/raid1/www/Hosts/bankrupt/TCR_Public/220912.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, September 12, 2022, Vol. 26, No. 254
Headlines
129 N WALNUT STREET: 41-Unit NJ Apartment Seeks Chapter 11
ADRIAN WYATT: Hires Petway Mills & Pearson as Accountant
AH DEVELOPMENT: Hires Jill M. Flinton CPA as Accountant
ALCARAZ CATERING: Seeks Cash Collateral Access
ALL AMERICA TRADING: Gets Cash Collateral Access Thru Sept 21
ALLENA PHARMA: Sept. 13 Deadline Set for Panel Questionnaires
ARA MACAO: Edgewater Belize Files Reorganizing Plan
ATS AUTOMATION: S&P Alters Outlook to Pos., Affirms 'BB' LT ICR
AUDACY INC: 2nd Largest Radio Company Denies Bankruptcy Report
BASIC WATER: Case Summary & Four Unsecured Creditors
CATSKILL CASE STUDY: U.S. Trustee Appoints Creditors' Committee
CELSIUS NETWORK: Debtor, Committee Okay Appointment of Examiner
CHARLES DEWEESE: Seeks Cash Collateral Access Thru Oct 10
CHICK LUMBER: Seeks Cash Collateral Access Thru Dec 31
CHUB CAY: Claims Will be Paid from Property Sale/Refinance
CINEMA SQUARE: Court OKs SBA Cash Collateral Deal
CLARUS THERAPEUTICS: Sept. 13 Deadline Set for Panel Questionnaires
COADVANTAGE: Moody's Hikes CFR to B2, Outlook Stable
COLGATE ENERGY: S&P Raises ICR to 'B+' on Close of Merger
COOK COUNTY CSD: Moody's Upgrades Issuer & GOLT Ratings to 'Ba2'
COPPER MECHANICAL: Unsecureds Will Get 10% Dividend in 36 Months
COVETRUS INC: Moody's Assigns 'B2' CFR, Outlook Stable
CRYSTAL PACKAGING: Unsecureds to Get Share of Income for 5 Years
DA LUGO INVESTMENT: Hires Buddy D. Ford, P.A. as Counsel
DIAMANTE CUSTOM: Unsecureds Will Get 14.9% Dividend in Plan
DIVERSIFIED HEALTHCARE: Moody's Cuts CFR to B3, Outlook Remains Neg
DOCUPLEX INC: Wins Cash Collateral Access Thru Oct 6
ELEVATE TEXTILES: Moody's Cuts CFR to Caa1, Outlook Stable
EMPIRE HOLDING: Case Summary & 20 Largest Unsecured Creditors
EQT CORP: Moody's Affirms 'Ba1' CFR Amid Tug Hill Transaction
FC COMPASSUS: S&P Alters Outlook to Negative, Affirms 'B' ICR
FIRST GUARANTY: Creditors to Get Proceeds From Liquidation
FULL CIRCLE: Case Summary & 20 Largest Unsecured Creditors
GEO GROUP: Moody's Ups CFR to B3, Outlook Remains Stable
GIP III STETSON: S&P Alters Outlook to Pos., Affirms 'B-' ICR
HAMON HOLDINGS: Taps Robert Recio of RJC as Wind-Down Officer
HEARTBRAND HOLDINGS: Hires Omni as Claims and Noticing Agent
HEARTBRAND HOLDINGS: Hires Vinson & Elkins as Counsel
HIGHPOINT LIFEHOPE: Lender Seeks to Prohibit Cash Collateral Use
HOMELIBERTY INC: Bid to Use Cash Collateral Denied
HOYOS INTEGRITY: Unsecureds to Get Share of 8% New Equity in Plan
JA SEEKINS: Gets Cash Collateral Access Thru Feb 2023
KENDRA A. FLOWERS: Case Summary & Seven Unsecured Creditors
LATAM AIRLINES: Revised Business Plan Sees Bullish Future
LINDERIAN COMPANY: Unsecureds Will Get 5% in Subchapter V Plan
LIONHEART TRAUMA: Files Emergency Bid to Use Cash Collateral
LUZERNE IRONWORKS: Creditors to Get Proceeds From Liquidation
MACON DOOR: Case Summary & 20 Largest Unsecured Creditors
MALACHI GROUP: Amends ETEHUD Secured Claims Pay Details
MICRON DEVICES: Trustee Hires Susan E. Kaufman as Special Counsel
MILLENNIUM SERVICES: Seeks to Hire BransonLaw PLLC as Counsel
MILLENNIUM SERVICES: Wins Cash Collateral Access Thru Sept 28
NERAM GROUP: Seeks Cash Collateral Access Thru Feb 2023
NEW YORK HAND: Unsecureds Will Get 5% of Claims in 5 Years
NEWAGE INC: Sept. 12 Deadline Set for Panel Questionnaires
OSG GROUP: Moody's Assigns Caa2 CFR Following Bankruptcy Emergence
PERMIAN RESOURCES: S&P Upgrades ICR to 'B+' on Merger Close
PICARD MIDCO: S&P Assigns 'B' ICR, Outlook Stable
PILATES AND YOGA: Seeks Cash Collateral Access
PRINCIPLE ENTERPRISES: Case Summary & 20 Top Unsecured Creditors
PUNYAKAM PLLC: Punyakam Unsecureds to Split $10K in Joint Plan
QURATE RETAIL: S&P Lowers ICR to 'B+' on Supply Chain Pressures
RED RIVER: Executes Global Settlement; Files Amended Plan
REHME CUSTOM: Case Summary & 20 Largest Unsecured Creditors
S.A. WAGNER: Unsecureds Will Get 24.62% in Liquidating Plan
SHEM OLAM: Hires Leech Tishman Robinson Brog as Counsel
SHOPS AT BROAD: Lender Wants Debtor Identified as SARE
SIGNIFY HEALTH: Moody's Puts 'B1' CFR on Review for Upgrade
SNAP INC: Snapchat Parent Fires 20% of Workforce
STONEBRIDGE VENTURES: Case Summary & One Unsecured Creditor
TEDESCHI & SONS: Continued Operations to Fund Plan Payments
THIRD FLOOR: Case Summary & 19 Unsecured Creditors
TIBCO SOFTWARE: Moody's Affirms B3 CFR & Rates First Lien Debt B2
TRC FARMS: Hires Country Boys Auction & Realty as Auctioneer
WELLS ENTERPRISES: S&P Downgrades ICR to 'B', Outlook Negative
[^] BOND PRICING: For the Week from September 5 to 9, 2022
*********
129 N WALNUT STREET: 41-Unit NJ Apartment Seeks Chapter 11
----------------------------------------------------------
129 N Walnut Street LLC has sought bankruptcy protection in New
York.
The Debtor owns a 41-unit apartment building in 129 N Walnut Street
at
East Orange, NJ 07017. The Property is currently fully occupied.
The Property is the Debtor's sole tangible asset. The Debtor's
sole source of revenue are the rents paid by tenants at the
Property.
A substantial portion of the tenants have not been paying rent for
quite some time -- a circumstance that started during the Covid
pandemic. Since acquiring the Property, the Debtor has been working
diligently to buy out or evict non-paying tenants. Court
proceedings, however, are moving extremely slowly. The Debtor is
also seeking compensation from Covid related government programs
that are slated to pay rents owed by indigent tenants.
At the present time the Debtor's operations are running at a
deficit on a cash basis, but the Debtor's principal, Samuel
Rosenbaum, has been funding the shortfall. Since November of 2021,
he has advanced approximately $144,000 and is willing to continue
to make loans to allow the Debtor to meet ongoing operating
obligations.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Oct. 3, 2022, at 2:30 PM at Teleconference - Brooklyn.
About 129 N Walnut Street LLC
129 N Walnut Street LLC is a Single Asset Real Estate (as defined
in 11 U.S.C. Sec. 101(51B)).
129 N Walnut Street LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-42104) on
September 2, 2022. In the petition filed by Samuel Rosenbaum, as
managing member, the Debtor reported assets and liabilities between
$1 million and $10 million.
Isaac Nutovic of Nutovic & Associates is the Debtor's counsel.
ADRIAN WYATT: Hires Petway Mills & Pearson as Accountant
--------------------------------------------------------
Adrian Wyatt Adams Drub, Inc. seeks approval from the U.S.
Bankruptcy Court for the Eastern District of North Carolina to
employ Petway Mills & Pearson, PA to provide general tax, payroll,
and accounting advice.
The firm will be paid at these rates:
Partners $180 per hour
Accounting and Bookkeeping Staffs $100 per hour
Administrative Staffs $85 per hour
The firm will be paid $2,500 per month for accounting, tax
consulting, annual tax planning, and preparation of Federal and
State tax returns.
C. Briggs Petway, Jr., a partner at Petway Mills & Pearson, PA,
disclosed in a court filing that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
C. Briggs Petway, Jr.
Petway Mills & Pearson, PA
806 N Arendell Ave.
Zebulon, NC 27597
Tel: (919) 269-7405
Email: briggscpa@aol.com
About Adrian Wyatt Adams Drub, Inc.
Adrian Wyatt Adams Drug, Inc. operates two independently-owned drug
stores in Wake County, North Carolina. The Debtor sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.C. Case
No. 22-01834) on August 18, 2022. In the petition signed by Adrian
Wyatt Adams, president, the Debtor disclosed $392,125 in total
assets and $1,919,109 in total liabilities.
Judge David M. Warren oversees the case.
George Mason Oliver, Esq., at the Law Offices of Oliver and Cheek,
PLLC is the Debtor's counsel.
AH DEVELOPMENT: Hires Jill M. Flinton CPA as Accountant
-------------------------------------------------------
AH Development Group LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of New York to employ Jill M.
Flinton, CPA, PLLC as accountant.
The firm will provide these services:
a. prepare ongoing monthly operating reports of the Debtor;
b. prepare periodic tax documents of the Debtor; and
c. prepare other financial documents and statements of the
Debtor as necessary during the pendency of the bankruptcy case.
The firm will be paid $150 per hour for bookkeeping services and
$250 per hour for accounting services.
Jill M. Flinton, a partner at Jill M. Flinton, CPA, PLLC, disclosed
in a court filing that the firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Jill M. Flinton
Jill M. Flinton, CPA, PLLC
2290 Maple Avenue
Charlton, NY 12019
Tel: (518) 460-5165
Email: jill@jillflintoncpa.com
About AH Development Group LLC
AH Development Group, LLC filed a petition for Chapter 11
protection (Bankr. N.D. N.Y. Case No. 21-11106) on Dec. 5, 2021,
listing $767,107 in assets and $1,178,466 in liabilities. Ben
Gaspard, managing member, signed the petition.
The Debtor tapped Michael Boyle, Esq., at Boyle Legal, LLC, as
legal counsel.
ALCARAZ CATERING: Seeks Cash Collateral Access
----------------------------------------------
Alcaraz Catering, Inc. asks the U.S. Bankruptcy Court for the
Central District of California for authority to use cash collateral
to continue to operate its business and honor existing and future
contracts for work.
The Debtor requires the use of cash collateral to operate its
business, to pay workers, to purchase supplies for trucks, to pay
insurance, utilities, and building loan payments and other
expenses.
The Debtor had financial and business difficulties caused by
Covid-19 when the business was shut down to follow government
guidelines. The lack of income forced missed payments to creditors.
The lender of the loan on the property sought foreclosure on the
note after only being two payments behind. The foreclosure was set
for early August 2022.
The Debtor has a second loan on the property through SBA. The SBA
loan has not been paid in several years, but no action has been
taken by SBA to collect on the money due.
The Debtor projects that the value of its monthly income from
rentals will be stable throughout the pendency of the case since
the economy has returned to operation and COVID-19 is better
controlled. The business has been consistent, and it was only
COVID-related closures that created the lack of cash flow.
Despite its financial and business difficulties, the Debtor has
taken time to identify the problems and potential solutions to
stabilize its business. The Debtor is putting more formalities in
place by using written contracts for leases and rentals, whereas
for many years, they depended upon a person's word. The Debtor will
require at least 30 days before it determines how to proceed on the
repayment program, but plans to use a 60-month repayment plan.
The Debtor also requests the Court set an immediate hearing on the
matter.
A copy of the motion is available at https://bit.ly/3RvOiMh from
PacerMonitor.com.
About Alcaraz Catering
Alcaraz Catering Inc. is a catering company.
Alcaraz Catering filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
22-10622) on August 13, 2022. In the petition filed by Antonio
Alcaraz, as president, the Debtor reported assets and liabilities
between $1 million and $10 million each.
Susan K Seflin has been appointed as Subchapter V trustee.
The Law Offices of Kenneth H.J. Henjum is the Debtor's counsel.
ALL AMERICA TRADING: Gets Cash Collateral Access Thru Sept 21
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Orlando Division, authorized All America Trading, LLC to use cash
collateral on an interim basis through September 21, 2022.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court; and (b) the current and
necessary expenses set forth in the budget, plus an amount not to
exceed 10% for each line item.
As adequate protection, the Debtor will pay $4,500, to be
distributed prorata to the Secured Creditors starting on September
15, 2022, by the 15th of each month.
Each creditor with a security interest in cash collateral will have
a perfected post-petition lien against cash collateral to the same
extent and with the same validity and priority as the prepetition
lien, without the need to file or execute any document as may
otherwise be required under applicable non bankruptcy law.
The final hearing on the matter is set for September 21 at 11 a.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3RvuM2n from PacerMonitor.com.
The budget provides for total operating expenses, on a monthly
basis, as follows:
$262,550 for September 2022;
$382,000 for October 2022;
$549,850 for November 2022;
$589,850 for December 2022;
$660,650 for January 2022; and
$665,350 for February 2022.
About All America Trading
All America Trading LLC is is a Florida limited liability company
whose primary place of business is in Orlando, Orange County,
Florida. AAT exports bananas globally. It works virtually out of
the apartment of the principal of AAT, Joe Mudar, who is the 100%
owner of AAT.
All America Trading LLC filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 22-02876) on August 11, 2022. In the petition filed by
Mudar Y. Mahmoud, as owner, the Debtor reported assets between
$500,000 and $1 million and liabilities between $500,000 and $1
million.
Judge Grace E. Robson oversees the case.
Aaron R. Cohen has been appointed as Subchapter V trustee.
Adina L Pollan, Esq., at McGlinchey Stafford, is the Debtor's
counsel.
ALLENA PHARMA: Sept. 13 Deadline Set for Panel Questionnaires
-------------------------------------------------------------
The United States Trustee is soliciting members for committee of
unsecured creditors in the bankruptcy case Allena Pharmaceuticals,
Inc.
If a party wishes to be considered for membership on any official
committee that is appointed, it must complete a Questionnaire
available at https://bit.ly/3xbd5gc and return by email it to Rosa
Sierra-Fox -- Rosa.Sierra-Fox@usdoj.gov-- at the Office of the
United States Trustee so that it is received no later than 4:00
p.m., on Sept. 13, 2022.
If the U.S. Trustee receives sufficient creditor interest in the
solicitation, it may schedule a meeting or telephone conference for
the purpose of forming a committee.
About Allena Pharmaceuticals
Allena Pharmaceuticals is a pre-commercial clinical
biopharmaceutical company dedicated to discovering, developing and
commercializing first-in-class, oral biological therapeutics to
treat patients with rare and sever metabolic and kidney disorders
such as gout and kidney stones.
Allena Pharmaceuticals, sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10842) on Sept. 2,
2022. In the petition signed by Matthew Foster, chief restructuring
officer, the Debtor disclosed $14,368,000 in assets and $3,455,000
liabilities.
Allena's legal counsel is Landis Rath & Cobb LLP and Wilmer Cutler
Pickering Hale and Dorr LLP is its Special Corporate Counsel. SSG
Advisors, LLC is Debtor's Investment Banker and Stretto, Inc.
Debtor's Notice & Claims Agent.
ARA MACAO: Edgewater Belize Files Reorganizing Plan
---------------------------------------------------
Edgewater Belize Investors, LLC ("EBI" or "the Proponent") filed
with the U.S. Bankruptcy Court for the District of Arizona a
Disclosure Statement accompanying Plan of Reorganization for Ara
Macao Holdings, L.P., ("AMH") dated September 6, 2022.
AMH was formed in 2004 to acquire and develop a large parcel of
land, comprising some 616.5 acres, at the northern end of the
Placencia Peninsula, in the Stann Creek District of Belize.
AMH's General Manager was IoVest LLC, led by Paul Goguen ("PG");
under the terms of partnership agreement PG enjoyed a near absolute
protection from removal as General Manager.
Sec. 363 Land Sale and its implications
On July 11, 2022, the Trustee entered into a Purchase Contract with
Jisheng Song ("JS"), or his nominee ("Buyer") for the cash purchase
price of $5.8 million. Escrow was opened on July 15th, at which
time Buyer placed a refundable Good Faith deposit of $200,000 into
the escrow account.
Buyer has a 90-day Due Diligence period after which he must make
his offer irrevocable, or the contract is canceled; although Buyer
has the option to extend his Due Diligence period for up to 60 days
by paying a non-refundable $10,000 fee for each 30 day extension.
Concurrent with the filing of a motion to approve the Land Sale,
the Trustee filed a "Sales Procedure" motion, which provides a
mechanism by which "Higher and Better Offers" by "Qualified
Bidders".
EBI estimates that the net proceeds available from the Purchase
Contract for distribution to unsecured creditors of all classes
would be approximately $2.9m. this would represent a payment of
about 20% of unsecured creditor claims and the total extinction of
subordinated creditor claims and equity interests.
The Plan Sponsor
EBI was created to provide a focused vehicle in which the skills of
its founders, RS and GS, and their organizations, could be combined
to create an optimum platform of fully aligned interests for the
successful development of the Placencia Marina project.
Proponent's overriding goal is to maximize distributions to the
largest possible group of stakeholders in the AMH Estate.
The Plan of Reorganization ("POR") provides for all allowed
creditor claims, at a minimum, to have their principal amounts
repaid in full. For certain creditor classes that elect to use
their claims as payment towards land, or condominiums, or marina
homes, substantially greater value will be received than the
principal value of their claims. Equity holders will receive, pro
rata, a share in EBI's common units. These goals represent a far
greater return to AMH stakeholders than the alternative provided
for in the §363 Land Sale.
Upfront Payment of $4.5M to the Bankruptcy Estate to finalize
transfer of The Estate's title to the Property and pay Unimpaired
Claims and Classes and Initial Distributions to Classes 4B and 5.
Additional funding of approximately $20M to begin phased
development of the Property. Will provide the following
treatments:
* Class 1 - Super Priority Claims (DIP Lenders)
-- Payment in Full
-- Option to apply their Note(s) toward the purchase of
Product
* Class 2 – Priority Tax Claims – Receive Payment in Full
* Class 3 – Secured Claim of Barrow & Williams – Receive
Payment in Full
* Class 4 – Deposit Creditors
-- Option A – Apply existing Deposit to new Product Purchase
Contract
-- Base Credit of 100% of Deposit
-- Bonus Credit of 125% of all Base Credits for a total of
225%
-- Further 10% off list price
-- Option B – 100% Deposit Refund
-- Pro-rata share of Initial Distribution
-- Promissory Note for balance after (i) payment
* Class 5 – General Unsecured Creditors
-- Pro-rata share of Initial Distribution
-- Promissory Note for balance after (i) payment
* Class 6 – Subordinated General Unsecured Creditors
-- Subordinated Promissory Note for the principal amount of
allowed claim
-- If also holding Class 1 (and electing Product) or 4A Claim
- Option to apply Subordinated Promissory Note towards purchase of
Product
* Class 7 – Limited Partnership Interest will receive, as a
whole, 12.5% of EBI Common Equity Units.
-- Each interest holder will receive a pro-rata share of the
12.5% of EBI Common Equity Units based upon their limited partner
position at the time of filing the Petition.
-- Class 7 creditors must, first, sign the EBI Operating
Agreement.
Proponent is closely familiar with the holders of the DIP Loan
Notes and has received verbal indications from all of them that
they will elect to use their DIP Loan Notes, as well as any and all
Class 4A, Class 5, and Class 6 claims they may also hold, towards
the purchase of Product.
DIP Loan Note holders will need to be repaid in full, removing
approximately $1,000,000 from the Cash Available for Distribution
upon approval of the Land Sale by the Court.
This number is derived by dividing the numerator, the total Class
4b and Class 5 Claims seeking a cash reimbursement by the Cash
available for Distribution. The percentage is Gross
(56.5%)/Adjusted (41.7%).
The Gross number represents the actual percentage of allowed Class
4b and 5 claims. The adjusted number calculates the percentage as
if pre-petition interest were being paid so that one can make a
more direct comparison with the distribution from a §363 Land
sale. For the avoidance of doubt, any Class 4a, 5, or 6 claim which
is used towards the purchase of Product is not eligible to receive
any cash from the Initial Distribution.
A full-text copy of the Disclosure Statement dated September 6,
2022, is available at https://bit.ly/3U0nFk9 from PacerMonitor.com
at no charge.
Attorneys for Edgewater Belize Investors:
JARED G. PARKER
LAWRENCE D. HIRSCH
PARKER SCHWARTZ, PLLC
7310 N. 16th St., Suite 330
Phoenix, Arizona 85020
Email: jparker@psazlaw.com
Email: lhirsch@psazlaw.com
Telephone:(602) 282-0477
Facsimile: (602) 282-0478
About Ara Macao Holdings
Ara Macao Holdings, L.P. provides real estate development
services.
On April 6, 2018, an involuntary Chapter 11 petition was filed
against Ara Macao Holdings (Bankr. D. Ariz. Case No. 18-03615). The
petitioning creditors are KB Partners, Inc., Christopher de Sibert,
Gary Nitsche, Daniel Dorgan, Richard Umbach and Edgewater
Resources, LLC. They are represented by Patrick A Clisham, Esq., at
Engelman Berger, P.C.
On May 8, 2018, the involuntary proceeding was converted to a
voluntary Chapter 11 case (Bankr. D. Ariz. Case No. 18-03615).
Judge Paul Sala oversees the case. Ara Macao Holdings hired
Burch & Cracchiolo, P.A. as its bankruptcy counsel.
The U.S. Trustee for Region 14 appointed an official committee of
unsecured creditors in Ara Macao Holdings' bankruptcy case. The
committee is represented by Engelman Berger, P.C.
S. Cary Forrester is the Chapter 11 trustee appointed for Ara Macao
Holdings. The trustee hired Forrester & Worth, PLLC as bankruptcy
counsel and Snell & Wilmer LLP as special counsel.
ATS AUTOMATION: S&P Alters Outlook to Pos., Affirms 'BB' LT ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook on ATS Automation Tooling
Systems Inc. to positive from stable and affirmed its 'BB'
long-term issuer credit rating on the company. S&P revised its
recovery rating on the senior unsecured debt to '5' from '6'. S&P's
'5' recovery rating corresponds with modest (10%-30%; rounded
estimate: 20%) recovery in a default scenario. As a consequence,
S&P raised its issue-level rating on the company's unsecured debt
to 'BB-' from 'B+' on improved recovery prospects.
The positive outlook primarily reflects the potential that ATS can
generate and sustain an adjusted debt-to-EBITDA ratio (leverage) of
about 2.5x beyond this year, with steady organic growth in its life
sciences, food and beverage, and transportation end markets.
S&P said, "We view ATS business risk profile more favorably than in
the past, which underpins the outlook revision to positive. We
believe ATS has enhanced its business risk profile over the past
several years, led by strong organic growth and acquisitions that
have increased the company's scale and exposure to historically
less cyclical end markets, and improved profitability. The company
is on track to generate earnings and cash flow above our previous
estimates this year (fiscal 2023), with continued growth in the
next couple of years. We estimate ATS' adjusted EBITDA in the
high-C$300 million area in fiscal 2023 (ending March 2023)--a
steady improvement from strong levels last year and well above
historical average levels. In addition, despite sharply higher
sales in 2021, the company generated stronger EBITDA margins to
more than 15% (from just over 12% on average over the past six
years). We assume its higher margins are sustainable, and favorable
relative to those of similarly rated peers in the global capital
goods industry.
"Moreover, we expect ATS will face moderate exposure to
macroeconomic headwinds. Its automation systems sales are focused
primarily on the life sciences and the food and beverage end
markets (which together account for about 70% of revenue). Demand
in these segments is linked to population growth and largely
resilient to slowing economic growth, which should provide a degree
of stability to the company's prospective earnings.
"Based mainly on the improvements to ATS' scale of operations and
profitability, we believe the company is better positioned within
our fair business risk assessment. In addition, we expect ATS will
generate steady improvement in its credit measures to levels we now
view as strong for the current rating. As a result, we believe
there is greater upside potential for the rating than we previously
envisioned, as reflected in the positive outlook.
"Steady improvement in earnings and positive free cash flow should
lead to credit measures that are strong for the rating. We expect
the company's leverage to improve to about 2.6x by fiscal year-end
2023 and to the low-2.0x area in fiscal 2024 and thereafter. Steady
earnings growth and positive free cash flow generation that reduce
adjusted debt are key drivers. We believe the material increase in
its backlog (up 25% in first-quarter 2023 year over year) provides
good near-term visibility for earnings, along with contributions
from recent acquisitions. We also expect demand will remain solid
beyond this year, with steady (albeit, potentially lumpy) orders
for medical-related automation systems that notably benefited from
the COVID-19 pandemic. ATS recently secured a large order from a
global automotive original equipment manufacturer and should
continue to benefit from growth in the electric vehicle industry
(such as battery enclosures/assembly), which is in the early stages
of its investment cycle.
"We also believe cost-saving initiatives ATS implemented and growth
in higher-margin after-sale services (which remain a small share of
overall revenue) should mitigate macroeconomic headwinds. The
company has raw material cost pass-through provisions in its
contracts, which limit its exposure to certain inflationary
pressures. Supply-chain constraints, notably for machine
components, and labor availability remain key potential risks at
least in the near term, but we assume this is manageable.
"We believe ATS can generate steady free cash flow that will
contribute to deleveraging. The company is expected to increase
capital expenditures (capex) to sustain the growth of its business
but we expect its capital intensity will remain modest relative to
prospective cash flows. We estimate its free operating cash flow
(FOCF)-to-debt ratio in the 15%-25% range over the next few years,
which provides financial flexibility.
"The company's financial policy could support a higher rating. ATS'
financial policy could support a higher rating as the company's
intent is to maintain leverage at about 2.5x on a sustainable
basis. We expect acquisitions will remain a core component of ATS'
long-term strategy, and a notable contributor to the expansion of
the company's business, but for ATS to take a prudent approach to
growth. The company's leverage peaked at close to 3.5x in December
2021 following its SP Industries Inc. acquisition, which is high
for the rating, but has steadily declined and is expected to
approach 2.5x in fiscal 2023. ATS has also historically maintained
leverage well below this level (average of about 1x from fiscal
years 2017 to 2021) to preserve balance-sheet capacity for
larger-scale purchases that were eventually completed.
"However, the potential for larger-scale debt-funded acquisitions
is a key source of uncertainty that tempers rating upside at
present. ATS' leverage was 2.9x on June 30, 2022, which is above
our threshold for an upgrade. Incremental acquisitions beyond our
estimates would likely delay the expected pace and amount of
improvement in this ratio that we currently expect this year.
Moreover, the effect would presumably be exacerbated if earnings
and cash flow fall short of our assumptions. While we view ATS'
business as largely resilient to slowing GDP growth, a recession
could have negative implications for customer demand and
potentially weaken company earnings. Therefore, we believe more
time is required to assess if the company will achieve or exceed
our estimated credit measures before contemplating an upgrade.
"The positive outlook primarily reflects our more favorable view of
company's business risk profile mainly due to ATS' larger scale and
improved profitability following recent acquisitions, and
stronger-than-expected operating results through this year. We
believe ATS can generate leverage of about 2.5x on a sustained
basis, which we now view as commensurate with a higher rating.
"We could raise the ratings if, over the next 12 months, the
company generates leverage approaching 2.5x by fiscal year-end
2023, and we believe this can be sustained over the next several
years. In this scenario, we expect continued growth in earnings,
led by solid demand in its key automation systems end markets and
contributions from recent acquisitions. In addition, we expect
excess cash flow generation to reduce ATS' adjusted debt levels.
While the potential for higher leverage is possible from future
acquisitions, we would expect any increase to be temporary in order
to contemplate an upgrade.
"We could revise the outlook to stable if, over the next 12 months,
ATS's adjusted debt to EBITDA were to remain close to 3x, with
reduced prospects for material improvement. We believe this could
occur if its prospective earnings are expected to meaningfully
weaken from our current estimates, potentially from slowing demand,
heightened competition ,and/or sustained cost pressure. Higher
adjusted debt, most likely related to acquisitions, could also lead
to a stabilization of the rating."
ESG credit indicators: E-2, S-2, G-2
AUDACY INC: 2nd Largest Radio Company Denies Bankruptcy Report
--------------------------------------------------------------
Radio NK Home reports that the country's second largest radio
company Audacy Inc. denies that it is filing for bankruptcy.
Executives at radio's second largest company are denying a blog
post written by Jerry Del Colliano that CEO David Field confirmed
the company was filing for bankruptcy.
The report was apparently picked up by at least one media outlet in
Massachusetts which could have been the reason Audacy went public
to deny the report.
Audacy posted this response to the report on the company Twitter
page. As you can see from the Audacy tweet, public station WGBH is
tagged. A search of the WGBH Twitter page and website does not
result in any news about Audacy, however. Of course, the story
could have been deleted after Audacy denied the report, if one was
ever posted.
The company stock has been below $1.00 in recent weeks and Audacy
received a delisting letter from the NYSE. Following their Q2
results a round of layoffs went into effect at the company and 3rd
quarter revenue was projected to be flat. Audacy is expecting a
stronger 4th quarter, buoying by political revenue. The Audacy
stock closed at .52 Tuesday.
About Audacy Inc.
Audacy, Inc., is a publicly traded American multi-platform audio
content and entertainment organization based in Philadelphia,
Pennsylvania. Founded in 1968 as Entercom Communications
Corporation, it is the second largest radio company in the United
States, owning 235 radio stations across 48 media markets.
BASIC WATER: Case Summary & Four Unsecured Creditors
----------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Basic Water Company 22-13252
875 West Warm Springs Road
Henderson, NV 89011-4063
Basic Water Company SPE 1, LLC 22-13253
875 West Warm Springs Road
Henderson, NV 89011-4063
Business Description: Basic Water is a water utility company in
Nevada.
Chapter 11 Petition Date: September 10, 2022
Court: United States Bankruptcy Court
District of Nevada
Judge: Hon. Mike K. Nakagawa
Debtors' Counsel: Samuel A. Schwartz, Esq.
SCHWARTZ LAW, PLLC
601 East Bridger Avenue
Las Vegas, NV 89101
Tel: 702-385-5544
Email: saschwartz@nvfirm.com
Debtors'
Financial
Advisor: FORCE 10 PARTNERS, LLC
Basic Water Company's
Estimated Assets: $10 million to $50 million
Basic Water Company's
Estimated Liabilities: $1 million to $10 million
Basic Water Company SPE's
Estimated Assets: $10 million to $50 million
Basic Water Company SPE's
Estimated Liabilities: $10 million to $50 million
The petitions were signed by Stephanne A. Zimmerman as president.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/AFS265Y/BASIC_WATER_COMPANY__nvbke-22-13252__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/AXXYYMY/BASIC_WATER_COMPANY_SPE_1_LLC__nvbke-22-13253__0001.0.pdf?mcid=tGE4TAMA
List of Basic Water Company's Four Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. EMD Acquisition LLC Contract $0
dba Borman Specialty Materials
PO Box 55
Henderson, NV 89009
2. Lhoist North Contract $0
America of Arizona, Inc
PO Box 985004
Fort Worth, TX
76185-5004
3. Pioneer Americas LLC Contract $0
dba Olin Chlor Alkali Products
3855 N Ocoee St,
Ste 200
Cleveland, TN 37312
4. Titanium Metals Corporation Contract $0
4832 Richmond Rd,
Ste 100
Cleveland, OH 44128
Basic Water Company SPE's Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bank of Nevada Loan Unknown
Divison of Western
Alliance Bank
P.O. Box 26237
Las Vegas, NV
89126-0237
CATSKILL CASE STUDY: U.S. Trustee Appoints Creditors' Committee
---------------------------------------------------------------
The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Chapter 11 case of Catskill
Case Study, LLC.
The committee members are:
1. Jim and Chantal Glancy
155 West 18th Street
New York, NY 10011
Tel: (917) 414-5054
2. Heather McDonough
c/o Penachio Malara, LLP
245 Main Street, Suite 450
White Plains, NY 10601
Tel: (914) 946-2889
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 Catskill Case Study
Catskill Case Study LLC -- https://Milancasestudy.com/ -- is a
construction contractor in Brooklyn, N.Y.
Due to ongoing litigation, Catskill Case Study sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.Y. Case
No. 22-41817) on July 28, 2022, listing $500,000 to $1 million in
assets and $1 million to $10 million in liabilities. Nicolas
Mahedy, managing member of Catskill Case Study, signed the
petition.
Judge Nancy Hershey Lord oversees the case.
Gregory M. Messer, Esq., at the Law Office of Gregory Messer, PLLC,
is the Debtor's counsel.
CELSIUS NETWORK: Debtor, Committee Okay Appointment of Examiner
---------------------------------------------------------------
Celsius Network LLC and its Official Committee of Unsecured
Creditors have consented to the U.S. Trustee's request for an
appointment of an examiner in the crypto platform's bankruptcy
cases after the U.S. Trustee agreed to limit the scope of the
examiner's investigation.
Celsius had earlier said any investigation by an examiner with a
broad scope would be duplicative of the Creditors' Committee's
ongoing investigation and would result in undue delay in these
chapter 11 cases and additional costs to the Debtors' estates --
all to the detriment of the Debtors' stakeholders.
The Creditors' Committee said it supports greater transparency in
the case but believes the scope and budget for any examination that
is conducted by an examiner must be narrowly tailored so as avoid
excessive costs and delays that will diminish recoveries and
prolong the timetable of these cases.
After negotiations, the parties agreed that the scope of the
examiner's investigation will consist of:
i. An examination of the Debtors' cryptocurrency holdings,
including a determination as to where the Debtors' cryptocurrency
holdings were stored prepetition and are stored postpetition and
whether different types of accounts are commingled.
ii. An examination as to why there was a change in account
offerings beginning in April 2022 from the Earn Program to the
Custody Service for some customers while others were placed in a
"Withhold Account."
iii. An examination of the Debtors' procedures for paying sales
taxes, use taxes, and value added taxes and the extent of the
Debtors' compliance with any non-bankruptcy laws with respect
thereto.
iv. An examination of the current status of the utility
obligations of the Debtors' mining business.
v. Subject to the terms of this Order, otherwise perform the
duties of an examiner set forth in Sec. 1106(a)(3) and 1106(a)(4)
of the Bankruptcy Code.
The original request by the U.S. Trustee included an investigation
into:
* The identification of the undisclosed third party loan party
and what steps the Debtors took to neutralize their lost
collateral.
* An examination as to why was the $648 million repaid,
collateral returned prepetition, and the terms of these loans.
* An examination as to the terms of the $750 million
intercompany revolver, including how Celsius used the loan
proceeds.
* An examination as to the liquidation of the Tether loan.
* An examination of the GK8 acquisition.
The Debtors and the Committee will fully cooperate with the
Examiner in the performance of any of the Examiner's duties and the
Investigation.
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.
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, maintains the page https://cases.stretto.com/celsius
On July 27, 2022, the U.S. Trustee appointed an official committee
of unsecured creditors. On July 29, 2022, the committee voted to
retain White & Case as its counsel. The committee tapped Elementus
as blockchain forensics advisor, M3 as its financial advisor, and
Perella Weinberg Partners LP as its investment banker.
CHARLES DEWEESE: Seeks Cash Collateral Access Thru Oct 10
---------------------------------------------------------
Charles Deweese Construction, Inc. asks the U.S. Bankruptcy Court
for the Western District of Kentucky, Bowling Green Division, for
authority to use cash collateral on an interim basis.
The Debtor requires the use of cash collateral to meet ongoing and
necessary operating expenses as set forth in the projected budget
through the week of October 10, 2022.
Between April 14, 2017 and March 12, 2018, the Debtor executed and
delivered three promissory notes to First-Citizens Bank & Trust
Company, as successor by merger to CIT Bank, N.A., with a
cumulative principal balance of $17,954,000. Between April 29, 2022
and June 3, 2022, the Debtor executed and delivered three
additional promissory notes to FBT in the cumulative principal
balance of $5,425,000. FBT has filed Proofs of Claim in this case
[Claim Nos. 4, 5, 6, 7, 8, and 9] asserting a cumulative balance of
$19,859,593 due under the Credit Agreements as of the Petition
Date.
As security for repayment of the Debtor's obligations arising under
the Credit Agreements, FBT's pre-petition loans to the Debtor were
secured by multiple real estate mortgages and a Commercial Security
Agreement dated March 12, 2018, which granted FBT a security
interest in all of the Debtor's right, title, and interest in, to,
and under all personal property and other assets. FBT perfected its
interest in the cash collateral upon the filing of UCC-1 Financing
Statements with the Kentucky Secretary of State on March 6, 2014
(#2014-26090644-28) and July 15, 2013 (#2013-2653865-91).
Avtech Capital, LLC has filed a proof of claim in the Debtor's case
[Claim No. 23] and asserts a subordinated interest in cash
collateral by virtue of UCC-1 Financing Statements filed of record
with the Kentucky Secretary of State.
As adequate protection, the Debtor proposes that the Court should
grant FBT and Avtech replacement liens on all collateral of the
same type and respective priorities upon which each held valid and
properly perfected liens prior to the Petition Date.
The Debtor submits that the proposed replacement liens are
sufficient to protect FBT's and Avtech's respective asserted
interest in the cash collateral.
The Debtor also requests the Court to conduct an expedited hearing
as soon as the Court's calendar will allow.
A copy of the motion is available at https://bit.ly/3RMgGJJ from
PacerMonitor.com.
About Charles Deweese Construction
Charles Deweese Construction
--https://www.charlesdeweeseconstruction.com/ -- is a construction
and engineering company that provides clients with quality projects
on time and within budget.
Charles Deweese Construction, Inc. sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. W.D. Ky. Case No. 22-10355)
on July 1, 2022. In the petition filed by Charles Weldon Deweese,
as president, the Debtor reports estimated assets and liabilities
between $50 million and $100 million.
Judge Joan A. Lloyd oversees the case.
Tyler R. Yeager, Esq., at Kaplan Johnson Abate & Bird, LLP, is the
Debtor's counsel.
CHICK LUMBER: Seeks Cash Collateral Access Thru Dec 31
------------------------------------------------------
Chick Lumber, Inc. asks the U.S. Bankruptcy Court for the District
of New Hampshire for authority to use up to $1,626,786 of cash
collateral to pay post-petition costs and expenses incurred in the
ordinary course of business to the extent provided for in the
budget during the period between October 1 to December 31, 2022.
The Debtor requires the use of cash collateral for an effective
reorganization.
Based on a UCC Lien Report and the Debtor's books of account and
business records, the Debtor concluded preliminarily that only BFG
Corporation and Amex Bank hold or may hold a lien on or interest in
the cash collateral.
The Debtor says adequate protection payments will be made only to
the Cash Collateral Record Lienholders and the other secured
creditors named in the Budget that hold Record Liens on property
that the Debtor plans to retain. The Debtor decided preliminarily
not to treat these Record Lienholders and other creditors known to
assert a lien on cash collateral as Cash Collateral Record
Lienholders:
-- RBS Citizens, N.A. (no effective Financing Statement);
-- Herget Building Supply (no Financing Statement); and
-- Great American Financial Services Corporation and Merchant
Cash and Capital, LLC (Corporation Service Company, Financing
Statement Agent), both of which were paid in full according to the
Debtor's books of account.
The Proposed Order includes a "winding down" proviso under which
the Court reserves the right to enter such further orders as may be
necessary regarding the use of cash collateral to provide for
payment of any administrative claims for wage and trade creditors
who have supplied goods or services to the debtor during the period
of operation under the order which remain unpaid at the time of
termination of authorized cash collateral usage, and which goods or
services have created additional collateral for the secured
claimant.
A copy of the motion is available at https://bit.ly/3cY3bb0 from
PacerMonitor.com.
About Chick Lumber
Chick Lumber, Inc. -- https://www.chicklumber.com/ -- is a dealer
of lumber, plywood, steel beams, engineered wood, trusses, steel
and asphalt roofing, windows, doors, siding, trim, stair parts, and
finish materials. It also offers drafting and design, installation,
delivery, outside sales, and plan reading and estimating services.
The Debtor sought Chapter 11 protection (Bankr. D.N.H. Case No.
19-11252) on Sept. 9, 2019, in Concord. In the petition signed by
Salvatore Massa, president, the Debtor disclosed between $1 million
and $10 million in both assets and liabilities.
Judge Bruce A. Harwood oversees the case.
William S. Gannon PLLC is the Debtor's legal counsel.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Oct. 3, 2019. The Committee is represented by
Goldstein & McClintock, LLLP as its legal counsel.
CHUB CAY: Claims Will be Paid from Property Sale/Refinance
----------------------------------------------------------
Chub Cay LLC filed with the U.S. Bankruptcy Court for the Western
District of Texas a Disclosure Statement describing Plan of
Reorganization dated September 6, 2022.
The Debtor is a non-public limited liability company. Since 2018,
the Debtor has been in the business of a real estate holding
company.
Debtor has acquired a parcel of commercial real property: Lot 39
Block 9 NCB 8340 FUCD Subdivision, San Antonio, Bexar County, Texas
generally known as 100 St. Cloud, San Antonio, Texas herein
referred to as the "Real Property".
Debtor is in the process of developing the Real Property. Without
positive cash flow, Debtor was unable to make the mortgage payment
and the secured creditor initiated foreclosure proceedings. Debtor
believes there is significant equity in the Real Property and filed
this chapter 11 case to prevent the loss of that equity.
Debtor believes the Real Property has a value of $ 3,324,123.00.
The source of this value is based on recent comparable sales of
similar commercial real property. As the total of all claims
asserted against the Real Property do not exceed $3,000,000.00,
Debtor believes the sale or liquidation of the Real Property will
generate sale proceeds sufficient to pay all claims and
administrative expenses leaving funds available for Debtor's equity
holders.
The Plan provides that Debtor shall have 90 days from October 1,
2022 to sell the Real Property for an amount sufficient to pay the
secured and priority claims asserted against the Debtor.
Class 1 consists of Secured claims against the Real Property. At
the closing of the refinance loan or the sale of the Real Property,
the Class 1 claim shall be paid in full with interest accruing from
the Petition Date at a rate of 5% per annum.
Class 2 consists of the Secured claim of Bexar County. At the
closing of the refinance loan or the sale of the Real Property
Asset, the Class 2 claim shall be paid in full with interest
accruing from the Petition Date at a rate of 12% per annum.
Class 3 consists of Unsecured claims. At the closing of the
refinance loan or the sale of the Real Property Asset, the Class 3
claim shall be paid in full.
Payments and distributions under the Plan will be funded by the
closing of the refinance loan or sale of the Real Property.
A full-text copy of the Disclosure Statement dated September 6,
2022, is available at https://bit.ly/3xeS04z from PacerMonitor.com
at no charge.
Debtor's Counsel:
Morris E. White III, Esq.
Villa & White, LLP
1100 N.W. Loop 410 Ste. 802
San Antonio, TX 78213
Tel: (210) 225-4500
Fax: (210) 212-4649
Email: treywhite@villawhite.com
About Chub Cay
Chub Cay, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Texas Case No. 22-50615) on June 6,
2022, listing as much as $10 million in both assets and
liabilities. The case is assigned to Judge Michael M. Parker.
Morris E. White, III, Esq., at Villa & White, LLP, is the Debtor's
counsel.
CINEMA SQUARE: Court OKs SBA Cash Collateral Deal
-------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Northern Division, approved the stipulation between Cinema Square,
LLC and the U.S. Small Business Administration, authorizing the
Debtor to use cash collateral.
On June 16, 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 the SBA Loan Authorization and Agreement executed on
June 16, 2020, the Debtor is required to "use all the proceeds of
THE 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 16, 2020, and
a validly recorded UCC-1 filing on June 27, 2020, as Filing Number
20-7795084648, the SBA Loan is secured by all tangible and
intangible personal property.
The SBA's interest in cash collateral is junior to the interest of
secured creditor Wilmington Trust, National Association, As
Trustee, for the benefit of the Holders of COMM 2016-DC2 Mortgage
Trust Commercial Mortgage Pass Through Certificates, Series
2016-DC2.
The Parties agreed that portions of the Personal Property
Collateral constitute the cash collateral of the SBA, pursuant to
11 U.S.C. section 363(a). The SBA consented to the Debtor's use of
cash collateral on the terms set forth herein. Other than the
Debtor's use of cash collateral, the Debtor represents to the SBA
that it will make no additional or unauthorized use of the cash
collateral retroactive from the SBA Loan date until entry of an
Order Confirming the Debtor's Plan of Reorganization or November
30, 2022, whichever occurs earlier, for ordinary and necessary
expenses as set forth in the projection.
As adequate protection, the SBA is granted a replacement lien to
the extent that the automatic stay, pursuant to 11 U.S.C. section
362, as well as the use, sale, lease or grant results in a decrease
in the value of the SBA's interest in the Personal Property
Collateral on a post-petition basis. The replacement lien is valid,
perfected and enforceable and will not be subject to dispute,
avoidance, or subordination, except that it is and shall remain
subordinate to the lien of the Wilmington Trust in the cash
collateral and this replacement lien need not be subject to
additional recording. The SBA is authorized to file a certified
copy of the cash collateral order and any other necessary and
related documents to further perfect its lien.
Any diminution in the value of the SBA's interest in cash
collateral pursuant to the SBA Loan over the life of the proceeding
shall entitle the SBA to a super-priority claim pursuant to 11
U.S.C. sections 503(b), 507(a)(2) and 507(b).
The SBA's claim under the SBA Loan will be allowed as a claim in
the amount of $150,000, plus all accrued interest through the
filing of the case.
The parties agreed that as and for additional adequate protection,
the Debtor agrees it will not propose any Plan of Reorganization
that pays SBA less than $731 per month on account of its claim.
A copy of the stipulation and the Debtor's budget is available at
https://bit.ly/3xc6qlY from PacerMonitor.com.
A copy of the order is available at https://bit.ly/3BBZzFn from
PacerMonitor.com.
The budget provides for total expenses, on a monthly basis, as
follows:
$4,252 for September 2022;
$4,252 for October 2022;
$4,252 for November 2022; and
$4,252 for December 2022.
About Cinema Square, LLC
Cinema Square, LLC is the owner of a small shopping center located
at 6917 El Camino Real, Atascadero, CA 93422. There are several
tenants, the primary tenant is a movie theater, the Galaxy
Theater.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-10634) on June 14,
2021. In the petition signed by Jeffrey C. Nelson, president, the
Debtor disclosed up to $50 million in assets and up to $10 million
in liabilities.
Judge Deborah J. Saltzman oversees the case.
William C. Beall, Esq., at Beall & Burkhardt, APC is the Debtor's
counsel.
CLARUS THERAPEUTICS: Sept. 13 Deadline Set for Panel Questionnaires
-------------------------------------------------------------------
The United States Trustee is soliciting members for committee of
unsecured creditors in the bankruptcy case Clarus Therapeutics.
If a party wishes to be considered for membership on any official
committee that is appointed, it must complete a Questionnaire
available at https://bit.ly/3B45txf and return by email it to
Benjamin Hackman -- Benjamin.A.Hackman@usdoj.gov -- at the Office
of the United States Trustee so that it is received no later than
4:00 p.m., on Sept. 13, 2022.
If the U.S. Trustee receives sufficient creditor interest in the
solicitation, it may schedule a meeting or telephone conference for
the purpose of forming a committee.
About Clarus Therapeutics Holdings
Clarus Therapeutics Holdings, Inc., sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10845)
on Sept. 5, 2022. In the petition signed by Lawrence R. Perkins,
chief restructuring officer, the Debtor disclosed up to $100,000 in
both assets and liabilities.
Clarus' legal counsel is Goodwin Procter, LLP and Potter Anderson &
Corroon LLP, and its investment banker is Raymond James &
Associates, Inc. Clarus has also named Lawrence Perkins of Sierra
Constellation Partners, LLC as Chief Restructuring Officer during
the Chapter 11 process. Stretto is the claims agent.
COADVANTAGE: Moody's Hikes CFR to B2, Outlook Stable
----------------------------------------------------
Moody's Investors Service upgraded AQ Carver Buyer, Inc.'s (d/b/a
"CoAdvantage") corporate family rating to B2 from B3 and its
probability of default rating to B2-PD from B3-PD. Concurrently,
Moody's upgraded the rating on the issuer's senior secured first
lien credit facility to B1 from B2 as well as the rating on senior
secured second lien term loan to Caa1 from Caa2. The outlook is
stable.
The following ratings/assessments are affected by the action:
Ratings Upgraded:
Issuer: AQ Carver Buyer, Inc.
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
GTD Senior Secured 1st Lien Bank Credit Facility, Upgraded to B1
(LGD3) from B2 (LGD3)
GTD Senior Secured 2nd Lien Bank Credit Facility, Upgraded to Caa1
(LGD5) from Caa2 (LGD5)
Outlook:
Issuer: AQ Carver Buyer, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The upgrade of the CFR to B2 from B3 was driven by CoAdvantage's
deleveraging to 4.8x as of June 30, 2022 as well as Moody's
expectation of continued improvement in the company's operating
performance over the coming 12 to 18 months amidst relatively
healthy employment levels and SMB clients' continued outsourcing of
increasingly complex and burdensome payroll and related human
resource functions. Concurrently, Moody's expects the company's
strong profitability metrics, which have exceeded pre-coronavirus
levels in recent periods, to be sustained, with the possibility of
modest margin expansion fueled by operating leverage benefits
during this period.
The potential for CoAdvantage to pursue additional debt financed
asset purchases or dividend distributions continues to present
releveraging risk, but Moody's expects such initiatives to fuel
limited increases in the company's debt such that CoAdvantage's
credit metrics will remain consistent with comparable services
industry issuers also rated in the B2 CFR category.
CoAdvantage's B2 CFR is principally constrained by moderately high
debt/EBITDA of 4.8x (Moody's adjusted) as of June 30, 2022 as well
as small revenue scale relative to Professional Employer
Organization ("PEO") industry leaders in a highly competitive
market with relatively low barriers to entry. CoAdvantage's
exposure to macroeconomic cyclicality with respect to employment
trends, historically considerable turnover in the company's core
SMB customer base, and substantial revenue concentration in the
Southeast United States also pressure its credit profile. Moreover,
CoAdvantage's concentrated private equity ownership by Aquiline
Capital Partners ("Aquiline") presents corporate governance risks,
particularly with respect to aggressive financial strategies.
However, the company's credit profile is supported by the
attractive long term secular growth prospects of the PEO sector as
well as CoAdvantage's recurring revenue sales model which provides
good revenue visibility. Additionally, CoAdvantage's strong
profitability margins and modest capital expenditure budget should
fuel solid free cash flow generation over the next 12 months.
The upgrade of the senior secured first lien credit facility
ratings to B1 (LGD3) from B2 (LGD3) reflects the upgrade of
CoAdvantage's CFR and PDR to B2 and B2-PD, respectively, as well as
a loss given default ("LGD") assessment of (LGD3). The first lien
loan rating is one notch above the CFR and takes into account the
instrument's priority in the collateral and senior ranking in the
capital structure relative to CoAdvantage's second lien debt
maturing in 2026 rated Caa1 (LGD5). The Caa1 rating on the second
lien term loan is two notches below the B2 CFR acknowledging its
junior position in the capital structure which exposes it to the
first loss.
CoAdvantage's good liquidity position is supported by an
unrestricted cash balance of $127 million as of June 30, 2022, and
Moody's expectation for free cash flow of approximately $60 million
over the next 12 months. Free cash flow should comfortably cover
approximately $3.5 million of annual required first lien term loan
amortization. The company's liquidity is also bolstered by an
undrawn $45 million revolving credit facility maturing in September
2024. While AQC's term loans are not subject to financial
covenants, the revolving credit facility has a springing covenant
based on a maximum net first lien leverage ratio of 4.75x and a
maximum total net leverage ratio set at 6.75x which the company
should be comfortably in compliance with over the next 12-18
months.
The stable ratings outlook reflects Moody's expectation that
CoAdvantage will realize annual organic revenue growth in the
mid-to-high single digit percentage range in the coming 12 to 18
months as healthy employment levels in the company's markets and
employers continued outsourcing of payroll and related functions
fuels solid demand trends for the company's services. Concurrently,
Moody's expects modest improvement in EBITDA margins and
debt-to-EBITDA (Moody's adjusted) levels to moderate during this
period and approach 4x by the end of 2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if CoAdvantage expands revenues and
EBITDA to drive improved scale, Moody's expects the company will
maintain debt-to-EBITDA below 4x, annual free cash flow to debt is
sustained above 10%, and the company adheres to conservative
financial strategies.
The ratings could be downgraded if CoAdvantage experiences a
deterioration in operating performance or adopts more aggressive
financial policies, resulting in Debt/EBITDA increasing above 6.5x
and annual free cash flow to debt is sustained below 5%.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Headquartered in Tampa, FL, CoAdvantage, owned by Aquiline,
provides outsourced human resource functions, including payroll,
benefits acquisition, and regulatory compliance management,
primarily to small and mid-sized businesses. In 2022, Moody's
expects the company's net revenues to exceed $260 million.
COLGATE ENERGY: S&P Raises ICR to 'B+' on Close of Merger
---------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Colgate
Energy Partners III LLC to 'B+' from 'B' and removed it from
CreditWatch, where S&P placed it with positive implications on May
20, 2022, and subsequently withdrew our issuer credit rating on
Colgate.
As the same time, S&P raised its issue-level ratings on Colgate's
unsecured notes to 'BB-' from 'B+', in line with the unsecured debt
ratings on Permian Resources, and removed them from CreditWatch.
On Sept. 1, 2022, Denver-based independent crude oil and natural
gas exploration and production company Centennial Resource
Development Inc. completed its merger with Colgate Energy, with the
combined companies renamed Permian Resources Corp.
The transaction valued Colgate at about $3.9 billion, including the
assumption of $1.4 billion of Colgate's debt.
These rating actions follow the close of the merger between
Centennial Resource Development Inc. and Colgate Energy Partners
III LLC, with the combined company renamed Permian Resources Corp.
We raised our issuer credit rating on Colgate to 'B+' from 'B' and
issue-level ratings to 'BB-' from 'B+' to equalize them with the
Permian Resources ratings because we consider the company and its
assets to be core to Permian Resources Corp.
S&P then withdrew our issuer credit rating on Colgate Energy
Partners III LLC.
ESG credit indicators: E-4, S-2, G-3
COOK COUNTY CSD: Moody's Upgrades Issuer & GOLT Ratings to 'Ba2'
----------------------------------------------------------------
Moody's Investors Service has upgraded to Ba2 from Ba3 the issuer
and general obligation limited tax (GOLT) ratings of Cook County
Comm. S.D. 147 (Dixmoor), IL. The issuer rating reflects the
district's general credit quality and ability to repay debt and
debt-like obligations without consideration of any pledge,
security, or structural features. The district has about $1 million
in rated GOLT debt outstanding. The outlook is stable.
RATINGS RATIONALE
The upgrade to Ba2 reflects the district's rebuilt financial
position following years of imbalanced operations. Changes in the
state aid formula and severe expenditure reductions have led to
four consecutive years of operating surpluses as of fiscal 2021
results. The rating also incorporates the district's small and
stressed tax base characterized by below average resident income
levels and weak property tax collection rates. Long-term
liabilities are low relative to operating revenue and high relative
to the size of the tax base. Further, state support on behalf of
school districts to an underfunded teacher's pension system poses
contingent risk if that support weakens in the future.
The absence of distinction between the Ba2 GOLT rating and the Ba2
issuer rating is because debt service on the bonds is a first
budget obligation payable from all available funds.
RATING OUTLOOK
The stable outlook reflects Moody's expectation that the district
will maintain its rebuilt financial reserves that provide a buffer
to potential revenue disruptions.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Improvement in the district's enrollment trend and resident
income levels
Appreciation of the tax base paired with higher property tax
collection rates
Maintenance of rebuilt operating reserves over the
long-term
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Further tax base contraction or continued declines in
property tax collections
Continued enrollment declines that pressure financial
operations
Deterioration of rebuilt reserves
Growth in long-term liabilities
LEGAL SECURITY
The district's GOLT debt is backed by a pledge of all available
funds from a dedicated levy unlimited as to rate but limited as to
the amount of the debt service extension base.
PROFILE
Cook County CSD 147 (Dixmoor) is located about 20 miles south of
downtown Chicago (Ba1 stable) and serves portions of the villages
of Harvey, Dixmoor, Blue Island and Posen. The district has about
800 students.
METHODOLOGY
The principal methodology used in these ratings was US K-12 Public
School Districts Methodology published in January 2021.
COPPER MECHANICAL: Unsecureds Will Get 10% Dividend in 36 Months
----------------------------------------------------------------
Copper Mechanical, Inc., filed with the U.S. Bankruptcy Court for
the Eastern District of New York a Disclosure Statement for the
Small Business Plan of Reorganization dated September 6, 2022.
The Debtor is a plumbing/heating/fire sprinkler company located at
184 Oxford Street, 1st Floor, Brooklyn, NY 11235.
The Debtor commenced this Chapter 11 Case to restructure its debts
through the proposed Plan, which envisions distributions to holders
of claims to be made over a three-year period.
Class 1 consists of General Unsecured Claims. Class 1 is impaired.
* JPMorgan Chase Bank, N.A. with $38,476.22 claim amount. The
claim will be paid a 10% dividend ($3,847.62) in 36 monthly
installment payment in the amount of $106.87, commencing on the
effective date of the plan.
* JPMorgan Chase Bank, N.A. with $61,900.00 claim amount. The
claim will be paid a 10% dividend ($6,190.00) in 36 monthly
installment payments in the amount of $171.94, commencing on the
effective date of the plan.
* JPMorgan Chase Bank, N.A. with $49,962.39 claim amount. The
claim will be paid a 10% dividend ($4,996.24) in 36 monthly
installment payments in the amount of $138.78, commencing on the
effective date of the plan.
* 148 Supplies Corp. with $94,519.97 claim amount. The claim
will be paid a 10% dividend ($9,451.99) in 36 monthly installment
payments in the amount of $262.55, commencing on the effective date
of the plan.
* Citibusiness Case with $3,782.74 claim amount. The claim
will be paid a 10% dividend ($378.27) in 36 monthly installment
payments in the amount of $10.50, commencing on the effective date
of the plan.
Equity interest holder Roman Midyany shall retain her interest in
the Debtor following confirmation, in consideration of a new value
contribution, being made by her as the equity holder toward the
payment of general unsecured creditor claims. The Debtor's
principal will contribute funds in installments over the life of
the plan, on as needed basis.
The Plan will be financed by continuing the reorganized business
operations of the Debtor, as well as funds accumulated in the
Debtor in Possession bank account.
A full-text copy of the Disclosure Statement dated September 6,
2022, is available at https://bit.ly/3RyZ7x1 from PacerMonitor.com
at no charge.
Attorney for the Debtor:
Alla Kachan, Esq.
2799 Coney Island Ave, Suite 202
Brooklyn, NY 11235
Tel: (718) 513-3145
Fax: (347) 342-3156
E-mail: alla@kachanlaw.com
About Copper Mechanical
Copper Mechanical, Inc., sought Chapter 11 protection (Bankr.
E.D.N.Y. Case No. 21-41797) on July 12, 2021, listing under $1
million in both assets and liabilities. Judge Nancy H. Lord
oversees the case. The Debtor tapped the Law Offices of Alla
Kachan, PC as counsel and Wisdom Professional Services Inc. As
accountant.
COVETRUS INC: Moody's Assigns 'B2' CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating and
B2-PD Probability of Default Rating to Covetrus, Inc. The ratings
are being assigned in conjunction with a leveraged buyout of the
company. Moody's also assigned B1 ratings to the company's proposed
first-lien credit facilities, consisting of a $300 million bank
revolving credit facility expiring 2027, and a $1,525 million term
loan due 2029. The ratings outlook is stable.
In May of 2022, Clayton, Dubilier & Rice ("CD&R") and TPG entered
into a definitive agreement to acquire publicly traded Covetrus.
The acquisition will be financed with the proposed $1,525 million
first-lien term loan, a $350 million dollar second-lien term loan
(unrated), along with new and rollover sponsor equity.
Assignments:
Issuer: Covetrus, Inc.
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Senior Secured 1st Lien Revolving Credit
Facility, Assigned B1 (LGD3)
Outlook Actions:
Issuer: Covetrus, Inc.
Outlook, Assigned Stable
ESG factors are material to the ratings assignment. Social risk
exposure for Covetrus includes responsible production risks related
to compliance with regulatory requirements, partially offset by
favorable demographic and societal trends in the animal health
end-market. Among governance considerations, Moody's expects
Covetrus' financial policies under private equity ownership to be
aggressive.
RATINGS RATIONALE
Covetrus, Inc.'s B2 Corporate Family Rating reflects its high pro
forma debt-to-EBITDA financial leverage of 7.1x (on Moody's
adjusted basis) for the last twelve month period ending June 30,
2022, and financial policy risks related to its private equity
ownership. The rating is also constrained by Covetrus' concentrated
presence in the highly competitive animal health distribution
market with low profit margins (distribution generates 74% of
EBITDA pre-corporate allocation). Covetrus' distribution segment,
which primarily serves veterinarian customers that ultimately sell
products to pet owners, is subject to ongoing competition from
alternative sales channels including online and other retailers
that may offer lower pricing. Key risks also include Covetrus' lack
of diversification from its niche focus on animal health, as well
as its high reliance on few manufacturing suppliers, which exposes
it to high business risk in Moody's view.
Positively, Covetrus benefits from established relationships with
large animal-health pharmaceutical suppliers, including a
long-standing relationship with Zoetis Inc. (Baa1/Stable), the
leading global manufacturer of animal health pharmaceuticals. The
company's established position with major suppliers and customers
in the animal health supply chain, as well as its broad product
offering with significant scale, has allowed it to maintain top
global market share. Management estimates Covetrus' global animal
health distribution market share at 27%. Furthermore, the company's
positive growth outlook is underpinned by increasing global
trends in pet ownership. This in-turn leads to more visits to the
veterinarian, driving higher demand for the animal-health
pharmaceuticals and medical equipment that Covetrus distributes.
Finally, the company's business mix continues to shift towards its
higher margin technology offerings, including Global Pharmacy
Management ("GPM"; 16% of EBITDA) and Global Software Services
("GSS"; 10% EBITDA) segments. GPM is the leading US technology
offering for vets to run their own online pharmacies through
Covetrus' network, while GSS provides software on a subscription
basis for vet practice management.
Covetrus has good liquidity supported by full access under a $300
million revolving credit facility expiring 2027, and Moody's
expectation of modestly positive free cash flow in FY2023 (ending
December 31, 2023). Moody's expects free cash flow to improve to
approximately $50 million in FY2024 as costs to achieve synergies
are wound down. These cash sources provide coverage of the required
1% amortization (roughly $15.2 million annually) of its first-lien
senior secured term loan. The cash balance at the close of the
transaction will be approximately $50 million.
The first lien credit facilities are rated B1, one notch above the
B2 Corporate Family Rating, reflecting the priority lien on pledged
assets and the benefit of a layer of loss absorption provided by
the $350 million second lien term loan due 2030 (unrated).
The stable outlook reflects Moody's expectation that the company
will reduce debt/EBITDA to below 6.5x (on Moody's adjusted basis)
within 12-18 months of transaction close, primarily through organic
earnings growth. Moody's expects that the company's relatively
stable business profile will result in sustained mid-single digit
top line growth, along with positive free cash flow.
ESG considerations are material to Covetrus' ratings. Covetrus
faces negative social risks from compliance with various federal,
state and local regulatory requirements for the sale and
distribution of animal-health pharmaceuticals. However, the company
benefits from favorable demographic and societal trends, including
growth in the number of US households that own pets. As a leading
global animal health distributor, Covetrus is well-positioned to
benefit from growth in the overall veterinary services end-market,
underpinning healthy same-store sales growth. Among governance
considerations, Covetrus' financial policies under private equity
ownership are aggressive; this is partially reflected in the high
financial leverage following the leveraged buyout.
As proposed, Moody's expects the new credit facilities to provide
covenant flexibility that if utilized could negatively impact
creditors.
Moody's expects the proposed first and second lien term loans to
have no financial maintenance covenants, while the proposed
revolving credit facility will contain a springing maximum total
first lien net leverage ratio of 9.0x that will be tested when the
revolver is more than 40% drawn.
The credit facility contains incremental debt capacity up to the
greater of $280 million and 100.0% of consolidated EBITDA, plus
unused capacity reallocated from the general debt basket, plus
unlimited first lien debt subject to a 5.5x first lien net
leverage ratio (if pari passu secured). Amounts up to the
greater of $280 million and 100% of EBITDA and debt incurred in
connection with a permitted acquisition or investment may be
incurred with an earlier maturity than the initial term loans.
There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit protective provisions limiting such guarantee releases.
There are no express protective provisions prohibiting an
up-tiering transaction.
The proposed terms and the final terms of the credit agreement may
be materially different.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Covetrus faces performance
headwinds from things such as heightened competition and/or pricing
pressure in its distribution platform, high customer turnover, or
losses of any key supplier relationships. In addition, a more
aggressive financial policy or a weakening in liquidity could also
result in a downgrade. Quantitatively ratings could be downgraded
if debt/EBITDA is sustained above 6.5 times.
The ratings could be upgraded if the company increases
diversification by lowering its earnings concentration from the
distribution platform. Additionally, Covetrus would need to reduce
financial leverage with debt/EBITDA sustained below 5.5 times,
along with sustained good liquidity and positive free cash flow.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
Headquartered in Portland, Maine, Covetrus, Inc. is a leading
provider of distribution and technology solutions to the global
animal health market. The company generated pro forma revenues of
over $4.6 billion for the twelve months ended June 30, 2022.
CRYSTAL PACKAGING: Unsecureds to Get Share of Income for 5 Years
----------------------------------------------------------------
Crystal Packaging, Inc., filed with the U.S. Bankruptcy Court for
the District of Colorado a First Amended Subchapter V Plan of
Reorganization dated September 6, 2022.
The Debtor is a Colorado corporation incorporated in 1986. The
Debtor has 45 employees. The Debtor's business involves blending
and packaging windshield washer fluid; industrial and consumer
cleaning products; and bulk lubricants and glycols.
In August, 2021, the Debtor filed a lawsuit against Client in the
Adams County, Colorado District Court asserting claims of breach of
contract, unjust enrichment, and promissory estoppel. The matter
was removed to the United States District Court for the District of
Colorado and ultimately settled in February 2022. The terms of the
parties' settlement agreement are confidential.
However, as of the Petition Date, $450,000 remained owing to the
Debtor under the agreement. An installment payment of $225,000 was
received in June 2022 and the remaining installment of $225,000 is
due in January 2023. Debtor has no reason to believe the payment
will not be received.
The Chapter 11 Case was filed on March 26, 2022 to take advantage
of the $7.5 million debt cap in Subchapter V that expired on March
27, 2022.
During the Chapter 11 Case, the Debtor has continued operations and
its performance has exceeded its projections. The Debtor obtained
authorization to use cash collateral and a debtor in possession
financing agreement with A/R Funding. The Debtor also obtained
authorization to employ professionals including attorneys.
The Debtor scheduled approximately 60 general unsecured creditors.
Certain creditors were paid post-petition pursuant to the
Bankruptcy Court's Order date May 22, 2022. In addition, one large
scheduled claim related to unpaid rent and will be addressed by
lease assumption. As of the date of the Plan, the Debtor believes
general unsecured claims, not including deficiency claims, total
approximately $1.03 million. Inclusive of the deficiency claims of
ODC, ZFT, and RMP, the Debtor estimates all general unsecured
Claims together total $2,509,008.
Class 7 consists of the Allowed Claims of unsecured creditors.
Class 7 shall receive all of the Debtor's Projected Disposable
Income for a five-year period beginning on the Effective Date.
Class 7 Claim shall be paid on a Pro Rata basis in quarterly
installments beginning the first full calendar quarter after the
Effective Date. This Class is Impaired.
Class 8 consists of the Interests in the Debtor. Upon confirmation
of the Plan, all Interest holders will retain their identical
ownership interests in the Debtor.
The Plan proposes to pay creditors from operations.
On the Effective Date, the Debtor shall open a new deposit account
with Key Bank which shall be deemed the Creditor Account. The
Reorganized Debtor shall deposit all Projected Disposable Income in
the Creditor Account. All payments to the holders of Allowed Class
7 Claims shall be made from the Creditor Account until the payment
obligations under the Plan are completed.
A full-text copy of the First Amended Plan dated September 6, 2022,
is available at https://bit.ly/3DhmA1w from PacerMonitor.com at no
charge.
Attorneys for Debtor:
David V. Wadsworth, Esq.
Wadsworth Garber Warner Conrardy, PC
2580 West Main Street, Suite 200
Littleton, CO 80120
Telephone: (303) 296-1999
Facsimile: (303) 296-7600
Email: dwadsworth@wgwc-law.com
About Crystal Packaging
Crystal Packaging, Inc. is a specialty chemical and petroleum
contract packager and private label manufacturer in the Rocky
Mountain Region.
Crystal Packaging filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. D. Colo. Case No. 22-10990) on March
26, 2022, listing up to $10 million in both assets and liabilities.
Mark David Dennis serves as Subchapter V trustee.
Judge Elizabeth E. Brown oversees the case.
Wadsworth Garber Warner Conrardy, PC, led by David V. Wadsworth,
Esq., is the Debtor's bankruptcy counsel while Scott A. Hale, P.C.
serves as its special counsel.
DA LUGO INVESTMENT: Hires Buddy D. Ford, P.A. as Counsel
--------------------------------------------------------
Da Lugo Investment LLC seeks approval from the U.S. Bankruptcy
Court for the Middle District of Florida to employ Buddy D. Ford,
P.A., as counsel.
The firm's services include:
a. advising the Debtor regarding its powers and duties in the
continued operation of its business and management of property of
the estate;
b. preparing and filing schedules of assets and liabilities,
statement of affairs and other documents required by the court;
c. representing the Debtor at the Section 341 creditors'
meeting;
d. advising 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;
e. preparing legal papers and appearing at court hearings;
f. protecting the interest of the Debtor in all matters pending
before the court;
g. representing the Debtor in negotiation with its creditors in
the preparation of a Chapter 11 plan; and
h. performing all other necessary legal services for the
Debtor.
The hourly rates of the firm's counsel and staff are as follows:
Buddy D. Ford, Esq. $450 per hour
Senior Associate Attorneys $400 per hour
Junior Associate Attorneys $350 per hour
Senior Paralegal Services $150 per hour
Junior Paralegal Services $100 per hour
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the commencement of its case, the Debtor paid the firm an
advance fee of $20,000.
Buddy Ford, Esq., 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:
Buddy D. Ford, Esq.
Jonathan A. Semach, Esq.
Heather M. Reel, Esq.
Buddy D. Ford, P.A.
9301 West Hillsborough Avenue
Tampa, FL 33615-3008
Telephone: (813) 877-4669
Email: Buddy@tampaesq.com
Jonathan@tampaesq.com
Heather@tampaesq.com
About Da Lugo Investment LLC
Da Lugo Investment LLC, doing business as Oasis Sports Lounge,
filed a Chapter 11 bankruptcy petition (Bankr. M.D. Fla. Case No.
22-bk-03542), listing as much as $500,000 in both assets and
liabilities. Judge Roberta A. Colton oversees the case.
Buddy D. Ford, P.A. is the Debtor's legal counsel.
DIAMANTE CUSTOM: Unsecureds Will Get 14.9% Dividend in Plan
-----------------------------------------------------------
Diamante Custom Homes, LLC, filed with the U.S. Bankruptcy Court
for the Western District of Texas a Plan of Reorganization under
Subchapter V dated September 6, 2022.
The Debtor is a Texas Limited Liability Company and a residential
contractor. It was formed in 2014 and began building custom homes
throughout South Texas.
One hundred percent of the Debtor's equity interests are wholly
owned by its parent, JAS Development Corporation, a Subchapter S
corporation. In late 2019 the Debtor ceased negotiating for and
seeking new projects and began to complete its remaining projects.
The Debtor had two remaining projects in progress as of the
Petition Date.
As of the Petition Date, the Debtor had work in process consisting
of two remaining custom home projects: the Challoo and Williams
projects. The Williams' project, a custom home in Pearsall, Texas,
is completed. The Williams' project did not generate sufficient
funds to pay the overhead and profit component of the Debtor's
contract. The Challoo project is a custom home in Cordillera Ranch
for Rajab and Linda Challoo (collectively "Challoo"). As of the
Petition Date, the Challoo project's subcontractors and suppliers
have been paid directly by Challoo's third party lender. Thus far
the Debtor has not been compensated for profit and overhead for
this project.
The Challoo project is at a stage of completion estimated to be
70%. Its projected completion date is in late October 2022. There
is uncertainty regarding the Challoo's willingness to allow the
Debtor to complete the work. The Debtor will continue work on the
Challoo project until: a) the Challoo's lender ceases to pay draws;
b) Challoo terminates the contract; or c) the project is completed.
In the event the project is not completed, Challoo will have an
unsecured rejection claim in the projected amount of $600,000.00.
In the event the Challoo project is completed, it is doubtful that
the Debtor will be compensated for profit and overhead.
This Plan of Reorganization proposes to pay creditors of the Debtor
from funds on hand, operations, liquidation of assets and proceeds
from litigation claims.
Class 4 consists of Non-Priority General Unsecured Claims Less than
$10,000.00. These Allowed Claims will be paid in full within 60
days of the Effective Date of the Plan from the Third-Party Funds.
The Class 4 Creditors are impaired.
Class 5 consists of Burris Non-Priority Unsecured Claim. This Claim
will be paid the sum of $321,600.26 from Hurricane Insurance
Proceeds upon the Effective Date of the Plan from the funds held by
the Subchapter V Trustee. Effective upon confirmation Burris will
be assigned all of the Debtor's right title and interest to the
claims and Causes of Action against the Debtor's pre-petition
insurers, which shall include but are not limited to claims and
counterclaims against American Builders Insurance and Cypress
Insurance, together with any adjusters, co-insurers, contractors,
agents, employees or counsel for any statutory or non-statutory
claims or Causes of Action arising under applicable law for actual
or exemplary damages, attorneys' fees and expenses, including both
first party and third-party claims against such insurers, their
contractors, agents, employees or counsel. The unfunded remainder
of the Burris Allowed Non-Priority Unsecured Claim will be paid
pari passu and pro rata with the Class 6 claims which exceed
$10,000.00 from the balance of the Third-Party Funds after payment
in full of the Class 1, 2 and Class 4 claims and after deduction of
$100,000.00 for Class 3.
Class 6 consists of General Unsecured Claims Greater Than
$10,000.00. The Allowed Class 6 claims will be paid pro rata from
the balance of the Third-Party Funds after payment of the claims or
allocation of funds for Classes 1, 2, 3 and 4. Class 6 allowed
claims will be paid pari passu with the Burris Class 5 Claim. Class
5 and 6 unsecured claims will receive a dividend of 14.9%.
The Class 7 Equity Interests held by JAS Development will be
cancelled.
This Plan is based upon the distributions to creditors by the
Debtor from the Hurricane Insurance Proceeds and the Third-Party
Funds currently held by the Subchapter V Trustee, as follows.
* $321,600.26 to be distributed to Burris Class 5 upon the
Effective Date of the Plan.
* Payment of Class 1, Class 2 and Class 4 claims from the
Third-Party Funds or Funds on Hand.
* Payment of $100,000.00 for labor or materials or payment of
attorneys' fees and expenses for the Bengali Class 3 Claim from the
Third-Party Funds.
* After full payment of the Class 1, 2 and 4 Claims and
allocation of funds for the Bengali Class 3 Claim the remaining
funds will be used to pay the unpaid remainder of the Burris Class
5 claim after payment of the Hurricane Insurance Proceeds and the
Allowed Class 6 Claims pro rata pari passu.
A full-text copy of the Plan of Reorganization dated September 6,
2022, is available at https://bit.ly/3UdIVmL from PacerMonitor.com
at no charge.
Counsel for the Debtor:
Michael J. O’Connor Law Office
The Spectrum Building
613 NW Loop 410, Ste. 840
San Antonio, TX 78216
Telephone: (210) 729-6009
oconnorlaw@gmail.com
About Diamante Custom Homes
Diamante Custom Homes, LLC, sought protection under Subchapter V of
Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Tex. Case No.
22-50606) on June 6, 2022. In the petition signed by Adam
Sanchez, CEO and president, the Debtor estimated assets and
liabilities between $1 million and $10 million each.
Michael J. O'Connor, of the Law Office of Michael J. O'Connor, is
the Debtor's counsel.
Michael G. Colvard has been appointed as Subchapter V trustee.
DIVERSIFIED HEALTHCARE: Moody's Cuts CFR to B3, Outlook Remains Neg
-------------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Diversified
Healthcare Trust ("DHC") including its corporate family rating to
B3 from B2, its guaranteed senior unsecured notes to B3 from B2,
and its senior unsecured notes to Caa1 from B3. The speculative
grade liquidity (SGL) rating was maintained at SGL-4. The rating
outlook remains negative.
The ratings downgrades reflect the ongoing weak performance of the
REIT's senior housing operations which has raised Net Debt/EBITDA
to very high levels. DHC's financial flexibility also remains
limited until it is able to resume compliance with certain
covenants in its unsecured bonds and secured credit facility. The
REIT's high leverage also raises concerns about financial policy
and governance.
Ratings Downgraded:
Issuer: Diversified Healthcare Trust
Corporate Family Rating, Downgraded to B3 from B2
Gtd. Senior Unsecured Regular Bond/Debenture, Downgraded to B3
from B2
Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 from
B3
Outlook Actions:
Issuer: Diversified Healthcare Trust
Outlook, Remains Negative
RATINGS RATIONALE
DHC's B3 CFR reflects weak cash flows related to the healthcare
REIT's senior housing operating business. The senior housing
operating business, 62% of gross book real estate but only 14% of
total NOI for 2Q22, experienced steep cash flow declines over the
course of the coronavirus pandemic, driven by falling occupancy and
rising expenses, particularly labor. NOI has improved in recent
quarters, but the trajectory of recovery remains slow and labor
costs remain a significant challenge for margins. DHC's recent
transition of a large portion of its senior housing assets from
Five Star to new managers potentially improves their growth outlook
but execution risks remain as leverage remains high with Moody's
Net Debt/EBITDA of 12.5x for 2Q22.
DHC's ratings also consider governance risks associated with its
financial policy given its very high leverage and inability to
comply with certain incurrence covenants in its bonds and bank
facility. In 2021, the REIT executed an amendment that converted
its revolver to a secured facility in exchange for a waiver on
certain covenants through 4Q22 among other terms. DHC's ability
to regain compliance by year-end remains uncertain and risk
remains.
DHC benefits from portfolio diversification that includes stable
income from medial office buildings (MOBs) and life science assets.
The REIT also has a sizable unencumbered asset pool, although the
size and quality has diminished with recent joint venture
transactions that reduced its ownership stakes in some of the
highest quality buildings in its portfolio. These transactions
did provide the REIT with liquidity and help it to reduce debt
levels.
DHC's SGL-4 rating reflects its limited financial flexibility until
it is able to comply with incurrence covenants within its bonds and
bank facility. The REIT drew down the full amount available on
its secured credit facility in early 2021 and maintains a large
cash balance. The REIT had about $868 million of cash as of 2Q22.
Moody's expects cash will be used to repay debt and fund cap ex,
as the REIT is working to redevelop some MOB/life science assets
and reposition its senior living portfolio. DHC has a large
unencumbered portfolio but the size and quality of this pool has
diminished in recent years as it has executed JVs with some of its
highest quality assets in order to raise capital. Upcoming
maturities are manageable consisting of a $114 million paydown on
its revolver in 1Q23 as the size of its line will be reduced at
that time. In 2024, DHC will need to address a $250 million bond
maturity and refinance its revolver.
DHC's negative outlook reflects its weak cash flows, high Net
Debt/EBITDA and limited financial flexibility as long as it remains
below certain bond and bank facility incurrence covenants.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
DHC's ratings could be downgraded should the REIT fail to maintain
ample liquidity (as measured by cash balances and revolver
capacity) as upcoming debt maturities approach. Fixed charge
coverage below 1.25x or Net Debt/EBITDA above 11x on a sustained
basis as well as lack of material improvement in senior housing
cash flows by year-end 2022 could also result in a downgrade.
DHC's ratings could be upgraded if the REIT were to resume
compliance and maintain good cushion with all bank and bond
covenants, as well as retain ample liquidity. Refinancing its
secured revolver with an unsecured facility, as well as reducing
Net Debt/EBITDA below 10x and generating positive NOI growth from
all business segments on a sustained basis would also support an
upgrade.
Diversified Healthcare Trust is a real estate investment trust, or
REIT, which owns senior living communities, medical office and life
science buildings and wellness centers throughout the United
States. DHC is managed by the operating subsidiary of The RMR Group
Inc. (Nasdaq: RMR), an alternative asset management company that is
headquartered in Newton, MA.
The principal methodology used in these ratings was REITs and Other
Commercial Real Estate Firms Methodology published in July 2021.
DOCUPLEX INC: Wins Cash Collateral Access Thru Oct 6
----------------------------------------------------
The U.S. Bankruptcy Court for the District of Kansas authorized
Docuplex, Inc. to use cash collateral, which has been pledged to
Equity Bank, on an interim basis through October 6, 2022.
Thereafter, and subject to the Debtor's right to request additional
cash collateral authority for further periods on proper notice, the
Debtor is looking to access cash collateral through February 28,
2023, at 11:59 p.m. The Specified Period may be extended by
agreement of the Debtor and Equity, or upon further Court order.
The Debtor is permitted to use cash collateral to pay expenses of
its operation and the liquidation of its operation in accordance
with the Budget, up to amounts not to exceed 110% of each line-item
amount set forth in the Budget measured monthly, with a variance of
up to two months for each monthly expense.
The Debtor will deposit the cash collateral into the Debtor's
existing bank accounts consistent with its pre-petition practices.
All creditors will deliver any proceeds from Debtor's ordinary
operations and or sales to the Debtor, and endorse any cash
collateral checks on which any of them are jointly listed as a
payee so that such payments and proceeds may be deposited into the
Debtor's bank accounts.
Equity Bank holds an alleged properly perfected first-priority
security interest in the cash collateral, as well as all other
equipment, furniture, and personal property of the Debtor. The U.S.
Small Business Administration holds an alleged properly perfected
second priority security interest in the Debtor's accounts.
receivables, non-titled machinery and equipment, general
intangibles, goods, and other forms of personal property.
Other creditors may assert first priority purchase money security
interests in specific items of equipment, as follows:
1) Heidelberg USA, Inc. (S_Coating GTT C CD102B Large Bail --
claim totals $8,848.73);
2) Canon Financial Services, Inc. (certain leased printers --
assets not owned by Debtor);
3) Fujifilm North America Corporation (FLH85Z Plate Processor
S/N 94199-0158 and Chiller S/N 109079002 -- claim totals
$17,099.96);
4) TCF Equipment Finance (ST100 6 Pocket Stitcher and
Fennimore Punch System -- claim totals $807.21); and
5) Key Equipment Finance (2009 Screen PTR8600S Thermal
Platesetter -- claim amount is unknown).
These events constitute an "Event of Default:"
1) The entry of an order by the Court granting relief from or
modifying the automatic stay of Section 362 of the Bankruptcy Code
(i) to allow any creditor to execute upon or enforce a lien on or
security interest in any of the Collateral;
2) Dismissal of the case or conversion of the case to Chapter
7 case;
3) The sale after the Petition Date of any portion of any of
the Debtor's assets outside the ordinary course of dealing and
without approval by the Court under 11 U.S.C. section 363;
4) The failure by the Debtor to perform, after notice from
Equity, in any respect, any of the material terms, provisions,
conditions, covenants, or obligations under the Order granting the
Motion or under the requirements of the underlying loan documents
between the Debtor and Equity, to the extent such requirements
materially affect the Collateral and are not otherwise inconsistent
with the terms of the Order or bankruptcy law.
As partial adequate protection, Equity is granted a valid,
automatically perfected replacement lien against the Debtor's
assets for the full amount of the cash collateral that is utilized
pursuant to the Order. The replacement liens will have the same
validity, avoidability and priority as the security interests and
liens existing against the cash collateral as of the date of the
Order on the Motion. The replacement liens will be valid and
perfected without the need for the execution, recording or filing
of any further document or instrument or the taking of any further
act otherwise required under nonbankruptcy law.
Equity, for its benefit, is granted, an additional and replacement
continuing valid, binding, enforceable, non-avoidable, and
automatically perfected post-petition security interest in and lien
on any and all presently owned and hereafter acquired personal
property and all other assets of the Debtors and the estate,
together with any proceeds thereof.
Equity will also receive from the Debtor, commencing not later than
September 30, 2022, and continuing monthly thereafter until a)
confirmation of a chapter 11 plan, b) dismissal of the case, c)
conversion of the case to another chapter, or d) subsequent order
of the Court, payments in the amount of $10,000 as adequate
protection.
The Post-Petition Replacement Adequate Protection Lien granted to
Equity will have the same priority as the priority Equity enjoyed
in the Debtor's assets as of the Petition Date, and nothing set
forth wherein is intended to grant Equity or any other creditor a
priming lien on or security interest in the Debtor's assets and
property. Further, except for the Carve Out, the Adequate
Protection Superpriority Claims of Equity will have priority over
all administrative expenses and unsecured claims against the Debtor
and its estate.
The Carve-Out means:
1) Fees payable to the Subchapter V trustee, in an amount not
to exceed $5,000;
2) The allowed professional fees and disbursements for the
Debtor's accountant in this case, in an amount not to exceed
$5,000; and
3) The allowed professional fees and disbursements for the
Debtor's counsel in this case, in an amount not to exceed $40,000;
and
4) Any costs of sale associated with the sale of the
Collateral, including broker commissions, marketing fees, property
taxes, escrow fees, recording costs, and similar expenses, to the
extent authorized by any section 363 order approving of such
sales.
A copy of the order is available at https://bit.ly/3DcP3We from
PacerMonitor.com.
About Docuplex, Inc.
Docuplex, Inc. owns and operates a print and mailing company,
providing all varieties of commercial printing, finishing, and
direct mailing services. It is one of the largest providers of
these services in Wichita, Kansas. Docuplex does not own any real
property, but owns a significant amount of furniture, fixtures,
machinery, equipment, rolling stock, and inventory used in the
operation.
Docuplex sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. D. Kan. Case No. 22-10734) on September 2, 2022. In
the petition signed by Gina Cherry, controller, the Debtor
disclosed up to $10 million in both assets and liabilities.
Judge Mitchell L. Herren oversees the case.
David Prelle Eron, Esq., at Prelle Eron & Bailey, P.A. is the
Debtor's counsel.
ELEVATE TEXTILES: Moody's Cuts CFR to Caa1, Outlook Stable
----------------------------------------------------------
Moody's Investors Service downgraded Elevate Textiles, Inc.'s
ratings, including the corporate family rating to Caa1 from B3,
probability of default rating to Caa1-PD from B3-PD, senior secured
first lien term loan rating to Caa1 from B3, and senior secured
second lien term loan rating to Caa3 from Caa2. The outlook was
changed to stable from negative.
The downgrade reflects Moody's view that the weaker retail
environment and increasing macroeconomic pressures will result in
limited growth in earnings and free cash flow, which would impede
Elevate's ability to reduce leverage. Although Moody's expects the
company's operating performance to remain broadly resilient due to
the diversified nature of its business, earnings growth is needed
to sufficiently cover the higher costs stemming from rising
interest rates, which increases the risk that the company could
face difficulty refinancing its debt in a timely and economical
manner. Elevate has high leverage of 6.1x Moody's-adjusted
debt/EBITDA (5.2x based on credit agreement net leverage
calculations) and the majority of its funded debt matures in 2024.
Moody's took the following rating actions for Elevate Textiles,
Inc.:
Corporate Family Rating, downgraded to Caa1 from B3
Probability of Default Rating, downgraded to
Caa1-PD from B3-PD
Gtd Senior Secured 1st Lien Term Loan, downgraded
to Caa1 (LGD3) from B3 (LGD4)
Gtd Senior Secured 2nd Lien Term Loan, downgraded
to Caa3 (LGD5) from Caa2 (LGD5)
Outlook, revised to Stable from Negative
RATINGS RATIONALE
Elevate's Caa1 CFR reflects its high leverage and 2024 maturities.
The company experienced a strong earnings recovery in the first
half of 2022, driven by demand across all channels, price increases
to offset inflationary cost pressures, high capacity utilization,
and productivity improvements. However, the curtailing of retailer
orders in summer 2022 in response to the supply-demand mismatch is
expected to impact Q3 results. Further, rising macroeconomic
pressures increase the risk that future earnings improvement will
be limited. The rating also reflects governance risks associated
with private equity ownership, particularly acquisition strategies
and dividend and capital allocation policies. Elevate's high debt
levels largely stem from the May 2018 acquisition of American &
Efird Global Holdings, LLC (A&E), a transformative transaction that
more than doubled the company's size. In 2019, Elevate experienced
earnings declines and transformation costs that were not
anticipated at the time of the transaction, resulting in high
leverage heading into 2020.
At the same time, the rating incorporates Elevate's solid market
position in the fragmented global threads and textile manufacturing
markets. The company's diverse product end markets and geographical
footprint, and its established long-term key customer
relationships, support revenue stability. This is evidenced by
Elevate's strong performance during the coronavirus pandemic, when
the company grew earnings as it added barrier fabrics business that
more than offset the declines in other products. The rating is also
supported by Elevate's adequate liquidity over the next 12-18
months.
The stable outlook reflects expectations for adequate liquidity and
stable earnings performance over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the company does not make
progress in addressing its debt ahead of its maturities, or if
earnings or liquidity deteriorate.
The ratings could be upgraded if the company refinances its debt in
a timely and economically manner with long dated maturities, such
that EBITA/interest expense is above 1.25 times on a pro-forma
basis. An upgrade would require stable or growing earnings and at
least adequate liquidity.
Headquartered in Charlotte, North Carolina, Elevate Textiles, Inc.
is a global textiles and threads manufacturer serving diverse end
markets, including apparel, denim, military, fire, auto and
industrials. Elevate is a direct subsidiary of Elevate Textiles
Holding Corporation. The company is owned by affiliates of private
equity firm Platinum Equity LLC. Revenues for the twelve months
ended June 30, 2022 were approximately $1.3 billion.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
EMPIRE HOLDING: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Empire Holding Company, LLC
136 Mehrhof Rd
Little Ferry, NJ 07643-2125
Business Description: The Debtor owns and operates The
Empire Club Wedding Venue located at
128 & 136 Mehrhof Rd, Little Ferry, NJ.
The Property is valued at $2.5 million.
Chapter 11 Petition Date: September 9, 2022
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 22-17152
Judge: Hon. John K. Sherwood
Debtor's Counsel: Brian G. Hannon, Esq.
NORGAARD, O'BOYLE & HANNON
184 Grand Ave
Englewood, NJ 07631-3578
Email: bhannon@norgaardfirm.com
Total Assets: $2,568,470
Total Liabilities: $2,357,509
The petition was signed by Napoleon T. Yfantis as owner.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/KYYYNPQ/Empire_Holding_Company_LLC__njbke-22-17152__0001.0.pdf?mcid=tGE4TAMA
EQT CORP: Moody's Affirms 'Ba1' CFR Amid Tug Hill Transaction
-------------------------------------------------------------
Moody's Investors Service affirmed EQT Corporation's Ba1 Corporate
Family Rating and senior notes ratings in light of the company's
proposed acquisition of upstream assets from THQ Appalachia I, LLC
(Tug Hill) and gathering and processing assets from THQ-XcL
Holdings I, LLC (XcL Midstream). The outlook remains positive. The
SGL-1 Speculative Grade Liquidity (SGL) rating was unchanged.
EQT announced its proposed acquisition of Tug Hill's upstream
assets and XcL Midstream's gathering and processing assets, for a
total consideration of $5.2 billion. Both Tug Hill and XcL
Midstream are currently owned by Quantum Energy Partners, a private
equity firm. The transaction is expected to close in the fourth
quarter of 2022, subject to regulatory approvals. The transaction
adds about 800 MMcfe/day of production to EQT and about 90,000 core
net leasehold acres in West Virginia. The transaction also adds
gathering and processing assets and gas transportation trunklines
to EQT's portfolio. The transaction will be funded with $2.6
billion in cash and approximately $2.6 billion in EQT common stock.
The cash consideration will be funded with cash on hand, borrowings
under EQT's revolving credit facility and/or through one or more
financing or debt capital markets transactions.
"EQT's positive outlook reflects its strong free cash flow position
that benefits from high natural gas prices, improved capital
efficiency, and commitment to debt reduction," said Sreedhar Kona,
Moody's Vice President - Senior Analyst and Lead Analyst for EQT.
"While this transaction substantially increases debt, we expect
that the company will prioritize debt reduction under its financial
policy framework to achieve its debt target while also gaining the
benefits of enhanced scale and improved cost structure from this
acquisition."
Affirmations:
Issuer: EQT Corporation
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4)
Senior Unsecured Shelf, Affirmed (P)Ba1
Senior Unsecured Medium-Term Note Program, Affirmed (P)Ba1
Outlook Actions:
Issuer: EQT Corporation
Outlook, Remains Positive
RATINGS RATIONALE
The Tug Hill transaction substantially increases EQT's absolute
debt burden, however the acquired acreage improves the durability
of EQT's free cash flow generation and somewhat improves EQT's
overall cost structure and lowers EQT's breakeven price. Although
the company's debt increases due to the transaction, the weakening
of its projected leverage metrics will be mitigated by EQT's
prioritization of debt reduction particularly if natural gas prices
decline from present high levels. Importantly, the company has
increased its debt reduction target reinforcing its focus on
aggressively reducing its debt burden. Should the commodity price
strength be sustained, the company will be able to reduce a
substantial amount of debt through 2023, significantly improving
the company's credit profile and rendering its capital structure
durable and resilient.
EQT's Ba1 CFR reflects the substantial improvement in its organic
capital efficiency and improvement in financial leverage metrics.
The company's cost structure improvements have allowed EQT to
generate meaningful free cash flow while maintaining its production
output and to realize improved credit metrics in a volatile natural
gas price environment. The company's multi-pronged strategy to
efficiently develop its acreage, navigate its hedging strategy, and
further reduce its absolute debt level enhance its resilience and
support its rating and outlook. EQT's continued focus on absolute
debt reduction and managing its commodity hedge book points to
increased visibility in free cash flow and enhanced credit metrics
that was supported by restrained capital spending in the previous
two years.
EQT's positive outlook reflects the company's stated position to
reduce absolute debt significantly while restraining capital
spending to generate free cash flow. Strong commodity price
environment and EQT's ability to demonstrate substantial cash flow
metrics (including retained cash flow to debt) also contribute to
the positive outlook.
EQT's stronger business and financial profiles will bolster its
ability to withstand negative credit impacts from carbon transition
risks. While the financial performance of the company will continue
to be impacted by industry cycles, Moody's expects future
profitability and cash flow in this sector to be less robust at the
cycle peak and worse at the cycle trough compared to the past.
Global initiatives to limit the adverse impacts of climate change
will constrain the use of hydrocarbons and accelerate the shift to
less environmentally damaging and renewable energy sources. EQT's
focus on natural gas should help mitigate the impact from
carbon-focused policies compared to its more oil focused peers, as
natural gas is likely to be used as a transition fuel and demand
for natural gas should peak after demand for oil.
The company's senior unsecured notes are rated Ba1, which is the
same as its CFR, because the debt portion of its capital structure
is all unsecured, including its $2.5 billion revolving credit
facility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
EQT's ratings could be upgraded if the company is able to reduce
its debt burden substantially towards its stated targets, including
the incremental debt from the acquisition, while maintaining its
current production levels to generate free cash flow. The company
would need to sustain its retained cash flow-to-debt (RCF/Debt)
metric above 50% and its leverage full-cycle ratio (LFCR) above
2x.
EQT's ratings could be downgraded if the company fails to
meaningfully reduce debt or if a substantial decline in reserves
and production occurs. The ratings could be downgraded if its
retained cash flow-to-debt (RCF/Debt) ratio falls below 30%.
EQT Corporation is an independent exploration and production (E&P)
company focused on developing natural gas assets in the Appalachian
Basin.
The principal methodology used in these ratings was Independent
Exploration and Production published in August 2021.
FC COMPASSUS: S&P Alters Outlook to Negative, Affirms 'B' ICR
-------------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on
Brentwood, Tenn.-based hospice and home health services provider FC
Compassus LLC (doing business as Compassus) and 'B' issue-level
ratings on its revolver and first-lien debt.
The negative outlook reflects the risk that patient volumes and
profitability are slow to recover, exacerbated by the impact of
sequestration on hospice reimbursement and proposed Centers for
Medicare and Medicaid Services (CMS) reimbursement cuts for home
health services leading to annual free cash flow generation
remaining below 3% of debt (about $15 million annually) well into
2023.
S&P said, "We believe the decline in volumes and profitability,
resulting in an increase in leverage, is primarily due to COVID-19,
and that has begun to subside. Hospice utilization declined
substantially in response to COVID-19 and has been slow to recover.
We believe this is due to a combination of factors, including
concerns among both patients and providers about exposure to the
virus, a reduction in patients using skilled nursing facilities (a
key source of referrals), challenges meeting with referral sources
during the pandemic, and a reduction in demand given the
accelerated mortality among medically vulnerable patients during
the pandemic. Although the acceleration in mortality among these
patients will likely weigh on demand for several years, we expect a
recovery in volumes supported by rising hospice utilization rates
(among eligible patients), increasing census at skilled nursing
facilities, and improving access to referral sources for eligible
patients."
Compassus is well positioned to benefit from higher reimbursement
rates and improving margins in 2023. Like many health care services
companies, Compassus's margins have been pressured by higher wages
and elevated turnover, albeit to a lesser degree than many peers.
S&P said, "Over the past two years, the company invested in
expanding its referral base and has pursued new partnerships that
we believe should support organic and inorganic growth. We expect
the company to benefit from a 3.8% increase in CMS hospice
reimbursement rates in 2023, which will more than offset a 2%
headwind from sequestration and the proposed 4.2% reimbursement cut
to home health rates, because hospice represents over 80% of
revenue (excluding the unowned portion of the home health joint
venture). We see incremental upside if the final home health rates
end up being more favorable to the company, than the proposed
rates."
S&P said, "We expect FOCF generation to improve and leverage to
decline over the next few quarters. Following the recoupment of the
last $24.7 million of CARES Act Medicare advance payments in the
next few months, we expect the company to return to generating
material free cash flow. In addition, as labor pressures lessen,
volumes continue recovering, and rates increase, we expect
profitability to meaningfully increase closer to historic levels by
mid-2023. The company's cash balance of about $215 million
alleviates near-term liquidity and covenant concerns and is a key
factor supporting the 'B' rating.
"Our rating on Compassus continues to reflect the highly fragmented
and competitive hospice and home health services industries, as
well as its relationship with Ascension Health. The industry
remains very competitive and fragmented, with only modest potential
for differentiation and limited barriers to entry. We believe the
company's preferred provider relationship with Ascension Health for
its hospice services and home health services (through Ascension at
Home) provides some differentiation. In addition, we view the
involvement of Ascension Health and Ascension Capital in
Compassus's board favorably because the company is able to align
its growth strategy with the needs of one of the nation's largest
health systems. We believe the partial ownership of the company by
Ascension has contributed to a more conservative financial policy
than other financial sponsor-owned peers, as is evidenced by the
strong cash balance and slow pace of acquisitions in recent years
when acquisition multiples were at historically high levels."
The negative outlook reflects the risk that patient volumes and
profitability are slow to recover, exacerbated by the adverse
impact of sequestration on reimbursement and proposed CMS
reimbursement cuts for home health services, leading to
expectations of annual free cash flow generation remaining below 3%
of debt (about $15 million annually) well into 2023.
S&P could lower the rating if it did not expect the ratio of free
cash flow to debt to rise to about 3% over the next few quarters.
Alternatively, a depletion of the cash balance while leverage is
elevated could result in a lower rating.
S&P could revise the outlook to stable if it expected the ratio of
free cash flow to debt to be sustained above 3%.
ESG credit indicators: E-2, S-2, G-3
FIRST GUARANTY: Creditors to Get Proceeds From Liquidation
----------------------------------------------------------
First Guaranty Mortgage Corporation ("FGMC") and Maverick II
Holdings, LLC ("Maverick" and together with FGMC, the "Debtors"),
filed with the U.S. Bankruptcy Court for the District of Delaware a
Combined Disclosure Statement and Chapter 11 Plan dated September
6, 2022.
FGMC is a Virginia corporation and, as Maverick's sole Member, owns
100% of the equity interests in Maverick, a Delaware LLC. Prior to
the Petition Date, FGMC operated as a full service, non bank
mortgage lender offering a full suite of residential mortgage loan
options tailored to borrowers' different financial situations.
Maverick is a non-operating holding company with no employees.
The combination of continued losses and volatile daily margin calls
on hedge positions has led to drastic reductions in the Debtors'
unrestricted cash creating a liquidity crisis. Despite their best
efforts, the Debtors were unable to obtain additional equity
capital. As a result, the Debtors determined that, in order to
protect part of the current pipeline, they needed to suspend all
new loan applications, suspend all correspondent lending, cease all
hedging payments and significantly reduce their workforce. The
Debtors further determined that filing these Chapter 11 Cases was
the best way to preserve operational ability to enable customers to
close on loans already in the pipeline.
Pursuant to the Plan, the Debtors will liquidate their remaining
assets, wind down their affairs, and be dissolved through a
Liquidating Trust. After payment of senior claims as provided in
the Plan, any Residual Value in the Liquidating Trust will be
distributed to the holder of the Cash Flow DIP Claims, until paid
in full, and thereafter, to the holders of general unsecured
claims.
Based upon the Debtors' current projections, holders of Allowed
Administrative Claims, Priority Claims and Other Secured Claims
will be paid in full under the Plan, while holders of Allowed
General Unsecured Claims will receive a projected distribution to
be determined based on various assumptions.
Class 4 consists of Loan Settlement Claims. Each holder of a Loan
Settlement Claim shall (i) receive an Allowed Claim in the amount
of the cash in their possession, and (ii) (a) retain an amount of
the cash in their possession and (b) turnover to the Debtors any
cash beyond such amount in accordance with any settlement agreement
reached between such holder and the Debtors and approved by the
entry of an Order pursuant to Rule 9019.
Class 5 consists of the Prepetition LVS II Offshore Guaranty Claim.
The holder of the Prepetition LVS II Offshore Guaranty Claim shall
receive a Pro Rata share of the Liquidating Trust Interests in
exchange for its Allowed Claims following the payment or reserve
for Administrative Claims, DIP Loan Claims, Priority Tax Claims,
Priority Non-Tax Claims, and Other Secured Claims, except as
otherwise provided by the terms of the Committee Settlement.
Class 6 consists of all General Unsecured Claims other than the
unsecured claims described in Classes 4 and 5. Each holder of an
Allowed General Unsecured Claim in Class 6 shall receive a Pro Rata
share of the Liquidating Trust Interests in exchange for their
Allowed Claims following the payment or reserve for the Plan
Contribution Amount, Administrative Claims, DIP Loan Claims,
Priority Tax Claims, Priority Non-Tax Claims, and Other Secured
Claims, except as otherwise provided by the terms of the Committee
Settlement. Class 6 is Impaired. The allowed unsecured claims total
$51,700,781.
Class 7 consists of all Interests. There shall be no Distribution
on account of Class 7 Interests. Upon the Effective Date, all
Interests will be deemed cancelled and will cease to exist;
provided, however, for purposes of convenience, the Debtors and the
Cash Flow DIP Lender may agree that Interests in Maverick shall
continue to be held by FGMC as of the Effective Date.
Pursuant to the terms of the Committee Settlement: (a) the net
proceeds from the recoveries, if any, on account of (A) Avoidance
Actions and (B) the first $7.5 million of the Debtors' commercial
tort claims (collectively, "Unencumbered Claims") shall be split
(i) 50% to the Debtors' estates (the "Estate's Share"), and (ii)
50% to the Cash Flow DIP Lender, the Prepetition Bridge Lender,
and/or the other released parties under the Final Cash Flow DIP
Order; (b) (i) the Estate's Share shall not be part of the
collateral pool securing the loans granted by the Interim Cash Flow
DIP Order, Final Cash Flow DIP Order, Interim Repo DIP Order, or
Final Repo DIP Order, and (ii) the Released Parties and the DIP
Repo Parties shall not be entitled to share in any distribution of
the Estate's Share on account of their secured, superpriority,
administrative, or unsecured claims (including subrogation claims)
they may have against the Debtors' Estates.
Provided, however, that Flagstar shall be entitled to participate
in distributions from the Estate's Share to the extent of any
allowed unsecured claims (including deficiency claims); (c) the
Debtors shall consult with the Committee and the Cash Flow DIP
Lender prior to pursuing, settling and/or releasing any
Unencumbered Claims; provided, however, that in the event the
Committee or the Cash Flow DIP Lender do not agree with the Debtors
as to such actions, the Committee and the Cash Flow DIP Lender
retain the right to seek appropriate relief from the Bankruptcy
Court; and (d) the aggregate amount in the "Committee Professional
Fees" line item in the Approved DIP Budget shall be $1,500,000 for
the case, which shall be inclusive of the Investigation Budget.
On the Effective Date, the Liquidating Trust shall be established
pursuant to the Liquidating Trust Agreement for the purpose of,
inter alia, (i) administering the Liquidating Trust Assets, (ii)
prosecuting and/or resolving all Disputed Claims, (iii)
investigating and pursuing any Causes of Action the Debtors hold or
may hold against any Entity, and (iv) making all Distributions to
the Beneficiaries provided for under the Plan.
A full-text copy of the Combined Plan and Disclosure Statement
dated September 6, 2022, is available at https://bit.ly/3eGUaDz
from Kurtzman Carson Consultants, LLC, claims and notice agent.
Counsel for Debtors:
Samuel R. Maizel, Esq.
Tania M. Moyron, Esq.
Malka S. Zeefe, Esq.
601 S. Figueroa Street, Suite 2500
Los Angeles, CA 90017
Telephone: (213) 623-9300
Email: samuel.maizel@dentons.com
tania.moyron@dentons.com
malka.zeefe@dentons.com
And
DENTONS US LLP
David F. Cook, Esq.
1900 K Street, NW
Washington, DC 20006
Telephone: (202) 496-7301
Email: david.f.cook@dentons.com
Laura Davis Jones, Esq.
Pachulski Stang Ziehl & Jones, LLP
919 North Market Street, 17th Floor
P.O. Box 8705
Wilmington, DE 19899-8705
Telephone: (302) 652-4100
Facsimile: (302) 652-4400
Email: ljones@pszjlaw.com
About First Guaranty Mortgage
First Guaranty Mortgage Corporation -- https://fgmc.com -- was a
full service, non-bank mortgage lender, offering a full suite of
residential mortgage options tailored to borrowers' different
financial situations. It was one of the leading independent
mortgage companies in the United States that originated residential
mortgages through a national platform.
Just before the bankruptcy filing, as a result of an extreme and
unanticipated liquidity crisis and resultant inability to obtain
additional capital, FGMC ceased all of its mortgage loan
origination activity and separated nearly 80% of its workforce.
FGMC and an affiliate commenced Chapter 11 Cases to evaluate their
options, accommodate their customers, and maximize and preserve
value for all stakeholders.
First Guaranty Mortgage Corporation sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del Case No. 22-10584) on
June 30, 2022. Affiliate Maverick II Holdings, LLC also sought
bankruptcy protection (Bankr. D. Del. Case No. 22-10583). In the
petition signed by Aaron Samples, chief executive officer, FGMC
disclosed up to $1 billion in both assets and liabilities.
Dentons US LLP and Pachulski Stang Ziehl, and Jones LLP represent
the Debtor as counsel. Kurtzman Carson Consultants, LLC, serves
as the Debtors' claims and notice agent.
LVS II SPE XXXIV LLC, as Cash Flow DIP Lender, is represented by
lawyers at Greenberg Traurig, LLP. The Cash Flow DIP Lender is
an indirect subsidiary of a private investment managed by Pacific
Investment Management Company LLC. B2 FIE IV LLC, an affiliate of
the DIP Lender, owns 100% of the equity interests of FGMC.
Barclays Bank PLC serves as DIP Repo Agent and DIP Repo Purchaser.
Barclays Capital Inc. serves as DIP MSFTA Counterparty. They are
represented by Hunton Andrews Kurth LLP and Potter Anderson &
Corroon LLP.
FULL CIRCLE: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Full Circle Technologies, LLC
7411 Hines Place
Suite 100
Dallas, TX 75235
Chapter 11 Petition Date: September 9, 2022
Court: United States Bankruptcy Court
Northern District of Texas
Case No.: 22-31660
Judge: Hon. Scott W. Everett
Debtor's Counsel: Eric A. Liepins, Esq.
ERIC A. LIEPINS
12770 Coit Road
Suite 850
Dallas, TX 75251
Tel: 972-991-5591
Fax: 972-991-5788
Email: eric@ealpc.com
Total Assets: $1,040,000
Total Liabilities: $3,265,341
The petition was signed by Abheeshek Sharma as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/UUQGKZY/Full_Circle_Technologies_LLC__txnbke-22-31660__0001.0.pdf?mcid=tGE4TAMA
GEO GROUP: Moody's Ups CFR to B3, Outlook Remains Stable
--------------------------------------------------------
Moody's Investors Service has upgraded GEO Group, Inc.'s corporate
family rating to B3 from Caa2, its existing senior secured bank
facilities to B3 from Caa1, and its senior unsecured debt to Caa1
from Caa2. In the same rating action, Moody's assigned B2 ratings
to the company's new senior secured exchange bank facilities and B3
ratings to its new second lien secured notes. The speculative grade
liquidity rating remains unchanged at SGL-3. The company's rating
outlook remains stable.
The rating actions reflect the issuer's completion of a distressed
debt restructuring transaction with its credit facility lenders and
bondholders. The stable outlook reflects the issuer's repositioned
capital structure, balance sheet and liquidity profile, driven by a
reduction in net recourse debt and an extension of near-term
maturities.
Upgrades:
Issuer: GEO Group, Inc.
Corporate Family Rating, Upgraded to B3 from Caa2
Senior Unsecured Shelf, Upgraded to (P)Caa1 from (P)Caa2
Senior Secured Term Loan B, Mar 22, 2024, Upgraded to B3 from
Caa1
Senior Secured Revolving Credit Facility, May 17, 2024, Upgraded
to B3 from Caa1
Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 from
Caa2
Assignments:
Issuer: GEO Group, Inc.
Tranche 1 US$ 857M Sr Sec Term Loan, Mar 23, 2027, Assigned B2
Tranche 2 US$ 237M Sr Sec Term Loan, Mar 23, 2027, Assigned B2
Senior Secured Revolving Credit Facility, Mar 23, 2027, Assigned
B2
Tranche 3 US$ 45M Sr Sec Term Loan, Mar 22, 2024, Assigned B3
Senior Secured Term Loan B Mar 22, 2024, Assigned B3
Senior Secured 2nd Lien Notes, Assigned B3
Outlook Actions:
Issuer: GEO Group, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The upgrade of GEO's corporate family rating reflects the company's
closing and execution of a comprehensive debt restructuring of its
capital structure. The exchange transaction, which provides
participants with a combination of cash and new debt at par as well
as an enhanced collateral package, strengthens the issuer's capital
structure, balance sheet and liquidity profile, through a reduction
in short-term debt and extension of maturities. Based on higher
than expected participation levels at closing, GEO's revised debt
maturities include approximately $126 million in 2023 (effectively
redeemed as of September 2022); approximately $170 million in 2024;
approximately $340 million in 2026; approximately $1.1 billion in
2027; and approximately $526 million in 2028.
GEO's SGL-3 speculative grade liquidity rating reflects Moody's
expectation that the company will maintain sufficient liquidity to
repay its remaining short-term tranche maturities and long-term
debt through cash on hand, recurring cash flow and opportunistic
asset sales. Moody's note however, that uncertain growth prospects
and operating fundamentals could pressure the company's longer-term
business model and GEO's ability to execute on its revised capital
allocation strategy.
GEO's governance risk is highly negative, reflecting its exposure
to refinancing risk as lenders and investors disassociate from the
industry as well as substandard corporate governance practices in
comparison to peers and as evidenced by the distressed debt
exchange transaction. These risks are partially offset by a
requirement and commitment post-closing to allocate capital and
excess cash flow to pay down debt and reduce leverage longer-term.
Furthermore, the higher than expected participation levels in the
exchange, demonstrates that lenders maintain an appetite for new
debt and funding to the industry, though at a higher cost of
capital.
The stable outlook reflects Moody's expectation that GEO will
continue to reduce its long-term leverage as well as maintain
sufficient liquidity to meet its contractual debt obligations amid
the challenging operating environment for private prison
operators.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of GEO's ratings, which is unlikely in the medium term,
would require material improvement in the long-term industry
outlook, including improved access to capital and demonstration of
positive revenue and earnings growth, on a sustained basis.
A downgrade of GEO's ratings could occur should the issuer default
on its debt obligations, or if recovery expectations on its debt
instruments were to weaken further. Further exposure to adverse
regulatory events could also lead to downward ratings pressure.
The principal methodology used in these ratings was REITs and Other
Commercial Real Estate Firms Methodology published in July 2021.
GEO Group, Inc. (NYSE: GEO) is a leading provider of government
outsourced services focused on the management and ownership of
correctional facilities, processing centers, reentry and
residential community-based and youth services to Federal, State,
and local governments in the United States, Australia, South Africa
and the United Kingdom.
GIP III STETSON: S&P Alters Outlook to Pos., Affirms 'B-' ICR
-------------------------------------------------------------
S&P Global Ratings revised the outlook on GIP III Stetson I L.P.
and GIP III Stetson II L.P. to positive from stable and affirmed
its 'B-' issuer credit rating on the company.
S&P said, "Our 'B-' issuer credit rating on Stetson continues to be
five notches lower than our 'BB+' issuer credit rating on master
limited partnership (MLP) Midstream LLC (EnLink). The notching
reflects Stetson's sole reliance on upstream distributions from
EnLink to service its financial obligations, the underlying cash
flow stability of the distributions it receives from EnLink, and
Stetson's stand-alone leverage. We analyze Stetson as a pure-play
general partnership (GP) because there are no other substantive
assets other than what is described above.
"We typically rate the GP two-to-five notches below our issuer
credit rating on the MLP when they do not constitute a group, as is
the case with Stetson. The number of notches between our rating on
the GP and our rating on the MLP reflects how we assess (positive,
neutral, or negative) certain characteristics such as cash flow
interruption risk, stand-alone debt leverage, and cash flow
diversity.
"We expect Stetson will receive $100 million in annual
distributions from EnLink and repay $45 million in debt (including
sweeps) in each of 2022 and 2023.
The positive outlook on Stetson mirrors the positive outlook on
EnLink Midstream L.P., reflecting our view that EnLink's credit
metrics will continue to improve with increased drilling activity
in the company's basins. We expect that EnLink will maintain a
distribution coverage ratio of more than 1.0x.
On a stand-alone basis, we expect Stetson will maintain adequate
liquidity and adjusted debt leverage in the 7.0x-7.5x area over the
next 12 months.
"We could raise our rating on Stetson if we raise our rating on
EnLink, which could occur if EnLink maintains stand-alone leverage
below 5.0x on a sustained basis. We could also consider raising our
rating if Stetson maintains stand-alone debt to EBITDA of less than
5.0x such that the underlying distributions from EnLink remain
stable even amid prolonged weak commodity prices.
"We would revise our outlook on Stetson if we revise our outlook on
EnLink. We would revise the outlook on EnLink to stable if its
debt-to-EBITDA ratio remains above 4.25x. We could lower our rating
on Stetson if EnLink reduces its distribution, which would lead us
to view the company's capital structure as unsustainable."
Environmental, Social and Governance
ESG credit indicators: E3;S-2;G-2
S&P said, "Environmental factors are a moderately negative
consideration in our credit rating analysis of GIP III Stetson I
L.P. As the controlling owner of a midstream company (Enlink) that
transports natural gas and NGLs, the company faces risks associated
with the energy transition. As the gradual pace of the energy
transition increases, it could pressure Enlink's volumes.
Specifically, if drilling and production declined as part of the
energy transition, Enlink's volumes and asset utilization could
decline, consequently leading to lower dividends for GIP Stetson."
HAMON HOLDINGS: Taps Robert Recio of RJC as Wind-Down Officer
-------------------------------------------------------------
Hamon Holdings Corporation and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Robert Recio, a partner at RJC Services, LLC, as wind-down
officer.
Mr. Recio's services include:
a. taking actions as the wind-down officer reasonably deems
appropriate to minimize administrative expenses of the Debtors'
estates;
b. overseeing the disposition of the Chapter 11 Cases through
the filing of a liquidating plan or other appropriate disposition;
c. working with and supervising the Debtors' professionals;
d. authorizing and causing the payment of the Debtors' approved
expenses from funds of the Debtors' estates only;
e. establishing and administering any accounts required to be
established pursuant to any liquidating plan;
f. causing the Debtors to comply with all other post-closing
obligations of the Debtors under any approved asset purchase
agreement;
g. acting on behalf of the Debtors with respect to any
transitional services agreement between the Debtors and any
purchaser under an approved asset purchase agreement;
h. in conjunction with and subject to the advice of the Debtors'
professionals and advisors, taking appropriate action in connection
with the preparation and filing of tax returns for the Debtors and
Form 5500s for the Debtors' employee benefit plans;
i. in conjunction with and subject to the advice of the Debtors'
professionals and advisors, overseeing the preparation and filing
of any necessary state regulatory filings, monthly operating
reports and other reporting required by the Court or the U.S.
Trustee;
j. in conjunction with and subject to the advice of the Debtors'
professionals and advisors, reviewing, revising, and executing on
behalf of the Debtors any Debtors' liquidating plan and disclosure
statement;
k. appearing before the Court as representative of the Debtors
on an as-needed basis;
l. overseeing and causing the disposition of the Debtors'
records in compliance with applicable law; and
m. all other administrative matters incident to the wind down of
the Debtors' business affairs and bankruptcy estates as reasonably
necessary.
RJC will be paid $23,000 per month.
Mr. Recio disclosed in a court filing that his firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Robert A. Recio, Esq.
RJC Services, LLC
PO Box 403
Morris Plains, NJ 07950
About Hamon Holdings Corporation
Hamon Holdings Corp., a Delaware-based engineering and contracting
company, and its affiliates sought Chapter 11 bankruptcy protection
(Bankr. D. Del. Lead Case No. 22-10375) on April 24, 2022. In the
petition filed by Joseph DeMartino, vice-president, Hamon Holdings
listed up to $50,000 in assets and up to $50,000 in liabilities.
Judge John T. Dorsey oversees the cases.
Jarret P. Hitchings, Esq., at Duane Morris, LLP and Gellert Scali
Busenkell & Brown, LLC serve as the Debtors' bankruptcy counsel and
conflicts counsel, respectively.
HEARTBRAND HOLDINGS: Hires Omni as Claims and Noticing Agent
------------------------------------------------------------
Heartbrand Holdings, Inc. and American Akaushi Association, Inc.
seek approval from the U.S. Bankruptcy Court for the Southern
District of Texas to employ Omni Agent Solutions as claims and
noticing agent.
The firm will oversee the distribution of notices and will assist
in the maintenance, processing and docketing of proofs of claim
filed in the Debtors' Chapter 11 cases.
The retainer fee is $25,000.
Paul Deutch, executive vice president of Omni Agent Solutions,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Paul H. Deutch
Omni Agent Solutions
5955 De Soto Avenue, Suite 100
Woodland Hills, CA 91367
Tel: (818) 906-8300
Email: pdeutch@omniagnt.com
About Heartbrand Holdings, Inc.
HeartBrand Holdings Inc. -- https://www.heartbrandbeef.com -- is a
beef company in Texas. The Company is a leading producer of Akaushi
beef, a type of red Wagyu Japanese cattle known for its
high-quality meat. HBI is a holding company with no independent
operations, instead HBI operates its business through five
wholly-owned operating subsidiaries, each of which is critical to
the Company's operations and beef production process.
HeartBrand Holdings Inc. and American Akaushi Association, Inc.,
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D. Tex. Case No. 22-90127 and 22-90128) on Aug. 2, 2022.
In the petition filed by Ronald Beeman, as Chairman of the Board of
Directors, HeartBrand reported assets between $50 million and $100
million and liabilities between $10 million and $50 million.
Judge David R. Jones oversees the cases.
Vinson & Elkins, is the Debtors' counsel. Omni Agent Solutions is
the claims agent.
HEARTBRAND HOLDINGS: Hires Vinson & Elkins as Counsel
-----------------------------------------------------
Heartbrand Holdings, Inc. and its affiliates seek approval from the
U.S. Bankruptcy Court for the Southern District of Texas to employ
Vinson & Elkins LLP as counsel.
The firm will provide these services:
a. provide legal advice with respect to the Debtors' powers and
duties as debtors in possession in the operation of their
businesses and the management of estate property;
b. prepare all necessary motions, answers, orders, reports, and
other legal papers on the Debtors' behalf in connection with the
administration of their bankruptcy estates;
c. advise the Debtors regarding tax matters;
d. analyze proofs of claim that may be filed against the Debtors
and potential objections to such claims;
e. analyze certain executory contracts and unexpired leases and
potential assumptions, assignments, or rejections of such
contracts and leases;
f. advise the Debtors with respect to corporate and litigation
matters, including discovery requests, and matters related to the
Bankruptcy Code's automatic stay as well as compliance with
non-bankruptcy law;
g. consult with the United States Trustee for the Southern
District of Texas (the "U.S. Trustee"), any official committee of
unsecured creditors appointed in the chapter 11 cases, any other
committees that may be appointed in these chapter 11 cases, and all
other creditors and parties in interest concerning the
administration of these chapter 11 cases;
h. continue representing the Debtors in a state court case in
accordance with the firm's engagement letter;
i. if necessary, take action on the Debtors' behalf to obtain
approval of a disclosure statement and confirmation of a chapter 11
plan; and
j. provide representation and all other legal services required
by the Debtors in discharging their duties as debtors in possession
or otherwise in connection with these chapter 11 cases.
The firm will be paid at these rates:
Attorneys $566 to $1,309 per hour
Paraprofessionals $296 to $370 per hour
The Debtors paid the firm $300,000 as an "advance payment retainer.
During the 90-day period prior to the Petition Date, the Debtors
paid the firm a total of $641,615.45.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
In accordance with Appendix B-Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed under 11
U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the
following is provided in response to the request for additional
information:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: 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 postpetition, explain the
difference and the reasons for the difference.
Response: The firm will use the same hourly rates for services
rendered on behalf of the Debtors during the pendency of these
chapter 11 cases as it used during the 12 months prior to the
Petition Date. The firm has historically provided the Debtors with
discounted rates from its standard rates. The firm will continue to
apply these discounted rates during the pendency of these chapter
11 cases.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period?
Response: Yes, the Debtors have approved the firm's prospective
budget and staffing plan for the period from July 25, 2022 through
the resolution of the Debtors' appeal in a state court case.
David S. Meyer, a partner at Vinson & Elkins LLP, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
David S. Meyer, Esq.
Vinson & Elkins
845 Texas Avenue, Suite 4700
Houston, TX 77002
Telephone: (713) 758-2222
Facsimile: (713) 758-2346
Email: dmeyer@velaw.com
About Heartbrand Holdings, Inc.
HeartBrand Holdings Inc. -- https://www.heartbrandbeef.com -- is a
beef company in Texas. The Company is a leading producer of Akaushi
beef, a type of red Wagyu Japanese cattle known for its
high-quality meat. HBI is a holding company with no independent
operations, instead HBI operates its business through five
wholly-owned operating subsidiaries, each of which is critical to
the Company's operations and beef production process.
HeartBrand Holdings Inc. and American Akaushi Association, Inc.,
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D. Tex. Case No. 22-90127 and 22-90128) on Aug. 2, 2022.
In the petition filed by Ronald Beeman, as Chairman of the Board of
Directors, HeartBrand reported assets between $50 million and $100
million and liabilities between $10 million and $50 million.
Vinson & Elkins, is the Debtor's counsel. Omni Agent Solutions is
the claims agent.
HIGHPOINT LIFEHOPE: Lender Seeks to Prohibit Cash Collateral Use
----------------------------------------------------------------
Capital One, National Association asks the U.S. Bankruptcy Court
for the Western District of Texas, San Antonio Division, to require
Highpoint Lifehope SPE LLC to identify, segregate and sequester all
cash collateral and provide adequate protection of Capital One's
interests.
Capital One is the agent and lender under the Loan Agreement
pursuant to which Highpoint Lifehope was provided a $65 million
secured non-revolving credit facility.
As of the Petition Date, the amount owing from the Debtor to
Capital One under the Loan Agreement and the other Loan Documents
is not less than $51,135,447 of unpaid principal, plus accrued and
accruing interest (including default interest), costs, fees
(including attorney's fees) and other amounts chargeable to the
Debtor under the Loan Documents.
On April 18, 2019, and to secure the repayment of the Loan and all
of the Debtor's other Indebtedness under the Loan Agreement and
other Loan Documents, the Debtor executed for the benefit of
Capital One a Leasehold Deed of Trust, Assignment of Leases and
Rents, Security Agreement and Fixture Filing dated as of April 18,
2019, which was filed in the real property records of Bexar County,
Texas on April 22, 2019 at Document No. 20190071427. A related
UCC-1 financing statement naming the Debtor as debtor and Capital
One as secured party was filed with the Delaware Department of
State on April 18, 2019 at UCC Initial Filing No: 2019 2714595.
As security for repayment of the Loan, and among other things,
Capital One holds first and prior, valid and perfected liens on:
(a) the Project; and (b) on all rents and other income of any kind
generated by the Debtor from the Project. The Debtor has been in
protracted and material default, including monetary default, under
the Loan for many months. These defaults include the failure of the
Debtor to make ground lease and property tax payments when due,
which threaten directly Capital One's liens in the Debtor's
assets.
Capital One's Collateral includes, among other things, rents from
tenants at the Project, deposit accounts, and other cash and cash
equivalents that constitute "cash collateral."
Immediately after the filing of the Bankruptcy Case, Capital One
notified the Debtor's counsel of its liens and interests in the
cash collateral; it asked for information regarding the amounts and
intended uses of cash collateral; it demanded that its cash
collateral be segregated and preserved; it stated that it does not
consent to any use of its cash collateral; it stated that it was
willing to discuss a consensual use of cash collateral for
necessary and critical expenses. However, now more than two weeks
ago into the case, the Debtor has yet to identify or account for
the cash collateral, and it has failed to present any concrete cash
collateral request. In addition, the Debtor has failed to provide
requested information regarding the cash collateral currently held
by the Debtor; what rents and other cash collateral are actually
being generated by the Debtor; where such cash collateral is being
deposited and held; the projected ground lease payments and
operating expenses for the Project or how the Debtor proposes to
pay for same. Further, the Debtor has refused to provide an
explanation for the actions of the principal of the Debtor to drain
at least $415,000 of funds from the Debtor's operating account (all
of which is Capital One's cash collateral) shortly before the
Debtor's bankruptcy filing, or to account for these funds.
To provide adequate protection of Capital One's interests in the
cash collateral, Capital One requests that the Court enter the
Proposed Order. The primary terms and conditions include the
following (among others):
a. The Proposed Order confirms that, pursuant to Bankruptcy
Code section 363(c)(2), the Debtor will not use any cash collateral
for any purpose without (i) the prior written consent of Capital
One, or (ii) further Court order. The Proposed Order contemplates
that the Debtor and Capital One may later agree to a budget stating
expenses that Capital One consents may be paid using its cash
collateral during specified time periods. Further, nothing in the
Proposed Order prohibits the Debtor from subsequently requesting
Court approval (after notice and a hearing) to use cash collateral
to pay any other expenses, or prohibits Capital One from objecting
to any such request.
b. The Proposed Order provides that the Debtor is required to
sequester and segregate all of Capital One's cash collateral,
including, without limitation, all cash held by and for the Debtor
and all rents collected by the Debtor from tenants of the Project
in a designated "Cash Collateral Account." The Cash Collateral
Account will be a debtor in possession account owned by the Debtor.
None of the cash collateral will be transferred to or held by any
affiliate of the Debtor, and any affiliate of the Debtor currently
holding any funds will be directed to immediately return all such
funds to the Debtor for deposit in the Cash Collateral Account.
c. The Proposed Order provides that Capital One is granted
valid and perfected security interests and liens in all of the
Debtor's post-petition assets of the type described in the Loan
Documents, including, without limitation, the Cash Collateral
Account and all other deposit accounts maintained by the Debtor,
all cash contained in such deposit accounts, and all rents and
other income collected by the Debtor from any source. The
continuing Replacements Liens held by or granted to Capital One:
(i) will secure repayment of the Indebtedness, but will be limited
in amount to the total amount of cash collateral used by the Debtor
from and after the Filing Date; (ii) will be evidenced by the
existing Loan Documents and the Order; and (iii) will have the same
validity and priority as Capital One's existing liens and security
interests under the Loan Documents as of the Filing Date.
Capital One does not consent to any use of its cash collateral by
the Debtor for any purpose without the protections, and under the
terms and conditions, requested in the Motion.
A copy of the motion is available at https://bit.ly/3B1OMmi from
PacerMonitor.com.
About Highpoint Lifehope SPE LLC
Highpoint Lifehope SPE LLC, also known as Honan Property Management
- Highpoint, is a Single Asset Real Estate (as defined in 11 U.S.C.
Sec. 101(51B)).
Highpoint Lifehope SPE LLC sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. W.D. Tex. Case No. 22-50929) on
August 22, 2022. In the petition filed by Scott C. Honan, as
manager, the Debtor reports estimated assets and liabilities
between $50 million and $100 million each.
The Debtor is represented by Natalie F. Wilson, Esq., at Langley &
Banack Inc.
HOMELIBERTY INC: Bid to Use Cash Collateral Denied
--------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota denied as
moot the Motion for Continued Use of Cash Collateral filed by
HomeLiberty, Inc., including the Debtor's request to pay actual
Operating Expenses in the ordinary course of business pursuant to
11 U.S.C. section 363(c)(1).
The Court said the Debtor's motion is denied, without prejudice, as
to the request for authorization to pay prepetition creditors,
including payments for "Monthly Interest" or "Debt Service".
As previously reported by the Troubled Company Reporter, the Debtor
sought authority to use cash collateral to meet its operating
expenses.
The Debtor explained it filed for Chapter 11 filing after one of
its borrowers commenced litigation in the Hennepin County District
Court and as a result of the associated costs with pursuing that
litigation.
A copy of the order is available at https://bit.ly/3KYRBZG from
PacerMonitor.com.
About HomeLiberty Inc.
HomeLiberty Inc. -- https://www.home-liberty.com/aboutus.html -- is
a company that provides financial products to qualified homeowners
with severe negative equity.
HomeLiberty, Inc. sought Chapter 11 protection (Bankr. D. Min. Case
No. 22-30548) on April 12, 2022. In the petition filed by Patricia
Hanratty, as chief executive officer (CEO), HomeLiberty Inc. listed
estimated assets between $1 million and $10 mllion and estimated
liabilities between $1 million and $10 million.
The case is assigned to Honorable Judge Kesha L Tanabe.
Steven B Nosek, Esq., at Steven Nosek PA, is the Debtor's counsel.
HOYOS INTEGRITY: Unsecureds to Get Share of 8% New Equity in Plan
-----------------------------------------------------------------
Hoyos Integrity Corporation filed with the U.S. Bankruptcy Court
for the District of Delaware a Disclosure Statement for the Plan of
Reorganization dated September 6, 2022.
Hoyos is an information technology company that specializes in the
fields of mobile device security and technology.
Hoyos commenced this chapter 11 case to avoid the sale of 10,000
secure mobile phones by its pre-petition secured creditor. At the
time of its filing, the Debtor had two employees, no accounts
receivable, and no operations to speak of. It has restarted
operations, obtained DIP funding, settled issues with its pre
petition secured creditor, kept its IP license intact, (which its
pre-petition secured creditor (the licensor) sought to terminate)
which is very important to its future business prospects and now is
hopefully on its way to obtaining 15,000 new, secure phones to sell
or lease all in its overall efforts to create value for its
creditors and interest holders.
The Plan contemplates a restructuring of the Debtor through a debt
for equity swap whereby the DIP Lenders get 92.0 percent of the
equity (pro rata per their individual percentage of the DIP) of the
Reorganized Debtor, unsecured creditors get 8.0 percent (pro rata
based upon a creditor's unsecured debt percentage to the overall
total of unsecured debt. Further, the Debtor will create a General
Unsecured Creditors' Trust (the "GUC Trust") which will hold and
prosecute to judgment or settle certain claims and causes of action
of the Debtor or its estate(as more fully described in the Plan)
(the "GUC Claims").
The Plan also contemplates the appointment of a GUC Trust Trustee
to direct the investigation into, and if appropriate, the
prosecution to conclusion and collection or settlement the GUC
Claims and then to distribute the proceeds to the holders of
Allowed General Unsecured Claims, pro rata, up to the payment in
full of all Allowed General Unsecured Claims, with any funds in
excess of that amount to be contributed to the Reorganized Debtor
for its use in its operations. To be clear, the Debtor does not
know if any of the GUC Claims are viable valid claims or if they
are whether there is insurance covering such claims or absent that,
whether the potential defendants have sufficient wherewithal to pay
any recovery or settlement on account of such GUC Claims.
Each Existing Equity Interest Holder of the Debtor shall receive in
warrants its pro rata share of 8.0 percent of the New Common Equity
in the Reorganized Debtor. Each warrant shall be convertible into
one share of New Common Existing with an exercise price based upon
a valuation of $125,000,000 of the Reorganized Debtor. Existing
Equity Holders will have a two-year window from the Effective Date
to exercise their warrants.
The Debtor contemplates that its path forward under its Plan is
through a debt for equity swap. The Plan thus provides the Debtor
with the necessary latitude to negotiate the precise terms of its
ultimate emergence from chapter 11.
Class 1 consists of Other Secured Claims. Each holder of an Allowed
Other Secured Claim will receive: (a) payment in full in Cash of
such holder's Allowed Other Secured Claim; (b) the collateral
securing such holder's Allowed Other Secured Claim; (c)
Reinstatement of such holder's Allowed Other Secured Claim; or (d)
such other treatment rendering such holder's Allowed Other Secured
Claim Unimpaired in accordance with section 1124 of the Bankruptcy
Code.
Class 2 consists of Other Priority Claims. Each holder of an
Allowed Other Priority Claim will receive payment in full in Cash
of such holder's Allowed Other Priority Claim or such other
treatment in a manner consistent with section 1129(a)(9) of the
Bankruptcy Code.
Class 3 consists of General Unsecured Claims. Each holder of an
Allowed General Unsecured Claim will receive its Pro Rata share of
8.0 percent of the New Common Equity. In addition, each holder of
an Allowed General Unsecured Claim shall receive its Pro Rata share
of any recoveries from the proceeds of the GUC Trust up to the full
amount of it Allowed Claim. The Debtor estimates that Allowed
General Unsecured Claims total approximately $7 million dollars.
Class 4 consists of Existing Equity Interests. On the Effective
Date, each holder of an Existing Equity Interest will have such
Interest cancelled, released, and extinguished and without any
distribution. Each holder of an Existing Equity Interest shall
however receive warrants exercisable in the 2 year window following
the Effective Date in the amount of its pro rata share of 8.0
percent of the New Common Equity in the Reorganized Debtor. Each
warrant shall be convertible into one share of New Common Equity
with an exercise price based on a putative value of the Reorganized
Debtor of $125,000,000.00.
The Reorganized Debtor will fund distributions under the Plan with
Cash held on the Effective Date by or for the benefit of the Debtor
or Reorganized Debtor, including Cash from operations, proceeds
from all Causes of Action not settled, released, discharged,
enjoined, or exculpated (or transferred to the GUC Trust) under the
Plan or otherwise on or prior to the Effective Date and the DIP
Lender Contribution.
A full-text copy of the Disclosure Statement dated September 6,
2022, is available at https://bit.ly/3RWw9GW from PacerMonitor.com
at no charge.
Debtor's Counsel:
Raymond H. Lemisch, Esq.
Klehr Harrison Harvey Branzburg LLP
919 North Market Street, Suite 1000
Wilmington, DE 19801-3062
Telephone: (302) 426-1189
Email: rlemisch@klehr.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, listing up to $10 million in assets and up to $50 million in
liabilities. Frank Tobin, president of Hoyos Integrity, signed the
petition.
Judge Mary F. Walrath oversees the case.
Raymond H. Lemisch, Esq., at Klehr Harrison Harvey Branzburg, LLP,
and Stout Capital, LLC serve as the Debtor's legal counsel and
investment banker, respectively.
JA SEEKINS: Gets Cash Collateral Access Thru Feb 2023
-----------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Washington
authorized JA Seekins Painting Inc. to use cash collateral on an
interim basis through February 28, 2023, to pay these post-petition
operating expenses:
1. Post-petition payroll expenses to non-insiders Heyden
Alexander at the rate of $25 per hour, Nakota Glossip at the rate
of $25 per hour, and Andrew Emmerich in the amount of $2,500 per
week, including payroll and related taxes;
2. Post-petition payroll to insider David Seekins in the
amount of $1,500, per week including payroll and related taxes;
3. Marketing expenses;
4. Insurance expense;
5. Travel expense; and
6. Materials and Supplies expense
As adequate protection, creditor WebBank is granted a replacement
lien on the Debtor's collateral as set forth in the Supplemental
Declaration of David Seekins, in the same priority as existed on
the petition date.
A copy of the order is available at https://bit.ly/3cVmX7e from
PacerMonitor.com.
About JA Seekins Painting, Inc.
JA Seekins Painting, Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. W.D. Wash. Case No. 22-11316) on
August 14, 2022. In the petition signed by David Seekins,
president, the Debtor disclosed up to $50,000 in assets and up to
$500,000 in liabilities.
Judge Christopher M. Alston oversees the case.
Thomas D. Neeleman, Esq., at Neeleman Law Group, P.C. is the
Debtor's counsel.
KENDRA A. FLOWERS: Case Summary & Seven Unsecured Creditors
-----------------------------------------------------------
Debtor: Kedra A. Flowers, CPA PC
d/b/a Kedra Flowers Tax Relief & Business Consultation
d/b/a Flowers & Associates Tax Relief
2626 Cole Avenue Ste. 300
Dallas, TX 75204
Business Description: The Debtor offers tax and business
consulting services.
Chapter 11 Petition Date: September 9, 2022
Court: United States Bankruptcy Court
Northern District of Texas
Case No.: 22-42136
Debtor's Counsel: Marilyn D. Garner, Esq.
LAW OFFICE OF MARILYN D. GARNER
2001 E. Lamar Blvd., Suite 200
Arlington, TX 76006
Tel: (817) 505-1499
Email: mgarner@marilyndgarner.net
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Kendra A. Flowers as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/RMLEUTY/Kedra_A_Flowers_CPA_PC__txnbke-22-42136__0001.0.pdf?mcid=tGE4TAMA
LATAM AIRLINES: Revised Business Plan Sees Bullish Future
---------------------------------------------------------
CH-Aviation reports that LATAM Airlines Group is expected to save
US$100 million more than initially expected, reduce its debt by
36%, and hopes to exceed 2019 revenue levels by reaching US$11.5
billion in 2024.
This is according to adjustments made to its five-year 2021-2027
business plan in line with new global macroeconomic conditions, the
airline group announced in a statement.
"Our updated business plan reflects how LATAM group is better
prepared to face future challenges, with a more competitive and
flexible cost structure, a more complete offering for customers,
and important progress towards more sustainable aviation,"
commented Group Chief Executive Officer Roberto Alvo.
As reported, on June 18, 2022, the US Bankruptcy Court in New York
confirmed the group's plan of reorganisation and financing to exit
Chapter 11, expected in the last quarter of 2022.
The new version of the plan updated LATAM’s cost savings estimate
from USD900 million to more than USD1 billion annually, resulting
from initiatives that have already been implemented. These include
improvements in its cost structure and structural reform in fleet
renegotiation, network strengthening, and a reduction of its total
debt by 36% compared to pre-pandemic levels.
Regarding revenue, the group is expected to exceed 2019 levels by
2024, reaching US$11.5 billion.
It expects a recovery in the domestic markets of its subsidiaries
to 2019 levels by the end of 2022. In the case of Colombia, such
recovery was achieved in the first quarter of 2022 already, while
Brazil and Ecuador are expected to achieve it within the third
quarter of 2022.
Recovery of international traffic -- which accounted for about 45%
of 2019 revenues -- is expected to be slower, reaching 2019 levels
by mid-2023.
For 2024, the group projects passenger operations measured in
available seat kilometres (ASK) similar to 2019.
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is
the committee's Brazilian counsel.
The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as
counsel.
Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew
Glenn and partner Shai Schmidt, has been retained as counsel to the
Ad Hoc Committee of Shareholders.
LINDERIAN COMPANY: Unsecureds Will Get 5% in Subchapter V Plan
--------------------------------------------------------------
The Linderian Company, Ltd., filed with the U.S. Bankruptcy Court
for the Eastern District of Texas an Amended Chapter 11 Plan of
Reorganization under Subchapter V dated September 6, 2022.
Debtor operates a 115-bed skilled nursing facility (SNF) founded in
2004 and located in Longview, Texas under the name Summer Meadows,
which facility and related furniture, fixtures, and equipment is
leased from Shefa under the Lease.
The Debtor previously reorganized under Chapter 11 from a filing in
January 2016 and has been operating successfully for the last
several years after its initial exit from bankruptcy. However, the
recent COVID-19 pandemic has dramatically and negatively affected
the Debtor's financial strength.
The reduction in revenue caused the Debtor to fall behind on its
payroll tax obligations to the IRS resulting in tax liens being
placed on its receivables. On January 19, 2022, the Petition Date
the Debtor filed its voluntary petition for relief with this Court
under Subchapter V of Chapter 11 of the Bankruptcy Code.
The executed LOI, dated June 27, 2022, between Vista and Shefa,
along with the PSA and OTA provide for a purchase by Vista from
Shefa of the real estate, furniture, fixtures, and tangible
personal property of Summer Meadows, and a transfer of the
operations from the Debtor to Vista. This transaction, in essence,
would transfer operations of Summer Meadows away from the Debtor
and into the hands of Vista. The Debtor's managing member, Greg
Sechrist, will remain as an employee in a consulting and advising
role. The transaction contemplated by the LOI, PSA and OTA will
allow for a smooth and safe transfer of the facilities and
operations with little to no disruption to the healthcare of the
patients, and is in their best interests, as well as in the best
interests of the Debtor's estate and its creditors.
The transaction will leave all pre-Closing receivables in the
possession of the Debtor, reduce the administrative claim of Shefa,
mitigate the rejection claim of Shefa and solve the licensing issue
in order that the Debtor may continue to collect and distribute
proceeds to satisfy the claims of its professionals and other
administrative claims, and make payments toward its other
obligations to priority, secured and unsecured creditors.
The Plan proposes to pay creditors with cash on hand, cash flow
from operations and future income from all pre-Closing receivables
of the Debtor, to include all revenue, receivables and collections
therefrom; all refunds and credits to which it is entitled,
including its Employee Retention Credit to be remitted by the IRS,
whenever received. This Plan shall provide distributions only to
Allowed Claims; nothing within this Plan shall provide for the
Allowance of any Claim.
The Debtor's financial projections show that the Debtor will have
projected income of $3,3366,238.48. The final Plan payment is
expected to be paid within 10 months. The Debtor's 10-month
Projections are largely contingent upon receipt of the Employee
Retention Credit ("ERC"), which is expected to be received by year
end, but could come later. The Debtor has confirmed with its
professionals the amount of the ERC to be received will be
$2,106,000. But, the timing of receipt is uncertain.
Class 4 consists of Priority Non-Tax Unsecured Claims. The Debtor's
Priority Non-Tax Claim is held by Shefa, pursuant to a postpetition
Court approved loan in the amount of $125,000. This Allowed Class 4
Claim shall be paid in full in 4 equal monthly installments,
beginning on the month after the Effective Date, pursuant to the
Payment Schedule contained on the Debtor's Projections. This claim
is separate and apart from Shefa's prepetition claim and Shefa's
postpetition rent claim for Shefa's postpetition occupancy of the
Facility and use of Shefa's personal property.
Class 5 consists of General Unsecured Claims. Linderian will pay a
total of approximately 5% of each Allowed General Unsecured Claim
under Class 5, whose pro rata distributions shall be paid by
Linderian in the Allowed Amounts of such Claims.
Upon completion of the Payment Schedule, and in the event that
Linderian holds excess funds available for distribution, Linderian
may make additional pro rata distributions on behalf of Allowed
General Unsecured Claims under Class 5 and Allowed General
Unsecured Factor Claims under Class 6 from an amount not to exceed
$100,000. No Class subordinate to or junior to Classes 5 and 6 will
receive any cash distribution unless Allowed Class 5 and 6 Claims
are paid in full.
Class 6 consists of General Unsecured Guaranteed Claims. Holders of
General Unsecured Factor Claims are substantially similar and shall
have their Claims classified in Class 6. Linderian will pay a total
of approximately 4% of each Allowed General Unsecured Factor Claim
under Class 6, whose pro rata distributions shall be paid by
Linderian. Upon completion of the Payment Schedule and in the event
that Linderian holds excess funds available for distribution,
Linderian may make additional pro rata distributions on behalf of
Allowed General Unsecured Claims under Class 5 and Allowed General
Unsecured Factor Claims under Class 6 from an amount not to exceed
$100,000. No Class subordinate to or junior to Classes 5 and 6 will
receive any cash distribution unless Allowed Class 5 and 6 Claims
are paid in full.
Class 7 Interests in the Debtor shall be retained but shall receive
no Cash distributions or Cash dividends whatsoever on account of
such Interests.
On the Effective Date, the Reorganized Debtor shall be created for
the purpose of preserving and liquidating the Assets for the
benefit of the Creditors and satisfying Claims consistent with the
Plan. The Reorganized Debtor shall be entitled and authorized to
engage in the conduct of the trade or business of the Debtor solely
to the extent reasonably necessary to, and consistent with, the
distribution purposes of the Plan.
The Reorganized Debtor shall receive any and all assets coming into
or becoming a part of the Debtor's estate and disburse the proceeds
from revenues realized from the operation, lease, assignment, sale
or other similar transaction involving the property of the
Reorganized Debtor consistent with the terms of this Plan and the
OTA.
To fund the Reorganized Debtor, by operation of the Confirmation
Order, the Reorganized Debtor shall be in possession of and have
title to all pre-Closing receivables of the Effective Date,
including any cash, bank deposits, certificates of deposit,
refunds, credits, recoupments, rights, contracts, claims and causes
of action, garnishments, and all documents evidencing and relating
to the ownership of such estate property.
A full-text copy of the Amended Subchapter V Plan dated September
6, 2022, is available at https://bit.ly/3QDrE34 from
PacerMonitor.com at no charge.
Counsel for Debtor:
Stephanie D. Curtis
Texas State Bar No. 05286800
Christopher J. Harbin
Texas State Bar. No. 24083134
CURTIS | LAW PC
901 Main Street, Suite 6515
Dallas, Texas 75202
Telephone: 214.752.2222
Facsimile: 214.752.0709
Email: scurtis@curtislaw.net
charbin@curtislaw.net
About The Linderian Company
The Linderian Company, Ltd. operates a nursing care facility in
Longview, Texas.
Linderian Company sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Texas Case No. 22-60024) on Jan. 19,
2022. In the petition signed by Greg Sechrist, managing partner,
the Debtor disclosed up to $1 million in assets and up to $10
million in liabilities.
Judge Joshua P. Searcy oversees the case.
Mark A. Castillo, Esq., at Curtis Castillo, PC and BKD, LLP serve
as the Debtor's legal counsel and accountant, respectively.
LIONHEART TRAUMA: Files Emergency Bid to Use Cash Collateral
------------------------------------------------------------
Lionheart Trauma Support Services, LLC asks the U.S. Bankruptcy
Court for the Eastern District of Kentucky, Lexington Division, for
authority to use cash collateral, on an interim basis, and provide
adequate protection.
The Debtor requires the use of cash collateral to meet its
postpetition obligations and pay its expenses, general and
administrative operating expenses, and other necessary costs and
expenses incurred during the pendency of the bankruptcy case.
The Debtor seeks authority to use cash collateral in the amounts as
set forth on the budget, with a 10% variance, for the interim
period through any final hearing date, and in addition to or
pursuant to subsequent proposed budgets to be filed with the
Court.
The University of Kentucky Federal Credit Union may claim an
interest in cash collateral pursuant to any setoff rights in
deposit accounts. As the result of errors in submitting bills for
its services, payment from third-party payors, including Medicaid,
have been delayed and the Debtor has fallen behind on payment of
wages and employee withholding taxes. The Debtor owes the U.S.
Internal Revenue Service approximately $8,800 and the Kentucky
Department of Revenue approximately $1,400, as well as lesser
amounts to local taxing authorities.
In an attempt to replace the shortfall in revenues, the Debtor
borrowed from lenders at unfavorable terms, with payments being
automatically drafted from the Debtor's bank account. As the
Debtors' revenues declined, the automatically deducted payments did
not, resulting in an even greater cash shortfall. While certain
lenders may claim a lien against the Debtor's revenues and receipts
(Business Backer, Rapid Finance, Fundworks and the University of
Kentucky Federal Credit Union), only one creditor has filed a
financing statement with the Kentucky Secretary of State's office.
The combination of a delay in receipt of revenues and an increase
in payments to lenders put the Debtor in an untenable position and
in evaluating its options, elected to seek relief under Chapter 11
of the Bankruptcy Code to preserve the value of the company and to
fulfill the ongoing needs of its clients.
An unidentified creditor may claim an interest in cash collateral
based on the UCC-1 filing lodged with the Kentucky Secretary of
State's office as set forth on the Notice of Filing of Liens in
Cash Collateral.
As adequate protection for any diminution in the value of the Cash
Collateral Creditor's interests in the prepetition collateral, the
Debtor of the same type and description as the prepetition
collateral as of the Petition Date. The Debtor is open to
negotiating adequate protection payments with its Cash Collateral
Creditor, but no payment is being offered during this interim
period. The Debtor will continue to account for all cash use, and
the proposed cash use is being incurred to preserve property of the
Estate.
Additionally, the Debtor requests relief without prejudice to
future "carve-out" requests of cash collateral to pay its attorneys
or other professionals in this Chapter 11 proceeding if necessary.
A minimal carve-out in the amount of $3,000 per month is being
sought during this interim period.
A copy of the motion is available at https://bit.ly/3RRePmY from
PacerMonitor.com.
About Lionheart Trauma Support Services, LLC
Lionheart Trauma Support Services, LLC is a Kentucky limited
liability company which maintains its principal business assets in
Fayette County, Kentucky where it leases office space. The Debtor
also maintains leased offices in Hopkinsville and Murray,
Kentucky.
The Debtor employs a varied group of social workers, counselors,
therapists and support staff to provide both in-person and remote
counseling services to individuals and groups, with a focus on
trauma-related symptoms. They also provide education and training
for groups and medication management for individual clients. The
Company is led by sole member Katherine L. Middleton, a licensed
clinical social worker with a masters degree in social work.
The Debtor provides no inpatient services or medical treatment and
limits its services to patients as described above. The Debtor
relies on its staff and third-party vendors to maintain the
confidentiality of its patient records, pursuant to HIPAA.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Ky. Case No. 22-50861) on September 6,
2022. In the petition signed by Middleton, member, the Debtor
disclosed up to $500,000 in both assets and liabilities.
Dean A. Langdon, Esq., at DelCotto Law Group PLLC is the Debtor's
counsel.
LUZERNE IRONWORKS: Creditors to Get Proceeds From Liquidation
-------------------------------------------------------------
Luzerne Ironworks, Inc., filed with the U.S. Bankruptcy Court for
the Middle District of Alabama a Chapter 11 Plan of Liquidation
under Subchapter V dated September 6, 2022.
The Debtor is an S-Corp incorporated under the laws of the State o
Pennsylvania. On or about December 29, 2020, Mr. Richard D. Biddle
acquired all 100 shares of Class A Stock of the Debtor from Michael
Fasciano.
While headquartered in Eufaula, Alabama, the assets of LI, Inc.
Consists of 1 parcel of commercial real estate located at 300 Sly
Street, Swoyersville, Pennsylvania 18709 as well as equipment,
fixtures and other business personal property.
Mr. Biddle considered selling the Debtor's real property.
Unfortunately, during the respective due diligence periods,
prospective buyers elected to cancel the relevant contracts.
Subsequent to the cancellation of contract, Newtek Small Business
Finance, LLC initiated a sheriff's sale of the property pursuant to
its first-mortgage position and a recorded monetary judgment. In
response, the Debtor filed its petition under Title 11 to stay said
sale and endeavor to reorganize.
The Debtor proposes to liquidate all of its assets in a reasonable,
arms-length manner. While the Debtor reserves the right and
authority to use its prudent business judgment to determine whether
one sale of all of its assets or multiple sales of its assets will
maximize the most monetary return for the benefit of its creditors,
should the Debtor elect to sell only the commercial real estate at
300 Sly Street, Swoyersville, Pennsylvania 18709 (the Debtor's
commercial real estate), it will do so for no less than $850,000.00
so as to fully satisfy Class Three; allow for an escrow of
applicable capital gain taxes; and, satisfy Class Two.
Class Seven consists of Unsecured Creditors. The Allowed Unsecured
Claims total $70,846.83. The Best Interest Analysis indicates that
after consideration of the priority claims within Class Two as well
as the secured claims within Class Three, Class Four and Class
Five, the Debtor owns insufficient equity so as to entitle Class
Seven to any distribution. That notwithstanding, should the
Debtor's sale of its assets realize equity/value over the principal
balances owed to relevant creditors within Class Two, Three, Four
and Five, the Debtor proposes to distribute such equity/value in
pro rata cash distributions among creditors with Class Seven.
Class Nine consists of ownership/equity interest of shareholder in
the Debtor. Such shareholders shall retain their ownership/equity
interest in the Debtor, except for those assets which they chose to
transfer of abandon before or after confirmation of the Plan. In
consideration, the Debtor covenants to use its future earnings for
a period of no less than 5 years to make payments under this Plan.
A full-text copy of the Liquidating Plan dated Sept. 6, 2022, is
available at https://bit.ly/3eGuKGv from PacerMonitor.com at no
charge.
Attorney for Debtor:
J. Kaz Espy, Esq.
Collier H. Espy, Esq.
The Espy Firm
P.O. Drawer 6504
Dothan, AL 36302-6504
Telephone: (334) 793-6288
Facsimile: (334) 712-1617
Email: cindi@espyfirm.com
About Luzerne Ironworks
Luzerne Ironworks, Inc. filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. M.D. Ala. Case No.
22-10501) on June 2, 2022, listing up to $10 million in both assets
and liabilities. Chris Richardson serves as Subchapter V trustee.
J. Kaz Espy, Esq., and Collier H. Espy, Esq., at The Espy Firm are
the Debtor's bankruptcy attorneys.
MACON DOOR: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Macon Door & Hardware, Inc.
125 State Street
Macon, GA 31206
Business Description: Macon Door & Hardware is a distributor of
division 8 & 10 materials in the Middle
Georgia area.
Chapter 11 Petition Date: September 9, 2022
Court: United States Bankruptcy Court
Middle District of Georgia
Case No.: 22-51044
Debtor's Counsel: Ward Stone, Jr., Esq.
STONE & BAXTER, LLP
557 Third Street
Macon, GA 31201
Tel: 478-750-9898
Fax: 478-750-9899
Email: wstone@stoneandbaxter.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Daniel L. Pike as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/ODMCDPQ/Macon_Door__Hardware_Inc__gambke-22-51044__0001.0.pdf?mcid=tGE4TAMA
MALACHI GROUP: Amends ETEHUD Secured Claims Pay Details
-------------------------------------------------------
Malachi Group Trust submitted a First Modification to Plan of
Reorganization under Subchapter V dated September 6, 2022.
A new Section is added to the Plan that provides as follows: "State
Action" means that certain action styled ETEHUD, Inc. v. Malachi
Group Trust et al., Case No. 46cv-21-551 pending in the Circuit
Court of Miller County, Arkansas, Civil Division, as of the
Petition Date.
Section 6.4 of the Plan is modified to add the following provisions
to the treatment of the Class 3 Claims of ETEHUD, Inc.:
"Notwithstanding anything to the contrary in this Plan, (1) the
Allowed Amount of the Class 3 Claim is $576,423.15 (less any
payments made by the Debtor that have not been credited in the debt
amount which shall be provided to ETEHUD within 30 days of the
Confirmation Date).
The term "indebtedness" or "Indebtedness" with regard to ETEHUD's
Claim shall mean a Class 3 Allowed Claim of this amount, and (2)
any and all payments made under this Section 6.4 to ETEHUD are
authorized.
ETHEHUD's Allowed Claim is not a Contested Claim under the Plan.
Nothing contained in this Plan shall preclude ETEHUD from seeking
pursuant to 11 U.S.C. § 506(b) the allowance of any additional
amounts to the Indebtedness, including interest, reasonable fees,
costs or charges and nothing shall prevent the Debtor from
objecting to such amounts.
Any failure by the Debtor to maintain the Insurance Coverage or the
Loss Payee Designation at any time shall constitute a default under
the Plan and, upon notice of default and failure to cure same and
to provide proof of cure to ETEHUD and its counsel within 3
business days of such notice, ETEHUD shall be authorized to proceed
with the State Action.
ETEHUD shall retain its pre-Petition Date Liens against the Real
Property and Personal Property securing its Claim and such property
shall remain encumbered by such Liens. Nothing in the financial
projections shall modify or amend the treatment of Class 3 Claims
under the Plan.
Section 8.6 of the Plan, headed "Temporary Injunction" shall not
apply to ETEHUD, the treatment of ETEHUD's Class 3 Claim under the
Plan, or ETEHUD's enforcement of any of its contractual or
statutory rights or remedies against non-debtor third parties under
any guaranty or other agreement."
Like in the prior iteration of the Plan, Class 7 Allowed General
Unsecured Claims shall be paid in full over 60 months from the
Effective Date, without interest.
The Debtor intends to make all payments required under the Plan
from available cash and income from the business operations of the
Debtor and from the Debtor's sale or refinance of the Property and
Personal Property securing Secured Claims. The business operations
are those of the Dapper, Inc. which will provide a source of
funding for the Plan. Dapper Inc. operates a restaurant in
Texarkana.
A full-text copy of the First Modified Plan dated September 6,
2022, is available at https://bit.ly/3TYxL55 from PacerMonitor.com
at no charge.
Attorneys for Debtor:
Joyce W. Lindauer
State Bar No. 21555700
Joyce W. Lindauer Attorney, PLLC
1412 Main St. Suite 500
Dallas, Texas 75202
Telephone: (972) 503-4033
Facsimile: (972) 503-4034
About Malachi Group Trust
Malachi Group Trust owns 4 rental homes which are currently not
leased, a small hotel and real property currently being used for a
restaurant. All the properties are located in Texarkana,
Arkansas and Texarkana, Texas. Malachi Group is also the 90% owner
of Dapper at Park Place, LLC, which operates The Dapper at Park
Place restaurant on the Debtor's property located at 2905 Arkansas
Blvd., Texarkana, Arkansas.
Malachi Group Trust filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. N.D. Texas Case No. 22-30471) on
March 16, 2022, listing up to $10 million in assets and up to $1
million in liabilities. Behrooz P. Vida serves as Subchapter V
trustee.
Judge Stacey G. Jernigan oversees the case.
Joyce W. Lindauer Attorney, PLLC, serves as the Debtor's legal
counsel.
MICRON DEVICES: Trustee Hires Susan E. Kaufman as Special Counsel
-----------------------------------------------------------------
Tarek Kirk Kiem, the Subchapter V trustee appointed in Micron
Devices, LLC's Chapter 11 case, seeks approval from the U.S.
Bankruptcy Court for the Southern District of Florida to employ the
Law Office of Susan E. Kaufman, LLC as special litigation counsel.
The firm will assist the trustee with due diligence, investigation,
analysis, and to the extent appropriate, pursuit of: (i) claims
against the Debtor's current or former officers, directors,
managers, employees, control persons, shareholders, members, and/or
owners; (ii) claims against the Debtor's current or former
professionals, including attorneys, accountants, and auditors;
(iii) Chapter 5 avoidance claims in respect of or related to the
insider claims and professional liability claims; and (iv) any
other litigation claims as mutually agreed to by the trustee and
the firm.
The firm will be paid at these rates:
Susan E. Kaufman, Esq. $500 per hour
M. Clare McCudden, Esq. $400 per hour
January Eaton Reif, Paralegal $275 per hour
Susan Kaufman, Esq., a partner at the Law Office of Susan E.
Kaufman, LLC, disclosed in a court filing that the firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Susan E. Kaufman, Esq.
Law Office of Susan E. Kaufman, LLC
919 N. Market Street, Suite 460
Wilmington, DE 19801
Email: skaufman@skaufmanlaw.com
About Micron Devices, LLC
Micron Devices, LLC is a Miami Beach, Fla.-based company that
manufactures medical equipment and supplies.
Micron Devices filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla.
Case No. 20-23359) on Dec. 7, 2020, disclosing total assets of
$2,520,764 and total liabilities of $6,254,656. Laura Perryman,
manager, signed the petition.
Judge Laurel M. Isicoff oversees the case.
Michael Gulisano, Esq., at Gulisano Law, PLLC serves as the
Debtor's legal counsel.
Tarek Kirk Kiem is the Subchapter V trustee appointed in the
Debtor's Chapter 11 case. The trustee tapped Furr Cohen, P.A. as
legal counsel and Cimo Mazer Mark, PLLC as special counsel.
MILLENNIUM SERVICES: Seeks to Hire BransonLaw PLLC as Counsel
-------------------------------------------------------------
Millennium Services of Florida LLC seeks approval from the U.S.
Bankruptcy Court for the Middle District of Florida to employ
BransonLaw, PLLC as counsel.
The firm will provide these services:
a. prosecute and defend any causes of action on behalf of the
Debtor, and prepare all necessary applications, motions, reports,
and other legal papers;
b. assist in the formulation of a plan of reorganization; and
c. provide all other services of a legal nature.
The firm will be paid at hourly rates ranging from $200 to $395 and
will be reimbursed for reasonable out-of-pocket expenses incurred.
The Debtor paid the firm an advance fee of $30,000.
Jeffrey Ainsworth, Esq., a partner at BransonLaw, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Jeffrey S. Ainsworth, Esq.
BransonLaw, PLLC
1501 E. Concord St.
Orlando, FL 32803
Tel: (407) 894-6834
Fax: (407) 894-8559
Email: jeff@bransonlaw.com
About Millennium Services of Florida LLC
Millennium Services of Florida, LLC --
http://www.millenniumservicesfl.com/-- provides residential and
commercial landscaping services.
Millennium Services of Florida filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 22-02173) on June 20, 2022, listing up to $1 million in
assets and up to $10 million in liabilities. Robert Altman is the
Subchapter V trustee.
Judge Tiffany P. Geyer oversees the case.
Jeffrey S. Ainsworth, Esq., at BransonLaw, PLLC is the Debtor's
counsel.
MILLENNIUM SERVICES: Wins Cash Collateral Access Thru Sept 28
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida
authorized Millennium Services of Florida, LLC to use cash
collateral in accordance with the budget on an interim basis
through the next hearing on the Motion set for September 28, 2022
at 10 a.m.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court, including rent; and (b) the
current and necessary expenses as determined by the Trustee or his
designee.
The order will immediately terminate in the event the trustee
appointed to the Debtor's case is removed and the Debtor reinstated
as a debtor-in-possession pursuant to Bankruptcy Code Section
1185.
As adequate protection, Assurance Mezzanine Fund III, L.P. will
have a perfected post-petition lien against cash collateral to the
same extent and with the same validity and priority as their
respective prepetition liens, without the need to file or execute
any documents as may otherwise be required under applicable
non-bankruptcy law.
A copy of the order is available at https://bit.ly/3qm00gx from
PacerMonitor.com.
About Millennium Services of Florida
Millennium Services of Florida, LLC --
http://www.millenniumservicesfl.com/-- provides residential and
commercial landscaping services.
Millennium Services of Florida filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 22-02173) on June 20, 2022, listing up to $1 million in
assets and up to $10 million in liabilities. Robert Altman is the
Subchapter V trustee.
Judge Tiffany P. Geyer oversees the case.
Kenneth D. Herron, Jr., Esq., at Herron Hill Law Group, PLLC is the
Debtor's counsel.
NERAM GROUP: Seeks Cash Collateral Access Thru Feb 2023
-------------------------------------------------------
Neram Group Inc. asks the U.S. Bankruptcy Court for the Central
District of California, Santa Ana Division, for authority to use
cash collateral and provide adequate protection.
The Debtor seeks to use cash collateral to pay the Debtor's
ordinary and necessary expenses for the period from October 1, 2022
to February 1, 2023 as set forth in the budget.
There are five alleged secured creditors that at one time may have
claimed to be secured by the Debtor's property, a 12-unit apartment
house located in Ontario, California.
The Debtor has owned the Property for many years. At one time, the
Property allegedly fully or partially secured several loans. Due to
some unusual circumstances, there were and are a number of alleged
creditors claiming they had secured claims of the Property. These
claims originally included in no particular order: (1) M&A
Enterprises, LLC, (2) SMN LO, Inc., (3) Han Tran, and (4) Arturo
Leyva & Juana Leyva. The amounts, priority and secured status of
all of the claims was and is in dispute.
Some of the alleged secured claims ended up suing each other in the
California Superior Court in a case styled, SMN LO. INC. vs. M&A
Enterprises. LLC. A Judgment was entered in the case (after an
appeal) that established part of the priority of some of the
secured claims and disallowed the secured claim of M&A as it had
lost the security for its claim.
Arturo and Juana Leyva appear to be judgment lien claimants, albeit
disputed as to amount. This does not give them cash collateral
rights.
The recorded documents show Hanh 'Iran holds a recorded trust deed
of $200,000 in face amount. Hahn Tran asserts that she holds an
assignment of rents and Debtor has reached an agreement with her to
make monthly adequate protection payment to her in the amount of
$1,000 which are included in the Budget.
The recorded documents also show that SMN LO, Inc. holds an alleged
recorded trust deed of $110,000 in face amount. The amounts and
alleged security of the remaining alleged secured claims remains in
dispute. The Debtor has been in negotiations with SMN LO but has
not reached a settlement as of this date. The Debtor is continuing
to negotiate with all of the alleged creditors regarding these
issues.
The Debtor believes that the secured claims against the Property
should currently be estimated as follows:
Claimant Amount
-------- ------
County of San Bernardino Tax Collector $62,320
SMN LO $170,000
* (apparently secured)[currently there is
no evidence of an enforceable assignment
of rents].
Han Tran $314,000
- $345,000
* (apparently secured) [creditor contends
that it has an enforceable assignment
of rent]
Leyva's $300,000
* (per tentative settlement) [no assignment
of rents]
M&A (not secured) $_______
During the pendency of the dispute over priority in the state court
among the alleged creditors, M&A, which had been prior to the
bankruptcy filing collecting the rents since 2017 apparently did
not pay anyone during its stewardship. Thus, foreclosure
proceedings were expected to be imminent.
The Debtor filed its present bankruptcy proceeding to stop these
expected processes. The Debtor intends to either (a) refinance the
Property; or (b) sell the Property and pay its creditors, once the
validity, amount, and priority of the claims can be determined.
The Debtor contends the value of the Properly ($2,500,000) provides
more than adequate protection for all of the secured property
claims and, as such, at this time no adequate protection payments
should be required for any of the alleged secured claims.
The Debtor has filed a plan of reorganization and a motion to hire
a broker and list the Property and expects to be able to sell or
refinance the Property in the next 9 months with all liens
attaching to the proceeds to the extent they are legitimate. The
sale or refinance is expected to generate sufficient funds to pay
the allowed creditors. The Debtor has also been in negotiation with
all of the creditors and anticipates that it will be able to
resolve the claims by settlement or objections to claims and will
then be able to pay the creditors.
The Debtor proposes that replacement liens would be issued in the
same validity, extent and priority as existed on the filing date.
About Neram Group
Orange, Calif.-based Neram Group, Inc. is the fee simple owner of a
12-unit apartment building located at 1211 N. El Dorado Ave,
Ontario, Calif., having a comparable sale value of $2.5 million.
Neram Group filed a petition for Chapter 11 protection (Bankr. C.D.
Calif. Case No. 22-10268) on Feb. 16, 2022, listing $2,802,000 in
assets and $1,675,000 in liabilities. Humberto Perez Figuerola,
chief executive officer, signed the petition.
Judge Scott C. Clarkson oversees the case.
The Debtor tapped the Law Offices of Robert M. Yaspan as bankruptcy
counsel.
NEW YORK HAND: Unsecureds Will Get 5% of Claims in 5 Years
----------------------------------------------------------
New York Hand & Physical Therapy, PLLC, filed with the U.S.
Bankruptcy Court for the Southern District of New York an Amended
Plan of Reorganization dated September 6, 2022.
New York Hand & Physical Therapy PLLC. was incorporated in 2013 and
operates as a hand and physical therapy business in Poughkeepsie,
New York.
As a result of Covid-19, the debtor experienced a severe downturn
in business, greatly impacting the debtor's cash flow. The
subchapter V case was filed to provide New York Hand & Physical
Therapy PLLC. the opportunity to restructure the secured obligation
with Tompkins Community Bank f/k/a Mahopac Bank.
Class 1 consists of Administrative Claims. Class 1 claims shall be
paid in full or in accordance with an agreement between the debtor
and the claimant. At the present time, it is estimated that
administrative expenses with consist of the following: (1)
approximately $10,000.00 in attorneys' fees, expenses and
disbursements to the firm of Salts Law Office, less the
pre-petition retainer fee and costs paid by the debtor in the sum
of $4000.00; (2) approximately $5,000.00 in fees owed to the
Sub-Chapter V Trustee, Charles Persing; and (3) U.S. Trustee
quarterly fees, if any, shall be paid on the effective date of the
Plan and shall continue to be paid post-confirmation, pursuant to
28 U.S.C. §1930, until such time as the Court enters a final
decree closing the case. Total unpaid administrative debt is
estimated at $11,000.00.
Class 2 consists of the Secured Claim of Tompkins Community Bank
f/k/a Mahopac Bank ("TCB"), with respect to the note and security
agreement as perfected by a UCC-1 filing, filed on December 22,
2014 and continued on July 11, 2019. Class 2 consists of the
Secured Claim of TCB, evidenced by the note and security agreement
secured by substantially all of the debtor's assets, perfected by a
UCC-1 filing, filed on July 11, 2019. As per the Interim
Stipulation and Agreement. between the Debtor and TCB, the Secured
Claim of TCB shall be fixed at $128,966.00 with interest to accrue
at 5% over a 5-year term (the "Loan Amount"). Payment of $2,000.00
shall be made every month on the 20thday of the month throughout
the term of the Plan. Upon completion of the Plan, the balance due
of the Loan Amount shall be paid in a lump sum on or before the end
of the Plan, or on the 20thday on the 61st month after confirmation
of the Plan, whichever is earlier.
Class 3 consists of the Allowed Unsecured Claims of non-insider
unsecured claimants of the debtor, including the general unsecured
claims of Poughkeepsie K Holdings, LLC., Practice Care Management
Group and Mackey Butts & Whalen LLP. The Class 5 Claims shall be
paid pro rata from the debtor's projected disposable income, on a
bi-yearly basis (June 15 and December 15), over a period of 5 years
without interest. The claims in Class 5 total the sum of
approximately $93,567.11. The debtor anticipates a distribution to
Class 5 claimants of 5%, or a total of $4,678.35. This results in
bi yearly payments to Class 5 claimants of $467.84. The Class of
Holders of General Unsecured Claims is a class that is impaired.
Class 4 consists of the interest of the principal of the debtor,
Patrick Clough. The holder of the Class 4 interest shall retain his
interest.
Class 5 consists of the unsecured priority claim of the Internal
Revenue Service. Class 5 claim will be paid in full as it consists
of Unsecured Priority Claim of the Internal Revenue Service for
WT-FICA and FUTA taxes in the amount of $5,074.14. The Debtor will
makes bi-quarterly distributions in the approximate amount of
$507.41 over a period of 5 years with interest.
The debtor's Chapter 11 Plan will be implemented by revenues
generated and received in the ordinary course and operation of the
debtor's business.
A full-text copy of the Amended Plan dated September 6, 2022, is
available at https://bit.ly/3B5WyLO from PacerMonitor.com at no
charge.
About New York Hand & Physical Therapy
New York Hand & Physical Therapy PLLC is a Poughkeepsie, New
York-based physical therapy business. New York Hand & Physical
Therapy -- http://www.NewYorkHand.com/ --is committed to
providing the best physical therapy experience with the highest
quality of care for optimal results. Patrick Clough PT CHT,
owner of New York Hand & Physical Therapy, opened the private
practice in response to the needs of the local community.
New York Hand & Physical Therapy PLLC filed its voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y.
Case No. 21-35911) on Dec. 23, 2021. Patrick Clough, president,
signed the petition. Devon Salts, Esq., at the Salts Law Office,
serves as the Debtor's legal counsel.
NEWAGE INC: Sept. 12 Deadline Set for Panel Questionnaires
----------------------------------------------------------
The United States Trustee is soliciting members for committee of
unsecured creditors in the bankruptcy case NewAge Inc., et al.
If a party wishes to be considered for membership on any official
committee that is appointed, it must complete a Questionnaire
available at https://bit.ly/3cXmgdD and return by email it to John
Schanne -- John.Schanne@usdoj.gov -- at the Office of the United
States Trustee so that it is received no later than 4:00 p.m., on
Sept. 12, 2022.
If the U.S. Trustee receives sufficient creditor interest in the
solicitation, it may schedule a meeting or telephone conference for
the purpose of forming a committee.
About NewAge, Inc.
NewAge Inc. (Nasdaq: NBEV) is a purpose-driven firm dedicated to
inspiring the planet to Live Healthy. The Utah-based Company
commercializes a portfolio of organic and healthy products
worldwide primarily through a direct-to-consumer (D2C) route to
market distribution system across more than 50 countries. The
company competes in three major category platforms including health
and wellness, inner and outer beauty, and nutritional performance
and weight management -- through a network of exclusive independent
Brand Partners, empowered with the leading social selling tools and
technology available worldwide. On the Web:
http://www.NewAgeGroup.com/
NewAge Inc. and certain of its subsidiaries, Ariix LLC, Morinda
Holdings, Inc., and Morinda, Inc., sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10819)
on August 30, 2022.
NewAge reported total assets of $310,902,000 against total
liabilities of $149,447,000 as of the bankruptcy filing.
The Debtors tapped Greenberg Traurig, LLP as bankruptcy counsel and
SierraConstellation Partners LLC as financial advisor. Houlihan
Lokey Capital, Inc., conducted the prepetition marketing process
for the Debtors. Stretto is the claims agent.
OSG GROUP: Moody's Assigns Caa2 CFR Following Bankruptcy Emergence
------------------------------------------------------------------
Moody's Investors Service assigned ratings to OSG Group Holdings,
Inc. following its emergence from bankruptcy. Moody's assigned to
OSG a Caa2 corporate family rating and a Caa2-PD probability of
default rating, as well as a Caa1 rating to the amended and
extended senior secured first lien credit facility at wholly-owned
borrower entity Output Services Group, Inc. The outlook is stable.
The credit facility was amended on August 30, 2022, to, among other
things, extend the maturity dates on the revolver and term loan
debt to June 2025 and June 2026, respectively. The amendment also
increased the interest rate on the first lien facilities and allows
for a portion to be paid in kind ("PIK").
The assignments reflect Moody's view that weak operating
performance will persist, leading to sustained free cash flow
deficits and very high debt-to-EBITDA above 8x through the end of
2023. Despite the $134 million or roughly 16% reduction of funded
debt following the bankruptcy reorganization, Moody's views that
absent additional debt reduction or significant EBITDA expansion,
OSG's capital structure remains at elevated risk for potential
future debt restructuring.
Governance considerations are a key driver of the rating actions,
given Moody's anticipation for evolving financial strategies
following its prepackaged bankruptcy exit and resulting ownership
and control by its former second lien creditors following the
execution of its prepackaged Chapter 11 filing.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: OSG Group Holdings, Inc.
Corporate Family Rating, Assigned Caa2
Probability of Default Rating, Assigned Caa2-PD
Issuer: Output Services Group, Inc.
GTD Senior Secured 1st Lien Term Loan, Assigned Caa1 (LGD3)
GTD Senior Secured 1st Lien Revolving Credit Facility, Assigned
Caa1 (LGD3)
Outlook Actions:
Issuer: OSG Group Holdings, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
OSGs' Caa2 CFR broadly reflects the company's very high
debt-to-EBITDA leverage of 10x expected by Moody's pro forma for
the debt restructuring at year end 2022 that is expected to remain
above 8x through 2023. Cash on hand of $44.2 million pro forma for
the exit financing will enable the company to operate through the
next 18 months, but the company may face a liquidity shortfall by
late 2023 without significant improvement in earnings and cash
flow. Moody's expects that the company will generate free cash flow
deficits of roughly $20 million during the next 12 months, but
should generate break even free cash flow in 2023. Revenue and
profitability will remain under pressure as the company faces
secular demand shifts away from physical print and mail services
and rising input costs for paper and labor. The company will also
need to increase investment spending in order to grow its digital
offerings. Moody's expects revenue will be flat in 2022 before
returning to growth in the low single digit percentages in 2023
with declines in its UK customer experience business offset by
growth in the North American digital offerings.
All financial metrics cited reflect Moody's standard adjustments.
Moody's considers OSG's liquidity weak and expects that the company
will rely on its existing cash balance. Moody's expects around $20
million of negative free cash flow over the next 12 months and
considers cash interest of about $52 million high relative to the
company's expected EBITDA in 2023 of nearly $100 million. The
company also has capital expenditure requirements of about 5% of
revenue or $28 million over the next twelve months. The $20 million
revolving credit facility due 2025 is fully drawn and is not
expected to provide any meaningful liquidity. The net senior
secured first lien leverage financial coverage will be tested
starting December 31, 2023, at 7.5x, with step downs thereafter.
There will also be a $15 million minimum liquidity covenant tested
monthly. Moody's considers OSG's prospective ability to remain in
compliance with these financial tests uncertain, given expected
cash flow losses and business challenges.
The Caa1 (LGD3) ratings assigned to the senior secured first lien
credit facilities reflect their senior-most position in the capital
structure and the loss absorption cushion provided by the unrated
$70 million unsecured subordinated notes due 2027 and other
unsecured obligations of the company. The instrument rating
reflects the Caa2-PD PDR and an expected average family recovery
rate of 50% at default.
The stable outlook reflects Moody's view that the company has
sufficient cash on hand to operate the business during the next 12
months, which provides time for management to implements its
turnaround plan.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could result in a downgrade include weaker than
expected liquidity or if the risk of default rose further such that
its likelihood became more imminent, including the potential for a
distressed exchange of any portion of its debt.
Factors that could lead to an upgrade include sustained profitable
revenue growth and improving free cash flow trends.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Headquartered in Ridgefield Park, New Jersey, Output Services
Group, Inc. provides printing and mailing of customer invoices and
bills, critical communications and customer engagement solutions
services to multiple end markets including financial services,
healthcare, education, telecom, HOA/property management and other
accounts receivable management organizations in the US. The company
is privately held by a lender group comprised of the company's
previous secured creditors, Pemberton Capital Advisors and Apogem
Capital, and private equity sponsor Aquiline Capital Partners.
Moody's expects 2022 revenue of about $600 million.
PERMIAN RESOURCES: S&P Upgrades ICR to 'B+' on Merger Close
-----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Permian
Resources Corp. to 'B+' from 'B' and removed it from CreditWatch
where S&P placed it with positive implications on May 20, 2022.
S&P said, "We also raised the issue-level ratings on the unsecured
debt to 'BB-' from 'B+'. Our '2' recovery rating on the unsecured
notes is unchanged, indicating our expectation for substantial
(70%-90%; rounded estimated: 85%) recovery of principal in the
event of a payment default.
"Our stable outlook reflects our expectation that the company will
increase production and proved reserves over the next one to two
years, generating significant positive free cash flow and
maintaining modest credit metrics. We expect the company to balance
its use of free cash flow between debt repayments and shareholder
rewards."
Centennial Resource Development Inc. and Colgate Energy Partners
III LLC have closed their merger transaction and the combined
company has been renamed Permian Resources Corp.
Permian benefits from its improved scale following the close of the
merger. The combined entity is the largest pure-play exploration
and production (E&P) company in the Delaware basin, holding a
180,000-net-acreage position. Following the merger, the combined
entity's proved developed reserves are in line with its 'B+' rated
peers at nearly 555 million barrels of oil equivalent (MMBoe) on a
pro forma year-end 2021 basis.
The company is currently operating an eight-rig drilling program
that it expects to decrease to a seven-rig program in November.
Based on this activity level, Permian Resources expects to maintain
average production in the 140 MMboe per day (/d)-150 MMboe/d range
in the fourth quarter of 2022 and increase the average production
by 5%-10% in 2023. In addition, S&P expects Permian Resources to
generate meaningful synergies as the two companies integrate, which
should help to improve its margins going forward.
However, its highly concentrated footprint in the Delaware basin
makes the company's profitability susceptible to unforeseen
regional risks, supply and demand-driven price differentials,
takeaway constraints, or regulatory changes.
Permian Resources assumed Colgate Energy's debt. Permian Resources
Corp. assumed $1.4 billion of Colgate's debt, including $700
million of 5.875% senior unsecured notes due 2029 and $300 million
of 7.75% senior unsecured notes due 2026, as well as about $400
million of the Colgate's outstanding borrowings on its
revenue-based lending facility. Colgate's unsecured notes are pari
passu with the existing Permian Resources' unsecured notes. The
company's next near-term maturity is not until 2026.
Permian's liquidity has improved, and it has announced a formal
return of the capital program. Permian's liquidity is also improved
on the back of the merger, with the revolving credit facility
extended to 2027 and its commitments increasing to $1.5 billion.
S&P said, "We expect the company to reduce the outstanding
borrowings under its credit facility using its free cash flow in
the near term. In addition, the company recently announced its
updated return of capital program comprising a base dividend of
about $30 million per quarter, as well as variable dividends and
share buybacks as part of its capital allocation strategy. We do
not expect the company to increase total debt levels to support its
returns to shareholders."
S&P said, "We expect Permian's financial performance to be strong;
however, as a result of the merger, Permian's financial risk
profile is now constrained by financial sponsor ownership. We
project strong credit measures for Permian Resource Corp. over the
next two years, including average funds from operations (FFO) to
debt of greater than 60% and debt to EBITDA of 0.5x-1.5x. However,
the financial risk profile is constrained by our view of financial
sponsor ownership. The largest holders are Pearl Energy
Investments, NGP Energy Capital, and Riverstone Holdings,
accounting for a nearly 50% interest in the company. Combined, the
financial sponsors hold two of the 11 board seats and company
management holds three seats while the remaining seats are held by
six independent directors.
"Our stable outlook reflects our expectation that the company will
increase production and proved reserves over the next one to two
years, generating significant positive free cash flow and
maintaining modest credit metrics. We expect the company to balance
its use of free cash flow between debt repayment and shareholder
rewards.
"We could lower our rating on Permian Resources Corp. if FFO to
debt approached 45%, which could cause us to reassess our view of
the company's financial policy. This would most likely occur if the
company experienced difficulties integrating its operations or
should commodity prices weaken below our current expectations and
the company not take steps to reduce its capital spending. In
addition, we could lower our rating if the company failed to reduce
its outstanding borrowings on its credit facility in favor of
shareholder returns.
"We could raise our rating on Permian Resources Corp. if it
increased production and reserves more in line with higher-rated
peers while maintaining FFO to debt above 60% and debt to EBITDA of
about 1.5x. In addition, we could consider raising our rating if we
no longer viewed the company as being controlled by financial
sponsors."
ESG credit indicators: To E-4, S-2, G-3; From E-4, S-2, G-2
Following the successful completion of the merger, S&P is changing
its governance ESG score to 'G-3' from 'G-2' due to the significant
private equity sponsorship of the company.
Governance is a moderately negative consideration in our credit
rating analysis of Permian Resources. S&P said, "Our assessment of
the company's financial risk profile as aggressive reflects its
corporate decision-making that prioritizes the interest of its
controlling owners, which is in line with our view of the majority
of rated entities owned by private-equity sponsors. Our assessment
also reflects private-equity sponsors' generally finite holding
periods and focus on maximizing shareholder returns. Environmental
factors are a negative consideration in our credit rating analysis
on Permian Resources Corp. because the E&P industry contends with
an accelerating energy transition and adoption of renewable energy
sources. We believe falling demand for fossil fuels will lead to
declining profitability and returns for the industry as it fights
to retain and regain investors that seek higher return investments.
To help address these concerns, on a stand-alone basis, Centennial
had reduced its percentage of natural gas flared (0.8% in the
fourth quarter of 2021), increased its recycled water usage to 48%,
reduced its trucked produced water (1%), and completed an electric
substation in Texas that has enabled it to transition a majority of
its well sites to electric power. Colgate had reduced its
percentage of natural gas flaring to 0.9% in the fourth quarter of
2021, as well as reduced the greenhouse gas emissions to 13.3 in
2021."
PICARD MIDCO: S&P Assigns 'B' ICR, Outlook Stable
-------------------------------------------------
S&P Global Ratings assigned Picard Midco Inc. a 'B' issuer credit
rating and, at the same time, raised its issuer credit rating on
Balboa Intermediate Holding LLC and TIBCO Software Inc. to 'B' from
'B-'.
S&P said, "We also assigned our 'B' issue-level and '3' recovery
ratings to the proposed senior secured first-lien debt. Our
issue-level and recovery ratings on TIBCO Software's existing debt
are unchanged because we expect them to be repaid in connection
with the transaction."
The stable outlook reflects S&P's expectations for the company,
despite having weak credit metrics and significant debt service
requirements at the close of transaction, to integrate the TIBCO
and Citrix businesses successfully and achieve its aggressive
cost-savings plan, generating increased levels of profitability and
cash flow to reduce adjusted leverage to the 9.5x by the end of
fiscal 2023.
Affiliates of Vista Equity Partners Management LLC and Elliott
Investment Management L.P. have created Picard Midco Inc. under
Balboa Intermediate Holding LLC to facilitate their pending
acquisition of Citrix Systems Inc. and subsequent merger with TIBCO
Software Inc. Upon completing these transactions, S&P expects
Picard to own 100% of the equity interests of both TIBCO and Citrix
and report all of their assets and obligations in its financials.
S&P said, "The rating action reflects our expectations for the
pending acquisition of Citrix Systems Inc. and subsequent plan of
the merger with TIBCO, given that all shareholder and regulatory
approvals have been satisfied and with affiliates of Vista Equity
Partners Management LLC and Elliott Investment Management L.P.
formally launching their debt financing plans, to close by the end
of September."
S&P's assessments of the stand-alone TIBCO and Citrix businesses
have historically balanced the following factors.
Positive considerations:
-- Both maintain a good presence in highly fragmented and
competitive markets, including TIBCO in enterprise data and Citrix
digital workspace and application delivery.
-- As Citrix and TIBCO generate 91% and 88% of their revenues
under recurring subscription and maintenance contracts, they have
significant revenue visibility.
-- High switching costs as products become an increasingly
mission-critical part of IT infrastructure.
-- Both companies enjoy long-tenured relationships with diverse
customers across a broad set of end markets.
-- Both companies have above-average profitability based on
historical EBITDA margins in the 35% area.
Negative considerations:
-- The market for enterprise data, digital workspace and
application delivery solutions are all highly competitive and
includes competitors with more extensive product offerings and
greater financial resources.
-- Ongoing requirements for significant research and development
(R&D) spending as technological advances and rapidly changing
customer needs and consumption models expand the number of
alternatives customers have.
-- Both companies have seen only modest organic growth in recent
years, despite enjoying favorable underlying long-term secular
trends.
-- Challenges and the pace of their respective transitions from a
license to a subscription business model have not been without
challenges and, in our view, have occurred at a slower rate
relative to other enterprise software providers and remain subject
to execution risk, despite being in more advanced stages compared
to recent years.
-- Combining TIBCO and Citrix creates a more significant
enterprise software provider with broader product diversification,
but it should not alter the market positioning of these respective
products.
S&P said, "We think the motivations of adjoining Citrix with Tibco
are primarily financial instead of product- or technology-driven
due to our belief there is minimal overlap between the two sets of
solutions. Although we think the merger is unlikely to change the
market position or competitive advantages structurally previously
ascribed to Citrix and TIBCO as stand-alone companies, the
economies of scale it will yield leads us to view the business of
the combined company as slightly better. Specifically, based on pro
forma revenue of roughly $4.5 billion and our view that integration
of the two businesses will be successful, we see good prospects to
reduce expenses by eliminating redundant general and administrative
costs and operating more efficiently with its product investments
and go-to-market activities, thereby improving profitability over
time. We also believe the mission-critical nature of both sets of
products and the roles they play in distributed work environments
and aggregating and unlocking the value of increasing amounts of
data in the context of digital transformation, enhanced exposure
and potentially better relationships with now more than 400,000
customers, could unlock cross-selling and wallet share gains.
"This modest benefit gets overshadowed by the aggressive levels of
debt utilized in financing the transaction, but we expect credit
metrics to improve as cost savings are recognized.
"We assume Picard will have $15 billion of funded debt in its
capital structure. This includes the proposed $3.0 billion term
loan A due 2028, $4.05 billion USD term loan B due 2029, $500
million EUR term loan B due 2029, as well as our expectation that
remaining debt financing will be composed of senior secured
first-lien notes and a senior secured second-lien term loan. The
company is also issuing $2.5 billion of payment-in-kind (PIK)
preferred equity that we will treat as debt-like obligation for
analytical purposes because it is callable and carries a high PIK
margin, potentially creating an incentive for redemption with
proceeds from new debt. In addition, we also treat liabilities from
Citrix's pre-transaction restricted stock and stock-option
programs, estimated to be about $300 million, as they will require
cash payments over the next several years as vesting requirements
are satisfied. Based on assumed adjusted debt balances of roughly
$17.5 billion and full-year pro forma adjusted EBITDA for the
combined entities of around $1.5 billion, we estimate that Picard's
starting leverage will be around 11.5x, which includes about 1.5x
of PIK. We believe this should improve to around 9.5x area by
fiscal 2023 as cost savings are recognized and profitability
improves as a result. Moreover, although we treat the preferred
equity as debt-like obligation, it does not meaningfully detract
from our view of Picard's overall credit quality, since it is
subordinated to the company's funded debt, does not require cash
payments, and could potentially be defeased through the
monetization of Wrike assets which sit outside of the credit
group."
Management is targeting significant cost reductions, which, if
achieved, should translate to higher profitability, cash flow
generation, and, ultimately, stronger credit metrics.
Picard's management team and financial sponsors believe this
transaction presents a significant opportunity to reduce costs and
operate more efficiently. Specifically, by eliminating duplicative
general and administrative (G&A) functions, offshoring some of its
R&D efforts, and driving sales and marketing efficiency gains
(refining how its approach to serving larger customers, and
expanding relationships with channel partners), it aims to generate
roughly $491 million in combined company cost savings (plus benefit
from $115 million of cost savings Citrix has already realized under
its Nov. 2021 restructuring program) and thinks it can fully
achieve them by year-end 2023. S&P said, "We believe the strategy
appears feasible and assume the management team, based on a track
record of implementing similar cost-saving strategies with mature
enterprise software providers, has the expertise and ability to do
so. At these levels, our estimated EBITDA for the combined entity
at closing of roughly $1.6 billion would be about to $2.2 billion,
equating to S&P Global Ratings' adjusted EBITDA margins in the 47%
area and more robust credit metrics. That said, this also requires
successful integration of the two businesses, which given the size,
is not without risk. We also believe this timeline may be
aggressive, and since it will likely require significant cost to
achieve, the total savings will probably not be evident in the
financial results until the end of fiscal 2024 or later."
Debt service requirements will initially represent a significant
proportion of the company's cash flow generation capacity, but S&P
thinks it can compensate for this risk as it works to implement and
achieve its cost-savings targets.
S&P said, "We estimate Picard's annual cash interest outlays
required on the roughly $15 billion debt in the capital structure
will be approximately $1.2 billion, and two quarters after closing,
its term loans will require mandatory quarterly principal payments
equal to about $80 million annually for two years increasing to
about $100 million annually after that. In our view, these required
outflows likely leave limited capacity to deleverage through
voluntary debt repayments. We also think it limits the operational
and financial flexibility to withstand macroeconomic pressures and
rising interest rates. Notwithstanding, we expect the company will
seek to implement hedges on a portion of its variable-rate debt,
which despite being expensive to implement, compensates for some of
this limited flexibility. We also think Citrix and TIBCO's tenured
incumbent position, the mission-critical nature and high switching
costs we attribute to its products, and the benefits of a highly
recurring revenue model and variable-cost structure should help
further cushion some of the potential adverse effects in a
recession.
"The stable outlook reflects our expectations for the company,
despite having weak credit metrics and significant debt service
requirements at the close of transaction, to integrate the TIBCO
and Citrix businesses successfully and achieve its aggressive
cost-savings plan, generating increased levels of profitability and
cash flow to reduce adjusted leverage to the 9.5x area by the end
of fiscal 2023.
"We could consider lowering our ratings on Picard if its operating
performance falls short of our expectations, and we expect the
company to sustain either S&P Global Ratings-adjusted debt to
EBITDA above 9x or free operating cash flow (FOCF) to debt below
3%, respectively. This could occur if revenue declines due to
competitive or macro pressures, the company underperforms its
cost-savings plans, experiences larger-than-expected restructuring
costs, or generates FOCF at levels that only modestly exceed its
debt service requirements.
"While unlikely over the next 12 months, we could raise our rating
on Picard if, through improved profitability and cash flow
generation, it can reduce leverage below 7x and generate FOCF to
debt above 5% on a sustained basis. Picard could achieve this by
meeting its cost-saving plans, growing its subscription revenue,
and adhering to relatively conservative financial policies."
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 Picard's highly leveraged 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."
PILATES AND YOGA: Seeks Cash Collateral Access
----------------------------------------------
Pilates and Yoga Center, LLC asks the U.S. Bankruptcy Court for the
Southern District of Florida, West Palm Beach Division, for
authority to use cash collateral to maintain the business.
First Citizens Bank & Trust holds a security interest in all of the
Debtor's assets including all accounts, receivables, future,
fixtures, equipment, etc.
Pilates of Palm Beach also holds a security interest in these
items. Its security interest is inferior to First Citizens Bank &
Trust.
The estimated value of the secured assets at the time of the filing
of the case was $13,500.
The loans were obtained pre-COVID-19. Once COVID-19 struck, the
business operation was shut down resulting in a default on the
loans. Business is starting to come back, but at a slower rate than
in 2019.
The Debtor's individual owners filed a personal Chapter 13 case
(Case Number 21-17482-EPK) in which the creditors filed claims. In
that case, the two main creditors in this case are also creditors
in the Chapter 13. The owners are dedicating $992 per month. First
Citizens is receiving approximately $604 per month in that case.
Pilates of Palm Beach is receiving approximately $252 per month.
A copy of the motion and the Debtor's monthly budget is available
at https://bit.ly/3qs7ChA from PacerMonitor.com.
The Debtor projects $24,00 in net operating income and $23,699 in
total expenses.
About Pilates and Yoga Center, LLC
Pilates and Yoga Center, LLC owns and operates two pilates and yoga
studios. The studios are operated in leased locations at 901 N
Congress Ave, Unit D-103, Boynton Beach, FL and 223 Sunset Ave, Ste
160, Palm Beach, FL.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-16923-MAM) on
September 6, 2022. In the petition signed by Holly Andronicescu,
managing member, the Debtor disclosed up to $100,000 in assets and
up to $500,000 in liabilities.
Brian K. McMahon, Esq. at Brian K. McMahon, PA is the Debtor's
counsel.
PRINCIPLE ENTERPRISES: Case Summary & 20 Top Unsecured Creditors
----------------------------------------------------------------
Debtor: Principle Enterprises, LLC
6000 Towne Center Blvd
Canonsburg, PA 15317
Business Description: The Debtor offers support activities for
mining industry.
Chapter 11 Petition Date: September 9, 2022
Court: United States Bankruptcy Court
Western District of Pennsylvania
Case No.: 22-21779
Debtor's Counsel: Daniel R. Schimizzi, Esq.
WHITEFORD, TAYLOR & PRESTON, LLP
11 Stanwix Street
Suite 1400
Pittsburgh, PA 15222
Tel: 412-275-2401
Email: dschimizzi@wtplaw.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Angelo Mark Papalia, president of AMP
Holdings, Inc., sole member.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/E3BH4EI/Principle_Enterprises_LLC__pawbke-22-21779__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Automotive Rentals, Inc. Trade Debt $494,107
PO Box 8500-4375
Philadelphia, PA 19178
Tel: 866-274-1034
Email: aripartners@arifleet.com
2. Bridgestone Trade Debt $207,415
Hosepower LLC
PO Box 947777
Atlanta, GA 30394
Jason Weigand, CFO
Tel: 904-264-1267
Email: jweigand@hosepower.com
3. ENGS Commerical Finance Loan $193,998
One Pierce Place
Suite 1100
Itasca, IL 60143
Tel: 800-680-3002
Email: customerservice@engsfinance.com
4. First National Bank Trade Debt $68,004
4140 E. State St.
Hermitage, PA 16148
Legal Department
Tel: (724) 983-4856
5. Ford Motor Credit Loan $561,341
PO Box 220564
Pittsburgh, PA 15257
Tel: 800-727-7000
6. Kenworth Northeast Truck parts $111,743
Group, Inc. and repairs
100 Commerce Drive
Buffalo, NY 14218
Dan Dintino
Tel: 1-800-688-3380
7. Key Bank Loan Unknown
PO Box 74225
4910 Tiedeman Rd
Cleveland, OH 44144
Vincent Harper
Tel: 585-770-1661
Email: vincent_j_harper@keybank.com
8. Komatsu Financial Loan $124,764
Limited Partnership
8770 W. Bryn Mawr Avenue
Chicago, IL 60631
Antonino Randazzo
Tel: 847-437-2899
Email: antonino.randazzo@global.komatsu
9. McNees Wallace & Nurick Legal Fees $48,077
100 Pine Street
Harrisburg, PA 17101
Tel: 717-237-5416
Nicole Kaylor, Esq.
Email: nkaylor@mcneeslaw.com
10. Mersino Dewatering, Inc. Trade Debt $179,261
PO Box 105951
Atlanta, GA 30348
Tel: 724-701-6002
Stacey Ross
Email: stacey.ross@mersino.com
11. PA Industrial Loan $91,666
Development Authority
Karen Robey
Tel: 717-720-1318
Email: krobey@pa.gov
12. PACCAR Loan $85,219
777 106th Avenue N.E.
Bellevue, WA 98004
Michael Heryla
Tel: 800-851-2576 x2952
Email: michael.heryla@paccar.com
13. Peoples Capital and $59,956
Leasing Corp
2005 Market St, 14th Floor
Philadelphia, PA 19103
Tel: 203-338-6500
14. Randy & Darlene Castle $199,333
556 Ward Hill Road
Canton, PA 17724
15. Sage Pump Services Trade $191,721
P.O. Box 736162
Dallas, TX 75373
Joe Porterfield
Tel: 833-563-1918 x340
Email: jporterfield@sagerentalservices.com
16. Skyworks, LLC Equipment $38,142
P.O. Box 74404 Rentals
Cleveland, OH 44194
Tel: 585-749-4936
17. Smartdrive Systems, Inc. Trade Debt $184,246
PO Box 80452
City of Industry, CA 91716
Tel: 888-352-2492
Email: omni.billing.team@omnitracs.com
18. SWN Production Company LLC Water Transfer $127,500
10000 Energy Drive Supplies
Spring, TX 77389
Chris Lacy - General Counse
Tel: (281) 618-4700
19. Talley Petroleum Trade Debt $273,542
Enterprises Inc.
10046 Allentown Blvd
Grantville, PA 17028
Dillon Talley
Tel: 717-469-0338
Email: dtalley@talleypetro.com
20. Wendell H. Stone Litigation $167,271
Company Inc.
606 McCormick Avenue
Connellsville, PA 15425
Carrie Armstong
Tel: 724-628-2200
Email: carmstrong@stoneconcrete.com
PUNYAKAM PLLC: Punyakam Unsecureds to Split $10K in Joint Plan
--------------------------------------------------------------
Punyakam, PLLC, ("Punyakam"), Chadwick R. Gammage and Punya R.
Gammage ("Gammage") filed with the U.S. Bankruptcy Court for the
District of Arizona a Joint Plan of Reorganization for Small
Business dated September 6, 2022.
Gammage are individuals and the owners of Punyakam doing business
as Avista Medical Center, a family medical practice located in
Gilbert, Arizona, offering family medicine, medical weight loss,
allergy testing and treatment, and hormone therapy (collectively
the "Debtors").
By June 2020, Gammage and Punyakam were preparing for the worst.
There was no end to the pandemic or its effects in sight. Until
then, they had learned, adapted, and fought for their livelihood
and Punyakam's future. But no matter how hard they tried, they knew
they would default on the loan for the aesthetic equipment.
Gammage also discovered that the building that was recently built
that is the location where Punyakam operates had numerous
structural problems. The contractors that built the building tried
to put bandages on the problems, but that did not solve the
problems. The building construction ended up in litigation. Those
unfortunate effects of the pandemic have forced Punyakam and
Gammage to file bankruptcy.
This Plan of Reorganization under chapter 11 of the Bankruptcy
Code, Subchapter V, proposes to pay creditors of Punyakam and
Gammage from cash flow from their operations of future income.
Non-priority, unsecured creditors holding allowed claims will
receive distributions, after administrative and priority creditors
have been paid in full. The Plan provides for full payment of
administrative and priority claims over the life of the Plan, prior
to any payments to general unsecured creditors.
Class P3 consists of All non-priority, unsecured claims against
Punyakam. The creditors with allowed unsecured claims in Class 3
shall be paid in quarterly installments their pro rata share of
funds paid into the Plan Fund after all administrative, and
priority claims are paid in full, and concurrently with payments to
secured creditors, their pro-rata share of $10,000. This Class is
impaired.
Class P4 Equity interests in Punyakam. Punyakam shall retain all
assets not distributed to creditors pursuant to the Plan, and such
assets shall be revested in Punyakam upon confirmation of the Plan,
if the Plan confirmation is consensual, or upon closing of the
case, if the Plan confirmation is non-consensual. The equity
interests in Punyakam shall retain their ownership but shall not
receive a distribution for their equity interests until after all
claims are paid according to the terms of the Plan.
Class G3 consists of All non-priority, unsecured claims against
Gammage. The creditors with allowed unsecured claims in Class 3
shall be paid in quarterly installments their pro rata share of
funds paid into the Plan Fund after all administrative, and
priority claims are paid in full, and concurrently with payments to
secured creditors, their pro-rata share of $5,000.
Class G4 consists of the interests of Gammage in the estate.
Gammage shall retain all assets not distributed to creditors
pursuant to the Plan, and such assets shall be revested in Gammage
upon confirmation of the Plan, if the Plan confirmation is
consensual, or upon closing of the case, if the Plan confirmation
is non consensual.
The Debtors shall each establish a separate Plan Fund for the
management of all funds for distribution to creditors and claimants
under the terms of the Plan. The Plan Fund will be administered by
the Debtors, unless otherwise directed by the Court. The Debtors
shall make deposits into the Plan Fund monthly (no later than the
10th day of each month), following Plan confirmation for the
payment of creditors claims that are being treated under the Plan.
Punyakam is dedicating $10,000.00 for the payment of its unsecured
creditors out of future operations and Gammage are dedicating
$5,000.00 for the payment of their unsecured creditors out of
future wages, both paid over the term of the Plan, so that
unsecured creditors will receive a distribution that is better than
unsecured creditors would receive in a Chapter 7 liquidation.
A full-text copy of the Joint Plan dated September 6, 2022, is
available at https://bit.ly/3U2e4Jp from PacerMonitor.com at no
charge.
About Punyakam PLLC
Punyakam, PLLC sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Ariz. Case No. 22-03615) on June 6, 2022, listing
under $500,000 in assets and under $1 million in liabilities.
Punya R. Gammage, its member, signed the petition.
D. Lamar Hawkins, Esq., at Guidant Law, PLC and Craig L. Elggren,
CPA PC serve as the Debtor's legal counsel and accountant,
respectively.
QURATE RETAIL: S&P Lowers ICR to 'B+' on Supply Chain Pressures
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
video commerce and online retailer Qurate Retail, Inc. to 'B+' from
'BB-'. The outlook is stable. S&P also lowered its issue-level
rating on subsidiary QVC, Inc.'s secured debt to 'BB' from 'BB+'.
The recovery ratings remain '1'.
The stable outlook reflects S&P's view that, although sales and
profitability will likely stay pressured over the next year amid
the challenging operating environment, the company will sustain
leverage below 5x with sufficient liquidity to address its
near-term maturities as it benefits from management's turn-around
initiatives and debt-reduction initiatives.
The downgrade reflects Qurate's weak credit metrics due to the
negative impact of ongoing supply chain challenges and recessionary
conditions on its revenue and profitability. Qurate's operating
momentum continued to slow in the first half of 2022, with
consolidated sales declining by about 15% as the company continued
to face significant supply chain disruptions and inflationary
pressure that led to suppressed demand for the electronics and
beauty categories. The company's customer count continued to
decline year over year, with the number of total customers dropping
below its June 2019 level as the company remained exposed to
discretionary spending despite its loyal customer base.
The company had a limited ability to effectively adjust its
merchandising strategy amid the early stages of its turnaround.
While it has taken steps to stabilize the business, including
implementing key organizational changes, we expect the
greater-than-expected inventory challenges will result in S&P
Global Ratings-adjusted EBITDA margins well below 14% this year.
Qurate's S&P Global Ratings-adjusted EBITDA was about $620 million
through the first two quarters this fiscal year from about $1.14
billion during the same period the previous year.
S&P said, "We expect Qurate's cash flow generation to remain weak
with free operating cash flow (FOCF) to debt (excluding proceeds
from asset sales) remaining below 10% the next two years, in line
with the EBITDA decline and the net working capital outflows as the
company continues to navigate the difficult supply environment. Our
calculation of Qurate's leverage, which reflects its debt levels
and our adjustments, including operating lease liabilities, at the
overall corporate structure was 4.7x as of June 30, 2022, up from
3.8x as of year-end 2021. In 2020, the company paid nearly $1.3
billion in special cash dividends to its shareholders and
distributed approximately $1.3 billion in aggregate liquidation
preference through the dividend of its 8% preferred stock, which we
include in our calculation of its adjusted debt due to the terms of
the equity. These actions were consistent with its publicly stated
financial policy of maintaining leverage of less than 2.5x at QVC
Inc. We expect Qurate's adjusted leverage to remain above 4x over
the next two years. As such, we revised our assessment of the
financial risk profile to aggressive from significant."
Adequate liquidity and flexibility to manage shareholder returns
remain positive rating considerations. Qurate has a positive track
record of maintaining adequate liquidity with substantial cash and
availability under its $3.25 billion revolving credit facility. In
June, Qurate through its QVC subsidiary completed a cash tender for
about 71% of its senior secured notes due 2023. Recently, the
company entered into several sale-leaseback transactions to
monetize real estate assets, including the sale and leaseback for
its Ontario, California fulfillment center and other U.S.
properties for an aggregate amount of about $685 million after tax.
In addition, as of July, the company had collected about $250
million of insurance proceeds following the fire that occurred at
one of the company's North Carolina fulfillment centers in December
2021. S&P said, "In our view, the company's liquidity was
strengthened by these transactions because we expect it to continue
to favor debt repayment over shareholder returns in the medium term
given near-term debt maturities that we expect it will repay with
cash on hand and revolver borrowings in the coming months." Among
the company's staggered debt maturities, $214 million in senior
secured notes are due in March 2023 and $600 million are due in
March 2024.
Longer-term headwinds such as cord-cutting and declining TV
viewership trends could accelerate. Qurate generates a significant
portion of its revenue from TV viewership, which is in secular
decline due to cord cutting and other factors. S&P said, "We also
foresee some execution risks as the company shifts away from TV
viewership in a cost-effective manner, but we recognize that it has
adequate financial resources to expand its digital and mobile
content. Furthermore, Qurate remains susceptible to intensified
competitive pressures from pure e-commerce players that could
require it to hasten its promotional cadence to sustain its sales.
Because of all these factors, we view the company's competitive
position to be relatively worse than other 'BB-' rated peers.
Therefore, we use a negative comparable rating analysis score that
brings down the anchor score by one notch to 'b+' from 'bb-'."
S&P said, "The stable outlook reflects our view that, despite
economic headwinds, Qurate will have adequate liquidity to address
its near-term maturities and sufficient cushion in its credit
metrics over the next 12 months to withstand a pullback in sales,
maintaining S&P Global Ratings-adjusted leverage in the low- to
mid-4x area."
S&P could lower its rating on Qurate over the next 12 months if:
-- The company significantly underperformed our expectations and
faced the prospects of depressed sales and profits beyond 2022 due
to operational or sales execution challenges, merchandise missteps,
greater-than-expected cord-cutting patterns, or increased
competitive pressures amid scarce discretionary spending, which
would cause us to assess its business less favorably; or
-- The company's financial policy became more aggressive, and it
undertook shareholder returns while its performance weakened and it
continued to face near-term maturities such that adjusted leverage
remained over 5x or free cash flow declined below 5% on a sustained
basis.
While unlikely during the next 12 months, S&P could raise its
ratings on Qurate if:
-- The supply chain environment improved and Qurate stabilized its
business by successfully turning around its product execution such
that it could return to revenue growth and EBITDA margins in the
mid-teen percent area; and
-- S&P expected leverage to be maintained below 4x and FOCF to
debt above 10% on a sustained basis as the company directed part of
its cash on hand toward repayment of near-term debt maturities.
ESG credit indicators: E-2, S-2, G-3
S&P said, "Governance is a moderately negative consideration in our
credit rating analysis of Qurate, Retail Inc. Ownership remains
concentrated among key executives, and most directors and officers
have overlapping roles with Liberty Media Corp. (LMC). Gregory B.
Maffei, Chairman of the Board of Qurate and president and chief
executive officer of LMC, beneficially owns approximately 20% of
the voting rights in Qurate, and John C. Malone, who serves as
chairman of the board of LMC and a director of Qurate, beneficially
owns approximately 6.7% of the voting rights in Qurate. Qurate has
executed unconventional financial transactions to return capital to
its shareholders. In 2018, the company contributed most of its
equity investment securities to a newly acquired company (General
Communication, Inc.), which was subsequently split off into an
independent, publicly traded company. This led to a reduction in
collateral available for unsecured debt holders and a lowering of
the issue-level ratings."
RED RIVER: Executes Global Settlement; Files Amended Plan
---------------------------------------------------------
Red River Waste Solutions, LP, submitted a Disclosure Statement
for the Third Amended Chapter 11 Plan dated September 6, 2022.
The Plan contemplates the Debtor's wind down and liquidation after
the Sale of substantially all the Debtor's tangible assets, the
creation of the Liquidation Trust, and implementation of the Global
Settlement.
With the Bankruptcy Court's permission, the Debtor completed its
sale of substantially all its assets to Platform Waste Solutions,
LLC (or its designee) on or around August 10, 2022.
The purpose of the Plan is to distribute the remaining sale
proceeds, maximize the value of and liquidate for the benefit of
the administrative-expense holders and other creditors assets of
the bankruptcy estate – including causes of action – remaining
after the sale to Platform. The Plan establishes a liquidating
trust and appoints a liquidating trustee to oversee and administer
that trust for the benefit of the liquidation-trust beneficiaries
– that is, the administrative-expense holders and other creditors
of the bankruptcy estate.
The Plan's goal is to (a) implement the Global Settlement, and
pursue certain litigation, (b) distribute the Sale Proceeds
following the Sale of substantially all the Debtor's tangible
Assets, and (c) wind down the Estate.
Global Settlement
Union Bank filed a Proof of Claim against the Estate in the amount
of $31,105,474.10. Union Bank asserts a first-priority security
interests and liens in substantially all the Estate's Assets,
including accounts, Cash, inventory, and general intangibles, to
secure repayment of its Claim against the Estate.
During the Chapter 11 Case, Union Bank and the Estate have been
involved in existing and potential litigation related to their
various disputes. The Debtor is confident in the Estate's position
against Union Bank. However, after good-faith, arms-length
negotiations, to avoid the expense, inconvenience, delay, and
uncertainty of further prosecuting, disputing, or pursuing the
claims by and against Union Bank the Estate, the Debtor
Professionals, Union Bank, the Committee, and Equity agreed to
fully and completely resolve their respective disputes and claims.
A settlement agreement was executed by the Debtor, Union Bank,
Equity, and the Committee to memorialize the settlement between
these parties (the "Mediation Settlement").
If approved, the Global Settlement resolves the outstanding
disputes between the Debtor Union Bank, the Committee, and Equity.
The terms of the Global Settlement are as follows:
* Equity will pay $3,400,000.00 to the Estate, (a)
$1,700,000.00 on or before the Sale Closing Date and (b)
$1,700,000.00 on the earlier of (i) September 30, 2022, and (ii)
the Effective Date.
* Union Bank received $3,850,000.00 on the Sale Closing Date.
* Liquidation Trust Assets will be distributed pursuant to the
Liquidation Trust Waterfall.
Nashville Settlement
Nashville asserts that it has sustained damages totaling in excess
of $3 million related to allegations that the Debtor breached its
post-petition obligations under the contract between the Debtor and
Nashville originally entered in 2004 and last amended in December
2020 (the "Existing Nashville Contract"), which such assertions are
disputed by the Debtor. Nashville also asserts that it is entitled
to recover a portion of these damages by recoupment, setoff or
offset against amounts due to Red River for services provided since
April 1, 2022, which such assertions are disputed by the Debtor.
However, after good-faith, arms-length negotiations, to avoid the
expense, inconvenience, delay, and uncertainty of prosecuting,
disputing, or pursuing the Claims by and against Nashville and the
Debtor, and to compromise the disputes, and in the objection filed
by Nashville, the parties agreed to fully and completely resolve
their respective disputes and Claims by entering into a mutual
release and settlement agreement (the "Nashville Settlement
Agreement") resolving this dispute (the "Nashville Settlement").
Comerica Settlement
To settle potential disputes, the Debtor and Comerica desire to
enter into a settlement (the "Comerica Settlement"). Pursuant to
the Comerica Settlement, a portion of the Comerica Bank Collateral
will be used to reimburse Comerica Bank its reasonable attorneys'
fees and costs incurred in connection with the Corporate Card
Program and the Debtor's Chapter 11 cases. After application of the
Comerica Bank Collateral to the reimbursement of such attorneys'
fees and costs, which are $75,000, the balance of the Comerica Bank
Collateral will be returned to the Debtor for satisfaction of
Allowed Administrative Expense Claims. The estimated amount of
Comerica Cash Collateral to be returned to the Estate is $30,000
(the "Comerica Returned Amount").
On the Effective Date, all Claims of Comerica Bank will be fully
satisfied, compromised, settled, released, and discharged, and the
Comerica Returned Amount will be used to pay all Allowed
Administrative Expense Claims.
All Priority Tax Claims were paid on the Sale Closing Date in
accordance with the Sale Order; thus, no such Claim is owed.
Further, if there are any Allowed Priority Non-Tax Claims filed
against the Estate, such Claims will be paid (a) after all Allowed
Administrative Expense Claims and Claims higher in priority under
the Bankruptcy Code are paid in full and (b) on the later of (i)
the Effective Date, (ii) the date on which such Priority Claim
becomes an Allowed Claim or as soon as reasonably practicable
thereafter, and (iii) when sufficient Cash exists to pay such
Claims in full in Cash, even if that date is after entry of the
Confirmation Order and the occurrence of the Effective Date, unless
the Holder of such Allowed Priority Claim agrees to less favorable
treatment of its Allowed Priority Claim.
Class 3 consists of the Union Bank Claim. Class 3 Claims will be
paid in full and final satisfaction, settlement, release, and
discharge of and in exchange for each such Class 3 Claim pursuant
to the terms of the Global Settlement and the Liquidation Trust
Waterfall.
Class 4 consists of Comerica Bank Secured Claims. Class 4 Claims
will be paid in full pursuant to the Comerica Settlement.
Class 5 consists of the Signature Secured Claims. Each Holder of a
Class 5 Claim received the Collateral for such Class 5 Claims in
full and final satisfaction, compromise, settlement, release, and
discharge of, and in exchange for each Holder's Class 5 Claim.
Class 6 consists of the Northpoint Secured Claims. Each Holder of a
Class 6 Claim was paid pursuant to the terms of the Sale Order in
full and final satisfaction settlement, release, and discharge of,
and in exchange for each holder's Class 6 Claim.
Class 7 consists of Caterpillar Secured Claims. Each Holder of a
Class 7 Claim was paid pursuant to the terms of the Sale Order in
full and final satisfaction settlement, release, and discharge of,
and in exchange for each Holder's Class 7 Claim.
Class 8 consists of John Deere Secured Claims. Each Holder of a
Class 8 Claim was paid pursuant to the terms of the Sale Order in
full and final satisfaction settlement, release, and discharge of,
and in exchange for each Holder's Class 8 Claim.
Class 9 consists of Santander Secured Claims. Each Holder of a
Class 9 Claim received the Collateral for such Class 9 Claims in
full and final satisfaction settlement, release, and discharge of,
and in exchange for each Holder's Class 9 Claim.
Class 10 consists of TBK Bank Secured Claims. Each Holder of a
Class 10 Claim received the Collateral for such Class 10 Claims in
full and final satisfaction, settlement, release, and discharge of
and in exchange for such Holder's Class 10 Claim.
Class 11 consists of TCF Secured Claims. Each Holder of a Class 11
Claim was paid pursuant to the terms of the Sale Order in full and
final satisfaction settlement, release, and discharge of, and in
exchange for each Holder's Class 11 Claim.
Class 12 consists of VFSUS Secured Claims. Each Holder of a Class
12 Claim was paid pursuant to the terms of the Sale Order in full
and final satisfaction settlement, release, and discharge of, and
in exchange for each Holder's Class 12 Claim.
Class 16 consists of General Unsecured Claims. On the Effective
Date, in full and final satisfaction, compromise, settlement,
release, and discharge of, and in exchange for, its Allowed General
Unsecured Claim, each Holder of an Allowed General Unsecured Claim
against the Debtor shall receive its Pro Rata share of Liquidation
Trust Interests.
The Plan shall be funded from the Sale Proceeds, the Liquidation
Trust Assets, including recoveries from any Causes of Action, and
the proceeds from any other Assets available to fund the Plan.
A copy of the Third Amended Plan dated September 6, 2022, is
available at https://bit.ly/3Dxbu8P from Stretto, the claims
agent.
Counsel for the Debtor:
Marcus A. Helt, Esq.
Jane A. Gerber, Esq.
McDERMOTT WILL & EMERY LLP
2501 North Harwood Street, Suite 1900
Dallas, Texas 75201
Tel: (214) 210-2821
Fax: (972) 528-5765
E-mail: mhelt@mwe.com
jagerber@mwe.com
About Red River Waste Solutions
Red River Waste Solutions LP is a company in Dripping Springs,
Texas, that provides waste management services. It also offers
solid waste and garbage pickup, recycling, industrial waste
collection, disposal, and landfill management services.
Red River Waste Solutions sought Chapter 11 protection (Bankr. N.D.
Tex. Case No. 21-42423) on Oct. 14, 2021, listing up to $50 million
in assets and up to $100 million in liabilities.  James
Calandra, chief restructuring officer of Red River Waste Solutions,
signed the petition.
Judge Morris oversees the case.
Marcus Alan Helt, Esq., at McDermott Will & Emery LLP, is the
Debtor's legal counsel. Stretto, Inc., is the claims and
noticing agent.
The Debtor's official committee of unsecured creditors tapped
Womble Bond Dickinson (US) LLP as legal counsel and Rock Creek
Advisors, LLC as financial advisor.
REHME CUSTOM: Case Summary & 20 Largest Unsecured Creditors
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Debtor: Rehme Custom Doors & Lighting, Inc.
d/b/a Rehme Steel Windows & Doors
3914 Crawford Rd.
Spicewood, TX 78669
Business Description: The Debtor manufactures doors and windows.
Chapter 11 Petition Date: September 9, 2022
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 22-50059
Debtor's Counsel: Christopher Murray, Esq.
JONES MURRAY, LLP
602 Sawyer St. Ste. 400
Houston, TX 77007
Tel: (832) 529-1999
Email: chris@jonesmurray.com
Total Assets: $1,001,370
Total Liabilities: $4,944,534
The petition was signed by Peter J. Rehme as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/22MNYOA/Rehme_Custom_Doors__Lighting__txsbke-22-50059__0001.0.pdf?mcid=tGE4TAMA
S.A. WAGNER: Unsecureds Will Get 24.62% in Liquidating Plan
-----------------------------------------------------------
S.A. Wagner Agency, Inc., filed with the U.S. Bankruptcy Court for
the Western District of Pennsylvania a Small Business Chapter 11
Plan of Liquidation dated September 6, 2022.
The Debtor operated an insurance agency providing customers with
brokerage services to obtain commercial, personal, life and health
insurance coverage from various insurance companies.
The estate of Donald E. Wagner is the sole owner and principal of
the Debtor. Mr. Wagner passed away on May 15, 2022. Mr. Wagner’s
spouse, Ms. Karen J. Wagner is the Administrator of his estate.
The scheduled value of the Debtor's book of business was based upon
a rule of thumb of two times the annual commissions or $700,000.
This was done in part so as not to underestimate the value of the
business pending a sale. However, the value of the Debtor's Book of
Business (especially the commercial line) was severely compromised
when it became known that Mr. Wagner had been collecting customer
annual premiums, at a discount, but then only paying a portion of
that amount to the insurance carriers.
The Debtor received 4 letters of intent to purchase the book of
business, the highest and best offer having been received from
Loesel-Schaaf Insurance Agency, Inc. After notice and hearing held
August 18, 2022, on Debtors Motion for Order Approving the Sale of
Assets, the Bankruptcy Court confirmed the sale of the Debtor's
Book of Business and related assets to Loesel-Schaaf for $133,000,
including $8,000 for 1/2 of the cost of E&O tail coverage for 2
years. The sale confirmation order was dated August 19, 2022 and
the closing was held on September 1, 2022.
The Plan proposes to pay administrative and priority claims in full
unless otherwise agreed. The Debtor estimates approximately 24.62%
will be paid on account of general unsecured claims pursuant to the
Plan. There are no secured creditors.
Class 4 consists of General unsecured claims. The general unsecured
creditors will receive their respective prorata share of the funds
available after the Administrative and Priority Claims are paid in
full. It is estimated that the general unsecured creditors will
receive approximately 24.62% of their Allowed Claims. There will be
an interim distribution of -10% on the Effective Date and a final
distribution as soon as the remaining assets of the estate have
been liquidated, including the Avoidance Actions, the office
furniture and equipment. This Class is impaired. The allowed
unsecured claims total $1,988,125.53.
Class 5 consists of the Estate of Donald E. Wagner. There will be
no distribution to the Equity owner and the company will be
dissolved following liquidation.
The Plan proposes to pay the Debtor's creditors from the sale of
assets, life insurance proceeds on the life of Donald E. Wagner and
cash flow from operations during the case.
The Debtor's financial projections demonstrating the Debtor's
ability to make Plan payments in the aggregate amount of
$640,167.35 during the Plan term (the "Plan Funding"). The final
Plan payment is expected to be paid on or before September 1,
2023.
A full-text copy of the Liquidating Plan dated September 6, 2022,
is available at https://bit.ly/3Dxm27V from PacerMonitor.com at no
charge.
Debtor's Counsel:
Guy C. Fustine, Esq.
Knox McLaughlin Gornall & Sennett, PC
120 West Tenth Street
Erie, PA 16501-1461
Telephone: (814) 459-2800
Email: gfustine@kmgslaw.com
About S.A. Wagner Agency
S.A. Wagner Agency, Inc. -- https://www.sawagner.com/ -- is an
insurance company that provides the right commercial, personal, and
life insurance policies based on clients' needs.
S.A. Wagner Agency filed a petition for relief under Subchapter V
of Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Pa. Case No.
22-10258) on June 8, 2022, listing up to $1 million in assets and
up to $10 million in liabilities. William G. Krieger has been
appointed as Subchapter V trustee.
Guy C. Fustine, Esq., at Knox McLaughlin Gornall & Sennett, PC and
Jeffrey Beach, CPA, at McGill, Power, Beil & Associates, LLP serve
as the Debtor's counsel and accountant, respectively.
SHEM OLAM: Hires Leech Tishman Robinson Brog as Counsel
-------------------------------------------------------
Shem Olam LLC, seeks approval from the U.S. Bankruptcy Court for
the Southern District of New York to employ Leech Tishman Robinson
Brog, PLLC as counsel.
The firm's services include:
a. providing legal advice with respect to the Debtor's powers
and duties as a debtor in possession under the Bankruptcy Code in
the continued operation of its business and the management of its
property;
b. negotiating, drafting, and pursuing all documentation
necessary in this chapter 11 case, including, without limitation,
any debtor in possession financing arrangements and the disposition
of the Debtor's assets, by sale or otherwise;
c. preparing, on behalf of the Debtor, applications, motions,
answers, orders, reports, and other legal papers necessary to the
administration of the Debtor's estate;
d. negotiating with creditors of the Debtor, preparing a plan of
reorganization and taking the necessary legal steps to consummate a
plan, including, if necessary, negotiations with respect to
financing a plan;
e. appearing in Court and protecting the interests of the Debtor
before the Court;
f. attending meetings and negotiating with representatives of
creditors, the United States Trustee, and other
parties-in-interest;
g. providing legal advice to the Debtor regarding bankruptcy
law, corporate law, corporate governance, tax, litigation, and
other issues attendant to the Debtor's business operations;
h. taking all necessary actions to protect and preserve the
Debtor's estate including prosecuting actions on the Debtor's
behalf, defending any action commenced against the Debtor, and
representing the Debtor in negotiations concerning litigation in
which the Debtor is involved, including objections to claims filed
against the Debtor's estate; and
i. performing other legal services for, and providing other
necessary legal advice to, the Debtor, which may be necessary and
proper in the chapter 11 case or otherwise requested by the Debtor
and reasonably acceptable to the firm.
The firm will be paid at these rates:
Shareholders $500 to $800 per hour
Counsels $495 to $600 per hour
Associates $325 to $475 per hour
Legal Assistants/Paralegals $120 to $250 per hour
The retainer is $25,000.
The firm will also be reimbursed for reasonable out-of-pocket
expenses incurred.
A. Mitchell Greene, Esq., a partner at Leech Tishman Robinson Brog,
PLLC, disclosed in a court filing that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
A. Mitchell Greene, Esq.
Leech Tishman Robinson Brog, PLLC
875 Third Avenue, 9th Floor
New York, NY 10022
Tel: (212) 603-6300
Email: amgreene@leechtishman.com
About Shem Olam LLC
Shem Olam LLC is the owner of the real property located at 82
Highview Road, Suffern, New York 10901 ("Property"). Rabbi Aryeh
Zaks is the present manager of Shem Olam LLC.
Shem Olam LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 22-22493). In the
petition filed by Rabbi Aryeh Zaks, as manager, the Debtor
estimated assets and liabilities between $1 million and $10 million
each.
Arnold Mitchell Greene, of Leech Tishman Robinson Brog PLLC, is the
Debtor's counsel.
SHOPS AT BROAD: Lender Wants Debtor Identified as SARE
------------------------------------------------------
Shops at Broad LLC has sought bankruptcy protection in Texas.
The Debtor owns and operates a large shopping center in Mansfield,
Texas known as the "Shops at Broad." Substantially all assets of
the Debtor are contained within the shopping center and upon
information and belief, the Debtor contains no other significant
asset other than the Shops at Broad.
TREZ SHOPS AT BROAD LP is the primary perfected secured creditor in
the above -- referenced case by virtue of a first and second lien
on Debtor's only asset -- a 200,177 square foot retail building(s),
surface parking, and land parcel building on 55.10 acres of land
located at the intersection of East Broad and Frontage Road in
Tarrant, Mansfield, Texas 76063, which is more particularly
described infra Section III (the "Property").
The Property clearly constitutes "single asset real estate" as that
term is defined in section 101(51B) of the Bankruptcy Code because
(1) the Property, the Debtor's sole asset, constitutes a "single
property or project," and (2) the Property generates substantially
all of the Debtor's income since (3) the Debtor's only source of
income is from the sale or lease of the Property or activities
related thereto. See 11 U.S.C. Sec. 101(51B).
Despite this fact, the Debtor did not check the box on its original
or amended voluntary petition identifying to the Court that it is a
single asset real estate entity. Thus, Trez Shops brings with the
Bankruptcy Court a motion seeking entry of an order determining
that:
a. The Property is "single asset real estate" under section
101(51B) of the Bankruptcy Code; and
b. The Shops at Broad, LLC is subject to the requirements of
section 362(d)(3) of the Bankruptcy Code.
"Not only does this case fit squarely within the defmition of a
single asset real estate case under Section 101(51B) and,
therefore, automatically qualify for Section 362(d)(3) expedited
relief, the circumstances of this case also present the exact
scenario that Congress intended to address by enacting amended
section 362(d)(3). Indeed, the filing itself was precipitated by a
foreclosure sale scheduled to occur on the Property, after a
protracted state court injunctive proceeding," the lender said.
According to court filings, Shops at Broad LLC estimates between 1
and 49 creditors. The petition states funds will be available to
unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Oct. 12, 2022, at 11:00 AM by TELEPHONE. Proofs of claim are due
by Jan. 10, 2023.
About Shops at Broad LLC
Shops at Broad LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Tex. Case No. 22-42059) on Sept. 2,
2022. In its petition, the Debtor reported assets and liabilities
between $50 million and $100 million. The Debtor is represented by
Areya Holder of Holder Law.
SIGNIFY HEALTH: Moody's Puts 'B1' CFR on Review for Upgrade
-----------------------------------------------------------
Moody's Investors Service placed the ratings of Signify Health, LLC
on review for upgrade following the announcement that the company
has entered into a definitive agreement to be acquired by CVS
Health Corporation ("CVS", Baa2 stable). The ratings affected by
the review for upgrade include the B1 corporate family rating,
B1-PD probability of default rating, and the B1 senior secured
rating.
The sale agreement has been approved by Signify's and CVS' board of
directors, but it is subject to approval by a majority of Signify's
stockholders. Approximately sixty percent of the common stock is
owned by funds affiliated to New Mountain Capital, which have
agreed to vote in favor of the transaction as well. The transaction
is expected to close in the first half of 2023.
On Review for Possible Upgrade:
Issuer: Signify Health, LLC
Corporate Family Rating, Placed on Review for
Upgrade, currently B1
Probability of Default Rating, Placed on
Review for Upgrade, currently B1-PD
Senior Secured 1st Lien Revolving Credit
Facility, Placed on Review for Upgrade,
currently B1 (LGD4)
Senior Secured 1st Lien Term Loan, Placed
on Review for Upgrade, currently B1 (LGD4)
Outlook Actions:
Issuer: Signify Health, LLC
Outlook, Changed To Rating Under Review
From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The rating action reflects Moody's assessment that Signify's
creditworthiness would improve upon being acquired by CVS, which
has a much stronger credit profile than Signify. The ratings could
be confirmed if the transaction is not consummated as announced.
Absent the acquisition by CVS, the ratings could be upgraded if
Signify's free cash flow as a percentage of debt holds above 10%;
if the company maintains good revenue growth while diversifying
revenue sources across business lines and away from CMS-associated
(Centers for Medicaid and Medicare) sources; if sponsor-controlled
equity ownership falls below 50%, and; if Moody's expects it will
adhere to a conservative financial policy.
Given the ratings are under review for upgrade, a negative rating
action is unlikely in the near term. However, if the acquisition by
CVS does not close, the ratings could be downgraded if there was a
significant reduction in revenue growth; if Moody's adjusted
debt-to-EBITDA is sustained above four times; if free cash flow
substantially deteriorates; or if there is a legislatively imposed
change to the scope of the HRA model.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Signify Health, domiciled in both Dallas, TX and Norwalk, CT, is a
leading provider of home-based health risk assessment ("HRA")
services on behalf of Medicare Advantage health plans in the US.
The company was formed by the late-2017 acquisition by New Mountain
Capital of both Censeo Health and Advance Health. In 2019, New
Mountain contributed to the Signify Health entity another of its
portfolio companies, Connecticut-based Remedy Partners, a provider
of software and analytics that facilitate large-scale bundled
payment programs. The company undertook an IPO in February 2021. In
2021, Signify generated $773 million of revenue.
SNAP INC: Snapchat Parent Fires 20% of Workforce
------------------------------------------------
Snapchat's parent company, Snap Inc., has announced plans to fire
20% of its global workforce, or almost 1,300 employees.
According to a filing with the Securities and Exchange Commission
last week, the headcount reduction is part of a broader strategic
reprioritization by the company to focus on its top priorities,
improve cost efficiencies, and drive toward profitability and
positive free cash flow.
"We are restructuring our business to increase focus on our three
strategic priorities: community growth, revenue growth, and
augmented reality. Projects that don't directly contribute to these
areas will be discontinued or receive substantially reduced
investment. We have worked thoughtfully and deliberately to find
the right balance between focusing our investments while continuing
to innovate, and we have made the decision to discontinue our
investments in Snap Originals, Minis, Games, and Pixy, among other
areas. We have also started the process of winding down the
standalone applications Zenly and Voisey," Evan Spiegel said in a
letter to employees.
"As a result, we have made the difficult decision to reduce the
size of our team by approximately 20%. The scale of these changes
vary from team to team, depending upon the level of prioritization
and investment needed to execute against our strategic priorities.
The extent of this reduction should substantially reduce the risk
of ever having to do this again, while balancing our desire to
invest in our long term future and reaccelerate our revenue growth.
Overall, the size of our team will remain larger than it was at
this time last year."
The social messaging and media company had 6,446 full-time
employees as of the end of June 2022, an increase of 38%
year-over-year.
In the United States, Snap said it will provide at least four
months of compensation replacement, as well as financial assistance
to enroll in COBRA, so that team members affected by the massive
layoffs will have until the end of the year to find new
opportunities while still receiving compensation and health
benefits from Snap.
As a result of the strategic reprioritization, the Company
currently estimates it will incur pre-tax charges in the range of
$110 million to $175 million, primarily consisting of severance and
related costs, contract termination costs, and other impairment
charges, of which $95 million to $135 million are expected to be
future cash expenditures. The majority of these costs are expected
to be incurred during the third quarter of 2022. Potential
position eliminations in each country are subject to local law and
consultation requirements, which may extend this process into the
fourth quarter of 2022 or beyond in certain countries.
About Snap Inc.
Snap Inc. -- http://snap.com/-- is an American camera and social
media company, founded on September 16, 2011, by Evan Spiegel,
Bobby Murphy, and Reggie Brown based in Santa Monica, California.
The company developed and maintains technological products and
services, namely Snapchat, Spectacles, and Bitmoji. Snap believes
that reinventing the camera represents its greatest opportunity to
improve the way people live and communicate.
The Company's balance sheet at June 30, 2022, showed $8.790 billion
in assets, including $2.298 billion in cash, against $5.347 billion
in liabilities.
The Company incurred a net loss of $781.7 million on $2.174 billion
of revenue in the first six months of 2022 compared with a net loss
of $438.5 million on $1.752 billion of revenue in the same period
in 2021.
STONEBRIDGE VENTURES: Case Summary & One Unsecured Creditor
-----------------------------------------------------------
Debtor: Stonebridge Ventures, LLC
15 Corporate Plaza Drive, Suite 200
Newport Beach, CA 92660
Chapter 11 Petition Date: September 9, 2022
Court: United States Bankruptcy Court
Central District of California
Case No.: 22-11556
Judge: Hon. Theodor Albert
Debtor's Counsel: Summer Shaw, Esq.
SHAW & HANOVER, PC
42-600 Cook Street, Suite 210
Palm Desert, CA 92211
Tel: (760) 610-0000
Fax: (760) 687-2800
Email: ss@shaw.law
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Joshua R. Pukini, director/CFO.
The Debtor listed Luna Construction Management, LLC as its only
unsecured creditor holding a claim of $322,356.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/2REW5DA/Stonebridge_Ventures_LLC__cacbke-22-11556__0001.0.pdf?mcid=tGE4TAMA
TEDESCHI & SONS: Continued Operations to Fund Plan Payments
-----------------------------------------------------------
Tedeschi & Sons, Inc., filed with the U.S. Bankruptcy Court for
the Middle District of Florida a Plan of Reorganization dated
September 6, 2022.
Debtor is a New Jersey corporation that was incorporated under the
laws of the State of New Jersey on November 2, 2016. On May 9,
2022, the Debtor registered the Debtor corporation to do business
in Florida.
The Debtor operates from premises located at 104 Gala Circle,
Daytona Beach, Florida, 32124, which is rented by Michael Tedeschi,
the Debtor's President, and Barbara Tedeschi, the Debtor's Vice
President, which are the Debtor's only two Directors, Officers, and
Shareholders.
Class 1 consists of the Secured Claim of SBA. This Claim is secured
by liens on the SBA Collateral. The Class 1 Secured Claim is
approximately $121,000.00. This Class is Impaired. To the extent
that the claim is allowed as a secured claim, then the holder will:
(i) retain the liens securing the claim to the extent of the
allowed amount of the claim; and (ii) receive on account of such
claim deferred cash payments totaling at least the allowed amount
of the claim, of a value, as of the Effective Date of at least the
value of the claimant's interest in the estate's interest in the
property securing the claim.
Debtor is filing a separate motion to determine the amount of the
secured claim. Debtor contends the value of the collateral securing
the claim and therefore the allowed amount of the secured claim is
$14,757.39. The Reorganized Debtor shall make 60 equal monthly
payments of principal and interest of $270.12, which payment amount
is calculated based upon amortizing the amount of the Allowed
Secured Claim over a five-year period at 3.75% per annum. This
claim shall be paid directly by the Debtor.
Class 2 consists of the Allowed Unsecured Claims against the
Debtor. This Class is Impaired.
* Consensual Plan Treatment: The liquidation value or amount
that unsecured creditors would receive in a hypothetical chapter 7
case is approximately $0.00. Accordingly, the Debtor proposes to
pay unsecured creditors a pro rata portion of $35,000.00. Payments
will be made in equal quarterly payments totaling $1,750.00.
Payments shall commence on the fifteenth day of the month, on the
first month that begins more than ninety days after the Effective
Date and shall continue quarterly for eleven additional quarters.
Pursuant to §1191, the value to be distributed to unsecured
creditors is greater than the Debtor's projected disposable income
to be received in the 3-year period beginning on the date that the
first payment is due under the plan.
* Nonconsensual Plan Treatment: The liquidation value or
amount that unsecured creditors would receive in a hypothetical
chapter 7 case is approximately $0.00. Accordingly, the Debtor
proposes to pay unsecured creditors a pro rata portion of its
Disposable Income. If the Debtor remains in possession, plan
payments shall include the Subchapter V Trustee's administrative
fee which will be billed hourly at the Subchapter V Trustee's then
current allowable blended rate, which shall not exceed the
Disposable Income. Plan Payments shall commence on the fifteenth
day of the month, on the first month that is ninety days after the
Effective Date and shall continue quarterly for eleven additional
quarters. The initial estimated quarterly payment shall be $0.00.
Class 3 consists of any and all equity interests and warrants
currently issued or authorized in the Debtor. This Class is
Unimpaired. Holders of a Class 3 interests shall retain their full
equity interest in the same amounts, percentages, manner and
structure as existed on the Petition Date.
The Plan contemplates that the Reorganized Debtor will continue to
operate the Debtor's business.
Except as explicitly set forth in this Plan, all cash in excess of
operating expenses generated from operation until the Effective
Date will be used for Plan Payments or Plan implementation, cash on
hand as of Confirmation shall be available for Administrative
Expenses.
A full-text copy of the Plan of Reorganization dated September 6,
2022, is available at https://bit.ly/3DxuUKL from PacerMonitor.com
at no charge.
Counsel for Debtor:
Jeffrey Ainsworth, Esq.
Jacob D. Flentke, Esq.
BransonLaw, PLLC
Flentke Legal Consulting, PLLC, Of Counsel
1501 E. Concord St.
Orlando, FL 32803
Telephone: (407) 894-6834
Facsimile: (407) 894-8559
Email: jeff@bransonlaw.com
jacob@bransonlaw.com
About Tedeschi & Sons
Tedeschi & Sons Inc. -- https://www.tedeschitax.com/ -- is an
expert in all areas of accounting, bookkeeping, consulting,
outsourcing, payroll and business services. It takes care of
clients' tax, accounting and bookkeeping needs.
Tedeschi & Sons filed a petition for relief under Subchapter V of
Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No.
22-02046) on June 8, 2022, listing up to $50,000 in assets and up
to $500,000 in liabilities. Jerrett M. McConnell has been appointed
as Subchapter V trustee.
Judge Tiffany P. Geyer oversees the case.
Jeffrey S. Ainsworth, Esq., at BransonLaw, PLLC, is the Debtor's
counsel.
THIRD FLOOR: Case Summary & 19 Unsecured Creditors
--------------------------------------------------
Debtor: Third Floor Properties, L.L.C.
811 Mamou Prairie Road
Iota, LA 70543
Chapter 11 Petition Date: September 9, 2022
Court: United States Bankruptcy Court
Western District of Louisiana
Case No.: 22-20303
Judge: Hon. John W. Kolwe
Debtor's Counsel: Thomas R. Willson, Esq.
THOMAS R. WILLSON
1330 Jackson Street, Suite C
Alexandria, LA 71301
Tel: (318) 442-8658
Email: rocky@rockywilsonlaw.com
Total Assets: $2,453,000
Total Liabilities: $4,129,105
The petition was signed by Jason A. Thomas as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 19 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/BQU3RMQ/Third_Floor_Properties_LLC__lawbke-22-20303__0001.0.pdf?mcid=tGE4TAMA
TIBCO SOFTWARE: Moody's Affirms B3 CFR & Rates First Lien Debt B2
-----------------------------------------------------------------
Moody's Investors Service affirmed TIBCO Software Inc.'s B3
Corporate Family Rating and assigned B2 ratings to TIBCO's proposed
senior 1st lien credit facilities and notes, and a Caa2 rating to
the proposed 2nd lien debt. The ratings outlook is stable. TIBCO
will use net proceeds from the debt offering along with equity
investments to complete its acquisition of Citrix Systems, Inc.
Upon the close of the pending acquisition, TIBCO and its direct
wholly-owned subsidiary, Picard Parent, Inc., which will own equity
interests in Citrix, will be the co-borrowers of the credit
facilities and senior notes. TIBCO will be primarily owned by the
affiliates of Vista Equity Partners Management, LLC. and Elliott
Investment Management L.P., and the transaction will value the
combined company at approximately $24 billion. Moody's will
withdraw the ratings for TIBCO's existing credit facilities upon
full repayment following the close of the acquisition.
Affirmations:
Issuer: TIBCO Software Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Assignments:
Issuer: TIBCO Software Inc.
Senior Secured Bank Credit Facility, Assigned B2 (LGD3)
Senior Secured 1st Lien Notes, Assigned B2 (LGD3)
Senior Secured 2nd Lien debt, Assigned Caa2 (LGD5)
Outlook Actions:
Issuer: TIBCO Software Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The B3 CFR reflects TIBCO's initially weak financial profile after
the acquisition of Citrix, elevated execution risks in combining
two large companies, and the highly competitive software segments
that the combined company will operate in with rapidly evolving
technologies. Governance considerations, specifically, the
financial sponsors' high financial risk tolerance and the risk of
debt-financed distributions to shareholders or acquisitions,
negatively influence the credit profile. These risks are tempered
by the nearly $4 billion of recurring software revenues of the
combined company and the meaningful cost synergies that are
expected from the combination.
Moody's expects TIBCO's revenue growth in the mid-single digits
over the longer term, if the combined company successfully executes
its cost savings program and growth strategy. Following the
acquisition, TIBCO will focus on expanding license usage in its
installed base of enterprise customers and increasing revenues from
converting legacy perpetual software license users and
maintenance-paying customers of the two companies to higher-value
subscription offerings. TIBCO's $1 billion of revolving credit
facility will provide good operating flexibility during the
business model transition and while cost reductions are executed.
Moody's does not expect meaningful revenue synergies from the
merging of Citrix's Application Virtualization and Virtual Desktop
Infrastructure solutions, and App Delivery and Security products
with TIBCO's application integration and API management, messaging,
master data management, and analytics offerings. The integration
risks in combining two large companies while undertaking
substantial cost reductions will be high over the 12 to 18 months
after the acquisition. The weakening economic conditions in the US
and Europe increase downside risks to new software sales and
renewals.
Although cost savings are easier to execute, large restructurings
rarely come without a negative impact on software revenues in the
intermediate term and the impact can occur with a lag after cost
reductions are implemented. TIBCO expects to achieve $371 million
of cost savings from its acquisition of Citrix. Citrix has already
realized $115 million of cost savings as a standalone company under
a cost saving program that was initiated in November 2021, and it
expects to realize the majority of the remaining approximately $115
million of cost savings by year-end 2022. The $115 million of
Citrix's remaining stand alone cost savings, together with the $371
million of combined company cost savings, represent an additional
$486 million of cost savings, comprising about 10% of the total pro
forma revenues (excluding Wrike's revenues). The targeted cost
synergies will be key to free cash generation given high debt
service costs.
Moody's also expects that Citrix's ongoing business model
transition from perpetual licenses ($136 million of revenues in the
LTM 2Q 2022 period) to subscription or term licenses will
negatively affect reported revenues and operating cash flow over
the next 12 to 18 months. Revenue and operating cash flow trends
for the combined company could also exhibit some volatility due to
variations in software sales mix between term licenses and Software
as a Subscription (SaaS) offerings, and contract durations.
Moody's estimates that TIBCO's total debt to EBITDA (Moody's
adjusted) will be very high at about 11x pro forma for the
acquisition of Citrix, before the $371 million of cost savings from
the combination are included in EBITDA. Leverage would be about 9x
if Citrix's $323 million of stock-based compensation is excluded
from EBITDA. But at least a portion of the stock-based incentives
will need to be replaced with alternative cash or equity-based
incentives with options to monetize the awards, under the new
ownership.
The B3 CFR is supported by the combined company's good geographic
and product revenue diversity and the $4 billion of revenues under
software maintenance, term licenses and subscription agreements
that have high gross profit margins. Citrix is the leader in the
Virtual Client Computing software segment and multiple products of
Citrix and TIBCO are well-regarded in their respective market
segments. Although both companies have previously faced challenges
in transitioning their business model toward cloud and subscription
services and as well as in sales execution, their addressable
markets are growing.
The track record of Vista Equity Partners in improving TIBCO's
profitability since 2014 and an experienced management team at
TIBCO support Moody's expectation for improving profitability of
the combined company over time. The B3 CFR incorporates Moody's
expectation that TIBCO's free cash flow will increase from 2% of
total adjusted debt in 2023, to 5% in 2024, as cost synergies are
realized and costs to achieve operating efficiencies abate.
Excluding stock-based compensation expense, Moody's expects total
debt to EBITDA (Moody's adjusted) to decline to 6x by the end of
2024. TIBCO will have good liquidity, primarily supported by the $1
billion of revolving credit facility.
The acquisition of Citrix will be partially financed with $2.5
billion of preferred equity investment. The preferred stock will
have no maturity date, the issuer of the preferred stock (the
indirect parent of TIBCO) will have the option to pay dividends in
cash or equity, and all or a portion of the outstanding preferred
stock can be redeemed from the proceeds from the sale of Wrike
(which Citrix acquired in February 2021 for approximately $2.25
billion). The Wrike subsidiary will not be part of the restricted
credit group. However, in the event the divestiture of Wrike does
not materialize, or proceeds from the divestiture are insufficient
to redeem the accrued amounts of the preferred stock, there will be
a risk of incremental debt at TIBCO to redeem the preferred stock
which has a high dividend accretion rate.
The stable outlook reflects Moody's expectation that TIBCO will
realize the targeted cost savings in 12 to 18 months following the
closing of the acquisition and its free cash flow will increase
from 2% of total adjusted debt in 2023, to 5% in 2024.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following:
Incremental debt capacity up to the greater of $2.025 billion and
100% of Consolidated EBITDA, plus unused capacity of the general
indebtedness basket, plus unlimited amounts subject to the greater
of 5.75x first lien leverage ratio and the ratio immediately
prior (if pari passu secured). Amounts up to the greater of $2.55
billion and 125% of Consolidated EBITDA, along with any incremental
facilities incurred in connection with a permitted acquisition or
other investment, may be incurred with an earlier maturity date
than the initial term loans.
The credit facilities allow 200% restricted payments capacity from
numerous carve-outs to be reallocated to increase debt incurrence
capacity.
The term loans will not include any financial maintenance covenant
but the borrowings under the revolver will be subject to a
springing net first lien leverage ratio covenant if revolver
utilization exceeds 40% of the total commitment amount.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit provisions limiting such guarantee releases. Debt up to
the greater of $3.05 billion and 150% of EBITDA can be secured by
non-collateral.
There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions. In addition, there are no express protective provisions
prohibiting an up-tiering transaction.
The final terms of the credit agreement may be different from the
proposed terms.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade TIBCO's ratings if the company generates
organic revenue growth around the mid-single digits and free cash
flow of 5% or higher relative to total debt on a sustained basis.
Conversely, the rating could be downgraded if: (i) execution
challenges or weak operating performance result in negative free
cash flow for an extended period of time; (ii) growth in total
recurring revenues from software maintenance, subscription and SaaS
falters to the low single digits; or (iii) liquidity becomes weak.
TIBCO Software Inc. provides software solutions that connect
applications or data sources, unify data, and predict outcomes. The
company is owned by affiliates of Vista Equity Partners since
December 2014. Citrix Systems, Inc. provides digital workspace
solutions that provide secure access to business applications and
content across networks; content collaboration and collaborative
work management solutions; and, Applications Delivery and Security
solutions.
The principal methodology used in these ratings was Software
published in June 2022.
TRC FARMS: Hires Country Boys Auction & Realty as Auctioneer
------------------------------------------------------------
TRC Farms, Inc. seeks approval from the U.S. Bankruptcy Court for
the Eastern District of North Carolina to employ Country Boys
Auction & Realty, Inc. to auction its real properties in Craven
County, N.C.
The firm will be paid in an amount equal to the greater of $2,000;
or 10 percent of the first $25,000.
Mike Gurkins, a partner at Country Boys Auction & Realty, Inc.,
disclosed in a court filing that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Mike Gurkins
Country Boys Auction & Realty, Inc.
1211 5th Street PO Box 1903
Washington, NC 27889
Tel: (252) 946-6007
Email: mgurkins@countryboysauction.com
About TRC Farms, Inc.
TRC Farms, Inc., a privately held company in the livestock farming
industry, filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. N.C. Case No. 20-00309) on Jan. 23,
2020. In the petition signed by Timmy R. Cox, president, the Debtor
disclosed $3,846,275 in assets and $5,412,282 in liabilities.
Judge Joseph N. Callaway oversees the case.
The Debtor tapped Ayers & Haidt, PA as its legal counsel, and Carr
Riggs & Ingram, LLC as its accountant.
WELLS ENTERPRISES: S&P Downgrades ICR to 'B', Outlook Negative
--------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Iowa-based
ice cream producer Wells Enterprises Inc. to 'B' from 'B+'.
Concurrently, S&P lowered its issue-level ratings on the company's
senior secured term loan due March 2025 to 'B' from 'B+' with an
unchanged recovery rating of '3' (reflecting a rounded estimated
recovery of 50% in the event of payment default).
The negative outlook reflects the potential for a lower rating over
the next 12 months if the company does not reduce leverage below
6.5x.
S&P said, "Operating performance was below our expectations and
cretic metrics may remain pressured over the next 12 months. We
project leverage will be above 8x at fiscal year-end 2022, which is
above our prior expectation of 4.5x and above our 5x downgrade
threshold for the 'B+' issuer rating. The operating
underperformance is a result of packaging and ingredient cost
inflation, which sequentially accelerated in Q2 2022 higher than
our previous base-case expectations. The company implemented a
price increase in May 2022 to offset the inflation experienced
across all input costs to date. Furthermore, after facing
significant labor turnover last year, Wells has improved its
manufacturing conversion cost and labor productivity issues, which
peaked in the first quarter of 2022. Nonetheless, we expect EBITDA
margins will further decline to 5% in 2022 compared to our prior
expectation of improvement to mid-8% in 2022 due to other non-dairy
input cost inflation, lack of a full-year of higher pricing, and
lingering manufacturing conversion headwinds from earlier in the
year. Given the company's inherent price pass-through lag, we
believe there is risk that input cost inflation further accelerates
and leverage remains above 6.5x well into fiscal 2023.
Additionally, due to lower profitability we now expect free
operating cash flow (FOCF) to be negative for fiscal 2022, below
our prior expectation of $15 million."
Despite currently very high leverage above 10x, Wells has the
liquidity to navigate a more challenging macro environment. Despite
weaker cash flow generation in 2022, the company is committed to
funding $70 million-$75 million in growth capital expenditure
(capex) to support novelties manufacturing capacity expansion,
while also maintaining historical dividend levels to its
family-owners. Wells' ability to commit to these funding priorities
is supported by its $100 million term loan upsizing in late-2021.
S&P said, "Our base-case forecast assumes profitability improves in
2023 such that FOCF returns positive and can fully support Wells'
capital allocation priorities. Underpinning our improved
profitability forecast in 2023 are our expectations that
manufacturing efficiency gains are upheld, packaging and ingredient
cost inflation does not significantly worsen, commodity dairy costs
are effectively hedged, and its cost savings program remains on
track. To the extent Wells underperforms our base-case if economic
conditions worsen, its access to liquidity should remain sound,
supported by its lack of near-term maturities, covenant-lite
first-lien credit agreement, partially hedged floating rate
exposure (approximately 65% of term debt), and flexibility to draw
on its asset-backed lending (ABL) revolver, which is governed by a
1x fixed charged covenant ratio (FCCR) if availability is below
10%."
Wells' operating outlook remains favorable, underpinned by healthy
category demand and attractive growth opportunities. Euromonitor
projects the U.S ice cream category to grow at an approximately 4%
compound annual growth rate (CAGR) from 2022 through 2027. Growing
consumer demand for novelties and single-serve SKUs should drive
volume growth, and, in preparation for this, Wells is refocusing
its portfolio toward higher margin branded and novelty products.
Although Wells' revenue contribution remains predominantly co-pack
and private-label driven, we expect it will hold market share and
grow revenue in line with the overall category given its
higher-margin branded novelty sales growth has outpaced the
category (14% in Q2 2022 vs. 11% for the category) through line
extensions and product introductions, such as Blue Bunny twist
cones.
The negative outlook reflects the risk to S&P's forecast that
pricing actions and productivity are unable to offset inflation
headwinds such that leverage does not improve below 6.5x in fiscal
2023.
S&P could lower the rating if it no longer expect leverage to
improve below 6.5x over the next 12 months. This could occur if:
-- EBITDA margins remain below 6%, possibly if the company faces
difficulty in implementing price increases and hedging input cost
inflation or if sales decline significantly from changing consumer
preferences toward private label away from branded novelties; or
-- The company sustains negative discretionary cash flow
generation in fiscal 2023, possibly if margins do not rebound and
the company continues its growth capex without considering a
dividend cut.
S&P could revise the outlook to stable if the company sustains
leverage below 6.5x. This could occur if:
-- The company restores profitability, potentially through a
combination of stabilized input cost inflation and higher margin
product mix; and
-- The company achieves and sustains positive FOCF.
ESG credit indicators: E-2, S-2, G-3
[^] BOND PRICING: For the Week from September 5 to 9, 2022
----------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
Ahern Rentals Inc AHEREN 7.375 76.266 5/15/2023
Ahern Rentals Inc AHEREN 7.375 76.597 5/15/2023
Audacy Capital Corp CBSR 6.500 30.861 05/01/2027
Avaya Holdings Corp AVYA 2.250 42.250 6/15/2023
BPZ Resources Inc BPZR 6.500 3.017 03/01/2049
Basic Energy Services BASX 10.750 8.000 10/15/2023
Basic Energy Services BASX 10.750 7.749 10/15/2023
Bed Bath & Beyond Inc BBBY 3.749 40.298 08/01/2024
Buckeye Partners LP BPL 6.375 81.780 1/22/2078
Buffalo Thunder
Development Authority BUFLO 11.000 54.468 12/09/2022
Clovis Oncology Inc CLVS 4.500 57.121 08/01/2024
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 18.807 8/15/2026
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 6.625 8.938 8/15/2027
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 18.184 8/15/2026
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 18.367 8/15/2026
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 6.625 8.540 8/15/2027
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 18.184 8/15/2026
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 18.660 8/15/2026
Diebold Nixdorf Inc DBD 8.500 61.627 4/15/2024
EnLink Midstream
Partners LP ENLK 6.000 78.000 N/A
Energy Conversion
Devices Inc ENER 3.000 7.875 6/15/2013
Energy Transfer LP ET 6.250 83.500 N/A
Envision Healthcare EVHC 8.750 32.436 10/15/2026
Envision Healthcare EVHC 8.750 32.579 10/15/2026
Exela Intermediate
LLC / Exela
Finance Inc EXLINT 11.500 31.678 7/15/2026
Exela Intermediate
LLC / Exela
Finance Inc EXLINT 10.000 69.837 7/15/2023
Exela Intermediate
LLC / Exela
Finance Inc EXLINT 11.500 32.019 7/15/2026
Exela Intermediate
LLC / Exela
Finance Inc EXLINT 10.000 69.837 7/15/2023
GNC Holdings Inc GNC 1.500 0.816 8/15/2020
GTT Communications Inc GTTN 7.875 7.797 12/31/2024
GTT Communications Inc GTTN 7.875 8.125 12/31/2024
General Electric Co GE 4.200 80.250 N/A
JPMorgan Chase & Co JPM 4.625 92.375 N/A
Lannett Co Inc LCI 7.750 32.831 4/15/2026
Lannett Co Inc LCI 4.500 29.740 10/01/2026
Lannett Co Inc LCI 7.750 33.265 4/15/2026
MAI Holdings Inc MAIHLD 9.500 30.000 06/01/2023
MAI Holdings Inc MAIHLD 9.500 30.000 06/01/2023
MAI Holdings Inc MAIHLD 9.500 30.000 06/01/2023
MBIA Insurance Corp MBI 13.772 11.212 1/15/2033
MBIA Insurance Corp MBI 13.772 11.212 1/15/2033
Macy's Retail Holdings M 6.700 85.686 7/15/2034
Macy's Retail Holdings M 6.700 85.686 7/15/2034
Morgan Stanley MS 1.800 75.103 8/27/2036
OMX Timber Finance
Investments II LLC OMX 5.540 0.850 1/29/2020
Party City Holdings Inc PRTY 6.125 70.444 8/15/2023
Party City Holdings Inc PRTY 6.125 70.444 8/15/2023
Patriot National
Bancorp Inc PNBK 6.250 73.372 6/30/2028
Patriot National
Bancorp Inc PNBK 6.250 73.372 6/30/2028
Plains All American
Pipeline LP PAA 6.125 83.450 N/A
Renco Metals Inc RENCO 11.500 24.875 07/01/2003
Revlon Consumer
Products Corp REV 6.250 17.875 08/01/2024
Sears Holdings Corp SHLD 8.000 2.660 12/15/2019
Sears Holdings Corp SHLD 6.625 5.613 10/15/2018
Sears Holdings Corp SHLD 6.625 5.613 10/15/2018
Sears Roebuck Acceptance SHLD 7.000 0.873 06/01/2032
Sears Roebuck Acceptance SHLD 6.500 1.500 12/01/2028
Sears Roebuck Acceptance SHLD 6.750 0.726 1/15/2028
Sears Roebuck Acceptance SHLD 7.500 0.880 10/15/2027
Shift Technologies Inc SFT 4.750 26.919 5/15/2026
TPC Group Inc TPCG 10.500 54.030 08/01/2024
TPC Group Inc TPCG 10.500 53.500 08/01/2024
TerraVia Holdings Inc TVIA 5.000 4.644 10/01/2019
UpHealth Inc UPH 6.250 31.500 6/15/2026
Vroom Inc VRM 0.750 32.250 07/01/2026
Wesco Aircraft Holdings WAIR 8.500 50.623 11/15/2024
Wesco Aircraft Holdings WAIR 13.125 33.016 11/15/2027
Wesco Aircraft Holdings WAIR 8.500 54.037 11/15/2024
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
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Each Tuesday edition of the TCR contains a list of companies with
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*********
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