/raid1/www/Hosts/bankrupt/TCR_Public/220825.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, August 25, 2022, Vol. 26, No. 236
Headlines
22 ELM RYE: Wins Interim Cash Collateral Access
942 PENN RR: Trustee Taps HVS Consulting & Valuation as Appraiser
96 WYTHE: Trustee Taps Cowan Liebowitz & Latman as Special Counsel
ADHERA THERAPEUTICS: Posts $99K Net Income in Second Quarter
ALTERA INFRASTRUCTURE: U.S. Trustee Appoints Creditors' Committee
ALTIUM PACKAGING: $125MM Loan Add-on No Impact on Moody's B2 CFR
AMERICAN EAGLE: Family Asks Court to Dodge Chapter 11 Stay
ARIAN MOWLAVI: Court OKs Appointment of Naylor as Examiner
AUDACY INC: S&P Downgrades ICR to 'CCC+', Outlook Negative
AVISON YOUNG: $75MM Incremental Loan No Impact on Moody's B2 CFR
B.E.C BARAJAS: Wins Interim Cash Collateral Access
BANTEC INC: Posts $457K Net Loss in Third Quarter
BARRACUDA NETWORKS: Fitch Withdraws Ratings
BED BATH & BEYOND: To Hire Kirkland & Ellis To Help Debt Load
BOMBARDIER INC: S&P Upgrades ICR to 'B-', Outlook Stable
BOY SCOUTS: Back in Mediation to Fix Trust Fund Rejected by Judge
BVM THE BRIDGES: Wins Interim Cash Collateral Access
CALIFORNIA LAW: Voluntary Chapter 11 Case Summary
CAPITOL PRESORT: Wins Cash Collateral Access Thru Sept 21
CARESTREAM HEALTH: Case Summary & 30 Largest Unsecured Creditors
CARESTREAM HEALTH: S&P Downgrades ICR to 'D' on Bankruptcy Filing
CCC INTELLIGENT: S&P Upgrades ICR to 'B+', Outlook Stable
CELSIUS NETWORK: DOJ Says Examiner Can Neutralize Distrust
CHERRY MAN: Wins Continued Cash Collateral Access
CHRIS PETTIT: Trustee Taps RFM Commercial as Real Estate Broker
COCRYSTAL PHARMA: Incurs $24.4 Million Net Loss in Second Quarter
CREDITO REAL: Faces Mexican Securities Regulator Probe
CSG SYSTEMS: Moody's Affirms Ba2 CFR & Lowers Secured Debt to Ba2
CUREPOINT LLC: Files Emergency Bid to Use Cash Collateral
DAVITA INC: S&P Affirms 'BB' Issuer Credit Rating, Outlook Stable
DR. R'KIONE: No Change in Patient Care, PCO Report Says
E-BOX LLC: Voluntary Chapter 11 Case Summary
EL CALAMAR: Has Deal on Cash Collateral Access
ELITE METAL: Seeks to Hire Susan Lasky as Bankruptcy Counsel
ENDO INT'L: Needs Alternative Plan, Noteholders Say
ENDO INTERNATIONAL: Wins Interim Cash Collateral Access
ENVIA HOLDINGS: Wins Cash Collateral Access
ESCADA AMERICA: Committee Seeks to Tap Emerald as Financial Advisor
ETHEMA HEALTH: Posts $180K Net Loss in Second Quarter
EXCELSIOR SECURITY: Seeks to Tap Thames Markey as Legal Counsel
EXPRESSJET AIRLINES: Case Summary & 20 Top Unsecured Creditors
FLORIDA KEYS: Seeks to Hire Van Horn Law Group as Legal Counsel
FRONTIER COMMUNICATIONS: Fitch Affirms BB- Long-Term IDR
GEO GROUP: S&P Upgrades ICR to 'B' Following Debt Exchange
GISSING NORTH: Seeks to Tap Wolfson Bolton as Bankruptcy Counsel
GISSING NORTH: Taps Livingstone Partners as Investment Banker
GROM SOCIAL: Incurs $3.2 Million Net Loss in Second Quarter
GULF COAST: Seeks to Hire George F. May as Litigation Counsel
HEALTHMYNE INC: Taps Ostrow Reisin Berk & Abrams as Tax Preparer
HERMELL PRODUCTS: Has Interim Cash Collateral Access Thru Dec 24
HGIM CORP: Moody's Withdraws 'Caa3' CFR Following Debt Repayment
HIGHLAND CAPITAL: Exit Plan Survives Former-CEO's Circuit Appeal
HOYOS INTEGRITY: Seeks Cash Collateral Access, $2.5MM DIP Loan
JJS LOGISTICS: Taps Route Consultants as Marketing and Sales Agent
LADO ENTERPRISES: Taps Steven H. Greenfeld as Bankruptcy Counsel
LEAR CAPITAL: Committee Taps Dundon Advisers as Financial Advisor
LEAR CAPITAL: Committee Taps Potter Anderson & Corroon as Counsel
LOVE RENOVATIONS: Seeks to Hire eXp Realty as Real Estate Broker
LOVE RENOVATIONS: Seeks to Tap Weir Greenblatt Pierce as Counsel
LOYALTY VENTURES: Moody's Lowers CFR to B2 & Alters Outlook to Neg.
MADISON SQUARE: Panel Taps Pachulski Stang Ziehl & Jones as Counsel
MANHATTAN CAPITAL: Case Summary & Two Unsecured Creditors
MANNINGTON MILLS: S&P Affirms 'BB-' ICR, Outlook Stable
MARTIN MIDSTREAM: Moody's Alters Outlook on 'Caa1' CFR to Positive
MAYAN POOLS: Wins Access to Cash Collateral Thru Jan 2023
MID SOUTH RECYCLING: Files for Chapter 11 With $890K Debt
MV TRUCKING: Case Summary & 12 Unsecured Creditors
NATURALSHRIMP INC: Incurs $2.2 Million Net Loss in First Quarter
OFF-SPEC SOLUTIONS: Wins Cash Collateral Access Thru Sept 16
PHUNWARE INC: Incurs $17.1 Million Net Loss in Second Quarter
QHC UPSTATE: Seeks to Hire Anderson Kill as Litigation Counsel
QUALITAT DRYWALL: Wins Cash Collateral Access on Final Basis
REEF GLOBAL: Moody's Assigns First Time B1 Corporate Family Rating
REMARK HOLDINGS: Incurs $12.5 Million Net Loss in Second Quarter
RIOT BLOCKCHAIN: Posts $366.3 Million Net Loss in Second Quarter
ROCK SPLITTERS: Taps Nickless, Phillips and O'Connor as Counsel
S3 SPA: Wins Interim Cash Collateral Access
SAS AB: Lender Apollo Global In Line for Breakup Fee
SIGNET JEWELERS: Fitch Affirms 'BB' IDR, Outlook Stable
SP STAR ENTERPRISE: Strip Club Files Subchapter V Case
STEM HOLDINGS: Posts $472K Net Income in Third Quarter
TEAM SERVICES: Moody's Rates $100MM Incremental Term Loan 'B2'
TEEZ SALON: Files Emergency Bid to Use Cash Collateral
TRINITY PUBLIC UTILITY: S&P Lowers Revenue Bonds Rating to 'BB+'
TROPICAL DELIGHT: Seeks to Tap Rehan N. Khawaja as Legal Counsel
TRUGREEN LIMITED: Moody's Lowers CFR to B3 & First Lien Debt to B2
VENUE CHURCH: Case Summary & 20 Largest Unsecured Creditors
VITEC ELECTRONICS: Case Summary & Four Unsecured Creditors
WC BRAKER: Case Trustee Seeks Cash Collateral Access
WINDSTREAM HOLDINGS II: Fitch Affirms 'B' IDR, Outlook Stable
WOLVERINE WORLD: Moody's Cuts CFR to Ba2 & Alters Outlook to Stable
WR GRACE: Fitch Alters Outlook on 'B+' IDR to Negative
ZEROHOLDING LLC: Files Emergency Bid to Use Cash Collateral
ZOAK DEVELOPMENT: Voluntary Chapter 11 Case Summary
[^] Recent Small-Dollar & Individual Chapter 11 Filings
*********
22 ELM RYE: Wins Interim Cash Collateral Access
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The U.S. Bankruptcy Court for the Southern District of New York
authorized 22 Elm Rye, Inc. to use cash collateral on an interim
basis in accordance with the budget, with a 10% variance, effective
nunc pro tunc as of August 16, 2022, and continuing through
September 18.
The Debtor asserts that continued access to cash collateral on an
interim basis pending a final hearing is necessary to prevent
immediate and irreparable harm to the Debtor's estate.
The final hearing on the matter is set for September 8 at 11 a.m.
The Debtor entered into (i) a Loan Agreement, dated as of September
21, 2021, as amended by the First Amendment to Loan Agreement,
dated as of October 13, 2021, (ii) a Security Agreement, dated as
of September 21, 2021, and (iii) other documents defined as "Loan
Documents" in the Loan Agreement with the Secured Lender pursuant
to which the Debtor borrowed the original principal amount of
$1,000,000. On September 21, 2021, FVP perfected the security
interest of Secured Lender in all assets of the Debtor by recording
a financing statement in the New York Slate Registry, file number
202109216522682.
The Debtor further acknowledges that the New York State Department
of Taxation and Finance also has a secured claim established by the
filing of two tax warrants in the amount of $172,286 and $49,149
for a total of $221,435.
The use of the Debtor's assets including bank accounts which
potentially constitutes collateral of the Secured Lender and DTF is
essential to the continued preservation and maximization of the
Debtor's estate.
The Debtor is also permitted to use the cash collateral to pay the
Wage Motion filed at the same time as the cash collateral motion,
which has been granted by separate order, in accordance with the
Budget.
In addition to the existing rights and interests of Secured Lender
and DTF in the Collateral and tor the purpose of adequately
protecting the Secured Lender and DTF from Collateral Diminution,
FVP and DTF is granted replacement liens to the same extent,
validity and priority that existed on the Petition Date, on all
post-petition property of the Debtor's estate and all proceeds,
rents, and pro tits thereof, including but not limited to accounts
receivables, to the extent Collateral Diminution occurs during the
Chapter 11 case, subject to (i) United States Trustee fees pursuant
to 28 U.S.C. Section 1930. together with interest, if any, pursuant
to 31 U.S.C. Section 3717 and any Clerk's filing fees, and (ii) the
fees and commissions of a hypothetical Chapter 7 trustee in an
amount not to exceed $10,000.
The Debtor will pay, timely and in full, all insurance premium
payments as they come due, and within five business days of
payment, provide proof of payment to FVP and DTF.
A copy of the order is available at https://bit.ly/3PDGqX3 from
PacerMonitor.com.
About 22 Elm Rye Inc.
22 Elm Rye Inc. is a restaurant operator specializing in
Mediterranean cuisine. The Debtor sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. N.Y. Case No. 22-22544)
on August 16, 2022. In the petition signed by Alan Schoening,
president, the Debtor disclosed $1,318,000 in total assets and
$2,938,497 in total liabilities.
Judge Sean H. Lane oversees the case.
H. Bruce Bronson, Esq., at Bronson Law Office, P.C. is the Debtor's
counsel.
942 PENN RR: Trustee Taps HVS Consulting & Valuation as Appraiser
-----------------------------------------------------------------
Barry Mukamal, the trustee appointed in the Chapter 11 case of 942
Penn RR LLC, seeks approval from the U.S. Bankruptcy Court for the
Southern District of Florida to employ HVS Consulting & Valuation
as appraiser.
The trustee needs an appraiser specializing in the hospitality
industry to prepare an appraisal report of the Debtor's property
located at 942 Pennsylvania Ave., Miami Beach, Fla.
HVS has agreed to perform the required appraisal services for a
total cost of $7,000.
John Lancet, a senior managing director at HVS Consulting &
Valuation, disclosed in a court filing that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
John P. Lancet
HVS Consulting & Valuation
7561 SW 175 Street
Miami, FL 33157
Telephone: (305) 502-1167
Email: jlancet@hvs.com
About 942 Penn RR
942 Penn RR, LLC is the fee simple owner of a real property located
at 942 Pennsylvania, Avenue, Miami Beach, Fla. The property is
valued at $1.62 million.
942 Penn RR filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-14038) on
May 23, 2022, disclosing $1,617,630 in assets and $27,179,541 in
liabilities. Raziel Ofer, manager, signed the petition.
Judge Laurel M. Isicoff oversees the case.
Mark S. Roher, Esq., at the Law Office of Mark S. Roher, PA serves
as the Debtor's counsel.
96 WYTHE: Trustee Taps Cowan Liebowitz & Latman as Special Counsel
------------------------------------------------------------------
Stephen Gray, the trustee appointed in the Chapter 11 case of 96
Wythe Acquisition LLC, seeks approval from the U.S. Bankruptcy
Court for the Southern District of New York to employ Cowan,
Liebowitz & Latman, PC as his special intellectual property
counsel.
The trustee needs a special counsel to provide legal services
regarding the ownership and use of The Williamsburg Hotel name and
trademark and all other intellectual property used in the operation
of the Debtor's business.
The hourly rates of the firm's counsel and staff are as follows:
Partners/Counsel $480 - $810
Associates $345 - $480
Paralegals $325 - $400
In addition, the firm will seek reimbursement for expenses
incurred.
Joel Karni Schmidt, Esq., a partner at Cowan, Liebowitz & Latman,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Joel Karni Schmidt
Cowan, Liebowitz & Latman PC
21st Floor
114 West 47th Street
New York, NY 10036-1525
Telephone: (212) 790-9200
Facsimile: (212) 575-0671
Email: jks@cll.com
About 96 Wythe Acquisition
96 Wythe Acquisition, LLC operates the Williamsburg Hotel, an
eight-story hotel located at 96 Wythe Ave., Brooklyn, N.Y.
96 Wythe Acquisition sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-22108) on Feb. 23,
2021, disclosing zero assets and $79,990,206 in liabilities. CRO
David Goldwasser signed the petition.
Judge Sean H. Lane oversees the case.
The Debtor tapped Backenroth Frankel & Krinsky, LLP and Mayer
Brown, LLP as bankruptcy counsels; Fern Flomenhaft, PLLC as
insurance counsel; and B. Riley Advisory Services as litigation
support consultant. Getzler Henrich & Associates, LLC and Hilco
Real Estate, LLC serve as the Debtor's financial advisors.
Stephen Gray was appointed as Chapter 11 trustee. Togut, Segal &
Segal, LLP; Cowan, Liebowitz & Latman, PC; and Verdolino & Lowey PC
serve as the trustee's legal counsel, special intellectual property
counsel, and tax accountant, respectively.
ADHERA THERAPEUTICS: Posts $99K Net Income in Second Quarter
------------------------------------------------------------
Adhera Therapeutics, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting net income
of $99,000 for the three months ended June 30, 2022, compared to a
net loss of $514,000 for the three months ended June 30, 2021.
For the six months ended June 30, 2022, the Company reported net
income of $25,000 compared to a net loss of $942,000 for the six
months ended June 30, 2021.
As of June 30, 2022, the Company had $976,000 in total assets,
$20.97 million in total liabilities, and a total stockholders'
deficit of $20 million.
The Company has incurred recurring losses and negative cash flows
from operations since inception and has funded its operating losses
through the sale of common stock, preferred stock, warrants to
purchase common stock, convertible notes and secured promissory
notes. The Company recognized net income for the six months ended
June 30, 2022 and used cash in operating activities of
approximately $690,000. The Company had an accumulated deficit of
approximately $53.6 million as of June 30, 2022.
"In addition, to the extent that the Company continues its business
operations, the Company anticipates that it will continue to have
negative cash flows from operations, at least into the near future.
However, the Company cannot be certain that it will be able to
obtain such funds required for its our operations at terms
acceptable to the Company or at all. General market conditions, as
well as market conditions for companies in the Company's financial
and business position, as well as the ongoing issues arising from
the COVID-19 pandemic, the Ukraine war and inflation and the
Federal Reserve interest rate increases in response, may make it
difficult for the Company to seek financing from the capital
markets, and the terms of any financing may adversely affect the
holdings or the rights of its stockholders. If the Company is
unable to obtain additional financing in the future, there may be a
negative impact on the financial viability of the Company. The
Company plans to increase working capital by managing its cash
flows and expenses, divesting development assets and raising
additional capital through private or public equity or debt
financing. There can be no assurance that such financing or
partnerships will be available on terms which are favorable to the
Company or at all. While management of the Company believes that
it has a plan to fund ongoing operations, there is no assurance
that its plan will be successfully implemented. Failure to raise
additional capital through one or more financings, divesting
development assets or reducing discretionary spending could have a
material adverse effect on the Company's ability to achieve its
intended business objectives. These factors raise substantial
doubt about the Company's ability to continue as a going concern
for a period of twelve months from the issuance date of this
Report," Adhera said.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/737207/000149315222022832/form10-q.htm
About Adhera
Headquartered in Durham, NC, Adhera Therapeutics, Inc. (formerly
known as Marina Biotech, Inc.) -- http://www.adherathera.com-- is
a clinical stage biopharmaceutical company engaged in the
development of novel cancer products and a proprietary vaccine
technology.
Adhera reported a net loss of $6.35 million for the year ended Dec.
31, 2021, compared to a net loss of $3.77 million for the year
ended Dec. 31, 2020. As of March 31, 2022, the Company had $170,000
in total assets, $25.67 million in total liabilities, and a total
stockholders' deficit of $25.50 million.
Boca Raton, Florida-based Salberg & Company, P.A., the Company's
auditor since 2021, issued a "going concern" qualification in its
report dated April 15, 2022, citing that the Company has a net loss
and cash used in operations of approximately $6.4 million and
$665,000 respectively, in 2021 and a working capital deficit,
shareholders' deficit and accumulated deficit of $25.1 million,
$25.1 million and $53 million respectively, at Dec. 31, 2021.
These matters raise substantial doubt about the Company's ability
to continue as a going concern.
ALTERA INFRASTRUCTURE: U.S. Trustee Appoints Creditors' Committee
-----------------------------------------------------------------
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Altera
Infrastructure, LP and its affiliates.
The committee members are:
1. The Bank of New York Mellon
Attn: David M. Kerr
385 Rifle Camp Road
Woodland Park, NJ 07424
Tel: 973-247-4143
Email: david.m.kerr@bnymellon.com
Counsel: Carter Ledyard & Milburn LLP
c/o Leonardo Trivigno, Esq.
28 Liberty Street, 41st Floor
New York, NY 10005
Tel: 212-732-3200
Fax: 212-732-3232
Email: trivigno@clm.com
2. American High-Income Trust
Attn: David Daigle
333 S. Hope Street, 55th Floor
Los Angeles, CA 90071
Tel: 212-641-1748
Email: david_daigle@capgroup.com
Counsel: Capital Research and Management Company
c/o Kristine Nishiyama
333 S. Hope Street, 55th Floor
Los Angeles, CA 90071
Tel: 213-486-9652
Email: knn@capgroup.com
3. CI Canadian Short-Term Bond Pool
Attn: Grant Connor
15 York Street, 2nd Floor
Toronto, ON, M5J 0A3
Tel: 647-402-2633
Email: gconnor@ci.com
Counsel: Wachtell, Lipton, Rosen & Katz
Michael Benn, Esq.
51 West 52nd Street
New York, NY 10019
Tel: 212-403-1158
Fax: 212-403-2158
Email: msbenn@wlrk.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Altera Infrastructure
Westhill, United Kingdom-based Altera Infrastructure L.P. (NYSE:
ALIN-A) is a global energy infrastructure services partnership
primarily focused on the ownership and operation of critical
infrastructure assets in the offshore oil regions of the North Sea,
Brazil and the East Coast of Canada. Altera has consolidated
assets of approximately $3.8 billion comprised of 44 vessels,
including floating production, storage and offloading (FPSO) units,
shuttle tankers, floating storage and offtake (FSO) units,
long-distance towing and offshore installation vessels and a unit
for maintenance and safety (UMS). The majority of Altera's fleet is
employed on medium-term, stable contracts.
After agreeing to a debt-for-equity plan with bank lenders and
owner Brookfield, Altera Infrastructure L.P. and 37 affiliate
sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No.
22-90130) on Aug. 12, 2022.
As of the Petition Date, the Debtors were liable for approximately
$1.6 billion in aggregate principal amount of funded debt.
Kirkland & Ellis LLP and Jackson Walker LLP serve as the Debtors'
counsel. Stretto is the claims agent. David Rush, Senior Managing
Director of FTI Consulting, Inc., serves as restructuring advisor
to the Debtors.
The DIP Lenders are represented by Paul, Weiss, Rifkind, Wharton &
Garrison LLP, as counsel to the DIP Lenders, Ducera Partners LLC,
as financial advisor, and Porter & Hedges LLP, as their Texas
counsel.
A Committee of Coordinators was appointed under and as defined in
the appointment letter originally dated May 6, 2022, among Altera
Infrastructure L.P. and each member of the CoCom (as amended,
restated, amended and restated, supplemented, or otherwise modified
from time to time). The CoCom is represented by Norton Rose
Fulbright US LLP and Norton Rose Fulbright LLP, as counsel, and PJT
Partners (UK) Ltd., as financial advisor.
ALTIUM PACKAGING: $125MM Loan Add-on No Impact on Moody's B2 CFR
----------------------------------------------------------------
Moody's Investors Service said that Altium Packaging LLC's B2
Corporate Family Rating and B2-PD Probability of Default are not
affected by the recently placed $125 million add-on to the
company's senior secured bank credit facility, which is rated B2.
Proceeds from add-on will be used, together with common equity, to
fund the acquisitions of Plastic Industries and Andersen Plastics.
The outlook remains negative.
Moody's views the majority equity financed acquisitions as credit
positive. The equity support from Altium's sponsors, Loews and GIC,
who injected equity of over 50% of the combined purchase price to
finance the acquisitions, displays balance sheet and risk
management discipline. Furthermore, this transaction will improve
the company's leverage and interest coverage by adding meaningful
acquired EBITDA with material synergy potential and expansion
opportunities. Altium will build upon its presence in the Food and
Beverage, Health & Wellness, and Dairy segments with twelve
manufacturing facilities across the US, optimizing operating
efficiency and better reach to targeted customers. Moody's forecast
includes proforma 2022 debt-to-EBITDA and interest coverage of
around 5.8x and 3.1x, respectively (inclusive of Moody's
adjustments), an improvement from 8.1x and 3.0x, respectively, for
the last twelve month period ending June 30, 2022.
The negative outlook reflects increased execution risk to reduce
debt leverage and achieve sustained EBITDA improvement through
effective pricing actions against cost inflation, new business, and
cost efficiency opportunities.
Based in Atlanta, Georgia, Altium Packaging LLC (formerly
Consolidated Container Company, LLC) is one of the leading North
American manufacturers of rigid plastic containers for mostly
branded consumer product and beverage companies. The company is
also a supplier of recycled resin. Revenues for the twelve months
ended December 31, 2021 were $1,247.4 million and predominantly
generated domestically. The company is 53% owned by Loews
Corporation (A3 stable) and 47% GIC - Sovereign Wealth Fund of
Singapore. Altium does not publicly disclose financial information.
AMERICAN EAGLE: Family Asks Court to Dodge Chapter 11 Stay
----------------------------------------------------------
Rick Archer of Law360 reports that the estate of a deceased
resident of a Florida nursing facility owned by American Eagle
Delaware Holding Co. is asking a Delaware bankruptcy judge to lift
the Chapter 11 pause on its wrongful death suit against the nursing
home chain.
On Tuesday, August 16, 2022, the estate of Carole Rives asked the
court to lift the Chapter 11 stay preventing it from moving forward
with its negligence claims against American Eagle, saying any award
would come from the company's insurance policies, not the pockets
of its creditors. Ann Arbor, Michigan-based American Eagle, which
operates 15 residential care facilities across the United States.
About American Eagle
Established in 2018, Eagle Senior Living --
https://www.eagleseniorliving.org/ -- is a non-profit provider of
senior living services across the United States, providing care on
a daily basis to approximately 1,000 residents. Eagle Senior Living
and related entities operate 15 residential senior care facilities
located across the country, from Colorado, Minnesota, Wisconsin,
and Ohio to Alabama, Tennessee, and Florida.
On Jan. 14, 2022, American Eagle Delaware Holding Company LLC and
16 affiliated companies each filed a petition seeking relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No.
22-10028) to seek confirmation of their prepackaged plan. The
Debtors' cases have been assigned to Judge J. Kate Stickles.
Parent company American Eagle Lifecare Corporation and management
company Greenbrier Senior Living are not included in the Chapter 11
filing. Greenbrier Senior Living continues to manage all of the
communities.
American Eagle Delaware Holding estimated assets and debt of $10
million to $50 million as of the bankruptcy filing.
The Debtors are represented in the Chapter 11 cases by Polsinelli
PC as legal counsel. FTI Consulting Inc. and Blueprint Healthcare
Real Estate Advisors, LLC serve as financial advisor and real
estate advisor, respectively. Epiq Corporate Restructuring, LLC,
is the claims agent and administrative advisor.
ARIAN MOWLAVI: Court OKs Appointment of Naylor as Examiner
----------------------------------------------------------
Judge Erithe Smith of the U.S. Bankruptcy Court for the Central
District of California approves the appointment by Peter C.
Anderson, the United States Trustee for Region 16, of Karen Sue
Naylor to serve as Chapter 11 examiner for Arian Mowlavi.
The U.S. Trustee appointed Naylor as examiner in the case on August
19, 2022.
A copy of the order is available for free at https://bit.ly/3QPiGkd
from PacerMonitor.com.
About Arian Mowlavi
Arian Mowlavi is a medical doctor specializing in reconstructive
and cosmetic surgery. Mowlavi conducts business through his wholly
owned medical corporation known as A.M. Cosmetic Surgery Clinics,
Inc., a California Corporation.
Mowlavi filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 22
10296) on February 21, 2022.
AUDACY INC: S&P Downgrades ICR to 'CCC+', Outlook Negative
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on radio
broadcaster Audacy Inc. to 'CCC+' from 'B-'. The outlook is
negative. At the same time, S&P lowered its ratings on the
company's first-lien secured debt to 'B' from 'B+', and on the
second-lien debt to 'CCC-' from 'CCC+'.
S&P said, "The negative outlook reflects our expectation that the
recovery in broadcast advertising will continue to slow over the
second half of 2022 and Audacy's leverage will remain elevated near
9x. It also reflects the elevated risk of recession over the next
12 months and our view that Audacy may face difficulty refinancing
its 2024 maturities if a recession occurs."
The radio industry's recovery from the pandemic is stalling.
Broadcast radio advertising revenue is highly correlated to GDP
growth because expectations for consumer spending drive advertising
budgets. Radio advertising also has very short lead times and is
one of the first advertising mediums to experience declines when
the economy slows. Multiple radio broadcasters have publicly
indicated that national advertising is slowing much faster than
local advertising. Larger advertisers are likely concerned about
the economic outlook and it is possible this is the beginning of a
broader pullback in radio advertising. In previous downturns, such
as 2008 and 2020, national advertising was the first category to
experience declines and precipitated larger pullbacks in local
advertising. Additionally, the radio industry has lost significant
portions of its advertising base in previous downturns. S&P
believes the broadcast radio industry lost roughly 20% of total
revenue in 2020 and slowing growth makes it unlikely that it will
ever recover closer to 2019 levels. If another recession occurs, it
is more likely the industry would face additional losses relative
to pre-pandemic levels.
Audacy's already high leverage would likely become unsustainable in
a recession.
S&P Global economists believe the risk of recession has increased
significantly since the beginning of 2022 as inflation has remained
above expectations and the Federal Reserve has become more
aggressive with its interest rate policy. S&P said, "If a recession
does occur, Audacy's revenue and EBITDA generation would likely be
materially weaker than our current forecast. We currently expect
Audacy's leverage will remain elevated at 8x-9x over the next 12
months, but leverage could spike well above 9x in 2023 if a
recession occurs. The industry could potentially face additional
losses relative to pre-pandemic levels and radio companies with
elevated leverage, such as Audacy, may not be able to ever recover
to pre-pandemic credit metrics. Even if a recession does not occur,
we believe an extended period of slow economic growth is likely,
which could also result in Audacy's leverage remaining at about
8x-9x through 2024. In either scenario we believe Audacy's leverage
will remain elevated and the company will be unable to generate
material cash flow or reduce leverage."
Elevated leverage increases the refinancing risk associated with
the company's 2024 maturities.
Audacy's revolving credit facility, accounts-receivable facility,
and its term loan B are all due at various points in 2024. This
maturity wall is roughly $842 million of debt as of June 30, 2022.
As lending conditions have tightened, Audacy's growth has slowed
and its leverage has remained elevated, increasing the risk
associated with refinancing this paywall. In past down cycles,
radio companies with high leverage have faced difficulty accessing
the debt markets. The company may need to significantly reduce
leverage, which S&P views as unlikely, or it could be dependent on
lending conditions improving significantly prior to its 2024 debt
being due.
Audacy's second-lien notes are trading at distressed levels,
increasing the likelihood of a subpar debt exchange.
S&P said, "The company's second--lien secured notes due in 2027 and
2029 are currently trading below 40 cents on the dollar. While we
do not foresee a liquidity shortfall over the next 12 months, the
significant discount associated with the value of the company's
second--lien notes increases the likelihood that the company would
be able to negotiate some form of a subpar debt exchange or out of
court restructuring. We would view any type of distressed exchange
in which the lenders receive less than originally promised as a
default."
Audacy would likely need a covenant waiver in a recession.
The company's credit agreement includes a maximum first-lien net
leverage ratio covenant of 4x, with no step downs. The company's
EBITDA margin of covenant compliance was about 10% as of June 30,
2022. S&P said, "We believe this cushion will tighten over the next
12 months and if a recession hits, we expect EBITDA will decline by
more than 10% and the company will need a waiver to avoid a
technical default. While we believe a covenant waiver will be
easier to obtain than a full scale refinancing, there will also
likely be a cost to obtaining the waiver that could potentially
harm liquidity."
S&P said, "The negative outlook reflects our expectation that the
recovery in broadcast advertising will continue to slow over the
second half of 2022 and Audacy's leverage will remain elevated near
9x. It also reflects the elevated risk of recession over the next
12 months and our view that Audacy will likely face difficulty
refinancing its 2024 maturities."
S&P could lower the rating if it expects a default scenario to
occur within the next 12 months. This could occur if:
-- The economy enters a more severe recession than anticipated and
we expect Audacy will be unable to meet its financial or operating
commitments over the next 12 months;
-- Market conditions remain unfavorable and Audacy is unable to
refinance its 2024 maturities before they become current; or
-- The company pursues a subpar debt exchange that we would view
as a default.
S&P could raise the rating if:
-- S&P expects the company to generate sustainably positive free
operating cash flow with a clear path to reducing leverage below
6x.
-- S&P believes the risk of an economic recession has declined
below 30% over the next 12 months; and
-- The company successfully refinances or extends its 2024
maturities.
ESG credit indicators: E2, S2, G2
ESG factors have no material influence on S&P's credit rating
analysis of Audacy.
AVISON YOUNG: $75MM Incremental Loan No Impact on Moody's B2 CFR
----------------------------------------------------------------
Moody's Investors Service says Avison Young (Canada) Inc.'s new
incremental first lien term loan issuance will not impact the B2
corporate family rating, B2 senior secured bank credit facility
rating or stable outlook at this time.
Avison Young announced on August 18, 2022 an issuance of a new
US$75 million incremental first lien term loan due 2026. Proceeds
from the transaction will be used to fund upfront cash for
identified acquisitions and future M&A. Avison Young's pro-forma
leverage, reflecting full acquisition EBITDA, is expected below
6.5x on a debt to EBITDA basis (incorporating Moody's standard
adjustments). Pro-forma for the transaction, as of June 30, 2022,
Avison Young will have approximately C$14 million in unrestricted
cash on hand and US$24 million in availability on its recently
upsized US$80 million revolving credit facility due 2025 and net
proceeds from the US$75 million term loan upsize for acquisitions.
Avison Young's ratings are supported by the company's improving
operating and financial performance post pandemic, driven by the
expansion of its business portfolio through strategic acquisitions
and organic growth. The ratings also reflect the company's small
size on a revenue basis relative to its peers and potential cash
flow volatility inherent in its transaction business.
B.E.C BARAJAS: Wins Interim Cash Collateral Access
--------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado authorized
B.E.C Barajas Excavating Construction, LLC to continue using cash
collateral on an interim basis through the date of rescheduled
final hearing.
The final hearing is set for September 14, 2022 at 1:30 p.m.
As previously reported by the Troubled Company Reporter, as
adequate protection, First-Citizens Bank & Trust Company and any
other party asserting an interest in the Debtor's proceeds and
accounts receivables interests in cash collateral were granted a
post-petition lien and superpriority administrative expense claim,
subject to professional fees, Subchapter V trustee fees, and
customary Chapter 7 expenses, if converted, on all post-petition
inventory and income derived from the operation of the business and
assets, to the extent that the use of the cash results in a
decrease in the value of the Bank's interest in the collateral.
A copy of the order is available at https://bit.ly/3wt9VUN from
PacerMonitor.com.
About B.E.C Barajas Excavating Construction
B.E.C Barajas Excavating Construction, LLC is a Denver-based
company, which operates in the utility system construction
industry.
B.E.C Barajas Excavating Construction filed a petition under
Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Colo.
Case No. 22-12574) on July 17, 2022, disclosing $4,834,092 in total
assets and $4,618,845 in total liabilities. Mark David Dennis
serves as Subchapter V trustee.
Judge Michael E. Romero oversees the case.
Katharine S. Sender, Esq., at Cohen & Cohen is the Debtor's
counsel.
BANTEC INC: Posts $457K Net Loss in Third Quarter
-------------------------------------------------
Bantec, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q reporting a net loss of $457,257 on
$750,756 of sales for the three months ended June 30, 2022,
compared to a net loss of $963,682 on $622,423 of sales for the
three months ended June 30, 2021.
For the nine months ended June 30, 2022, the Company reported a net
loss of $2.03 million on $1.52 million of sales compared to a net
loss of $1.15 million on $2.03 million of sales for the nine months
ended June 30, 2021.
As of June 30, 2022, the Company had $838,279 in total assets,
$16.43 million in total liabilities, and a total stockholders'
deficit of $15.59 million.
Bantec said, "We are currently issuing shares under the S-1
offering but expect to raise additional proceeds with debt
securities, and/or more loans, however if sufficient funding is not
available, we would be required to cease business operations. As a
result, investors would lose all of their investment. Under the
terms of our credit agreement with TCA, all potential new
investments must first be reviewed and approved by TCA, which may
constrain our options for new fundraising. However, we have been
in contact with the receiver for the TCA management companies and
funds and do not expect any such objections over investment
opportunities. We are currently in discussion to undertake a
second S1 offering.
"We anticipate our short-term liquidity needs to be approximately
$5,000,000 which will be used to satisfy certain of our existing
current liabilities and we expect gross profits of approximately
$500,000. To meet these needs, we intend to complete our equity
financing and refinance or restructure certain existing
liabilities. Once this is completed, and we implement our sales and
marketing plan to sell UAV products, we anticipate minimal
long-term liquidity needs which we expect to meet through equity
financing or short-term borrowings.
"Additionally, we will have to meet all the financial disclosure
and reporting requirements associated with being a publicly
reporting company. Our management will have to spend additional
time on policies and procedures to make sure it is compliant with
various regulatory requirements, especially that of Section 404 of
the Sarbanes-Oxley Act of 2002. This additional corporate
governance time required of management could limit the amount of
time management has to implement the business plan and may impede
the speed of its operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1704795/000121390022047832/f10q0622_bantecinc.htm
About Bantec Inc.
Bantec, Inc., a product and service company, through its
subsidiaries and divisions, sells drones and related products
manufactured by third parties to various parties, including
facility managers, engineers, maintenance managers, purchasing
managers and contract officers who work for hospitals,
universities, manufacturers, commercial businesses, local and state
governments and the US Government. The Company also offers
technical services related to drone utilization.
Bantec reported a net loss of $1.88 million for the year ended
Sept. 30, 2021, compared to a net loss of $4.33 million for the
year ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had
$1.46 million in total assets, $16.25 million in total liabilities,
and a total stockholders' deficit of $14.80 million.
Boca Raton, Florida-based Salberg & Company, P.A., the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated Jan. 7, 2022, citing that the Company has a net loss
and cash used in operations of $1,882,071 and $1,576,648
respectively, in fiscal 2021, and has a working capital deficit,
stockholders' deficit and accumulated deficit of $14,709,592,
$14,796,078 and $32,956,840 at Sept. 30, 2021. These matters raise
substantial doubt about the Company's ability to continue as a
going concern.
BARRACUDA NETWORKS: Fitch Withdraws Ratings
-------------------------------------------
Fitch Ratings has withdrawn Barracuda Networks, Inc.'s ratings
including the Long-Term Issuer Default Rating (IDR), $75 million
first lien revolver, $950 million first lien term loan and $365
million second lien term loan as the Fitch-rated credit facilities
have been fully repaid post the sale by Thoma Bravo to KKR. Fitch
will no longer receive information on the company and must withdraw
the rating for lack of sufficient information.
Fitch is withdrawing Barracuda Networks, Inc.'s ratings as the
Fitch-rated credit facilities were fully pre-paid.
KEY RATING DRIVERS
Ratings have been withdrawn and Key Rating Drivers no longer
apply.
Rating Prior
------ -----
Barracuda Networks, Inc. LT IDR WD Withdrawn B-
senior secured LT WD Withdrawn B+
Senior Secured 2nd Lien LT WD Withdrawn CCC
BED BATH & BEYOND: To Hire Kirkland & Ellis To Help Debt Load
-------------------------------------------------------------
Bed Bath & Beyond Inc., the Union, NJ-based home goods chain, hired
law firm Kirkland & Ellis to help it address a debt load that's
become unmanageable, and is late on its payments to vendors,
leading some to restrict shipments or halt them altogether,
according to a Bloomberg report.
Kirkland, typically known for its dominance in restructuring and
bankruptcy situations, was tapped to advise the retailer on options
for raising new money, refinancing existing debt, or both,
according to the person, who asked not to be named discussing
private company plans, Bloomberg said..
Much of Bed Bath & Beyond's bonds and loans are trading at
distressed levels.
"If the company does not secure adequate financing to appease its
vendor base, it might have not appropriate inventory for the key
holiday period, leading to a fast downward spiral and creating
bankruptcy risk," according to a note by Wedbush analyst Seth
Basham, The New York Post said.
The Post notes that a cascade of bad news for the retailer was
ignited last week when billionaire investor Ryan Cohen pulled his
stake out of Bed Bath & Beyond, bagging a $68.1 million profit.
Bed Bath & Beyond shares tumbled 41% on Friday after news of the
stake sale by Cohen, an influential investor among the Reddit crowd
who founded Chewy.com and who also is chairman of video game
retailer GameStop.
It's unclear what prompted Cohen to sell his position in the
company, which forced out its CEO in June due to the company's
subpar performance. Cohen had successfully pushed for the company
to add three new board directors and has also urged the retailer to
sell itself. Cohen purchased more than 7 million shares of Bed
Bath & Beyond earlier this year.
There is concern that the company may not have enough cash and that
vendors will demand payment upfront before shipping the struggling
retailer goods.
About Bed Bath & Beyond
Bed Bath & Beyond Inc., together with its subsidiaries, is an
omnichannel retailer selling a wide assortment of merchandise in
the Home, Baby, Beauty & Wellness markets and operate under the
names Bed Bath & Beyond, buybuy BABY, and Harmon, Harmon Face
Values. The Company also operates Decorist, an online interior
design platform that provides personalized home design services.
The Company reported a net loss of $559.62 million for the fiscal
year ended Feb. 26, 2022, a net loss of $150.77 million for the
year ended Feb. 27, 2021, a net loss of $613.82 million for the
year ended Feb. 29, 2020, and a net loss of $137.22 million for the
year ended March 2, 2019. As of May 28, 2022, the Company had
$4.94 billion in total assets, $5.16 billion in total liabilities,
and a total stockholders' deficit of $220.30 million.
BOMBARDIER INC: S&P Upgrades ICR to 'B-', Outlook Stable
--------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Canada-based
Bombardier Inc. to 'B-' from 'CCC+'. At the same time, S&P raised
its issue-level rating on the company's unsecured debt to 'B-' from
'CCC+'. The '4' recovery rating on about US$6.3 billion of
corresponding notes and debentures is unchanged. S&P also raised
its rating on the company's preferred shares to 'CCC-' from 'CC'.
The stable outlook reflects Bombardier's ability to spur further
profitability improvements and deleverage as the company executes
its US$14.7 billion contracted revenue backlog over the next couple
of years.
Favorable market conditions and steady execution are allowing
Bombardier to accelerate its deleveraging. Market conditions for
business aviation are favorable, in our opinion. Global private jet
use is about 20% higher than pre-pandemic, used-aircraft inventory
is still low (particularly for newer aircraft), and aircraft
original equipment manufacturers (OEMs) have successfully rebuilt
their order backlogs to at or above pre-pandemic levels. S&P said,
"While we have witnessed some slowdown in private jet use over the
past couple of months and market confidence appears to be waning
somewhat, we believe market conditions for aircraft OEMs will
remain supportive in the near term given tight supply for new
aircraft, pent-up demand for post-pandemic travel among core
high-net worth and business travelers, and ongoing service
disruption in commercial airline travel, the latter of which could
be a possible substitute for these customers."
For Bombardier, advances on about US$2.5 billion of net new orders
in first-half 2022 (2.1x unit book-to-bill ratio and revenue
backlog up 37% year over year) allowed the company to post US$514
million of free cash flow (FCF) year to date, significantly higher
than its prior full-year 2022 guidance (and S&P's previous
estimates) of greater than US$50 million. Bombardier used excess
liquidity to early-redeem US$773 million of debt and combined with
anticipated profitability and earnings growth, appears poised to
reduce debt leverage to the mid-8x area this year (about 1x better
than the February 2022 forecast) and 7.0x-7.5x for 2023--metrics
S&P believes are supportive of a higher rating.
Strength of contracts and improving profitability provide a buffer
against a moderate industry downturn. S&P said, "Cyclical risk to
sustainability of earnings and cash flow is a key credit risk for
Bombardier, in our opinion, as evidenced by past cycles with
peak-to-trough business aircraft deliveries declining 40%-60%. As
the company is an operator in a niche segment of aviation (business
jets) and has a relatively smaller scope of offerings, we believe
Bombardier is arguably more exposed than many of its diversified
peers, particularly given its higher financial leverage. Based on
our recently revised base-case economic forecast indicating a
low-growth recession in the U.S., slowing global growth, and rising
risks of a recession within the next 12 months, our updated base
case for Bombardier assumes that both jet usage and demand for new
orders (affecting working capital) moderate considerably through
2023 compared with the recent 12-months."
S&P said, "However, we believe Bombardier can produce modest
earnings growth over this period (assuming a moderate short-lived
industry downturn) while preserving much of its liquidity for the
following reasons: First, Bombardier has cultivated an attractive
revenue backlog of more than two years. We understand the aircraft
mix is diversified and contract structures (unique to the current
cycle) provide meaningful financial disincentives to cancel;
although there could be some deferral risk. Second, supply of new
aircraft within Bombardier's target segments is tight, providing
the company with some flexibility to accommodate customers without
materially adjusting production. Also, the level of business jet
production in the industry is low compared with historical
measures, and supply has already declined before a potential
downturn owing to the COVID-19 pandemic and supply-chain issues.
Finally, we expect Bombardier management will be disciplined, take
action to protect the company's improved profitability in aircraft
manufacturing and believe it can continue to spur growth in its
higher-margin aftermarket services segment from share gains, given
significant investments through 2022.
"Refinancing risks appear manageable amid a structurally sustaining
operation. Following debt repayments to date, Bombardier's nearest
term maturities consist of US$510 million of the company's December
2024 notes and US$1.295 billion of its March 2025 notes. In our
base-case scenario, we assume the company funds its December 2024
maturity internally and looks to refinance most of its 2025
maturities. We are encouraged by management's statements that the
company is now structurally FCF positive at a 1x unit book-to-bill
ratio, and that debt reduction remains a top priority. With US$1.8
billion of liquidity as of June 30, 2022 (management target's
US$1.5 billion minimum), when including US$410 million of
restricted cash, we believe Bombardier retains adequate financial
flexibility to repay some debt and absorb a moderate industry
downturn. Lower order intake (we assume below 1x for 2023),
however, could invariably affect working capital and cause FCF to
be volatile (and meaningfully negative) through a severe and
prolonged downturn. For 2023, we estimate this sensitivity at about
US$100 million-US$120 million for a 10% change in our net unit
order intake assumption, all else being equal."
Supply-chain, inflation, and transition risks could test the pace
of profit improvement. Supply of certain aircraft engines and
certain parts from lower-tier suppliers is a notable near-term
headwind for Bombardier (and other OEMs). The company has tempered
its near-term aircraft delivery targets to reflect these supply
challenges, and we anticipate these risks will remain through much
of 2023, with the potential to affect the timing of revenue
bookings and margin. Therefore, S&P assumes production increases
will be tempered relative to the previous guidance, and for
Bombardier to make appropriate investments and actions to mitigate
some of this risk.
S&P said, "We view profitability risk from high inflation as a
medium-term issue given price caps for key components, hedging, the
company's ability to pass-through costs more quickly in aftermarket
services, and ongoing efforts to raise prices on new aircraft (the
benefits of which will take some time). We believe such efforts
should allow the company to mitigate rising labor cost over time as
contracts are renegotiated. Finally, we continue to be cognizant of
the company's execution around planned product transitions, in
particular the relocation of Bombardier's Global series plant in
late-2023, which could affect operating efficiency. In our view,
execution around these risks and delivering to our base-case
earnings will remain an important factor supporting our ratings
stability on Bombardier over the next 12-18 months.
"The stable outlook reflects the company's ability to drive further
profitability improvement and sustain leverage below 8x as
Bombardier executes its US$14.7 billion contracted backlog over the
next couple of years. We expect Bombardier will maintain liquidity
(about close to its target of US$1.5 billion) sufficient to support
its growth as well as absorb potentially lower cash flow from a
moderately weaker business jet aviation market, and to
opportunistically address its 2024 and 2025 debt maturities.
"Consideration for a higher rating will depend on the company
executing its earnings growth and FCF target and demonstrating that
it can deleverage to close to 5x on a sustained basis--a stricter
threshold reflecting the company's participation in a highly
cyclical industry and limited scope of products. Given prospects of
weakening macroeconomic conditions amid rising interest rates and
high inflation, we believe an upgrade is less likely in the next 12
months.
"We could consider downgrading the company over the next 12 months
should Bombardier's earnings recovery stall as the company fails to
execute on incremental cost actions and/or growth in revenue (and
net new orders) such that reported EBITDA is materially weaker than
our base-case scenario or if the company posts a large FCF deficit
likely owing to a market downturn, increasing the potential for a
liquidity crisis."
ESG credit indicators: E-2, S-3, G-3
Social factors are a moderately negative consideration in our
credit rating analysis of Bombardier. Demand (and supply) for the
company's business jets and maintenance, repair, and overhaul
services was hampered by the COVID-19 pandemic, as evidenced by
close to 20% reduction in deliveries in 2020, and risks to supply
chain and demand remain.
Governance factors are also a moderately negative consideration.
Management turnover, operational execution, and a material shift of
business strategy contributed to a significant increase in debt
leverage and value erosion.
BOY SCOUTS: Back in Mediation to Fix Trust Fund Rejected by Judge
-----------------------------------------------------------------
Steven Church of Bloomberg News reports that the the Boy Scouts of
America is back in mediation over its proposal to create the
biggest ever US trust fund for sex abuse victims and may have a new
plan ready by Sept. 1, 2022, the youth group said in court
Thursday, August 18, 2022.
The Boy Scouts are in mediation with allies and critics of the $2.7
billion fund, the organization's top bankruptcy lawyer Jessica
Lauria said in court.
The fund would compensate tens of thousands of people who claim
they were abused while in the organization.
Last July 2022, Wilmington, Delaware-based U.S. Bankruptcy Court
Judge Laurie Silverstein demanded changes to the trust fund.
A full-text copy of the report is available at
https://news.bloomberglaw.com/bankruptcy-law/boy-scouts-back-in-mediation-to-fix-trust-fund-rejected-by-judge
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC, as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BVM THE BRIDGES: Wins Interim Cash Collateral Access
----------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida, Tampa
Division, authorized BVM The Bridges, LLC and BVM Coral Landing,
LLC to use cash collateral on an interim basis in accordance with
the budget.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court, including payments to the U.S.
Trustee for quarterly fees; (b) the current and necessary expenses
set forth in the budgets, plus an amount not be exceed 10% for each
line item; and (c) additional amounts as may be expressly approved
in writing by CPIF Lending, LLC and US Bank, National Association
and Pallardy, LLC (as to The Bridges only).
Each creditor or other party with a security interest or other
interest in the cash collateral will have a perfected post-petition
lien or interest against cash collateral to the same extent and
with the same validity and priority as its prepetition lien or
interest, without the need to file or execute any document as may
otherwise be required under applicable non bankruptcy law.
As adequate protection, the Debtors will provide the Secured
Creditors and Pallardy with a post-petition replacement lien or
interest in cash collateral equal in validity and dignity as it
existed pre-petition.
The Debtors will maintain insurance coverage for their property in
accordance with the obligations under the loan and security
documents with the Secured Creditors.
A continued preliminary hearing on the matter is scheduled for
September 19, 2022 at 10:30 a.m.
A copy of the order and the Debtors' three-month budgets is
available at https://bit.ly/3Tahl9q from PacerMonitor.com.
The Bridges projects $964,545 in total income and $942,071 in total
expenses for three months, from August to October.
Coral Landing projects $469,095 in total income and $506,099 in
total expenses for the same three-month period.
About BVM The Bridges, LLC
BVM The Bridges, LLC operates an 87-bed/69-unit assisted living
facility known as The Bridges Assisted Living & Memory Care and The
Claridge House at the Bridges located at 11202 Dewhurst Drive in
Riverview, Florida, since 2014. The Debtor's average census is 70
residents.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-00345) on January 28,
2022. In the petition signed by John Bartle, president, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
Judge Michael J. Williamson oversees the case.
Alberto F. Gomez, Jr., Esq., at Johnson, Pope, Bokor, Ruppel &
Burns, LLP is the Debtor's counsel.
CALIFORNIA LAW: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: California Law Center
9465 Wilshire Blvd, 3rd
Beverly Hills, CA 90212
Chapter 11 Petition Date: August 24, 2022
Court: United States Bankruptcy Court
Northern District of California
Case No.: 22-10326
Judge: Hon. Charles Novack
Debtor's Counsel: William Utnehmer, Esq.
LAW OFFICES OF Wm UTNEHMER
Post Office Box 2101
Sonoma, CA 95476
Tel: 707-633-3007
Email: Bill@Utnehmer.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by William Utnehmer as authorized
representative.
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/ZLJTHEY/California_Law_Center__canbke-22-10326__0001.0.pdf?mcid=tGE4TAMA
CAPITOL PRESORT: Wins Cash Collateral Access Thru Sept 21
---------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Pennsylvania,
authorized Capitol Presort Services, LLC to use cash collateral on
an interim basis through September 21, 2022.
The Debtor is permitted to pay regular, postpetition expenses,
including any fees owed to the Office of the U.S. Trustee and
allowed fees and costs to professionals. The payments will
generally be in accordance with the budget attached to the Motion.
Included in the sums permitted to be paid by the Debtor is the sum
of $500 per month on account of fees which may become owed to the
Subchapter V Trustee, Lisa Rynard. The $500 per month payments will
be paid to Cunningham, Chernicoff & Warshawsky, P.C., counsel to
the Debtor, to be held by counsel in escrow until further Court
order.
Firstrust Bank, Truist Bank and LG Funding, LLC are granted
replacement liens in the Debtor's postpetition cash collateral
consisting of receivables, cash and the proceeds thereof, and in
all assets of the Debtor to which the Lenders have liens and
security interests pre-Petition, to the extent such liens exist and
in such priority as exists prepetition, to the extent there is a
diminution in value of the Lenders' postpetition cash collateral
position. The liens will be perfected and effective without any
further recordation action and the liens will survive conversion of
the case or appointment of a Trustee in the case. In the event that
postpetition cash collateral is insufficient to provide an amount
equal to such diminution, then the Lenders will have superpriority
status pursuant to Bankruptcy Code Section 364(c)(1) and have an
administrative claims having priority over all other administrative
claims, including those set forth in Bankruptcy Code Sections
503(b) or 507(a) except for amounts owed for fees to professionals
in this case and fees to the U.S. Trustee's Office, which fees will
be pari passu with the Lenders' administrative claims.
A continued hearing on the use of cash collateral is set for
September 20, 2022 at 9:30 a.m.
A copy of the order is available at https://bit.ly/3AeHgDZ from
PacerMonitor.com.
About Capitol Presort Services, LLC
Capitol Presort Services, LLC is a corporation engaged in mail
presorting services. The Debtor sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. M.D. Pa. Case No. 22-01406) on
July 29, 2022. In the petition signed by Philip E. Gray, Esq.,
member, the Debtor disclosed up to $1 million in both assets and
liabilities.
Judge Henry W. Van Eck oversees the case.
Robert E. Chernicoff, Esq., at Cunningham, Chernicoff & Warshawsky
PC, is the Debtor's counsel.
CARESTREAM HEALTH: Case Summary & 30 Largest Unsecured Creditors
----------------------------------------------------------------
Lead Debtor: Carestream Health, Inc.
150 Verona Street
Rochester, NY 14608
Business Description: The Debtors, together with their non-Debtor
affiliates, are providers of medical imaging
and non-destructive testing products with
over 100 years of industry experience. Its
products are used by prominent health
systems, hospitals, imaging centers,
specialty practices and industrial companies
worldwide.
Chapter 11 Petition Date: August 23, 2022
Court: United States Bankruptcy Court
District of Delaware
Nine affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Carestream Health, Inc. (Lead Case) 22-10778
Carestream Health Acquisition, LLC 22-10779
Carestream Health Canada Holdings, Inc. 22-10780
Carestream Health Holdings, Inc. 22-10781
Carestream Health International Holdings, Inc. 22-10782
Carestream Health International
Management Company, Inc. 22-10783
Carestream Health Puerto Rico, LLC 22-10784
Carestream Health World Holdings, LLC 22-10785
Lumisys Holding Co. 22-10786
Judge: Hon. J. Kate Stickles
Debtors'
General
Bankruptcy
Counsel: Patrick J. Nash, Jr., P.C.
Tricia Schwallier Collins, Esq.
Yusuf U. Salloum, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
300 North LaSalle Street
Chicago, Illinois 60654
Tel: (312) 862-2000
Fax: (312) 862-2200
Email: patrick.nash@kirkland.com
tricia.schwallier@kirkland.com
yusuf.salloum@kirkland.com
- and -
Nicole L. Greenblatt, P.C.
Rachael M. Bentley, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Tel: (212) 446-4800
Fax: (212) 446-4900
Email: nicole.greenblatt@kirkland.com
Email: rachael.bentley@kirkland.com
Debtors'
Local
Bankruptcy
Counsel: Laura Davis Jones, Esq.
Timothy P. Cairns, Esq.
Edward Corma, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
919 North Market Street, 17th Floor
P.O. Box 8705
Wilmington, Delaware 19801
Tel: (302) 652-4100
Fax: (302) 652-4400
Email: ljones@pszjlaw.com
tcairns@pszjlaw.com
ecorma@pszjlaw.com
Debtors'
Restructuring
Advisor: ALIXPARTNERS, LLC
Debtors'
Financial
Advisor &
Investment
Banker: HOULIHAN LOKEY, INC.
Debtors'
Claims &
Noticing
Agent: KURTZMAN CARSON CONSULTANTS LLC
Estimated Assets: $1 billion to $10 billion
Estimated Liabilities: $1 billion to $10 billion
The petitions were signed by Scott Rosa as chief financial
officer.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
A full-text copy of the Lead Debtor's petition is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/NY2BTCI/Carestream_Health_Inc__debke-22-10778__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Auriga Polymer Inc Trade Vendor $2,695,600
4235 S Stream Blvd
Ste 450
Charlotte, NC 28217 USA
Thomas Breskovsky
Tel: 980-233-8226
Email: tom.brekovsky@us.indorama.net
2. Innocare Optoelectronics Trade Vendor $2,025,715
USA Inc.
101 Metro Dr, Suite 510
San Jose, CA 95110 USA
Eric Raymond
Tel: 408-573-8438
Email: eric.p.raymond@innocare-x.com
3. SKC Inc. Trade Vendor $1,846,660
1000 SKC Drive
Covington, GA 30014 USA
Daryl Jones
Tel: 770-235-5234
Email: djones@skcfilms.com
4. SAP America Inc. Trade Vendor $1,742,395
3999 West Chester Pike
Newtown Square, PA
19073, USA
Jim Soboleski
Tel: 859-406-2873
Email: jim.soboleski@sap.com
5. Eastman Kodak Company Inc. Trade Vendor $1,056,719
1669 Lake Avenue
Rochester, NY 14615 USA
John Brennan
Tel: 585-477-3747
Email: john.m.brennan@kodak.com
6. TrimedX Holdings, LLC Customer $933,230
5451 Lakeview Parkway S Prepaids
Drive Indianapolis, IN
46268 USA
AP – ap@trimedx.com
Kellie Barber –
kellie.barber@trimedx.com
(Parts and Service calls)
Gloria Brown –
gloria.brown@trimedx.com
(Service Agreements)
David Blomeke Senior Operations
Strategy Specialist
David.Blomeke@trimedx.com
Tel: 317-957-5169
7. Amelia US LLC Trade Vendor $920,059
17 State St, 14th FL
New York, NY 10005 USA
Robert Maze
Tel: 212-798-5691
Email: robert.maze@ipsoft.com
8. Univar Solutions USA Inc. Trade Vendor $901,097
3075 Highlands Pkways
Ste 200
Downers Grove, IL 60515 USA
Matt Stephens
Tel: 832-795-3760
Email: matt.stephens@univarsolutions.com
9. Schoeller Technocell Trade Vendor $844,656
GMBH & Co. KG
Burg Gretesch
Osnabruck, 03 DE
Mark Ward
Tel: 315-298-8428
Email: msward@felix-schoeller.com
10. Riverside Electronics Ltd Trade Vendor $815,376
One Riverside Dr.
Lewiston, MN 55952 USA
Anita Werner
Tel: 507-523-5517
Email: awerner@riversideintegrated.com
11. Larsen & Toubro Trade Vendor $780,853
Infotech Limited
2035 Lincoln Highway
Ste. 3000
Edison, NJ 08817 USA
Ojas.Lokhande
Tel: 732-248-6151
Email: Ojas.Lokhande@lntinfotech.com
12. MCI Communicationos Trade Vendor $751,204
Services Inc.
22001 Loudoun County Pkwy
Ashburn, VA 20147
Chad Hutchings
Tel: 303-305-1534
Email: Chad.hutchings@verizon.com
13. Rousselot Inc. Trade Vendor $646,589
Suite 2210 6737 W
Washington Street
West Allis, WI 53214 USA
Michael Schmit
Tel: 262-363-6064
Email: mike.schmit@rousselot.com
14. Mercury Aircraft Inc. Trade Vendor $601,619
PO Box 338 8126 County
Route 88
Hammondsport, NY 14840
Peter Hannan
Tel: 607-569-4213
Email: pete_hannan@mercurycorp.net
15. Barentz North America Trade Vendor $600,386
Intermediate
1390 Jaycox Rd.
Avon, OH 44011 USA
Mark Maroon
Tel: 440-937-1000
Email: mark@barentz.us
16. Nissan Chemical Amer Corp Trade Vendor $599,400
10375 Richmond Ave., Ste. 1000
Houston, TX 77042 USA
William Smith
Tel: 713-532-4745
Email: will.smith@nissanchem-usa.com
17. Eastman Chemical Company Trade Vendor $564,291
100 N Eastman Road,
Kingsport, TN 37660 USA
Paul Anderson
Tel: 423-229-4981
Email: panderson@eastman.com
18. Element Fleet Corporation Trade Vendor $525,104
940 Ridgebrook Rd,
Sparks Glencoe, MD US
Dale-Ann Gilbert
Tel: 514-612-6812
Email: dgilbert@elementcorp.com
19. Poudre Valley Rea Trade Vendor $510,768
PO Box 272550
Fort Collins, CO 80527-2550 USA
Amy Rosier
Tel: 970-282-6445
Email: arosier@pvrea.coop
20. Orient Intl Holding Shanghai Trade Vendor $496,139
85 Lou Shan Guan Rd
Suite B
Shanghai 20036 China
Mr. Yan Zheng
Tel: 021-37285158
Email: yanzheng1@vip.sina.com
21. Varex Imaging Corporation Trade Vendor $485,509
1678 S. Pioneer Road
Salt Lake City, UT 84104
USA
David Carmona
Tel: 440-543-1882
Email: david.carmona@vareximaging.com
22. Iray Korea Limited Trade Vendor $475,325
1833, 18F, 5, Gasan
Digital1-RO, Geumch,
Seoul, 01 KR
Betty Li
Email: Bin.li@iraygroup.com
23. Alliance Contract Trade Vendor $412,548
Manufacturing SDN
2006 Jalan Jelawat
Penang, My My
Mr. GH Tan
Tel: (6)04-399-2922
Email: gh.tan@acm-holdings.com
24. GS YUASA Energy Trade Vendor $395,224
Solutions, Inc.
1150 Northmeadow Pkwy
Roswell, GA 30076 USA
Jim Morath
Tel: 262-490-7457
Email: jim.morath@gsyuasa-es.com
25. Miller & Associates Sourcing Trade Vendor $391,201
P.O. Box 244 2280
East Avenue
Rochester, NY 14610 USA
James Miller
Tel: 585-472-1948
Email: james@millerandassociates.com
26. Inventus Power (Illinois) LLC Trade Vendor $371,277
1200 Internationale Pkwy
Woodridge, IL 60517 US
Miguel Conde
Tel: 717-309-0046
Email: mconde@inventuspower.com
27. BJ Gear A/S Trade Vendor $360,184
Niels Bohrs VEJ 47
Sanderborg, DK
Gert Christensen
Tel: 45 87 40 80 80
Email: gc@bj-gear.dk
28. Brenntag North Trade Vendor $359,050
America, Inc.
1000 Coolidge St.
South Plainfield, NJ
07080 USA
Anita Kuo
Tel: 972-795-1160
Email: akuo@brenntag.com
29. Enmarq Technologies Limited Trade Vendor $337,325
71-75, Shelton Street
London, LO GB
Kiran Alluri
Tel: 44 01182954274
Email: kiran.a@enmarq.com
30. Henan Harvest Chem CO. Ltd. Trade Vendor $326,610
24th Fl No. 1 Building
Zhengzhou, 180 CN
Mr. George Zhang
Tel: 86 13939 0299 33
Email: george@hnharvest.com
CARESTREAM HEALTH: S&P Downgrades ICR to 'D' on Bankruptcy Filing
-----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Carestream
Health Inc. to 'D' (default) from 'CC'. At the same time, S&P
lowered all of its ratings on the company's debt to 'D'.
The downgrade follows the disclosure of Carestream Health's Chapter
11 bankruptcy filing. S&P views the bankruptcy as primarily driven
by ongoing market volatility and an unfavorable macroeconomic
environment that has posted challenges in the company refinancing
its full capital structure as its debt approach maturity.
The filing follows Carestream Health's previously announced plan to
implement a restructuring support agreement with its lenders. In
connection with the filing, Carestream Health has filed several
customary motions with the court seeking authorization to support
its operations through the bankruptcy process. Carestream Health
has secured sufficient votes from its secured lenders in favor of
the prepackaged financial restructuring plan. The company has
indicated it could complete this prepackaged financial
restructuring plan and emerge from Chapter 11 proceedings in the
next 35 to 45 days.
S&P plans to review its ratings once new credit facilities are
issued, which S&P expects following the conclusion of the Chapter
11 hearing process over the next few weeks. The company will
operate under usual business conditions through the proceedings.
CCC INTELLIGENT: S&P Upgrades ICR to 'B+', Outlook Stable
---------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on auto
collision and casualty claims and repair solutions provider CCC
Intelligent Solutions Inc. (CCC) to 'B+' from 'B'. The outlook is
stable.
S&P raised its issue-level rating on the company's first-lien debt
to 'B+' from 'B'. The recovery rating is unchanged at '3'.
The stable outlook on CCC reflects S&P's expectation that the
company will exhibit organic growth upward of 10% and
proportionally expand its EBITDA base such that its leverage
declines to the high-2x area by the end of 2022.
The upgrade reflects the decline in CCC's leverage to the low-3x as
of June 2022, down from 4.9X after its IPO last July 2021. The
company's stable growth profile, recurring revenue base, and robust
EBITDA margin will support further deleveraging over the coming
quarters. S&P said, "We expect CCC's leverage to decline to the
high-2x area by the end of 2022 absent any large merger and
acquisition (M&A) or shareholder return activities. We also expect
CCC to generate robust cash flow and over the next 12 months we
forecast the company to generate free operating cash flow (FOCF) to
debt upward of 16%." This level of cash flow coupled with $227
million of cash as of June 30, 2022, and $250 million of revolver
availability, provides CCC with sufficient liquidity to manage its
operational cash requirements while executing on its acquisition
strategy. Although CCC has demonstrated the ability to deleverage,
the company's high sponsor ownership stake (Advent controls around
58% of the common equity), along with its lack of a publicly stated
leverage target will likely be risk factors that minimizes upgrade
potential.
The high quality of CCC's revenues and the mission-critical nature
of its workloads should provide stability, even with a slowdown of
the U.S. economy. Eighty percent of revenues are recurring through
traditional subscriptions while the remaining 20% stem from
predictable transactional revenue streams tied to insurance claims
triggered by accidents that are not affected by discretionary
spending. S&P expects an economic slowdown will have minimal impact
on claims volume given the reliance that most Americans have on
cars as their main form of transportation along with auto insurance
being a requirement in all 50 states. Further supporting the
company's resiliency are the long nature of its contracts which
average three to five years as well as its high gross dollar
retention which has been around 99% over the last two quarters.
Even with the evolution of advanced driver assistance systems which
aim to reduce the amount of accident occurrences, claim values have
continued to rise as vehicles become more complex and there are
increasing requirements to run diagnostics and other special tests
which are connected by CCC's solutions.
CCC's long-term growth prospects remain strong given the
acceleration of digital transformation for insurance companies as
well as repair shops. S&P said, "We view CCC's good market
positions in claims management and repair solutions to support
revenue growth as clients increase technology investments to
automate processes and increase efficiencies throughout the claims
and repair lifecycle. The entire repair cycle is highly intricate
with many touch points and several participants including insurers,
consumers, dealers, repair facilities, medical providers, and
original equipment manufacturer (OEMs) often requiring a
centralized process to streamline the various workflows throughout
the claims and repair network. CCC has been capitalizing on the
wave of digital transformation by successfully cross-selling and
up-selling and we expect CCC's growth strategy to focus expansion
of its solutions by increasing mobile adoption for carriers as well
offering newer solutions such as payments. We forecast revenue
growth of about 13% in fiscal 2022, stemming from new customer
additions as well continual capture of cross-sell, which we expect
to support net dollar retention over 110% through the next several
quarters. We expect EBITDA margins to expand slightly to roughly
37% in 2022 from about 35% in 2021 from higher operating leverage
off revenue growth while continuing to scale the business, slightly
offset by increasing investments to expand its product base."
S&P said, "The stable outlook on CCC reflects our expectation that
the company will exhibit good organic growth upwards of 10% and
proportionally expand its EBITDA base such that its leverage
declines to the high-2x area by the end of 2022. Our forecast does
not incorporate any large acquisitions or shareholder returns."
While unlikely over the next 12 months, S&P could lower the rating
if:
-- Leverage increases to above 5x;
-- Or if S&P expects FOCF to debt to decline to the
mid-single-digit range%.
This could occur if CCC undertook a large debt-financed
acquisition.
While unlikely over the next 12 months, S&P would consider raising
its rating on CCC if:
-- It exhibits consistent organic revenue growth while maintaining
high profitability such that its leverage declines to, and remains
substantially below, 4x.
-- S&P would also look for its private-equity owners to relinquish
the majority of their stake in the company before raising its
rating.
-- Lastly, S&P would require CCC to expand its total addressable
market by increasing the scope of its solution set while
diversifying its geographical footprint.
ESG credit indicators: E-2, S-2, G-3
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of the company, as is
the case for most rated entities owned by private-equity sponsors.
We believe CCC Intelligent Solutions Inc.'s aggressive financial
risk profile points to corporate decision-making that prioritizes
the interests of the controlling owners. This also reflects the
generally finite holding periods and a focus on maximizing
shareholder returns."
CELSIUS NETWORK: DOJ Says Examiner Can Neutralize Distrust
----------------------------------------------------------
The U.S. Department of Justice's arm that oversees bankruptcy cases
asked a New York bankruptcy judge Thursday, August 18, 2022, to
appoint an examiner in cryptocurrency platform Celsius Network's
Chapter 11 case, saying an independent party needs to look into how
the company runs its business in order to "neutralize" creditors'
distrust.
William K. Harrington, the United States Trustee for Region 2, said
in a 28-page motion that the divergent interests of the various
estates, the extreme financial irregularities that have taken
place, and the extensive mistrust of the Debtors' customers, all
make the appointment of an independent and disinterested examiner
in the best interests of creditors and investors.
The U.S. Trustee added that creditors, as well as investors,
require an independent, conflict-free, experienced party
investigating the financial affairs of these Debtors, free from the
constraints of current management, to serve as a clear, easily
understood, and trusted source of information.
"There is no real understanding among customers, parties in
interest, and the public as to the type or actual value of crypto
held by the Debtors or where it is held. An independent examiner
is necessary here to investigate and report in a clear and
understandable way on the Debtors' business model, their
operations, their investments, their lending
transactions, and the nature of the customer accounts to ensure
public confidence in the integrity of the bankruptcy system and to
neutralize the inherent distrust creditors and parties in interest
have in the Debtors," the UST said in court filings.
"There are also numerous questions in this case as to the Debtors'
management and their role in creating the Debtors' current
illiquidity (i.e., the prepetition failure of the Debtors and their
affiliates to adequately collateralize their loans on an
institutional level and the Debtors' repayment of hundreds of
millions of dollars in loans during the ninety days prepetition)
that require investigation by an impartial third party. Moreover,
the allegations found in the prepetition complaints and regulatory
actions against the Debtors are severe, including allegations of
offering of unregistered securities, the failure to obtain proper
licenses, and the failure to hedge against market volatility. If
these allegations are true, they could expose further
irregularities. An examiner would be able to look into these and
other issues to determine if there are any claims or causes of
actions that the Unsecured Creditors Committee (the "Committee")
can pursue."
About Celsius Network
Celsius Network LLC -- http://www.celsius.network/-- is a
financial services company that generates revenue through
cryptocurrency trading, lending, and borrowing, as well as by
engaging in proprietary trading.
Celsius helps over a million customers worldwide to find the path
towards financial independence through a compounding yield service
and instant low-cost loans accessible via a web and mobile app.
Celsius has a blockchain-based fee-free platform where membership
provides access to curated financial services that are not
available through traditional financial institutions.
The Celsius Wallet claims to be one of the only online crypto
wallets designed to allow members to use coins as collateral to get
a loan in dollars, and in the future, to lend their crypto to earn
interest on deposited coins (when they're lent out).
Crypto lenders such as Celsius boomed during the COVID-19 pandemic,
drawing depositors with high interest rates and easy access to
loans rarely offered by traditional banks. But the lenders'
business model came under scrutiny after a sharp sell-off in the
crypto market spurred by the collapse of major tokens terraUSD and
luna in May 2022.
New Jersey-based Celsius froze withdrawals in June 2022, citing
"extreme" market conditions, cutting off access to savings for
individual investors and sending tremors through the crypto
market.
The list of major crypto firms that have filed for bankruptcy
protection in 2022 now includes Celsius Network, Three Arrows
Capital and Voyager Digital.
Celsius Network LLC and its subsidiaries sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No.
22-10964) on July 14, 2022. In the petition filed by CEO Alex
Mashinsky, the Debtor estimated assets and liabilities between $1
billion and $10 billion.
Joshua A. Sussberg, of Kirkland & Ellis LLP, is serving as legal
counsel, Centerview Partners is serving as financial advisor, and
Alvarez & Marsal is serving as restructuring advisor.
Kirkland & Ellis LLP is serving as legal counsel, Centerview
Partners is serving as financial advisor, and Alvarez & Marsal is
serving as restructuring advisor to Celsius.
Stretto, the claims agent, maintain the page
https://cases.stretto.com/celsius
CHERRY MAN: Wins Continued Cash Collateral Access
-------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, authorized Hamid R. Rafatjoo, the Chapter 11
Trustee of Cherry Man Industries, Inc., to use cash collateral on a
final basis, subject to the terms, including but not limited to the
provisions of adequate protection, as set forth in the Cash
Collateral Stipulation as modified by the Second Supplement.
On July 26, 2022, the court held a hearing on the Debtor's
Emergency Motion for Order Authorizing Interim Use of Cash
Collateral; Granting Adequate Protection as affected by the
Stipulation Authorizing Use Of Cash Collateral; Granting Adequate
Protection, as modified by the Supplement to Stipulation
Authorizing Use Of Cash Collateral; Granting Adequate Protection,
which Cash Collateral Stipulation the Court approved by its Order
entered on July 6, 2022.
Since then, Rafatjoo and Cathay Bank have entered into a Second
Supplement to the Cash Collateral Stipulation to which the U.S.
Small Business Administration does not object.
A continued hearing on the matter is set for September 1, 2022 at 1
p.m.
A copy of the order is available at https://bit.ly/3R1xnQS from
PacerMonitor.com.
About Cherry Man Industries
Cherry Man Industries, Inc., sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. C.D. Calif. Case No. 22-11471) on March
17, 2022, listing $100 million to $500 million in assets and $10
million to $50 million in liabilities. Frank Lin, president of
Cherry Man Industries, signed the petition.
El Segundo, Calif.-based Cherry Man was started in 2002 by Frank
Lin. It is one of the largest nationwide importers and distributors
of office furniture case goods. It has five distribution centers
across the United States.
Judge Neil W. Bason oversees the case.
The Law Offices of Michael Jay Berger serves as the Debtor's legal
counsel.
An official committee of unsecured creditors has been appointed in
the case. The Committee has retained Kelley Drye & Warren LLP as
counsel.
CHRIS PETTIT: Trustee Taps RFM Commercial as Real Estate Broker
---------------------------------------------------------------
Eric Terry, the trustee appointed in the Chapter 11 cases of Chris
Pettit & Associates, PC and Christopher John Pettit, seeks approval
from the U.S. Bankruptcy Court for the Western District of Texas to
employ RFM Commercial, Inc. as real estate broker.
The trustee needs a broker to assist in the sale of Mr. Pettit's
real property located at 13111 Huebner Road, San Antonio, Texas.
RFM will be entitled to a commission of 5 percent of the sales
price in the event of a sale where there is an outside broker
representing the buyer and 4 percent of the sales price in the
event there is no broker representing the buyer.
Richard McCaleb, president of RFM Commercial, disclosed in a court
filing that his firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Richard F. McCaleb
RFM Commercial, Inc.
1920 Nacogdoches, Suite 201
San Antonio, TX 78209
Telephone: (210) 826-0036
Email: richard@rfmcommercial.com
About Chris Pettit & Associates
Chris Pettit & Associates, PC, a personal injury law firm in Texas,
and principal Christopher John Pettit sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Texas Lead Case
No. 22-50591) on June 1, 2022. In the petition filed by Mr. Pettit,
the Debtors listed up to $50,000 in assets and up to $500,000 in
liabilities.
Judge Craig A. Gargotta oversees the cases.
Michael G. Colvard, Esq., at Martin & Drought, PC is the Debtors'
counsel.
Eric Terry, the trustee appointed in the Chapter 11 cases, is
represented by Dykema Gossett, PLLC.
COCRYSTAL PHARMA: Incurs $24.4 Million Net Loss in Second Quarter
-----------------------------------------------------------------
Cocrystal Pharma, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $24.43 million for the three months ended June 30, 2022,
compared to a net loss of $3.82 million for the three months ended
June 30, 2021.
For the six months ended June 30, 2022, the Company reported a net
loss of $28.64 million compared to a net loss of $6.56 million for
the same period in 2021.
As of June 30, 2022, the Company had $52.38 million in total
assets, $2.99 million in total liabilities, and $49.39 million in
total stockholders' equity.
The Company reported unrestricted cash of $51.0 million as of June
30, 2022 compared with $58.7 million as of Dec. 31, 2021. Net cash
used in operating activities for the first half of 2022 was $7.6
million. The Company reported working capital of $48.8 million as
of June 30, 2022.
The Company has not yet established an ongoing source of revenue
sufficient to cover its operating costs. The Company had
$51,033,000 unrestricted cash on June 30, 2022 and believes this is
sufficient to maintain planned operations for at least the next 36
months.
"We have focused our efforts on research and development
activities, including through collaborations with suitable
partners. We have been profitable on a quarterly basis, but have
never been profitable on an annual basis. We have no products
approved for sale and have incurred operating losses and negative
operating cash flows on an annual basis since inception," Cocrystal
stated.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1412486/000149315222022597/form10-q.htm
About Cocrystal Pharma
Headquartered in Creek Parkway Bothell, WA, Cocrystal Pharma, Inc.
-- http://www.cocrystalpharma.com-- is a clinical stage
biotechnology company discovering and developing novel antiviral
therapeutics that target the replication machinery of influenza
viruses, hepatitis C viruses, noroviruses, and coronaviruses.
Cocrystal Pharma reported a net loss of $14.19 million for the year
ended Dec. 31, 2021, a net loss of $9.65 million on $2.01 million
of revenues for the year ended Dec. 31, 2020, a net loss of $48.17
million for the year ended Dec. 31, 2019, and a net loss of $49.05
million for the year ended Dec. 31, 2018. As of March 31, 2022,
the Company had $75.37 million in total assets, $1.79 million in
total liabilities, and $73.58 million in total stockholders'
equity.
CREDITO REAL: Faces Mexican Securities Regulator Probe
------------------------------------------------------
Michael O'Boyle of Bloomberg News reports that Credito Real SAB,
Mexico's biggest payroll lender, said it's being probed by the
country's securities regulator.
The non-bank lender, which defaulted this 2022, said in a filing
Wednesday, August 17, 2022, that it had received notification of a
raid by the National Banking and Securities Commission, known as
the CNBV. It didn't specify if regulators had already carried out
the inspection.
Representatives for the CNBV and Mexico's finance ministry didn't
immediately respond to requests for comment placed after normal
business hours.
The implosion of Credito Real, which defaulted on a Swiss bond in
February 2022 and is seeking to liquidate.
About Credito Real SAB
Credito Real SAB de CV SOFOM ENR is a Mexico-based company that
provides consumer financing. Credito is Mexico's biggest payroll
lender and second largest non-bank lender after Real Unifin.
Credito Real provides loans, either by providing direct financing
to consumers or by establishing financing programs with consumer
financing dealers that sell to Credito Real the collection rights
from consumer financing products. It also provides financing
directly to individuals that are employed by corporations with
payroll deduction agreements with consumer financing dealers
authorized by Credito Real. Credito Real operates through a number
of subsidiaries, including AFS Acceptance LLC.
Three alleged creditors signed a petition to send Credito Real to
Chapter 11 bankruptcy on June 22, 2022 (Bankr. S.D.N.Y. Case No.
22-10842). Institutional Multiple Investment Fund LLC, of Boston,
Massachusetts; Banco Monex, S.A., of Mexico, and Solitaire Fund, of
Liechtenstein, who claim to own an aggregate $8 million of
unsecured bond debt, signed the involuntary Chapter 11 petition.
David H. Botter, Esq., at Akin Gump Strauss Hauer & Feld LLP is
advising the three bondholders.
Despite efforts by bondholders to force the company to pursue a
Chapter 11 restructuring in the U.S., the Debtor opted to pursue
proceedings in Mexico instead. On June 28, 2022, Angel Francisco
Romanos Berrondo, one of the Debtor's shareholders and the former
CEO of Credito Real, filed a petition, in his capacity as a
shareholder, with the Mexican Court seeking to commence the Mexican
Liquidation Proceeding.
On June 30, 2022, the Mexican Court entered an order commencing the
dissolution and liquidation proceedings for the Company and
appointing Mr. Fernando Alonso-de-Florida Rivero as the Mexican
Liquidator.
The liquidator for Credito Real filed a Chapter 15 bankruptcy
petition (Bankr. D. Del. Case No. 22-10630) on July 14, 2022, to
seek U.S. recognition of the Mexican proceedings. The petition was
signed by Robert Wagstaff, the foreign representative of the
liquidator. Richards, Layton & Finger, P.A., led by John Henry
Knight, is counsel in the U.S. case.
CSG SYSTEMS: Moody's Affirms Ba2 CFR & Lowers Secured Debt to Ba2
-----------------------------------------------------------------
Moody's Investors Service affirmed CSG Systems International,
Inc.'s corporate family rating at Ba2, and its probability of
default rating at Ba2-PD. Moody's downgraded the company's rating
on the senior secured credit facilities, which consist of a $150
million term loan due 2026 and a $450 million revolver maturing
2026. Moody's maintained CSG's speculative grade liquidity (SGL)
rating unchanged at SGL-1. The outlook remains stable.
The rating actions are driven by Moody's expectation for stable
operating performance and a continuation of CSG's modest financial
policies. The downgrade of the senior secured instrument rating
follows the repayment of CSG's senior unsecured convertible notes
earlier in 2022, which eliminated the loss absorbance benefits from
subordinated debt. ESG considerations were not a key driver of the
rating action.
The following ratings/assessments are affected by the action:
Ratings Downgraded:
Issuer: CSG Systems International, Inc.
Senior Secured 1st Lien Bank Credit Facility, Downgraded to Ba2
(LGD3) from Ba1 (LGD2)
Ratings Affirmed:
Issuer: CSG Systems International, Inc.
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Outlook Actions:
Issuer: CSG Systems International, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
CSG benefits from a stable business profile and strong position in
the North American cable and direct broadcast satellite (DBS)
billing and customer management services market. CSG has steadily
grown its annual revenue base to roughly $1.1 billion, which is
mostly generated from SaaS subscriptions and related services. Most
of the revenue is recurring, with contracts typically spanning 4-5
years and high renewal rates. Historically, the company has
reported organic growth in the in the low single-digit percentage
range. A stronger focus on growth from new CEO Brian Shepherd
(appointed January 2021) seeks to increase the rate towards a
$1.5-$2.0 billion total revenue target by 2025. Larger scale and
diversification are credit positive, but event risk has increased
given the ambitious revenue goal, which Moody's expects will
require inorganic contributions that could lead to a higher
appetite for financial leverage. The current ratings reflect
Moody's assumption for balanced financial strategies with long-term
debt/EBITDA sustained under 3.0x (Moody's adjusted) in the event of
a large strategic transaction.
CSG's credit profile is constrained by its relatively small scale
within the rating category. High client and market concentration
also weigh on the credit. CSG's top 2 customers, Comcast
Corporation (A3 stable) and Charter Communications, Inc. (Ba2
stable), comprise approximately 40% of total revenue. About 75% of
revenue is derived from a relatively small number of communications
service providers. CSG also has low geographic diversity with
roughly 84% of revenue generated in the US, a mature market. Large
customers have negotiating leverage and typically demand pricing
discounts upon renewal negotiations, pressuring growth, and
profits. International markets are maturing and CSG faces
heightened competition over the intermediate term as participants
chase fewer deals. Growth and profitability are constrained by a
consolidating client base, the negotiating leverage of CSG's large
customers and a competitive international market landscape.
The ongoing conversion of Charter users in the US to CSG's ACP
platform, recently announced new wins in international markets, and
the lack of large contract renewals over the next 12 months will
support organic growth above historical rates. The outlook reflects
Moody's expectation that CSG will experience revenue growth in the
3%-4% range over the next 12 months (higher in the event of further
inorganic M&A). Moody's anticipates higher labor costs will offset
the benefit of larger scale, keeping EBITA margin in the
16.5%-17.5% range and debt/EBITDA around 2.0x, in the absence of
leveraging transactions.
CSG's SGL-1 speculative grade liquidity rating reflects a very good
liquidity profile based on a cash and short-term investments
balance of $135 million as of June 2022. Moody's expects annual
cash from operations around $125 - 135 million (Moody's adjusted,
excluding capitalized operating leases) will be more than
sufficient to cover capital expenditures in the $55 - 65 million
range (Moody's adjusted), about $35 million of dividend payments
and mandatory term loan amortization. CSG also has $205 million of
available capacity as of June 2022 within its $450 million
revolving credit facility, which matures in September 2026. Per the
Credit Agreement, the interest coverage ratio, defined as the ratio
of consolidated EBITDA to consolidated interest expense, cannot be
less than 2.0x. In addition, the company's total leverage, as
defined by its total debt/EBITDA ratio cannot be greater than 4.5x
and the first-lien leverage ratio cannot exceed 2.75x (all covenant
metrics per the Credit Agreement definition). Moody's expects CSG
will be well in compliance with its covenants for at least the next
twelve months.
The ratings for CSG's first-lien credit facilities reflect both the
overall probability of default rating (PDR), to which Moody's has
assigned a Ba2-PD, and an average family loss given default
assessment. Because there is no other meaningful debt in the
capital structure to absorb potential losses (after the repayment
of CSG's unsecured convertible notes in 2022), the senior secured
first-lien credit facilities are rated in line with the Ba2
corporate family rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Moody's expects 1) organic revenue
growth above mid-single digits, evidencing market share gains or
successful expansion into new markets; 2) increased scale and
market diversification result in materially lower customer
concentration; 3) conservative financial policies that keep
debt/EBITDA around historical levels; 4) sustained improvements in
profitability and free cash flow, with operating margins (Moody's
adjusted) stabilizing in the upper 10s percent and free cash flow
to debt above 20%; and 5) very good liquidity.
The ratings could be downgraded if Moody's expects 1) organic
revenue declines due to client losses or large contract renewals at
unfavorable terms, signaling a weakening competitive position; 2)
debt/EBITDA (Moody's adjusted) sustained above 3.0x; 3)
profitability declines with operating margin (Moody's adjusted)
trending towards 10% or free cash flow to debt (Moody's adjusted
including dividends) sustained below 15%; or 4) liquidity
deteriorates materially.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CSG Systems International, Inc., based in Greenwood Village,
Colorado, is a leader in revenue management, digital monetization
and customer experience software and managed services for North
American communications service providers, with an international
presence in telecom, media, and entertainment companies around the
globe. The company generated roughly $1.1 billion in revenue as of
the twelve months ending June 2022.
CUREPOINT LLC: Files Emergency Bid to Use Cash Collateral
---------------------------------------------------------
Curepoint, LLC asks the U.S. Bankruptcy Court for the Northern
District of Georgia, Atlanta Division, for authority to use cash
collateral on an emergency basis to continue its operations in
accordance with the proposed budget and the Proposed Interim
Order.
Like so many other small businesses, the Debtor suffered a series
of setbacks at the hands of the pandemic, including seeking out
financing from merchant cash advance companies. The Debtor was and
continues to be involved in multiple law suits through which
significant legal fees were incurred.
Multiple merchant cash advance companies assert liens on the
Debtor's cash collateral. Because the MCAs file UCC1 financing
statements through a servicer, such as Corporation Service Company,
it is impossible at this stage to determine which MCA asserts a
first position interest in Debtor's cash collateral.
The lenders that may assert an interest in Debtor's cash collateral
are CLG Servicing, LLC, Lafayette Bank, NFG Advance, LLC, Parkview
Advance, LLC, PointOne Capital, LLC, U.S. Small Business
Administration, AMOA Finance, LLC, and First Liberty Building and
Loan.
The Debtor proposes to use cash collateral for general operational
and administrative expenses as set forth in the Budget.
To the extent that any interest the Lenders may have in the cash
collateral is diminished, the Debtor proposes to grant the Lenders
a replacement lien in post-petition collateral of the same kind,
extent, and priority as the liens existing pre-petition, except
that the Adequate Protection Lien will not extend to the proceeds
of any avoidance actions received by the Debtor or the estate
pursuant to chapter 5 of the Bankruptcy Code.
A copy of the motion and the Debtor's four-week budget is available
at https://bit.ly/3T8GDEC from PacerMonitor.com.
The budget provides for total expenses, on a weekly basis, as
follows:
$50,000 for Week 1;
$41,960 for Week 2;
$88,937 for Week 3; and
$92,583 for Week 4.
About Curepoint, LLC
Curepoint, LLC offers a full-service radiation therapy program for
a broad range of cancers. The Debtor sought protection under
Chapter 11 of the US Bankruptcy Code (Bankr. N.D. Ga. Case No.
22-56501) on August 19, 2022. In the petition signed by Phillip
Miles, designated officer, the Debtor disclosed up to $10 million
in both assets and liabilities.
Will Geer, Esq., at Roundtreee, Leitman, Klein & Geer, LLC is the
Debtor's counsel.
DAVITA INC: S&P Affirms 'BB' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on DaVita
Inc.
S&P said, "Our stable outlook reflects our expectation that
leverage will average about 4x over time, but may temporarily
fluctuate slightly above or below this level given the timing of
investments and share repurchases.
"We believe DaVita will continue to direct the majority of
internally generated cash flow to share buybacks, but we believe
that EBITDA growth will allow the company to maintain S&P Global
Ratings-adjusted leverage of about 4x.While soft operating
performance in 2022 and several quarters of share buybacks
exceeding free cash flow have resulted in current leverage of about
4.4x, we expect improving operating results in 2023. We also expect
that the company will both manage its share buyback activity and
use operating cash flow to help fund higher capital investments
expected in 2023 to lower leverage back to about 4x."
DaVita's investment strategies into value-based care and improving
dialysis at home continue to be a near-term credit negative but
remain a long-term opportunity. DaVita's losses are easing as it
continues to expand the program, but it remains unprofitable. The
company stated it expects an incremental loss of about $50 million
in 2022, with losses declining as the program continues to add
scale with new patient cohorts.
S&P said, "While potential regulatory changes continue to be an
overhang, we do not expect any looming major adverse impact for the
time being. DaVita has been contending with several regulatory
issues, including the charitable premium assistance program (CPA),
the ballot initiative in California to regulate dialysis centers
more strictly, and the recent Supreme Court ruling in the Marietta
case. While we acknowledge some event risk from these proposals, we
do not expect any major changes to DaVita's operations or
profitability as a result. The ballot initiative in California will
again be on the ballot in November 2022 (after two previous
defeats), and the company continues to spend heavily to fight it.
We expect only a small adverse impact over the next few years from
the Supreme Court ruling in Marietta Memorial Hospital Employee
Health Benefit Plan litigation, given our expectation that only
small plans will implement changes."
DaVita has a strong market position and large operating scale in
the highly consolidated dialysis sector.The company's scale helps
it procure drugs and other supplies at lower costs, an advantage
that's important given the impact of the pandemic and inflation.
DaVita, along with its peer Fresenius, provides dialysis to nearly
75% of patients in the U.S. This provides the company with superior
negotiating power with private insurance companies. Moreover, the
very necessary life-saving nature of dialysis treatments mitigates
the risk of legislation that could dramatically affect the
business.
S&P said, "The stable outlook reflects our expectation that
DaVita's adjusted leverage will average about 4x over the long
term. However, it may temporarily fluctuate somewhat above or below
this level at times.
"We could consider a lower rating if we thought the company's
adjusted leverage would average above 4.25x over time without
prospects for near-term deleveraging. The most likely scenario that
could lead to this outcome is if the company adopted a more
aggressive financial policy that included share repurchases that
were not offset by free cash flow and EBITDA growth.
"While unlikely over the next 12 months, we could consider a higher
rating if we expected the company to maintain its adjusted leverage
below 3x on a sustained basis."
ESG credit indicators: E-2, S-2, G-2
Social factors are an integral part of S&P's credit analysis on
DaVita. The dialysis industry has attracted controversy in recent
years and public opinion toward this industry has been negative. As
a top-two dialysis operator in the U.S., DaVita's policies are
highly visible and have been under public scrutiny.
In particular, the use of the CPA program, which assists patients
in acquiring commercial insurance policies (which reimburse for
dialysis at much higher rates than Medicare) has gathered
significant societal scrutiny in recent years. DaVita has estimated
a potential operating income decrease of $100 million-$250 million
if CPA is eliminated in the market. That said, dialysis is an
essential and life-saving treatment, and S&P views the elimination
of CPA as a tail risk.
DR. R'KIONE: No Change in Patient Care, PCO Report Says
-------------------------------------------------------
Tamar Terzian, the duly appointed Patient Care Ombudsman for Dr.
R'Kione Britton, filed with the U.S. Bankruptcy Court for the
Central District of California a first interim report for the
period from June 9 through August 9, 2022, regarding the Debtor's
health care facility.
The PCO conducted an unannounced visit physically on site. During
the visit the PCO met with five staff members who were preparing
charts for the patients scheduled for the day visit. The PCO met
with Dr. R'Kione and spoke with staff regarding the day-to-day
operations of the facility. The PCO observed all medication stored
on the premises to assure that they are properly stored, and access
is limited. In addition, the equipment and the message tables were
clean. The Debtor provides treatment for arthritis, iv therapy,
knee pain, headaches and migraines, and neuropathy.
Based on the PCO's initial observations, there were four patients
for treatment and staff was well organized and friendly to address
the concerns of the patients.
The PCO noted that there are no changes to report currently in
terms of the quality of care. The Debtor continues to provide the
patients the required standard of care.
A copy of the Ombudsman Report is available for free at
https://bit.ly/3dNSgAN from PacerMonitor.com.
The Ombudsman may be reached at:
Tamar Terzian, Esq.
EPPS & COULSON, LLP
1230 Crenshaw Boulevard, Suite 200
Torrance, CA 90501
Telephone: (213) 929-2390
Facsimile: (213) 929-2394
Email: tterzian@eppscoulson.com
About Dr. R'Kione Britton Chiropractic Corp.
Dr. R'Kione Britton Chiropractic Corporation is a Los Angeles-based
healthcare company offering chiropractic, spinal and joint care;
neuropathy treatment; spinal decompression; soft tissue
rehabilitation and pain relief; muscle and joint injury
rehabilitation; chronic pain relief care; posture restoration;
laser therapy; peak performance and sports injury treatment; and
scar tissue treatment.
Dr. R'Kione Britton Chiropractic sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 22-13004)
on May 31, 2022. In the petition signed by Dr. R'Kione Britton,
president, the Debtor disclosed $226,317 in assets and $1,308,118
in liabilities.
Judge Deborah J. Saltzman oversees the case.
The Debtor tapped Steven E. Cowen, Esq., at S.E. Cowen Law as legal
counsel; Small Business Tax, Inc. as tax advisor; and Scott
Christansen, a principal at AAdvanced Business Systems, as
bookkeeper.
E-BOX LLC: Voluntary Chapter 11 Case Summary
--------------------------------------------
Debtor: E-Box, LLC
10636 Shelton Road
Collierville, TN 38017-3271
Chapter 11 Petition Date: August 23, 2022
Court: United States Bankruptcy Court
Western District of Tennessee
Case No.: 22-23526
Judge: Hon. M. Ruthie Hagan
Debtor's Counsel: Jerome C. Payne, Esq.
PAYNE LAW FIRM
605 Poplar Avenue, Suite 102
Memphis, TN 38105
Tel: 901-794-0884
- and -
Craig M. Geno, Esq.
LAW OFFICES OF CRAIG M. GENO, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39157
Tel: 601-427-0048
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Byron Brown, successor to Norman Brown,
Member.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/UWISZAQ/E-Box_LLC__tnwbke-22-23526__0001.0.pdf?mcid=tGE4TAMA
EL CALAMAR: Has Deal on Cash Collateral Access
----------------------------------------------
El Calamar, Inc. and the U.S. Small Business Administration advised
the U.S. Bankruptcy Court for the Central District of California,
Santa Ana Division, that they have reached an agreement regarding
the Debtor's use of cash collateral and now desire to memorialize
the terms of this agreement into an order.
Pre-petition, on June 15, 2020, the Debtor executed an SBA Note,
pursuant to which the Debtor obtained a $150,000 loan. The terms of
the Note require the Debtor to pay principal and interest payments
of $731 every month beginning 12 months from the date of the Note
over the 30 year term of the SBA Loan. The SBA Loan has an annual
rate of interest of 3.75% and may be prepaid at any time without
notice or penalty. Pursuant to Congressionally approved loan
deferment, monthly payments commence on December 15, 2022.
Pursuant to the SBA Loan Authorization and Agreement executed on
June 15, 2020, the Debtor is required to "use all the proceeds of
this Loan solely as working capital to alleviate economic injury
caused by disaster occurring in the month of January 31, 2020 and
continuing thereafter and to pay Uniform Commercial Code lien
filing fees and a third-party UCC handling charge of $100 which
will be deducted from the Loan amount."
As evidenced by a Security Agreement executed on June 15, 2020 and
a validly recorded UCC-1 filing on June 28, 2020 as Filing Number
20-7796987328, the SBA Loan is secured by all tangible and
intangible personal property.
The parties agree that the Debtor may use cash collateral to pay
for the expenses outlined in the Debtor's cash collateral budget.
As adequate protection, the SBA will have a replacement lien on all
post-petition revenues of the Debtor to the same extent, priority
and validity that its lien attached to the cash collateral. The
scope of the replacement lien is limited to the amount (if any)
that cash collateral diminishes post-petition as a result of the
Debtor's post-petition use of cash collateral. The replacement lien
is valid, perfected and enforceable and will not be subject to
dispute, avoidance, or subordination, and the replacement lien need
not be subject to additional recording.
The SBA's claim under the SBA Loan will be allowed as a secured
claim in the amount of $161,697, including all ongoing accrued
interest.
The Stipulation will remain in effect until plan confirmation, or
until the Parties enter into an amended Stipulation or a consensual
Chapter 11 Plan, or until the case is converted or dismissed,
whichever first occurs.
The conversion of the Debtor's Bankruptcy Case to any other chapter
or the dismissal of the Debtor's Bankruptcy Case will constitute an
Event of Default.
A final hearing on the matter is scheduled for August 31, 2022 at
10 a.m.
A copy of the stipulation is available at https://bit.ly/3dSMLkq
from PacerMonitor.com.
About El Calamar, Inc.
El Calamar, Inc. is a family-owned Mexican grill and seafood
restaurant in Santa Ana, California. The Debtor sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case
No. 22-11188) on July 17, 2022. In the petition signed by Hugo E.
Camacho, president, the Debtor disclosed up to $500,000 in both
assets and liabilities.
Michael Jay Berger, Esq., at Law Offices of Michael Jay Berger is
the Debtor's counsel.
ELITE METAL: Seeks to Hire Susan Lasky as Bankruptcy Counsel
------------------------------------------------------------
Elite Metal Building and Roofing, LLC seeks approval from the U.S.
Bankruptcy Court for the Southern District of Florida to employ
Susan Lasky, Esq., a practicing attorney in Ft. Lauderdale, Fla.,
to handle its Chapter 11 case.
Ms. Lasky will render these services:
(a) advise the Debtor regarding its powers and duties in the
continued management of its financial affairs;
(b) advise the Debtor with respect to its responsibilities in
complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
(c) prepare legal documents;
(d) protect the interest of the Debtor in all matters pending
before the court; and
(e) represent the Debtor in negotiation with its creditors in
the preparation of a plan.
Ms. Lasky has agreed to represent the Debtor at the reduced hourly
rate of $400 for attorney services and $200 for paralegal
services.
In addition, the firm will seek reimbursement for expenses
incurred.
The Debtor's principal provided the pre-bankruptcy funds to pay the
Chapter 11 filing fee of $1,738 and $7,500 as retainer in this
case.
Ms. Lasky disclosed in a court filing that she is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The attorney can be reached at:
Susan D. Lasky, Esq.
320 S.E. 18th St.
Ft. Lauderdale, FL 33316
Telephone: (954) 400-7474
Facsimile: (954) 206-0628
Email: Sue@SueLasky.com
About Elite Metal Building and Roofing
Elite Metal Building and Roofing, LLC filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Case No. 22-16032) on Aug. 4, 2022, listing as much as $1
million in both assets and liabilities. Panagis Vittoratos,
manager, signed the petition.
Judge Peter D. Russin oversees the case.
Susan D. Lasky, Esq., serves as the Debtor's bankruptcy counsel.
ENDO INT'L: Needs Alternative Plan, Noteholders Say
---------------------------------------------------
Rick Archer of Law360 reports that creditors of Endo International
told a New York bankruptcy judge Thursday, August 18, 2022, that
they will seek to file an alternative to Endo's proposed Chapter 11
sale, as the drugmaker made its first court appearance in its
bankruptcy case.
At a hearing conducted virtually, counsel for a group of unsecured
noteholders told U.S. Bankruptcy Judge James L. Garrity Jr. that
the noteholders are going to ask for permission to file their own
Chapter 11 plan in the face of what they called Endo's abandonment
of the usual bankruptcy process.
About Endo International
Endo International plc (NASDAQ: ENDP) is a specialty pharmaceutical
company committed to helping everyone we serve live their best life
through the delivery of quality, life-enhancing therapies. Our
decades of proven success come from passionate team members around
the globe collaborating to bring the best treatments forward.
Together, we boldly transform insights into treatments benefiting
those who need them, when they need them. On the Web:
http://www.endo.com/
On August 16, 2022, Endo International plc and certain of its
subsidiaries initiated voluntary prearranged Chapter 11 proceedings
(Bankr. S.D.N.Y. Lead Case No. 22-22549). The Company's cases are
pending before the Honorable James L. Garrity, Jr.
The Company has put up a Web site dedicated to its restructuring:
http://www.endotomorrow.com/
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, PJT Partners LP is serving as investment banker, and
Alvarez & Marsal is serving as financial advisor to Endo. Kroll is
the claims agent.
ENDO INTERNATIONAL: Wins Interim Cash Collateral Access
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Endo International plc and its debtor-affiliates to,
among other things, use cash collateral on an interim basis in
accordance with the budget.
The Debtors require immediate access to cash collateral in order
to, among other things, permit the orderly continuation of their
businesses, pay First Lien Adequate Protection Payments, and pay
the costs of administration of their estates and satisfy other
working capital and general corporate purposes of the Debtors.
As of the Petition Date, the Debtors' consolidated long-term debt
obligations totaled approximately $8.15 billion arising under (a)
one credit agreement, which consists of a revolving credit facility
and a term loan facility, (b) four series of secured notes, and (c)
four series of unsecured notes.
On April 27, 2017, Debtors Endo International plc (Parent), Endo
Luxembourg Finance Company I S.a r.l., and Endo LLC entered into
the credit agreement with JPMorgan Chase Bank, N.A., as swing line
lender, issuing bank, and administrative agent and the lenders
party thereto from time to time. The Credit Agreement provides for
a senior secured revolving credit facility and a senior secured
term loan facility in the total aggregate principal amount
outstanding of $5.869 billion.
On March 25, 2021, Parent, the Borrowers, and certain of the
Prepetition First Lien Loan Secured Parties entered into the
Amendment and Restatement Agreement which amended and restated the
Prior Credit Agreement.
On March 25, 2021, Debtors Lux Borrower and Endo U.S. Inc., issued
the 6.125% Notes pursuant to the indenture, dated as of March 25,
2021, by and among, Computershare Trust Company, National
Association, as trustee, the guarantors party, and the 6.125% Notes
Issuers. As of the Petition Date, approximately $1.295 billion was
outstanding under the 6.125% Notes Indenture.
On March 28, 2019, Debtor Par Pharmaceuticals, Inc. issued $1.5
billion aggregate principal amount of 7.500% senior secured notes
due on April 1, 2027, pursuant to the Indenture, dated March 28,
2019, by and among Par Pharma, as issuer, the guarantors party
thereto, and Computershare, as trustee. The 7.500% Notes are
secured on a pari passu basis by first-priority liens on, and
security interests in, the Prepetition Collateral in accordance
with the terms of the First Lien Prepetition Security Documents and
the First Lien Collateral Trust Agreement. In June 2020, the
Company executed certain transactions which included, among others,
an additional issuance of 7.500% Notes under the 7.500% Notes
Indenture in the aggregate principal amount of approximately $516
million. As of the Petition Date, approximately $2 billion was
outstanding under the 7.500% Notes Indenture.
On April 27, 2017, Debtors Endo Designated Activity Company, Endo
Finance LLC, and Endo Finco Inc. issued $300 million aggregate
principal amount of 5.875% senior secured notes due October 15,
2024, pursuant to the Indenture, dated April 27, 2017 by and among
Computershare, as trustee, the guarantors party thereto, and the
5.875% Notes Issuers. The 5.875% Notes are secured on a pari passu
basis by first-priority liens on, and security interests in, the
Prepetition Collateral in accordance with the terms of the First
Lien Prepetition Security Documents and the First Lien Collateral
Trust Agreement. As of the Petition Date, approximately $300
million was outstanding under the 5.875% Notes Indenture.
On June 16, 2021, Debtors Endo DAC, Endo Finance, and Endo Finco
issued $940.6 million aggregate principal amount of 9.50% senior
secured second lien notes due July 31, 2027, pursuant to that
certain Indenture, dated June 16, 2020, by and among, Wilmington
Savings Fund Society, FSB, as trustee, the Second Lien Notes
Issuers, and the guarantors party thereto. The Second Lien Notes
are secured by a second-priority lien on, and on a junior basis
with respect to, the Prepetition Collateral in accordance with the
terms of the Second Lien Prepetition Security Documents and the
Second Lien Collateral Trust Agreement . As of the Petition Date,
approximately $941 million was outstanding under the Second Lien
Indenture.
To secure the obligations arising under the Second Lien Indenture,
the Co-Borrower and certain Guarantors entered into, among other
things, that certain Second Lien US Pledge and Security Agreement,
dated as of June 16, 2020, as may be amended, restated,
supplemented, or otherwise modified from time to time, granting
Wilmington Trust, N.A., in its capacity as collateral trustee,
second-priority liens on, and security interests in, the
Prepetition Collateral.
To secure the obligations arising under the Credit Agreement and
the First Lien Notes, the Co-Borrower and certain Guarantors
entered into, among other things, a US Pledge and Security
Agreement, dated as of April 27, 2017, granting Wilmington Trust,
N.A., in its capacity as collateral trustee, first-priority liens
on and security interests in substantially all of the Debtors'
assets, including all proceeds thereof.
As of the Petition Date, (a) approximately $277 million was
outstanding under the Revolving Credit Facility and (b)
approximately $1.98 billion was outstanding under the Term Loan
Facility.
After extensive negotiations among the Debtors and the Prepetition
Secured Parties, the Debtors agreed to provide the Adequate
Protection Obligations, subject in each case to the Carve Out and
Permitted Prior Liens, to the extent of any diminution in value of
the Prepetition Secured Parties' respective interests in the
Prepetition Collateral resulting from the imposition of the
automatic stay, the Debtors' use, sale, or lease of the Prepetition
Collateral during the Cases, and/or for any other reason for which
adequate protection may be granted under the Bankruptcy Code.
The Prepetition First Lien Secured Parties are granted valid,
binding, continuing, enforceable, fully-perfected first-priority
senior, additional and replacement security interests in and liens
on the Debtor's prepetition collateral and other now-owned and
hereafter-acquired real and personal property, assets and rights.
As further adequate protection, the First Lien Secured Parties are
allowed superpriority administrative expense claims in each of the
Cases ahead of and senior to any and all other administrative
expense claims in such Cases to the extent of any Diminution in
Value, but junior only to the Carve Out.
As adequate protection, the Prepetition Second Lien Notes Secured
Parties are granted:
a. Second Lien Adequate Protection Liens on the Prepetition
Collateral and the Collateral, which will be immediately junior in
priority only to the Permitted Prior Liens, the Carve Out, the
First Lien Adequate Protection Liens, and the Prepetition First
Liens;
b. Second Lien Adequate Protection Superpriority Claims, which
will be immediately junior in priority to the Carve Out and the
First Lien Adequate Protection Superpriority Claims;
c. Operational covenants similar to those granted to the
Prepetition First Lien Secured Parties;
d. Subject to the limitations and conditions set forth in the
Interim Order, payment of certain fees and expenses of
professionals to the Prepetition Second Lien Notes Secured Parties;
and
e. certain reporting obligations.
A copy of the order is available at https://bit.ly/3dTXmf2 from
PacerMonitor.com.
About Endo International
Endo International plc (NASDAQ: ENDP) is a specialty pharmaceutical
company committed to helping everyone they serve live their best
life through the delivery of quality, life-enhancing therapies. On
the Web: http://www.endo.com/
On August 16, 2022, Endo International plc and certain of its
subsidiaries initiated voluntary prearranged Chapter 11 proceedings
(Bankr. S.D.N.Y. Lead Case No. 22-22549). The Company's cases are
pending before the Honorable James L. Garrity, Jr.
The Company has put up a Web site dedicated to its restructuring:
http://www.endotomorrow.com/
Judge James L. Garrity, Jr. oversees the case.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, PJT Partners LP is serving as investment banker, and
Alvarez & Marsal is serving as financial advisor to Endo. Kroll is
the claims agent.
Gibson, Dunn & Crutcher LLP represents an Ad Hoc First Lien Group
in the Chapter 11 cases of Endo International PLC, et al.
Paul, Weiss, Rifkind, Wharton & Garrison LLP represents an Ad Hoc
Cross Holder Group.
Stevens & Lee, P.C. and Keller Postman LLC represent Eric Hestrup
and the Private Insurance Class Claimants.
ENVIA HOLDINGS: Wins Cash Collateral Access
-------------------------------------------
The U.S. Bankruptcy Court for the Northern District of California,
San Jose Division, authorized Envia Holdings, LLC to use cash
collateral to pay United States Trustee fees, property taxes and
insurance according to the schedule set forth in the Debtor's
request.
As previously reported by the Troubled Company Reporter, the Debtor
proposed to be allowed to use all cash collateral to pay for:
1. The U.S. Trustee fees estimated at $325/quarter with the
first payment due in July 2022.
2. Post-petition property taxes with the next payment due on
Nov. 1, 2022 and delinquent Dec. 10, 2022 in the estimated amount
of $14,444.
3. Insurance with the next payment due Feb. 2023 in the
estimated amount of $1,300.
There will be no disbursements to the Debtor's principal. All funds
not reserved for the payments set forth above will be paid to The
Richard Vazquez and Robin C. Silvera Vasquez Revocable Trust.
Property is encumbered by a note secured by a first trust deed in
favor of The Richard Vazquez and Robin C. Silvera Vasquez Revocable
Trust made on May 30, 2019.
The County of Santa Clara County Department of Tax and Collections
has a statutory lien on the Property for property taxes. As of the
petition date, there were arrears of $51,291. As to the Improved
Property, (APN 835-07-023), the property taxes are $9,528 due
semiannually. As to the Unimproved Property (APN835-07-024) the
property taxes are $4,916 semiannually. The next installment is due
on Nov. 1, 2022 and delinquent on Dec. 10, 2022.
A copy of the order is available at https://bit.ly/3TdMatU from
PacerMonitor.com.
About Envia Holdings
Envia Holdings, LLC is a single asset real estate (as defined in 11
U.S.C. Sec. 101(51B)). The company is based in San Jose, Calif.
Envia Holdings sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. N.D. Calif. Case No. 22-50489) on June 2, 2022,
listing between $1 million and $10 million in both assets and
liabilities. Nathaniel Villareal, sole member, signed the
petition.
The case is assigned to Judge M. Elaine Hammond.
Lars T. Fuller, Esq., at The Fuller Law Firm is the Debtor's
counsel.
ESCADA AMERICA: Committee Seeks to Tap Emerald as Financial Advisor
-------------------------------------------------------------------
The official committee of unsecured creditors appointed in the
Chapter 11 case of Escada America, LLC seeks approval from the U.S.
Bankruptcy Court for the Central District of California to employ
Emerald Capital Advisors as its financial advisor.
The firm will render these services:
(a) analyze and advise the committee with respect to
liquidation analyses of the Debtor;
(b) analyze the Debtor's pre-bankruptcy payments to or for the
benefit of insiders;
(c) assess data the committee receives from the Debtor
regarding its assets, liabilities and operating performance;
(d) analyze 13-week cash collateral budgets for the Debtor;
(e) analyze the financial structure and impact of the Debtor's
historic transactions with insiders;
(f) evaluate the economic terms of the Debtor's currently
filed plan or any other plan that may be filed with respect to the
Debtor;
(g) advise the committee with respect to cash proceeds of the
Debtor's customs bonds and its efforts to liquidate such bonds;
(h) assist the committee in negotiating a fair, reasonable and
confirmable Chapter 11 plan for the Debtor; and
(i) provide such other advice and analysis as the committee
may request.
The hourly rates of Emerald's professionals are as follows:
Managing Partners $600
Managing Directors $500 - $550
Vice Presidents $400 - $450
Associates and Analysts $200 - $350
Analysts $200 - $250
In addition, the firm will seek reimbursement for expenses
incurred.
John Madden, founder and managing partner at Emerald Capital
Advisors, disclosed in a court filing that his firm is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
John P. Madden
Emerald Capital Advisors
150 East 52nd Street, 15th Floor
New York, NY 10022
Telephone: (646) 968-4094
Email: info@emeraldcapitaladvisors.com
About Escada America
Escada America, LLC, owner of a clothing store in New York, sought
Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No.
22-10266) on Jan. 18, 2022. In the petition filed by Kevin Walsh,
director of finance, the Debtor listed $1 million to $10 million in
both assets and liabilities.
Judge Sheri Bluebond oversees the case.
John Patrick M. Fritz, Esq., at Levene, Neale, Bender, Yoo &
Golubchik, LLP serves as the Debtor's legal counsel while
Holthouse, Carlin & Van Trigt, LLP is the Debtor's accountant.
On May 18, 2022, the U.S. Trustee for Region 16 appointed an
official committee of unsecured creditors in this Chapter 11 case.
The committee tapped Kelley Drye & Warren, LLP as legal counsel and
Emerald Capital Advisors as financial advisor.
The Debtor filed its proposed Chapter 11 plan of reorganization and
disclosure statement on May 12, 2022.
ETHEMA HEALTH: Posts $180K Net Loss in Second Quarter
-----------------------------------------------------
Ethema Health Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $179,614 on $1.14 million of revenues for the three months ended
June 30, 2022, compared to a net loss of $2.63 million on $96,158
of revenues for the three months ended June 30, 2021.
For the six months ended June 30, 2022, the Company reported a net
loss of $344,599 on $2.16 million of revenues compared to a net
loss of $4.99 million on $186,951 of revenues for the six months
ended June 30, 2021.
As of June 30, 2022, the Company had $6.53 million in total assets,
$16.27 million in total liabilities, $400,000 in preferred stock,
and a total stockholders' deficit of $10.14 million.
Cash generated from operating activities was $246,940 and cash used
in operating activities was $(383,358) for the six months ended
June 30, 2022 and 2021, respectively, an increase of $630,298.
Cash used in investing activities was $213,726 and $498,020 for the
six months ended June 30, 2022 and 2021, respectively In the
current period the Company invested in expanding the Evernia
facility, the prior year investment was attributable to the
advances made to Evernia, which acquisition closed on July 1,
2021.
Cash provided by financing was $127,261 and $691,302 for the six
months ended June 30, 2022 and 2021, respectively. In the current
period the Company made a net repayment to convertible promissory
note holders of $118,467 and received receivables funding of
$195,500 of which $15,000 was repaid during the current period and
proceeds from related parties of $207,294.
Ethema said, "Over the next twelve months we estimate that the
company will require approximately $1.5 million in working capital
as it continues to develop the Evernia facility and it is also
exploring several other treatment center options and sources of
patients throughout the country. The Company also has convertible
notes, short term loans and secured promissory notes which have
matured and are in default and the Company may have to raise equity
or secure debt. There is no assurance that the Company will be
successful with future financing ventures, and the inability to
secure such financing may have a material adverse effect on the
Company's financial condition. In the opinion of management, the
Company's liquidity risk is assessed as high due to this
uncertainty."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0000792935/000190359622000529/sfsgrst10q081122.htm
About Ethema Health
Headquartered in West Palm Beach, Florida, Ethema Health
Corporation -- http://www.ethemahealth.com-- operates in the
behavioral healthcare space specifically in the treatment of
substance use disorders. Ethema developed a unique style of
treatment over the last eight years and has had much success with
in-patient treatment for adults.
Ethema reported a net loss of $1.57 million for the year ended Dec.
31, 2021, compared to net income of $3.08 million on $338,996 of
revenues for the year ended Dec. 31, 2020. As of Dec. 31, 2021,
the Company had $6.55 million in total assets, $16.01 million in
total liabilities, $400,000 in preferred stock, and a total
stockholders' deficit of $9.86 million.
Sunrise, Florida-based Daszkal Bolton LLP, the Company's auditor
since 2018, issued a "going concern" qualification in its report
dated April 14, 2022, citing that the Company had accumulated
deficit of approximately $44.7 million and negative working
capital
of approximately $13.2 million at Dec. 31, 2021, which raises
substantial doubt about its ability to continue as a going concern.
EXCELSIOR SECURITY: Seeks to Tap Thames Markey as Legal Counsel
---------------------------------------------------------------
Excelsior Security Agency of North Florida, Inc. seeks approval
from the U.S. Bankruptcy Court for the Middle District of Florida
to employ Thames Markey to handle its Chapter 11 case.
The hourly rates of the firm's counsel and staff are as follows:
Senior Partners $465
Paralegals and Associates $245
Prior to the petition date, the firm received a retainer of $20,000
for services to be rendered and costs advanced on behalf of the
Debtor.
Bradley Markey, Esq., a partner at Thames Markey, disclosed in a
court filing that his firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Bradley R. Markey, Esq.
Ryan T. Hyde, Esq.
Thames | Markey
50 N. Laura Street, Suite 1600
Jacksonville, FL 32202
Telephone: (904) 358-4000
Facsimile: (904) 358-4001
Email: brm@thamesmarkey.law
rlh@thamesmarkey.law
About Excelsior Security Agency of North Florida
Excelsior Security Agency of North Florida, Inc., a security
services provider in Jacksonville, Fla., sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No.
22-01609) on Aug. 19, 2022. In the petition signed by Bobby J.
Lingold, vice president, the Debtor disclosed up to $1 million in
assets and up to $10 million in liabilities.
Bradley R. Markey, Esq., at Thames Markey is the Debtor's counsel.
EXPRESSJET AIRLINES: Case Summary & 20 Top Unsecured Creditors
--------------------------------------------------------------
Debtor: ExpressJet Airlines LLC
1745 Phoenix Boulevard
Suite 250
College Park, GA 30349
Business Description: The Debtor historically was engaged in
business as a "regional air carrier,"
providing flight services on behalf of other
airlines under private label capacity
purchase agreements using aircraft subleased
from United. Shortly before the Petition
Date, the Debtor ceased all operations,
including air charter and scheduled flight
services, laid off a majority of its
employees, and is in the process of
returning its aircraft to lessors.
Chapter 11 Petition Date: August 23, 2022
Court: United States Bankruptcy Court
District of Delaware
Case No.: 22-10787
Judge: Hon. Mary F. Walrath
Debtor's Counsel: Eric D. Schwartz, Esq.
Matthew B. Harvey, Esq.
Paige N. Topper, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL
1201 North Market Street
Wilmington, DE 19801-1347
Tel: (302) 658-9200
Email: eschwartz@morrisnichols.com
Debtor's
Special
Corporate &
Transactional
Counsel: EVERSHEDS SUTHERLAND (US) LLP
Debtor's
Notice &
Claims
Agent: EPIQ CORPORATE RESTRUCTURING, LLC
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by John Greenlee as president.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/ADG53QA/ExpressJet_Airlines_LLC__debke-22-10787__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Small Business Administration PPP Loan $10,000,000
(SBA)
PPP Loan
409 3rd Street SW
Washington, DC 20416
Contact: Therese Meers
Email: answerdesk@sba.gov
2. U.S. Department of the Cares Act Loan $3,924,393
Treasury
Cares Act Loan
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Contact: General Counsel
Email: caresitforms@treasury.gov
3. Skywest Airlines Inc. Workers $2,500,000
444 South River Road Compensation
St. George, UT 84790
Contact: Chief Financial Officer
Tel: 435-634-3000
Fax: 435-634-3105
4. EIC Aircraft Aircraft $702,547
Leasing Limited Leasing
3rd Floor Kilmore House
Dublin 1
Ireland
Contact: Danica Gutierrez
Tel: 353-19032660
5. Hawker Pacific Aerospace Repairs & $508,401
PO Box 894524 Maintenance
Los Angeles, CA 90189-4524
Contact: Valerie Sawyer
Email: valerie.sawyer@hawker.com
6. Marsh USA Inc. Insurance $182,973
PO Box 946015
Dallas, TX 75284-6015
Contact: Jordan Briggs
Email: jordan.briggs@marsh.com
7. Houston, City of Lease Agreement $179,133
PO Box 204172
Houston, TX 77216-4172
Contact: General Counsel
HAS-
wiretransfer@houstontx.gov
8. DAL Global Services LLC Handling Fees $176,995
PO Box 745139 - 6W
Atlanta, GA 30349
Contact: Larry Wexler
Email: ar@unifiservice.com
9. Regional One Inc. Parts/Supplies $148,500
PO Box 24620
West Palm Beach, FL 33416
Contact: Doron Marom
Email: accountsreceivable@regionalone.com
10. World Fuel Services Inc. Fuel Costs $125,486
9800 NW 41st Street
Miami, FL 33178
Contact: Ira M. Birns
Email: ygordon@wfscorp.com
11. C&L Aerospace LLC Repairs & $86,208
40 Wyoming Avenue Maintenance
Bangor, ME 04401
Contact: Jon Lay
Email: accounts@cla.areo
12. Tripaction Travel and Misc. $81,729
1501 Page Mill Rd. Bld 1 Expenses
Palo Alto, CA 93401
Contact: Thomas Tuchcherer
Email: ar@tripactions.com
13. Foundry LLC Advertising/ $79,736
PO Box 2945 Marketing
Mobile, AL 36652
Contact: Jim Bauserman
Email: gina@foundryideas.com
14. Cintas Uniforms $67,845
97627 Eagle Way
Chicago, IL 60678-9760
Contact: J. Michael Hansen
Email: nasdeftachpymt@cintas.com
15. Reno-Tahoe Airport Rents $66,936
Authority
PO Box 12490
Reno, NV 89510
Contact: Daren Grifin
Email: aesquivel@renoairport.com
16. Capital Region Rents $55,885
Airport Commission
1 Richard E. Byrd Terminal Drive
Richmond, VA 23250-2400
Contact: Steve Owen
Email: achpayments@flyrichmond.com
17. STS Line Maintenance Repairs & $50,606
2000 NE Jensen Beach Boulevard Maintenance
Jensen Beach, FL 34957
Contact: Chief Financial Officer
Email: sales@stsaviationservices.com
18. Mechanical Piping Repairs & $46,017
Systems Inc Maintenance
PO Box 1781
Tomball, TX 77377
Contact: Joe Hynes
Email: mgalloway@mpshou.com
19. Xerox Corporation Repairs & $45,649
PO Box 202882 Maintenance
Dallas, TX 75320-2882
Contact: William Osbourn
Email: eftremit@xerox.com
20. Parker Hannifin Corp Repairs & $41,027
7969 Collection Center Drive Maintenance
Chicago, IL 60693
Contact: Thomas L. Williams
Email: csoremittancedetails@parker.com
FLORIDA KEYS: Seeks to Hire Van Horn Law Group as Legal Counsel
---------------------------------------------------------------
Florida Keys Ambulance Service, Inc. seeks approval from the U.S.
Bankruptcy Court for the Southern District of Florida to employ Van
Horn Law Group, PA as its counsel.
The firm will render these legal services:
(a) advise the Debtor regarding its powers and duties in the
continued management of its business operations;
(b) advise the Debtor regarding its responsibilities in
complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
(c) prepare legal papers;
(d) protect the interest of the Debtor in all matters pending
before the court;
(e) represent the Debtor in negotiation with its creditors in
the preparation of a Chapter 11 plan.
The Debtor paid the firm a total retainer of $11,738.
The firm's hourly rates range from $150 to $450 for law clerks,
paralegals and attorneys.
In addition, the firm will seek reimbursement for expenses
incurred.
Chad Van Horn, Esq., an attorney at Van Horn Law Group, disclosed
in a court filing that his firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Chad Van Horn, Esq.
Van Horn Law Group, PA
330 North Andrews Avenue, Suite 450
Fort Lauderdale, FL 33301-1012
Telephone: (954) 637-0000
Email: chad@cvhlawgroup.com
About Florida Keys Ambulance Service
Florida Keys Ambulance Service, Inc. filed its voluntary petition
for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
S.D. Fla. Case No. 22-16165) on Aug. 10, 2022, listing as much as
$1 million in both assets and liabilities. Edward Bonilla,
president and chief executive officer, signed the petition.
Judge Robert A. Mark oversees the case.
Chad Van Horn, Esq., at Van Horn Law Group, PA serves as the
Debtor's counsel.
FRONTIER COMMUNICATIONS: Fitch Affirms BB- Long-Term IDR
--------------------------------------------------------
Fitch Ratings has affirmed the 'BB-' Long-Term Issuer Default
Rating (IDR) of Frontier Communications Parent, Inc. and its
subsidiaries, with a Stable Rating Outlook.
Frontier's ratings reflect increasing, but still relatively low
leverage for the rating and a strengthening competitive position
arising from plans to aggressively invest in its fiber broadband
network. Concerns include the pressure on cash flows stemming from
heavy investments and continued pressure on legacy revenue sources.
There is execution risk, with respect to the build-out, but recent
success in adding fiber broadband customers mitigates this risk.
KEY RATING DRIVERS
Low Leverage: Frontier's 'BB-' IDR and Stable Outlook are supported
by relatively low leverage for the rating. Fitch-calculated gross
leverage was 3.3x at YE 2021 and net leverage was 2.4x. With much
lower rural broadband support in 2022, and borrowing related to
funding the fiber expansion into 2024, gross leverage could rise by
approximately 1.0x-1.1x by year-end 2022. Net leverage is expected
to be in the mid-3x range, given Fitch-estimated projected cash and
short-term investment balances of around $2 billion at YE2022.
Frontier's cash generation has improved materially after the April
2021 emergence from bankruptcy due to the $1 billion reduction in
annual interest expense. The improved cash generation will enable
Frontier to more aggressively invest in the business, focusing on
fiber to the home and greater fiber investment to support
enterprise and wholesale services, including fiber to the tower.
The rating is constrained by the near-term expected decline in
legacy revenues and the need to continue to take costs out of the
business.
Capital Allocation: The company's capital allocation policy has
gained clarity post emergence as the company has accelerated plans
to invest in fiber to the home as well as to target fiber
deployment to small and medium businesses, enterprises and the
wholesale market. The company's financial policy targets a
long-term net leverage ratio in the mid-3x range, which provides
for the flexibility to invest, although the company may temporarily
exceed this range to accelerate its fiber build.
Frontier's aggressive investment plan will broadly expand the
deployment of fiber to more than 10 million locations by the end of
2025, or two-thirds of its footprint. As of June 30, 2022, the
company has passed approximately 4.4 million locations and is
targeting more than 5.1 million locations by the end of 2022.
Penetration rates on the base fiber network have recently been in
the 42%-43% range; penetration rates in new build areas are lower
on average but have been reaching similar levels as the base
markets within 24 months.
The company faces execution risk related to growing fiber-based
revenues. Risk is mitigated by the recent success in adding fiber
customers, as demonstrated by twelve consecutive quarters of
positive net additions and success in lowering churn. The
opportunity to capture additional broadband share is highlighted by
a footprint that has only one or no competitors in approximately
85% of its markets. The new locations to be served by fiber have
material upside, as penetration rates for the company's legacy,
less-competitive copper broadband network are in the low-teens
percentage range.
FCF: Fitch-calculated FCF, pro forma for cash paid for
non-recurring net reorganization costs approached $500 million in
2021. FCF is expected to be pressured in 2022 due to the expiration
of CAF II funding and increased capital spending on fiber
investments. The company's FCF deficits, depending on the pace of
the fiber build and success-based capital, could exceed $1 billion
annually on average over 2022-2025.
Challenging Operating Environment: The rating incorporates a
challenging operating environment for wireline operators. Fitch
expects Frontier's revenue growth trends to remain negative in 2022
due to the expiration of $332 million of annual Connect America
Fund II (CAF II) funding at the end of 2021.
Fitch expects this latter effect to be mitigated by the next
generation of broadband support through the Rural Digital
Opportunity Fund (RDOF); Frontier won $37 million annually (over a
ten-year period beginning in 2022) in the RDOF auction. Over time,
the de-emphasis of products, such as certain video offerings, will
affect revenues but will have a far lower effect on EBITDA margins
given programming cost offsets.
Secured Debt Notching: For rated entities with IDRs of 'BB-' or
above, Fitch does not perform a bespoke analysis of recovery upon
default for each issuance. Instead, Fitch uses notching guidance
whereby an issuer's first-lien secured debt can be notched upward
one or to two rating levels. Frontier's secured first-lien debt is
notched up two levels from the Long-Term IDR to 'BB+'/'RR2'. The
recovery is limited to 'RR2' given the first-lien debt is primarily
secured by equity pledges and there is material subsidiary-level
debt. The first mortgage bonds of Frontier Southwest Inc. are also
notched up two levels from the IDR to 'BB+'/'RR1', the security
provided by a first lien on substantially all of its assets
supporting the 'RR1' recovery.
Nonfirst-Lien Debt Notching: For corporate entities rated 'BB-' and
above, the ratings assigned to an issuer's nonfirst-lien debt
(second lien, unsecured and subordinated debt) are capped at 'RR4'
and there is no notching above the IDR. This leads to 'BB-'/'RR4'
ratings for Frontier's second-lien debt and subsidiary unsecured
debt, except for Frontier Florida LLC. The 'B+'/'RR5' rating
assigned to Frontier Florida's unsecured debt reflects that
Frontier Florida is a guarantor of Frontier's secured credit
facility.
Parent-Subsidiary Relationship: Fitch links the IDRs of Frontier
and its subsidiaries based on a strong parent/weak subsidiary
approach. The IDRs are equalized under Fitch's criteria based on an
analysis incorporating high strategic and operational incentives
and low legal incentives.
DERIVATION SUMMARY
Frontier has a higher exposure to the consumer market compared with
wireline peer Lumen Technologies, Inc. (BB/Stable), and to some
extent Windstream Services, LLC (B/Stable). The consumer market
continues to face secular challenges. Incumbent wireline operators
face competition for broadband customers from cable operators,
including Comcast Corp. (A-/Stable) and Charter Communications Inc.
(Fitch rates Charter's indirect subsidiary CCO Holdings, LLC
BB+/Stable). Fitch views Frontier's aggressive fiber investments
positively, with successful execution key to supporting the
longer-term credit profile.
Frontier needs to improve its competitive position in the
enterprise market, although the company's enterprise business has
some differences compared to the larger companies as it is less
exposed to large enterprise accounts. In this market, Frontier is
smaller than AT&T Inc. (BBB+/Stable), Verizon Communications Inc.
(A-/Stable) and Lumen. All three companies have an advantage with
national or multinational companies given their extensive
footprints in the U.S. and abroad. Windstream Services, LLC
(B/Stable) is somewhat smaller than Frontier and is a hybrid in
that it operates as an incumbent in rural markets and as a business
services provider with its enterprise and wholesale units, which
compete nationally.
Compared with Frontier, AT&T and Verizon have wireless offerings
that provide more service diversification. Fitch expects Frontier's
fiber build plans to cause its gross leverage to be moderately
higher over time than AT&T and Verizon.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer
-- Revenues decline in the high single digits in 2022, reflecting
the loss of CAF II revenues in 2022. Revenue grows nominally
in 2023, as the company starts to see the benefit of its focus
on fiber and increasing fiber broadband penetration. In 2024,
revenue is expected to grow in the low to mid-single digits
with increased fiber penetration;
-- The Fitch-calculated EBITDA margin declines from the high 30%
range in 2020 and 2021 to the mid-30% range in 2022, largely
due to the pressure from the loss of CAF II funding. Pressure
is partly offset by new, but lower, rural broadband subsidies;
-- Capital spending under Fitch's rating case reflects spending
of approximately $2.6 billion in 2022, currently at the high
end of company guidance. The level could be higher depending
on the pace of the fiber expansion and success-based capex
related to customer loading. The four-year period of 2023-2025
could see capex related to the fiber expansion plan in the at
a similar level or higher, depending on the pace of the
buildout and the rate of increase in penetration levels;
-- Cash taxes are nominal in 2022-2025.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Gross leverage, defined as total debt with equity
credit/operating EBITDA, expected to be sustained at or below
3.0x, while consistently generating positive FCF margins in
the midsingle digits;
-- Successful execution on cost-reduction plans;
-- Consistent gains in revenues from anticipated investments in
fiber and broadband product areas;
-- Demonstrated stable EBITDA and FCF growth.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A weakening of operating results, including deteriorating
margins and an inability to stabilize revenue erosion in key
product areas or offset EBITDA pressure through cost
reductions;
-- Discretionary management decisions, including but not limited
to execution of M&A activity that increases gross leverage
beyond 4.5x, in the absence of a credible deleveraging plan.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: At June 30, 2022, Frontier had $2.978 billion of
unrestricted cash and short-term investments, as well as $767
million available on its $900 million RCF, after letters of credit.
The RCF is due April 2025.
First-lien debt at Frontier Communications Holdings totals $5.357
billion, second-lien debt totals $2.75 billion and subsidiary debt
totals $850 million. Other than the revolver maturity in 2025,
there are no major maturities until 2027.
ISSUER PROFILE
Frontier is the nation's fourth-largest incumbent local exchange
carrier (ILEC) providing wireline voice, data and video service to
residential and business customers. At the end of 2021, the company
operated in 25 states and primarily serves medium-sized cities and
suburban and rural areas. The company had 2021 revenue of $6.4
billion.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Rating Prior
------ -----
Frontier North Inc. LT IDR BB- Affirmed BB-
senior unsecured LT BB- Affirmed RR4 BB-
Frontier Florida LLC LT IDR BB- Affirmed BB-
senior unsecured LT B+ Affirmed RR5 B+
Frontier California, Inc. LT IDR BB- Affirmed BB-
senior unsecured LT BB- Affirmed RR4 BB-
Frontier Communications
Holdings, LLC LT IDR BB- Affirmed BB-
senior secured LT BB+ Affirmed RR2 BB+
Senior Secured 2nd Lien LT BB- Affirmed RR4 BB-
Frontier Communications
Parent, Inc. LT IDR BB- Affirmed BB-
Frontier Southwest Inc. LT IDR BB- Affirmed BB-
senior secured LT BB+ Affirmed RR1 BB+
Frontier West Virginia Inc. LT IDR BB- Affirmed BB-
senior unsecured LT BB- Affirmed RR4 BB-
GEO GROUP: S&P Upgrades ICR to 'B' Following Debt Exchange
----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on The GEO Group
Inc. to 'B' from 'SD'. The outlook is stable.
S&P said, "We finalized our preliminary 'BB-' issue-level rating
and '1' recovery rating on the new first lien facilities and our
preliminary 'B' issue-level rating and '3' recovery rating on the
new second lien notes.
"We raised our issue-level ratings on the existing secured term
loan due March 2024 to 'BB-' from 'D' reflecting our expectation
for very high (90%-100%; rounded estimate: 95%) recovery in the
event of a default, and our issue-level ratings on all the
unsecured notes to 'CCC+' from 'D' reflecting our expectation for
negligible (0%-10%; rounded estimate: 0%) recovery.
"The stable outlook reflects our expectation GEO will generate
stable FOCF of about $90 million in 2023, allowing it to meet its
remaining near-term debt maturities while maintaining at least $200
million in total liquidity sources with gross adjusted leverage in
the low-5x area."
The GEO Group Inc. completed its debt exchange transaction,
significantly reducing its 2023, 2024, and 2026 debt maturities.
Despite uncertain industry operating conditions and our forecast
for moderate earnings declines, S&P believes GEO will meet its
near-term debt maturities while sustaining adequate liquidity and
leverage in the low-5x area over the next 12 months.
S&P said, "The 'B' issuer credit rating reflects significant
improvement in GEO's near-term liquidity position following the
debt exchange. Under GEO's new capital structure, the company's
near-term debt maturity burden over the next 24 months is reduced
to about $300 million, from more than $2 billion. We forecast the
company will manage these maturities with a healthy liquidity
buffer of at least $200 million even if it executes no further
asset sales. This will provide GEO with sufficient financial
flexibility to execute its key strategic initiatives, which include
contract renewals, the reactivation, lease, or sale of idle
facilities, and the development of detention alternatives.
"We forecast gross adjusted leverage to remain in the low-5x area
through 2023 with FOCF to debt of around 5% despite the increase in
interest expense and modest forecast earnings decline. GEO's pro
-forma interest expense will increase by about $50 million due to
the higher interest rates under its exchanged credit facilities. In
addition, we forecast the company's adjusted EBITDA margins will
contract to 20%-21% in 2023 from 23% as occupancy rates steadily
recover towards pre-pandemic levels, resulting in higher servicing
costs. Relative to its competitor CoreCivic Inc., GEO's customer
terms feature a higher proportion of fixed-rate contract
structures. While that makes GEO's revenues less sensitive to
changes in occupancy rates, its EBITDA margins are more sensitive
to a likely increase in servicing cost associated with higher
occupancy rates. Occupancy rates remain suppressed due to capacity
limitations related to COVID-19, as well as the Title 42 policy, a
pandemic era regulation which authorizes the Center for Disease
Control and Prevention (CDC) to prevent migrants from entering the
United States on public health concerns. As the pandemic recedes,
we believe lifting these regulations will provide a tailwind for
GEO's facilities and services, supporting its contract renewal
efforts albeit with an increase in labor and other servicing
costs.
"As a result of higher interest costs and EBITDA margin contraction
we forecast a decline in reported FOCF generation to $90 million in
2023 and $100 million in 2024. This is compared to our forecast
prior to the debt exchange of $150 million-$200 million in 2023 and
2024. Nevertheless, we expect GEO's cash flow generation will
remain healthy relative to rated peers at the 'B' rating.
"Our assessment reflects GEO's multiyear contracts, high
competitive entry barriers, and the essential nature of its
services. Rising social pressure and the non-renewal of federal
detention facility contracts under the January 2021 executive order
have pressured occupancy rates, reduced longer-term earnings
visibility, and resulted in modest revenue declines. Nevertheless,
we acknowledge the strong value proposition GEO provides its
government clients through its flexible capacity offerings and
significantly newer facilities which reduce taxpayer servicing
costs. GEO is one of the largest private sector providers of
support services for correctional and detention facilities in the
U.S., and its long-dated contracts and leading market share support
its competitive position."
While growth in alternative solutions to detention will pressure
long-term U.S. Secure Services segment revenues, GEO's Electronic
Monitoring and Supervision Services segment will likely expand as a
result. Key considerations underlying our assumption for
low-single-digit percent area annual revenue declines include:
-- Bureau of Prisons (BOP; about 4% of year-to-date revenue)
revenues remaining at risk for non-renewal under the executive
order are limited. The North Lake Correctional Facility in Michigan
($38 million in annual revenues) is the only remaining facility
subject to expiration under the executive order. S&P forecasts this
contract will expire at the end of September 2022.
-- U.S. Marshals Services (USMS; 16%) revenue declines should
remain modest. USMS populations are expected to remain stable.
GEO's services are logistically difficult to replace in the
near-term. Even certain contracts subject to the executive order
have recently been renewed (The Western Regional Detention
Facility) given the close proximity of the company's facilities to
federal courthouses. This demonstrates the critical role of GEO's
services. S&P assumes USMS contracts with perpetual maturities are
not terminated.
-- U.S. Immigrations and Customers Enforcement (ICE; 42%) revenues
are primarily fixed based on the agency's funded capacity of 34,000
beds. S&P believes these contracted volumes are likely to be
reduced in 2023 to reflect lower capacity utilization. That said,
the likely repeal of Title 42 will support ICE's capacity needs.
Furthermore, the high seasonality of immigration trends supports
ICE's needs for scalable capacity offerings. As a result, the vast
majority of ICE detainees are currently housed in private sector
facilities, relative to a small minority for the overall prison
population in the U.S.
The stable outlook reflects S&P's expectation GEO will generate
stable FOCF of about $90 million in 2023, allowing it to meet its
remaining near-term debt maturities while maintaining at least $200
million in total liquidity sources with gross adjusted leverage in
the low-5x area.
S&P could lower the ratings if it forecasts FOCF to debt will
weaken and remain below 5%, or if it expects adjusted gross
leverage will increase and remain over 6.5x. This could occur if:
-- Contract termination rates exceed our expectations resulting in
greater than anticipated revenue declines;
-- Rising servicing costs cause EBITDA margins to contract towards
the mid- to high-teens percent area; or
-- A larger than expected reduction in contracted ICE volumes
result in larger than expected earnings declines.
S&P could raise its ratings if we forecast GEO will sustain
adjusted leverage beneath 5x while generating FOCF to debt above
5%. In this case:
-- Earnings declines are more moderate than expected due to
stronger than anticipated contract renewals and cost controls;
-- Industry social and regulatory risks moderate improving our
long-term view of the private prison industry; and
-- GEO deploys cash towards early debt repayment.
Environmental, Social, And Governance
ESG credit indicators: E-2, S-5, G-3
Social factors are a very strong negative consideration in S&P's
ratings analysis of GEO. The controversial topic of human rights,
combined with evolving public sentiment and policy views on
criminal justice reform, expose privately operated criminal
detention facilities operators to ongoing social and governance
risks. The company is often criticized for various human rights
issues--including its confinement practices, prisoner violence, and
mistreatment--and is subject to ongoing litigation. In recent
years, select banks have chosen to end their lending relationships
with GEO once their commitments matured because of pressure from
activist advocacy groups."
GISSING NORTH: Seeks to Tap Wolfson Bolton as Bankruptcy Counsel
----------------------------------------------------------------
Gissing North America, LLC and affiliates seek approval from the
U.S. Bankruptcy Court for the Eastern District of Michigan to
employ Wolfson Bolton, PLLC as bankruptcy counsel.
Wolfson Bolton will render these legal services:
(a) advise the Debtors with respect to their powers and duties
in the continued management and operation of their businesses and
properties;
(b) administer the Debtors' Chapter 11 cases and oversee the
Debtors' affairs;
(c) prepare legal papers;
(d) prepare adversary proceedings to determine the validity,
extent, and priority of asserted security interests and liens on
the Debtors' assets and prosecute Chapter 5 causes of action;
(e) appear in bankruptcy court and at meetings to represent
the interests of the Debtors;
(f) negotiate with individual creditors and any creditors'
committee should one be appointed in these cases;
(g) advise the Debtors regarding the sale of their assets and
guide the Debtors through the sale process;
(h) prepare and prosecute a Chapter 11 plan of reorganization
and disclosure statement;
(i) communicate with creditors; and
(j) perform all other legal services for the Debtors in
connection with these Chapter 11 cases.
The firm received a retainer of $100,000 from Gissing North America
LLC.
As of the petition date, the firm continues to hold a retainer of
$89,063.57 in trust.
Scott Wolfson, Esq., an associate at Wolfson Bolton, disclosed in a
court filing that his firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Scott A. Wolfson, Esq.
Michelle H. Bass, Esq.
Anthony J. Kochis, Esq.
Wolfson Bolton PLLC
3150 Livernois, Suite 275
Troy, MI 48083
Telephone: (248) 247-7105
Facsimile: (248) 247-7099
Email: akochis@wolfsonbolton.com
About Gissing North America
Gissing North America LLC, formerly known as Conform Gissing
International, LLC, and its affiliates are innovative and
technology-driven suppliers of acoustic systems and weight
reduction solutions for the automotive industry. They provide
customers products that minimize noise, vibration, and harshness
throughout a vehicle and reduce vehicle weight by using proprietary
technology.
On Aug. 8, 2022, Gissing North America and its affiliates sought
Chapter 11 protection (Bankr. E.D. Mich. Lead Case No. 22-46160).
Gissing North America reported up to $100 million in both assets
and liabilities.
The Debtors tapped Wolfson Bolton, PLLC as bankruptcy counsel;
Steven R. Wybo of Riveron Management Services as chief
restructuring officer; and Livingstone Partners, LLC as investment
banker.
GISSING NORTH: Taps Livingstone Partners as Investment Banker
-------------------------------------------------------------
Gissing North America, LLC and affiliates seek approval from the
U.S. Bankruptcy Court for the Eastern District of Michigan to
employ Livingstone Partners, LLC as investment banker.
Livingstone will render these services:
(a) advise the Debtors concerning a potential transaction;
(b) review and familiarize itself with the business,
operations, and financial condition of Debtors, as well as other
matters it deems relevant;
(c) assist the Debtors in the preparation of a comprehensive
confidential information presentation describing the Debtors and in
the negotiation of any confidentiality agreements to be entered
into by third parties;
(d) assist in the identification and screening of potential
buyers;
(e) contact potential buyers on the Debtors' behalf and, as
appropriate, arrange for and orchestrate meetings between potential
buyers or investors and the Debtors;
(f) present to the Debtors and simultaneously to agent and the
lenders all proposals from potential buyers and make
recommendations as to the Debtors' appropriate negotiating strategy
and course of conduct;
(g) assist in all negotiations and in all document review as
reasonably requested and directed by the Debtors; and
(h) provide such other financial advisory and investment
banking services as are customary for similar transactions and as
may be mutually agreed upon in advance in writing by the Debtors
and Livingstone.
Livingstone will be compensated as follows:
(a) A monthly fee of $25,000;
(b) An accomplishment fee based on total consideration upon
consummation of a transaction; and
(c) reimbursement of certain fees and expenses.
Joseph Greenwood, a member of Livingstone Partners, disclosed in a
court filing that his firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Joseph Greenwood
Livingstone Partners, LLC
443 North Clark
Chicago, IL 60654
Telephone: (312) 670-5900
Email: greenwood@livingstonepartners.com
About Gissing North America
Gissing North America LLC, formerly known as Conform Gissing
International, LLC, and its affiliates are innovative and
technology-driven suppliers of acoustic systems and weight
reduction solutions for the automotive industry. They provide
customers products that minimize noise, vibration, and harshness
throughout a vehicle and reduce vehicle weight by using proprietary
technology.
On Aug. 8, 2022, Gissing North America and its affiliates sought
Chapter 11 protection (Bankr. E.D. Mich. Lead Case No. 22-46160).
Gissing North America reported up to $100 million in both assets
and liabilities.
The Debtors tapped Wolfson Bolton, PLLC as bankruptcy counsel;
Steven R. Wybo of Riveron Management Services as chief
restructuring officer; and Livingstone Partners, LLC as investment
banker.
GROM SOCIAL: Incurs $3.2 Million Net Loss in Second Quarter
-----------------------------------------------------------
Grom Social Enterprises, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $3.20 million on $1.14 million of sales for the three
months ended June 30, 2022, compared to a net loss of $2.50 million
on $1.39 million of sales for the three months ended June 30,
2021.
For the six months ended June 30, 2022, the Company reported a net
loss of $6.66 million on $2.37 million of sales compared to a net
loss of $4.82 million on $3.26 million of sales for the same period
in 2021.
As of June 30, 2022, the Company had $35.31 million in total
assets, $10.44 million in total liabilities, and $24.86 million in
total stockholders' equity.
At June 30, 2022, the Company had cash and cash equivalents of
$4,174,763.
Net cash used in operating activities for the six months ended June
30, 2022 was $3,383,231, compared to net cash used in operating
activities of $2,662,823 during the six months ended June 30, 2021,
representing an increase in cash used of $760,408, primarily due to
the increase in its net loss, recognition of a derivative
liability, change in its operating assets and liabilities,
stock-based compensation and amortization of debt discounts.
Net cash used in investing activities for the six months ended June
30, 2022 was $33,308, compared to net cash used in investing
activities of $2,790 during the six months ended June 30, 2021
representing an increase in cash used of $30,518. This change is
attributable to an increase in the amount of fixed assets purchased
and/or leasehold improvements made by its animation studio in
Manilla, Philippines during the six months ended June 30, 2022.
Net cash provided by financing activities for the six months ended
June 30, 2022 was $1,040,992, compared to net cash provided by
financing activities of $10,644,544 for the six months ended June
30, 2021, representing a decrease in cash provided of $9,308,013.
The primary reason for the decrease is attributable to the
Company's public equity offering completed in June 2021.
The Company's primary sources of cash from financing activities
during the six months ended June 30, 2022 were attributable to
$1,444,000 in proceeds from second tranche of convertible notes
issued to L1 Capital, as compared to $8,953,616 in proceeds from
the sale of its common stock, $950,000 and $100,000 in proceeds
from the sale of its Series B Stock and Series C Stock,
respectively, and $908,500 in proceeds from the sale of 8% to 12%
senior secured convertible notes during the six months ended June
30, 2021. These sources of cash were offset, in part, by the
repayment of convertible notes and loans payable of $107,469 and
cash settlement of a derivative liability of $295,539 in accordance
with a note conversion during the six months ended June 30, 2022,
as compared to repayments of convertible notes and loans for
$267,572 during the six months ended June 30, 2021.
The Company believes it has adequate working capital to meet its
operational needs for at least the next 12 months.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1662574/000168316822005837/grom_i10q-063022.htm
About Grom Social
Boca Raton, Florida-based Grom Social Enterprises, Inc. --
www.gromsocial.com -- is a media, technology and entertainment
company focused on delivering content to children under the age of
13 years in a safe secure Children's Online Privacy Protection Act
("COPPA") compliant platform that can be monitored by parents or
guardians.
Grom Social reported a net loss of $10.22 million for the year
ended Dec. 31, 2021, a net loss of $5.74 million for the yearended
Dec. 31, 2020, and a net loss of $4.59 million for the year ended
Dec. 31, 2019. As of March 31, 2022, the Company had $37.46
million in total assets, $9.90 million in total liabilities, and
$27.56 million in total stockholders' equity.
GULF COAST: Seeks to Hire George F. May as Litigation Counsel
-------------------------------------------------------------
Gulf Coast Brake and Motor, Inc. seeks approval from the U.S.
Bankruptcy Court for the Western District of Louisiana to employ
George May, Esq., an attorney at Twomey May, PLLC, as special
counsel.
The Debtor needs a special counsel to provide legal services in the
suit styled Gulf Coast Brake & Motor, Inc. et al v. MHWIRTH, Inc.,
Case No. 01-21-00492-CV, in the First Court of Appeals at Houston,
Texas.
The attorney will be paid at his hourly rate of $295. He received a
pre-bankruptcy retainer of $10,000.
Mr. May disclosed in a court filing that he is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
George F. May, Esq.
Twomey May, PLLC
1500 S. Dairy Ashford Rd., Ste. 325
Houston, TX 77077
Telephone: (713) 659-0000
Facsimile: (832) 201-8485
Email: george@twomeymay.com
About Gulf Coast Brake and Motor
Gulf Coast Brake and Motor, Inc. provides remanufactured Eddy
Current Brakes to the drilling industry for over 20 years.
Gulf Coast Brake and Motor Inc. filed a petition for relief under
Subchapter V of Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D.
La. Case No. 22-50450) on July 14, 2022, listing $100,000 to
$500,000 in both assets and liabilities. Armistead Mason Long has
been appointed as Subchapter V trustee.
Judge John W. Kolwe oversees the case.
The Debtor tapped H. Kent Aguillard as legal counsel and George F.
May, Esq., at Twomey May, PLLC as special counsel.
HEALTHMYNE INC: Taps Ostrow Reisin Berk & Abrams as Tax Preparer
----------------------------------------------------------------
HealthMyne, Inc. seeks approval from the U.S. Bankruptcy Court for
the Western District of Wisconsin to employ Ostrow Reisin Berk &
Abrams, Ltd. to finalize its 2021 and 2022 tax returns.
The firm will be compensated through an advanced, flat fee of
$12,000.
Robert Swenson, director at Ostrow Reisin Berk & Abrams, disclosed
in a court filing that his firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Robert Swenson
Ostrow Reisin Berk & Abrams, Ltd.
NBC Tower, Suite 1500
455 N. Cityfront Plaza Dr.
Chicago, IL 60611
Telephone: (312) 670-7444
Facsimile: (312) 670-8301
Email: rswenson@orba.com
About HealthMyne Inc.
HealthMyne, Inc. provides end-to-end radionomic data management and
analysis. It was founded in 2013 and is headquartered in Madison,
Wis.
HealthMyne filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. W.D. Wis. Case No. 22-10780) on May 15,
2022, listing up to $10 million in both assets and liabilities.
William E. Wallo serves as Subchapter V trustee.
Judge Catherine J. Furay oversees the case.
The Debtor tapped Justin M. Mertz, Esq., at Michael Best and
Friedrich, LLP as legal counsel and Ostrow Reisin Berk & Abrams,
Ltd. as tax preparer. Convergence Healthcare Advisors, LLC serves
as the Debtor's advisor in connection with the sale of its business
and assets.
HERMELL PRODUCTS: Has Interim Cash Collateral Access Thru Dec 24
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Connecticut
authorized Hermell Products, Inc. to use cash collateral in
accordance with the budget, with a 10% variance, from the date of
entry of the current preliminary order December 24, 2022.
As previously reported by the Troubled Company Reporter, parties
claiming an interest in the cash collateral -- (i) Windsor Federal
Savings and Loan Association, (ii) The Business Backer, LLC, (iii)
Celtic Bank/Kabbage Funding, (iv) State of Connecticut Department
of Economic and Community Development and (v) the United States
Small Business Administration -- assert valid lien and security
interest in the Debtor's personal property. Windsor Federal holds
a first priority lien status among the Claimants.
As adequate protection for the Debtor's use of cash collateral, the
Claimants are granted a lien upon post-petition assets.
The Debtor is directed to provide to the Court, Claimants, the
Sub-Chapter V Trustee and the U.S. Trustee by each Wednesday
following the close of a Budget week, a report of its actual
receipts and disbursements for the prior week with a comparison to
the Budget, along with a statement of cash on hand and receivables
at the beginning and end of such week. The Debtor will provide such
other additional documents and information that the Coun may
require in connection with analyzing the Budget, compliance with
the Budget, and any proposed Budget for future periods.
A copy of the order and the Debtor's budget for September to
December 31, 2022 is available for free at https://bit.ly/3KiIeDZ
from PacerMonitor.com.
The Debtor projects $932 per month in total expenses.
About Hermell Products
Hermell Products, Inc. -- https://www.hermell.com/ -- offers
comfortable and supportive medical equipment including, orthopedic
supports, slings, cervical and lumbar cushions, foot care products,
decubitus care products, wheelchair and seating cushions, and a
collection of products for the bed.
Hermell Products sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Conn. Case No. 21-20284) on March 25,
2021. In the petition signed by Ronald G. Pollack, president, the
Debtor disclosed $710,254 in assets and $2,125,418 in liabilities.
Judge James J. Tancredi oversees the case.
The Debtor tapped Novak Law Office, P.C. as its legal counsel and
Bardaglio Hart & Shuman, LLC as its accountant.
Timothy Miltenberger has been appointed Subchapter V Trustee of the
estate.
HGIM CORP: Moody's Withdraws 'Caa3' CFR Following Debt Repayment
----------------------------------------------------------------
Moody's Investors Service has withdrawn all of HGIM Corp.'s
ratings, including the Caa3 Corporate Family Rating and the Caa3
rating on its senior secured term loan, upon full repayment of the
company's outstanding balance on its term loan in August 2022.
Withdrawals:
Issuer: HGIM Corp.
Corporate Family Rating, Withdrawn, previously rated Caa3
Probability of Default Rating, Withdrawn, previously rated
Caa3-PD
Senior Secured Bank Credit Facility, Withdrawn, previously rated
Caa3 (LGD3)
Outlook Actions:
Issuer: HGIM Corp.
Outlook, Changed To Rating Withdrawn From Negative
RATINGS RATIONALE
HGIM refinanced its existing debt and fully repaid the outstanding
balance on its $350 million senior secured term loan. The company
does not have any other rated debt. Therefore, Moody's has
withdrawn all of HGIM's ratings since all of its rated debt is no
longer outstanding.
HGIM Corp. (under the Harvey Gulf International Marine trade name,
or Harvey Gulf) provides service vessels to support offshore
drilling and production operations predominantly in the US Gulf of
Mexico.
HIGHLAND CAPITAL: Exit Plan Survives Former-CEO's Circuit Appeal
----------------------------------------------------------------
Daniel Gill of Bloomberg Law reports that Highland Capital
Management LP's bankruptcy plan withstood its co-founder's appeal
after the Fifth Circuit found that creditor treatment was proper.
But the plan's powerful release of liability for certain parties,
called exculpation, needs to be curtailed since it "exceeds the
bankruptcy court's authority," according to the decision issued
Friday by the US Court of Appeals for the Fifth Circuit.
The appeal arguments by James Dondero, the investment firm's
co-founder and former CEO, is "bankruptcy-law blunderbuss," the
appeals court said.
The ruling came more than a year after a Texas bankruptcy court
shut down Dondero's objections and approved the plan.
About Highland Capital Management
Highland Capital Management, LP was founded by James Dondero and
Mark Okada in Dallas in 1993. Highland Capital is the world's
largest non-bank buyer of leveraged loans in 2007. It also manages
collateralized loan obligations. In March 2007, it raised $1
billion to buy distressed loans. Collateralized loan obligations
are created by bundling together loans and repackaging them into
new securities.
Highland Capital Management sought Chapter 11 protection (Bank. D.
Del. Case No. 19-12239) on Oct. 16, 2019. On Dec. 4, 2019, the case
was transferred to the U.S. Bankruptcy Court for the Northern
District of Texas and was assigned a new case number (Bank. N.D.
Texas Case No. 19-34054). Judge Stacey G. Jernigan is the case
judge.
At the time of the filing, Highland had between $100 million and
$500 million in both assets and liabilities.
The Debtor tapped Pachulski Stang Ziehl & Jones LLP as bankruptcy
counsel, Foley & Lardner LLP as special Texas counsel, and Teneo
Capital, LLC as litigation advisor. Kurtzman Carson Consultants,
LLC, is the claims and noticing agent.
The U.S. Trustee for Region 6 appointed a committee of unsecured
creditors on Oct. 29, 2019. The committee tapped Sidley Austin LLP
and Young Conaway Stargatt & Taylor LLP as bankruptcy counsel, and
FTI Consulting, Inc. as financial advisor.
HOYOS INTEGRITY: Seeks Cash Collateral Access, $2.5MM DIP Loan
--------------------------------------------------------------
Hoyos Integrity Corporation asks the U.S. Bankruptcy Court for the
District of Delaware for authority to, among other things, use cash
collateral and obtain additional post-petition financing.
Since entry of the Final DIP Order, the Debtor has resumed
operations and rehired several employees. The Debtor is in need of
additional post-petition financing to continue its operations and
maximize the value of its estate for the benefit of creditors. The
Debtor has worked with its DIP Lenders and Manuel A. Varela as DIP
Agent to negotiate at arm's-length the availability of additional
funds.
The Debtor seeks to borrow $2,500,000 in additional funds for a
total DIP Facility of $5,000,000.
The Debtor asserts the DIP Lenders are the only lenders that would
provide post-petition financing to the Debtor on the proposed
terms. The Debtor has minimal unencumbered assets, so few lenders,
if any, could or would extend the necessary credit or factoring to
the Debtor.
The Debtor's assert that if the increase in the DIP Facility is not
approved, the Debtor's ability to finance its operations will
cease. Accordingly, the Debtor's ability to continue its efforts to
maximize the value of its estate will be significantly impaired to
the detriment of all creditors and other parties-in-interest.
A copy of the motion is available at https://bit.ly/3dPF5zh from
PacerMonitor.com.
About Hoyos Integrity
Hoyos Integrity Corporation is an information technology company
that specializes in the fields of mobile, security, and
technology.
Hoyos Integrity sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 22-10365) on April 21,
2022. In the petition signed by Frank Tobin, president, the Debtor
disclosed up to $10 million in estimated assets and up to $50
million in estimated liabilities.
Judge Mary F. Walrath oversees the case.
Raymond H. Lemisch, Esq., at Klehr Harrison Harvey Branzburg LLP
serves as the Debtor's legal counsel.
JJS LOGISTICS: Taps Route Consultants as Marketing and Sales Agent
------------------------------------------------------------------
JJS Logistics of Florida, Inc. received approval from the U.S.
Bankruptcy Court for the Middle District of Florida to employ Route
Consultants as its marketing and sales agent.
The Debtor needs an agent to assist in the sale of its tangible
personal property in the form of equipment, scanners and all of its
assets excluding its vehicles.
The compensation shall be as follows:
(a) Route Consultants shall retain an 8.99 percent commission
from the gross sales price of all items of property sold prior to
or at the public auction sale.
(b) The firm shall recoup its advanced expenses, if any,
incurred in connection with its performance of the agreement solely
from its commission from the property sale proceeds.
As disclosed in court filings, Route Consultants is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached at:
Route Consultants
5511 Virginia Way, Ste. 400
Brentwood, TN 37027
Telephone: (629) 257-0265
Email: info@routeconsultant.com
About JJS Logistics of Florida
JJS Logistics of Florida Inc. is a Florida profit corporation which
provides local FedEx delivery commercial and residential services
in western Pasco County.
JJS Logistics of Florida sought protection under Subchapter V of
Chapter 11 of the U.S. Bankruptcy Court (Bankr. M.D. Fla. Case No.
22-01884) on May 10, 2022, listing as much as $500,000 in both
assets and liabilities. Amy Denton Mayer has been appointed as
Subchapter V trustee.
Judge Catherine Peek McEwen oversees the case.
Daniel E. Etlinger, Esq., at Jennis Morse Etlinger, is the Debtor's
counsel.
LADO ENTERPRISES: Taps Steven H. Greenfeld as Bankruptcy Counsel
----------------------------------------------------------------
Lado Enterprises, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Maryland to employ the Law Offices of
Steven H. Greenfeld, LLC as its counsel.
The firm will render these legal services:
(a) advise the Debtor regarding its powers and duties in the
continued management of its business affairs and property;
(b) prepare legal papers; and
(c) perform all other legal services for the Debtor which may
be necessary herein.
Steven Greenfeld, Esq., will be paid at his hourly rate of $475.
Mr. Greenfeld disclosed in a court filing that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Steven H. Greenfeld, Esq.
Law Offices of Steven H. Greenfeld, LLC
325 Ellington Boulevard, #610
Gaithersburg, MD 20878
Telephone: (301) 881-8300
Email: steveng@cohenbaldinger.com
About Lado Enterprises
Lado Enterprises Inc., an educational service provider in Silver
Spring, Md., sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Md. Case No. 22-14357) on Aug. 9, 2022,
listing $657,396 in assets and $1,447,002 in liabilities. Margaret
Lado Schepis, chief executive officer, signed the petition.
Judge Maria Ellena Chavez-Ruark oversees the case.
The Law Offices of Steven H. Greenfeld, LLC serves as the Debtor's
counsel.
LEAR CAPITAL: Committee Taps Dundon Advisers as Financial Advisor
-----------------------------------------------------------------
The committee of customers appointed in the Chapter 11 case of Lear
Capital, Inc. seeks approval from the U.S. Bankruptcy Court for the
District of Delaware to employ Dundon Advisers, LLC as its
financial advisor.
The firm will render these services:
(a) assist in the analysis, review, and monitoring of the
restructuring process;
(b) develop a complete understanding of the Debtor's
businesses and their valuations;
(c) enable the committee to appreciate, and advocate where
appropriate, what business practices may be both lawful and proper
from a consumer and investor perspective, and also permit the
Debtor to operate properly;
(d) monitor and, to the extent appropriate, assist the Debtor
in efforts to develop and solicit transactions which would support
unsecured creditor recovery;
(e) assist the committee in identifying, valuing and pursuing
estate causes of action;
(f) assist the committee to analyze, classify and address
claims against the Debtor and to participate effectively in any
effort in this Chapter 11 case to estimate contingent, unliquidated
and disputed claims;
(g) assist the committee to identify, preserve, value and
monetize tax assets of the Debtor;
(h) advise the committee in negotiations with the Debtor and
third parties;
(i) assist the committee in reviewing the Debtor's financial
reports;
(j) assist the committee in reviewing the Debtor's
cost/benefit analysis with respect to the assumption or rejection
of any executory contracts and leases;
(k) review and provide analysis of any proposed
debtor-in-possession financing or use of cash or precious metal
collateral;
(l) assist the committee in evaluating and analyzing avoidance
actions;
(m) review and provide analysis of any proposed disclosure
statement and Chapter 11 plan;
(n) attend meetings and assist in discussions with the
committee, the Debtor, the secured lenders, the U.S. Trustee and
other parties-in-interest and professionals;
(o) present at meetings of the committee, as well as meetings
with other key stakeholders and parties;
(p) perform such other advisory services for the committee as
may be necessary or proper in these proceedings, subject to the
aforementioned scope; and
(q) provide testimony on behalf of the committee as and when
may be deemed appropriate.
The hourly rates of the firm's professionals through June 30, 2023
are as follows:
Matthew Dundon, Principal $850
Peter Hurwitz, Principal $850
Alex Mazier, Managing Director $760
Eric Reubel, Managing Director $760
Heather Barlow, Managing Director $760
Tabish Rizvi, Managing Director $760
Joshua Nahas, Senior Adviser $760
Michael Garbe, Senior Director $625
April Kimm, Director $625
Lee Rooney, Director $625
Yi Zhu, Director $625
Gregory Hill, Senior Associate $475
Thomas Short, Senior Associate $475
David Chen, Associate $370
Michael Whelan, Associate $370
In addition, the firm will seek reimbursement for expenses
incurred.
Matthew Dundon, a principal at Dundon Advisers, disclosed in a
court filing that his firm is a "disinterested person" as defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Matthew Dundon
Dundon Advisers LLC
Ten Bank Street, Suite 1100
White Plains, NY 10606
Telephone: (917) 838-1930
Email: md@dundon.com
About Lear Capital
Lear Capital Inc. is a silver and gold coin dealer based in Los
Angeles, Calif.
Lear Capital filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. D. Del. Case No. 22-10165) on March 2,
2022, to weather possible future legal claims associated with its
sales practices as well as customer disclosures. Jami B. Nimeroff
serves as Subchapter V trustee.
As of Feb. 28, 2022, Lear Capital had assets of $34,449,619 against
liabilities of $22,355,066.
Judge Brendan Linehan Shannon oversees the case.
The Debtor tapped Shulman Bastian Friedman & Bui, LLP as general
bankruptcy counsel; Morris James, LLP as local counsel; Mitchell
Silberberg & Knupp, LLP and The Cook Law Firm, P.C. as special
counsels; Paladin Management Group as financial advisor; and Baker
Tilly US, LLP as accountant. BMC Group, Inc., is the claims,
noticing and administrative agent.
On July 13, 2022, the U.S. Trustee appointed the committee of
customers in this Chapter 11 case. The committee tapped Potter
Anderson & Corroon, LLP as legal counsel and Dundon Advisors, LLC
as financial advisor.
LEAR CAPITAL: Committee Taps Potter Anderson & Corroon as Counsel
-----------------------------------------------------------------
The committee of customers appointed in the Chapter 11 case of Lear
Capital, Inc. seeks approval from the U.S. Bankruptcy Court for the
District of Delaware to employ Potter Anderson & Corroon, LLP as
its legal counsel.
The firm will render these legal services:
(a) advise the committee with respect to its rights, powers
and duties;
(b) advise the committee in its consultations with the Debtor
relative to the administration of the Chapter 11 case;
(c) advise the committee in analyzing the claims of the
Debtor's customer creditors and in negotiating with such
creditors;
(d) review financial and operational information furnished by
the Debtor to the committee;
(e) investigate, and advise the committee with respect
thereto, the acts, conduct, assets, liabilities, and financial
condition of the Debtor or insiders and any other matters relevant
to the Chapter 11 case;
(f) advise the committee with respect to any contemplated sale
of the Debtor's assets, and assist, participate, and attend any
related auction and sale process;
(g) analyze the value of the Debtor's go forward businesses;
(h) assist the committee in its analysis of, and negotiations
with, the Debtor or any third-party concerning matters related to,
among other things, cash collateral usage and financing to be
obtained in the Chapter 11 case and the terms of any plan of
reorganization or liquidation of the Debtor;
(i) confer with the Debtor's management, counsel, and
financial advisor and any other retained professional;
(j) confer with the principals, counsel and advisors of the
Debtor's lenders and equity holders;
(k) assist and advise the committee with respect to its
communications with the Debtor's customers regarding significant
matters in the Chapter 11 case;
(l) represent the committee at hearings and other
proceedings;
(m) attend the meetings of the committee;
(n) review and analyze applications, orders, statements of
operations, and schedules filed with the court and advise the
committee as to their propriety;
(o) take necessary actions to protect and preserve the
interests of the committee;
(p) appear, as appropriate, before this court and the
appellate courts, to protect the interests of the committee before
those courts;
(q) assist the committee in preparing and filing pleadings,
motions, applications, answers, orders, reports and papers as may
be necessary in furtherance of the committee's interests and
objections; and
(r) perform such other legal services as may be required and
are deemed to be in the interests of the committee.
The hourly rates of the firm's counsel and staff are as follows:
Partners $800
Counsel $640
Associates $420 - $450
Paraprofessionals $305 - $320
In addition, the firm will seek reimbursement for expenses
incurred.
Christopher Samis, Esq., an attorney at Potter Anderson & Corroon,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Christopher M. Samis, Esq.
R. Stephen McNeill, Esq.
Elizabeth R. Schlecker, Esq.
Potter Anderson & Corroon LLP
1313 N. Market Street, 6th Floor
Wilmington, DE 19801
Telephone: (302) 984-6000
Facsimile: (302) 658-1192
Email: csamis@potteranderson.com
rmcneill@potteranderson.com
eschlecker@potteranderson.com
About Lear Capital
Lear Capital Inc. is a silver and gold coin dealer based in Los
Angeles, Calif.
Lear Capital filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. D. Del. Case No. 22-10165) on March 2,
2022, to weather possible future legal claims associated with its
sales practices as well as customer disclosures. Jami B. Nimeroff
serves as Subchapter V trustee.
As of Feb. 28, 2022, Lear Capital had assets of $34,449,619 against
liabilities of $22,355,066.
Judge Brendan Linehan Shannon oversees the case.
The Debtor tapped Shulman Bastian Friedman & Bui, LLP as general
bankruptcy counsel; Morris James, LLP as local counsel; Mitchell
Silberberg & Knupp, LLP and The Cook Law Firm, P.C. as special
counsels; Paladin Management Group as financial advisor; and Baker
Tilly US, LLP as accountant. BMC Group, Inc., is the claims,
noticing and administrative agent.
On July 13, 2022, the U.S. Trustee appointed the committee of
customers in this Chapter 11 case. The committee tapped Potter
Anderson & Corroon, LLP as legal counsel and Dundon Advisors, LLC
as financial advisor.
LOVE RENOVATIONS: Seeks to Hire eXp Realty as Real Estate Broker
----------------------------------------------------------------
Love Renovations & Design, LLC seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Pennsylvania to employ
eXp Realty, LLC as its real estate broker.
The Debtor needs the assistance of a broker to market and sell its
real property located at 1533 4th St., Philadelphia.
eXp Realty will receive a commission equal to 5 percent of the
gross sale price of the real property.
As disclosed in court filings, eXp Realty is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Omar Din
eXp Realty, LLC
28 Valley Road, Suite 1
Montclair, NJ, 07042
Telephone: (866) 201-6210
About Love Renovations & Design
Love Renovations & Design, LLC sought relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa. Case No.
22-12011) on Aug. 1, 2022, listing as much as $1 million in both
assets and liabilities. Leona Mogavero, Esq., serves as Subchapter
V trustee.
Judge Magdeline D. Coleman oversees the case.
Jeffrey S. Cianciulli, Esq., at Weir Greenblatt Pierce, LLP serves
as the Debtor's counsel.
LOVE RENOVATIONS: Seeks to Tap Weir Greenblatt Pierce as Counsel
----------------------------------------------------------------
Love Renovations & Design, LLC seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Pennsylvania to employ
Weir Greenblatt Pierce, LLP as its counsel.
The firm will render these legal services:
(a) advise and assist the Debtor with respect to its rights,
powers and duties and take all necessary actions to protect and
preserve the Debtor's estates;
(b) prepare legal documents;
(c) handle inquiries and calls from creditors and counsel to
interested parties regarding pending matters and the general status
of this Chapter 11 case;
(d) appear in court;
(e) attend meetings and negotiate with representatives of
creditors and other parties-in-interest;
(f) advise and assist the Debtor in maximizing value in
connection with the formulation, negotiation and promulgation of a
sale of assets, other transaction, or a disclosure statement and
Chapter 11 plan and all documents related thereto; and
(g) perform all other necessary legal services for the Debtor
in connection with the prosecution of this Chapter 11 case.
The hourly rates of the firm's counsel and staff are as follows:
Partners $360 - $700
Associates $260 - $450
Paralegals $260 - $185
In addition, the firm will seek reimbursement for expenses
incurred.
The firm received a retainer of $5,524.
Jeffrey Cianciulli, Esq., an attorney at Weir Greenblatt Pierce,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Jeffrey S. Cianciulli, Esq.
Weir Greenblatt Pierce LLP
The Widener Building
1339 Chestnut St., Suite 500
Philadelphia, PA 19107
Telephone: (215) 665-8181
Facsimile: (215) 665-8464
Email: jcianciulli@wgpllp.com
About Love Renovations & Design
Love Renovations & Design, LLC sought relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa. Case No.
22-12011) on Aug. 1, 2022, listing as much as $1 million in both
assets and liabilities. Leona Mogavero, Esq., serves as Subchapter
V trustee.
Judge Magdeline D. Coleman oversees the case.
Jeffrey S. Cianciulli, Esq., at Weir Greenblatt Pierce, LLP serves
as the Debtor's counsel.
LOYALTY VENTURES: Moody's Lowers CFR to B2 & Alters Outlook to Neg.
-------------------------------------------------------------------
Moody's Investors Service has downgraded Loyalty Ventures Inc.'s
corporate family rating to B2 from B1, probability of default
rating to B2-PD from B1-PD, senior secured term loan B to B2 from
B1, senior secured term loan A to B2 from B1, and senior secured
revolving credit facility to B2 from B1. Moody's has also
downgraded the speculative grade liquidity rating to SGL-3 from
SGL-1. At the same time, Moody's changed the outlook to negative
from stable.
"The rating actions reflect Moody's expectation that Loyalty
Ventures' operating and financial performance will remain weak over
the next 12-24 months as cost inflation and softening in demand
will limit EBITDA and cash flow recovery and result in leverage
around 7x" stated Aziz Al Sammarai, a Moody's analyst.
Downgrades:
Issuer: Loyalty Ventures Inc.
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-3 from
SGL-1
Senior Secured Bank Credit Facility, Downgraded to B2 (LGD3) from
B1 (LGD3)
Outlook Actions:
Issuer: Loyalty Ventures Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Loyalty Ventures' B2 CFR is constrained by: Moody's expectation
that leverage will remain high at around 7x over the next 12-18
months; weakness in its short-term loyalty campaign business
(BrandLoyalty) as a result of demand uncertainties, and supply
chain challenges including increased shipping costs; customer
concentration within its coalition loyalty rewards business (AIR
MILES) following the recent exit by Sobeys; and potential for
increased competition within the loyalty program market which could
lead to further loss of sponsors.
The company's rating benefits from its: good brand name Air Miles
business that is a well-recognized and established in Canada;
business diversification provided by its BrandLoyalty business that
has customers in over 50 countries globally; and adequate
liquidity.
The negative outlook reflects Moody's view that uncertain consumer
sentiment, cost inflation, uncertainties related to Air Miles
reward miles redemption and limited visibility for behavior of
existing Air Miles sponsors could further weaken liquidity and
elevate leverage over the next 12-18 months.
Loyalty Ventures has adequate liquidity (SGL-3), with sources
around $185 million over the next four quarters compared to around
$51 million of term loan amortization. Sources are comprised of
cash on hand of around $47 million at June 2022 (balance sheet cash
of around $97 million less around $50 million Moody's believes the
company needs to operate the company), free cash flow of about $10
million (including about $50 million from net positive change in
redemption settlement assets) and $127 million of availability
under the company's $150 million revolving credit facility due
November 2026. Moody's expects revolver commitment will be reduced
by $2.8 million a quarter starting from September 2022. The
company's financial covenants include a Total Leverage Ratio of
5.75x with step downs and Moody's expect the company to remain in
compliance of this covenant. Alternate sources of liquidity are
limited given that Loyalty Ventures assets are encumbered.
Loyalty Ventures' senior secured credit facilities are rated B2,
the same level as the company's corporate family rating, as they
represent virtually all of the debt in the company's debt capital
structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Loyalty Venture's ratings could be downgraded if liquidity weakens,
current challenging industry environment persists delaying EBITDA
recovery, further loss of key customers, adjusted Debt/EBITDA is
sustained above 6x beyond 2023, or retained cash flow/debt falls
below 10%.
The company's ratings could be upgraded if the company's
debt/EBITDA is sustained below 5x, retained cash flow/debt is
sustained above 15%, scale increases through new sponsor wins and
retention of existing collectors, and liquidity improves.
Loyalty Ventures Inc. is a Dallas, Texas-based provider of loyalty
and rewards programs to retailers across several verticals such as
grocery, fuel and financial services. The company operates through
two segments; its AIR MILES coalition-based rewards program in the
Canadian marketplace, and its BrandLoyalty segment that focuses on
providing short term loyalty programs to retailers in approximately
45 countries globally but focused on Europe.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
MADISON SQUARE: Panel Taps Pachulski Stang Ziehl & Jones as Counsel
-------------------------------------------------------------------
The official committee of unsecured creditors appointed in the
Chapter 11 case of Madison Square Boys & Girls Club, Inc. seeks
approval from the U.S. Bankruptcy Court for the Southern District
of New York to employ Pachulski Stang Ziehl & Jones, LLP as its
legal counsel.
The firm will render these legal services:
(a) assist, advise, and represent the committee in its
consultations with the Debtor regarding the administration of this
case;
(b) assist, advise, and represent the committee in analyzing
the Debtor's assets and liabilities; investigate the extent and
validity of liens or other interests in the Debtor's property; and
participate in and review any proposed asset sales, asset
dispositions, financing arrangements, and cash collateral
stipulations or proceedings;
(c) review and analyze all applications, motions, orders,
statements of operations and schedules filed with the court by the
Debtor or third parties;
(d) prepare legal papers;
(e) represent the committee at hearings before the court, and
communicate with the committee regarding the issues raised as well
as the decisions of the court;
(f) represent the committee at all mediation sessions, if any,
before the court;
(g) perform all other legal services for the committee which
may be necessary and proper in this case and any related
proceedings;
(h) represent the committee in connection with any litigation,
disputes, or other matters that may arise in connection with this
case or any related proceedings;
(i) assist, advise, and represent the committee in any manner
relevant to reviewing and determining the Debtor's rights and
obligations under leases and other executory contracts;
(j) assist, advise, and represent the committee in
investigating the acts, conduct, assets, liabilities, and financial
condition of the Debtor, the Debtor's operations, and the
desirability of the continuance of any portion of those
operations;
(k) assist, advise, and represent the committee in its
participation in the negotiation, formulation and drafting of a
plan of liquidation or reorganization;
(l) assist, advise, and represent the committee on the issues
concerning the appointment of a trustee or examiner under Section
1104 of the Bankruptcy Code;
(m) assist, advise, and represent the committee in
understanding its powers and its duties under the Bankruptcy Code
and the Bankruptcy Rules, and in performing other services as are
in the interests of those represented by the committee;
(n) assist, advise, and represent the committee in the
evaluation of claims and on any litigation matters; and
(o) provide such other services to the committee as may be
necessary in this case or any related proceedings.
The hourly rates of the firm's counsel and staff are as follows:
Partners $945 - $1,775
Counsel $725 - $1,425
Associates $675 - $825
Paralegals $460 - $495
In addition, the firm will seek reimbursement for expenses
incurred.
James Stang, Esq., a partner at Pachulski Stang Ziehl & Jones,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Mr.
Stang also disclosed the following:
Question: Did you agree to any variations from, or
alternatives to, your standard or customary billing arrangements
for this engagement?
Answer: Yes. Pachulski proposes to discount its regular
attorney hourly rate to the extent such rates exceed a blended rate
of $900 per hour for attorneys on a cumulative basis.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Answer: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and reasons for the difference.
Answer: Not applicable.
Question: Has your client approved your respective budget and
staffing plan, and, if so, for what budget period?
Answer: Pachulski is preparing a budget for its client's
approval. The committee and its professionals reserve all rights to
seek approval of committee professional fees.
Pachulski can be reached through:
James I. Stang, Esq.
John W. Lucas, Esq.
Malhar S. Pagay, Esq.
Gillian N. Brown, Esq.
Pachulski Stang Ziehl & Jones LLP
780 Third Avenue, 34th Floor
New York, NY 10017-2024
Telephone: (212) 561-7700
Facsimile: (212) 561-7777
Email: jstang@pszjlaw.com
jlucas@pszjlaw.com
mpagay@pszjlaw.com
gbrown@pszjlaw.com
About Madison Square Boys & Girls Club
Madison Square Boys & Girls Club Inc. --
https://www.madisonsquare.org -- is to save and enhance the lives
of New York City boys and girls who by means of economic and/or
social factors are most in need of its services.
Madison Square Boys & Girls Club, Inc. filed a voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y.
Case No. 22-10910) on June 29, 2022. In the petition filed by
Jeffrey Dold, chief financial officer, the Debtor disclosed $50
million to $100 million in assets and $100 million to $500 million
in liabilities.
Judge Sean H. Lane oversees the case.
The Debtor tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP as
bankruptcy counsel; and Pillsbury Winthrop Shaw Pittman, LLP and
Friedman Kaplan Seiler & Adelman, LLP as special counsels. Epiq
Corporate Restructuring, LLC is the claims and noticing agent.
On July 13, 2022, the U.S. Trustee for Region 2 appointed an
official committee of unsecured creditors in this Chapter 11 case.
The committee tapped Pachulski Stang Ziehl & Jones, LLP as its
legal counsel.
MANHATTAN CAPITAL: Case Summary & Two Unsecured Creditors
---------------------------------------------------------
Debtor: Manhattan Capital, LLC
1761 Yardley-Langhorne Road
Morrisville, PA 19067
Chapter 11 Petition Date: August 23, 2022
Court: United States Bankruptcy Court
Eastern District of Pennsylvania
Case No.: 22-12207
Judge: Hon. Eric L. Frank
Debtor's Counsel: Albert A. Ciardi III, Esq.
CIARDI CIARDI & ASTIN
1905 Spruce Street
Philadelphia, PA 19103
Tel: 215-557-3550
Email: aciardi@ciardilaw.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Gerald Katzoff as managing member.
A copy of the Debtor's list of two unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/M6OLIYQ/Manhattan_Capital_LLC__paebke-22-12207__0001.2.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/MVBIR4Q/Manhattan_Capital_LLC__paebke-22-12207__0001.0.pdf?mcid=tGE4TAMA
MANNINGTON MILLS: S&P Affirms 'BB-' ICR, Outlook Stable
-------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' issuer credit rating on U.S.
flooring manufacturer Mannington Mills Inc. and its 'BB-'
issue-level rating on its term loan. Our '3' recovery rating on the
term loan is unchanged.
S&P said, "The stable outlook reflects our expectation that
Mannington Mills will continue to operate with leverage metrics we
consider appropriate for the current rating.
"We expect Mannington Mills' S&P Global Ratings-adjusted debt
leverage will be in the 4x-5x range in fiscal years 2022 and 2023.
Through 2022 and into 2023, we expect the company will increase its
revenue ($960.4 million in fiscal 2021) by the low- to mid-single
digit percent area as it works through its backlog while market
demand remains relatively cool relative to peaks levels a year ago.
Still, we anticipate that Mannington Mills' expansion in fiscal
year 2022 could moderate given the diminishing tailwinds in the
building materials industry. This compares with the record 12.4%
increase in the company's revenue in 2021. The slower pace of
growth mainly reflects our expectation for weaker demand in the
company's key end markets given our forecast that residential
construction spending will decline by 4.6% in calendar year 2022
and 2.1% in 2023, as well as our estimate for flat total annual
housing starts of 1.6 million in 2022, declining to 1.5 million in
2023."
Mannington typically operates with a gross margin of 29%-30% and
EBITDA margins in the high single digit percent area. The company
has used pricing initiatives and cost controls to maintain these
levels through the inflationary environment. S&P forecasts that
Mannington will sustain these metrics such that its leverage
remains in line with the current rating.
The demand for flooring is cyclical and tends to decline amid
recessionary environments. Historically, flooring manufacturers
have shown sensitivity to economic downturns and underperform other
manufacturers of more non-discretionary building product types
during recessions. The probability that the U.S. will enter a
recession is also rising along with the decline in consumer
sentiment. S&P said, "We think the demand for flooring products
could slow as sustained high inflation and rising interest rates
limit the demand for repair and remodel (R&R) projects, which would
ultimately reduce the company's future earnings. However,
Mannington's solid balance sheet, global vertical integration, and
manageable cash flows will likely enable it to somewhat offset the
effects of declining demand on its operating performance. Although
we expect a slowdown from the historically high demand levels in
2021, steady homebuilding rates, the normalization of its backlog,
and demand from other key sectors will likely provide it with some
near-term support."
Mannington Mills operates in the highly competitive flooring
industry and has limited pricing power. Overall, the flooring
industry is very competitive and the demand for the company's
legacy products made with vinyl, laminate, and wood is declining as
customer substitute rigid-core LVT products for more traditional
products. Mannington is a leader in rigid-core LVT and has begun
manufacturing these products at its Calhoun, Ga. plant to better
compete against imports from China. While the company has invested
in product innovation, we assess the business as constrained by its
sole focus on flooring products. Given its 2021 revenue of $960
million, which compares with the $11 billion of revenue reported by
its competitor Mohawk Industries Inc. over the same period, we view
Mannington as having weaker profitability and market strength than
the larger players in its industry.
The stable outlook on Mannington reflects S&P's expectation that it
will generate moderate sales and implement pricing initiatives to
offset ongoing input-cost inflation such that its S&P Global
Ratings-adjusted leverage remains in the 4x-5x range.
S&P could lower its ratings on Mannington over the next 12 months
if its debt to EBITDA exceeds 5x with little prospects for
improvement. This could occur if:
-- There is a significant decline in residential or R&R demand
that causes its EBITDA to decline by $70 million; or
-- The company pursues debt-funded acquisitions or share-holder
distributions such that its total S&P Global Ratings-adjusted debt
increases above $350 million while its EBITDA remains relatively
stable.
Although unlikely, S&P could raise its rating on Mannington if:
-- It improves its debt to EBITDA below 3x, which could occur if
its gross margins rise by 200 basis points and its EBITDA exceeds
$120 million over the next 12 months; and
-- The company generates significant positive discretionary cash
flow on a sustained basis.
ESG credit indicators: E-2, S-2, G-2
ESG factors have no material influence on S&P's credit rating
analysis of residential and commercial flooring manufacturer and
distributor Mannington Mills Inc.
MARTIN MIDSTREAM: Moody's Alters Outlook on 'Caa1' CFR to Positive
------------------------------------------------------------------
Moody's Investors Service changed Martin Midstream Partners L.P.'s
(MMLP) outlook to positive from stable. Concurrently, Moody's
affirmed MMLP's Corporate Family Rating at Caa1, senior secured 1.5
lien notes due 2024 rating at Caa1 and senior secured second lien
notes due 2025 rating at Caa2. MMLP's Speculative Grade Liquidity
(SGL) rating remains SGL-3.
"The change in Martin Midstream's outlook to positive reflects
Moody's expectation for MMLP to maintain low leverage over the next
12-18 months, and once it addresses its refinancing needs the
rating could be upgraded," said Jonathan Teitel, a Moody's
analyst.
Affirmations:
Issuer: Martin Midstream Partners L.P.
Corporate Family Rating, Affirmed Caa1
Probability of Default Rating, Affirmed Caa1-PD
Senior Secured 1.5 Lien Regular Bond/Debenture, Affirmed Caa1
(LGD3)
Senior Secured 2nd Lien Regular Bond/Debenture, Affirmed Caa2
(LGD5)
Outlook Actions:
Issuer: Martin Midstream Partners L.P.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
MMLP's Caa1 CFR and positive outlook reflects refinancing risks in
volatile capital market conditions balanced by Moody's expectation
for improved EBITDA generation in 2022 and maintenance of low
leverage. Moody's expects EBITDA to remain solid into 2023 but to
moderate somewhat from stronger than average operating conditions
in 2022.
MMLP has small scale balanced by a diversified asset base and
long-standing customer relationships. A majority of MMLP's EBITDA
is derived from fee-based contracts mitigating commodity price risk
though volume risk remains. MMLP's focus on the US Gulf Coast
results in concentrated exposure to regional drivers but also
positions the partnership well to serve oil refiners which are
large customers. There are risks inherent in the master limited
partnership business model but currently MMLP pays only a nominal
distribution to limited partners. While Moody's anticipates that
MMLP will eventually increase distributions, Moody's also expects
reduction of borrowings on the revolver and maintenance of low
leverage to be prioritized when the company considers boosting
distributions. Favorable governance considerations include the
steps that MMLP has taken to reduce leverage.
MMLP's SGL-3 rating reflects Moody's expectation for MMLP to
maintain adequate liquidity predicated on MMLP obtaining an
extension of its revolver in the near term. MMLP's $275 million
revolver matures in August 2023. As of June 30, 2022, $149 million
of borrowings were outstanding on the facility and $39 million in
letters of credit outstanding. Moody's expects letters of credit
will decrease as MMLP enters the butane sale season. Revolver
financial covenants include a maximum leverage ratio, minimum
interest coverage ratio and maximum first lien leverage ratio.
Moody's expects the company to remain in compliance with these
covenants through 2023.
MMLP's approximately $54 million senior secured 1.5 lien notes due
February 2024 are rated Caa1 and the approximately $291 million
senior secured second lien notes due February 2025 are rated Caa2.
The revolver (unrated) has a first lien priority claim on assets,
ahead of both the 1.5 lien and second lien notes.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include an extended debt
maturity profile and sustained adequate liquidity; consistent
EBITDA generation and maintenance of low leverage; and
EBITDA/interest above 2.5x.
Factors that could lead to a downgrade include weakening
liquidity.
MMLP, headquartered in Kilgore, Texas, is a publicly traded master
limited partnership with primary operations in the US Gulf Coast
region. Martin Resource Management Corporation controls Martin
Midstream GP LLC, which is MMLP's general partner, and owns 15.7%
of MMLP's outstanding limited partner units.
The principal methodology used in these ratings was Midstream
Energy published in February 2022.
MAYAN POOLS: Wins Access to Cash Collateral Thru Jan 2023
---------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia,
Rome Division, authorized Mayan Pools & Sports Construction, LLC to
use cash collateral on a final basis through January 31, 2023, or
upon entry of an order confirming a plan of reorganization,
whichever occurs first.
If the Debtor has not confirmed a plan by January 31, the Debtor
may file a motion, with appropriate notice and opportunity to be
heard by the relevant parties, to approve additional use of cash
collateral.
As previously reported by the Troubled Company Reporter, the Debtor
is a borrower on certain loans with ODK Capital, LLC and the United
States Small Business Administration, which assert security
interests in certain of the Debtor's personal property.
To provide adequate protection for the Debtor's use of cash
collateral, the Lenders are granted a valid and properly-perfected
lien on all property acquired by the Debtor after the Petition
Date. The Adequate Protection Lien will be deemed automatically
valid and perfected upon entry of the Order.
A copy of the order is available at https://bit.ly/3pCuAlz from
PacerMonitor.com.
About Mayan Pools & Sports Construction, LLC
Mayan Pools & Sports Construction, LLC provides commercial and
residential swimming pool construction and remodeling services and
other outdoor living construction services.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-40744) on June 20,
2022. In the petition signed by Jeff Anderson, managing member, the
Debtor disclosed up to $500,000 in assets and up to $1 million in
liabilities.
Judge Barbara Ellis-Monro oversees the case.
William A. Rountree, Esq., at Rountree, Leitman Klein & Geer, LLC
is the Debtor's counsel.
MID SOUTH RECYCLING: Files for Chapter 11 With $890K Debt
---------------------------------------------------------
Mid South Recycling Inc. has sought bankruptcy protection without
stating a reason. The Debtor filed as a small business debtor
seeking relief under Subchapter V of Chapter 11 of the Bankruptcy
Code.
The Debtor disclosed $1.081 million in assets against $891,300 in
liabilities as of the bankruptcy filing. The Debtor owns the
property at 2989 SR 247 Russellville, AR, 4 acres, mini-storage,
and warehouse (10,000 square feet), which property has been
appraised for $700,000.
According to court filing, Mid South Recycling estimates between 1
and 49 unsecured creditors. The petition states funds will be
available to unsecured creditors.
About Mid South Recycling
Mid South Recycling Inc. primarily operates in the Recycling, Waste
Materials business/industry.
Mid South Recycling Inc. filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. E.D. Ark.
Case No. 22-12261) on Aug. 19, 2022. In the petition filed by Lisa
Garretson, as officer, the Debtor reported assets between $1
million and $10 million and liabilities between $500,000 and $1
million.
The Debtor is represented by Vanessa Cash Adams of AR Law Partners,
PLLC.
The Subchapter V trustee:
Donald A. Brady
Brady Law Firm
807 S. West End Street
Springdale, AR 72764
479-935-2632
don@bradylaw-nwa.com
MV TRUCKING: Case Summary & 12 Unsecured Creditors
--------------------------------------------------
Debtor: MV Trucking and Logistics, LLC
FDBA MV Trucking and Tire Services, LLC
830 Morris Turnpike, 4th Floor
Short Hills, NJ 07078
Chapter 11 Petition Date: August 23, 2022
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 22-16657
Debtor's Counsel: Albert A. Ciardi III, Esq.
CIARDI CIARDI & ASTIN
1905 Spruce Street
Philadelphia, PA 19103
Tel: 215-557-3550
Email: aciardi@ciardilaw.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Laura Gabriella Ramos as managing
member.
A copy of the Debtor's list of 12 unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/JKUXDJA/MV_Trucking_and_Logistics_LLC__njbke-22-16657__0002.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/JPC6NOQ/MV_Trucking_and_Logistics_LLC__njbke-22-16657__0001.0.pdf?mcid=tGE4TAMA
NATURALSHRIMP INC: Incurs $2.2 Million Net Loss in First Quarter
----------------------------------------------------------------
Naturalshrimp Incorporated filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting a net loss
of $2.20 million on $36,336 of sales for the three months ended
June 30, 2022, compared to a net loss of $2.56 million on zero sale
for the three months ended June 30, 2021.
As of June 30, 2022, the Company had $35.45 million in total
assets, $24.71 million in total liabilities, $2.02 million in
series E redeemable convertible preferred stock, $43.61 million in
series F redeemable convertible preferred stock, and a total
stockholders' deficit of $34.89 million.
Naturalshrimp said, "The Company has accumulated losses through the
period to June 30, 2022 of approximately $152,758,000 as well as
negative cash flows from operating activities of approximately
$2,055,000. Presently, the Company does not have sufficient cash
resources to meet its plans in the twelve months following the date
of issuance of this filing. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
Management is in the process of evaluating various financing
alternatives in order to finance the continued build-out of our
equipment and for general and administrative expenses. These
alternatives include raising funds through public or private equity
markets and either through institutional or retail investors.
Although there is no assurance that the Company will be successful
with our fund-raising initiatives, management believes that the
Company will be able to secure the necessary financing as a result
of ongoing financing discussions with third party investors and
existing shareholders."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1465470/000149315222023485/form10-q.htm
About NaturalShrimp
NaturalShrimp, Inc. is a publicly traded aqua-tech Company,
headquartered in Dallas, with production facilities located near
San Antonio, Texas. The Company has developed a commercially
viable system for growing shrimp in enclosed, salt-water systems,
using patented technology to produce fresh, never frozen, naturally
grown shrimp, without the use of antibiotics or toxic chemicals.
NaturalShrimp systems can be located anywhere in the world to
produce gourmet-grade Pacific white shrimp.
NaturalShrimp reported a net loss of $86.30 million for the year
ended Dec. 31, 2022, a net loss of $3.59 million for the year ended
March 31, 2021, and a net loss of $4.81 million for the year ended
March 31, 2020. As of March 31, 2022, the Company had $37.90
million in total assets, $24.88 million in total liabilities, $2.54
million in series E redeemable convertible preferred stock, $43.61
million in series F redeemable convertible preferred stock, and a
total stockholders' deficit of $33.13 million.
Dallas, Texas-based Turner, Stone & Company, L.L.P., the Company's
auditor, issued a "going concern" qualification in its report dated
June 29, 2022, citing that the Company has suffered significant
losses from inception and has a significant working capital
deficit. These conditions raise substantial doubt about its
ability to continue as a going concern.
OFF-SPEC SOLUTIONS: Wins Cash Collateral Access Thru Sept 16
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Idaho authorized
Off-Spec Solutions, LLC, dba Cool Mountain Transport, to use cash
collateral on an interim basis in accordance with the budget, with
a 10% variance.
The Debtor requires the use of cash collateral to operate its
business in the ordinary course and maintain its properties in
accordance with state and federal law.
The Debtor's lender, Fifth Third Bank, N.A., consented to the
Debtor's use of cash collateral and use, sale or lease of other
collateral during the term of the Court's order.
The Debtor is authorized and directed to accept capital
contributions from its existing members in the aggregate amount of
$120,000 -- $60,000 of which will be made on or before on or before
September 8 and $60,000 of which will be made on or before
September 18.
The Capital Contributions will be treated as equity in the Debtor
and not debt. The Debtor is authorized to execute any documents
related to the Capital Contributions provided they are consistent
with the Order and in form and substance acceptable to the Lender.
As adequate protection, the Lender is granted valid and perfected,
replacement security interests in, and liens on, all of the
Debtor's right, title and interest in, to and under the Collateral,
subject only to any validly perfected security interest or lien
senior to the liens of the Lender on the Petition Date.
The Replacement Liens granted will constitute valid and duly
perfected security interests and liens.
The Debtor's right to use cash collateral will terminate upon the
earlier of (a) the occurrence of (a) Default occurs, or (b)
September 16, 2022 and the Debtor (i) may not use, sell or lease
cash collateral; (ii) will segregate and account for any cash
collateral in its possession, custody or control; and (iii) will
hold such cash collateral for the exclusive benefit of the Lender,
subject to further Court order; provided, however, the obligations
and rights of the Lender and the Debtor with respect to all
transactions which have occurred prior to the Termination Date will
remain unimpaired and unaffected by any such termination and will
survive such termination; provided further upon such termination,
the Lender will be deemed to have retained all of its rights and
remedies.
A hearing on the matter is scheduled for September 15 at 1:30 p.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3PMvpmg from PacerMonitor.com.
The budget provides for total expenses, on a weekly basis, as
follows:
$365,140 for the week ending August 11, 2022;
$451,986 for the week ending August 18, 2022;
$160,140 for the week ending August 25, 2022;
$509,629 for the week ending September 1, 2022;
$427,000 for the week ending September 8, 2022; and
$501,080 for the week ending September 15, 2022.
About Off-Spec Solutions
Off-Spec Solutions LLC, doing business as Cool Mountain Transport,
is a trucking company located in Nampa, Idaho.
Off-Spec Solutions LLC filed a petition for relief under Subchapter
V of Chapter 11 of the Bankruptcy Code on (Bankr. D. Idaho Case No.
22-00346) on August 5, 2022. In the petition filed by Richard
Coyle, as president, the Debtor reported between $1 million and $10
million in both assets and liabilities.
Matthew Todd Christensen, Esq., at Johnson May, PLLC, is the
Debtor's counsel.
The Subchapter V trustee is Matthew W. Grimshaw, Esq., at Grimshaw
Law Group, P.C.
PHUNWARE INC: Incurs $17.1 Million Net Loss in Second Quarter
-------------------------------------------------------------
Phunware, Inc. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q reporting a net loss of $17.07
million on $5.49 million of net revenues for the three months ended
June 30, 2022, compared to a net loss of $7.78 million on $1.44
million of net revenues for the three months ended June 30, 2021.
For the six months ended June 30, 2022, the Company reported a net
loss of $31.99 million on $12.26 million of net revenues compared
to a net loss of $22.08 million on $3.08 million of net revenues
for the six months ended June 30, 2021.
As of June 30, 2022, the Company had $61.24 million in total
assets, $25.54 million in total liabilities, and $35.69 million in
total stockholders' equity.
As of June 30, 2022, the Company held total cash of $2.7 million,
all of which was held in the United States. The Company has a
history of operating losses and negative operating cash flows. As
the Company continues to focus on growing its revenues, it expects
these trends to continue into the foreseeable future.
Phunware said, "We may, if needed, sell our digital asset holdings
for cash to fund our ongoing operations. As of June 30, 2022, we
held 653 bitcoins and 780 ethereum, of which consist of the
majority of the digital assets recorded on our balance sheet. The
digital asset market historically has been characterized by
significant volatility in its price, limited liquidity and trading
volumes compared to sovereign currencies markets, relative
anonymity, a developing regulatory landscape, susceptibility to
market abuse and manipulation, and various other risks inherent in
its entirely electronic, virtual form and decentralized network.
During times of instability in the digital asset market, we may not
be able to sell our digital asset holdings at reasonable prices, or
at all. As a result, our digital assets are less liquid than our
existing cash and cash equivalents and may not be able to serve as
a source of liquidity for us to the same extent as cash and cash
equivalents."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001665300/000162828022022920/phun-20220630.htm
About Phunware
Headquartered in Austin, Texas, Phunware, Inc. --
http://www.phunware.com-- offers a fully integrated software
platform that equips companies with the products, solutions and
services necessary to engage, manage and monetize their mobile
application portfolios globally at scale.
Phunware reported a net loss of $53.52 million for the year ended
Dec. 31, 2021, a net loss of $22.20 million for the year ended Dec.
31, 2020, a net loss of $12.87 million for the year ended Dec. 31,
2019, and a net loss of $9.80 million for the year ended Dec. 31,
2018. As of March 31, 2022, the Company had $81.42 million in
total assets, $29.43 million in total liabilities, and $51.99
million in total stockholders' equity.
QHC UPSTATE: Seeks to Hire Anderson Kill as Litigation Counsel
--------------------------------------------------------------
QHC Upstate Medical, PC seeks approval from the U.S. Bankruptcy
Court for the Southern District of New York to employ Anderson
Kill, PC as its special litigation counsel.
The Debtor needs the firm's legal assistance in the pre-bankruptcy
litigation encaptioned QHC Upstate Medical, P.C. V. New York
Quality Health Care Corporation d/b/a Fidelis Care (Index No.
36072/2019) in the Supreme Court of the State of New York, Rockland
County.
The hourly rates charged by the firm's attorneys are as follows:
Sheldon Eisenberger $700 per hour
Paul Kaplan $700 per hour
Other Attorneys $325-$700 per hour
The Debtor paid the firm a pre-bankruptcy retainer in the amount of
$50,000.
Sheldon Eisenberger, Esq., a shareholder of Anderson Kill,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Sheldon Eisenberger, Esq.
Anderson Kill, PC
1251 Avenue of the Americas
New York, NY 10020
Telephone: (212) 278-1000
Email: seisenberger@andersonkill.com
About QHC Upstate Medical
QHC Upstate Medical, PC was a medical services provider in several
sites in New York before being forced to shutter in mid-2021.
QHC Upstate Medical sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 22-22410) on July 5,
2022. In the petition filed by Seth Kurtz, president, the Debtor
estimated assets between $100,000 and $500,000 and liabilities
between $1 million and $10 million.
Judge Sean H. Lane oversees the case.
The Debtor tapped Davidoff Hutcher & Citron, LLP as bankruptcy
counsel and Anderson Kill, PC as special litigation counsel.
QUALITAT DRYWALL: Wins Cash Collateral Access on Final Basis
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of California
authorized Qualitat Drywall, LLC to use cash collateral on a final
basis in accordance with the budget.
Specifically, the Debtor is permitted to use cash collateral to pay
ordinary business expenses on a final basis as those expenses come
due through the earlier of (i) the effective date of any confirmed
Ch. 11 plan or reorganization; (ii) dismissal of the case; (iii)
the Debtor's default and failure to cure the same with respect to
any term, provision or condition of the Order (which specifically
incorporates by this reference the terms and conditions of the
Stipulations); (iv) conversion of the case to one under Ch 7 of the
Bankruptcy Code; or (v) appointment of a Ch. 11 Trustee, in
accordance with the budget, including the payment of insider
compensation.
As adequate protection, CDC Small Business Finance Corp. and the
U.S. Small Business Administration are granted valid, enforceable,
fully perfected, and unavoidable replacement liens in favor of the
CDC and the SBA on all of Debtor's assets or interests in assets
acquired on or after the petition date of the same type and
priority that the CDC and the SBA had in such assets as of the
petition date.
A copy of the order and the Debtor's budget for September to
November 2022 is available at https://bit.ly/3QJy1Ts from
PacerMonitor.com.
The budget provides for total expenses, on a monthly basis, as
follows:
$116,173 for September 2022;
$121,303 for October 2022; and
$121,303 for November 2022.
About Qualitat Drywall
Qualitat Drywall LLC -- https://qualitatdrywall.com/ -- is a
drywall contractor in Southern California.
Qualitat Drywall sought protection under Subchapter V of Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D. Cal. Case No. 22-01405) on
May 27, 2022. In the petition filed by Heriberto Gonzalez, as
managing member, Qualitat Drywall estimated assets between $100,000
and $500,000 and estimated liabilities between $500,000 and $1
million.
Jean Goddard has been appointed as Subchapter V trustee.
Steven E. Cowen, Esq., at S.E. Cowen Law is the Debtor's counsel.
REEF GLOBAL: Moody's Assigns First Time B1 Corporate Family Rating
------------------------------------------------------------------
Moody's Investors Service assigned a first-time ratings to REEF
Global Midco LLC ("REEF", "the Borrower" or "the company") with a
B1 Corporate Family Rating and a Probability of Default Rating of
B1-PD. Concurrently, Moody's assigned a B1 rating to the issuer's
proposed senior secured first lien credit facility that will mature
in August 2027 and comprises a: 1) US$450 million senior secured
term loan; 2) one, $100 million delayed draw term loan available in
two draws, and 3) a US$25 million revolving letter of credit. The
proceeds from the new debt financing will be used to repay the
company's existing US$375 million credit facility as well as for
other general corporate uses, including growth capital expenditures
and fees. The rating outlook is stable.
The stable outlook reflects Moody's expectation that the company
will continue to remain profitable, generating stable and growing
cash flows in addition to deleveraging its balance sheet on a debt
to EBITDA basis.
Ratings Assigned:
Issuer: REEF Global Midco LLC
Corporate Family Rating, Assigned B1
Probability of Default Rating, Assigned B1-PD
Gtd Senior Secured First Lien Term Loan, Assigned B1 (LGD3)
Gtd Senior Secured First Lien Delayed Draw Term Loan, Assigned B1
(LGD3)
Gtd Senior Secured First Lien Revolving Letter of Credit, Assigned
B1 (LGD3)
Outlook Action:
Issuer: REEF Global Midco LLC
Outlook, Assigned Stable
RATINGS RATIONALE
REEF's CFR incorporates the company's position as one the leading
parking facility operators in North America. Benefiting from its
geographic diversification and broad spectrum of end-users as
margins of safety, REEF's operations have been rapidly recovering
since the loosening of government-mandated mobility restrictions
and temporary business closures in response to the COVID-19
outbreak. Supported by its heavier weight towards management
contracts, which are less impacted by transient volume parking, the
company's cash flow generation has quickly rebounded in step with
the overall resurgence in general vehicular traffic, airport
travel, and "return to office" policies. Cash flows are expected to
remain steady and grow as a result of more ancillary service
offerings, new parking site acquisitions, and management's
strategic expansion into new vessel leasing and operation segments.
REEF's credit rating, however, is constrained by its small scale in
terms of revenues and low profitability margins relative to some
other business service providers that have a longer operating
history. There is uncertainty about the firm's long-term financial
policy due to its private equity sponsorship as the company
operates with moderately high leverage levels and coverage ratios
that are considered weak. Although it is a highly fragmented sector
with low institutional ownership, the parking business is a mature
business and the barriers to entry are considered to be low.
Further, there are inherent risks related to contract renewals and
the short-term cancelability of the management contracts, despite
the relatively high switching costs for parking facility owners and
the company's historically high tenant retention rate. Lastly, the
current macroeconomic uncertainty and volatility pose as downside
risk to the recovery of the US economy, which could subdue business
confidence and consumer spending.
The company's liquidity position, pro forma for the completion of
the refinancing transaction, is considered to be adequate over the
next 12 to 18 months. Moody's anticipate healthy free cash flow
generation as the parking management company has minimal capital
expenditure requirements as a result of its asset-lite business
model. Liquidity will be provided by the proposed credit facility,
including the proposed delayed draw term loan and the revolving
letter of credit (both undrawn at closing), and a minimum required
cash on hand balance. After the repayment of the company's old
credit facility, REEF's ongoing free cash flow are expected to be
used primarily to fund operations with reinvestments into the
company's product and technology capabilities. Access to the $100
million delayed draw term loan will be predicated upon the company
achieving certain run-rate performance hurdles.
The B1 ratings for REEF's proposed senior secured first lien credit
facility reflect the borrower's B1-PD probability of default rating
("PDR") and a loss given default ("LGD") assessment of LGD3. The B1
rating assigned to the individual tranches of the credit facility
accounts for REEF's entire debt capital structure and that all
tranches rank pari passu to each other. The proposed credit
facility will be secured by the first lien on substantially all
assets of the Borrower, consisting of its parking management
operations ("REEF Parking") and additional asset collateral
(container vessels, "Vessels"), but excluding some already pledged
vessels. The facility will also be guaranteed by multiple upstream
entities, including the parent company, under payment guarantees
and an equity pledge to the Borrower. The credit facility is
subject to financial covenants related to leverage and interest
coverage ratios. Additionally, the Borrower can only gain access to
the delayed draw term loan funds upon achieving certain financial
conditions set by the lender.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded upon REEF increasing its scale with
continued strong revenue and profitability growth and Moody's
adjusted debt to EBITDA decreasing to below 3.0 times. Upward
rating movement would also be predicated upon the maintenance of a
good liquidity profile and current coverage ratios, at a minimum.
The ratings could be downgraded if cash flow generation were to
deteriorate. Additionally, debt-financed acquisitions that increase
financial leverage would also result in a downgrade such that debt
to EBITDA approached 6.0 times. A weakening of profitability
metrics could also result in downward rating pressure.
Based in Miami, Florida, REEF Global Midco LLC was formed in
November 2018 to finance the company's acquisition of two of the
largest parking lot operators in North America, Citizens Parking in
March 2018, and Imperial Parking Corporation in March 2019, for a
combined consideration of US$900 million. REEF Parking, the
company's main business segment, provides a comprehensive suite of
parking services, parking management, and ground transportation
services. Additionally, REEF parking segments offers value-adding
ancillary services, including customer service, marketing,
accounting, and revenue control functions for its client base.
Complementing the company's core parking business is its
integration of alternative use cases, enhancing parking lot yield
and driving profitability for the company and its customer base.
This vertical integration also includes a fast-growing
vessel-leasing operation that has commercial applications in the
food, convenience, logistics and fulfillment, and health care
industries.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
REMARK HOLDINGS: Incurs $12.5 Million Net Loss in Second Quarter
----------------------------------------------------------------
Remark Holdings, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $12.53 million on $2.56 million of revenue for the three months
ended June 30, 2022, compared to a net loss of $1.56 million on
$4.02 million of revenue for the three months ended June 30, 2021.
For the six months ended June 30, 2022, the Company reported a net
loss of $37.96 million on $7.23 million of revenue compared to a
net loss of $7.02 million on $8.42 million of revenue for the six
months ended June 30, 2021.
As of June 30, 2022, the Company had $33.36 million in total
assets, $39.68 million in total liabilities, and a total
stockholders' deficit of $6.32 million.
Remark said, "Our history of recurring operating losses, working
capital deficiencies and negative cash flows from operating
activities give rise to substantial doubt regarding our ability to
continue as a going concern.
"We intend to fund our future operations and meet our financial
obligations through revenue growth from our AI offerings, as well
as through sales of our thermal-imaging products. We cannot,
however, provide assurance that revenue, income and cash flows
generated from our businesses will be sufficient to sustain our
operations in the twelve months following the filing of this Form
10-Q. As a result, we are actively evaluating strategic
alternatives including debt and equity financings and reactively
pursuing the sale of our Bikini.com subsidiary.
"Conditions in the debt and equity markets, as well as the
volatility of investor sentiment regarding macroeconomic and
microeconomic conditions (in particular, as a result of the
COVID-19 pandemic, global supply chain disruptions, inflation and
other cost increases, and the geopolitical conflict in Ukraine),
will play primary roles in determining whether we can successfully
obtain additional capital. We cannot be certain that we will be
successful at raising additional capital or in selling our
Bikini.com subsidiary."
Management Commentary
"The company's second quarter was highlighted by additional
partnerships and the joining of industry experts to expand its
sales channels significantly," noted Kai-Shing Tao, chairman and
chief executive officer of Remark Holdings. "Our unique value
proposition and the innovation inherent in our AI solutions
continued to satisfy the different needs of our customers. Looking
ahead, we are building a pipeline of opportunities across the U.S.
with our SSP-based products with a new streaming fee model and are
continuing to advance our deployment activities in China. Taken
together, we believe these activities lay the groundwork for
continued momentum across our businesses as we seek to deliver
first-class AI solutions to our customers."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1368365/000136836522000049/mark-20220630.htm
About Remark Holdings
Remark Holdings, Inc. (NASDAQ: MARK) --
http://www.remarkholdings.com-- its subsidiaries, and the
variable-interest entities that the company consolidates,
constitute a diversified global technology business with leading
artificial intelligence and data-analytics, as well as a portfolio
of digital media properties. The company's easy-to-install AI
products are being rolled out in a wide range of applications
within the retail, urban life cycle and workplace and food safety
arenas. The company also owns and operates digital media
properties that deliver relevant, dynamic content and ecommerce
solutions. The company's corporate headquarters and U.S.
operations are based in Las Vegas, Nevada, and it also maintain
operations in London, England and Shanghai, China. The operations
of the variable interest entities the company consolidates are
headquartered in Chengdu, China with additional operations in
Hangzhou.
As of March 31, 2022, the Company had $47.12 million in total
assets, $40.99 million in total liabilities, and $6.12 million in
total stockholders' equity.
Los Angeles, California-based Weinberg & Company, the Company's
auditor since 2020, issued a "going concern" qualification in its
report dated March 31, 2022, citing that the Company has suffered
recurring losses from operations and negative cash flows from
operating activities and has a negative working capital and a
stockholders' deficit that raise substantial doubt about its
ability to continue as a going concern.
RIOT BLOCKCHAIN: Posts $366.3 Million Net Loss in Second Quarter
----------------------------------------------------------------
Riot Blockchain, Inc. filed with the Securities and Exchange
Commission is Quarterly Report on Form 10-Q reporting a net loss of
$366.33 million on $72.95 million of total revenue for the three
months ended June 30, 2022, compared to net income of $19.34
million on $34.35 million 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 $330.71 million on $152.73 million of total revenue
compared to net income of $26.87 million on $57.55 million of total
revenue for the six months ended June 30, 2021.
As of June 30, 2022, the Company had $1.44 billion in total assets,
$147.66 million in total liabilities, and $1.29 billion in total
stockholders' equity.
At June 30, 2022, the Company had approximate balances of cash and
cash equivalents of $270.5 million, working capital of $395.9
million, total stockholders' equity of $1.3 billion and an
accumulated deficit of $568.5 million. To date, the Company has,
in large part, relied on equity financings to fund its operations.
During the six months ended June 30, 2022, the Company sold 1,000
Bitcoin for proceeds of approximately $33.1 million. The Company
is monitoring its balance sheet on an ongoing basis, evaluating the
level of Bitcoin retained from monthly production in consideration
of operational and expansion cash requirements. The Company
continues to hold a long-term view on its Bitcoin holdings and
believes it is in the best interest of its stockholders to have
Bitcoin on its balance sheet. The Company believes its current
cash and Bitcoin on hand is sufficient to meet its operating and
capital requirements for at least one year from the date these
unaudited condensed consolidated financial statements are issued.
"We are extremely encouraged by Riot's financial resilience and
operational achievements this quarter," said Jason Les, CEO of
Riot. "We continued to make substantial progress in executing
towards our ambitious growth plans, including completion of our
first immersion-cooled building and the successful transition of
all miners which were previously hosted by Coinmint to our
Whinstone Facility, which will further reduce our operating costs.
Going forward, we will continue to focus on executional excellence
as we work in pursuit of developing Riot into the world's leading
Bitcoin-driven infrastructure platform."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1167419/000155335022000687/riot-20220630.htm
About Riot Blockchain
Headquartered in Castle Rock, Colorado, Riot Blockchain, Inc. --
http://www.RiotBlockchain.com-- specializes in cryptocurrency
mining with a focus on bitcoin. The Company is expanding and
upgrading its mining operations by securing the most energy
efficient miners currently available. Riot is headquartered in
Castle Rock, Colorado, and the Company's mining facility operates
out of upstate New York, under a co-location hosting agreement with
Coinmint.
Riot Blockchain reported a net loss of $7.93 million for the year
ended Dec. 31, 2021, a net loss of $12.67 million for the year
ended Dec. 31, 2020, a net loss of $20.30 million for the year
ended Dec. 31, 2019, and a net loss of $60.21 million for the year
ended Dec. 31, 2018. As of March 31, 2022, the Company had $1.55
billion in total assets, $162.07 million in total liabilities, and
$1.38 billion in total stockholders' equity.
ROCK SPLITTERS: Taps Nickless, Phillips and O'Connor as Counsel
---------------------------------------------------------------
Rock Splitters, Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Massachusetts to employ the law firm of
Nickless, Phillips and O'Connor as its counsel.
The firm will render these legal services:
(a) represent the Debtor in all matters related to the
Debtor's Chapter 11 proceeding;
(b) assist the Debtor in the preparation and filing of
pleadings in this court;
(c) pursue civil litigation;
(d) dispose of and recover assets; and
(e) act on the trustee's behalf in this proceeding.
The firm's hourly rates range from $150 to $375.
James O'Connor, Jr., Esq., owner of the law firm of Nickless,
Phillips and O'Connor, disclosed in a court filing that his firm is
a "disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
James O'Connor, Jr., Esq.
Nickless, Phillips and O'Connor
625 Main Street
Fitchburg, MA 01420
Telephone: (978) 342-4590
Email: joconnor@npolegal.com
About Rock Splitters
Rock Splitters, Inc. filed a petition under Chapter 11, Subchapter
V of the Bankruptcy Code (Bankr. D. Mass. Case No. 22-40584) on
Aug. 10, 2022, listing as much as $1 million in both assets and
liabilities. David Mawhinney serves as Subchapter V trustee.
Judge Elizabeth D. Katz oversees the case.
James O'Connor, Jr., Esq., at Nickless, Phillips and O'Connor
serves as the Debtor's bankruptcy counsel.
S3 SPA: Wins Interim Cash Collateral Access
-------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona authorized S3
SPA, LLC to use cash collateral on an interim basis in accordance
with the limited needs budget.
The Debtor is permitted to use cash collateral to pay post-petition
operating expenses in the ordinary course of its businesses but
only as set forth in, and subject to, the limited needs budget.
As adequate protection, any creditor holding a valid and
enforceable prepetition security interest in any pre-petition cash
collateral, will have a post-petition replacement lien on the same
type of post-petition assets acquired by the Debtor after the
Petition Date, if any, and in the same validity, priority, and
extent as such creditor possessed a lien on the cash collateral on
the Petition Date, and will have all the rights and remedies of a
secured creditor in connection with the replacement liens granted
by this Order, except to the extent that the Bankruptcy Code may
affect such rights and remedies. The liens will be effective
without perfection and as against any successors of the Debtor,
including any trustee.
A final hearing on the matter is scheduled for September 8, 2022 at
11 a.m.
A copy of the order is available at https://bit.ly/3CsxoJy from
PacerMonitor.com.
About S3 SPA, LLC
S3 SPA, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Ariz. Case No. 22-05439) on August 17,
2022. In the petition filed by Kiera L. Stroup, owner, the Debtor
disclosed up to $50,000 in assets and up to $500,000 in
liabilities.
Judge Paul Sala oversees the case.
D. Lamar Hawkins, Esq., at Guidant Law, PLC is the Debtor's
counsel.
SAS AB: Lender Apollo Global In Line for Breakup Fee
----------------------------------------------------
Erin Hudson of Bankruptcy Law reports that the federal judge
overseeing SAS AB's Chapter 11 process approved a $7 million
breakup fee to Apollo Global Management Inc. if its planned
bankruptcy financing package for the Scandinavian airline falls
through.
Apollo said it would provide roughly $700 million to help SAS
continue to operate during bankruptcy on the condition that the
court signed off on the breakup fee and a $1 million deposit to
help cover the investment firm's expenses in putting together the
deal.
About Scandinavian Airlines
SAS SAB, Scandinavia's leading airline, with main hubs in
Copenhagen, Oslo and Stockholm, is flying to destinations in
Europe, USA and Asia. Spurred by a Scandinavian heritage and
sustainable values, SAS aims to be the global leader in sustainable
aviation. The airline will reduce total carbon emissions by 25
percent by 2025, by using more sustainable aviation fuel and our
modern fleet with fuel-efficient aircraft. In addition to flight
operations, SAS offers ground handling services, technical
maintenance and air cargo services. SAS is a founder member of the
Star Alliance, and together with its partner airlines offers a wide
network worldwide. On the Web: https://www.sasgroup.net
SAS AB and its affiliates, including Scandinavian Airlines Systems
Denmark-Norway-Sweden and Scandinavian Airlines of North America
Inc., sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 22-10925) on July 5, 2022. In the
petition filed by Erno Hildén, as authorized representative, the
Debtor SAS AB estimated assets between $10 billion and $50 billion
and liabilities between $1 billion and $10 billion.
Weil, Gotshal & Manges LLP is serving as global legal counsel and
Mannheimer Swartling Advokatbyra AB is serving as Swedish legal
counsel to SAS. Seabury Securities LLC and Skandinaviska Enskilda
Banken AB are serving as investment bankers, Seabury is also
serving as restructuring advisor. FTI Consulting is serving as
financial advisor. Kroll Restructuring Advisors is the claims
agent.
SIGNET JEWELERS: Fitch Affirms 'BB' IDR, Outlook Stable
-------------------------------------------------------
Fitch Ratings has affirmed Signet Jewelers Limited's and Signet
Group Limited's ratings, including their Long-Term Issuer Default
Ratings (IDR) at 'BB'. The Rating Outlook is Stable.
Signet's ratings reflect its leading market position as a U.S.
specialty jeweler with approximately 9% share of a highly
fragmented industry. The rating considers Signet's recently strong
operating trajectory, which demonstrates success in the
implementation of its topline and other initiatives.
Although Fitch expects some near-term contraction from record 2021
results, revenue and EBITDA beginning in 2023 are projected to
trend in the mid-$7 billion and mid-$800 million ranges,
respectively, well above pre-pandemic levels of $6 billion and $504
million. The rating reflects expectations that Signet will be able
to maintain adjusted leverage (adjusted debt/EBITDAR, capitalizing
leases at 8x) in the low-4x range, in line with their publicly
articulated financial policy.
KEY RATING DRIVERS
Strong Recent Performance: Following several years of declining
sales pre-pandemic, Signet's 2021 sales grew to $7.8 billion,
nearly 30% above the $6.1 billion recorded in 2019. Performance was
driven in part by the redeployment of savings from stimulus checks
and reduced spending on consumer services like travel and
entertainment. Beyond these industry tailwinds, Signet has
introduced a number of initiatives in recent years to improve same
store sales (SSS), including increasing the pace of product
innovation, developing product extensions and investing in its
omnichannel platform.
Over the last few years, the company has been focused on investing
in its digital shopping platform and using consumer data to guide
decision making in merchandising and to allow greater
personalization in service. Fitch believes good execution of these
initiatives have allowed the company to gain market share since the
onset of the pandemic.
Fitch expects organic sales could decline in the mid-high single
digits in 2022 and 2023, given strong recent growth and shifts in
consumer spending back toward services. Beginning in 2024, Fitch
projects Signet's revenue could stabilize around $7.5 billion,
above pre-pandemic levels supported by good operational execution
and recent acquisitions, including Diamond Direct in 4Q21 and Blue
Nile, which is expected to close in 3Q22. Together, these
businesses are expected to contribute around $1 billion in annual
sales.
EBITDA Rebound: Signet's EBITDA margins are expected to trend in
the 11% range beginning in 2022, well above the low-8% seen in
pre-pandemic 2019, yielding EBITDA in the mid-$800 million range.
In recent years, Signet has been focused on structural cost
reductions, including consolidation of distribution centers and
sourcing optimization. Additionally, Signet's store fleet
optimization effort yielded a gross margin benefit of around 500
bps.
During 2018-2021, the company achieved over $400 million in
annualized net savings across a number of functions, ahead of its
goal of $200 million to $225 million in cost reductions announced
in March 2018. In March 2021, the company announced another
three-year goal to reduce costs by $200 million to $220 million.
Fitch expects the company to redeploy a significant level of these
savings into topline investments as it has historically.
Improved Leverage; Strong FCF: Signet paid down approximately $466
million of debt in 2020 and currently has approximately $800
million of debt outstanding. In March 2021, the company revised its
financial target to below 3.0x adjusted leverage versus a previous
3.5x (capitalizing rent at 5x; Fitch-adjusted equivalent is at or
below 4.5x). Fitch projects that, absent a debt-financed
transaction, Signet's leverage could trend in the mid-3x range
across the forecast period, below the mid-to-upper 5x range seen
pre-pandemic based on EBITDA growth and debt reduction. Per
Signet's leverage calculations, this equates to leverage trending
in the low-2x range.
Fitch believes Signet currently has headroom under its leverage
target, and recognizes that Signet could potentially use this
flexibility to undergo a transaction that brings leverage closer to
its stated 3.0x target.
With $928 million of cash as of April 30, 2022, and positive free
cash flow expected over the rating horizon, Signet has good
liquidity and financial flexibility. The company could deploy FCF
generation towards a combination of debt reduction, share
repurchases, dividends, and acquisitions. Signet repurchased
approximately $318 million in shares year to date as of April 30,
2022. Signet has recently been acquisitive, purchasing Diamond
Direct in November 2021 for $490 million and Blue Nile (expected to
close during 3Q22) for $360 million. Both of these transactions
were funded with cash on hand.
Leading Jeweler Position: Signet is the leading U.S. specialty
jeweler with approximately 9% share of a fragmented $69 billion
market. The company ended 2021 with 2,854 stores across well-known
brands like Kay, Jared, Zales and Piercing Pagoda in the U.S.;
Peoples in Canada; and H.Samuel and Ernest Jones in the U.K.
Signet benefits from its scale and ability to invest in its
omnichannel platform. If executed effectively, these investments
could provide Signet competitive advantages against smaller and
independent jewelers with limited capacity to invest. Longer term,
Signet's ability to grow its share of the fragmented mid-tier
jewelry market will depend on execution against its omnichannel and
other growth initiatives.
Parent Subsidiary Linkage: Fitch's analysis includes a strong
subsidiary/ weak parent approach between the parent, Signet
Jewelers Limited and its subsidiaries Signet UK Finance, PLC and
Signet Group Limited. Fitch assesses the quality of the overall
linkage as high, which results in an equalization of IDRs.
DERIVATION SUMMARY
Signet's ratings reflect its leading market position as a U.S.
specialty jeweler with approximately 9% share of a highly
fragmented industry. The rating considers its recently strong
operating trajectory, which demonstrates success in the
implementation of its topline and other initiatives. Although Fitch
expects some near-term contraction from record 2021 results,
revenue and EBITDA beginning 2023 are projected to trend in the
mid-$7 billion and mid-$800 million ranges, respectively, well
above pre-pandemic levels of $6 billion and $504 million.
The rating reflects expectations that Signet will be able to
maintain adjusted leverage (adjusted debt/EBITDAR, capitalizing
leases at 8x) in the low-4x range, in line with their publicly
articulated financial policy.
Similarly rated peers include Mattel, Inc. (BB+/Positive), Capri
Holdings Limited (BBB-/Stable), Levi Strauss & Co. (BB+/Stable) and
Samsonite International S.A. (BB-/Negative).
Mattel's 'BB+'/Positive rating reflects the company's meaningfully
improved credit metrics achieved through better than expected
execution on both the top and bottom line as well as discretionary
debt paydown. While Fitch expects the company to surrender some of
the revenue and margin gains achieved in 2021 as the tailwinds from
the pandemic dissipate, the Positive Outlook reflects Fitch's view
that improved competitive positioning, cost cuts and debt reduction
could result in post-pandemic credit metrics and an operational
profile supportive of an investment grade rating over time.
Capri's 'BBB-'/Stable rating reflects its strong positioning in the
U.S. handbag market, historical growth at its various brands and
its commitment to debt reduction. The rating also considers the
fashion risk inherent in the accessories and apparel space. Capri's
rating reflects expectations that Capri will be able to maintain
adjusted leverage in the low-3x range.
Levi's 'BB+'/Stable rating continues to reflect the company's
position as one of the world's largest branded apparel
manufacturers, with broad channel and geographic exposure, while
also considering the company's narrow focus on the Levi brand and
in bottoms. The rating reflects expectations that Levi will be able
to maintain adjusted leverage under 3.5x.
Samsonite's ratings reflect the company's position as the world's
largest travel luggage company, with strong brands and historically
good organic growth. The rating also considers the adverse impact
on performance since the onset of the pandemic.
The Negative Outlook reflects Fitch's view that operating results
will remain challenged until travel related spending recovers, with
lingering uncertainty regarding the exact timing and trajectory of
a rebound. Samsonite's substantial liquidity position of over $1.4
billion as of March 31, 2022 -- largely held as cash, provides a
significant buffer against the current environment and offers
strong prospects for deleveraging.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer:
-- Signet's revenue, which expanded by approximately 50% in 2021
to $7.8 billion and compares with $6.1 billion in pre-pandemic
2019, is expected to decline in the mid-single digits in 2022 as
the impact of the Diamond Direct acquisition only partially offsets
a shift in consumer spending patterns toward services and away from
goods like jewelry.
Signet's revenue in 2023 could be flat as a continued unwind in
demand is offset by the impact of a full year of revenue from the
Blue Nile acquisition, which is expected to generate over $500
million in annual sales. Beginning 2024, revenue could grow around
1%, supported by the company's topline initiatives including its
omnichannel focus.
-- EBITDA is expected to decline from $1.1 billion in 2021 to
around $870 million in 2022 partly based on mid-single digit
top-line decline, as well as industry wide cost inflation. EBITDA,
beginning in 2023 could trend in the mid-$800 million range,
relative to 2019 levels of $504 million. EBITDA margins could trend
in the 11% range beginning 2022, higher than the low-8% range in
2019 given strong top-line growth and expense management
initiatives. Fitch does not assume meaningful EBITDA contribution
from Blue Nile.
-- Fitch expects 2022 FCF of approximately $340 million, lower
than the $1.0 billion generated in 2021 due to lower EBITDA, higher
capex spend, and some reversal in recent working capital benefits.
FCF could be in the $380 million-$400 million range annually
beginning 2023.
-- Signet could use its strong cash balances of $928 million as of
April 2022 and good FCF to reinvest in its business, continue share
buybacks, and reduce debt over the next two to three years. The
company's $147 million of unsecured notes matures in July 2024. The
company has earmarked $360 million of its cash balance for its
recently announced Blue Nile acquisition, closing in 3Q of 2022.
-- Total adjusted debt/EBITDAR (capitalizing leases at 8.0x) is
expected to trend in the mid-3.0x range across the forecast, lower
than the 5.4x level seen in 2019 based on EBITDA expansion and debt
reduction. Fitch recognizes the company could undertake capital
structure actions to increase adjusted leverage to the low-4x
range, in concert with its publicly articulated financial policy.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action could occur if the company revised its
financial policy, which increases Fitch's confidence of Signet
maintaining adjusted leverage (adjusted debt/EBITDAR, capitalizing
leases at 8x) below 4.0x, while also performing in line with
Fitch's current base case forecast, including sustaining EBITDA
above $800 million.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A downgrade could occur if operating performance is below
expectations, yielding EBITDA declines toward $500 million and
adjusted debt/EBITDAR (capitalizing leases at 8.0x) sustained above
4.5x.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity and Limited Near-Term Maturities: As of April 30,
2022, Signet had $927.6 million in cash and cash equivalents and no
borrowings on its $1.5 billion ABL facility due July 2026, with
$1.2 billion in available borrowing capacity.
As of April 30, 2022, the company's capital structure consists of
$147.1 million in unsecured notes due July 2024 and $652.6 million
of preferred equity, which receives 0% equity credit. Permanence in
the capital structure -- in this case permanence of the convertible
preferreds -- is necessary for equity credit recognition. Fitch
views these securities as not conducive to being maintained as a
permanent part of the capital structure, with the main purpose
being to support the company's stock price. Given current cash
balances and cash flow generation, the company could pay-off
outstanding debt maturities when they come due using cash.
In March 2021, the company announced a new target of adjusted
leverage below 3.0x. The target capitalizes leases at 5.0x and thus
equates to a target of approximately 4.5x on Fitch's leverage
calculation which capitalizes rent at 8.0x.
RECOVERY CONSIDERATIONS
Fitch does not employ a waterfall recovery analysis for issuers'
assigned ratings in the 'BB' category. The further up the
speculative-grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes. Fitch
has affirmed Signet's secured ABL facility at 'BBB-'/'RR1'
indicating outstanding recovery prospects (91% to 100%). Fitch has
affirmed the unsecured notes at 'BB'/'RR4' indicating average
recovery prospects (31% to 50%). Fitch has affirmed the preferred
equity at 'BB-'/'RR5', indicating below average recovery prospects
(11% to 30%).
ISSUER PROFILE
Signet, incorporated in Bermuda, is the world's largest diamond
jewelry retailer, with 2,854 stores and kiosks (as of the end of
2021) in the U.S., U.K. and Canada operating under a variety of
national and regional brands. Signet's largest brands include Kay
(38% of 2021 sales), Zales (22%), and Jared (17%), all of which
operate in North America.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical and projected EBITDA is adjusted to add back non-cash
stock-based compensation expense and exclude non-recurring charges.
For the year ending January 29, 2022, Fitch added back $45.8
million in stock-based compensation expense. Fitch has adjusted the
historical and projected debt by adding 8x annual gross rent
expense.
ESG Considerations:
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Rating Prior
------ -----
Signet Group Limited LT IDR BB Affirmed BB
senior secured LT BBB- Affirmed RR1 BBB-
Signet Jewelers Ltd. LT IDR BB Affirmed BB
Preferred LT BB- Affirmed RR5 BB-
Signet UK Finance plc
senior unsecured LT BB Affirmed RR4 BB
SP STAR ENTERPRISE: Strip Club Files Subchapter V Case
------------------------------------------------------
SP Star Enterprise Inc., doing business as Platinum Showgirls LA,
has filed for bankruptcy protection. The Debtor filed as a small
business debtor seeking relief under Subchapter V of Chapter 11 of
the Bankruptcy Code.
Platinum Showgirls LA is an adult entertainment club at 710 E
Commercial St, Los Angeles, CA 90012. On the Web:
http://platinumshowgirlsla.com/
According to court filing, SP Star Enterprise 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
Sept. 13, 2022, at 9:15 AM at UST-LA3, TELEPHONIC MEETING.
CONFERENCE LINE:1-866-811-2961, PARTICIPANT CODE:9609127. Proofs
of claim are due by Oct. 27, 2022.
About SP Star Enterprise
Located in Los Angeles, California, Platinum Showgirls LA provides
an after-hours hangout with sexy dancers entertaining all night.
SP Star Enterprise Inc., doing business as Platinum Showgirls LA,
filed a petition for relief under Subchapter V of Chapter 11 of the
Bankruptcy Code under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. C.D. Cal. (Case No. 22-14502) on August 18, 2022. In the
petition filed by Mohan S. Makkar, as president, Debtor disclosed
at least $1 million in liabilities against assets of less than
$100,000.
Gregory Kent Jones has been appointed as Subchapter V trustee.
The Debtor is represented by W. Derek May, of the Law Office of W.
Derek May.
STEM HOLDINGS: Posts $472K Net Income in Third Quarter
------------------------------------------------------
Stem Holdings, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q reporting net income
of $472,000 on $4.17 million of revenues for the three months ended
June 30, 2022, compared to net income of $2.59 million on $5.43
million of revenues for the three months ended June 30, 2021.
For the nine months ended June 30, 2022, the Company reported a net
loss of $7.18 million on $12.52 million of revenues compared to a
net loss of $9.32 million on $16.19 million of revenues for the
nine months ended June 30, 2021.
As of June 30, 2022, the Company had $41.93 million in total
assets, $14.67 million in total liabilities, and $27.26 million in
total shareholders' equity.
Stem Holdings said, "Management believes that the Company has
access to capital resources through potential public or private
issuances of debt or equity securities. However, if the Company is
unable to raise additional capital, it may be required to curtail
operations and take additional measures to reduce costs, including
reducing its workforce, eliminating outside consultants, and
reducing legal fees to conserve its cash in amounts sufficient to
sustain operations and meet its obligations. These matters raise
substantial doubt about the Company's ability to continue as a
going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001697834/000149315222022843/form10-q.htm
About Stem Holdings
Headquartered in Boca Raton, Florida, Stem Holdings, Inc. --
http://www.stemholdings.com-- is a multi-state, vertically
integrated, cannabis company that, through its subsidiaries and its
investments, is engaged in the manufacture, possession, use, sale,
distribution or branding of cannabis, and holds licenses in the
adult use and medical cannabis marketplace in the states of Oregon,
Nevada, California, Oklahoma and Massachusetts.
Stem Holdings reported a net loss of $64.6 million for the year
ended Sept. 30, 2021, compared to a net loss of $11.5 million for
the year ended Sept. 30, 2020. As of Dec. 31, 2021, the Company
had $43.80 million in total assets, $13.91 million in total
liabilities, and $29.90 million in total shareholders' equity.
Deer Park, IL-based LJ Soldinger Associates, LLC, the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated Jan. 13, 2022, citing that the Company, and its
affiliates, had net losses of $64.4 million and $11.5 million,
negative working capital of $2.954 million and $9.235 million and
accumulated deficits of $115.750 million and $51.386 million as of
and for the year ended Sept. 30, 2021 and 2020, respectively. In
addition, the Company has commenced operations in the production
and sale of cannabis and related products, an activity that is
illegal under United States Federal law for any purpose, by way of
Title II of the Comprehensive Drug Abuse Prevention and Control Act
of 1970, otherwise known as the Controlled Substances Act of 1970.
These facts raise substantial doubt as to the Company's ability to
continue as a going concern.
TEAM SERVICES: Moody's Rates $100MM Incremental Term Loan 'B2'
--------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to TEAM Services
Group, LLC's $100 million incremental senior secured first lien
term loan. All other ratings, including the B3 Corporate Family
Rating, B3-PD Probability of Default Rating, B2 ratings on the
existing senior secured first lien bank credit facilities, and Caa2
rating on the senior secured second lien term loan, remain
unchanged. The outlook is stable.
Proceeds from the incremental first lien term loan will be used to
fund acquisitions that are signed under a purchase agreement in
addition to acquisitions under a letter of intent, add cash to the
balance sheet for future acquisitions, as well as pay fees and
expenses. The incremental financing is credit negative as it will
increase leverage to approximately 7 times on a Moody's adjusted
basis. Despite the increase in leverage, the company's operating
performance has been good year-to-date with double-digit organic
revenue and EBITDA growth. Moody's expects earnings growth to
continue, such that leverage will improve to the low 6 times range
over the next 12 to 18 months.
Assignments:
Issuer: TEAM Services Group, LLC
Gtd Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
LGD Adjustments:
Issuer: TEAM Services Group, LLC
Gtd Senior Secured 2nd Lien Term Loan, Adjusted to (LGD6) from
(LGD5)
RATINGS RATIONALE
TEAM's B3 CFR reflects Moody's expectation that the company will
continue to operate with high adjusted debt/EBITDA over the next 12
to 18 months. Pro forma for the incremental $100 million term loan
add-on, Moody's estimates that TEAM's adjusted debt/EBITDA is
approximately 7 times based on the LTM ending June 30, 2022.
Further, the rating is constrained by the company's moderate scale
and geographic concentration in four states – California,
Colorado, Georgia, and Pennsylvania, though only one state
(California) accounts for greater than 10 percent of total revenue.
The rating also reflects Moody's expectation that TEAM will
aggressively pursue tuck-in acquisitions using the proceeds from
the incremental term loan add-on. Moody's further anticipates that
the company will operate with aggressive financial policies typical
of private equity-backed firms.
The B3 CFR is supported by the company's diversification by
services and payors. Despite having a large exposure to Medicaid
reimbursement rates, TEAM benefits from insulation given the
state-by-state nature of reimbursement changes. The exposure may
also be mitigated as TEAM expands into additional states. The
rating is supported by growing demand for home-based long-term
care, the preference of the BYOC (bring your own caregiver) model
especially during the current period with caregiver labor
shortages, and long-term contractual relationships. Revenues are
derived from administrative fees in the Risk Management Strategies
(RMS) business and from either a spread between state Medicaid
reimbursement rates and caregiver compensation or an administrative
fee in the TEAM Public Choices (TPC) business. Over the next 12 to
18 months, Moody's expects the company to maintain good liquidity,
highlighted by positive free cash flow generation.
Moody's expects the company to maintain good liquidity over the
next 12 months given the company's access to an undrawn $35 million
revolving credit facility and the expectation for positive free
cash flow generation. Liquidity is also supported by the company's
good cash balance as well as significant flexibility within the
credit agreement, including the absence of financial maintenance
covenants in the term loans.
TEAM faces social risks, such as the rising concerns around the
access and affordability of healthcare services. However, relative
to many other rated healthcare companies, TEAM faces below average
social risk since the company serves seniors and people with
disabilities, which represents an advocated group with legislative,
political, media and regulatory focus. That said, given TEAM's high
percentage of revenue generated from Medicaid, the company is
exposed to reimbursement changes. In terms of governance, TEAM's
acquisitions have generally been debt-funded, which poses future
risk to creditors, though the company's sponsors have shown a
willingness to partially fund larger transactions with equity such
as 24Hr Home Care.
The stable outlook reflects Moody's view that the company will
continue to grow both organically and through acquisitions, but
that leverage will remain elevated.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be downgraded if TEAM's revenue or profitability
weakens or if the company fails to effectively manage its rapid
growth. A downgrade could also occur with negative changes to
Medicaid reimbursement rates or if the company's financial policies
become more aggressive. The ratings could also be downgraded if
liquidity erodes.
The ratings could be upgraded if TEAM continues to successfully
execute its acquisition growth strategy leading to improved scale,
generates a track record of consistent positive free cash flow, and
debt/EBITDA is sustained below 6.0 times.
TEAM Services Group, LLC is a leading provider of employment
administration and risk management solutions that facilitate
self-directed home care for seniors and people with long-term
disabilities. TEAM is owned by a continuation fund managed by
private equity firm Alpine Investors. TEAM generated approximately
$650 million in contract revenues for the last twelve month period
ending June 30, 2022.
The principal methodology used in this rating was Business and
Consumer Services published in November 2021.
TEEZ SALON: Files Emergency Bid to Use Cash Collateral
------------------------------------------------------
Teez Salon and Spa, LLC asks the U.S. Bankruptcy Court for the
Eastern District of Texas, Sherman Division, for authority to use
cash collateral and provide adequate protection.
The Debtor has an immediate need to use the cash collateral of
Bankers Healthcare Group, LLC, the Debtor's secured creditor, which
claims a lien on substantially all of the Debtor's property
including accounts, equipment, inventory and other personal
property. The cash collateral will be used to continue the Debtor's
ongoing operations.
The Debtor intends to rearrange its affairs and needs to continue
to operate in order to pay its ongoing expenses, generate
additional income and to propose a plan in the case.
The use of cash collateral will ensure that the Debtor can pay its
employees, buy supplies (including inventory), pay utilities and
provide sufficient working capital for normal business operations.
As adequate protection, the Secured Lender is granted replacement
liens and security interests, in accordance with Bankruptcy Code
Sections 361, 363, 364(c)(2), 364(e), and 552, co-extensive with
its pre-petition liens.
The replacement liens are automatically perfected without the need
for filing of a UCC-1 financing statement with the Secretary of
State's Office or any other such act of perfection.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3dIejbX from PacerMonitor.com.
Th Debtor projects $28,450 in total expenses for the period from
August 2 to September 15, 2022 and $19,400 for the period from
September 16 to September 30, 2022.
About Teez Salon and Spa, LLC
Teez Salon and Spa, LLC owns and operates a hair salon. The Debtor
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. E.D. Tex. Case No. 22-41050) on August 21, 2022. In the
petition filed by Justin Lattimore, managing member, the Debtor
disclosed up to $50,000 in assets and up to $500,000 in
liabilities.
Howard Marc Spector, Esq., at Spector & Cox, PLLC is the Debtor's
counsel.
TRINITY PUBLIC UTILITY: S&P Lowers Revenue Bonds Rating to 'BB+'
----------------------------------------------------------------
S&P Global Ratings lowered its long-term rating and underlying
rating (SPUR) on Trinity Public Utility District (TPUD), Calif.'s
previously issued electric revenue bonds to 'BB+' from 'BBB+'. The
outlook is stable.
"We lowered the rating to reflect our opinion that unrestricted
cash and investments of $1.3 million as of June 2022 are not
commensurate with the amalgam of the state's determination that the
utility faces pronounced exposure to wildfires because much of the
service territory lies within an area the California Public
Utilities Commission designated as a Tier 2 risk zone and the
utility's inability to procure insurance covering wildfire claims
in the wake of multimillion-dollar wildfire liability claims in
connection with a 2017 wildfire event attributed to utility
assets," said S&P Global Ratings credit analyst Alexandra
Rozgonyi.
S&P captures TPUD's exposure to these environmental physical risks
under our environmental, social and governance (ESG) factors.
S&P said, "Environmental physical risks are negative within our
credit rating analysis given the substantial amount of power lines
and customer meters within elevated fire threat areas and its
inability to maintain wildfire insurance. In addition, current
prolonged drought conditions in California can exacerbate wildfire
risk. Nevertheless, we view positively the district's power supply
entirely from non-carbon-emitting hydro resources.
"In our opinion, governance, risk management, culture, and
oversight are also negative to credit quality given management's
expectation of maintaining just approximately $3 million of
unrestricted cash through fiscal 2026, which we view as very thin
given the associated operational risk stemming from potential
wildfires. Management's policies and procedures include a cost
pass-through mechanism on its electric rates, long-term financial
planning, and capital planning.
"We believe the district's social capital factors are neutral in
our credit rating analysis given the low cost of power driving
competitive rates, which is modestly offset by the below-average
income indicators that could pressure planned rate increases
complicated by high inflation.
"The stable outlook reflects our view of TPUD's significant ongoing
efforts to mitigate wildfire exposure and its rate flexibility
given the benefits of its low cost, non-carbon-emitting power
supply. We believe TPUD will continue to pass through higher power
costs to its customers but not plan to materially bolster reserves
as a contingency for potential future wildfire claims.
"We could lower the rating, potentially by multiple notches, over
the next two years if TPUD faces wildfire claims beyond its
financial capacity, and if it is unable or unwilling to raise rates
or access capital markets to fund said damages.
"Over the next two years, we are unlikely to raise the rating
because the risk from wildfires will remain considerable. Actions
taken by TPUD and the state can reduce the utility's exposure to
wildfires, but these actions could be politically unpalatable
and/or require sustained efforts over multiple years."
Total electric system debt outstanding as of fiscal year-end June
30, 2021, was $18.6 million.
TROPICAL DELIGHT: Seeks to Tap Rehan N. Khawaja as Legal Counsel
----------------------------------------------------------------
Tropical Delight 1, Inc. seeks approval from the U.S. Bankruptcy
Court for the Middle District of Florida to employ the Bankruptcy
Law Offices of Rehan N. Khawaja as its counsel.
The firm will render these legal services:
(a) advise the Debtor concerning the operation of its business
in compliance with Chapter 11 and order of the court;
(b) prosecute and defend any causes of action on behalf of the
Debtor;
(c) prepare legal documents;
(d) assist in the formulation of a plan of reorganization and
preparation of a disclosure statement; and
(e) provide all other services of a legal nature.
The firm received a retainer of $5,000 from the Debtor.
The firm's attorneys will be paid at the hourly rate of $375.
Rehan Khawaja, Esq., disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Rehan N. Khawaja, Esq.
Bankruptcy Law Offices of Rehan N. Khawaja
817 North Main Street
Jacksonville, FL 32202
Telephone: (904) 355-8055
Facsimile: (904) 355-8058
Email: Khawaja@Fla-Bankruptcy.com
About Tropical Delight 1
Tropical Delight 1, Inc. filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
22-01612) on Aug. 14, 2022, listing as much as $1 million in both
assets and liabilities. Robert Altman serves as Subchapter V
trustee.
The Bankruptcy Law Offices of Rehan N. Khawaja is the Debtor's
counsel.
TRUGREEN LIMITED: Moody's Lowers CFR to B3 & First Lien Debt to B2
------------------------------------------------------------------
Moody's Investors Service downgraded TruGreen Limited Partnership's
Corporate Family Rating to B3 from B2 and Probability of Default
Rating to B3-PD from B2-PD. Moody's also downgraded the secured
bank credit facility rating to B2 from B1 and second lien term loan
rating to Caa2 from Caa1. The outlook remains stable.
"TruGreen's dividend in early 2022, followed by weakening consumer
demand and rising interest, fuel and ferritization costs, will
continue to challenge the company's credit quality," says Justin
Remsen, Moody's Assistant Vice President.
"Despite price increases and cost cutting measures, we no longer
believe TruGreen will generate much more than break even cash flow
or maintain leverage under 6.0x over the next 12 to 18 months,
including Moody's standard adjustments," adds Remsen.
Downgrades:
Issuer: TruGreen Limited Partnership
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
Senior Secured 1st Lien Revolving Credit Facility, Downgraded to
B2 (LGD3) from B1 (LGD3)
Senior Secured 1st Lien Term Loan, Downgraded to B2 (LGD3) from B1
(LGD3)
Gtd Senior Secured 2nd Lien Term Loan, Downgraded to Caa2 (LGD6)
from Caa1 (LGD5)
Outlook Actions:
Issuer: TruGreen Limited Partnership
Outlook, Remains Stable
RATINGS RATIONALE
TruGreen's B3 Corporate Family Rating reflects the company's
limited growth, low EBITDA margins, and elevated leverage stemming
from an aggressive financial policy. Leverage is expected to
remain near 7x as persistent inflation challenges both consumer
demand and expense levels. At the same time, TruGreen has a solid
market position as the leading lawn care service provider for the
residential market in the US. With significant market share in a
highly fragmented industry, TruGreen competes predominantly against
smaller independent local providers in a highly fragmented
industry. In addition, the company is supported by high levels of
recurring revenues and a diversified customer base.
TruGreen has an adequate liquidity profile, which Moody's expects
to be maintained over the next 12 to 18 months. The company's
liquidity profile is supported by about $22 million in cash as of
July 2, 2022 and $139 million in availability under the company's
revolving credit facility. Moody's forecast assumes the company
will rely more heavily on the revolver in 2023, but below the
company's springing covenant test of 35% drawn. Moody's projects
$25 million of free cash flow in 2022 (excluding the $164 million
dividend) and $10 million in 2023, with an assumed incremental $35
million interest expense a key driver of the deterioration.
The stable outlook reflects Moody's expectations that while
TruGreen will continue to be pressured by softening consumer demand
and elevated input costs, its credit metrics will remain in line
with B3 peers.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if adjusted debt to EBITDA is
sustained below 6x, EBITA to interest greater than 1.75x, the
company shows an improvement in free cash flow, and maintains a
good liquidity profile.
The ratings could be downgraded if adjusted debt to EBITDA is above
7.0x, EBITA to interest is below 1.0x, and there is a deterioration
in liquidity.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Headquartered in Memphis, Tennessee, TruGreen Limited Partnership
is a lawn care service provider in North America controlled by
affiliates of Clayton, Dubilier & Rice. The company primarily
serves the residential market with over 250 company operated and
franchise locations across 48 states and three Canadian provinces.
VENUE CHURCH: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Venue Church Inc.
6401 Lee Highway, Suite 101
Chattanooga, TN 37421-4765
Business Description: The Debtor owns a property located at 6401
Lee Highway, Suite 101, Chattanooga TN
valued at $4.5 million.
Chapter 11 Petition Date: August 23, 2022
Court: United States Bankruptcy Court
Eastern District of Tennessee
Case No.: 22-11829
Judge: Hon. Shelley D. Rucker
Debtor's Counsel: W. Thomas Bible, Jr., Esq.
TOM BIBLE LAW
6918 Shallowford Road, Suite 100
Chattanooga, TN 37421
Tel: (423) 424-3116
Fax: (423) 499-6311
Email: tom@tombiblelaw.com
Total Assets: $4,742,285
Total Liabilities: $3,019,714
The petition was signed by Tavner Smith as president.
A full-text copy of the Debtor's list of 20 largest unsecured
creditors is available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/ZWYS4NQ/Venue_Church_Inc__tnebke-22-11829__0004.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/ZCJQA6I/Venue_Church_Inc__tnebke-22-11829__0001.0.pdf?mcid=tGE4TAMA
VITEC ELECTRONICS: Case Summary & Four Unsecured Creditors
----------------------------------------------------------
Debtor: Vitec Electronics Corporation
6213 El Camino Real
Carlsbad, CA 92009
Business Description: Vitec Electronics develops, manufactures,
and markets pulse and isolation
transformers, switching power supply
magnetics, transformers for Local Area
Network (LAN), telecommunications
applications, and custom products.
Chapter 11 Petition Date: August 23, 2022
Court: United States Bankruptcy Court
Southern District of California
Case No.: 22-02205
Judge: Hon. Christopher B. Latham
Debtor's Counsel: K. Todd Curry, Esq.
CURRY ADVISORS, A PROFESSIONAL LAW CORPORATION
185 West F. Street, Ste. 100
San Diego, CA 92101
Email: tcurry@currylegal.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Brad Rogers as vice president and
general manager.
A copy of the Debtor's list of four unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/D7JLQMQ/Vitec_Electronics_Corporation__casbke-22-02205__0006.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/DCNVT7A/Vitec_Electronics_Corporation__casbke-22-02205__0001.0.pdf?mcid=tGE4TAMA
WC BRAKER: Case Trustee Seeks Cash Collateral Access
----------------------------------------------------
Dawn Ragan, the chapter 11 trustee for WC Braker Portfolio, LLC,
asks the U.S. Bankruptcy Court for the Western District of Texas,
Austin Division, for authority to, among other things, use cash
collateral and provide adequate protection at least through
September 30, 2022.
The Trustee needs to use cash to pay for services necessary to
maintain and operate the Debtor's Properties, including
landscaping, trash, utilities, and other expenses to operate the
Properties, meet the Debtor's obligation to tenants, and to pay
administrative costs of the Debtor's Chapter 11 Case.
According to the Debtor, on February 28, 2019, the Debtor, as
borrower and JPMorgan Chase Bank, National Association, as lender,
entered into the Loan Agreement and the Debtor, as borrower,
executed the Promissory Note pursuant to which JPMorgan agreed to
make a loan in the principal amount of $71 million to the Debtor.
The Debtor used the proceeds of the Loan to refinance 13 low-rise
office buildings and a nearby retail center that it owned, all
located in Austin, Texas.
On April 29, 2022, ATX acquired the Loan from JPMorgan.
As of the Petition Date, the aggregate principal amount outstanding
under the Loan, including the amount of accrued and unpaid
interest, was scheduled as not less than approximately $71
million.
ATX, as the successor to JP Morgan, asserts that all obligations
under the Prepetition Loan Agreement, and the Prepetition
Promissory Note are secured by first-priority liens on the
Properties, and that pursuant to that certain Cash Management
Agreement, dated February 28, 2019, between Debtor, as Borrower,
JPMorgan, as Lender, and Wells Fargo Bank, N.A., as Agent, a
first-priority security interest in all rents deposited into a
lockbox account, and that all of Debtor's cash and cash equivalents
constitute cash collateral with respect to the Loan.
As of the Petition Date, the Debtor was indebted to the Prepetition
Secured Party in the aggregate amount of $72,870,133, consisting
of:
i) principal amount $71,000,000,
ii) $1,836,792 in accrued and unpaid interest with respect
thereto, and
iii) $33,341 in reasonable fees, costs, premiums, expenses
allowable under the Loan Documents.
Since the Debtor's cash is derived from rents and asserted as cash
collateral of ATX, and is currently being held in the Chase Reserve
Account held by ATX, the Trustee has no ability to operate or
restructure the Debtor absent use of cash collateral.
The Prepetition Secured Party is currently holding approximately
$10,200,368 in trust for the Debtor as of June 30 in an account at
JP Morgan Chase Bank, N.A. in the name of ATX Braker SR, LLC. The
Trustee has requested the Prepetition Secured Party to provide the
Trustee with viewing access to the Chase Reserve Account.
The Trustee offers the following adequate protection for the use of
cash collateral for purposes of the Proposed Order:
a. valid, binding, continuing, enforceable, fully-perfected,
non-avoidable, first-priority senior replacement security interests
in and liens on the Prepetition Collateral and all tangible and
intangible post-petition property related to the Properties in
which the Debtor has an interest.
b. allowed superpriority administrative expense claims
against the Debtor ahead of and senior to any and all unsecured
claims and administrative expense claims to the extent of any
Diminution in Value.
c. adequate protection payments as follows: (i) upon entry of
the Order, the first such adequate protection payment will be paid,
in kind, in an amount equal to the sum of all accrued and unpaid
interest due and payable under the Prepetition Loan Agreement from
the date of the last interest payment made by the Debtor under the
Prepetition Loan Agreement through and including the Petition Date,
calculated at the default rate set forth in the Prepetition Loan
Agreement, and (ii) on the last business day of each calendar month
thereafter, each such adequate protection payment will be paid in
cash, in an amount comprising all accrued and unpaid interest,
incurred following the Petition Date, with interest payable to the
Prepetition Secured Party under the Prepetition Loan Agreement
calculated at the default rate set forth in the Prepetition Loan
Agreement.
d. As further adequate protection, the Trustee will pay in
full: (i) in kind upon entry of the Order, the reasonable,
documented fees, expenses, and disbursements incurred by the
Prepetition Secured Party arising prior to the Petition Date; and
(ii) in cash, on a monthly basis, within five business days after
receipt by counsel for the Trustee of invoices therefor, the
reasonable and documented fees, expenses, and disbursements
incurred by Prepetition Secured Party arising subsequent to the
Petition Date.
The Trustee's right to use cash collateral on a consensual basis
will terminate on the earlier of: (x) September 30, 2022, unless
extended by agreement of the Trustee and Prepetition Secured Party
and (y) if an Event of Default occurs and remains uncured for more
than five business days following the delivery to counsel to the
Trustee and the Debtor and the filing with the Court of written
notice declaring that the Trustee's right to use cash collateral
has been terminated by the Prepetition Secured Party.
A copy of the motion and the Debtor's budget is available at
https://bit.ly/3ckijPF from PacerMonitor.com.
The budget provides for total estimated disbursements, on a monthly
basis, as follows:
$179,347 for June 2022;
$172,303 for July 2022;
$415,866 for August 2022; and
$256,640 for September 2022.
About WC Braker Portfolio
WC Braker Portfolio is primarily engaged in renting and leasing
real estate properties. The Debtor filed Chapter 11 Petition
(Bankr. W.D. Tex. Case No. 22-10293) on May 2, 2022.
Hon. Tony M. Davis oversees the case.
Todd Headden, Esq. of HAYWARD PLLC is the Debtor's Counsel.
In the petition signed by Natin Paul, authorized signatory, the
Debtor disclosed $100 million to $500 million in assets and $50
million to $100 million in liabilities.
ATX Braker SR, LLC, as mortgage lender, is represented by Liz
Boydston, Esq. and Stephen P. McKitt, Esq. at Polsinelli PC and
Mitchell A. Karlan, Esq. and Keith R. Martorana, Esq. at Gibson,
Dunn & Crutcher LLP.
WINDSTREAM HOLDINGS II: Fitch Affirms 'B' IDR, Outlook Stable
-------------------------------------------------------------
Fitch Ratings has affirmed Windstream Services LLC's (WIN) and
Windstream Holdings II, LLC's Long-Term Issuer Default Rating at
'B'. The Rating Outlook is Stable. Fitch has also affirmed the
'BB'/'RR1' rating of WIN's first lien secured debt comprised of
super senior revolving facility, first lien term loan and 7.75%
first lien notes.
The ratings reflect Fitch's expectation of continued revenue
pressures due to secular declines in WIN's legacy products, offset
by stabilizing EBITDA and improving EBITDA margins over the next
couple of years supported by continued cost take-outs and fiber
investments resulting in Kinetic consumer market share gains. Fitch
expects adjusted gross leverage to remain around the mid to high-4x
on a normalized basis.
KEY RATING DRIVERS
Adjusted Leverage: Fitch evaluates the company's leverage on a
lease-adjusted basis since a significant portion of WIN's assets
are leased from Uniti Group Inc. (applying an 8x multiple to the
master and other lease payments, adjusted for settlement payments).
Fitch projects adjusted gross leverage (total adjusted
debt/EBITDAR) will remain in mid to high-4x over the forecast.
WIN's capital structure provides some financial flexibility as the
company accelerates fiber deployment across its Kinetic footprint
and gains market share.
Revenue Pressures Continue: Windstream continues to experience
pressure particularly in Enterprise segment due to declining
legacy-products-related revenue and effects of competition.
However, the strategic Enterprise revenue, comprised of SDWAN and
UCaaS offerings, continues to grow in double digits and offset some
of these underlying pressures. Fitch's base case assumes Enterprise
revenue declines in high single digits in 2022 moderating to
mid-single-digits by 2024 supported by growth in strategic revenue.
Consumer revenue has continued to grow in low to mid-single digits,
aided by sustained broadband customer growth over the last few
years.
High Strategic Execution Risk: Fitch believes there is a meaningful
execution risk to the company's strategy to contain revenue
declines and grow EBITDA over the next few years. While there are
relatively low risk opportunities such as interconnection costs
take-out that will support EBITDA, WIN's ability to gain
residential market share through increased network investments will
be a key driver for future revenue growth. In Fitch's view,
Windstream has limited capacity to mitigate execution risks while
still deleveraging.
GCI Led Increased Spending: As part of the settlement agreement
with Uniti, the latter will reimburse WIN a total of $1.75 billion
in growth capital investments (GCI) through 2030, and pay
Windstream about $400 million over five years, at an annual
interest rate of 9%. GCI reimbursements will be critical to support
WIN's fiber to the home (FTTH) investment strategy that aims to
drive 1GB speed to approximately half of its ILEC footprint,
roughly 2 million homes by 2026. The company is on track to exceed
30% coverage by the end of 2022.
Cost Savings Support Margins: Windstream continues to optimize
costs including realization of cost savings from interconnection
expenses (i/c expenses) as it transitions away from legacy
products. During 2021 and 2020, i/c expenses reduced in high teens.
WIN launched a three-year TDM exit plan in 2020 to migrate almost
all its CLEC customers off of the TDM network to newer
technologies. Fitch believes i/c cost savings along with additional
identified cost saving opportunities will support EBITDA margins
over the rating horizon.
DERIVATION SUMMARY
Windstream is a hybrid in that it has characteristics of both an
incumbent operator with its Kinetic business unit (ILEC business)
operating in primarily rural areas in 18 states and as a business
services provider with its Enterprise and Wholesale units (CLEC),
which compete nationally.
In comparison to Frontier Communications Parent, Inc. (BB-/Stable),
Windstream has less exposure to the residential market. The
residential market held up relatively well during the coronavirus
pandemic but continues to face secular challenges. WIN derives
approx. 25% of revenues from consumers whereas Frontier generates
about 50% of consumer revenues. Frontier has a slightly larger
scale than Windstream and operates at a lower debt leverage (3.3x
at YE 2021) compared with WIN's lease adjusted leverage. Both
Frontier and WIN have similar EBITDA(/R) margins on a like-to-like
basis.
In the enterprise service market, Windstream has a weaker
competitive position based on scale and size of its operations in
the enterprise market. Larger companies, including AT&T Inc.
(BBB+/Stable), Verizon Communications Inc. (A-/Stable), and Lumen
Technologies, Inc. (BB/Stable), have an advantage with national or
multinational companies given their extensive footprints in the
U.S. and abroad. Besides scale, these companies operate at a lower
leverage and have better financial flexibility and FCF profile.
KEY ASSUMPTIONS
-- Fitch expects revenue declines averaging near mid-single-digit
in 2022 and 2023. 2022 revenue declines due to revenue pressures in
Kinetic and Enterprise segments, partially offset by increasing
Wholesale segment. Kinetic segment is expected to decline in 2022
as a lower RDOF funding replaces CAF II funding. Starting 2023,
Fitch expects revenue growth in low single digits in Kinetic,
partially offsetting declines in Enterprise and Wholesale.
-- 2022 EBITDA margins are expected to dip below 20% in 2022 due
to one-time effects from CAF II funding step down effective
beginning of 2022 and Uniti settlement payments for 2022 received
in advance in 4Q'21. The margins are expected to normalize in 22%
to 23% range in 2023. The growth in EBITDA margins will be
supported by continued interconnection cost take-outs and other
cost saving measures.
-- No dividends are assumed over the forecast.
-- Fitch expects adjusted leverage (total adjusted debt/EBITDAR)
to remain in mid to high 4x range (on a normalized basis).
Recovery Assumptions:
The recovery analysis assumes that Windstream would be reorganized
as a going-concern in bankruptcy rather than liquidated.
Fitch has assumed a 10% administrative claim.
The revolving facility is assumed to be fully draw.
WIN's going concern (GC) EBITDA is based on 2Q'22 LTM EBITDA
adjusted for advanced settlement payments from Uniti in 2021 and
CAF II to RDOF rollover funding starting in 2022. The GC EBITDA is
assumed roughly 20% lower than the pro forma adjusted LTM EBITDA in
a bankruptcy scenario due to the company's inability to grow
consumer and/or strategic business revenue that is sufficient to
offset declines in legacy revenue. These pressures could stem from
competitive pressures, an unsuccessful fiber deployment strategy or
protracted pressures on enterprise revenue. EBITDA declines faster
than anticipated, eroding benefits from cost cutting measures.
The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which we base the enterprise
valuation.
An enterprise value (EV) multiple of 4.5x EBITDA is applied to the
GC EBITDA to calculate a post-reorganization EV. The choice of this
multiple considered the following factors:
The historical bankruptcy case study exit multiples for most
telecom companies ranged from 3x-7x, with a median of 5.4x.
Windstream emerged from bankruptcy in 2020 with a reorganization
multiple of roughly 3.5x.
We use a 4.5x multiple to reflect WIN's improved capital structure
(reduced debt levels) following the recent restructuring and the
strategic focus on fiber spending to increase market share.
The recovery analysis produces Recovery Ratings of 'RR1' for all
secured debt, reflecting strong recovery prospects (100%).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Revenue stabilization achieved through a) continued growth in
broadband subscribers as a result of increased GCI spending and b)
expansion in strategic enterprise revenue.
-- Successful execution on cost reduction plans, resulting in
EBITDA margins sustained in low to mid 20s range and consistently
positive FCFs.
-- Adjusted leverage, defined as total adjusted debt/ operating
EBITDAR, sustained below 4.0x or a positive adjusted (CFO-capex)/
Total debt where capex is adjusted for GCI reimbursements.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Deterioration in operating profile, including inability to
stabilize revenue or offset EBITDA pressure through cost
reductions.
-- Aggressive shareholder policies such as dividend recaps
resulting in negative FCFs (adjusted for Uniti GCI reimbursements)
on a sustained basis.
-- Adjusted leverage sustained above 5.0x; or adjusted
(CFO-capex)/total debt below -7%.
LIQUIDITY AND DEBT STRUCTURE
Fitch believes Windstream has sufficient liquidity supported by
cash balances and availability under the $500 million revolver. As
of June 30, 2022, there was approximately $396 million available
under the revolving facility (after taking LCs into consideration).
There are no significant maturities in the near term.
Windstream's capital structure consists of: (a) a $500 million
super senior secured revolving facility, (b) a $750 million term
loan facility, and (c) $1,400 million of senior secured notes. The
revolver matures on Sept. 21, 2024. The term loan amortizes at the
rate of 1% annually and matures on Sept. 21, 2027. The 7.75% first
lien notes are due on Aug. 15, 2028.
The first lien obligations under both the credit agreement and the
indenture are secured by substantially all assets of the company
and its guarantor subsidiaries. The credit facility is also
guaranteed by Windstream Holdings II, LLC. The revolver includes a
financial maintenance covenant of 3.5x total net leverage ratio.
Windstream's settlement agreement with Uniti has a 3.0x total
leverage incurrence covenant with respect to Uniti's GCI commitment
obligations. The settlement agreement also provides that Uniti will
not be required to comply with its GCI funding commitment if
Windstream's total leverage ratio exceeds 3.5x (the maintenance
leverage covenant) and Windstream breaches certain conditions on
debt incurrence, dividends and acquisitions amongst other
provisions as provided in the agreement. The maintenance and
incurrence covenant do not apply at certain rating levels, as
defined in the agreement.
ISSUER PROFILE
Windstream offers bundled broadband, voice, digital television and
security solutions to consumers primarily in rural areas in 18
states. As it transforms into an advanced, nationwide network
communications provider, it provides data, cloud solutions, unified
communications and managed services to enterprise clients.
Windstream's fiber-optic network spans approximately 170,000
miles.
WOLVERINE WORLD: Moody's Cuts CFR to Ba2 & Alters Outlook to Stable
-------------------------------------------------------------------
Moody's Investors Service downgraded Wolverine World Wide, Inc.'s
ratings, including the corporate family rating to Ba2 from Ba1,
probability of default rating to Ba2-PD from Ba1-PD and senior
unsecured notes rating to Ba3 from Ba2. The company's speculative
grade liquidity rating remains SGL-2. The outlook was changed to
stable from negative.
The downgrade reflects Wolverine's elevated leverage compared to
Moody's original expectations and similarly rated peers, and risks
to the pace of deleveraging given macroeconomic, foreign currency
and supply chain pressures and the more promotional retail
environment. In addition, the downgrade reflects governance
factors, specifically Wolverine's continued high debt levels
following the Sweaty Betty acquisition and as reduced cash flow
generation and share repurchases prevented debt repayment.
Moody's took the following rating actions for Wolverine World Wide,
Inc.:
Corporate Family Rating, downgraded to Ba2 from Ba1
Probability of Default Rating, downgraded to Ba2-PD from Ba1-PD
Senior Unsecured Global Notes, downgraded to Ba3 (LGD5) from Ba2
(LGD5)
Outlook, Changed to stable from negative
RATINGS RATIONALE
Wolverine's Ba2 CFR benefits from its diversified distribution in
the global footwear industry and the dependable replenishment
demand cycle of the footwear category due to normal product wear
and tear. The company's product portfolio appeals to a broad range
of consumer needs and demographics. About three quarters of
Wolverine's revenue is generated from its top 5 brands, including
Merrell, which is established, differentiated and well-positioned
in its segment. Financial leverage is currently high, with
debt/EBITDA at 5.0x for the twelve months ended July 2022, in part
because of the incremental debt from the 2021 Sweaty Betty
acquisition. Moody's projects debt/EBITDA to decline to high-3x
over the next 18 months, driven by revolver repayment with free
cash flow generation and modest earnings growth. Moody's expects
inflationary pressures to be mitigated by the still solid spending
for casual and sports footwear in the US in the near term, pent-up
demand internationally, and improved supply chain conditions. The
rating is also supported by the company's overall balanced
financial strategies and good liquidity.
At the same time, the ratings are constrained by the company's
relatively small revenue scale, narrow product focus primarily in
the footwear segment, and fashion risk. In addition, Wolverine's
growth strategy has included acquisitions, which introduce event,
execution and financing risk. As a footwear company, Wolverine is
also subject to social and environmental risks related to
responsible sourcing, the treatment of work force, natural capital
and customer relations.
The stable outlook reflects Moody's expectation that Wolverine will
reduce leverage and maintain good liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company achieves and
demonstrates a commitment to maintaining lower financial leverage
on a sustained basis. An upgrade would also require continued solid
revenue and earnings performance, while maintaining at least good
liquidity. Quantitative measures include Moody's-adjusted
debt/EBITDA sustained below 3.5x and EBITA/interest expense
sustained above 4x.
The ratings could be downgraded if operating performance or
liquidity deteriorate, or if the company undertakes aggressive
financial strategy actions such as meaningful debt-financed share
repurchases or acquisitions. Quantitative measures include
Moody's-adjusted debt/EBITDA sustained above 4.5x or EBITA/interest
expense below 3.0x.
Headquartered in Rockford, Michigan, Wolverine World Wide, Inc. is
a designer and marketer of casual, active lifestyle, work, outdoor
sport, athletic, children's and uniform footwear and apparel. The
company's portfolio of brands includes Merrell, Saucony, Sperry,
Sweaty Betty, Hush Puppies, Wolverine, Keds, Chaco, Bates, HYTEST
and Stride Rite. The company also is the global footwear licensee
of the Cat and Harley-Davidson brands. Revenue for the latest
twelve months ended July 2, 2022 was $2.6 billion.
The principal methodology used in these ratings was Apparel
published in June 2021.
WR GRACE: Fitch Alters Outlook on 'B+' IDR to Negative
------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating of
'B+' to W. R. Grace Holdings LLC, affirmed the 'BB+'/'RR1' on the
company's secured debt and affirmed the 'B+'/'RR4' on the company's
unsecured debt. The Rating Outlook has been revised to Negative
from Stable.
The 'B+' rating level captures the company's strong FCF generation,
specialized product portfolio and modest cyclicality, offset by a
sizable but falling debt burden. The Negative Outlook reflects the
effects of raw material price inflation on the company's ability to
generate enough cash to meaningfully pursue debt reduction. Fitch
notes that the extent to which a recovery in the company's margin
profile (potentially driven by moderating raw material prices)
drives its application of free cash flow towards debt reduction in
2023 and 2024 will determine the manner in which the Outlook is
resolved.
KEY RATING DRIVERS
Ongoing Balance Sheet Evolution: Grace's acquisition of Albemarle's
FCS business and Standard Industries' subsequent acquisition of
Grace itself added more than $2.5 billion in debt to the company's
capital structure. While Grace will continue to operate with higher
gross leverage than it did before it was taken private, Fitch notes
that the company has the opportunity to improve its cost of capital
and debt structure without materially affecting its operational
strategy. Fitch notes that once the company has addressed the $300
million 2024 secured notes maturity, it will enjoy solid financial
flexibility, with no significant maturities until 2027. Fitch
expects debt reduction to be accomplished primarily through
voluntary term loan prepayments.
Elevated Cost, Leverage Profile: Leverage remains elevated
following the Albemarle FCS and Standard Industries transactions,
further compounded by rising raw material prices causing a
contraction in margins despite strong demand from a volume
perspective. However, moderating input costs and continued
volumetric stability in 2023 and beyond is likely to drive solid
EBITDA generation and strong, stable FCF generation.
The extent to which the company is able to apply this cash towards
gross debt reduction will determine the strength of the company's
credit profile -- accordingly, Fitch views the manner in which the
company addresses the 2024 maturities as an important signal as to
the company's financial strategy as a private company in a less
certain financial environment.
Specialized Chemical Portfolio: Grace's two business segments offer
highly specialized products with high margins and pricing power.
Grace has been able to pass through costs to customers, and the
Catalysts Technologies segment has consistently generated EBITDA
margins of around 35%, while the Materials Technologies business is
in the low 20% range. These margins are on the high end for
specialty chemical companies, and while somewhat volatile, are
partially insulated by way of solid pass-through rates. Fitch
believes the company will continue to deploy capital in the medium
term to build out the Materials Technologies segment.
Refinery Production Drives Growth: Growth in the Refining
Technologies subsegment, which accounts for just under half of
Grace's revenue, is determined primarily by refinery production
utilization levels. Products in this subsegment have various uses,
including cracking hydrocarbon chains in distilled crude oil to
produce transportation fuels, maximizing propylene production and
converting methanol into petrochemical feeds. These are valuable
inputs to a refinery's operations that support the optimization of
crack spreads -- as such, Fitch expects volumes to track refinery
production utilization levels, with high pass-through rates keeping
gross margins relatively stable.
DERIVATION SUMMARY
Grace's EBITDA margins are consistently above 25%, placing the
company firmly within the specialty manufacturer group. The company
is smaller than direct competitor Albemarle, which also produces
lithium and bromine to complement its catalysts. Like NewMarket
Corporation (BBB/Stable), Grace is a leader in a highly specialized
industry, but has a greater appetite for debt funded M&A, and Fitch
expects the company under Standard will operate with a leverage
profile generally consistent with the 'B+' rating category,
generally at or above 5.0x. Aruba Investments, Inc. (B/Stable)
possesses a comparable leverage profile with similarly resilient
cash flow streams, albeit with far less scale.
Like many of its peers, Fitch anticipates Grace's growth to roughly
track economic activity. Fitch projects Grace to generate
consistent FCF margins in the mid-single digits over the forecast
period, given low maintenance capex requirements and relatively
stable earnings, which is consistent with Fitch's views on
Newmarket.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
-- Raw material inflation drives both revenue increases and
margin compression in 2022-2023;
-- EBITDA margins recover from raw material inflationary effects
beginning in the second half of 2023;
-- Deleveraging primarily through voluntary term loan
prepayments;
-- Limited to no upstream dividends to Standard;
-- Total debt with equity credit/operating EBITDA peaks in 2022,
falling sharply thereafter as the normalization of raw
material prices and voluntary debt reduction drives leverage
to below 5.0x by 2025.
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes Grace would be reorganized as a
going-concern (GC) in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
Grace's GC EBITDA assumption is based on forecast 2023 EBITDA. The
GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which the valuation of the
company is based. The GC EBITDA depicts a scenario in which severe
headwinds in the company's more commoditized Refining Technologies
business, and weak growth in other segments due to slower
macroeconomic activity, leads to a severe drop in both EBITDA and
cash generation. The assumption also reflects corrective measures
taken in the reorganization to offset the adverse conditions that
triggered default, such as cost cutting efforts and industry
recovery.
An enterprise value (EV) multiple of 6.5x EBITDA is applied to the
GC EBITDA to calculate a post-reorganization EV. The multiple is
comparable to the range of historical bankruptcy case study exit
multiples for peer companies, which ranged from 5.0x to 8.0x.
Bankruptcies in this space related either to litigation or to deep
cyclical troughs.
The revolving credit facility is assumed to be drawn at 80%.
Fitch's recovery assumptions result in a recovery rating for the
senior secured debt within the 'RR1' range and results in a 'BB+'
rating. The assumptions also result in a recovery rating for the
senior unsecured debt within the 'RR4' range and results in a 'B+'
rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Demonstrated commitment to debt reduction coupled with
continued cash generation and earnings stability, leading to
total debt with equity credit/operating EBITDA durably below
4.5x;
-- Successful completion of Materials Technologies and Specialty
Catalysts buildout while continuing to strengthen the
company's capital structure.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Operating EBITDA/Interest Paid durably below 2.0x;
-- Loss of leading market positions -- particularly in the
Catalysts segment -- leading to total debt with equity
credit/operating EBITDA durably above 5.5x;
-- Reduced ability to pass through costs to customers, leading to
less stable margins and heightened cash flow risk;
-- More aggressive than anticipated M&A activity, including
transformative, credit-unfriendly acquisitions, or dividend
policy otherwise incompatible with management's articulated
capital deployment.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: Grace's liquidity position is solid, with full
availability on its $450 million revolving credit facility and a
moderate cash balance. Additionally, Fitch anticipates solid FCF
generation through the medium term. The company faces a $300
million maturity in 2024, after which it faces limited maturities
until 2027. Fitch believes that the manner in which the company
addresses these maturities will be an important indicator of the
company's medium-term capital deployment policy.
ISSUER PROFILE
W. R. Grace Holdings LLC (Grace) is a specialty chemicals company
that is comprised of two business segments: Grace Catalysts
Technologies and Grace Materials Technologies. Grace Catalysts
Technologies produces and sells catalysts and related products and
technologies used in petrochemical, refining, and other chemical
manufacturing applications. Grace Materials Technologies produces
and sells specialty materials, which are either silica-based or
complex organic molecules, that can be used in pharma & consumer,
coatings, and chemical process applications.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Rating Prior
------ -----
W. R. Grace Holdings LLC
LT IDR B+ Affirmed B+
senior secured LT BB+ Affirmed RR1 BB+
senior unsecured LT B+ Affirmed RR4 B+
ZEROHOLDING LLC: Files Emergency Bid to Use Cash Collateral
-----------------------------------------------------------
Zeroholding, LLC asks the U.S. Bankruptcy Court for the Northern
District of Georgia, Atlanta Division, for authority to use cash
collateral on an emergency basis to continue its operations in
accordance with the proposed budget and the Proposed Interim
Order.
Like so many other small businesses, the Debtor suffered a series
of setbacks at the hands of the pandemic, including seeking out
financing from merchant cash advance companies.
Multiple merchant cash advance companies assert liens on Debtor's
cash collateral, as defined below. Because the MCAs file UCC1
financing statements through a servicer, such as Corporation
Service Company, it is impossible at this stage to determine which
MCA asserts a first position interest in Debtor's cash collateral.
The lenders that may assert an interest in the Debtor's cash
collateral are City Capital NY, LLC, Med Direct Capital, LLC, NFG
Advance, LLC, Parkview Advance, LLC, PointOne Capital, LLC, Newtek
Small Business Finance, Premium Merchant Funding, LLC, and Zen
Capital.
The Debtor proposes to use cash collateral for general operational
and administrative expenses as set forth in the Budget.
To the extent that any interest the Lenders may have in the cash
collateral is diminished, the Debtor proposes to grant the Lenders
a replacement lien in post-petition collateral of the same kind,
extent, and priority as the liens existing pre-petition, except
that the Adequate Protection Lien will not extend to the proceeds
of any avoidance actions received by the Debtor or the estate
pursuant to chapter 5 of the Bankruptcy Code.
A copy of the motion and the Debtor's 4-week budget is available at
https://bit.ly/3T8Y9sv from PacerMonitor.com.
The budget provides for total expenses, on a weekly basis, as
follows:
$46,883 for Week 1;
$70,133 for Week 2;
$32,533 for Week 3; and
$46,883 for Week 4.
About Zeroholding, LLC
Zeroholding, LLC offers cleaning services to buildings and
dwellings. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-56502) on August
19, 2022. In the petition signed by Philip Miles, manager, the
Debtor disclosed up to $1 million in assets and up to $10 million
in liabilities.
Judge Jeffery W. Cavender oversees the case.
Will Geer, Esq., at Roundtreee, Leitman, Klein & Geer, LLC is the
Debtor's counsel.
ZOAK DEVELOPMENT: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Zoak Development LLC
3527 Mt. Diablo Blvd, Ste 174
Lafayette, CA 94549
Business Description: Zoak Development is a Single Asset Real
Estate (as defined in 11 U.S.C. Section
101(51B)).
Chapter 11 Petition Date: August 23, 2022
Court: United States Bankruptcy Court
Northern District of California
Case No.: 22-40811
Debtor's Counsel: Marc Voisenat, Esq.
LAW OFFICE OF MARC VOISENAT
2329 A Eagle Avenue
Alameda, CA 94501
Tel: 510-263-8755
Fax: 510-272-9158
Email: voisenat@gmail.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Chinazam Igweka as managing member.
The Debtor stated it has no creditors holding unsecured claims.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/VLGOIVY/Zoak_Development_LLC__canbke-22-40811__0001.0.pdf?mcid=tGE4TAMA
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Bankr. E.D.N.Y. Case No. 22-41992
Chapter 11 Petition filed August 19, 2022
represented by: Robert Rattet, Esq.
In re John C. Klosterman
Bankr. S.D. Ohio Case No. 22-11385
Chapter 11 Petition filed August 19, 2022
represented by: Christian J. Dennery, Esq.
In re Downtown Jordan, LLC
Bankr. W.D. Tenn. Case No. 22-23468
Chapter 11 Petition filed August 19, 2022
See
https://www.pacermonitor.com/view/CY346RQ/Downtown_Jordan_LLC__tnwbke-22-23468__0001.0.pdf?mcid=tGE4TAMA
represented by: Toni Campbell Parker, Esq.
LAW FIRM OF TONI CAMPBELL PARKER
E-mail: tparker002@att.net
In re Steven James Nelson
Bankr. E.D. Tenn. Case No. 22-11809
Chapter 11 Petition filed August 19, 2022
represented by: Amanda Stofan, Esq.
In re Robert H McClure
Bankr. N.D. Ga. Case No. 22-56521
Chapter 11 Petition filed August 21, 2022
In re TEEZ Salon and Spa, LLC
Bankr. E.D. Tex. Case No. 22-41050
Chapter 11 Petition filed August 21, 2022
See
https://www.pacermonitor.com/view/GX5LUOI/TEEZ_Salon_and_Spa_LLC__txebke-22-41050__0001.0.pdf?mcid=tGE4TAMA
represented by: Howard Marc Spector, Esq.
SPECTOR & COX, PLLC
E-mail: hms7@cornell.edu
In re Bona Vista 1606 LLC
Bankr. S.D. Fla. Case No. 22-16461
Chapter 11 Petition filed August 22, 2022
See
https://www.pacermonitor.com/view/RWZ6VOA/Bona_Vista_1606_LLC__flsbke-22-16461__0001.0.pdf?mcid=tGE4TAMA
represented by: Joel Aresty, Esq.
JOEL M. ARESTY PA
E-mail: aresty@icloud.com
In re Johnstone Family Practice, LLC
Bankr. S.D. Ind. Case No. 22-03312
Chapter 11 Petition filed August 22, 2022
See
https://www.pacermonitor.com/view/XZYM4QY/Johnstone_Family_Practice_LLC__insbke-22-03312__0001.0.pdf?mcid=tGE4TAMA
represented by: David Krebs, Esq.
HESTER BAKER KREBS LLC
E-mail: dkrebs@hbkfirm.com
In re Khawaja of Manassas, Inc.
Bankr. W.D. Va. Case No. 22-70482
Chapter 11 Petition filed August 22, 2022
See
https://www.pacermonitor.com/view/ECZNHGY/Khawaja_of_Manassas_Inc__vawbke-22-70482__0001.0.pdf?mcid=tGE4TAMA
represented by: Andrew S. Goldstein, Esq.
MAGEE GOLDSTEIN LASKY & SAYERS, P.C.
E-mail: agoldstein@mglspc.com
*********
Monday's edition of the TCR delivers a list of indicative prices
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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
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then-ending.
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
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Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon,
Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and
Peter A. Chapman, Editors.
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