception, and as
of March 31, 2022, the Company had a deficit of approximately $79.1
million. The Company is currently investing significant resources
in the development and commercialization of its product candidates
for use by clinicians and researchers in the fields of regenerative
medicine and bioengineering. As a result, the Company expects to
incur operating losses and negative operating cash flows for the
foreseeable future.
Biostage said "The Company will need to raise additional funds to
fund its operations. In the event the Company is unable to raise
additional capital from outside sources in first quarter of 2023,
it may be forced to curtail or cease its operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1563665/000155837022008998/tmb-20220331x10q.htm
About Biostage
Holliston, Massachusetts-based Biostage, Inc. -- www.biostage.com
-- is a clinical-stage biotech company that uses cell therapy to
regenerate organs inside the human body to treat cancer, trauma and
birth defects. The Company has performed the world's first
regeneration of an esophagus in a human cancer patient. This
surgery was performed at Mayo Clinic and was published in August
2021.
Biostage reported a net loss of $7.98 million for the year ended
Dec. 31, 2021, compared to a net loss of $4.87 million for the year
ended Dec. 31, 2020. As of Dec. 31, 2021, the Company had $1.87
million in total assets, $4.90 million in total liabilities, and a
total stockholders' deficit of $3.03 million.
Flushing, New York-based Wei, Wei & Co., LLP, the Company's auditor
since 2021, issued a "going concern" qualification in its report
dated March 31, 2022, citing that the Company has suffered
recurring losses from operations, has an accumulated deficit, uses
cash flows in its operations, and will require additional financing
to continue to fund its operations. This raises substantial doubt
about the Company's ability to continue as a going concern.
BLUE JAY COMMUNICATIONS: Wins Cash Collateral Access Thru July 25
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Ohio,
Western Division, authorized Blue Jay Communications, Inc. to use
cash collateral on an interim basis in accordance with the budget
through July 25, 2022.
The Huntington National Bank is the Debtor's secured lender.
The Court said the terms of the Second Amended Interim Order are
fully incorporated into the Agreed Third Amended Order.
The Debtor is directed to pay a minimum of $35,000 per month to
these parties on a pro rata basis:
Amount
------
Fox Capital Group, Inc. $2,170
Spin Capital, LLC $6,195
BMF Advance, LLC $8,925
IBEX Funding Group, LLC $17,710
Fox Capital et al. have objected to the Debtor's request.
This amount will be payable on or before the 15th day of each month
commencing May 2022 (or, if the 15th is not a business day, on the
immediately succeeding business day). The first payment (for May
2022) will be due within three business days after entry of the
Order. The payments in the amount of $35,000 will continue until
Debtor has caught up on the arrears owed to the Objectors, then the
minimum monthly amount will be reduced to $25,000 per month
allocated as follows:
Amount
------
Fox Capital Group, Inc. $1,550
Spin Capital, LLC $4,425
BMF Advance, LLC $6,375
IBEX Funding Group, LLC $12,650
For clarity, the Debtor's arrearages through April 2022 are:
Amount
------
Fox Capital Group, Inc. $4,650 ($9,300 less $4,650
in applied payments)
Spin Capital, LLC: $26,550 (no payments made)
BMF Advance, LLC $38,250 (no payments made)
IBEX Funding Group, LLC $63,400 ($75,900 less $12,500
in applied payments)
Of each payment of $35,000, $10,000 will be designated towards the
respective arrearages. If the Debtor catches up on the arrearages
owed to one Objector before the other Objectors, the $10,000
arrearage payment will be reallocated accordingly. The payment
amounts may be modified only through confirmation of a consensual
plan of reorganization.
These events constitute an "Event of Default:"
a. The Debtor's failure to comply with each and every term and
provision of the Order including failure to make required payments
to HNB and the Objectors without HNB or the Objectors written
consent to any delay in their respective payment(s);
b. The cessation of business operations by the Debtor;
c. The failure to maintain insurance on any Collateral;
d. The Debtor's use of the cash collateral to pay any
obligation other than those specified in the Order or in the
Approved Budget, or the Debtor's use of the cash collateral to pay
any obligation in excess of the applicable amount specified in the
Order or in the Approved Budget;
e. The Debtor will provide to its financial advisor, Newpoint
Advisors Corporation, a list of proposed disbursements by each
Tuesday at 5:00pm ET and prior to releasing any payments. Newpoint
will respond to the Debtor, in writing, with its list of
recommended disbursements from said list. The Debtor will have the
final authority to make payments. Newpoint will notify the Lien
Holder's counsel and the Subchapter V Trustee if it believes that
the Debtor failed to adhere to any written recommendation from
Newpoint regarding the payment of a material expense transaction
(material being defined as one which will financially impact the
Debtor in an amount in excess of $8,000 per transaction). The
Debtor may challenge the recommendation. If the Lien Holders do not
agree with the Debtor, the Debtor may seek a determination from the
Court that such expense was reasonable and/or appropriately made.
If the expense is deemed by the Court to be unreasonable it will be
an event of default upon which Newpoint will tender to the Debtor
its resignation and petition the Court to withdraw from the case;
f. The entry of an order dismissing the bankruptcy case,
converting the bankruptcy case to a case under chapter 7 of the
Bankruptcy Code, or terminating the authority of the Debtor to
conduct or operate its business (no Cure Period will apply to this
Event of Default);
g. The Debtor materially violates any other court order, any
rules or guidelines promulgated by the United States Trustee;
h. Any sale of the Post-Petition Collateral (other than in the
ordinary course of business) is approved without the consent of the
Lien Holders or an order of the Court;
i. The Debtor's failure to provide for the timely filing
monthly Forms 941 and timely payment of the corresponding
post-petition tax liabilities; or
j. The Debtor's failure to timely meet any allowed
post-petition tax obligations, make payments or deposits; and
k. The Debtor will file and seek confirmation of a Subchapter
V Plan which incorporates the Order and includes terms agreed to by
the Parties (in a written separate agreement) on or before June 30,
2022.
A further hearing on the matter is scheduled for July 19 at 3 p.m.
A copy of the order and the Debtor's budget for the period from May
9 to July 31 is available at https://bit.ly/3G7oxNq from
PacerMonitor.com.
The budget provides for total expenses, on a weekly basis, as
follows:
$148,096 for the week ending May 15, 2022;
$195,968 for the week ending May 22, 2022;
$165,411 for the week ending May 29, 2022;
$194,623 for the week ending June 5, 2022;
$151,066 for the week ending June 12, 2022;
$214,322 for the week ending June 26, 2022;
$146,104 for the week ending June 19, 2022;
$188,536 for the week ending June 26, 2022;
$148,245 for the week ending July 3, 2022;
$201,180 for the week ending July 10, 2022;
$146,104 for the week ending July 17, 2022; and
$134,827 for the week ending July 24, 2022.
About Blue Jay Communications
Blue Jay Communications, Inc. installs telecommunication and
network infrastructure throughout the Midwest with a particular
concentration in northern Ohio, southern Michigan, and Illinois. It
has offices in Cleveland, Marion, Toledo and Youngstown, Ohio; and
St. Charles, Ill. The company serves major telecommunications
companies as its clients.
Blue Jay Communications filed a petition for Chapter 11 protection
(Bankr. N.D. Ohio Case No. 21-31915) on Nov. 9, 2021, disclosing
$5,145,458 in assets and $7,618,110 in liabilities. John F.
Houlihan, president, signed the petition.
Judge Mary Ann Whipple oversees the case.
The Debtor tapped Frederic P. Schwieg, Esq. at Frederic P Schwieg
Attorney at Law as bankruptcy counsel and Gino Pulito, Esq., at
Pulito and Associates, LLC as special counsel. Pease & Associates,
LLC and Newpoint Advisors Corporation serve as the Debtor's
accountant and financial advisor, respectively.
BOY SCOUTS OF AMERICA: Bankruptcy Costs At Least $245 Million
-------------------------------------------------------------
Steven Church of Bloomberg News reports that the Boy Scouts of
America will likely spend at least $245 million to develop a plan
to compensate victims of childhood sexual abuse and could see that
figure rise should a judge demand changes to the proposal.
The nonprofit youth organization has been waiting a month for U.S.
Bankruptcy Judge Laurie Silverstein to rule on the plan, which
would set up a $2.7 billion compensation fund, the largest of its
kind in the U.S. Last April 2022, Judge Silverstein ended a
weeks-long trial that featured competing testimony from advocates
and opponents, including insurers who have fought the Boy Scouts
since the Chapter 11.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC, as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
C.H.I. OVERHEAD: Moody's Puts 'B2' CFR on Review for Upgrade
------------------------------------------------------------
Moody's Investors Service placed C.H.I. Overhead Doors, LLC's
ratings on review for upgrade following Nucor Corporation's
announcement that it will acquire C.H.I [1]. C.H.I.'s ratings on
review include its B2 Corporate Family Rating, B2-PD Probability of
Default Rating and B2 senior secured bank credit facility.
Nucor (Baa1 stable) is acquiring C.H.I in an all-cash transaction
valued at $3 billion, representing 13x C.H.I.'s calculated adjusted
EBITDA for the twelve months ending June 2022. Moody's expects the
transaction to close at the end of second quarter or early third
quarter.
"The potential ownership by Nucor is a positive development for
C.H.I. given Nucor's stronger credit profile including a more
conservative financial policy," commented Scott Manduca, Moody's
Vice President.
The following ratings/assessments are affected by the actions:
On Review for Upgrade:
Issuer: C.H.I. Overhead Doors, LLC
Corporate Family Rating, Placed on Review for Upgrade, currently
B2
Probability of Default Rating, Placed on Review for Upgrade,
currently B2-PD
Senior Secured Bank Credit Facility, Placed on Review for Upgrade,
currently B2 (LGD3)
Outlook Actions:
Issuer: C.H.I. Overhead Doors, LLC
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
C.H.I.'s ratings were placed on review for upgrade based on the
company's potential ownership by Nucor (Baa1 stable), who has a
stronger credit profile.
Moody's review will consider Nucor's plans for C.H.I.'s existing
debt comprised of a senior secured term loan and revolving credit
facility. Moody's believes that C.H.I.'s existing debt will be
repaid, given the change of control provision and Nucor's lower
cost of capital. Should the debt be repaid, C.H.I.'s ratings will
be withdrawn.
C.H.I.'s B2 Corporate Family Rating reflects the company's small
scale based on sales, cyclicality of the garage door end market,
limited business verticals and production footprint, and potential
for debt financed acquisitions and shareholder returns. The rating
also reflects C.H.I.'s strong operating margins, exposure to
relatively stable repair and remodeling market, and solid free cash
flow generation.
C.H.I. Overhead Doors, LLC, headquartered in Arthur, Illinois,
manufactures overhead doors for residential and commercial
applications throughout the United States and Canada. Revenue for
the 12 months ended December 31, 2021 is near $500 million.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
CENTURY 21: Returns to New York After Bankruptcy, Pandemic Closure
------------------------------------------------------------------
Century 21 announced they are making a New York City comeback,
relaunching the beloved institution in Early Spring 2023 at its
flagship location downtown across from the World Trade Center. The
iconic retailer and purveyor of off-price luxury fashion has teamed
with premium experiences company Legends to introduce a revitalized
shopping experience to Century 21's faithful local -- and global --
fans.
This partnership will couple Legends omnichannel operating
expertise with Century 21's expert curation of designer brands at
amazing prices, to bring fans of the iconic brand an enhanced
shopping experience in-store and online.
The re-opened Cortlandt Street location will span the four main
floors of the original downtown space and will offer men's, women's
and children's designer apparel, footwear, outerwear, handbags,
accessories and fragrances.
About Century 21
Century 21 Department Stores LLC and its affiliates are pioneers in
off-price retail offering access to designer brands at amazing
prices. They opened their iconic flagship location in downtown
Manhattan in 1961. As of the petition date, the Debtors had 13
stores across New York, New Jersey, Pennsylvania and Florida and an
online retail presence, operate seasonal pop-ups, and employ other
innovative retail concepts. On the Web: http://www.c21stores.com/
Century 21 Department Stores LLC and its affiliates sought Chapter
11 protection (Bankr. S.D.N.Y. Lead Case No. 20-12097 on Sept. 10,
2020).
Century 21 was estimated to have $100 million to $500 million in
assets and liabilities as of the bankruptcy filing.
The Hon. Shelley C. Chapman is the case judge.
The Debtors have tapped Proskauer Rose LLP as their legal counsel,
Berkeley Research Group LLC as financial advisor, and Hilco
Merchant Resources LLC as liquidation consultant. Stretto is the
Debtors' claims agent.
On Sept. 16, 2020, the U.S. Trustee for Region 2 appointed an
official committee of unsecured creditors. The committee is
represented by Lowenstein Sandler, LLP.
* * *
The Debtors proposed a Plan to liquidate all assets.
The Gindi family, which founded the New York chain, bought Century
21's intellectual property assets out of bankruptcy. In December
2020, the family along with a private investor purchased the
intellectual property for the brand for $9 million after 34 rounds
of bidding, which opened at $800,000, according to court documents.
CHURCHILL DOWNS: Moody's Rates Amended Credit Facility 'Ba1'
------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to Churchill Downs
Incorporated's ("CDI") amended credit facility that became
effective on April 13, 2022. The amended facility is comprised of a
$1.2 billion revolving credit facility expiring 2027 -- the
amendment increased the size of CDI's revolver $1.2 billion from
$700 million -- and the addition of an $800 million senior secured
delayed draw term A tranche due 2029 to the company's existing $700
million term loans rated Ba1.
CDI has a Ba3 Corporate Family Rating, Ba3-PD Probability of
Default Rating, stable rating outlook, an SGL-2 Speculative Grade
Liquidity rating, and a CIS-3 ESG Credit Impact Score.
Proceeds from the amended $1.2 billion revolver and $800 million
delayed draw term loan, along with $1.2 billion senior unsecured
notes due 2030 that were rated B1 on March 30, 2021, are being used
to fund CDI's acquisition of Peninsula Pacific Entertainment LLC
("P2E") for total consideration of $2.485 billion. The acquisition
was announced on February 22, 2022 and is expected to close by the
end of 2022.
The Ba1 assigned to CDI's amended revolver and delayed draw term
loan A, two-notches higher than CDI's Ba3 Corporate Family Rating,
considers the credit support provided by the company's senior
unsecured notes. CDI's B1 senior unsecured rating, one-notch below
the company's Corporate Family Rating, reflects the significant
amount of effectively senior secured debt in the company's capital
structure
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: Churchill Downs Incorporated
Senior Secured 1st Lien Delayed Draw Term Loan A, Assigned Ba1
(LGD2)
Senior Secured 1st Lien Revolving Credit Facility, Assigned Ba1
(LGD2)
RATINGS RATIONALE
CDI's Ba3 Corporate Family Rating reflects the strong history,
popularity, and performance of the Kentucky Derby along with the
company's practice of operating with moderate leverage. Also viewed
favorably is the consistent and stable performance of TwinSpires,
the company's horse racing digital wagering platform. CDI's credit
profile also considers that despite the increase in leverage
resulting from the acquisition of Peninsula Pacific Entertainment
(P2E). Moody's expects debt/EBITDA (pro forma for the P2E
acquisition and incorporating only earnings from CDI's wholly owned
operations, excluding distributions received from joint ventures)
to remain within the 5.5x potential downgrade factor. CDI will also
benefit from the expanded scale and increased geographic
diversification. Pro forma revenue is above $2.0 billion, compared
to about $1.6 billion in revenue for FYE December 31, 2021, and the
company's footprint will expand into three additional states โ
Virginia, New York, and Iowa.
Key credit concerns include the highly discretionary nature of
consumer spending on traditional gaming and betting activities in
general. CDI has performed well despite the coronavirus. However,
continued pressure from efforts to contain the coronavirus,
potential for a slow longer-term recovery, and the long-term
fundamental challenges facing regional gaming companies remain a
risk, albeit to varying degrees, for CDI and other regional gaming
companies. CDI's credit profile also reflects that the company is
willing to increase leverage to accommodate strategic investments.
Development projects including CDI's plan to expand HRM machines
following the P2E acquisition present risk such as construction
costs and returns that are subject to market demand and maintaining
an appropriate operating cost structure. Moody's expects CDI to
generate sizable operating cash flow, but free cash flow will be
constrained in 2023 due to sizable-planned capital projects.
The stable outlook considers the revenue and EBITDA growth at CDI's
online wagering segment, a trend Moody's believes will continue
despite the ongoing effects of the coronavirus pandemic. Moody's
also assumes in the stable outlook that CDI's gaming and
horseracing businesses will continue to operate without
interruption or capacity restrictions, that the company will
generate sizable free cashflow in 2022, and that development
projects in 2023 will be internally funded from operating cash flow
with no meaningful increase in debt.
CDI's SGL-2 Speculative Grade Liquidity rating considers that the
company will continue to generate and maintain an excess level of
internal cash resources after satisfying all scheduled debt
service. Moody's expects CDI will generate free cash flow of about
$100 million in the next 12-to-18-month period and maintain about
$100 million of unrestricted cash. Moody's projects CDI will
continue to comfortably meet the 4.0x senior secured debt-to-EBITDA
leverage ratio covenant included in the company's credit facility.
CDI also has discrete assets that could be sold to raise cash, if
needed.
CDI's ESG Credit Impact Score is moderately negative (CIS-3). ESG
attributes have limited credit impact today but have the potential
to pressure the company's ratings over time. CDI has neutral to low
environmental risk exposure associated with physical climate risk
and highly negative social risk exposure partially mitigated by a
conservative financial policy and track record.
Moody's regards the coronavirus outbreak as a social risk under
Moody's ESG framework, given the substantial implications for
public health and safety. The gaming sector has been one of the
sectors most significantly affected by the shock given its
sensitivity to consumer demand and sentiment. More specifically,
CDI remains vulnerable to a renewed spread of the outbreak. CDI
also remains exposed to discretionary consumer spending that leave
it vulnerable to shifts in market sentiment in these unprecedented
operating conditions.
Additional social risk for gaming companies includes evolving
consumer preferences related to entertainment choices and
population demographics that may drive a change in demand away from
traditional casino-style gaming. Younger generations may not spend
as much time playing casino-style games (particularly slot
machines) as previous generations. Data security and customer
privacy risk is elevated given the large amount of data collected
on customer behavior. In the event of data breaches, CDI could face
higher operational costs to secure processes and limit reputational
damage.
Governance factors include targeting and maintaining a moderate
leverage level. The company's targeted net leverage is between 3.0x
and 4.0x (based on the company's calculation), but it would be
willing to go higher for strategic investments with the intention
of getting back to the stated net leverage targeted range. CDI pays
a dividend that is a use of free cash flow and has also authorized
a $500 million share repurchase program.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade requires a high degree of confidence that the gaming
sector has returned to a period of long-term stability, positive
free cashflow and good liquidity, and debt-to-EBITDA (on a wholly
owned basis) sustained below 4.0x. The company would also need to
realize good returns on the sizable planned capital spending
programs.
A downgrade could result if revenue and earnings decline due to
renewed facility shutdowns, reduced visitation or increased
competition, the company realizes poor returns on the planned
capital investments, liquidity deteriorates, or debt-to-EBITDA (on
a wholly-owned basis) is sustained above 5.5x.
The principal methodology used in these ratings was Gaming
published in June 2021.
CDI is a racing, online wagering and gaming entertainment company
that owns the Kentucky Derby along with brick-and-mortar casino
gaming in nine states. The company also owns and operates three
pari-mutuel gaming entertainment venues with approximately 3,050
historical racing machines in Kentucky, and owns and operates
TwinSpires, one of the largest and most profitable online wagering
platforms for horse racing in the U.S., and has nine retail
sportsbooks. The company is publicly traded (NASDAQ:CHDN) and has
annual net revenue of about $1.6 billion. Revenue pro forma for the
planned acquisition of P2E is over $2 billion.
CITE LLC: Reaches Settlement Agreement with Evangeline Gouletas
---------------------------------------------------------------
Cite, LLC, submitted a First Amended Plan of Reorganization dated
May 17, 2022.
The Plan contemplates two alternative scenarios depending on how
the process of the sale of the Debtor's real property develops.
Under either scenario, the Plan is feasible and can be effectuated.
The first scenario is a sale of the Debtor's real property and the
Debtor ceasing to operate the restaurant, effectively a liquidation
of the Debtor's assets. In this first scenario, it is expected that
only secured creditors will receive a distribution. The second
scenario also involves a sale of the Debtor's real property but
with the Debtor leasing back the real property and continuing to
operate the restaurant. Under this scenario, the Plan contemplates
the payment of all creditor claims over a three year period from
the Effective Date.
Cite's senior Secured Creditor is Republic Bank, which holds a
first priority lien on all of the real property. The junior secured
creditor is Araco which has a second mortgage on the real property
by virtue of judgment and citation liens arising out of a judgment
based on loans by Araco to affiliates of Cite. Araco also has a
lien on substantially all of Cite's other assets by virtue of its
citation liens. Republic Bank is owed approximately $3.6 million.
Araco claims to be owed approximately $1,000,000.
The Debtor and Evangeline Gouletas have been in the process of
negotiating a settlement with Araco to resolve its claims. As of
the filing of this Plan, the parties have reached an agreement in
principal regarding a settlement. Subject to certain terms and
conditions of the settlement, Evangeline Gouletas will be
quitclaiming to Araco properties that she or one of the Non-Debtor
Affiliates own.
Pursuant to the agreement to quitclaim the properties to Araco,
Evangeline Gouletas, the Non-Debtor Affiliates and the Debtor will
receive a credit toward the claim of Araco. This will lower the
claim of Araco in the Chapter 11 Case from approximately $1,000,000
to under $500,000. Additionally, Araco is expected to support the
Debtor's Plan.
Class 2 consists of the secured Claim of Araco in the amount of
$500,000. The claim asserted is in the amount of approximately
$1,000,000 however, after application of the credit from the
settlement with Evangeline Gouletas, the remaining amount due will
be reduced to $500,000. The Debtor will pay the full amount of the
secured claim upon the sale of the real property. If the sale
proceeds are not sufficient for the payment of the claim in full,
any remaining amounts due will be paid as a general unsecured
claim.
The source of the funds to pay the Claims of Claimants in Classes
1-3 will be from the proceeds of the sale of the Debtor's real
property. The Subchapter V Trustee has obtained a broker and is in
the process of listing the real property. The Subchapter V Trustee
has also filed a sales procedure motion to set the process for the
sale under this Plan. The units are valued at approximately $4.65
million. All costs of sale, brokers commissions and prorations will
be paid at closing. The proceeds will then be used to pay the
outstanding Claim of the Secured Creditors up to the full amount of
their Claims.
Class 4 consists of Unsecured Claims and will be paid as follows:
* In the event that the restaurant shuts down in a liquidation
of the Debtor's assets, each non-insider Unsecured Creditor will
receive a Pro-Rata share of the remaining net sale proceeds of the
real estate and any other liquidation proceeds after payment of
Secured Claims.
* In the event that the restaurant continues to operate after
a sale and leaseback of the real property, each non-insider
Unsecured Creditor will receive (a) the remaining net sale proceeds
of the real estate after payment of secured claims and (b) a pro
rata share of the Debtor's projected free Cash flow over the three
year term of the Plan, paid monthly, up to the full amount of the
Claims.
* The holder of the insider unsecured claim, Evangeline
Gouletas will subordinate the payment of her claim to the payment
of all other Plan payments.
If the Debtor's real property is sold without the leaseback option,
the Debtor will no longer operate after the sale. In that event,
all remaining assets of the Debtor will be sold and the proceeds
will paid to creditors, in their respective priority, and unsecured
creditors will receive payments of claims in their pro rata share
of the proceeds after Claims of Secured Creditors have been
satisfied.
If the real property is sold with a leaseback option, the Debtor
will lease the real property and continue to operate the restaurant
going forward. After the payment of all expenses from the operation
of the restaurant, the Debtor will pay the free cash flow to
unsecured creditors on a pro rata basis, on the first of each month
beginning on the Effective Date and continuing each month
thereafter over a three year period. The Debtor will retain the
right to pay the claims in full at a time sooner than three years
from the Effective Date.
The Plan will be funded via either (a) the sale of the real
property with no leaseback and an eventual liquidation of the
Debtor's remaining assets or (b) the sale and leaseback of the
Debtor's real property and then continued operations of the
restaurant.
A full-text copy of the First Amended Plan of Reorganization dated
May 17, 2022, is available at https://bit.ly/3PDnZmM from
PacerMonitor.com at no charge.
Attorneys for Debtor:
Matthew E. McClintock, Esq. (Atty. No. 6280574)
Jeffrey Dan, Esq. (Atty. No. 6242750)
111 W. Washington Street, Suite 1221
Chicago, IL 60602
Telephone: (312) 337-7700
Facsimile: (312) 277-2310
E-mail: mattm@goldmclaw.com
jeffd@goldmclaw.com
About Cite LLC
Cite LLC, an American restaurant business, filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
N.D. Ill. Case No. 21-13730) on Dec. 3, 2021. In the petition
signed by Evangeline Gouletas, managing member, the Debtor
disclosed $5,517,547 in total assets and $7,945,223 in total
liabilities.
Judge Janet S. Baer oversees the case.
The Golding Law Offices, PC serves as the Debtor's counsel.
COATESVILLE AREA SD: Moody's Lowers Issuer & GOLT Ratings to B1
---------------------------------------------------------------
Moody's Investors Service has downgraded Coatesville Area School
District (Chester County), PA's issuer, general obligation limited
tax (GOLT), and guaranteed lease revenue ratings to B1 from Ba3.
The issuer rating represents the district's ability to repay debt
and debt-like obligations without consideration of any pledge,
security, or structural features. The district has $186.3 million
in net debt outstanding. The outlook is negative.
RATINGS RATIONALE
The downgrade of the issuer rating to B1 reflects the district's
highly pressured finances that are challenged to materially improve
in the near term. The rating incorporates the district's sharply
declining enrollment that is driven in part by significant
competition from local charter schools. Further, the rating
incorporates the district's manageable leverage that will grow in
the near to middle term due to districtwide capital needs.
The lack of distinction between the district's issuer rating and
the B1 rating on the district's GOLT debt is based on the
district's general obligation full faith and credit pledge. The
GOLT rating also reflects Pennsylvania school districts' ability to
apply for exceptions to the cap on property tax increases for debt
service and the Commonwealth's history of granting such exceptions.
The lack of distinction between the district's issuer rating and
its guaranteed lease revenue rating is based on the loan agreement
between the district and its building authority that extends the
districts GOLT pledge to the authority in order to pay debt
service.
Governance considerations are material to the district's credit
quality. The district maintains a formal fund balance policy that
mirrors the commonwealth's recommendation to maintain between 5%
and 8% of its annual budget as unassigned in its General Fund. The
district has not been in compliance with its own policy for the
last three consecutive fiscal years. Most of the district's
financial stress is related to competition from brick and mortar
charter schools within the district. While the district has
undertaken efforts to bring students back, efforts have fallen
short. The district is attempting to bring students that attend
outside cyber schools back into the district through the marketing
of its own in-house cyber program, though the results of such
efforts have yet to be seen. While management generally budgets
accurately, it has remained unable to restore its financial
position to a satisfactory level.
RATING OUTLOOK
The negative outlook reflects the district's highly pressured
financial position that is unlikely to materially improve in the
near term in light of ongoing charter school competition and
growing debt service requirements.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Materially improved reserve position
Restoration of structurally balanced financial operations
Reduced charter school tuition requirements in conjunction with
stabilization of enrollment trend
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Inability to pay debt service
Further declines in reserves and liquidity
Material additional borrowing leading to outsized leverage
LEGAL SECURITY
The district's Series A and B of 2020 bonds, Series C and D of 2020
notes, and Series of 2017 bonds are secured by the district's GOLT
pledge, which is subject to the limits of Pennsylvania's Act 1
"Taxpayer Relief Act."
The district's Series of 2018 bonds are secured by lease payments
made to the Coatesville Area School District Building Authority.
The lease payments are ultimately secured by the district's full
faith and credit general obligation limited tax (GOLT) pledge, per
a guaranty agreement between the district and the building
authority.
PROFILE
Coatesville Area School District serves 5,322 students in the City
of Coatesville, PA (and some of its surrounding community), which
is approximately halfway between Lancaster (A3) and Philadelphia
(A2 stable) in Chester County (Aaa stable). The district operates
one high school (10th through 12th grade), an 8th/9th grade center,
two middle schools, and five elementary schools. In addition, 3,009
students are enrolled at charter and cyber schools, representing a
significant source of financial pressure for the district.
METHODOLOGY
The principal methodology used in these ratings was US K-12 Public
School Districts Methodology published in January 2021.
COEUR MINING: Moody's Lowers CFR to B3 & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating of
Coeur Mining, Inc. to B3, the probability of default rating to
B3-PD and the rating of the company's senior unsecured notes to
Caa1, which were previously under review for downgrade. The outlook
has been changed to stable from rating under review.
This rating action concludes the review for downgrade initiated on
February 25, 2022 that was prompted by Coeur's announcement of a
material increase in the estimated capital cost and a delay in the
completion of the Rochester mine expansion project ("POA 11"),
along with a substantial increase in the estimated operating costs
at several mines.
Downgrades:
Issuer: Coeur Mining, Inc.
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
GTD Senior Global Notes, Downgraded to Caa1 (LGD5) from B3 (LGD5)
Outlook Actions:
Issuer: Coeur Mining, Inc.
Outlook, Changed To Stable From Rating Under Review
RATINGS RATIONALE
This rating downgrade reflects Moody's expectations that Coeur's
credit profile will evidence a meaningful deterioration in the next
18-24 months as the company works to complete the POA 11 expansion
project. In February 2022, Coeur announced an increase in total
estimated construction capital for POA 11 project to approximately
$597 million. The original construction capital estimate when the
project's major construction activities commenced in early 2021 was
$397 million. The increase reflects approximately $20 million of
project enhancements, $70 to $80 million added to incorporate
pre-screens into the new crusher, 10% - 15% cost escalation as well
as additional contingency to reflect ongoing COVID and schedule
risk of approximately $20m. The project target completion date has
been moved from the 2022 year-end to mid-2023 when the company
expects to complete the installation of the new crushing circuit.
Materially higher than previously estimated 2022 and 2023 operating
costs are additional negative credit considerations.
Coeur has recently taken several actions to boost its liquidity
position in order to complete the project. The company increased
the availability under its revolving credit facility (unrated) to
$390 million from $300 million, completed $100 million
at-the-market equity offering and raised its gold hedging position
to provide material downside protection by selling 70% of the
expected 2022 gold production at the average forward price of
$1,955/oz and 38% of the expected 2023 gold production at the
average forward price of $1,982/oz. Consequently, the company's
current liquidity combined with its potential sources of additional
liquidity could be sufficient to complete the re-baselined POA11
expansion project. However, the continued cost pressure across all
of Coeur's operations, particularly at the Rochester mine,
potential further declines in gold and silver prices, project
execution risk and material uncertainty around the eventual cost
structure of the expanded Rochester mine pose material risks to the
company's financial performance and could lead to a substantial
increase in financial leverage and the need for additional
liquidity.
Assuming 2022 average price of $1,800/oz gold and $22/oz silver and
2023 price of $1,600/oz gold and $21/oz silver, and considering the
company's current gold hedges, Moody's estimates that Coeur will
generate $174 million in Moody's-adjusted EBITDA in 2022 and $159
million in 2023. Leverage is expected to increase to 4.1x in 2022
and 5.7x in 2023 driven by higher RCF borrowings. These estimates
do not consider that the company could monetize its equity
investments, which it views as potential sources of additional
liquidity. Under this scenario, Moody's also forecasts Coeur to
generate negative free cash flow of about $250 million in 2022 and
$200 million in 2023, fully utilize its expanded revolver and to
require additional liquidity.
The stable outlook reflects Moody's expectations that Coeur will
complete the re-baselined Rochester expansion as planned and that
currently high operating costs at Rochester will decline materially
after the ramp-up to commercial production. The outlook also
assumes that Coeur's credit metrics will remain commensurate with
B3 rating and that the company will maintain an adequate liquidity
profile throughout the construction phase.
Coeur, like other mining companies, faces a number of ESG risks
including but not limited to environmental and asset retirement
obligations, cyanide use, water management and water rights.
Coeur's CIS-3 (moderately negative) Credit Impact Score reflects
its very highly negative exposure to environmental risks (E-5 IPS),
highly negative exposure to social risks (S-4 IPS), and moderately
negative exposure to governance considerations (G-3 IPS). Overall,
the ESG risks do not have a material impact on the credit rating.
Coeur's SGL-3 rating reflects its adequate liquidity profile as of
March 31, 2022 supported by $73 million in cash and cash
equivalents and about $85 million outstanding (including the $30
million L/C use) under the revolving credit facility. Subsequent to
the quarter end, the company expanded the revolver to $390 million
from $300 million previously, increasing the revolver availability
to $305 million on a proforma basis. The RCF is secured by
substantially all of the assets of the company and its domestic
subsidiaries, as well as a pledge of the shares of certain of the
Company's subsidiaries. Moody's expects Coeur to be substantially
FCF negative in 2022 and 2023 and to rely heavily on the facility
to complete the expansion. The level of cash burn could range
widely depending on commodity prices, new hedges, and the company's
ability to reduce cash costs, particularly at Rochester. The credit
agreement contains financial covenants including maximum net
leverage ratio of 3.5x, senior secured leverage ratio of 2.0x and
minimum interest coverage ratio (EBITDA/ Interest Charges) of
3.0x.
Under Moody's Loss Given Default for Speculative-Grade Companies
methodology, the Caa1 rating on the new senior unsecured notes, one
notch below the CFR, reflects their lower priority position in the
capital structure and their effective subordination to the RCF
(unrated). The notes are guaranteed by domestic subsidiaries of the
company representing a majority of Coeur's sales and total assets.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would be considered if the company successfully
completes the Rochester expansion project, ramps up the expanded
mine to commercial production as planned and is able to generate
sustained positive free cash flow. Quantitatively, Moody's would
consider an upgrade if, post Rochester expansion, the company were
expected to sustain an adjusted leverage ratio of below 3.5x
(debt/EBITDA) and EBIT margin of at least 8%.
A negative rating pressure could develop if there is a significant
reduction in borrowing availability or liquidity, if commodity
prices decline meaningfully from current levels and if production
and operating costs do not meet the projected targets.
Quantitatively, Moody's would consider a downgrade if the leverage
ratio increases and is expected to remain above 4.5x on a sustained
basis, EBIT margin is expected to remain below 6% and (CFO
-Dividends) declines to below 10% of outstanding debt.
Coeur Mining, Inc. is a mid-tier gold and silver producer. The
company's producing properties include Rochester silver-gold mine
in Nevada, Palmarejo gold-silver complex in Mexico, Wharf gold mine
in South Dakota and Kensington gold mine in Alaska. The company
also owns the Silvertip mine (silver-zinc-lead) in Canada,
Sterling/Crown Gold Project in Nevada, multiple exploration assets
in North America and interests in early stage precious metals
companies. Coeur generated $833 million of revenue in FY2021.
The principal methodology used in these ratings was Mining
published in October 2021.
COLLEGE DUDES: Wins Cash Collateral Access Thru June 15
-------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of North
Carolina, Raleigh Division, authorized College Dudes Help-U-Move
Inc. to use cash collateral on an interim basis in accordance with
the budget, with a 10% variance for the period of May 15 to June
15, 2022.
The budget provides for $90,000 in revenue $94,493 in total
expenses for the period.
The bankruptcy estate has an interest in revenues from the
operation of its business. This revenue may constitute the cash
collateral of secured creditors within the meaning of section 363
of the Bankruptcy Code.
The possible lienholders of the Debtor's cash collateral are RBR
Global, Expansion Capital Group, and QS Capital Partners.
As adequate protection, the secured creditors are granted liens in
after-acquired revenue to the same extent and priority as they had
prior to the filing of the case.
A further hearing on the matter is scheduled for June 9 at 10 a.m.
A copy of the order is available at https://bit.ly/3NptVh4 from
PacerMonitor.com.
About College Dudes Help-U-Move, Inc.
College Dudes Help-U-Move, Inc. sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. E.D. N.C. Case No. 22-00822-5)
on April 15, 2022. In the petition filed by Abraham Cannon, its
chief executive officer, the Debtor disclosed up to $50,000 in
assets and up to $500,000 in liabilities.
Judge Joseph N. Callaway oversees the case.
Travis Sasser, Esq., at Sasser Law Firm is the Debtor's counsel.
CREATD INC: Incurs $6.9 Million Net Loss in First Quarter
---------------------------------------------------------
Creatd, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $6.88
million on $1.35 million of net revenue for the three months ended
March 31, 2022, compared to a net loss of $6.64 million on $743,913
of net revenue for the three months ended March 31, 2021.
As of March 31, 2022, the Company had $9.34 million in total
assets, $6.23 million in total liabilities, and $3.11 million in
total stockholders' equity.
As of March 31, 2022, the Company had an accumulated deficit of
$116 million, a net loss, and net cash used in operating activities
of $5.1 million for the reporting period then ended. The Company
said these factors raise substantial doubt about the Company's
ability to continue as a going concern for a period of one year
from the issuance of these financial statements.
Cread stated "The Company is attempting to further implement its
business plan and generate sufficient revenues; however, its cash
position may not be sufficient to support its daily operations.
While the Company believes in the viability of its strategy to
further implement its business plan and generate sufficient
revenues and in its ability to raise additional funds by way of a
public or private offering of its debt or equity securities, there
can be no assurance that it will be able to do so on reasonable
terms, or at all. The ability of the Company to continue as a
going concern is dependent upon its ability to further implement
its business plan and generate sufficient revenues and its ability
to raise additional funds by way of a public or private offering."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1357671/000121390022027118/f10q0322_creatdinc.htm
About Creatd Inc.
Headquartered in Fort Lee, NJ, Creatd, Inc. -- https://creatd.com
-- is a creator-first technology company and the parent company of
the Vocal platform. Its mission is to empower creators,
entrepreneurs, and brands through technology and partnership. The
Company accomplishes this through Creatd's three main business
pillars: Vocal Ventures, Creatd Partners, and its newest
initiative, Recreatd.
Creatd reported a net loss of $37.38 million for the year ended
Dec. 31, 2021, compared to a net loss of $24.21 million for the
year ended Dec. 31, 2020. The Company reported a net loss of $8.04
million for the year ended Dec. 31, 2019. As of Dec. 31, 2021, the
Company had $9.17 million in total assets, $5.49 million in total
liabilities, and $3.69 million in stockholders' equity.
CRECHALE PROPERTIES: Court Confirms Modified Plan
-------------------------------------------------
Judge Katharine M. Samson has entered an order confirming the Plan
of Reorganization, as modified, and approving the Disclosure
Statement of Crechale Properties, LLC.
Objection to confirmation was timely filed by the holder of Class 5
Claims, First Bank as well as the holder of Class 3 Claims,
Citizens Bank. The objections by First Bank and Citizens were
resolved pursuant to the agreed orders entered on April 13 and
April 20, 2022.
Classes 2, 4, 7, 8 and 10 did not accept the Plan on account of the
failure of holders of claims in those Classes to cast any votes.
Class 6, First Southern Bank, and Class 9, PriorityOne Bank, voted
to accept the Plan.
The deadline for filing motions for administrative costs, fees
and/or expenses is established as 30 days from and after the
Effective Date.
As required by Sec. 1129(a)(8) and (a)(10), and as set forth in the
Certificate of Tally filed in the proceeding on April 20, 2022, the
Plan was accepted by affirmative votes from Classes 6 and 9.
Therefore, at least one Class of creditors whose claims are
impaired has accepted the Plan.
As required by Section 1129(b)(2) (A) of the Bankruptcy Code, the
Plan does not discriminate unfairly and is fair and equitable, with
respect to each of class of secured claims that is impaired under
and has not accepted, the Plan on account of the provisions of the
Plan that provide for the holders of such claims to realize the
indubitable equivalent of such claims and there has been no
objection of any holder of a secured claim asserting such.
Attorney for the Debtor:
W. Jarrett Little, Esq.
William J. Little, Jr., Esq.
LENTZ & LITTLE, P.A.
2505 14th St., Ste. 500
Gulfport, MS 39501
Tel: (228) 867-6050
E-mail: jarrett@lentzlittle.com
bill@lentzlittle.com
About Crechale Properties
Crechale Properties, LLC, is a Hattiesburg, Miss.-based company
engaged in the operation of apartment buildings.
Crechale Properties filed its voluntary petition for Chapter 11
protection (Bankr. S.D. Miss. Case No. 21-50079) on Jan. 21, 2021,
listing up to $10 million in assets and up to $50 million in
liabilities. Elizabeth Crechale, manager of Crechale Properties,
signed the petition.
Judge Katharine M. Samson presides over the case.
W. Jarrett Little, Esq., at Lentz & Little, PA serves as the
Debtor's legal counsel.
CYPRESS ENVIRONMENTAL: May Tap $3MM of APE V DIP Loan
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Cypress Environmental Partners, L.P.
and its debtor-affiliates to use cash collateral on an interim
basis in accordance with the budget, with a 15% variance and obtain
post-petition financing.
The Debtors are permitted to obtain post-petition financing
consisting of a non-amortizing, new money, multi-draw credit
facility in an aggregate principal amount of $5 million, of which:
(i) $3 million in principal amount of new money revolving loans
will be available upon entry of the Interim Order and (ii) an
additional $2 million in principal amount of new money revolving
loans will be available upon entry of the Final Order, provided by
APE V Cypress, LLC, as lender, and the other lenders party thereto
from time to time, for which APE V Cypress, LLC will act as
administrative agent.
Subject to the terms of the Interim Order, the Prepetition First
Lien Secured Parties have agreed (i) to permit the Debtors to use
the cash collateral and (ii) not to object to the DIP Facility,
including the DIP Liens contemplated in connection therewith,
pursuant to the DIP Credit Agreement.
Pursuant to the Amended and Restated Credit Agreement, dated as of
May 29, 2018, as last amended by Second Amendment dated as of
August 13, 2021, among Cypress Environmental Partners, L.P, Tulsa
Inspection ResourcesโCanada ULC, the Prepetition First Lien
Agent, and the several banks and other financial institutions or
entities from time to time party to the Prepetition First Lien
Credit Agreement as lenders, the Prepetition First Lien Agent and
the Prepetition First Lien Lenders agreed to extend a credit
facility to the Prepetition First Lien Borrowers in an aggregate
principal amount of up to $75,000,000.
As of the Petition Date, the aggregate amount of the Obligations
due and payable by the Prepetition First Lien Borrowers to the
Prepetition First Lien Secured Parties under the Prepetition First
Lien Credit Agreement, equaled approximately $58,853,976 inclusive
of outstanding principal and accrued and unpaid interest as of the
Petition Date.
The Debtors need to obtain immediate access to the postpetition
financing under the DIP Facility and to use cash collateral to,
among other things, permit the orderly continuation of the
operation of their businesses, maintain business relationships with
vendors and suppliers, make capital expenditures, satisfy other
working capital and operational needs, and fund the administration
and prosecution of the Chapter 11 Cases.
The Debtors are authorized, subject to the terms and conditions of
the DIP Facility Documents and the Interim Order, to use cash
collateral, including, without limitation, cash collateral on which
the DIP Secured Parties and the Prepetition First Lien Secured
Parties hold a lien to fund (a)(i) working capital, (ii) general
corporate purposes, (iii) restructuring expenses, and (iv) any fees
required under the DIP Credit Agreement or any other DIP Facility
Document, in each case with respect to clauses (i) through (iv),
pursuant to the Approved DIP Budget, subject to Permitted
Variances, and (b) fees and expenses incurred by Professionals.
As adequate protection, the Prepetition First Lien Secured Parties
are granted a valid, binding, continuing, enforceable, fully
perfected replacement security interest in and lien upon the
Prepetition First Lien Collateral, which replacement security
interests and liens and allowed superpriority claims against each
of the Debtors with priority over any and all other administrative
expenses, and other claims against the Debtors.
The DIP Loan matures on the earliest of (i) three months after the
Petition Date; (ii) the consummation of a
sale of all or substantially all of the assets of the Credit
Parties pursuant to Section 363 of the Bankruptcy
Code or otherwise; (iii) the effective date of a plan of
reorganization or liquidation in the Cases; (iv) the
entry of an order by the Bankruptcy Court dismissing any of the
Cases or converting such Cases to a case
under Chapter 7 of the Bankruptcy Code; and (v) the date of
termination of the Lenders' commitments
and the acceleration of any outstanding extensions of credit, in
each case, under this Agreement and in
accordance with the DIP Orders.
The Debtors are required under the DIP Facility to obtain
confirmation of a Plan of Reorganization no later than 40 days
after the Petition Date, and exit Chapter 11 within 15 days after
the entry of the Confirmation Order.
A final hearing on the matter is scheduled for May 31, 2022 at 9:30
a.m.
The DIP Lender may be reached at:
Phil VanTrease
Eric Weeldreyer
APE V Cypress, LLC
7030 South Yale Avenue, Suite 810
Tulsa, OK 74136
Email: philvt@argonautpe.com
ericw@argonautpe.com
The DIP Lender is represented by:
Samuel Ory, Esq.
Frederic Dorwart, Lawyers PLLC
124 East Fourth Street
Tulsa, OK 74103
Telephone: (918) 583-9913
Email: sory@fdlaw.com
A copy of the order is available at https://bit.ly/3liHiUk from
PacerMonitor.com.
About Cypress Environmental Partners LP
Cypress Environmental Partners LP offers suite of services includes
inspection, water treatment, and other environmental services that
help their customers protect people, property, infrastructure, and
the environment with a focus on safety and sustainability. The
Debtors' primary business, inspection services, provides essential
environmental services, including inspection and integrity services
on a variety of infrastructure assets such as midstream pipelines,
oil and gas well gathering systems, natural gas plants, storage
facilities, pumping stations, compression stations, and natural gas
distribution systems.
Cypress Environmental Partners LP and affiliates sought Chapter 11
bankruptcy protection (Bankr. S.D. Tex. Lead Case No. 22-90039) on
May 8, 2022. In the petition filed by Jeffrey Herbers, authorized
signatory, Cypress Environmental Partners LP listed estimated total
assets amounting to $96,978,000 and total liabilities of
$62,418,000.
The case is assigned to Honorable Bankruptcy Judge Hon. Marvin
Isgur.
The Debtor's counsels are James Grogan, Esq. of PAUL HASTINGS LLP,
Justin Rawlins, Esq., and Matthew Micheli, Esq. FTI CONSULTING,
INC. is the financial advisor, PIPER SANDLER & CO. is the
investment banker,and KURTZMAN CARSON CONSULTANTS LLC is the claims
agent.
DALEX DEVELOPMENT: June 21 Plan Confirmation Hearing Set
--------------------------------------------------------
On May 10, 2022, debtor Dalex Development Inc. filed with the U.S.
Bankruptcy Court for the District of New Jersey a Disclosure
Statement referring to Chapter 11 Plan.
On May 17, 2022, Judge John K. Sherwood approved the Amended
Disclosure Statement and ordered that:
* Written acceptances, rejections or objections to the Plan
shall be filed not less than seven days before the hearing on
confirmation of the Plan.
* June 21, 2022 at 10:00 is fixed as the date and time for the
hearing on confirmation of the Plan.
A copy of the order dated May 17, 2022, is available at
https://bit.ly/3wzYlaQ from PacerMonitor.com at no charge.
Counsel to the Debtor:
PORZIO, BROMBERG & NEWMAN, P.C.
100 Southgate Parkway
P.O. Box 1997
Morristown, New Jersey 07962
Tel: (973) 538-4006
Fax: (973) 538-5146
Warren J. Martin, Jr., Esq.
Christopher P. Mazza, Esq.
David E. Sklar, Esq.
E-mail: wjmartin@pbnlaw.com
cpmazza@pbnlaw.com
desklar@pbnlaw.com
About Dalex Development
Dalex Development, Inc., a company in Wayne, N.J., sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J.
Case No. 21-17577) on Sept. 28, 2021, listing up to $50,000 in
assets and up to $10 million in liabilities.
Judge John K. Sherwood oversees the case.
Porzio, Bromberg & Newman, P.C., is the Debtor's legal counsel.
DAVID BARTENWERFER: SCOTUS to Review Fraud Exception to Discharge
-----------------------------------------------------------------
Jonah Wacholder and Daniel A. Lowenthal of Patterson Belknap Webb &
Tyler LLP wrote an article titled "Supreme Court Agrees to Hear a
Case About the Scope of the Fraud Exception to Discharge".
A discharge in bankruptcy usually discharges a debtor from the
debtor's liabilities. Section 523 of the Bankruptcy Code, however,
sets forth certain exceptions to this policy, including for "any
debt . . . for money, property, services, or an extension, renewal,
or refinancing of credit, to the extent obtained by . . . false
pretenses, a false representation, or actual fraud. . . ." 11
U.S.C. Sec. 523(a)(2)(A). (We have previously written about this
provision in the context of statements respecting a debtor's
financial condition.) There is a split among the courts of appeal
as to whether this provision applies only to a debtor who has some
level of knowledge of the fraud, or whether the bar on discharge
applies also when the debtor is liable only by imputation for a
fraud committed by an agent or partner of the debtor. On May 2,
the Supreme Court granted a petition for certiorari in Bartenwerfer
v. Buckley, No. 21-908, a case presenting this question.
Kate and David Bartenwerfer jointly purchased a house in February
2005 for about $900,000 and then sold it in March 2008 to Kieran
Buckley for $2.1 million. Buckley later sued the Bartenwerfers for
breach of contract, negligence, nondisclosure of material facts,
negligent misrepresentation, and intentional misrepresentation.
The jury found for Buckley on the breach of contract, negligence,
and nondisclosure of material facts claims but found against him on
the remaining claims, and awarded damages to Buckley. The
Bartenwerfers then filed for bankruptcy. Buckley brought an
adversary proceeding in the bankruptcy court against the
Bartenwerfers, arguing that the state court judgment he had been
awarded against them was nondischargeable under section
523(a)(2)(A) because it was a debt that had been obtained through
fraud. The bankruptcy court ruled in Buckley's favor, finding that
David Bartenwerfer had actual knowledge of the false
representations and his fraudulent conduct could be imputed to Kate
Bartenwerfer as his partner. The Ninth Circuit Bankruptcy
Appellate Panel reversed, holding that nondischargeability under
section 523(a)(2)(A) only resulted if a debtor "knew or should have
known" of the fraud, based on the Eighth Circuit's decision in
Walker v. Citizens State Bank (In re Walker), 726 F.2d 452 (8th
Cir. 1984). On remand, the bankruptcy court held that Kate
Bartenwerfer had no knowledge of the fraud and her debt was
therefore dischargeable, and the Bankruptcy Appellate Panel
affirmed. Buckley appealed to the Ninth Circuit, which reversed,
holding that the application of section 523(a)(2)(A) does not
depend on the debtor's knowledge of the fraud. Kate Bartenwerfer
then petitioned for certiorari.
Bartenwerfer's petition focused on the presence of a circuit split,
noting that the Ninth Circuit's ruling follows the Fifth Circuit's
ruling in Deodati v. M.M. Winkler & Assocs. (In re M.M. Winkler &
Assocs.), 239 F.3d 746 (5th Cir. 2001), in conflicting with the
Eighth Circuit's ruling in Walker. Bartenwerfer also made several
arguments that the Ninth Circuit's decision was wrong. First,
Bartenwerfer pointed to the text of the provision and the statutory
context of the Bankruptcy Code, arguing that the provision's text
does not expressly include a debtor liable for fraud by imputation
and that barring such a liability from discharge would be
inconsistent with the Bankruptcy Code's policy of granting a fresh
start to honest but unfortunate debtors. Second, Bartenwerfer
argued that a knowledge requirement is consistent with the
statute's legislative history, noting legislative statements that
the provision was meant to cover actual fraud rather than fraud
implied by law. Third, Bartenwerfer argued that Supreme Court
decisions finding that scienter is an element of fraud for purposes
of section 523 support imposing a scienter requirement here.
Buckley's opposition acknowledged the existence of a circuit split,
but argued it was old and lopsided in favor of the Fifth Circuit's
position, and was not of much significance because it will rarely
be the case that a debtor whose agent or partner committed fraud
will not have any knowledge of the fraudulent conduct. Buckley
also argued that the Ninth Circuit's decision was correct. First,
Buckley pointed to the provision's text, which states that "any
debt" for money "obtained by . . . actual fraud" is
nondischargeable, without any statement that the fraud need have
been by the debtor or that the debtor need have known of the fraud.
Second, Buckley relied on the Supreme Court's decision in Strang
v. Bradner, 114 U.S. 555 (1885), which, interpreting a similar
provision in the Bankruptcy Act of 1867, held that the fraud of one
partner could be imputed to the others for purposes of
nondischargeability. Third, Buckley argued that the Ninth
Circuit's reading of the statute makes sense, as a reflection of
Congress's desire to prioritize the interests of the victims of
fraud over the partners of fraudsters.
The Supreme Court granted the petition on May 2. The case will
likely be argued and decided next term.
The authors can be reached at:
Daniel A. Lowenthal, Esq.
Partner
PATTERSON BELKNAP WEBB & TYLER LLP
1133 Avenue of the Americas
New York, NY 10036
Tel: 212-336-2720
- and -
Jonah Wacholder, Esq.
Associate
PATTERSON BELKNAP WEBB & TYLER LLP
1133 Avenue of the Americas
New York, NY 10036
Tel: 212-336-2606
About the Bartenwerfers
David William Bartenwerfer and Kate Marie Bartenwerfer operated two
businesses: RJUOP I, LLC, a property development business, and
Parthenon Design.
The Bartenwerfers bought and extensively remodeled a home located
at 549 28th Street, San Francisco, California, which they
subsequently sold to Kieran Buckley. Unbeknownst to the wife, the
husband allegedly made false representations to the buyer.
Post-sale, Mr. Buckley discovered undisclosed defects and
ultimately sued the Bartenwerfers in San Francisco County Superior
Court to recoup damages under a number of theories.
After the jury found for Buckley on the breach of contract,
negligence, and nondisclosure of material facts, the Bartenwerfers
then filed for bankruptcy (Bankr. N.D. Cal. Case No. 13-30827) in
2013. A discharge was entered December 15, 2014.
After the bankruptcy filing, Buckley commenced an adversary
proceeding before the bankruptcy court alleging, inter alia, that
the judgment is excepted from the debtors' discharge pursuant to
Bankruptcy Code Sec. 523(a)(2)(A). The bankruptcy court eventually
entered a nondis-chargeable judgment against Mr. Bartenwerfer for
$539.158 as of October 27, 2016, with interest.
Following an earlier appeal and judgment on remand, the bankruptcy
court correctly determined that Section 523(a)(2)(A) applies only
to a debtor who, at a minimum, knew or should have known of her
agentโs fraud. (Pet. App., 58a). Accordingly, the court entered
judgment in favor of the wife, Mrs. Bartenwerfer. (Pet. App., 33a)
On appeal, the Bankruptcy Appellate Panel agreed. (Pet. App.,
18a-24a). On further appeal, the Ninth Circuit affirmed the
Bankruptcy Appellate Panel's decision on a different issue but
reversed with respect to Mrs. Bartenwerfer, holding expressly that
fraud imputed against a debtor is nondischargeable "regardless of
her knowledge of the fraud."
DERBY MOBILE: Wins Cash Collateral Access Thru May 31
-----------------------------------------------------
In the Chapter 11 case of Derby Mobile Home Park, LLC, the U.S.
Bankruptcy Court for the District of Colorado approved the
Stipulated Order Authorizing the Debtor's Use of Cash Collateral
for the Period from May 1, 2022, through May 31, 2022.
Derby Mobile Home Park, LLC d/b/a Desert Oasis RV Park, is
permitted to use cash collateral in accordance with the budget,
with a 15% variance.
The Debtor will pay $7,000 to First Guaranty Bank within three
business days upon Court approval of the Stipulated Cash Collateral
Order.
As adequate protection, the Bank is granted a replacement lien and
security interest upon the Debtor's post-petition assets with the
same priority and validity and in the same amount as its
pre-petition liens and security interests to the extent of the
Debtor's post-petition use of cash collateral.
To the extent the Adequate Protection Lien proves to be
insufficient, the Bank, as may be applicable, will be granted
superpriority administrative expense claims under section 507(b) of
the Bankruptcy Code but only to the extent that the Bank has a
valid allowed secured claim under section 506(a) in the cash
collateral used.
The Debtor will maintain insurance coverage on the pre-petition
personal and real property for the full replacement value of any
such assets and will cause the Bank to be named as a loss payee for
the insurance policies.
A copy of the order is available at https://bit.ly/3NiuhpG from
PacerMonitor.com.
About Derby Mobile Home Park, LLC
Derby Mobile Home Park, LLC owns and operates the Desert Oasis RV
Park located in Eunice, New Mexico, having an appraised value of
$1.5 million. Derby Mobile sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. D. Colo. Case No. 22-10966) on
March 24, 2022. In the petition signed by Brian Tanner, managing
member, the Debtor disclosed $1,519,563 in assets and $6,029,019 in
liabilities.
Judge Elizabeth E. Brown oversees the case.
David J. Warner, Esq., at Wadsworth Garber Warner Conrardy, P.C. is
the Debtor's counsel.
DERRICK'S SPORTS: Unsecureds Will Get 10% in Subchapter V Plan
--------------------------------------------------------------
Derrick's Sports & Fitness, LLC, filed with the U.S. Bankruptcy
Court for the District of Maryland a Chapter 11 under Subchapter V
Plan dated May 17, 2022.
Derricks Sports & Fitness provides customized fitness programs in a
structured, results-oriented setting. Clients are held accountable
for their fitness commitment, and achievement of fitness goals are
guaranteed.
The Debtor had been posed for growth, by upgrading the facilities
and embarking upon a sustained marketing plan. Debtor's gross
receipts for 2019 was $115,830.00 in 2020 it was $75,721.00 and in
2021 $69,200.00 substantially lower because of the pandemic and
resulting gym lockdowns.
Unfortunately, in late December On Deck Capital Inc., one of
Debtor's creditor filed suit and received a judgement which forced
Debtor into bankruptcy. Additionally, there was also a frivolous
suit pending Salamatu Khadar v. Derrick's Sports & Fitness, LLC.
The value of the property to be distributed under the Plan during
the term of the Plan is not less than the Debtor's projected
disposable income for that same period. Unsecured creditors holding
allowed claims will receive distributions, which the Debtor has
valued at approximately 10 cents on the dollar. The Plan also
provides for the payment of secured, administrative, and priority
claims in accordance with the Bankruptcy Code.
The term of this Plan begins on the date of confirmation of this
Plan and ends on the 36th month subsequent to that date.
The Plan will treat claims as follows:
* Class 1 consists of Administrative Expense Priority Claims.
Attorney fees paid pursuant to fee application. Trustee fees and
taxes paid in full, unimpaired.
* Class 2 consists of the Secured Claims of Prince Georges
County and Life Fitness. This Class shall be paid in full and is
unimpaired.
* Class 3 consists of General Unsecured Claims. This Class
shall be paid pro rata and is impaired. This Class will receive a
distribution of 10% of their allowed claims.
During the term of this Plan, the Debtor shall submit the
disposable income (or value of such disposable income) necessary
for the performance of this plan to the Subchapter V Trustee (the
"Trustee") and shall pay the Trustee the sums set forth herein.
A full-text copy of the Plan of Reorganization dated May 17, 2022,
is available at https://bit.ly/3yRMNSa from PacerMonitor.com at no
charge.
Counsel for Debtor:
Joy P. Robinson, Esq.
Joy P Robinson P.C.
9701 Apollo Dr., Ste 100
Upper Marlboro, MD 20774
Telephone: (301) 322-3170
Facsimile: (301) 263-6888
Email: joy@joyrobinsonlaw.com
About Derrick's Sport
Derrick's Sport Fitness, LLC, filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D. Md. Case No.
22-10792) on Feb. 16, 2022, listing up to $50,000 in assets and up
to $500,000 in liabilities. Michael Wolff serves as the Subchapter
V trustee.
Judge Thomas J. Catliota oversees the case.
The Debtor tapped Joy P. Robinson P.C. as legal counsel.
DIOCESE OF CAMDEN: Tells Court Chapter 11 Plan Is Best Option
-------------------------------------------------------------
Vince Sullivan of Law360 reports that the Diocese of Camden told a
New Jersey bankruptcy court Thursday, May 19, 2022, that its
proposed Chapter 11 plan represents the best possible outcome for
sex abuse claimants and that insurer opposition to the plan is
unfounded because it doesn't impact their contractual rights.
In a response to a spate of objections to the diocese's plan
disclosure statement, the debtor said its plan is being proposed
with the support of the official committee of tort claimants that
represents the hundreds of abuse survivors and objections from
insurers are a tactic seeking to delay the plan process.
About The Diocese of Camden, NJ
The Diocese of Camden, New Jersey is a nonprofit religious
corporation organized pursuant to Title 16 of the Revised Statutes
of New Jersey. The Diocese is the secular legal embodiment of the
Roman Catholic Diocese of Camden, a juridic person recognized under
Canon Law.
The Diocese of Camden sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case No. 20-21257) on Oct. 1, 2020.
The petition was signed by Reverend Robert E. Hughes, vicar General
and vice president. At the time of the filing, the Debtor had
total assets of $53,575,365 and liabilities of $25,727,209. Judge
Jerrold N. Poslusny Jr. oversees the case. McManimon, Scotland &
Baumann, LLC, is the Debtor's legal counsel.
ELI & ALI: Unsecured Creditors Will Get 14.3% of Claims in Plan
---------------------------------------------------------------
Eli & Ali, LLC, submitted a Third Amended Disclosure Statement for
the Plan of Reorganization dated May 17, 2022.
The Debtor has continued to operate its business and has operated
profitably during the Chapter 11 Case. As a result of the Debtor's
improvement in operations, the Debtor is now in a position to
successfully emerge from Chapter 11 and effectuate the Plan.
Class 4 consists of one partially secured claim held by the United
States Small Business Administration for an Economic Injury
Disaster Loan ("EIDL") which was received by the Debtor on or about
May 2020. The loan balance is $155,285.56 of which $79,272.39 is
secured. The balance of $76,013.17 is unsecured and will be
treated as a Class 5 general unsecured creditor. The secured
$79,272.39 plus interest at 3.75%, will be paid in 72 equal
consecutive monthly payments of $1,189.68 each.
Class 5 consists of 24 holders of Allowed General Unsecured Claims.
This class totals approximately $562,086.54. This class includes
the partially unsecured claim of the Small Business Administration
in the amount of $76,013.17. This class will be paid $80,000.00 or
14.3% of its Allowed Claims with quarterly payments commencing
within 30 days of the effective date of the Plan. This Class will
receive a total of $80,000.00 payable in twenty equal, consecutive,
quarterly payments of $4,000.00 each commencing 30 days after the
effective date of the Plan.
Jeffrey Ornstein, the sole member of the Debtor's LLC has
contributed $50,000 of new value to the Debtor and will also secure
the payment to TD Bank with a mortgage on his residence. In
exchange for this capital contribution and the new collateral
mortgage on his residence, he shall retain his 100% interest in the
Debtor. The Class 6 is impaired.
The Plan shall be effectuated from a new value contribution of
$50,000.00 by Jeffrey Ornstein to be used for the settlement with
Capital One and a mortgage on Jeffrey Ornstein and Susan Ornstein's
residence in the amount of $75,000.00 to partially secure the Class
3 Claim of TD Bank, N.A. The balance of the payments are to be
funded from ongoing business operations.
The Bankruptcy Court has scheduled June 29, 2022 at 10:00 a.m. as
the date and time for Confirmation of the Plan.
The Bankruptcy Court has fixed June 20, 2022 at 4:00 p.m. as the
date and time by which all written objections to confirmation of
the Plan shall be filed.
A full-text copy of the Third Amended Disclosure Statement dated
May 17, 2022, is available at https://bit.ly/3yR8B03 from
PacerMonitor.com at no charge.
Counsel to the Debtor:
Heath S. Berger, Esq.
BERGER, FISCHOFF, SHUMER, WEXLER & GOODMAN, LLP
6901 Jericho Turnpike, Suite 230
Syosset, NY 11791
Tel: (516) 747-1136
E-mail: hberger@bfslawfirm.com
About Eli & Ali
Saying that it faced financial difficulties caused by the shutdown
of restaurants during the first wave of the Covid 19 pandemic, Eli
& Ali LLC sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. E.D.N.Y. Case No. 21-40920) on April 7, 2021. In the
petition signed by Jeffrey Ornstein, managing member, the Debtor
disclosed $270,150 in assets and $1,427,375 in liabilities.
Judge Jil Mazer-Marino oversees the case.
Heath S. Berger, Esq., at Berger, Fischoff, Shumer, Wexler &
Goodman, LLP, is the Debtor's counsel.
Capital One, National Association, the prepetition lender, is
represented by Troutman Pepper Hamilton Sanders LLP.
FBN TRANSPORTATION: Case Summary & Three Unsecured Creditors
------------------------------------------------------------
Debtor: FBN Transportation LLC
504 Pine St.
Athens, WI 54411
Chapter 11 Petition Date: May 20, 2022
Court: United States Bankruptcy Court
Western District of Wisconsin
Case No.: 22-10829
Judge: Hon. Catherine J. Furay
Debtor's Counsel: John P. Driscoll, Esq.
KREKELER STROTHER, S.C.
2901 West Beltline Highway
Suite 301
Madison, WI 53713
Tel: (608) 258-8555
Fax: (608) 258-8299
E-mail: jdriscoll@ks-lawfirm.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Keith A. Zinkowich as member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's three unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/PNNWX2A/FBN_Transportation_LLC__wiwbke-22-10829__0001.0.pdf?mcid=tGE4TAMA
FLEXIBLE FUNDING: Unsecureds' Recovery in Sale Plan "TBD"
---------------------------------------------------------
Flexible Funding Ltd. Liability Co., and Instapay Flexible, LLC
filed with the U.S. Bankruptcy Court for the Northern District of
Texas an Amended Disclosure Statement for Chapter 11 Amended Joint
Plan of Liquidation dated May 17, 2022.
The Debtors are privately held asset-based lending (ABL) and
factoring companies, primarily focused on the staffing and
transportation industries. Instapay is a wholly owned subsidiary of
Flexible Funding. Instapay engages in factoring for clients in the
transportation industry, while Flexible Funding focuses on ABL,
mainly for the staffing industry.
Prior to the commencement of the cases, the Debtors explored a wide
variety of options for recapitalizing and/or restructuring their
enterprise. Ultimately, the Debtors determined that they were
likely to realize the highest and best value for their enterprise
through a sale of all or substantially all of their assets. The
Debtors, through their financial advisors, marketed the Debtors'
assets widely and aggressively for approximately several months
before the commencement of these cases.
Both before and after the commencement of the chapter 11 cases, the
Debtors engaged in good-faith and arm's-length negotiations for the
sale of their assets. On Oct. 15, 2021, the Bankruptcy Court
entered an order approving notice and bidding procedures for a
potential sale of substantially all the assets of Flexible. On
Oct. 18, 2021, the Bankruptcy Court entered a similar order with
respect to Instapay.
Ultimately, the highest and best offers for the Debtors' assets
were received from affiliates of eCapital Corp. In November 2021,
transactions were closed for the sale of substantially all of the
Debtors' assets. The proceeds from the sales allowed the Debtors to
retire the senior secured indebtedness owed to Umpqua Bank in full.
The remaining sale proceeds provide the primary source of funding
for Distributions under the Plan.
The Plan is a liquidating chapter 11 plan. It provides for the
distribution of the proceeds from the sale of substantially all the
Debtors' assets to all holders of Allowed Claims. The Plan
organizes certain kinds of Claims into Classes, and leaves other
kinds of Claims unclassified, as the Bankruptcy Code requires.
After full payment of Allowed Administrative Expenses, Allowed
Priority Tax Claims, U.S. Trustee fees, Secured Tax Claims, and
Priority Non-Tax Claims, Distributions to be made to holders of
Allowed Claims in the following Classes will be made in a
"waterfall" fashion, meaning that a higher priority class must be
paid in full first before the next lower priority class will
receive any distribution.
Class 6 consists of General Unsecured Claims. Each holder of an
Allowed General Unsecured Claim shall receive, on the applicable
Plan Distribution Date, a Pro Rata Share of the Distributable Cash
remaining, if any, after Classes 1 through 5 have been paid in full
in accordance with the treatment provided in the Plan to such
Classes. Holders of Class 6 Claims are entitled to vote to accept
or reject the Plan. The Amended Disclosure Statement still has
blanks as to the estimated percentage recovery for holders of
unsecured claims totaling $21.9 million.
Class 7 consists of Interest Holders. On the Effective Date, the
holders of Interests in the Debtors shall have no ability to direct
or control the affairs of the Liquidating Debtors. Holders of
Interests, however, shall be permitted to serve on the Oversight
Committee. Unless all holders of Allowed Claims in Classes 1
through 6 are paid in full, holders of Allowed Class 7 Interests
will not receive any payment on their respective Interests. After
full payment of Claims in Classes 1 through 6, holders of Interests
shall be paid a Pro Rata Share of available Distributable Cash on a
date to be determined by the Plan Administrator.
The sources of funds for making Distributions will consist of
remaining sales proceeds as well as recoveries from the pursuit of
Estate Claims. For that reason, the amount of funds that will
ultimately be available for distribution to creditors is unknown at
this time as it will depend on the outcome of the pursuit of the
Estate Claims.
A full-text copy of the Amended Disclosure Statement dated May 17,
2022, is available at https://bit.ly/3wKqEm5 from PacerMonitor.com
at no charge.
Attorneys for Debtors:
Jeff P. Prostok
State Bar No. 16352500
Lynda L. Lankford
State Bar No. 11935020
Dylan T.F. Ross
State Bar No. 24104435
FORSHEY PROSTOK LLP
777 Main Street, Suite 1550
Fort Worth, Texas 76102
Telephone: (817) 877-8855
Facsimile: (817) 877-4151
jprostok@forsheyprostok.com
llankford@forsheyprostok.com
dross@forsheyprostok.com
About Flexible Funding
Flexible Funding Ltd. and Instapay Flexible LLC are privately held
asset-based lending (ABL) and factoring companies, primarily
focused on the staffing and transportation industries. The Debtors
filed petitions for Chapter 11 protection (Bankr. N.D. Texas Lead
Case No. 21-42215) on Sept. 19, 2021. Judge Mark X. Mullin
oversees the cases.
At the time of the filing, Flexible Funding listed $100 million to
$500 million in both assets and liabilities while Instapay listed
as much as $50 million in both assets and liabilities.
Jeff P. Prostok, Esq., and Lynda L. Lankford, Esq., at Forshey &
Prostok, LLP are the Debtors' bankruptcy attorneys.
FLOOR-TEX COMMERCIAL: Wins Cash Collateral Access Thru June 6
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Floor-Tex Commercial Flooring, LLC to
use cash collateral on an interim basis in accordance with the
budget until the final hearing on the matter.
The final hearing is scheduled for June 6, 2022 at 10:30 a.m.
Pursuant to the Order, the Cash Collateral Lenders will continue to
have the same liens, encumbrances and security interests in the
cash collateral generated or created post filing, plus all
proceeds, products, accounts, or profits thereof, as existed prior
to the filing date.
The Debtor is authorized to pay $2,000 to Westwood Funding
Solutions, LLC, during the time period for the projected budget.
The payment will be made based on instructions for payment to be
provided by counsel for Westwood.
Westwood objects to its characterization as a lender in the
Debtor's Cash Collateral Motion and the Order, and reserves all
rights with respect to a determination of the nature of its
transaction with the Debtor and the extent and nature of its
security interest.
The Debtor will pay Fresh Funding Solutions, LLC, $1,000 during the
time period for the projected budget; the payment will be made
based on instructions for payment to be provided by counsel for
Fresh.
Fresh Funding also objects to its characterization as a lender in
the Motion and the Order, and reserves all rights with respect to a
determination if the nature of its transaction with the Debtor and
the extent and nature of its security interest.
The Debtor will pay Blue Bridge Capital, LLC, $2,000 during the
time period for the projected budget; the payment will be made
based on instructions for payment to be provided by counsel for
Blue Bridge. Blue Bridge objects to its characterization as a
lender in the Motion and the Order; and reserves all rights with
respect to a determination if the nature of its transaction with
the Debtor and the extent and nature of its security interest.
The Debtor will pay Vox Funding, LLC, $1,200 during the time period
for the projected budget; the payment will be made based on
instructions for payment to be provided by counsel for Vox. Vox
also objects to its characterization as a lender in the Motion and
the Order, and reserves all rights with respect to a determination
if the nature of its transaction with the Debtor and the extent and
nature of its security interest.
The Debtor may also pay any pre-petition amounts to subcontractors
or vendors that are included in payments to the Debtor in order to
obtain lien waivers, to prevent liens on construction jobs, and to
maintain the ability to continue to work on construction job.
A copy of the order is available at https://bit.ly/3MuMCQy from
PacerMonitor.com.
About Floor-Tex Commercial Flooring, LLC
Floor-Tex Commercial Flooring, LLC specializes in residential and
commercial flooring contracting. The Debtor sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No.
21-33751) on November 19, 2021. In the petition signed by Chief
Executive Officer Doris Springer, the Debtor disclosed up to $10
million in assets and liabilities.
Judge Eduardo V. Rodriguez oversees the case.
Reese Baker, Esq., at Baker and Associates is the Debtor's
counsel.
GHX ULTIMATE: S&P Alters Outlook to Negative, Affirms 'B' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook on GHX Ultimate Parent Corp.
to negative from stable and affirmed its 'B' issuer credit rating
and 'B' issue-level rating on its first-lien debt. S&P's '3'
recovery rating on the debt remains unchanged.
GHX is increasing its organic investment in 2022 to accelerate its
expansion, which will burden its EBITDA and cash flow while
providing it with uncertain future benefits.
S&P said, "The negative outlook reflects the risk that the
company's rising costs and interest expense could cause its FOCF to
debt to drop below 3% given the thin cushion under our
forecast.Although GHX redeemed all of its preferred shares with
common equity and its bookings have rebounded significantly (up
almost 40% in 2021) since the early stages of the coronavirus
pandemic, we believe its EBITDA and cash flow will contract in 2022
as it invests in its business and pays higher interest expense. In
addition, we believe it will take some time for it to realize the
benefits from its expanded workforce.
"Moreover, we expect higher interest expense on its nearly $950
million of debt. We think GHX's base rates could rise to nearly 2%
in 2022 and increase further in 2023. Additionally, the company
will need to refinance its first-lien term loan, which matures in
June 2024, and may be forced to accept a larger spread on the
refinanced debt given the tightening conditions in the credit
markets. We currently expect slightly more than $30 million of free
cash flow in 2022, which equates to FOCF to debt in the mid-3%
area, thus the company will need to sustain a higher level of
EBITDA starting in 2023 to maintain FOCF to debt of greater than
3%.
"GHX's acquisition strategy contributes to our view of elevated
risk.Since 2020, the company has increased its reported debt by
about $250 million to redeem its preferred equity and fund its
acquisitions of Lumere Inc. and ExplORer Surgical Corp. (in
combination with balance sheet cash). Although GHX used common
equity to fund its recent acquisition of Syft, these three
acquisitions have only contributed a small amount of EBITDA and
will likely burden its EBITDA in 2022 given the increased
investment required for it to expand their scale. Although the
increase in the company's investment will likely lead to improving
revenue and EBITDA in 2023, we believe its growth trajectory is
uncertain, especially because its recent acquisitions are only
ancillary to its core exchange business. Additionally, GHX could
undertake additional acquisitions that further weaken its credit
metrics.
"We believe the ability to hire and retain talent while controlling
costs is a key credit risk.GHX relies heavily on experienced
software information technology (IT) personnel to maintain and grow
its platforms. However, we believe the current labor market for IT
professionals is among the most competitive. Although our forecast
includes an expectation for higher wages, we think incremental
challenges in terms of hiring and retaining talent could either
lead to lower-than-expected revenue growth or higher expenses.
"Our rating also reflects the company's entrenched position in a
specialized niche and its relatively small scale.GHX generates most
of its revenue from its cloud-based exchange where health care
providers, manufacturers, and distributors can transact and
collaborate efficiently. The company is the largest player in this
industry as its products are used by hospitals covering 85%-90% of
the total hospital beds in the U.S. However, it is a niche product,
which leaves it vulnerable to market changes. GHX has good barriers
to entry because of the low standardization of product
identification and prices, thus competing exchange providers would
need access to a large set of proprietary data. However, these
barriers could erode with the standardization of product
information, increased transparency around pricing, consolidation
among group purchasing organizations, or other shifts in technology
or the supply chain. GHX has expanded into payment, inventory
management, and sales representative training services via its
recent acquisitions, though these new areas do not yet contribute
material EBITDA and are likely less predictable than its core
exchange business. The scale of the overall company is also very
small relative to that of many of its customers and rated
healthcare IT peers."
These risks are somewhat offset by its diverse set of customers
(its top 10 providers account for only about 15% of its total
revenue and its top 10 suppliers account for about 40%).
Furthermore, its core exchange service contracts are signed for
multi-year terms and are subscription-based, which provides it with
high revenue visibility and customer retention rates of over 95%.
The negative outlook on GHX reflects the elevated risk that its
FOCF to debt will drop below 3% over the next 12 months due to its
rising costs and interest expense.
S&P said, "We could consider lowering our rating on GHX if we
expect its S&P Global Ratings-adjusted FOCF to debt sustained below
3%. We think this could occur if its expected revenue opportunities
do not fully materialize and it faces a higher expense base along
with increasing interest rates.
"We could revise our outlook on GHX to stable if it refinances its
first-lien term loan and we expect it to sustain FOCF to debt of
more than 3% supported by the solid execution of its growth
plans."
ESG credit indicators: E-2; S-2; G-3
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of GHX Ultimate Parent
Corp. Our highly leveraged assessment of the company's financial
risk profile reflects its corporate decision-making that
prioritizes the interests of its controlling owners, which is in
line with our view of the majority of rated entities owned by
private-equity sponsors. Our assessment also reflects
private-equity sponsors' generally finite holding periods and focus
on maximizing shareholder returns."
GOPHER COURIER: Wins Cash Collateral Access Thru May 26
-------------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts
authorized Gopher Courier Service, Inc. to use cash collateral on
the same terms and conditions as the prior order authorizing use of
cash collateral, through May 26, 2022.
A further hearing on the matter is scheduled for May 26 at 10:30
a.m., via Zoom video conference.
A copy of the order is available at https://bit.ly/39AR29W from
PacerMonitor.com.
About Gopher Courier Service
Gopher Courier Services, Inc. filed a Chapter 11 bankruptcy
petition (Bankr. D. Mass. Case No. 21-40929) on Dec. 24, 2021,
disclosing as much as $1 million in both assets and liabilities.
Judge Elizabeth D. Katz oversees the case.
The Debtor is represented by Robert W. Kovacs Jr., Esq., at Kovacs
Law, P.C.
HACIENDA HOLDINGS: Unsecureds to Get What's Left of $201K Cash
--------------------------------------------------------------
Hacienda Holdings LLC submitted a First Amended Plan of
Reorganization.
The Debtor owns approximately 130.14-acres (83 +/- acres of which
are usable) located at or around 3145 Austin Merritt Road in
Groveland, Florida (the "Property"). The Property includes one
completed 291,000 SF hydroponic greenhouse structure and a second
greenhouse structure of equivalent size currently under
construction. The Property has the capacity to support up to four
hydroponic greenhouse structures. In addition, there is a fresh
produce market and another greenhouse attached to the market, as
well as a restaurant that operates from a trailer on the Property.
In 2021, the Debtor generated approximately $115,415 in revenues.
From January 1, 2022, through the Petition Date, the Debtor has
generated approximately $39,504.00 in revenues.
Class 2 General Unsecured Claims are impaired. The liquidation
value or amount that unsecured creditors would receive in a
hypothetical chapter 7 case is approximately $0.00. Accordingly,
the Debtor proposes to pay unsecured creditors, pro rata portion of
the remaining amount of the Cash Payment, after payment of all
Secured Tax Claims, Allowed Priority Tax Claims, and Allowed
Administrative Expense Claims. In accordance with the mediated
settlement agreement, MJH has agreed to waive any right to a
distribution from the Cash Payment.
Cash Payment shall mean a $201,000 cash payment ("Cash Payment")
which all shall be paid and disbursed as set forth in the Plan.
The $101,000 of the Cash Payment shall first be used to pay the
Secured Tax Claim, then all Allowed Administrative Expense Claims
and Allowed Priority Claims. The remainder of the Cash Payment
shall be paid pro rata to the Allowed Unsecured Claims.
The Plan is premised upon, and funded by Debtor's sale, under
Bankruptcy Code Section 363(f), of the Real Property, Causes of
Action, and Personal Property to MJH or its assigns. The sale shall
be free and clear of all liens, claims, and encumbrances. The
consideration for the sale shall be a credit bid of $1,100 subject
to increase as noted in the Plan plus contribution of the Cash
Payment. Within 1 day of entry of the Confirmation Order,
Debtor/Reorganized Debtor shall convey the Real Property by
Warranty Deed and Personal Property by bill of sale with both
documents to be in a form satisfactory to MJH.
Counsel for the Debtor:
Jeffrey S. Ainsworth, Esq.
Jacob D. Flentke, Esq.
BRANSONLAW, PLLC
1501 East Concord Street
Orlando, Florida 32803
Telephone: (407) 894-6834
Facsimile: (407) 894-8559
E-mail: jeff@bransonlaw.com
jacob@bransonlaw.com
A copy of the Plan dated May 13, 2022, is available at
https://bit.ly/3lg4qCS from PacerMonitor.com.
About Hacienda Holdings, LLC
Hacienda Holdings, LLC owns approximately 130.14-acres (83 +/-
acres of which are usable) located at or around 3145 Austin Merritt
Road in Groveland. The property includes one completed 291,000 SF
hydroponic greenhouse structure and a second greenhouse structure
of equivalent size currently under construction. The property has
the capacity to support up to four hydroponic greenhouse
structures. In addition, there is a fresh produce market and
another greenhouse attached to the market, as well as a restaurant
that operates from a trailer.
Hacienda Holdings sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-00998) on March 21,
2022. In the petition signed by Colin Farnum, managing member, the
Debtor disclosed $1,164,718 in assets and $6,710,220 in
liabilities.
Judge Tiffany P. Geyer oversees the case.
Jeffrey S. Ainsworth, Esq., at Bransonlaw, PLLC is the Debtor's
counsel.
HAYWARD HOLDINGS: S&P Ups ICR to 'BB' on Reduced Sponsor Ownership
------------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on N.C.-based
Hayward Holdings Inc. to 'BB' from 'BB-' and its issue-level rating
on its senior secured term facility to 'BB' from 'BB-'.The recovery
rating on the term loan remains '3', indicating its expectation for
meaningful (50%-70%, rounded estimate: 65%) recovery in the event
of a payment default.
The stable outlook reflects S&P's expectation for low-double-digit
percentage EBITDA growth in 2022 and continued free operating cash
flow (FOCF) growth, enabling more cushion for the company to pursue
growth strategies and periodic share repurchases while maintaining
leverage below 3x.
S&P said, "We believe the reduced sponsor ownership and financial
policy commitment lower the likelihood for more aggressive leverage
levels. In late 2021, the company announced a $450 million share
repurchase authorization that would be aimed toward privately
negotiated transactions with its financial sponsors. Following the
announcement, CCMP Capital Advisors (CCMP) and Alberta Investment
Management Corp. (AIMCO) have reduced their ownership stakes,
making Hayward now 70% private equity-owned, compared with 80% a
year ago. We believe this indicates the beginning of a phased exit
for the two financial sponsors while MSD partners (MSD) continues
to own 32% of common stock outstanding. This, combined with the
company's 2x-3x net leverage target, should lower the risk of large
debt-funded acquisitions or shareholder returns."
Strong operating performance should provide more cushion for the
company to pursue growth strategies while maintaining leverage
within its targets. In the first quarter of 2022, Hayward delivered
solid 23% revenue growth, compared with record sales growth in the
same period the previous year. The company has managed to uphold
26%-28% EBITDA margins despite cost and freight inflation through a
combination of price increases, cost-reduction initiatives, and
scaling production volumes for better fixed-cost absorption. S&P
said, "We forecast low-double-digit EBITDA growth in 2022.
Underpinning our forecast are the strong current order backlog;
recurring demand from a robust installed equipment base; and the
focus on higher-technology, higher-margin pool equipment. We
estimate this growth, coupled with improving working capital,
should enable the company to generate FOCF of $225 million in 2022.
We believe that this cash generation and EBITDA growth, combined
with $118 million of cash on the balance sheet as of the end of the
first quarter of 2022 and lower funded debt levels following the
IPO, provide cushion to support both growth initiatives and lower
leverage levels. The company's growth priorities include internal
investment in new products, particularly premium high technology
and environmentally friendly offerings, as well as bolt-on mergers
and acquisitions in similar product areas as well as new geographic
areas. We believe Hayward demonstrates the willingness to operate
with leverage on the higher-end of its 2x-3x commitment to support
these initiatives, but it is unlikely this will translate into S&P
Global Ratings leverage sustained above the 4x downgrade trigger."
Hayward remains financial-sponsor controlled, which constrains any
further improvement in its financial risk profile until its
sponsors relinquish control. Following the recent sponsor sell
down, private equity continues to hold about 70% ownership in
Hayward. S&P said, "We believe the majority ownership enables
sponsors to control aspects of financial decision-making.
Therefore, we continue to classify Hayward as financial
sponsor-owned, which constrains additional improvement of its
financial risk profile until the company's financial sponsor
ownership is below 40%. We believe CCMP and AIMCO have begun the
process of relinquishing control, but the timing may still extend
well beyond 2022. Sponsor ownership notwithstanding, we believe the
company maintains a moderately independent board that provides risk
oversight on behalf of both minority public owners and
stakeholders."
The stable outlook reflects S&P's expectation for continued
earnings growth on account of stable aftermarket demand, smart
product conversion, and margins holding in the high-20% area. This
should allow leverage to remain below 3x.
S&P could lower its rating on Hayward if it expected adjusted debt
leverage to increase and be sustained at more than 4x. This could
occur if:
-- There were weaker-than-anticipated operating performance,
particularly in the new construction portion of the business in the
event of an economic downturn; or
-- Hayward pursued material leveraging acquisitions or debt-funded
share repurchases that resulted in adjusted debt to EBITDA
sustained above 4x.
Hayward's current financial-sponsor ownership limits the potential
for an upgrade at this time; however, S&P could consider a higher
rating in the future if:
-- The ownership position of financial sponsors were reduced below
40%;
-- The company demonstrates it could operate with stable credit
metrics through challenging economic cycles; and
-- The company prudently adhered to its financial strategy of
leverage below 3x.
ESG credit indicators: To E-2, S-2, G-2; From E-2, S-2, G-3
Governance factors are now a neutral consideration in S&P's credit
rating analysis of Hayward Holdings Inc. because it believes the
sponsor sell down and more diversified board structure point to
corporate decision-making that is less likely to prioritize
interests of controlling owners. In addition, the company's
significant financial risk profile, compared with the previous
aggressive financial risk profile, reflects a lower risk appetite,
which should lead to lower leverage more in line with that
generally associated with publicly traded companies.
HEALTHIER CHOICES: Incurs $1.3 Million Net Loss in First Quarter
----------------------------------------------------------------
Healthier Choices Management Corp. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $1.32 million on $5.05 million of total net sales for
the three months ended March 31, 2022, compared to a net loss of
$696,258 on $3.47 million of total net sales for the three months
ended March 31, 2021.
As of March 31, 2022, the Company had $35.43 million in total
assets, $7.52 million in total liabilities, and $27.92 million in
total stockholders' equity.
The Company's net cash used in operating activities of
approximately $0.7 million for the three months ended March 31,
2022 resulted from a net loss of $1.3 million, offset by a non-cash
adjustment of $0.4 million and a net cash provided of $0.2 million
from changes in operating assets and liabilities. The Company's
net cash used in operating activities of $0.7 million for the three
months ended March 31, 2021 resulted from a net loss of $0.7
million and a net cash usage of $0.3 million from changes in
operating assets and liabilities, offset by a non-cash adjustment
of $0.4 million.
The net cash used in investing activities of $5.3 million for the
three months ended March 31, 2022 resulted from the acquisition of
Mother Earth's Storehouse, collection on a note receivable, and
purchases of property and equipment. The net cash used in
investing activities of $18,000 for the three months ended March
31, 2021 resulted from the collection of a note receivable, and
purchases of patents and property and equipment.
The net cash provided by financing activities of $35,000 for the
three months ended March 31, 2022 is due to proceeds received from
the line of credit. The net cash provided by financing activities
of $3.1 million for the three months ended March 31, 2021 is due to
proceeds received from the Securities Purchase Agreement of $5.0
million, partially offset by a principal payment of $2.0 million on
the line of credit.
At March 31, 2022 and Dec. 31, 2021, the Company did not have any
material financial guarantees or other contractual commitments with
vendors that are reasonably likely to have an adverse effect on
liquidity.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0000844856/000084485622000027/form10q.htm
About Healthier Choices
Headquartered in Hollywood, Florida, Healthier Choices Management
Corp. -- http://www.healthiercmc.com-- is a holding company
focused on providing consumers with healthier daily choices with
respect to nutrition and other lifestyle alternatives.
Healthier Choices reported a net loss of $4.04 million for the year
ended Dec. 31, 2021, a net loss of $3.72 million for the year ended
Dec. 31, 2020, a net loss of $2.80 million for the year ended Dec.
31, 2019, and a net loss of $13.16 million for the year ended Dec.
31, 2018. As of Dec. 31, 2021, the Company had $34.44 million in
total assets, $5.21 million in total liabilities, and $29.23
million in total stockholders' equity.
HEALTHMYNE INC: Has Deal on Cash Collateral Access
--------------------------------------------------
HealthMyne, Inc. and Silicon Valley Bank advised the U.S.
Bankruptcy Court for the Western District of Wisconsin that they
have reached an agreement regarding the Debtor's use of cash
collateral and now desire to memorialize the terms of this
agreement into an agreed order.
SVB provided certain loans to the Debtor as documented by various
notes, mortgages, security instruments, and related documents. SVB
asserts that the loan(s) to the Debtor are secured by
first-priority, properly perfected security interests against the
Debtorโs general business assets, including cash collateral.
The Debtor agrees to provide SVB replacement and supplemental liens
as set forth in the Court's order approving the Stipulation.
In consideration for the continued, uninterrupted, use of cash and
SVB's agreement to forbear from enforcing its claims against its
Collateral prior to the Termination Date in accordance with the
Cash Collateral Order, the Debtor will:
a. provide monthly financial reports, consistent with the
reporting requirements of the U.S. Trustee during the Chapter 11
case;
b. provide periodic updates on the marketing and sales efforts
for the Debtor's business as may be reasonably requested by SVB;
c. expeditiously file and seek approval of appropriate
motion(s) and supporting documents to effectuate the continued
marketing, auction, and eventual sale of the Debtor's business to
interested third-parties;
d. expeditiously file and seek approval of the employment of
its professionals to be used during the case, which may include
Michael Best & Friedrich LLP (bankruptcy counsel), and Convergence
Healthcare Advisors LLC (investment banker); and
e. adhere to the budget, as may be amended and modified with
the consent of SVB, detailing the Debtor's anticipated postpetition
revenues and expenditures, which may include amounts necessary for
all post-petition insurance, taxes, utilities, wages, and any other
operational expenses as detailed therein.
SVB agrees and consents to the Debtor's entry into an amended loan
agreement with certain lenders who are insiders of the Debtor.
SVB agrees to set aside $50,000 of SVB's collateral for the benefit
of the Debtor's general bankruptcy counsel, Michael Best &
Friedrich LLP, for the payment of accrued, invoiced, and/or unpaid
fees and disbursements on or after the petition date. The claims of
SVB against the Debtor (and any Liens securing payment of such
amounts), will be subject to payment of the Carve-Out. The
Carve-Out will not be used to pay any success fee, transaction fee,
or bonus incurred by the Debtor's investment bankers, brokers, or
financial advisor that may be employed in the case pursuant to
other terms of payment and Court approval.
The Debtor's authorization to use cash collateral will terminate
upon (i) the confirmation of the Debtor's plan of reorganization,
if any, which will then control, (ii) the appointment of a trustee
or other person pursuant to section 1104 of the Bankruptcy Code,
(iii) the conversion of the case to a case under chapter 7 of the
Bankruptcy Code, (iv) the dismissal of the case, (v) a material
default by the Debtor that is not cured within three business days,
or (vi) payment in full of the Debtor's loans with SVB, unless
extended by the parties in writing.
A copy of the stipulation is available at https://bit.ly/3wBcMKO
from PacerMonitor.com.
About HealthMyne, Inc.
HealthMyne, Inc. provides end-to-end radionomic data management and
analysis. HealthMyne was founded in 2013 and is headquartered in
Madison, Wisconsin. The Debtor sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. W. D. Wisc. Case No. 22-10780)
on May 15, 2022. In the petition signed by Rose Higgins, authorized
person, the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Catherine J. Furay oversees the case.
Justin M. Mertz, Esq., at Michael Best and Friedrich, LLP is the
Debtor's counsel.
HELLO LIVING: Plan Has Fatal Issues, Mezz Lender Says
-----------------------------------------------------
Nostrand Mezz Lender LLC filed an objection to the Application
Seeking Conditional Approval of Disclosure Statement filed by Hello
Living Developer Nostrand LLC.
According to the Mezz Lender, since the Debtor cannot fix the fatal
issues in the Plan or submit a disclosure statement with required
adequate information, the Court should deny the DS Motion.
"Pursuant to Section 1125 of the Bankruptcy Code, a disclosure
statement must provide creditors with "adequate information"
concerning a chapter 11 plan in order to allow them to make
informed decisions on voting to accept or reject the plan. Far
from providing creditors with such information, the Debtor's
Disclosure Statement contains misleading, inaccurate and/or biased
statements about Hello Nostrand, LLC's ("Hello Nostrand")
pre-bankruptcy relationship with Madison Realty. Hello Nostrand is
not a debtor. Rather, it is a wholly-owned subsidiary of the
Debtor, which owns a parcel of real property commonly known as 1580
Nostrand Avenue, Brooklyn, NY 11226 (the "Property"), whose equity
interests (the "Ownership Interests") are the Debtor's sole asset
and pledged to the Mezz Lender," the Mezz Lender said in court
filings.
"The Disclosure Statement also omits important facts concerning the
Debtor's ability to consummate the Plan and make distributions to
creditors, including, how the Debtor is planning to use proceeds
from Hello Nostrand's lease with 1580 Nostrand Management, LLC (the
"Management Co"), which proceeds are assigned to Hello Nostrand's
Mortgage Lender, and when the Property is currently at risk of
being foreclosed on by the Mortgage Lender."
"Moreover, the Plan improperly shields the Debtor's principal, Mr.
Eli Karp, for no consideration and seeks to reward him by allowing
him to keep his stake in the Property and his management position
despite years of him not being able to complete development of the
Property. Yet, the Disclosure Statement contains absolutely no
details regarding the Plan's releases of Mr. Karp, who personally
guaranteed the Mezz Lender's loan. The Debtor's estate received no
value from insiders. It is not an "operating" entity; it has no
employees, no business, no revenue. Mr. Karp put the Debtor into
bankruptcy after a New York State Court repeatedly denied staying a
foreclosure sale of the Ownership Interests (the "UCC Foreclosure
Sale")."
Meanwhile, according to the Mezz Lender, the proposed Plan -- which
the Debtor filed unilaterally without any negotiations with its key
stakeholder, the Mezz Lender -- suffers from myriad issues making
it patently unconfirmable. Among other reasons, the Plan violates
section 1129(b), which the Debtor must satisfy since the Mezz
Lender opposes confirmation of the Plan. The Plan provides Mezz
Lender with a payment stream (from non-debtor Hello Nostrand) on
terms that are undisputedly below market, shifting the real risk of
the Debtor's default under the Plan to the Mezz Lender. In
addition, the Plan is not feasible. The proposed payment stream
from Hello Nostrand to the Debtor impermissibly diverts the
Mortgage Lender's collateral. Moreover, the Plan is premised on
the Mortgage Lender not foreclosing on the Property during the
five-to-nine years it will take the Debtor to pay creditors in full
-- an incredibly unlikely scenario.
"Clearly, the Debtor is not able to (nor was ever able to) propose
a confirmable Plan. The Plan is just another tactic the Debtor has
used to delay and frustrate the Mezz Lender from exercising its
rights. The Debtor's estate should not bear the cost of soliciting
votes for a Plan that is doomed to fail. A "do-over" is not
possible. The Debtor has no source of revenue and is already
administratively insolvent," the Mezz Lender tells the Court.
Attorneys for the Nostrand Mezz Lender LLC:
Alan J. Brody, Esq.
GREENBERG TRAURIG, LLP
500 Campus Drive, Suite 400
Florham Park, New Jersey 07932
Telephone: (973) 443-3543
Email: BrodyA@gtlaw.com
- and -
Nathan A. Haynes, Esq.
Leo Muchnik, Esq.
GREENBERG TRAURIG, LLP
One Vanderbilt Avenue
New York, New York 10017
Telephone: (212) 801-9200
Email: HaynesN@gtlaw.com
MuchnikL@gtlaw.com
About Hello Living Developer Nostrand
Hello Living Developer Nostrand, LLC, is a single asset real estate
debtor (as defined in 11 U.S.C. Section 101(51B)).
Hello Living filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-22696) on
Dec. 21, 2021, disclosing $50 million to $100 million in both
assets and liabilities. Eli Karp, manager, signed the petition.
Judge Sean H. Lane oversees the case.
The Debtor tapped Leo Fox, Esq., a practicing attorney in New York,
to handle its bankruptcy case. Victor A. Worms, Esq., is tapped as
an associate attorney.
INLAND BOAT: Case Summary & 12 Unsecured Creditors
--------------------------------------------------
Debtor: Inland Boat Club, LLC
d/b/a Inland Boat Club Holdings II, LLC
d/b/a Inland Boat Club Company
d/b/a Insoft, LLC
d/b/a Inland Storage LLC
d/b/a Inland Financing LLC
d/b/a Inland Detail LLC
d/b/a Inland Club LLC
118 South 1800 West
Lindon, UT 84042
Business Description: Inland Boat Club, LLC is a boat club in Boat
club for avid boaters and water sport
enthusiasts.
Chapter 11 Petition Date: May 20, 2022
Court: United States Bankruptcy Court
District of Utah
Case No.: 22-21879
Judge: Hon. Kimball R. Mosier
Debtor's Counsel: Kenneth L. Kannon II, Esq,.
DENTONS DURHAM JONES PINEGAR P.C.
111 South Main Street, Suite 2400
PO Box 4050
Salt Lake City, UT 84110-4050
Tel: (801) 415-3000
Email: kenneth.cannon@dentons.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Mark B. Lewis as president.
A copy of the Debtor's list of 12 unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/OWJF75A/Inland_Boat_Club_LLC__utbke-22-21879__0002.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/OIHTQCA/Inland_Boat_Club_LLC__utbke-22-21879__0001.0.pdf?mcid=tGE4TAMA
INVEPA INTERNATIONAL: June 2 Hearing on Disclosures and Plan
------------------------------------------------------------
Judge Robert A. Mark has entered a scheduling order, setting a
hearing to consider approval of the Disclosure Statement and
confirmation of the Plan of Invepa International, LLC, for June 2,
2022 at 11:00 a.m. via Zoom Video Conference.
May 31, 2022, is fixed as the last day for filing and serving
written objections to the Disclosure Statement and confirmation of
the plan.
May 31, 2022, is fixed as the last day for filing written
acceptances or rejections of the Plan.
The last day for filing and serving objections to claims is on May
31, 2022.
About Invepa International
Invepa International LLC, owner of a property at Bay Harbour
Islands, Florida, sought Chapter 11 protection (Bankr. S.D. Fla.
Case No. 22-12929) on April 15, 2022. The Debtor estimated assets
and debt of $1 million to $10 million as of the bankruptcy filing.
The Hon. Robert A. Mark is the case judge. MEYER & NUNEZ, P.A.,
led by Robert C. Meyer, is serving as the Debtor's counsel.
ISABEL ENTERPRISES: UST Appoints Mitchell as Subchapter V Trustee
-----------------------------------------------------------------
Gregory M. Garvin, Acting United States Trustee, Region 18, has
appointed Amy Mitchell as the Subchapter V Trustee for Isabel
Enterprises, Inc.
A copy of the appointment is available for free at
https://bit.ly/3wKrQqR from PacerMonitor.com.
The Subchapter V Trustee can be reached at:
Amy Mitchell
PO Box 2289
Lake Oswego, OR 97035
Tel: (503) 675-9955
Fax: (503) 675-9977
mitchelltrustee@comcast.net
About Isabel Enterprises
Isabel Enterprises is part of the restaurant industry. The Debtor
filed Chapter 11 Petition (Bankr. D. Ore. Case No. 22-30801) on May
18, 2022.
The Hon. Peter C. Mckittrick oversees the case. Oren B. Haker,
Esq., of Stoel Rives LLP is the Debtor's Counsel. In its petition,
the Debtor was estimated to have $50,000 to $100,000 in assets and
$1 million to $10 million in liabilities.
JEFFERSON-11TH: Seeks Continuance of Hearing to Appoint Trustee
---------------------------------------------------------------
Jefferson-11th Street, LLC filed with the U.S. Bankruptcy Court for
the District of Columbia a motion to continue the hearing on the
request of the Acting United States Trustee to dismiss the Debtor's
Chapter 11 Case, or in the alternative, to direct the appointment
of a Chapter 11 Trustee.
The Court held a status hearing on May 4, 2022, at which the Office
of the United States Trustee was present. At the Court's direction,
prior to setting a hearing date, Tenants' Association and the
District of Columbia, and the Debtor agreed to work together on a
litigation schedule, anticipating a hearing in July.
On May 13, 2022, 10 days after the initial Motions were filed, the
Office of the United States Trustee filed the Motion to Dismiss,
which was also joined three days later by the District of Columbia.
The U.S. Trustee scheduled a hearing for June 7, 2022, less than 60
days into the case. The date for response is June 3. The Office of
the United States Trustee did not confer with the Debtor about the
hearing and it appears that the Motion is scheduled for a regular
motions day.
The Debtor contends:
* that its request for continuance makes certain legal
arguments but also incorporates many factual assertions regarding
pre-petition occurrences made in the request of 2724 11th St. N.W.
Tenants Association, Inc. to dismiss the bankruptcy case, or in the
alternative, abstain, for which appropriate time is to be set aside
for discovery. The Debtor anticipates that any hearing on the
motion would be evidentiary and last far longer than the amount of
time specifically set aside for motions.
* The parties discussed a two-day in-person hearing for the
original motion. The Debtor has requested a continuance to coincide
with the hearing on the original motion. Although recognizing the
efficiency of such an approach, the United States has declined to
agree.
* Courts have routinely found compelling circumstances exist
to continue Sec. 1112(b) motions early in complex cases when a
Chapter 11 plan or motion to sell is being developed, and when
discovery has been found necessary.
* In this case, the creditors and the Debtor are developing a
schedule for a hearing more than 30 days after their motion to
dismiss was filed. Discovery will be issued, the Debtor's property
will be marketed, and a sale plan and/or sale motion is being
developed. There will already be a hearing on a separate motion to
dismiss to be scheduled in July. In the meantime, the Debtor will
strive towards a consensual resolution of all issues in this case.
A copy of the motion is available for free at
https://bit.ly/3wGUIi7 from PacerMonitor.com.
Proposed Counsel to the Debtor:
Janet M. Nesse, Esq.
Justin P. Fasano, Esq.
McNamee Hosea, PA
6411 Ivy Lane, Suite 200
Greenbelt, MD 20770
Telephone: (301) 441-2420
Facsimile: (301) 982-9450
Email: jnesse@mhlawyers.com
jfasano@mhlawyers.com
About Jefferson-11th Street
Jefferson-11th Street, LLC is primarily engaged in renting and
leasing real estate properties. The Debtor is the fee simple owner
of a real property located at 2724, 11th St., NW, Washington, DC,
valued at $5 million.
Jefferson-11th Street sought Chapter 11 bankruptcy protection
(Bankr. D.D.C. Case No. 22-00059) on March 31, 2022. In the
petition filed by Francis Hill Parker, managing member, the Debtor
disclosed $5,531,267 in total assets and $1,931,368 in total
liabilities.
Judge Elizabeth L. Gunn oversees the case.
The Debtor tapped McNamee Hosea, PA as bankruptcy counsel and
Blumenthal, Cordone & Erklauer, PLLC as special counsel.
K. ANTHONY INC: Unsecureds Will Get 2% of Claims over 60 Months
---------------------------------------------------------------
K. Anthony, Incorporated, d/b/a K. Anthony PreSchool Inc., filed
with the U.S. Bankruptcy Court for the Central District of
California a Plan of Reorganization for Small Business dated May
17, 2022.
The Debtor is a non-profit, tax-exempt entity pursuant to the
Internal Revenue Code Section 501(c)(3). Since its inception in
1982, the Debtor has been in the business of offering education to
children in kindergarten, pre-school and elementary school.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income of $364.35. The final Plan
payment is expected to be paid on August 1, 2027.
Pre-Petition, Debtor's income has been significantly affected by
Covid-19. Since filing, Debtor had increased the pre-school
attendance from approximately 23 students to 45 students. Crystal
Stairs had also increased the pre-school tuition per student from
$625 to $1,039 per month, which in turn increased the Debtor's
monthly income by an estimated $18,630. Additionally, Debtor signed
up over 85 students for the special summer leadership program,
which will generated additional income for the Debtor during the
summer months.
This Plan of Reorganization proposes to pay creditors of the Debtor
from the continued operation of kindergarten, pre-school, and
elementary school. Debtor receives payments from Crystal Stairs,
Crystal Stairs Cal-Works, and from the parents of enrolled
students. Crystal Stars provides financing to the Debtor for
students from low-income families. Crystal Stairs Cal-Works pay for
students' tuition for parents who are full-time students.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 2 cents (appx. $13,677.55) on the dollar. This
Plan also provides for the payment of administrative and priority
claims.
Class 2A consists of the Secured claim of Internal Revenue Service.
Debtor proposes to pay the allowed secured claim amount of
$105,939.45 within 5 year from the petition date at the applicable
interest rate, currently 4%. The monthly amortized payment amount
is $1,951.34, with the first payment of $1,951.34 due on the
Effective Date, followed by 54 consecutive monthly payments of
$1,951.34 each until the secured claim is paid in full.
Class 3 consists of Non-priority unsecured creditors. Debtor's
general unsecured creditors have allowed claims totaling
$796,863.07. Each holder of an allowed claim in Class 3 will
receive a pro-rata distribution on its allowed claim equal to 2% of
its allowed claim amount over 60 months. The first payment of
$265.59 will be due on the Effective Date, followed by 59
consecutive monthly payments each for $265.59 thereafter.
Class 4 consists of Equity security holders of the Debtor. Margaret
Johnson is the principal of the Debtor and has a 100% equity
Interest in the Debtor. Mrs. Johnson does not have a pre-petition
claim against the Debtor. Mrs. Johnson will retain her equity
interest in the Debtor as of the Effective Date.
Distribution to creditors under this Plan will be funded primarily
from the net income derived from the continued operation of the
Debtor's business. This plan proposes to pay creditors using the
net disposable income of the debtor over the five-year period after
the Effective Date. This plan will allow non-insider general
unsecured creditors (Class 3) to recover 2 times more than if the
Debtor's assets were sold in a hypothetical Chapter 7 liquidation
and the proceeds paid out to each Creditor respective creditors.
Debtor believes that this Plan represents the best possible return
to holders of claims. The Debtor believes that this plan will
successfully reorganize the Debtor and that the confirmation of
this Plan is in the best interests of the Debtor, its creditors,
and equity interest holder. Accordingly, the Debtor strongly urges
its creditors to vote in favor of this Plan. The Debtor will become
the Reorganized Debtor on the Effective Date. The Reorganized
Debtor shall be responsible for managing its assets and financial
affairs.
On the Effective Date, Margaret Johnson, who is the principal owner
of the Debtor and a 100% shareholder, shall remain the principal
and owner of the Reorganized Debtor. Mrs. Johnson, as the principal
owner of the Reorganized Debtor, shall serve as the Disbursing
Agent for all obligations of Reorganized Debtor under this Plan and
shall not be compensated for the services as a disbursing agent.
A full-text copy of the Plan of Reorganization dated May 17, 2022,
is available at https://bit.ly/3lupqGn from PacerMonitor.com at no
charge.
About K. Anthony, Incorporated
K. Anthony, Incorporated, dba K. Anthony PreSchool Inc., operates a
pre-school educational facility in Inglewood, California. K.
Anthony PreSchool sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-10852) on Feb. 16,
2022. In the petition signed by Margaret Johnson, chief executive
officer, the Debtor disclosed up to $50,000 in assets and up to $10
million in liabilities.
Judge Sandra R. Klein oversees the case.
Michael Jay Berger, Esq., at the Law Offices of Michael Jay Berger,
is the Debtor's counsel.
KDR SUPPLY: Has Deal on Cash Collateral Access
----------------------------------------------
KDR Supply, Inc. asks the U.S. Bankruptcy Court for the Eastern
District of Texas, Beaumont Division, for authority to use cash
collateral in accordance with its agreement with the Texas
Comptroller of Public Account.
The parties have negotiated the terms of an Agreed Order on Interim
Use of Cash Collateral.
During these negotiations and between the expiration of the First
Interim Order and the Second Interim Order, the Debtor has been
operating under a budget. The Comptroller and the United States
Small Business Administration have agreed to the Debtor's
operations during these negotiations.
In addition to an agreement for the use of cash collateral and
adequate protection, the Second Interim Order contains certain
stipulations with the Comptroller. The Stipulations are the subject
of a Motion to Approve Stipulations Contained in Agreed Interim
Order Authorizing Use of Cash Collateral and Granting Adequate
Protection pursuant to Local Bankruptcy Rule 4001(d) filed
concurrently with the filing of the Unopposed Motion. If the
Stipulations are approved, the Debtor would request that the Court
also approve the Unopposed Motion and enter the Second Interim
Order.
Counsel for the Texas Comptroller of Public Accounts and Counsel
for the SBA, the creditors holding a secured interest in the cash
collateral, do not oppose the Unopposed Motion and have approved
and executed the proposed Second Interim Order.
The term of the Second Interim Order is from April 27, 2022, until
July 31, 2022. Therefore, a hearing is requested prior to July 31,
2022.
KDR requires the emergency use of cash collateral in accordance
with the proposed budget, with a 10% variance in order to avoid the
harm to the Debtor's estate.
As adequate protection for the use of cash collateral, the Debtor
proposes to grant the Texas Comptroller and the SBA valid and
automatically perfected replacement liens and security
interestsโin the same extent, validity, and priority as existed
on the Petition Dateโin and upon all of the properties and assets
of the Debtor and its estate.
The liens and security interests granted and created pursuant to
the Interim Order constitute valid, automatically perfected and
unavoidable security interests and liens, with the priorities
granted hereunder and thereunder, without the necessity of
creating, filing, recording, or serving any financing statements,
mortgages, or other documents that might otherwise be required
under federal or state law.
A copy of the motion is available at https://bit.ly/3yG0BPs from
PacerMonitor.com.
About KDR Supply, Inc.
KDR Supply, Inc. was founded in 1981 to support the local oilfield
service industry. KDR Supply offers, subsurface pumps, industrial
supplies, oilfield supplies, pumps, and tools.
KDR Supply sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Tex. Case No. 22-10115) on April 6,
2022. In the petition signed by president Rocky Fisher, the Debtor
disclosed $2,668,765 in total assets and $6,793,314 in total
liabilities.
Julie M. Koenig, Esq., at Cooper and Scully, PC is the Debtor's
counsel.
LATAM AIRLINES: White & Case Gives 7th Update on LATAM Bondholders
------------------------------------------------------------------
In the Chapter 11 cases of LATAM Airlines Group S.A., et al., the
law firm of White & Case LLP submitted a seventh verified statement
under Rule 2019 of the Federal Rules of Bankruptcy Procedure, to
disclose an updated list of Ad Hoc Group of LATAM Bondholders that
it is representing.
As of May 9, 2022, members of the Ad Hoc Group and their
disclosable economic interests are:
Bardin Hill Investment Partners
299 Park Avenue, 24th Floor
New York, New York 10171
* Holder of $14,200,000 of 2024 Bonds, $9,000,000 of 2026 Bonds,
and $17,232,278 in Tranche C DIP commitments
BICE VIDA Compania de Seguros S.A.
Av. Providencia 1806, Metropolitana
Chile Santiago, Region
* Holder of $750,000 of 2024 Bonds
BlackRock Financial Management
40 East 52nd Street
New York, NY 10022
* Holder of $20,000,000 of 2024 Bonds and $2,000,000 of Tranche A
DIP commitments
BNP Paribas
787 Seventh Avenue, 2nd Floor
New York, NY 10019
* Holder of $11,959,000 of 2024 Bonds, and $6,000,000 of 2026
Bonds
Canyon Capital Advisors LLC
2727 N. Harwood Street, 2nd Floor
Dallas, Texas 75201
* Holder of $127,390,000 of 2024 Bonds and $101,450,000 of 2026
Bonds, and $164,906,439.45 of Tranche C DIP commitments
Caspian Capital L.P.
10 E. 53rd St.
New York, NY 10022
* Holder of $47,199,000 of 2024 Bonds, $61,936,000 of 2026 Bonds,
$52,664,772 of Tranche C DIP commitments
Diameter Capital Partners, LP
24 W 40th Street, 5th Floor
New York, NY 10018
* Holder of $10,000,000 of 2026 Bonds, $64,000,000 of Tranche A DIP
commitments, $51,787,879 of Tranche C DIP commitments, and
$11,262,354.26 of OpCo Claims
DSC Meridian Capital LP
888 Seventh Ave.
New York, NY 10016
* Holder of $4,502,000 of 2024 Bonds and $3,395,000 of 2026 Bonds
Glendon Capital Management, L.P.
2425 Olympic Blvd., Suite 500E
Santa Monica, CA 90404
* Holder of $5,500,000 of 2024 Bonds, $10,000,000 of 2026 Bonds,
$25,250,000 of the Revolving Credit Facility4, $50,000,000 of
Tranche A DIP commitments and $63,197,727.54 of Tranche C DIP
Commitments
HBK Capital Management
2300 North Field Street, Suite 2200
Dallas, Texas 75201
* Holder of $10,00,000 of 2024 Bonds, $3,000,000 of 2026 Bonds and
$14,289,000 of OpCo Claims
Mariner Investment Group, LLC
299 Park Avenue, 12th Floor
New York, NY 10171
* Holder of $5,000,000 of 2024 Bonds, $6,000,000 of 2026 Bonds and
$17,424,242.00 of Tranche C DIP commitments
Redwood Capital Management, LLC
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
* Holder of $2,275,000 of 2024 Bonds, $6,699,000 of 2026 Bonds
Taconic Capital Advisors L.P.
280 Park Avenue, 5th Floor
New York, NY 10017
* Holder of $19,500,000 of 2024 Bonds and $29,311,000 of 2026 Bonds
and $20,000,000 of Tranche
UBS O'Connor LLC
One North Wacker Drive
31st Floor Chicago, IL 60606
* Holder of $8,000,000 of 2026 Bonds and $17,424,242 of Tranche C
DIP commitments
VR Global Partners, L.P.
300 Park Avenue, 16th Floor
New York, NY 10022
* Holder of $4,127,000 of 2024 Bonds, $15,000,000 of 2026 Bonds,
and $24,393,939 of Tranche C DIP commitments
Whitebox Advisors LLC
2022 Excelsior Blvd., Suite 500
Minneapolis, MN 55416
* Holder of $15,000,000 of 2026 Bonds, $323,076.95 of Parent Claims
and $6,655,970.31 of OpCo Claims
On June 15, 2020, the Ad Hoc Group retained Counsel to represent it
in connection with the Debtors' Chapter 11 Cases.
Each member of the Ad Hoc Group has consented to Counsel's
representation.
Counsel for the Ad Hoc Group of LATAM Bondholders can be reached
at:
White & Case LLP
John K. Cunningham, Esq.
Brian D. Peiffer, Esq.
Gregory Starner, Esq.
Joshua Weedman, Esq.
Kathryn Sutherland-Smith, Esq.
1221 Avenue of the Americas
New York, NY 10020
Telephone: (212) 819-8200
Facsimile: (212) 354-8113
E-mail: jcunningham@whitecase.com
brian.pfeiffer@whitecase.com
gstarner@whitecase.com
jweedman@whitecase.com
kathryn.sutherland.smith@whitecase.com
Richard S. Kebrdle, Esq.
Varoon Sachdev, Esq.
Southeast Financial Center, Suite 4900
200 South Biscayne Boulevard
Miami, FL 33131
Telephone: (305) 371-2700
Facsimile: (305) 358-5744
E-mail: rkebrdle@whitecase.com
varoon.sachdev@whitecase.com
A copy of the Rule 2019 filing is available at
https://bit.ly/3Gakn7h at no extra charge.
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is
the committee's Brazilian counsel.
The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as
counsel.
Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew
Glenn and partner Shai Schmidt, has been retained as counsel to the
Ad Hoc Committee of Shareholders.
LIMETREE BAY: Unsecureds Will Get 0% to 2% in Liquidating Plan
--------------------------------------------------------------
Limetree Bay Services, LLC, and its Affiliated Debtors filed with
the U.S. Bankruptcy Court for the Southern District of Texas a
Combined Disclosure Statement and Chapter 11 Plan of Liquidation
dated May 17, 2022.
The Plan contemplates a liquidation of each of the Debtors and
their Estates. The primary objective of the Plan is to maximize the
value of recoveries to all Holders of Allowed Claims and to
distribute all property of the Estates that is or becomes available
for distribution generally in accordance with the priorities
established by the Bankruptcy Code. The Debtors believe that the
Plan accomplishes this objective and is in the best interest of the
Estates and therefore seek to confirm the Plan.
Pursuant to prior orders of the Bankruptcy Court, the Debtors sold
substantially all their assets to West Indies Petroleum Limited and
Port Hamilton Refining and Transportation, LLLP as a going concern.
The Plan provides for the distribution of the proceeds from the
sale of those assets remaining after satisfaction of the DIP
Obligations on the Effective Date of the Plan. The Plan also
contemplates the creation of a liquidating trust to liquidate and
administer substantially all remaining property of the Debtors,
including Claims and Causes of Action, not sold, transferred or
otherwise waived or released before the Effective Date.
The Plan provides for the liquidation of the Debtors (and the
eventual termination of each of the Debtors' respective corporate
existences), and payment, or other satisfaction, on or after the
Effective Date, of all allowed Administrative Expense Claims,
Priority Tax Claims, Other Priority Claims, Prepetition Revolver
Secured Debt Claims, Prepetition Term Secured Debt Claims, Other
Secured Claims, General Unsecured Claims, Governmental Fine and
Penalty Claims, and Prepetition Holdco Secured Debt Claims.
The Plan further provides for the potential reorganization of
Debtor Limetree Bay Refining, LLC at the election of the Purchaser
into an entity which shall be owned and managed by the Purchaser
and to which the Debtors' permits to operate the Refinery shall be
transferred on the Effective Date, and the cancellation of Equity
Interests, the Holders of which shall receive no distribution under
the Plan.
The Debtors sold substantially all their assets on January 21,
2022. Under the terms of the Sale, the Debtors retained certain
litigation claims and funds in order to wind down their operations
and make distributions to Creditors with Allowed Claims. The Plan
contemplates the creation of a Liquidating Trust on the Effective
Date for the purposes of effectuating the liquidation of the
Liquidating Trust Assets and distributing the proceeds of the
Liquidating Trust to the Beneficiaries of the Liquidating Trust,
which Liquidating Trust shall issue Class A Liquidating Trust
Units, Class B Liquidating Trust Units, and Class C Liquidating
Trust Units, each as described in this Plan and the Liquidating
Trust Agreement.
The Liquidating Trust shall be managed by a Liquidating Trustee in
accordance with the Liquidating Trust Agreement and who shall be
selected by the Debtors after consultation with the Committee and
upon the consent of the Ad Hoc Term Lender Group. The primary
purpose of the Liquidating Trust and its Liquidating Trustee shall
be (i) administering, monetizing and liquidating the Liquidating
Trust Assets, (ii) resolving all Disputed Claims and (iii) making
all Distributions from the Liquidating Trust as provided for in the
Plan and the Liquidating Trust Agreement. The Liquidating Trust
Assets shall primarily consist of the Liquidating Trust Funding
Amount and the Liquidating Trust Causes of Action, among other
things.
Class 5 consists of General Unsecured Claims. The Debtors estimate
that the amount of General Unsecured Claims is no less than
$274,000,000. In full and final satisfaction of each Allowed
General Unsecured Claim, the Holder of such Claim shall receive its
Pro Rata Share of (i) the Class B3 Liquidating Trust Units and (ii)
the Class C2 Liquidating Trust Units. This Class is impaired. This
Class will receive a distribution of 0% to 2% of their allowed
claims.
Class 9 consists of Equity Interests. On the Effective Date, all
Equity Interests will be deemed cancelled and extinguished. Holders
of Equity Interests will receive no property or Distribution under
the Plan on account of such Interests.
On the Effective Date, the Debtors shall transfer to the
Liquidating Trust the Liquidating Trust Assets. The Liquidating
Trust shall administer the Liquidating Trust Assets and distribute
Available Trust Cash to the Beneficiaries of the Liquidating Trust
in accordance with the terms of the Liquidating Trust Agreement,
Plan, and Plan Confirmation Order. The Liquidating Trust shall be
responsible for and shall have standing to evaluate, prosecute and
settle all causes of action transferred to the Liquidating Trust.
The Debtors shall transfer to the Liquidating Trust the Liquidating
Trust Funding Amount on the Effective Date for the administration
of the Liquidating Trust. The Liquidating Trust shall also retain
the Initial Class C Liquidating Trust Recoveries for funding the
administration of the Liquidating Trust. In the event of any
inconsistency between the terms of the Plan, the Plan Confirmation
Order and Liquidating Trust Agreement regarding the Liquidating
Trust, the terms of the Plan shall govern, unless expressly ordered
otherwise in the Plan Confirmation Order.
A full-text copy of the Combined Disclosure Statement and Plan
dated May 17, 2022, is available at https://bit.ly/3G4GbkV from
PacerMonitor.com at no charge.
Attorneys to the Debtors:
Elizabeth A. Green, Esq.
Jimmy D. Parrish, Esq.
BAKER & HOSTETLER LLP
SunTrust Center, Suite 2300, 200 South Orange Ave.
Orlando, FL 32801-3432
Telephone: (407) 649-4000
Facsimile: (407) 841-0168
Email: egreen@bakerlaw.com
jparrish@bakerlaw.com
- and -
Jorian L. Rose, Esq.
45 Rockefeller Plaza
New York, New York
Telephone: (212) 589-4200
Facsimile: (212) 589-4201
Email: jrose@bakerlaw.com
About Limetree Bay
Limetree Bay Energy is a large-scale energy complex strategically
located in St. Croix, U.S. Virgin Islands. The complex consists of
Limetree Bay Refining, a refinery with peak processing capacity of
650 thousand barrels of petroleum feedstock per day, and Limetree
Bay Terminal, a 34-million-barrel crude and petroleum products
storage and marine terminal facility serving the refinery and
third-party customers.
Limetree Bay Refining, LLC, restarted operations in February 2021,
and is capable of processing around 200,000 barrels per day. Key
restart work at the site began in 2018, including the 62,000
barrels per day modern, delayed Coker unit, extensive
desulfurization capacity, and a reformer unit to produce clean,
low-sulfur transportation fuels. The restart project provided much
needed economic development in the U.S.V.I. and created more than
4,000 construction jobs at its peak.
Limetree Bay Refining, LLC and its affiliates sought Chapter 11
protection on July 12, 2021. The lead case is In re Limetree Bay
Services, LLC (Bankr. S.D. Texas Case No. 21-32351).
Limetree Bay Terminals, LLC did not file for bankruptcy.
In the petitions signed by Mark Shapiro, chief restructuring
officer, Limetree Bay Services disclosed up to $10 million in
assets and up to $50,000 in liabilities. Limetree Bay Refining,
LLC, estimated up to $10 billion in assets and up to $1 billion in
liabilities.
The Debtors tapped Baker & Hostetler LLP as bankruptcy counsel,
Beckstedt & Kuczynski LLP as special counsel, and GlassRatner
Advisory & Capital LLC, doing business as B. Riley Advisory
Services, as restructuring advisor. Mark Shapiro of GlassRatner is
the Debtors' chief restructuring officer.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtors' cases on July 26, 2021.
Pachulski Stang Ziehl & Jones, LLP and Conway MacKenzie, LLC serve
as the committee's legal counsel and financial advisor,
respectively.
405 Sentinel, LLC serves as administrative and collateral agent for
the DIP lenders.
LOGOS INC: Wins Interim Cash Collateral Access
----------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland, Baltimore
Division, authorized Logos, Inc. to use cash collateral on an
interim basis in accordance with the budget, with a 20% variance.
The Debtor is permitted to use cash collateral to pay reasonable
and ordinary operating expenses and pay the Post-Petition Payroll
in the ordinary course of business.
As adequate protection for any cash collateral used, Sysco
Baltimore, LLC is granted a security interest of the same priority
and to the same extent as its pre-petition security interest in the
Collateral, and all profits, offspring and proceeds of the
Collateral hereafter acquired, to the extent of the Debtor's use of
such cash collateral.
The security interest granted will become and are duly perfected
without the necessity for filing or execution of documents which
might otherwise be required pursuant to applicable non-bankruptcy
law for the creation or perfection of such security interest, will
survive the conversion of this case to a case under Chapter 7 of
the Bankruptcy Code, and will be binding upon any subsequently
appointed trustee and upon all creditors of the Debtor and its
bankruptcy estate.
The Court approved the pre-petition payment of $6,201 by the Debtor
to Sysco Baltimore, saying Sysco Baltimore is a critical vendor.
In order to promote the administration of the bankruptcy estate, a
super-priority lien, superior to Sysco Baltimore's secured lien, is
granted to pay the allowed administrative expense claims of the
Debtor's professionals and the Chapter 11 Trustee, and to pay U.S.
Trustee's fees.
A final hearing on the matter is scheduled for June 27, 2022 at 3
p.m.
A copy of the order and the Debtor's budget for the period from May
to June 22 is available at https://bit.ly/3loUwyU from
PacerMonitor.com.
The Debtor projects $365,000 in total income and $224,197 in total
expenses.
About Logos Inc.
Logos, Inc. filed a voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. D. Md. Case No. 22-12491) on May 9,
2022, listing up to $50,000 in assets and up to $1 million in
liabilities.
Judge David E. Rice oversees the case.
Robert B. Scarlett, Esq., at Scarlett & Croll, PA serves as the
Debtor's legal counsel.
MATHESON FLIGHT: USPS Contractor Files for Chapter 11 Protection
----------------------------------------------------------------
Matheson Flight Extenders Inc. and Matheson Postal Services, Inc.,
filed for chapter 11 protection in Sacramento, California.
The Matheson family of companies are ultimately owned by trusts
benefiting certain members of the Matheson family. MFE is owned
100% by Joe Garret, Inc., which is owned 100% by the Matheson
Trusts. Similarly, MPS is owned 100% by Matheson Trucking, Inc.
("MTI"), which, in turn, is owned 100% by the Matheson Trusts. The
Debtors provide extensive mail handling services under contracts
with the United States Postal Service and others. The Debtorsโ
relationship with USPS began in 1964 and at the time of this filing
the Debtors' rank 11th out of the Top 100 USPS Suppliers nationwide
for USPS in terms of revenue ($194,561,160).
MFE has been providing service to the USPS since December 1998.
Starting in 2019, MFE began providing terminal handling services at
Terminal Handling Stations for the USPS as part of the USPS's
campaign to reduce costs by outsourcing components of its
operations. MFE presently operates 38 THS sites throughout the
United States. THSs are located at or adjacent to airports across
the United States and act as interfaces between the USPS and FedEx,
which is responsible for the transportation of the majority of mail
transferred via air in the United States.
MFE employees pick up mail from FedEx aircraft and transport it to
the THS site, where it is then sorted and placed into containers
that are either returned to waiting aircraft or loaded onto trucks
that transfer the mail over the road to other postal facilities.
The USPS utilizes 13 Service Transportation Centers across the
nation. MFE operates six of these facilities for the USPS located
in: Atlanta, Georgia; Brandywine, Maryland; Chicopee,
Massachusetts; Kansas City, Missouri; Long Beach, California; and
Sacramento, California. MFE's contracts with the USPS account for
approximately 84 percent of its business.
MPS provides extensive ground transportation services to USPS
throughout the United States. It maintains terminals in multiple
cities throughout the United States and utilizes a fleet of
approximately 280 large tractor trailers to transfer mail and
freight between distribution nodes. MPS's contracts with the USPS
account for approximately 99 of its business.
About Matheson Flight Extenders
Matheson Flight Extenders Inc. and Matheson Postal Services, Inc.,
provide extensive mail handling services under contracts with the
United States Postal Service and others. Matheson is a
family-owned and operated company founded in 1962 by Robert and
Carole Matheson.
Matheson Flight Extenders and affiliate Matheson Postal Services,
Inc., sought Chapter 11 bankruptcy protection (Bankr. E.D. Cal.
Lead Case No. 22-21148) on May 5, 2022. In the petition filed by
Charles J. Mellor, as chief restructuring officer, Matheson
estimated assets between $10 million and $50 million and
liabilities between $10 million and $50 million.
According to Matheson Flight Extenders estimates between 1,000 and
5,000 unsecured creditors. The petition states that funds will be
available to unsecured creditors.
The cases are overseen by Honorable Bankruptcy Judge Christopher M
Klein.
Nuti Hart LLP, is the Debtors' counsel. Development Specialists,
Inc., is the Debtors' financial advisor. Donlin Recano is the
claims agent.
MD HELICOPTERS: Arizona Law Supports Netherlands Chapter 11 Lien
----------------------------------------------------------------
The government of The Netherlands argued in support of its $15.5
million priority lien against bankrupt MD Helicopters Inc., saying
Arizona law governing leases on real property clearly weighed in
favor of the nation's claim on the debtor's Mesa manufacturing
facility.
In a response filed late Wednesday, May 18, 2022, in the Delaware
bankruptcy court, the Dutch said MD Helicopters' argument that the
debtor's leasehold interests in the 20-acre property consist of
personal property that cannot be subject to a lien flies in the
face of Arizona law.
Even though in Arizona bankruptcy courts, "[t]reatment of leases as
real
property interests appears consistent throughout the Arizona
statutes," such that "[a]n interest in real property which must be
foreclosed by real property procedures in logic should be perfected
through application of real property law," the Debtors want the
Delaware court to reject this plain statement of Arizona law and
hold that leases relating to more than 20 acres of Phoenix-area
land populated with an array of large manufacturing structures is
personal property not subject to a judgment lien properly recorded
under Arizona law.
According to The Netherlands, the Court should not take the Debtors
up
on their request to ignore Arizona's application of its own law and
statutes to embrace an alternate theory that would portray a
long-established manufacturing facility, comprised of several large
buildings at an airport in Mesa, Arizona, as personal property.
Once that notion is rejected, the
limited relevant facts are agreed. Namely, that the Netherlands
properly filed a judgment lien in the appropriate land records and
that no other party has done so. As such, the Court should hold
that the Netherlands Claim is a secured claim that attaches to the
Mesa Leases and the Mesa Improvements, so that the parties can move
on to Phase Two of Lien Determination Process established under the
Final DIP Order.
About MD Helicopters Inc.
MD Helicopters Inc. is a global manufacturer and supplier of
commercial and military helicopters, spare parts, and related
services. The Company's sole manufacturing facility is located in
Mesa, Arizona.
MD Helicopters sought Chapter 11 bankruptcy protection (Bankr. D.
Del. Case No. 22-10263) on March 30, 2022.
MD Helicopters estimated assets between $100 million to $500
million and liabilities between $100 million to $500 million.
Suzzanne Uhland, Esq., Adam S. Ravin, Esq., Brett M. Neve, Esq.,
Tianjiao (TJ) Li, Esq., Alexandra M. Zablocki, Esq., at Latham &
Watkins LLP are the Debtors' counsel. Moelis & Company LLC are the
Debtors' investment bankers. AlixPartners, LLP is the restructuring
advisor. Prime Clerk LLC is the notice, claims and balloting
agent.
MIAMI JEWISH: Fitch Affirms 'BB+' IDR, Outlook Stable
-----------------------------------------------------
Fitch Ratings has affirmed the 'BB+' Issuer Default Rating (IDR) on
the Miami Jewish Health Systems and Subsidiaries (MJHS or the
system) and affirmed the revenue rating on the following bonds
issued by the city of Miami Health Facilities Authority on behalf
of MJHS at 'BB+':
-- $44,035,000 revenue and refunding bonds series 2017.
The Rating Outlook is Stable.
SECURITY
The bonds are secured by a pledge of gross revenues and a mortgage
on certain property of the obligated group (OG), which includes
MJHS, the Florida PACE Centers and the Miami Jewish Health
Foundation, Inc.
ANALYTICAL CONCLUSION
The 'BB+' rating reflects MJHS's mixed demand characteristics, with
softer independent living (IL) occupancy balanced by good demand
across other continuum of care services, an operating risk profile
that incorporates ongoing operating challenges and an expected
improvement in performance, and adequate levels of unrestricted
liquidity. The rating also incorporates the application of an
asymmetric risk factor related to MJHS's exposure to government
payors in two of its main service lines -- skilled nursing and the
Program of All-Inclusive Care for the Elderly (PACE). Together
these service lines represent over 75% of the OG's revenues, and
government payors are the largest payor source for each of the
service lines.
Fitch's forward look shows the operating performance thin over the
next two years, but improving over time to levels more consistent
with the upper end of the 'bb' rating category. Capital spending is
expected to remain well below depreciation over this time.
KEY RATING DRIVERS
Revenue Defensibility: 'bb'
Mixed Demand Characteristics; Limited Rate Flexibility
The weaker revenue defensibility assessment reflects softer
occupancy in IL that is offset by historically good demand for
skilled nursing and PACE services. Historically, IL occupancy has
been below 70%, which is consistent with a weak revenue
defensibility assessment. The pandemic has led to IL occupancy
dropping further to below 60%, but it has recovered to above 60% in
FY22. MJHS has had much stronger demand for skilled nursing, with
occupancy prior to the pandemic generally above 90%, and for
assisted living (AL), which, while lower than skilled nursing
occupancy, had hovered in the mid-to-high 80% range. Both of these
occupancies were recently affected by the Delta and Omicron
variants. Demand in the PACE program remains consistently strong,
with MJHS generally able to fill its allocation of members for the
program.
MJHS faces steady competition from a number of AL and skilled
nursing providers in the immediate service area. While IL
competition is limited in downtown Miami, there are number of
entrance fee IL providers in the broader east coast Florida market,
especially north of Miami. Service area demographics are mixed,
with very good growth characteristics offset by income levels lower
than county and state levels, a further indication of MJHS's
limited ability to raise its rates for the private pay services it
provides. However, more than 80% of the OG's revenues are derived
from government payors, which sets the rates that MJHS receives and
that limited rate flexibility is reflected in the weaker revenue
defensibility assessment.
Operating Risk: 'bb'
Turnaround Efforts Slowed by Pandemic
The weak operating risk assessment reflects the sizable operating
losses at MJHS over the past few years, with the operating ratio
climbing to above 110% and the net operating margin negative in
FY19 through FY21. A few one-time items have supported MJHS'
financial performance as it has looked to improve core operations.
In FY21 (Jun. 30 year end) about $16.4 million of proceeds from the
sale of a non-obligated asset helped MJHS cover its debt service
according to its covenants (Fitch's calculation backed out that one
item and showed coverage at less than 1x) and bolstered MJHS's
balance sheet. FY22 results through February 2022 also show
realized gains helping its financial performance.
MJHS is moving forward on efficiency and expense initiatives around
reduced use of agency, improving the Medical Loss Ratio in the PACE
program, and review of supply chain. However, Fitch expects MJHS's
operating performance to remain largely consistent with the weak
operating profile assessment. Management has reported a good trend
in IL occupancy as it improved to above 60% in FY22; however, the
PACE census has trailed budgeted levels as pandemic challenges and
elevated participant turnover have slowed MJHS's ability to fill an
increase in the number of participants it has been allotted by the
state. PACE has historically been a key driver of performance for
MJHS. Assisted living (AL) and skilled nursing have also been slow
to rebuild due to the recent Omicron variant and state regulations
around quarantining in the higher levels of care, which affected
revenues.
Capital spending is expected to remain below depreciation over the
next two years. Fitch notes as a credit positive MJHS' low debt
burden as maximum annual debt service as a percentage of revenue
represented was modest of 2.6% in FY21.
Financial Profile: 'bb'
Thin But Resilient Financial Profile Though a Moderate Stress
Given MJHS's weak revenue defensibility and operating risk
assessments and Fitch's forward-looking scenario analysis, Fitch
expects key leverage metrics to remain consistent with a 'bb'
financial profile, through the current economic and business cycle.
At FYE 2021, MJHS had unrestricted cash and investments of
approximately $33.3 million. This equates to about 79.4% of total
adjusted debt.
MJHS has no debt equivalents as it fully funded its defined pension
plan and terminated it in FY20. Days Cash on Hand (DCOH) was at 92
days at year end 2021. Fitch's baseline scenario, which is a
reasonable forward look of financial performance over the next five
years given current economic expectations, shows operating metrics
stressed over the next two years, but steadily improving after
that.
Capital spending is expected to remain well below depreciation,
with no major projections currently factored into the rating.
Fitch's stress scenario assumes an economic stress (to reflect
equity volatility), which is specific to MJHS's asset allocation.
The forward look shows MJHS maintains cash-to-adjusted debt levels
that are consistent with the rating throughout Fitch's baseline
scenario and cash to adjusted debt remains resilient through a
stress scenario. MADS coverage is expected to be thin over the next
two years, but it shows improvement in the latter years of the
forward look.
Asymmetric Additional Risk Considerations
MJHS' high levels of exposure to government payors provides MJHS
with less financial flexibility, potentially restraining upward
movement on the rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Growth in unrestricted liquidity such that cash to adjusted
debt stabilizes above 120%;
-- Improvement to cash flow such that debt service coverage is
consistently around 3x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Failure to improve the core operating performance such that
the operating ratio remains above 105% and MJHS is unable make
its debt service coverage covenant of 1.2x;
-- A deterioration in unrestricted liquidity such that cash to
adjusted debt falls below 50%.
CREDIT PROFILE
Founded in the 1940s as a 23-bed nursing home for Jewish widows and
widowers, MJHS has grown into a provider of a wide array of senior
services in South Florida. The OG consists of a 438-bed skilled
nursing facility, one of the largest in the Southeast, a 95-unit
rental ILU, 81-unit ALU, 19-unit memory care facility, and a small
32-bed acute care hospital, mostly catering to the needs of the
MJHS residents, all located on the system's main campus in Miami,
and a foundation. The OG operates a large PACE program with four
centers providing care to about 1,153 participants. Fitch's
financial analysis is based on the OG. The OG had approximately
$121.4 million in operating revenue in FY21.
The main entities outside of the OG include the Wolf/Cypen
Foundation which operates exclusively for the benefit of MJHS, and
has approximately $7.5 million in unrestricted cash and
investments, as well as three HUD Section 202 apartment buildings
providing subsidized housing for the elderly, and a nurse registry
program.
Operating Risk
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.
MIAMI-DADE COUNTY IDA: Moody's Rates 2022A/B Revenue Bonds 'Ba2'
----------------------------------------------------------------
Moody's Investors Service has assigned a Ba2 rating and stable
outlook to the Miami-Dade County Industrial Development Authority's
(FL) approximately $23.2 million Educational Facilities Revenue
Bonds (AcadeMir Charter Schools, Inc. Project), Series 2022A and
$250,000 Taxable Educational Facilities Revenue Bonds (AcadeMir
Charter Schools, Inc. Project), Series 2022B of AcadeMir Charter
Schools, Inc. D/B/A as AcadeMir Preparatory Academy and AcadeMir
Charter School Middle (the "schools"). Upon issuance of the series
2022A & 2022B bonds, the schools will share $23 million in debt
outstanding.
RATINGS RATIONALE
The assignment of the Ba2 rating incorporates adequate demand, and
reasonable projections for debt service coverage and liquidity
despite increased leverage. Pro forma fiscal 2022 debt service
coverage is projected at 1.39x and declines slightly to 1.31x by
2026. Pro forma days cash on hand is projected to be 96 days for
fiscal 2022 and strengthen to over 200 days by 2026. Pro forma
maximum annual debt service is $1.5 million and occurs in 2033.
The Ba2 rating also reflects challenges and risks with respect to
the valuable and key role the founders, the management company, and
the board play in governance, long term strategy and day to day
management, which subjects the schools to unique strategic,
succession and mission risk. The five-member Board of Directors
provides oversight across 6 charters and the Board is actively
pursuing opening two additional middle schools, an elementary
school, and two high schools. Three board members have been with
the schools since its founding. In addition, Superior Schools Inc.,
the management company, is owned and operated by the Mir family,
the founders of AcadeMir Charter Schools, Inc. and provides back
office service for each school and the board.
RATING OUTLOOK
The stable outlook reflects an expectation of balanced to positive
operating performance, and at minimum meet projected debt service
coverage and liquidity targets. Likewise, the outlook expects a
continuation of the schools' enrollment growth and achievement of
full enrollment and maintaining or improving its competitive
position. In addition, the outlook reflects an assumption that
continued expansion of other AcadeMir Charter Schools, Inc. will
not have an impact on the financial position of AcadeMir
Preparatory Academy or AcadeMir Charter School Middle.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Trend of debt service coverage and liquidity measures
exceeding projections
Positive operating trends for new and existing charter
schools
Successful achievement of borrower strategic plans
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Weakening debt service coverage or material decline in
liquidity
Declining enrollment or weakened academic performance
Increased leverage at the school, borrower, or other schools
that increases borrower leverage or reduces operating flexibility
Evidence that management and governance risks are negatively
impacting the reputation, enrollment, or operations of the school
LEGAL SECURITY
The bonds of each series are secured by a gross revenue pledge of
AcadeMir Preparatory Academy and the AcadeMir Charter School Middle
and any other public charter school owned by the Borrower using
facilities that are financed or refinanced with the proceeds of the
Series 2022 Bonds and a first priority lien on its facilities. The
security is a joint and several pledge of both charter schools.
The bond covenants include the schools on an aggregate basis must
have a debt service coverage requirement of 1.1x as of June 30,
2023, a liquidity test of 60 days cash on hand to be measured
starting June 30, 2022. If the coverage and liquidity covenants are
not met the school is required to hire a management consultant to
review and make recommendations as to the operation and
administration of the school.
The additional bond test requires the schools to have historical
coverage and projected two consecutive years with a coverage ratio
of 1.2x. The borrower, other schools are not limited by the
additional bond test as long as other school debt is only secured
by other school revenues or property. The debt service reserve is
funded at the lesser of the standard three-pronged test: maximum
annual debt service, or 125% of average annual debt service, or 10%
of initial principle, which will be funded from bond proceeds.
USE OF PROCEEDS
The current issuance will be used to acquire the school property
currently leased by the schools. The bond proceeds will also fund a
debt service reserve, capitalized interest, and costs of issuance.
Following this purchase AcadeMir Charter Schools, Inc., the
Borrower, will own all the facilities at its AcadeMir Preparatory
Academy and AcadeMir Charter School Middle Campus.
PROFILE
AcadeMir Charter Schools, Inc. was incorporated in 2008. AcadeMir
Charter Schools, Inc. currently operates six schools under the
D/B/A nomenclature. This includes the school securing the bonds
(AcadeMir Preparatory Academy, AcadeMir Charter School Middle), as
well as, AcadeMir Charter School West, AcadeMir Charter School of
Math and Science, AcadeMir Charter School Preparatory, and AcadeMir
Charter School East, all of which operate under separate charter
authorization with Maimi-Dade School District. Additionally,
AcadeMir Charters Schools, Inc. expects to operate AcadeMir Charter
School Elementary (South) with an estimated opening date in fall
2022. The board and management also plan to open two high schools
to serve its K-8 population in Miami-Dade School District. In
addition, the board and management team are in the process or have
attained additional charter authorization to open additional
charter schools over the next five years.
The AcadeMir Preparatory Academy (K-5) and AcadeMir Charter School
Middle (6-8) on a single campus. Total campus enrollment is 759
students. The schools are near full capacity, but will add 50 to 60
more students over the next five years. The AcadeMir Charter School
Middle was granted its third charter in 2022, expiring in 2037;
AcadeMir Preparatory Academy was granted its second charter in
2020, expiring in 2025
METHODOLOGY
The principal methodology used in these ratings was US Charter
Schools published in September 2016.
MULLEN AUTOMOTIVE: Incurs $32.6 Million Net Loss in Second Quarter
------------------------------------------------------------------
Mullen Automotive Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $32.57 million for the three months ended March 31, 2022,
compared to a net loss of $9.30 million for the three months ended
March 31, 2021.
For the six months ended March 31, 2022, the Company reported a net
loss of $69.04 million compared to a net loss of $14.29 million for
the six months ended March 31, 2021.
As of March 31, 2022, the Company had $105.21 million in total
assets, $55.65 million in total liabilities, and $49.56 million in
total stockholders' equity.
"As an early-stage development company, our ability to access
capital is critical. Our management plans to raise additional
capital through a combination of equity and debt financings,
strategic alliances, and licensing arrangements. Company
management has evaluated whether there are any conditions and
events, considered in aggregate, which raise substantial doubt
about its ability to continue as a going concern over the next
twelve months from the date of filing this report. Since
inception, we have incurred significant accumulated losses of
approximately $219.4 million, and management expects to continue to
incur operating losses over the near future. Proceeds from the
business combination with Net Element, the exercise of warrants,
and a qualified public offering, should they materialize, are
expected to provide Mullen with sufficient liquidity and capital
resources to fund its operating expenses and capital requirements
for at least the next 12 months. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1499961/000155837022008993/muln-20220331x10q.htm
About Mullen
Mullen Automotive Inc. (fka Net Element Inc.) is an electronic
vehicle (EV) manufacturer. The Company operated as the EV di
vision of Mullen Technologies, Inc. until Nov. 5, 2021, at which
time the Company underwent a capitalization and corporate
reorganization by way of a spin-off by MTI to its shareholders,
followed by a reverse merger with and into Net Element, Inc.
Mullen Automotive reported a net loss of $44.24 million for the
year ended Sept. 30, 2021, compared to a net loss of $30.18 million
for the year ended Sept. 30, 2020. As of Dec. 31, 2021, the
Company had $45.41 million in total assets, $55.90 million in total
liabilities, and a total deficiency in stockholders' equity of
$10.49 million.
Fort Lauderdale, Florida-based Daszkal Bolton LLP, the Company's
auditor since 2020, issued a "going concern" qualification in its
report dated Dec. 29, 2021, citing that the Company has sustained
net losses, has indebtedness in default, and has liabilities in
excess of assets, which raise substantial doubt about its ability
to continue as a going concern.
PARKLAND CORPORATION: DBRS Confirms BB Issuer Rating
----------------------------------------------------
DBRS Limited confirmed the Issuer Rating and Senior Unsecured Notes
rating of Parkland Corporation at BB with Stable trends. The
Recovery Rating on Senior Unsecured Notes remains RR4. The
confirmations reflect Parkland's solid operating performance during
2021 primarily due to robust fuel volume recovery driven by the
economic reopening and incremental contributions from Parkland's
recent acquisitions. The Stable trends reflect DBRS Morningstar's
view that the Company is well positioned to navigate the current
macroeconomic environment, including uncertainties surrounding the
effects of the ongoing Russia-Ukraine conflict on fuel prices and
inflationary pressures coming out of the Coronavirus Disease
(COVID-19) pandemic, as well as integration risks associated with
the 17 acquisitions the Company completed since Q3 2020, within the
context of the current rating category. Parkland's ratings continue
to be supported by its strong position as Canada's largest
independent marketer and distributor of fuels as well as by its
efficient operations, diversified customer and supplier base, and
geographic diversification. The ratings also continue to reflect
the intense competition, exposure to economic cycles, and
volatility in refinery margins as well as risks associated with
environmental liability.
Although DBRS Morningstar acknowledges that the currently elevated
prices at the pumps could potentially have a modestly negative
impact on fuel demand, DBRS Morningstar nonetheless expects
Parkland's total fuel volume to increase to above 25.0 billion
liters in 2022 from 23.9 billion liters in 2021 mainly because of
(1) full-year contributions from acquisitions completed in 2021
(including Conrad & Bischoff Inc., Urbieta Oil Co., and Petroles
Crevier Inc.) as well as incremental contributions from the
acquisition of 156 Husky retail locations expected to close by
mid-2022; (2) continued recovery of commuter traffic and; (3)
continued recovery in tourism and international travel. DBRS
Morningstar believes gross margins on a cents-per-liter (cpl) basis
could be volatile in the near term because of the current
macroeconomic environment but expects modest improvement over the
medium term as Parkland leverages its growing scale and continues
to enhance digital and analytical capabilities. DBRS Morningstar
forecasts Parkland's EBITDA margins will increase marginally toward
7.0% in 2022 as the Company is expected to continue to focus on
improving efficiencies and reducing costs, including achieving
synergies as it integrates recent acquisitions and benefits from
gains in operating leverage, partially offset by increasing
inflationary pressures and higher marketing, general and
administrative expenses caused by higher employee-related costs to
support the Company's growth programs. As such, DBRS Morningstar
expects Parkland's EBITDA to increase toward $1.60 billion in 2022
from $1.44 billion in 2021.
Parkland's financial profile is expected to improve over the near
to medium term as the Company's earnings and cash flow reflect the
full contribution from recent acquisitions as well as recovering
commuter traffic and rebounding tourism and international travel,
resulting in improved free cash flow generation. Cash flow from
operations should continue to track operating income, increasing to
above $1.1 billion in 2022 from $994 million in 2021. Capex
spending is expected to increase moderately to approximately $480
million in 2022 mainly consisting of construction and acquisition
of new-to-industry sites, remodels, including continued On the Run
site conversions, and marketing and data analytics to enhance
digital capabilities. DBRS Morningstar does not expect any changes
to the Company's dividend policy and expects total cash outlay to
be approximately $200 million. DBRS Morningstar expects any free
cash flow (after changes in working capital) in the near term will
be used to repay debt and/or to complete minor tuck-in acquisitions
(excluding the already-announced acquisition of 156 Husky retail
locations expected to close by mid-2022, respectively). Although
Parkland may use a portion of its free cash flow (after changes in
working capital) to moderate debt level, DBRS Morningstar expects
improvement in the Company's key credit metrics to be largely
driven by operating income growth. As such, DBRS Morningstar
expects Parkland's key credit metrics to improve moderately over
the near to medium term, with debt-to-EBITDA expected to improve
toward 3.6 times (x) from 3.9x at the end of 2021, mainly because
of growth in operating income.
Should Parkland's lease-adjusted debt-to-EBTIDA improve toward the
mid-three-times range on a sustainable basis, primarily driven by
growth in operating income, including successful integration of its
recent acquisitions, a positive rating action would likely result
over the next 12 months. Conversely, although unlikely, should
Parkland's credit metrics weaken as a result of
weaker-than-expected operating results and/or more aggressive
financial management, the ratings could be pressured.
Notes: All figures are in Canadian dollars unless otherwise noted.
PHOENIX SERVICES: Moody's Lowers CFR to Caa1, Outlook Remains Neg.
------------------------------------------------------------------
Moody's Investors Service downgraded Phoenix Services International
LLC's Corporate Family Rating to Caa1 from B2, its Probability of
Default Rating to Caa1-PD from B2-PD and the rating on Phoenix
Services Merger Sub, LLC's $65 million senior secured first lien
revolving credit facility and its $465 million senior secured first
lien term loan to Caa1 from B2. The ratings outlook is negative.
"The downgrade of Phoenix Services' ratings reflects its weak
operating performance despite increased steel production at its
mill sites due to operational issues and inflationary cost
pressures, which have resulted in credit metrics that are likely to
remain weak for the Caa1 corporate family rating. It also reflects
the risks related to the looming maturity of its revolving credit
facility in March 2023 and the need to pursue equipment leases to
support new business due to its weak liquidity profile," said
Michael Corelli, Moody's Senior Vice President and lead analyst for
Phoenix Services International LLC.
Downgrades:
Issuer: Phoenix Services International LLC
Corporate Family Rating, Downgraded to Caa1 from B2
Probability of Default Rating, Downgraded to Caa1-PD from B2-PD
Issuer: Phoenix Services Merger Sub, LLC
GTD Senior Secured First Lien Revolving Credit Facility,
Downgraded to Caa1 (LGD3) from B2 (LGD4)
GTD Senior Secured First Lien Term Loan, Downgraded to Caa1 (LGD3)
from B2 (LGD4)
Outlook Actions:
Issuer: Phoenix Services International LLC
Outlook, Remains Negative
Issuer: Phoenix Services Merger Sub, LLC
Outlook, Remains Negative
RATINGS RATIONALE
Phoenix Services' Caa1 corporate family rating reflects its high
financial leverage, negative interest coverage, reliance on the
highly cyclical steel sector, inconsistent free cash generation due
to capital spending at new mill sites in advance of cash flow
generation from those sites and its recent weak operating
performance despite higher steel production volumes due to
operational issues and an inability to fully pass through rising
costs. Its rating is supported by its strong market position,
variable cost structure and the downside protection afforded by the
company's long-term contracts with fixed fees and tiered pricing.
It also reflects the good EBITDA margins it has generated through
various steel sector cycles, its ability to consistently grow the
number of sites it serves and its relatively low maintenance
expenditures.
Phoenix Services' operating performance has materially weakened
over the past four years as it was impacted by lower steel
production during the pandemic and a delayed response in reducing
costs to match a lower level of production at mill sites. It then
suffered from operational issues and inflationary cost pressures as
steel production has recovered. As a result, its adjusted EBITDA
has plunged from about $100 million in 2017 to around $60 million
in 2021 and is not expected to materially improve in the near term.
The weaker operating performance along with an increase in lease
liabilities has led to a significant deterioration in its credit
metrics with its leverage ratio (Debt/EBITDA) rising to 9.4x in
December 2021 from 4.8x in December 2017, while its interest
coverage (EBIT/Interest) has declined to -0.9x from 0.5x.
Phoenix Services is implementing operational improvement
initiatives and is engaging customers to discuss contract
modifications related to the timing and magnitude of cost pass
throughs and has been awarded several new contracts that should
contribute to its operating performance in the near term. However,
the outcome of its customer negotiations is uncertain, and the
profitability of new contracts is yet to be proven. Therefore,
Moody's anticipates its operating performance and credit metrics
will remain weak for the Caa1 rating over the next 12 โ 18
months.
Phoenix has a weak liquidity profile since it needs to extend the
maturity date of its $65 million first lien revolving credit
facility beyond March 2023. The company had about $20 million of
cash and $46 million of availability under the revolver as of
December 2021. The company could generate free cash flow in 2022
due to its decision to lease rather purchase equipment for new mill
sites, but this will result in a rising adjusted debt level. The
company has a relatively low level of maintenance capital
expenditures and could generate free cash flow if it wasn't winning
new business, but it has won several contracts recently and its
spending will remain elevated in the near term.
The Caa1 rating on the senior secured credit facilities is
commensurate with the corporate family rating since the revolver
and the term loan share the same collateral package and account for
virtually all of the debt in the company's capital structure. The
credit facilities have a first priority security interest in the
equity interests of Phoenix Services International LLC and
substantially all the assets of Phoenix and its subsidiary
guarantors.
The negative ratings outlook presumes the company's operating
results will not materially improve over the next 12 โ 18 months
and that its credit metrics will remain weak for its rating. It
also considers the risks related to the looming maturity of the
company's revolving credit facility in March 2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Phoenix Services' ratings are not likely to experience upward
pressure in the near term, but an upgrade could occur if the
company sustains a leverage ratio below 5.5x (Debt/EBITDA) and cash
flow from operations above 10% of outstanding debt. An upgrade
would also require more conservative financial policies, such as
using internally generated cash flow to fund a large percentage of
the capital spending associated with new business wins.
The ratings would be considered for a downgrade if the company's
leverage ratio remains above 7.0x or its interest coverage
(EBIT/Interest) remains negative on a sustained basis. The
inability to extend its revolver maturity over the next few months,
a material reduction in liquidity or more aggressive financial
policies could also pressure the rating.
Headquartered in Radnor, Pennsylvania, Phoenix Services
International LLC provides on-site steel mill services such as the
removal, handling, and processing of slag, metal recovery, scrap
preparation, material handling, aggregate sales and other ancillary
services and generated about $400 million in revenues for the LTM
period ended December 31, 2021. The company is wholly owned by
Apollo Global Management.
The principal methodology used in these ratings was Steel published
in November 2021.
POPPA CONSTRUCTION: 3 Entities Hit Chapter 11 Bankruptcy
--------------------------------------------------------
Three entities, George Vukobratovich, Jordan Poppa-Turner, and
Poppa Construction Inc., simultaneously sought for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code
The three debtors filed with the Bankruptcy Court a motion for
joint administration of their Chapter 11 cases. But the motion was
denied as to Vukobratovich, and the motion was granted as to
Poppa-Turner and PCI.
Dispute With PFF
Vukobratovich was previously part owner of a Florida limited
liability company known as If Six Were Nine, LLC (the "Tenant"),
which, on July 11, 2014, entered into a lease with Lincoln Road
III, LLC, for the lease of premises located at 600 Lincoln Road in
Miami Beach, Florida.
PCI was hired as the general contractor to build out the Sola Salon
Suites that Tenant intended to operate at the Premises.
Unfortunately, Vukobratovich and Poppa-Turner executed a
Construction Completion Guaranty Agreement that purported to
guarantee the buildout costs for the specific-use tenant
improvements associated with the Premises. Following the signing
of the Lease and without any disclosure to the Tenant or the
Debtors, Lincoln Road sold the Premises to PPF LRIII Portfolio, LLC
in a non-arms-length transaction. The Tenant took possession and
finished approximately 40% of the buildout. As a result of the
undisclosed sale (which resulted in a tax reassessment) and the
construction, the value of the Premises increased, along with the
real estate taxes. This increase in the real estate taxes resulted
in the total rent Tenant would have to pay to increase from
approximately $28,000 per month as anticipated in the signed Lease
to over approximately $60,000 per month. This increase effectively
ruined any chance Tenant would have to make a profit. The main
financial partner of the Tenant made the decision to halt
construction at that time due to the undisclosed sale and resulting
tax consequences.
Nevertheless, PPF brought suit for breach of the Construction
Guaranty in the amount of approximately $1 million. On Sept. 1,
2021, the trial court entered a judgment in favor of PPF and
against the Debtors, jointly and severally, in the amount of
$1,062,679. It is the Debtors' position that PPF did not suffer
any damages because PPF admitted that it had not incurred any costs
whatsoever for the completion of the construction of the
improvements and testified that it "didn't want to expend the money
for a specialized single-use purpose without having a tenant."
Therefore, no costs for completing the improvements ever became
due.
On May 2, 2022, the trial court denied the motion for rehearing.
The Debtors filed a notice of appeal on May 5, 2022, prior to the
filing of the bankruptcy cases. The liability to PPF has nothing
to do with the Debtors' business operations and is an unfortunate
anomaly in the Debtors' financial history. What is further
unfortunate is that PPF has embarked on some of the most aggressive
collection actions that the undersigned has ever seen, including
filing fraudulent transfer lawsuits against Poppa-Turner's wife,
Poppa-Turner's landlord for his family's residence, and the Florida
Prepaid College Fund. These fraudulent conveyance actions are
absolutely frivolous, and the Debtors intend to move to dismiss
them based on their frivolity.
The Debtors filed the Chapter 11 cases in an effort to reorganize
for the benefit of all creditors.
According to court filings, Poppa Construction Inc. estimates
between 1 and 49 unsecured creditors. The petition states that
funds will be available to unsecured creditors.
About Poppa Construction Inc.
Poppa Construction Inc. is a Naples, Florida-based independent
general contracting firm. PCI's services include commercial and
residential construction and remodeling. PCI has four employees.
Jordan Poppa-Turner is an individual who owns and operates PCI.
George Vukobratovich is an individual and co-owns and operates
Welsh Companies of Florida, Inc., as tenants by the entireties with
his wife Susan Vukobratovich.
George Vukobratovich, Jordan Poppa-Turner, and Poppa Construction
Inc., sought for relief under Subchapter V of Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-00496 to 22-00498) on
May 5, 2022.
The cases of Jordan David Poppa-Turner and PCI are jointly
administered under PCI's Case No. 22-00497.
Poppa Construction is estimated assets between $100,000 and
$500,000 and liabilities between $1 million and $10 million.
Edward J. Peterson, III, of Stichter, Riedel, Blain & Postler,
P.A., is the Debtors' counsel.
PROJECT ALPHA: Moody's Affirms B3 CFR & Alters Outlook to Positive
------------------------------------------------------------------
Moody's Investors Service affirmed Project Alpha Intermediate
Holding, Inc.'s (dba Qlik Technologies; "Qlik") ratings, including
the B3 Corporate Family Rating, B3-PD Probability of Default
Rating, and B3 debt instrument rating on the first lien credit
facility consisting of a $75 million revolving credit facility due
October 2023 and a $1,418 million first lien term loan due April
2024. Moody's also revised the outlook to positive from stable.
The positive outlook reflects Qlik's increasingly recurring revenue
base and Moody's expectation of continued solid free-cash-flow
(FCF) generation. The company's transition to a subscription based
sales approach performed well through FY 2021, with annual
recurring revenue (ARR) and revenue generated over time from term
licenses (as labeled in FY 2021 audit; i.e. maintenance) growing
more than 10% and 60%, respectively, over FY 2020 results. Qlik's
ability to generate FCF/debt in the mid-to-high single digit
percentage range through FY 2021 provides ample cushion to absorb
elevated investments in cloud infrastructure and rising interest
rates without compromising the company's good liquidity profile.
However, Qlik's ratings remain constrained by the company's private
equity ownership and approaching debt maturity schedule. The
company confidentially submitted a draft registration statement
with the U.S. Securities and Exchange Commission (SEC) for a
proposed initial public offering (IPO) of its common stock on
January 6, 2022. However, IPO activity through 2022 has cooled
relative to 2021 amid intense market volatility and macroeconomic
headwinds. Meanwhile, the company's first lien credit facility
goes current in less than 12 months (April 2023). There is elevated
risk of Qlik's private equity sponsors executing a dividend
recapitalization should the IPO remain on the shelf over the next
12 months.
Affirmations:
Issuer: Project Alpha Intermediate Holding, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured Bank Credit Facility, Affirmed B3 (LGD3)
Outlook Actions:
Issuer: Project Alpha Intermediate Holding, Inc.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
The B3 CFR reflects Qlik's moderate financial leverage, the
company's narrow scope of products within the competitive business
intelligence and analytics (BIA) market, and the challenges of
converting existing perpetual license users to subscription
licenses. The company competes against large and well capitalized
firms with superior distribution and bundling capabilities
including Microsoft, SAP, and salesforce (Tableau). Furthermore,
Moody's believes the probability of Qlik deploying aggressive
financial policies is elevated while under private equity
ownership.
Moody's expects Qlik will increase internal investments to support
its cloud offering over the next 12-18 months, resulting in CASH
EBITDA margin erosion upwards of 400 basis points relative to FY
2021 levels. Debt/CASH EBITDA is expected to peak around 5.5x by
the end of FY 2022 before returning to the low 5x through FY 2023
(CASH EBITDA includes changes in deferred revenue and unbilled
receivables).
At the same time, Qlik benefits from an increasingly recurring
revenue profile, good geographic diversity, and a very good
liquidity profile. The company's solutions are consistently
regarded as a leader in the BIA industry and partially mitigate the
intense competitive pressures of the industry. The company's
liquidity is underpinned by solid FCF generation and roughly $375
million of total liquidity ($300 million cash and $75 million
revolver availability) as of December 31, 2021. Moody's projects
FCF/debt will approach 5% over the next 12-18 months.
Governance considerations are credit negative. Qlik's propensity
for aggressive financial policies remains elevated while under
private equity firm Thoma Bravo's ownership. The use of debt to
enhance equity returns is a common strategy for private equity
firms and can impede Qlik's ability to achieve meaningful
deleveraging over time. The lack of public financial disclosure and
absence of board independence are also incorporated in Qlik's
credit profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Qlik's ratings could be upgraded if the company builds a track
record of conservative financial policies, sustains debt/CASH
EBITDA below 6x, and generates FCF/debt in the mid-to-high single
digit range on a more than temporary basis.
Qlik's ratings could be downgraded should the company's operating
performance weaken such that debt/CASH EBITDA remains above 7x or
FCF/debt is sustained in the low single digit range. In addition,
Qlik's ratings would be negatively pressured if its liquidity
profile deteriorates.
Qlik is a provider of business intelligence and data analytics
solutions to over 38,000 unique customers worldwide. The Company's
software products help users integrate and harmonize disparate data
streams to improve analysis across different groups and lines of
business within an organization. The solutions are delivered
on-premise via term licenses or through the cloud as a
Software-as-a-Service (SaaS) solution. Qlik is wholly owned by
private equity firm Thoma Bravo following the take-private LBO in
August 2016. Revenue for the twelve months ending December 31,
2021 was over $925 million.
The principal methodology used in these ratings was Software
Industry published in August 2018.
PROMETHEUS HEALTH: Case Summary & Four Unsecured Creditors
----------------------------------------------------------
Debtor: Prometheus Health Imaging, Inc.
269 S. Beverly Dr.
Suite 1800
Beverly Hills, CA 90212
Chapter 11 Petition Date: May 20, 2022
Court: United States Bankruptcy Court
Central District of California
Case No.: 22-12841
Judge: Hon. Ernest M. Robles
Debtor's Counsel: David M. Browne, Esq.
21900 Burbank Blvd., Suite 112
Woodland Hills, CA 91367
Tel: 818-276-1925
Fax: 818-702-0910
Email: dmbrownelaw@gmail.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Patrick Rubeiz, CEO.
A full-text copy of the petition containing, among other items, a
list of the Debtor's four unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/AT5SZCY/Prometheus_Prometheus_Health_Imaging__cacbke-22-12841__0001.0.pdf?mcid=tGE4TAMA
PROVENCROWN BUILDERS: Seeks Access to JPMorgan's Cash Collateral
----------------------------------------------------------------
ProvenCrown Builders, LLC asks the U.S. Bankruptcy Court for
authority to use the cash collateral of JPMorgan Chase Bank, NA in
accordance with the proposed budget.
The Debtor requires the use of cash collateral to pay for its
monthly operating expenses which include, among other things,
payroll and adequate protection payments to the secured creditor.
The Debtor believes there is a pre-petition lien on the Business
Assets in favor of JPMorgan in the approximate amount of $40,000.
The Debtor asserts JPMorgan will not be harmed by the interim use
of cash collateral generated from the Business Assets and proceeds
thereof. As to the use thereof, the Debtor proposes that JPMorgan
be granted a replacement lien upon the assets in the Debtor's
possession subsequent to the filing of the Chapter 11 petition to
the extent of the collateral utilized subject to the verification
of the extent and validity of the lien. In addition, as Adequate
Protection, the Debtor proposes to make a monthly Adequate
Protection payment to JPMorgan in the amount of $701.
A hearing on the matter is scheduled for May 31, 2022 at 1:30 p.m.
A copy of the motion is available at https://bit.ly/3Nn2ULf from
PacerMonitor.com.
About ProvenCrown Builders LLC
ProvenCrown Builders LLC -- https://provencrown.com/ -- is a mason
contractor in Chicago, Illinois that specializes in masonry
restoration, concrete, roofing, decking.
ProvenCrown Builders filed for Chapter 11 protection (Bankr. N.D.
Ill. Case No. 22-04099) on April 8, 2022. In the petition filed by
Damion Perry, as managing member, ProvenCrown Builders estimated
assets between $0 and $50,000 and estimated liabilities between
$500,000 and $1 million.
The case is assigned to Honorable Judge Jacqueline P. Cox.
Ben Schneider, of Schneider & Stone, is the Debtor's counsel.
Neema T. Varghese has been appointed as Subchapter V Trustee.
RED RIVER: Lender Seeks Appointment of Ch. 11 Trustee or Examiner
-----------------------------------------------------------------
MUFG Union Bank, N.A., as Lender and Administrative Agent, filed
with the U.S. Bankruptcy Court for the Northern District of Texas
an emergency motion for appointment of a Chapter 11 Trustee or, in
the Alternative, an Examiner for Red River Waste Solutions, LP.
MUFG Union Bank also objected to the Debtor's Motion for Entry of
an Order (A) Approving Plan Support Agreement and (B) Granting
Certain Related Relief.
MUFG Union Bank argues that the PSA should be denied for three
reasons:
(1) the PSA is baldly a sub rosa plan that dictates the terms
of a chapter 11 plan, circumventing the requirements and safeguards
of the confirmation process;
(2) the Debtor has utterly failed to demonstrate that approval
of the PSA is permissible by any standard of approval for similar
categories of transactions; and
(3) even if the Debtor proposed the settlement through a
chapter 11 plan, the plan could not be confirmed
by law because, among other faults, the plan would not be in the
best interests of the estate and would be proposed in bad faith.
The Lender argued that approval of the PSA would lead the Debtor
and Creditors' Committee into an irreconcilable conflict of
interest and cause them to breach their fiduciary duties as estate
representatives:
(1) The stated purpose of the PSA is solely to benefit the
out-of-the-money Equity and a minority of general unsecured
creditors of the estate. As a result, the Bank is harmed;
(2) The Debtor and the Committee will be bound by the terms,
obligations, liabilities and covenants contained in the PSA for so
long as it is consistent with the Debtor's and Committee's
fiduciary duties;
(3) The Fiduciary Out is illusory. Equity and the Minority
GUCs will control the Fiduciary Out through their control of the
Debtor's board and the Committee's membership; and
(4) In order to exercise the Fiduciary Out, Equity and the
Minority GUCs will have to determine that it is a breach of their
fiduciary duties as members of the Debtor's board and the Committee
to pursue a deal that would benefit them personally to the
detriment of another creditor the Committee represents.
On account of the irreconcilable conflict, if the Court approves
the PSA Motion, the Bank submits sufficient cause will exist for
the appointment of a Chapter 11 trustee in this case, and
therefore, the appointment of a Chapter 11 trustee will be
mandatory pursuant to Section 1104(a)(1) of the Bankruptcy Code.
Further, if the Court approves the PSA Motion, the Bank submits
that the appointment of a Chapter 11 trustee will be appropriate
under Section 1104(a)(2) of the Bankruptcy Code because it will be
in the best interests of the creditors and the estate. Otherwise,
the estate will be left with no disinterested party to exercise the
Fiduciary Outs under the PSA on behalf of the estate.
Alternatively, on account of the inherent conflict of interest, if
the Court does not appoint a Chapter 11 trustee, if the PSA Motion
is approve then MUFG Union Bank submits sufficient cause will exist
for appointment of an independent examiner under Section 1104(c) of
the Bankruptcy Code with special duties and powers to investigate
the governance of the Debtor and the actions of its management.
A copy of the motion is available at https://bit.ly/3aiXXVP from
Stretto, Inc., claims agent.
Counsel to MUFG Union Bank, N.A.:
Michael T. Benz, Esq.
Bryan E. Jacobson, Esq.
CHAPMAN AND CUTLER LLP
320 South Canal Street
Chicago, IL 60606
Tel: (312) 845-3000
E-mail: benz@chapman.com
bjacob@chapman.com
- and -
William A. (Trey) Wood III, Esq.
BRACEWELL LLP
711 Louisiana Street, Suite 2300
Houston, TX 77002
Telephone: (713) 221-1166
Facsimile: (713) 221-1212
E-mail: trey.wood@bracewell.com
About Red River Waste Solutions
Red River Waste Solutions LP is a company in Dripping Springs,
Texas, that provides waste management services. It also offers
solid waste and garbage pickup, recycling, industrial waste
collection, disposal, and landfill management services.
Red River Waste Solutions sought Chapter 11 protection (Bankr. N.D.
Texas Case No. 21-42423) on Oct. 14, 2021, listing up to $50
million in assets and up to $100 million in liabilities. James
Calandra, chief restructuring officer of Red River Waste Solutions,
signed the petition.
Judge Morris oversees the case.
Marcus Alan Helt, Esq., at McDermott Will & Emery LLP, is the
Debtor's legal counsel. Stretto, Inc. is the claims and noticing
agent.
The Debtor's official committee of unsecured creditors tapped
Womble Bond Dickinson (US) LLP as legal counsel and Rock Creek
Advisors, LLC as financial advisor.
RITE AID: S&P Downgrades ICR to 'CCC+' on Weakening Performance
---------------------------------------------------------------
S&P Global Ratings downgraded its issuer credit rating on
U.S.-based drugstore retailer Rite Aid Corp. to 'CCC+' from 'B-'.
The outlook is negative, reflecting the risk that the company's
turnaround efforts may not materialize quickly enough to increase
its presently weak cash flow generation and margins.
U.S.-based drugstore retailer Rite Aid Corp.'s operating prospects
for fiscal 2023 are weaker than we previously anticipated with both
consolidated revenue and the company's adjusted EBITDA declining
compared to fiscal 2022.
S&P said, "We expect Rite Aid's multiyear turnaround effort to slow
down this year leading to a potentially unsustainable capital
structure. We expect the decreased demand for vaccines associated
with the COVID-19 pandemic last year to have a significant impact
on Rite Aid's retail pharmacy division. This along with the planned
closure of additional underperforming stores and ongoing challenges
at Elixir, will lead to topline declines in consolidated revenues
in fiscal 2023 despite improvements in acute prescription to
pre-pandemic levels. Previously, we forecasted the recovery in the
company's sales to accelerate through fiscal year 2023 and
estimated they would rise by the low- to mid-single digit percent
range.
"To preserve profit, the company has aggressive plans to manage
costs across its business including through the closure of 145
stores. It also includes changes to its loyalty card program and
initiatives to expand private-label brand penetration. In addition,
growth at the company's pharmacy services provider (largely PBM),
Elixir, has been slower than we previously expected reflecting what
we view as a highly competitive and complex business segment. Sales
at Elixir declined by about 9% in the fourth quarter of 2022 due
primarily to a planned decrease in Elixir insurance membership as
well as a client loss that was driven by industry consolidation. We
believe there is significant execution risk associated with the
plan to both drive profitability and gain sales traction across the
retail and pharmacy services operations.
"We continue to take a cautious approach to Rite Aid's public
guidance for the coming years given the persistent challenges
across its business lines. While the company expects its EBITDA to
grow by double digits over fiscal 2022 levels by the end of fiscal
2025, we expect the improvement in performance to be more gradual.
We project the company's adjusted EBITDA will be at the low end of
the $460 million-$500 million range by company calculations for the
coming year. We forecast slightly negative free operating cash flow
(FOCF) for the coming year (after capital spending and excluding
any sale leaseback proceeds or gain on asset sales). This compares
to positive $139 million of FOCF last year according to our
calculations.
"We currently expect Rite Aid's S&P Global Ratings-adjusted
leverage to remain in the high-5x area on a lease-adjusted basis
through the next two years, down from 6.3x in fiscal year 2021
(ended Feb. 27, 2021). We also forecast capital spending of $250
million, interest expense of about $200 million, and a slight
working capital benefit in the coming year amid further inventory
reductions and other items.
"We believe the pace of improvement will have to be important if
Rite Aid is to sustain its current highly leveraged capital
structure, which includes about $2.7 billion of funded debt. The
company's first upcoming maturity is in 2025 and Rite Aid maintains
significant asset-based lending (ABL) revolver capacity of about
$1.9 billion, which provides some time and resources to execute its
plans. Still, we expect most cash flow to be absorbed by interest
expense and necessary capital expenditures to refresh the store
base with effective cost controls to drive longer-term
profitability. If operating improvement does not ramp up, we
believe the capital structure may not be sustainable.
"We continue to believe the company will face headwinds in the
highly competitive drugstore sector, which is rapidly evolving due
to acquisitions, partnerships, and collaborations, as well as
complex shifts in the U.S. health care system. The company cites
the ongoing efforts of Congress and federal agencies, health
maintenance and managed care organizations, and others to reduce
prescription drug costs and pharmacy reimbursement rates. This has
had a material effect on Rite Aid's profit margins, which are
already thin compared with those of its peers, including CVS and
Walgreens."
The negative outlook reflects the risk that Rite Aid's turnaround
efforts will not gain enough traction to result in a sustainable
capital structure given the company's weak cash flow generation and
margins over the coming year.
S&P said, "We could lower our ratings on Rite Aid if planned cost
savings do not materialize or operating conditions worsen such that
we see a restructuring possible without an unforeseen positive
development in the following 12 months.
"We could take a positive rating action on Rite Aid if makes
material progress on its pending turnaround initiatives driving
profit growth. Under this scenario, we would expect the company to
demonstrate a significant and sustained improvement in its
operating performance and cash flows. This would provide more
certainty that it will be able to refinance its 2025 maturities at
par."
Environmental, Social, And Governance
ESG credit indicators: E-2, S-2, G-2
ROCKALL ENERGY: EPA, U.S. Govt. Want Revisions to Bankruptcy Plan
-----------------------------------------------------------------
James Nani of Bloomberg Law reports that the US government is
opposing Rockall Energy Holdings' bankruptcy plan, calling for
revisions that would have the oil explorer comply with
environmental health and safety rules and reclaim its well sites.
Rockall Energy's Chapter 11 plan proposes to abandon property in
illegal ways, according to a filing Wednesday, May 18, 2022, by the
US Environmental Protection Agency and the Department of Interior.
The Dallas-based company's plan also proposes to wipe out certain
liabilities too broadly and doesn't preserve US rights to audit
federal leases of drilling sites, the agency said in the filing
with the U.S. Bankruptcy Court for the Northern District of Texas.
About Rockall Energy Holdings
Rockall Energy Holdings, LLC is a mid-sized oil exploration and
production company.
Rockall Energy and its affiliates sought Chapter 11 bankruptcy
protection (Bank. N.D. Tex. Lead Case No. 22-90000) on March 9,
2022. In the petition filed by David Mirkin, as chief financial
officer, Rockall Energy Holdings listed $100 million and $500
million in both assets and liabilities.
The cases are handled by Honorable Judge Mark X. Mullin.
The Debtors tapped Vinson & Elkins, LLP as legal counsel; Lazard
Freres & Co., LLC as investment banker; and Ankura Consulting
Group, LLC, as restructuring advisor. Stretto, Inc. is the claims
agent.
On March 18, 2022, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. The committee tapped
Pachulski Stang Ziehl & Jones LLP as its counsel and Riveron RTS,
LLC, as financial advisor.
ROYAL BLUE REALTY: May Use $14,479 of Cash Collateral Thru June 30
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Royal Blue Realty Holdings, Inc. to continue using cash
collateral on an interim basis in accordance with the budget, with
a 10% variance.
Specifically, the Debtor is authorized to use up to $14,479 from
June 1 through June 30, 2022. This amount includes $10,328 in
property tax payments reimbursed by Comm-U.
Deutsche Bank National Trust Company may assert an interest in the
cash collateral. DB is the Trustee for American Home Mortgage
Asset Trust 2006-6 Mortgage-Backed Pass-Through Certificates,
Series 2006-6; or Deutsche Bank National Trust Company as Trustee
for American Home Mortgage Asset Trust 2007-1 Mortgage-Backed
Pass-Through Certificates, Series 2007-1,
The Debtor's cash collateral access under the Eighth Interim Order
will terminate immediately upon the earliest to occur of: (i) June
30; (ii) the entry of an order dismissing the Case, (iii) the entry
of an order converting the Case to one under Chapter 7; (iv) the
entry of an order appointing a trustee or an examiner with expanded
powers with respect to the Debtor's estate; (v) entry of an order
reversing, vacating, or otherwise amending, supplementing, or
modifying the Order, (vi) entry of an order granting relief from
the automatic stay to any creditor (other than DB) holding or
asserting a lien in the Prepetition Collateral, or (vii) the
Debtor's breach or failure to comply with any material term or
provision of the Seventh Interim Order after receipt of no less
than five business days' notice to cure DB has consented to the
Debtor's use of the cash collateral.
As adequate protection for the Debtor's use of cash collateral, DB
is granted valid, binding, enforceable, and automatically perfected
post-petition liens on all property, whether now owned or hereafter
acquired or existing and wherever located, of the Debtor and the
Debtor's estate. DB's replacement liens include avoidance actions
under Chapter 5 of the Bankruptcy Code.
As additional adequate protection, the Debtor will, among other
things, maintain all of its insurance policies in full force and
effect, and will make timely payments of all property taxes and
common charges relating to the prepetition collateral.
Although the Debtor is responsible for paying post-petition
property taxes due on the Prepetition Collateral, and has been
responsible for doing so under the prior Cash Collateral Orders, DB
has paid $122,287.84 of the property taxes and is entitled to a
claim for reimbursement from the Debtor in that amount. The Debtor
reimbursed DB in the amount of $61,303.86 in February 2022. The
Debtor shall reimburse DB for such payments
and may seek reimbursement or an advance from Comm-U for such
amounts in accordance with the lease between the Debtor and Comm-U.
It is anticipated DB will make a payment of approximately $31,000
for property taxes relating to the Prepetition Collateral before
June 30.
A final hearing on the matter is scheduled for June 29 at 10 a.m.
A copy of the stipulated order is available for free at
https://bit.ly/3yKziDJ from PacerMonitor.com.
About Royal Blue Realty Holdings
Royal Blue Realty Holdings, Inc., holding business at 162-174
Christopher Street, New York, N.Y., is primarily engaged in renting
and leasing real estate properties. Royal Blue filed a Chapter 11
petition (Bankr. S.D.N.Y. Case No. 21-10802) on April 26, 2021.
As of the Petition Date, the Debtor estimated between $1 million to
$10 million in assets, and between $10 million to $50 million in
liabilities. The petition was signed by Andrew Nichols, chief
restructuring officer.
Davidoff Hutcher & Citron LLP represents the Debtor as counsel.
Judge Hon. Lisa G. Beckerman oversees the case.
Elaine Shay was appointed as temporary receiver with respect to the
Debtor by order of the Supreme Court of New York on March 9, 2021.
RYAN ENVIRONMENTAL: Returns to Chapter 11 Bankruptcy
----------------------------------------------------
Ryan Environmental LLC, d/b/a Ryan Energy Services, filed for
chapter 11 protection in the Northern District of West Virginia.
According to court documents, Ryan Environmental estimates between
200 and 999 unsecured creditors. The petition states that funds
will be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Sec. 341(a) is slated for
June 23, 2022 at 10:00 a.m.
The Debtor's Chapter 11 Plan and Disclosure Statement are due by
Sept. 6, 2022.
About Ryan Environmental
Ryan Environmental LLC, doing business as Ryan Energy Services, is
a West Virginia-based environmental consultant.
Ryan Environmental previously sought Chapter 11 bankruptcy
protection (Bankr. N.D. W.Va. Case No. 20-00738) on Sept. 29, 2020.
The case was dismissed May 11, 2021.
Ryan Environmental sought Chapter 11 bankruptcy protection (Bankr.
N.D. W.Va. Case No. 22-00216) on May 5, 2022. In the petition
filed Clayton Rice, as managing member, Ryan Environmental
estimated assets between $1 million and $10 million and estimated
liabilities between $10 million and $50 million.
Martin P. Sheehan, of Sheehan & Associates, PLLC, is the Debtor's
counsel. Cava & Bankco, PLLC, is the Debtor's accountant.
SEDGWICK CLAIMS: Moody's Affirms 'B3' CFR, Outlook Stable
---------------------------------------------------------
Moody's Investors Service has affirmed the B3 corporate family
rating and B3-PD probability of default rating of Sedgwick Claims
Management Services, Inc. (Sedgwick). The rating agency has also
affirmed the B2 rating on Sedgwick's existing first-lien credit
facility and term loans. The rating outlook for Sedgwick is
stable.
RATINGS RATIONALE
According to Moody's, the affirmation of Sedgwick's ratings reflect
its position as the largest US based third party administrator
(TPA) of workers' compensation and other property and casualty
claims by revenue, diverse client base, broad product and
geographic spread, and strong historical organic revenue growth. As
a service provider to corporations, insurance companies and
governmental entities, Sedgwick benefits from long-term contracts,
recurring earnings, relatively high switching costs for clients,
and a somewhat variable cost structure. These strengths are
tempered by the company's high financial leverage, modest interest
coverage, and weak free-cash-flow-to-debt ratio.
For 2021, Sedgwick generated total revenue of $4 billion, with
strong organic growth of about 10% as well as acquisition driven
expansion. Sedgwick will generate continued healthy organic growth
in 2022 as service companies benefit from the mandatory nature of
claims processing and new growth from ancillary services, said
Moody's.
Moody's estimates that Sedgwick's pro forma debt-to-EBITDA is in
the range of 7.0x-7.5x, with (EBITDA - capex) coverage of interest
around 1.5x and a free-cash-flow-to-debt ratio in the low single
digits. These metrics include the rating agency's adjustments for
operating leases, pensions, run-rate earnings from acquisitions,
and certain non-recurring items.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The following factors could lead to an upgrade of Sedgwick's
ratings: (1) debt-to-EBITDA ratio below 6.0x, (2) (EBITDA - capex)
coverage of interest exceeding 2x, and (3) free-cash-flow-to-debt
ratio exceeding 4%.
The following factors could lead to a downgrade of Sedgwick's
ratings: (1) debt-to-EBITDA ratio remaining above 7.5x, (2) (EBITDA
- capex) coverage of interest below 1.2x, or (3)
free-cash-flow-to-debt ratio remaining below 2%.
Moody's has affirmed the following ratings for Sedgwick:
Corporate family rating at B3;
Probability of default rating at B3-PD;
$400 million backed senior secured first-lien revolving credit
facility maturing in December 2023 at B2 (LGD3);
$1.4 billion ($1.216 billion outstanding) senior secured first-lien
term loan maturing in September 2026 at B2 (LGD3);
$2.340 billion ($2.264 billion outstanding) senior secured
first-lien term loan maturing in December 2025 at B2 (LGD3);
The rating outlook for Sedgwick is stable.
The senior secured credit facilities are also available to Sedgwick
affiliate Lightning Cayman Merger Sub, Ltd.
Sedgwick also maintains an $890 million unsecured term loan
maturing December 2026 that was privately placed with lenders who
are not affiliated with the equity owners.
The principal methodology used in these ratings was Insurance
Brokers and Service Companies published in June 2018.
Sedgwick is the largest insurance claim service provider in the US
based on revenue. The company processes claims for a wide range of
insurance product lines including workers' compensation, general
liability and disability. It is also a leading global provider of
property insurance loss adjusting, claims management and other risk
management services to insurance and reinsurance companies,
self-insured corporations and government agencies. The company
operates in over 900 locations in 65 countries. Sedgwick generated
revenues of approximately $4 billion for 2021.
SENIOR CARE LIVING: Wins Cash Collateral Access Thru June 2
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida, Tampa
Division, authorized Senior Care Living VII, LLLC to use cash
collateral on an interim basis in accordance with the budget, with
a 10% variance.
The Debtor is permitted to use cash collateral until the earlier of
June 2, 2022, or the Debtor's ability to use cash collateral
terminates as the result of the occurrence of a Termination Event,
but only on the terms of the Interim Order. The Debtor's cash
collateral access will be limited solely to the amounts, times, and
categories of expenses listed in the Budget.
Validus Senior Living will remain as manager of the Debtor's
assisted living facility.
As adequate protection of the Trustee's interests in its
collateral, the Trustee will have a valid, perfected, and
enforceable replacement lien and security interest in all assets of
the Debtor existing on or after the Petition Date of the same type
as set forth in the Bond Documents.
The Debtor will provide, or will cause Validus to provide, the
Trustee with (a) a weekly census of residents residing at the ALF
and (b) a weekly summary of all receipts and disbursements as
compared to the Budget. The Weekly Reporting will be provided to
the Trustee by 5 p.m. E.T. on the second business day of each week
with respect to the week ending the prior Friday.
The Debtor will maintain insurance coverage for its property in
accordance with the obligations under the loan and security
documents with the Trustee. Debtor will provide proof of insurance
upon written request.
A termination event will be deemed to have occurred three days
after written notice sent by the Trustee to the Debtor, its
counsel, and the United States Trustee of the occurrence of any of
the following pursuant to the Order:
a. The Debtor fails to comply with the Budget (subject to the
Permitted Variance) and terms governing the Budget;
b. The Debtor terminates Validus as manager of the ALF and/or
fails to satisfy its postpetition payment obligations to Validus;
or
c. The Debtor fails to comply with, keep, observe, or perform
any of its agreements or undertakings under the Interim Order.
A further hearing on the matter is scheduled for June 2 at 2 p.m.
A copy of the order is available at https://bit.ly/3wmZPVL from
PacerMonitor.com.
About Senior Care Living VII
Senior Care Living VII, LLC sought Chapter 11 bankruptcy protection
(Bankr. M.D. Fla. Lead Case No. 22-00103) on Jan. 10, 2022, listing
up to $50 million in both assets and liabilities.
Judge Caryl E. Delano oversees the case.
Michael C. Markham, Esq., at Johnson Pope Bokor Ruppel & Burns, LLP
is the Debtor's legal counsel while SC&H Group, Inc. serves as the
Debtor's financial advisor.
SERVICE ONE: Trustee Seeks to Hire Operational Consultant
---------------------------------------------------------
Mark Weisbart, Subchapter V trustee for Service One, LLC seeks
approval from the U.S. Bankruptcy Court for the Eastern District of
Texas to hire Elizabeth Hastings, managing member of E-Capital
Advisors, LLC, as operational consultant.
The trustee requires an operational consultant to provide services
including customer relations, communications with vendors and
suppliers, and office oversight.
Ms. Hastings will receive a flat fee of $2,500 per week.
Ms. Hastings disclosed in a court filing that she is a
disinterested person as defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached at:
Elizabeth L. Hastings
5136 West Grove Drive
Dallas, TX 75248
Phone: (214) 789-5339
Email: E-CapitalAdvisors@outlook.com
About Service One
Service One, LLC specializes in construction, roofing, insurance
estimating and claims, construction and property management, and
renovation services. The company is based in Addison, Texas.
Service One filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. E.D. Texas Case No. 22-40503) on April 21,
2022, listing as much as $10 million in both assets and
liabilities. Mark A. Weisbart serves as Subchapter V trustee.
Christopher J. Moser, Esq., at Quilling, Selander, Lownds, Winslett
& Moser, PC and Lain, Faulkner & Co., P.C. serve as the Debtor's
legal counsel and accountant, respectively.
SERVICE ONE: Trustee Taps Lain, Faulkner & Co. as Accountant
------------------------------------------------------------
Mark Weisbart, Subchapter V trustee for Service One, LLC seeks
approval from the U.S. Bankruptcy Court for the Eastern District of
Texas to hire Lain, Faulkner & Co., P.C. as his accountants.
The firm's services include:
a) assisting the trustee in the analysis of tax and taxation
issues and in the filing of any necessary information and
compliance forms regarding taxes;
b) testifying at any hearings or trials if necessary; and
c) performing all other accounting services and financial
advice to the trustee in connection with the Debtor's Chapter 11
case.
The hourly rates charged by the firm for its services are as
follows:
Directors $385 - $500
Accounting Professionals $210 - $325
IT Professionals $280
Staff Accountants $175 - $255
Clerical and Bookkeepers $80 - $125
Kelly McCullough, director at Lain, Faulkner & Co., disclosed in a
court filing that the firm is a "disinterested person" as defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Kelly McCullough
Lain, Faulkner & Co., P.C.
400 N. St. Paul, Suite 600
Dallas, TX 75201
Phone: (214) 720-1929
About Service One
Service One, LLC specializes in construction, roofing, insurance
estimating and claims, construction and property management, and
renovation services. The company is based in Addison, Texas.
Service One filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. E.D. Texas Case No. 22-40503) on April 21,
2022, listing as much as $10 million in both assets and
liabilities. Mark A. Weisbart serves as Subchapter V trustee.
Christopher J. Moser, Esq., at Quilling, Selander, Lownds, Winslett
& Moser, PC and Lain, Faulkner & Co., P.C. serve as the Debtor's
legal counsel and accountant, respectively.
SIMPKINS & THOMPSON: Wins Interim Cash Collateral Access
--------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of West
Virginia authorized Simpkins & Thompson to use cash collateral in
accordance with its agreement with WesBanco Bank, Inc.
WesBanco is a secured creditor of the Debtor on account of various
mortgage obligations for properties in Cabell County, West
Virginia.
The total value of the WesBanco secured claim is $46,940.
The Debtor is not in default on its obligations to WesBanco,
including without limitation its obligation to make payments as
they become due under the terms of the mortgage loan agreements.
The Court held that the automatic stay is modified as to the
property to the extent that WesBanco is permitted to exercise its
foreclosure and other rights against the property in the event: (i)
the Debtor fails to cure a default under the terms of the deed of
trust, as modified by this order; (ii) the Debtor fails to insure
the property or allow such insurance to lapse; (iii) the Debtor
fails to follow the terms of the applicable Deed of Trust regarding
taxes for the properties, including letting a property proceed to a
tax sale; ; (iv) the Debtor's Chapter 11 petition is converted to a
Chapter 7 or the Debtor's Chapter 11 petition is dismissed and the
Debtor fails to pay in accordance with the agreement as set forth
in the Order; or (v) the Debtor proposes a plan which treats
WesBanco differently than set forth in the Order.
In the event the automatic stay is modified giving WesBanco the
right to exercise all rights and remedies granted to it under the
terms of the Contracts and applicable non-bankruptcy law, the
Debtor will make the property available within 24 hours of the
modification of the stay for an inspection of the property.
In order to provide WesBanco with adequate protection of its
security interest, the Debtor will continue to pay the balance of
$46,940 pursuant to the terms of the existing mortgage loan
obligations. In addition, the Debtor will strictly comply with all
terms of the mortgage loan agreements including, but not limited
to, those obligations regarding insurance coverage, use of the
property, payment of taxes and the maintenance thereof. The Debtor
will also permit a representative of WesBanco to periodically
inspect the property to verify its condition.
A copy of the order is available at https://bit.ly/3Pz6XGb from
PacerMonitor.com.
About Simpkins & Thompson
Simpkins & Thompson sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. W.Va. Case No. 22-30111) on April 28,
2022. In the petition signed by Arvin Thompson, manager, the Debtor
disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Judge B. McKay Mignault oversees the case.
Daniel Lattanzi, Esq., at Pepper and Nason is the Debtor's counsel.
SM WELLNESS: Moody's Affirms 'B3' CFR & Alters Outlook to Negative
------------------------------------------------------------------
Moody's Investors Service affirmed SM Wellness Holdings, Inc.'s
("Solis") B3 corporate family rating, B3-PD probability of default
rating, B2 senior secured rating on its first lien senior secured
facilities and Caa2 senior secured rating on its second lien
facilities. The outlook was changed to negative from stable.
"The negative outlook reflects high leverage sustained above 8x and
Solis's dependence on incremental debt to fund its development
pipeline," said Whitney Leavens, Moody's analyst. "An aggressive
financial policy, limited track record and active debt-funded
growth strategy heighten governance risks."
Affirmations:
Issuer: SM Wellness Holdings, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured 1st Lien Bank Credit Facility, Affirmed B2 (LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Affirmed Caa2
(LGD5)
Outlook Actions:
Issuer: SM Wellness Holdings, Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Solis's B3 corporate family rating is constrained by: (1) high
leverage sustained above 8x; (2) small scale (about $210 million in
revenues on a proportionate basis as of LTM-Dec 21) and geographic
concentration in Texas (accounting for almost two-thirds of sales);
(3) a narrow business focus on mammography, with around half of
revenues linked to voluntary screenings; and (4) ongoing execution
risk due to an active debt-funded growth strategy involving
acquisitions, joint ventures and de novos. The company benefits
from: (1) a tailored service offering focused on breast cancer
screening and associated recurring revenue streams, differentiating
its business model from multimodal diagnostic providers; (2) low
reimbursement risk and a solid payor profile, with limited exposure
to government plans; and (3) partnerships with strong healthcare
networks providing supportive platforms for expansion.
Solis has adequate liquidity. Sources total close to $45 million as
of Q1-22, consisting of cash on hand of about $15 million
(excluding cash held at JVs), $6 million available under its
delayed draw term loan and full availability under a $25 million
committed revolving credit facility (expires 2026). Uses of cash
through Q1-23 total close to $43 million, consisting of negative
free cash flow of about $40 million and $3 million in mandatory
term loan amortizations. The company also has flexibility around
the pace of deployment of development spend and discretionary
capex, and Moody's expect the company to reduce capex to ensure
liquidity remains adequate. The secured revolver is subject to a
springing first lien leverage covenant of 8x when more than 40%
drawn, with which Moody's expect the company to remain comfortably
in compliance. Solis has limited capacity to sell assets to raise
cash. The company has close to $25 million in seller notes with a
JV partner due in February 2023, with the option of forfeiting
repayment and unwinding its JV share in the absence of liquidity to
repay the note. In the absence of an additional capital injection,
Moody's would expect the company to forfeit the note.
Governance considerations include risks associated with private
equity ownership and aggressive financial policies that favor
shareholders, including high leverage. There is a short track
record under the company's debt-funded growth strategy, involving
ongoing execution risks.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Solis successfully executes its
growth strategy, evidenced by expanded scale and stable organic
growth. A demonstrated track record of positive free cash flow and
sustained Moody's-adjusted debt/EBITDA below 6x would also support
an upgrade.
The ratings could be downgraded if operating performance
deteriorates, liquidity weakens (including sustained negative free
cash flow before acquisitions), or debt to EBITDA is sustained
above 8x.
Headquartered in Addison, Texas, Solis is a provider of mammography
services, operating over 90 centers across eight states dedicated
to annual screenings, diagnostic mammograms, breast ultrasounds,
biopsies and bone density screenings. Solis is majority owned by
private equity sponsor Madison Dearborn Partners.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
STONERIDGE PARKWAY: Property Sale Proceeds to Fund Plan Payments
----------------------------------------------------------------
Stoneridge Parkway LLC, filed with the U.S. Bankruptcy Court for
the District of Nevada a Disclosure Statement for the Plan of
Reorganization dated May 17, 2022.
Stoneridge was formed on August 3, 2015. On Dec. 16, 2015, the
Debtor acquired the Silverstone Ranch Community Golf Course,
located at 8600 Cupp Drive, Las Vegas, NV 89131 (the "Property" or
the "Golf Course") from the prior owner, Desert Lifestyles, LLC
("DLS").
The Debtor focused on developing and executing a reorganization
strategy to: (a) maximize the value of its Estate; (b) address the
factors that led to the bankruptcy filing; and (c) enable the
Debtor to emerge from chapter 11 as a stronger, more viable
company. Based on the analysis, it is the Debtor's conclusion that
restoring the Property to a 27-hole golf course is not profitable,
not feasible and will not maximize the value of the Debtor's estate
to pay its creditors.
Accordingly, the Debtor intends on selling the entire property, all
272 acres to the highest bidder for development with drought
tolerant amenities, including walking trails, playgrounds, tennis
courts and basketball courts. The Debtor has been working with
homebuilders and potential buyers for the Property. The method of
transfer and how the Debtor will effectuate the sale of the
Property is set forth in the Restructuring Transactions.
Through the Adversary Proceeding and as set forth in the
Restructuring Transactions, the Debtor submits that the Golf Course
Covenants can be stripped from the Property, and the Property can
be sold free and clear of the Golf Course Covenants for
development. The Debtor intends to accomplish the removal of the
Golf Course Covenants from the Property through the Adversary
Proceeding, pursuant to NRS 116 or through the doctrine of changed
circumstances.
Separately, the Property is zoned for the construction of up to
1,900 homes. Currently, the Silverstone community has 1,526 homes.
Based on its analysis of the Property and discussions with
homebuilders and potential buyers, the Debtor believes the Property
does not need any zoning changes. In order to build homes, however,
the City of Las Vegas and its related agencies will have to approve
a housing map, and any proposed building. In addition, the Debtor
is working with the Las Vegas Valley Water District to repair and
protect the drainage system and flood channel on the Property. The
Debtor expects that if the Golf Course Covenants are removed,
approval of construction will be obtained by the winning bidder for
the Debtor's Property.
Class 6 consists of the Unsecured Claims of Silverstone Community
Homeowners with Homes Adjacent to the Property. Each Holder of the
Allowed Class 6 Claims shall be Impaired and shall receive a pro
rata distribution from the sale of the Debtor's Property in an
amount to be determined from the sale.
Class 7 consists of the Unsecured Claims of Silverstone Community
Homeowners with Homes Not Adjacent to the Property. Each Holder of
the Allowed Class 7 Claims shall be Impaired and shall receive a
pro rata distribution from the sale of the Debtor's Property in an
amount to be determined from the sale.
Class 8 consists of General Unsecured Claims. Allowed General
Unsecured Creditors shall receive, upon the later of: (i) the
closing of the sale of the Debtor's Property; or (ii) the 90th day
after the Effective Date of the Plan, their pro rata distribution
from the sale of the Debtor's Property in an amount to be
determined from the sale, after payment of all Allowed secured,
administrative and priority claims of the Debtor.
In this Chapter 11 Case, the Debtor is a California limited
liability company. As all Allowed claims are being paid in full, on
the Effective Date of the Plan, the Debtor's principal, Danny
Modaberpour, will retain 100% of the equity interests in the
Reorganized Debtor.
Prior to, on or after the Effective Date, and pursuant to the Plan,
the Debtor and the Reorganized Debtor shall enter into the
restructuring transactions (the "Restructuring Transactions") and
shall take any actions as may be necessary or appropriate to affect
a restructuring of its businesses or the overall organizational
structure of the Reorganized Debtor. The Restructuring Transactions
shall include one or more sales, mergers, consolidations,
restructurings, conversions, dissolutions, transfers or
liquidations as may be determined by the Debtor or the Reorganized
Debtor to be necessary or appropriate.
Pursuant to the Plan, and as the Debtor's principal Restructuring
Transaction, the Debtor seeks to sell the entire property (all 272
acres) pursuant to Section 363, 1123 and 1129 of the Bankruptcy
Code, in conjunction with the Plan Confirmation process. The Debtor
will extensively market the Property up to the bid deadline, which
is 7 days prior to the Confirmation Hearing and will mail notice of
the Debtor's proposed auction sale and bid procedures to the top 30
commercial brokers in Las Vegas, Nevada.
A full-text copy of the Disclosure Statement dated May 17, 2022, is
available at https://bit.ly/3yOSWhK from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
Samuel A. Schwartz, Esq.
Schwartz Law, PLLC
601 East Bridger Avenue
Las Vegas, NV 89101
Tel: 702-385-5544
Fax: 702-201-1330
Email: saschwartz@nvfirm.com
About Stoneridge Parkway
Stoneridge Parkway, LLC, a company in Reseda, Calif., filed a
petition for Chapter 11 protection (Bankr. D. Nev. Case No.
22-10540) on Feb. 16, 2022, listing up to $50 million in both
assets and liabilities. Danny Modaberpour, president, signed the
petition.
Judge August B. Landis oversees the case.
The Debtor tapped Schwartz Law, PLLC as legal counsel.
TALEN ENERGY: They Need to End Coal Plant Fight, Say Utilities
--------------------------------------------------------------
Rick Archer of Law360 reports that a group of Pacific Northwest
utilities are asking the Texas bankruptcy judge overseeing Talen
Energy Supply's Chapter 11 case to lift the stay of litigation
involving the electricity retailer to allow them to sort out a
dispute over control of a Montana power plant they mutually own.
In a motion filed Wednesday, May 18, 2022, the four utilities said
they need to be able to continue the litigation involving Talen in
order to break a yearlong "logjam" produced by Montana state law
that has prevented them from arbitrating their dispute over the
possibility of shutting down the plant in question.
About Talen Energy
Allentown, Pennsylvania-based Talen Energy Corp. is an independent
power producer founded in 2015. Riverstone Holdings LLC completed
its acquisition of the remaining 65% stake of Talen Energy in 20216
for $5.2 billion.
Talen Energy Corporation, through subsidiary Talen Energy Supply
LLC, is one of the largest competitive power generation and
infrastructure companies in North America. Through subsidiary
Cumulus Growth, TEC is developing a large-scale portfolio of
renewable energy, battery storage, and digital infrastructure
assets across its expansive footprint. On the Web:
https://www.talenenergy.com/
TES owns and/or controls approximately 13,000 Megawatts of
generating capacity in wholesale U.S. power markets, principally in
the Mid-Atlantic, Texas and Montana. Woodlands, Texas-based TES
runs 18 power generation facilities, at eight of which rely on
natural gas to make electricity.
Talen Energy Supply, LLC, and 71 affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 22-90054) on May 9,
2022. The Hon. Marvin Isgur is the case judge.
Talen Energy Corporation (TEC), its Cumulus Growth subsidiary, and
TES' LMBE subsidiaries are excluded from the in-court process.
TES has retained Weil Gotshal & Manges LLP as its legal advisor,
Evercore as its investment banker and Alvarez & Marsal as its
financial advisor for its restructuring. Kroll is the claims
agent.
TEC is represented by PJT Partners as financial advisors and Vinson
& Elkins as legal counsel.
Cumulus Growth is represented by Ardea Partners and DH Capital as
its investment bankers, and Gibson Dunn as legal counsel.
The Consenting Noteholders are represented by Kirkland & Ellis LLP
and Rothschild & Co US Inc.
TELINTEL LTD: Wins Continued Cash Collateral Access Thru May 31
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, authorized Telintel, Ltd. to use cash
collateral on an interim basis, in accordance with the budget, with
a 10% variance.
The Debtor is permitted to continue using cash collateral to
operate in the ordinary course of its business as provided in the
Debtor's Revised Operating Budget, with a 10% variance through the
earlier of (i) May 31, 2022, or (ii) the occurrence of an Event of
Default. The Operating Budget may be modified at any time during
the Cash Collateral Term without further Court order, upon written
agreement between the Debtor and Decathlon Alpha III, L.P.
As adequate protection for the use of cash collateral, alleged
secured creditors are granted a post-petition security interest and
lien in, to and against any and all assets of the Debtor to the
extent of the diminution resulting from use of cash collateral, to
the same extent and priority the Alleged Secured Creditor held a
properly perfected pre-petition security interest in such assets.
The replacement liens and security interests granted to the Alleged
Secured Creditors will be deemed attached, perfected, and
enforceable against the Debtor and all other persons including
without limitation any subsequent Trustee (if appointed under
Chapter 7 or Chapter 11 of the Bankruptcy Code), without the filing
of any financing statements or other compliance with non-bankruptcy
law.
These events constitute an "Event of Default:"
a. Failure of the Debtor to timely comply with any obligation
contained in the Order; or
b. Entry of an order converting or dismissing the case or
appointing an operating trustee or examiner.
A further cash collateral hearing is scheduled for May 19 at 1:30
p.m.
A copy of the order and the Debtor's budget for May 22 is available
at https://bit.ly/3PxnlHw from PacerMonitor.com.
The Debtor projects $179,449 in gross profit and $162,861 in total
expenses.
About Telintel Ltd
Telintel, Ltd., a Weston, Fla.-based provider of telecommunication
services, filed a petition for Chapter 11 protection (Bankr. S.D.
Fla. Case No. 21-22154) on Dec. 30, 2021, listing $751,038 in
assets and $4,996,862 in liabilities. Mario Acosta, chief
executive
officer, signed the petition.
Judge Peter D. Russin oversees the case.
The Debtor tapped Thomas L. Abrams, Esq., at Gamberg & Abrams as
legal counsel and Kaufman Rossin & Co., PA as accountants.
TNBI INC: May Tap $120,000 of DIP Loan from Aisling
---------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
TBNI, Inc. to, among other things, use cash collateral on an
interim basis and obtain postpetition financing.
The Debtor is authorized to borrow from Aisling Investments LP, up
to $120,000 in postpetition debtor-in-possession financing, subject
to the Budget and in the business judgment of the Debtor. The
Debtor has obtained commitment of up to $500,000, of which $125,000
will be utilized on a first interim basis (unsecured) and an
additional $120,000 on a second interim basis.
The DIP Facility will incur interest at a rate of 5% per annum
through the Maturity Date. The DIP Facility will mature on the
earlier to occur of the Effective Date of the Plan and the
expiration of any Remedies Notice Period.
The Debtor has argued its ability to maintain its property and
administer the Chapter 11 Case requires continued use of cash
collateral and the incurrence of the DIP Facility.
The Court said the DIP Facility may be used during the Specified
Period by the Debtor to: (a) finance its working capital needs and
for any other general corporate purposes; and (b) pay related
transaction costs, fees, liabilities and expenses and other
administration costs incurred in connection with and for the
benefit of the Chapter 11 Case. Nothing in the Second Interim Order
will authorize (A) any disposition of any assets of the Debtor or
its estate, including, without limitation, any disposition of its
interests or rights in any intellectual property or software
assets, or (B) the Debtor's use of any DIP Facility proceeds except
as permitted in the Interim Order and in accordance with the
Budget.
As adequate protection, the Prepetition Secured Parties are granted
valid, binding, continuing, enforceable, fully perfected, first
priority senior replacement liens on and security interests in any
and all tangible and intangible pre- and post-petition property of
the Debtor.
The Adequate Protection Liens will be junior only to the Carve-Out,
the superpriority lien as and when granted to the Final DIP
portion, as and when approved, and any Permitted Encumbrance. The
Adequate Protection Liens will otherwise be senior to all other
security interests in, liens on, or claims against any of the
Adequate Protection Collateral.
The Adequate Protection Amount due to the Prepetition Secured
Parties will constitute an allowed superpriority administrative
expense claim against the Debtor in the amount of any diminution in
value of the Prepetition Collateral, including cash collateral.
These events constitute an "Event of Default:"
a. The Adequate Protection Liens cease to be in full force and
effect, or cease to create a perfected security interest in, and
lien on, the Prepetition Collateral purported to be created
thereby;
b. The failure of the Debtor to perform or comply with any of
the terms, provisions, conditions, covenants, or obligations under
the Interim Order, including all Budget Covenants;
c. The Court enters an order granting relief from the
automatic stay applicable under section 362 of the Bankruptcy Code
authorizing an action by a lienholder with respect to assets of the
Debtor on which such lienholder has a lien with an aggregate value
in excess of $50,000;
d. The entry of an order: (a) appointing a trustee, receiver
or examiner with expanded powers, including to manage the Debtor's
business, with respect to the Debtor, (b) dismissing the Chapter 11
Case, (c) converting the Chapter 11 Case to a case under chapter 7
of the Bankruptcy Code, in each case where such order has become a
final order not subject to appeal, or (d) terminating the Debtor's
exclusivity period under section 1121 of the Bankruptcy Code for
any reason whatsoever;
e. The Debtor, after the Petition Date, takes any action, or
as to insiders, permits any action, that would result in an
"ownership change" as such term is used in 26 U.S.C. section 382;
or
f. The Debtor breaches or fails to comply with the terms of
the Interim Order, the DIP Promissory Note, the Final Order or the
Plan, in any material respect.
The final hearing on the matter is scheduled for June 8, 2022 at 10
a.m.
A copy of the order is available at https://bit.ly/39C4OZN from
PacerMonitor.com.
About TNBI Inc.
TNBI Inc. is the creator of a mobile application for using the most
advanced laundromat payment system. The Debtor sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case
No. 22-10343) on April 14, 2022. In the petition signed by James
Garrity, chief executive officer, the Debtor disclosed $717,963 in
assets and $2,787,751 in liabilities.
Judge J. Kate Stickles oversees the case.
Ronald S. Gellert, Esq., at Gellert Scali Busenkell and Brown, LLC
is the Debtor's counsel.
TUMBLEWEED TINY: Seeks OK of Cash Collateral Deal Thru June 30
--------------------------------------------------------------
Tumbleweed Tiny House Company, Inc., asks the U.S. Bankruptcy Court
for the District of Colorado for entry of an order approving its
Motion for Approval of Stipulated Order Authorizing Debtor's Use of
Cash Collateral for the Period of January 1, 2022 through June 30,
2022.
The Debtor desires to use the post-petition proceeds from the
pre-petition accounts receivable or post-petition proceeds from
pre-petition contracts to preserve and maintain its business as a
going concern.
Prior to the Petition Date, the Debtor and Janine Sagert were
parties to a Loan Agreement, pursuant to which the Debtor received
$150,000 from Sagert. In exchange, the Debtor is required to make
interest only payments of $1,000 on the last day of each month.
Under paragraph 7 of the Loan Agreement, the Debtor grants Sagert a
security interest in 75% of the Debtor's assets up to the first
$200,000 of asses in addition to other things.
Sagert filed a UCC Financing Statement with the Colorado Secretary
of State on February 7, 2019 to perfect any security interests
granted under the Loan Agreement. Other creditors have filed UCC
Financing Statement against the Debtor or its assets and the Debtor
will attempt to resolve any additional claims regarding cash
collateral through separate motions or stipulations.
Under the proposed stipulated order:
a. The Debtor will be authorized to use cash collateral for
the period from January 1, 2022 through June 30, 2022 or pursuant
to the terms of a confirmed plan of reorganization.
b. Sagert will be granted a replacement lien and security
interest upon the Debtor's post-petition assets with the same
priority and validity as Sagert's pre-petition liens to the extent
of the Debtor's post-petition use of the proceeds of Sagert's
pre-petition collateral.
c. To the extent the Adequate Protection Liens prove to be
insufficient, Sagert will be granted superpriority administrative
expense claims under section 507(b) of the Bankruptcy Code.
d. The Debtor will pay Sagert $1,000 per month by the last day
of each month beginning on January 31, 2022 through June 30, 2022
or as set forth in a confirmed plan of reorganization.
e. The Debtor will provide Sagert by the 21st of each month a
copy of the Debtor's monthly operating report for the previous
month.
A copy of the motion is available for free at
https://bit.ly/3PvuDLK from PacerMonitor.com.
About Tumbleweed Tiny House Company
Tumbleweed Tiny House Company, Inc., a manufacturer of tiny house
RVs, sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D. Colo. Case No. 20-11564) on March 4, 2020. At the time
of filing, the Debtor estimated between $500,000 and $1 million in
assets and between $1 million and $10 million in liabilities.
Judge Kimberley H. Tyson oversees the case.
Wadsworth Garber Warner Conrardy, P.C., and Gerard Fox Law, P.C.,
serve as the Debtor's bankruptcy counsel and special counsel,
respectively. Stockman Kast Ryan + Company is the Debtor's
accountant.
UDP LABS: Case Summary & Three Unsecured Creditors
--------------------------------------------------
Debtor: UDP Labs, Inc.
16615 Lark Ave., Ste 201
Los Gastos, CA 95032
Business Description: UDP Labs, Inc. is a biometric monitoring
start-up company.
Chapter 11 Petition Date: May 19, 2022
Court: United States Bankruptcy Court
Northern District of California
Case No.: 22-50439
Debtor's Counsel: Keith McDaniels, Esq.
KELLER BENVENUTTI KIM LLP
650 California Street, 19th Floor
San Francisco, CA 94108
Tel: 415-496-6723
Email: kmcdaniels@kbkllp.com
Total Assets: $4,096,000
Total Debts: $4,681,663
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Carl Hewitt, chief technology officer.
A copy of the Debtor's list of three unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/7UKKQ6I/UDP_Labs_Inc__canbke-22-50439__0002.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/7JEHGDA/UDP_Labs_Inc__canbke-22-50439__0001.0.pdf?mcid=tGE4TAMA
WESCO AIRCRAFT: Moody's Rates New First Lien Notes Due 2026 'Caa2'
------------------------------------------------------------------
Moody's Investors Service affirmed its ratings for Wesco Aircraft
Holdings, Inc.'s (doing business as "Incora"), including the Caa3
Corporate Family Rating and the Caa3-PD/LD (/LD appended)
Probability of Default Rating. Moody's also assigned Caa2 ratings
to the company's new senior secured first lien notes due 2026 and
Ca ratings to the company's new senior secured second lien notes
due 2027. Concurrently, Moody's downgraded the ratings on the 8.5%
senior secured notes due 2024 to Ca from Caa3 and also downgraded
the ratings on the 9% senior secured notes due 2026 to Ca from Caa3
as these notes no longer benefit from a security package. Moody's
also affirmed the Ca ratings on the company's senior unsecured
notes due 2027. Moody's changed the ratings outlook to stable from
negative.
The rating actions follow Incora's recent recapitalization under
which the company issued new first lien senior secured notes due
2026 and new second lien senior secured notes due 2027. Incora also
amended the indentures of its existing 8.5% senior secured notes
due 2024 and 9% senior secured notes due 2026, such that these
notes are now unsecured and rank pari passu with the company's
existing unsecured notes. Concurrently, Incora received $250
million of cash from new incremental notes and also extended the
maturity of over $450 million in debt. The company also reduced its
cash interest expense by issuing debt with pay-in-kind interest
features. Moody's believes the transaction constitutes a distressed
exchange and, as such, Moody's will append an "LD" to the
post-transaction PDR to indicate a limited default, which will be
removed after 3 business days.
"The rating actions balance the benefits of the transaction -- a
partially extended capital structure and liquidity enhancements --
against Incora's still very high leverage and 2024 debt maturities,
which raise the likelihood of another restructuring event or
transaction that Moody's would consider to be a distressed exchange
in the next few years", said Moody's Lead Analyst, Eoin Roche.
The following is a summary of the rating actions:
Assignments:
Issuer: Wesco Aircraft Holdings, Inc.
Senior Secured 1st Lien Regular Bond/Debenture, Assigned Caa2
(LGD3)
Senior Secured 2nd Lien Regular Bond/Debenture, Assigned Ca
(LGD4)
Affirmations:
Issuer: Wesco Aircraft Holdings, Inc.
Corporate Family Rating, Affirmed Caa3
Probability of Default Rating, Affirmed Caa3-PD /LD (/LD
appended)
Senior Unsecured Regular Bond/Debenture, Affirmed Ca (LGD5)
Downgrades:
Issuer: Wesco Aircraft Holdings, Inc.
Senior Unsecured Regular Bond/Debenture (changed from Senior
Secured), Downgraded to Ca (LGD5) from Caa3 (LGD3)
Outlook Actions:
Issuer: Wesco Aircraft Holdings, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The Caa3 corporate family rating reflects Incora's very high
financial leverage, lingering headwinds in commercial aerospace
markets, and a mixed track record of execution. As of December
2021, debt-to-EBITDA was well in excess of 20x and interest expense
significantly exceeded EBITDA for the year. The short-dated nature
of a portion of Incora's capital structure ($600 million debt
becomes due in 2024) and a growing debt burden due to payment in
kind (PIK) features on certain debt necessitates a significant
increase in earnings in the next two years in order to sustain the
current capital structure and allow the company to refinance
maturing debt.
Moody's recognizes that demand for Incora's hardware products in
commercial aerospace will strengthen and that demand in military
markets is likely to remain relatively healthy. Moody's expects
this demand to translate to sales and earnings growth over the next
few years. That said, Moody's expects that debt-to-EBITDA will
remain above 10x until at least 2024 and that the company will not
generate any meaningful free cash flow. Incora's ability to improve
inventory turns, particularly for its legacy Wesco hardware
business, will be an important determinant of the company's ability
to generate more cash in future years. Moody's recognizes Incora's
position as a leading services provider and distributor to the
aerospace and defense industries and the stability of the company's
defense and chemical end-markets.
The stable outlook reflects Moody's expectations that leverage will
improve from earnings growth but remain very high. The outlook also
reflects the partial extension of Incora's capital structure and
the higher cash balances following the recent recapitalization.
Moody's expects Incora to have adequate liquidity over the next 12
months. Pro forma cash balances as of March 2022 are around $280
million and there are no principal obligations due until 2024.
Moody's expects flat to modestly negative free cash generation
during 2022 and does not anticipate meaningful free cash generation
until at least 2025. Incora has a $475 million five-year
asset-backed revolver that expires in 2024. As of December 2021,
the company had drawn down $420 million. The revolver contains a
minimum availability requirement of $48 million, essentially
limiting any additional availability on the revolver. The senior
secured notes are covenant-lite. Other alternative sources of
liquidity are limited given the significant amount of secured debt
relative to the company's assets.
The $1.3 billion 10.5% senior secured first lien notes are rated
Caa2, one notch above the Caa3 CFR reflecting their priority status
within the capital structure after the $475 million ABL. The Ca
rating on the $472 million 13.125% senior secured second lien notes
is the same as the Ca ratings on senior unsecured debt. This
reflects the large amount of priority debt at the top of Incora's
capital structure and Moody's expectation that recovery rates for
the junior lien and subordinated debt would be limited in a
distressed exchange.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include sustained earnings
growth and material deleveraging, improving liquidity and sustained
positive free cash generation.
Factors that could lead to a downgrade include an inability to
sustainably grow earnings, an inability to improve inventory turns
or expectations of weakening liquidity.
Wesco Aircraft Holdings, Inc., headquartered in Fort Worth, TX, is
a leading distributor and provider of supply chain management
services to the global aerospace industry. Services include the
distribution of C-class hardware, chemical and electrical products
and supply chain management services. Wesco reported revenue of
$1.8 billion for the twelve months ended December 2021.
The principal methodology used in these ratings was Aerospace and
Defense published in October 2021.
ZOTEC PARTNERS: S&P Alters Outlook to Stable, Affirms 'B-' ICR
--------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' rating on Carmel, Ind.-based
revenue cycle management (RCM) provider Zotec Partners LLC and
revised the outlook to stable from positive. Issue-level ratings
are unchanged.
S&P said, "The stable outlook reflects our expectations that the
company will refinance its term loan and produce positive cash
flows over the next two quarters, despite some margin compression.
We believe the maturing capital structure allows for little cushion
to manage business or financial market related setbacks. Margins
were temporarily elevated in 2021 due in part to a vaccination
management contract. We expect a compression to margins from before
the COVID-19 pandemic with the winding down of revenue stemming
from that contract and elevated corporate expenses primarily due to
the building of new headquarters, investments in infrastructure and
security, and other expenses normalizing. Furthermore, cash flow
deficits for the past two quarters, largely due to difficulties
with a large client contract ramp-up, lead us to expect a free
operating cash flow (FOCF) deficit in 2022. Nevertheless, we
continue to expect the company's significant cash balance (about
$61.5 million as of March 2022) will be sufficient to cover cash
flow deficits in 2022 and that EBITDA in 2023 will be sufficient to
cover mandatory expenses, even without the availability of a
revolver.
"We do not believe the transition of the large client contract
indicates underlying weakness, nor do we expect it to significantly
affect Zotec's immediate growth prospects. We believe the
transition of the large client contract back to Optum reflects the
leadership changes at the client and not underperformance at Zotec.
However, the transition highlights that the RCM industry may be
less sticky than we originally assessed. Despite the pending
transition, we project that Optum, UnitedHealth Group's diversified
health services company, which is expected to account for about 18%
of revenue in 2022, will replace the lost revenue. Nevertheless, we
believe there could be risk to this expectation, especially as
Optum plans to close its acquisition of large RCM player Change
Healthcare by December.
"We expect leverage to remain above 5x in 2022 and 2023, with cash
flow deficits in 2022 , and Zotec to maintain adequate liquidity
even as the revolver becomes current. While we expect revenue to
decline in 2022, this is largely due to 2021 revenue being
bolstered by the vaccination management contract. We expect
low-single-digit percentage organic growth from underlying volume
growth, new clients, and continued volume from Optum in 2022 and
2023. We expect suppressed margins in 2022 due to an unusually weak
first quarter from challenges with the large client integration
referenced earlier. While we expect a cash flow deficit by year-end
2022 due to ongoing investments in labor and security, we expect
margins will ramp up in the second half as integration-related
struggles subside. We expect full-year margins to be about 20%,
improving to about 23% in 2023, burdened by capitalized software
development costs. We expect the company to turn cash flow positive
on a quarterly basis in the second half of 2022, but with a FOCF
deficit of $10 million for the full year. By 2023, with the
investments in infrastructure, security, and personnel, as well as
integration issues behind it, we expect Zotec to generate $20
million of FOCF.
"The stable outlook reflects our expectations that Zotec is able to
refinance its term loan over the next couple of quarters, EBITDA
compression will be limited, and that it will produce positive cash
flows over the upcoming two quarters.
"We could lower the rating if the company falls short of organic
growth and cash flow expectations, leading us to expect cash flow
deficits over an extended period and lowering our confidence that
it will be able to refinance its debt."
While unlikely in the near term, S&P could raise the rating if:
-- The company successfully refinances;
-- EBITDA margins increase as investments subside; and
-- S&P views the core business as stable with strong visibility.
In this case, it would also need the company to demonstrate a
commitment to maintaining leverage below 5x on a sustained basis.
ESG credit indicators: E2, S2, G5
Governance factors are a very negative consideration in S&P's
credit rating analysis of Zotec Partners LLC. This primarily
reflects Zotec's family-controlled ownership, a board structure
that lacks any independent members, and aggressive shareholder
distributions that could hinder stakeholders.
[^] BOND PRICING: For the Week from May 16 to 20, 2022
------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
Accelerate Diagnostics AXDX 2.500 58.500 3/15/2023
Accuray Inc ARAY 3.750 86.154 7/15/2022
Allegiance Bank/Texas ABTX 5.250 76.732 12/15/2027
American Financial
Group Inc/OH AFG 3.500 100.165 8/15/2026
BPZ Resources Inc BPZR 6.500 3.017 03/01/2049
Basic Energy Services Inc BASX 10.750 2.705 10/15/2023
Basic Energy Services Inc BASX 10.750 2.705 10/15/2023
Buckeye Partners LP BPL 6.375 80.532 1/22/2078
Buffalo Thunder
Development Authority BUFLO 11.000 50.000 12/09/2022
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 33.337 8/15/2026
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 6.625 20.005 8/15/2027
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 6.625 20.160 8/15/2027
Diebold Nixdorf Inc DBD 8.500 47.046 4/15/2024
EnLink Midstream Partners LP ENLK 6.000 72.023 N/A
Energy Conversion Devices ENER 3.000 7.875 6/15/2013
Energy Transfer LP ET 6.250 77.150 N/A
Enterprise Products
Operating LLC EPD 4.875 83.825 8/16/2077
Envision Healthcare Corp EVHC 8.750 33.629 10/15/2026
Envision Healthcare Corp EVHC 8.750 35.453 10/15/2026
Exela Intermediate LLC /
Exela Finance Inc EXLINT 11.500 35.103 7/15/2026
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 66.250 7/15/2023
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 65.377 7/15/2023
Exela Intermediate LLC /
Exela Finance Inc EXLINT 11.500 35.127 7/15/2026
Expedia Group Inc EXPE 3.600 100.311 12/15/2023
Expedia Group Inc EXPE 3.600 100.308 12/15/2023
GNC Holdings Inc GNC 1.500 0.864 8/15/2020
GTT Communications Inc GTTN 7.875 7.750 12/31/2024
GTT Communications Inc GTTN 7.875 9.000 12/31/2024
General Electric Co GE 4.200 78.750 N/A
General Electric Co GE 4.000 72.387 N/A
General Mills Inc GIS 3.700 101.050 10/17/2023
INNOVATE Corp VATE 7.500 99.850 06/01/2022
Intercontinental Exchange ICE 0.700 97.496 6/15/2023
Lannett Co Inc LCI 4.500 26.960 10/01/2026
MAI Holdings Inc MAIHLD 9.500 29.928 06/01/2023
MAI Holdings Inc MAIHLD 9.500 29.928 06/01/2023
MAI Holdings Inc MAIHLD 9.500 29.928 06/01/2023
MBIA Insurance Corp MBI 12.304 11.797 1/15/2033
MBIA Insurance Corp MBI 12.304 11.797 1/15/2033
Macquarie Infrastructure
Holdings LLC MIC 2.000 95.530 10/01/2023
Macy's Retail Holdings LLC M 6.700 99.485 7/15/2034
Macy's Retail Holdings LLC M 6.700 99.378 7/15/2034
Macy's Retail Holdings LLC M 6.700 99.378 7/15/2034
Morgan Stanley MS 1.800 78.179 8/27/2036
Nine Energy Service Inc NINE 8.750 61.663 11/01/2023
Nine Energy Service Inc NINE 8.750 62.147 11/01/2023
Nine Energy Service Inc NINE 8.750 62.415 11/01/2023
OMX Timber Finance
Investments II LLC OMX 5.540 0.783 1/29/2020
Plains All American
Pipeline LP PAA 6.125 79.580 N/A
Renco Metals Inc RENCO 11.500 24.875 07/01/2003
Revlon Consumer Products REV 6.250 18.409 08/01/2024
RumbleON Inc RMBL 6.750 44.095 01/01/2025
Sears Holdings Corp SHLD 8.000 2.050 12/15/2019
Sears Holdings Corp SHLD 6.625 1.752 10/15/2018
Sears Holdings Corp SHLD 6.625 1.929 10/15/2018
Sears Roebuck Acceptance SHLD 7.000 1.125 06/01/2032
Sears Roebuck Acceptance SHLD 7.500 0.915 10/15/2027
Sears Roebuck Acceptance SHLD 6.750 0.529 1/15/2028
Sears Roebuck Acceptance SHLD 6.500 1.040 12/01/2028
TPC Group Inc TPCG 10.500 35.621 08/01/2024
TPC Group Inc TPCG 10.500 35.689 08/01/2024
Talen Energy Supply LLC TLN 9.500 48.037 7/15/2022
Talen Energy Supply LLC TLN 9.500 49.384 7/15/2022
Talos Petroleum LLC SGY 7.500 95.887 5/31/2022
TerraForm Power Operating TERP 4.250 100.471 1/31/2023
TerraForm Power Operating TERP 4.250 99.640 1/31/2023
TerraVia Holdings Inc TVIA 5.000 4.644 10/01/2019
Trousdale Issuer LLC TRSDLE 6.500 26.500 04/01/2025
Wayfair Inc W 0.375 98.150 09/01/2022
Wesco Aircraft Holdings Inc WAIR 13.125 38.468 11/15/2027
Wesco Aircraft Holdings Inc WAIR 8.500 54.000 11/15/2024
fuboTV Inc FUBO 3.250 30.750 2/15/2026
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
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 is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA.
Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante,
Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon,
Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and
Peter A. Chapman, Editors.
Copyright 2022. All rights reserved. ISSN: 1520-9474.
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 subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***