/raid1/www/Hosts/bankrupt/TCR_Public/220803.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, August 3, 2022, Vol. 26, No. 214
Headlines
4TH STREET MEDICAL: Unsecureds Owed $63K to Recover 100% After Sale
ACER THERAPEUTICS: FDA OKs for Review NDA Resubmission for ACER-001
AEARO TECHNOLOGIES: 3M Criticizes Broken MDL System
AEARO TECHNOLOGIES: Obtains Debtor-Friendly Venue in Indianapolis
AMYNTA AGENCY: Moody's Affirms 'B3' CFR & Rates Extended Debt 'B2'
ANDOVER SENIOR: Taps Colangelo & Taber as Accountant
ANYWHERE REAL: Extended Secured Debt No Impact on Moody's B1 CFR
BALDWIN RISK: Moody's Affirms B2 CFR & Alters Outlook to Negative
BAUSCH + LOMB: S&P Downgrades ICR to 'CCC+', Outlook Developing
BAUSCH HEALTH: Moody's Lowers CFR to Caa1 & Alters Outlook to Neg.
BAUSCH HEALTH: S&P Downgrades ICR to 'CCC+', Outlook Negative
BK AUTUMN: Nationstate Says Debtor Has No Reason to Reorganize
CADIZ INC: Appoints Former Senator Polanco as Director
CATSKILL CASE STUDY: Contractor Seeks Chapter 11 Protection
CURIA GLOBAL: S&P Downgrades ICR to 'B-', Outlook Stable
CUSHMAN & WAKEFIELD: Moody's Alters Outlook on B1 CFR to Positive
DLVR INC: Files Chapter 11 Subchapter V Case
DMDS LLC: Voluntary Chapter 11 Case Summary
DYNAMETAL TECHNOLOGIES: Case Summary & 20 Top Unsecured Creditors
E QUALCOM: Case Summary & Seven Unsecured Creditors
ENDO INT'L: Makes $38M Interest Payment, In Grace Period for Others
ENDO INTERNATIONAL: Makes $38-Mil. Interest Payment on 2028 Notes
GA REAL ESTATE: Case Summary & Five Unsecured Creditors
GAP INC: Moody's Affirms 'Ba2' CFR & Alters Outlook to Negative
GETTY IMAGES: Moody's Ups CFR to B2 & Alters Outlook to Positive
HEARTBRAND HOLDINGS: Case Summary & One Unsecured Creditor
HEMISPHERE MEDIA: Moody's Affirms B2 CFR & Rates 1st Lien Loans B2
HILTON WORLDWIDE: S&P Upgrades ICR to 'BB+', Outlook Stable
HOLY REDEEMER: S&P Lowers Revenue Bonds Rating to 'BB+'
HORIZON GLOBAL: Receives Noncompliance Notice from NYSE
HUCKLEBERRY PARTNERS: Taps Latham, Luna, Eden & Beaudine as Counsel
INFINERA CORP: Incurs $55.7 Million Net Loss in Second Quarter
INFOW LLC: Jones Must Pay for Falsehoods, Says Victims' Lawyer
IRONSIDE LLC: Unsecureds Owed $10M to Get Less Than 1% in Plan
ISABEL ENTERPRISES: Taps Ian Biggi of Capacity Commercial as Broker
ISABEL ENTERPRISES: Taps Strategic Tax Management as Accountant
J BOWERS: Case Summary & 20 Largest Unsecured Creditors
JETBLUE AIRWAYS: S&P Alters Outlook to Negative, Affirms 'B+' ICR
JETBLUE AIRWAYS: Spirit Airlines Deal No Impact on Moody's Ba2 CFR
LIFE UNIVERSITY: Moody's Affirms Ba3 Rating on 2017A/2017B Bonds
LTL MANAGEMENT: Kaplan Appoints Feinberg to Value Claims
LUCID ENERGY II: Moody's Withdraws B2 CFR Following Loan Repayment
MICROVISION INC: Incurs $13.6 Million Net Loss in Second Quarter
MIND TECHNOLOGY: All Three Proposals Approved at Annual Meeting
MUSCLEPHARM CORP: Former CFO to Get $162,500 in Separation Pay
NASCAR HOLDINGS: Moody's Upgrades CFR & Senior Secured Debt to Ba2
NEOVASC INC: To Report Second Quarter Financial Results on Aug. 11
PECOS INN: Hotel Owner Files Subchapter V Case
PIPELINE FOODS: Plan Trustee Alleges Fraud by Sponsor Amerra
PMC PARTNERS: Case Summary & Seven Unsecured Creditors
PROFESSIONAL DIVERSITY: Grace Reyes Quits as Director
Q BIOMED INC: Incurs $1.3 Million Net Loss in Second Quarter
QUEST PATENT: All Three Proposals Passed at Annual Meeting
RUNNER BUYER: S&P Downgrades ICR to 'B-', Outlook Stable
SANDY ROAD: Voluntary Chapter 11 Case Summary
SHEM OLAM: Sent by Rabbi to Chapter 11 Due to YCC Dispute
SPIRIT AIRLINES: S&P Alters Outlook to Stable, Affirms 'B' ICR
STRATHCONA RESOURCES: Moody's Affirms 'B2' CFR Amid Serafina Deal
TARGET HOSPITALITY: Moody's Assigns 'B1' CFR, Outlook Stable
THREE ARROWS: Liquidators May Try to Force Founders to Cooperate
TREETOP DEVELOPMENT: Case Summary & 20 Top Unsecured Creditors
U.S. SILICA: Posts $22.8 Million Net Income in Second Quarter
VALVOLINE INC: Moody's Ba2 CFR Remains Under Review for Downgrade
VOYAGER DIGITAL: Ordered to Stop False Deposit Insurance Claims
WELBILT INC: Moody's Withdraws 'B3' CFR Following Debt Repayment
[*] Business Bankruptcy Filings Down 17.7% in Period Ended June 30
[*] Stress Testing for Margin Compression During Volatility
*********
4TH STREET MEDICAL: Unsecureds Owed $63K to Recover 100% After Sale
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4th Street Medical Building, LLC, submitted an Amended Combined
Plan of Reorganization and Tentatively Approved Disclosure
Statement.
General unsecured creditors will recover 100% of their allowed
claims in one payment within 14 days after the closing of the sale
of the Debtor's real properties. General unsecured creditors
exclude all claims arising from membership interests in the Debtor.
Taxes and other priority claims would be paid in full, as shown in
Part 3.
Holders of membership interests in the Debtor in Class 5 will
receive their pro rata portion of the residue in the estate, after
payments in full to all other creditors, distributed based upon the
number of membership units held by the Class 5 members.
Most creditors (those in impaired classes) are entitled to vote on
confirmation of the Plan. Completed ballots must be received by
Debtor's counsel, and objections to confirmation must be filed and
served, no later than August 26, 2022. The court will hold a
hearing on confirmation of the Plan on September 7, 2022, at 11:00
a.m.
Under the Plan, Class 2(a) General Unsecured Claims total $63,753.
Allowed claims of general unsecured creditors (including allowed
claims of creditors whose executory contracts or unexpired leases
are being rejected under this Plan) will be paid 100 percent of
their allowed claim in 1 installment, due on the 14th day after the
Debtor closes the sale of its real properties located at 1701 4th
Street, Santa Rosa, CA, and 1623 4th Street, Santa Rosa, CA. The
deadline for the closing of the sale is December 31, 2023.
Creditors in this class may not take any collection action against
Debtor so long as Debtor is not in material default under the Plan.
Class 2(a) is impaired.
Class 2(b). Current Tenant Security Deposits totaling $36,759.74.
The Class 2(b) claims are for security deposits provided by the
Debtor's current tenants. These creditors' legal, equitable, and
contractual rights remain unchanged. The security deposits will be
returned to these creditors at the end of the terms of the
creditors' leases in the event that and to the extent that under
applicable non-bankruptcy law the Debtor is obligated to do so.
Class 2(b) is unimpaired.
A copy of the Amended Combined Plan of Reorganization and
Tentatively Approved Disclosure Statement dated July 27, 2022, is
available at https://bit.ly/3ziDBVp from PacerMonitor.com.
About 4th Street Medical Building
4th Street Medical Building, LLC, a single asset real estate,
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. N.D. Cal. Case No. 22-10124) on March 28, 2022. In the
petition signed by Ruth Skidmore, chair of managers, the Debtor
disclosed up to $10 million in both assets and liabilities.
ACER THERAPEUTICS: FDA OKs for Review NDA Resubmission for ACER-001
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Acer Therapeutics Inc. announced the U.S. Food and Drug
Administration (FDA) has accepted for review Acer's resubmitted New
Drug Application (NDA) for ACER-001 (sodium phenylbutyrate) for
oral suspension for the treatment of patients with urea cycle
disorders (UCDs). The FDA designated the NDA as a Class 2
resubmission and set a Prescription Drug User Fee Act (PDUFA)
target action date of Jan. 15, 2023.
"We are very pleased to receive confirmation that the FDA is
commencing its review of our NDA resubmission," said Chris
Schelling, founder & chief executive officer of Acer. "We have
notified the FDA that our third-party contract packaging
manufacturer is ready for inspection and are hopeful that the
Agency's review can be completed in a timely manner. While NDA
approval is not assured, if approval is received, we are prepared
to execute on our comprehensive launch plan and provide a new
treatment option to underserved UCDs patients. These efforts
reinforce our ongoing commitment to developing new and
differentiated treatment options for those affected by rare
diseases."
In June 2022, as previously announced, the FDA issued Acer a
Complete Response Letter (CRL) stating that satisfactory inspection
of Acer's third-party contract packaging manufacturer is required
before the ACER-001 NDA may be approved. Acer notified the FDA in
the NDA resubmission that the third-party contract packaging
manufacturer is ready for inspection. The FDA did not cite any
other approvability issues in the CRL pertaining to the NDA, nor
request any additional clinical or pharmacokinetic studies be
conducted prior to FDA action. Additional existing nonclinical
information as requested by the FDA in the CRL but identified as
"not an approvability issue", as well as labeling and other
required updates to the original NDA, were provided in the
resubmission of the NDA.
There can be no assurance that ACER-001 will be approved for any
indication.
Acer Therapeutics
Acer Therapeutics Inc. -- http://www.acertx.com-- is a
pharmaceutical company focused on the acquisition, development and
commercialization of therapies for serious rare and
life-threatening diseases with significant unmet medical needs.
Acer's pipeline includes four investigational programs: ACER-001
(sodium phenylbutyrate) for treatment of various inborn errors of
metabolism, including urea cycle disorders (UCDs) and Maple Syrup
Urine Disease (MSUD); ACER-801 (osanetant) for treatment of induced
Vasomotor Symptoms (iVMS); EDSIVO (celiprolol) for treatment of
vascular Ehlers-Danlos syndrome (vEDS) in patients with a confirmed
type III collagen (COL3A1) mutation; and ACER-2820 (emetine), a
host-directed therapy against a variety of viruses, including
cytomegalovirus, zika, dengue, ebola and COVID-19.
Acer Therapeutics reported a net loss of $15.37 million for the
year ended Dec. 31, 2021, compared to a net loss of $22.89 million
for the year ended Dec. 31, 2020. As of March 31, 2022, the
Company had $31.47 million in total assets, $41.57 million in total
liabilities, and a total stockholders' deficit of $10.10 million.
Boston, MA-based BDO USA, LLP, the Company's auditor since 2019,
issued a "going concern" qualification in its report dated March 2,
2022, citing that the Company has recurring losses and negative
cash flows from operations that raise substantial doubt about its
ability to continue as a going concern.
AEARO TECHNOLOGIES: 3M Criticizes Broken MDL System
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Dietrich Knauth and Brendan Pierson of Reuters report that a 3M Co
subsidiary on Wednesday criticized the way federal courts have
handled 290,000 consolidated lawsuits over allegedly defective
earplugs it made for the U.S. military, saying that the "broken"
legal system allowed claims to balloon and threatened the company's
ability to settle them.
3M subsidiary Aearo Technologies LLC pressed for, but did not get,
a court order that would protect its parent company from the
lawsuits at its first hearing in U.S. bankruptcy court in
Indianapolis. Instead, it reached a more limited agreement with
plaintiffs to pause work for three weeks, interrupting witness
depositions and expert reports scheduled in the lawsuits, which
have been consolidated in the largest-ever multidistrict litigation
(MDL) in U.S. court.
Plaintiffs sued Aearo and 3M over the company's Combat Arms
Earplugs version 2 (CAEv2), claiming they are defective and damaged
their hearing. The cases ballooned to a peak of more than 290,000
last year and now account for nearly one-third of all cases pending
in all federal courts, according to a court filing.
Aearo filed for Chapter 11 protection on Tuesday to resolve the
lawsuits and has committed $1 billion to fund a trust to fund the
settlement.
The filing triggered a multi-court battle over how the bankruptcy
should impact the ongoing litigation against 3M. Aearo attorney
David Bernick said at Wednesday's bankruptcy court hearing that 3M
and Aearo needed a broader pause of MDL litigation to pursue a
bankruptcy restructuring. Bernick said the judge who is overseeing
the MDL had already questioned whether the bankruptcy was filed in
good faith, which could prevent progress in bankruptcy court.
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"We've got a tension that's developed between this proceeding and
the MDL, and it is very corrosive," Bernick said.
U.S. Bankruptcy Judge Jeffrey Graham said he did not have enough
evidence on Aearo's first day in court to block further litigation
against 3M, which is not bankrupt, but said he would consider the
matter at a hearing on Aug. 15.
U.S. District Judge Casey Rodgers in Pensacola, Florida, had said
at a hearing Wednesday morning that she did not believe Aearo's
bankruptcy filing automatically protected parent company 3M, and
she castigated the company for canceling scheduled depositions
Tuesday with "not so much as a phone call" to her.
Separately, a group of plaintiffs filed notice with the Judicial
Panel on Multidistrict Litigation, requesting that the bankruptcy
case be transferred to Florida and overseen by Rodgers. The
attorney who made the request, Ashley Keller, said he would not
withdraw it as part of the three-week litigation pause.
Of the 16 bellwether trials in the MDL to date involving 19 service
members, plaintiffs have won in 10, with about $265 million in
combined awards to 13 plaintiffs.
The case is Aearo Technologies LLC, U.S. Bankruptcy Court for the
Southern District of Indiana, No. 22-10493.
For Aearo Technologies: Chad Husnick and David Bernick of Kirkland
& Ellis
For the MDL plaintiffs' committee: Rob Pfister and Sasha Gurvitz of
KTBS Law
About Aearo Technologies
Aearo Technologies -- https://earglobal.com/en -- is a 3M company
that designs, manufactures, and sells personal protection
equipment. The Company offers prescription and non-prescription
safety eye wear, face shields, hard hats, and respirators. Aearo
serves customers worldwide.
To address claims related to the Combat Arms Earplugs Version 2,
Aearo Technologies LLC and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Lead Case
No. 22-02890) on July 26, 2022. In the petition filed by John R.
Castellano, as authorized signatory, Aearo Technologies estimated
assets and liabilities between $1 billion and $10 billion each.
3M is not a debtor in the Chapter 11 cases. 3M has committed $1
billion to fund a trust allocated for Combat Arms claims.
Kirkland & Ellis LLP is serving as legal counsel and AlixPartners
LLP is serving as restructuring advisor to Aearo Technologies. Ice
Miller LLP, is serving as bankruptcy co-counsel to the Debtors.
Kroll is the claims agent.
PJT Partners is serving as financial advisor and White & Case LLP
is serving as legal counsel to 3M.
AEARO TECHNOLOGIES: Obtains Debtor-Friendly Venue in Indianapolis
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James Nani and Alex Wolf of Bloomberg Law report that the
Indianapolis bankruptcy court isn't the typical venue for large
corporate Chapter 11 cases, but its business-friendly legal
findings have made it the logical choice for 3M Co.'s Aearo
Technologies LLC to try to resolve widespread litigation over
allegedly faulty combat earplugs.
Large bankruptcies have gravitated to a few venues in the US --
those in Delaware, New York, and Houston -- where judges have a
reputation for efficiently resolving complex issues with high
financial stakes. But in the Seventh Circuit, which encompasses the
Indianapolis court where the Aearo bankruptcy is pending, 3M --
which is not itself in bankruptcy -- has found a jurisdiction known
for allowing non-bankrupt entities to dodge litigation without
filing for Chapter 11 themselves.
Despite comments Wednesday from the judge overseeing the Aearo
case, US Judge Jeffrey Graham, suggesting the company faces an
"uphill battle" in securing a litigation shield for its
non-bankrupt parent, 3M has Seventh Circuit precedent in its
favor.
"The Seventh Circuit has the most favorable law in the country on
non-consensual non-debtor releases," Georgetown University law
professor Adam Levitin said.
Given that Aearo is headquartered in Indianapolis, its venue choice
may also have helped avoid potential forum-shopping disputes.
3M on Tuesday placed its Aearo subsidiary into bankruptcy in the US
Bankruptcy Court for the Southern District of Indiana. The filing
came after what the company said is three years and $350 million in
legal fees spent in multi-district litigation over allegedly faulty
earplugs used by the US military that caused hearing damage in more
than 230,000 mostly service member plaintiffs.
Aearo wants to reach a settlement that would end all of the
lawsuits and related tort claims against the unit and 3M.
3M has said it would fund a $1 billion settlement trust to
compensate people suing over the earplugs -- a majority of the tort
claims. The strategy is similar to those used by other companies
facing extensive personal injury liabilities like Johnson & Johnson
and Purdue Pharma LP, although those companies are handling their
liabilities in New York and New Jersey courts.
Friendly Circuit
Other large Seventh Circuit cases have also been friendly to
debtors. In 2016, the Seventh Circuit handed down a decision
finding that the bankruptcy court in the Chapter 11 of Caesars
Entertainment Operating Company Inc. had the power to stay lawsuits
in New York and Delaware, where some $12 billion was at stake.
3M may also find encouragement in a 2008 Seventh Circuit ruling
that a bankruptcy court had "residual authority" to approve third
party litigation releases in the Chapter 11 case for Airadigm
Communications Inc.
"Perhaps the thought was Airadigm provides clear support on the
release path," said Lowenstein Sandler LLP attorney Philip J.
Gross.
More recently, USA Gymnastics successfully reorganized through
Chapter 11 proceedings in Indiana, reaching a large settlement with
hundreds of former gymnasts who filed claims stemming from sexual
abuse committed by former team doctor Larry Nassar. Under the
deal, the US Olympic & Paralympic Committee contributed $34 million
to a settlement trust and also received a release from the
gymnasts' litigation, despite not filing for bankruptcy itself.
During their first appearance in the case on Wednesday, Aearo's
attorneys from Kirkland & Ellis LLP cited at least six Seventh
Circuit decisions dating back to 1987 in support of their argument
that the court should extend a temporary injunction to 3M or
potentially jeopardize its ability to pay plaintiffs.
In consolidated litigation in the Northern District of Florida,
plaintiffs in about 230,000 cases say the Aearo Combat Arms version
2 earplugs were ineffective and caused them to develop hearing loss
and tinnitus. 3M and Aearo have been litigating issues related to
the earplugs’ development and approval in an Eleventh Circuit.
While filing for bankruptcy in Indiana doesn't lead to any obvious
disadvantages for Aearo, a larger question, Levitin said, is
whether the court will grant 3M a bankruptcy automatic stay, which
generally halts litigation outside of the bankruptcy case.
"If it does, then Aearo will sit in bankruptcy indefinitely until
the plaintiffs' attorneys are willing to take a deal," Levitin
said. "It's a breath-holding contest that 3M is poised to win if it
can get protection in its subsidiary's bankruptcy."
Mass Tort Bankruptcy Hurdles
Aearo's bankruptcy comes less than a year after New Brunswick,
N.J.-based health care giant Johnson & Johnson created spinoff LTL
Management LLC, using a corporate-friendly Texas law, and placed
that spinoff into bankruptcy, which is now underway in New Jersey.
The legal maneuver is commonly referred to in corporate bankruptcy
circles as the "Texas two-step."
The judge overseeing LTL's bankruptcy earlier this year rejected
claimants' push to throw out the bankruptcy, which they said was
filed in bad faith because of the two-step maneuver. The US Court
of Appeals for the Third Circuit plans to hear the appeal in
September.
The Second Circuit, which encompasses New York's Southern District
bankruptcy court, is also considering the propriety of non-debtor,
non-consensual releases in the Purdue Pharma bankruptcy.
While Aearo's case doesn't involve the same two-step strategy that
LTL used, it draws inspiration from the LTL court's support for
using the bankruptcy system to resolve mass tort cases, according
to Negisa Balluku, a bankruptcy litigation analyst at Bloomberg
Intelligence.
The Third Circuit's ultimate ruling on the LTL appeal may raise
uncertainty about filing for bankruptcy in that circuit, which
includes both Delaware and New Jersey, Balluku said.
For Aearo, "A Delaware filing could have been risky in the event
the LTL case gets overturned," Balluku said.
About Aearo Technologies
Aearo Technologies -- https://earglobal.com/en -- is a 3M company
that designs, manufactures, and sells personal protection
equipment. The Company offers prescription and non-prescription
safety eye wear, face shields, hard hats, and respirators. Aearo
serves customers worldwide.
To address claims related to the Combat Arms Earplugs Version 2,
Aearo Technologies LLC and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Lead Case
No. 22-02890) on July 26, 2022. In the petition filed by John R.
Castellano, as authorized signatory, Aearo Technologies estimated
assets and liabilities between $1 billion and $10 billion each.
3M is not a debtor in the Chapter 11 cases. 3M has committed $1
billion to fund a trust allocated for Combat Arms claims.
Kirkland & Ellis LLP is serving as legal counsel and AlixPartners
LLP is serving as restructuring advisor to Aearo Technologies. Ice
Miller LLP, is serving as bankruptcy co-counsel to the Debtors.
Kroll is the claims agent.
PJT Partners is serving as financial advisor and White & Case LLP
is serving as legal counsel to 3M.
AMYNTA AGENCY: Moody's Affirms 'B3' CFR & Rates Extended Debt 'B2'
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Moody's Investors Service has affirmed the B3 corporate family
rating and B3-PD probability of default rating of Amynta Agency
Borrower, Inc. The rating agency has also affirmed the B2 rating on
Amynta's senior secured term loan, and assigned a B2 rating to the
company's extended senior secured revolving credit facility. The
rating outlook for Amynta is stable.
RATINGS RATIONALE
According to Moody's, the affirmation of Amynta's ratings reflects
its growing market presence in US warranty products, particularly
vehicle service contracts, as well as its managing general agency
(MGA) business and special risk services operations. The company
has increased revenues both organically and through acquisitions
over the past several years in both its warranty and MGA segments,
while improving EBITDA margins. Amynta continues to focus on
controlling costs, streamlining systems and enhancing data and
analytics capabilities. Although the company designs its coverage
and service contracts and provides claims administration, it does
not bear underwriting risk.
These strengths are offset by the high debt load Amynta assumed
when it was carved out from AmTrust Financial Services, Inc.
(AmTrust), modest interest coverage and low free-cash-flow-to-debt
ratio. Other credit challenges include the company's limited size
and the still high, but declining, concentration of its insurance
placements with AmTrust. Amynta also faces a challenging operating
environment in its core warranty business, which continues to be
affected by supply chain issues for autos and the slowing US
economy. Shortages of new and used vehicles are driving the costs
of automobiles higher which could impact warranty claims.
Moody's estimates that Amynta's pro forma debt-to-EBITDA is in the
range of 7.0x-7.5x, with (EBITDA – capex) coverage of interest
between 1.5x- 2x and a free-cash-flow-to-debt ratio in the
low-single digits. These metrics incorporate Moody's standard
accounting adjustments for operating leases, contingent earnout
obligations, run-rate EBITDA from completed acquisitions, and
certain non-recurring costs and other items.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The following factors could lead to an upgrade of Amynta's ratings:
debt-to-EBITDA ratio below 6x; (EBITDA - capex) coverage of
interest exceeding 2x; free-cash-flow-to-debt ratio exceeding 5%;
and ability to place business with a range of carriers and reduce
the concentration with AmTrust.
The following factors could lead to a downgrade of Amynta's
ratings: debt-to-EBITDA ratio above 7.5x; (EBITDA-capex) coverage
of interest below 1.2x; free-cash-flow-to-debt ratio below 2%.
Moody's has affirmed the following ratings for Amynta:
Corporate family rating at B3;
Probability of default rating at B3-PD;
$870 million senior secured first-lien term loan maturing in
February 2025 at B2 (LGD3); and
$110 million senior secured first-lien revolving credit facility
maturing in February 2023 at B2 (LGD3).
Moody's has assigned the following rating:
$110 million senior secured first-lien revolving credit facility
maturing in May 2024 at B2 (LGD3).
(The new revolver replaces the company's prior $110 million
revolver maturing in February 2023, for which the rating will be
withdrawn.)
The rating outlook for Amynta is stable.
The principal methodology used in these ratings was Insurance
Brokers and Service Companies published in June 2018.
Based in New York City, Amynta writes warranty coverages for autos
and other consumer products, and is a third-party administrator and
managing general agent doing business with large manufacturers and
retailers, small and mid-sized companies, and non-profit and
government entities throughout the US and Canada. The company
generated total revenue of over $1.1 billion during the 12 months
ended March 31, 2022. Private equity sponsor Madison Dearborn
Partners owns a 95% equity interest in Amynta, while management and
employees own a 5% stake.
ANDOVER SENIOR: Taps Colangelo & Taber as Accountant
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Andover Senior Care, LLC seeks approval from the U.S. Bankruptcy
Court for the District of Kansas to hire Colangelo & Taber, P.A. to
prepare its income tax returns.
Greg Colangelo, the firm's accountant who will be providing the
services, will be paid at the rate of $150 per hour.
In court papers, Mr. Colangelo disclosed that he does not hold or
represent any interest adverse to the Debtor's estate.
Mr. Colangelo can be reached at:
Greg Colangelo, CPA
Colangelo & Taber, P.A.
1955 N. Andover Road
P.O. Box 489
Andover, KS 67002
Phone: (316) 733-2252
Email: ctcpa@ctcpas.net
About Andover Senior Care
Andover Senior Care, LLC, owns and operates an assisted living
facility in Andover, Kansas.
Andover Senior Care filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Kansas Case No.
22-10139) on March 11, 2022, listing $5,351,220 in assets and
$16,334,476 in liabilities. Dennis L. Bush, managing member, signed
the petition.
Judge Mitchell L. Herren oversees the case.
Mark Lazzo, Esq., at Mark J. Lazzo, P.A. and Colangelo & Taber,
P.A. serve as the Debtor's legal counsel and accountant,
respectively.
ANYWHERE REAL: Extended Secured Debt No Impact on Moody's B1 CFR
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Moody's Investors Service said Anywhere Real Estate Group LLC's
(formerly known as Realogy Group LLC, "Anywhere") announced senior
secured revolving credit facility extension is a positive credit
and liquidity development because the new $1.1 billion revolver
expiring July 2027 is larger and has a later expiration date than
the existing $948 million revolver expiring February 2025. The
company also announced that the $477 million revolver expiring
February 2023 was terminated. However, since it was set to
terminate within the next year anyway, Moody's did not consider it
a source of external liquidity, so Moody's considers its early
termination inconsequential. Given Moody's had anticipated that
Anywhere would extend the revolver, the ratings, including the B1
corporate family rating, Ba1 senior secured and B2 senior unsecured
ratings, as well as the positive outlook, remain unchanged at this
time.
Anywhere's operating and financial results in the fiscal quarter
ended June 30, 2022 were substantially lower than the record levels
it reported in the same period of 2021, before rising interest
rates cooled the existing home sale market. Although Moody's
anticipates headwinds from lower existing home sale and mortgage
refinance activity will drive declines in revenue and profits in
2022, Anywhere's financial strategies emphasizing debt repayment
and extending its debt maturity profile have led to stronger credit
metrics, a better liquidity profile and a far more flexible debt
capital structure than the company had before the coronavirus
pandemic struck in early 2020. Moody's expects that Anywhere will
generate enough free cash flow to repay in full its remaining
4.875% notes due June 2023 before their maturity date, driving
lower financial leverage and further extending its debt maturity
profile.
Anywhere is an indirect subsidiary of publicly-traded Anywhere Real
Estate Inc. (NYSE:HOUS, formerly known as Realogy Holdings Corp.)
and is based in Madison, NJ. Anywhere provides franchise and
brokerage operations as well as national title, settlement, and
relocation companies and nationally scaled mortgage origination and
underwriting joint ventures. The company operates in three
segments: Anywhere Brands (formerly Franchise), Anywhere Advisors
(formerly Owned Brokerage) and Anywhere Integrated Services
(formerly Title). The franchise brand portfolio includes Better
Homes and Gardens(R) Real Estate, CENTURY 21(R), Coldwell
Banker(R), Coldwell Banker.
Commercial(R), Corcoran(R), ERA(R), and Sotheby's International
Realty(R). Moody's expects revenue of over $7 billion in 2022.
BALDWIN RISK: Moody's Affirms B2 CFR & Alters Outlook to Negative
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Moody's Investors Service has affirmed the B2 corporate family
rating and B2-PD probability of default rating of Baldwin Risk
Partners, LLC (BRP), the operating subsidiary of publicly traded
BRP Group, Inc. (NASDAQ: BRP). Moody's also affirmed the B2 rating
on BRP's senior secured term loan, and assigned a B2 rating to the
company's increased and extended senior secured revolving credit
facility. BRP uses proceeds of these borrowings for general
corporate purposes, including to help fund acquisitions. Moody's
has changed BRP's rating outlook to negative from stable based on
the company's recent increase in financial leverage to help fund an
acquisition.
RATINGS RATIONALE
The rating affirmation reflects BRP's growing presence in property
& casualty insurance brokerage and employee benefits, with a
smaller presence in Medicare related products, according to
Moody's. BRP offers a range of insurance products to middle market
businesses and individuals through distinct channels across four
business segments: Middle Market, Specialty, MainStreet and
Medicare. The company generates strong organic growth through
various partnership based and technology enabled offerings, notably
including renter's insurance sold through agency partners and
property management software providers. BRP also seeks acquisitions
with favorable growth prospects. Historically, the company has
issued a combination of equity and debt to help fund its growth and
manage its financial leverage.
These strengths are offset by BRP's limited scale relative to other
rated insurance brokers and its geographic concentration in the
Southeastern US, although the firm is expanding its national
footprint. Other challenges include significant financial leverage
(per Moody's calculations), modest interest coverage, and lower
EBITDA margins compared to similarly rated peers. BRP's acquisition
strategy carries execution and integration risks and could heighten
the firm's exposure to errors and omissions, a risk inherent in
professional services.
In April 2022, BRP completed its largest acquisition to date,
purchasing Westwood Insurance Agency (Westwood) for upfront cash of
$385 million (reduced by the value of certain stock consideration),
plus potential contingent consideration payable in cash. Westwood,
a technology enabled, personal lines agency specializing in
builder-sourced homeowners insurance, enhances BRP's capabilities
and market presence in the US homeowners line. To help fund the
acquisition, BRP borrowed an additional $380 million under its
revolving credit facility, lifting its financial leverage above its
historical working range.
Giving effect to the Westwood acquisition, Moody's estimates that
BRP has a pro forma debt-to-EBITDA ratio well above 7x, with
(EBITDA - capex) interest coverage of 1.5x-2.5x and a
free-cash-flow-to-debt ratio in the low single digits. These pro
forma metrics include Moody's adjustments for operating leases,
contingent earnout liabilities, and run-rate earnings from
completed acquisitions. Moody's expects that BRP will reduce its
financial leverage to 6.5x or less through EBITDA growth and
capital management over the next 12-18 months. If the company does
not reduce its leverage, the ratings could be lowered.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The following factors could lead to a stable rating outlook for
BRP: (i) profitable growth with further geographic diversification,
(ii) debt-to-EBITDA ratio below 6.5x, (iii) (EBITDA - capex)
coverage of interest remaining above 1.5x, and (iv)
free-cash-flow-to-debt ratio above 3%.
The following factors could lead to a downgrade of BRP's ratings:
(i) disruptions to existing or newly acquired operations given the
company's rapid growth, (ii) debt-to-EBITDA ratio remaining above
6.5x, (iii) (EBITDA - capex) coverage of interest below 1.5x, or
(iv) free-cash-flow-to-debt ratio below 3%.
Moody's has affirmed the following ratings:
Corporate family rating at B2;
Probability of default rating at B2-PD;
$850 million senior secured term loan maturing in October 2027 at
B2 (LGD3); and
$475 million senior secured revolving credit facility maturing in
October 2025 at B2 (LGD3).
Moody's has assigned the following rating:
$600 million senior secured revolving credit facility maturing in
April 2027 at B2 (LGD3).
(The new revolver replaces the company's prior $475 million
revolver, for which the rating will be withdrawn.)
The rating outlook for BRP has changed to negative from stable.
The principal methodology used in these ratings was Insurance
Brokers and Service Companies published in June 2018.
Based in Tampa, Florida, BRP provides a range of commercial and
personal property & casualty insurance, employee benefits, and
Medicare related products and services to middle market businesses
and individuals. BRP generated revenue of $657 million for the 12
months through March 2022.
BAUSCH + LOMB: S&P Downgrades ICR to 'CCC+', Outlook Developing
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S&P Global Ratings lowered its issuer credit rating on Bausch +
Lomb Corp. (B+L) to 'CCC+' from 'B'. This rating action reflects a
similar action S&P took at its ultimate parent, Bausch Health Cos.
Inc. (BHC).
S&P said, "We cap our rating on B+L to that of BHC, because we do
not consider B+L an insulated subsidiary and believe the relatively
weaker parent could divert assets from B+L or burden it with
liabilities during financial stress.
"Our stand-alone credit profile on B+L remains 'bb+'.
"We lowered our rating on B+L's senior secured credit facility to
'CCC+' from 'B'. Our recovery rating on the debt remains '3'.
"Our developing outlook reflects the likelihood of a downgrade on
parent Bausch Health (which currently has a negative outlook), as
well as the potential for a higher rating if the parent ultimately
distributes its ownership to Bausch shareholders, which could
delink the rating from that of the parent company.
"Our rating on Bausch Health caps our 'CCC+' issuer credit rating
on B+L. We continue to expect the remaining ownership will be
transferred to Bausch Health's shareholders eventually, at which
point the rating may no longer be tied to the parent and we could
raise the rating in line with our stand-alone credit profile on B+L
of 'bb+'. We cap our rating because we do not consider B+L an
insulated subsidiary and believe the weaker parent could divert
assets from the subsidiary or burden it with liabilities during
financial stress.
"While B+L remains a restricted subsidiary, we could raise our
rating on the company by one notch prior to the equity distribution
if it was designated as an unrestricted subsidiary. At that point,
we could consider B+L a partially insulated entity and apply a
one-notch uplift from the parent's rating to reflect the presence
of some outside shareholders and our potential view that the parent
has an incentive to preserve B+L's credit quality.
"Our outlook on B+L is developing. The rating is currently capped
at 'CCC+', in line with parent company Bausch Health. During the
next 12 months, we could lower the rating if we lower our rating on
Bausch Health or raise the rating if the entity qualifies for
notching due to insulation given our belief that B+L's stand-alone
credit profile is stronger than that of its parent.
"We could lower the rating on B+L if we lower the rating on parent
company Bausch Health.
"We could raise the rating if B+L becomes an unrestricted
subsidiary of parent company Bausch Health. At that point, we could
consider B+L a partially insulated entity and apply a one-notch
uplift from the rating on the parent, given the presence of some
outside shareholders and our potential view that the parent has an
incentive to preserve B+L's credit quality. The subsidiary could be
unrestricted at some point within the next 12 months once
consolidated leverage (as per Bausch Health's covenant
calculations) falls below 7.6x.
"If unrestricted, we could further raise the rating if we believe
B+L is fully insulated from Bausch Health, which could cause us to
assess credit quality on a stand-alone basis. This could occur once
Bausch Health transfers its ownership stake in B+L to its
shareholders. At that point, it's likely the rating will no longer
be tied to that of Bausch Health and would be raised in line with
B+L's stand-alone credit profile."
B+L is a leading global eye health company with a broad product
portfolio. It generated $3.8 billion revenues in the fiscal year
ended Dec. 31, 2021.
The company operates via three distinct business segments:
-- Vision care/consumer health care (62% of total revenues): The
vision care portfolio includes contact lenses while the consumer
eye care business consists of contact lens care products,
over-the-counter eye drops, and eye vitamins.
-- Ophthalmic pharmaceuticals (19% of revenues): The segment sells
a broad range of drugs for various eye conditions such as glaucoma,
eye inflammation, ocular hypertension, dry eye, and retinal
diseases. It also sells drugs for post-operative treatment.
-- Surgical (19% of revenues): The segment sells medical
equipment, consumables and instrumental tools and technologies for
the treatment of corneal, cataracts, and vitreous and retinal eye
conditions. Also includes intraocular lenses and delivery systems,
phacoemulsification equipment, and other surgical instruments
necessary for cataract surgery.
BAUSCH HEALTH: Moody's Lowers CFR to Caa1 & Alters Outlook to Neg.
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Moody's Investors Service downgraded the ratings of Bausch Health
Companies Inc. ("Bausch Health") and certain of its subsidiaries.
The downgrades include the Corporate Family Rating to Caa1 from B2,
the Probability of Default rating to Caa1-PD from B2-PD, the
secured credit facilities and secured notes of Bausch Health to B2
from Ba3, and the secured credit facilities of Bausch + Lomb
Corporation to B1 from Ba2. Moody's lowered the Speculative Grade
Liquidity Rating to SGL-2 from SGL-1. The outlook on Bausch Health
remains negative, while the outlook on Bausch + Lomb Corporation is
revised to negative from positive.
The downgrade follows the recent oral ruling in the Xifaxan patent
challenge, in which the court found certain Xifaxan patents to be
invalid and others to be valid. Although the timing of a generic
launch will depend on many variables including receipt of an FDA
approval, the potential for a generic launch prior to 2028 has
materially increased, significantly raising Bausch Health's risk
profile. Xifaxan is Bausch Health's largest product, and sales
erosion would cause the company's already high financial leverage
to increase and its capital structure to likely become untenable.
The lower Speculative Grade Liquidity rating reflects Moody's view
that liquidity will remain good prior to any generic launch,
reflecting positive free cash flow, revolver availability and good
cushion under the revolver's financial maintenance covenant.
However, in the event of a generic Xifaxan launch, cash flow will
dramatically decline and the covenant cushion will shrink.
The negative outlook reflects the potential for additional credit
degradation that would ensue from a generic Xifaxan launch or from
operating headwinds that cause leverage to remain high. Regarding
the pending Bausch + Lomb spin-off, Moody's believes that
uncertainty in completing the spin-off has increased. As such,
Moody's is revising the outlook on Bausch + Lomb to negative from
positive, consistent with the outlook on Bausch Health.
Governance risk is a consideration in the rating action. Governance
risk factors related to financial strategy, risk management,
credibility and track record are elevated because financial
leverage has been persistently high for several years, and the
potential for a generic Xifaxan launch, has further weakened the
company's credit profile and is contributing to the downgrade.
Ratings downgraded:
Issuer: Bausch Health Companies Inc.
Corporate Family Rating, Downgraded to Caa1 from B2
Probability of Default Rating, Downgraded to Caa1-PD from B2-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-2 from
SGL-1
Senior Secured Revolving Credit Facility, Downgraded to B2 (LGD2)
from Ba3 (LGD2)
Senior Secured Term Loan, Downgraded to B2 (LGD2) from Ba3 (LGD2)
Senior Secured Notes, Downgraded to B2 (LGD2) from Ba3 (LGD2)
Senior Unsecured Notes, Downgraded to Caa2 (LGD5) from B3 (LGD5)
Issuer: Bausch + Lomb Corporation
Senior Secured Term Loan, Downgraded to B1 (LGD1) from Ba2 (LGD1)
Senior Secured Revolving Bank Credit Facility, Downgraded to B1
(LGD1) from Ba2 (LGD1)
Issuer: Bausch Health Americas, Inc.
Senior Unsecured Notes, Downgraded to Caa2 (LGD5) from B3 (LGD5)
Outlook Actions:
Issuer: Bausch + Lomb Corporation
Outlook, Changed to Negative from Positive
Issuer: Bausch Health Americas, Inc.
Outlook, Remains Negative
Issuer: Bausch Health Companies Inc.
Outlook, Remains Negative
RATINGS RATIONALE
Bausch Health's Caa1 Corporate Family Rating reflects its high
financial leverage with pro forma consolidated gross debt/EBITDA of
about 7x using Moody's calculations and reflecting recent
transactions including the IPO of Bausch + Lomb. The credit profile
is also constrained by the exposure to potential genericization of
Xifaxan – the company's largest product. A recent court decision
invalidated certain Xifaxan patents and validated others, and the
timing of a generic launch remains uncertain. A planned spin-off of
Bausch + Lomb would increase business risks of the remaining
company due to reduced scale and diversity and high leverage
initially, with targeted net debt/EBITDA of 6.5x to 6.7x, and faces
execution risks in attaining this target.
These risks are tempered by the company's significant global scale
and diversity. The credit profile is supported by good liquidity,
including solid free cash flow.
ESG considerations are material to Bausch Health's credit profile,
reflected in the Credit Impact Score of CIS-5, Very Highly Negative
(previously CIS-4, Highly Negative). Bausch Health faces very
highly negative governance risk exposures, reflected in the G-5
score (previously G-4). Despite a consistent debt reduction
strategy, gross debt/EBITDA has remained persistently high,
creating financial strategy and risk management exposures which are
now elevated following the Xifaxan court ruling. In addition, the
company faces execution risk in completing the Bausch + Lomb
spinoff as well as subsequently operating the remaining Bausch
Pharma business, highlighting management credibility and track
record risks. In addition, like other pharmaceutical companies
Bausch Health has highly negative exposures to social risks,
reflected in the S-4 score. These exposures include a variety of
unresolved legal issues, notwithstanding significant progress to
date at resolving such matters. Other social risks include exposure
to regulatory and legislative efforts aimed at reducing drug
pricing. Bausch Health's product and geographic diversification
help mitigate some of that exposure, as well as business lines
outside of branded pharmaceuticals.
The negative outlook reflects the potential for additional credit
degradation that would ensue from a generic Xifaxan launch or from
operating headwinds that cause leverage to remain high.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a downgrade include generic competition
for Xifaxan, other operating setbacks, large litigation-related
cash outflows, deteriorating liquidity or transactions that
increase the probability of default.
Factors that could lead to an upgrade include clarity in avoiding
generic competition for Xifaxan, solid operating performance, and
successful pipeline execution of new rifaximin formulations. Debt
reduction would also improve the company's credit profile.
Bausch Health Companies Inc. is a global company that develops,
manufactures and markets a range of pharmaceutical, medical device
and over-the-counter products. These are primarily in the
therapeutic areas of eye health, gastroenterology and dermatology.
Revenues for the 12 months ended March 31, 2022 totaled
approximately $8.3 billion.
The principal methodology used in these ratings was Pharmaceuticals
published in November 2021.
BAUSCH HEALTH: S&P Downgrades ICR to 'CCC+', Outlook Negative
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S&P Global Ratings lowered its issuer credit rating on Bausch
Health Cos. Inc. (BHC) to 'CCC+' from 'B'. At the same time, S&P
lowered its rating on the senior secured debt to 'B' from 'BB-' and
our rating on the unsecured debt to 'CCC' from 'B-'.
The negative outlook reflects S&P's assessment of the risk of a
near-term default, including a below-par repurchase of debt that it
may view as a distressed exchange.
The negative trial outcome opens the door for generic competition
much earlier than previously anticipated. While a final judgement
has not yet been issued, the oral order indicated the court will
find the composition of matter and use of Xifaxan patents to treat
IBS-D invalid. S&P expects that Norwich will resubmit its
abbreviated new drug application (ANDA) for rifaximin with the
hepatic encephalopathy (HE) indication removed, which when
approved, could lead to a skinny label launch of generic Xifaxan.
Approval and launch by Norwich would also permit Teva
Pharmaceutical Industries Ltd., Sandoz Corp., and Sun
Pharmaceutical Industries Ltd. to launch authorized generics as per
the settlements they have previously signed with Bausch Health. All
Xifaxan sales across IBS-D and HE indications (totaling $1.6
billion in 2021) would be at risk.
S&P said, "BHC has announced that they will appeal the decision
(which will likely slow proceedings), but we now expect that
generic competition will enter the market no later than year end
2024--much earlier than our previous base-case assumption of Jan.
1, 2028.
"Business prospects become much more challenging, causing us to
view the capital structure as unsustainable longer term. We believe
that Bausch Health will have even more difficulty investing in its
already bare development pipeline. The most material asset in
development is an additional indication for a new rifaximin
formulation to treat liver cirrhosis currently in phase III
testing, which could open the drug to a much larger addressable
market. However, we do not expect FDA approval or a product launch
for the next several years. With limited new product launches on
the horizon and an inability to pursue substantial mergers and
acquisitions, we believe there is a much higher probability that
Bausch Health will be unable to refinance or repay its sizable
upcoming debt maturities. We forecast that Bausch Health will
generate only enough cash flow to cover its maturities through
2026.
"We think there is an increased chance that the Bausch + Lomb spin
will be indefinitely postponed or cancelled. With an expected
material decline in revenue and EBITDA looming, we believe it is
increasingly likely that Bausch Health will indefinitely postpone
or call off its planned spin of B+L. We believe that it will be
very difficult for Bausch Health to delever to the required levels
with diminished EBITDA contribution from Xifaxan. While cancelling
the spinoff would be positive for BHC's credit quality, we do not
expect the cash flow contributions from B+L will enable BHC to
cover its longer dated debt maturities.
"We view an increased likelihood of below- par debt repurchases. We
believe this negative trial decision puts more pressure on Bausch
Health's capital structure, leading management to consider more
strongly the repurchase of long-term bonds trading at very
distressed levels (55 cents on the dollar); an act they had already
alluded to during past calls with investors. We could view such a
transaction as a distressed exchange tantamount to a default, given
some lenders will be receiving less than their original promise.
"The negative outlook reflects our expectation for material revenue
and EBITDA declines from generic competition to Xifaxan starting in
2024, but sufficient liquidity to cover fixed cost for at least the
next several years. It also reflects the near-term risk of a
below-par debt repurchase that we could view as distressed.
"We could lower our rating on Bausch Health within the next 12
months if we believe it is increasingly likely that a default will
occur, including below par repurchase of debt that we viewed as a
distressed exchange.
"We could revise the outlook to stable if we believed that the risk
of a near-term default had lessened. Under this scenario, we would
likely still believe that longer-term risks (including refinancing
longer dated maturities) remained."
BK AUTUMN: Nationstate Says Debtor Has No Reason to Reorganize
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Nationstar Mortgage LLC filed an objection to Bk Autumn 701 LLC's
Second Amended Disclosure Statement Pursuant to Section 1125 of the
Bankruptcy Code, filed July 19, 2022.
Nationstar points out that the Disclosure Statement should not be
approved because the Debtor's proposed Plan annexed thereto is not
confirmable and because the Disclosure Statement itself does not
contain "adequate information" as required by the 11 U.S.C. Section
1125(b).
Nationstar further points out that Debtor has no ability to and no
reason to reorganize. The Debtor has no unsecured creditors and
little to no operating capital. The only secured creditors who
filed claims in this case are Nationstar and the NYC Water Board.
The Debtor is an LLC with no business operations, no employees and
no realistic ability to complete a plan of reorganization.
Nationstar and the Debtor have no contractual relationship as the
Debtor is not the borrower. The Debtor obtained ownership of the
property by deed without the Secured Creditor's consent and subject
to its mortgage. As there is no privity of contract, Debtor has no
right to modify Nationstar's claim.
According to Nationstar, as an individual, Edwin Chiquito would not
have the ability to cramdown Nationstar's lien against the
property. It would appear that the borrower transferred ownership
of the property in the hopes of avoiding his contractual obligation
to Nationstar and the Debtor filed the instant bankruptcy with the
sole purpose of attempting to force Nationstar to accept less than
it is owed.
Nationstar complains that this is not a plan proposed in good faith
by a borrower to reorganize his debts, but rather a plan proposed
by an LLC which was formed for the sole purpose of modifying the
pre-existing mortgage on the property. This does not meet the
requirements of 11 U.S.C Section 1129(a)(3), and therefore cannot
be confirmed, according to Nationstar.
Nationstar asserts that the Debtor's proposed Plan and disclosure
statement propose payment to Nationstar in the amount of
$395,000.00, which is less than half of the full claim amount as of
filing of $807,346.08. In addition, interest continues to accrue
and Nationstar continues to make advances for taxes and insurance.
Nationstar points out that Debtor's Disclosure statement
incorrectly states that the Secured Creditor would receive less
under a chapter 7 liquidation because of the Trustee's fees.
However, as there is no equity in this property according to the
Debtor's valuation, three would be no Trustee sale in a chapter 7
liquidation. A chapter 7 liquidation would result in a Trustee's
Report of no Assets, Nationstar pursuing a foreclosure sale of the
Mortgaged Premises and eventually receiving payment of its full
claim.
Nationstar will receive under this proposed Plan less than it would
so receive if the Debtor were liquidated under Chapter 7. As such,
the plan does not meet the requirements of section
1129(a)(7)(A)(ii) and is not confirmable. The disclosure statement
cannot be approved where the proposed plan cannot be confirmed.
Counsel for Nationstar Mortgage LLC:
Ehret A. Van Horn, Esq.
GROSS POLOWY LLC
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.
CADIZ INC: Appoints Former Senator Polanco as Director
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Cadiz Inc.'s Board of Directors appointed Senator Richard Polanco
(ret.) as a new member of the Board, filling an existing vacancy
and returning the Board's size to 10 members.
Sen. Polanco is an esteemed California political and business
leader, and champion for the state's disadvantaged communities. He
brings to the Board 40 years of high-level experience in elected
office and the public and private sectors with frontline expertise
in public policy, economic development, risk management and
community empowerment, among other areas.
Senator Polanco began his career in public service in 1975 and has
served on the staff of several local and state officials including
Los Angeles County Supervisor Ed Edelman (1975 - 1978), California
Governor Jerry Brown (1978 - 1982) and Assemblyman Richard Alatorre
(1982 - 1986).
In 1986, Senator Polanco was elected to the California State
Assembly where he served until 1994 when he was elected to the
California State Senate. Senator Polanco served in the Senate from
1994 until his retirement in 2002, including four years as the
Senate Majority Leader from 1998 - 2002. During his 16 years in
the State Legislature Sen. Polanco rose to some of the most
powerful positions in Sacramento, including as Senate Majority
Leader (1998-2002) and Chair of the Latino Legislative Caucus (1990
– 2002), while authoring landmark bills across a wide range of
policy areas, from clean drinking water to voting rights.
In October 2002, Senator Polanco established the California Latino
Caucus Institute for Public Policy, a 501 (c) 3 non-profit
organization that supports innovative leadership programs to
enhance the quality of life for all Californians. The Institute
was created as a non-partisan effort by the California Latino
Legislative Caucus. Senator Polanco served as the Institute's
first Chairman of the Board.
Previously, Senator Polanco served as the executive director to the
Maravilla Neighborhood Project Area Committee, a $24m community
redevelopment program in East Los Angeles, and as a Community
Organizer for the Maravilla Public Housing Project.
Senator Polanco has also served on a variety of public and private
sector boards and commissions, including California Delta Dental
Plan (Board Director), Meruelo Maddux Construction Inc. (Board
Director), California Public Utility Commission Low Income
Oversight Board (Board Director), Sylvatex Inc. (Advisory Board),
Farmworker Institute for Education & Leadership Development- Cesar
Chavez Adult Charter School (Advisory Board) and the UCLA Luskin
School of Urban Affairs (Advisor).
Senator Polanco resides in Los Angeles and is presently managing
director of Tres Es Inc., a boutique government affairs firm.
He received his bachelor's degree in Business Administration
following study at the University of Redlands and Universidad de
Mexico.
Concurrently with his appointment to the Board, Senator Polanco was
also appointed to the Board's Compensation Committee and the
Equity, Sustainability and Environmental Justice Committee.
Senator Polanco has initially been appointed as a director for a
term expiring at the Company's 2023 Annual Meeting of Stockholders
and will stand for re-election as a director at the 2023 meeting.
Senator Polanco will be compensated for his service as a director
in accordance with the Company's Director Compensation Policy, as
described in the Company's most recent Proxy Statement for its
Annual Meeting of Stockholders held on July 12, 2022, as filed with
the Securities and Exchange Commission on May 26, 2022.
About Cadiz Inc.
Founded in 1983 and headquartered in Los Angeles, California, Cadiz
Inc. -- http://www.cadizinc.com-- is a natural resources
development company dedicated to creating sustainable water and
agricultural opportunities in California. The Company owns 70
square miles of property with significant water resources in
Southern California and are the largest agricultural operation in
San Bernardino, California, where we have sustainably farmed since
the 1980s. The Company is also partnering with public water
agencies to implement the Cadiz Water Project, which was named a
Top 10 Infrastructure Project that over two phases will create a
new water supply for approximately 400,000 people and make
available up to 1 million acre-feet of new groundwater storage
capacity for the region.
Cadiz reported a net loss and comprehensive loss of $31.25 million
for the year ended Dec. 31, 2021, a net loss and comprehensive loss
of $37.82 million for the year ended Dec. 31, 2020, a net loss and
comprehensive loss applicable to common stock of $29.53 million for
the year ended Dec. 31, 2019, and a net loss and comprehensive loss
of $26.27 million for the year ended Dec. 31, 2018. As of March
31, 2022, the Company had $119.74 million in total assets, $74.13
million in total liabilities, and $45.61 million in total
stockholders' equity.
CATSKILL CASE STUDY: Contractor Seeks Chapter 11 Protection
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Catskill Case Study, LLC filed for chapter 11 protection in the
Eastern District of New York.
The Debtor is a construction contractor and owns various parcels of
real property where it sells the property and provides contracting
services. The property currently owned by Catskill is undeveloped
and is not rented.
Most recently, the Debtor has been dealing with litigation from
three prior construction projects. The Debtor is concerned that
its creditors will take other actions against its property and that
the Debtor will therefore be unable to operate, manage and sell its
real property.
The Debtor accordingly filed a Chapter 11 case in order to obtain
some breathing room from its creditors and an opportunity to
reorganize its affairs based upon a restructuring of obligations.
According to court filing, Catskill Case Study estimates between 1
and 49 creditors. The petition states funds will be available to
unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
for Aug. 26, 2022 at 9:30 am Filed by Office of the United States
Trustee.
About Catskill Case Study
Catskill Case Study LLC -- https://Milancasestudy.com/ -- is a
construction contractor and owns various parcels of real property
where it sells the property and provides contracting services.
Due to ongoing litigation, Catskill Case Study LLC sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
E.D.N.Y. Case No. 22-41817) on July 28, 2022. In the petition filed
by Nicolas Mahedy, as managing member, the Debtor reports estimated
assets between $500,000 and $1 million and estimated liabilities
between $1 million and $10 million.
Gregory M. Messer, of the Law Office of Gregory Messer, PLLC, is
the Debtor's counsel.
CURIA GLOBAL: S&P Downgrades ICR to 'B-', Outlook Stable
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S&P Global Ratings lowered its issuer credit rating on Albany,
N.Y.-based pharmaceutical contract development and manufacturing
organization (CDMO) Curia Global Inc. (formerly Albany Molecular
Research Inc.) to 'B-' from 'B.' S&P also lowered its issue-level
rating on the senior secured credit facility to 'B-' from 'B'. The
recovery rating on this debt is unchanged at '3'.
S&P said, "The outlook is stable and reflects our expectation for
high-single-digit percent revenue growth and for profitability to
begin to stabilize in 2023. We also expect that Curia will generate
free cash flow deficits due to higher growth spending and for S&P
Global Ratings-adjusted debt leverage above 7x over the next year.
"We downgraded Curia to 'B-' to reflect our expectation for free
cash flow deficits and elevated leverage in 2022 and
2023.Inflationary pressures, increasing interest rates, and recent
acquisitions performing below expectations as well as higher
capital spending contributes to our expectation that free cash flow
will be negative and leverage will remain above 7x for the next
year. We have updated our projections and now expect capital
spending to increase to $115 million to $125 million annually
compared to $80 million in 2021. The increase in spending is
attributable to various expansion projects at its existing
facilities, which includes about $35 million to $40 million in
spending to expand manufacturing capacity for complex small
molecules, in addition to about $200 million in additional capital
spending over the next three years related to its partnership
agreement with the U.S. government to expand and advance its
fill-finish capabilities for injectables at its Albuquerque,
N.M.-facility. We expect Curia will be reimbursed for more than
half of the $200 million in spending related to the Albuquerque
Expansion Partnership with the U.S. government; however, we have
not included these reimbursements in our projections, and we
estimate that including these reimbursements would still result in
free cash flow to debt below 3% in 2022 and 2023.
"We expect rising input costs, higher interest rates, and
integration challenges will continue to pressure profitability in
2022.Curia's EBITDA margin declined about 110 basis points to 19.7%
in 2021 and we expect margins to weaken further in 2022, before
stabilizing in 2023. During the first half of 2022, Curia reported
significant weakness in profitability and EBITDA margins stemming
from higher operating expenses at its manufacturing facilities and
slower than expected bookings in its R&D division. Inflationary
pressures related to key input costs have been the main driver of
weaker margins in the manufacturing business, which has been
negatively affected by significant price increases in energy, raw
materials, and other key production inputs. The long-term nature of
Curia's manufacturing contracts limits its ability to pass through
price increases to its customers, therefore we expect margins to
remain weak throughout 2022. We expect the company to pass on some
additional costs over time and project an easing of inflationary
pressures in 2023 to support a stabilization in manufacturing
margins."
In addition to rising input costs, challenging macroeconomic
conditions including rising interest rates and a slowdown in R&D
funding for small and medium-sized biotech companies present
additional risks that could put more pressure on margins. Curia's
R&D business is highly dependent on R&D spending by small and
midsized pharmaceutical and biotechnology companies, which are in
turn influenced by the level of available biotech funding. During
the first half of 2022, performance in the R&D segment was
constrained by softer bookings, an increase in customer delays, and
some customer cancellations, which was partly attributable to a
slowdown in biotech funding. Because the R&D business produces
higher margins and has generally shorter contracts, S&P would
expect a further weakening in bookings or uptick in customer delays
or cancellation would likely result in increased pressure on
margins.
S&P said, "We expect high-single-digit organic revenue growth over
the next few years supported by favorable industry tailwinds and
Curia's leading position in several niche high-growth markets.We
estimate the global CDMO industry is growing at a high-single-digit
percent rate supported by continued outsourcing trends among
pharmaceutical and biotechnology companies and the growing number
of new drug approvals. We believe Curia is well positioned to
benefit from these favorable industry trends supported by its
global network of integrated manufacturing facilities and its
strong position as a leading API and drug product (DP)
manufacturer. Additionally, Curia's expertise and capabilities in
high-growth subsectors including the manufacturing of high-potency
APIs (HPAPIs), injectables, and sterile dosage form products
further supports growth as these sectors are characterized by high
barriers to entry and are expected to experience the highest
growth.
"The stable outlook reflects our expectation for high-single-digit
percent revenue growth and for profitability to begin to stabilize
in 2023. We also expect that Curia will generate free cash flow
deficits due to higher growth spending and for adjusted debt
leverage above 7x over the next year.
"We could lower our rating on Curia if the company experiences a
significant deterioration in profitability such that free cash flow
generation is materially weaker than expected, leading us to
consider the capital structure to be unsustainable.
"Although unlikely in the next 12 months, we could raise our rating
on Curia if the company's revenue and EBITDA growth strengthen such
that it generates sufficient cash flow despite planned growth
spending, contributing to a reduction in adjusted leverage to below
7x while generating free cash flow to debt of more than 3%."
ESG credit indicators: E-2, S-2, G-3
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis. 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 most rated entities
owned by private-equity sponsors. Our assessment also reflects the
generally finite holding periods and a focus on maximizing
shareholder returns."
CUSHMAN & WAKEFIELD: Moody's Alters Outlook on B1 CFR to Positive
-----------------------------------------------------------------
Moody's Investors Service has affirmed Cushman & Wakefield U.S.
Borrower LLC's ("CWK") corporate family rating at B1, its senior
secured term loan, senior secured first lien revolving facility,
and senior secured notes at Ba3, and its probability of default
rating at B1-PD. In the same rating action, Moody's revised the
outlook to positive from stable. Additionally, Moody's changed
CWK's speculative grade liquidity rating to SGL-1 from SGL-2.
The revision of the outlook to positive anticipates continued
strong operating performance, as exhibited by improving cash flow
metrics. Additionally, the positive outlook reflects expected
deleveraging and maintenance of strong liquidity as it seeks to
drive strategic growth through opportunistic investments.
Ratings Affirmed:
Issuer: Cushman & Wakefield U.S. Borrower, LLC.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Gtd Senior Secured First Lien Term Loan, Affirmed Ba3 (LGD3)
Gtd Senior Secured First Lien Revolving Facility, Affirmed Ba3
(LGD3)
Gtd Senior Secured Regular Bond/Debenture, Affirmed Ba3 (LGD3)
The following rating was changed:
Issuer: Cushman & Wakefield U.S. Borrower LLC
Speculative Grade Liquidity Rating to SGL-1 from SGL-2
Outlook Actions:
Issuer: Cushman & Wakefield U.S. Borrower, LLC.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
The revision of the outlook to positive reflects the expectation
that CWK will sustain recent trends of strong operating results
across service lines and regions, driven by a distinct rebound in
business momentum and CRE investment activity. CWK has sustained
leverage below 4.0x, as measured by Debt/EBITDA (including Moody's
standard adjustments for pensions and operating leases), primarily
due to a renewed focus on cash flow generation and deleveraging.
Moody's expect the company to continue to reduce leverage over the
medium-term, given no near-term debt plans and continued revenue
growth. Moody's note however, that performance could moderate in
the near-term due to rising interest rates, elevated inflation and
lingering pandemic-related volume disruption.
The ratings affirmation reflects Cushman & Wakefield's market
position as a leading global commercial real estate services
provider and strong base of recurring income from contractual
property, facility and project management businesses. Separately,
credit challenges continue to include the cyclical nature of its
transaction-based service lines including capital markets and
leasing as well as exposure to governance risk due to its private
equity ownership with substantial board representation.
The revision of the speculative grade liquidity rating to SGL-1
from SGL-2 reflects the issuer's strong liquidity profile as of the
first quarter 2022, supported by its low capital intensive business
model and robust cash flow, full availability under its $1.1
billion revolving facility, a cash position of approximately $612
million, and no debt maturities until 2025 when its $2.6 billion
senior secured first lien term loan comes due. Moody's expect the
company to allocate available liquidity and excess cash flow to its
services platform, in-fill M&A and recruitment, debt repayment, and
returning capital to shareholders.
The Ba3 ratings on the senior secured first lien term loan and
revolving facility, which are one notch above the CFR reflect the
first lien security on all assets and substantially all material
tangible and intangible assets of CWK and its guarantors. These
include the parent company, and its material direct and indirect
wholly-owned subsidiaries organized in the United States and
certain direct and indirect wholly-owned subsidiaries organized in
England and Wales.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade would be predicated on a reduction in leverage as
defined by Debt/EBITDA (including Moody's standard adjustments for
pensions and operating leases) to below 4.0x, interest coverage
above 3.5x and RCF/Net Debt above 15%, on a sustained basis.
A ratings downgrade would result from weakening operating
performance and/or a shift to a more aggressive financial policy,
with Debt/EBITDA in excess of 5.0x, and interest coverage below
2.0x, on a sustained basis.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Cushman & Wakefield is one of the leading, global providers of
commercial real estate services, providing a full array of
corporate real estate services (CRES) to occupiers, property
owners, investors, and developers worldwide.
DLVR INC: Files Chapter 11 Subchapter V Case
--------------------------------------------
DLVR Inc. filed for chapter 11 protection in the District of
Arizona. The Debtor filed as a small business debtor seeking
relief under Subchapter V of Chapter 11 of the Bankruptcy Code.
The Company said it has sought bankruptcy as it has insufficient
funds to make payments to current creditors and the Company is
unable to pay its obligations as they become due.
The Company's balance sheet at June 30, 2022 showed $342,900 in
assets against liabilities of $12.781 million.
The Company had a net loss of $857,300 on revenue of $61,600 in the
second quarter of 2022, compared with a net loss of $742,300 on
$59,800 of revenue in the first quarter of 2022.
According to court filing, DLVR Inc. estimates between 1 and 49
creditors. The petition states funds will be available to
Unsecured Creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Aug. 30, 2022, at 9:00 AM as a Telephonic Hearing (341). Proofs of
claim are due by Oct. 5, 2022.
About DLVR Inc.
DLVR Inc. -- https://www.dlvr.com/ -- helps customers create the
best possible video viewing experience.
On July 27, 2022, DLVR Inc. filed a voluntary petition for relief
under chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No.
22-04935). The Debtor has elected to proceed under subchapter V of
chapter 11.
In the petition filed by Michael Gordon, as CEO, President,
Secretary, and Treasurer, the Debtor estimated assets and
liabilities between $1 million and $10 million.
Jennifer A. Giamo has been appointed as Subchapter V trustee.
Christopher C. Simpson of Osborn Maledon, P.A., is the Debtor's
counsel.
DMDS LLC: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: DMDS, LLC
404 Spencer Highway
South Houston, TX 77587
Chapter 11 Petition Date: August 1, 2022
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 22-32201
Judge: Hon. Jeffrey P. Norman
Debtor's Counsel: Larry A. Vick, Esq.
LARRY A. VICK
13501 Katy Freeway, Suite 1460
Houston, TX 77079
Tel: (832) 413-3331
Fax: (832) 202-2821
Email: lv@larryvick.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by David M. Soliman as president.
The Debtor filed an empty list of its 20 largest unsecured
creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/KXRH22Q/DMDS_LLC__txsbke-22-32201__0001.0.pdf?mcid=tGE4TAMA
DYNAMETAL TECHNOLOGIES: Case Summary & 20 Top Unsecured Creditors
-----------------------------------------------------------------
Debtor: Dynametal Technologies, Inc.
400 North Dupree Avenue
Brownsville, TN 38012
Chapter 11 Petition Date: August 1, 2022
Court: United States Bankruptcy Court
Western District of Tennessee
Case No.: 22-10831
Judge: Hon. Jimmy L. Croom
Debtor's Counsel: Steven N. Douglass, Esq.
HARRIS SHELTON, PLLC
40 S. Main Street, Suite 2210
Memphis, TN 38103-2555
Tel: (901) 525-1455
Email: sdouglass@harrisshelton.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Robert L. Nolan as president.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/OXZGGDA/Dynametal_Technologies_Inc__tnwbke-22-10831__0003.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/OOE7MWA/Dynametal_Technologies_Inc__tnwbke-22-10831__0001.0.pdf?mcid=tGE4TAMA
E QUALCOM: Case Summary & Seven Unsecured Creditors
---------------------------------------------------
Debtor: E Qualcom, Corp
1960 North Commerce Parkway
Suite 3
Weston, FL 33326
Chapter 11 Petition Date: August 1, 2022
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 22-15957
Debtor's Counsel: David W. Langley, Esq.
DAVID W. LANGLEY
8551 W. Sunrise Blvd., Suite 303
Plantation, FL 33322
Tel: 954-356-0450
Email: dave@flalawyer.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Luis Navia as officer.
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/JULUCLA/E_QUALCOM_CORP__flsbke-22-15957__0001.0.pdf?mcid=tGE4TAMA
ENDO INT'L: Makes $38M Interest Payment, In Grace Period for Others
-------------------------------------------------------------------
Endo International plc elected not to make interest payments in the
amounts of approximately (i) $38 million due on June 30, 2022 with
respect to the Company's outstanding 6.00% Senior Notes due 2028
(the "2028 Notes"), and (ii) $1.9 million due on July 15, 2022 with
respect to the Company's outstanding 5.375% Senior Notes due 2023
and 6.000% Senior Notes due 2023 (collectively, the "2023 Notes"
and, together with the 2028 Notes, the "Notes"). Under each
applicable indenture governing the Notes, the Company has a 30-day
grace period to make the applicable interest payment before such
non-payment constitutes an "event of default".
According to a regulatory filing, the Company on July 28, 2022,
made the interest payment of approximately $38 million with respect
to the 2028 Notes. As a result of making the interest payment on
the 2028 Notes, the default has been cured and the Company is in
compliance with the indenture governing the 2028 Notes.
The Company remains in the grace period, which expires on August
14, 2022, for the interest payments in the aggregate amount of
approximately $1.9 million with respect to the Company's
outstanding 2023 Notes.
In addition, the Company has elected not to make interest payments
in the amounts of approximately (i) $45 million due on July 31,
2022 with respect to the Company's outstanding 9.50% Senior Secured
Second Lien Notes due 2027 (the "2027 Notes"), and (ii) $600,000
due on August 1, 2022 with respect to the Company's outstanding
6.00% Senior Notes due 2025 (the "2025 Notes"). Under the
applicable indenture governing each of the 2027 Notes and the 2025
Notes, the Company has a 30-day grace period to make the applicable
interest payment before such non-payment constitutes an "event of
default" with respect to each of the 2027 Notes and 2025 Notes.
The Company has chosen to enter these grace periods as it continues
previously-disclosed discussions with certain creditors in
connection with the Company's evaluation of strategic alternatives.
The Company's decision to enter the grace periods was not driven
by liquidity constraints, as it had approximately $1.4 billion in
cash as of March 31, 2022. Accordingly, the Company's day-to-day
operations will not be impacted by the decision.
About Endo International PLC
Endo International plc (NASDAQ: ENDP) -- http://www.endo.com/-- is
a holding company that conducts business through its operating
subsidiaries. The Company's focus is on pharmaceutical products and
it targets areas where it believes it can build leading positions.
Endo International reported a net loss of $613.24 million for the
year ended Dec. 31, 2021. As of March 31, 2022, the Company had
$8.45 billion in total assets, $1.38 billion in total current
liabilities, $15.96 million in deferred income taxes, $8.04 billion
in long-term debt (less current portion), $5 million in long-term
legal settlement accrual (less current portion), $31.69 million in
operating lease liabilities (less current portion), $288.43 million
in other liabilities, and a total shareholders' deficit of $1.31
billion.
* * *
Endo International, like some other drugmakers, has been pushed to
the brink by opioid lawsuits.
In September 2021, S&P Global Ratings lowered its long-term issuer
credit rating on Endo International to 'CCC+' from 'B-'. The
outlook is negative. S&P said the negative outlook reflects the
potential for an event of default within the next 12 months
stemming from opioid-related litigation or the possibility of a
distressed exchange.
At the end of June 2022, S&P Global lowered its issuer credit
rating on Endo International to 'CC' from 'CCC'. S&P said the
downgrade reflects Endo's entrance into a 30-day grace period for
interest non-payment, making a near-term bankruptcy filing or
distressed exchange almost an inevitability.
ENDO INTERNATIONAL: Makes $38-Mil. Interest Payment on 2028 Notes
-----------------------------------------------------------------
Endo International plc made interest payment on July 28, 2022, of
approximately $38 million with respect to the 2028 Notes. As a
result of making the interest payment on the 2028 Notes, the
default has been cured and the Company is in compliance with the
indenture governing the 2028 Notes.
As previously disclosed, Endo International elected not to make
interest payments in the amounts of approximately (i) $38 million
due on June 30, 2022 with respect to the Company's outstanding
6.00% Senior Notes due 2028, and (ii) $1.9 million due on July 15,
2022 with respect to the Company's outstanding 5.375% Senior Notes
due 2023 and 6.000% Senior Notes due 2023. Under each applicable
indenture governing the Notes, the Company has a 30-day grace
period to make the applicable interest payment before such
non-payment constitutes an "event of default".
The Company remains in the grace period, which expires on Aug. 14,
2022, for the interest payments in the aggregate amount of
approximately $1.9 million with respect to the Company's
outstanding 2023 Notes.
In addition, the Company has elected not to make interest payments
in the amounts of approximately (i) $45 million due on July 31,
2022 with respect to the Company's outstanding 9.50% Senior Secured
Second Lien Notes due 2027, and (ii) $600,000 due on Aug. 1, 2022
with respect to the Company's outstanding 6.00% Senior Notes due
2025. Under the applicable indenture governing each of the 2027
Notes and the 2025 Notes, the Company has a 30-day grace period to
make the applicable interest payment before such non-payment
constitutes an "event of default" with respect to each of the 2027
Notes and 2025 Notes. The Company has chosen to enter these grace
periods as it continues previously-disclosed discussions with
certain creditors in connection with the Company's evaluation of
strategic alternatives. The Company said its decision to enter the
grace periods was not driven by liquidity constraints, as it had
approximately $1.4 billion in cash as of March 31, 2022.
Accordingly, the Company's day-to-day operations will not be
impacted by the decision.
About Endo International plc
Endo International plc (NASDAQ: ENDP) -- http://www.endo.com/-- is
a holding company that conducts business through its operating
subsidiaries. The Company's focus is on pharmaceutical products
and it targets areas where it believes it can build leading
positions.
Endo International reported a net loss of $613.24 million for the
year ended Dec. 31, 2021. As of March 31, 2022, the Company had
$8.45 billion in total assets, $1.38 billion in total current
liabilities, $15.96 million in deferred income taxes, $8.04
billion
in long-term debt (less current portion), $5 million in long-term
legal settlement accrual (less current portion), $31.69 million in
operating lease liabilities (less current portion), $288.43 million
in other liabilities, and a total shareholders' deficit of $1.31
billion.
* * *
As reported by the TCR on July 4, 2022, S&P Global Ratings lowered
its issuer credit rating on Endo International PLC to 'CC' from
'CCC'. S&P said the downgrade reflects Endo's entrance into a
30-day grace period for interest non-payment, making a near-term
bankruptcy filing or distressed exchange almost an inevitability.
GA REAL ESTATE: Case Summary & Five Unsecured Creditors
-------------------------------------------------------
Debtor: Ga Real Estate Acquisitions, LLC
150 Austin Oaks Dr
Ellenwood, GA 30294
Business Description: The Debtor is engaged in activities related
to real estate.
Chapter 11 Petition Date: August 1, 2022
Court: United States Bankruptcy Court
Northern District of Georgia
Case No.: 22-55886
Judge: Hon. Lisa Ritchey Craig
Debtor's Counsel: William Rountree, Esq.
ROUNTREE, LEITMAN, KLEIN & GEER, LLC
2987 Clairmont Road Suite 350
Atlanta, GA 30329
Tel: 678-587-8740
Email: wrountree@rlkglaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Carmenlita Trimble as CEO.
A full-text copy of the petition containing, among other items, a
list of the Debtor's five unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/CD6SH2I/Ga_Real_Estate_Acquisitions_LLC__ganbke-22-55886__0001.0.pdf?mcid=tGE4TAMA
GAP INC: Moody's Affirms 'Ba2' CFR & Alters Outlook to Negative
---------------------------------------------------------------
Moody's Investors Service changed the outlook for The Gap, Inc.'s
to negative from positive and affirmed its corporate family rating
at Ba2 and its probability of default rating at Ba2-PD. At the
same time, Moody's affirmed the Ba3 rating of Gap's senior
unsecured notes. The speculative grade liquidity rating is changed
to SGL-2 from SGL-1.
"The change in outlook reflects the much weaker than expected
operating performance and Moody's expectation that credit metrics
will remain weak as inflationary pressures and an increasing
promotional environment result in lower margins and profitability",
Moody's Vice President - Senior Credit Officer Mickey Chadha
stated. "The uncertain macro-economic environment and the shift
in spending patterns from goods to services and from discretionary
to non-discretionary items will further exacerbate the pressures
faced by the company and make it difficult to change the current
operating performance trajectory", Chadha further stated.
The change in the company's speculative grade liquidity rating to
SGL-2 (good) from SGL-1 (very good) is primarily due to the much
lower expected free cash flow generation in the next 12 months.
Affirmations:
Issuer: The Gap, Inc.
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD4)
Downgrades:
Issuer: The Gap, Inc.
Speculative Grade Liquidity Rating, Downgraded to SGL-2 from
SGL-1
Outlook Actions:
Issuer: The Gap, Inc.
Outlook, Changed To Negative From Positive
RATINGS RATIONALE
The Gap, Inc.'s Ba2 corporate family rating reflects the company's
good liquidity and Moody's expectation that Gap, Inc.'s current
weak operating performance and credit metrics will recover by the
end of 2023. Although credit metrics will be much weaker than
expected in 2022 with Moody's estimate of debt/EBITDA and
EBIT/interest of over 4.0x and less than 1.5x respectively at the
end of the fiscal year. Moody's expect sequential improvement in
operating performance and metrics starting in the third quarter of
fiscal 2022 as supply chain pressures gradually ease and the
company resolves excess inventory issues particularly at Old Navy.
As a result, debt/EBITDA should improve to around 3.5x and
EBIT/interest improving to around 2.5x in the next 12-18 months.
However, cost pressures, shifting consumer preferences and
assortment missteps especially at the Old Navy brand which has a
higher share of fleece and activewear categories that are
experiencing lower demand, will continue to pressure profitability,
leaving very little room for error.
Although Moody's expects Gap, Inc. to be free cash flow negative
for 2022, it had $845 million in cash at the end of the first
quarter of 2022 with about $1.85 billion availabiled under its $2.2
billion asset based revolving credit facility after considering the
$350 million borrowed under the facility. The company also owns
sizable assets that it can monetize. The rating is supported by
the company's good market position in the specialty apparel market
with its ownership of specialty apparel brands (Old Navy, Gap,
Banana Republic, and Athleta) and relatively low amount of funded
debt. The relatively shorter term of its store leases
(approximately five years) has enabled the right sizing of its
mature brands (Gap and Banana Republic) while continuing to add
stores to its higher growth concepts (Old Navy and Athleta).
Investments in its online and mobile business have also
strengthened its operational profile and improved its customer
experience. Continued integration of its online and store
experiences also supports its efforts to increase customer
conversion.
The negative outlook reflects Moody's expectation that the business
environment especially for apparel retailers will remain very
challenging, which can make it difficult for the company to improve
operating performance and causing credit metrics and profitability
to remain weaker than expected for a longer period of time.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would require consistency of performance at all its
major brands including sustained sales growth and margin expansion,
and very good liquidity, as well as a conservative financial
strategy. Quantitatively, debt/EBITDA would need to be sustained
below 3.5x and EBIT/interest above 3.5x.
Ratings could be downgraded should operating performance remain
weak or liquidity deteriorates for any reason, or financial
strategies become detrimental to creditors. Ratings could also be
downgraded if operating margins and sales growth of the company
particularly at Old Navy do not show improvement. Ratings could
also be downgraded if debt/EBITDA is sustained above 4.0x or
EBIT/interest is sustained below 2.5x.
Headquartered in San Francisco, California, The Gap, Inc. is a
leading global retailer offering clothing, and accessories for men,
women, and children under the Gap, Banana Republic, Old Navy, and
Athleta. LTM April 30, 2022 net sales were approximately $16
billion. The Gap, Inc. products are available for purchase through
its 2,825 company-operated stores and 589 franchise stores that are
in operation across 44 countries. Its products are also available
to customers online through Company-owned websites and through the
use of third parties that provide logistics and fulfillment
services.
The principal methodology used in these ratings was Retail
published in November 2021.
GETTY IMAGES: Moody's Ups CFR to B2 & Alters Outlook to Positive
----------------------------------------------------------------
Moody's Investors Service has upgraded Getty Images, Inc.'s (i)
Corporate Family Rating to B2 from B3; (ii) Probability of Default
Rating to B2-PD from B3-PD; (iii) senior secured credit facilities'
ratings to B1 from B2 (comprising the $80 million revolving credit
facility (RCF), $995.2 million outstanding first-lien term loan and
EUR419 Million outstanding first-lien euro term loan); and (iv)
senior unsecured notes rating to Caa1 from Caa2 ($300 million
outstanding). The outlook was changed to Positive from Stable.
Following is a summary of the rating actions:
Ratings Upgraded:
Issuer: Getty Images, Inc.
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
$300 Million Gtd Senior Unsecured Global Notes due 2027, Upgraded
to Caa1 (LGD6) from Caa2 (LGD6)
Issuer: Getty Images, Inc. (Co-Borrower: Abe Investment Holdings,
Inc.)
$80 Million Senior Secured First-Lien Revolving Credit Facility
due 2024, Upgraded to B1 (LGD3) from B2 (LGD3)
EUR419 Million ($468.2 Million US dollar equivalent) Senior
Secured First-Lien Euro Term Loan B due 2026, Upgraded to B1 (LGD3)
from B2 (LGD3)
$995.2 Million Senior Secured First-Lien Term Loan B due 2026,
Upgraded to B1 (LGD3) from B2 (LGD3)
Outlook Actions:
Issuer: Getty Images, Inc.
Outlook, Changed to Positive from Stable
RATINGS RATIONALE
The ratings upgrade reflects Moody's expectation for continued
de-leveraging following Getty's solid improvement in operating
performance, debt protection measures and liquidity as business
conditions experienced strong recovery from the pandemic-induced
recession. The improvement was driven by increased customer demand
in the Creative segment and strong volumes in Editorial as live
entertainment and sporting events resumed their normal cadence
owing to the pandemic's abatement and reopening of economies. At
LTM March 31, 2022, financial leverage, as measured by total debt
to EBITDA, decreased to roughly 5.6x (Moody's adjusted, including
Moody's standard operating lease adjustment and excluding non-cash
gains on foreign currency and fair value adjustments for swaps and
foreign exchange contracts), while free cash flow (FCF)/debt
increased to 8% (Moody's adjusted).
The positive outlook reflects Moody's expectation that Getty will
deleverage further over the near-term via the paydown of debt with
cash equity proceeds from the company's recent combination with CC
Neuberger Principal Holdings II ("CCNB"), a publicly-owned special
purpose acquisition company (SPAC), which closed last week. As a
result of the expected debt reduction, Moody's projects greater FCF
generation and improved liquidity. Moody's also expects continued
solid organic revenue growth driven by demand for visual, digital
and video content, albeit expected to moderate as the economy and
advertising spend slow over the coming quarters.
Under the terms of the de-SPAC transaction, roughly $865 million of
new cash equity was sourced from: (i) $360 million in PIPE
financing (consisting of $100 million from CCNB's sponsor, $185
million from Getty Investments and $75 million from Multiply
Group); (ii) a $300 million backstop agreement from Neuberger
Berman Opportunistic Capital Solutions Master Fund L.P. ("NBOKS");
(iii) a $200 million forward purchase agreement from an affiliate
of CCNB's sponsor; and (iv) $5 million of CCNB's cash held in
trust. Net of expected transaction expenses, the new equity sources
plus Getty's cash balances will be used to retire approximately
$275 million of Getty's existing debt, repay roughly $615 million
of the PIK preferred equity instrument (note: the PIK's remaining
$150 million of value will be converted to common shares) and fund
$100 million of opening balance sheet cash. Amounts are subject to
change modestly as transaction costs and allocation of repayment
amounts for each debt tranche are finalized. In connection with
last week's closing, CCNB merged into a subsidiary of a
newly-formed publicly traded entity called Getty Images Holdings,
Inc., which will continue as Getty's parent and become the new
financial reporting entity.
Pro forma for the planned debt repayment, Moody's estimates Getty's
total debt to EBITDA will decrease to the 4.8x-5x area (Moody's
adjusted, including the adjustments previously mentioned plus a
non-standard adjustment for CCNB's on-balance sheet warrant
liabilities). Getty is currently targeting net leverage of 2.5x-3x
(as-reported) within 24-36 months after closing (equivalent to
approximately 3x-3.5x gross leverage on a Moody's adjusted basis).
Moody's anticipates slowing advertising demand in H2 2022,
consistent with Moody's expectation for slowing economic growth and
persistently high inflation. Though the company has negligible
exposure to Russia or Ukraine (less than 1% of revenue), Moody's
continues to expect some macroeconomic spillover from the conflict
in that region. The magnitude of the effects will depend on the
length and severity of the crisis. Moody's currently projects US
GDP growth will decelerate to 2.1% in 2022 (2.2% in Euro area) and
1.3% in 2023 (0.9% in Euro area), while US inflation is forecast to
remain high at 7.0% yoy by year end 2022, declining from 9.1% yoy
in June 2022.
Getty's B2 CFR reflects the company's differentiation relative to
competitors, which includes its: (i) global position as the leading
source of visual imagery with over 1 million customers annually
across more than 200 countries; (ii) sizable collection of
exclusive and premium pictorial content, believed to be one of the
largest and broadest in the world; and (iii) variable cost
operating model with long-term relationships across a broad
customer base comprising news, entertainment and sports publishing
organizations. Rating constraints include: (i) Getty's moderately
high financial leverage, albeit expected to decline over the
near-term; (ii) exposure to SMBs and consumer discretionary
businesses that are typically more cyclical and likely to
experience greater pullback in spend compared to larger firms
during economic slowdowns and downturns; and (iii) large number of
competitors in the non-exclusive lower-priced (Royalty-Free) stock
imagery vertical.
Over the next 12-15 months, Moody's expects Getty will maintain
very good liquidity supported by positive FCF generation in the
range of $150-$160 million, unrestricted cash balances of at least
$100 million (unrestricted cash totaled $211 million at March 31,
2022) and access to the $80 million RCF (currently undrawn)
maturing in 2024. Getty has $10.4 million of mandatory principal
payments due over the next 12 months, which Moody's projects the
company will fund from internal sources.
ESG CONSIDERATIONS
Social risks are moderately-negative primarily related to Getty's
exposure to human capital considerations with respect to the
company's reliance on attracting, developing and retaining a highly
skilled workforce. The company benefits from limited exposure to
customer relations, health & safety and responsible production, and
its low risk profile to demographic and societal trends as
customers increasingly purchase visual imagery from Getty's online
libraries.
Credit exposure to governance risks is highly-negative due to
Getty's moderately high financial leverage (albeit declining)
offset by improving positive FCF. This risk also reflects that
Getty is a controlled company with significant majority ownership
held by the Getty Family. Most of the company's board members are
not independent (as defined by Moody's), a further governance
weakness. Somewhat offsetting this is management's track record of
achieving business objectives, good financial performance and
managing operating risk.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade could occur if Getty: (i) demonstrates
mid-to-high single-digit percentage organic revenue growth driven
by clients' continuing demand for the company's visual imagery
products and stable-to-improving product pricing; and (ii) exhibits
a continued mix shift to higher volume enterprise subscriptions and
higher margin Royalty-Free products. Additionally, upward rating
pressure could occur if free cash flow to debt is sustained in the
mid-to-high single-digit percentage range and total debt to EBITDA
is sustained below 5x (both metrics are Moody's adjusted). Ratings
could be downgraded if operating performance tracks below Moody's
expectations or if total debt to EBITDA is sustained above 6x
(Moody's adjusted). Ratings could also experience downward pressure
if liquidity deteriorates such that free cash flow to debt is
sustained below 4% (Moody's adjusted).
Headquartered in Seattle, WA, Getty Images, Inc. is a leading
creator and distributor of still imagery, vector, video and
multimedia products, as well as a recognized provider of other
forms of premium digital content, including music. The company was
founded in 1995 and provides stock images, music, video and other
digital content through gettyimages.com, iStock.com and
Unsplash.com. Revenue totaled approximately $939 million for the
twelve months ended March 31, 2022.
The principal methodology used in these ratings was Media published
in June 2021.
HEARTBRAND HOLDINGS: Case Summary & One Unsecured Creditor
----------------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
HeartBrand Holdings, Inc. (Lead Case) 22-90127
101 West Main
Flatonia, TX 78941
American Akaushi Association, Inc. 22-90128
101 West Main
Flatonia, TX 78941
Business Description: HeartBrand Holdings, Inc. acquires,
develops, and markets Akaushi cattle and
beef through its cooperating ranches in
Texas and the United States. Akaushi cattle
are a type of Japanese cattle known for its
highly-marbled and exceptionally flavorful
beef. HeartBrand's headquarters are located
in Flatonia, Texas, and its operations span
a fully-integrated process that begins with
breeding and raising Akaushi cattle and
continues through the sale of high-quality
beef nationwide.
Chapter 11 Petition Date: August 1, 2022
Court: United States Bankruptcy Court
Southern District of Texas
Judge: Hon. David R. Jones
Debtors' Counsel: Harry A. Perrin, Esq.
Kiran Vakamudi, Esq.
VINSON & ELKINS LLP
845 Texas Avenue
Suite 4700
Houston, TX 77002
Tel: 713-758-2222
Fax: 713-758-2346
Email: hperrin@velaw.com;
kvakamudi@velaw.com
- and -
David S. Meyer, Esq.
Zachary A. Paiva, Esq.
1114 Avenue of the Americas, 32nd Floor
New York, NY 10036
Tel: 212-237-0000
Fax: 212-237-0100
Email: dmeyer@velaw.com;
zpaiva@velaw.com
Debtors'
Noticing &
Claims
Agent: OMNI AGENT SOLUTIONS
HeartBrand's
Estimated Assets: $50 million to $100 million
HeartBrand's
Estimated Liabilities: $10 million to $50 million
American Akaushi's
Estimated Assets: $100,000 to $500,000
American Akaushi's
Estimated Liabilities: $10 million to $50 million
The petitions were signed by Ronald Beeman, chairman of the Board
of Directors.
The petitions are available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/2YMUQPQ/HeartBrand_Holdings_Inc__txsbke-22-90127__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/3C2D3IQ/American_Akaushi_Association_Inc__txsbke-22-90128__0001.0.pdf?mcid=tGE4TAMA
List of Debtors' One Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Twinwood Cattle Company Disputed $28,923,582
10514 FM 1489 Judgment
PO Box 649
Simonton, Texas 77476
Tel: 281-346-1940
HEMISPHERE MEDIA: Moody's Affirms B2 CFR & Rates 1st Lien Loans B2
------------------------------------------------------------------
Moody's Investors Service affirmed Hemisphere Media Holdings, LLC's
B2 corporate family rating and B2-PD probability of default rating.
Moody's also assigned a B2 rating to the company's proposed senior
secured facilities comprising a new $370 million term loan due 2029
and a new $35 million revolving credit facility due 2027. The
outlook on the ratings is stable.
Along with the proceeds from the sale of Pantaya, the new
facilities will be used to fund Gato Investments LP (an investment
vehicle of private equity firm Searchlight Capital Partners) 's
acquisition of Hemisphere's equity stake it does not currently own
and to repay the existing debt.
The ratings on the current facilities are unchanged and will be
withdrawn at the time these are repaid. The SGL rating is withdrawn
in anticipation of Hemisphere being a privately owned company once
the transaction closes. The outlook on the ratings is stable.
Affirmations:
Issuer: Hemisphere Media Holdings, LLC
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Assignments:
Issuer: Hemisphere Media Holdings, LLC
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD4)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD4)
Withdrawals:
Issuer: Hemisphere Media Holdings, LLC
Speculative Grade Liquidity Rating, Withdrawn , previously rated
SGL-1
Outlook Actions:
Issuer: Hemisphere Media Holdings, LLC
Outlook, Remains Stable
RATINGS RATIONALE
Hemisphere's B2 CFR reflects the company's small scale as one of
the smallest rated issuers in the media sector. Most of
Hemisphere's revenues are generated in the US where its market
share of the Spanish language TV market remains small relative
other competitors, including Univision Communications Inc. (B1
positive). The company's ad revenues are highly exposed to a single
broadcast station, WAPA covering a single market, Puerto Rico. A
significant portion of Hemisphere's programming is sourced and
licensed from third party distributors which exposes the company to
potential rights renewal and programming inflation risks.
Hemisphere's B2 CFR also reflects the company's targeted focus on
the high growth Spanish-speaking populations primarily in the US,
Latin America, and Puerto Rico. The company has carved itself a
demographic niche and successfully delivers differentiated content
to a Spanish speaking target audience of about 44 million
subscribers through its five cable networks. The company's strength
lies in targeting the underserved non-Mexican US Hispanic
population. Hemisphere's revenue model is also well balanced with
approximately half of net sales contributed by recurring and
growing retransmission fees. While the acquisition by Gato will see
the quantum of debt increase, the sale of Pantaya – which had
been EBITDA negative since it was acquired a year ago – and the
addition of the Puerto Rico radio stations' EBITDA means that
leverage will decline. Moody's expects the company's leverage
(Moody's adjusted on a 2-year average basis) to decrease to 4.8x by
year-end 2022.
Hemisphere agreed to sell its streaming platform Pantaya to
Univision in exchange for $115 million in cash and Univsion's radio
stations in Puerto Rico. The removal of the losses from Pantaya,
which was at a start-up stage and required material investment in
both content and marketing, as well as the addition of EBITDA
generating radio stations is driving the improvement in metrics.
While metrics will improve, the sale of the streaming platform
exposes Hemisphere's revenues to an even greater extent to
advertising cyclicality and the Puerto Rican economy. Since Gato
already controls around 72.4% of the voting power of Hemisphere,
Moody's does not expect material changes in financial policy but
the acquisition by Gato will lead to the delisting of the company
and potential changes in the amount of information shared in
Hemisphere's financial reporting.
Hemisphere Media's credit impact score is CIS-4 which reflects the
highly negative impact of ESG attributes on the company's rating.
On the social side, the sale of streaming platform Pantaya,
increases the company's exposure to demographic and societal trends
surrounding changes in consumer's consumption of linear television.
Hemisphere also has some environmental risk, given its operations
in Puerto Rico which is prone to severe weather disruption. Lastly,
following the closing of the Gato acquisition, Hemisphere will be a
privately owned company with a majority shareholder holding all
voting power and control of the board.
Hemisphere's liquidity profile is very good. As part of the new
financing, the company will receive access to a new $35 million
revolver which is expected to remain undrawn. The revolver will be
subject to a springing maintenance covenant set at 6.5x first lien
net leverage. The company is expected to generate consistent free
cash flow and build up cash reserves even after voluntary debt
reductions.
The instrument ratings reflect the probability of default of the
company, as reflected in the B2-PD Probability of Default Rating
(PDR), an average expected family recovery rate of 50% at default
given the covenant-lite nature of the all bank debt structure, and
the particular instruments' ranking in the capital structure. The
revolver and term loans are secured by a first lien claim on
substantially all assets of the borrowers and guarantors.
Moody's has reviewed the draft terms of the new credit facilities.
As proposed, the new facilities are expected to provide covenant
flexibility that, if utilized, could negatively impact creditors.
Notable terms include the following:
Incremental debt capacity:
up to the greater of $58.4 million and 75% trailing twelve months
consolidated adjusted EBITDA, plus unlimited secured debt amounts
subject to first lien net leverage ratio not exceeding 4.5x (if
pari passu secured).
Amounts up to the greater of $39 million and 50% of trailing
twelve months EBITDA may be incurred with an earlier maturity date
than the initial term loans.
The credit agreement permits the transfer of specified assets to
unrestricted subsidiaries up to carve-out capacity, subject to
"blocker" provisions which prohibit (i) the designation of any
restricted subsidiary, which owns intellectual property that is
material to the company (taken as a whole), as an unrestricted
subsidiary; and (ii) the transfer of any such intellectual property
to any unrestricted subsidiary.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, subject to
protective provisions which only permit guarantee releases if
such transfers are made with bona fide unaffiliated third parties,
for bona fide business purposes, and for fair market value, as
determined by the company in good faith.
The credit agreement provides some limitations on up-tiering
transactions, including the requirement that each lender directly
and adversely affected consents to contractually subordinate (x)
any liens securing the obligations to liens securing any other debt
for borrowed money or (y) the obligations in right of payment to
any debt for borrowed money, unless a bona fide right of first
offer is extended to all lenders on the same terms at such time.
The proposed terms and the final terms of the credit agreement may
be materially different.
Hemisphere's outlook is stable and reflects the company's financial
metrics improvements following the sale of Pantaya and the
acquisition of the Puerto Rico radio assets. It also reflects
Moody's expectations that financial policy will remain prudent
after the full buyout by Gato leading to leverage (Moody's adjusted
on a 2-year average basis) declining to below 4x in 2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded should leverage (Moody's adjusted debt /
2-year average EBITDA) be sustained comfortably below 3.75x, and
Moody's adjusted 2-year average free cash flow / debt is sustained
above 12%. A positive rating action would also be contingent on the
company increasing diversification and scale.
Ratings could be downgraded if leverage (Moody's adjusted debt to
2-year average EBITDA) is sustained above 5.0x or if Hemisphere's
liquidity profile were to deteriorate.
The principal methodology used in these ratings was Media published
in June 2021.
Headquartered in Miami, FL, Hemisphere is a US Spanish-language TV
and cable network business serving the Hispanic population in the
US, Latin America, and Puerto Rico. Hemisphere owns and operates
five cable television networks, WAPA America, Centroamerica TV, and
Television Dominicana in the U.S., and Cinelatino and Pasiones in
the U.S. and Latin America. The company also owns WAPA, the leading
broadcast television network in Puerto Rico, and Snap Media, a
distributor of content to broadcast and cable television networks
and OTT, SVOD, and AVOD platforms in Latin America. Hemisphere also
has a 40% interest in Canal 1, a broadcast television network in
Columbia, and a 25.5% interest in REMEZCLA, a digital media
company. Gato Investments LP owns approximately 43.9% of the
economic interest in Hemisphere (approximately 72.4% of the voting
interest). The company reported revenue of around $195 million in
2021.
HILTON WORLDWIDE: S&P Upgrades ICR to 'BB+', Outlook Stable
-----------------------------------------------------------
S&P Global Ratings raised the issuer credit rating on Hilton
Worldwide Holdings Inc. to 'BB+' from 'BB' and the issue-level
rating on the senior unsecured debt to 'BB+' from 'BB'.
S&P said, "We affirmed 'BBB-' issue-level rating on the senior
secured debt. We apply a cap of 'BBB-' to issue-level ratings on
the debt of speculative-grade issuers, regardless of the debt's
recovery rating, to deemphasize the role recovery plays for issuers
near the investment-grade threshold.
"The stable outlook reflects our view that the company will make
financial policy choices regarding share repurchases and other
investments that should enable it to maintain adjusted debt to
EBITDA below 5x, even if revenue and EBITDA unexpectedly
underperform our base case forecasts for 2022 or 2023."
"The upgrade reflects Hilton's leverage cushion as of the second
quarter of 2022 and our forecast for the cushion to widen as U.S.
business transient and group demand, as well as international
demand, continues to recover over the next several quarters and
could largely offset the risks of an ADR moderation and a slowing
economy in the U.S.
"We estimate Hilton's trailing-12-months S&P Global
Ratings-adjusted net debt to EBITDA was about 4x at the end of the
second quarter of 2022, which has a significant cushion compared
with the 5x downgrade threshold at the current 'BB+' rating.
Largely on the strength of U.S. summer travel demand, Hilton's
second-quarter 2022 systemwide RevPAR and total revenue (excluding
cost reimbursements) were just 2.1% and 3.1%, respectively, below
the level for the same period in 2019. U.S. leisure demand is
likely to be exceptionally strong through the summer and could
remain good in the fall due to the partial continuation of remote
work arrangements. If leisure demand decreases, we assume an
acceleration in business transient and group travel in the fall
could largely replace the decrease in leisure demand. It is our
understanding that small- and midsize companies drove a substantial
share of transient demand so far this year because they are less
able to rely on remote work, and we believe this is unlikely to
change. Hilton has indicated that business transient demand in the
second half of 2022 could be equal to 2019 levels. Furthermore, we
believe Hilton's group bookings in the remainder of this year could
continue to recover from being 15% below 2019 levels as of the
second quarter." There is potential for group demand to make a
fuller recovery in the second half of 2022 depending on the health
of the economy and whether event planners execute on their plans.
In addition to Hilton's majority U.S. rooms exposure that underpins
its RevPAR recovery, RevPAR and occupancy in the second half of
2022 and 2023 could be supported if Europe continues to rebound and
travel patterns in Asia Pacific begin to return to normal. Hilton's
RevPAR in China was 47% below 2019 levels in the second quarter
of2022, which in S&P's view has less downside going forward and
could be a source of incremental RevPAR. These factors cause it to
believe that Hilton's systemwide occupancy could inch up over the
coming quarters, such that in 2023 RevPAR could remain flat or only
decline modestly even if there is a pullback in ADR and consumers
decrease travel spending due to slowing U.S. GDP growth. Over the
next several years, an additional source of demand could result
from the recently passed Infrastructure Investment and Jobs Act in
the U.S., which could buoy construction-related business travel and
occupancy, especially at Hilton's focused-service hotels.
S&P's assumptions lead it to forecast that Hilton can reduce S&P
Global Ratings-adjusted leverage to the 3.5x-4x area in 2022,
incorporating publicly stated capital returns plans.
S&P assumes Hilton can complete anticipated capital returns while
maintaining a substantial leverage cushion.
Hilton has restarted share repurchases and provided guidance that
its total capital returns to shareholders in 2022 could be $1.5
billion-$1.9 billion. S&P said, "We assume Hilton would have
significant leverage cushion even after completing the indicated
capital returns because of the company's high-margin and highly
cash flow-generative business model. We also forecast capital
returns could continue in 2023 as long as hotel demand and
profitability do not materially decline."
Hilton's publicly stated financial policy is to target 3x-3.5x net
leverage based on the company's measure of debt and EBITDA. S&P
said, "Our adjustments typically add 0.25x-0.5x of leverage to
Hilton's measure, primarily because of our operating lease
adjustment related to the company's owned and leased hotel
portfolio. Hilton will likely reach well within its leverage target
in the next three months, and we believe the company might use
leverage from time to time to finance investments or return capital
to shareholders. Our understanding is that Hilton might in the
future consider modestly raising its leverage tolerance depending
on macroeconomic conditions and capital allocation options, but we
have assumed that the leverage cushion in this scenario would still
be material." Hilton has maintained its current financial policy
since 2017, when it spun off its real estate and timeshare
businesses and the debt that went with them, resulting in
significant cash flow and debt reduction. Hilton accomplished a
significant reduction in leverage after 2013, primarily through a
highly visible, publicly stated strategy of reducing debt with
available free cash flow until the company reached its leverage
policy goal.
S&P looks for a sizable leverage cushion in our upgrade action
because of increasing macroeconomic risks.
S&P said, "We accordingly completed a sensitivity analysis by
assuming a 10% year-over-year RevPAR decline in 2023. EBITDA margin
could be under modest pressure in this scenario. We also assume
that a 1% RevPAR change translates into an approximately 1% EBITDA
change--a relationship estimated by Hilton--primarily because of
the company's large and high-margin fee base as well as its highly
variable cost structure. S&P Global Ratings-adjusted leverage in
this scenario could deteriorate modestly to the 3.75x area in 2023,
which would nonetheless have a meaningful cushion compared with the
5x downgrade threshold and supports our upgrade.
"Our qualitative assessment of recession risk in the U.S. over the
next 12 months is 45%, within a wider range of 40%-50%. The
weakening macroeconomic environment could delay the recovery of
business transient and group demand, particularly among large
corporate and group customers. Inflationary or other cost
pressures, such as continued interest rate hikes by the Federal
Reserve, could also slow Hilton's RevPAR recovery. The
Russia-Ukraine conflict and its potential to expand could disrupt
energy markets further and add to inflationary pressures.
"Given Hilton's exposure to full-service hotel rooms, the spread of
other potential COVID-19 variants could cause RevPAR and EBITDA
recovery to underperform our base case. These variants could
introduce fresh uncertainty into the trajectory of the pandemic,
particularly for group and business travel, which has been
sensitive to such developments."
Hilton could also face ADR competition if travel in the U.S.
returns to normal over the coming quarters and lodging companies
use pricing as a tool to attract or retain occupancy.
Hilton's owned and leased hotel portfolio will recover
profitability gradually.
Hilton operates a portfolio of leased hotels located primarily in
Europe and with modest exposure to Asia. The portfolio exhibits
meaningful operating leverage because of fixed rents and the
operating risks borne by Hilton. The portfolio was hurt by the
pandemic because of the exposure to Europe and is likely to recover
more slowly than the U.S.
S&P said, "The owned and leased portfolio reported profits in
second-quarter of 2022 for the first time since the pandemic began.
This portfolio may have reached an inflection point. We also expect
the drag on profits from owned and leased hotels will reduce over
time because Hilton has exited a portion of its lease agreements
over the past several years.
"The stable outlook reflects our view that the company will make
financial policy choices regarding share repurchases and other
investments that should enable it to maintain adjusted debt to
EBITDA below 5x, even if revenue and EBITDA unexpectedly
underperform our base case forecasts for 2022 or 2023.
"Under our base case forecast, Hilton has significant cushion in
credit measures compared with our downgrade thresholds through
2023. However, we could lower the ratings one notch if Hilton's
operating performance significantly underperformed our expectations
and if we believed total adjusted debt to EBITDA would remain above
5x and funds from operations (FFO) to debt below 12%. While
probably unlikely, this could occur in the event of a severe
economic downturn that meaningfully impaired RevPAR and EBITDA.
"We could raise the rating one notch if Hilton could sustain
adjusted debt to EBITDA below 4x with a cushion and FFO to debt
above 20% over the highly volatile lodging cycle. We believe rating
upside is unlikely given Hilton's financial policy to target
leverage in the 3x-3.5x range based on its measure, the high end of
which may not translate into sufficient leverage cushion after our
typical EBITDA and debt adjustments."
ESG credit indicators: E-2, S-3, G-2
S&P said, "Health and safety factors are a moderately negative
consideration in our credit rating analysis of Hilton. The S-3
reflects the unprecedented decline in systemwide RevPAR due to the
pandemic. Although the pandemic was a rare and extreme disruption,
Hilton is unlikely to recover to 2019 systemwide RevPAR until 2023.
Regional health concerns and travel restrictions could slow
Hilton's recovery in Asia and Europe. Hilton's owned and leased
hotel portfolio could also experience a gradual EBITDA margin
recovery due to high operating leverage and EBITDA sensitivity to
revenue fluctuations, despite the company's primarily high-margin,
fee-based hotel management and franchising business model. Risk
also centers on a slower recovery among upscale and luxury hotels
and uncertainty around long-term disruption to group and business
travel."
HOLY REDEEMER: S&P Lowers Revenue Bonds Rating to 'BB+'
-------------------------------------------------------
S&P Global Ratings lowered its long-term rating on the Montgomery
County Higher Education & Health Authority, Pa.'s revenue bonds,
issued for Holy Redeemer Health System (d/b/a Redeemer Health [RH])
to 'BB+' from 'BBB-'. The outlook is stable.
"The downgrade reflects Holy Redeemer's persistent operating losses
that have dramatically accelerated year to date and limited
balance-sheet growth even with recent limited investment in capital
and periods of strong investment returns," said S&P Global Ratings
credit analyst Cynthia Keller.
Securing the bonds is a gross receipts pledge from the obligated
group and a mortgage on Holy Redeemer Hospital. The obligated group
consists of RH (Holy Redeemer Hospital, Holy Redeemer St. Joseph
Manor, Holy Redeemer Lafayette, Holy Redeemer Home
Care--Pennsylvania, and Holy Redeemer Support at Home) and Holy
Redeemer Physician Services.
RH's negative operating performance is below expectations and there
are added pressures this year from capacity and throughput issues,
staffing challenges, and inflation. RH remains highly reliant on
nonoperating revenue to produce just adequate debt service coverage
for the rating. Partially offsetting weak operating performance are
RH's stable balance-sheet metrics that compare favorably with
speculative-grade credits and support a positive one-notch holistic
adjustment to the rating. In addition, RH operates a diversified
portfolio of assets including outside acute care and has experience
in value-based care. Management indicates that RH will meet all
covenants in fiscal 2022, including its 1.1x maximum annual debt
service (MADS) coverage requirement that is calculated on the
obligated group alone.
The stable outlook reflects flexibility provided by RH's revenue
diversity and balance sheet as well as management's decision to
seek a strategic partner that could ultimately lead to a more
stable financial position. S&P believes these strengths are
sufficient to offset likely continued operating losses and
competitive threats in the greater Philadelphia market.
HORIZON GLOBAL: Receives Noncompliance Notice from NYSE
-------------------------------------------------------
Horizon Global Corporation was notified by the New York Stock
Exchange on July 25, 2022, that it was not in compliance with the
continued listing standard set forth in Section 802.01B of the NYSE
Listed Company Manual because the Company's average market
capitalization was less than $50 million over a consecutive 30
trading-day period and the stockholders' equity of the Company was
less than $50 million.
The Company plans to notify the NYSE that it intends to submit a
plan to cure this deficiency and return to compliance with the NYSE
continued listing requirements. In order to avoid delisting under
Section 802.01B, the Company has 45 days from the receipt of the
Notice to submit a business plan advising the NYSE of definitive
actions the Company has taken, or proposes to take, that would
bring it into compliance with the market capitalization listing
standards on or before Jan. 25, 2024. If the NYSE accepts the
plan, the Company's common stock will continue to be listed and
traded on the NYSE during the Cure Period, subject to the Company's
compliance with other continued listing standards, and the Company
will be subject to quarterly monitoring by the NYSE for compliance
with the plan.
The Notice has no immediate impact on the listing of the Company's
common stock, which will continue to be listed and traded on the
NYSE during the Cure Period, subject to the Company's compliance
with the other listing requirements of the NYSE. The Company's
common stock will continue to trade under the symbol "HZN," but
will have an added designation of ".BC" to indicate that the
Company is not currently in compliance with NYSE continued listing
standards.
About Horizon Global
Horizon Global Corporation -- http://www.horizonglobal.com-- is a
designer, manufacturer, and distributor of a wide variety of
custom-engineered towing, trailering, cargo management and other
related accessory products in North America, Australia and Europe.
The Company serves OEMs, retailers, dealer networks and the end
consumer.
Horizon Global reported a net loss of $33.12 million for the 12
months ended Dec. 31, 2021, compared to a net loss of $37.98
million for the 12 months ended Dec. 31, 2020. As of March 31,
2022, the Company had $488.50 million in total assets, $550.15
million in total liabilities, and a total shareholders' deficit of
$61.65 million.
HUCKLEBERRY PARTNERS: Taps Latham, Luna, Eden & Beaudine as Counsel
-------------------------------------------------------------------
Huckleberry Partners, LLC seeks approval from the U.S. Bankruptcy
Court for the Middle District of Florida to hire Latham, Luna, Eden
& Beaudine, LLP to serve as legal counsel in its Chapter 11 case.
The firm's services include:
a. advising the Debtor regarding its rights and duties;
b. preparing pleadings, including a plan of reorganization;
and
c. taking other actions necessary to administer the Debtor's
estate.
The hourly rates charged by the firm's attorneys and
paraprofessionals range from $105 to $475.
Benjamin Taylor, Esq., and Justin Luna, Esq., the attorneys who
will be handling the case, charge $250 per hour and $475 per hour,
respectively.
The firm received an advance fee of $26,738 for its pre-bankruptcy
services and expenses.
As disclosed in court filings, Latham, Luna, Eden & Beaudine does
not represent interests adverse to the Debtor and its estate.
The firm can be reached at:
Justin M. Luna, Esq.
Latham, Luna, Eden & Beaudine, LLP
201 S. Orange Avenue, Suite 1400
Orlando, FL 32801
Tel: (407) 481-5800
Fax: (407) 481-5801
Email: jluna@lathamluna.com
About Huckleberry Partners
Huckleberry Partners, LLC owns and operates a shopping center
called Waterford Commons, which is located at 12789 Waterford Lakes
Parkway, Orlando, Fla. It is a member-managed company -- the only
member with decision making authority is Henry James Herborn, III.
Huckleberry Partners sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-02159). In the
petition filed by Henry James Herborn, III, managing member, the
Debtor disclosed between $1 million and $10 million in both assets
and liabilities.
Judge Grace E. Robson oversees the case.
Justin M. Luna, at Latham, Luna, Eden & Beaudine, LLP, serves as
the Debtor's counsel.
INFINERA CORP: Incurs $55.7 Million Net Loss in Second Quarter
--------------------------------------------------------------
Infinera Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $55.72 million on $357.99 million of total revenue for the three
months ended June 25, 2022, compared to a net loss of $35.59
million on $338.23 million of total revenue for the three months
ended June 26, 2021.
For the six months ended June 25, 2022, the Company reported a net
loss of $97.57 million on $696.86 million of total revenue compared
to a net loss of $83.92 million on $669.13 million of total revenue
for the six months ended June 26, 2021.
As of June 25, 2022, the Company had $1.47 billion in total assets,
$555.18 million in total current liabilities, $640.08 million in
total long-term debt, $17.57 million in long-term accrued warranty,
$29.13 million in long-term deferred revenue, $2.12 million in
long-term deferred tax liability, $50.84 million in long-term
operating lease liabilities, $57.33 million in other long-term
liabilities, and $116.56 million in total stockholders' equity.
Infinera CEO David Heard said, "Our second quarter results were
encouraging in a challenging environment, with revenue beating the
midpoint of our outlook range, non-GAAP operating margin at the
upper end of the range, and non-GAAP gross margin near the midpoint
of the range due to higher supply chain costs. Strong demand
resulted in greater than 80% year-over-year growth in total
backlog, which includes product backlog growth exceeding 100%, and
a quarterly book-to-bill ratio above 1."
"We are executing well against our 8x4x1 strategy as we scale ICE6
globally, expand our metro footprint, and prepare to bring our
pluggables business online, all while planning to deliver continued
growth and margin expansion in the second half of 2022. The timing
of our refreshed portfolio allows us to take advantage of the
accelerated shift to open architectures and our customers' growing
requirement to bring on new vendors to improve their supply chain
resilience."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1138639/000113863922000127/infn-20220625.htm
About Infinera Corp.
Headquartered in Sunnyvale, Calif., Infinera Corp. --
www.infinera.com -- is a global supplier of innovative networking
solutions that enable carriers, cloud operators, governments, and
enterprises to scale network bandwidth, accelerate service
innovation, and automate network operations. The Infinera
end-to-end packet-optical portfolio delivers industry-leading
economics and performance in long-haul, submarine, data center
interconnect, and metro transport applications.
Infinera reported a net loss of $170.78 million for the year ended
Dec. 25, 2021, a net loss of $206.72 million for the year ended
Dec. 26, 2020, and a net loss of $386.62 million for the year ended
Dec. 28, 2019.
INFOW LLC: Jones Must Pay for Falsehoods, Says Victims' Lawyer
--------------------------------------------------------------
Jack Queen of Reuters reports that U.S. conspiracy theorist Alex
Jones led a "vile campaign of defamation" when he falsely claimed
the 2012 Sandy Hook massacre was a hoax, a Texas jury was told on
Tuesday, July 26, 2022, but a lawyer for Jones said his client
already had paid a price.
Attorney Mark Bankston, representing the parents of slain
6-year-old Jesse Lewis, made the accusation at the start of a jury
trial to decide how much Jones must pay for spreading falsehoods
about the killing of 20 children and six staff at Sandy Hook
Elementary School in Newtown, Connecticut, on Dec. 14, 2012.
Jones, founder of the Infowars radio show and webcast, had asserted
the mainstream media and gun-control activists conspired to
fabricate the tragedy. He had said the shooting was staged using
crisis actors but later acknowledged it took place.
"Mr. Jones was continually churning out this idea that Sandy Hook
was fake," Bankston told jurors. He said Jones and Infowars were
responsible for the "most despicable and vile campaign of
defamation and slander in American history."
Neil Heslin and Scarlett Lewis, Jesse's parents, are seeking $150
million in compensatory and punitive damages for what they say was
a campaign of harassment and death threats by Jones' followers.
Federico Reynal, an attorney for Jones, acknowledged that Infowars
had spread false information but said his client had a right to
question mainstream narratives on his show. He said Jones had lost
millions of viewers since being deplatformed on social media in
2018.
U.S. House panel probing Capitol riot holds hearing in Washington
"He regrets what he did, and he’s paying a price for it," Reynal
said.
Judge Maya Guerra Gamble in Austin, Texas, who is overseeing the
trial, issued a rare default judgment in 2021, finding Jones liable
without a trial after he flouted court orders and failed to turn
over documents.
The defamation suit in Texas, where Infowars is based, is one of
several brought by families of victims who say they were harassed
by Jones’ followers and suffered emotional distress after he
claimed the shooting was staged.
Jones and his company Free Speech Systems LLC are the defendants in
the case.
The damages trial follows months of delays. Three entities related
to Infowars filed bankruptcy in a since-dismissed case. The
families of the Sandy Hook victims had said the bankruptcy was a
sinister attempt by Jones to shield his assets from liability
stemming from the defamation lawsuits.
Jones, who was present in the courtroom, is set to face trial in
September in a similar defamation suit in Connecticut state court,
where he has also been found liable for defamation in a default
judgment.
The Sandy Hook gunman, Adam Lanza, 20, used a Remington Bushmaster
rifle to carry out the massacre. It ended when Lanza killed himself
with the approach of police sirens.
Reporting by Jack Queen; Editing by Noeleen Walder and Howard
Goller
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.
IRONSIDE LLC: Unsecureds Owed $10M to Get Less Than 1% in Plan
--------------------------------------------------------------
Ironside, LLC, et al., submitted a Corrected First Amended Combined
Chapter 11 Plan of Liquidation and Disclosure Statement.
The Combined Plan and Disclosure Statement is a liquidating chapter
11 plan for the Liquidating Debtors. The Combined Plan and
Disclosure Statement provides that, upon the Effective Date,
significant assets of the estate including the real estate owned by
Ironside LLC will be transferred to Lubchem, Inc.
The mediated settlement provides for Lubchem to take over most of
the Debtors' assets, including the Ironside Lubricants product
formulas, Lubchem shall assume the secured claims, Forshey &
Prostok and Prendergraft & Simon agreed to cap their professional
fees, Lubchem shall receive an unsecured allowed claim of $9.5
million, and Lubchem shall fund the Unsecured Fund to allowed
unsecured creditors to be paid out over five years. Finally,
Lubchem shall pay the administrative creditors from the accounts
receivables, except for Pendergraft and Simon and Forshey & Prostok
who shall be paid from the retainer held by Forshey & Prostok.
Lubchem shall serve as the Disbursing Agent and assigned all
rights, interests, claims and granted standing to object to the
allowance of any unsecured claims and/or vendor administrative
claims Randy Riney and Keith Hightower agree to a non-compete
agreement with Lubchem in the manufacture, marketing or sale of
oilfield valve and wireline lubricants and oilfield valve and
wireline sealants in North America. The Non-Competition Agreement,
Compensation and Commission Agreement and Mutual Release with Randy
Riney is attached as Exhibit D with the following link:
https://bit.ly/3Q0UdHQ. The Non-Competition Agreement and Mutual
Release with Keith Hightower is attached as Exhibit E with the
following link: https://bit.ly/3zm7HXR.
Randy Riney is to be paid $25,000 by Lubchem on the Effective Date
of the Plan and allowed to reside in the apartment at 12080 FM
3038, Conroe, Texas 77301 for 180 days after the Effective Date.
Randy Riney has provided proof of renter insurance to Lubchem.
Further, other business terms were arranged between Randy Riney and
Lubchem for the transition of business where Mr. Riney would be
incentivized to help with sales but not required to help with
sales. Many of the transition issues with the transfer of utility
accounts and securing property insurance as well as handling
transition of sale orders will require additional work between
Lubchem and the Debtors. The CRO has reached out to Lubchem
regarding these issues.
The settlement was a negotiated arm's length resolution without any
party admitting fault or liability. Given the parties other than
the Debtors are also family members and the cost and expense of
litigation while there is a pending bankruptcy, the settlement was
viewed in the business judgment of the CRO to be a better outcome
than conversion to Chapter 7 or uncertainty that continued
litigation would cause to ongoing operations and cash flow.
Pursuant to this Combined Plan and Disclosure Statement, each
Holder of an Allowed General Unsecured (Class 4) Claim will receive
in satisfaction of its Claim a pro rata beneficial interest in the
Unsecured Fund established by the Mediated Term Sheet and/or
Settlement Agreement payable by Lubchem over 5 years. The U.S.
federal income tax treatment to Holders of Allowed General
Unsecured Claims may depend in part on the tax basis a Holder has
in its Claim and, in some circumstances, what gave rise to or the
nature of the Holder's Claim.
Under the Plan, Class 4 General Unsecured Claims total $10,206,049.
This figure includes Lubchem's $9.5 million allowed unsecured claim
which is a separate class but the unsecured claim will receive the
same treatment as other unsecured claims in Class 4 and its allowed
unsecured claim entitled to pro rata distributions pari passu with
Class 4. Lubchem votes in both Class 3 and Class 4. Creditor Jerry
Kutach filed duplicate claims for $706,049 and Lubchem has an
allowed claim of $9.5 million if the Plan is confirmed with the
incorporated mediated settlement agreement. The Debtors strongly
dispute validity and liability of the Kutach claim. Unsecured
creditors will receive a pro rata distribution from the Unsecured
Fund over 5 Years. Creditors will recover less than 1% of their
claims. Class 4 is impaired.
The Chief Restructuring Officer:
Deirdre Carey Brown, Esq.
DEIRDRE CAREY BROWN, pllc
FORSHEY & PROSTOK LLP
1990 Post Oak Blvd, Suite 2400
Houston, TX 77056
Tel: (832) 536-6910
Fax: (832) 310-1172
E-mail: dbrown@forsheyprostok.com
Counsel for the Debtors:
Leonard H. Simon, Esq.
PENDERGRAFT & SIMON, LLP
2777 Allen Parkway, Suite 800
Houston, TX 77019
Tel: (713) 528-8555
Fax: (713) 868-1267
E-mail: lsimon@pendergraftsimon.com
A copy of the Corrected First Amended Combined Chapter 11 Plan of
Liquidation and Disclosure Statement dated July 23, 2022, is
available at https://bit.ly/3ScnQrK from PacerMonitor.com.
About Ironside LLC
Ironside, LLC -- https://ironsidemfg.com/ -- designs and builds a
line of thru-tubing mud motors and other components for the
oilfield industry. Its products include bearings, transmissions,
components, motors, agitator, and dual flapper valve.
Ironside, LLC and its affiliate, Ironside Lubricants, LLC, filed
voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-34222) on Aug.
20, 2020. Randy Riney, managing member, signed the petitions. At
the time of the filing, Ironside, LLC disclosed estimated assets of
$1 million to $10 million and estimated liabilities of $500,000 to
$1 million. Judge Eduardo V. Rodriguez oversees the cases.
Pendergraft & Simon, LLP, serves as the Debtors' legal counsel.
ISABEL ENTERPRISES: Taps Ian Biggi of Capacity Commercial as Broker
-------------------------------------------------------------------
Isabel Enterprises, Inc. and Isabel, LLC received approval from the
U.S. Bankruptcy Court for the District of Oregon to hire Ian Biggi,
a real estate broker at Capacity Commercial Group.
The Debtors require a real estate broker to market a commercial
property located at 330 NW 10th Ave., Portland, Ore., in connection
with either a stand-alone transaction or a transaction pursuant to
a Chapter 11 plan.
The broker will get a commission of 6 percent of the gross sale
price of the property.
Mr. Biggi disclosed in a court filing that his firm does not hold
interest adverse to the interest of the Debtors' estate, creditors
and equity security holders.
Mr. Biggi can be reached at:
Ian M. Biggi
Capacity Commercial Group
805 SW Broadway, Suite 700
Portland, OR 97205
Phone: (503) 222-1683
Email: ianbiggi@capacitycommercial.com
About Isabel Enterprises
Isabel Enterprises, Inc.'s affiliate Isabel LLC owns two tax lots
consisting of a commercial unit located at 330 NW 10th Ave., Suite
116, Portland, Ore., and a related parking unit. Historically,
Isabel LLC leased the property to 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 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.
Judge Peter C. Mckittrick oversees the cases.
Oren B. Haker, Esq., at Stoel Rives, LLP and Strategic Tax
Management serve as the Debtors' legal counsel and accountant,
respectively.
ISABEL ENTERPRISES: Taps Strategic Tax Management as Accountant
---------------------------------------------------------------
Isabel Enterprises, Inc. and Isabel, LLC received approval from the
U.S. Bankruptcy Court for the District of Oregon to hire Strategic
Tax Management as their accountant.
The firm's services include:
a. preparing any missing federal and state business income tax
returns and supporting schedules;
b. preparing any missing payroll tax returns for Isabel
Enterprises;
c. reviewing and advising the Debtors with respect to
adjustments to certain bookkeeping entries;
d. addressing related accounting and tax matters; and
e. providing tax advice relating to or in connection with a
potential transaction.
Christopher Vassar, the principal at Strategic Tax Management who
will be primarily responsible on this matter, will be paid at his
hourly rate of $75. In addition, his firm will receive
reimbursement for its work-related expenses.
Mr. Vassar disclosed in a court filing that his firm does not hold
interest adverse to the interest of the Debtors' estate, creditors
and equity security holders.
Strategic Tax Management can be reached at:
Christopher W. Vassar
Strategic Tax Management
3033 5th Avenue, Suite 335
San Diego, CA 92103
About Isabel Enterprises
Isabel Enterprises, Inc.'s affiliate Isabel LLC owns two tax lots
consisting of a commercial unit located at 330 NW 10th Ave., Suite
116, Portland, Ore., and a related parking unit. Historically,
Isabel LLC leased the property to 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 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.
Judge Peter C. Mckittrick oversees the cases.
Oren B. Haker, Esq., at Stoel Rives, LLP and Strategic Tax
Management serve as the Debtors' legal counsel and accountant,
respectively.
J BOWERS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
J Bowers Construction Inc. 22-50878
3113 Mogadore Road
Akron, OH 44312
Restoration Services of Akron, Inc. 22-50879
d/b/a RestorX of Northeast Ohio
3113 Mogadore Road
Akron, OH 44312
Business Description: JBC is a fire restoration company that
provides detailed, itemized estimates and
appraisals required when dealing with all
manners of insurance losses, including storm
and water losses, vehicle damage repairs,
and all types of fire and smoke damage, as
well as water mitigation and restorative
drying services.
Chapter 11 Petition Date: July 29, 2022
Court: United States Bankruptcy Court
Northern District of Ohio
Debtors' Counsel: Marc P. Gertz, Esq.
Peter G. Tsarnas, Esq.
GERTZ & ROSEN, LTD.
11 South Forge Street
Akron, Ohio 44304
Tel: 330-255-0735
330-376-8336
Fax: 330-932-2367
Email: mpgertz@gertzrosen.com
ptsarnas@gertzrosen.com
J Bowers's
Total Assets: $1,059,836
J Bowers'
Total Liabilities: $2,464,220
Restoration Services'
Total Assets: $71,397
Restoration Services'
Total Liabilities: $678,532
The petitions were signed by Kyle Bowers as authorized
representative.
Full-text copies of the petitions containing, among other items,
lists of the Debtors' 20 largest unsecured creditors are available
for free at:
https://www.pacermonitor.com/view/LXEIG7Y/Restoration_Services_of_Akron__ohnbke-22-50879__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/KVDFMNI/J_Bowers_Construction_Inc__ohnbke-22-50878__0001.0.pdf?mcid=tGE4TAMA
JETBLUE AIRWAYS: S&P Alters Outlook to Negative, Affirms 'B+' ICR
-----------------------------------------------------------------
S&P Global Ratings revised its outlook on JetBlue Airways Corp. to
negative from positive and affirmed its 'B+' issuer rating.
The negative outlook reflects its expectation that S&P may lower
its ratings on JetBlue if it expects its funds from operations
(FFO) to debt to remain below 12% due to higher debt levels,
significant transaction-related expenses, or weaker operating
performance.
On July 28, 2022, New York-based JetBlue Airways Corp. announced an
agreement to acquire Miramar, Fla.-based Spirit Airlines Inc. for
$33.50 per share in cash, implying a total diluted equity value of
$3.8 billion.
S&P said, "We expect the transaction to benefit JetBlue's
competitive market position but weaken its profitability
metrics.The combined entity would be the fifth-largest airline in
the U.S. in terms of available seat miles (ASM), which we believe
will better position the company to compete against the larger U.S.
legacy carriers (American, Delta, and United) as well as Southwest
Airlines. Both JetBlue and Spirit operate similar Airbus A320
aircraft fleets, which is generally considered more efficient for
maintenance, spare parts, and pilot training. JetBlue, like Spirit,
has a predominantly domestic network focused on leisure markets.
However, unlike Spirit, an ultra-low-cost carrier, JetBlue has
premium offerings as well as basic fares, catering to a broad range
of mostly leisure customers. Spirit and JetBlue have each expanded
rapidly over the last few years, and we expect this to continue
given they have sizable aircraft orderbooks.
"While we anticipate JetBlue's competitive position will benefit
from the combination over the longer term, the company's
profitability will likely be hurt by integration and other
acquisition-related costs before it is able to realize the $600
million-$700 million of annual net synergies (net of dis-synergies)
that it expects from the transaction in four to five years. We also
note that a large part of the estimated synergies is associated
with expected higher revenues, which we expect JetBlue to achieve
by retrofitting Spirit's entire fleet to its configuration and then
increasing pricing to JetBlue's levels. Since this should be a
multi-year initiative, we don't expect JetBlue to fully realize the
defined synergies over the next several years. There are also
dis-synergies associated with the proposed acquisition, primarily
related to added labor costs and labor integration, as well as
costs associated with reconfiguring the Spirit aircraft, which will
result in fewer seats to spread higher costs over. When two merging
airlines have different levels of compensation, the pattern has
been for the lower-paid employees' compensation to rise to match
that of the airline with higher pay.
"The transaction's regulatory approval is not guaranteed. The
proposed transaction is subject to review by the U.S. Department of
Justice (DOJ). The DOJ and JetBlue (and American Airlines) are
already involved in a litigation concerning JetBlue's and
American's previously implemented Northeast Alliance (NEA), an
expanded codeshare and marketing alliance between the two
companies. A trial is scheduled to begin in September 2022. As a
mitigant to concerns associated with this litigation, JetBlue has
made an upfront commitment to divest Spirit's holdings at the NEA
airports to allow for allocation to other ultra-low-cost carriers.
Nevertheless, we expect the regulatory process for approval of a
JetBlue acquisition of Spirit to be protracted, potentially lasting
for up to two years. Management's preliminary expectations are for
the transaction to close in the fourth quarter of 2023 or first
quarter of 2024 (and no later than the first half of 2024). If we
come to believe that the merger will not receive regulatory
approval, we would likely revise our outlook on JetBlue
accordingly.
"We expect JetBlue's stand-alone operating performance in 2022 to
be somewhat impacted by labor shortages and other operating
disruptions. JetBlue, like other airlines, experienced a
weaker-than-expected first quarter, as the spread of the omicron
variant suppressed demand and hurt operational efficiency. Even
though demand has increased rapidly since then, JetBlue has faced
operational challenges associated with labor shortages (including
pilots and flight attendants, as well as staffing shortages at air
traffic control centers (ATCs)), which has resulted in the company
lowering its fleet utilization and efficiency to ensure reliable
operations. Furthermore, higher crude oil prices have led to higher
costs associated with jet fuel.
"Additionally, although we believe air travel demand will remain
strong through the summer months, our expectation for lower
macroeconomic growth increases uncertainty heading into 2023. S&P
Global Ratings' economists expect U.S. real GDP growth will
moderate to 2.4% in 2022 and 1.6% in 2023, compared with 5.7% in
2021. We also believe there is a 35%-45% risk of a recession over
the next year. Although demand for air travel has not yet declined
significantly, we believe demand could fall as the summer travel
season ends and inflation reduces discretionary spending. These
trends could also limit the company's ability to raise fares to
cover higher costs.
"The proposed debt-financed acquisition of Spirit will weaken
JetBlue's credit metrics. JetBlue plans to use proceeds from debt
issuance to largely finance the acquisition cost of $3.8 billion.
In comparison, JetBlue's capital structure as of March 31, 2022,
included S&P Global Ratings-adjusted debt of $4.8 billion
(including leases) as well as cash of $2.8 billion. The acquisition
cost is thus significant relative to its current capitalization.
Spirit's capital structure included S&P Global Ratings-adjusted
debt of $5.1 billion and cash of $1.3 billion as of March 31,
2022.
"Based on the proposed transaction structure, we expect the
combined company's FFO to debt to be below 12% in 2023 on a pro
forma basis (this is representational; the actual transaction may
not be completed before early-2024). We don't include any
synergies, nor any integration expenses in these pro forma
calculations, given the significant uncertainties around the
expected size and timing of these factors. On the other hand, on a
stand-alone basis, we forecast JetBlue's FFO to debt to be about
10% in 2022, improving to about 20% in 2023 (compared with 8.7% in
2021).
"The negative outlook reflects our expectation that JetBlue's
credit metrics will be weakened by the proposed transaction, given
the company expects to finance it largely with debt. Additionally,
we also expect credit metrics over the next few years to be
impacted by high transaction and integration expenses. However, due
to regulatory uncertainties, we believe the proposed transaction
might not close before early-2024. On a stand-alone basis too, we
expect JetBlue's credit metrics to be somewhat weaker than our
previous expectations, due to the impact of recent operating
disruptions, lower capacity and utilization, as well as continued
high capital spending. Results in 2023 will also be influenced by
the opposing trends of continued demand recovery from COVID, and
weaker consumer spending.
"We could lower our ratings on JetBlue if we expect its FFO to debt
to remain below 12% on a sustained basis. This could happen due to
the higher debt levels and integration costs associated with the
proposed acquisition, even as operating performance remains
somewhat impacted by higher fuel and other operating expenses."
S&P could revise our outlook on JetBlue to stable if it expects its
FFO to debt to remain above 12%. This could happen if
-- The company's operating performance significantly improves such
that it is sufficient to offset the higher debt levels associated
with the proposed transaction, and it expects the company to be
able to integrate the acquisition while maintaining/improving its
profitability; or
-- S&P no longer expects the proposed acquisition to close.
ESG Credit Indicators: E-3, S-4, G-2
JETBLUE AIRWAYS: Spirit Airlines Deal No Impact on Moody's Ba2 CFR
------------------------------------------------------------------
Moody's Investors Service said that JetBlue Airways Corp.'s Ba2 and
Spirit Airlines, Inc.'s B1 corporate family ratings are unaffected
by the companies agreement to merge announced on July 28, 2022.
JetBlue will acquire Spirit in an all cash transaction valued at
$3.8 billion. The acquisition of Spirit would be a leveraging
transaction, a credit negative. However, the DOJ's stance on the
transaction is uncertain and the companies expect that the
transaction would not close before 2024.
JetBlue Airways Corp., based in Long Island City, New York, is a
leading carrier in New York, Boston, Fort Lauderdale-Hollywood, Los
Angeles, Orlando, and San Juan. JetBlue serves more than 110 cities
throughout the United States, Latin America, the Caribbean, Canada
and the United Kingdom. Revenue was $6 billion in 2021.
Spirit Airlines, Inc., headquartered in Miramar, Florida, is a
leading low-cost US airline providing service to destinations
throughout the US, Latin America and the Caribbean. Revenue was
$3.2 billion in 2021.
LIFE UNIVERSITY: Moody's Affirms Ba3 Rating on 2017A/2017B Bonds
----------------------------------------------------------------
Moody's Investors Service has affirmed Life University's (GA) Ba3
issuer rating and the Ba3 ratings on the Series 2017A and Federally
Taxable Series 2017B revenue bonds. The bonds were issued through
the Marietta Development Authority (Georgia). The university
recorded $93.2 million of outstanding debt at fiscal end 2021. The
outlook is stable.
RATINGS RATIONALE
Affirmation of Life University's (LU) Ba3 issuer rating
incorporates its relatively small scale as a niche provider of
chiropractic education, with aims to strategically grow and
diversify its enrollment and revenue mix. LU's limited brand and
strategic positioning reflects a high reliance on tuition revenue,
modest donor support and research activity, limited pricing power
in its core chiropractic programs and weaker pricing flexibility
for undergraduate programs. Favorably, the university's operating
performance has been improving, with steady net tuition revenue
growth and highly disciplined expense controls that help weather a
constrained revenue environment. LU's wealth is modest with $27.5
million of cash and investments for fiscal 2021, projected to be
nearly similar for fiscal 2022. This provides a very weak 0.4x
cushion relative to expenses. Lingering effects of the pandemic
around student demand and now, rising inflationary costs add longer
term pressure to materially build reserves, particularly as the
university has ongoing capital needs. LU remains highly leveraged
with wealth to debt at 0.3x and debt to revenue of 1.2x. However,
favorable operating cash flow and a fixed rated debt structure
currently support debt affordability.
Affirmation of the Ba3 revenue bond rating incorporates the issuer
rating, in addition to security features that include a gross
revenue pledge, first mortgage pledge of university real property
and a debt service reserve fund.
RATING OUTLOOK
The stable outlook reflects Moody's expectations that Life
University will maintain its improved level of operating
performance, with ongoing fiscal discipline to meet more than ample
debt service coverage, with minimal use of reserves and no
borrowing plans beyond a potential partnership for additional
student housing.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Material improvement in strategic positioning, reflected by
continued enrollment diversification, growing net tuition revenue,
and overall improvement in wealth and financial flexibility
- Sustained improvement in operating performance and debt
affordability
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Deterioration of student demand, given very high reliance on
student generated revenue; further accreditation problems that
could negatively impact student demand
- Inability to sustain sufficient operating performance to
generate debt service coverage above 1x (on a Moody's adjusted
basis)
- Material additional debt given already high leverage, or
reduction in headroom on debt covenants or covenant violations
LEGAL SECURITY
The Series 2017A and Series 2017B bonds are secured by a gross
revenue pledge, first mortgage pledge of university real property
and cash funded debt service reserve fund equal to maximum annual
debt service (currently funded at $7.0 million). A small portion of
the campus near the student housing funded by a portion of the
bonds is carved out of the mortgage pledge to allow the university
to support a future public-private partnership or alternative
finance mechanism for additional student housing facilities.
Covenants include: rates and charges sufficient to meet university
operations and payments under the Loan Agreement; debt service
coverage of 1.2x; liquidity covenant of at least 80 days cash on
hand; long-term indebtedness ratio of at least 0.15x; and trades
payable of at least 90% of payables at less than 60 days. As of
June 30, 2022, the university's exceeded all covenants, with 1.33x
coverage, 145.8 days cash on hand, indebtedness ratio of 0.32x, and
trade payables at 99.6%. Failure to meet the required covenants
would trigger the university's need to engage a consultant. Failure
to meet the required covenants in any two consecutive calendar
quarters would trigger the university's requirement to transfer all
Revenues to the Trustee on a daily basis.
PROFILE
Life University was founded in 1974 as a private university in the
Atlanta suburb of Marietta, Georgia. The majority of students are
enrolled in its doctoral degree program in chiropractic. The
university also offers undergraduate and graduate programs in
health and wellness-oriented fields. In fiscal 2021, Life generated
operating revenue of $78.3 million and enrolled 2,609 full-time
equivalent (FTE) students as of fall 2021.
METHODOLOGY
The principal methodology used in these ratings was Higher
Education Methodology published in August 2021.
LTL MANAGEMENT: Kaplan Appoints Feinberg to Value Claims
--------------------------------------------------------
Dietrich Knauth of Reuters reports that a U.S. bankruptcy judge
said on Thursday, July 28, 2022, that he has selected an
independent expert to assess the value of about 38,000 lawsuits
alleging that Johnson & Johnson's talc products caused ovarian
cancer and mesothelioma, in an effort to break an impasse in the
bankruptcy of a J&J subsidiary, LTL Management.
U.S. Bankruptcy Judge Michael Kaplan in Trenton, New Jersey
selected well-known mediator Kenneth Feinberg to perform an initial
estimation of the number and value of current and future cancer
claims.
J&J spun off subsidiary LTL Management in October 2021, assigned
its talc claims to it and immediately placed it into bankruptcy,
pausing the pending lawsuits.
Kaplan on Thursday said LTL and the official committee representing
cancer plaintiffs had presented him with two "very different paths
forward." The plaintiffs had asked the judge to allow some trials
to move forward outside of bankruptcy court, while LTL proposed a
year-long procedure to estimate the value of claims in bankruptcy
court.
Both sides had attacked the other's proposals as a "road to
nowhere," and Kaplan said on Thursday his path would avoid the
delays and controversies that those proposals would bring.
A J&J representative did not immediately respond to a request for
comment. J&J has denied the talc plaintiffs' allegations, saying
decades of scientific testing and regulatory approvals have shown
its talc to be safe.
Clayton Thompson, an attorney who represents plaintiffs with
mesothelioma in the case, said he was disappointed that Kaplan
continued to block lawsuits against J&J, which is not itself
bankrupt.
The talc plaintiffs have argued LTL's bankruptcy is an abuse of the
Chapter 11 system. Kaplan rejected their argument that it was filed
in bad faith in March, and the plaintiffs are appealing to the 3rd
U.S. Circuit Court of Appeals.
Kaplan did not select a firm due date for Feinberg's initial
report, but he said it would be complete "before the weather turns
cold."
Feinberg oversaw a victims compensation fund related to the Sept.
11, 2001 attacks and served as a mediator in settlement talks in
the federal litigation over allegations that Bayer AG’s Roundup
weedkiller caused cancer, among other cases. Kaplan said Feinberg
will not serve as a mediator in the LTL case, limiting his role to
claims estimation.
Before the bankruptcy filing, the company faced costs from $3.5
billion in verdicts and settlements, including one in which 22
women were awarded a judgment of more than $2 billion, according to
bankruptcy court records.
The case is LTL Management LLC, U.S. Bankruptcy Court for the
District of New Jersey, No. 21-30589.
For the LTL: Greg Gordon of Jones Day
For Talc Claimants Committee I: David Molton of Brown Rudnick,
Melanie Cyganowski of Otterbourg, Daniel Stolz of Genova Burns,
Brian Glasser of Bailey & Glasser, Lenard Parkins of Parkins &
Rubio and Jonathan Massey of Massey & Gail
About LTL Management
LTL Management, LLC, is a subsidiary of Johnson & Johnson (J&J),
which was formed to manage and defend thousands of talc-related
claims and oversee the operations of Royalty A&M. Royalty A&M owns
a portfolio of royalty revenue streams, including royalty revenue
streams based on third-party sales of LACTAID, MYLANTA/MYLICON and
ROGAINE products.
LTL Management filed a petition for Chapter 11 protection (Bankr.
W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was
transferred to New Jersey (Bankr. D.N.J. Case No. 21-30589) on Nov.
16, 2021. The Hon. Michael B. Kaplan is the case judge. At the time
of the filing, the Debtor was estimated to have $1 billion to $10
billion in both assets and liabilities.
The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as
bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon
LLP as special counsel; McCarter & English, LLP as litigation
consultant; Bates White, LLC as financial consultant; and
AlixPartners, LLP as restructuring advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
An official committee of talc claimants was formed in the Debtor's
Chapter 11 case on Nov. 9, 2021. On Dec. 24, 2021, the U.S. Trustee
for Regions 3 and 9 reconstituted the talc claimants' committee and
appointed two separate committees: (i) the official committee of
talc claimants I, which represents ovarian cancer claimants, and
(ii) the official committee of talc claimants II, which represents
mesothelioma claimants.
The official committee of talc claimants I tapped Genova Burns LLC,
Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its
legal counsel. Meanwhile, the official committee of talc claimants
II is represented by the law firms of Cooley LLP, Bailey Glasser
LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and
Sherman Silverstein Kohl Rose & Podolsky P.A.
A full-text copy of the Bloomberg Article is available at
https://news.bloomberglaw.com/bankruptcy-law/j-j-talc-claimants-seek-to-write-their-own-compensation-plan
About Johnson & Johnson
Johnson & Johnson is an American multinational corporation founded
in 1886 that develops medical devices, pharmaceuticals, and
consumer packaged goods. It is the world's largest and most broadly
based healthcare company.
Johnson & Johnson is headquartered in New Brunswick, New Jersey,
the consumer division being located in Skillman, New Jersey. The
corporation includes some 250 subsidiary companies with operations
in 60 countries and products sold in over 175 countries.
The corporation had worldwide sales of $82.6 billion in 2020.
LUCID ENERGY II: Moody's Withdraws B2 CFR Following Loan Repayment
------------------------------------------------------------------
Moody's Investors Service withdrew all of Lucid Energy Group II
Borrower, LLC's ratings, including its B2 Corporate Family Rating,
B2-PD Probability of Default Rating and B2 rating for its senior
secured term loan due 2028. The outlook was changed to ratings
withdrawn from rating under review. These withdrawals follow
repayment of the term loan in conjunction with the closing of the
acquisition of Lucid by Targa Resources Corp. (Targa, Baa3
stable).
Withdrawals:
Issuer: Lucid Energy Group II Borrower, LLC
Corporate Family Rating, Withdrawn, previously rated B2
Probability of Default Rating, Withdrawn, previously rated B2-PD
Senior Secured 1st Lien Bank Credit Facility, Withdrawn,
previously rated B2 (LGD4)
Outlook Actions:
Issuer: Lucid Energy Group II Borrower, LLC
Outlook, Changed To Rating Withdrawn From Rating Under Review
RATINGS RATIONALE
Lucid has fully repaid its senior secured term loan due 2028 in
conjunction with the closing of the acquisition of Lucid by Targa.
All of Lucid's ratings have been withdrawn since all of its rated
debt is no longer outstanding.
Lucid is a natural gas gathering and processing company in the
Delaware Basin within the broader Permian Basin. It is now a
wholly-owned subsidiary of Targa, which has a portfolio of
midstream energy assets and is headquartered in Houston, Texas.
MICROVISION INC: Incurs $13.6 Million Net Loss in Second Quarter
----------------------------------------------------------------
MicroVision, Inc. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $13.60
million on $314,000 of total revenue for the three months ended
June 30, 2022, compared to a net loss of $14.96 million on $746,000
of total revenue for the three months ended June 30, 2021.
For the six months ended June 30, 2022, the Company reported a net
loss of $26.77 million on $664,000 of total revenue compared to a
net loss of $21.19 million on $1.23 million of total revenue for
the same period during the prior year.
As of June 30, 2022, the Company had $107.19 million in total
assets, $13.09 million in total liabilities, and $94.10 million in
total shareholders' equity.
"We are pleased to have announced the launch of our new generation
MicroVision MAVIN lidar hardware during the second quarter of 2022.
In June, we completed another round of track testing showcasing how
our product can surpass OEM expectations in new, more complex
highway driving scenarios," said Sumit Sharma, MicroVision's chief
executive officer. "We have had very successful driving
demonstrations with OEMs and, as we expand our efforts to show our
product and deepen engagement with OEMs, we will continue to
highlight the excellence and superiority of our product."
"I am also pleased to announce that as a result of successful
engagement with OEMs and Tier 1s, we expect to start strategic
sample sales during the second half of 2022 as previously
announced. As we continue working to deliver on our 2022
objectives, we plan to demonstrate in 2023 a drive-by-wire system
centered on our lidar hardware and our high-speed highway pilot
ADAS software," continued Sharma.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/65770/000113626122000275/form10q.htm
About MicroVision
Microvision, Inc. -- http://www.microvision.com-- is a pioneering
company in MEMS based laser beam scanning technology that
integrates MEMS, lasers, optics, hardware, algorithms and machine
learning software into its proprietary technology to address
existing and emerging markets. The Company's integrated approach
uses its proprietary technology to provide solutions for automotive
lidar sensors, augmented reality micro-display engines, interactive
display modules and consumer lidar modules.
MicroVision reported a net loss of $43.20 million for the year
ended Dec. 31, 2021, a net loss of $13.63 million for the year
ended Dec. 31, 2020, a net loss of $26.48 million for the year
ended Dec. 31, 2019, and a net loss of $27.25 million for the year
ended Dec. 31, 2018. As of March 31, 2022, the Company had $117.77
million in total asse ts, $14.30 million in total liabilities, and
$103.47 million in total shareholders' equity.
MIND TECHNOLOGY: All Three Proposals Approved at Annual Meeting
---------------------------------------------------------------
At the 2022 Virtual Annual Meeting of Stockholders of MIND
Technology, Inc., the stockholders:
(1) elected Peter H. Blum, Robert P. Capps, William H.
Hilarides, Thomas S. Glanville, Nancy J. Harned, and Alan P. Baden
to serve on the Board of Directors of the Company until the next
annual meeting of stockholders, each until their respective
successors are duly elected and qualified;
(2) approved, on an advisory basis, the compensation of the
Named Executive Officers; and
(3) ratified the selection by the Audit Committee of the Board
of Directors of Moss Adams LLP as the Company's independent
registered public accounting firm for the fiscal year ending Jan.
31, 2023.
About Mind Technology
Mind Technology, Inc. -- http://mind-technology.com-- provides
technology and solutions for exploration, survey and defense
applications in oceanographic, hydrographic, defense, seismic and
security industries. Headquartered in The Woodlands, Texas, MIND
Technology has a global presence with key operating locations in
the United States, Singapore, Malaysia and the United Kingdom. Its
Klein and Seamap units design, manufacture and sell specialized,
high performance sonar and seismic equipment.
Mind Technology reported a net loss of $15.08 million for the year
ended Jan. 31, 2022, a net loss of $20.31 million for the year
ended Jan. 31, 2021, compared to a net loss of $11.29 million for
the year ended Jan. 31, 2020. As of April 30, 2022, the Company
had $37.78 million in total assets, $10.65 million in total
liabilities, and $27.13 million in total stockholders' equity.
Houston, Texas-based Moss Adams LLP, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
April 29, 2022, citing that the Company has suffered recurring
losses from operations and has continued to rely on sale of
preferred stock and leasepool equipment to sustain operations. The
Company's inability to generate positive cash flows from operations
combined with the limited amount of leasepool equipment remaining
to be sold raise substantial doubt about its ability to continue as
a going concern.
MUSCLEPHARM CORP: Former CFO to Get $162,500 in Separation Pay
--------------------------------------------------------------
MusclePharm Corporation entered into a Separation and Release
Agreement with Sabina Rizvi, the Company's former president and
chief financial officer. Ms. Rizvi resigned from her positions
effective July 22, 2022.
Pursuant to the Separation Agreement, Ms. Rizvi acknowledged that
her status as an employee of the Company ended on July 22, 2022.
In addition, Ms. Rizvi tendered her resignation as a director of
the Company effective as of the Termination Date. The Company said
Ms. Rizvi's resignation was not the result of any disagreement with
the Company relating to its operations, policies or practices.
The Agreement further provides that the Company will (a) pay Ms.
Rizvi the sum of $162,500 in equal installments of $18,055.56 on
the date of each of the Company's next nine pay periods following
the Effective Date of the Separation Agreement, and (b) pay Ms.
Rizvi a lump sum of $6,260.25 concurrently with the first Severance
Payment to offset costs under the Company's group health plan in
accordance with the Consolidated Omnibus Budget Reconciliation Act.
Pursuant to the Separation Agreement, Ms. Rizvi has agreed to
comply with the Confidentiality Agreement dated Feb. 17, 2021
between Ms. Rizvi and the Company.
Appointment of Eric Chin as Chief Financial Officer
On July 28, 2022, the Board of Directors appointed Eric Chin as
chief financial officer and director of the Company.
Mr. Chin, joined the Company in June 2022 as chief accounting
officer. Prior to that, Mr. Chin served as the chief financial
officer of Apollo Medical Holdings Inc. from 2018 to May 2022.
Prior to that, Mr. Chin served as the Controller/Head of Finance -
Real Estate of Public Storage from 2015 to 2018. Mr. Chin served
as assistant vice-president - financial reporting of Alexandria
Real Estate Equities, Inc. from 2011 to 2015. Mr. Chin began his
career at Ernst & Young, LLP in 2002. Mr. Chin is a Certified
Public Accountant and received his Bachelor of Arts in
Business/Economics with Accounting and Computing from UCLA.
About MusclePharm
Headquartered in Denver, Colorado, MusclePharm Corporation
(OTCQB:MSLP) -- http://www.musclepharm.comand
http://www.musclepharmcorp.com-- is a lifestyle company that
develops, manufactures, markets and distributes branded
nutritional
supplements. The Company offers a broad range of performance
powders, capsules, tablets, gels and on-the-go ready to eat snacks
that satisfy the needs of enthusiasts and professionals alike.
MusclePharm reported a net loss of $12.87 million for the year
ended Dec. 31, 2021. As of March 31, 2022, the Company had $11.98
million in total assets, $50.03 million in total liabilities, and a
total stockholders' deficit of $38.06 million.
Orange County, California-based Moss Adams LLP, the Company's
auditor since 2021, issued a "going concern" qualification in its
report dated April 15, 2022, citing that the Company has suffered
recurring losses from operations and has a net capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
NASCAR HOLDINGS: Moody's Upgrades CFR & Senior Secured Debt to Ba2
------------------------------------------------------------------
Moody's Investors Service upgraded NASCAR Holdings, LLC's Corporate
Family Rating and senior secured facility to Ba2 from Ba3. The
outlook is stable.
The upgrade of NASCAR's CFR and stable outlook reflect the
reduction in leverage to 3.5x as of Q1 2022 due to improved
financial performance following the impact of the pandemic and the
repayment of debt from Free Cash Flow (FCF) and asset sale
proceeds. NASCAR has also carried out a series of changes to the
sport over several years which has helped to improve spectator
interest and operating performance.
Moody's ESG Credit Impact Score (CIS) for NASCAR (CIS-3) and
Governance (G-3) were a factor in the ratings as Moody's expects
NASCAR will maintain a conversative financial profile and will
continue to direct FCF and asset sale proceeds to debt repayment.
NASCAR is likely to maintain a strong liquidity position supported
by full access to the revolving credit facility, cash on the
balance sheet of $131 million, and good operating cash flow.
A summary of the actions are as follows:
Upgrades:
Issuer: NASCAR Holdings, LLC
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Senior Secured Bank Credit Facility, Upgraded to Ba2 (LGD3) from
Ba3 (LGD3)
Outlook Actions:
Issuer: NASCAR Holdings, LLC
Outlook, Remains Stable
RATINGS RATIONALE
NASCAR's Ba2 CFR reflects Moody's expectation that leverage (3.5x
as of Q1 2022) will continue to decrease in 2022 from additional
debt repayment and EBITDA growth. NASCAR benefits from its
significant size and ownership of the NASCAR sanctioning body as
well as its position as the largest track owner of NASCAR and other
race events. The TV broadcast agreements with contracted increases
through 2024, support performance and contribute to EBITDA at a
high margin level. Contractual media revenues reduced the impact of
the pandemic and helped NASCAR outperform many other live
entertainment companies that are more reliant on attendance related
revenue. NASCAR also has a joint venture in a casino at the
company's Kansas Speedway which has recovered significantly from
the pandemic and Moody's projects results will continue to expand
in 2022. Capex levels declined during the pandemic following
significant renovations to existing tracks and developments on its
properties, but will increase modestly in 2022.
NASCAR has faced multiyear declines in attendance pre-pandemic due
to reduced fan interest in NASCAR racing. Several changes to the
sport have been made to increase fan interest, attract different
demographic groups and new team owners. The changes have supported
better TV viewership and attendance levels, but Moody's expects
maintaining spectator interest will be a challenge and require
ongoing innovative initiatives. While the TV broadcast agreements
have offset declines in revenue from other race related segments
prior to the pandemic, the broadcast agreements expire at the end
of 2024 while the term loan matures in 2026.
ESG CONSIDERATIONS
NASCAR's ESG Credit Impact Score is moderately-negative (CIS-3)
driven by the company's exposure to moderately-negative social
risks (S-3) and moderately-negative governance risk (G-3). NASCAR
faces some secular societal trends as a result of reduced spectator
interest in NASCAR, but the company has taken several steps to
enhance fan interest over the past several years. While the company
maintained low leverage levels historically, leverage increased
following the International Speedway Corporation acquisition. The
company is expected to target lower leverage levels going forward
and has repaid significant amounts of debt since the end of 2020
from FCF and asset sale proceeds. NASCAR is a private company owned
by the France family, but Moody's expects the company will maintain
good management practices and conservative financial policies.
Moody's expects NASCAR will maintain a strong liquidity position
supported by $131 million of cash on the balance sheet as of Q1
2022 and access to an undrawn $150 million revolver due October
2024. Capex was $47 million as of LTM Q1 2022, but will increase
modestly going forward. Free cash flow as a percentage of debt was
16% LTM as of Q1 2022 and Moody's projects the ratio will improve
further in 2022 and 2023. While NASCAR will continue to make modest
equity distributions, Moody's expects NASCAR will continue to use a
significant portion of FCF to repay debt. NASCAR has reduced debt
by $348 million since the end of 2020 from FCF and asset sale
proceeds.
The term loan is covenant lite with the revolver subject to a
springing first lien net leverage ratio of 6.25x (as defined in the
credit agreement) when more than 35% of the revolver is drawn.
Moody's projects NASCAR will maintain a significant cushion of
compliance going forward.
The stable outlook reflects the support provided by the media
broadcast agreements and the success of recent initiatives to
improve spectator interest in NASCAR. Moody's expects modest growth
in track and event related revenues as consumer demand for out of
home entertainment will be partially offset by higher inflation and
slower economic growth during the second half of 2022 and 2023.
NASCAR will generate good FCF after modest member distributions
during the remainder of 2022 and 2023 with a portion directed to
debt reduction. Moody's expects leverage to decrease toward the 3x
range by the end of 2022, but leverage could decline further if
additional asset sales are completed.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade could occur after completion of a new long term media
agreement at comparable or better terms than the existing contracts
and the continued stabilization of fan interest in NASCAR racing as
reflected by attendance revenue growth and positive broadcast
viewership trends. Confidence that the financial policy of the firm
would be consistent with a higher rating would also be required in
addition to leverage maintained below 2.5x and FCF as a percentage
of debt above 10%.
The ratings could be downgraded if leverage was expected to be
sustained above 4x due to lower media content revenue, debt funded
redevelopment projects, or a sustained decline in profitability due
to a deterioration in spectator interest in NASCAR. A weak
liquidity position including a FCF to debt percentage ratio below
the mid-single percentages could also lead to a downgrade.
NASCAR Holdings, LLC, headquartered in Daytona Beach, Florida is
the sanctioning body of NASCAR and other race series. The company
also owns and/or operates sixteen racetracks within the territory
of the United States, which includes ovals, road courses and a drag
strip. In Q3 2019, NASCAR acquired International Speedway
Corporation, which was previously a publicly traded company (ISCA).
Members of the France family own 100% of NASCAR.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
NEOVASC INC: To Report Second Quarter Financial Results on Aug. 11
------------------------------------------------------------------
Neovasc Inc. will report financial results for the quarter ended
June 30, 2022 on Thursday, Aug. 11, 2022. Neovasc's President and
Chief Executive Officer Fred Colen, and Chris Clark, Chief
Financial Officer, will host a conference call to review the
company's results at 4:30 pm EDT on Aug. 11, 2022.
Interested parties may access the conference call by dialing (877)
407-9208 or (201) 493-6784 (International) and reference Conference
ID 13730925. Participants wishing to join the call via webcast
should use the link posted on the investor relations section of the
Neovasc website at neovasc.com/investors/. A replay of the webcast
will be available approximately 30 minutes after the conclusion of
the call using the link on the Neovasc website.
About Neovasc Inc.
Neovasc -- www.neovasc.com -- is a specialty medical device company
that develops, manufactures and markets products for the rapidly
growing cardiovascular marketplace. The Company develops minimally
invasive transcatheter mitral valve replacement technologies, and
minimally invasive devices for the treatment of refractory angina.
Its products include the Neovasc Reducer, for the treatment of
refractory angina, which is not currently commercially available in
the United States (2 U.S. patients have been treated under
Compassionate Use) and has been commercially available in Europe
since 2015, and Tiara, for the transcatheter treatment of mitral
valve disease, which is currently under clinical investigation in
the United States, Canada, Israel and Europe.
Neovasc reported a net loss of $24.89 million for the year ended
Dec. 31, 2021, following a net loss of $28.70 million for the year
ended Dec. 31, 2020. As of March 31, 2022, the Company had $60.05
million in total assets, $16.28 million in total liabilities, and
$43.77 million in total equity.
Vancouver, Canada-based Grant Thornton LLP, the Company's auditor
since 2002, issued a "going concern" qualification in its report
dated March 9, 2022, citing that the Company incurred a
comprehensive loss of $25.2 million during the year ended Dec. 31,
2021. These conditions, along with other matters, raise
substantial doubt about the Company's ability to continue as a
going concern as at Dec. 31, 2021.
PECOS INN: Hotel Owner Files Subchapter V Case
----------------------------------------------
Pecos Inn LLC filed for chapter 11 protection in the Western
District of Texas. The Debtor filed as a small business debtor
seeking relief under Subchapter V of Chapter 11 of the Bankruptcy
Code.
The Debtor's business consists of the ownership and operation of a
hotel in Pecos, Texas. As a result of a slow down in business, the
Debtor sought bankruptcy protection.
Newtek Small Business Finance and the Small Business
Administration
(“SBA”) currently assert lien positions, on among other things
the rents, accounts receivable and inventory of the Debtor.
According to court documents, Pecos Inn LLC estimates between 1 and
49 creditors. The petition states funds will be available to
unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Aug. 25, 2022, at 10:00 AM at Via Phone: (866)909-2905; Code:
5519921#. Proofs of claim are due Oct. 6, 2022.
About Pecos Inn LLC
Pecos Inn LLC is a limited liability company in Texas.
On July 28, 2022, the Debtor filed a voluntary petition for relief
under chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No.
22-70099). The Debtor has elected to proceed under subchapter V of
chapter 11.
In the petition filed by Ram Kunwar, as managing member, the Debtor
estimated assets and liabilities between $1 million and $10
million.
Brad W. Odell has been appointed as Subchapter V trustee.
Eric A Liepins, of Eric A. Liepins, P.C., is the Debtor's counsel.
PIPELINE FOODS: Plan Trustee Alleges Fraud by Sponsor Amerra
------------------------------------------------------------
The liquidating trustee of Pipeline Foods LLC has sued the bankrupt
organic food supplier's former owner in Delaware bankruptcy court,
alleging that agribusiness hedge fund Amerra Capital Management LLC
and company executives knowingly misstated the value of inventory
to get millions in loans that weren't fully backed.
In an adversary complaint filed Wednesday, July 27, 2022, in the
U.S. Bankruptcy Court for the District of Delaware, Pipeline Foods
Liquidating Trust's trustee Nauni Manty is seeking damages and
court costs on claims of breaches of fiduciary duty, common law
fraud, aiding and abetting such breaches, and negligent
misrepresentation.
"Shortly after filing these Chapter 11 Cases, the Debtors reported
inventory with a net book value of $38 million. But when the
inventory was sold by order of this Court, the sales yielded barely
half that amount, generating just $19.5 million. What happened to
the other half of the Debtors' reported inventory? It never
existed," according to the Complaint.
"As Defendants had known for years, the Debtors' inventory
accounting data was inaccurate, unreliable, and untrustworthy due
to systemic flaws, poor infrastructure, and missing controls.
Pre-petition, these pervasive deficiencies were the topic of board
discussion, the butt of derision among the Debtors' finance
personnel, and the target of both a consultant's "scathing" report
and an auditor's material weaknesses letter. Post-petition, newly
retained outside accountants refused to issue inventory reports
using the same systems, infrastructure, and data."
According to the Complaint, Amerra Capital Management, et al.,
caused the Debtors to materially overstate their reported inventory
to their secured lenders and later the Bankruptcy Court.
"Defendants did so knowing that the lenders relied on the inventory
data to determine the Borrowing Base under their revolving credit
facility in making advances to the Debtors. Defendants chose to
not disclose the many underlying inventory issues to the lenders or
external stakeholders. Defendants instead actively worked to
increase available cash by overstating the Borrowing Base --
primarily through their reckless disregard for the inventory
problems. From June 2018 to April 2021, Defendants caused the
Debtors to request and receive loans in the tens of millions of
dollars based on inventory data that they knew to be inaccurate,
unreliable, and untrustworthy -- harming the Debtors and their
creditors," the Trustee said.
AMERRA is a New York hedge fund that specializes in food and
agribusiness investing. AMERRA describes itself as an agribusiness
asset manager currently with about $1.4 billion in assets under
management. According to AMERRA, since 2009 it has completed over
380 investments with an aggregate value of over $5.7 billion.
Through May 2021, AMERRA controlled Pipeline Holdings' Board,
holding two of the three seats. AMERRA, acting through Craig
Tashjia, Robert Hodgen, and others, was hands-on in its management
and control of the Debtors, which AMERRA branded a portfolio
company.
As of the Petition Date, AMERRA's capital contributions to the
Debtors totaled $83,778,000, for an equity stake of 97.5%.
About Pipeline Foods
Pipeline Foods, LLC -- https://www.pipelinefoods.com/ -- is the
first U.S.-based supply chain solutions company focused exclusively
on non-GMO, organic, and regenerative food and feed. It is based in
Fridley, Minn.
Pipeline Foods and its affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 21-11002) on July 8, 2021. The
affiliates are Pipeline Holdings, LLC, Pipeline Foods Real Estate
Holding Company, LLC, Pipeline Foods, ULC, Pipeline Foods Southern
Cone S.R.L., and Pipeline Foods II, LLC. In the petition signed by
CRO Winston Mar, Pipeline Foods disclosed between $100 million and
$500 million in both assets and liabilities.
Judge Karen B. Owens oversees the cases.
The Debtors tapped Saul Ewing Arnstein & Lehr, LLP as legal
counsel; Ocean Park Securities, LLC as investment banker; Baker
Tilly US, LLP and Baker Tilly Windsor, LLP as tax consultants; and
The Finley Group, Inc. as financial advisor. Matthew Smith,
managing director at Finley Group, serves as chief restructuring
officer. Stretto is the claims, noticing and administrative
agent.
Bryan Cave Leighton Paisner, LLP serves as legal counsel to the
Board of Directors.
On July 22, 2021, the U.S. Trustee for Region 3 appointed an
official committee of unsecured creditors. The committee tapped
Barnes & Thornburg, LLP as its legal counsel and Dundon Advisers,
LLC as its financial advisor.
Bryan Cave Leighton Paisner LLP serves as special counsel to the
board of managers of Pipeline Holdings, LLC, one of the affiliated
debtors.
* * *
On March 1, 2022, the Court entered an order confirming the
Debtors' and Creditors' Committee's Amended Joint Plan of
Liquidation. On March 17, 2022, the Plan became effective. The
Plan established the Liquidating Trust and duly appointed Nauni
Manty as the Liquidating Trustee.
PMC PARTNERS: Case Summary & Seven Unsecured Creditors
------------------------------------------------------
Debtor: PMC Partners, LLC
2857 Hunter Road
Fairfax, VA 22031
Chapter 11 Petition Date: August 2, 2022
Court: United States Bankruptcy Court
Eastern District of Virginia
Case No.: 22-11009
Debtor's Counsel: David K. Spiro, Esq.
SPIRO & BROWNE, PLC
2400 Old Brick Road
Glen Allen, VA 23060-5841
Tel: 804-441-6080
Fax: 804-836-1855
Email: dspiro@sblawva.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Larry Turner as director.
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/ZEZILPA/PMC_Partners_LLC__vaebke-22-11009__0001.0.pdf?mcid=tGE4TAMA
PROFESSIONAL DIVERSITY: Grace Reyes Quits as Director
-----------------------------------------------------
Grace Reyes, a member of the Board of Directors of Professional
Diversity Network, Inc., tendered her resignation as a director of
the Company effective on July 28, 2022. Ms. Reyes has served as a
director of the Company since June 2020. The Companys stated that
her resignation was not due to any disagreement with the Company on
any matter relating to its operations, policies or practices as
described in Item 5.02(a) of Form 8-K.
Effective on July 28, 2022, Ms. Reyes accepted an offer from IAW,
Inc., a wholly-owned subsidiary of the Company, to join IAW's
Advisory Board as its Chairwoman. In connection with that
position, she will be paid (a) $50,000 per year in cash, and (b)
commissions in an amount of 10% of total sponsorship sales brought
by Ms. Reyes to IAW, and (c) after an initial $200,000 in
sponsorship sales have been brought by Ms. Reyes to IAW, a
restricted stock grant valued at $10,000 for each additional
$100,000 in sponsorship sales generated subject to the Company's
board approval.
On July 28, 2022, the remaining four directors of the Company
elected Chris Renn to fill the vacancy on the Board created by Ms.
Reyes' resignation, effective immediately.
Mr. Renn currently is a director of Bluestone Capital, an asset
manager focusing on alternative investments, including technology,
infrastructure, energy, real estate, and other alternative assets.
He also currently serves as a senior vice president of Rennatus, an
advisory division of Bluestone Capital. Previously, Mr. Renn
served in senior management positions at SIG, an international
infrastructure finance company, Great Bay, an electricity hedge
fund, and Urban Retail Properties, an operating arm of a public
REIT. Mr. Renn is a graduate of Illinois Institute of Technology
and Harvard University.
About Professional Diversity
Headquartered in Chicago, Illinois, Professional Diversity Network,
Inc. -- https://www.prodivnet.com -- is a global developer and
operator of online and in-person networks that provides access to
networking, training, educational and employment opportunities for
diverse individuals.
Professional Diversity reported a net loss of $2.76 million for the
year ended Dec. 31, 2021, a net loss of $4.35 million for the year
ended Dec. 31, 2020, compared to a net loss of $3.84 million for
the year ended Dec. 31, 2019. As of March 31, 2022, the Company had
$8.15 million in total assets, $5.56 million in total liabilities,
and $2.59 million in total stockholders' equity.
Wilmington, DE-based Ciro E. Adams, CPA, LLC, the Company's auditor
since 2018, in its report dated March 31, 2022, citing that the
Company has incurred significant losses, and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
Q BIOMED INC: Incurs $1.3 Million Net Loss in Second Quarter
------------------------------------------------------------
Q Biomed Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $1.27
million on $170,487 of net sales for the three months ended May 31,
2022, compared to a net loss of $1.91 million on $45,000 of net
sales for the three months ended May 31, 2021.
For the six months ended May 31, 2022, the Company reported a net
loss of $3.56 million on $245,546 of net sales compared to a net
loss of $4.38 million on $45,000 of net sales for the same period
during the prior year.
As of May 31, 2022, the Company had $470,088 in total assets, $7.56
million in total liabilities, and a total stockholders' deficit of
$7.09 million.
Q Biomed stated, "We have not yet established an ongoing source of
significant revenues and must cover our operating costs through
debt and equity financings to allow us to continue as a going
concern. We had approximately $27,000 in cash as of May 31, 2022.
Our ability to continue as a going concern depends on the ability
to obtain adequate capital to fund operating losses until we
generate adequate cash flows from operations to fund our operating
costs and obligations. If we are unable to obtain adequate
capital, we could be forced to cease operations.
"Our primary requirements for liquidity are to fund our working
capital needs, capital expenditures and general corporate needs.
Our ongoing capital expenditures are principally related to
expanding revenue generating sales efforts and ongoing research and
development costs. We estimate our capital expenditures will be
approximately $7.0 million for the next 18 months period.
"We depend upon our ability, and will continue to attempt, to
secure equity and/or debt financing. We cannot be certain that
additional funding will be available on acceptable terms, or at
all. Our management determined that there was substantial doubt
about our ability to continue as a going concern within one year
after the condensed consolidated financial statements were issued,
and management's concerns about our ability to continue as a going
concern within the year following this report persist."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1596062/000141057822001992/tmb-20220531x10q.htm
About Q BioMed Inc.
Q BioMed Inc. -- http://www.QBioMed.com-- is a biotech
acceleration and commercial stage company. The Company is focused
on licensing and acquiring undervalued biomedical assets in the
healthcare sector. Q BioMed is dedicated to providing these target
assets the strategic resources, developmental support, and
expansion capital needed to ensure they meet their developmental
potential, enabling them to provide products to patients in need.
Q Biomed reported a net loss of $8.24 million for the year ended
Nov. 30, 2021, compared a net loss of $13.49 million for the year
ended Nov. 30, 2020. As of Feb. 28, 2022, the Company had $538,426
in total assets, $6.37 million in total liabilities, and a total
stockholders' deficit of $5.83 million.
New York, NY-based Marcum LLP, the Company's auditor since 2015,
issued a "going concern" qualification in its report dated Feb. 28,
2022, citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
QUEST PATENT: All Three Proposals Passed at Annual Meeting
----------------------------------------------------------
Quest Patent Research Corporation held its 2022 annual meeting of
stockholders, at which the stockholders:
(1) elected Jon C. Scahill, Ryan T. Logue, Timothy J. Scahill,
and Dr. William Ryall Carroll as directors;
(2) ratified the selection of Rosenberg Rich Baker Berman, P.A.
as independent auditor for 2022; and
(3) approved the amendment to the Company's amended and restated
certificate of incorporation (a) to effect a one-for-100 reverse
split of the Company's common stock, and (b) to decrease the
authorized common stock to 30,000,000 shares.
About Quest Patent
Rye, New York-based Quest Patent Research Corporation --
http://www.qprc.com-- is an intellectual property asset
management
company. The Company's principal operations include the
development, acquisition, licensing and enforcement of
intellectual
property rights that are either owned or controlled by the Company
or one of its wholly owned subsidiaries. The Company currently
owns, controls or manages eleven intellectual property portfolios,
which principally consist of patent rights.
Quest Patent reported a net loss of $4.15 million for the year
ended Dec. 31, 2021, compared to a net loss of $1.31 million for
the year ended Dec. 31, 2020. As of March 31, 2022, the Company
had $1.59 million in total assets, $9.64 million in total
liabilities, and a total stockholders' deficit of $8.05 million.
Somerset, New Jersey-based Rosenberg Rich Baker Berman, P.A., the
Company's auditor since 2021, issued a "going concern"
qualification in its report dated March 31, 2022, citing that the
Company has suffered recurring losses from operations and has a net
capital deficiency that raises substantial doubt about its ability
to continue as a going concern.
RUNNER BUYER: S&P Downgrades ICR to 'B-', Outlook Stable
--------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
e-commerce rug retailer Runner Buyer Inc. (doing business as
RugsUSA) to 'B-' from 'B'.
At the same time, S&P lowered its issue-level rating on RugsUSA's
revolving facility and term loan to 'B-' from 'B'. Our '3' recovery
rating on the facilities remains unchanged.
The stable outlook reflects S&P's expectation that the company will
increase its cash conversion once it optimizes its inventory
levels, which will offset the pressure on its margins and credit
metrics.
The downgrade reflects RugsUSA's high leverage amid the difficult
operating conditions this year. The company's year-over-year sales
decreased during the first quarter ended March 31, 2022, because it
lapped its strong performance during the same period in 2021 when
elevated government stimulus and excess savings led to heightened
demand. S&P anticipates the weak demand will persist through the
year and forecast RugsUSA's sales will turn slightly negative in
2022 as inflationary pressures squeeze consumers' purchasing power.
In addition to slowing sales, supply chain challenges--reflected in
its higher transportation costs and lead times--are affecting the
company's margins and cash flow generation because it relies
heavily on imported merchandise. In response, management is raising
prices, in line with the rest of its industry, and shifting its
product mix to partially offset the higher costs.
S&P said, "We anticipate weaker margins in 2022 than during the
height of the pandemic.In the first quarter, RugsUSA's S&P Global
Ratings-adjusted EBITDA decreased by more than 20% year over year
due to higher ocean freight costs. We believe there is a risk of
further operating margin compression due to continuing elevated
cost inflation and low consumer confidence. In addition, the
company's cash flow generation was weak over the past year because
it increased its investment in its inventory to ensure merchandise
availability for its customers. RugsUSA is working on optimizing
its inventory management, which supported an increase in its cash
flow generation in the first quarter of 2022. We expect the ongoing
cost pressures will abate and enable the company to increase its
cash flow generation in 2023 as the supply chain normalizes,
leading to lower and more-efficient working capital investment
levels.
"We expect free operating cash flow (FOCF) of about $20 million in
2022, which compares with a nominal amount in 2021. We also note
S&P Global Ratings-adjusted leverage increased by more than three
turns after financial sponsor Francisco Partners acquired the
company in October 2021. We forecast its interest expense will
increase above $35 million in 2022.
"The stable outlook on RugsUSA reflects our expectation that it
will increase its cash conversion once supply chain patterns
normalize and it optimizes its inventory levels, which will enable
it to generate modestly positive free cash flow.
"We could lower our rating on RugsUSA if its operating results
track below our base-case assumptions due to weak demand or margins
pressures that challenge its ability to deleverage, which could
cause us to view its capital structure as unsustainable."
S&P could raise its rating on RugsUSA if its operating pressures
subside and it expects it will sustain S&P Global Ratings-adjusted
leverage of about 6.5x. This could occur if:
-- It sustains an S&P Global Ratings-adjusted EBITDA margin of
more than 23%; or
-- The company deleverages its capital structure by paying down
its debt.
ESG credit indicators: E-2, S-2, G-3
SANDY ROAD: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Sandy Road Farms, LLC
23179 5 Road
Plains, KS 67869
Business Description: The Debtor is part of the hog and pig
farming industry.
Chapter 11 Petition Date: August 1, 2022
Court: United States Bankruptcy Court
District of Kansas
Case No.: 22-40446
Debtor's Counsel: Jonathan A. Margolies, Esq.
McDOWELL, RICE, SMITH & BUCHANAN, PC
605 West 47th Street, Suite 350
Kansas City, MO 64112-1900
Tel: 816-753-5400
Email: jmargolies@mcdowellrice.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Glenn Karlberg as chief restructuring
officer/manager.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/AEKTSBQ/Sandy_Road_Farms_LLC__ksbke-22-40446__0001.0.pdf?mcid=tGE4TAMA
SHEM OLAM: Sent by Rabbi to Chapter 11 Due to YCC Dispute
---------------------------------------------------------
Shem Olam LLC and affiliates filed for chapter 11 protection in the
Southern District of New York.
The Debtor is the owner of the real property located at 82 Highview
Road, Suffern, New York 10901 ("Property"). Rabbi Aryeh Zaks is
the present manager of Shem Olam LLC.
Yeshiva Chofetz Chaim Inc. ("YCC") formerly owned the Property. In
September 2017, Del Realty, LLC, acquired the Property from TD Bank
for $1,400,00 in a foreclosure auction. On Dec. 28, 2018, the
Property was conveyed from Del Realty to 82 Highview LLC, which was
formed by Rabbi Aryeh Zaks to use the site for YCC or form his own
new yeshiva on the site of a new campus and (ultimately) student
housing units. On June 29, 2021, after Zaks became the sole member
and manager of 82 Highview, he caused the Property to be
transferred to Shem Olam.
There is currently a pending litigation in the Supreme Court of the
State of New York, County of Rockland styled Yeshiva Chofetz Chaim
Inc. and 82 Highview LLC v. 82 Highview LLC, Shem Olam LLC, and
Aryeh Zaks, Index Number 036879/2021 (the "State Court
Litigation"). In the State Court Litigation, plaintiffs sought
declaratory relief regarding the Property and to set aside the deed
conveying the Property to Shem Olam. On July 12, 2022, the State
Court denied the defendants' motion to dismiss the State Court
Litigation. On July 25, 2022, the defendants appealed the State
Court's decision.
An adverse ruling in the state court has the potential to impact
the
ability to refinance or sell the Property. Therefore, in order to
preserve the value of the Property and to either refinance the
Property or sell it to pay its debts, the Debtor sought the
protection afforded under the Bankruptcy Code.
According to court filing, Shem Olam LLC estimates between 1 and 49
creditors. The petition states funds will be available to
unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Aug. 25, 2022, at 1:00 PM at Office of UST (TELECONFERENCE ONLY) -
CHAPTER 11s.
About Shem Olam LLC
Shem Olam LLC is the owner of the real property located at 82
Highview Road, Suffern, New York 10901 ("Property"). Rabbi Aryeh
Zaks is the present manager of Shem Olam LLC.
Shem Olam LLC and affiliates sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 22-22493). In
the petition filed by Rabbi Aryeh Zaks, as manager, the Debtor
estimated assets and liabilities between $1 million and $10 million
each.
Arnold Mitchell Greene, of Leech Tishman Robinson Brog PLLC, is the
Debtor's counsel.
SPIRIT AIRLINES: S&P Alters Outlook to Stable, Affirms 'B' ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook on Spirit Airlines Inc. to
stable from positive, and affirmed all its ratings on the company,
including the 'B' issuer credit rating.
On July 28, 2022, New York-based JetBlue Airways Corp. announced an
agreement to acquire Miramar, Fla.-based Spirit Airlines Inc. for
$33.50 per share in cash, implying a total diluted equity value of
$3.8 billion.
S&P expects Spirit to report a moderate loss in 2022, based on
relatively weak performance in the first half (due to the omicron
variant, continued operational disruptions, and lower capacity than
previously expected) and a somewhat stronger second half.
S&P said, "While we expect the combined entity to enjoy a stronger
competitive position, credit metrics will remain highly leveraged
in the near-term. The combined entity would be the fifth-largest
airline in the U.S. in terms of available seat miles (ASM), which
we believe will better position the company to compete against the
larger U.S. legacy carriers (American, Delta, and United) as well
as Southwest Airlines. Both JetBlue and Spirit operate similar
Airbus A320 aircraft fleets, which is generally considered more
efficient for maintenance, spare parts, and pilot training. Spirit
and JetBlue have each expanded their operations rapidly over the
last few years, and we expect this to continue, given they have
sizable aircraft orderbooks."
However, JetBlue plans to use proceeds from debt issuance to
finance the acquisition cost of $3.8 billion. In comparison,
Spirit's capital structure as of March 31, 2022 included S&P Global
Ratings-adjusted debt of $5.1 billion (including leases) and $1.4
billion in cash and equivalents, while JetBlue's capital structure
included S&P Global Ratings-adjusted debt of $4.8 billion
(including leases) and cash of $2.8 billion. The acquisition cost
is thus significant relative to current capitalization of both
entities.
S&P said, "Based on the proposed transaction structure, we expect
the combined company's funds from operations (FFO) to debt to be
below 12% in 2023 on a pro forma basis (this is representational;
the actual transaction may not be completed before early-2024). We
don't include any synergies, nor any integration expenses in these
pro forma calculations, given the significant uncertainties around
the expected size and timing of these factors. On a stand-alone
basis, we expect Spirit's FFO to debt to remain in the
mid-single-digit percent area in 2022 (compared with 5% in 2021)
and improve to the low-teen percent area in 2023.
"Additionally, we expect Spirit's stand-alone operating performance
in 2022 to be somewhat impaired by significant operating
disruptions.Spirit, like other airlines, experienced a
weaker-than-expected first quarter as the spread of the omicron
variant suppressed demand and hurt operational efficiency. Even
though demand has increased rapidly since then, Spirit has faced
operational challenges associated with labor shortages affecting
the airline industry (including staffing shortages at air traffic
control centers [ATCs]) which has resulted in the company reducing
its fleet utilization and efficiency to enable smoother operations.
Furthermore, higher crude oil prices have led to higher costs
associated with jet fuel.
"Additionally, although we believe air travel demand will remain
strong through the summer months, our expectation for lower
macroeconomic growth increases uncertainty heading into 2023. S&P
Global Ratings' economists expect U.S. real GDP growth will
moderate to 2.4% in 2022 and 1.6% in 2023, compared with 5.7% in
2021. We also believe there is a 35%-45% risk of a recession over
the next year. Although demand for air travel has not yet declined
significantly, we believe demand could fall as the summer travel
season ends and inflation reduces discretionary spending. These
trends could also limit the company's ability to raise fares to
cover higher costs.
"We expect Spirit to report a moderate loss in 2022, based on
relatively weak performance in the first half (due to the omicron
variant, continued operational disruptions, and lower capacity than
previously expected) and a somewhat stronger second half. Results
in 2023 will be influenced by the opposing trends of continued
recovery from COVID-19 (assuming no seriously disruptive new
variant) and weaker macroeconomic conditions. If the proposed
acquisition by JetBlue is successfully completed (although this may
not happen until early 2024), we believe the combined entity's
competitive position will benefit from a somewhat larger scale of
operations, but its credit metrics will remain highly leveraged in
the near-term due to higher debt levels associated with the
transaction, as well as higher acquisition and integration costs.
"We could lower our ratings on Spirit over the next year if the
company's operating performance is weaker than expected such that
we expect FFO to debt to remain in the mid-single-digit percent
area on a sustained basis.
"We could raise our rating on Spirit over the next year if we see
sustained improvement in demand resulting in FFO to debt increasing
to and remaining above 12% on a sustained basis."
ESG Credit Indicators: E-3, S-4, G-2
STRATHCONA RESOURCES: Moody's Affirms 'B2' CFR Amid Serafina Deal
-----------------------------------------------------------------
Moody's Investors Service has affirmed all of Strathcona Resources
Ltd.'s ratings, including its B2 corporate family rating, its B2-PD
probability of default rating, and the B3 rating on its senior
unsecured notes. The outlook remains positive.
On July 27, 2022, Strathcona entered into an agreement with
Serafina Energy Ltd. to acquire all the outstanding shares of
Serafina for cash consideration of C$2.3 billion. A payment of
C$1.9 billion will be made at closing on August 29, 2022, and
deferred payments of C$100 million will be made on each of
September 30, 2022, October 31, 2022, November 30, 2022 and
December 30, 2022. The acquisition will be funded through
borrowings on Strathcona's revolving credit facility, with total
committed borrowing capacity increased to C$2 billion (from C$1.5
billion), and through a C$700 million term loan. Serafina is an
exploration and production company that produces about 40,000
bbls/d (before royalties) primarily through thermal heavy oil
assets in Saskatchewan.
"The affirmation and maintenance of the positive outlook reflects
Strathcona's sizable production and reserve base pro forma for the
complimentary Serafina acquisition," said Moody's analyst Paresh
Chari. "The affirmation also reflects that financial leverage will
remain solid despite the acquisition being entirely debt funded
because Strathcona will use free cash flow to reduce debt."
Affirmations:
Issuer: Strathcona Resources Ltd.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed B3 (LGD5)
Outlook Actions:
Issuer: Strathcona Resources Ltd.
Outlook, Remains Positive
RATINGS RATIONALE
Strathcona's rating benefits from: 1) good credit metrics that
should improve over the next 12-18 months with the company using
free cash flow to reduce debt and improve retained cash flow to
debt towards 50% in 2023; 2) majority of production from heavy oil
and oil sands assets that have low decline rates (around 20%) that
requires a low level of capital to sustain production; and 3) a
sizable production (about 150,000 boe/d) and proved developed
reserve (175 million boe) base pro forma for the acquisition. The
company's rating is constrained by: 1) its limited operating
history and rapid growth through acquisitions, which leads to
greater financial and operating uncertainty as well as execution
risks associated with the company's plan to grow production
organically; 2) its exposure to heavy oil that is benchmarked to
the historically volatile Western Canadian heavy oil price; and 3)
an aggressive funding for the acquisition that utilizes a high
proportion of committed credit capacity and an 18 month term loan
that limits Strathcona's financial flexibility.
Strathcona's liquidity is significantly diminished by the
acquisition, but is adequate. Proforma for the Serafina acquisition
and new debt instruments, Moody's expects minimal cash and about
C$200 million of availability under its C$2 billion revolving
credit facility (expiring in February 2026). Moody's expects
about $450 million of free cash flow through to mid-2023 using
Moody's medium term price assumptions and much higher if current
market prices were to persist. Strathcona will also need to fund
the deferred payments of C$400 million from September to December
2022 which Moody's expects will be funded using revolver
availability and free cash flow. Strathcona's new term loan is
subject to a cash flow sweep provision that sweeps 100% of free
cash flow until the term loan balance falls by 50%, and then the
cash flow sweep declines to 50%. Moody's expects Strathcona will be
in compliance with its three financial covenants through to
mid-2023. Alternate liquidity is limited, as all assets are pledged
to the first lien credit facilities, but only 50% of the asset sale
proceeds are required to repay the term loan.
Strathcona's unsecured notes are rated B3, one notch below the
company's B2 CFR. Moody's Loss Given Default for Speculative-Grade
Companies (LGD) methodology suggests that the notes be ranked two
notches below Strathcona's B2 CFR due to the size and priority
ranking of the company's C$2 billion first lien revolver and C$700
million first lien term loan due 2024 (revolver and term loan are
pari passu) relative to the unsecured US$500 million notes due 2026
in the company's capital structure. However, given the positive
outlook on Strathcona's CFR, strong asset coverage, Moody's views
the assigned B3 rating as more appropriate. If the CFR is upgraded
to B1, then the notes rating is likely to remain B3 absent
unanticipated changes to the capital structure. However, if the CFR
remains B2 and the outlook changed to stable, the notes rating is
likely to be downgraded.
The positive outlook is supported by Moody's expectation that
Strathcona's credit metrics and liquidity will improve with debt
reduction funded by free cash flow and that production will
modestly grow over the next 12 to 18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Strathcona is able successfully
operate the acquired assets, organically grow production at
competitive costs while maintaining positive free cash flow, if
retained cash flow (RCF)-to-debt is sustained above 30%, and the
LFCR is sustained above 1.5x.
The ratings could be downgraded if RCF-to-debt is below 15%, if the
LFCR is below 1x, or Strathcona's liquidity profile deteriorates
either as a result of sustained negative free cash flow or from
cash distributions to the company's PE owners.
Strathcona Resources Ltd. is an oil and gas producer headquartered
in Calgary Alberta, with producing assets located across Western
Canada. Strathcona is majority owned by private equity firm
Waterous Energy Fund.
The principal methodology used in these ratings was Independent
Exploration and Production published in August 2021.
TARGET HOSPITALITY: Moody's Assigns 'B1' CFR, Outlook Stable
------------------------------------------------------------
Moody's Investors Service upgraded Arrow BidCo LLC's 9.5% senior
secured second lien notes due March 2024 to B2 from Caa1 and
assigned to Target Hospitality Corp. ("Target Hospitality" or
"Target") a B1 corporate family rating, a B1-PD probability of
default rating and a speculative grade liquidity rating ("SGL") of
SGL-1. The outlook is stable for both issuers. The CFR, PDR and SGL
assigned to Arrow BidCo LLC were withdrawn.
The rating actions follow the announcement of a large contract in
the government segment of Target under which the company will
provide additional housing and related services to the US
government for humanitarian aid missions. The expanded contract
includes minimum revenue commitments that will increase revenue
significantly for 2022 and 2023. Moody's expects cash flow and
credit metrics to also improve. Moody's expects leverage to decline
to 1.1x by the end of 2022 from 2.9x as of the end of March 2022
and liquidity to improve further over the next 12 to 15 months.
New Assignments:
Issuer: Target Hospitality Corp.
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Speculative Grade Liquidity Rating, Assigned SGL-1
Ratings Upgraded:
Issuer: Arrow BidCo LLC
GTD Senior Secured 2nd Lien Regular Bond/Debenture, Upgraded to B2
(LGD4) from Caa1 (LGD4)
Ratings Withdrawn:
Issuer: Arrow BidCo LLC
Corporate Family Rating, Withdrawn , previously rated B3
Probability of Default Rating, Withdrawn , previously rated B3-PD
Speculative Grade Liquidity Rating, Withdrawn , previously rated
SGL-2
Outlook Actions:
Issuer: Arrow BidCo LLC
Outlook, Remains Stable
Issuer: Target Hospitality Corp.
Outlook, Assigned Stable
RATINGS RATIONALE
The B1 CFR reflects Target Hospitality's moderate leverage of 2.9x
as of March 2022 (Moody's adjusted) that Moody's expects to decline
to 1.1x by the end of 2022, narrow operating scope and exposure to
the politically-sensitive government-sponsored humanitarian
assistance market (about 75% of expected 2022 revenue) and volatile
oil and gas industry (about 25% of anticipated revenue for 2022).
The ratings are further constrained by high levels of customer
concentration that could result in earnings volatility. Target's
largest two customers accounted for approximately 35% and 19% of
revenues, respectively, for 2021 and the top five represented 68%
of 2021 revenue. With the new humanitarian contract award, revenue
will be further concentrated, with over 60% of revenue for 2022
from the expanded contract. Although there are minimum revenue
provisions incorporated in the contract, it is not guaranteed
beyond the initial one-year term. Therefore, there is risk that
the counterparty will not renew the contract unless demand for
humanitarian assistance housing continues to remain at elevated
levels and there is ongoing political support for the contract.
Contracts with oil and gas customers have longer contracts lengths,
which provides some mitigation to the shorter government
contracts.
Moody's expects revenue for 2022 to increase to over $500 million
as activity in the oil and gas sector remains strong and from
revenue earned under the expanded humanitarian contract. Target
benefits from strong EBITDA margins of over 50%, so expected
revenue growth and steady profit margins should reduce debt
leverage to 1.1x by the end of this year. Free cash flow to debt is
expected to be approximately 50% for this year. Capital
expenditures for the new contract will be funded by the US
government, which is a long-term benefit for the company.
Utilization and average daily rates will also improve as a result
of the expansion and increased demand for beds that Moody's expects
will continue through 2023.
Target Hospitality's ratings benefit from its 'take or pay'
contracts which are further supported by high client retention
rates. Target's oil and gas revenue base is contracted for multiple
years with large blue-chip oilfield services companies and large
investment grade integrated energy companies. The contracts with
oil and gas customers are also characterized by exclusivity
provisions under which Target's customers exclusively use the
company's services for all of their employee housing and
hospitality services needs across geographies where the company's
services are present. Target has maintained a client renewal rate
of at least 90% over the last five years.
The debt instrument ratings reflect Target's B1-PD PDR and the
expected loss for the individual instruments. The rated debt is
issued by Arrow Bidco LLC, a wholly-owned, indirect subsidiary of
publicly traded Target. The upgrade of the rating assigned to the
senior secured notes to B2 from Caa1 reflects the B1-PD PDR and a
Loss Given Default assessment of LGD4. The notes are positioned
behind the unrated asset-based lending ("ABL") facility and ahead
of all other creditors in Moody's hierarchy of claims at default.
The notes are secured by a second priority lien on all assets of
the company and guaranteed on a secured, second lien basis by all
current and future subsidiaries, as well as by Target Hospitality
Corp.
The SGL-1 speculative grade liquidity rating reflects Moody's
expectation that Target's liquidity profile will be very good over
the course of 2022 and into 2023. Cash at the end of March 2022 was
approximately $6 million, while the company had full availability
under its unrated $125 million ABL facility that matures in
September 2023. Moody's expects free cash flow to be around $115
million this year, which further supports the strong liquidity
profile. The ABL credit agreement contains springing covenants- a
minimum fixed charge coverage of 1.0x and total net leverage ratio
of 4.0x, tested if the availability under the facility falls below
$15.6 million or 12.5% under the line cap. Currently, the borrowing
base is $200 million and the revolver notional size is $125
million, which implies that the company has the ability to increase
the size of availability, should it be required. Growth capex will
step up in 2022 as the company builds out the additional capacity
and is projected to be approximately $150 million and funded by the
US government according to the terms of the new contract.
Maintenance capex is within $5 million to $8 million annually.
The stable outlook reflects the expectation that revenue will grow
to over $500 million in FY 2022, which is a growth of approximately
75% from FY 2021 revenue, while Target maintains a very good
liquidity profile. The outlook also incorporates Moody's
anticipation for solid energy prices that will support demand for
lodging and hospitality services from its oil and gas sector
customers. Moody's currently expects medium term oil prices to
range from $50 to $70 per barrel. The outlook does not incorporate
any debt funded acquisitions or distributions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if: (1) revenue continues to grow,
(2) the company gains new multi- year contracts and is able to
diversify end markets beyond the oil and gas sector and government
sector that reduces customer concentration, (3) debt-to EBITDA
(Moody's adjusted) is sustained below 3.0x, and (4) free cash
flow-to-debt is sustained above 15%. In addition, the company would
need to maintain very good liquidity and maintain a balanced
financial policy with respect to acquisitions and shareholder
returns.
The ratings could be downgraded if: (1) adjusted debt-to-EBITDA is
sustained above 5x (Moody's adjusted); (2) occupancy, average daily
rates and utilization rates decline significantly, (3) the level of
contracted revenue declines significantly thus reducing the
visibility of cash flows, or (4) free cash is lower than Moody's
current expectation, thus increasing the reliance on the ABL
facility.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Target Hospitality (NASDAQ:TH), headquartered in The Woodland,
Texas, provides turnkey specialty rental workforce lodging and
hospitality solutions in North America. The company provides
vertically integrated lodging and catering services mainly to oil
and gas companies that operate in the Permian Basin and Bakken.
Target also serves the government sector where it provides its
services to immigration related facilities in Texas. Target
Hospitality is controlled by affiliates of private equity sponsor
TDR Capital LLP, which own approximately 63% of the company. The
company generated revenue of $291 million in 2021.
THREE ARROWS: Liquidators May Try to Force Founders to Cooperate
----------------------------------------------------------------
Jeremy Hill of Bloomberg News reports that liquidators overseeing
the wind-down of Three Arrows Capital may soon try to force
founders Kyle Davies and Su Zhu to help clean up the mess left
behind by the crypto hedge fund's collapse.
Zhu and Davies have so far provided "rather selective and piecemeal
disclosures" about the fund's assets, attorney Adam Goldberg said
on behalf of the liquidators in a bankruptcy hearing Thursday, July
28, 2022. Without further cooperation, lawyers will try to compel
the founders to turn over more information with assistance from US
Bankruptcy Judge Martin Glenn, he said.
About Three Arrows Capital
Three Arrows Capital Ltd. was an investment firm engaged in
short-term opportunities trading, and is heavily invested in
cryptocurrency, funded through borrowings.
As of April 2022, the Debtor was reported to have over $3 billion
of assets under its management.
Three Arrows Capital Ltd. was incorporated as a business company
under the laws of the British Virgin Islands. Its sole shareholder
owning all of its "management shares" is Three Arrows Capital Pte.
Ltd., which previously operated as a regulated fund manager in
Singapore until 2021, when it shifted its domicile to the BVI, as
part of a global corporate plan to relocate operations to Dubai.
The Debtor borrowed digital and fiat currency from multiple lenders
to fund its cryptocurrency investments. After cryptocurrency lost
99% of its value, and then prices of other cryptocurrencies had
rapid declines, the Debtor reportedly defaulted on its
obligations.
On June 24, 2022, one of the Debtor's many creditors -- DRB Panama
Inc. -- filed an application to appoint joint provisional
liquidators -- and thereafter, full Liquidators -- in the Eastern
Caribbean Supreme Court in the High Court of Justice (Commercial
Division) located in BVI. The application was assigned claim number
BVIHCOM2022/0117.
Subsequently, on June 27, 2022, the Debtor filed its own
application for the appointment of joint liquidators before the BVI
Commercial Court.
On June 29, 2022, the Honorable Mr. Justice Jack of the BVI
Commercial Court appointed Russell Crumpler and Christopher Farmer
of Teneo (BVI) Limited as joint liquidators of Three Arrows Capital
Ltd.
On July 1, 2022, liquidators of Three Arrows Capital filed a
Chapter 15 bankruptcy in the U.S. (Bankr. S.D.N.Y. Case No.
22-10920) to seek recognition of the BVI proceedings. Judge Martin
Glenn is the case judge. Latham & Watkins, led by Adam J. Goldberg
is counsel in the U.S. case.
The law firm of Ogier, led by Grant Carroll, is advising the
liquidators in the BVI proceedings.
TREETOP DEVELOPMENT: Case Summary & 20 Top Unsecured Creditors
--------------------------------------------------------------
Debtor: Treetop Development, LLC
11301 W. Olympic Blvd #537
Los Angeles, CA 90064
Business Description: The Debtor is part of the residential
building construction industry.
Chapter 11 Petition Date: August 1, 2022
Court: United States Bankruptcy Court
Central District of California
Case No.: 22-14165
Judge: Hon. Sheri Bluebond
Debtor's Counsel: Lewis R. Landau, Esq.
LEWIS R. LANDAU ATTORNEY AT LAW
22287 Mulholland Hwy. #318
Calabasas, CA 91302
Tel: (888) 822-4340
Fax: (888) 822-4340
Email: Lew@Landaunet.com
Estimated Assets: $100 million to $500 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Mohamed A. Hadid, manager of manager.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/7LLVVOQ/Treetop_Development_LLC__cacbke-22-14165__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Cruz Concrete $2,849,660
33323 Agua Dulce Cyn Rd #77
Agua Dulce, CA 91390
2. Bellis Steel Inc. $700,000
10049 Canoga Avenue
Chatsworth, CA 91311
3. HD Supply Construction $600,000
White Cap LP
PO Box 4944
Orlando, FL 32802
4. MAS Concrete Construction $488,180
1435 Anita St
Upland, CA 91786
5. Golden Blue Builders Group $484,396
PO Box 1561
Venice, CA 90294
6. Melt de la Paz $350,000
1411 Tower Grive Dr
Beverly Hills, CA 90210
7. LC Engineering $311,200
889 Pierce Court Ste 101
Thousand Oaks, CA 91360
8. National Ready Mix Concrete $205,000
15821 Ventura Blvd Ste 475
Encino, CA 91436
9. Dexore $65,000
460 W Lambert Rd Suite G
Brea, CA 92821
10. Pacific Growth Investments LLC $60,000
1014 Broadway Suite 610
Santa Monica, CA 90401
11. PNC Equipment Finance $45,000
655 Business Ctr Dr #250
Horsham, PA 19044
12. LADWP $20,000
PO Box 515407
Los Angeles, CA 90051
13. Rosenthal Inspections $34,000
PO Box 487
Yorba Linda, CA 92885
14. Payan Surveying $30,000
2404 Mary Clare St.
Corona, CA 92882
15. Rodriguez and Rodriguez $30,000
16800 Devonshire St # 307
Granada Hills, CA 91344
16. CalWest Geotechnical $22,000
Consulting
889 Pierce Court Ste 101
Thousand Oaks, CA 91360
17. LADWP $20,000
PO Box 515407
Los Angeles, CA 90051
18. Willscot $15,000
901 Bond St Suite 600
Baltimore, MD 21231
19. Abdulaziz Grossbart & Rudman $13,000
6454 Coldwater Canyon Ave
North Hollywood, CA 91606
20. NCL Electric $6,000
13391 Bradley Ave
Sylmar, CA 91342
U.S. SILICA: Posts $22.8 Million Net Income in Second Quarter
-------------------------------------------------------------
U.S. Silica Holdings, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing net income
of $22.84 million on $388.51 million of total sales for the three
months ended June 30, 2022, compared to net income of $25.90
million on $317.30 million of total sales for the three months
ended June 30, 2021.
For the six months ended June 30, 2022, the Company reported net
income of $14.32 million on $693.40 million of total sales compared
to net income of $4.97 million on $551.72 million of total sales
for the same period during the prior year.
As of June 30, 2022, the Company had $2.28 billion in total assets,
$1.64 billion in total liabilities, and $634.43 million in total
stockholders' equity.
Management Commentary
Bryan Shinn, chief executive officer, commented, "We delivered an
exceptional second quarter with outstanding sales volume, revenue,
earnings and cash generation across the company. By capitalizing
on the strength in our underlying markets and improved operational
efficiencies, we generated a 77% sequential increase in adjusted
EBITDA, and $88 million of cash flow from operations. We continued
to experience robust customer demand during the quarter and
implemented numerous price increases and surcharges across both
business units to fight inflationary impacts. In addition, I am
extremely proud of our organization's execution during the second
quarter as we creatively improved international logistics
performance, increased plant outputs and delivered world class
safety performance.
"In our Oil & Gas segment, the supply and demand balance in the
sand and last mile logistics market remains very tight and we were
effectively sold out due to strong well completion demand,
particularly in West Texas. During the second quarter, we took
advantage of operational efficiency gains at key mine sites to
maximize production and our sand and SandBox sales prices and
margins continued to move higher. Given the expectation for a
multi-year energy up cycle, customers have been determined to
secure sand supply and are signing attractive multi-year contracts,
including paying cash up front.
"In our Industrial & Specialty Products segment, demand remained
strong across end market segments. The transitory seasonal issues
we experienced in the first quarter were resolved and we realized a
very strong rebound in the second quarter, driven by price
increases and surcharges across all major product lines to combat
inflation, improved product mix, and greater operational
efficiencies from initiatives such as leveraging alternate shipping
ports and packaging automation.
"During the first half of 2022, our businesses generated
significant profitability and levels of free cash flow that
afforded us the ability to opportunistically repurchase $100
million of debt at a discount to par using cash on hand earlier
this month. Given that we expect continued meaningful free cash
flow generation in the second half of 2022, we anticipate further
reductions in our net debt, and are forecasting continued positive
momentum in the third quarter."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1524741/000152474122000022/slca-20220630.htm
About U.S. Silica
Headquartered in Katy, Texas, U.S. Silica Holdings, Inc. --
http://www.ussilica.com-- is a global performance materials
company and a producer of commercial silica used in a wide range of
industrial applications and in the oil and gas industry. In
addition, through its subsidiary EP Minerals, LLC, the Company
produces products derived from diatomaceous earth, perlite,
engineered clays, and non-activated clays.
For the nine months ended Sept. 30, 2021, the Company reported a
net loss of $15.21 million. U.S. Silica reported a net loss of
$34.32 million in 2021, a net loss of $115.12 million in 2020, a
net loss of $329.75 million in 2019, and a net loss of $200.82
million in 2018. As of Dec. 31, 2021, the Company had $2.22
billion in total assets, $1.61 billion in total liabilities, and
$614.08 million in total stockholders' equity.
VALVOLINE INC: Moody's Ba2 CFR Remains Under Review for Downgrade
-----------------------------------------------------------------
Moody's Investors Service said that the ratings of Valvoline Inc.,
including its Ba2 Corporate Family Rating and Ba3 rating on the
unsecured notes, remain under review for downgrade after the
announced divesture of its Global Products business. Moody's
initiated the rating review in October 2021, when Valvoline
announced the strategic separation of its two business segments,
Retail Services and Global Products. On August 1, 2022, Valvoline
announced that it has reached a definitive agreement with Saudi
Arabian Oil Company (Aramco, A1 stable) to sell its Global Products
business for $2.65 billion in cash. The acquisition is subject to
customary closing conditions and regulatory approvals and is
expected to close in late 2022 or early 2023.
RATINGS RATIONALE
The review for downgrade continues to reflect Moody's expectation
that Valvoline will become smaller in scale, have narrower
geographical footprint and offer less products and services after
divesting Global Products. The reduction in business scale and
diversity will weaken the company's operating and financial
flexibility. Valvoline's Retail Services competes with other quick
lube stores in a fragmented market and faces the risks of volatile
base oil prices, supply chain disruptions and the growing number of
electric vehicles that use little or no motor oils. Additionally,
Moody's expect certain dis-synergies from the business divesture,
such as the allocation of full corporate overhead costs to Retail
Services and potential adjustments in supply agreements with Global
Products, which will be owned by Aramco.
Moody's expects Valvoline's debt leverage will likely increase
after the divesture of Global Products, as management plans to use
the majority of the $2.25 billion net proceeds from the divesture
to accelerate capital return to shareholders, with the remaining
portion for debt reduction and business reinvestment. Moreover, the
divesture will reduce free cash flow generation and weigh on cash
flow to debt metrics. Global Products has generated strong cash
flows to support the capital-intensive growth of Retail Services in
the last several years.
The divesture will allow Valvoline to focus on its fast-growing,
high-margin Retail Services segment and enhance value creation
through business expansion and broader service offerings. Retail
Services has exhibited strong growth in sales and earnings through
organic service center expansion, acquisitions and franchisee
growth, as well as retail service offerings in recent years. Retail
Services reported $1.2 billion sales and 21% system-wide same-store
sales growth in FY2021. Retail Services also has a higher profit
margin than Global Products thanks to its value-added services and
franchise value. Management aims to extend its services to electric
vehicle owners, OEMs and fleets as the car parc evolves. Currently
it has the second largest quick lube chain in the US and the third
largest chain in Canada by the number of stores, although the quick
lube market remains fragmented.
Moody's rating review will continue to focus on the company's
business strategy and financial policies after the announced
divesture, including the pro-forma financial profile, capital
structure target and management strategy to grow its Retail
Services through organic expansions and acquisitions.
Valvoline Inc., headquartered in Lexington, Kentucky, is a global
leader in premium-branded automotive and commercial lubricant
products and services, sold through nearly 1,700 company-operated
and franchised service center stores, to retailers with over 55,000
retail outlets, and to installer customers with approximately
15,000 locations. Its two business segments are Global Products
(approximately 60% of sales for FY21) and Retail Services
(approximately 40% of sales for FY21). The Retail Services segment
services the passenger car and light truck quick lube market in the
U.S. and Canada providing preventive maintenance services and
capabilities through Valvoline's retail network of
company-operated, independent franchise and Express Care stores.
With a presence in more than 140 countries and territories,
Valvoline's Global Products segment sells lubricants and other
automotive and engine maintenance products, including battery
fluids for electric vehicles, primarily to automotive retailers,
installers, and original equipment manufacturers. Revenues for the
fiscal year ending September 30, 2021 are approximate $3 billion.
VOYAGER DIGITAL: Ordered to Stop False Deposit Insurance Claims
---------------------------------------------------------------
Pete Schroeder of Reuters reports that U.S. banking regulators have
ordered crypto firm Voyager Digital to cease and desist from making
"false and misleading" claims that its customers' funds were
protected by the government.
The Federal Reserve and the Federal Deposit Insurance Corp (FDIC)
sent a letter to the firm on Thursday, July 28, 2022, stating they
believed that Voyager had misled customers by claiming their funds
with the company would be covered by the FDIC.
A company spokesman did not immediately respond to a request for
comment.
The regulators said the company, which declared bankruptcy earlier
this month, and its executives had made various statements
indicating that Voyager itself was FDIC-insured, that customers who
invested in its cryptocurrency platform would have their funds
insured, and that the FDIC would insure customers against the
failure of Voyager itself.
In reality, the company simply had a deposit account at
Metropolitan Commercial Bank, and customers investing via the
company's platform had no FDIC insurance, the regulators said.
"Based on the information gathered to date, it appears that these
representations likely misled and were relied upon by customers who
placed their funds with Voyager and do not have immediate access to
their funds," the regulators said in a joint statement.
In a letter sent to company executives, the regulators ordered the
company to remove all misleading statements within two business
days of receiving the letter. The regulators added such action
would not preclude the agencies from taking further action against
the firm in the future.
Voyager was one of several crypto firms to struggle in the wake of
broad crypto market turmoil. In its Chapter 11 bankruptcy filing
earlier this month, Voyager estimated that it had more than 100,000
creditors and between $1 billion and $10 billion in assets, as well
as liabilities of the same value.
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, the Debtor 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.
WELBILT INC: Moody's Withdraws 'B3' CFR Following Debt Repayment
----------------------------------------------------------------
Moody's Investors Service has withdrawn all ratings for Welbilt,
Inc., including the company's B3 corporate family rating and B3-PD
probability of default rating. Moody's has also withdrawn the B2
rating on the company's senior secured credit facility and Caa2
rating on the unsecured notes.
Withdrawals:
Issuer: Welbilt, Inc.
Corporate Family Rating, Withdrawn , previously rated B3
Probability of Default Rating, Withdrawn , previously rated B3-PD
Speculative Grade Liquidity Rating, Withdrawn, previously rated
SGL-3
Senior Secured Revolving Credit Facility, Withdrawn, previously
rated B2 (LGD3)
Senior Secured Term Loan B, Withdrawn, previously rated B2 (LGD3)
Senior Unsecured Regular Bond/Debenture, Withdrawn , previously
rated Caa2 (LGD5)
Outlook Actions:
Issuer: Welbilt, Inc.
Outlook, Changed To Rating Withdrawn From Positive
RATINGS RATIONALE
All rated debt has been repaid, therefore all ratings are being
withdrawn.
Welbilt, Inc., based in New Port Richey, Florida, is a global
manufacturer and designer of commercial foodservice equipment,
including refrigeration, ice-making, cooking, and beverage
dispensing products for use in commercial food preparation
applications.
[*] Business Bankruptcy Filings Down 17.7% in Period Ended June 30
------------------------------------------------------------------
The Administrative Office of the U.S. Courts on Aug. 1 disclosed
that personal and business bankruptcy filings took a sharp drop in
the twelve-month period ending June 30, 2022, falling 17.7%
compared with the previous year.
According to statistics released by the Administrative Office of
the U.S. Courts, annual bankruptcy filings totaled 380,634 in the
year ending June 2022, compared with 462,309 cases in the previous
year.
Business filings fell 31.1%, from 18,511 to 12,748 in the year
ending June 30, 2022. Non-business bankruptcy filings fell 17.1% to
367,886, compared with 443,798 in the previous year.
Bankruptcy filings have fallen almost steadily since peaking in
2010. That trend has accelerated since the pandemic began in early
2020, despite some early COVID-related disruptions to the economy.
[*] Stress Testing for Margin Compression During Volatility
-----------------------------------------------------------
By Ben T. Nicholson, president of Fortis Business Advisors
Businesses tend to get in trouble because of recessions, fraud, and
stupidity. The latter two are always prevalent, and during normal
economic conditions, management's often forced reality check that
"gas prices in Poland have nothing to do with this business in
Georgia" can curtail excuses and set the stage for rightsizing an
operation. The first challenge, however, is out of the business's
control, and while the actual gas prices in Poland remain
irrelevant what is affecting them, and other emerging economic
challenges, can quickly become legitimate realities.
With economic volatility you never know what's coming next -- a
sugar rush or sugar crash -- so it is challenging for businesses to
make long-term plans and lenders to understand current and future
capital needs. Cash flow loans become progressively more
problematic, and because asset values fluctuate less than cash
flow, ABLs can provide risk mitigation, but disrupted cash
conversion cycles result in both the lender and borrower trying to
figure out how much cash is needed and when. To dive deeper, there
is proven benefit in crafting an analyst mosaic that includes
13-week initiatives to quantify what should happen, and cash
conversion analysis to quantify direct internal/external effects.
By adding stress testing for margin compression, lenders and their
borrowers can rationalize and quantify what could happen.
Reality Check
Consider a confluence of challenges effectively out of a business's
operational control:
* Sales are distorted because inflation is driving price
increases.
* Cash conversion cycles have lengthened due to increased
material lead times, production line labor shortages, and A/R
stretched by other customers facing the same issues.
* Supply chain snarls are leading to disruptions in production
timelines which are being compounded by increased material costs.
* Increased finished goods costs are hitting core business
products, lead times are disrupted, and as consumer demand changes,
inventory management is challenged.
* With labor shortage prevalence, wage pressure is increasing as
businesses pay more to incentivize retention.
* With more expensive goods comes higher insurance coverage.
* Marketing effectiveness is diminishing as social media spends
are growing faster than user growth.
* Rents on both space and equipment are increasing, sometimes
with property leases up 20% at negotiation.
* As interest rates increase, interest coverage is challenged.
* Container prices from China remain 4x pre-Covid levels.
This list is a fraction of the challenges, with no clear end in
sight. And when one condition improves another declines.
Clarity in an Anamorphic Image
By adding stress testing for margin compression, the predictive
analytics modeling will help lenders and borrowers gain a better
understanding of the effects uncontrolled outward pressure can have
on margins, especially as they interlink and push against
break-even. Results will help businesses craft more explanatory
and effective internal and external messaging when strategies must
be adjusted.
Consider just a few scenarios and their potential margin impact:
* With inflation-driven prices, if customers get squeezed what
will result from the revenue impact and how will it affect
inventory management? How high can prices go?
* If discounting is initiated to combat decreased sales, what is
the compression threshold from increased COGS? If prices are held
and sales decline, what is the threshold?
* How high can fixed costs increase, tested individually and
collectively, before reaching a compression threshold, and what is
realistic revenue to cover? How will the increases affect variable
expenses? If deflation occurs, what is the compression effect from
elevated fixed expenses as prices soften?
* How high can wages increase to stay competitive? Is a path to
increased revenue to scale additional labor expenses realistic?
What is the compression effect of initiatives to convert to a
variable labor cost structure?
* How high can transport costs increase before product lines
need to be dropped? What will be the decreased revenue effects?
* How much additional interest can the business bear before
becoming a "zombie?"
When building a retention wall, one stone leads to the next one and
it's the next one you worry about. Stress testing will help
highlight how one impact affects the next, and then the next. By
modeling a cause/effect sequence the business can be evaluated for
the worst-case scenarios and walked back into situation-specific
scenarios, particularly as new inputs arise.
Economic volatility is complex and full of uncertainty, but it is
not a rationale for a business to not gain a better understanding
of its impact. That's a recipe for getting disrupted, becoming
obsolete, or worse, out of business.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
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Troubled Company Reporter is a daily newsletter co-published
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Peter A. Chapman, Editors.
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*** End of Transmission ***