/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/220722.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 22, 2022, Vol. 26, No. 202 Headlines 10193 FLANDERS: Court Approves Disclosure Statement 1933 ASSOCIATES: Disclosures Inadequate, Sterling Says 626 HOSPICE: Patient Care Ombudsman Files First Interim Report A&V HOLDINGS: Moody's Lowers CFR to B3, Outlook Still Negative AGWAY FARM & HOME: U.S. Trustee Appoints Creditors' Committee ALPHA RE ASSETS: Case Summary & Two Unsecured Creditors AVEANNA HEALTHCARE: Moody's Alters Outlook on 'B3' CFR to Negative BARRETT AND PEREZ: Taps Tiffany Ruiz of Mid South as Realtor BED BATH: Moody's Lowers CFR to Caa2 & Alters Outlook to Negative BELLE GROVE: Taps Tiffany Ruiz of Mid South Residential as Realtor BENJAMIN EYE CARE: Gets Approval to Hire Bankruptcy Attorneys BK AUTUMN: Amends Plan to Include Mr. Cooper's Unsecured Claim BRODIE HOLDINGS: Kaiser Trustee Files Liquidating Plan CHULA FREIGHT: Taps Tyler, Bartl & Ramsdell as Legal Counsel COLONIAL GATE: Reaches Resolution with Wilmington CREDITO REAL: Headed to Liquidation and Dissolution in Mexico CS GROUP: Taps Dore Rothberg McKay as Legal Counsel D & L REAL ESTATE: Seeks to Hire RHM Law as Bankruptcy Counsel DING TRANS: Taps Law Offices of Alla Kachan as Legal Counsel DING TRANS: Taps Wisdom Professional Services as Accountant ELDERHOME LAND: Seeks to Expand Scope of Gordon & Simmons' Services ELWOOD ENERGY: S&P Downgrades ICR to 'BB-', Outlook Negative ENJOY TECHNOLOGY: Seeks to Hire Stretto as Administrative Advisor FEH INC: S&P Cuts ICR to 'BB-' on Increased Leverage; Outlook Neg FLEXIBLE FUNDING: Court Confirms Amended Plan GEO GROUP: Moody's Cuts CFR to Caa2 & Alters Outlook to Stable HARRELL REALTY: Case Summary & Two Unsecured Creditors HILLENBRAND INC: Linxis Transaction No Impact on Moody's Ba1 CFR INFOW LLC: Texas Court Denies Jones' Newest Sanctions Delay Bid INTERMEDIA HOLDINGS: Moody's Alters Outlook on B3 CFR to Negative ION GEOPHYSICAL: Amends Unsecured Claims Pay Details ISABEL ENTERPRISES: LLC Debtor Needs Financing to Exit Chapter 11 JAB OF ROCKLAND: Sept. 19 Debtor to File Plan and Disclosure JCB TRUCKING: Files Amendment to Joint Plan & Disclosures JNS LLC: Amends DFA Claims Pay Details KAH HOSPICE: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable KENWOOD COMMONS: Unsecureds Could Recover Up to 100% in Plan KS OWNER: Kings' Shops Mall in Hawaii Has August 29 Auction MEDICAL ACQUISITION: Unsecureds to be Paid in Full with Interest NEW YORK OPTICAL: Unsecureds Owed $755K to Get 20% in Plan ODYSSEY CONTRACTING: Court Directs Chapter 11 Trustee Appointment ORBCOMM INC: S&P Lowers ICR to 'B-' on Weaker Earnings PANHANDLE EASTERN: Moody's Affirms Ba1 Rating on Jr. Sub. Bond PARK VIEW: Case Summary & Seven Unsecured Creditors POMMEL MEADOWS: U.S. Trustee Unable to Appoint Committee PRIME ECO: Aug. 30 Hearing on Plan & Disclosures Set PROFRAC HOLDINGS II: Moody's Raises CFR to B2, Outlook Stable PWM PROPERTY: Mortgage Trustees Want Default Interest RESTORATION HARDWARE: S&P Alters Outlook to Neg., Affirms 'BB' ICR SHAMROCK FINANCE: Unsecureds to Get Share of Net Asset Proceeds SIGNAL PARENT: Moody's Cuts CFR to B3 & Alters Outlook to Stable SOUTHWIRE CO: S&P Upgrades To 'BB+' ICR, Outlook Stable ST. JOSEPH ENERGY: Moody's Alters Outlook on Sec. Loans to Stable TRUTH DATA: Case Summary & Six Unsecured Creditors UPSTREAM NEWCO: Moody's Affirms B3 CFR & Alters Outlook to Stable US TOBACCO: SSG Advises Business in Chapter 11 Reorganization VOYAGER DIGITAL: U.S. Trustee Appoints Creditors' Committee ********* 10193 FLANDERS: Court Approves Disclosure Statement --------------------------------------------------- Judge Katherine A. Constantine has entered an order approving 10193 Flanders, LLC's Disclosure Statement dated June 29, 2022. A hearing to consider confirmation of the plan will be held on Sept. 8, 2022 at 10:00 a.m., in Courtroom 8W, Diana E. Murphy United States Courthouse, 300 South Fourth Street, Minneapolis, Minnesota 55415. The hearing may be continued by notice at the hearing without further written notice. Seven days prior to the hearing is the last day to timely serve and file an objection. Five days prior to the hearing is fixed as the last day to timely file the ballots to accept or reject the plan. About 10193 Flanders 10193 Flanders LLC is a Minnesota Limited Liability Corporation formed for the purpose of holding a real estate asset. It has operated as a single asset real estate entity since inception. 10193 Flanders filed a Chapter 11 petition (Bankr. D. Minn. Case No. 21-41779) on Oct. 5, 2021. The Debtor estimated assets and debt of $500,001 to $1 million. The Debtor's counsel: John D. Lamey, III Lamey Law Firm, P.A. Tel: (651) 209-3550 E-mail: bankrupt@lameylaw.com 1933 ASSOCIATES: Disclosures Inadequate, Sterling Says ------------------------------------------------------ Sterling Townhomes LLC, a secured creditor of the bankruptcy estates of 933 Associates LP and affiliate 2123 Partners, LP, filed an objection to each Debtor's Amended Disclosure Statement in Respect to Debtor's Amended Chapter 11 Plan of Reorganization Dated June 3, 2022. Sterling says the Amended Disclosure Statements should not be approved because they do not contain adequate information within the meaning of Section 1125(a)(1). In Section IV of the Amended Disclosure Statements, the Debtors state that the Chapter 11 Plans will be funded by a "Plan Contribution" by Myron Berman in the approximate amount of $700,000 for the 1933 Debtor and $1,250,000 for the 2123 Debtor if the Debtors can cure-and-reinstate the subject Promissory Notes after the entry of Judgments thereon in September 2020. According to the Debtors, Myron Berman intends to sell some of his real estate interests in order to obtain the funds necessary to make the "Plan Contribution". The Debtors then identify one partnership in which Myron Berman allegedly holds a 61% interest (BP Real Estate Investors) and one property (the Warfield Property) that the partnership allegedly purchased through two other entities (Warfield and Brilliantine). Myron Berman expects to receive at least $5 million when the Warfield Property is sold on June 15, 2022 and will use those funds to make the "Plan Contribution". Significantly, however, the Debtors have wholly failed to disclose or provide adequate information concerning (i) a pending lawsuit challenging Myron Berman's ownership interest in BP Real Estate Investors; (ii) whether the Warfield Property was sold on June 15, 2022 or whether the closing date was extended and what the new closing date is; and (iii) whether Myron Berman received the anticipated proceeds from the sale of the Warfield Property. According to Sterling, the Amended Disclosure Statements also do not contain adequate information because the Projections are wildly optimistic when compared to the receiver reports since January 2021. The Debtors do not explain how they derived the Projections. Even then, assuming the Merger Doctrine does not apply, there does not appear to be debt service factored into the calculations. If the Mortgages are reinstated and the Debtors pay Sterling under the Notes at the non-default rate of interest then in the first year the Debtors will have net income of almost negative $60,000 even using the optimistic Projections. Of course, Sterling submits these Projections are not realistic and the Debtors' income would be much less and therefore in even worse shape. The Chapter 11 Plans are patently unconfirmable. Finally, in Section IV of the Amended Disclosure Statements, the Debtors state that they conducted an initial investigation to identify potential avoidance claims and neither they nor their counsel know of, or have reason to know of, claims against third parties including Corey Berman. This statement is astonishing in light of this Court's recognition during a hearing on June 1, 2022 of the undisputed fact of Corey Berman's unlawfully diversion of tenant security deposits and rents from the Debtors and direction to the Debtors to promptly file amended schedules to identify claims against him. To date, the Debtors have failed to comply with the Court's direction. Moreover, the Amended Disclosure Statements make a passing reference in Section 2 that Sterling's action against Corey Berman "will be enjoined as of the Effective Date of the Plan[s]." The Amended Disclosure Statements should not be approved due to the Debtors' failure to disclose or provide adequate information concerning the Debtor's rights or interests vis-a-vis Corey Berman. Attorneys for Sterling Townhomes LLC: Robert F. Elgidely, Esq. Joseph A. Caneco, Esq. FOX ROTHSCHILD LLP 101 Park Avenue, 17th Floor New York, NY 10178 Tel: (212) 878-7900 E-Mail: relgidely@foxrothschild.com jcaneco@foxrothschild.com - and - David Giles, Esq. 2000 Market Street, 20th Floor Philadelphia, Pennsylvania 19103 Tel: (215) 299-2000 About 1933 Associates 1933 Associates LP, a company that is primarily engaged in renting and leasing real estate properties, filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 21-42981) on Nov. 30, 2021, listing $3,021,000 in total assets and $1,547,467 in total liabilities. Affiliate 2123 Partners, LP, also signed the Chapter 11 petition (Bankr. E.D.N.Y. Case No. 21-42983). Corey M. Berman, sole partner, signed the petitions. Judge Jil Mazer-Marino oversees the cases. Rosenberg, Musso & Weiner, LLP serves as the Debtors' counsel. 626 HOSPICE: Patient Care Ombudsman Files First Interim Report -------------------------------------------------------------- Tamar Terzian, the Court-appointed Patient Care Ombudsman for 626 Hospice, Inc., filed with the U.S. Bankruptcy Court for the Central District of California a first interim report regarding the Debtor's health care facility. The PCO discussed with the Debtor the status of each current patient and is currently assisting the Debtor in assuring proper transfer of each patient to different agencies. In compliance with the federal privacy requirements, the PCO cannot disclose any individually identifiable health information that could distinguish a patient directly or could provide a reasonable basis to do so. Further, as with all regulatory/compliance work, the PCO does not assume liability for the Debtor's compliance obligations under state and federal law and any and all proposed or implementing regulations. Moreover, while the PCO may use auditing tools/guidelines that are employed by certification agencies and auditors, the PCO does not certify the Debtor's compliance with regulatory standards. As of the filing of this bankruptcy case, the Debtor had approximately 10 patients in its care. Of the 10 patients, as of the date of this report, six patients were discharged and are currently under the care of a different hospice provider or facility. As for the six patients, two patients transferred to Good Faith Hospice effective July 5, 2022; one patient is with Home Health Kaiser; one patient was hospitalized; and two are no longer terminally ill. Each of these patients is under continuous family care and supervised by their doctors. The PCO reported that the Debtor is currently working to transfer the remaining four patients. In the meantime, the patients are at home under the care of family members. The Debtor has notified each patient of the bankruptcy and has recommended three facilities for the patient to consider transfer. Until the date of transfer of each patient, the Debtor continues to provide services for the patient, but anticipates that all patients will be transferred by the end of July 2022. A copy of the Ombudsman Report is available for free at https://bit.ly/3B8U5BV from PacerMonitor.com. The Ombudsman may be reached at: Tamar Terzian EPPS & COULSON, LLP 1230 Crenshaw Boulevard, Suite 200 Torrance, CA 90501 Telephone: (213) 929-2390 Facsimile: (213) 929-2394 E-mail: tterzian@eppscoulson.com About 626 Hospice Inc. 626 Hospice Inc. is a hospital and health care company. 626 Hospice filed a petition for relief under Subchapter V of Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-12904) on May 25, 2022. In the petition filed by Natasha Gill as CEO, 626 Hospice Inc. listed estimated liabilities between $500,000 and $1 million. The case is assigned to the Honorable Bankruptcy Judge Ernest M. Robles. The Law Offices of Yeznik O. Kazandjian, is the Debtor's counsel. Arturo Cisneros has been appointed as Subchapter V trustee. Tamar Terzian is the Court-appointed Patient Care Ombudsman. A&V HOLDINGS: Moody's Lowers CFR to B3, Outlook Still Negative -------------------------------------------------------------- Moody's Investors Service downgraded A&V Holdings Midco, LLC's (dba "AVI-SPL" or "AVI") corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD, and senior secured credit facility rating to B3 from B2. The outlook remains negative. The following ratings/assessments are affected by the action: Ratings Downgraded: Issuer: A&V Holdings Midco, LLC Corporate Family Rating, Downgraded to B3 from B2 Probability of Default Rating, Downgraded to B3-PD from B2-PD Senior Secured Bank Credit Facility, Downgraded to B3 (LGD3) from B2 (LGD4) Outlook Actions: Issuer: A&V Holdings Midco, LLC Outlook, Remains Negative RATINGS RATIONALE "While demand drivers remain favorable across all of AVI's end-markets, continuing supply chain constraints, inflationary pressures, renewed covid lockdowns in China and geopolitical risks could hinder its business recovery," said Moody's AVP-Analyst Oleg Markin. "Although AVI's debt leverage remains only modestly high, at mid-4.0x as of June 30, 2022, supply chain challenges have put significant pressure on its ability to complete projects and collect revenue, greatly straining its liquidity profile," added Markin. The downgrade of the CFR to B3 from B2 reflects Moody's concerns around liquidity tightening throughout 2022 given prevailing macroeconomic uncertainty, including global supply chain challenges and an inflationary environment. AVI faces several operating challenges as a large number of projects have been delayed due to the company's inability to secure certain products from its suppliers, which prevents it from completing projects. Deferred projects have slowed revenue recognition and elevated inventory levels. Combined with higher operating costs, these factors have resulted in significant free cash flow deficits, which, in turn, has led to increased revolver usage in the first half of 2022, straining its liquidity profile. AVI has implemented several operating initiatives in fiscal 2022 to improve backlog turns, identify billing opportunities and institute price increases to offset higher costs. Management expects meaningful free cash flow generation once the supply chain clears in the next several months. However, Moody's is concerned that market conditions could remain challenging in the near-to-medium term and, given the company's high cost of debt capital and significant debt amortization requirements, that free cash flow could remain pressured over the next 12-18 months. Moody's expects AVI will continue to rely upon its revolving credit facility for working capital needs. AVI's B3 CFR reflects Moody's anticipation of little or negative free cash flow over the next 12 to 18 months if supply chain disruptions do not abate, despite the company's only moderately high debt-to-EBITDA leverage (Moody's adjusted), in the mid-4.0x range as of June 30, 2022. Moody's has concerns around the company's liquidity tightening given the supply chain challenges and inherently low audio visual ("AV") and video conferencing ("VC") solutions industry profit margins that Moody's anticipates will remain in a mid-single digits range. The rating is also constrained by the company's concentrated business focus on the fragmented and competitive global AV and VC solutions market, with revenue that is largely project-based and relationship-dependent. The company is also exposed to event risks under private equity ownership, including for debt-funded acquisitions and shareholder distributions. Nonetheless, AVI's rating is supported by the company's solid presence within its target market with strong vendor affiliations and technical AV and VC expertise. Historically high net promoter scores from a diversified base on long-standing clients as well as favorable long term trends toward outsourcing of digital workplace services, which are driven by the growing technical complexity of AV and VC solutions and evolving technology needs, also provide credit support. Moody's also acknowledges management's track record of integrating past acquisitions and realizing cost synergies. ESG considerations have a negative credit impact on AVI. Its opportunistic financial strategies, including a history of debt-funded acquisitions, create highly negative governance risks. AVI also exhibits moderately negative social risks arising from the dependence on highly skilled technical and engineering talent characteristic of the sector broadly. Moody's anticipates AVI may have a less than adequate liquidity profile over the next 12-15 months. At June 30, 2022, Moody's expects approximately $30 million of balance sheet cash and $20 million drawn under the company's $50 million revolving credit facility due 2025. Given current operating headwinds, Moody's expects AVI will generate breakeven to negative free cash flow that will not fully fund the required annual term loan amortization of approximately $22 million, paid quarterly. Liquidity is at risk for further deterioration, depending on the duration of the supply chain challenges. There are no financial maintenance covenants under the term loan. The revolving credit facility is subject to a springing maximum first lien net leverage ratio covenant of 5.6x if the amount revolving loans exceeds 35% ($17.5 million) of the revolving credit facility. Due to revolver usage, the covenant is now in effect. Moody's expects the company will maintain adequate covenant compliance over the next 12-15 months. The negative outlook reflects the uncertainty around the timing of the resolution of supply chain challenges and management's effectiveness at managing working capital and improving its liquidity profile. Weak global economic growth coupled with resurgence of new covid variants could also delay the recovery and further weaken AVI's liquidity profile. The outlook could return to stable if the company replenishes its liquidity and demonstrates sustained positive free cash generation. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The ratings could be downgraded if the company's liquidity further weakens, including sustained negative free cash flow generation, increased revolver usage, or if financial covenant compliance becomes less certain. Given the negative outlook, a positive rating action is not considered likely in the near term. Over the longer term, the ratings could be upgraded if AVI demonstrates sustained organic revenue growth and profit margin expansion, while also improving its liquidity profile. Quantitatively, free cash flow-to-debt (Moody's adjusted) sustained above 5% and maintenance of good liquidity would be supportive of an upgrade. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. AVI-SPL, headquartered in Tampa, FL and majority-owned by affiliates of private equity sponsor Marlin Equity Partners, is a digital workplace solutions provider whose services include design, engineering, procurement, integration and installation of audio-visual and video collaboration systems and managed services for the operation and maintenance of AV and VC systems to North American enterprise, public sector and SMB clients. Moody's expects revenue of $1.3 billion in 2022. AGWAY FARM & HOME: U.S. Trustee Appoints Creditors' Committee ------------------------------------------------------------- The U.S. Trustee for Regions 3 and 9 on July 18 appointed an official committee to represent unsecured creditors in the Chapter 11 case of Agway Farm & Home Supply, LLC. The committee members are: 1. The Scotts Company, LLC Attention: David S. Robinson 7873 Lakeshore Ct. Parker, CO 80134 Phone: 716-553-2157 Email: dave.robinson@scotts.com 2. Animal Health International, Inc. Attention: Heather Kayser P.O. Box 1418 Loveland, CO 80539 Phone: 970-371-9400 Email: heather.kayser@pattersonvet.com 3. Wildlife Sciences, LLC Attention: William J. Gleason 11400 K-Tel Drive, Ste. A Hopkins, MN 55343 Phone: 952-238-1111 Email: bill.gleason@wildlifesciences.net 4. Capital Forrest Products Attention: Bryant R. O'Kane 222 Severn Ave., Bldg. 14, Suite 100 Annapolis, MD 21403 Phone: 800-255-3405 Email: bokane@capitalforest.com 5. Gallagher North America, Inc. Attention: Julie McGovern 5005 NW 41st Street Riverside, MO 64150 Phone: 816-500-9029 Email: Julie.mcgovern@gallagher.com 6. Hub Group, Inc. Attention: Geoffrey F. De Martino 2002 Hub Group Way Oak Brook, IL 60523 Phone: 630-271-3623 Email: gdemartino@hubgroup.com 7. American Wood Fibers, Inc. Attention: Owen Ward 9740 Patuxent Woods Drive, Suite 500 Columbia, MD, 21046 Phone: 410-290-8700 Email: oward@awf.com Official creditors' committees serve as fiduciaries to the general population of creditors they represent. They may investigate the debtor's business and financial affairs. Committees have the right to employ legal counsel, accountants and financial advisors at a debtor's expense. About Agway Farm & Home Supply Agway Farm & Home Supply LLC -- https://www.agway.com/ -- is a one-stop shop for lawn, garden, bird, pet and farm products. It is based in Richmond, Va. Agway Farm & Home Supply sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10602) on July 6, 2022, listing $10 million to $50 million in both assets and liabilities. Jay Quickel, president and chief executive officer, signed the petition. Jeffrey R. Waxman, Esq., at Morris James, LLP is the Debtor's counsel. ALPHA RE ASSETS: Case Summary & Two Unsecured Creditors ------------------------------------------------------- Debtor: Alpha Re Assets One LLC 50 Cragwood Road, Suite 225 South Plainfield, NJ 07080 Business Description: The Debtor is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: July 20, 2022 Court: United States Bankruptcy Court District of New Jersey Case No.: 22-15736 Debtor's Counsel: David Stevens, Esq. SCURA WIGFIELD, HEYER, STEVENS & CAMMAROTA LLP 1599 Hamburg Turnpike Wayne, NJ 07470 Tel: 201-490-4777 Email: dstevens@scura.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Parag P. Parikh as member. A full-text copy of the petition containing, among other items, a list of the Debtor's two unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/IXEVZWA/Alpha_Re_Assets_One_LLC__njbke-22-15736__0001.0.pdf?mcid=tGE4TAMA AVEANNA HEALTHCARE: Moody's Alters Outlook on 'B3' CFR to Negative ------------------------------------------------------------------ Moody's Investors Service affirmed all of its ratings assigned to Aveanna Healthcare LLC including the B3 Corporate Family Rating, B3-PD Probability of Default Rating, B2 ratings on the senior secured revolving credit facility, term loan and delayed term loan, and the Caa2 rating on the senior secured second lien term loan. At the same time, Moody's downgraded the Speculative Grade Liquidity Rating to SGL-3 from SGL-2. Moody's changed the outlook to negative from stable. The rating action follows the company's announcement on July 19, 2022 that it will be cutting its fiscal year 2022 EBITDA guidance to no less than $150 million from previously a range of $190 million to $205 million. As a result, Moody's expects Aveanna's financial leverage to be in excess of 10 times for fiscal year 2022. The change in outlook to negative from stable reflects Moody's expectation that labor issues including wage inflation and recruitment challenges will continue to pressure the company's earnings and cash flow, resulting in very high financial leverage and a weaker liquidity position. The affirmation of Aveanna's B3 Corporate Family Rating reflects Aveanna's role as a provider of critical pediatric services and Moody's expectation that demand for the company's private duty nursing services will remain solid. The downgrade of the Speculative Grade Liquidity rating to SGL-3 from SGL-2 reflects the material decline in earnings that will hinder cash flows over the next 12 to 18 months, but Moody's view that liquidity will remain adequate due in part to significant availability under the $200 million revolving credit facility. Social risk considerations related to human capital are relevant to the rating action. Aveanna faces operational headwinds stemming from labor shortages, specifically with the recruitment and retainment of nurses in a highly competitive market, resulting in substantial increased costs via wage inflation. Affirmations: Issuer: Aveanna Healthcare LLC Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Secured 1st Lien Term Loan, Affirmed B2 (LGD3) Senior Secured 1st Lien Revolving Credit Facility, Affirmed B2 (LGD3) Senior Secured 1st Lien Delayed Draw Term Loan, Affirmed B2 (LGD3) Senior Secured 2nd Lien Term Loan, Affirmed Caa2 (LGD5) Downgrades: Issuer: Aveanna Healthcare LLC Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Outlook Actions: Issuer: Aveanna Healthcare LLC Outlook, Changed To Negative From Stable RATINGS RATIONALE Aveanna's B3 CFR reflects its very high pro forma financial leverage with debt/EBITDA that Moody's anticipates increasing to approximately 10 times in fiscal year 2022 (using Moody's standard adjustments) but declining to approximately 9 times in fiscal year 2023. Moody's anticipates ongoing nursing labor shortages resulting in upward wage inflation that will pressure Aveanna's earnings. Moody's believes that the company could continue to pursue an aggressive acquisition growth strategy, including acquisitions that are likely to be funded with incremental debt, as evidenced by the presence of a $200 million delayed draw term loan in the capital structure. The rating also reflects Aveanna's highly concentrated payor mix with significant Medicaid exposure, and meaningful geographic concentration in the states of California, Texas, and Pennsylvania. The rating benefits from Aveanna's leading niche position in the otherwise fragmented market of pediatric home health services, where it provides critical services to children and families, as well as its expanding presence in the home health and hospice segment. Moody's believes that the company's strategy to grow its home health and hospice businesses will benefit the credit profile through greater scale, increased service line, payor diversity and faster growth. Social and governance considerations are material to Aveanna's credit profile. Aveanna will remain exposed to the social risks of providing health care and related services in private duty nursing and therapy to a highly vulnerable patient base often comprised of sick and disabled children who need near around-the-clock care. There is ongoing legislative, political, media and regulatory focus on ensuring the delivery of medically appropriate care to this patient base. Private duty nursing, home health and hospice companies that bill Medicare and Medicaid are subject to a significant number of complex regulations. Any weakness in providing healthcare services - real or perceived - can negatively affect Aveanna's reputation and ability to attract and sustain clients at profitable rates. With respect to governance, Aveanna's private equity investors' significant ownership interest will result in meaningful governance risk related to financial strategy and risk management. Moody's anticipates the strategy to supplement organic growth with material debt-funded acquisitions could persist, given the very fragmented nature of the market. The Speculative Grade Liquidity Rating of SGL-3 reflects Moody's expectation that Aveanna will maintain adequate liquidity, demonstrated by low cash balances and negative free cash flow that is offset by majority availability under its $200 million revolving credit facility that does not expire until 2026. Moody's expects Aveanna will generate negative $45 to $55 million of free cash flow over the next 12 months. However, excluding repayment of deferred payroll taxes of approximately $25 million to the government, Moody's estimates normalized free cash flow of negative $20 to $30 million. Moody's expects Aveanna to maintain sufficient covenant cushion of at least 30 percent with the springing first lien net leverage covenant on the revolver, if triggered. Aveanna's senior secured first lien credit facility, comprised of a $200 million revolving credit facility expiring 2026, $860 million term loan due 2028, and $200 million delayed draw term loan due 2028, is rated B2, one notch above the B3 Corporate Family Rating. This reflects the benefit of a layer of loss absorption provided by the $415 million second lien term loan due 2029, which is rated Caa2. The outlook is negative, reflecting the potential for a downgrade if labor challenges continue to result in deterioration of operating performance. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if Aveanna experiences significant reimbursement reductions and/or further wage pressures. Ratings could be downgraded if Aveanna pursues more aggressive financial policies including significant debt-funded acquisitions. Further weakening of liquidity or sustained negative free cash flow could also lead to a downgrade. The ratings could be upgraded if Aveanna successfully grow its home health and hospice business, thereby further diversifying its geographic and payor mix. Quantitatively, debt/EBITDA sustained below 6.0x could support an upgrade. The company would also need to materially improve its liquidity position to support an upgrade. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. Headquartered in Atlanta, Georgia, Aveanna Healthcare LLC, is a leading provider of pediatric skilled nursing and therapy services, home health and hospice services, as well as medical solutions, such as enteral nutrition, respiratory therapy, and medical supply procurement. Aveanna completed an initial public offering in April 2021. As of March 31, 2022, private equity investors Bain Capital and J. H. Whitney retain a significant ownership interest in the company. Aveanna generated revenues of approximately $1.7 billion for the last twelve month period ended April 2, 2022. BARRETT AND PEREZ: Taps Tiffany Ruiz of Mid South as Realtor ------------------------------------------------------------ Barrett and Perez Construction, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Tennessee to hire Tiffany Ruiz, a realtor at Mid South Residential, LLC, to find and negotiate with potential buyers in connection with the sale of its real properties. Ms. Ruiz will receive a commission equal to 5 percent of the purchase price. As disclosed in court filings, Ms. Ruiz is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Ms. Ruiz can be reached at: Tiffany Ruiz Mid South Residential, LLC 10862 Hwy 51 South, #6 Atoka, TN 38004 Phone: +1 901-837-7511 About Barrett and Perez Construction Barrett and Perez Construction, LLC is a Millington, Tenn.-based company that operates in the residential building construction industry. Barrett and Perez filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. W.D. Tenn. Case No. 22-21799) on May 9, 2022, listing $833,875 in assets and $1,004,922 in liabilities. James E. Bailey, III serves as Subchapter V trustee. The case is assigned to Judge Denise E. Barnett. Toni Campbell Parker, Esq., at the Law Offices of Toni Campbell Parker is the Debtor's counsel. BED BATH: Moody's Lowers CFR to Caa2 & Alters Outlook to Negative ----------------------------------------------------------------- Moody's Investors Service downgraded Bed Bath & Beyond Inc.'s corporate family rating to Caa2 from B2, its probability of default rating to Caa2-PD from B2-PD and its senior unsecured notes rating to Caa3 from B3. The speculative grade liquidity rating was also downgraded to SGL-4 from SGL-2. The outlook was changed to negative from stable. The downgrades reflect the impact of Bed Bath's steep decline in revenues and EBITDA on its liquidity, free cash flow and credit metrics. Also considered are the challenges Bed Bath faces to restore its profitability. Inventory levels are not only elevated and misaligned with sales trends but are overweighted to private label product which must be cleared and replaced with national brands in the face of weaker consumer demand. Additionally, the downgrades reflect governance considerations which include the company's rapid departure of its CEO and Chief Merchandising Officer, the completion of its $1 billion accelerated share repurchase program with $40 million of share repurchases in the first quarter of 2022 despite the company's weak operating performance and the ineffectiveness of its turnaround strategy to meet the continuing pressures on Bed Bath's operations and credit metrics. The downgrade of its speculative grade liquidity rating to SGL-4 (weak liquidity) reflects Bed Bath's reduced cash balances following its share repurchases at a time when free cash flow is expected to be significantly negative in fiscal 2022 due to high working capital usage and weak operating performance. As a result, Bed Bath will increase its reliance on its $1 billion asset based revolving credit facility ("ABL") which will result in limited excess capacity in the upcoming quarters. Bed Bath's ABL expires in August 2026 but its maturity will spring to May 1, 2024 if more than $50 million of the 2024 notes are still outstanding on such date. Bed Bath's credit impact score has been lowered to CIS-5 from CIS-3 and the governance IPS has been lowered to G-5 from G-3 acknowledging Bed Bath's aggressive share repurchase program combined with management's inability to effectuate its operational turnaround and manage inventory levels effectively which have resulted in its weak liquidity and very high leverage. Downgrades: Issuer: Bed Bath & Beyond Inc. Corporate Family Rating, Downgraded to Caa2 from B2 Probability of Default Rating, Downgraded to Caa2-PD from B2-PD Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-2 Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3 (LGD5) from B3 (LGD4) Outlook Actions: Issuer: Bed Bath & Beyond Inc. Outlook, Changed To Negative From Stable RATINGS RATIONALE Bed Bath's Caa2 CFR reflects its weak liquidity, very high leverage and the challenges it faces to turnaround its operating performance. For the LTM period ended May 28, 2022, debt/EBITDA was 9.7x and EBIT/interest was -1.6x. For the same period, Bed Bath generated free cash flow deficits of $722 million. The company's operational challenges have continued to accelerate which has weighed heavily on its profitability and liquidity. Interim senior management has hired consultants to support Bed Bath in its efforts deliver on its operational turnaround, which include inventory, cash management and balance sheet optimization. However, operating performance is expected to weaken further over the course of 2022 as the company must clear excess inventory while continuing to contend with supply chain and inflation challenges. Bed Bath's liquidity is weak as working capital usage has increased from longer product lead times, higher in transit inventory, and a drop off in consumer demand which has left inventories imbalanced. Nonetheless, the company continues to look at strategic alternatives for its buybuy BABY operations which has sales in excess of $1.4 billion and a could pose a meaningful source of additional liquidity. Bed Bath faces a $285 million notes maturing in 2024 and a significant improvement in profitability will be needed to return to a sustainable capital structure. The negative outlook reflects Moody's expectation for continued pressure on profitability which reflects the lack of progress in its turnaround efforts as it contends with a challenging consumer environment for the home goods category. The outlook also reflects the need to refinance its 2024 maturity which increases the risk of a distressed exchange and its need to enhance its liquidity profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be downgraded to the extent that its operating efforts do not result in consistent operational improvement over the near term, market share erosion is sustained, liquidity deteriorates for any reason or the risk of a distressed exchange or financial restructuring increases. An upgrade would require that the company maintains adequate liquidity and makes significant progress in its operational initiatives which results in positive free cash flow and market share stabilization while EBIT/interest is sustained above 1.0x. Headquartered in Union, NJ, Bed Bath & Beyond Inc. is an omni-channel retailer selling a wide assortment of domestic merchandise and home furnishings which operates under the names Bed Bath & Beyond, Harmon, Harmon Face Values or Face Values, buybuyBABY, and Decorist. LTM revenues for the period ending May 28, 2022 were approximately $7.4 billion. The principal methodology used in these ratings was Retail published in November 2021. BELLE GROVE: Taps Tiffany Ruiz of Mid South Residential as Realtor ------------------------------------------------------------------ Belle Grove Home Builders, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Tennessee to hire Tiffany Ruiz, a realtor at Mid South Residential, LLC, to find and negotiate with potential buyers in connection with the sale of its real properties. Ms. Ruiz will receive a commission equal to 5 percent of the purchase price. As disclosed in court filings, Ms. Ruiz is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Ms. Ruiz can be reached at: Tiffany Ruiz Mid South Residential, LLC 10862 Hwy 51 South, #6 Atoka, TN 38004 Phone: +1 901-837-7511 About Belle Grove Home Builders Belle Grove Home Builders, LLC filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. W.D. Tenn. Case No. 22-21811) on May 9, 2022, listing up to $1 million in assets and up to $500,000 in liabilities. James E. Bailey, III serves as Subchapter V trustee. Judge M. Ruthie Hagan presides over the case. The Law Offices of Toni Campbell Parker serves as the Debtor's counsel. BENJAMIN EYE CARE: Gets Approval to Hire Bankruptcy Attorneys ------------------------------------------------------------- Benjamin Eye Care, LLC received approval from the U.S. Bankruptcy Court for the Northern District of Illinois to employ attorneys to handle its Chapter 11 case. The attorneys are Gregory Stern, Esq., Monica O'Brien, Esq., Dennis Quaid, Esq., and Rachel Sandler, Esq. The legal services to be provided by the attorneys include: (a) reviewing assets, liabilities, loan documentation, executory contracts and other relevant documentation; (b) preparing list of creditors, list of 20 largest unsecured creditors, schedules and statement of financial affairs; (c) giving legal advice with respect to the Debtor's powers and duties in the operation and management of its financial affairs; (d) assisting in the preparation of schedules, statement of affairs and other necessary documents; (e) preparing legal papers; (f) negotiating with creditors and other parties in interest, and attending court hearings, meetings of creditors and meetings with other parties in interest; (g) reviewing proofs of claim and solicitation of creditors' acceptances of plan; and (h) performing all other legal services for the Debtor. The attorneys will bill these hourly rates: Gregory K. Stern $550 Dennis E. Quaid $550 Monica C. O'Brien $500 Rachel S. Sandler $385 As disclosed in court filings, the attorneys do not represent interests adverse to the Debtor or to the estate in the matters upon which they are to be engaged. The attorneys can be reached at: Gregory K. Stern, Esq. Dennis E. Quaid, Esq. Monica C. O'Brien, Esq. Rachel S. Sandler, Esq. 53 West Jackson Boulevard, Suite 1442 Chicago, IL 60604 Phone: (312) 427-1558 Email: greg@gregstern.com About Benjamin Eye Care Benjamin Eye Care, LLC -- https://benjamineyecare.com/ -- offers personalized attention, compassionate care and excellence in eye care. Benjamin Eye Care LLC filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 22-07349) on June 30. 2022. In the petition filed by Mark Benjamin, as manager, the Debtor estimated assets between $100,000 and $500,000 and estimated liabilities between $1 million and $10 million. Neema T Varghese has been appointed as Subchapter V trustee. Gregory Stern, Esq., Monica O'Brien, Esq., Dennis Quaid, Esq., and Rachel Sandler, Esq., are the Debtor's bankruptcy attorneys. BK AUTUMN: Amends Plan to Include Mr. Cooper's Unsecured Claim -------------------------------------------------------------- BK Autumn 701 LLC submitted a Second Amended Disclosure Statement in connection with its Second Amended Plan dated July 18, 2022. The Debtor filed its Proposed Plan of Reorganization seeking to provide a basis for resolving outstanding claims against the Debtor through a refinancing of the property located at 1482 Bryant Ave., Bronx, NY 10460 ("Subject Property"). The Plan will accomplish its objectives through the repayment of certain of the Debtor's obligations mainly through the Debtor's future earnings and proceeds from certain litigation which the Debtor has or will be commencing. The Debtor believes that creditors will receive a higher overall return under the provisions of the Plan than other alternatives, particularly liquidation of all of the Debtor's assets. The Debtor will be obtaining exit financing from Manhattan Bridge Capital, Inc., ("Manhattan Bridge") in order to refinance the Subject Property and fund its Plan of Reorganization. The key terms are as follows: The loan is for four hundred and twenty five thousand dollars ($425,000) for twelve months at 8%. Two thousand Seven Hundred dollars ($2,700) of the loan proceeds will be for a construction draw (8 draws, $300 per draw). The loan will be personally guaranteed by Etai Vardi and Elliot Ambalo. Manhattan Bridge will take a first position lien on the Subject Property; the loan is also subject to Manhattan Bridge obtaining clear title; the owner's insurance must name the lender as a lender loss payee; final review of each purchase by Manhattan Bridge's underwriting and clearance department; and adequate notice of the closing date, time and place. Class 2 consists of the unsecured portion of Mr. Cooper's claim in the amount of $412,346.08. This amount shall be paid pro-rata at 2%. The funds to pay this shall come from the funds contributed by the Debtor's interest holders. The estimated payout to Mr. Cooper on account of its unsecured claim shall be $8,246.92. Class 3 consists of the Secured Claim of the New York City Water Board by virtue of its lien on the Subject Property for unpaid water bills in the amount of $8,970.60. On June 28, 2022, the Debtor filed a motion to reclassify this claim from secured to unsecured. In the event this motion is granted Class 2 shall be deemed unsecured. The Debtor will pay the NYC Water Board pro rata at 2% on account of its unsecured claim. The estimated payout to the NYC Water Board shall be approximately $179.00. The funds to pay this claim shall come from the new value being contributed to the Plan from the Debtor's interest holders. This amount shall be paid at the time of the closing of the loan with Exit Financier which shall take place on the Effective Date in full satisfaction of its Claim. The treatment and consideration to be received by holders of Class 2 Claims shall be in full settlement, satisfaction, release and discharge of their respective Claims. Class 2 is impaired and thus, the Creditors in Class 2 are entitled to vote to accept or reject the Plan. Class 4 consists of the claim of the New York City Environmental Control Board ("NYC ECB") in the approximate amount of $6,250 by virtue of ECB violations issued against the Subject Property. The NYC ECB has not yet filed a proof of claim. The Debtor originally scheduled NYC ECB as holding a secured claim in the amount of $6,250. The initial basis for classifying the NYC ECB as secured was pursuant to a title report dated March 29, 2021, which showed NYC ECB violations acting as a lien against the Subject Property. On July 14, 2022, the Debtor filed amended schedules D/E/F removing the NYC ECB from Schedule D and placing it as an unsecured creditor on schedule F. The Debtor's basis for this reclassification is pursuant to 11 U.S.C. §506 in that there is no equity in the Subject Property for which the NYC ECB lien can attach. The Debtor will pay the NYC ECB 2% on account of its unsecured claim. The estimated payout to the NYC ECB shall be approximately $56.24. This amount shall be paid at the time of the closing of the loan with Exit Financier which shall take place on the Effective Date in full satisfaction of all claims held by NYC ECB against the Subject Property. Class 3 is impaired and thus, the Creditors in Class 3 are entitled to vote to accept or reject the Plan. Class 5 consists of the claim of the New York City Department of Buildings ("NYC DOB") in the approximate amount of $1,500 by virtue of building code violations issued against the Subject Property. Although NYC DOB has not yet filed a proof of claim the Debtor originally scheduled scheduled NYC DOB as holding a secured claim of $1,500. The initial basis for classifying the NYC DOB as secured was pursuant to a title report dated March 29, 2021, which showed NYC DOB violations purportedly acting as a lien against the Subject Property. On July 14, 2022, the Debtor filed amended schedules D/E/F removing the NYC DOB from Schedule D and placing it as an unsecured creditor on schedule F. The Debtor's basis for this reclassification is pursuant to 11 U.S.C. §506 in that there is no equity in the Subject Property for which the NYC ECB lien can attach. The Debtor will pay the NYC DOB 2% (two percent) on account of its unsecured claim The estimated payout to the NYC DOB shall be approximately $30.00 (thirty dollars). This amount shall be paid at the time of the closing of the loan with Exit Financier which shall take place on the Effective Date in full satisfaction of all claims held by NYC DOB against the Subject Property Class 4 is impaired and thus, the Creditors in Class 4 are entitled to vote to accept or reject the Plan. Class 5 consists of all Interest Holders of the Debtor. The Debtor's interest holders are Blackstone Real Estate Group, LLC (40%), and The Business Account, LLC (60%). Upon confirmation of the Plan, the Interest Holders shall retain their Interests in the Reorganized Debtor. In exchange for retaining their interests, Interest Holder will contribute $10,000 towards the funding of the Plan. The Interest Holders shall not receive any monetary distributions on account of such Interests. The funds necessary for the implementation of the Plan shall be utilized from the exit financing of Manhattan Bridge Capital and the funds contributed by the Debtor's Interest Holders. A full-text copy of the Second Amended Disclosure Statement dated July 18, 2022, is available at from PacerMonitor.com at no charge. Counsel to the Debtor: Btzalel Hirschhorn, Esq. SHIRYAK, BOWMAN, ANDERSON, GILL & KADOCHNIKOV, LLP 8002 Kew Gardens, Suite 600 Kew Gardens, NY 11415 Tel: (718) 263-6800 Fax: (718) 520-9401 Email: Bhirschhorn@sbagk.com About BK Autumn 701 LLC BK Autumn 701, LLC, sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 21-42682) on Oct. 21, 2021, listing under $1 million in both assets and liabilities. Judge Elizabeth S. Stong oversees the case. Btzalel Hirschhorn, Esq., at Shiryak, Bowman, Anderson, Gill & Kadochnikov, LLP and Singer & Falk CPA's serve as the Debtor's legal counsel and accountant, respectively. BRODIE HOLDINGS: Kaiser Trustee Files Liquidating Plan ------------------------------------------------------ Morgan W. Fisher, in his capacity as Chapter 7 Trustee for Harry Kaiser, filed with the U.S. Bankruptcy Court for the District of Maryland a Disclosure Statement to accompany Plan of Liquidation for Brodie Holdings, LLC and its Debtor Affiliates dated July 18, 2022. The Plan calls for the liquidation of the Debtors' real property interests, pays all non-Insider debts in full, and reserves all Insider party rights regarding the remaining proceeds pending further Orders of the Probate Court and the Bankruptcy Court in the Harry Kaiser Bankruptcy Case. While those rights are adjudicated and/or compromised, the Plan contemplates the distribution of the net proceeds from the contemplated sales to the court appointed fiduciaries for the two adverse constituents: namely, the Curator Cowan and Trustee Fisher. Prior to filing, Mr. Kaiser and the various insiders of the Debtors were embroiled in probate litigation which is pending in the Circuit Court of the Eleventh Judicial Circuit for Miami-Dade County, Florida Probate Division. The case is styled In re: Estate of Beatrice Brodie, Case No. 2020-001990-CP-02. Because the automatic stay in his own individual case did not extend to the Debtors, Brodie Holdings, LLC, and ZNB, LLP, filed voluntary petitions under Chapter 11 of the Bankruptcy Code on October 5, 2021. On November 12, 2021, Debtors Grandma Bea, LLC, and Second, LLC, filed voluntary petitions under Chapter 11 of the Bankruptcy Code. The Plan is a joint Plan for the Debtors' jointly administered Estates. The Plan does not provide for the consolidation of the Debtors' Estates for purposes of implementing the Plan or making Distributions thereunder. The Plan provides for the appointment of a Plan Administrator to implement the Plan. The Plan Administrator shall be empowered to, among other things, administer and liquidate all remaining assets. The Plan also provides for the Plan Administrator to make Distributions to Holders of Allowed Claims and Interest Holders, including Administrative Expense Claims, Professional Fee Claims, Priority Tax Claims and Priority Non-Tax Claims. On June 13, 2022, the Bankruptcy Court entered an Order (I) Approving Bidding Procedures for the Sale of Properties, (II) Approving Form of Purchase Agreements, (III) Scheduling Hearing to Consider Approval of Sale of the Properties, (IV) Approving Form and Manner of Notice of Sale, and (V) Granting Related Relief. The Chapter 11 Trustee will file a motion for approval of sales of the Properties on July 18, 2022, in accordance with the bidding procedures order. The Plan provides for payment in full to each class of creditors and interest holders. As each such class is unimpaired or has agreed to their treatment, holders of claims are not being solicited, are not entitled to vote to accept or reject the plan and are deemed to have accepted the plan. Class 1 consists of the Allowed Secured Claims of the Secured Lender and are secured by mortgage Liens on 2 N. Maple Avenue, Ridgely, Maryland and 315 High Street, Chestertown, Maryland, and are evidenced by the Secured Lender's proofs of claims and acknowledged in the Schedules. In full and complete satisfaction, discharge and release of the Class 1 Claims, which shall include, without limitation, unpaid principal, accrued and outstanding interest, any late charges and any advances from Secured Lender recoverable under the loan documents evidencing and/or otherwise securing the Secured Claim, the Secured Creditor shall be paid 100% of its Allowed Secured Claim. Class 2 consists of all Allowed general unsecured Claims of persons that are not insiders of Suszanne Kaiser, Jennifer Kaiser, Steven Brodie, Harry Kaiser, and/or Mindell Brodie (aka Mindell Fischer). In full and complete satisfaction, discharge and release of Class 2 Claims, Allowed Class 2 Claims shall be paid up to their full amount from the Net Proceeds on, or as soon thereafter as is reasonably practicable but not later than (i) fourteen (14) days after the Effective Date, or (ii) thirty (30) calendar days after the date all Class 2 Claims become an Allowed Claim. Class 3 consists of all Insider Claims and Interests. In full and complete satisfaction, discharge and release of Class 3 Claims, the Insider Claims and Interests shall be paid the remainder of Net Proceeds (and other property of the Estates, if any, held by the Plan Administrator), after the payment of all other Claims and Plan Administrator fees and expenses including, without limitation, those of his professionals, pending adjudication of the validity, priority and extent of those Insider Claims and Interests in the Probate Court, any other court of competent jurisdiction or pursuant to the terms of a settlement agreement approved by the Probate Court or other court of competent jurisdiction. Pending an adjudication or compromise of Class 3 Claimants' disputes, the Plan Administrator shall disburse all Net Proceeds to Trustee Fisher and the Curator Cowan. On the Effective Date, all Cash, and other property of the estate shall be deemed turned over by the Chapter 11 Trustee to the Plan Administrator, who shall use such Cash and property to fund all payments required under the Plan. A full-text copy of the Disclosure Statement dated July 18, 2022, is available at https://bit.ly/3PqEfae from PacerMonitor.com at no charge. Chapter 7 Trustee for Harry Kaiser: Morgan W. Fisher, #28711 Law Offices of Morgan Fisher, LLC 18 West St Annapolis, MD 21401 410-626-6111 mwf@morganfisherlaw.com About Brodie Holdings Chestertown, Md.-based Brodie Holdings, LLC filed a petition for Chapter 11 protection (Bankr. D. Md. Case No. 21-16309) on Oct. 5, 2021, listing as much as $10 million in both assets and liabilities. Harry Kaiser, managing member, signed the petition. Judge Thomas J. Catliota oversees the case. The Debtor tapped Tate M. Russack, Esq., at RLC, PA Lawyers & Consultants as legal counsel and Larry Strauss, Esq., CPA and Associates, Inc. as accountant. On Feb. 22, 2022, the court approved the appointment of Zvi Guttman as Chapter 11 trustee. The trustee tapped Shapiro Sher Guinot & Sandler as bankruptcy counsel; Gunster Yoakley & Stewart, PA as litigation counsel; and A & G Realty Partners, LLC as real estate advisor. CHULA FREIGHT: Taps Tyler, Bartl & Ramsdell as Legal Counsel ------------------------------------------------------------ Chula Freight & Logistics, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Tyler, Bartl & Ramsdell, PLC as its legal counsel. The firm's services include: a. assisting with required bankruptcy schedules and related forms; b. representing the Debtor at creditors' meetings; c. advising the Debtor of its duties and responsibilities under the Bankruptcy Code; d. assisting in preparing monthly financial forms and in analyzing cash flow and financial matters; e. advising the Debtor in connection with executory contracts; f. drafting documents to reflect agreements with creditors; g. resolving motions for relief from stay and adequate protection; h. negotiating for obtaining financing and use of cash collateral, as necessary, and determining whether reorganization, dismissal or conversion is in the best interests of the Debtor and its creditors; i. working with creditors' committee and other counsel, if any; j. working on any disclosure statement and plan of reorganization; and k. handling other matters that arise in the normal course of administration of the Debtor's bankruptcy estate. The firm will be paid at the rate of $450 per hour for its services and will be reimbursed for out-of-pocket expenses. The retainer fee is $11,738. Steven Ramsdell, Esq., a partner at Tyler, 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: Steven B. Ramsdell, Esq. Tyler, Bartl & Ramsdell, PLC 300 N. Washington St., Suite 310 Alexandria, VA 22314 Email: (703) 549-5003 Chula Freight & Logistics, LLC is a licensed and bonded freight shipping and trucking company running freight hauling business from Woodbridge, Va. Chula Freight & Logistics filed a petition for relief under Subchapter V of Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Va. Case No. 22-10878) on July 7, 2022, listing up to $1 million in assets and up to $10 million in liabilities. Jolene E. Wee has been appointed as Subchapter V trustee. Steven B. Ramsdell, Esq., at Tyler, Bartl & Ramsdell, PLC is the Debtor's counsel. COLONIAL GATE: Reaches Resolution with Wilmington ------------------------------------------------- Colonial Gate Gardens LLC, submitted an Amended Disclosure Statement describing Plan of Reorganization dated July 18, 2022. As emphasized throughout the Plan, the Debtor's primary goal is to restructure the underlying mortgage debt, and pay other creditors, so as to permit the Debtor to maintain ownership of 18 of its real properties, consisting of 26 single family homes throughout Orange, Rockland and Ulster Counties in New York (the "Properties"). Wilmington, the mortgagee in connection with the Mortgage debt, filed a proof of claim docketed as Claim Number 3 on the Bankruptcy Court's Claims Register. The Debtor has objected to Wilmington's Claim on the basis that no default was properly called under the Loan Documents and under applicable New York State law, and as a result, Wilmington is not entitled to default rate interest, attorney fees, pre-payment penalties, late charges and other charges included in its Claim. The Court issued partial rulings on several of the issues raised in the parties' pleadings. The parties then consented to mediation over the remaining issues. At the conclusion of the mediation, the Debtor and Wilmington reached a resolution of all of the issues between them and that resolution is memorialized in the Disclosure Statement and Plan. In addition, the Plan also provides for a 100% distribution to general unsecured creditors over 3 years, in quarterly payments, plus interest at the federal judgment rate in effect on the date the Plan is confirmed. It is the Debtor's position that both of the classes of creditors are impaired and, as a result, are entitled to vote on the Plan. Class 1 shall consist of the Allowed Wilmington Secured Claim. Class 1 is impaired. Wilmington's Secured Claim shall be allowed in the amount of $5,106,943.49. Wilmington is entitled to be paid its additional legal fees which accrue after May 23, 2022 for transactional charges which include, without limitation, legal fees tied to finalizing this settlement, fees in connection with the confirmation process and fees to process lien releases for real estate sales and refinancings. Upon Confirmation, the loan from Wilmington shall be reinstated and shall be deemed in good standing. The amount needed to reinstate the loan is $836,143.49. The 8 houses to be sold and the sale prices and release prices as set forth in the loan documents. Those sales are to be private sales and shall take place within 60 days of Confirmation. From the sales proceeds of those closings, the Release Prices totaling $1,324,574.47 and the Additional Release Prices of $11,145.66 plus an additional $56,000 for prepaid insurance and taxes are to be first paid to Wilmington for a total amount of $1,469,989.73. Thereafter, in addition, from the net proceeds of those sales, all Allowed Administrative Claims are to be paid. In addition, $100,000.00 of an Exit Financing Loan made to the Debtor shall be repaid from those net proceeds. Lastly, any remaining funds shall be escrowed in the IOLA account of the Law Offices of Avrum J. Rosen, PLLC, ("Cash Collateral Escrow") as a reserve for operating expenses pursuant to an agreed operating budget to be in effect until the balance of the Wilmington Allowed Secured Claim is paid off. The remaining principal balance of the Wilmington Allowed Secured Claim shall be paid by a single or multiple refinances of different groupings of the remaining Properties. This resolution of Wilmington's Claim shall be binding on all parties and Wilmington shall not be permitted to collect against the Debtor any amounts in excess of what is authorized under the Plan. Class 2 shall consist of all Allowed General Unsecured Claims. Class 2 Claimants shall receive a 100% distribution to be paid in equal quarterly payments over 3 years by the Debtor commencing on the Effective Date with interest at the federal judgment rate in effect on the Confirmation Date. Class 2 Claimants are impaired. The Plan shall be funded through: (a) a combination of: (i) access to existing cash reserves; (ii) the Debtor's receipt of funds from the New York State Landlord Rental Assistance Program; (iii) the net proceeds (after payment of the release prices to Wilmington) from the sale of the For Sale Properties; (iv) contributions from the Debtor's principal and insiders; Subordinate Exit Financing of $500,000 and (b) the Refinancing of the Properties. The Debtor intends to sell the 8 Sale Properties by a private sale to two different purchasers for a combined gross price of $1,705,000.00. The Debtor and Debtor's principals represent that these are arm's length sales to non-insider third parties. There is no broker involved in these sales and the Debtor will file the contracts of sale in a Plan Supplement prior to Confirmation. If these contracts are not consummated, at its election, the Debtor may sell the For Sale Properties at an auction Sale to be held by video/telephone conference pursuant to sections 1123(a)(5)(B) and (D) of the Bankruptcy Code. A full-text copy of the Amended Disclosure Statement dated July 18, 2022, is available at https://bit.ly/3ODzpW1 from PacerMonitor.com at no charge. Counsel to Colonial Gate: Law Offices of Avrum J. Rosen, PLLC Alex E. Tsionis, Esq. Avrum J. Rosen, Esq. 38 New Street Huntington, New York 11743 Tel: (631) 423-8527 arosen@ajrlawny.com atsionis@ajrlawny.com About Colonial Gate Gardens Colonial Gate Gardens LLC is a limited liability company, formed and existing under the laws of the State of New York, with its principal office located at 45 Washington Ave, Spring Valley, New York 10977. Colonial Gate Gardens is engaged in the real estate investment business by purchasing single-family homes and or condominium units, renovating them and then leasing them to tenants in exchange for rent. Colonial Gate Gardens sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-22265) on May 6, 2021. In the petition signed by Yitzchok Loeffler, managing director, the Debtor disclosed up to $10 million in both assets and liabilities. Avrum J. Rosen, Esq., at Law Office of Avrum J. Rosen, PLLC, is the Debtor's counsel. CREDITO REAL: Headed to Liquidation and Dissolution in Mexico ------------------------------------------------------------- Credito Real SAB's ex-CEO Angel Francisco Romanos Berrondo has pushed his own company to liquidation in Mexico, throwing a wrench into efforts by bondholders to force the company to pursue a Chapter 11 restructuring in the U.S. At the behest of Mr. Berrondo, the Mexican court has ordered the liquidation of the payroll lender. The liquidators subsequently filed a Chapter 15 petition to seek U.S. recognition of the winding down proceedings in Mexico. Credito Real is a leading specialty finance company based in Mexico City, Mexico. The company offered loans to segments generally underserved by the traditional banking system. The Company provided loans paid via payroll deduction, car loans and funding for small and medium enterprises to customers in Mexico, Honduras, Nicaragua, Panama, Costa Rica, Guatemala, and the United States. Credito Real has over US$2.55 billion in funded debt obligations: * Total bank debt: $615 million * 2.875% Senior Notes due 2022 (CHF) $181 million * 7.250% Senior Notes due 2023 (USD) $249 million * 9.500% Senior Notes due 2026 (USD) $400 million * 5% Senior Notes due 2027 (EUR) $379 million * 8% Senior Notes due 2028 (USD) $500 million * 9.125% Perpetual Notes (USD) $230 million Since the start of the COVID-19 pandemic in early 2020, the Company has been faced with severe liquidity constraints, which led it to implement structural changes to its operations to optimize cash flows and maximize revenue streams. The Company was unable to satisfy or refinance its Swiss law governed notes, in aggregate principal amount outstanding of approximately US$181 million, before it matured in February 2022. Following the maturity of these Swiss notes, the Company hired advisors and began engaging in discussions regarding potential restructuring transactions with its various stakeholders, including ad hoc groups consisting of its secured and unsecured bank lenders and certain holders of Credito Real's unsecured New York law governed bonds. Those discussions did not result in an agreed restructuring of the Company. On June 22, 2022, certain parties alleging to hold less than 0.3% of the Chapter 15 Debtor's US$2.5 billion outstanding funded debt obligations under section 303 of the Bankruptcy Code filed an involuntary chapter 11 petition against Credito Real in the United States Bankruptcy Court for the Southern District of New York thereby commencing an involuntary chapter 11 case. As a result of the Company's untenable financial position and decline in value, on June 28, 2022, Mr. Angel Francisco Romanos Berrondo, one of the Debtor's shareholders, filed a petition, in his capacity as a shareholder, with the Mexican Court seeking to commence the Mexican Liquidation Proceeding. The Mexican Petitioner sought relief from the Mexican Court alleging loss of two-thirds of the value of the Company's equity, provides a basis for the commencement of the Dissolution and Liquidation Procedure under the Mexican Corporations Law. On June 30, 2022, a Mexican liquidator was appointed by the Mexican Court to wind up the affairs of the Chapter 15 Debtor, liquidate its assets, and maximize value for the benefit of its stakeholders. On July 7, 2022, the Chapter 15 Debtor received service of process of the Mexican Liquidation Proceeding. The Mexican Court also granted on June 30, 2022 certain provisional protective measures, including a stay to maintain the status quo in Mexico that substantially mirrors the stay available upon recognition as a foreign main proceeding pursuant to section 1520 of the Bankruptcy Code. The Mexican Liquidator has displaced Credito Real's existing directors and management and is bound to distribute the Chapter 15 Debtor's assets in accordance with the order of priority proscribed under Mexican law. Mexican law affords ample due process to creditors throughout the Mexican Liquidation Proceeding, including by allowing creditors to engage with the Mexican Liquidator and, if necessary, challenge the Mexican Liquidator's actions in the Mexican Court. Juan Pablo Estrada Michel, founding partner of Mexico-based law firm of López Melih y Estrada, said in U.S. court filings that the Mexican Corporations Law is consistent with the principles of absolute priority, as it only permits equity holders to receive distributions after other creditors have received payment in full. The Dissolution and Liquidation Procedure involves all of the entity's assets, rights, obligations, and liabilities, with respect to all entity's creditors, customers, and clients regardless of whether the parties are non-Mexican. The Dissolution and Liquidation Procedure also treats foreign creditors and Mexican creditors alike. Assets in the U.S. Credito Real's U.S. assets include the equity interests in its wholly- owned Delaware-incorporated subsidiary, Credito Real USA, Inc. ("Credito USA"). The estimated value of the equity of Credito USA is estimated to be approximately US$85 million. Credito USA and its subsidiaries comprise approximately 8% of the Company's total loan portfolio. In addition, the Company has business operations in the United States, which are performed by three U.S.-based subsidiaries. The Chapter 15 Debtor also has one bank account at Citibank that has held an average balance of US$3.95 million for the past six months in New York, and currently holds a balance of approximately US$1.3 million. About Credito Real SAB Credito Real SAB de CV SOFOM ENR is a Mexico-based company that provides consumer financing. Credito is Mexico's biggest payroll lender and second largest non-bank lender after Real Unifin. Credito Real provides loans, either by providing direct financing to consumers or by establishing financing programs with consumer financing dealers that sell to Credito Real the collection rights from consumer financing products. It also provides financing directly to individuals that are employed by corporations with payroll deduction agreements with consumer financing dealers authorized by Credito Real. Credito Real operates through a number of subsidiaries, including AFS Acceptance LLC. Three alleged creditors signed a petition to send Credito Real to Chapter 11 bankruptcy on June 22, 2022 (Bankr. S.D.N.Y. Case No. 22-10842). Institutional Multiple Investment Fund LLC, of Boston, Massachusetts; Banco Monex, S.A., of Mexico, and Solitaire Fund, of Liechtenstein, who claim to own an aggregate $8 million of unsecured bond debt, signed the involuntary Chapter 11 petition. David H. Botter, Esq., at Akin Gump Strauss Hauer & Feld LLP is advising the three bondholders. On June 28, 2022, Angel Francisco Romanos Berrondo, one of the Debtor's shareholders and the former CEO of Credito Real, filed a petition, in his capacity as a shareholder, with the Mexican Court seeking to commence the Mexican Liquidation Proceeding. On June 30, 2022, the Mexican Court entered an order commencing the dissolution and liquidation proceedings for the Company and appointing Mr. Fernando Alonso-de-Florida Rivero as the Mexican Liquidator. The liquidator for Credito Real filed a Chapter 15 bankruptcy petition (Bankr. D. Del. Case No. 22-10630) on July 14, 2022, to seek U.S. recognition of the Mexican proceedings. The petition was signed by Robert Wagstaff, the foreign representative of the liquidator. Richards, Layton & Finger, P.A., led by John Henry Knight, is counsel in the U.S. case. CS GROUP: Taps Dore Rothberg McKay as Legal Counsel --------------------------------------------------- CS Group, LLC, seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to hire Dore Rothberg McKay, P.C. to serve as legal counsel in its Chapter 11 case. The firm's services include: a. advising the Debtor regarding the administration of its bankruptcy case; b. assisting the Debtor in analyzing its assets and liabilities, investigating the extent and validity of liens, and participating in and reviewing any proposed asset sales or dispositions; c. attending meetings and negotiating with representatives of secured creditors; d. assisting the Debtor in the preparation, analysis and negotiation of any plan of reorganization and disclosure statement; e. taking all necessary action to protect and preserve the interests of the Debtor; f. appearing, as appropriate, before the bankruptcy court, the appellate courts and other courts in which matters may be heard; and g. performing all other necessary legal services for the Debtor. The hourly rates charged by the firm are as follows: Carl Dore, Jr. $440 per hour Mitchell Ayer $420 per hour Zach McKay $360 per hour Lisa Rothberg $360 per hour Brent Dore $360 per hour Vianey Garza $335 per hour Purvi Patel $305 per hour Other Attorneys $285 per hour Paralegal $145 per hour Law Clerks $125 per hour In addition, the firm will seek reimbursement for work-related expenses. Dore received a retainer of $20,000. As disclosed in court filings, Dore is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached at: Vianey Garza, Esq. Mitchell Ayer, Esq. 16225 Park Ten Place Drive, Suite 700 Houston, TX 77084 Phone: (281) 829-1555 Email: vgarza@dorelaw.com mayer@dorelaw.com About CS Group CS Group, LLC, a company in Spring, Texas, sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Case No. 22-80112) on June 6, 2022. In the petition signed by Carolina Dupuis, managing member, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Jeffrey P. Norman oversees the case. Dore Rothberg McKay, PC is the Debtor's legal counsel. D & L REAL ESTATE: Seeks to Hire RHM Law as Bankruptcy Counsel -------------------------------------------------------------- D & L Real Estate Enterprises, LLC seeks approval from the U.S. Bankruptcy Court for the Central District of California to hire RHM Law, LLP as its bankruptcy counsel. The firm will render these services: a. advise regarding compliance with the requirements of the United States Trustee; b. advise regarding matters of bankruptcy law, including the rights and remedies of the Debtor with respect to its assets and claims of creditors; c. advise regarding cash collateral matters; d. conduct examinations of witnesses, claimants or adverse parties, and prepare reports, accounts and pleadings; e. advise concerning the requirements of the Bankruptcy Code and applicable rules; f. assist in the negotiation, formulation, confirmation and implementation of a Chapter 11 plan of reorganization; and g. make any appearances in the bankruptcy court and perform other necessary legal services for the Debtor. The firm received a retainer in the amount of $26,738. As disclosed in court filings, RHM Law is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Roksana D. Moradi-Brovia, Esq. Matthew D. Resnik, Esq. RHM Law LLP 17609 Ventura Coulevard, Suite 314 Encino, CA 91316 Telephone: (213) 572-0800 Facsimile: (818) 855-7013 Email: matt@rhmfirm.com About D & L Real Estate Enterprises D & L Real Estate Enterprises, LLC, a real estate company, filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. C.D. Calif. Case No. 22-12412) on June 25, 2022, listing up to $1 million in assets and up to $500,000 in liabilities. Arturo Cisneros serves as Subchapter V trustee. Matthew D. Resnik, Esq., at RHM Law LLP is the Debtor's counsel. DING TRANS: Taps Law Offices of Alla Kachan as Legal Counsel ------------------------------------------------------------ Ding Trans Corp. seeks approval from the U.S. Bankruptcy Court for the Eastern District of New York to employ the Law Offices of Alla Kachan, P.C. to serve as legal counsel in its Chapter 11 case. The firm's services include: a. assisting the Debtor in administering the case; b. making such motions or taking such actions as may be appropriate or necessary under the Bankruptcy Code; c. representing the Debtor in prosecuting adversary proceedings to collect assets of the estate and such other actions as the Debtor deems appropriate; d. taking such steps as may be necessary for the Debtor to marshal and protect the estate's assets; e. negotiating with creditors in formulating a plan of reorganization for the Debtor; f. drafting and prosecuting the Debtor's plan of reorganization; and g. rendering such additional services as the Debtor may require in its bankruptcy case. The Law Offices of Alla Kachan will be paid $475 per hour for attorney's services and $250 per hour for paraprofessional services. The firm will also receive reimbursement for its out-of-pocket expenses. The firm received an initial retainer of $13,000. Alla Kachan, Esq., disclosed in a court filing that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached at: Alla Kachan, Esq. Law Offices of Alla Kachan, P.C. 2799 Coney Island Avenue, Ste. 202 Brooklyn, NY 11235 Tel: (718) 513-3145 Email: alla@kachanlaw.com About Ding Trans Corp. Ding Trans Corp., a New York-based transportation company, sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-41126) on May 24, 2022, listing as much as $500,000 in both assets and liabilities. Shimon Navaro, president of Ding Trans Corp., signed the petition. Judge Nancy Hershey Lord oversees the case. The Law Offices of Alla Kachan P.C. and Wisdom Professional Services, Inc. serve as the Debtor's legal counsel and accountant, respectively. DING TRANS: Taps Wisdom Professional Services as Accountant ----------------------------------------------------------- Ding Trans Corp. seeks approval from the U.S. Bankruptcy Court for the Eastern District of New York to employ Wisdom Professional Services, Inc. as its accountant. The firm's services include: a. gathering and verifying all pertinent information required to compile and prepare monthly operating reports; and b. preparing monthly operating reports for the Debtor during the pendency of its Chapter 11 case. The firm will be paid at the rate of $150 per report and will be reimbursed for its out-of-pocket expenses. Wisdom Professional Service received an initial retainer of $900 from the Debtor. Michael Shtarkman, a certified public accountant at Wisdom Professional Services, disclosed in a court filing that his firm is "disinterested" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Michael Shtarkman Wisdom Professional Services, Inc. 626 Sheepshead Bay Road, Suite 640 Brooklyn, NY 11224 Tel: (718) 554-6672 Email: michael@shtarkmancpa.com mshtarkmancpa@gmail.com About Ding Trans Corp. Ding Trans Corp., a New York-based transportation company, sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-41126) on May 24, 2022, listing as much as $500,000 in both assets and liabilities. Shimon Navaro, president of Ding Trans Corp., signed the petition. Judge Nancy Hershey Lord oversees the case. The Law Offices of Alla Kachan P.C. and Wisdom Professional Services, Inc. serve as the Debtor's legal counsel and accountant, respectively. ELDERHOME LAND: Seeks to Expand Scope of Gordon & Simmons' Services ------------------------------------------------------------------- ElderHome Land, LLC and Burtonsville Crossing, LLC filed a supplemental application seeking approval from the U.S. Bankruptcy Court for the District of Maryland to expand the scope of services of its special counsel, Gordon & Simmons, LLC. The Debtors need the firm's legal assistance in an adversary proceeding against Eagle Commercial Ventures, LLC, EagleBank, and Eagle Bancorp, Inc. (Adv. Proc. 22-00090). Gordon & Simmons will be paid at these rates: Attorneys $225 to $325 per hour Paralegals $45 to $110 per hour The firm will also be reimbursed for out-of-pocket expenses incurred. As disclosed in court filings, Gordon & Simmons is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Gordon & Simmons, LLC 1050 Key Pkwy, Suite 101 Frederick, MD 21702 Tel: (301) 662-9122 About ElderHome Land and Burtonsville Crossing Burtonsville Crossing, LLC and ElderHome Land, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Lead Case No. 21-10492) on Jan. 25, 2021. At the time of the filing, the Debtors had between $1 million and $10 million in both assets and liabilities. Judge Maria Ellena Chavez-Ruark oversees the cases. McNamee, Hosea, Jernigan, Kim, Greenan & Lynch, PA, and Gordon & Simmons, LLC, serve as the Debtors' bankruptcy counsel and special counsel, respectively. ELWOOD ENERGY: S&P Downgrades ICR to 'BB-', Outlook Negative ------------------------------------------------------------ S&P Global Ratings lowered its rating on Elwood Energy LLC's senior secured notes to 'BB-' from 'BB'. The recovery rating remains '1', indicating its expectation for very high (90%-100%; rounded estimate: 95%) recovery in the event of a payment default. The negative outlook reflects S&P's expectation that the project's DSCR will likely fall below 1x in 2023 given historically low cleared capacity prices in PJM ComEd zone. Elwood is a 1,576 MW power plant about 50 miles southwest of Chicago. It operates as a peaking facility and is deployed mainly during the summer months. The project is fully merchant and has nine simple-cycle 7FA combustion turbines sourced from General Electric Co. Each turbine earns revenue by selling production capacity and electricity into PJM's ComEd power market. S&Ps aid, "The downgrade reflects our expectation that given historically low capacity prices in the PJM-ComEd zone, Elwood's DSCR will decline to below 1x in 2023 and 2025. As a peaking facility, Elwood derives about 70% of its revenue from capacity sales in the in the PJM-ComEd zone. Historically, capacity prices in that service area cleared at about $180 to $200 per MW-day, which had resulted in robust credit metrics, including debt service coverage ratios above 2x. However, due to lack of meaningful core load growth in the region, changing bidding behavior of the market participants, and other structural shifts in the market fundamentals, the recent capacity prices cleared at significantly lower levels: $69 per MW-day for 2022-2023 and $34 per MW-day for 2023-2024. We believe the current market factors will persist and result in a similar outcome in the next auction in December 2022, which will pressure Elwood's cash flow profile and debt service coverage ratios. "Although lower capacity revenue is somewhat offset by greater energy margin on the back of elevated energy prices in 2022, as a peaking power plant, Elwood will not be able to fully capture these benefits. Accordingly, we revised the Operations Phase Business Assessment (OPBA) to '10' (previously '8'). "Positively, we expect Elwood to have sufficient balance sheet liquidity to cover any potential shortfalls in its debt service. The project benefits from its sculpted fully-amortized debt profile with $57 million of outstanding debt as of March 31, 2022, and debt service payments declining from $25 million-$35 million in 2022 and 2023 to $10 million-$15 million in 2024-2026." In 2021 Elwood's financial performance was strong, as indicated by a 20% increase in total revenue to $142 million, and an increase of cash flow from operations of 14% to $90 million. This was mainly the result of an increase in energy prices. The project's $57 million outstanding debt is not subject to any financial covenants. Given its strong historical performance and relatively low amount of outstanding debt, Elwood compares favorably with its peers like Helix Gen Funding LLC and Compass Power Generation LLC, whose debt S&P rates 'BB-'. S&P said, "The negative outlook reflects our expectation that Elwood will face a material decline in cash flow available for debt service (CFADS) during the next two years given the cleared capacity price of $34.13 per MW-day in the PJM ComEd zone for 2023/2024, resulting in our expected DSCR of below 1x in 2023. We anticipate capacity prices in PJM ComEd will not exceed $40 to $45 per MW-day during the debt tenor, which will continue to weaken Elwood's credit profile. "We could lower the rating further if Elwood's DSCR deteriorates to below 1x, which could happen if the project is unable to generate adequate energy margin and simultaneously reduce its fixed costs in 2023. We would also lower the rating if cash distributions to the sponsor result in liquidity deterioration. "We could change our outlook to stable if despite low cleared capacity prices Elwood maintains DSCR of at least 1x during the remaining life of its notes." ENJOY TECHNOLOGY: Seeks to Hire Stretto as Administrative Advisor ----------------------------------------------------------------- Enjoy Technology, Inc. and its affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to hire Stretto, Inc. as their administrative advisor. The firm's services include: a. assisting with, among other things, solicitation, balloting, and tabulation of votes, preparing any related reports in support of confirmation of a Chapter 11 plan, and processing requests for documents; b. preparing an official ballot certification and, if necessary, testifying in support of the ballot tabulation results; c. assisting with the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs, and gathering data in conjunction therewith; d. providing a confidential data room, if requested; and e. managing and coordinating any distributions pursuant to a Chapter 11 plan. The firm will be paid a retainer in the amount of $25,000. Sheryl Betance, a senior managing partner at Stretto, disclosed in a court filing that her firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Sheryl Betance Stretto, Inc. 410 Exchange, Ste. 100 Irvine, CA 92602 Telephone: (714) 716-1872 Email: Sheryl.betance@stretto.com About Enjoy Technology Enjoy Technology, Inc. provides a commerce-at-home experience for consumers through their network of mobile retail stores. It is based in Palo Alto, Calif. Enjoy Technology and affiliates, Enjoy Technology Operating Corp. and Enjoy Technology, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10580) on June 30, 2022. In the petition signed by Tiffany N. Meriweather, chief legal officer and corporate secretary, Enjoy Technology, Inc. disclosed $111,661,000 in total assets and $69,956,000 in liabilities. Judge J. Kate Stickles oversees the cases. The Debtors tapped Cooley, LLP and Richards, Layton, and Finger P.A. as counsel; AP Services, LLC as restructuring advisor; Centerview Partners, LLC as investment banker; and Stretto, Inc. as claims, noticing agent and administrative advisor. Asurion, LLC, a Delaware Limited Liability Company, as DIP lender, is represented by Gibson, Dunn & Crutcher LLP, Bass, Berry & Sims PLC, and Pachulski Stang Ziehl & Jones, LLP. The U.S. Trustee for Regions 3 and 9 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases on July 11, 2022. The committee is represented by Howard Cohen, Esq. FEH INC: S&P Cuts ICR to 'BB-' on Increased Leverage; Outlook Neg ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit and issue ratings on FEH Inc. to 'BB-' from 'BB'. The recovery rating on the first-lien term loan remains '4', indicating its expectation for an average (35%) recovery. The outlook is negative. FEH's adjusted EBITDA declined about 21% in the first quarter of 2022, compared with the same period in 2021. As of March 31, 2022, more than 80% of FEH's AUM is subject to market movement and redemption risk, and we expect market volatility to continue over the next 12 months and the company's AUM and earnings to erode further. That said, FEH's strategies have high cash and gold allocations, lowering their equity market exposure, and as a result have historically outperformed their respective benchmarks during downturns. Net flows have improved in recent quarters, aided by investor demand for more conservative investments amid the current market volatility. S&P expects modest inflows over the next few quarters, providing a slight offset to the market impact. S&P said, "While accretive to earnings over the longer term, we expect the acquisition of Napier Park, expected to close in the second half of 2022, to be partially debt-funded. As a result of our expectation for greater debt at the close of acquisition, and our worsening earnings forecast, we expect FEH to operate with leverage around 5.0x over the next 12-24 months. We include FEH's tax receivable agreement liability and operating leases in our calculation of adjusted debt, and we do not net excess cash. "We see FEH's comparative business supports as weakening. We historically viewed FEH as somewhat stronger than peers with similar business risk profiles because of its capital preservation-focused core strategies, above-average margins, and good benchmark-relative investment performance. The company remains somewhat concentrated, AUM growth has been unsteady, despite the (largely debt-funded) growth of the credit platform, and net flows remain weak (albeit improving). In addition, FEH operated with leverage around 3x from 2015-2018--much lower than its peers--but has not reduced its leverage consistently following the acquisition of THL Credit in January 2020. "We expect the alternative credit platform to grow to $40 billion–$45 billion following the acquisition of Napier Park. We view the growth of the alternative credit platform positively, as it adds locked up capital which is not subject to redemption risk and generates more stable and predictable fees. However, this platform remains a smaller portion of AUM compared with alternative asset managers with stronger business risk profiles. We expect the company's EBITDA margins to decline as the credit platform grows, but remain above average compared with peers. "We view FEH's business risk as similar to peers of similar size with either concentrated but entirely locked up capital bases (like EIG Management Co, LLC), similar exposure to redemption risk, though with good investment performance or stickier asset base (like Clipper Acquisitions Corp. or Edelman Financial Services), or with more diversified products (like Victory Capital Holdings). Higher rated peers are typically much larger and more diversified with significantly lower leverage. "The negative outlook reflects our expectation that weighted average leverage will remain near the 5.0x downside threshold over the next 12 months. "We could lower the rating in the next 12 months if we think leverage will be sustained above 5x. This could occur if earnings, following the integration of Napier Park, fall below expectations, net flows worsen, or markets deteriorate further than anticipated. "We could revise the outlook to stable if leverage declines and we expect it to remain below 5.0x on a sustained basis." FLEXIBLE FUNDING: Court Confirms Amended Plan --------------------------------------------- Judge Mark X. Mullin has entered an order confirming the Amended Chapter 11 Joint Plan of Liquidation of Flexible Funding Ltd. Liability Co., et al. The issues raised in the Objection are resolved by agreement between the Debtors and Medalist. The agreement is approved as follows: (a) The third full paragraph of Section 4.03 and the third full paragraph of Section 4.04 of the Plan shall be deleted and each replaced by the following: No later than 14 days after the Effective Date, the Plan Administrator shall make a distribution, in an amount to be determined by the Plan Administrator, on a pro rata basis, to Bison and Medalist (the "Initial Bison/Medalist Distribution"). The Initial Bison/Medalist Distribution shall be applied by Bison and Medalist to the outstanding principal amount owed by the Debtors to each lender. Additionally, concurrently with making the Initial Bison/Medalist Distribution, the Plan Administrator shall establish a reserve (the "Bison/Medalist Reserve") in an amount representing the difference between $2,000,000 and the amount distributed to Bison from the Initial Bison/Medalist Distribution. The Bison/Medalist Reserve shall accrue no interest under Bankruptcy Code section 506(c), to the extent such section is applicable. Interest on the remaining unpaid principal owed to Bison and Medalist, other than the amount held in the Bison/Medalist Reserve, may continue to accrue interest under section 506(c), to the extent such section is applicable. The Liquidating Debtors reserve the right to challenge Bison's and Medalist's right to receive interest under section 506(c), including, but not limited to, the right to seek disgorgement of interest paid to Bison and Medalist. After the Initial Bison/Medalist Distribution, all subsequent distributions to Bison and Medalist shall be made on a pro-rata basis, with a dollar-for-dollar reduction in the Bison/Medalist Reserve to account for distributions made to Bison. (b) Notwithstanding anything to the contrary in the Plan, the Plan Administrator shall provide notice by email to Medalist at John.Slonieski@medalistpartners.com and Jake.Giordano@medalistpartners.com prior to taking any action to pledge, encumber, sell, liquidate, dispose of, or distribute any Assets of the Post-Confirmation Estate with a value or in the amount of $150,000 or more that constitute collateral of Medalist securing its Class 4 Subordinated Secured Claim (each a "Proposed Action"). Medalist shall have ten (10) days from the date of such email notice from the Plan Administrator to object to any Proposed Action. The objection shall be made by email to the Plan Administrator at burkart@cwo.com and CSullivan@diamondmccarthy.com within such ten-day objection period. Medalist and the Plan Administrator shall have 5 days from the date of the objection to reach an agreement to resolve the objection to a Proposed Action (the "Resolution Period"). If the parties are unable to reach an agreement at the end of the Resolution Period, Medalist shall have 5 days from the end of the Resolution Period to seek relief from the Bankruptcy Court on an emergency basis. If no emergency relief is sought by Medalist within 5 days after the end of the Resolution Period, the Plan Administrator may proceed with the Proposed Action. Based upon the agreement set forth above, the Objection is deemed withdrawn by Medalist. Upon the Effective Date of the Plan, the Liquidating Debtors through the Plan Administrator are authorized and directed to take all actions necessary or appropriate to implement, effectuate or consummate the Plan, the terms of this Confirmation Order and the transactions respectively contemplated therein, and to otherwise fully perform and execute their duties under the Plan or this Confirmation Order. The form and substance of the Plan Documents, are all approved. The reservation of the Estate Claims and Estate Defenses is approved. Class 1 and Class 2 under the Plan are deemed to have accepted the Plan pursuant to section 1126(f). No Class is conclusively deemed to have rejected the Plan pursuant to Section 1126(g). One objection to the Plan was filed by Medalist Partners Opportunity Master Fund II-A, L.P. Medalist is the sole member Class 4 holding the Class 4 Subordinated Secured Claim. Medalist and the Debtors reached an agreement resolving the Objection as set forth in Paragraph 2 hereunder. With the agreement, the Objection is deemed withdrawn by Medalist. Additionally, Medalist originally cast a vote to reject the Plan, and the parties having reached an agreement resolving Medalist's objection to the Plan, Medalist announced at the Confirmation Hearing that its vote rejecting vote is changed to a vote accepting the Plan. The Plan specifies Classes 1 and 2 to be unimpaired classes. Consequently, the Plan satisfies section 1123(a)(2) of the Bankruptcy Code. The 5 impaired Classes of Claims and Interests voted as follows to accept or reject the Plan: a) Class 3 - accept; b) Class 4 - one accepting vote for Class 4 cast by the sole member of the class was received after the Voting Deadline upon extension of the Voting Deadline by the Debtors. The Court finds good cause exists to count the accepting vote for Class 4; c) Class 5 - accept; d) Class 6 - accept; and e) Class 7 – two accepting votes for Class 7 were received after the Voting Deadline upon extension of the Voting Deadline by the Debtors. The Court finds good cause exists to count the accepting vote for Class 7 and therefore Class 7 has accepted the Plan. All Classes entitled to vote have voted to accept the Plan. Consequently, Section 1129(a)(8) is satisfied. Classes 3 to 7 are all impaired Classes of Claims. All Classes entitled to vote have voted to accept the Plan in accordance with section 1126(e) of the Bankruptcy Code. The tabulation for Classes 3 to 5 excludes the votes of any insiders included in such Classes. Therefore, the requirement of section 1129(a)(10) that at least one Class of Claims that is impaired under the Plan has accepted the Plan, determined without including any acceptance of the Plan by any insider, has been satisfied. Attorneys for the Debtors: Jeff P. Prostok, Esq. Lynda L. Lankford, Esq. Dylan T.F. Ross, Esq. FORSHEY PROSTOK LLP 777 Main Street, Suite 1550 Fort Worth, Texas 76102 Telephone: (817) 877-8855 Facsimile: (817) 877-4151 E-mail: jprostok@forsheyprostok.com llankford@forsheyprostok.com dross@forsheyprostok.com About Flexible Funding Flexible Funding Ltd. and Instapay Flexible LLC filed petitions for Chapter 11 protection (Bankr. N.D. Tex. 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. GEO GROUP: Moody's Cuts CFR to Caa2 & Alters Outlook to Stable -------------------------------------------------------------- Moody's Investors Service has downgraded GEO Group, Inc.'s ratings, including its corporate family rating and senior unsecured debt ratings to Caa2 from Caa1 and its senior secured credit facility to Caa1 from B3. The speculative grade liquidity rating was changed to SGL-3 from SGL-4. Concurrently, the company's rating outlook was revised to stable from negative. The rating actions reflect the issuer's execution of a distressed debt restructuring transaction with its credit facility lenders and bondholders in order to avoid a likely eventual default per Moody's definition, and is expected to close in August 2022. The outlook revision to stable reflects the issuer's repositioned capital structure, balance sheet and liquidity profile, driven by a reduction in net recourse debt and an extension of near-term maturities. Ratings downgraded: Issuer: GEO Group, Inc. Corporate family rating to Caa2 from Caa1 Senior unsecured debt to Caa2 from Caa1 Senior unsecured debt shelf to (P)Caa2 from (P)Caa1 Senior secured bank credit facility to Caa1 from B3 Ratings changed: Issuer: GEO Group, Inc. Speculative grade liquidity rating to SGL-3 from SGL-4 Outlook actions: Issuer: GEO Group, Inc. Outlook revised to stable from negative RATINGS RATIONALE The downgrade of GEO's corporate family rating and senior unsecured debt ratings to Caa2 reflects the company's announcement of a comprehensive debt restructuring of its capital structure, which is viewed by Moody's as a distressed exchange, by having the effect of helping to avoid a likely eventual default. The proposed exchange transaction will provide participants with a combination of cash and new debt at par as well as an enhanced collateral package. Moody's note that non-participants of the exchange transaction will subsequently rank junior to the enhanced collateral package provided under the new facilities and notes. The revision of the speculative grade liquidity rating to SGL-3 from SGL-4 reflects the issuer's repositioned capital structure, balance sheet and liquidity profile. The proposed transaction, which extends maturities through 2027 and 2028, will provide GEO with additional time to further reduce its quantum of debt through free cash flow generated from the business, though longer-term growth prospects for the private prison business model remain uncertain. Based on current commitments and minimum participation requirements, GEO's revised debt maturities are expected to be approximately $170 million in 2023; approximately $430 million in 2024; approximately $340 million in 2026; approximately $900-960 million in 2027; and approximately $440 million in 2028. GEO's governance risk is highly negative, reflecting its exposure to refinancing risk as lenders and investors disassociate from the industry as well as substandard corporate governance practices in comparison to peers and as evidenced by the proposed distressed debt exchange transaction. These risks are partially offset by a commitment to allocating capital and excess cash flows to pay down debt and reduce leverage longer-term. Moody's note that GEO continues to maintain steady operating performance and an adequate financial credit profile for the rating category despite broader ESG and liquidity concerns related to corporate governance, refinancing risk and cost of capital. Furthermore, the company remains on track to complete its previously articulated goal of between $100 million and $150 million in proceeds from asset sales. Moody's expect the company to continue to opportunistically sell assets that are either underutilized or to realize a premium relative to initial investment. The stable outlook reflects Moody's expectation that GEO will continue to reduce its long-term leverage as well as maintain sufficient liquidity to meet its contractual debt obligations amid the challenging operating environment for private prison operators. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade of GEO's ratings, which is unlikely in the medium term, would require material improvement in the long-term private prison outlook, including improved access to capital and demonstration of positive revenue and earnings growth, on a sustained basis. A downgrade of GEO's ratings could occur should the issuer default on its debt obligations, or if recovery expectations on its debt instruments were to weaken further. Further exposure to adverse regulatory events could also lead to downward ratings pressure. The principal methodology used in these ratings was REITs and Other Commercial Real Estate Firms Methodology published in July 2021. GEO Group, Inc. (NYSE: GEO) is a leading provider of government outsourced services focused on the management and ownership of correctional facilities, processing centers, reentry and residential community-based and youth services to Federal, State, and local governments in the United States, Australia, South Africa and the United Kingdom. HARRELL REALTY: Case Summary & Two Unsecured Creditors ------------------------------------------------------ Debtor: Harrell Realty Corporation 940 Haight St. San Francisco, CA 94117 Business Description: The Debtor is a real estate investment firm. Chapter 11 Petition Date: July 20, 2022 Court: United States Bankruptcy Court Northern District of California Case No.: 22-30362 Judge: Hon. Dennis Montali Debtor's Counsel: Iain A. Macdonald, Esq. MACDONALD FERNANDEZ LLP 221 Sansome Street, Third Floor San Francisco, CA 94104 Tel: (415) 362-0449 Fax: (415) 394-5544 Estimated Assets: $1 million to $10 million Estimated Liabilities: $100,000 to $500,000 The petition was signed by Paula J. Harrel as president. A full-text copy of the petition containing, among other items, a list of the Debtor's two unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/UM5WE5A/Harrell_Realty_Corporation__canbke-22-30362__0001.0.pdf?mcid=tGE4TAMA HILLENBRAND INC: Linxis Transaction No Impact on Moody's Ba1 CFR ---------------------------------------------------------------- Moody's Investors Service said that Hillenbrand, Inc.'s ratings, including the Ba1 corporate family rating, and stable outlook are unaffected following the company's announcement that it will acquire Linxis Group for approximately EUR572 million. Linxis, based in France, manufactures specialized equipment used for food production, including dairy and bakery products, and for processing materials used in the chemical, pharmaceutical and cosmetics industries. The transaction is expected to close in the fourth quarter of calendar 2022, subject to customary closing conditions. Moody's views the transaction as credit negative because it will increase Hillenbrand's adjusted debt to LTM EBITDA, which Moody's estimates to approach a pro forma 4x (at March 31, 2022) from approximately 3x, and reduce its available liquidity with a planned draw on the revolver and likely integration costs. Hillenbrand plans to tap its $1 billion revolver (due 2027) and a recently issued $200 million term loan A to fund Linxis along with additional targets. Moody's notes the acquisitions, including the recently announced acquisition of Herbold Meckesheim GmbH ("Herbold") for about EUR80 million, a Germany-based manufacturer of equipment used for plastic and non-plastic recycling, also pose integration risks. The acquisitions are occurring amid slowing global economic growth, intensifying inflationary pressures and supply chain constraints that will likely continue for some time. Considering Hillenbrand's European manufacturing footprint, along with that of Linxis and Herbold, the company will face energy cost and availability headwinds related to the knock-on effects of the Russia-Ukraine military conflict. However, Moody's expects Hillenbrand to maintain good liquidity and prioritize reducing leverage steadily (including paying down debt) to improve its financial flexibility, consistent with its stated plan and history following acquisitions. The combination with Linxis will broaden Hillenbrand's product offerings to the food and pharma end markets in its Advanced Process Solutions (APS) segment while expanding its geographic presence in Europe. Hillenbrand's announcement also noted the company is exploring strategic alternatives for its deathcare segment (Batesville). A sale of this business would reduce Hillenbrand's revenue diversification and the benefit of its predictable cash flow. While Batesville is in secular decline, its high margins and low capital spending needs have helped to fund Hillenbrand's ongoing transformation to a higher growth, industrial-focused company, which has also increased its vulnerability to economic cycles. Positively, Linxis' product offerings serve end markets with good long term growth prospects. As well, Herbold expands Hillenbrand's position in plastic recycling amid growing demand for more sustainable, durable plastics. Hillenbrand, Inc. is a diversified industrial company consisting of three segments: Advanced Process Solutions or APS (previously the Process Equipment Group), Molding Technology Solutions or MTS (previously Milacron Holdings) and Batesville. APS manufactures process and material handling equipment and systems used in a variety of industries. MTS manufacturers and customizes equipment and supplies used in plastic technology and processing. Batesville is a market leader in the North American death care industry. Revenue approximated $2.9 billion for twelve months ended March 31, 2022. INFOW LLC: Texas Court Denies Jones' Newest Sanctions Delay Bid --------------------------------------------------------------- Katie Buehler of Law360 reports that a Texas appellate panel has denied conspiracy theorist Alex Jones' most recent attempt to delay payment of $1 million in sanctions in a trio of defamation suits brought by families of victims of the 2012 Sandy Hook Elementary School shooting. A three-justice panel of the Third Court of Appeals in Austin issued a two-sentence opinion Thursday, July 14, 2022, denying a petition for writ of mandamus filed by Jones and the company that runs his InfoWars podcast, Free Speech Systems LLC. Jones had asked the intermediate appellate court to direct an Austin judge to either defer payment of the sanctions until a final judgment. A full-text copy of the article is available at https://www.law360.com/bankruptcy/articles/1512032/texas-court-denies-alex-jones-newest-sanctions-delay-bid About InfoW LLC InfoW, LLC, also known as InfoWars, is an American far-right conspiracy theory and fake news website that is owned by Alex Jones. InfoW and affiliates, IWHealth, LLC and Prison Planet TV, LLC, filed petitions under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April 18, 2022. Melissa A. Haselden serves as Subchapter V trustee. In the petition filed by W. Marc Scwartz, chief restructuring officer, InfoW listed up to $50,000 in assets and up to $10 million in liabilities. Judge Christopher M. Lopez oversees the cases. Kyung S. Lee, Esq., is the Debtor's legal counsel. * * * In June 2022, U.S. Bankruptcy Judge Christopher M. Lopez agreed to sign an order approving dismissal of the cases of InfoW LLC, IWHealth LLC and Prison Planet TV LLC, all entities that hold intellectual property assets connected to Jones' podcast network. Mr. Jones was criticized for abusing the bankruptcy system by having his companies file for bankruptcy in April 2022 to limit their liability after a defamation judgment against him and InfoWars for making false statements about the Sandy Hook Elementary School shooting. The Debtors later reached an agreement with the U.S. Trustee for the dismissal of the Chapter 11 cases in light of the dismissal with prejudice of the Debtors from the lawsuits against them by the Texas and Connecticut plaintiffs. INTERMEDIA HOLDINGS: Moody's Alters Outlook on B3 CFR to Negative ----------------------------------------------------------------- Moody's Investors Service affirmed Intermedia Holdings, Inc.'s existing ratings, including its B3 corporate family rating, and changed the outlook to negative from stable. The change in outlook reflects Moody's expectation that leverage will remain high over the next 12-18 months as investments in sales and marketing, R&D, and technical operations will lead to slower-than-anticipated earnings improvement and liquidity will continue to weaken, despite revenue growth. Free cash flow is also expected to remain negative in FY2023. Affirmations: Issuer: Intermedia Holdings, Inc. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Secured 1st Lien Bank Credit Facility, Affirmed B3 (LGD3) Outlook Actions: Issuer: Intermedia Holdings, Inc. Outlook, Changed To Negative From Stable RATINGS RATIONALE Intermedia's B3 CFR reflects its high leverage, relatively small scale as measured by revenue, weak interest coverage, low growth in its business cloud applications (BCA) products that are concentrated with a single vendor and margin pressures. Intermedia faces intense competition in both of its key segments: business cloud applications segment (59% of 2021 total revenue) and its fast-growing Unified Communications as a Service (UCaaS). The UCaaS business faces fewer barriers to entry as Competitive Local Exchange Carriers (CLECs) and other telecom providers can and do offer similar services bundled with connectivity services. Supporting the credit profile, Intermedia's largely subscription-based revenue model provides a fair degree of predictability, driven by sales through a large and growing network of channel partners. While Moody's views Intermedia's liquidity as adequate over the next 12 months, the company's continued inability to generate positive free cash flow may make it more difficult to refinance the senior secured credit facility well in advance of its maturity. For external liquidity, Intermedia relies on its recently upsized $62 million revolver. As of March 31, 2022, Intermedia had $22 million drawn on the revolver. The company received a $25 million capital contribution from its parent that was used to repay revolver borrowing. As of April 30, 2022, Intermedia's revolver was undrawn. Given the expectation of negative free cash flow projected over the next 12 months, Moody's estimates that the company will likely tap into revolver borrowing in the second half of 2022 to meet its basic cash needs, including capital expenditures in the $21-$35 million range, debt service of approximately $27 million and working capital. Moody's expects the company to burn $25-30 million in cash in FY2022 and another $10-15 million in FY2023. The revolving credit facility contains a springing maximum first lien net leverage covenant when the revolver is greater than 30% drawn. Moody's projects adequate cushion under the maintenance test over the next 12-18 months. The B3 instrument ratings on the senior secured credit facility (first lien term loan and revolver) reflect the probability of default of the company, as reflected in its B3-PD probability of default rating and an average expected family recovery rate of 50% at default given the covenant lite structure. The negative rating outlook reflects Moody's expectation that Intermedia's Debt to EBITDA will remain above 6x (Moody's adjusted) through at least 2022 due to increased investment in growth. It also incorporates Moody's expectation that Intermedia's free cash flow will remain negative over the next 12 months with increased reliance on the revolver. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be downgraded if liquidity deteriorates, free cash flows remain negative, Moody's adjusted leverage is sustained above 6x, or operating performance weakens such that Moody's believes that the company will be challenged to proactively refinance upcoming debt obligations well ahead of its maturity. Ratings could be upgraded if Intermedia's Moody's adjusted leverage is expected to be sustained below 5x with free cash flow to debt above 5%. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. Based in Sunnyvale, CA, Intermedia is a provider of cloud-based communications, collaboration, security and productivity software solutions for businesses. Products include cloud voice, Contact Center as a Service (CCaaS), web/video/content sharing and conferencing, file backup, sync and share, business e-mail, archiving and security. The company is also one of the largest independent providers of Microsoft's cloud-based Exchange e-mail. The company generated revenue of $281 million for the last twelve months ended March 31, 2022. Intermedia is majority owned by Madison Dearborn Partners. ION GEOPHYSICAL: Amends Unsecured Claims Pay Details ---------------------------------------------------- ION Geophysical Corporation and its Affiliated Debtors submitted a First Amended Joint Chapter 11 Plan and Disclosure Statement dated July 18, 2022. Class 3 consists of all Allowed RCF Claims. Except to the extent that a Holder of an Allowed RCF Claim agrees to less favorable treatment, on the Effective Date, or as soon as reasonably practicable thereafter, in full and final satisfaction, compromise, settlement, and release of and in exchange for each Allowed RCF Claim, each Holder thereof shall receive RCF Distributable Cash. Class 4 consists of all Allowed Second Lien Notes Secured Claims. Except to the extent that a Holder of an Allowed Second Lien Notes Secured Claim agrees to less favorable treatment, on the Effective Date, or as soon as reasonably practicable thereafter, in full and final satisfaction, compromise, settlement, and release of and in exchange for each Allowed Second Lien Notes Secured Claim, each Holder thereof shall receive its Pro Rata share of 96 percent of any Second Lien Notes Distributable Cash. Class 5 consists of all Allowed General Unsecured Claims. Each Holder thereof shall receive its Pro Rata share of (i) the available GUC Recovery Pool and (ii) any proceeds derived from, or on account of, the Plan Administrator GUC Assets; provided that the Plan Administrator shall be authorized to retain funds in the GUC Recovery Pool and proceeds of Plan Administrator GUC Assets in its reasonable discretion to enhance recoveries on account of additional Plan Administrator GUC Assets for the benefit of Holders of Allowed General Unsecured Claims. For the avoidance of doubt, the Second Lien Notes Deficiency Claims shall not participate in any recoveries or distributions to the Holders of Allowed General Unsecured Claims. Class 5 is Impaired under the Plan. Class 6 consists of all Intercompany Claims. On the Effective Date, Intercompany Claims shall be, at the option of the applicable Debtor or the Plan Administrator, either Reinstated or cancelled and released without any distribution. Class 7 consists of all Intercompany Interests. On the Effective Date, Intercompany Interests shall be, at the option of the applicable Debtor or the Plan Administrator, either Reinstated or cancelled and released without any distribution. Class 8 consists of all ION Geophysical Preferred Interests. On the Effective Date, all ION Geophysical Preferred Interests will be cancelled, released, and extinguished, and will be of no further force or effect. Class 9 consists of all ION Geophysical Common Interests. On the Effective Date all ION Geophysical Common Interests will be cancelled, released, and extinguished, and will be of no further force or effect. Class 9 is Impaired under the Plan. Holders of ION Geophysical Common Interests are conclusively deemed to have rejected the Plan pursuant to section 1126(g) of the Bankruptcy Code. Therefore, ION Geophysical Common Interests are not being solicited to vote to accept or reject the Plan. The Debtors and the Plan Administrator, as applicable, shall fund distributions under the Plan with (i) Cash on hand, (ii) Sale Proceeds, and (iii) any other proceeds derived from, or on account of, the Plan Administrator Assets. The Plan Administrator shall use Cash on hand to fund distributions to certain Holders of Allowed Claims in accordance with the Plan. The Plan Administrator shall use any Sale Proceeds pursuant to the terms of any Asset Purchase Agreement(s) and the Plan to fund distributions to certain Holders of Allowed Claims in accordance with the Plan. The Plan Administrator shall use any proceeds derived from, or on account of, the Plan Administrator Assets to fund distributions to certain Holders of Allowed Claims in accordance with the Plan; provided that any proceeds derived from Plan Administrator GUC Assets shall be distributed to the Holders of Allowed General Unsecured Claims only. Proposed Counsel for the Debtors: Katherine A. Preston, Esq. WINSTON & STRAWN LLP 800 Capitol Street, Suite 2400 Houston, Texas 77002 Telephone: (713) 651-2600 Facsimile: (713) 651-2700 Email: kpreston@winston.com - and - Timothy W. Walsh, Esq. 200 Park Avenue New York, New York 10166 Telephone: (212) 294-6700 Facsimile: (212) 294-4700 E-mail: twwalsh@winston.com - and - Daniel J. McGuire, Esq. Laura Krucks, Esq. 35 W Wacker Drive Chicago, IL 60601 Telephone: (312) 558-5600 Facsimile: (312) 558-5700 Email: dmcguire@winston.com lkrucks@winston.com About ION Geophysical Corp. Headquartered in Houston, Texas, ION (NYSE: IO) -- http://www.iongeo.com/ --is an innovative, asset light global technology company that delivers powerful data-driven decision-making offerings to offshore energy, ports and defense industries. The Company is entering a fourth industrial revolution where technology is fundamentally changing how decisions are made. The Company provides its services and products through two business segments -- E&P Technology & Services and Operations Optimization. Ion Geophysical Corp. and its affiliates sought Chapter 11 bankruptcy protection (Bankr. S.D. Tex. Lead Case No. 22-30987) on April 12, 2022. In the petition filed by Mike Morrison, as authorized signatory, Ion Geophysical estimated assets between $10 million and $50 million and estimated liabilities between $100 million and $500 million. The cases are assigned to Honorable Judge Bankruptcy Judge Christopher M. Lopez. WINSTON & STRAWN LLP, is the Debtor's counsel. FTI CONSULTING, INC., is the financial consultant and PERELLA WEINBERG PARTNERS LP is the investment banker. EPIQ CORPORATE RESTRUCTURING, LLC is the claims agent. ISABEL ENTERPRISES: LLC Debtor Needs Financing to Exit Chapter 11 ----------------------------------------------------------------- Isabel Enterprises, Inc., and Isabel LLC submitted a First Amended Disclosure Statement. The Joint Plan seeks to reorganize the LLC Debtor ("Reorganized Isabel LLC") and the Enterprises Debtor ("Reorganized Isabel Enterprises") such that each legal entity will emerge from bankruptcy as a separate and distinct legal entity under the same ownership as the Isabel LLC and Isabel Enterprises. There are however material conditions necessary to the effectiveness of the Joint Plan for each of the LLC Debtor and the Enterprises Debtor. For the LLC Debtor to be reorganized under the Joint Plan, the LLC Debtor must obtain financing in the approximate amount of no less than $850,000 to satisfy the Allowed Claim of OR Real Estate LLC as a condition to the occurrence of the date on which the Joint Plan becomes effective and binding on all parties-in-interest ("Effective Date"). The Debtors are currently in discussions with third-parties ("Exit Facility Lender") to provide financing ("Exit Financing"). Moreover, to the extent the terms of the Exit Financing are objected to by LLC Creditors holding Allowed Secured Claims against the LLC Debtor, the LLC Debtor may not be able to secure Exit Financing necessary for the Joint Plan to be consummated. The LLC Debtor's belief that it will be able to secure a commitment in an amount no less than $850,000 is based on a broker's opinion of value for the Real Property in the amount of $1,400,000. For the Enterprises Debtor to be reorganized under the Joint Plan, the Enterprises Debtor must be sufficiently capitalized to implement its business plan. Cash flow projections for the Reorganized Isabel Enterprises for the next three years following the occurrence of the Effective Date ("Joint Plan Term") are attached to the Joint Plan as Exhibit A. Key assumptions made by the Debtors in connection with the cash flow projections include: * Gross profit from the sale of ready-made and prepackaged goods purchased by Reorganized Isabel Enterprises will be approximately 50% of the cost of goods sold to Reorganized Isabel Enterprises; * Reorganized Isabel Enterprises will be able to pay all of its operating expenses and generate sufficient net income to make monthly rent payments under a new lease between Reorganized Isabel LLC as landlord and Reorganized Isabel Enterprises as tenant in the approximate amount of $6,000 per month, which funds shall be used by Reorganized Isabel LLC to satisfy the Allowed Claims of the LLC Creditors (except for the Allowed Claim of OR Real Estate LLC, which shall be paid in full from the Exit Financing), plus the post-Effective Date expenses of the Reorganized LLC Debtor; and * William Tosheff will inject capital into Reorganized Isabel Enterprises in an amount sufficient to effectuate the business plan under a confirmed Joint Plan; and * Distributions by Reorganized Isabel Enterprises of "disposable income" on account of Allowed Claims held by Enterprises Creditors will depend upon available net income after Reorganized Isabel Enterprises satisfies its operating costs as well as the monthly lease payments to Reorganized Isabel LLC. In the event the conditions necessary for the Effective Date of the Joint Plan are not satisfied, the Joint Plan provides the LLC Debtor with authority to sell the Real Property to the highest and best bidder, subject only to the Court's authorization under Section 363 of the Bankruptcy Code for the Debtors to seek approval of bidding procedures, which the LLC Debtor shall file no later than 30 days prior to the Confirmation Hearing. In the event the Court authorizes the LLC Debtor to control an auction for the Real Property, the net sale proceeds shall be held in the Isabel Debtor's deposit account pending further order from the Court. For the avoidance of doubt, should the Effective Date not occur as set forth in the Joint Plan, the Debtors will not be able to resume operations as the Reorganized LLC Debtor and the Reorganized Isabel Enterprises Debtor and satisfy Allowed Claims held by the Enterprises Creditors in accordance with the Joint Plan, unless two conditions are satisfied: first, the net sale proceeds from the sale of the Real Property exceed the total amount of the Allowed Secured Claims held by the LLC Creditors plus all Allowed Administrative Expense Claims; and second, the purchaser agrees to lease back the Real Property to Reorganized Isabel Enterprises on terms consistent with the business plan proposed by the Joint Plan. Absent the occurrence of each condition, the Debtors will need to consider, in consultation with key parties-in-interest, whether conversion or dismissal is in the best interests of the Debtors, their creditors and other parties-in-interest, or further modification of the Joint Plan is in the best interests of the Debtors, their creditors and other parties-in-interest. The Plan will treat claims as follows: * Class 8(a) General Unsecured Creditors of the LLC Debtor. Payment in full over the Joint Plan Term following the Effective Date. Class 8(a) is impaired. * Class 8(b) General Unsecured Creditors of the Enterprises Debtor totaling $100,000. Payments over the Joint Plan Term from the "disposable income" of the Enterprises Debtor after Enterprises Debtor satisfies rent payments under New Lease to LLC Debtor. Class 8(b) is impaired. With respect to the LLC Debtor, the Joint Plan seeks authority to sell the LLC Debtor's only asset – the Real Property – in the event the Debtors cannot satisfy the conditions precedent to the Effective Date of the Joint Plan. Because the Joint Plan provides for the liquidation of the LLC Debtor's assets in the event the Debtors are unable to exit chapter 11 protection, no feasibility analysis is warranted. In addition, the Debtors acknowledge that because the LLC Debtor's ability to satisfy Allowed Claims held by the LLC Creditors is contingent on Reorganized Isabel Enterprises' ability to generate sufficient net income to fund the lease payments under the New Lease with the Reorganized LLC Debtor, any inquiry into feasibility for purposes of satisfying section 1129(a)(11) of the Bankruptcy Code requires analysis of the Joint Plan with respect to the Enterprises Debtor only. The Enterprises Debtor relies on the more than 30 years-experience that William Tosheff has in the service industry. To the extent the Reorganized Enterprises Debtor is able to generate the projected sales, generate projected gross profit after deducting the costs of goods sold, and operate the business within the projected expenses, the Reorganized Enterprises Debtor believes it will be able to pay the Reorganized LLC Debtor monthly rent in the amount of $6,000. For the avoidance of doubt, the feasibility of the Joint Plan with respect to the Enterprises Debtor is also dependent on the LLC Debtor's ability to negotiate Exit Financing terms that do not demand additional rents or payments by Reorganized Isabel Enterprises to Reorganized Isabel LLC during the Joint Plan Term. Attorneys for Debtors: Oren B. Haker, Esq. STOEL RIVES LLP 760 SW Ninth Avenue, Suite 3000 Portland, OR 97205 Telephone: 503.224.3380 Facsimile: 503.220.2480 E-mail: oren.haker@stoel.com A copy of the First Amended Disclosure Statement dated July 13, 2022, is available at https://bit.ly/3aEtdz1 from PacerMonitor.com. About Isabel Enterprises Isabel LLC owns two tax lots consisting of a commercial unit located at 330 NW 10th Avenue, #116, Portland, Oregon 97209 and a related parking unit. Historically, Isabel LLC leased the property to affiliate Isabel Enterprises, which operated a restaurant on the premises commonly known as the Isabel Pearl. Amid deteriorating conditions in the neighborhood and the pandemic, the restaurant shut operations in July 2019. Amid an impending sale of the property as a result of a foreclosure action initially instituted by the Condominium Owners' Association, Isabel Enterprises, Inc., and Isabel LLC sought Chapter 11 protection (Bankr. D. Ore. Lead Case No. 22-30801) on May 18, 2022. In its petition, Isabel Enterprises was estimated to have $50,000 to $100,000 in assets and $1 million to $10 million in liabilities. The Hon. Peter C. Mckittrick oversees the cases. Oren B. Haker, Esq., of Stoel Rives LLP is the Debtors' counsel. JAB OF ROCKLAND: Sept. 19 Debtor to File Plan and Disclosure ------------------------------------------------------------ Judge Sean H. Lane has entered an order that the time for JAB of Rockland, Inc., d/b/a David's Bagels to file a Chapter 11 Plan and Disclosure Statement pursuant to 11 U.S.C. Section 1121 (e) (3) be and the same is extended up to and including Sept. 19, 2022. The time for the Debtor to obtain confirmation of a Chapter 11 Plan pursuant to 11 U.S.C. Sec. 1121 (e) (3) be and the same is extended up to and including Oct. 7, 2022. About JAB of Rockland JAB of Rockland, Inc., which conducts business under the name David's Bagels, filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case No. 19-23153) on June 11, 2019, disclosing under $1 million in both assets and liabilities. Judge Robert D. Drain oversees the case. The Debtor is represented by Elizabeth A. Haas, Esq., PLLC. JCB TRUCKING: Files Amendment to Joint Plan & Disclosures --------------------------------------------------------- JCB Trucking Enterprises LLC and JKM Storage and Rentals LLC submitted a Modified Joint Small Business Chapter 11 Plan and Disclosure Statement Under Subchapter V dated July 18, 2022. The Plan is modified to clarify that Holders of an Allowed Secured Claim in any Class that expressly includes the allowance and/or payment of that Claimant's reasonable postpetition attorney fees, costs, and/or charges in the treatment of such Allowed Unsecured Claim may, but are not required, to file a motion for allowance and/or payment of such postpetition attorney fees, costs, and/or charges pursuant to the procedures set forth in Article III of the Plan in the section entitled "Other Administrative Expenses and Bar Date." To the extent any terms in the Plan contradict the terms of this Modification, the terms set forth in this Modification shall control. The following provisions shall replace the provisions titled "Other Administrative Expenses and Bar Date" set forth in Article III of the Plan: Other Administrative Expenses and Bar Date. Except as provided otherwise in this Article, all other entities seeking payment of an Administrative Expense shall file their respective request for allowance and/or payment thereof by no later than thirty (30) days after the Effective Date, or such other date as may be fixed by an order of the Court (the "Administrative Bar Date"). Only 1) those parties who file for allowance and/or payment of an administrative expense, or 2) have an Allowed Secured Claim that expressly includes allowance and payment of such party's reasonable postpetition attorney fees, costs, and/or charges (holders of such Allowed Secured Claims shall not be required to file an application for allowance of any post-petition fees, costs, and/or charges), or 3) Professionals that file an application for payment as required under the Bankruptcy Code and any Order of this Court, shall be paid under this Plan. Each Holder of an Administrative Expense against Debtors shall receive, in full satisfaction, settlement, release, and extinguishment of such cost or expense, Cash equal to the amount of such Administrative Expense, either (a) on the Effective Date, or, if later, the Allowance Date; or (b) upon such terms as may be agreed to in writing by the Administrative Claimant. Debtors shall review the claims and the supporting documents. If Debtors disagree with the amount of any Administrative Expense, then Debtors shall file an appropriate objection. If no objection is filed, then the Administrative Expense shall be allowed and treated as an Allowed Administrative Expense. All Holders of Administrative Expenses that are required to file but do not file and serve a request for allowance and/or payment by the Administrative Bar Date set forth in this Section shall be forever barred from asserting such expenses. A Proof of Claim asserting administrative priority under 11 U.S.C. §§ 507(a)(1), 503(b), and/or 507(b) or otherwise is not a proper request for allowance and payment of an Administrative Expense in accordance with this Section. A full-text copy of the Modified Joint Plan and Disclosure dated July 18, 2022, is available at https://bit.ly/3PNdhZV from PacerMonitor.com at no charge. Counsel for Debtors: Sarah L. Fowler, Esq. Weston E. Overturf, Esq. Overturf Fowler LLP 9102 N. Meridian Street, Suite 555 Indianapolis, IN 46260 Tel: 317-559-3379 Email: sfowler@ofattorneys.com wes@ofattorneys.com About JCB Trucking Enterprises JCB Trucking Enterprises, LLC is a privately held company operating in the general freight trucking industry. The company is based in Lafayette, Ind. JCB Trucking Enterprises and its affiliate, JKM Storage & Rentals, LLC, filed petitions under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Ind. Lead Case No. 22-40047) on March 18, 2022, listing up to $50,000 in assets and up to $10 million in liabilities. Douglas R. Adelsperger serves as Subchapter V trustee. Judge Robert E. Grant oversees the cases. Sarah L. Fowler, Esq., at Overturf Fowler, LLP and Heath CPA & Associates serve as the Debtors' legal counsel and accountant, respectively. JNS LLC: Amends DFA Claims Pay Details -------------------------------------- JNS, LLC submitted an Amended Disclosure Statement describing Chapter 11 Plan of Reorganization dated July 17, 2022. The Debtor believes that restructuring and reorganization is the best and only course of action to take in this proceeding and the Plan is in the best interests of all creditors. Class 1 consists of the secured claim of DFA and is in the amount of $72,756.76 and is secured by all personal property owned by the Debtor. The remainder of the secured claim filed by the DFA, in the amount of $18,584.79, shall be treated in the priority section of the Plan. DFA shall retain its lien on the property and retain all of its state law remedies upon any uncured default. DFA will be paid in full on its bifurcated secured claim by amortizing the balance on this debt in the total amount of $72,756.47 over 5 years at 10% per annum. The Debtor shall pay a monthly payment of $1545.86. The first monthly payment will be made on the 15th day of the first full month following the effective date of the Plan and subsequent payments are due on or before the same day of each month thereafter. Debtor shall be allowed to prepay this debt in full without penalty. ADF&A shall retain its liens, if any, on property of the Debtor until its claim(s) are paid in full. Despite any other provision of this plan to the contrary, any failure by the Debtor to timely make any payment due under this plan, or to timely file and pay post-petition taxes (including those due after confirmation of the plan) shall constitute an event of default. In the event of Default, DFA shall provide the Debtor and his counsel with written notice of default and a 10 day opportunity to cure. Class 2 consists solely of the priority claim of DFA, and in the estimated amount of $38,429.44 (such amount includes the filed claims of the DFA for priority debt and the remainder of the bifurcated secured claim). Debtor proposes to pay this claim at $640.50 over 60 months of the plan. Class 3 consists solely of the unsecured claim of DFA, and in the amount of $1946.05. Debtor proposes to pay this claim at $32.43 over 60 months of the plan. Debtors will maintain and continue its current business operations and commit its available income to the Plan for the required 5 year period. This plan shall be in effect and subject to the jurisdiction of the Bankruptcy Court, for up to and including 60 months (5 years) from the effective date of the plan, or so long as it takes to pay priority tax claims, administrative claims, secured claims and unsecured claims as provided for in the Debtors' plan, whichever is less. A full-text copy of the Amended Disclosure Statement dated July 17, 2022, is available at from PacerMonitor.com at no charge. Attorney for the Debtor: Joel G. Hargis, Esq. CADDELL REYNOLDS, LAW FIRM 3000 Browns Lane Jonesboro, AR 72401 PH (870) 336-6407 FX (479) 230-2002 jhargis@caddellreynolds.com About JNS LLC JNS LLC is incorporated with the Arkansas Secretary of State. The primary purpose of JSN LLC is to serve as a limited liability company doing business as Sandy's Bakery, Natural State Janitorial Services, and a remodeling company in the city of Jonesboro, AR. Sandy's Bakery -- https://www.sandysbakeryandcatering.com/ -- is a bakery and catering company. JNS, LLC, sought Chapter 11 bankruptcy protection (Bankr. E.D. Ark. Case No. 22-11064) on April 25, 2022. In the petition filed by Juan Morales, vice-president and managing member, JNS LLC listed estimated assets up to $50,000 and estimated liabilities between $100,000 and $500,000. The case is assigned to Honorable Bankruptcy Judge Phyllis M Jones. Joel Grant Hargis, of Caddell Reynolds Law Firm, is the Debtor's counsel. KAH HOSPICE: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable ----------------------------------------------------------------- S&P Global Ratings assigned its 'B' issuer credit rating to KAH Hospice Co. Inc. S&P also assigned its 'B' issue-level and '3' recovery ratings to the company's proposed term loan A, first-lien term loan and revolver, indicating its expectations for meaningful (50%-70%; rounded estimate: 60%) recovery prospects in the event of a default. Furthermore, S&P assigned its 'CCC+' issue-level and '6' recovery ratings to the company's proposed second-lien term loan, indicating its expectations for negligible (0%-10%; rounded estimate: 0%) recovery prospects in the event of a default. S&P said, "The stable outlook reflects our view that KAH's decent scale in the hospice business, industry-leading EBITDA margins, and strong referral sources will enable the company to achieve mid- to high-single-digit annual revenue growth and generate meaningful free cash flow over the next 12-18 months. That said, we expect tight labor markets to weigh on margins, and we expect adjusted leverage to remain above 7.0x." Clayton, Dubilier, & Rice LLC (CD&R) entered into a definitive agreement to acquire a majority interest (60%) in KAH Hospice Co. Inc., a provider of hospice and personal care services in the U.S. The remaining 40% stake will be owned by insurer Humana Inc. The capital structure will consist of a $400 million Term Loan A, a $1.2 billion first-lien term loan, a $450 million second-lien term loan, and common equity. KAH will also issue a $400 million revolving credit facility ($103 million drawn at close). KAH is one of the larger companies in the highly fragmented and commodity-like market for hospice and home care services, with nearly all revenues coming from government payors. The hospice and home care industry is characterized by largely undifferentiated, commodity-like services, low barriers to entry, and a generally challenging labor market with annual turnover of about 25%-30%. KAH is one of the largest hospice services providers in the U.S., with about $1.5 billion of revenue but market share of only about 7%. Peers include FC Compassus LLC ('B/Stable'), BW Homecare Holdings LLC ('CCC/Negative'), Pluto Acquisition I Inc. (doing business as AccentCare; 'B-/Stable'), and Amedisys (not rated). KAH is focused primarily on hospice services (about 83% of revenue) and S&P views the business mix as relatively concentrated, and a weakness relative to most of the other rated peers. KAH also provides, unskilled, personal care services in the home. Although hospice services are cost-efficient for government payors and desired by many eligible patients, we view the potential for adverse changes to government reimbursement as a key risk. This is because of KAH's high reliance on government payors (82% Medicare; 16% Medicaid) and the government's ability to unilaterally reduce or introduce adverse changes to reimbursement, particularly given rising budget pressures. The rest of KAH's revenues are from commercial payors and others. Recent reimbursement developments have been favorable, including the Provider Relief Fund and Medicare Advance Payments, which provided financial assistance and liquidity to the industry in the face of COVID-19 pandemic-related challenges in 2020. Moreover, the Centers for Medicare & Medicaid Services (CMS) issued a final hospice ruling, increasing Medicare rates by 2.1% in 2022, and it proposed a 2.7% rate increase for 2023. This, however, is partially offset by the effect of sequestration. In 2014, under the Budget Control Act, sequestration reduced Medicare payments to hospice and health care providers by 2%. This sequestration was suspended in May 2020 through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and the suspension was extended several times. The suspension ended March 31, 2022, thus effective April 1, 2022 the sequestration began at 1%, and as of June 30, 2022, it increased to 2%. S&P expects this to partially offset the 2022 rate increases. Key strengths include KAH's decent scale, relatively strong margins, good geographic diversity, and a cost structure with limited fixed costs. KAH is one of the largest providers of hospice and personal care services in the U.S., in a very fragmented market, with about $1.5 billion revenue, 377 hospice and palliative and 48 personal care branches across 35 states. The company provides hospice and home-based care services, which is often preferred by patients and is cost-efficient for payors relative to other care settings. The company's margin of about 17%-18% exceeds those of peers. S&P said, "KAH is present in six "CON" states (those requiring a certificate of need to open new hospice sites), representing about 45% of average daily census, which we view as positive. We believe this contributes to the company's attractive margins because they present a moderate barrier to new entrants. We believe KAH's larger scale relative to peers and strong sources of referrals are modest competitive advantages that also contribute to the company's margins." S&P said, "Although the industry experienced uncharacteristic volume declines during the pandemic, the hospice average daily census has largely recovered, and we expect it to exceed pre-pandemic levels as long-term care referrals normalize. As the pandemic eases, we believe KAH will benefit from the reopening of existing referrals sources as well as new referrals. In addition, aging demographics with significant end-of-life health care spend and higher quality of life for many patients electing hospice services support rising demand for hospice services. "The company's cost structure that is mostly variable with limited requirements for capital expenditure (capex), further support our rating. "We expect modest margin pressure from wage inflation in 2022-2023 while KAH takes measures to lower the impact. Similar to many other health care services companies, KAH is facing margin pressure amid wage inflation, primarily due to shortage of nurses, and to a lesser degree, with the less-skilled non-clinical staff. As a result, we expect the EBITDA margin to decline by 100-150 basis points in 2022 and modestly in 2023 as well. KAH has acted to minimize turnover and address its labor needs, including increasing the nurse headcount, providing hiring/sign-on bonuses to new hires, and adjusting pay for existing staff, which will increase direct costs 1%-2%. We believe the tight labor market--especially for nurses--is a longer-term issue. "We expect high leverage in 2022 and 2023, with modest free operating cash flow (FOCF) generation and FOCF to debt of 3%-4%.We expect KAH to remain highly leveraged over the next several years as it pursues acquisitions and maintains a financial policy from its financial sponsor ownership that we expect will prioritize mergers, acquisitions, and shareholder returns over debt reduction. Therefore, we expect adjusted leverage to remain above 7x over the next several years. However, given minimal capex requirement we expect the company to generate meaningful free cash flow in 2022 and 2023." The stable outlook reflects KAH's decent scale in the hospice business, strong referral sources that will enable the company to generate mid- to high-single-digit annual revenue growth, attractive EBITDA margins, and our expectation for the company to generate meaningful free cash flow over the next 12-18 months. That said, S&P expects tight labor markets to pressure margins, and it expects adjusted leverage to remain above 7.0x. S&P said, "We could lower our rating on KAH if reimbursement pressures, operational disruptions such as loss of referral partners, an larger than expected increase in labor costs, or reputational issues reduce the ratio of FOCF to debt to below 3% or leverage rises above 8x for an extended period. This could happen if EBITDA margin declines by 300 bps lower than our base-case assumption. "Though unlikely given the company's sponsor ownership, we could raise our rating on KAH if we expect adjusted leverage to decline and remain below 5x on sustainable basis." 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 KAH. Our assessment of the company's financial risk profile as highly leveraged reflects corporate decision-making that prioritizes the interests of the controlling owners, in line with our view of the majority of rated entities owned by private equity sponsors. Our assessment also reflects the generally finite holding periods and a focus on maximizing shareholder returns." KENWOOD COMMONS: Unsecureds Could Recover Up to 100% in Plan ------------------------------------------------------------ Kenwood Commons, LLC, submitted a Plan and a Disclosure Statement. In August 2017, Kenwood acquired a 74 acre historic site, situated in a designated Federal Opportunity Zone in the Central Business District of Albany, New York (the "Property"). The Property has two components: (i) the "Abbey, and (ii) the "Kenwood Development" site. The Abbey is, effectively, the project's "heart" -- it is a historic 249,138 square foot Neo-Medieval style cathedral situated on approximately 8 acres in the Property's center. The balance of the Property is approximately 66.65 acres of gently sloping, park-like land, shaded by magnificent rare species of 200+ year old trees, overlooking both the Hudson River and the Normans Kill Waterfall. Kenwood expects to sell its Property having a value of $103,000,000 and then cease doing business. If there are net proceeds after Kenwood sells its Real Property, it will determine what to do with the net proceeds after paying Creditors under the Plan. The Debtor and Briarcliff Commons PLC are to enter a "Purchase and Sale Agreement" dated July 2022 (PSA) for the sale of the Property. If the PSA with Briarcliff is not executed in time for Confirmation, then Debtor will enter into an alternative Purchase and Sale Agreement ("Aternative PSA") through Post-Confirmation marketing efforts. The Disclosure Statement indicates that Class 6 General Unsecured Claims will recover 100% and are unimpaired under the Plan. However, the Disclosure Statement later says that recovery for Class 6 will depend on the outcome of the sale and the total amount of allowed claims -- Except to the extent that a holder of an Allowed Class 6 Claim agrees to a different treatment, each holder of an Allowed Class 6 Claim will receive: I) If the PSA is executed and approved a) If the total of all Allowed Claims is equal to or less than $10,000,000, Cash in an amount equal to such Allowed Class 6 Claim on the later of the Closing Date and the date such Allowed Class 6 Claim becomes an Allowed Class 6 Claim, or as soon thereafter as is practicable; or b) If the total of all Allowed Claims is greater than $10,000,000, on the later of the Closing Date and the date such Allowed Class 6 Claim becomes an Allowed Class 6 Claim, or as soon thereafter as is practicable: i) Cash in an amount equal to: $10,000,000 less the total amount of all Allowed Administration and Class 1, 2, 3, 4 and 5 Claims; multiplied by a fraction, the numerator of which is the Amount of such Holder's Allowed Class 6 Claim; and the denominator of which is the Aggregate amount of All Allowed Class 6 Claims; and ii) If the Cash payment to the Holder of an Allowed Class 6 Claim is less than the Allowed Class 6 Claim, the Holder of that Class Allowed Class 6 Claim shall receive, on account of the difference between Cash received on account of their Allowed Class 6 Claim amount of that Class 6 Claim, such fractional Class B Preferred Units of beneficial interest in Briarcliff which is equal to such Holder's Redemption Amount having the rights and privileges as described in Article Three (3) of the post-Closing Operating Agreement of Briarcliff) or II) If the Alternate PSA is Approved: After the Allowed Claims in Classes, 1, 2, 3, 4, and 5 are paid, in full, allowed Class 6 Claims will be paid in full, up to the allowed amount of their claims. Class 6 is unimpaired. Attorney for Kenwood Commons LLC: Wayne Greenwald, Esq. WAYNE GREENWALD, P.C. 475 Park Avenue South - 18th Floor New York, New York 10016 Tel: (212) 983-1922 A copy of the Disclosure Statement dated July 13, 2022, is available at https://bit.ly/3IJ0RQQ from PacerMonitor.com. About Kenwood Commons LLC Kenwood Commons LLC sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 22-35169) on March 28, 2022. In the petition filed by Jacob Frydman, as manager, Kenwood Commons estimated assets between $100 million and $500 million estimated liabilities between $1 million and $10 million. Wayne M. Greenwald, Esq., of WAYNE GREENWALD PC, is the Debtor's counsel. KS OWNER: Kings' Shops Mall in Hawaii Has August 29 Auction ----------------------------------------------------------- Wells Fargo Bank National Association, as trustee, for the benefit of the holders of Comm 2014 CCRE21 Mortgage Trust Commercial Mortgage Pass Through Certificates, plaintiff, vs. KS Owner LLC, et al., defendants, in the Circuit Courts of the Third Circuit, State of Hawaii, the commissioner Oscar Parra, of Pacific Capital Retail Partners, will sell at public auction on Aug. 29, 2022, at 12:00 p.m., on the ewa lani fronting the entrance of the Circuit Court for the First Circuit, also known as Kaahumanu Hale, 777 Punchbowl Street, Honolulu, Hawaii, 96813. Property: fee simple interests in land, additional land, improvements, easements, equipment, fixtures, personal property, lease and rents, condemnation awards, insurance proceeds, tax certiorari, rights, agreements, intellectual property, accounts, UCC property, minerals, and proceeds and other rights in connection with the foregoing, with respect to the real property located at 69-250 Waikoloa Beach Drive, County and State of Hawaii, 96738, commonly known as the Kings' Shops shopping mall, all of the foregoing as more specifically described in a certain mortgage, assignment of leases and rents and security agreement recorded in the State of Hawaii Bureau of Conveyances as Doc. No. A-54020028; said property being identified by Tax Map Key No. (3) 6-9-088-005-000. For rurther information, contact: Oscar Parra Pacific Capital Retail Partners 100 N. Pacific Coast Highway Suite 1925 El Segundo, CA 90245 Tel: (310) 641-8060 Email: emaill@pacificretail.com MEDICAL ACQUISITION: Unsecureds to be Paid in Full with Interest ---------------------------------------------------------------- Medical Acquisition Company, Inc. filed with the U.S. Bankruptcy Court for the Southern District of California a Disclosure Statement describing Plan of Reorganization. The Debtor is a medical lien factoring company founded nearly 30 years ago. Debtor has successfully operated for most of the 30 years. The Debtor's sole shareholder is Charles Perez. In the early 2010s, the Debtor entered into a series of agreements with TriCity Healthcare District to construct a medical office building on TCHD's campus for the purpose of attracting world class surgeons to perform surgeries at TriCity Hospital. Although the agreements between the Debtor and TriCity hospital were approved by a sitting board of directors, when construction of the Medical Office Building was nearly completed. TCHD alleged breach of the agreements, forcing the Debtor to stop construction. Litigation started in 2014, and is still ongoing. In July 2021, TCHD obtained a partial judgment for approximately $4,000,000. The Debtor's primary assets consist of the DIP bank accounts, and Debtor's interest in the Ground Lease with TCHD which can be determined pursuant to the terms of the Ground Lease (rental incomes) and/or the fair market value of the Medical Office Building (real property appraisal values) constructed thereon. Under the Ground Lease, Debtor has a right to approximately 6,634,119.66 in rental income. Under a fair market value valuation, Debtor's previous appraisal of the MOB provides that the MOB is valued at approximately $24,000,000. TCHD also obtained an appraisal in August 15, 2014 valuing the MOB to be 24,504.158. The Plan proposes that the holders of Secured Claims will retain their liens and receive payment on account of their Allowed Secured Claim in an amount by which their Claim is actually secured. As a practical matter, all Secured Claims will be treated as fully secured to the extent that they are allowed. Class 3 consists of all Allowed Unsecured Claims. The Debtor believes that Class 3 Claims total approximately $384,137.32. The Debtor's Plan proposes to pay the holder of an Allowed Class 3 Claim the full amount of its Allowed Claim with simple interest on principal accruing from and after the Effective Date at the rate of 5% per annum, on or before the later of: (i) 1,596 days from the Effective Date, or (ii) 1,078 days after the Claim becomes an Allowed Claim. Class 3 is impaired. Class 4 consists of all membership interests (i.e. equity interests) in the Debtor corporation. Charles Perez possesses all shareholder interests in the Debtor. The Debtor's Plan proposes that the holder of the Class 4 Claim shall retain its full equity interest in the Debtor. Class 4 is not impaired. The Debtor's Plan proposes to pay all Allowed claims within a 60 month period. Debtor's income relies on the settlement of personal injury cases and the proceeds provided therefrom to the payment of existing medical liens. The Debtor's General Counsel has provided that Debtor's rate of recovery on outstanding medical liens is approximately 60%. Based on this average rate of recover, Debtor anticipates to collect approximately $15,600,000.00 within the 60 month plan period. Debtor's 60-month projected income exceeds the aggregate of all Claim Classes. Because the Debtor's projected income exceeds the Debtor's total liabilities and ordinary business expenses, the Debtor believes that payment of all claims with allowed interest is a feasible option. The Debtor/Reorganized Debtor shall make scheduled payments from its business income in an amount necessary to satisfy its Plan obligations. The Debtor is to use business income in excess of standard operating costs over a 60-month period from the petition date. A full-text copy of the Disclosure Statement dated July 18, 2022, is available at https://bit.ly/3B4gfFx from PacerMonitor.com at no charge. Attorneys for the Debtor: Deepalie Milie Joshi, Esq. Joshi Law Group 8555 Aero Drive, Suite 303 San Diego, CA 92123 Tel: (619) 822-7566 Email: milie@joshilawgroup.com About Medical Acquisition Company Medical Acquisition Company, Inc., a provider of lien-based medical financial services in Carlsbad, Calif., filed a petition for Chapter 11 protection (Bankr. S.D. Calif. Case No. 22-00058) on Jan. 13, 2022, listing up to $50,000 in assets and up to $10 million in liabilities. Charles Perez, chief executive officer and chief operations officer, signed the petition. Judge Christopher B. Latham oversees the case. The Debtor tapped Joshi Law Group as bankruptcy counsel; David A. Kay, Attorney at Law as appellate counsel; Sullivan, Workman & Dee, LLP as special counsel; Julie Stencil as bookkeeper; and Julie Cardin, Esq., CPA of Cardin & Company, APC as accountant. NEW YORK OPTICAL: Unsecureds Owed $755K to Get 20% in Plan ---------------------------------------------------------- New York Optical-International, Inc. d/b/a Tuscany Eyewear, submitted a Second Amended Plan of Reorganization. This Second Amended Plan of Reorganization under chapter 11 of the Bankruptcy Code proposes to pay creditors of New York Optical-International, Inc., from cash flow from operations and from the sale of inventory. This Plan provides for two classes of secured claims; two classes of unsecured claims; and one class of equity security holders. Unsecured creditors holding allowed claims will receive distributions, which the proponent of this Plan has valued at approximately 20 cents on the dollar. Under the Plan, Class 3 Unsecured Claims Allowed under Section 502 of the Code total $755,591. All unsecured claims allowed under Section 502 of the Code (with the exception of Rodenstock, which will be paid the same percentage of its claim but in Euros), will be paid 20% of the allowed claim in 60 equal monthly payments with no interest beginning 30 days after the effective date of the Plan as defined in Article VII, or the date on which such claim is allowed by a final non-appealable order. Class 3 is impaired. Class 4 Unsecured Claim of Rodenstock GMBH. The Debtor objected to Proof of Claim #8 filed by Rodenstock. The Parties have agreed to fix the Rodenstock Claim at EUR455,294 as of the Petition Date. For informational purposes only, that equates to $527,550 as of the Petition Date. The Debtor will pay Rodenstock, in Euros, its pro rata share of the Plan payments beginning on the Effective Date. The estimated monthly payment, based on the current exchange rate is $1,441. Rodenstock will be paid 20% of the allowed claim in Euros in 60 equal monthly payments with no interest beginning 30 days after the effective date of the Plan as defined in Article VII, or the date on which such claim is allowed by a final non-appealable order. Class 4 is impaired. Attorney for the Debtor: David W. Langley, Esq. DAVID W. LANGLEY 8551 W. Sunrise Blvd., Ste 303 Plantation, Florida 33322 Telephone: 954-356-0450 Facsimile: 954-356-0451 E-mail: dave@flalawyer.com A copy of the Second Amended Plan of Reorganization dated July 13, 2022, is available at https://bit.ly/3uQ3zy2 from PacerMonitor.com. About New York Optical-International New York Optical-International, Inc., is a Davie, Fla.-based company that offers optical products. It conducts business under the name Tuscany Eyewear. New York Optical-International filed a petition for Chapter 11 protection (Bankr. S.D. Fla. Case No. 20-17961) on July 22, 2020, listing as much as $10 million in both assets and liabilities. New York Optical-International President Wayne R. Goldman signed the petition. Judge Scott M. Grossman oversees the case. David W. Langley, Esq., is the Debtor's bankruptcy attorney while Leto Law Firm and Alexander Duve, Esq., serve as the Debtor's special counsel. Connolly Wasserstrom & Castillo, LLC, is the Debtor's accountant. ODYSSEY CONTRACTING: Court Directs Chapter 11 Trustee Appointment ----------------------------------------------------------------- Judge Carlota M. Bohm of the U.S. Bankruptcy Court for the Western District of Pennsylvania has entered an order within which a Chapter 11 Trustee be appointed by the United States Trustee in the case of Odyssey Contracting Corp. Judge Bohm further ordered that the Chapter 11 Trustee must file a Status Report by August 30, 2022, recommending either an attempt to pursue a Chapter 11 Reorganization Plan or conversion of the case to Chapter 7. In addition, the Chapter 11 Trustee's recommendation will be considered at the continued hearing on the Motion to Convert scheduled on October 4, 2022 at 10:00 a.m. A copy of the order is available for free at https://bit.ly/3B5xJ4q from PacerMonitor.com. About Odyssey Contracting Odyssey Contracting Corp. is a Pennsylvania corporation which was formed in 1987 and which is based in Houston, Pennsylvania. Odyssey is engaged in the business of bridge painting and repair which services it provides throughout the United States. Odyssey Contracting Corp. filed a Chapter 11 petition (Bankr. W.D. Pa. Case No. 15-22330) on June 29, 2015. In the petition signed by Stavros Semanderes, president, the Debtor estimated $1 million to $10 million in assets and liabilities. The Hon. Carlota M. Bohm presides over the case. Robert O. Lampl, Esq., at Robert O. Lampl, Attorney at Law, serves as the Debtor's counsel. On Dec. 29, 2016, the Debtor filed a Chapter 11 plan of reorganization and disclosure statement. Ongoing business operations will not be the primary source of funding for the Debtor's Plan. Rather, the primary source of funding for the Debtor's Plan is the litigation in which the Debtor is seeking damages in the approximate aggregate amount $28,000,000. ORBCOMM INC: S&P Lowers ICR to 'B-' on Weaker Earnings ------------------------------------------------------ S&P Global Ratings lowered all ratings on U.S.-based asset tracking and connectivity provider ORBCOMM Inc. by one notch, including the issuer credit rating, to 'B-' from 'B'. S&P said, "The stable outlook reflects our expectation that mid- to high-teens percentage organic revenue growth driven by increased device shipments and net subscriber growth, combined with expanding margins, should enable solid earnings growth, allowing it to reduce its leverage to the 7x area by the end of 2022 from the low-8x area in 2021, in line with our leverage parameters for the 'B-' rating. "We believe ORBCOMM's leverage will likely remain elevated, at above 6x over the next year, with limited FOCF. ORBCOMM's S&P Global Ratings-adjusted leverage increased to 8.2x in 2021 due to lower device shipments and subscriber growth because of the global chip shortage. As a result of component shortages and reduced device inventory, a larger portion of the devices ORBCOMM shipped in 2021 were allocated to replacing existing customer devices operating on legacy 3G technology (ahead of its sunset in 2022), which limited its growth from new subscribers. These factors, coupled with elevated churn from legacy customers, resulted in lower net subscriber growth and a 6% decline in service revenue during the year (compared with previous expectations for around 5% growth). In addition, devices shipped by the company in 2021 but not activated by its customers during the year also contributed to the drop in its service revenue in 2021. Supply chain issues continued to weigh on the company's performance during the first quarter of 2022, with service and product revenue down, 6% and 21%, respectively, year-over year, resulting in debt to annualized EBITDA of 10x. Still, we believe the easing of semiconductor supply constraints (in part reflecting the company's mitigation efforts) will allow ORBCOMM to service the growing demand for monitoring devices in the trucking, maritime, and heavy equipment segments and increase its earnings over the next year, such that its leverage will decline to the 7x area by the end of 2022. We believe there is potential for improvement to the low-5x area in the 2023 but our rating also incorporates uncertainty around the timing and magnitude of the improvement in credit metrics. We also consider our expectation for low free operating cash flow generation of less than 5% of debt over the next couple of years, which will be pressured by rising interest rates (as roughly half of its floating rate debt is unhedged). Global supply chain issues continue to be a headwind, but conditions are improving. ORBCOMM was unable to fulfill some of its product orders in 2021 due to supply shortages of chips and microprocessors. To address the shortages, the company reengineered devices to use available alternative components and added a second source supplier, among other initiatives. S&P said, "With semiconductor supply chain pressures likely to ease this year due to rising inventories, slowing demand, and a weaker economic outlook, we expect higher levels of product sales in 2022 based on healthy end-market demand and progress on the clearing of its device manufacturing backlog, which represented $26 million of product revenue as of the first quarter of 2022. We also expect the improved supply-demand balance will lower the cost of its key internet of things (IoT) components, which should lead to improving product margins over the next couple of years.Still, we recognize the potential for further supply chain disruption, including policies to combat pandemic outbreaks. Selective customer fulfillment also poses a risk if supplies are short." ORBCOMM's is a small-scale provider of IoT solutions and could be vulnerable to increasing competition. ORBCOMM operates in a niche--but growing--industry, targeting all transportation asset classes (road, sea, rail, and intermodal) and heavy equipment through IoT offerings. The company's most notable competitive advantage is its ability to design hardware that enables a comprehensive solution that includes connectivity, device management, and applications while offering lower prices to customers because of vertical integration. S&P said, "While we believe there are notable switching costs because it usually takes several quarters to outfit an entire fleet, ORBCOMM lacks a fully global, owned, low-latency network that allows real-time tracking of assets over the ocean. Unlike competitors such as Iridium Communications Inc. that have lower-latency networks with wider coverage zones, ORBCOMM's network of satellites can have a delay of up to 15 minutes over the ocean until it can reach a ground access point for communication. In addition, long-term risks include large-scale telecommunications providers, such as Verizon Communications Inc. through its Verizon Connect subsidiary (formerly Fleetmatics), trying to monetize 5G network build-outs by targeting IoT solutions. Currently, ORBCOMM has 10 partnerships with wireless and satellite providers that complement its owned satellite network to provide near-ubiquitous coverage. We believe this exposes the company to renewal risk and places it in a weak negotiating position if wireless partners shift their strategies to gain more control over the customer relationship in this growing market." In addition, there are several low-earth orbit (LEO) constellations launching over the next few years, such as SpaceX's Starlink and Amazon Kuiper, among others. As the IoT industry grows, those new entrants may be attracted to the market, either directly or through a service partnership. While S&P believes that at first these new entrants will be focused on higher-average revenue per user (ARPU) products, like consumer broadband, because the cost of receivers may initially be high compared with an ORBCOMM receiver, they could eventually shift their focus as they search for other use cases as the price of the hardware comes down. Not only is available bandwidth expected to increase over the next few years following the launch of the LEO constellations, but also due to the launch of very-high throughput (geostationary) satellites (VHTS). As the level of available bandwidth continues to increase, pricing pressure could also attract new service providers to the IoT space. However, in the short-term, competition is tempered by high switching costs and multiyear contracts, in which ORBCOMM is well positioned within its niche market to capture greater demand within the industrial IoT market. S&P said, "We believe ORBCOMM's partnership with Inmarsat and satellite-lite strategy will likely improve its free cash flow profile but will also increase ORBCOMM's reliance on satellite providers for network capacity. The company has renewed a key partnership with Inmarsat (Connect Bidco Ltd.) for the use of L-band spectrum through 2035 and may not own any satellites by 2028-2030, when its current fleet of satellites reaches its end of life. As a result, ORBCOMM could be fully reliant on third-party network providers such as Inmarsat or terrestrial network providers like AT&T and Verizon for network capacity, which will result in a higher dependency on favorable lease terms. However, due to the substantial amount of excess capacity likely becoming available through the launch of high-throughput satellites from various satellite providers, ORBCOMM may be able to take advantage of a declining pricing environment, which we expect will persist for the next several years. "As a result of a high amount of excess capacity available, we view the possibility that other competitors may be able to lease capacity and compete in similar markets as increasing. That being said, ORBCOMM has a significant early mover advantage on its third generation L-band service offering with Inmarsat, as well as its global scale and distribution network. ORBCOMM will also need to rely on its hardware technology design capabilities and patents and established customer relations as its primary competitive advantage. We believe these advantages may be difficult to sustain if a scaled technology player or established wireless carrier enters the market, which could be possible given our expectation for explosive growth in IoT stemming from 5G and associated technology innovation. "While we think ORBCOMM is well positioned in the near term as a lower-priced provider, we believe that its business faces considerable long-term threats from potential new entrants and evolving technology. "The stable outlook reflects our expectation that mid- to high-teens percentage organic revenue growth driven by increased device shipments and net subscriber growth combined with expanding margins should enable solid earnings growth, allowing it to reduce its leverage to the 7x area by the end of 2022 from the low-8x area in 2021, in line with our leverage parameters for the rating." S&P could raise the rating on ORBCOMM if: -- ORBCOMM sustained healthy growth in its subscriber count while expanding its margins; and -- Its leverage Improved to below 6x, with prospects for further improvement over time. S&P could lower the rating if: -- Supply chain constraints disrupted order fulfillment or reduced demand resulted in lower device shipments and subscriber growth. -- Its customer churn was substantially higher than we expect because of increased competition and pricing pressure, which limits EBITDA growth and FOCF generation and keeps leverage elevated such that the company's financial commitments appeared unsustainable over the long term. -- S&P believed the company would face a near-term liquidity crunch. ESG credit indicators: E-2 S-2 G-3 S&P said, "Governance is a moderately negative consideration in our credit rating analysis of ORBCOMM. Our assessment of the company's financial risk profile as highly leveraged reflects corporate decision-making that prioritizes the interests of controlling owners, in line with our view of most rated entities owned by private-equity sponsors. Our assessment also reflects their generally finite holding periods and a focus on maximizing shareholder returns." PANHANDLE EASTERN: Moody's Affirms Ba1 Rating on Jr. Sub. Bond -------------------------------------------------------------- Moody's Investors Service affirmed Panhandle Eastern Pipe Line Company, LP's (PEPL) Baa3 senior unsecured and Ba1 junior subordinated ratings. The ratings outlook remains stable. "The Baa3 affirmation reflects PEPL's low leverage, stable cash flow and limited business risk," noted John Thieroff, Moody's Senior Credit Officer. "PEPL benefits from good integration with, and its strategic importance to its parent, Energy Transfer LP." Affirmations: Issuer: Panhandle Eastern Pipe Line Company, LP Junior Subordinated Regular Bond/Debenture, Affirmed Ba1 Senior Unsecured Regular Bond/Debenture, Affirmed Baa3 Outlook Actions: Issuer: Panhandle Eastern Pipe Line Company, LP Outlook, Remains Stable RATINGS RATIONALE PEPL's Baa3 senior unsecured rating reflects the stable cash flow associated with its Federal Energy Regulatory Commission (FERC)- regulated interstate natural gas pipeline assets, limited business risk and its modest debt leverage. Although PEPL has faced increased competition from gas moving west from Appalachia, the company benefits from its interconnection with the Rover Pipeline (of which ET is the largest owner and operator) which allows PEPL (primarily through its Trunkline pipeline) to move gas to LNG export facilities on the Gulf Coast. Longer term, the fundamentals for Appalachian gas are strong and the ability to access supply from the region provides an important buffer against weakening Midcontinent natural gas production, which has been in decline since 2013. PEPL continues to repay an intercompany loan from ET, reducing leverage to levels which comfortably support its Baa3 rating. The rating also reflects the ownership and control of PEPL by Energy Transfer LP (ET). PEPL's average contract life is relatively short (less than 5 years on Panhandle Eastern and 6.4 years on Trunkline) compared to its peers. However, volumes delivered into the PEPL system from Rover are sticky despite the underpinning of a long-term contract in many cases, due to their producers' limited egress options. PEPL also faces a measure of regulatory risk with the potential for lower approved tariffs by the FERC. PEPL has limited liquidity needs as cash from operations readily covers maintenance capital requirements. The bulk of PEPL's free cash flow is being applied to repay an intercompany loan from ET, reducing the balance to $127 million as of March 31, 2022 from $550 million at year-end 2020. PEPL does not maintain a bank revolving credit facility; should there be a liquidity requirement, such as upcoming debt maturities, Moody's would expect PEPL to be funded through ET such as it was in 2019. ET has good liquidity backed by a large committed revolving credit facility with ample available borrowing capacity . The stable outlook reflects PEPL's lower risk pipeline operations, the stability of its cash flow and modest debt leverage. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A rating upgrade could be considered if PEPL's average contract life improves to more than 7 years or through an upgrade of ET. Ratings could be lowered due to a downgrade of ET's ratings or if FFO/debt decreases below 20%. The principal methodology used in these ratings was Natural Gas Pipelines published in July 2018. PARK VIEW: Case Summary & Seven Unsecured Creditors --------------------------------------------------- Debtor: Park View School, Inc. 9030 E Florentine Rd Prescott Valley, AZ 86314 Business Description: The Debtor owns a school building and land located at 9030 E Florentine Rd. Prescott, AZ 86314 valued at $8.3 million. Chapter 11 Petition Date: July 19, 2022 Court: United States Bankruptcy Court District of Arizona Case No.: 22-04720 Debtor's Counsel: Christopher J. Dutkiewicz, Esq. D.M. BANKRUPTCY LAW GROUP, LLC 1425 S Higley Rd Ste 101 Gilbert, AZ 85296 Tel: 480-842-8786 Email: chris@azdebtattorney.com Total Assets: $9,694,659 Total Liabilities: $9,423,458 The petition was signed by Douglas Pike as president. A full-text copy of the petition containing, among other items, a list of the Debtor's seven unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/XHI2EDI/PARK_VIEW_SCHOOL_INC__azbke-22-04720__0001.0.pdf?mcid=tGE4TAMA POMMEL MEADOWS: U.S. Trustee Unable to Appoint Committee -------------------------------------------------------- The U.S. Trustee for Region 6 on July 19 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of Pommel Meadows Hospitality, LLC. About Pommel Meadows Hospitality Pommel Meadows Hospitality, LLC operates the Best Western Plus Seabrook Suites located at 5755 Bayport Blvd., Seabrook, Texas. The hotel, which Pommel Meadows Hospitality acquired in 2018, features 85 rooms with a restaurant on-site, complimentary breakfast, a cocktail lounge, an outdoor pool, and an exercise facility. Pommel Meadows Hospitality sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 22-31579) on June 6, 2022, listing as much as $10 million in both assets and liabilities. Danish Khan, managing member, signed the petition. Judge Jeffrey P. Norman oversees the case. Stephen W. Sather, Esq., at Barron and Newburger, PC serves as the Debtor's legal counsel. The Debtor's lender, DCR Mortgage 10 Sub 3, LLC, is represented by Daniel J. Ferretti, Esq., at Baker, Donelson, Bearman, Caldwell and Berkowitz. PRIME ECO: Aug. 30 Hearing on Plan & Disclosures Set ---------------------------------------------------- Judge David R. Jones has entered an order conditionally approving the Disclosure Statement of Prime Eco Group, Inc., et al. The Court will conduct an evidentiary hearing in Courtroom 400, 4th Floor, United States Courthouse, 515 Rusk, Houston, Texas 77002 to consider final approval of the Disclosure Statement and confirmation of the Plan on August 30, 2022 at 2:30 p.m. (prevailing Central Time). August 23, 2022 at 5:00 p.m. (prevailing Central Time) is the deadline for filing and serving written objections to confirmation of the Plan pursuant to Fed. R. Bankr. P. 3020(b)(1) and written objections to final approval of the Disclosure Statement. August 23, 2022 at 5:00 p.m. (prevailing Central Time) is the deadline for filing ballots accepting or rejecting the Plan. About Prime Eco Group and Prime Eco Supply Prime Eco Group, Inc. is a manufacturer of specialty chemicals in Wharton, Texas. Prime Eco Group and its affiliate, Prime Eco Supply, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 21-32560) on July 30, 2021. At the time of the filing, Prime Eco Group disclosed $3,057,685 in assets and $3,587,476 in liabilities while Prime Eco Supply disclosed $107,969 in assets and $527,681 in liabilities. Judge David R. Jones oversees the cases. The Debtors tapped the Law Office of Margaret M. McClure as bankruptcy counsel, Edgardo E. Colon P.C. as special counsel, Abunden LLC as financial advisor, and Wells & Bedard P.C. as accountant. PROFRAC HOLDINGS II: Moody's Raises CFR to B2, Outlook Stable ------------------------------------------------------------- Moody's Investors Service upgraded ProFrac Holdings II, LLC's Corporate Family Rating to B2 from B3, its Probability of Default Rating to B2-PD from B3-PD, its senior secured term loan rating to B2 from B3. Moody's also assigned a Speculative Grade Liquidity (SGL) rating of SGL-2. The outlook is stable. "The upgrade of Profrac's ratings reflects an improvement in cash flow generation through rate increases for its fleet and a greater financial flexibility, supported by the recent initial public offering," commented Sreedhar Kona, Moody's Senior Analyst. "Profrac's completed acquisitions and the announced acquisitions, including the acquisition of USWS, will enhance the company's scale, competitive positioning and product offering, strengthening the company's business profile." Profrac's parent Profrac Holding Corp. (NASDAQ: PFHC) completed its initial public offering (IPO) in the second quarter 2022, raising a total of $304 million of net proceeds of which $144 million was used to reduce a portion of the Profrac's $450 million term loan balance, with the remainder applied towards reducing partial ABL outstanding balance, the payoff of related party notes and distribution to family shareholders. Through PFHC or otherwise, the Wilks family owns a substantial portion of the Profrac. In total, the Wilks family has approximately 89% voting interest in PFHC, hence giving the Wilks family substantial operating control over Profrac. In June 2022, Profrac announced its proposed acquisition of sand businesses SP Silica of Monahans, LLC and SP Silica Sales, LLC (together, Monahans) for approximately $90 million. The company will fund the transaction with 100% cash and the transaction is expected to close in July 2022. Profrac also announced its proposed acquisition of U.S. Well Services, Inc. (USWS), a provider of electric pressure pumping services and a market leader in electric pressure pumping. USWS acquisition is expected to be completed in the fourth quarter of 2022. Upgrades: Issuer: ProFrac Holdings II, LLC Corporate Family Rating, Upgraded to B2 from B3 Probability of Default Rating, Upgraded to B2-PD from B3-PD Gtd. Senior Secured Term Loan, Upgraded to B2 (LGD4) from B3 (LGD4) Assignments: Issuer: ProFrac Holdings II, LLC Speculative Grade Liquidity Rating, Assigned SGL-2 Outlook Actions: Issuer: ProFrac Holdings II, LLC Outlook, Remains Stable RATINGS RATIONALE The upgrade of ProFrac's CFR to B2 reflects the company's improving business profile, as well as Moody's expectation that a substantial improvement in cash flow generation in 2022 and recent public equity placement will reduce Profrac's reliance on debt in funding its growth and operations. Profrac is expanding its business through acquisitions. The most recently announced acquisition of USWS, will continue to add to scale, market position and competitive product offering of Profrac. The combined company will benefit from a substantially enhanced offering of electric fleet services, as well as a larger portfolio of active fleets. ProFrac will also benefit from its vertically integrated business model with enhanced manufacturing and distribution capabilities and improving execution capabilities. Following the IPO, Profrac is well positioned to fund its growth through a combination of raising public equity, operating cash flows and some borrowing. Moody's expects Profrac to generate solid operating cash flow in 2022. Larger fleet, improved utilization rates and higher fleet rates boost Profrac's cash flow generation faster than Moody's earlier expectations. The acquisition of sand businesses, manufacturing business and other cost savings measures should improve the company's cash margins. The company's credit profile is tempered by high cyclicality of the Oilfield Services (OFS) sector. While the company's financial leverage improved modestly in 2021 and is likely to continue to improve in 2022 as earnings rise, the company's largest service line focus makes it fully reliant on highly cyclical demand for pressure pumping services. The hydraulic fracturing service – Profrac's single service line - is particularly competitive and is dominated by several larger companies that have greater financial resources, and product and service line diversity, than Profrac. While Profrac repaid part of its term loan debt through allocation of the IPO proceeds, Moody's expects that the company will need to add to debt as a result of the acquisitions and expanding operations. USWS acquisition will involve refinancing or assuming over $200 million of USWS' existing debt. Moody's expects Profrac to use its cash flow to continue to reduce reliance on debt financing in 2022 and 2023. ProFrac has good liquidity as reflected in its SGL-2 liquidity rating. As of June 30, 2022, the company had $35 million of cash and $103 million drawn under its $200 million Asset Based Loan (ABL) facility maturing in March 2027. The company should be able to meet its cash requirements including interest, maintenance capital expenditures and cash taxes from operating cash flow. The term loan facility financial covenants include a maximum net leverage covenant of 1.55x through the year-end 2022 and stepping down to 1.25 by the end of first quarter 2023. The term loan facility also has a minimum liquidity covenant of $30 million and maximum capital expenditures covenant greater of $275 million or 50% of the previous four consecutive fiscal quarters total EBITDA. The ABL facility has a covenant for the company to maintain a minimum fixed charge coverage ratio of 1x. Based on improving fundamental conditions, Moody's expects the company to remain well in compliance with its covenants in 2022-23. Moody's notes that ABL covenants may become relatively tight in an event of a downturn in demand and cash flow. ProFrac's $450 million senior secured term loan ($306 million outstanding as of June 30, 2022) due in March 2025 is rated B2, the same as the CFR as it has a first lien on all the assets of the borrower and guarantors, including the subsidiaries, except for the ABL collateral. The $200 million ABL revolving credit facility with March 2027 maturity, has a first lien claim on all the working capital assets of the borrower (ABL collateral) and a second lien claim on all other assets of the borrower and guarantors. The company also has a $24 million First Financial Loan due in July 2025, collateralized by a small subset of ProFrac's tractor assets. The credit agreement has transfer blockers to prohibit transfer of specified assets (including material intellectual property and stock in, debt of, or liens on stock or assets of any restricted subsidiary, subject to certain exceptions) to unrestricted subsidiaries. Subsidiary guarantors are not required to be wholly-owned, eliminating the risk that guarantees will be released because they cease to be wholly-owned. The credit agreement provides some limitations on up-tiering transactions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade include sustainable EBITDA growth in a significantly improving industry environment, debt reduction, maintaining good liquidity and conservative financial policies. Factors that could lead to a downgrade include debt/EBITDA above 4x, EBITDA/interest below 3x, deterioration in liquidity, or more aggressive financial policies. ProFrac, headquartered in Fort Worth, Texas, fully owned by ProFrac Holding Corp. (NASDAQ: PFHC), is a vertically integrated provider of hydraulic fracturing services to E&P companies in the United States. ProFrac is substantially owned by the Wilks family. The principal methodology used in these ratings was Oilfield Services published in August 2021. PWM PROPERTY: Mortgage Trustees Want Default Interest ----------------------------------------------------- Wilmington Trust, National Association, and Wells Fargo Bank, National Association, as trustees, object to PWM Property Management LLC, et al.'s Disclosure Statement. WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee for the holders of 245 PARK AVENUE TRUST 2017-245P, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2017-245P, on behalf of itself and the holders of the related Companion Loans (in that capacity, the "Park Avenue Trustee”), acting by and through SITUS HOLDINGS, LLC ("Situs"), its Special Servicer, holds a (i) secured claim in the principal amount of $1.2 billion against the Park Avenue Owner, which is secured by 245 Park Avenue and its associated rents, reserves, and other property; and (ii) against West Madison Holding, an unsecured (A) guaranty claim in the principal amount of $1.2 billion; and (B) environmental indemnity claim, which is contingent, unmatured, and unliquidated. The underlying basis for the Park Avenue Trustee's claims is the $1.2 billion mortgage loan (the "Park Avenue Mortgage Loan") made in May 2017 by the Park Avenue Trustee's predecessor original lender, the Park Avenue Mortgage Loan Originators, to the Park Avenue Owner pursuant to the Park Avenue Mortgage Loan Documents. The Park Avenue Owner asserts that the value of 245 Park Avenue is $2,050,000,000. The Park Avenue Trustee asserts that various prepetition Events of Default occurred under the Park Avenue Mortgage Loan Agreement, thereby triggering the default interest provisions of the Park Avenue Mortgage Loan Agreement from in or about March 2020. WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for the holders of J.P. MORGAN CHASE COMMERCIAL MORTGAGE SECURITIES TRUST 2020-LOOP, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2020-LOOP, on behalf of itself and the holders of the related Companion Loans (in that capacity, the "West Madison Trustee"), holds a secured claim in the principal amount of $240 million against the West Madison Owner, which is secured by 181 West Madison and its associated rents, reserves, and other property. The underlying basis for the West Madison Trustee's claim is a $240M loan made in November 2019 by the West Madison Trustee's predecessor original lender, the West Madison Mortgage Loan Originator, to the West Madison Owner pursuant to the West Madison Mortgage Loan Documents. The West Madison Owner asserts that the value of 181 West Madison is $391,000,000. The West Madison Trustee asserts that various pre-petition Events of Default occurred under the West Madison Mortgage Loan Agreement, thereby triggering the default interest provisions of the West Madison Mortgage Loan Agreement from in or about the origination of that loan. As described in the Disclosure Statement (and as set forth in Debtors' proposed Joint Chapter 11 Plan of Reorganization of PWM Property Management LLC and Its Debtor Affiliates attached thereto and also separately filed [D.I. 671] (the "Plan")), notwithstanding that the Plan classifies the secured claims of the Park Avenue Trustee and West Madison Trustee as "unimpaired" and Bankruptcy Code section 1124(2)(A) does not excuse the required "cure" and payment of all accrued default interest as required by Bankruptcy Code section 1123(d), and requires that each Trustee's legal, equitable, and contractual rights under its respective Mortgage Loan Documents be left unaltered, the Plan fails to require the payment of any, and excuses payments of all, (i) accrued default interest; and (ii) other fees, costs, and charges associated with (A) any change of control of either or both of the Park Avenue Owner or the West Madison Owner; (B) the sale or transfer of either or both of 245 Park Avenue or 181 West Madison or the direct or indirect equity in either or both of the Park Avenue Owner or the West Madison Owner; or (C) the securitization of each Mortgage Loan and the servicing thereof. Thus, the Trustees assert that the Plan, due to its failure to require payment of (i) all accrued default interest; and (ii) all other amounts required by the respective Mortgage Loan Documents as a result of the Plan's proposed transactions for the sale or transfer of (A) 245 Park Avenue or 181 West Madison; (B) the direct or indirect equity in the Park Avenue Owner or the West Madison Owner; and (C) the securitization of each Mortgage Loan and the servicing thereof, improperly and incorrectly classifies the respective claims of the Park Avenue Trustee and the West Madison Trustee as "unimpaired." The Plan's proposed treatment of the secured claims of the Park Avenue Trustee and the West Madison Trustee does not comply with the terms of respective Mortgage Loan Documents and Bankruptcy Code section 1123(d). The Plan's proposed treatment, in failing to pay, or in eliminating the future obligation to pay, all contractually required accrued default interest and other amounts due upon the Plan's proposed transactions, impermissibly alters the legal and contractual rights of the Park Avenue Trustee and the West Madison Trustee. Thus, the claims of the Park Avenue Trustee and the West Madison Trustee are "impaired" under the Plan and they each have a right to vote on the Plan. Notwithstanding that the claims of the Trustees are "impaired," Bankruptcy Code section 1123(d) requires that, in order for any defaults other than defaults of the kinds specified in or excepted from cure under Bankruptcy Code section 356(b)(2) to be cured, the Trustees must be paid, on the Effective Date, all default interest under and all other fees required by the respective Mortgage Loan Documents. Accordingly, the Plan, on its face, cannot be confirmed with respect to the Park Avenue Owner or the West Madison Owner. As described in the Disclosure Statement (and as set forth in the Plan), notwithstanding that the Plan classifies the unsecured claim of the Park Avenue Trustee against West Madison Holding with respect to the Park Avenue Mortgage Guarantee Agreement as "unimpaired" and Bankruptcy Code section 1124(2)(A) requires that the Park Avenue Trustee's legal, equitable, and contractual rights under the Park Avenue Mortgage Guarantee Agreement be left unaltered, the Plan proposes to replace the Park Avenue Mortgage Guarantee Agreement with another guarantee by the Replacement Guarantor. Even if that replacement guarantee were an economic improvement for the Park Avenue Trustee over the existing Park Avenue Mortgage Guarantee Agreement, that treatment nonetheless is an impairment of the Park Avenue Trustee's claim against West Madison Holding. Accordingly, the Plan, on its face, cannot be confirmed with respect to West Madison Holding. Further, the Park Avenue Trustee's claims against West Madison Holding include not only its claim under the Park Avenue Mortgage Guarantee Agreement, but also its claims against West Madison Holding under the Environmental Indemnity (as defined in the Park Avenue Mortgage Loan Agreement) (the "Park Avenue Mortgage Indemnity Agreement"). The Plan does not, however, address the Park Avenue Trustee's claims against West Madison Holding with respect to the Park Avenue Mortgage Indemnity Agreement at all. Accordingly, the Plan, on its face, cannot be confirmed with respect to West Madison Holding without properly addressing this claim. Finally, according to the Trustees, the Disclosure Statement lacks financial information concerning (i) all Debtors, especially the Park Avenue Owner and the West Madison Owner, who will, apparently, continue to operate 245 Park Avenue and 181 West Madison, respectively; and (ii) the Replacement Guarantor. Without such financial information or projections of any kind respecting the operation of 245 Park Avenue or 181 West Madison or the financial wherewithal of the Replacement Guarantor, creditors, including the Park Avenue Trustee and the West Madison Trustee, cannot make an informed voting decision on the Plan. Additionally, the Disclosure Statement fails to provide other necessary information, including the identity and qualifications of the post-confirmation management team for 245 Park Avenue and the Park Avenue Owner or for 181 West Madison and the West Madison Owner. Attorneys for the Park Avenue Trustee and the West Madison Trustee: William F. Taylor, Jr., Esq. Shannon D. Humiston, Esq. MCCARTER & ENGLISH LLP 405 North King Street, 8th Floor Wilmington, Delaware 19801 Telephone: (302) 984-6300 E-mail: WTaylor@mccarter.com SHumiston@mccarter.com - and - Robert B. Kaplan, Esq. Nicolas De Lancie, Esq. JEFFER MANGELS BUTLER &MITCHELL LLP Two Embarcadero Center, Fifth Floor San Francisco, California 94111-3813 Telephone: (415) 398-8080 E-mail: rbk@jmbm.com nde@jmbm.com About PWM Property Management PWM Property Management LLC, et al., are primarily engaged in renting and leasing real estate properties. They own two premium office buildings, namely 245 Park Avenue in New York City, a prominent commercial real estate assets in Manhattan's prestigious Park Avenue office corridor, and 181 West Madison Street in Chicago, Illinois. On Oct. 31, 2021, PWM Property Management LLC and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11445). PWM estimated assets and liabilities of $1 billion to $10 billion as of the bankruptcy filing. The cases are pending before the Honorable Judge Mary F. Walrath and are being jointly administered for procedural purposes under Case No. 21-11445. The Debtors tapped White & Case LLP as restructuring counsel; Young Conaway Stargatt & Taylor, LLP as local counsel; and M3 Advisory Partners, LP as restructuring advisor. Omni Agent Solutions is the claims agent. RESTORATION HARDWARE: S&P Alters Outlook to Neg., Affirms 'BB' ICR ------------------------------------------------------------------ S&P Global Ratings revised its outlook on Corte Madera, Calif.-based luxury home furnishings retailer Restoration Hardware Inc. (RH) to negative from stable and affirmed all its ratings, including its 'BB' issuer credit rating. The negative outlook reflects that S&P could lower its rating over the next 12 months if credit metrics weaken beyond our expectation either due to performance deterioration or a less-conservative financial policy than it anticipate. RH's recent guidance revision implies a significant slowdown in demand this year, despite strong first-quarter results. RH reported revenue growth of about 11% in the first quarter ended April 30, 2022, relative to the comparable period in 2021, as sales momentum persisted. It also reported 480 basis points (bps) of gross margin and 210 bps of operating margin expansion on a company-adjusted basis during this period. S&P said, "Demand has since slowed amid challenging economic conditions, though we expect relief of its sales backlog will offset weakening demand in the second quarter, leading to modest revenue declines in the low- to mid-single-digit-percent area. With normalizing backlog through the fiscal year, we forecast low- to mid-teens-percent sales contraction in the second half of the year. Still, our forecast for full-year revenue decline of about 5% reflects approximately 35% growth relative to 2019 levels. We believe mounting inflationary cost pressures and weak sales, as well as ongoing expenses related to its growth initiatives will lead as much as 500 bps of S&P Global Ratings' adjusted EBITDA margin contraction in fiscal 2022." RH's long-planned international expansion and new product line should partially alleviate ongoing industry challenges in 2023. S&P said, "While we expect demand to remain soft in 2023, we anticipate some offsetting benefits that will moderate revenue decline to the low-single-digit-percent area. These benefits include RH's international expansion, which we expect to begin this fall with the opening of its new gallery in England, and its new RH Contemporary collection, which we expect to be more prominently presented in its galleries and through its catalogs in 2023. We believe this collection can garner some incremental demand because it reflects RH's first new product launch and first distribution of its catalog in over two years. Furthermore, we believe the new collection will be margin accretive to the business. We forecast about 150 bps of margin expansion in 2023 as the company passes on more of its inflated costs to customers and sells more products within its contemporary collection. "While we view its international expansion and RH Contemporary collection as opportunities for growth, the investments also present execution risk. If the RH brand is less successful than anticipated in Europe, or if its new collection does not resonate with customers, operating performance could stall and lead to a protracted period of deteriorating revenues and profitability. We maintain our one-notch negative comparable ratings analysis modifier to reflect potential volatility stemming from ongoing execution risks related to these initiatives. "The economic environment is weakening, and the home furnishings industry faces mounting headwinds. We expect inflationary pressures will likely drive lower consumer discretionary spending at least over the next 12 months, especially within home-related categories. While the impact will likely be less pronounced for higher-income and high-net worth consumers, we still anticipate reduced propensity to spend for this demographic. Meanwhile, rising interest rates have led to fewer home sales, which we expect will persist and hamper demand for home furnishing products. We also believe the company's strong performance during the prior two years reflected some pull-forward demand for home-related categories. These factors are likely to pose a persistent headwind to the home furnishings industry at least over the next 12 months. Nevertheless, we believe RH has improved its brand recognition and reputation over the past several years, leading to a larger customer base. We therefore expect its revenue and profit generation to remain well above pre-pandemic levels despite the significant industrywide challenges. "RH does not provide a public leverage target, though we anticipate increasing leverage from deteriorating performance to be partially offset by maintaining higher cash balances. The company reported around $2.2 billion of cash on its balance sheet as of the first quarter ended April 30, 2022, and subsequently issued an incremental $500 million term loan in May. We net most of its cash in our calculation of adjusted debt, resulting in no significant impact to S&P Global Ratings' adjusted credit metrics from its term loan issuance. Its S&P Global Ratings' adjusted last-12-month leverage was 1.2x as of the first quarter and we expect this to increase over time. We believe the company will return some of its excess cash to shareholders, in part because its stock price has declined over 50% year-to-date, which we think incentivizes RH to repurchase shares. "However, given the slowdown in recent business trends, future economic uncertainty, and management's focus on improving the quality of its products while avoiding promotional pricing, we anticipate it will pursue a somewhat conservative posture with respect to its liquidity position. Specifically, we forecast the company will hold about $1 billion of cash on its balance sheet to maintain financial flexibility. This results in our base-case S&P Global Ratings' adjusted leverage of about 3x in 2022, modestly improving with expanding profitability in 2023. Still, the company does not provide formal guidance with respect to its financial policy and cash management activity could deviate materially from our projections, which would result in credit metrics deviating from our forecast. "The negative outlook reflects that we could lower our ratings on RH if performance deteriorates beyond our expectation or if the company pursues a more aggressive financial policy than we anticipate, in either case resulting in persistently weaker credit metrics than we forecast." S&P could lower its rating on RH if: -- Revenue, profitability, and cash flow deteriorate beyond S&P's expectation, perhaps because of a more prolonged period of reduced demand for higher-end home furnishings or because of merchandising missteps that weaken the brand's reputation; or -- The company maintains less cash on its balance sheet than S&P anticipates while operating performance remains challenged, leading to S&P Global Ratings' adjusted leverage sustained at 3x or higher. S&P could revise the outlook to stable if: -- Operating performance is maintained at least in line with its forecast, while its prospects improve for revenue growth and expanding profitability; and -- The company maintains sufficient cash on its balance sheet to preserve financial flexibility while business conditions remain uncertain, leading to leverage sustained below 3x. ESG credit indicators: E-2, S-2, G-2 SHAMROCK FINANCE: Unsecureds to Get Share of Net Asset Proceeds --------------------------------------------------------------- Shamrock Finance, LLC and the Official Committee of Unsecured Creditors submitted a First Amended Disclosure Statement. The Plan provides for the liquidation of the Debtor's Assets and the distribution of proceeds to holders of Allowed Secured, Administrative, Priority, and Unsecured Claims. All or substantially all of the Unsecured Claims consist of holders ("Noteholders") of Claims who loaned money to the Debtor and were issued promissory notes ("Notes") by the Debtor. If you are a Noteholder, you will be in Class 4 (Non-Participating Noteholders) unless you assign to the Liquidating Trustee your Claims against David Pierce and/or Keith Harris and any Person affiliated with them or acting in concert with them ("Participating Noteholder Claims") by signing and returning the Class 5 Election and thereby becoming a Class 5 (Participating Noteholder) claimant. Under the Plan, all holders of Allowed Unsecured Claims, including Allowed Non-Participating Noteholder (Class 4) Claims, Participating Noteholder (Class 5) Claims, and Other Unsecured (Class 6) Claims who are not Noteholders, will receive their proportionate share of the Net Asset Proceeds. Holders of Allowed Claims in Classes 4, 5, and 6 will receive an initial payment, after the payment of, or reserve for, the asserted Secured, Administrative, and Priority Claims which the Plan Proponents estimate will be approximately 29% of their Allowed Claims. The total dividend to holders of Allowed Claims in Classes 4, 5, and 6 may increase depending upon the resolution of Disputed Claims and recoveries from the Debtor's remaining assets. Only Class 5 Participating Noteholders may also receive an additional recovery from the Participating Noteholder Claims, which amount cannot be estimated at the present time. On September 14, 2021, the Office of the United States Trustee filed a Notice of Appointment of Official Committee of Unsecured Creditors [docket no. 291], appointing three members of the Ad Hoc Committee whose security interests had been avoided by agreement or by default in the Noteholder Adversary: Rupert E. Annis, Lawrence P. Kaplan, and Ronda Lee Sturtevant (the "Committee"). The Committee selected Murphy & King to serve as its counsel, which retention was approved by order of the Bankruptcy Court dated October 5, 2021. Substantially all of the Unsecured Claims in the case are comprised of the Noteholder Claims. There are approximately $16,900,000 in Noteholder Claims filed by Noteholders with the Bankruptcy Court. This amount includes the asserted Secured and Unsecured Claims of DJJD, Damian Robert and Melanie Robert; excluding those Claims, the total Noteholder Claims are approximately $15,000,000. The Noteholder Claims include approximately $1,700,000 filed by persons who appear to be related to Pierce and Harris (the "Related Parties"). All Noteholder Claims, including those of Related Parties, will be subject to review by the Estate Fiduciaries and approval by the Bankruptcy Court if an objection is filed by the Liquidating Trustee. Class 4 consists of the Allowed Claims of Non-Participating Noteholders, or those Noteholder who do not qualify for, and elect, treatment as a Class 5 Participating Noteholder Claim. The total Noteholder Claims are approximately $16,900,000, which includes the DJJD Claim, Miscellaneous Secured Claims, and the Claims of both Non-Participating and Participating Noteholders. Class 4 Claims shall be classified and treated as follows: Each holder of an Allowed Non-Participating Claim shall receive from the Liquidating Trustee on the Plan Distribution Date its pro rata share of its beneficial interest in the Liquidating Trust as a Class 4 Liquidating Trust Beneficiary, entitling such holder to receive proceeds on account of such beneficial interest as further set forth in Section 9.2 herein. Class 4 is impaired. Class 5 consists of the Allowed Claims of Participating Noteholders, that is, those Noteholders who qualify for, and elect, Class 5 treatment. The total Noteholder Claims are approximately $16,900,000, which includes the DJJD Claim, Miscellaneous Secured Claims, and the Claims of both Non-Participating and Participating Noteholders. Class 5 Claims shall be classified and treated as follows: Each holder of an Allowed Participating Noteholder Claim shall receive from the Liquidating Trustee on the Plan Distribution Date its pro rata share of its beneficial interest in the Liquidating Trust as a Class 5 Liquidating Trust Beneficiary, entitling such holder to receive proceeds on account of such beneficial interest as further set forth in Section 9.2 herein. Class 5 is impaired. Class 6 consists of those Allowed Unsecured Claims other than the Allowed Claims of Participating and Non-Participating Noteholders. The Plan Proponents anticipate that the Allowed Class 6 Claims will be minimal. Class 6 Claims shall be classified and treated as follows: Each holder of an Allowed Other Unsecured Claim shall receive from the Liquidating Trustee on the Plan Distribution Date its pro rata share of its beneficial interest in the Liquidating Trust as a Class 6 Liquidating Trust Beneficiary, entitling such holder to receive proceeds on account of such beneficial interest as further set forth in Section 9.2 herein. Class 6 is impaired. The Liquidating Trustee is responsible for distributing the Net Asset Proceeds and the Net Participating Noteholder Claim Proceeds in accordance with the Plan. The Net Asset Proceeds shall be allocated and distributed to Classes 4, 5, and 6 Liquidating Trust Beneficiaries by aggregating all Allowed Claims in Classes 4, 5, and 6 and distributing the Net Asset Proceeds to all such claimants on a proportionate basis as determined by the Liquidating Trustee. The Net Participating Noteholder Claim Proceeds shall be allocated and distributed only to Class 5 Liquidating Trust Beneficiaries on a pro rata basis. The allocation among Classes 4, 5, and 6 of funds for distribution shall be conclusive. Counsel to the Creditors' Committee: Harold B. Murphy, Esq. Andrew G. Lizotte, Esq. MURPHY & KING, Professional Corp. 28 State Street, Suite 3101 Boston, MA 02109 Telephone: (617) 423-0400 Facsimile: (617) 423-0498 Counsel to the Debtor: Jeffrey D. Sternklar, Esq. JEFFREY D. STERNKLAR, LLC 101 Federal Street, 19th Floor Boston, MA 02210 Telephone: (617) 207-7800 Facsimile: (617) 507-6530 A copy of the Disclosure Statement dated July 13, 2022, is available at https://bit.ly/3AUllUQ from PacerMonitor.com. About Shamrock Finance Shamrock Finance, LLC -- https://www.shamrockfinance.com/ -- is an auto sales finance company in Ipswich, Mass., formed on March 28, 2008. As an automobile inventory "floor plan" lender, Shamrock provides floorplan financing to independent car dealerships in the New England area. Dealers are primarily located in Massachusetts, with a small number in New Hampshire, Connecticut and Rhode Island. Shamrock Finance sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Mass. Case No. 21-10315) on March 12, 2021. The sole member and manager, Kevin Devaney, signed the petition. In the petition, the Debtor disclosed total assets of up to $10 million and total liabilities of up to $50 million. Judge Frank J. Bailey oversees the case. The Debtor tapped Jeffrey D. Sternklar LLC as bankruptcy counsel, the Law Offices of James J. McNulty as special counsel, and Mid-Market Management Group, Inc. as a business advisor. Kevin P. Clancy is the examiner appointed in the Debtor's bankruptcy case. The examiner is represented by Riemer & Braunstein, LLP. SIGNAL PARENT: Moody's Cuts CFR to B3 & Alters Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service downgraded Signal Parent, Inc.'s (Interior Logic Group ("ILG")) Corporate Family Rating to B3 from B2, Probability of Default Rating to B3-PD from B2-PD, the rating on the company's first lien term loan due 2028 to B2 from B1 and the rating on its senior unsecured notes due 2029 to Caa2 from Caa1. The outlook was changed to stable from negative. The rating action reflects persistent high debt leverage and operating margin pressure amid an expected modest weakening in end market conditions. Synergy and costs savings realization post the LBO transaction and the RDS acquisition in 2021 are taking an extended period of time, which is preventing the company from deleveraging of its balance sheet. Over the next 12 to 18 months, ILG's credit metrics are expected to improve modestly given the anticipated growth due to solid backlog and operating pricing strategies. While this will bode well for ILG's profitability, leverage metrics will remain at levels consistent with the B3 CFR. The following rating actions were taken: Downgrades: Issuer: Signal Parent, Inc. Corporate Family Rating, Downgraded to B3 from B2 Probability of Default Rating, Downgraded to B3-PD from B2-PD Senior Secured 1st Lien Bank Credit Facility, Downgraded to B2 (LGD3) from B1 (LGD3) Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 (LGD5) from Caa1 (LGD5) Outlook Actions: Issuer: Signal Parent, Inc. Outlook, Changed To Stable From Negative RATINGS RATIONALE ILG's B3 Corporate Family Rating is constrained by: 1) the company's persistent high debt to EBITDA leverage; 2) relatively low operating margin inherent to the business model, and margin pressure experienced recently due to the inflationary environment and increases in input costs that have not been matched with prices increases; 3) a roll up acquisition strategy and presence of integration risks and potential increases in debt leverage; 4) risks related to private equity ownership, including a financial policy that has resulted in a significant leveraging of the balance sheet in a 2021 buyout transaction and potential shareholder friendly actions, and 5) the volatility and cyclicality inherent to the residential end markets served. At the same time the credit profile is supported by the following key factors: 1) meaningful size and scale, with revenue of about $2.0 billion and a national footprint; 2) a strong competitive position in a fragmented market of installation and design studio services and long-term customer relationships with homebuilders; 3) a track record of growth through acquisitions; 4) good liquidity profile; and 5) Moody's expectation of solid, albeit slowing, end market conditions. The stable outlook reflects Moody's expectation that the company will maintain a good liquidity profile, generate positive free cash flow, and modestly improve its operating margin through pricing strategies in the next 12 to 18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if the company improves operating margin, reduces debt to EBITDA sustainably below 5.5x, maintains conservative financial policies with respect to leverage, shareholder friendly actions and acquisitions, and maintains good liquidity and positive free cash flow. The ratings could be downgraded if the company's debt to EBITDA is sustained above 6.5x, EBITA to interest coverage declines below 1.5x, liquidity weakens, free cash flow turns negative, or market conditions deteriorate resulting in revenue and operating margin declines. The principal methodology used in these ratings was Distribution & Supply Chain Services Industry published in June 2018. Interior Logic Group, headquartered in Irvine, CA, is one of the nation's leading providers of design center management and interior installation services. The Blackstone Group is the company's financial sponsor. In the last twelve months ended March 31, 2022, the company generated about $2.0 billion in revenue. SOUTHWIRE CO: S&P Upgrades To 'BB+' ICR, Outlook Stable ------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on U.S.-based wire and cable manufacturer Southwire Co. LLC to 'BB+' from 'BB'. At the same time, S&P raised its issue-level rating on the company's secured term loan to 'BBB-' from 'BB+'. The stable outlook indicates S&P's expectation that Southwire will maintain leverage of less than 1.5x and its conservative financial policy while undertaking strategic growth initiatives. Southwire has continued to strengthen its financial position, which has provided it with the flexibility to pursue growth opportunities while maintaining a strong balance sheet. The company's significant earnings growth, free cash flow generation of over $1.5 billion, and almost $400 million of debt reduction over the last several years have led it to maintain a net cash position on an S&P Global Ratings-adjusted basis since 2020. The multiyear improvement in Southwire's credit strength has provided it with the capacity to undertake large discretionary spending while continuing its business transformation. As such, over the longer term we expect the company will maintain leverage of 1.5x-2.0x even after incorporating any potential large acquisitions, which S&P's view as in line with its conservative financial policy. Southwire will likely continue to report robust EBITDA and cash generation over the next several years due to its ongoing reinvestment in its asset base and diversification into new markets. S&P expects the company will continue to implement growth initiatives to improve its cost competitiveness and expand its presence in the non-wire and cable markets via acquisitions. Southwire more than doubled its EBITDA over the last three years supported by the improvement in its cost-position following its significant modernization investments in its price-sensitive product markets, as well as the accelerating demand for its higher-margin wire and cable products. These efforts, in addition to record high Midwest aluminum prices, have translated to strong cash flow and profitability metrics (especially its return on capital, which has averaged 25% over the past three years). Under current record metals prices, Southwire is generating a strong dollar margin over its metal costs and over $650 million of free operating cash flow over the 12 months ended March 31, 2022, despite the large working capital investments necessitated by record aluminum and copper prices. The company has continued to expand its product offerings via tuck-in acquisitions focused on its Tools, Components & Assembled Solutions (TCAS) and Services businesses. These acquisitions have improved Southwire's value proposition with its customers, enabled it to bundle additional goods with its wire products, and expanded its customer base. As the company expands this business, it will likely improve its overall margin because this segment generates more than double the EBITDA margins of its wire and cable segment. Nevertheless, Southwire will likely expand the segment through acquisitions, which entail integration risk. S&P said, "We anticipate the company's revenue from this segment will increase by 30%-40% in 2022 supported by steady organic growth, as well as the contributions from its most notable recent acquisitions, Topaz Lighting Corp. and Novinium Inc., which it purchased for $220 million and $164 million, respectively. We expect Southwire to balance its discretionary spending with the cash needs stemming from fluctuations in commodity prices, which can lead to working capital volatility during periods of rapidly changing metals prices." Southwire's business features notable supplier, product, and end-market concentrations. S&P views the company's supply chain as concentrated because it sources a large share of its copper from a limited number of suppliers and a substantive amount from one. However, Southwire has a long-standing operating track record and, so far, has successfully managed its business and inventory with minimal disruption. Furthermore, the majority of the company's products are wire and cable, the demand for which is highly correlated with the construction market, particularly in the U.S. However, over the next several years, the company will improve its product diversity as it continues to expand its product offerings and the markets it serves. S&P said, "We anticipate Southwire will generate another year of record EBITDA and strong cash flow in 2022. Our base-case scenario assumes favorable long-term demand fundamentals for Southwire, though the heightened potential for a recession in the U.S., Europe, Asia-Pacific, and Latin America regions present some downside risk to our forecast. The company is seeing robust demand in its construction markets despite commercial construction demand being below pre-pandemic levels. Record levels of utility capital spending, reflecting necessary investments in the energy transformation and safety, will likely continue to drive robust demand for Southwire. Infrastructure spending will also likely see a boost in the coming years due to government fiscal stimulus. Additionally, the long-term trends toward electrification and automation will continue to support Southwire's demand as it shifts to serve higher-margin markets, such as fulfillment and data centers, factory automation investment, electric vehicles, electric vehicle charging points, and appliances. "The stable outlook on Southwire indicates our expectation that it will maintain its conservative financial policy and leverage of less than 1.5x over the next 12 months while undertaking strategic growth initiatives." S&P could lower its rating on Southwire over the coming 12 months if it sustains leverage of more than 2x, which it believes could occur if: -- It deviates from its conservative financial policy by taking on debt to fund a large capital spending program or acquisitions; and -- The increase in its debt coincides with an unexpected downturn that leads to weaker earnings and cash flow, potentially indicating increased competitive pressure. S&P could raise its ratings on Southwire in the next 12 months if it continues to improve its scale, product offerings, and market diversity, somewhat mitigating its business concentration, via acquisitions and organic growth, while maintaining S&P Global Ratings-adjusted leverage of below 2x through a full business cycle. ESG credit indicators: E-2, S-2, G-2 S&P said, "ESG factors have an overall neutral influence on our credit rating analysis of Southwire. The company manufactures copper and aluminum wires and cables and related products. Southwire operates primarily as a metal processor and fabricator and we view its operations as more similar to those of companies in the capital goods sector rather than its peers in the metals and mining sector." Southwire is materially less exposed to environmental and social risks than the miners from which it sources its materials. ST. JOSEPH ENERGY: Moody's Alters Outlook on Sec. Loans to Stable ----------------------------------------------------------------- Moody's Investors Service has revised St. Joseph Energy Center, LLC's (SJEC or Project) outlook to stable from negative and affirmed the Ba3 rating on its senior secured credit facilities, consisting of a $369 million Term Loan B and $38.9 million of revolving credit facilities. RATINGS RATIONALE "The change in the St. Joseph Energy Center's outlook to stable from negative reflects our expectation for improved financial performance as stronger energy margins in 2022 and 2023 contribute more excess cash flow than previously forecast" said Gayle Podurgiel, Vice President-Senior Analyst. SJEC is a highly efficient combined cycle gas turbine that runs at a 70-80% capacity factor and is benefiting from the current high power prices in the market. This is driving margin expansion with expectations for credit metrics to continue to improve in 2022 and 2023. The project's strong energy margins help to mitigate the continued decrease in capacity prices that recently saw PJM Interconnection (Aa2 stable) capacity auction results for 2023/2024 clear at $34.13/MW-day for the broader regional transmission organization (RTO) region. This is a decline from the prior year auction of $50/MW-day that is now in effect for the 2022/2023 auction planning year, which runs from June to May, and a severe compression from the 2021/2022 pricing of $140/MW-day. While the decrease in capacity auction results will constrain the project's cash flow generation, the change in market dynamics largely offsets that concern over the next 12-18 months as projected energy margins are well above Moody's expectations from a year ago. The Ba3 credit rating continues to reflect the SJEC project's position as a new, highly efficient and competitive combined cycle gas turbine power plant, serving as a baseload unit in PJM. The credit profile remains tempered by the its ongoing merchant exposure, with some nodal basis risk relative to the AEP-Dayton Hub, more expensive fuel relative to other gas sources in the region, as well as a weaker 50% excess cash flow sweep feature relative to its single asset PJM-located peers. SJEC has implemented rolling hedging to manage its merchant exposure. Credit metrics have strengthened in conjunction with the higher power prices and are now straddling the B / Ba category range under the guidelines outlined in Moody's rating methodology. For the twelve months ended March 31, 2022, the SJEC produced a debt service coverage ratio of 2x, project cash flow from operations to debt of 9% and debt to EBITDA of 6x. Moody's expect that metrics will improve substantially in 2022 to levels comfortably in the Ba range, with DSCR above 2x, PCFO/debt above 10% and Debt/EBITDA below 6x. This should enable the project to repay debt at a faster rate than we had previously anticipated. LIQUIDITY PROFILE SJEC's liquidity is adequate, provided by a $7.9 million working capital facility, a $31 million revolving credit facility and supported by a 6-month debt service reserve backed by a L/C. The major maintenance reserve is discretionary. RATING OUTLOOK The stable outlook considers Moody's view that strong energy margins will continue through the remainder of 2022 and into 2023 and help the project maintain the recent improvement in financial metrics, despite lower capacity prices. The stable outlook also reflects Moody's expectation of a solid operational performance with minimal prolonged forced outages. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS FACTORS THAT COULD LEAD TO AN UPGRADE If financial performance improves further such that DSCR exceeds 2.5x and CFO/Debt approximates 15% on a sustained basis Significantly stronger capacity auction results in upcoming auctions relative to Moody's assumptions, coupled with continued strong energy margins that lead to cash flow well above current expectations FACTORS THAT COULD LEAD TO A DOWNGRADE If financial performance deteriorates such that DSCR is expected to be below 1.6x and project CFO/Debt is below 8% for a sustain period Energy margin compression in late 2023 and 2024 coupled with continued low capacity auction price outcomes for the upcoming auction PROFILE SJEC is located in St. Joseph County, Indiana, near the Town of New Carlisle. The project consists of two Siemens SGT6-5000F(5ee) CTGs, two Nooter/Eriksen HRSGs, and one Siemens STG with a nameplate capacity of approximately 709 megawatts. The HRSGs are equipped with duct burners to supplement plant capacity, subject to permit fuel throughput restrictions. The project achieved substantial completion on April 1, 2018 and final completion on November 28, 2018. The project's sponsors include two separate funds managed by Ares EIF Management, LLC for 80% of the equity, with Toyota Tsusho America Inc. holding the remaining 20%. Both sponsors have experience in the US power market, in particular through investments in combined cycle power plants. METHODOLOGY The principal methodology used in these ratings was Power Generation Projects Methodology published in January 2022. TRUTH DATA: Case Summary & Six Unsecured Creditors -------------------------------------------------- Debtor: Truth Data Insights LLC 4200 South Hulen St., Ste. 603 Fort Worth, TX 76109 Business Description: Truth Data provides Flight Data Monitoring (FDM) and Flight Operations Quality Assurance (FOQA) services that are right- sized to fit operators across all mission profiles including EMS, Oil & Gas, Aerial Firefighting and Utility Operations. Chapter 11 Petition Date: July 20, 2022 Court: United States Bankruptcy Court Northern District of Texas Case No.: 22-41610 Debtor's Counsel: Weldon L. Moore, III, Esq. SUSSMAN & MOORE, LLP 2911 Turtle Creek Blvd. Ste. 1100 Dallas, TX 75219 Tel: 214-378-8270 Fax: 214-378-8290 Email: wmoore@csmlaw.net Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Peter Henrikson as president. A full-text copy of the petition containing, among other items, a list of the Debtor's six unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/QEJGT7Q/Truth_Data_Insights_LLC__txnbke-22-41610__0001.0.pdf?mcid=tGE4TAMA UPSTREAM NEWCO: Moody's Affirms B3 CFR & Alters Outlook to Stable ----------------------------------------------------------------- Moody's Investors Service revised Upstream Newco, Inc.'s outlook to stable from positive. At the same time, Moody's affirmed Upstream's B3 Corporate Family Rating, B3-PD Probability of Default Rating, B2 rating on the first lien senior secured credit facility, and Caa2 rating on the second lien term loan. The stabilization of the outlook reflects Moody's expectation that Upstream's financial leverage will remain elevated over the next 12 to 18 months, reducing the likelihood of an upgrade. This reflects industry headwinds including labor pressures and rising interest rates that have followed the company's 2021 acquisition of Results Physiotherapy. The industry has been somewhat impacted by wage inflation, and while volume recovery has been solid as the severity of the pandemic has eased relative to mid-2020, there is the risk to volumes if the US economic environment weakens. Governance is a factor in this rating action as Upstream has continued to employ high financial leverage to fund smaller tuck-in transactions. Debt to EBITDA as of March 31, 2022 was 7.9x. Moody's expects leverage to improve as Upstream completes the integration of recent acquisitions and continues to build scale and density in markets, but at a slower pace than Moody's previous expectations. The affirmation of the B3 CFR reflects Moody's view that demand for physical therapy services will remain strong, supported by generally steady utilization trends throughout most of the ongoing pandemic. Moody's took the following rating actions: Affirmations: Issuer: Upstream Newco, Inc. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Secured 1st Lien Revolving Credit Facility, Affirmed B2 (LGD3) Senior Secured 1st Lien Term Loan, Affirmed B2 (LGD3) Senior Secured 2nd Lien Term Loan, Affirmed Caa2 (LGD5) Outlook Actions: Issuer: Upstream Newco, Inc. Outlook, Changed To Stable From Positive RATINGS RATIONALE Upstream's B3 Corporate Family Rating reflects its high financial leverage at 7.9x. The rating also reflects the company's rapid expansion strategy as it grows predominantly through new clinic openings. The rating is constrained by the low barriers to entry in the physical therapy business and the risk of market oversaturation given the rapid expansion plans of Upstream and many of its competitors. The rating is supported by Upstream's strong track record of same store sales growth and management of new clinic expansions and acquisitions. Moody's expects that the demand for physical therapy will continue to grow given it is relatively low-cost and relative advantage to more expensive treatments or opioid pain management. The stable outlook reflects Moody's expectation that the company's gross debt/EBITDA will steadily decline, but remain over 6.0x over the next 12-18 months. Moody's considers Upstream to have adequate liquidity. Moody's expects Upstream to generate negative free cash flow in 2022, after paying for significant growth expenditures and the repayment of approximately $13 million in Medicare Advance Payments and deferred payroll taxes in 2022. Despite these payments, liquidity is supported by the company's approximately $26 million of cash as of March 31, 2022, and $40 million of availability on the company's revolving credit facility. In addition, the company has demonstrated its ability to conserve cash if necessary by reducing growth investments. Upstream faces social risks such as the rising concerns around the access and affordability of healthcare services. However, Moody's does not consider the physical therapy providers to face the same level of social risk as many other healthcare providers. Further, Upstream benefits from positive social considerations, as physical therapy can be a less expensive and a safer alternative to surgery or opioid usage. From a governance perspective, Moody's views Upstream's growth strategy to be aggressive given its history of debt funded new clinic openings and clinic acquisitions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if Upstream increases its size and scale and demonstrates stable organic growth at the same time that it effectively executes its expansion strategy. Additionally, debt/EBITDA sustained below 6.0 times could support an upgrade. Ratings could be downgraded if the company's liquidity weakens or if the company fails to effectively manage its rapid growth or the company pursues more aggressive financial policies. Upstream Newco, Inc., headquartered in Birmingham, Alabama, is a provider of outpatient rehabilitation services - primarily physical therapy. Through its subsidiaries, Upstream operates about 1,150 clinics in 28 states, with a strong presence in the Southeast. Upstream is owned by Revelstoke Capital Partners, LLC, a Denver-based private equity firm. The company's revenue for the twelve months ended March 31, 2022 is approximately $663 million. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. US TOBACCO: SSG Advises Business in Chapter 11 Reorganization ------------------------------------------------------------- SSG Advisors, LLC (SSG) acted as the investment banker to U.S. Tobacco Cooperative Inc. and its affiliates (collectively USTC or the Cooperative) in the placement of exit financing pursuant to a confirmed Chapter 11 Plan of Reorganization (the Plan) in the U.S. Bankruptcy Court for the District of North Carolina, Raleigh Division. The Plan was confirmed and subsequently became effective in July 2022. Founded in 1946 and headquartered in Raleigh, North Carolina, USTC is a flue-cured tobacco processor, manufacturer and wholesale distributor of processed tobacco leaf, cigarettes and byproducts to domestic and international cigarette manufacturers. The Cooperative is grower-owned and is comprised of 550+ tobacco farmers located in the Southeastern United States and ably led by Oscar House, Chief Executive Officer, and Keith Merrick, Chief Financial Officer. The Cooperative had a long history of strong profitability and financial performance. In pursuing its mission to serve the interests of its member-growers, the Cooperative played an important role from 1946 to 2004 in administering the Tobacco Price Support Program (TPSP). The TPSP offered a combination of marketing quotas and nonrecourse loans designed to support and stabilize prices for farmers. In 2004, the Fair and Equitable Tobacco Reform Act ended all aspects of the federal tobacco marketing quota and price support loan programs that provided USTC and other producers payments under the Tobacco Transition Payment Program, and instead granted one-time lump-sum payments to participants. On July 7, 2021, USTC filed for Chapter 11 bankruptcy protection after an adverse court ruling in a North Carolina class action lawsuit led USTC's lenders to freeze the Cooperative's credit line, and to permit USTC to meet its contractual obligations to its member-growers. The Chapter 11 filing provided USTC the best path forward to meet its short-term obligations, negotiate with class action litigants and prepare for the future. The class action litigation was settled after extensive mediation efforts. SSG was retained in August 2021 to advise the Cooperative on strategic alternatives and to identify financing partners who could provide USTC with the capital to support its Plan and successfully emerge from bankruptcy. After an extensive marketing process resulting in multiple term sheets, USTC ultimately selected PNC Business Credit to provide a new $130 million exit financing package. SSG's ability to generate interest from lenders in an efficient and timely process and its experience with refinancing enabled the Cooperative to maximize loan availability, preserve jobs, maintain the loyalty of vendors and customers, and exit bankruptcy. SSG worked with management, counsel, and BDO USA, LLP to create an extraordinary result for all constituents with all creditors in all classes paid in full. PNC is a commercial bank based in Pittsburgh, Pennsylvania, offering personal, business and institutional banking services. Other professionals who worked on the transaction include: * Mark E. Felger, Simon E. Fraser, David R. Doyle and Christina Sanfelippo of Cozen O'Connor, counsel to U.S. Tobacco Cooperative Inc.; * Baker A. Smith, Jamie Schwarz and Anthony Del Piano of BDO USA, LLP, financial advisor to U.S. Tobacco Cooperative Inc.; * Jason L. Hendren, Rebecca F. Redwine, and Benjamin E.F.B. Waller of Hendren Redwine & Malone, PLLC, counsel to U.S. Tobacco Cooperative Inc.; * Lee M. Whitman and Benjamin N. Thompson of Wyrick Robbins, counsel to U.S. Tobacco Cooperative Inc.; * Bart A. Norman and Philip W. Romohr of Smith Anderson, counsel to U.S. Tobacco Cooperative Inc; and * Kevin M. O'Malley, Regina S. Kelbon, Morgan E. Landy and Victoria A. Guilfoyle of Blank Rome LLP, counsel to PNC Business Credit. About U.S. Tobacco Cooperative U.S. Tobacco Cooperative Inc. produces U.S. flue-cured tobacco grown by more than 500 member growers in Florida, Georgia, South Carolina, North Carolina, and Virginia. Member-grown tobacco is processed and sold as raw materials to cigarette manufacturers worldwide. U.S. Tobacco Cooperative and affiliates sought Chapter 11 protection (Bankr. E.D.N.C. Lead Case No. 21-01511) on July 7, 2021.Â Â In the petition signed by Keith H. Merrick, chief financial officer, U.S. Tobacco Cooperative estimated assets of between $100 million and $500 million and estimated liabilities of between $100 million and $500 million. Judge Joseph N. Callaway oversees the cases. The Debtors tapped Hendren, Redwine & Malone, PLLC as bankruptcy counsel, and McGuireWoods, LLP and Robinson, Bradshaw & Hinson, P.A., as special counsel. BDO Consulting Group, LLC, SSG Advisors, LLC and CliftonLarsonAllen serve as the Debtors' financial advisor, investment banker and accountant, respectively. VOYAGER DIGITAL: U.S. Trustee Appoints Creditors' Committee ----------------------------------------------------------- The U.S. Trustee for Region 2 on July 19 appointed an official committee to represent unsecured creditors in the Chapter 11 cases of Voyager Digital Holdings, Inc. and its affiliates. The committee members are: 1. Russell G. Stewart Email: russ.stewart@tmf.mortgage 2. Jason Raznick Email: jason@benzinga.com 3. Brandon Mullenberg Email: brandonmullenberg2022@gmail.com 4. Richard Kiss for Thincat Trust Email: richard.kiss@gmail.com 5. Christopher Moser Email: chrismmoser@gmail.com 6. Byron Walker Email: bywalker01@gmail.com 7. Melissa and Adam Freedman Email: freemanmelissac@gmail.com Official creditors' committees serve as fiduciaries to the general population of creditors they represent. They may investigate the debtor's business and financial affairs. Committees have the right to employ legal counsel, accountants and financial advisors at a debtor's expense. About Voyager Digital Based in Toronto, Canada, Voyager Digital Holdings Inc. -- https://www.investvoyager.com/ -- runs a cryptocurrency platform. Voyager claims to offer a secure way to trade over 100 different crypto assets using its easy-to-use mobile application. Through its subsidiary Coinify ApS, Voyager provides crypto payment solutions for both consumers and merchants around the globe. Voyager Digital Holdings Inc. and two affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-10943) on July 5, 2022. In the petition filed by Stephen Ehrlich, as chief executive officer, Voyager Digital Holdings estimated assets and liabilities between $1 billion and $10 billion. The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy counsel; Berkeley Research Group, LLC as financial advisor; Moelis & Company as investment banker; and Consello Group as strategic financial advisor. Stretto, Inc. is the claims agent. ********* 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. 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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 ***