/raid1/www/Hosts/bankrupt/TCR_Public/221020.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, October 20, 2022, Vol. 26, No. 292
Headlines
6 TURTLE KNOLL: Taps Richard Croughan as Real Estate Attorney
ADAPTIVE IDENTITY: Voluntary Chapter 11 Case Summary
ANDREWS FARM: May Recapitalize or Sell in Two-Option Plan
BED BATH & BEYOND: Makes Debt-Exchange Offer to Boost Finances
BED BATH: S&P Downgrades ICR to 'CC' on Proposed Debt Exchanges
BETTER 4 YOU BREAKFAST: Amends Unsec. Claims; Plan Hearing Dec. 14
BURFORD CAPITAL: S&P Affirms 'BB-' ICR, Outlook Stable
CARLISLE LOGISTICS: Seeks to Hire Eric A. Liepins as Legal Counsel
CELSIUS NETWORK: Federal Prosecutors Seek Docs Over Account Freeze
CHAFFIN GUTTERING: Taps Harlin Parker Attorneys at Law as Counsel
CHARGING GRIZZLY: Files for Chapter 11 Bankruptcy
CHURCH OF GOD: Seeks Chapter 11 Bankruptcy Protection
CIP 1106: Court OKs Cash Collateral Access Thru Dec 31
COLORADO WORLD: Continued Operations to Fund Plan Payments
DGS REALTY: Seeks to Continue Using Cash Collateral Thru Dec 31
EARTH HOUSE: Hits Chapter 11 Bankruptcy
EL CALAMAR: Unsecureds Will Get 5% of Claims over 5 Years
EYE INNOVATIONS: Seeks to Hire McGovern & Associates as Accountant
FIRST FRUITS: Starts Subchapter V Case; TriPharma Opposes
FLEETCOR: S&P Alters Outlook to Stable, Affirms BB+ ICR
FORMATION GROUP: Gets New 2-Year $681,000 DIP Loan
FRASIER CONTRACTING: Taps Saunders Law Group as Special Counsel
FREE SPEECH: Texas Court OKs Mediation in Alex Jones Firm's Case
FULL CIRCLE: Wins Cash Collateral Access on Final Basis
GIRARDI & KEESE: Court Approves $8M Bankruptcy Sale of Mansion
HIGHLINE AFTERMARKET: Moody's Alters Outlook on B2 CFR to Negative
HOLY GROUND: Taps Wadsworth Garber Warner Conrardy as Counsel
HOUSTON REAL ESTATE: Returns to Chapter 11, Removes State Suit
IMERYS TALC: Can Remain in Bankruptcy, Judge Rules
JA SEEKINS: Gets OK to Hire Neeleman Law Group as Counsel
JOHN V. GALLY: Gets Approval to Tap Resolute as Valuation Expert
JUST BELIEVE: Seeks to Hire Michael Cabot as Real Estate Broker
K&N PARENT: S&P Upgrades ICR to 'CCC-', Outlook Negative
KABBAGE INC: Hires Weil Gotshal & Manges as Bankruptcy Counsel
LADO ENTERPRISES: Taps Taksey Neff & Associates as Accountant
LATTICE SEMICONDUCTOR: S&P Hikes ICR to 'BB' on Leverage Reduction
LEVEL FOUR ORTHOTICS: $2.2MM DIP Loan, Cash Collateral Access OK'd
LTM SDLV 2020: Seeks to Hire Riggi Law Firm as Bankruptcy Counsel
LUMALE GROUP: Voluntary Chapter 11 Case Summary
M1 DEVELOPMENT: Unsecureds Will Get 100% of Claims in Plan
MALLINCKRODT PLC: Trust Sues to Recover $1.6-Bil. Shares Buyback
MERMAID BIDCO: S&P Alters Outlook to Stable, Affirms 'B-' ICR
MIDLAND ELECTRIC: Voluntary Chapter 11 Case Summary
MIDWEST OVERNITE: Seeks to Hire Turner Legal Group as Counsel
MILLERKNOLL INC: S&P Downgrades ICR to 'BB' on Looming Recession
MTG INC: Court Grants Summary Judgment Bid of Comerica, et al.
NATPE: UK Publishing Company Submits Letter of Intent to Buy Assets
NELSON BROTHERS: Voluntary Chapter 11 Case Summary
NORTH FORK COMMUNITY: Files for Chapter 11 With Plan Deal
NYMD GREEN: Seeks to Hire Berger as Legal Counsel
OLYMPIA SPORTS: Seeks to Hire BMC Group as Administrative Agent
PECOS ENTERTAINMENT: Taps Eric A. Liepins as Legal Counsel
PUERTO RICO: Court Okays Highway Authority Plan
QUANTUM SOURCE: Voluntary Chapter 11 Case Summary
RLG HOLDINGS: Moody's Rates $130MM 1st Lien Term Loan Add-on 'B2'
RLG HOLDINGS: S&P Rates New $130MM First-Lien Term Loan 'B-'
RODA EXPRESS: Files Subchapter V Case
SAINT KROIX: Seeks to Hire Robl Law Group as Bankruptcy Counsel
SEAHORSE RESTAURANT: Seeks to Hire Stichter as Bankruptcy Counsel
SERVICE LOGIC: $115MM Incremental Debt No Impact on Moody's B3 CFR
SHAGTASTIC ENTERPRISES: Taps Dilks Law Firm as Bankruptcy Counsel
SMART AND SASSY: Starts Subchapter V Case
SPRINGS FIREPLACE: Files for Chapter 11 Protection
TPC GROUP: Nearing Deal With Unsecured Creditors
VANGUARD WINES: Files Subchapter V to Pursue Going Concern Sale
VITAL PHARMACEUTICALS: Gets Interim OK to Tap CTO Services Provider
VITAL PHARMACEUTICALS: Gets OK to Hire Stretto as Claims Agent
VITAL PHARMACEUTICALS: Taps Berger Singerman as Local Counsel
VITAL PHARMACEUTICALS: Taps Latham & Watkins as Bankruptcy Counsel
VITAL PHARMACEUTICALS: Taps Rothschild & Co. as Investment Banker
VOYAGER DIGITAL: Won't Sue Execs Despite 3AC Mess
[^] Recent Small-Dollar & Individual Chapter 11 Filings
*********
6 TURTLE KNOLL: Taps Richard Croughan as Real Estate Attorney
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6 Turtle Knoll, LLC seeks approval from the U.S. Bankruptcy Court
for the Southern District of New York to employ Richard Croughan,
Esq., an attorney practicing in N.Y.
The Debtor requires legal representation in connection with the
sale of its real property located at 6 Turtle Knoll, Monroe, N.Y.
Mr. Croughan will be paid under a flat fee retainer of $1,750. He
will also charge $250 per hour for actual time spent on file if the
matter requires more legal work than is normal and customary in the
industry.
The attorney disclosed in a court filing that he is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The attorney can be reached at:
Richard J. Croughan, Esq.
Attorney at Law
210 Main Street
Goshen, NY 10924
Telephone: (845) 294-5953
Facsimile: (845) 294-3974
Email: rjclaw1227@yahoo.com
About 6 Turtle Knoll
6 Turtle Knoll, LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case
No.22-35095) on Feb. 22, 2022, with up to $500,000 in assets and up
to $1 million in liabilities.
Judge Cecelia G. Morris oversees the case.
The Debtor tapped James J. Rufo, Esq., at The Law Office of James
J. Rufo as bankruptcy counsel and Richard J. Croughan, Esq., as
real estate attorney.
ADAPTIVE IDENTITY: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Adaptive Identity Systems, LLC
46755 Camaron Road
Temecula, CA 92590
Business Description: The Debtor is engaged in activities related
to real estate.
Chapter 11 Petition Date: October 19, 2022
Court: United States Bankruptcy Court
Central District of California
Case No.: 22-13940
Judge: Hon. Mark D. Houle
Debtor's Counsel: RoseAnn Frazee, Esq.
FRAZEE LAW GROUP
5133 Eagle Rock Blvd
Los Angeles, CA 90041
Tel: (323) 274-4287
Email: roseann@frazeelawgroup.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Hilario D. Gonzales as managing member.
The Debtor stated it has no creditors holding unsecured claims.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/2Q6V3LI/Adaptive_Identity_Systems_LLC__cacbke-22-13940__0001.0.pdf?mcid=tGE4TAMA
ANDREWS FARM: May Recapitalize or Sell in Two-Option Plan
---------------------------------------------------------
Andrews Farm Water Company, Inc., filed with the U.S. Bankruptcy
Court for the District of Massachusetts a Plan of Reorganization
for Small Business dated October 17, 2022.
The Debtor is a private water company that was formed in or about
1991 to sell and provide water to residents of Andrews Farm, which
is a residential real estate development permitted pursuant to the
Comprehensive Permit issued by Boxford pursuant to MGLA 40-B.
MDPU issued the Rate Order that became effective during early March
2018. The Rate Order prevented the Debtor from earning sufficient
revenue to operate profitably in a prudent manner or build a
meaningful capital reserve. Inflation has caused the Debtor to
suffer negative cash flow. Customers stopped paying water bills
during Covid, but the Debtor cannot easily discontinue service to
them under the MDPU rules governing collections.
The Debtor does not have the financial capacity to design and
install the filtration system required by MDEP due to the presence
of PFAS in the water supply although MDEP has not ordered the
Debtor to stop selling water. As a result, the Debtor commenced
this Case to leave the private water company business in as
responsible manner as possible.
The Debtor may implement this Plan through Option A or B. Option A
requires the cooperation of Topsfield, Boxford, Lockwood and the
Debtor.
* Under Option A, Lockwood shall contribute to the maintenance
of the Water Distribution Assets for a period of 5 years from the
date of the Water Distribution Lease if and as long as Boxford
establishes a reserve fund of $10.00 per customer per month, which
will create a reserve of approximately $31,800 in 5 years. Lockwood
shall pay an amount equal to 100% thereof for the first 12-month
period; 80% thereof for the second 12-month period; 60% thereof for
the third 12-month period; 40% thereof for the fourth 12-month
period; and 20% thereof for the fifth 12-month period. Boxford
shall pay the balance for each 12-month period, but may bill the
Homeowners for its portion.
* Under Option B, the Debtor will retain the property of the
estate or sell all or substantially all of the property of the
estate known as the Purchased Assets to the Default Buyer free and
clear of all Liens, Claims and Interests pursuant to Bankruptcy
Code Section 363, an Asset Purchase Agreement, except for cash,
cash equivalents and the other Property specifically defined as
Excluded Property. Any Buyer of the Purchased Assets must assume
and agree to pay, perform and satisfy all of the Debtor's duties,
financial liabilities and other obligations evidenced by or arising
under the Plan Secured Claim Documents to be executed and delivered
to Conn as the Subordinated Non-Priority Creditor. in satisfaction
of the Plan Secured Claim and certain other Assumed Liabilities.
Class 4 consists of Non-Priority Unsecured Claims. The Debtor may
file an objection to the Proof of Claim filed by Dale and Theresa
Pyatt and a counterclaim or counterclaims based on or arising from
among other things, the dissolution of the Homeowners Association
and equitable servitude or servitudes imposed on their property
and/or the failure of the creditor to have quantified the
contingent claim or mitigated any damage sustained by them.
On the Effective Date, the Debtor shall pay the creditors holding
Allowed Claims in this Class the lesser of their allowed claims in
this class in full or a pro rata share of the sum of $20,000 on the
10th day from the date on which all claims in this class have been
allowed in whole or in part or disallowed by a final order from the
proceeds of the Debtor's cash on hand, the proceeds of its accounts
receivable and the sale of the well equipment if not needed after
the Effective Date of this Plan, the New Equity Purchase and the
Loan if necessary.
Class 5 consists of Conn Subordinated and Secured Claim Class. This
class includes the claims in the aggregate amount of $563,614.13
asserted by Douglas R. Conn in Proof of Claim 6-1. The Conn Allowed
Secured Claim shall be paid and deemed to have been paid in full,
with interest at the rate of 3.25% per annum, in 360 consecutive
monthly installments of principal and interest pursuant to the
terms of a promissory note for the payment of such amount to the
creditor in this Class, a statutory power of sale mortgage and/or
security agreement granting the creditor a mortgage of and security
interests in and to all of the Debtor's property, including
commercial torts and other Causes of Action, as security for the
payment of such consolidated claim.
Douglas Conn holds all of the equity interests in the Debtor. As of
the Effective Date, all equity interests in the Debtor shall be
canceled, without the payment of any dividend, and replaced by the
New Equity Interests to be issued to the New Equity Holder pursuant
to this Plan.
This Plan, filed under chapter 11 of the Code, proposes to pay
creditors holding Allowed Claims from the following sources:
* The Debtor's cash on hand on the Effective Date, which
represents the Debtor's net disposable income prior thereto, the
proceeds of the Debtor's accounts receivable, and any net
disposable income earned after the Effective Date if the Debtor
continues to sell water to Homeowners;
* The New Value to be contributed by the New Equity Holder in
exchange for the New Equity to be issued by the Debtor and the Loan
to be made by the New Equity Holder, if necessary;
* The assumption of the Conn Subordinated and Secured Claim in
the sale Transaction – the sale of all or substantially all of
the property of the estate to a Buyer pursuant to Bankruptcy Code
Section 363 and this Plan free and clear of all liens, claims and
interests, except for those expressly and specifically assumed by
the Buyer – should it occur in Option B.
In this Plan, the Debtor 2 options for the implementation of the
Plan. Option A known as the Topsfield-Boxford-Homeowners
Transaction which the Debtor believes to be the resolution that
most closely approximates the wishes of Topsfield, Boxford and the
Homeowners. It contemplates the sale of water purchased from
Topsfield to Homeowners by Boxford using the so-called Water
Distribution Assets leased from Lockwood pursuant to the
Conditional, Limited Joinder and Water Distribution Lease. Option B
will result in the sale of all or substantially all of the Debtor's
real and personal property to the Default Buyer, an entity to be
formed by Douglas Conn, free and clear of all liens, claims and
interests to the maximum extent permitted by law, pursuant to
Bankruptcy Code 363.
A full-text copy of the Plan of Reorganization dated October 17,
2022, is available at https://bit.ly/3TfZg9s from PacerMonitor.com
at no charge.
Counsel for the Debtor:
William S. Gannon, Esq.
William S. Gannon PLLC
740 Chestnut Street
Manchester, New Hampshire 03104
Phone: 603-621-0833
Fax: 603-621-0830
About Andrews Farm Water Company
Andrews Farm Water Company, Inc., filed a petition under Chapter
11, Subchapter V of the Bankruptcy Code (Bankr. D. Mass. Case No.
22-11004) on July 18, 2022, listing as much as $1 million in both
assets and liabilities. David B. Madoff serves as Subchapter V
trustee.
William S. Gannon, Esq., at William S. Gannon, PLLC and James G.
Grillo, Esq., at Davagian Grillo & Semple serve as the Debtor's
bankruptcy attorneys.
BED BATH & BEYOND: Makes Debt-Exchange Offer to Boost Finances
--------------------------------------------------------------
Bed Bath & Beyond Inc. (NASDAQ: BBBY) made a debt-exchange offer as
the home-goods chain looks to ease its financial burdens amid a
sales drop.
Bed Bath & Beyond on Oct. 18, 2022, announced that it has commenced
offers to exchange any and all of its outstanding Senior Notes.
Sue Gove, Director & Interim CEO of Bed Bath & Beyond Inc. said,
"We believe this transaction will put us in a stronger financial
position going forward by significantly reducing our debt and
interest expense upon a successful completion. By proactively
focusing on our Senior Notes, we also intend to address the
maturity of our nearest-term 2024 Notes and any impact they may
have on our current and future business. This transaction is
intended to create greater stability and flexibility in our
business which we believe benefits all stakeholders."
The recent announcement includes an offer to exchange:
(i) 3.749% Senior Notes due 2024 (the "2024 Notes") for new
3.693% Senior Second Lien Secured Non-Convertible Notes due 2027
(the "New Second Lien Non-Convertible Notes") and/or new 8.821%
Senior Second Lien Secured Convertible Notes due 2027 (the "New
Second Lien Convertible Notes"), at the option of the holder of the
2024 Notes;
(ii) 4.915% Senior Notes due 2034 (the "2034 Notes") for new
12.000% Senior Third Lien Secured Convertible Notes due 2029 (the
"New Third Lien Convertible Notes" and, together with the New
Second Lien Non-Convertible Notes and the New Second Lien
Convertible Notes, the "New Notes"); and
(iii) 5.165% Senior Notes due 2044 (the "2044 Notes" and,
collectively with the 2024 Notes and the 2034 Notes, the "Old
Notes") for New Third Lien Convertible Notes,
In connection with the Exchange Offers, the Company is also
soliciting consents to amend the indenture governing the Old Notes
(the "Consent Solicitations").
A copy of the company's regulatory filing is available at:
https://tinyurl.com/mr43y8t3
About Bed Bath & Beyond Inc.
The Union, NJ-based Bed Bath & Beyond Inc., together with its
subsidiaries, is an omnichannel retailer selling a wide assortment
of merchandise in the Home, Baby, Beauty & Wellness markets and
operates under the names Bed Bath & Beyond, buybuy BABY, and
Harmon, Harmon Face Values. The Company also operates Decorist, an
online interior design platform that provides personalized home
design services.
The Company reported a net loss of $559.62 million for the fiscal
year ended Feb. 26, 2022, a net loss of $150.77 million for the
year ended Feb. 27, 2021, a net loss of $613.82 million for the
year ended Feb. 29, 2020, and a net loss of $137.22 million for the
year ended March 2, 2019. As of May 28, 2022, the Company had
$4.94 billion in total assets, $5.16 billion in total liabilities,
and a total stockholders' deficit of $220.30 million.
Much of Bed Bath & Beyond's bonds and loans are trading at
distressed levels.
In August 2022, Bloomberg reported that Bed Bath hired law firm
Kirkland & Ellis to help it address a debt load that's become
unmanageable, and is late on its payments to vendors, leading some
to restrict shipments or halt them altogether. Kirkland, typically
known for its dominance in restructuring and bankruptcy situations,
was tapped to advise the retailer on options for raising new money,
refinancing existing debt, or both.
BED BATH: S&P Downgrades ICR to 'CC' on Proposed Debt Exchanges
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Union,
N.J.-based specialty home retailer Bed Bath & Beyond Inc. (BBBY) to
'CC' from 'CCC' and its issue-level rating on its outstanding
unsecured notes to 'CC' from 'CCC-'.
The negative outlook reflects that, upon the completion of the
exchanges, S&P will lower our issuer credit rating on the company
to 'SD' (selective default) and our issue-level rating on its
unsecured notes to 'D'.
BBBY has announced exchange offers for its outstanding senior
unsecured notes, under which it will provide new second- and
third-lien notes to its existing noteholders at a significant
discount to the par value of its existing notes.
S&P said, "We view the proposed exchanges as distressed. BBBY has
announced exchange offers for its outstanding unsecured notes due
2024, 2034, and 2044. Under the proposed terms of the exchanges,
the company will provide the holders of its unsecured 2024 notes
with either new non-convertible second-lien notes due 2027 at par
value, which would be redeemable by BBBY in one year at 40% of
principal, or new convertible second-lien notes valued at $410 per
$1,000 of principal. Meanwhile, the company would provide the
holders of its unsecured 2034 and 2044 notes with new third-lien
notes due 2029 valued at $217.50 per $1,000 of principal. It is
also incentivizing its noteholders to consent to the exchange
through early participation payments. We view these exchanges as
tantamount to a default because the noteholders will receive far
less than they were originally promised. In addition, we view the
offers as distressed rather than opportunistic because of BBBY's
very weak operating results this year.
"The negative outlook reflects that we will lower our issuer credit
rating on BBBY to 'SD' and our issue-level rating on its unsecured
debt to 'D' upon the completion of the exchanges."
ESG credit indicators: E-2, S-2, G-5
BETTER 4 YOU BREAKFAST: Amends Unsec. Claims; Plan Hearing Dec. 14
------------------------------------------------------------------
Better 4 You Breakfast, Inc., submitted a Disclosure Statement
which relates to the accompanying Chapter 11 Plan dated October 17,
2022.
During the Chapter 11 case and with Court approval, the Debtor sold
its business assets. Most of the Debtor's unexpired leases and
executory contracts were assumed and assigned - transferred as part
of the sale. Some were not transferred because: (1) in some cases
the one-year executory contracts with clients were still being
negotiated; (2) the buyer was not interested in taking on a
particular executory contract; or (3) there was simply an oversight
and a contract or lease was overlooked in the rush to complete the
sale transaction.
Class 1 consists of General Unsecured Claims. Under the Plan,
holders of General Unsecured Claims are likely, but not guaranteed
to be paid in full (100% of what is owed) without interest or an
amount which they agree to accept. Claimholders cannot be paid more
than they are owed.
The actual percentage to be paid could be lower depending on the
total funds available after the payment of Administrative Claims
and the total amount of the unsecured claims which are allowed. If
the total amount of General Unsecured Claims is more than expected,
or if the amount available is less than expected, the percentage
could be lower.
Class 2 consists of Interest Holders. The Interest Holders will
receive whatever assets exist in the estate after the payment in
full of all General Unsecured Claims. In other words, those holding
Interests will receiving nothing until and unless those holding
General Unsecured Claims are paid in full.
In this case, the bankruptcy estate consists of cash (mostly from
the asset sale), some cash from operations prior to the sale, cash
to be received from the sale which is being held back until certain
contingencies are resolved, stock in the buyer (which was part of
the purchase price from the asset sale), stock in the buyer which
is being held back until certain contingencies are resolved and
perhaps a few other miscellaneous assets of nominal value. The
precise terms and conditions of the sale are set forth in an Asset
Purchase Agreement. The stock in the buyer will be liquidated if
necessary to pay General Unsecured Claims.
Because the Debtor is not an individual, does not intend to
continue in business and the proposed Plan is a liquidating Plan,
the Debtor will not receive a discharge of debts. As of the Plan's
Effective Date, control over assets of this bankruptcy estate will
be returned to those designated under the Plan to manage them. The
Plan also restrains and enjoins creditors and other parties from
taking any action which is inconsistent with the Plan, or which
would disrupt implementation of the Plan. Specifically, creditors
may not try to enforce their pre-existing debts other than as
provided under the Plan.
The Bankruptcy Court scheduled December 14, 2022 at 2:00 p.m. as
Plan Confirmation Hearing.
A full-text copy of the Disclosure Statement dated October 17,
2022, is available at https://bit.ly/3DcfKdf from PacerMonitor.com
at no charge.
Attorney for Debtor:
David A. Tilem, Esq.
Law Offices of David A. Tilem
206 N Jackson St Suite 201
Glendale, CA 91206
Phone: +1 818-507-6000
Fax: 818-507-6800
Email: DavidTilem@TilemLaw.com
About Better 4 You Breakfast
Better 4 You Breakfast, Inc., is a school meal vendor based in Los
Angeles, Calif.
Better 4 You Breakfast sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-10994) on Feb. 24,
2022, listing as much as $50 million in both assets and
liabilities. Fernando Castillo, president, signed the petition.
Judge Sheri Bluebond oversees the case.
Daniel A. Tilem, Esq., at the Law Offices of David A. Tilem and
James Wong, a principal at Armory Consulting Co., serve as the
Debtor's legal counsel and chief restructuring officer,
respectively.
The U.S. Trustee for Region 16 appointed an official committee of
unsecured creditors on April 18, 2022. The committee is
represented by Brinkman Law Group, PC.
BURFORD CAPITAL: S&P Affirms 'BB-' ICR, Outlook Stable
------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' ratings on Burford Capital
Ltd. and its senior unsecured debt. The outlook remains stable.
The ratings affirmation follows Burford's successful navigation
through a stress period of two years of slow court activity. While
portfolio realizations remain depressed compared with pre-pandemic
levels, the company still generated enough cash to cover operating
expenses and maintained healthy deployments of new capital. In
addition, the resumption of court activity and any disputes
resulting from the pandemic could benefit Burford's investment
portfolio and returns.
Leverage, as measured by debt to adjusted total equity (ATE), was
0.9x as of June 30, 2022. Although an increase from the 0.7x a year
ago, it remains below most rated finance company peers. S&P expects
the company to maintain leverage around 1.0x, accounting for the
1.5x-2.0x leverage covenants under some of Burford's senior
unsecured notes. These are incurrence covenants, not maintenance
covenants, indicating that exceeding these leverage ratios would
only result in restricting some actions for Burford like incurring
additional debt.
Realizations and earnings remain inconsistent, with the timing of
litigation finance investments still unpredictable. Consolidated
capital provision income increased by 31% for the first half of
2022 from a year ago, but the portion attributable to fair value
adjustments (unrealized gains) increased to 79% from 24%.
Burford-only realizations for the first half of 2022 were also down
46% compared with the first half of 2021, though a single case (the
Akhmedov case) made up the majority of the first half 2021's
realizations. S&P still believes that the unpredictability of the
amount and timing of litigation finance investment realizations and
the high amount of undrawn commitments could strain Burford's
liquidity in a stress scenario.
S&P said, "The stable outlook reflects our expectation that as
Burford continues to grow its balance sheet and asset management
segment, successful investments will continue to provide more than
sufficient returns to offset the relatively high number of failed
investments because of their asymmetric return profile. The stable
outlook also reflects our expectation that the company will
maintain leverage around 1.0x over the next 12 months.
"We could lower our ratings on Burford if, in our view, its
investment performance weakens considerably, which could be
indicated by a decline in investment realizations over a six- to
12-month period, or by an increase in the ratio of cases that are
concluded with a return less than the invested principal. We could
also lower the ratings if leverage approaches 1.5x or if liquidity
becomes strained owing to higher draws on commitments or reduced
realizations.
"An upgrade is unlikely over the next 12 months. Over the longer
term, we could upgrade the company if its portfolio reaches a
maturity and diversification that would reduce potential lumpiness
of revenues and provide a more stable and predictable flow of
earnings while maintaining leverage below 1.5x."
CARLISLE LOGISTICS: Seeks to Hire Eric A. Liepins as Legal Counsel
------------------------------------------------------------------
Carlisle Logistics, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Texas to employ Eric A. Liepins,
PC as its bankruptcy counsel.
The Debtor requires legal assistance for the purpose of orderly
liquidating the assets, reorganizing the claims of the estate, and
determining the validity of claims against the estate.
The hourly rates of the firm's counsel and staff are as follows:
Eric A. Liepins $275
Paralegals and Legal Assistants $30 - $50
In addition, the firm will seek reimbursement for expenses
incurred.
The firm has been paid a retainer of $3,238.
Mr. Liepins, the sole shareholder of the firm, disclosed in a court
filing that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Eric A. Liepins, Esq.
Eric A. Liepins, PC
12770 Coit Road, Suite 850
Dallas, TX 75251
Telephone: (972) 991-5591
Facsimile: (972) 991-5788
Email: eric@ealpc.com
About Carlisle Logistics
Carlisle Logistics, LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Texas Case No.
22-31885) on Oct. 10, 2022, with as much as $1 million in both
assets and liabilities. Eric A. Liepins, PC serves as the Debtor's
counsel.
CELSIUS NETWORK: Federal Prosecutors Seek Docs Over Account Freeze
------------------------------------------------------------------
Andrew Smith of The Coin Republic reports that the Celsius network
was ordered to appear in court to provide evidence due to the
company freezing users' accounts in June. The United States'
Federal prosecutors said that the Celsius network trapped most of
its users' savings on the platform. The subpoena was issued on a
bankrupt crypto platform in the month of June by the US Department
of Justice in Manhattan.
The bankrupt crypto platform, Celsius, tweeted that the company has
filed petitions for the chapter 11 bankruptcy process in response
to the announcement and the company decided to initiate a financial
restructuring on the platform. When Celsius filed for Chapter 11
bankruptcy, it released a balance sheet that showed a $1.2 billion
(USD) loss.
In June 2022, by following the terms and conditions of the crypto
market, Celsius froze the users' withdrawals that affected the
digital assets in large amounts, surpassing nearly $300 billion
(USD) in that selloff in crypto assets and leaving retail investors
behind with their savings.
Celsius's platform has nearly 100,000 customers and assets worth
approximately $5.5 billion (USD). Celsius stated that assets which
are locked in these filings are not supported by any stakeholder or
it may not go as far as some custody programs and withheld account
holders. Similar kinds of security schemes can be seen in Britain
and in the European Union (EU).
"We are cooperating with all regulatory inquiries, and regulators
are key stakeholders in our reorganization. We are not commenting
as to the specific details of any inquiries."
The court didn't announce a bar date yet to file a claim. Once the
proceedings are approved by the court, then an official
notification will be released for the users to file a claim. The
motion is scheduled to be heard on November 1st for customers who
want to submit proof of claim.
Recently, the co-founder of Celsius network, Alex Mashinsky,
withdrew $10 million (USD) from savings to pay the taxes before the
seizing of users' accounts. As per the report on October 11,
because of Celsius freezing assets, the investors in the Cardano
network had lost nearly $25 million (USD).
Another cryptocurrency lender in the United States, Voyager Digital
Ltd., has announced bankruptcy after freezing its users' deposits.
In May 2022, after the fall of popular crypto tokens like Luna and
Terra USD, the investors came under scrutiny after their prices
fell in demand.
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, maintain the page
https://cases.stretto.com/celsius
CHAFFIN GUTTERING: Taps Harlin Parker Attorneys at Law as Counsel
-----------------------------------------------------------------
Chaffin Guttering, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Kentucky to employ Harlin Parker
Attorneys at Law as its legal counsel.
The firm will render these services:
(a) advise the Debtor on its powers and duties in the
continued operation of the estate' business and management of its
assets;
(b) take all necessary action to protect and preserve the
Debtor's estate;
(c) prepare legal papers; and
(d) perform all other services for the Debtor in connection
with this Chapter 11 case.
On Oct. 6, the firm received $5,000 from the Debtor.
Robert Chaudoin, Esq., an attorney at Harlin Parker Attorneys at
Law, disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Robert C. Chaudoin, Esq.
Harlin Parker Attorneys at Law
519 East Tenth Avenue
Bowling Green, KY 42102
Telephone: (270) 842-5611
Facsimile: (270) 842-2607
Email: chaudoin@harlinparker.com
About Chaffin Guttering
Chaffin Guttering, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. W.D. Ky. Lead Case No. 22-10569) on
Oct. 10, 2022, with as much as $1 million in both assets and
liabilities. Elton Chaffin, member, signed the petition.
Robert C. Chaudoin, Esq., at Harlin Parker Attorneys at Law serves
as the Debtor's counsel.
CHARGING GRIZZLY: Files for Chapter 11 Bankruptcy
-------------------------------------------------
Charging Grizzly LLC filed for chapter 11 protection in the Western
District of Oklahoma.
The Debtor filed $1.433 million in total assets against $2.706
million in liabilities in its schedules. The Debtor owns a 9.0%
interest in Red Hawk SWD 1-17 Well and 9.0% interest in Red Hawk
SWD 2-17 a/k/a 2-17H Well located in the SE4/SW/4 of Section 17,
Township 19N, Range 7 WIM, Kingfisher County, Oklahoma, valued at
$841,812. The Debtor's lone secured creditor is First National
Bank & Trust, owed a total of $2.706 million.
According to court filings, Charging Grizzly estimates having 1 to
49 creditors and says funds will be available to unsecured
creditors.
A telephonic meeting of creditors under 11 U.S.C. Section 341(a) is
slated for November 14, 2022 at 1:30 p.m.
About Charging Grizzly
Charging Grizzly LLC is a limited liability company in Oklahoma.
Charging Grizzly LLC filed a petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. W.D. Okla. Case No. 22-12334) on
October 10, 2022. In the petition filed by Charles V. Long Jr., as
managing member and owner, the Debtor reported assets and
liabilities between $1 million and $10 million.
The Debtor is represented by Stephen J. Moriarty of Fellers Snider
et al.
CHURCH OF GOD: Seeks Chapter 11 Bankruptcy Protection
-----------------------------------------------------
Church of God of Corona Inc. filed for chapter 11 protection in the
Eastern District of New York due to its financial situation.
According to court filings, Church of God of Corona estimates $1
million to $10 million in debt to 1 to 49 creditors. The petition
states that funds will be available to unsecured creditors.
A teleconference meeting of creditors under 11 U.S.C. Section
341(a) is slated for Nov. 14, 2022, at 1:00 p.m.
About Church of God of Corona
Church of God of Corona Inc. filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
22-42488) on Oct. 6, 2022. In the petition filed by Blanca Giron,
as president, the Debtor reported assets and liabilities between $1
million and $10 million each.
The Debtor is represented by H Bruce Bronson of Bronson Law Offices
PC.
CIP 1106: Court OKs Cash Collateral Access Thru Dec 31
------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles, Division, authorized CIP 1106 11th St, LLC to use cash
collateral on an interim basis in accordance with the budget, with
a 15% variance, through December 31, 2022.
As adequate protection to secured creditor ReadyCap Commercial,
LLC, the Debtor agreed to:
a. pay $12,000 per month starting from September 2022;
b. provide a replacement lien on the revenue generated
postpetition to the extent that its cash collateral is actually
used;
c. segregate and hold in its cash collateral DIP bank account
all revenue exceeding the funds needed to pay the expenses set
forth on the Budget.
The Court said if at any time the Debtor violates any provision of
the Order, ReadyCap may give written notice of the default to the
Debtor's counsel. If the Debtor fails to cure the default with
21-days of the notice, ReadyCap will be entitled to a hearing
requesting relief from the automatic stay pursuant to 11 U.S.C.
section 362 on an expedited basis.
About CIP 1106 11th St, LLC
CIP 1106 11th St, LLC is a Delaware limited liability company
created on October 24, 2019, as a real estate investment company.
Its managing member is Robert W. Clippinger.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-14521) on August 19,
2022.
Judge Vincent P. Zurzolo oversees the case.
Mathew D. Resnick, Esq., at RHM LAW, LLP is the Debtor's counsel.
COLORADO WORLD: Continued Operations to Fund Plan Payments
----------------------------------------------------------
Colorado World Resorts, LLC, filed with the U.S. Bankruptcy Court
for the District of Colorado a Disclosure Statement for Plan of
Reorganization dated October 17, 2022.
The Debtor was formed as a Colorado limited liability company.
There are two members of the Debtor, Ranko Mocevic and Keiter
Group, LLC, (an entity owned by Eric Keiter). Each of the members
holds a 50% membership interest.
The Debtor's principal asset is the Property located at 19302
Cottonwood Drive, Parker, Colorado 80138. The Property is a 59,547
square foot (on 1.37 acres) site located in Parker Colorado. The
Property is under construction to build a guest lodging facility to
be operated as a Hawthorn Suites by Wyndham.
In April 2022 the Debtor, the guarantors and BRMK Lending, LLC
entered into a Forbearance Agreement whereby BRMK Lending, LLC
agreed to extend the Maturity Date to October 1, 2022 and to
postpone or cancel the pending foreclosure. In consideration for
the Forbearance Agreement, Ranko Mocevic entered into an Agreement
to Transfer Property to Pay Down Loan pursuant to which 175 parcels
of real property were transferred to BRMK Lending, LLC. These
parcels are located principally in Arizona, New Mexico, Washington
as well as Florida, Arkansas and Maine.
Notwithstanding the provisions of the Forbearance Agreement, the
Debtor was advised in July 2022 that BRMK Lending, LLC intended to
proceed with its foreclosure and with an action for appointment of
a receiver. The Debtor commenced the filing of the Chapter 11 case
to reorganize and preserve the Property.
The payments under the Plan will be funded through the operation of
the Debtor's business. The Debtor believes that its operating
income will be sufficient to make payments under the Plan and to
operate the Reorganized Debtor.
Class 5 shall be comprised of creditors holding Allowed Impaired
Unsecured Claims against the Debtor, including any allowed penalty
Claims held by any taxing authority which are not related to actual
pecuniary loss. The treatment of the Class 5 Claims shall depend
upon whether the Plan is confirmed as a Consensual Plan or as a
Cramdown Plan.
Consensual Plan. In the event the Plan is confirmed as a Consensual
Plan, the Allowed Class 5 Claims shall receive their pro rata share
of the General Claims Fund, after payments to the Allowed
Administrative Claims under the terms of the Plan. The
distributions from the General Claims Fund shall continue for five
years following the Effective Date. Distributions to the Allowed
Class 5 Claimants shall commence thirty days following the close of
the first full calendar quarter following the Effective Date and
shall continue to be made thirty days following the close of each
calendar quarter for the remaining term of the Plan.
* In a Consensual Plan, the Class 5 creditors shall also
receive distribution of any proceeds from the Reorganization Loan
after payment of all amounts required to complete construction and
open operations of the Property and Allowed Administration Expenses
less a reserve of $100,000 to be used by the Debtor for working
capital purposes. The distribution of the remaining proceeds of the
Reorganization Loan shall be distributed with the next quarterly
payment following opening of operations of the Property.
Cramdown Plan. In the event the Plan is confirmed as a Cramdown
Plan, the Allowed Class 5 Claims shall receive their pro rata share
of the membership interests of the Reorganized Debtor to be issued
on the Effective Date.
Class 6 is comprised of the Claims of holders of unexpired
equipment leases or executory contracts. The Debtor, prior to the
hearing on confirmation, shall file motions to assume or reject its
unexpired leases and executory contracts. Any Class 6 claimant
asserting a claim for damages arising from rejection of a lease
shall file a proof of claim with the Bankruptcy Court by the later
of the Effective Date or thirty days after entry of the Order
granting the Motion to Reject or the claim shall be forever barred.
The claims held by holders of rejected leases or executory
contracts shall be treated as a Class 5 unsecured claims subject to
the limitations of Section 502 of the Code.
Class 8 is comprised of the membership interests held by the
Members of the Debtor.
* Consensual Plan. In the event that the Plan is confirmed as
a Consensual Plan, the Class 8 Interest holders shall retain their
membership interests in the Reorganized Debtor.
* Cramdown Plan. In the event that the Plan is confirmed as a
Cramdown Plan, the Class 8 Interest holders shall be canceled as of
the Effective Date.
A full-text copy of the Disclosure Statement dated October 17,
2022, is available at https://bit.ly/3SsdAdX from PacerMonitor.com
at no charge.
Counsel for the Debtor:
Bonnie Bell Bond, Esq.
Law Office of Bonnie Bell Bond, LLC
8400 E Prentice Ave Ste 1040
Greenwood Village, CO 80111-2922
Tel: (303) 770-0926
Email: bonnie@bellbondlaw.com
About Colorado World Resorts
Colorado World Resorts, LLC, a company in Greenwood Village, Colo.,
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D. Colo. Case No. 22-12558) on July 15, 2022, listing $10
million to $50 million in both assets and liabilities. Ranko
Mocavic, manager and member of Colorado World Resorts, signed the
petition.
Judge Michael E. Romero oversees the case.
Bonnie Bell Bond, Esq., at the Law Office of Bonnie Bell Bond, LLC
is the Debtor's counsel.
DGS REALTY: Seeks to Continue Using Cash Collateral Thru Dec 31
---------------------------------------------------------------
DGS Realty, LLC asks the U.S. Bankruptcy Court for the District of
New Hampshire for authority to continue using cash collateral and
provide adequate protection to PHH Mortgage Services through
December 31, 2022.
PHH Mortgage Services, as servicer for U.S. Bank National Trust
Association, as Trustee for Lehman Brothers Small Balance
Commercial Mortgage Pass-Through Certificates, Series 2006-3, is
the cash collateral lien holder of the Debtor.
PHH Mortgage holds or claims to hold:
-- a blanket first priority mortgage of record on the real
estate at 74 Regional Drive, and 72 Regional Drive, both in
Concord, New Hampshire; and
-- a collateral assignment of the rents thereof.
The PHH Mortgage First Priority Mortgage and Rent Assignment secure
the payment of $2,078,589, which is evidenced by a promissory note
in the original principal amount of $862,500.
The Debtor proposes not to spend or use more than $10,066 per month
during the period between November 1 and December 31, 2022, without
the written consent of the secured lender, as appropriate.
The cash collateral will be used solely and exclusively for the
purpose of paying the mortgage and taxes of the Debtor in the
ordinary course of business to the extent provided for in the
Budget and such other costs and expenses as may be authorized in
writing by the Secured Lender, as appropriate.
The Debtor will provide PHH Mortgage with adequate protection for
any loss or diminution in value of the cash collateral securing
their claims to the extent such claims qualify as secured claims
under Bankruptcy Code Section 506 pending the further order or
orders of the Court.
PHH Mortgage is being paid $6,750 per month plus real estate tax
escrow in the amount of $2,802 each month as adequate protection
payments beginning on February 1, 2022, and on the same date of
each month thereafter during the Use Term. These are the Debtor's
normal monthly payments.
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 (and any stipulation) 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/3gaonvR from
PacerMonitor.com.
A copy of the budget is available at https://bit.ly/3CWT5kR from
PacerMonitor.com.
The Debtor projects $98,029 in total income and $9,816 in total
expenses for November 2022 and $98,214 in total income and $10,0656
in total expenses for December 2022.
About DGS Realty
Based in Concord, New Hampshire, DGS Realty, LLC, is a real estate
limited liability company. Formed around May 10, 2017, the company
is owned by David H. Booth, Manager, Stephen W. Booth, and Gregory
A. Booth, each having a 1/3 interest. The company is an affiliate
of Walter H. Booth Clause 4 Trust, which sought bankruptcy
protection (Bankr. D.N.H. Case No. 16-11598) on Nov. 16, 2016.
DGS Realty filed a Chapter 11 petition (Bankr. D.N.H. Case No.
18-10024) on Jan. 11, 2018. In the petition signed by David H.
Booth, the Manager, the Debtor estimated assets and debts between
$1 million and $10 million. Representing the Debtor is Eleanor Wm
Dahar, Esq., at Victor W. Dahar Professional Association.
EARTH HOUSE: Hits Chapter 11 Bankruptcy
---------------------------------------
Earth House Inc. filed for chapter 11 protection in the District of
New Jersey without stating a reason.
The Debtor tapped Andre L. Kydala to provide representation of the
Debtor in the Chapter 11 case, communicate with creditors, and
prepare a Plan of Reorganization.
According to court filings, Earth House estimates $100,000 to
$500,000 million in debt to 1 to 49 creditors. The petition states
that funds will be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Nov. 3, 2022, at 11:00 AM at Telephonic. Proofs of claim are due
by Dec,. 19, 2022.
About Earth House
Earth House Inc. is a health care business as defined in 11 U.S.C.
Sec. 101(27A).
Earth House Inc. filed a petition for relief under Chapter 11 of
the Bankruptcy Code (Bankr. D.N.J. Case No. 22-18011) on Oct. 10,
2022. In the petition filed by James F. Karwosk, as executive
director, the Debtor reported assets between $500,000 and $1
million and liabilities between $100, 000 and $500,000.
The Debtor is represented by Andre L. Kydala of the Law Firm of
Andre Kydala, Esq.
EL CALAMAR: Unsecureds Will Get 5% of Claims over 5 Years
---------------------------------------------------------
El Calamar, Inc., filed with the U.S. Bankruptcy Court for the
Central District of California a Plan of Reorganization for Small
Business dated October 17, 2022.
The Debtor is a corporation. Since December 1, 2007, the Debtor has
been in the business of operating a family-owned Mexican grill and
seafood restaurant in Santa Ana, California.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income of $1,240.41 (based on a
12-month average computed using Year #1). The final Plan payment is
expected to be paid on January 2028.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 5 cents on the dollar. This Plan also provides for
the payment of administrative and priority claims.
Class 2 Secured claims:
* Class 2A (Funding Circle): Treatment of Funding Circle's
claim shall be pursuant to the terms of the Stipulation Regarding
Treatment of Funding Circle USA, Inc's Claim in Debtor's Subchapter
V Plan, filed on August 16, 2022; docket no.: 45; order approving
Stipulation, docket no.: 52. Debtor shall pay $6,268.20 (Allowed
Secured Claim) over 6 months, in monthly installments of $1,000 for
months 1 through 5, and $1,268.20 in month 6. The first payment of
$1,000.00 due within 5 business days of the Court's approval of the
Stipulation.
* Class 2B (OnDeck Capital): Treatment of OnDeck Capital,
Inc's claim shall be pursuant to Stipulation Regarding Treatment of
OnDeck Capital's Claim in Debtor's Subchapter V Plan, filed on July
29, 2022, docket no.: 39; Order approving Stipulation, docket no.:
56. OnDeck's $20,298.26 claim shall be paid within 60 months from
the Effective Date, in equal monthly payment of $338.30.
* Class 2C (US. Small Business Administration): Treatment of
SBA's claim shall be pursuant to the terms of the Stipulation for
Adequate Protection and Use of Cash Collateral, filed on August 23,
2022, docket no.: 50; Order approving Stipulation, docket no.: 53.
Monthly amortized payments of $731.00 per month for 30 years shall
commence in December 2022.
* Class 2D (Wesco Insurance Company): Treatment of Wesco
Insurance Company's claim shall be pursuant to the terms of the
Stipulation Regarding Treatment of Wesco's Claim In Debtor's
Subchapter V Plan, filed on October 4, 2022.
Class 3 consists of Non-priority unsecured creditors. Holders of
general unsecured creditors in Class 3 will be paid 5% of such
creditors' claims over 5 years, with the first payment of $132.79
due on the Effective Date, followed by 59 consecutive monthly
payments, each due on the first day of each month. The monthly
payments are $132.79.
Class 4 consists of Equity security holders of the Debtor. Hugo
Camacho is the principal of the Debtor and a 50% shareholder with
his wife, Maria Camacho, who holds the other 50% interest in the
Debtor. Neither Mr. Camacho nor Mrs. Camacho hold any
pre-prepetition claim against the Debtor. They will both retain
their equity ownership interest in the Debtor as of the Effective
Date.
Distribution to creditors under this Plan will be funded primarily
from the following sources: (a) the Debtor's cash on hand on the
Effective Date and (b) the net income derived from the continued
operation of the Debtor's restaurant business.
This plan will allow non-insider general unsecured creditors (Class
3) to recover five times more than if the Debtor's assets were sold
in a hypothetical Chapter 7 liquidation and the proceeds paid out
to each respective creditor. Debtor believes that this Plan
represents the best possible return to holders of claims. The
Debtor believes that this plan will successfully reorganize the
Debtor and that the confirmation of this Plan is in the best
interests of the Debtor, its creditors, and equity interest
holder.
Accordingly, the Debtor strongly urges its creditors to vote in
favor of this Plan. The Debtor will become the Reorganized Debtor
on the Effective Date. The Reorganized Debtor shall be responsible
for managing its assets and financial affairs. On the Effective
Date, Hugo E. Camacho and Maria Camacho, who are the principal
owners of the Debtor and 100% shareholders, shall remain the
principals and owners of the Reorganized Debtor. Mr. Camacho shall
serve as the Disbursing Agent for all obligations of Reorganized
Debtor under this Plan and shall not be compensated for the
services as a disbursing agent.
A full-text copy of the Plan of Reorganization dated October 17,
2022, is available at https://bit.ly/3ETILvi from PacerMonitor.com
at no charge.
Attorneys for Debtor:
Law Offices of Michael Jay Berger
Michael Jay Berger
Sofya Davtyan
About El Calamar, Inc.
El Calamar, Inc. is a family-owned Mexican grill and seafood
restaurant in Santa Ana, California. The Debtor sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case
No. 22-11188) on July 17, 2022. In the petition signed by Hugo E.
Camacho, president, the Debtor disclosed up to $500,000 in both
assets and liabilities.
Judge Theodor C. Albert oversees the case.
The Law Offices of Michael Jay Berger is the Debtor's counsel.
EYE INNOVATIONS: Seeks to Hire McGovern & Associates as Accountant
------------------------------------------------------------------
Eye Innovations, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Pennsylvania to employ McGovern &
Associates, PC as its accountant.
The Debtor needs an accountant to provide these services:
(a) review books and records;
(b) prepare accounting reports;
(c) general bookkeeping;
(d) bank account reconciliation; and
(e) tax return preparation.
The firm will be compensated as follows:
Bookkeeping services $500
Tax Return Preparation $2,500
As disclosed in court filings, McGovern & Associates does not have
any prior connection with the Debtor, creditors, or any other party
in interest, or their respective attorneys.
The firm can be reached at:
McGovern & Associates, PC
4109 Main St.
Philadelphia, PA 19127
Telephone: (215) 483-5555
Facsimile: (215) 482-2417
Email: info@cpaphilly.com
About Eye Innovations
Eye Innovations, LLC -- http://www.eyeinnovations.net/-- is an eye
care center in Drexel Hill, Pa., that provides comprehensive
optometric eye care and optical services.
Eye Innovations filed a petition under Chapter 11, Subchapter V of
the Bankruptcy Code (Bankr. E.D. Pa. Case No. 22-10600) on March
10, 2022, with up to $500,000 in assets and up to $1 million in
liabilities. Archima Major, an authorized representative, signed
the petition. Leona Mogavero, Esq., serves as the Subchapter V
trustee.
Judge Eric L. Frank oversees the case.
The Debtor tapped McDowell Law, PC, led by Daniel L. Reinganum,
Esq., as legal counsel and McGovern & Associates, PC as accountant.
FIRST FRUITS: Starts Subchapter V Case; TriPharma Opposes
---------------------------------------------------------
First Fruits Business Ministry LLC filed for chapter 11 protection
in the District of South Carolina. The Debtor elected on its
voluntary petition to proceed under Subchapter V of chapter 11 of
the Bankruptcy Code.
According to court filings, First Fruits Business Ministry LLC
estimates $1 million to $10 million in debt to 1 to 49 creditors.
The petition states that funds will be available to unsecured
creditors.
The Chapter 11 filing has raised objections from alleged creditor
TriPharma LLC. TriPharma says the Debtor and its member/manager
Roger J. Catarino have a history of engaging in fraudulent behavior
and that the Chapter 11 case was not filed in good faith.
TriPharma says it is informed and believes that the Debtor's
aggregate noncontingent liquidated secured and unsecured debts as
of the date of the filing of the petition or the date of the order
for relief significantly exceed $7,500,000; therefore, as a matter
of fact and law, the Debtor is ineligible to be a debtor under
Subchapter V.
TriPharma is the holder of two claims against the Debtor and
Catarino, as follows:
a) Claim 1, in the amount of approximately $6,800,000.001,
arises out of a final Default Judgment and Permanent Injunction
("Final Judgment") entered against the Debtor and Catarino on Aug.
2, 2013 in the United States District Court for the Central
District of California, Southern Division. As evidenced by the
record in Case 1, the Final Judgment arises out of the Debtor and
Catarino's infringement on patents to which TriPharma was the
exclusive licensee. No payments have been made on the Final
Judgment since its entry.
b) Claim 2 is an unliquidated claim against the Debtor and
Catarino arising out of a lawsuit filed by TriPharma in the
California District Court on October 31, 2021, captioned TriPharma,
LLC v. First Fruits Business Ministry, LLC et al., Case No.
8:21-cv-01806-JFS ("Case 2"). As a result of the continued actions
of the Debtor and its principal Catarino, among others, TriPharma
has sustained and seeks damages in excess of $10,000,000.
On June 8, 2022, the California District Court entered its Order
Granting TriPharma's ex parte Application and Motion for a
preliminary injunction pending satisfaction of the Final Judgment
and Order ("Preliminary Injunction"). On Sept. 13, 2022, and
memorialized by Order entered on September 20, 2022, the California
District Court entered its Order and Restraining Order in Case 1
appointing a post-judgment receiver to take possession and control
of the assets of the Debtor and Catarino, and to investigate the
same ("Receivership Order").
According to TriPHarma, the Debtor is incapable of reorganizing and
both the Debtor (and, by extension, Catarino), come to the
Bankruptcy Court with unclean hands.
About First Fruits Business Ministry
First Fruits Business Ministry LLC --
https://www.trimfitforlife.com -- produces TriFit Weight Loss Water
to provide a healthy weight loss solution for consumers.
First Fruits Business Ministry LLC filed a petition for relief
under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr.
D.S.C. Case No. 22-02747)on October 7, 2022. In the petition filed
by Roger Catarino, as CEO, the Debtor reported assets between $50
million and $100 million and liabilities between $1 million and $10
million.
The Debtor is represented by Jane H. Downey of Moore Bradley Myers
Law Firm, P.A.
The Subchapter V trustee:
Christine E. Brimm
P.O. Box 14805
Myrtle Beach, SC 29587
803-256-6582
cbrimm@bartonbrimm.com
FLEETCOR: S&P Alters Outlook to Stable, Affirms BB+ ICR
-------------------------------------------------------
S&P Global Ratings revised its outlook on FleetCor Techolocgies
Inc. to stable from positive. At the same time, S&P affirmed its
'BB+' issuer credit rating and senior secured issue ratings on
FleetCor. The recovery rating on the notes remains '3' (60%
recovery expectation).
S&P said, "The outlook revision reflects our view that the
potential for continued share repurchases and additional
acquisitions, along with macroeconomic uncertainty, will lead to
FleetCor's leverage to remain around 3.0x. Furthermore, in
conjunction with FleetCor maintaining leverage well below 3.0x, the
previous possibility of an upgrade was also dependent on a
resolution to the company's ongoing litigation with the Federal
Trade Commission (FTC), which continues to get pushed out.
"Our economists now expect U.S. GDP growth of 1.6% (versus 1.8% in
August 2022) and 0.2% (versus 1.6% in August 2022) in 2023 as the
economy falls into a shallow recession in the first half of the
year. The baseline forecast expects a six-month recession with a
peak in December 2022 and a trough in June 2023, with a 3.6%
decline in the stock market and an increase of 2.0% in
unemployment.
"While FleetCor's operating performance this year has been strong,
we expect a modest decline in growth in the second half of the year
due to macroeconomic uncertainty. For the first half of 2022,
revenues increased around 29% year over year to $1.65 billion,
driven by 19% growth in fleet solutions (40% of revenues). The
rising fuel prices benefited revenues by approximately $55 million,
and favorable fuel spreads added another $8 million that was offset
by unfavorable foreign exchange rates of $14 million, mostly in its
U.K. and European business. Going forward, we expect the fleet
solution revenue to remain volatile as fuel prices have decreased
from prior quarters and, at the same time, the dollar has
strengthened relative to the euro and the British pound.
The stable outlook over the next 12 months despite a challenging
economy reflects our expectation that FleetCor will maintain
leverage on the higher end of 2.0x-3.0x. Our outlook also considers
the company's market position, adequate liquidity, and stable
operating performance. "
Downside scenario
S&P could lower the rating over the next 12 months if leverage
approaches 4.0x through deterioration in operating performance,
large debt-financed acquisitions, or share repurchases that
meaningfully increase debt or deplete surplus cash, all else
equal.
Upside scenario
An upgrade is unlikely over the next 12 months. Over time, S&P
could raise the rating if the company maintains its market
position, materially scales backs its share repurchases, and
leverage approaches 2.0x.
Key analytical factors
-- S&P's simulated default scenario contemplates a payment default
in 2027 as a result of heightened competition, lower transaction
volume, and significant operational issues.
-- S&P assumes a reorganization following the default, using an
emergence EBITDA multiple of 6.0x to value the company.
-- S&P assumes an $1.6 billion draw on the company's
securitization facility.
-- S&P assumes an 85% draw on the company's $1.5 billion revolving
credit facility, which is pari passu to the company's term loans.
-- S&P's EBITDA at emergence reflects a fixed-charge proxy
consisting of projected interest expense on an amortized debt
balance and a minimum level of capital expenditure.
Simulated default assumptions
-- Simulated year of default: 2027
-- EBITDA at emergence: $937.3 million
-- EBITDA multiple: 6.0x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $5.3
billion
-- Collateral value available to secured creditors: $3.0 billion
-- First-lien debt: $5.8 billion
--Recovery expectations: 55%-65%; rounded estimate: 60%
Note: All debt amounts include six months of prepetition interest.
FORMATION GROUP: Gets New 2-Year $681,000 DIP Loan
--------------------------------------------------
Formation Group Fund I, L.P. and its debtor-affiliates and Bon
Woong Koo, as DIP Lender, advised the U.S. Bankruptcy Court for the
Northern District of California, San Jose Division, that they have
reached an agreement regarding the Debtor's use of cash collateral
and now desire to memorialize the terms of this agreement into an
agreed order.
The Debtors and the DIP Lender have agreed that the Debtors' access
to financing under the DIP Loan is evidenced by a new
debtor-in-possession promissory note between the Debtors and the
DIP Lender. The maximum principal amount of the note will be
$681,000, with interest accruing at a rate of 8% per annum. The
maturity date of the DIP Loan is January 2, 2024.
In consideration of the DIP Lender's providing the Debtors with
postpetition financing, the Debtors will grant to the DIP Lender
(a) an administrative expense claim for Advances, pursuant to
section 503(b)(1) of the Bankruptcy Code, (b) a fully, perfected,
first priority security interest in and lien under section
364(c)(2) of the Bankruptcy Code on all unencumbered Collateral of
the Debtors, and (c) a fully perfected junior lien under section
364(c)(3) on all previously encumbered Collateral of the Debtors.
Any Administrative Expense Claim and the DIP Liens will be
subordinate only to the Carve-Out, the Permitted Lines, and the
retainer held by Sheppard, Mullin, Richter & Hampton LLP.
The Debtors require postpetition financing and the continued use of
cash collateral in order to preserve and maximize the value of
their assets for the period beginning on October 1, 2022 and
continuing through and including November 30, 2020.
The Debtors have agreed to provide the DIP Lender with a
postpetition lien against, and security interest in all DIP
Collateral under sections 361(2), 362, 363(e)(2), and 363(e) of the
Bankruptcy Code to secure any Postpetition Loss.
Subject to the First Priority Liens and the Carve-Out, the DIP
Lender will also have an administrative claim under section 503(b)
of the Bankruptcy Code in the amount of any outstanding Advances.
The Lien and Adequate Protection Liens are deemed effective, valid,
and perfected as of the date of the entry of the DIP Order.
These events constitute an "Event of Default:"
a. The non-payment of any costs, or any other amount due under
the DIP Loan, or the failure to perform as required under the DIP
Loan Documents (whether monetary or non-monetary in nature), past
ten (10) business days of its due date or performance date
beginning from the date that the DIP Lender provides written notice
to the Debtors;
b. Expenditures beyond authorization under the Budget as
interpreted under the DIP Loan Agreement;
c. The entry of any Bankruptcy Court order that materially,
adversely affects the DIP Loan or the DIP Lender's rights,
remedies, liens, priorities, benefits and protections under any or
all of the Bankruptcy Court orders or the DIP Loan. In the event of
a dispute regarding the materiality of the adverse effect of such
order, the Bankruptcy Court will determine the dispute through a
motion and an adversary proceeding will not be required.
The Carve-Out means (a) unpaid post-petition professional fees and
expenses payable to each professional advisor retained by the
Debtors that are incurred or accrued prior to the occurrence of an
Event of Default, but subject to the aggregate amount(s) ultimately
allowed by the Court under sections 328, 330, 331, and 503 of the
Bankruptcy Code or any order of the Court (whenever such fees may
be actually incurred prior to the Event of Default); and (b) fees
payable to (1) the Clerk of the Bankruptcy Court or (2) the Office
of the U.S. Trustee under 28 U.S.C. section 1930(a)(6) that have or
will come due prior to the occurrence of an Event of Default.
A hearing on the matter is set for November 3 at 10 a.m.
A copy of the stipulation and the Debtor's budget is available at
https://bit.ly/3gbiqyE from PacerMonitor.com.
The budget provides for total cash disbursements, on a monthly
basis, as follows:
$676,058 for October 2022; and
$4,650 for November 2022.
About Formation Group Fund I
Formation Group Fund I LP -- https://www.formationgroup.com/ -- is
a venture capital firm in Palo Alto, Calif.
Formation Group Fund I, LP and Formation Group GP I, LLC filed
petitions for Chapter 11 protection (Bankr. N.D. Calif. Case Nos.
22-50302 and 22-50303) on April 10, 2022 while Formation Group
(Cayman) Fund I, L.P. filed its petition (Bankr. N.D. Calif. Case
No. 22-50337) on April 21, 2022. In its petition, Formation Group
Fund I listed up to $50 million in assets and up to $10 million in
liabilities.
Judge M. Elaine Hammond oversees the cases.
Ori Katz, Esq., at Sheppard, Mullin, Richter and Hampton, is the
Debtors' legal counsel.
FRASIER CONTRACTING: Taps Saunders Law Group as Special Counsel
---------------------------------------------------------------
Frasier Contracting Inc. seeks approval from the U.S. Bankruptcy
Court for the Middle District of Florida to hire Saunders Law Group
as its special counsel.
The firm will represent the Debtor on its claim against Hadley
Enterprises which has been pending since Feb. 11, 2021.
The firm will bill $400 per hour for attorney's time and $125 per
hour for paralegal work.
Thomas C. Saunders, Esq., a partner at Saunders Law, disclosed that
the firm does not hold nor represent any interest adverse to the
Debtor or its estate.
The firm can be reached through:
Thomas C. Saunders, Esq.
Saunders Law Group
Post Office Box 1279
Bartow, FL 33831-1279
Tel: 863-533-1279
Email: tom@saunders-law.com
About Frasier Contracting Inc.
Frasier Contracting Inc. -- https://www.frasiercontracting.com --
is a Florida State Certified Class A General Contracting company.
Frasier Contracting filed a petition for relief under Subchapter V
of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
22-03776) on Sept. 15, 2022, with between $1 million and $10
million in both assets and liabilities. Amy Denton Mayer has been
appointed as Subchapter V trustee.
Judge Catherine Peek Mcewen oversees the case.
Buddy D. Ford, P.A. and Saunders Law Group serve as the Debtor's
bankruptcy counsel and special counsel, respectively.
FREE SPEECH: Texas Court OKs Mediation in Alex Jones Firm's Case
----------------------------------------------------------------
Rick Archer of Law360 reports that a Texas bankruptcy judge
Wednesday, October 12, 202, approved a request by the trustee
appointed to see Alex Jones' podcast network through its bankruptcy
case to open mediation with the goal of reaching a consensual
bankruptcy plan.
Melissa A. Haselden, the Subchapter V trustee, said in a status
report that it has engaged counsel and began the investigatory
steps required by the Court.
Among other things, the Trustee served Rule 2004 document requests
on the Debtor and PQPR. Additionally, documents have been received
or are forthcoming pursuant to request by the Trustee from numerous
other parties, including Alex Jones.
The Trustee worked with counsel for the Debtor to locate a CRO.
Additionally, the Trustee identified and negotiated a proposed
engagement of M3 Partners to assist her with her investigation.
The Trustee, through counsel, worked with the various
constituencies in the Chapter 11 case to facilitate a mediation
amongst the parties in an effort to attain terms for a consensual
plan. Judge Marvin Isgur agreed to mediate this matter.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones has been sued by victims' family
members over Jones' lies that the 2012 Sandy Hook Elementary School
shooting was a hoax.
Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet
TV, LLC, filed petitions under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April
18, 2022.
The Debtors agreed to the dismissal of the Chapter 11 cases in June
2022 after the Sandy Hook victim families dismissed the three
bankrupt companies from their lawsuits.
Free Speech Systems filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-60043) on July 29, 2022. In the petition filed by W.
Marc Schwartz, as chief restructuring officer, the Debtor reported
assets and liabilities between $50 million and $100 million.
Melissa A Haselden has been appointed as Subchapter V trustee.
Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC,
is the Debtor's counsel.
FULL CIRCLE: Wins Cash Collateral Access on Final Basis
-------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas,
Dallas Division, authorized Full Circle Technologies, LLC to use
cash collateral on a final basis to pay normal, necessary and
reasonable postpetition operating expenses pursuant to the budget.
The Court said the Small Business Administration, Porter Capital
Corporation, Scansource, Inc., Mr. Advance, Delta Bridge Funding,
Lifetime Funding, and Bayview First National Bank, A National
Banking Association, are granted replacement liens under 11 U.S.C.
section 552 in any accounts receivable, inventory or other items
purchased with cash collateral and in cash on hand and in cash
received by the Debtor after such use to protect against the
diminution in value of to the extent the cash collateral of the
Secured Creditors is used consistent with their existing priority.
A copy of the order is available at https://bit.ly/3VI6Vz9 from
PacerMonitor.com.
About Full Circle Technologies, LLC
Full Circle Technologies, LLC provides video surveillance and
secured access controls. The Debtor sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 22-31660)
on September 9, 2022. In the petition signed by Abheeshek Sharma,
managing member, the Debtor disclosed up to $10 million in both
assets and liabilities.
Eric A. Liepins, Esq., is the Debtor's counsel.
GIRARDI & KEESE: Court Approves $8M Bankruptcy Sale of Mansion
--------------------------------------------------------------
James Nani of Bloomberg Law reports that Thomas Girardi's bankrupt
estate was approved to sell the disbarred attorney's Pasadena,
California, mansion for $8 million as part of efforts to repay
Girardi's creditors.
Judge Barry Russell of the US Bankruptcy Court for the Central
District of California said at a Tuesday hearing he would approve
Jun Tao and Peng Tao's purchase of the 10,277 square foot,
century-old home. The house is being sold by Chapter 7 trustee
Jason M. Rund to repay holders of an $11 million judgment against
Girardi and his former law firm, Girardi & Keese.
About Girardi & Keese
Girardi and Keese or Girardi & Keese was a Los Angeles-based law
firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It
served clients in California in a variety of legal areas. It was
known for representing plaintiffs against major corporations.
An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No.
20-21022) was filed in December 2020 against GIRARDI KEESE by
alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian,
Erika Saldana, Virginia Antonio, and Kimberly Archie.
The petitioners' attorneys:
Andrew Goodman
Goodman Law Offices, Apc
Tel: 818-802-5044
E-mail: agoodman@andyglaw.com
Elissa D. Miller, a member of the firm SulmeyerKupetz, has been
appointed as Chapter 7 trustee for GIRARDI KEESE. The Chapter 7
trustee can be reached at:
Elissa D. Miller
333 South Grand Ave., Suite 3400
Los Angeles, California 90071-1406
Telephone: (213) 626-2311
Facsimile: (213) 629-4520
E-mail: emiller@sulmeyerlaw.com
An involuntary Chapter 7 petition was also filed against Thomas
Vincent Girardi (Case No. 20-21020) on Dec. 18, 2020. The Chapter 7
trustee can be reached at:
Jason M. Rund
Email: trustee@srlawyers.com
840 Apollo Street, Suite 351
El Segundo, CA 90245
Telephone: (310) 640-1200
HIGHLINE AFTERMARKET: Moody's Alters Outlook on B2 CFR to Negative
------------------------------------------------------------------
Moody's Investors Service has changed Highline Aftermarket
Acquisition, LLC's outlook to negative from stable. At the same
time, Moody's has affirmed the company's B2 Corporate Family
Rating, B2-PD Probability of Default Rating and B2 rating on the
senior secured first lien credit facilities.
"The negative outlook reflects the company's weaker-than-expected
earnings and credit metrics amid cost inflation and supply chain
challenges in the lubricant manufacturing and automotive
aftermarket distribution business. Although price actions, easing
supply conditions and alternative sourcing program provide some
relief, the slowing economy, increasing interest rates, elevated
freight and labor costs will hinder a speedy recovery in Highline's
earnings and financial profile to the levels Moody's expected in
late 2020 when the company completed the acquisition of Warren and
API," said Jiming Zou, a Moody's Vice President and lead analyst on
Highline.
Affirmations:
Issuer: Highline Aftermarket Acquisition, LLC
- Corporate Family Rating, Affirmed B2
- Probability of Default Rating, Affirmed B2-PD
- Senior Secured First Lien Bank Credit Facility, Affirmed B2
(LGD3)
Outlook Actions:
Issuer: Highline Aftermarket Acquisition, LLC
- Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Moody's expects Highline's credit metrics to remain weak for the B2
rating. Debt leverage will likely improve to about mid-six times,
just enough to meet the rating requirement, in the next 12 months,
from over 7x at the end of June 2022, on the back of price actions
and improved supply chain conditions. Rising interest rates will
result in interest coverage falling below two times in 2023,
despite the benefits of interest rate swaps. Company strategy to
maintain safety stock and elevated raw material costs will continue
to demand high working capital needs for the business. Higher
interest expenses and elevated working capital position, coupled
with Moody's expectation of only modest earnings improvement, will
reduce free cash flow generation in the next one to two years.
The affirmation of Highline's B2 CFR takes into consideration the
recurring demand on lubricants and other automotive aftermarket
products including chemicals, parts, and consumable accessories.
The company has well established market position in the private
label lubricant manufacturing and automotive aftermarket
distribution. Primary drivers for the business include miles
driven, vehicles in operations and the increasing average age of
the vehicles in service, as older vehicles utilize aftermarket
products to a much greater degree than new ones. Highline's
value-added services such as packaging, filling, and distribution
of private label and branded products support its EBITDA margins at
low teens. The company's sound profit margin, low fixed cost base
and limited amount of capital expenditure will support free cash
flow generation.
Highline's B2 CFR is constrained by its high debt leverage and
business acquisitions under the ownership of a private equity firm.
Total debt almost tripled to $1.06 billion after a number of
acquisitions that nearly doubled its revenues in the past three
years. Tuck-in acquisitions, which are essential to business
growth, will limit the prospect of a lower leverage on a
sustainable basis. In addition, the mature nature of the lubricant
industry and the low profit margin of private label lubricants
leaves Warren susceptible to competition against other lubricant
producers and variation in manufacturing and distribution costs.
The B2 ratings on the senior secured first lien credit facilities
are in line with the B2 CFR, reflecting the predominance of the
first lien credit facilities and a relatively small portion of
second lien debt in the debt capital structure. The credit
facilities have a first lien security interest on substantially all
the assets of the company and guarantors and rank ahead of second
lien credit facility in terms of claims on such assets.
Highline has adequate liquidity to support business operations and
meet its financial obligations in the next 12-18 months. Moody's
expects the company to generate about $20 million free cash flow in
2023. The company has over $100 million availability under its $125
million revolving credit facility, after paying down a substantial
amount of revolver through a sales and lease back transaction in Q2
2022. The revolving credit facility has a springing first lien net
leverage covenant set at 6.9x, and will only be tested when the
revolver drawings exceeds 35% of the facility. Moody's expects the
company will remain in compliance under the covenant in the next
12-18 months.
The rating has also incorporate environmental, social and
governance considerations. Highline has adopted aggressive
financial policies evidenced by high debt leverage and multiple
acquisitions under its private equity ownership. The company is
also exposed to environmental risks and regulations due to the
waste and pollution from the company's production of lubricants and
distribution of aftermarket products. Health and safety risks arise
from the handling of lubricants and other chemical fluids at its
facilities and during transportation. The increasing engine
efficiency and transition to electric vehicles will result in lower
lubricant consumption over time, thereby capping the company's
organic growth prospects.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be downgraded, if the company fails to improve its
earnings and maintain its EBITDA margin at least in the low teens.
Downgrade could also be triggered by adjusted debt leverage staying
above 6.5x, diminishing free cash flow, or a deterioration in
liquidity. An upgrade of the rating is unlikely given the negative
outlook, but could be considered if adjusted debt leverage falls
below 5.0x on a sustained basis and annual free cash flow exceeds
$50 million.
Highline Aftermarket Acquisition, LLC is an automotive aftermarket
distributor of branded and private label packaged chemicals, oil,
parts, and consumable accessories. The company was formed in April
2016 through the combination of DYK Automotive and AAHC, Inc. In
November 2020, Pritzker Private Capital acquired and strategically
combined Highline from Sterling Group and Warren Distribution LLC,
a manufacturer of private label automotive lubricants. End markets
channels include automotive/jobber, non-automotive, auto retailers,
mass retailers, quick lube, internet, and heavy duty. Highline
recorded about $1.3 billion in revenues in 2021.
The principal methodology used in these ratings was Chemicals
published in June 2022.
HOLY GROUND: Taps Wadsworth Garber Warner Conrardy as Counsel
-------------------------------------------------------------
Holy Ground Tiny Homes, LLC and Revelations in Christ Ministries
seek approval from the U.S. Bankruptcy Court for the District of
Colorado to employ Wadsworth Garber Warner Conrardy, PC to handle
their Chapter 11 cases.
The hourly rates of the firm's counsel and staff are as follows:
David V. Wadsworth $450
Aaron A. Garber $450
David J. Warner $375
Aaron J. Conrardy $375
Lindsay S. Riley $300
Paralegals $125
Aaron Conrardy, Esq., an attorney at Wadsworth, 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:
David V. Wadsworth, Esq.
Aaron J. Conrardy, 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
aconrardy@wgwc-law.com
About Holy Ground Tiny Homes
Holy Ground Tiny Homes, LLC sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. D. Colo. Case No. 22-13918) on
Oct. 10, 2022, while Revelations in Christ Ministries filed for
Chapter 11 protection (Bankr. D. Colo. Case No. 22-13919) on Oct.
7, 2022. The cases are jointly administered under Case No.
22-13918.
At the time of the filing, Holy Ground Tiny Homes listed as much as
$1 million in both assets and liabilities while Revelations in
Christ Ministries listed up to $500,000 in assets and up to $10
million in liabilities.
Judge Elizabeth E. Brown oversees the cases.
Wadsworth Garber Warner Conrardy, PC serves as the Debtors' legal
counsel.
HOUSTON REAL ESTATE: Returns to Chapter 11, Removes State Suit
--------------------------------------------------------------
Houston Real Estate Properties LLC filed for chapter 11 protection
in the U.S. Bankruptcy Court for the Southern District of Texas on
Oct. 7, 2022.
Thereafter, REP filed a notice of removal of the action OSAMA
ABDULLATIF, Individually, and ABDULLATIF & COMPANY, LLC, v. ALI
CHOUDHRI and HOUSTON REAL ESTATE PROPERTIES, LLC, Texas State
Court, Cause No. 2013-41273, in the 334th Judicial District Court
of Harris County, Texas, to the Bankruptcy Court.
Osama Abdullatif and Abdullatif & Company on Oct. 17, 2022, filed
an emergency motion asking the Bankruptcy Court to abstain from
exercising jurisdiction and remanding the action to Texas State
Court.
Beginning on Aug. 8, 2022, the State Court oversaw a jury trial in
the underlying litigation. On Aug. 19, 2022, a jury returned a
verdict and a damages award in favor of Plaintiffs and against two
parties, Ali Choudhri, individually, a non-Debtor, and Houston Real
Estate Properties, LLC. The State Court was set to enter a Final
Judgment in the matter on Oct. 7, 2022. However, the morning
before the hearing, the Debtor filed the instant bankruptcy
proceeding and the Defendants noticed the removal of the underlying
litigation to the Bankrutcy Court.
Prior Bankruptcy
REP was formed on March 29, 2009, by Choudhri's mother, Shahnaz
Choudhri, for the purpose of filing bankruptcy. Choudhri's father,
Naaem Choudhri, Shahnaz, and Ali Choudhri placed nine parcels of
real estate in HREP along with properties owned by Damian and
Parvin Lattimore secured by various notes owed to Sterling Bank
(the "HREP Properties").
Shortly thereafter, Naaem replaced Shahnaz as HREP's sole member
and general manager. Choudhri was appointed president of HREP and
handled the day-to-day operations of HREP through his management
company, Jetall Companies, Inc. HREP filed a Voluntary Petition
for Chapter 11 protection on May 5, 2009. At the time of filing,
HREP owed Sterling Bank $1,021,779.12 and its primary assets were
the HREP Properties.
In resolving HREP's first Chapter 11 bankruptcy, Naaem and Choudhri
entered a Combination, Modification, Renewal and Extension of
Promissory Notes and Liens ("Combination Note") secured by the HREP
Properties and personal guarantees by Naaem and Choudhri. The
Combination Note was unique because it provided for a 15% discount
if the principal was paid in full by Dec. 15, 2009. HREP's first
bankruptcy was thereafter dismissed on Dec. 28, 2009.
Prior to Dec. 15, 2009, Naaem and Choudhri approached Abdullatif
about purchasing the Combination Note. The three worshipped
together at the same mosque. Naaem and Choudhri assured Abdullatif
that if he bought the Combination Note that they would quickly
repay him by selling one or more of the HREP Properties and
splitting the 15% discount. Based on this representation,
Abdullatif purchased the Combination Note for $837,895.
With the threat of foreclosure remaining over their heads if they
did not perform under the terms of the Combination Note, Naaem and
Choudhri convinced Abdullatif to purchase the HREP Properties for
$1,750,000. Just a month prior, Choudhri swore under penalty of
perjury in a Monthly Operating Report Summary for November 2009
filed with this Court that the HREP Properties were worth
$1,946,298. Naaem and Choudhri promised Abdullatif that if he
financed the purchase of the HREP Properties with his own line of
credit that they would service his debt, manage the properties, and
collect the rents therefrom. In doing so, Naaem and Choudhri were
released from their unconditional personal guarantees accompanying
the Combination Note.
Naaem passed away shortly thereafter. For nearly a year, Choudhri
sporadically made the agreed payments to Abdullatif. However,
Choudhri's payments came to an abrupt halt in March 2011, following
a tangential dispute between Abdullatif and Choudhri.
State Court Action
On July 15, 2013, Abdullatif and ACLLC filed the State Court
against the Debtor and Choudhri in the District Court of Harris
County, Texas originally falling in the 270th Judicial District
asserting claims for (1) fraudulent lien or claim against real
property; (2) slander of title and to quiet title; and (3) fraud in
a real estate transaction ("State Court Action"). And so began a
nine-year odyssey culminating in a jury verdict in favor of
Abdullatif and ACLLC against both Choudhri and HREP after an
eight-day trial concluding on August 19, 2022, and requiring
Choudhri to pay Abdullatif and ACLLC at least $4,174,564 in damages
and attorney's fees, and HREP to pay Abdullatif and ACLLC at least
$1,678,000.
A hearing on the plantiffs' motion to enter judgment was initially
set to be heard on Sept. 22, 2022. The in-person hearing was reset
for Friday, Oct. 7, 2022 before Judge Dawn Rogers.
On Oct. 7, 2022, the Debtor filed Chapter 11 in the Bankruptcy
Court and removed the entire State Court Action despite the fact
that Choudhri, individually, has not declared bankruptcy.
"This is not the first time that Choudhri, through one of his
entities, has attempted to take refuge in the bankruptcy courts to
prevent or delay a fraud judgment being entered against him
individually. In a prior case, Judge David R. Jones of this Court
lifted the stay and remanded all of the claims not directly dealing
with the Debtor back to the Harris County District Court. Choudhri
sought to remove that case to this Court after a series of adverse
rulings by former Judge Darryl Moore. The present action simply is
round two of a strategy utilized by Choudhri that failed the first
time," according to the plaintiffs.
* * *
According to court filings, Houston Real Estate Properties LLC
estimates $1 million to $10 million in debt to 1 to 49 creditors.
The petition states that funds will be available to unsecured
creditors.
A teleconference meeting of creditors under 11 U.S.C. Section
341(a) is slated for November 15, 2022 at 10:00 a.m.
About Houston Real Estate
Houston Real Estate Properties LLC is a real estate company in
Texas.
HREP first filed for Chapter 11 bankruptcy (Bankr. S.D. Tex. Case
No. 09-33215) on May 5, 2009.
HREP again filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-32998) on Oct. 10,
2022. In the petition filed by Dward Darjean, as manager, the
Debtor reported assets and liabilities between $1 million and $10
million each.
The Debtor is represented by Ron Satija of Hayward PLLC.
IMERYS TALC: Can Remain in Bankruptcy, Judge Rules
--------------------------------------------------
Becky Yerak of The Wall Street Journal reports that an insurer on
Monday lost its fight to dismiss the bankruptcy of Imerys Talc
America Inc., which sought protection from creditors three years
ago.
As earlier reported in the TCR, the Riverstone Insurers, comprised
of TIG Insurance Company, as successor by merger to International
Insurance Company, International Surplus Lines Insurance Company,
Mt. McKinley Insurance Company (formerly known as Gibraltar
Insurance Company), Fairmont Premier Insurance Company (formerly
known as Transamerica Premier Insurance Company), Everest
Reinsurance Company (formerly known as Prudential Reinsurance
Company), and The North River Insurance Company, asked the Court to
dismiss each debtor's case exist under 11 U.S.C. Sec. 1112,
including diminution of the debtors' estate, the inability to
confirm a plan, and the lack of a proper bankruptcy purpose.
"Imerys Talc America, Inc. ("ITA"), Imerys Talc Vermont, Inc.
("ITV") and Imerys Talc Canada Inc. ("ITC" and, collectively with
ITA and ITV, the "Debtors") have been in bankruptcy since February
2019. Despite having been in bankruptcy for over three years, the
Debtors have accomplished little other than liquidating their
ongoing business and incurring professional fees and other expenses
that account for more than half the value of the companies. The
Debtors have filed at least ten different proposed plans, none of
which have been confirmable. The Debtors' last plan failed to
achieve a necessary vote in October 2021. Since then, the Debtors
have been engaged in mediation efforts to no effect. During this
time, the value of their estates has continued to diminish by
millions of dollars per month. Enough is enough. This case is
inappropriate for chapter 11 and should be returned to the tort
system," the Riverstone Insurers said.
The Debtors, Cyprus Mines Corporation, the Official Committee of
Tort Claimants, and the Future Claimants' Representative objected
to the Dismissal Motion.
"The Insurers' Motion suggests that these Debtors cannot reorganize
and create a trust for the benefit of their tort victims unless the
Debtors continue in the operation of the very business that caused
their chapter 11 filings. That notion strains credulity and lacks
any support in the Bankruptcy Code," the Tort Committee said in an
Oct. 10 filing.
About Imerys Talc America
Imerys Talc America, Inc. and its subsidiaries --
https://www.imerys-performance-additives.com/ -- are in the
business of mining, processing, selling and distributing talc. Its
talc operations include talc mines, plants and distribution
facilities located in Montana (Yellowstone, Sappington, and Three
Forks); Vermont (Argonaut and Ludlow); Texas (Houston); and
Ontario, Canada (Timmins, Penhorwood, and Foleyet). It also
utilizes offices located in San Jose, Calif., and Roswell, Ga.
Imerys Talc America and its subsidiaries, Imerys Talc Vermont,
Inc., and Imerys Talc Canada Inc., sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 19-10289) on Feb. 13, 2019. The
Debtors were estimated to have $100 million to $500 million in
assets and $50 million to $100 million in liabilities as of the
bankruptcy filing.
Judge Laurie Selber Silverstein oversees the cases.
The Debtors tapped Richards, Layton & Finger, P.A., and Latham &
Watkins LLP as their legal counsel, Alvarez & Marsal North America,
LLC as financial advisor, and CohnReznick LLP as restructuring
advisor. Prime Clerk, LLC, is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
tort claimants in the Debtors' Chapter 11 cases. The tort
claimants' committee is represented by Robinson & Cole, LLP.
JA SEEKINS: Gets OK to Hire Neeleman Law Group as Counsel
---------------------------------------------------------
JA Seekins Painting, Inc. received approval from the U.S.
Bankruptcy Court for the Western District of Washington to hire
Neeleman Law Group as its legal counsel.
The firm's services include:
a. assisting the Debtors in the investigation of the financial
affairs of the estate;
b. providing legal advice and assistance to the Debtors with
respect to matters relating to its Chapter 11 case and creditor
distribution;
c. preparing all pleadings; and
d. performing all necessary legal services for the estate in
relation to the case.
The firm's hourly rates are as follows:
Principals $450 per hour
Associate $275 per hour
Paralegal $125 per hour
Neeleman Law Group received a retainer of $5,738.
Jennifer Neeleman, Esq., a principal at Neeleman Law Group,
disclosed in a court filing that she is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Jennifer L. Neeleman, Esq.
Neeleman Law Group
1403 8th Street
Marysville, WA 98270
Phone: 425.212.4800
Fax: 425.212.4802
Email: courtmail@expresslaw.com
About JA Seekins Painting
JA Seekins Painting, Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. W.D. Wash. Case No. 22-11316) on Aug.
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 overseees the case
Thomas D. Neeleman, Esq., at Neeleman Law Group, P.C. is the
Debtor's counsel.
JOHN V. GALLY: Gets Approval to Tap Resolute as Valuation Expert
----------------------------------------------------------------
The John V. Gally Family Protective Trust Inc. received approval
from the U.S. Bankruptcy Court for the District of Arizona to
employ Resolute Commercial Services, LLC as valuation expert.
The Debtor needs a valuation expert to determine the liquidation
value of certain carryback promissory notes that it held.
Resolute has agreed to provide the valuation of the carryback notes
on a $6,000 flat fee, plus reimbursement of out-of-pocket expenses
incurred.
Nicole Manos, a senior managing director at Resolute Commercial
Services, disclosed in a court filing that her firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Nicole Manos
Resolute Commercial Services, LLC
6750 E. Camelback Road, Suite 103
Scottsdale, AZ 85251
Telephone: (480) 947-3321
Facsimile: (480) 946-3556
Email: nmanos@resolutecommercial.com
About The John V. Gally Family
Protective Trust Inc.
The John V. Gally Family Protective Trust Inc., a domestic business
trust in Ariz., filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz.
Case No. 22-05770) on Aug. 30, 2022. In the petition signed by
Caryn K. Mangisi, trustee, the Debtor disclosed between $1 million
and $10 million in both assets and liabilities. James E. Cross of
the Cross Law Firm, PLC, has been appointed as Subchapter V
trustee.
Judge Daniel P. Collins oversees the case.
The Debtor tapped Bradley David Pack, Esq., at Engelman Berger PC
as legal counsel; Stephens & Company, PLLC as accountant; and
Resolute Commercial Services, LLC as valuation expert.
JUST BELIEVE: Seeks to Hire Michael Cabot as Real Estate Broker
---------------------------------------------------------------
Just Believe Recovery Center of Port Saint Lucie, LLC seeks
approval from the U.S. Bankruptcy Court for the Southern District
of Florida to employ Michael Cabot, a member of Behavioral Health
Properties, LLC, as real estate broker.
The Debtor needs a broker to market its business for sale subject
to an exclusive brokerage and listing agreement.
The broker will receive a commission of 4 percent of the purchase
price.
Mr. Cabot disclosed in a court filing that he is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The broker can be reached at:
Michael Cabot
Behavioral Health Properties, LLC
14255 US Hwy. One, Suite 2185
Juno Beach, FL 33409
Telephone: (772) 842-3959
Email: info@bhpsales.com
About Just Believe Recovery Center
Just Believe Recovery Center of Port Saint Lucie --
https://justbelieverecoverycenter.com/ -- is a drug and alcohol
addiction rehabilitation and detox facility with locations in
Florida and Pennsylvania.
Just Believe Recovery Center of Port Saint Lucie sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case
No. 22-15739) on July 27, 2022, with up to $50,000 in assets and up
to $10 million in liabilities. Cynthia Bellino, manager, signed the
petition.
Judge Mindy A. Mora oversees the case.
Craig I Kelley, of Kelley, Fulton & Kaplan, P.L., is the Debtor's
counsel.
K&N PARENT: S&P Upgrades ICR to 'CCC-', Outlook Negative
--------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on car, truck,
and motorcycle aftermarket parts provider K&N Parent Inc. to 'CCC-'
from 'D', its issue-level rating on its first-lien debt to 'CCC-'
from 'D', and its issue-level rating on its second-lien debt to 'C'
from 'D'.
The negative outlook reflects S&P's expectation that K&N could
default or engage in a distressed debt restructuring in the next
six months.
K&N Parent recently completed an amendment, under which it issued a
$10 million bridge loan facility and extended the grace period on
its missed fiscal third-quarter 2022 debt payments to Oct. 31,
2022.
S&P said, "The 'CCC-' issuer credit rating reflects our expectation
for a default in the next six months because we continue to believe
it will be quite challenging for the company to address its
upcoming liquidity needs.K&N recently completed an amendment, under
which it issued a new $10 million bridge loan facility (to continue
funding its operations) and extended the grace period on its missed
Sept. 30, 2022, debt amortization and interest payments to Oct. 31,
2022. While this transaction has provided it with a small amount of
additional liquidity, the company continues to face declining sales
as consumer spending wanes amid the weakening macroeconomic
conditions. Given K&N's operating weakness and inability to make
its third-quarter debt payments, we don't believe it will be able
to make its first-lien amortization and first- and second-lien
interest payments due Dec. 30, 2022, using its internally generated
cash flow. Furthermore, the company also faces the maturity of its
bridge loan facility on Jan. 3, 2023, which we expect it will be
unable to cover with its internally generated cash flow and the
expiration of its grace period for Sept. 30, 2022 debt payments on
Oct. 31, 2022. That said, we anticipate K&N will likely engage in a
transaction we would assess as a distressed restructuring to
address its upcoming debt payments. Beyond its near-term
maturities, the company's operating performance also remains weak
as the consumer environment continues to deteriorate.
"The company's liquidity position has deteriorated and we now
assess it as weak.K&N's sales declined by 14.5% in the second
quarter of fiscal year 2022 compared with the same period the prior
year, when government stimulus checks supported stronger consumer
spending. Deteriorating macroeconomic conditions and inflationary
pressures have since weakened consumer consumption. In addition,
the company has been negatively affected by lower original
equipment manufacturer (OEM) production levels as chip shortages
have delayed orders. While K&N has worked to reduce its operating
costs, we expect the U.S. economy could enter a recession in the
first half of 2023, which would likely lead to sustained weak
earnings and lack of cash flow generation. In addition to our
expectation that the company's weaker earnings will likely lead it
to generate negative free cash flow, we note its first-lien debt
becomes current on Oct. 20, 2023, and rising interest rates will
lead to higher interest payments. Therefore, we now assess the
company's liquidity as weak because we forecast its uses will
materially exceed its sources.
"The negative outlook on K&N reflects our expectation that it could
default or engage in a distressed debt restructuring in the next
six months."
S&P could lower its ratings on K&N if:
-- It announces or engages in a debt restructuring;
-- It misses its debt payments; or
-- It files for bankruptcy protection.
Although unlikely, S&P could raise its ratings on K&N if it
believes:
-- There is no longer a high-probability of a near-term distressed
restructuring or bankruptcy; and
-- Its liquidity has improved such that it would be capable of
funding its operations and meeting its mandatory debt payments over
the next six months.
ESG credit indicators: E-2, S-2, G-3
S&P said, "Environmental factors have an overall neutral influence
on our credit rating analysis of K&N Parent Inc. While many of its
products, like air and oil filters, are dependent on the internal
combustion engine, it sells its parts in the aftermarket, the
demand for its products primarily stems from enthusiasts, and we
expect it will take many years for the car park to materially shift
toward fully electric vehicles, particularly in North America.
Governance is a moderately negative consideration. Our highly
leveraged assessment of the company's financial risk profile
reflects its corporate decision-making that prioritizes the
interests of its controlling owners, which is in line with our view
of most rated entities owned by private-equity sponsors. Our
assessment also reflects private-equity owners' generally finite
holding periods and focus on maximizing shareholder returns."
KABBAGE INC: Hires Weil Gotshal & Manges as Bankruptcy Counsel
--------------------------------------------------------------
Kabbage, Inc. d/b/a KServicing seeks approval from the U.S.
Bankruptcy Court for the District of Delaware to employ Weil,
Gotshal & Manges LLP as its attorneys.
The firm's services include:
(a) taking all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions on the
Debtor's behalf, the defense of any actions commenced against the
Debtor, the negotiation of disputes in which the Debtor is involved
and the preparation of objections to claims filed against the
Debtor's estate;
(b) preparing on behalf of the Debtor, as debtor in
possession, necessary motions, applications, answers, orders,
reports and other papers in connection with the administration of
the Debtor's estate;
(c) taking necessary actions in connection with any chapter 11
plan and related disclosure statement and all related documents,
including in connection with any post-petition sale process, and
such further actions as may be required in connection with the
administration of the Debtor's estate;
(d) taking necessary action to protect and preserve the value
of the Debtor's estate and all related matters;
(e) performing other necessary legal services in connection
with the prosecution of this chapter 11 case.
The firm will be at these hourly rates:
Partners/Counsel $1,250 to $1,950
Associates $690 to $1,200
Paraprofessionals $275 to $495
Ray Schrock, Esq., a partner at Weil, 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.
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, Weil
Gotshal disclosed that:
-- it has not agreed to any variations from, or alternatives
to, its standard or customary billing arrangements for this
engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case;
-- the firm was formally engaged by the Debtors in April 2022.
Weil's billing rates and material financial terms have not changed
since the Debtors engaged Weil; and
-- Weil is developing a prospective budget and staffing plan
for this chapter 11 case.
The firm can be reached through:
Ray C. Schrock, Esq.
WEIL, GOTSHAL & MANGES LLP
Ray C. Schrock, P.C.
767 Fifth Avenue
New York, NY 10153
Telephone: (212) 310-8000
E-mail: ray.schrock@weil.com
About KServicing
Founded in 2010 and headquartered in Atlanta, Georgia, Legacy
Kabbage (a predecessor of KServicing) -- http://www.kservicing.com
-- was one of the leading fintech providers of working capital to
small businesses for over a decade. Legacy Kabbage began as a
proprietary online lending platform for small businesses, providing
loan services to over 250,000 American small businesses, many of
which were businesses that struggled to receive adequate funding
through traditional banking institutions. Legacy Kabbage offered a
variety of services to small business owners, including providing
small business loans, access to flexible lines of credit, business
checking accounts, online bill payment methods, cash flow
visualization tools, and e-gift certificates through its website
and software application. From 2020-2021, the Company provided and
facilitated necessary funding to small business owners through PPP
loans during the COVID-19 pandemic. The Company's existing
technology infrastructure spearheaded its PPP work, which led to a
total of $7 billion in loans being originated by the Company.
The origination and servicing of PPP Loans and small business loans
to eligible borrowers was critical during a time of unprecedented
health and economic uncertainty brought about by the COVID-19
pandemic. On August 16, 2020, much of the Company's business was
sold to American Express Travel Related Services Company, Inc.
pursuant to an executed Agreement and Plan of Merger. As a result
of the merger, KServicing now operates in a limited capacity as (i)
a servicer and subservicer of PPP Loans, (ii) a software services
provider for lenders of PPP Loans, and (iii) a servicer of a minor
portfolio of non-PPP small business loans.
Kabbage is a trademark of American Express used under license;
Kabbage, Inc. d/b/a KServicing is not affiliated with American
Express.
LADO ENTERPRISES: Taps Taksey Neff & Associates as Accountant
-------------------------------------------------------------
Lado Enterprises, Inc. seeks approval from the U.S. Bankruptcy
Court for the District of Maryland to employ Taksey Neff &
Associates, LLC as its accountant.
The firm's services include:
(a) quarterly review and adjustments to Quickbooks;
(b) quarterly tax planning services and advise;
(c) preparation of business income and personal property tax
returns;
(d) preparation of annual compiled financial statements;
(e) preparation of Employee Retention Credit (ERC) for 2020
and 2021; and
(f) consulting services as needed.
The firm charges the Debtor at a monthly rate of $833.33, plus the
sum of $2,500 for the preparation of the ERC.
Edward Neff, CPA, a principal at Taksey Neff & Associates,
disclosed in a court filing that his firm is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Edward J. Neff
Taksey Neff & Associates, LLC
2 Research Place, Suite 310
Rockville, MD 20850
Telephone: (301) 294-1100
Facsimile: (301) 294-1109
About Lado Enterprises
Lado Enterprises Inc., an educational service provider in Silver
Spring, Md., sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Md. Case No. 22-14357) on Aug. 9, 2022,
with $657,396 in assets and $1,447,002 in liabilities. Margaret
Lado Schepis, chief executive officer, signed the petition.
Judge Maria Ellena Chavez-Ruark oversees the case.
The Debtor tapped The Law Offices of Steven H. Greenfeld, LLC as
counsel and Taksey Neff & Associates, LLC as accountant.
LATTICE SEMICONDUCTOR: S&P Hikes ICR to 'BB' on Leverage Reduction
------------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
provider of low-power programmable logic devices Lattice
Semiconductor Corp. to 'BB' from 'BB-'. S&P also affirmed its 'BB'
issue-level rating on the company's upsized senior secured revolver
based on a recovery rating of '3'.
S&P said, "The stable outlook reflects our expectation that Lattice
will benefit from the ramp-up of recently launched products that
increase its presence in core areas such as data center servers,
automotive and industrial markets, and 5G infrastructure, or
relatively new areas like client computing. We expect this to
contribute to revenue growth in the low-teens percent area in 2023,
which in addition to EBITDA margins in the 40% area should keep
leverage below 1x barring debt-funded acquisitions.
"With a modest debt balance and EBITDA margins in the 40% area from
good business execution, we expect Lattice to maintain leverage
well below 2x. Lattice reduced its debt balance to about $150
million as of Sept. 1, 2022, in the form of a drawdown on a new
revolving credit facility (RCF) due in September 2027. This
followed steady debt repayments since 2020 from improving FOCF, in
turn driven by EBITDA growth. This EBITDA growth is partly due to
the successful execution of strategic initiatives implemented since
early 2019 to improve gross profit margins through price
optimization and cost efficiencies. In addition to mix gains from
higher-margin products, this has increased EBITDA margins above 40%
in 2022 from below 20% in 2018 and reduced leverage to 0.8x as of
July 2. While significant supply chain uncertainties and a
worsening macroeconomic backdrop remain, we believe Lattice has a
sufficient operational buffer to maintain leverage well below 2x,
in line with the 'BB' rating.
"Our adjusted debt, operating cash flow, and EBITDA include
standard adjustments for operating leases and share-based
compensation. We do not net accessible cash from our debt figures.
"The stable outlook reflects our expectation that Lattice will
benefit from the ramp-up of recently launched products that
increase its presence in data center servers, automotive and
industrial markets, and 5G infrastructure, or relatively new areas
including client computing. We expect this to contribute to revenue
growth in the low-teens percent area in 2023, which in addition to
EBITDA margins in the 40% area should keep leverage below 1x
barring debt-funded acquisitions.
"We could lower our rating if competitive pressure, operational
mishaps or a more aggressive financial policy, including large
debt-funded acquisitions, mean that we believe leverage could
increase above 2x while accounting for macroeconomic or industry
cyclicality."
While unlikely over the next 12 months, S&P could raise its rating
if:
-- Lattice gains significant scale and geographical or end-market
diversification, leading S&P to believe its credit metrics would be
less exposed to industry cyclicality; and
-- At the same time, S&P expects Lattice to repay debt or maintain
EBITDA growth such that it continues to maintain leverage well
below 1x and FOCF to debt well above 40%. These metrics would also
be supported by the company's financial policy after considering
share buybacks or potential acquisitions.
ESG credit indicators: E-2, S-2, G-2
LEVEL FOUR ORTHOTICS: $2.2MM DIP Loan, Cash Collateral Access OK'd
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Level Four Orthotics & Prosthetitics, Inc. d/b/a/ Restore POC and
affiliates to use cash collateral and obtain postpetition
financing, on a final basis.
The Debtors are permitted to incur DIP Obligations from Penta
Mezzanine SBIC Fund I, L.P., subject to the terms of the Final
Order, the Budget, and the DIP Loan Documents, in the aggregate
principal amount of up to $1,000,000 through October 27, 2022 and
$1,200,000 thereafter through November 17, 2022, subject to any
conditions and limitations on availability in the DIP Credit
Agreement, plus all interest, fees and other charges payable in
connection with such DIP Loans as provided in the DIP Credit
Agreement and other DIP Loan Documents.
The Debtors require the use of cash collateral and the DIP Loans in
order to finance their operations and fund the planned sale of
their business, absent which immediate and irreparable harm will
result to the Debtors, their estate and creditors, and the
prospects for a successful conclusion of the Chapter 11 Case.
As adequate protection against any diminution in value of the
Prepetition Secured Party's interest in the Prepetition Collateral,
if any, the Prepetition Secured Party is granted a valid and
perfected security interest in, and lien on all of the right, title
and interest of the Debtors in, to, and under all present and
after-acquired property and assets of the Debtors.
Subject to the Carve-Out, to the extent the Prepetition Liens are
valid and perfected, the Adequate Protection Liens will be (i)
priority perfected liens on all of the Postpetition Collateral that
is not otherwise encumbered by validly perfected, non-avoidable
security interests or liens as of the Petition Date or liens that
can relate back pursuant to Section 546(b) of the Bankruptcy Code,
and subordinate to the DIP Liens insofar as the Prepetition Liens
have been voluntarily subordinated to the DIP Facility by the
Prepetition Secured Party, (ii) perfected replacement liens on all
of the Postpetition Collateral as to which the Prepetition Secured
Party had a first priority lien as of the Petition Date, which
replacement liens will be junior only to the DIP Facility as
voluntarily subordinated, and (iii) junior perfected liens on all
Postpetition Collateral that is subject to a Prior Lien, with the
Prepetition Liens being voluntarily subordinated to the DIP
Facility.
As further adequate protection against any diminution in value of
the interests of the Prepetition Secured Party in the Prepetition
Collateral, if any, as a result of the stay, or any authorized use
of the Prepetition Collateral by the Debtors, the Prepetition
Secured Party is granted as and to the extent provided by sections
503(b) and 507(b) of the Bankruptcy Code allowed superpriority
administrative expense claims in these Chapter 11 Cases or any
Successor Case in the amount of the Adequate Protection
Obligations, which will be payable from and have recourse to all
Postpetition Collateral and all proceeds of Postpetition
Collateral.
These events constitute an "Event of Default:"
a. An "Event of Default" as defined under the DIP Loan
Documents will have occurred and is continuing, unless waived
pursuant to the DIP Loan Documents;
b. The failure by the Debtors to perform, in any respect, any
of the material terms, provisions, conditions, covenants, or
obligations under the Interim Order;
c. If the Debtors fail to timely meet any of the following
case milestones:
(i) If the Debtors have not filed a bidding
procedures motion, in form and substance acceptable to the DIP
Lender, seeking approval of bidding procedures for the sale of
substantially all of the Debtors' assets pursuant to section 363 of
the Bankruptcy Code, on or before five business days after the
Petition Date;
(ii) If an order approving the Bidding Procedures
Motion, in form and substance acceptable to the DIP Lender, has not
been entered on or before the date that is 30 days after the
Petition Date;
(iii) If an order approving the Sale, in form and
substance acceptable to the DIP Lender, has not been entered on or
before the date that is 60 days after the Petition Date; and
(iv) By no later than 60 days following the Petition
Date, the Approved 363 Sale will have closed.
e. The failure to comply with the Budget (subject to Permitted
Variances) in accordance with the Interim Order or the DIP Credit
Agreement for any weekly reporting period;
f. The filing by the Debtors of any motion seeking, or the
granting of any motion providing for, reversal or modification of
the Interim Order;
g. The filing by the Debtors of any motion seeking, or the
granting of any motion providing for, allowance of any
superpriority claim that is equal or senior to the Adequate
Protection Superpriority Claim (other than the DIP Superpriority
Claim) in this Chapter 11 Cases or in any Successor Case; or
h. The Debtors will have entered into any commitment or
agreement with respect to any financing (i) that is secured by a
security interest or other lien on all or any portion of the
Postpetition Collateral or the Prepetition Collateral which is
equal or senior to any security interest or other lien of the DIP
Lender, or (ii) any portion of which purports to be, or would be,
payable prior to payment in full of all DIP Obligations.
The Carve-Out means:
(i) Fees payable to the Clerk of the Court as and when they
are due without reference to the Budget;
(ii) In the event of a conversion of the Chapter 11 Case to
cases under Chapter 7 of the Bankruptcy Code, all reasonable and
documented fees and expenses, in an aggregate amount for all
Debtors not to exceed $25,000, incurred by a trustee under section
726(b) of the Bankruptcy Code;
(iii) Unpaid professional fees and expenses payable to any
Professional Person, in an aggregate amount for all Debtors equal
to the cumulative budgeted amounts on a line item basis for such
Professional Fees reflected in the Budget that are incurred or
accrued prior to the date on which the DIP Lender provides written
notice to the Debtors, the Debtors' counsel, the U.S. Trustee or
Sub V Trustee as the case may be and counsel to the Creditors'
Committee (if any) of an Event of Default;
(iv) Unpaid Professional Fees of the Debtors and the Creditors'
Committee's (if any), in each case incurred or accrued on or after
the Carve-Out Effective Date in an aggregate amount for all Debtors
not to exceed $100,000 for Debtors' Professional Persons and
$25,000 for Creditors' Committee Professional Persons (if any), to
the extent allowed at any time, whether by interim order,
procedural order or otherwise; and
(v) All accrued but unpaid wages and other compensation payable
to the Debtors' employees (including any obligations on account of
paid time off), whether arising before or after the Petition Date,
up to a maximum amount of $220,000.
A copy of the order is available at https://bit.ly/3D2rm2q from
PacerMonitor.com.
A copy of the budget is available at https://bit.ly/3MOw0Ex from
PacerMonitor.com.
The budget provides for total disbursements from operations, on a
weekly basis, as follows:
$326,000 for the week ending October 24, 2022;
$205,625 for the week ending October 31, 2022;
$219,250 for the week ending November 7, 2022;
$1,404,356 for the week ending November 14, 2022; and
$94,998 for the week ending November 21, 2022.
About Level Four Orthotics
Level Four Orthotics & Prosthetics, Inc., doing business as Restore
POC, is a provider of custom prosthetics, orthotics, and infant
cranial remolding products. It is based in Winter Park, Fla.
Level Four and five affiliates, including Cocco Enterprises, Inc.,
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
22-10807) on Aug. 29, 2022. At the time of the filing, Level Four
reported assets and debt of $10 million to $50 million. The
Debtors have pre-bankruptcy loan obligations totaling $20,235,011
as of the petition date, secured by some or all of the assets of
each of the Debtors.
Judge Brendan Linehan Shannon oversees the case.
The Debtors tapped Ruberto, Israel & Weiner, P.C. as bankruptcy
counsel; Cross & Simon, LLC as local counsel; and Verdolino &
Lowey, P.C. as accountant and financial advisor. Kroll
Restructuring Administration, LLC is the claims agent and
administrative advisor.
LTM SDLV 2020: Seeks to Hire Riggi Law Firm as Bankruptcy Counsel
-----------------------------------------------------------------
LTM SDLV 2020, LLC filed anew an application to employ Riggi Law
Firm as legal counsel in its Chapter 11 case.
The Debtor's initial application was denied by the U.S. Bankruptcy
Court for the District of Nevada on July 26.
Riggi Law Firm's services include:
1. instituting, prosecuting or defending any contested matters
arising out of this bankruptcy proceeding in which the Debtor may
be a party;
2. assisting the Debtor in seeking court approval to recover,
liquidate and protect estate assets;
3. assisting in determining the priorities and status of
claims and in filing objections thereto where necessary;
4. assisting in the preparation of a disclosure statement and
Chapter 11 plan;
5. performing all other legal services for the Debtor.
The firm received a retainer in the amount of $5,762.
The hourly rates charged by the firm's attorneys are as follows:
Partners $450
Associates $195
As disclosed in court filings, Riggi Law Firm is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
David A. Riggi, Esq.
Riggi Law Firm
5550 Painted Mirage Rd. Suite 320
Las Vegas, NV 89149
Tel: (702) 463-7777
Fax: (888) 306-7157
Email: RiggiLaw@gmail.com
About LTM SDLV 2020
LTM SDLV 2020, LLC filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. D. Nev. Case No. 22-11375) on April
21, 2022, listing as much as $1 million in both assets and
liabilities. Brian Shapiro serves as Subchapter V trustee.
Judge Natalie M. Cox oversees the case.
David Riggi, Esq., at Riggi Law Firm serves as the Debtor's
counsel.
LUMALE GROUP: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Lumale Group Inc.
10-06 160th Street
Whitestone, NY 11357
Business Description: The Debtor owns a single-family residence
located at 10-06 160 Street, Whitestone, NY
valued at $1.15 million.
Chapter 11 Petition Date: October 19, 2022
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 22-42597
Judge: Hon. Nancy Hershey Lord
Debtor's Counsel: Francis E. Hemmings, Esq.
LAW OFFICES OF FRANCIS E. HEMMINGS PLLC
228-18 Mentone Avenue
Laurelton, NY 11413
Tel: 212-747-9560 Ext. 22
Email: fhemmings@gmail.com
Total Assets: $1,150,000
Total Liabilities: $1,100,000
The petition was signed by Laura Ferris as president.
The Debtor stated it has no creditors holding unsecured claims.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/NA5CESY/Lumale_Group_Inc__nyebke-22-42597__0001.0.pdf?mcid=tGE4TAMA
M1 DEVELOPMENT: Unsecureds Will Get 100% of Claims in Plan
----------------------------------------------------------
M1 Development, LLC filed with the U.S. Bankruptcy Court for the
Eastern District of New York a Disclosure Statement describing Plan
of Reorganization dated October 17, 2022.
The Debtor is a limited liability company formed and existing under
the laws of the State of New York, with its principal place of
business in Brooklyn, New York. The Debtor operates as a developer,
that buys, renovates and sells real property.
The Debtor temporarily ceased operating its business due to the
filing of the instant bankruptcy and other litigation matters. The
Debtor's managing member is Rafi Manor ("Manor"). Currently, the
Debtor's primary assets consist of the ownership interest in
several LLC entities and amounts that remain outstanding from the
prior sale of the Debtor's interest in several entities.
As emphasized throughout the Plan, the Debtor's primary goal is to
file, together with Realya Crown Heights LLC ("Realya") on consent,
a chapter 11 petition for their entity M Rental Brooklyn LLC ("M
Rental"). M Rental is the fee owner of the multi-family residential
real property located at, and commonly known as 517 Brooklyn
Avenue, Brooklyn, New York, 11225 (the "Property"). The Debtor
shall transfer all of its interest and equity of M Rental and the
Property to Realya, subject to the confirmation of M Rental's plan
of reorganization. In consideration, Realya shall release the
Debtor of all claims.
The Debtor will continue to prosecute the pending Box Street
Adversary Proceeding in the instant bankruptcy and any and all
amounts recovered from the Box Street Adversary Proceeding
attributable to the Debtor shall pay the allowed claims. In the
event there are not enough funds from the recovery, the Debtor's
principals and insiders shall pay the remaining allowed claims.
The Plan also provides for a 100% distribution to the general
unsecured creditors, other than Realya, plus interest at the
federal judgment rate in effect on the date the Plan is confirmed.
The Debtor asserts that Realya is the only class of creditors that
is impaired and, as a result, is the only class entitled to vote on
the Plan. In the event that the Bankruptcy Court determines that
any other classes are impaired, the provisions on voting on the
Plan are included in this Disclosure Statement and Plan.
Class 1 shall consist of the Allowed Agreed Realya Claim. Class 1
is impaired. Since the Filing Date, the Debtor and Realya have
engaged in litigation surrounding the legitimacy of Realya's
unsecured claim. Upon the confirmation of the Debtor's plan
together with the confirmation of M Rental's plan, the debtor shall
transfer its equity of M Rental in consideration of a full release
of Realya's claim against the Debtor.
Class 2 shall consist of all Allowed General Unsecured Claims.
Class 2 Claimants shall receive a 100% distribution to be paid by
the Debtor within 60 days after the Effective Date with interest at
the federal judgment rate in effect on the Confirmation Date. The
Department of Treasury - Internal Revenue Services filed its proof
of claim [Claim No.: 1] claiming $400.00 in partnership tax as
general unsecured liability.
In addition, the Board of Managers of the Dupont Villa Condominium
(the "Dupont Condo Board") filed a proof of claim [Claim No.: 3]
claiming $26,339.00. It appears from the claim filed by Dupont
Condo Board that it is owed money for work performed at the address
161 Dupont Street, Brooklyn, New York 11222. However, the Debtor
will object to the Dupont Condo Board claim because it asserts that
it did not incur the debt and it is not the owner or developer of
the Dupont Street condo. Although, the Debtor also asserts that the
Dupont Condo Board claim was filed in error in the instant
bankruptcy case, because the Debtor's principal, Manor, is the
owner of a Dupont Street condo project and the Dupont Condo Board
filed an identical claim in the Manor bankruptcy case (E.D.N.Y
Bankruptcy Case No.:21-40976-nhl).
In any event, the Debtor anticipates paying any and all allowed
claims through the recovery of the Box Street Adversary Proceeding
and contributions from the Debtor's principal and insiders.
Accordingly, The Class 2 Claimants are unimpaired, are not eligible
to vote on the Plan and are deemed to have accepted the Plan.
Class 3 shall consist of all Allowed Equity Interests. Class 3
Claimants shall retain all existing pre-petition Equity Interest in
the Debtor effective as of the Effective Date. Class 3 Claimants
are unimpaired, are not eligible to vote on the Plan and are deemed
to have accepted the Plan.
The Plan shall be funded through a combination of: (i) transferring
the Debtor's interest in its entity M Rental, and the Property in
exchange for a release of Realya's claim against the Debtor,
subject to the confirmation of M Rental's plan of reorganization;
(ii) paying any and all valid claims through the recovery of the
Box Street Adversary Proceeding; and (iii) contributions from the
Debtor's principal and insiders.
A full-text copy of the Disclosure Statement dated October 17,
2022, is available at https://bit.ly/3VDPG1A from PacerMonitor.com
at no charge.
Attorneys for the Debtor:
Avrum J. Rosen, Esq.
Nico G. Pizzo, Esq.
Law Offices of Avrum J. Rosen, PLLC
Down Town Association
38 New Street
Huntington, NY 11743
Phone: (631) 423-8527
Fax: (631) 423-4536
Email: arosen@ajrlawny.com
About M1 Development
M1 Development, LLC, filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
21-40977) on April 14, 2021. Rafi Manor, owner of M1 Development,
signed the petition. At the time of the filing, the Debtor
disclosed $357,186 in assets and $2,272,000 in liabilities.
Judge Jil Mazer-Marino presides over the case.
The Law Offices of Avrum J. Rosen, PLLC serves as the Debtor's
legal counsel.
MALLINCKRODT PLC: Trust Sues to Recover $1.6-Bil. Shares Buyback
----------------------------------------------------------------
The Opioid Master Disbursement Trust II, the trust formed pursuant
to the chapter 11 Plan confirmed in the bankruptcy cases of
Mallinckrodt plc, has sued 72 entities to claw back $1.6 billion in
cash transfers Mallinckrodt plc paid to its equity owners through
the company's shares repurchase program. The Trust also filed a
separate lawsuit seeking to recover the value of the entire
Covidien enterprise at the time of the 2013 spinoff of Mallinckrodt
from Covidien, as well as the proceeds pocketed by Covidien before
completing the spinoff.
The Trust filed:
* Adv. Pro. No. 22-50435 (Bankr. D. Del.) against against Argos
Capital Appreciation Master Fund LP, Barclays Capital, Inc., BEC
Capital LLC, Blackrock Institutional Trust Company, N.A. (UK
Branch), Blackrock International Limited, Blackstone Senfina
Advisors LLC, Blue Ridge Capital Holdings LLC, Blue Ridge Capital
LLC, Capital Fund Management SA, Capital Growth Management Limited
Partnership, Carlson Capital LP, Chester Drive Capital LP, Chimera
Securities LLC, Citadel Securities LLC, Clear Street Markets LLC,
Consonance Capital Management LP, Cutler Group LLC, D.E. Shaw
Asymptote Portfolios LLC, D.E. Shaw Valence Portfolios LLC,
Deutsche Bank AG, EG Market Technologies LLC, Element Capital
Management LLC, Engineers Gate Manager LP, Ergoteles LLC, Everpoint
Associates LLC, G1 Execution Services LLC, GF Trading LLC, GTS
Securities LLC, Healthcor Management LP, Hehmeyer LLC, Hoplite
Capital LLC, HRT Execution Services LLC, HRT Execution Services,
LLC, HRT Financial LP, HRT Financial L P, IMC-Chicago LLC, Jane
Street Capital LLC, Jump Trading LLC, Korea Investment Corporation,
Latour Trading LLC, Lion Cave Capital LLC, Lion Cave Management
LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Moore
Capital Management LP, Palomino Limited, Paulson & Co., Inc., PFM
Health Sciences LP, Potamus Holdings LLC, Quantbot Management
Master Fund SPC Ltd, Quantitative Investment Management LLC,
Quantlab Securities LP, Quantlab Trading Partners US LP, Resilient
Capital LLP, RGM Securities LLC, RIEF RMP LLC, RIEF Trading LLC,
Rock Creek MB LLC, Simplex Trading LLC, Spire X Trading LLC,
Squarepoint Ops LLC, Susquehanna Securities LLC, SVB Securities
LLC, T. Rowe Price Associates, Inc. and John Doe Funds, T3 Trading
Group LLC, Tewksbury Investment Fund Ltd, Thesys Technologies LLC,
Tower Research Capital LLC, Tradebot Systems, Inc., Trillium
Trading LLC, VA Management LP, Virtu Americas LLC, Virtu Americas,
LLC, William Blair & Company LLC, XTX Markets LLC, John Doe
Defendants, HRT Financial LP, Paulson & Co., Inc. and Cutler Group
LP on behalf of themselves and a class of similarly situated
persons and legal entities.
* Adv. Pro. No. 22-50433 (Bankr. D. Del.) against Covidien
Unlimited Company, Covidien Group Holdings Ltd., Covidien
International Finance S.A., Covidien Group S.A R.L., Doe Defendants
1-500.
The complaints were filed under seal but the Trust's recently
submitted report to the Bankruptcy Court provides details about the
lawsuit.
Covidien Spinoff Action
On Oct. 11, 2022, the Trust filed a lawsuit in the U.S. Bankruptcy
Court for the District of Delaware against Covidien Unlimited
Company, Mallinckrodt plc's former parent, and three of its
subsidiaries. The Trust asserts causes of action for intentional
and constructive fraudulent transfers, as well as claims for breach
of fiduciary duty; reimbursement, indemnification or contribution;
equitable subordination; equitable disallowance; and disallowance
under the Bankruptcy Code.
The Trust seeks to avoid and recover (a) the value of the entire
Covidien enterprise (without the Mallinckrodt business) at the time
of the 2013 spinoff of Mallinckrodt from Covidien; (b) the
approximately $867 million in net cash transfers paid to Covidien
from 2010 through 2012 for no apparent consideration; and (c) the
approximately $721 million in Mallinckrodt note proceeds that
Covidien pocketed before completing the spinoff. In addition, the
Trust seeks to avoid (i) the putative indemnification obligations
that Covidien imposed on Mallinckrodt under the spinoff agreement
and (ii) certain pre-spin tax liabilities in the hundreds of
millions of dollars that were imposed on Mallinckrodt in connection
with the spinoff, and to recover from Covidien (iii) the value of
any payments made by Mallinckrodt on account of those pre-spin tax
liabilities. Furthermore, the Trust has asked the Court to award
reimbursement, indemnification or contribution by or from Covidien
for (1) payments of indemnity and defense costs made by
Mallinckrodt pre-bankruptcy in connection with, or as a result of,
opioid-related subpoenas, investigations, litigation, judgments,
fines, and settlements, and (2) payments made by Mallinckrodt
post-petition to satisfy (i) all professional fees and costs,
allowed administrative expenses, quarterly fees and other costs
related to Mallinckrodt's bankruptcy case and (ii) obligations
under Mallinckrodt's confirmed chapter 11 plan.
Share Repurchase Program Action
On Oct. 12, 2022, the Trust filed a lawsuit in the U.S. Bankruptcy
Court for the District of Delaware against seventy-two defendant
participants in Mallinckrodt plc's share repurchase program. The
Trust asserts causes of action for intentional and constructive
fraudulent transfers through which it seeks to avoid and recover
the approximately $1.6 billion in cash transfers Mallinckrodt plc
paid to its equity owners through the SRP between 2015 and 2018.
The Trust asserts that the shares Mallinckrodt purchased through
the SRP were worthless because Mallinckrodt was deeply insolvent at
the time of the repurchases due to massive liabilities incurred
from the manufacture and promotion of its opioid products. The
Trust asserts that the cash paid to Mallinckrodt shareholders
through the SRP was wrongly diverted and should be recouped for the
benefit of Mallinckrodt's creditors.
The Trust
The Opioid Master Disbursement Trust II ("MDT II" or "the Trust")
was established pursuant to the chapter 11 Plan confirmed in the
bankruptcy cases of Mallinckrodt plc, In re Mallinckrodt plc, Case
No. 20-12522 (Bankr. D. Del.). Jennifer E. Peacock, Michael
Atkinson, and Anne Ferazzi serve as the Opioid Master Disbursement
Trust II Trustees
The MDT II is a "hub" trust in a "hub & spoke" trust design,
created to receive distributions (from funds to be paid by
Mallinckrodt and any litigation recoveries) and then make
distributions to the "spoke" beneficiary trusts: the Public
Creditor Trusts (for the U.S. States and Territories and local
governments within U.S. States and Territories, as well as the
federally-recognized American Indian and Alaska Native Tribes) and
the Private Creditor Trusts (for, e.g., personal injury victims,
persons afflicted by neonatal abstinence syndrome, hospitals).
The MDT II's primary responsibilities are to: (i) receive the
opioid settlement funds from Mallinckrodt; (ii) investigate and
pursue claims against third parties that are assigned to the MDT
II; (iii) fix a bar date and administer Other Opioid Claims that
were not resolved as part of the Plan; (iv) make distributions to
the Public and Private Creditor Trusts per the allocations in the
Plan; and (v) monetize the New Opioid Warrants. These Opioid
Creditor Trusts disburse funds received from MDT II to their
respective creditors to be
used for approved opioid abatement strategies or, in the case of
the PI Trust, to compensate individuals for personal injury damages
sustained as a result of the use of Mallinckrodt's opioid
products.
The Trust has undertaken the activities necessary to ensure
efficient functioning. The Trust has established a banking
relationship, implemented internal controls, and hired advisors and
vendors.
Professional retentions include:
* Brown Rudnick LLP (General Counsel);
* Houlihan Lokey Capital, Inc. (Financial Advisor to the
Trust);
* Morgan Stanley (Financial Advisor to the Trust and Investment
Manager);
* Gilbert, LLP (Counsel – Litigation);
* Caplin & Drysdale (Counsel – Litigation);
* Cole Schotz P.C. (Counsel – Litigation and Delaware
Counsel);
* FTI Consulting, Inc. (Financial Advisor in Support of Trust
Litigations);
* Stretto, Inc. (Claims Administrator, Other Opioid Claims);
* Aon plc (Insurance Broker);
* Berkshire Hathaway Specialty Insurance Company (Insurance
Provider);
* CNA Insurance (Insurance Provider); and
* XL Specialty Insurance Company (Insurance Provider).
As of Sept. 30, 2022, the Trust has ending cash balance of
$170,661,561.
About Mallinckrodt PLC
Mallinckrodt -- http://www.mallinckrodt.com/-- is a global
business consisting of multiple wholly-owned subsidiaries that
develop, manufacture, market and distribute specialty
pharmaceutical products and therapies. The company's Specialty
Brands reportable segment's areas of focus include autoimmune and
rare diseases in specialty areas like neurology, rheumatology,
nephrology, pulmonology and ophthalmology; immunotherapy and
neonatal respiratory critical care therapies; analgesics; and
gastrointestinal products. Its Specialty Generics reportable
segment includes specialty generic drugs and active pharmaceutical
ingredients.
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware (Bankr. D. Del. Lead Case
No. 20-12522) to seek approval of a restructuring that would reduce
total debt by $1.3 billion and resolve opioid-related claims
against them.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Latham & Watkins, LLP and Richards, Layton &
Finger, P.A. as their bankruptcy counsel; Arthur Cox and Wachtell,
Lipton, Rosen & Katz as corporate and finance counsel; Ropes &
Gray, LLP as litigation counsel; Torys, LLP as CCAA counsel;
Guggenheim Securities, LLC as investment banker; and AlixPartners,
LLP as restructuring advisor. Prime Clerk, LLC is the claims
agent.
The official committee of unsecured creditors retained Cooley, LLP,
as its legal counsel; Robinson & Cole, LLP as co-counsel; and
Dundon Advisers, LLC as financial advisor.
On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an
official committee of opioid-related claimants. The OCC tapped
Akin Gump Strauss Hauer & Feld, LLP as its lead counsel; Cole
Schotz as Delaware co-counsel; Province, Inc. as financial advisor;
and Jefferies, LLC as investment banker.
* * *
Mallinckrodt plc on June 16, 2022, announced that it has
successfully completed its reorganization process, emerged from
Chapter 11 and completed the Irish Examinership proceedings.
Implementing the Plan and the Scheme strengthens the Company's
balance sheet, reduces its total debt by approximately $1.3 billion
and enables it to move forward with more than $250 million in cash
and cash equivalents on hand. The Plan and Scheme include key
legal settlements that resolve opioid claims brought against the
Company and litigation matters involving Acthar Gel, among other
claims, and provides for significant equitization of the Company's
guaranteed unsecured notes.
MERMAID BIDCO: S&P Alters Outlook to Stable, Affirms 'B-' ICR
-------------------------------------------------------------
S&P Global Ratings revised the outlook to stable from positive and
affirmed all ratings, including the 'B-' issuer credit rating on
U.S. virtual data room (VDR) solutions provider Mermaid Bidco Inc.
(d/b/a Datasite).
The stable outlook reflects S&P's expectation that declining
earnings over the next year could result in leverage rising above
7x and free operating cash flow (FOCF) to debt below 10%.
Lower levels of capital market transactions will lead to declining
earnings for Datasite. The company has been a beneficiary of record
levels of merger and acquisition (M&A) activity in 2021, leading to
higher utilization of its services. S&P said, "However, the M&A
market has since slowed down substantially and we expect Datasite
will experience a lag in revenue growth. Given the looming
recessionary environment and increasing interest rates, we expect
capital market activity to remain muted well into 2023. We believe
that Datasite's VDR product is exposed to the transaction
volatility in capital markets because most of the company's
corporate clients use Datasite's VDR product to manage M&A
transactions." Although ongoing M&A surveillance and due diligence
could limit dramatic declines in revenue growth, these recurring
revenue streams do not fully mitigate the company's significant
exposure to overall M&A activity.
The stable outlook reflects S&P's expectation that declining
earnings over the next year could result in leverage rising above
7x and free operating cash flow (FOCF)/debt below 10%.
S&P could lower the rating if it believes the capital structure has
become unsustainable or liquidity tightens.
This could occur if:
-- A more severe recession leads to low levels of capital market
transactions for a prolonged period of time, pressuring Datasite's
earnings and cash flow such that leverage rises to the high-single
digits without a credible deleveraging path;
-- Datasite faces competitive pressures that lead to deterioration
in its market share; or
-- The company is unable to generate meaningful FOCF, leading to
difficulty covering its fixed charges.
S&P could raise the rating on Datasite if:
-- S&P expects the company to maintain leverage below 7x, even
with M&A and shareholder rewarding activities; and
-- S&P expects Datasite will generate FOCF to debt of 10% or
higher on a sustainable basis.
ESG credit indicators: E2/S2/G3
S&P said, "Governance factors are a moderately negative
consideration in our credit rating analysis of Mermaid, as is the
case for most rated entities owned by private-equity sponsors. We
believe the company's highly leveraged financial risk profile
points to corporate decision-making that prioritizes the interests
of controlling owners. This also reflects the generally finite
holding periods and a focus on maximizing shareholder returns."
MIDLAND ELECTRIC: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Midland Electric Supply LLC
5818 Massachusetts Avenue
Indianapolis, IN 46218
Business Description: The Debtor is a merchant wholesaler of
household appliances and electrical and
electronic goods.
Chapter 11 Petition Date: October 19, 2022
Court: United States Bankruptcy Court
Southern District of Indiana
Case No.: 22-04199
Judge: Hon. Robyn L. Moberly
Debtor's Counsel: David Krebs, Esq.
HESTER BAKER KREBS LLC
One Indiana Sq Suite 1330
Indianapolis, IN 46204
Tel: 317-833-3030
Email: dkrebs@hbkfirm.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Matthew L. Johnson as owner/member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/R2WVXRI/Midland_Electric_Supply_LLC__insbke-22-04199__0001.0.pdf?mcid=tGE4TAMA
MIDWEST OVERNITE: Seeks to Hire Turner Legal Group as Counsel
-------------------------------------------------------------
Midwest Overnite Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Nebraska to employ Turner Legal Group, LLC as
its legal counsel.
The firm will render these services:
(a) advise the Debtor with respect to its powers and duties in
the continued management and operation of its business and
properties;
(b) attend meetings and negotiate with creditors and other
parties in interest;
(c) take all necessary action to protect and preserve the
Debtor's assets;
(d) prepare legal papers;
(e take any necessary action to obtain approval of a
disclosure statement and confirmation of a plan of reorganization;
(f represent the Debtor in connection with any potential
post-petition financing;
(g) appear before the bankruptcy court, appellate courts, and
any other courts; and
(h) perform other necessary 1ega1 services for the Debtor in
connection with its Chapter 11 case.
Prior to the petition date, Turner Legal requested a retainer in
the amount of $10,000 from the Debtor.
The firm will be paid at its hourly rate of $305, plus
reimbursement of expenses incurred.
Patrick Turner, Esq., an attorney at Turner Legal, 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:
Patrick R. Turner, Esq.
Turner Legal Group, LLC
139 S. 144th Street, Suite 665
Omaha, NE 68010
Telephone: (402) 690-3675
Email: pturner@turnerlegalomaha.com
About Midwest Overnite
Omaha-based Midwest Overnite, Inc. operates in the general freight
trucking industry.
Midwest Overnite sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Neb. Case No. 22-80737) on Oct. 6, 2022,
with up to $1 million in assets and up to $10 million in
liabilities. Chris Horn, Sr., president of Midwest Overnite, signed
the petition.
Judge Thomas L. Saladino oversees the case.
Patrick R. Turner, Esq., at Turner Legal Group, LLC, is the
Debtor's counsel.
MILLERKNOLL INC: S&P Downgrades ICR to 'BB' on Looming Recession
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on office and
residential furniture manufacturer MillerKnoll Inc. to 'BB' from
'BB+' and its rating on its senior secured bank credit facility to
'BB+' from 'BBB-'. The recovery rating remains '2', indicating its
expectations for substantial (70%-90%; rounded estimate: 75%)
recovery in the event of a payment default.
The negative outlook reflects the potential for a lower rating over
the next 12 months if it forecasts the company will sustain
adjusted leverage over 4x or free operating cash flow (FOCF) falls
well below its expectations, most likely due to an economic
downturn more severe or longer than it anticipates.
S&P said, "We lowered our rating mainly due to weakening economic
conditions, which will at least delay meaningful credit ratio
improvement. The company's debt and adjusted leverage were already
elevated following its primarily debt-financed acquisition of Knoll
Inc. in July 2021. S&P Global Ratings-adjusted debt increased to
about $1.6 billion from $234 million and pro forma adjusted
leverage increased to about 3.5x from the low-1x area. More
recently the company has performed relatively well battling severe
inflation and supply chain constraints, though credit ratios
weakened further, including adjusted leverage approaching 4x.
"We no longer believe the company will reach our prior adjusted
leverage expectation in 2023 given our revised economic forecast
for a shallow recession in 2023. This view is supported by
MillerKnoll's decelerating organic order trends including
sequential softening over the past three quarters of 31.5% growth,
4.4% growth, and most recently an 11% decline. We now expect
organic net sales will follow the order trend and turn negative
over the next few quarters, with adjusted leverage remaining in the
mid- to high-3x area at least through 2023.
"We also unfavorably reassessed our view of MillerKnoll's business
risk profile to fair. The downgrade also reflects this revision
because of its participation in a highly cyclical industry and
moderate scale. With about $4 billion in sales and global market
share estimated at or below 10%, MillerKnoll's scale is at the low
end compared to issuers with satisfactory business risk profiles.
The company's geographic diversification is fair, with over 70% of
sales generated in the U.S.
"Our business risk reassessment also incorporates our view that
hybrid work is a permanent shift that could result in uneven demand
over the next few years. Return-to-office trends have leveled off
recently, with the Kastle 10-city Back to Work Barometer showing
office occupancy of 47% versus a 100% pre-pandemic baseline.
"We still view positively MillerKnoll's good reputation for
producing quality products and diversification into residential
offerings, though the later provides little cyclical relief. The
company's key competitive advantage is its ability to design and
produce good quality products that carry a price premium. This is
demonstrated by its adjusted EBITDA margin outperformance relative
to top public rival Steelcase Inc. Moreover, MillerKnoll's
expansion into residential furnishings, bolstered by its
acquisition of Knoll, provides some protection against potentially
lackluster return-to-office trends over the medium term. That said,
this does not insulate the company from economic cyclicality as
residential demand has softened ahead of the office contract
business. While our economists' base-case forecast does not
consider a severe economic downturn, we note that legacy Herman
Miller's peak-to-trough reported EBITDA fell over 50% during the
2008-2009 global financial crisis.
"MillerKnoll's adjusted leverage is elevated in the high-3x area
following its leveraging acquisition of Knoll in July 2021 and the
significant widespread inflation and supply chain inefficiencies
over the last year. Our base-case forecast incorporates a shallow
recession, however performance and credit ratios could weaken
beyond our expectations in a more severe downturn."
The negative outlook reflects the potential for a lower rating over
the next 12 months if S&P forecasts MillerKnoll will sustain
adjusted leverage over 4x or FOCF falls well below its
expectations, possibly due to:
-- An economic downturn more severe or longer than S&P
anticipates;
-- Retail and "resimercial"-inspired products including home
office chairs not recovering due to a significant pull-forward of
demand during the pandemic;
-- Sustained high inflation, supply chain, and labor
inefficiencies;
-- Escalating competition from rivals that drives down pricing and
gross margin; or
-- While unlikely, a change in financial policy, including sizable
share repurchase activity.
S&P could revise the outlook to stable if it becomes more confident
the company will sustain adjusted leverage below 4x, which could
occur if:
-- Economic weakness proves to be mild and short-lived, prompting
clients to resume purchasing office furniture; or
-- Despite lingering economic softness, there is a significant
improvement in return-to-office trends and the company realizes its
Knoll integration and restructuring synergies.
S&P would also expect--consistent with its long-term target of
1x-2x company defined leverage--MillerKnoll to direct substantially
all discretionary cash flow toward debt repayment.
ESG credit indicators: E-2, S-2, G-2
S&P said, "ESG factors have an overall neutral influence on our
credit rating analysis of MillerKnoll. The company performed well
during the pandemic partly because of its decision years ago to
embrace a hybrid strategy serving both residential and commercial
settings, and its solid position in seating. This has offset its
participation in the commercial office future manufacturing sector,
which was hit hard by the pandemic."
MTG INC: Court Grants Summary Judgment Bid of Comerica, et al.
--------------------------------------------------------------
In the adversary proceeding captioned as IN RE: M.T.G., INC., d/b/a
MATRIX TECHNOLOGIES GROUP, Chapter 7, Debtor. GUY C. VINING, etc.,
Plaintiff, v. COMERICA BANK, et al., Defendants, Adv. Pro. No.
03-4950, (Bankr. E.D. Mich.), Bankruptcy Judge Thomas J. Tucker
grants the Defendants summary judgment on all of the Trustee's
Pre-Petition and Post-Petition Claims, except that:
(1) The Trustee is entitled to summary judgment on the fraud on
the court claim—requiring Taunt and his attorneys to disgorge,
and pay to the bankruptcy estate, all fees and expense
reimbursements that they received but have not yet been ordered to
disgorge—these are fees and expense amounts that are not included
in the $42,059 in fees that the Taunt attorneys already disgorged.
The Court also finds it appropriate to make a limited award of
attorney fees against each of the Taunt Defendants (i.e., former
Trustee Charles J. Taunt; Charles J. Taunt & Associates, P.C.) and
Plunkett & Cooney, jointly and severally. The fees will be awarded
and must be paid to the Trustee; and
(2) The Trustee is entitled to summary judgment against American
Casualty on the Bond, limited to the amount of the $22,823 plus the
limited attorney fees awarded against Taunt, in the amount to be
determined.
Pre-petition, MTG was "engaged in the business of rapid prototype
and tooling for plastics in the automotive industry from 1986
through February 1996." Comerica was MTG's primary lender. MTG's
and Comerica's commercial relationship was governed by various
agreements MTG and Comerica executed, and various promissory notes
MTG executed.
On Aug. 18, 2003, the Trustee filed a 21-count complaint against
Comerica, Taunt, and other Defendants, commencing this adversary
proceeding. The Trustee alleges in the complaint that he is
entitled to an award of compensatory damages in excess of $15
million, based on claims of MTG that arose before the filing of
MTG's bankruptcy case (the "Pre-Petition Claims"), and an award of
damages in excess of $19.5 million, plus attorney fees and punitive
damages, based on claims of the bankruptcy estate that arose after
the bankruptcy case was filed (the "Post-Petition Claims").
I. Pre-Petition Claims
The Court finds that Comerica Defendants are entitled to summary
judgment on all of the Pre-Petition Claims and that it is not
necessary for the Court to determine whether or not MTG suffered
any damages as a result of Comerica's complained of actions because
the Court has determined that summary judgment is required against
each of the Pre-Petition Claims for other reasons, to wit:
(A) Breach of Contract: The Trustee's claim for breach of
contract—which is based on Comerica demanding full payment on all
the promissory notes and refusing to advance further funds to MTG
on its $3.5 million line of credit—is entirely without merit as a
matter of law. The Court finds that the promissory notes expressly
permitted Comerica to refuse to advance funds at any time without
notice and without incurring any liability, hence, Comerica did not
have a good faith obligation to provide notice prior to enforcing
this right, or any other good faith obligation which limited
Comerica's right to stop advancing funds to MTG.
(B) Promissory Estoppel: The Court grants summary judgment for
the Comerica Defendants on this claim because it is based on
certain alleged oral promises Comerica made to waive certain
requirements in the Loan Documents, and thus is barred by the
statute of frauds. The Trustee does not specify what purported
promises by Comerica support his promissory estoppel claim. The
Court assumes, based on the other paragraphs under the promissory
estoppel count, that the promises referred to are the Bank's
alleged oral promise "to make loans in addition to the Debtor's
existing line of credit which might be required to continue the
Debtor's operations pending the closing on the sale," and the
Bank's alleged oral promise "that MTG would not be required to file
A/R Reports pending the closing of a sale to the Becker Group."
(C) Equitable Estoppel: This claim is based on alleged oral
promises Comerica made to waive certain requirements in the Loan
Documents, and thus is barred by the statute of frauds. In
addition, the Court states that equitable estoppel can only
preclude an opposing party from asserting or denying the existence
of a particular fact—it cannot form the basis of an independent
cause of action.
(D) Fraudulent Misrepresentation: The allegations in the
Trustee's fraudulent representation portion of the complaint fail
to meet the "particularity" standard in Fed. R. Civ. P. 9(b) —
the Trustee fails to (1) specify what statements he contends were
fraudulent; (2) identify who, among the Comerica Defendants, made
each statement; (3) state where and when the statements were made;
(4) explain why the statements were fraudulent; (5) state which
statements the Debtor MTG relied on; (6) explain why MTG's
purported reliance on the statements was reasonable; and (7) state
how MTG was damaged by relying on the statements.
(E) Breach of Fiduciary Duty: This claim would still fail because
Comerica did not have a fiduciary relationship with MTG, and as a
result, did not owe any fiduciary duty to MTG.
(F) Tortious Interference With Contractual Relations: There is no
genuine dispute that Comerica's efforts to collect a debt owed to
it from MTG, which was in default under the terms of the Loan
Documents, was motivated by a legitimate business purpose, thus,
the Comerica Defendants are shielded as a matter of law from claims
for tortious interference of business contracts or business
relations.
(G) Business Defamation: The Trustee states his business
defamation claim, based on, among other things, Comerica's 8/4/95
notification of Debtor's account debtors that (1) the Debtor was in
default of its loan obligations, and (2) account debtors must
forward account payments directly to Comerica. But given the fact
that the first statement was true; namely that the Debtor was in
default as of Aug. 4, 1995; and the second statement truthfully
represented a right that Comerica could exercise in the event of a
default by the Debtor, the Court concludes that Comerica Defendants
are entitled to a judgment as a matter of law on this
claim—neither of the statements on which the Trustee bases his
business defamation claim was false.
II. Post-Petition Claims
(A) Fraud on the Court Claim: To date, the Court has found that
Taunt and his law firms, Charles J. Taunt and Associates, P.C. and
Plunkett & Cooney (Taunt's attorneys while he was Trustee)
committed fraud on the Court. The Court so found in its 2007 Fraud
on the Court Opinion, and that was affirmed on appeal by the
district court. These include the continued failures to properly
and fully disclose the Comerica Fee Agreement, and in moving for
and obtaining the Comerica Settlement Order, on July 3, 1996 and
August 29, 1996, respectively. The Court concludes, however, that
none of the Comerica Defendants committed fraud on the Court, or
can be held liable based on fraud on the Court.
(B) Request to Disallow Comerica's Proof of Claim: Comerica's
claim is based on money it loaned pre-petition to the Debtor MTG.
No such lending by Comerica was fraudulent. Comerica's claim was
not obtained by Comerica fraudulently, and is not infected by any
fraud, or by any fraud on the court. Hence, there is no fair or
logical basis in this case for depriving Comerica of its $5.3
million-plus claim, or any part of that claim, as a remedy for the
fraud on the court by Taunt and his attorneys.
(C) Breach of Fiduciary Duty: The Court rules explained that "the
bankruptcy estate suffered no injury because of anything Taunt or
his attorneys did or failed to do during the nearly five years that
Taunt was the Chapter 7 Trustee in the MTG case." Nothing that the
Trustee alleges was a breach of fiduciary duty caused any damage to
the bankruptcy estate.
(D) Inducing Breach of Fiduciary Duty Claim Against Comerica: The
Comerica Defendants are correct in their argument that Michigan law
does not recognize a claim for inducing a breach of fiduciary duty.
While Michigan law does recognize a cause of action for aiding and
abetting a breach of fiduciary duty, the Comerica Defendants
correctly note that the Trustee did not plead such a claim. In
addition, claims for conspiracy and aiding and abetting cannot
survive separately from an independent, actionable tort. Just as
with the Trustee's breach of fiduciary duty claim, damages is an
essential element of a claim for aiding and abetting a breach of
fiduciary duty. And there are no such damages in this case.
(E) Fraudulent Misrepresentations Claim: Damages is an essential
element of the Trustee's fraudulent misrepresentations claim. As
with the Trustee's breach of fiduciary duty claim, the bankruptcy
estate suffered no damages because of any of the alleged fraudulent
misrepresentations.
(F) Equitable Subordination Claim: The Court cannot find that
Comerica or any of the Comerica Defendants engaged in "inequitable
conduct" of the type required for equitable subordination. But even
if the Court could make such a finding, an essential element
required for equitable subordination is missing. That is the
requirement that "the misconduct must have resulted in injury to
the creditors of the bankrupt or conferred an unfair advantage on
the claimant." None of the misconduct alleged by the Trustee caused
any injury to other creditors in the MTG bankruptcy case. Nor did
it confer an unfair advantage on Comerica. Equitable subordination
therefore cannot be imposed.
(G) Claim of Collusive Sales: The Court explains that Taunt, in
his capacity as Trustee of the bankruptcy estate, in effect,
already owned the estate's causes of action against Comerica. He
was not a potential buyer of those causes of action. Comerica was a
potential buyer ("potential bidder"). So even if Taunt and Comerica
colluded, it was not collusion between "potential bidders," and
Section 363(n) does not apply. The same is true of the other
settlements at issue — Taunt and his attorneys were not
"potential bidders" with respect to the settlement with the Becker
Group, or Injectronics, or May. Hence, the Trustee's claim under
Section 363(n) fails as a matter of law
(H) Avoidable Post-Petition Transfers: It is undisputed that
every alleged post-petition transfer that the Trustee seeks to
avoid under Section 549(a) was authorized by an order of this
Court. These orders include the Comerica Settlement Order; the
order approving the Becker Settlement; and the order approving the
Injectronics settlement. With the exception of the Comerica
Settlement Order, all of these orders remain in full force and
effect, and they are not being vacated or modified as a result of
any of the Trustee's claims in this adversary proceeding. The
Comerica Settlement Order was vacated in April 2007 because of
fraud on the court. But there is nothing in the Court's Fraud on
the Court Opinion, or in the order that vacated the Comerica
Settlement Order, stating or implying that the Comerica Settlement
Order was being vacated on some sort of retroactive basis, or nunc
pro tunc, or that it was void ab initio.
(I) Automatic Stay Violations: The Court concludes that, with the
minor and harmless exception of paying some MTG utility bills, none
of the Defendants violated the automatic stay. Comerica's payment
of the gas bill and other utility bills did not damage the
bankruptcy estate. The Court further concludes that, even if any of
the Defendants' acts could be construed as a stay violation, none
of the complained of acts resulted in any injury to the bankruptcy
estate. Therefore, the Trustee has failed to satisfy necessary
elements of his stay violation claim, and is not entitled to an
award of any damages on this claim.
(J) Common Law and Statutory Conversion Claims: Taunt's
actions—while he was serving as the Chapter 7 Trustee in the MTG
case—in settling, selling, or otherwise liquidating the
bankruptcy estate's causes of action and other assets, and in
distributing the proceeds, were authorized by provisions of the
Bankruptcy Code and by orders of this Court. These actions cannot
be deemed, after the fact, to have been a wrongful exercise of
dominion over the bankruptcy estate's property. Thus, they cannot
be deemed a conversion of any estate property. Because Taunt
committed no conversion, neither he nor any of the other Defendants
who allegedly aided and abetted, or conspired to commit, the
alleged conversion, can be held liable for conversion.
(K) Conspiracy Claim: The Court repeats what it said in
discussing the Trustee's claim for compensatory damages for fraud
on the court, where the Court has held and explained that "it is
now clear that the [bankruptcy] estate suffered no injury because
of anything Taunt or his attorneys did or failed to do during the
nearly five years that Taunt was the Chapter 7 Trustee in the MTG
case." This holding applies to the Trustee's civil conspiracy
claim—i.e., nothing that Vining alleges was an actionable wrong
in his civil conspiracy claim caused any damage to the bankruptcy
estate. As a result, the Trustee's civil conspiracy claim fails as
a matter of law
(L) Legal Malpractice Claim: Damages is an essential element of
the Trustee's legal malpractice claim. However, the Trustee cannot
establish that the alleged malpractice "was the proximate cause" to
any damage to the bankruptcy estate.
(M) RICO Act Claim: The Court holds that "an essential element of
the RICO claim is that the bankruptcy estate suffered injury
because of the Defendants' actions and omissions constituting the
alleged RICO violations. . . it is clear that the Trustee cannot
meet his burden of proving this element." Because the Trustee
cannot demonstrate any injury to the bankruptcy estate, his RICO
claim fails, and the Court must grant summary judgment for
Defendants on this claim.
(N) Claim Against the American Casualty Bond: The Court agrees
with the Trustee that American Casualty is liable on the Bond even
if the Court only finds that Taunt negligently performed any of his
official duties as Chapter 7 Trustee. Contrary to American
Casualty's argument, American Casualty's liability on the Bond does
not require the Court to find Taunt liable in his personal
capacity, as opposed to his official capacity. This also means that
it is not necessary for the Court to find that any breach of
fiduciary duty, misconduct, or fraud on the court by Taunt was
"willful" or "intentional."
(O) Claim for an Accounting: The Court grants summary judgment to
both Taunt and Comerica on the Trustee's claim for an accounting
for the following reasons: (1) the Trustee has failed to cite any
Bankruptcy Code provision or any other applicable statute that
gives him a right to an accounting from either Taunt or Comerica;
(2) with regard to the Trustee's request for an accounting from
Comerica and Taunt of Comerica's "liquidation of each of the
Debtor's assets;" and an accounting of Comerica's "receipt of
proceeds from the liquidation of each of the Debtor's assets;"
sufficient information regarding such matters has already been
provided to the Trustee by Taunt; neither Comerica nor Taunt has a
duty to provide the information requested; and the Trustee has not
demonstrated a need for more information than he already has; (3)
with regard to the Trustee's request for an accounting of Taunt's
"payments to the Bank," Taunt's filing of his detailed Final Report
satisfied any obligation to account for all of his payments to the
Bank; and (4) with regard to the Trustee's request for an
accounting of the Bank's payments to Taunt and his attorneys, the
Court's ruling in this Opinion requiring Taunt and his attorneys to
disgorge all attorney fees paid by Comerica to them, "either
directly or from the proceeds of Comerica's collateral, based on
the Comerica Fee Agreement" renders such an accounting unnecessary.
A full-text copy of the Opinion dated Oct. 7, 2022, is available at
https://tinyurl.com/bddfuka6 from Leagle.com.
About M.T.G. Inc.
M.T.G., Inc., through its attorney Todd Halbert, filed a voluntary
petition for relief under Chapter 11 on Aug. 7, 1995. MTG's
Chapter 11 case was converted to Chapter 7 on Feb. 8, 1996. Charles
J. Taunt was appointed as the Chapter 7 Trustee.
After Taunt's appointment was terminated on Oct. 27, 2000, Douglas
Ellman was appointed as the successor Chapter 7 Trustee. Guy C.
Vining was elected as the successor Chapter 7 Trustee of Douglas
Ellman on Jan. 10, 2002.
Halbert represented the Debtor while it was in Chapter 11. Halbert
now represents Vining as special counsel.
NATPE: UK Publishing Company Submits Letter of Intent to Buy Assets
-------------------------------------------------------------------
Jon Lafayette of Next TV reports that C21 Media, a U.K. publishing
company, said it issued a letter of intent to acquire the assets of
the National Association of Television Program Executives, which is
currently seeking Chapter 11 bankruptcy protection and has laid off
several of its staffers.
Any acquisition would need approval from the bankruptcy court, C21
said.
C21 also said it planned to hold two conferences for content
producers and distributors in 2023 in locations where NATPE had
operated conferences: Miami, Florida, and Budapest(opens in new
tab), Hungary. Specific dates were not disclosed.
In a Chapter 11 petition filed last week at the U.S. Bankruptcy
Court for the Central District of California, NATPE said it has run
at a $1.33 million deficit in the first six months of the fiscal
year after losing $1.92 million last year.
The organization, whose money-generating events were disrupted by
the COVID-19 pandemic, has laid off staff members, retaining as
consultants three former executives, including CEO JP Bommel,
several people familiar with the situation said. Bommel has not
replied to emails or telephone messages from B+C.
Last September 2022, NATPE held its NATPE Streaming Plus conference
in Los Angeles. The group said it planned to move its annual
January marketplace and conference from Miami, Florida, to a resort
in Nassau, the Bahamas. There have been no announced changes to
that plan. Joe Schramm, president of Schramm Marketing (an
unsecured creditor listed in the petition), said he was retained to
create programming for the conference and has not been told
recently whether or not the Bahamas event was going ahead. Schramm,
who also programmed the L.A. streaming conference among other NATPE
events, told B+C he enjoyed working with the organization and said
he hoped the Bahamas event will go ahead.
In its bankruptcy filing, NAPTE said it has total assets of
$949,000 as of September 30, 2022, the end of the first half of its
fiscal 2023. At the end of fiscal 2022, the organization had
assets of $2.6 million.
The Fontainebleau Miami Beach and Eden Roc Miami Beach Resort,
where the NATPE marketplace and conference used to take place, are
on a list of creditors that have the 20 largest unsecured claims
against NATPE. NATPE canceled the January 2022 conference just 10
days before it was scheduled to begin, citing health and safety
concerns for attendees during a rise in COVID-19 infections.
Bommel said at the time that "although this decision from a
financial point of view will cost the organization a great deal of
money, that was secondary to our primary concern, which is to put
the welfare of our members first."
NATPE listed $1.2 million in liabilities for the six months ended
September 30, including $148,187 in account payable, $20,000 in
accrued payroll, $91,358 in accrued vacation and $773,133 in
deferred revenue.
In the first six months of fiscal 2023, total gross revenues were
$1.329 million, compared to $892,911 in all of fiscal 2022.
NATPE listed expenses of $1.561 million for fiscal 2023 to date,
compared to $1.895 million in all of fiscal 2022.
Among the biggest creditors with unsecured claims broken out in the
NAPTE bankruptcy petition were Lionsgate TV, owed $128,800; MGM
Television, owned $80,500; NBCUniversal, owed $80,000; MODco Media,
owed $72,000, and Sony Pictures, owed $51,250.
"These two new events will provide a vibrant Hispanic and U.S.
programming market early in the year, and a progressive Central &
Eastern European content market in June, with some haste," David
Jenkinson, editor-in-chief and managing director of C21, said in a
release. "Alongside these new event initiatives, we have issued a
letter of intent to the management of NATPE with a view to
acquiring its assets, which will be aligned with our business
should this happen. Any acquisition would require the approval of
the U.S. bankruptcy court."
About NATPE
The National Association of Television Program Executives (NATPE)
is a professional association of television and emerging media
executives established in 1963.
NATPE filed a petition for relief under Subchapter V of Chapter 11
of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-bk-11181) on
Oct. 11, 2022. The Debtor estimated assets of less than $50,000
and debt of less than $1 million.
The Debtor's counsel:
Leslie A Cohen
Leslie Cohen Law PC
310-394-5900
leslie@lesliecohenlaw.com
NELSON BROTHERS: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Nelson Brothers West Seneca Investor Units, LLC
20 Enterprise, Suite 400
Aliso Viejo, CA 92656
Business Description: The Debtor is engaged in activities related
to real estate.
Chapter 11 Petition Date: October 19, 2022
Court: United States Bankruptcy Court
Western District of New York
Case No.: 22-10980
Debtor's Counsel: James C. Thoman, Esq.
HODGSON RUSS LLP
140 Pearl Street, Suite 100
Buffalo, NY 14202
Tel: 716-848-1361
Email: jthoman@hodgsonruss.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Brian Nelson as authorized
representative.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/TX3HKFY/Nelson_Brothers_West_Seneca_Investor__nywbke-22-10980__0001.0.pdf?mcid=tGE4TAMA
NORTH FORK COMMUNITY: Files for Chapter 11 With Plan Deal
---------------------------------------------------------
North Fork Community Power LLC filed for chapter 11 protection in
the Southern District of Mississippi.
The Debtor is a limited liability company organized in 2013 to
develop, own, and operate a specialized alternative energy (forest
biomass) power plant in North Fork, CA, in the Sierra foothills
above Madera, CA, at a total cost of approximately $30 million.
The Managing Members of the Debtor are Phoenix Biomass Energy,
Inc., which is the operating manager, EQTEC PLC, which developed
the technology to be used in the Debtor's operation, and NFCP
Holdings, LLC, an affiliate of the North Fork Community Development
Council, ("CDC") a local quasi-public development entity which
facilitated acquisition of the shuttered local mill site that
closed in the 1990s. CDC is contributing the land on which the
Debtor sits and has facilitated other grants and governmental
support for the Project, which forms a small piece of the larger
mill site redevelopment. CDC has also facilitated financing
through a special governmental program known as "New Market Tax
Credits."
The Project utilizes a unique technology to convert excess forest
"biomass" into clean renewable power, heat, and "biochar." The
plant will take dead and fire damaged trees and "gasify" them into
a hydrogen rich synthesis gas ("syngas") which will, in turn, power
generators to produce an estimated 15.4 million kilowatt-hours of
electricity per year. Pursuant to California's BioMAT Tariff
(SB1122), Pacific Gas & Electric ("PG&E") is obligated under a
"Power Purchase Agreement" with the Debtor to buy this power under
a 20 year fixed price contract at 19.972 cents per kilowatt-hour
once the Project is completed and goes online. It is anticipated
that this will generate revenue of approximately $3.1 million per
year, and when combined with the sales of biochar and carbon
credits should total approximately $4.5 Million per year.
"Biochar" is a byproduct of this power production. It is a solid
carbon material which can be sold for various agricultural and
industrial uses like filter media. The gasification process does
not "burn" wood, but rather "bakes" it into a hydrogen rich syngas
and biochar. The fact that this solid carbon residue is left
behind makes the process carbon negative and also entitles the
Debtor to receive Carbon Credits. The Debtor will sell these
Carbon Credits under contract.
Aside from the revenue potential, the Debtor's operation reduces
open-field burning, carbon and methane emissions, and reduces the
risk of catastrophic wildfires in one of California's most
endangered regions. It is anticipated that the 1,700 tons of
biochar produced annually by the Debtor during normalized
operations will directly draw down on atmospheric carbon in
California, according to a recent report by Lawrence Livermore
National Labs.
In addition to these clean energy benefits, the Debtor's plant is
located in an economically depressed rural area and is expected to
supply up to 15 direct jobs to local residents once operational.
The construction of the Debtor's plant has been primarily financed
by four sources:
* First, there are approximately $15 Million in senior secured
clean energy bonds issued by the California Pollution Finance
Authority (the "Authority") as (i) the $10,430,000 Senior Lien
Solid Waste Disposal Revenue Bonds (North Fork Community Power, LLC
Project), Series 2019A (AMT) (Green Bonds) (the "Series 2019A
Bonds"), and (ii) the $4,690,000 Senior Lien Solid Waste Disposal
Revenue Bonds (North Fork Community Power, LLC Project), Series
2019B (Taxable) (Green Bonds) (the "Series 2019B Bonds," and
together with the Series 2019A Bonds, together, the "Bonds"). The
Bonds were issued pursuant to that certain Indenture, dated as of
Dec. 1, 2019 (the "Indenture"), by and between Authority and UMB
Bank, N.A., as indenture trustee (the "Trustee"). The Bonds are
secured by a first deed of trust and blanket UCC-1 filing on all of
the Debtor's assets pursuant to, among other things, a Pledge and
Security Agreement, dated as of Dec. 31, 2019 (the "Security
Agreement"), Collateral Assignment of Contracts, Permits, Licenses
and Plans, dated as of Dec. 31, 2019 (the "Collateral Assignment"),
Leasehold Deed of Trust, Security Agreement and Fixture Filing with
Assignment of Leases and Rents, dated as of December 31, 2019 (the
"Leasehold Deed of Trust"), and all of the other documents executed
in connection with the issuance of the Bonds or delivered as
security for, or in respect of, the Bonds or Debtor's obligations
under any of such documents, including but not limited to the
Forbearance Agreement and the Bridge Advance Agreement, are
collectively referred to herein as the "Bond Documents." As of
September 30, 2022, the outstanding principal and accrued interest
on the Bonds is $17,499,170.80, plus fees, costs and expenses of
the Trustee (the "Bond Claim").
* Second, because the plant is expected to provide a
significant number of jobs in an economically depressed area, the
Debtor has secured funding from "New Market Tax Credits." This
accounts for approximately $5.7 Million of the funding (the "New
Market Tax Credit Loan"). The New Market Tax Credit Loan is
currently nominally in the form of junior debt, but $4 Million of
this facility will convert to an outright grant at the end of the
year, and there is an option for the assignment of the balance of
the debt to Phoenix Biomass Energy for $1,000. As of September 30,
2022, the outstanding principal on the New Market Tax Credit Loan
is $5,820,000.
* The third major source of funding has been that certain
Unsecured Subordinated Convertible Revolving Promissory Note in the
stated amount of $4,500,000, by and between the Debtor and EQTEC
PLC (the "EQTEC Note"). As noted above, EQTEC developed and sold
the biomass conversion technology to the Debtor, and later provided
equity capital and loans to assist in getting the plant built. As
of Sept. 30, 2022 the outstanding principal and accrued interest on
the EQTEC Note is $2,770,468.
* Fourth, owing to its public purpose in catastrophic wildfire
reduction as well as rural economic empowerment, the Project has
benefited from significant financing and grant contributions from
US Forest Service, CalFire, California Energy Commission and the
Sierra Nevada Conservancy (California Resources Agency) among
others.
Reasons for Chapter 11 Filing
In general, the reasons for the Chapter 11 filing are a series of
delays largely outside the Debtor's control which caused excessive
cost overruns, and depletion of our loan reserves so that there
were insufficient funds to complete construction on the Project.
The specific problems are:
* First, prior to the commencement of construction of the
Project, the Debtor entered into a 20 year Power Purchase Agreement
with PG&E, which the Debtor entered, in part, pursuant to
California's BioMAT Tariff. It was anticipated that the Debtor
would use this contract to obtain construction funding from a
commercial bank at a competitive interest rate. However, before
this financing was arranged, in late Jan., 2019, PG&E filed its own
Chapter 11 case. The uncertainty created by PG&E's chapter 11
proceedings dramatically challenged the Debtor's ability to obtain
Project financing. After reviewing various funding options for the
Project, the Debtor obtained bond financing pursuant to the Bond
Documents.
* Second, subsequent to the Bond financing, many of the parts,
machinery, and equipment required to construct the Project were
significantly delayed due to the supply chain crisis and other
global economic challenges created by the COVID-19 pandemic. This
led to significant construction delays with the Project.
* Third, the Project is located near the center of the area
severely impacted by the 2020 Creek Fire, which burned from
September to December, and at that time was the largest wildfire in
California history. Cal Fire and the U.S. Forest Service used the
Debtor's property as a staging site, and the fire significantly
disrupted our ability to get labor and materials needed for further
construction of the Project. For some time after the Creek Fire
was contained, the Debtor was unable to resume work due to poor air
quality, exacerbating this impact.
* Fourth, the Debtor's tax credit investor, SCV North Fork, LLC
("SCV"), materially breached its obligations to the Debtor arising
under the Debtor's Amended and Restated Operating Agreement, dated
Dec. 31, 2019 (the "Prior LLC Agreement") to make a certain second
capital contribution in the amount of $515,047. As a result of
SCV's breach, the Debtor's Managing Members exercised their rights
under Prior LLC Agreement to convert SCV's interests into a
separate class of equity that has no rights as a member of the
Debtor, except the limited right to receive a certain distribution
in accordance with the Prior LLC Agreement. To memorialize this
action, the Managing Members entered into an amended and restated
LLC operating agreement, dated Oct. 12, 2021, resulting in SCV
holding all new Class B membership units. SCV's breach of its
obligations to the Debtor caused damages to the Debtor that have
impacted its ability to reorganize outside of Chapter 11.
Debtor's Exit Strategy
After consultation with various credit sources, including the
Trustee for the bondholders, the Debtor has formulated a viable
exit strategy to obtain sufficient funding to complete the Project
and complete a financial restructuring that will stabilize the
Debtor's capital structure and ensure its future operational
success.
First, during the Chapter 11 Case, the Debtor anticipates it will
require significant liquidity to both continue construction of the
Project and to meet its operational and administrative expenses.
After exploring all of its financing options, the Debtor requested
the Trustee to provide debtor-in-possession financing. The Trustee
has agreed to enter into a senior secured DIP Loans in an amount up
to $4,300,000, and use of its Cash Collateral, subject to the
Debtor entering into a Restructuring Support Agreement that will
enable the Debtor to pursue an efficient plan of reorganization and
emerge from Chapter 11 by March 15, 2023.
The Restructuring Support Agreement, dated Oct. 10, 2022 (the
"RSA") has been filed contemporaneous with the chapter 11 petition
and incorporates a plan of reorganization term sheet (the "Plan
Term Sheet"), which establishes a roadmap by which the Debtor will
obtain both debtor-in-possession and long-term exit financing
pursuant to a consensual chapter 11 plan of reorganization (the
"Plan"). At broad strokes, the Plan will (a) provide sufficient
long term funding to complete the Project, (b) convert significant
unsecured debt to equity, and (c) reinstate the Bond Claim in a
manner that provides for adjustment in the payment terms of the
accrued interest and returns the Bonds to non-default status at
post-confirmation, non-default interest. The Debtor has filed a
motion to assume the RSA in accordance with this Court's ordinary
notice procedures. To the extent the Debtor does not default on
the RSA, the Trustee and Majority Bondholder have agreed to support
the Plan.
The RSA also incorporates the terms and conditions of a new debtor
in possession loan facility to enable the Debtor to continue
construction on the Project and fund both administrative and
operational expenses during the Chapter 11 Case (the "DIP Loans").
The term of the RSA anticipates the Debtor will emerge from Chapter
11 by March 15, 2023; however, the Project is not scheduled to be
completed until mid-June, 2023. The Debtor anticipates that it will
require approximately $10,500,000 in exit financing in order to
repay the DIP Loan and additional financing needed to complete the
Project.
As set forth in the Plan Term Sheet, the Debtor has obtained the
commitment from the Majority Bondholder to provide exit financing,
but such commitment does not preclude the Debtor from pursuing more
advantageous exit financing options prior to the hearing on the
approval of its anticipated disclosure statement. This optionality
for alternative sources of exit financing set forth in the Plan
Term Sheet is beneficial to the Debtor to ensure a successful
Chapter 11 Case, and also enables the Debtor to explore any
superior opportunities to refinance the DIP Loan and obtain the
additional funds necessary to complete the Project.
To obtain exit financing, it will be necessary to adjust the
existing debts on the Debtors' balance sheet. The Plan Term Sheet
sets forth treatment of all classes of creditors and interest
holders, and will allow the Debtor to emerge with a more
financially secure balance sheet under a restructured class of
equity interests in the Debtor.
About North Fork Community Power
North Fork Community Power LLC is a forest-based biomass
gasification plant that will utilize sustainable local forest
biomass.
North Fork Community Power LLC sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. N.D. Cal. Case No. 22-41001) on
Oct. 11, 2022.
In the petition filed by Gregory J. Stangl, as authorized agent,
the Debtor reported assets and liabilities between $10 million and
$50 million. The Debtor said it had between 1 and 49 creditors,
and that funds will be available to unsecured creditors.
The Debtor is represented by John H. MacConaghy of MacConaghy and
Barnier.
NYMD GREEN: Seeks to Hire Berger as Legal Counsel
-------------------------------------------------
NYMD Green Lake, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of New York to employ Berger Fischoff
Shumer Wexler & Goodman, LLP as legal counsel.
The Debtor requires legal counsel to:
a. provide advice with respect to its powers and duties in the
continued management of its business and property;
b. represent the Debtor before the bankruptcy court and at all
hearings on matters pertaining to its affairs, including
prosecuting and defending litigated matters as they may arise
during the Chapter 11 case;
c. advise and assist the Debtor in the preparation and
negotiation of a plan of reorganization with its creditors;
d. prepare legal papers; and
e. perform other necessary legal services for the Debtor.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Partners $525 to $635
Associates $425 to $500
Paralegals $185
Berger Fischoff will be paid a retainer in the amount of $25,000,
plus $1,738 filing fee, and will be reimbursed for out-of-pocket
expenses incurred.
Gary Fischoff, Esq., a partner at Berger, disclosed in a court
filing that his firm is a "disinterested person" within the meaning
of Section 101(14) of the Bankruptcy Code..
Berger Fischoff can be reached at:
Gary C. Fischoff, Esq.
Berger Fischoff Shumer Wexler & Goodman, LLP
6901 Jericho Turnpike, Suite 230
Syosset, NY 11791
Tel: (516) 747-1136
Email: gfischoff@sfbblaw.com
About NYMD Green Lake
NYMD Green Lake, LLC owns and operates a 146-acre retreat in
Catskill, N.Y., for the benefit of churches comprising the New York
Pentecostal community.
NYMD Green Lake sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-42032) on Aug. 26,
2022, with up to $10 million in both assets and liabilities. Judge
Elizabeth S. Stong presides over the case.
The Debtor is represented by Gary Fischoff, Esq., at Berger,
Fischoff, Shumer, Wexler & Goodman, LLP.
OLYMPIA SPORTS: Seeks to Hire BMC Group as Administrative Agent
---------------------------------------------------------------
Olympia Sports Acquisitions, LLC and its affiliates seek approval
from the U.S. Bankruptcy Court for the District of Delaware to
employ BMC, Group Inc. as administrative agent.
BMC will render these services:
(a) assist with the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs;
(b) create and maintain databases for maintenance and
formatting of schedules and statements data;
(c) coordinate and collect data from the Debtors and their
advisors;
(d) provide data entry and quality assurance assistance
regarding schedules and statements;
(e) generate an official ballot certification, testify, if
necessary, in support of the ballot tabulation results, and manage
any distributions pursuant to a confirmed Chapter 11 plan; and
(f) provide such other claims processing, noticing,
solicitation, balloting, and administrative services as may be
requested from time to time by the Debtors.
BMC will receive a retainer of $25,000 from the Debtors and
reimbursement for expenses incurred.
Tinamarie Feil, president of BMC Group, disclosed in a court filing
that the firm is a "disinterested person" as that term is defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Tinamarie Feil
BMC Group, Inc.
600 1st Avenue
Seattle, WA 98104
Telephone: (206) 499-2169
Email: tfeil@bmcgroup.com
About Olympia Sports Acquisitions
Olympia Sports Acquisitions, LLC, is a sporting goods retail
company that maintains brick and mortar locations across the East
Coast, including Maine, New Hampshire, Vermont, New York,
Massachusetts, Rhode Island, and New Jersey.
On Sept. 11, 2022, Olympia Sports and several affiliates,
including, RSG Acquisitions, LLC, Project Running Specialties,
Inc., and The Running Specialty Group, LLC, sought Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 22-10853).
Olympia Sports estimated assets of $1 million to $10 million and
liabilities of $10 million to $50 million as of the bankruptcy
filing.
The Debtors tapped Shulman Bastian Friedman & Bui LLP as general
bankruptcy counsel; Morris James LLP as local counsel; and Force 10
Partners as financial advisor. BMC Group is the claims agent. The
U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in Debtors' cases on
Sept. 23, 2022.
PECOS ENTERTAINMENT: Taps Eric A. Liepins as Legal Counsel
----------------------------------------------------------
Pecos Entertainment, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Texas to the law firm of Eric A.
Liepins, P.C. as its counsel.
The Debtor requires legal assistance for the purpose of orderly
liquidating the assets, reorganizing the claims of the estate, and
determining the validity of claims asserted against the estate.
The hourly rates of the firm's attorneys and staff are as follows:
Eric A. Liepins $275
Paralegals and Legal Assistants $30 - $50
In addition, the firm will seek reimbursement for expenses
incurred.
The firm received a retainer of $5,000.
Mr. Liepins, the sole shareholder of the firm, disclosed in a court
filing that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Eric A. Liepins, Esq.
Eric A. Liepins, PC
12770 Coit Road, Suite 850
Dallas, TX 75251
Telephone: (972) 991-5591
Facsimile: (972) 991-5788
Email: eric@ealpc.com
About Pecos Entertainment
Pecos Entertainment LLC is a single asset real estate (as defined
in 11 U.S.C. Sec. 101(51B)). The company is based in Pecos, Texas.
Pecos Entertainment filed a petition for relief under Chapter 11 of
the Bankruptcy Code on Oct. 3, 2022, with between $500,000 and $1
million in assets and between $1 million and $10 million in
liabilities. Ram Kumwar, managing member, signed the petition.
The Debtor is represented by Eric A. Liepins, P.C.
PUERTO RICO: Court Okays Highway Authority Plan
-----------------------------------------------
The Financial Oversight and Management Board for Puerto Rico said
Oct. 12, 2022, it welcomes the decision by Judge Laura Taylor Swain
of the U.S. District Court for the District of Puerto Rico
confirming the Plan of Adjustment for the Puerto Rico Highway and
Transportation Authority (HTA) that was submitted by the Oversight
Board on May 2, 2022, and modified on Sept. 6, 2022.
The Plan reduces HTA's $6.4 billion in claims by more than 80% and
saves Puerto Rico more than $3 billion in debt service payments.
Confirmation of the plan is an important step for Puerto Rico to
end its bankruptcy process under PROMESA and to achieve long-term
economic stability and growth.
Equally important, the Plan creates a solid financial foundation to
ensure Puerto Rico's roads and public transportation are maintained
and improved. HTA will now be in a position to implement the
transportation sector reforms set forth in the certified HTA and
Commonwealth Fiscal Plans.
HTA must establish a Toll Management Office that is exclusively
responsible for toll-roads, separate responsibility for
construction and maintenance between toll-roads and non-toll-roads,
and transfer the Tren Urbano to the Puerto Rico Integrated Transit
Authority. These reforms will create operational stability and
improve the transportation sector overall.
Every resident of Puerto Rico deserves safe, well-maintained roads
and an efficient and accessible transportation system, which in
turn will drive needed economic growth. Judge Swain’s
confirmation and the HTA transformation create a path to achieve
those goals.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are on-board as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and to chair a committee to review professionals' fees.
* * *
The two Title III plans of adjustment have been confirmed to date,
for the Commonwealth and COFINA debtors.
QUANTUM SOURCE: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Quantum Source Insurance Group LLC
67 Old Clairton Rd.
Suite 200
Pittsburgh, PA 15236
Business Description: Quantum Source is an insurance brokerage
firm that partners with over 100 insurance
carriers that specialize in a wide range of
industries.
Chapter 11 Petition Date: October 19, 2022
Court: United States Bankruptcy Court
Western District of Pennsylvania
Case No.: 22-22066
Debtor's Counsel: David Fuchs, Esq.
FUCHS LAW OFFICE, LLC
554 Washington Avenue
Carnegie, PA 15106
Tel: 412-223-5404
Email: dfuchs@fuchslawoffice.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Charles Harris as president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/3H43CXQ/Quantum_Source_Insurance_Group__pawbke-22-22066__0001.0.pdf?mcid=tGE4TAMA
RLG HOLDINGS: Moody's Rates $130MM 1st Lien Term Loan Add-on 'B2'
-----------------------------------------------------------------
Moody's Investors Service assigns a B2 rating to RLG Holdings,
LLC's $130 million first lien term loan add-on due July 2028. This
term loan is pari passu with the existing first lien term loan
outstanding. The company's B3 Corporate Family Rating and all
other ratings remain unchanged. Proceeds will be used to finance
bolt-on acquisitions. The outlook is stable.
Assignments:
Issuer: RLG Holdings, LLC
Senior Secured First Lien Term Loan, Assigned B2 (LGD3)
RATINGS RATIONALE
RLG's B3 CFR reflects high leverage. Moody's expects pro forma
adjusted debt-to EBITDA (including Moody's adjustments) of close to
7.0x at year end 2022 to approach 6.5x in 2023. The company's
liquidity is good with pro forma cash of about $10 million, as of
June 30, 2022, and full availability under a $60 million revolving
credit facility.
Moody's views this acquisition financing as consistent with RLG's
growth through acquisition financial policy. Moody's expects
EBITDA improvement will reduce leverage and increase free cash
flow, which can be allocated toward debt reduction or the funding
of further bolt-on acquisitions.
The stable outlook reflects the expectation RLG will continue to
grow organically and take a disciplined approach regarding
inorganic growth opportunities, while debt reduction remains in
focus.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be upgraded if debt-to-EBITDA (inclusive of
Moody's adjustments) is consistently below 5.5x, there is a
commitment to a less aggressive financial policy as it relates to
debt leverage and acquisition strategy, and the company maintains
good liquidity.
The ratings could be downgraded if debt-to EBITDA (inclusive of
Moody's adjustments) elevates above 6.5x, financial policy actions
continue to increase leverage, and the company's liquidity
weakens.
RLG is a leader in pressure-sensitive and other high-value label
solutions in the fragmented North American labels industry. The
company is owned by Ares Management and does not file public
financial statements.
The principal methodology used in this rating was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
RLG HOLDINGS: S&P Rates New $130MM First-Lien Term Loan 'B-'
------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '3'
recovery rating to RLG Holdings LLC's proposed $130 million
nonfungible incremental first-lien term loan, the same rating as on
the existing secured first-lien debt. The '3' recovery rating
indicates S&P's expectation for meaningful (50%-70%; rounded
estimate: 55%) recovery in the event of a payment default. S&P
expects the company will use the proceeds to fund three separate
bolt-on acquisitions in a continuation of its strategy to expand
into new geographies, more capabilities, and higher-margin product
offerings.
S&P said, "The other ratings on the company remain unchanged,
including our 'B-' issuer credit rating, 'B-' first-lien debt
rating, and the 'CCC' second-lien debt rating. Our issuer credit
rating on RLG reflects our expectation for improved financial
performance through 2022 as supply chain challenges and product
delays subside, resulting in EBITDA margin improvement. With the
additional debt, we expect pro-forma leverage to remain between
7x-8x over the next 12-18 months."
Key analytical factors
-- Pro forma for the debt issuance, RLG's capital structure will
consist of a $60 million revolving credit facility, $495 million
first-lien term loan, the $130 million first-lien nonfungible term
loan (2022 term loan), and the $125 million second-lien term loan.
S&P understands the incremental first-lien term loan, while not
fungible with the existing term loan, will have the same
guarantees, collateral, and priority as the existing loan.
-- S&P believes lenders will aim to maximize RLG's value and
pursue reorganization rather than liquidation in a default
scenario. Therefore, S&P values the company on a going-concern
basis and apply a 5x multiple to our projected emergence EBITDA.
The multiple primarily reflects its small operational scale and
niche product focus.
-- S&P's simulated default scenario contemplates a payment default
in 2024 due to a steep economic downturn and intense competition
from large national competitors in labels and packaging. An
economic slowdown could reduce manufacturers' need for labels and
design services and could contribute to lower product pricing. RLG
would default when liquidity is exhausted and EBITDA cash flow
generation deteriorates to the level of its fixed-charge
obligations.
Simulated default assumptions
-- Simulated year of default: 2024
-- EBITDA multiple: 5x
-- EBITDA at default: $76 million
-- Gross enterprise value (EV): $381 million
Simplified waterfall
-- Net EV (after 5% administrative costs): $362 million
-- Valuation split (obligors/non-obligors): 86%/14%
-- Collateral value available to first-lien secured creditors:
$357 million
-- Secured first-lien debt claims: $677 million
--Recovery expectations: 50%-70%; rounded estimate: 55%
-- Unpledged value still available: $5 million
-- Secured second-lien debt claims: $125 million
--Recovery expectations: 0%-10%; rounded estimate: 0%
All debt amounts include six months of prepetition interest.
Revolver facility assumed 85% drawn at default.
RODA EXPRESS: Files Subchapter V Case
-------------------------------------
RODA Express Logistics LLC filed for chapter 11 protection in the
Southern District of Texas without stating a reason. The Debtor
elected on its voluntary petition to proceed under Subchapter V of
chapter 11 of the Bankruptcy Code.
According to court filings, RODA Express Logistics estimates $1
million to $10 million in debt to 1 to 49 creditors. The petition
states that funds will be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Nov. 16, 2022, at 10:00 AM at telephone conference. Proofs of
claim are due by Feb. 14, 2023.
About RODA Express Logistics
RODA Express Logistics LLC is a licensed and DOT registred trucking
company running freight hauling business from Laredo, Texas.
RODA Express Logistics LLC filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-50069) on October 10, 2022. In the petition filed by
Maria De Los Angeles Villarreal, as president, the Debtor reported
assets and liabilities between $1 million and $10 million each.
Catherine Stone Curtis has been appointed as Subchapter V trustee.
The Debtor is represented by Carl Michael Barto of Law Office of
Carl M. Barto.
SAINT KROIX: Seeks to Hire Robl Law Group as Bankruptcy Counsel
---------------------------------------------------------------
Saint Kroix, Inc. seeks approval from the U.S. Bankruptcy Court for
the Northern District of Georgia to employ the law firm of Robl Law
Group, LLC as its counsel.
The firm will render these services:
(a) prepare pleadings and applications;
(b) advise the Debtor of its rights and obligations;
(c) consult with and represent the Debtor with respect to the
preparation and confirmation of a Chapter 11 plan;
(d) take all actions necessary to the proper preservation and
administration of the Debtor's estate and business; and
(e) perform those legal services necessary to the operations
of the Debtor's business.
The hourly rates of the firm's counsel and staff are as follows:
Partners $440
Associates $275
Paralegals $175
In addition, the firm will seek reimbursement for expenses
incurred.
Jones & Walden LLC, the Debtor's former counsel, will transfer the
remaining retainer of $11,262 to Robl Law Group.
Mr. Vos 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:
Michael D. Robl, Esq.
Maxwell W. Bowen, Esq.
Robl Law Group, LLC
3754 Lavista Road, Suite 250
Tucker, GA 30084
Telephone: (404) 373-5153
Facsimile: (404) 537-1761
Email: michael@roblgroup.com
max@roblgroup.com
About Saint Kroix
Saint Kroix, Inc. filed a voluntary petition for relief under
Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Ga.
Case No. 22-57323) on Sept. 15, 2022, with as much as $1 million in
both assets and liabilities. John T. Whaley has been appointed as
Subchapter V trustee.
Judge Paul Baisier oversees the case.
Robl Law Group, LLC serves as the Debtor's counsel.
SEAHORSE RESTAURANT: Seeks to Hire Stichter as Bankruptcy Counsel
-----------------------------------------------------------------
Seahorse Restaurant, LLC seeks approval from the U.S. Bankruptcy
Court for the Middle District of Florida to employ Stichter,
Riedel, Blain & Postler, PA as its legal counsel.
The firm will render these services:
(a) advise the Debtor of its powers and duties in the
continued operation of its business, and the management of its
property;
(b) prepare legal papers;
(c) appear before this court and the U.S. trustee;
(d) assist with and participate in negotiations with creditors
and other parties in interest in formulating a plan of
reorganization, drafting such a plan, and taking necessary legal
steps to confirm such a plan;
(e) represent the Debtor in all adversary proceedings,
contested matters, and matters involving administration of its
Chapter 11 case;
(f) represent the Debtor in negotiations with potential
financing sources, and prepare contracts, security instruments, and
other documents necessary to obtain financing; and
(g) perform all other legal services that may be necessary for
the proper preservation and administration of the case.
Stichter Riedel received the aggregate sum of $21,738 from Vikas
Bansal, the Debtor's authorized member, on account of
pre-bankruptcy services and as a retainer for post-petition
services.
The Debtor has agreed to compensate Stichter Riedel on an hourly
basis in this case in accordance with its ordinary and customary
rates. In addition, the firm will seek reimbursement for expenses
incurred.
Mark F. Robens, Esq., an attorney at Stichter Riedel, disclosed in
a court filing that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Mark F. Robens, Esq.
Stichter, Riedel, Blain & Postler, PA
110 East Madison Street, Suite 200
Tampa, FL 33602
Telephone: (813) 229-0144
Email: mrobens@srbp.com
About Seahorse Restaurant
Seahorse Restaurants, LLC filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
22-03707) on Sept. 12, 2022, with up to $1 million in both assets
and liabilities. Ruediger Mueller has been appointed as Subchapter
V trustee.
Judge Roberta A. Colton oversees the case.
Mark F. Robens, Esq., at Stichter, Riedel, Blain & Postler, PA,
serves as the Debtor's legal counsel.
SERVICE LOGIC: $115MM Incremental Debt No Impact on Moody's B3 CFR
------------------------------------------------------------------
Moody's Investors Service said that Service Logic Acquisition,
Inc.'s B3 corporate family rating and B3-PD probability of default
rating are not affected by the incremental $115 million add-on to
the company's B2 rated first lien term loan. Term loan proceeds
together with a $40 million delayed draw will be used to fund
several near-term acquisitions and pay related fees and expenses.
The outlook is stable.
The B3 CFR reflects Service Logic's elevated financial leverage and
debt-funded acquisition strategy. Moody's projects pro forma
adjusted total debt-to-EBITDA of about 7.3x for year-end 2022, up
from 7.1x at year-end 2021. Moody's expects solid operating
performance in 2023, with over 90% retention rates in its
maintenance business, diversified end markets, and its large base
of over 30,000 customers.
The stable outlook reflects Moody's expectation that Service Logic
will grow organically and through acquisitions. Moody's also expect
the company to lower financial leverage through EBITDA growth,
while maintaining good liquidity.
Headquartered in Charlotte, North Carolina, Service Logic provides
aftermarket maintenance, repairs and replacement services for
commercial HVAC equipment, chilled water systems, and building
automation and controls systems. Leonard Green & Partners, L.P.
acquired Service Logic in October 2020.
SHAGTASTIC ENTERPRISES: Taps Dilks Law Firm as Bankruptcy Counsel
-----------------------------------------------------------------
Shagtastic Enterprises Inc. received approval from the U.S.
Bankruptcy Court for the Eastern District of Arkansas to hire the
Dilks Law Firm to handle its Chapter 11 case.
Dilks Law Firm will be paid at the rate of $295 per hour for
attorney services; $100 per hour for paralegal services; and $25
per hour for legal assistant work.
The firm received a retainer in the amount of $10,000.
Lyndsey Dilks, Esq., disclosed in a court filing that the firm has
no connection with the Debtor and its creditors or any other
"party-in-interest" in the Debtor's bankruptcy case.
The firm can be reached through:
Lyndsey D. Dilks, Esq.
Dilks Law Firm
P.O. Box 34157
Little Rock, AR 72203
Tel: (501)244-9770
Fax: (888)689-7626
Email: ldilks@dilkslawfirm.com
About Shagtastic Enterprises
Shagtastic Enterprises Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Ark. Case No.
22-12702) on Sept. 30, 2022, with up to $50,000 in assets and up to
$500,000 in liabilities. Judge Phyllis M. Jones oversees the case.
Lyndsey D. Dilks, Esq., at Dilks Law Firm represents the Debtor as
counsel.
SMART AND SASSY: Starts Subchapter V Case
-----------------------------------------
Smart and Sassy LLC filed for chapter 11 protection in the District
of Nebraska without stating a reason. The Debtor elected on its
voluntary petition to proceed under Subchapter V of chapter 11 of
the Bankruptcy Code.
According to court filings, Smart and Sassy estimates $1 million to
$10 million in debt to 1 to 49 creditors. The petition states that
funds will not be available to unsecured creditors.
A telephonic meeting of creditors under 11 U.S.C. Section 341(a) is
slated for November 14, 2022 at 11:30 a.m.
About Smart and Sassy
Smart and Sassy LLC, doing business as Smartass and Sass, filed a
petition for relief under Subchapter V of Chapter 11 of the
Bankruptcy Code (Bankr. D. Neb. Case No. 22-40874) on October 6,
2022. In the petition filed by Abigail Bartholomew, as authorized
signer, the Debtor reported assets and liabilities between $1
million and $10 million each.
James A. Overcash has been appointed as Subchapter V trustee.
The Debtor is represented by John A. Lentz of Lentz Law, PC, LLO.
SPRINGS FIREPLACE: Files for Chapter 11 Protection
--------------------------------------------------
Springs Fireplace Properties LLC filed for chapter 11 protection in
the Eastern District of New York.
The Debtor disclosed $1.4 million in total assets against $4.287
million in liabilities in its schedules. The Debtor owns the
property at 444 E. 57th Street, Apt. 6D, in New York, NY 10022,
valued at $1.4 million (based on a comparable sale). The Debtor's
debt are all secured by the Debtor's property:
* BOM 444 E. 75th Street $212,980 (condo maintenance fees),
* Elina Dullmof $1.95 million (non-purchase money security),
* Ella Strangmark $700,000 (non-purchase money security), and
* First Republic Bank $1.424 million (mortgage).
According to court filings, Springs Fireplace Properties says it
has 1 to 49 creditors, and that funds will be available to
unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
November 8, 2022 at 2:00 p.m. in Room 562 560 Federal Plaza, CI,
NY.
About Springs Fireplace Properties
Springs Fireplace Properties LLC is a Single Asset Real Estate (as
defined in 11 U.S.C. Sec. 101(51B)).
Springs Fireplace Properties LLC filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
22-72699) on Oct. 4, 2022. In the petition filed by Michael Dubin,
as owner, the Debtor reported assets and liabilities between $1
million and $10 million.
The Debtor is represented by Rachel L Kaylie of Law Offices of
Rachel L. Kaylie, P.C.
TPC GROUP: Nearing Deal With Unsecured Creditors
------------------------------------------------
Steven Church of Bloomberg News reports that chemical maker TPC
Group Inc. is close to a deal to end unsecured creditor opposition
to its bankruptcy-exit plan, company attorney James R. Prince told
the judge overseeing the company's reorganization.
The company is in the final stages of talks with its unsecured
creditors committee and may have a global deal by early next week,
Prince said at a brief court hearing Tuesday, October 18, 2022.
TPC has been negotiating with unsecured creditors and a group of
people suing the company over a series of disasters at its plants.
The Houston-based company filed for bankruptcy in June 2022 after
making a deal with noteholders.
About TPC Group
TPC Group, headquartered in Houston, is a producer of value-added
products derived from petrochemical raw materials such as C4
hydrocarbons, and provider of critical infrastructure and logistics
services along the Gulf Coast. The Company sells its products into
a wide range of performance, specialty and intermediate markets,
including synthetic rubber, fuels, lubricant additives, plastics
and surfactants. With an operating history of more than 75 years,
TPC Group has a manufacturing facility in the industrial corridor
adjacent to the Houston Ship Channel and operates product terminals
in Port Neches, Texas and Lake Charles, Louisiana.
TPC Group Inc. and its subsidiaries sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 22-10493) on June 1, 2022. TPC Group
estimated assets and debt of $1 billion to $10 billion to $10
billion.
The Hon. Craig T. Goldblatt is the case judge.
Baker Botts L.L.P. is the Debtors' counsel; Morris, Nichols, Arshtn
& Tunnell LLP is the co-counsel; Moelis & Company LLC is the
investment banker; and FTI Consulting is the financial advisor.
Simpson Thacher & Bartlett LLP is the special finance counsel.
Kroll Restructuring Administration is the claims agent.
Eclipse Business Capital LLC is advised by Goldberg Kohn Ltd.
Paul Hastings LLP, and Stroock & Stroock & Lavan LLP are serving as
counsel to the Ad Hoc Noteholder Group that supports the Debtors'
restructuring. Evercore Group L.L.C., is the Group's financial
advisor. Young Conaway Stargatt & Taylor, LLP is local counsel to
the Ad Hoc Noteholder Group. The Supporting Noteholders are funds
controlled by FIG LLC and Fortress Capital Finance III(A) LLC,
Monarch Alternative Capital LP., PGIM Inc., Redwood Capital
Management LLC, and Strategic Value Partners LLC.
Pachulski Stang Ziehl & Jones LLP, Proskauer Rose LLP, and Selendy
Gay Elsberg PLLC are serving as counsel to an Ad Hoc Group of
Non-Consenting Noteholders, led by Bayside Capital, Inc., and
Cerberus Capital Management, L.P. Milbank LLP previously served as
the group's counsel but was later replaced by Pachulski and SGE.
VANGUARD WINES: Files Subchapter V to Pursue Going Concern Sale
---------------------------------------------------------------
Vanguard Wines LLC filed for chapter 11 protection in the Northern
District of Ohio. The Debtor elected on its voluntary petition to
proceed under Subchapter V of chapter 11 of the Bankruptcy Code.
The Debtor is an independently owned importer and distributor of
fine wines servicing the Ohio, Kentucky and Indiana markets.
Vanguard distributes high quality wines to the finest restaurants
in these markets.
On a company-wide basis, Vanguard has 26 employees as of the filing
of its chapter 11 case.
Road to Chapter 11
The filing of the Chapter 11 case was precipitated by a variety of
factors, the most significant being the loss of distribution to
restaurant customers upon the onset of the COVID-19 pandemic at the
end of the first quarter of 2020. For fiscal years 2017, 2018 and
2019 Vanguard's gross revenues totaled $7,366,498, $7,027,405 and
$6,123,207, respectively. In 2020 Vanguard's gross revenue totaled
$4,767,500. For 2021, it was $4,672,596. For 2022, through August
31 st , gross revenue is $2,249,662.
As Vanguard's revenue faltered, it was left it in a precarious
financial position. While government provided pandemic programs
were supportive, eventually Vanguard could not survive on its
current collections. The liquidity provided under its asset-based
lending facility became insufficient, and Vanguard had to turn to a
factoring relationship relative to its accounts receivable.
As events unfolded during 2022, it became apparent that the future
of Vanguard was best achieved through a strategic combination.
After substantial discussions and negotiations, Vanguard reached an
agreement, in principle, with Boutinot USA Inc., the American
affiliate of Boutinot International, a leading global wine producer
and distributor, for the acquisition of Vanguard business and
assets.
This case has been filed in order to implement this acquisition,
subject to a sale process designed to attract an opportunity for
the submission higher and better offers, for the benefit of
Vanguard's creditor constituents, its customers and its employees.
Vanguard's proposed sale of its assets to Boutinot will be subject
to higher and better offers following court approval of the Bid
Procedures Motion.
The sale timeline as set forth in the Bid Procedures Motion is
designed to achieve a closing of the sale in early December, 2022,
prior to the holiday season when after which, wholesale wine sales
decline seasonally and Vanguard's ability continue to fund its
operations substantially deteriorate.
Sale to Boutinot
Prior to the filing of the Chapter 11 case, the Debtor negotiated
the basic terms of a potential sale to Boutinot USA, Inc. The
Debtor seeks to have the stalking horse bid approved, subject to
higher and better offers at the Auction.
The Debtor and Boutinot USA continue to work to prepare a
definitive Asset Purchase Agreement; however, they have reached
agreement on the basic terms of the transaction against which
possible competing bids will be measured. The Debtor anticipates
filing the Sale Motion within the next ten business days.
In general, the Debtor will sell (and the Stalking Horse Bidder
will buy) all of the Debtor's right, title and interest in, to and
under all assets, properties and rights of every kind and nature,
whether real, personal or mixed, tangible or intangible (including
goodwill), whether presently existing or hereafter acquired, owned,
leased, licensed or used or held for use in or related to the
operation of the Debtor's business except for the Debtor's cash and
accounts receivable (collectively, the "Assets"). The Assets
include, among other things, the Debtor's leased property,
furniture, fixtures and equipment, certain contracts, intellectual
property, inventory, leases, all rights under insurance policies or
rights to proceeds goodwill and general intangibles, and other
tangible personal property.
The purchase transaction between the Debtor and the Stalking Horse
Bidder is for the acquisition of the Debtor as a going concern. As
a result, the Debtor has agreed to continue with its operations in
the ordinary course of business, and has filed the Chapter 11 case
to ensure that it could continue those operations unabated.
The purchase price will be the aggregate of the following: (i) the
value of the Debtor's stock in wine (with the stock valued at the
lower of cost price or net realizable value as listed on the
Debtor's stock valuation report) at the time of closing which is
anticipated to be approximately $1,000,000 (the "Stock Component");
and (ii) $52,000 (the "Cash Component").
According to court filings, Vanguard Wines LLC estimates $1 million
to $10 million in debt to 100 to 199 creditors. The petition
states that funds will be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Nov. 10, 2022 at 1:00 PM at remotely.
About Vanguard Wines
Vanguard Wines LLC is an Ohio-based wine wholesaler and importer.
Vanguard Wines LLC filed a petition for relief under Subchapter V
of Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ohio Case No.
22-51200) on Oct. 10, 2022. In the petition filed by Eric Stewart,
as president, the Debtor reported assets and liabilities between $1
million and $10 million each.
Patricia B. Fugee has been appointed as Subchapter V trustee.
The Debtor is represented by Richard K. Stovall of Allen Stovall
Neuman & Ashton LLP.
VITAL PHARMACEUTICALS: Gets Interim OK to Tap CTO Services Provider
-------------------------------------------------------------------
Vital Pharmaceuticals, Inc. and its affiliates received interim
approval from the U.S. Bankruptcy Court for the Southern District
of Florida to employ Huron Consulting Services, LLC to provide the
services of a chief transformation officer (CTO).
The CTO services include:
(a) managing those workstreams relating to the Debtors'
restructuring initiatives;
(b) liaising with and serving as principal contact with (i)
senior lenders and significant creditors; and (ii) the Debtors'
other stakeholders;
(c) supporting or managing: (i) the preparation and
maintenance of: (A) the Debtors' cash flow budget, (B) liquidity
and related cash flow forecasting, and (C) financial projections;
(ii) providing the Debtors' approved enhancements to the financial
projections; (iii) cash disbursement process, controls and
protocols; (iv) initiatives to enhance liquidity by developing and
implementing the plan(s) to: (A) enhance lease and trade payment
terms; (B) optimize near-term staffing and resulting payroll costs;
and (C) other cost savings and performance improvement initiatives;
(v) bankruptcy preplanning and post-bankruptcy management
workstreams;
(d) assisting in facilitating information flow relating to the
capital markets processes with the Debtors' advisors;
(e) directing negotiations with significant creditors;
(f) communicating directly with and providing information as
reasonable requested by agent in connection with the existing
credit facilities;
(g) assisting in managing the Debtors' designated vendors;
and
(h) providing such other services as are customarily provided
in connection with the analysis and negotiation of a restructuring
initiative, as mutually agreed upon in writing between the CTO and
the Debtors.
Huron will be paid $15,000 per week for its services.
The hourly rates of Huron's professionals are as follows:
Managing Directors $965 - $1,315
Senior Directors $920 - $950
Directors $605 - $770
Managers $575
Associates $495
Analysts $400
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the petition date, Huron received retainers from Vital
Pharmaceuticals in the amount of $1.12 million.
John DiDonato, a managing director at Huron, disclosed in a court
filing that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
John C. DiDonato
Huron Consulting Services, LLC
550 W. Van Buren St.
Chicago, IL 60607
Telephone: (312) 583-8700
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Huron Consulting
Group, Inc. as CTO services provider; and Rothschild & Co US, Inc.
as investment banker. Stretto, Inc. is the notice, claims and
solicitation agent.
VITAL PHARMACEUTICALS: Gets OK to Hire Stretto as Claims Agent
--------------------------------------------------------------
Vital Pharmaceuticals, Inc. and its affiliates received approval
from the U.S. Bankruptcy Court for the Southern District of Florida
to employ Stretto as notice, claims and solicitation agent.
Stretto will oversee the distribution of notices and will assist in
the maintenance, processing and docketing of proofs of claim filed
in the Chapter 11 cases of the Debtors.
Stretto will bill the Debtors no less frequently than monthly.
Prior to the petition date, the Debtors provided Stretto with a
retainer in the amount of $100,000.
Sheryl Betance, a senior managing director at Stretto, disclosed in
a court filing that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Sheryl Betance
Stretto, Inc.
410 Exchange, Ste. 100
Irvine, CA 92602
Telephone: (714) 716-1872
Email: sheryl.betance@stretto.com
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Huron Consulting
Group, Inc. as CTO services provider; and Rothschild & Co US, Inc.
as investment banker. Stretto, Inc. is the notice, claims and
solicitation agent.
VITAL PHARMACEUTICALS: Taps Berger Singerman as Local Counsel
-------------------------------------------------------------
Vital Pharmaceuticals, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the Southern District of Florida to
employ Berger Singerman, LLP as local counsel.
The firm will render these services:
(a) advise the Debtors with respect to their powers and duties
in the continued management of their business operations;
(b) advise the Debtors with respect to their responsibilities
in complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
(c) prepare legal papers;
(d) protect the interests of the Debtors in all matters
pending before the court; and
(e) represent the Debtors in negotiations with their creditors
and in the preparation of a plan.
Berger Singerman holds in its trust account the remaining retainer
in the amount of $379,062.59 as collateral security for the fees
and costs that may be awarded to it by the court in the Debtors'
Chapter 11 cases.
The hourly rates of the firm's counsel and staff are as follows:
Jordi Guso, Partner $695
Other Attorneys $300 - $765
Associates and Of Counsel $375 - $515
Legal Assistants and Paralegals $85 - $265
Berger Singerman provided the following in response to the request
for additional information set forth in Paragraph D.1 of the U.S.
Trustee Guidelines:
Question: Did Berger Singerman agree to any variations from, or
alternatives to, Berger Singerman's standard billing arrangements
for this engagement?
Answer: No. The rate structure provided by Berger Singerman is
appropriate and comparable to (a) the rates that the firm charges
for non-bankruptcy representations and (b) the rates of other
comparably skilled professionals.
Question: Do any of the Berger Singerman professionals in this
engagement vary their rate based on the geographic location of the
Debtors' Chapter 11 cases?
Answer: No.
Question: If Berger Singerman has represented the Debtors in the
12 months prepetition, disclose Berger Singerman's billing rates
and material financial terms for the prepetition engagement,
including any adjustments during the 12 months prepetition. If
Berger Singerman's billing rates and material financial terms have
changed post-petition, explain the difference and the reasons for
the difference.
Answer: Berger Singerman's current hourly rates for services
rendered on behalf of the Debtors are set forth above. These rates
have been used since January 1 of this year. During the prior
calendar year, Berger Singerman used the following rates for
services rendered on behalf of the Debtors: $300 to $750 per hour
for attorneys; and $135 to $265 per hour for law clerks and
paralegals.
Question: Have the Debtors approved Berger Singerman's budget and
staffing plan and, if so, for what budget period?
Answer: Yes. Berger Singerman has provided the Debtors with a
prospective budget and staffing plan setting forth the types of
timekeepers, numbers thereof, and applicable hourly rates it
expects during the Chapter 11 cases, which have been approved by
the Debtors. The budget and staffing plan cover the period from
Oct. 10 to Dec. 31, 2022.
Jordi Guso, Esq., a member of Berger Singerman, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Jordi Guso, Esq.
Michael J. Niles, Esq.
Berger Singerman LLP
Miami, FL 33131
Telephone: (305) 755-9500
Email: iguso@bergersingerman.com
mniles@bergersingerman.com
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Huron Consulting
Group, Inc. as CTO services provider; and Rothschild & Co US, Inc.
as investment banker. Stretto, Inc. is the notice, claims and
solicitation agent.
VITAL PHARMACEUTICALS: Taps Latham & Watkins as Bankruptcy Counsel
------------------------------------------------------------------
Vital Pharmaceuticals, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the Southern District of Florida to
employ Latham & Watkins, LLP as bankruptcy counsel.
The firm will render these services:
(a) advise the Debtors with respect to their powers and duties
in the continued management and operation of their businesses and
properties;
(b) advise and consult on the conduct of the Chapter 11
cases;
(c) advise the Debtors in connection with their efforts to
protect, preserve, and maximize the value of their estates;
(d) analyze proofs of claim filed against the Debtors and
object to such claims as necessary;
(e) represent the Debtors in connection with cash collateral
and post-petition financing matters;
(f) attend meetings and negotiate with representatives of
creditors and other parties in interest;
(g) analyze executory contracts and unexpired leases and
potential assumptions, assignments, or rejections of such contracts
and leases;
(h) prepare pleadings in connection with the Chapter 11
cases;
(i) advise the Debtors in connection with any potential exit
financing or other transaction to facilitate the Debtors' emergence
from bankruptcy;
(j) take necessary action on behalf of the Debtors to obtain
approval of a disclosure statement and confirmation of a Chapter 11
plan;
(k) appear before the bankruptcy court or any appellate
courts;
(l) advise on corporate, litigation, regulatory, finance, tax,
employee benefits, and other legal matters; and
(m) perform all other necessary legal services for the Debtors
in connection with the Chapter 11 cases.
Prior to the petition date, the firm received payments and advances
in the aggregate amount of $2,617,777.45 from the Debtors.
The hourly rates of the firm's counsel and staff are as follows:
Partners $1,265 - $2,075
Counsel $1,210 - $1,720
Associates $655 - $1,300
Professional Staff $190 - $965
Paralegals $270 - $600
The current hourly rates for the firm's attorneys are as follows:
Andrew Sorkin $1,540
Amy Quartarolo $1,265
Elizabeth Morris $1,165
Jeramy Webb $1,165
Brian Rosen $990
T.J. Li $990
Jon Weichselbaum $990
Whit Morley $895
In addition, the firm will seek reimbursement for expenses
incurred.
Latham & Watkins provided the following in response to the request
for additional information set forth in Paragraph D.1 of the U.S.
Trustee Guidelines:
Question: Did Latham & Watkins agree to any variations from, or
alternatives to, its standard billing arrangements for this
engagement?
Answer: No. The rate structure provided by Latham & Watkins is
appropriate and comparable to (a) the rates that it charges for
non-bankruptcy representations and (b) the rates of other
comparably skilled professionals.
Question: Do any of Latham & Watkins' professionals in this
engagement vary their rate based on the geographic location of the
Debtors' Chapter 11 cases?
Answer: No.
Question: If Latham & Watkins has represented the Debtors in the
12 months prepetition, disclose its billing rates and material
financial terms for the prepetition engagement, including any
adjustments during the 12 months prepetition. If its billing rates
and material financial terms have changed post-petition, explain
the difference and the reasons for the difference.
Answer: Latham & Watkins' current hourly rates for services
rendered on behalf of the Debtors are set forth above. These rates
have been used since Aug. 9 of this year. Prior to Aug. 9, Latham &
Watkins used the following hourly rates for services rendered on
behalf of the Debtors: $1,310 to $2,150 for partners; $1,255 to
$1,830 for counsel; $730 to $1,400 for associates; $230 to $1,290
for professional staff; and $185 to $735 for paralegals. All
material financial terms have remained unchanged since the
pre-bankruptcy period.
Question: Have the Debtors approved Latham & Watkins' budget and
staffing plan and, if so, for what budget period?
Answer: Yes. Latham & Watkins has provided the Debtors with a
prospective budget and staffing plan setting forth the types of
timekeepers, numbers thereof, and applicable hourly rates it
expects during the Chapter 11 cases, which have been approved by
the Debtors. The budget and staffing plan cover the period from
Oct. 10 to Dec. 31, 2022.
Andrew Sorkin, Esq., a partner at Latham & Watkins, 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:
Andrew D. Sorkin, Esq.
Latham & Watkins LLP
555 Eleventh Street, NW, Suite 1000
Washington, DC 20004
Telephone: (202) 637-2200
Email: andrew.sorkin@lw.com
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Huron Consulting
Group, Inc. as CTO services provider; and Rothschild & Co US, Inc.
as investment banker. Stretto, Inc. is the notice, claims and
solicitation agent.
VITAL PHARMACEUTICALS: Taps Rothschild & Co. as Investment Banker
-----------------------------------------------------------------
Vital Pharmaceuticals, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the Southern District of Florida to
employ Rothschild & Co. US Inc. as investment banker.
The firm will render these services:
(a) advise the Debtors with respect to a potential minority
investment, sale, merger, or other business or strategic
combination involving the Debtors;
(b) assist the Debtors in identifying possible counterparties
for a potential merger and acquisition (M&A) transaction;
(c) assist the Debtors in their assessment of the financial
aspects of a M&A transaction;
(d) assist the Debtors in raising new debt or equity financing
in connection with a new capital raise;
(e) assist the Debtors in making internal and external
presentations concerning the financial aspects of any proposed
transaction;
(f) advise and assist the Debtors in the development and
implementation of a process intended to generate bidders for a sale
pursuant to Section 363 of the Bankruptcy Code;
(g) advise and assist the Debtors in connection with any case
or cases commenced by or against the Debtors, whether individually
or on a consolidated basis, under title 11 of the Bankruptcy Code;
(h) review and analyze any proposals the Debtors receive from
third parties in connection with a transaction during the
restructuring process;
(i) assist or participate in negotiations with the parties in
interest; and
(j) provide such other investment banking and financial
advisory services to the Debtors.
Rothschild will be compensated as follows:
(a) monthly advisory fee of $200,000;
(b) a minority M&A transaction fee equal to: (i) if the
"implied enterprise value" is $7.25 billion or less, (A) 0.50
percent of the aggregate implied enterprise value multiplied by (B)
the minority M&A percentage; or (ii) if the implied enterprise
value is greater than $7.25 billion and equal to or less than
$10.00 billion, (A) 0.75 percent of the aggregate implied
enterprise value multiplied by (B) the minority M&A percentage; or
(iii) if the implied enterprise value is greater than $10 billion,
(A) 1.0 percent of the aggregate implied enterprise value
multiplied by (B) the minority M&A percentage;
(c) a control M&A transaction fee equal to: (i) if the
aggregate consideration involved in the control M&A transaction is
less than or equal to $7.25 billion, 0.50 percent of the aggregate
consideration involved in the Control M&A transaction; or (ii) if
the aggregate consideration involved in the control M&A transaction
is greater than $7.25 billion and equal to or less than $10
billion, 0.75 percent of the aggregate consideration involved in
the control M&A transaction; or (iii) if the aggregate
consideration involved in the control M&A transaction is greater
than $10 billion, 1 percent of the aggregate consideration involved
in the control M&A transaction;
(d) a new capital fee equal to (i) 1 percent of the face
amount of any senior secured or senior unsecured debt raised; (ii)
2 percent of the face amount of any junior, mezzanine or
subordinated secured or unsecured debt raised; and (iii) 2 percent
of any debt-like or hybrid equity capital raised;
(e) Reimbursement for out-of-pocket expenses incurred.
Homer Parkhill, a partner at Rothschild, disclosed in a court
filing that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Homer Parkhill
Rothschild & Co. US Inc.
1251 Avenue of the Americas
New York, NY 10020
Telephone: (212) 403-3500
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Huron Consulting
Group, Inc. as CTO services provider; and Rothschild & Co US, Inc.
as investment banker. Stretto, Inc. is the notice, claims and
solicitation agent.
VOYAGER DIGITAL: Won't Sue Execs Despite 3AC Mess
-------------------------------------------------
Derek Andersen of the Coin Telegraph reports that CEO Stephen
Ehrlich and financial head Evan Psaropolous will keep their jobs
even though they okayed a huge loan to Three Arrows Capital without
sufficient due diligence.
Voyager Digital has preferred not to sue its top executives for
incompetence in spite of their role in approving a huge loan to
Three Arrows Capital (3AC) without adequate due diligence. That
loan was a key element leading to Voyager Digital's bankruptcy.
Court papers filed Oct. 17 show that a Voyager Digital internal
special committee has proposed that CEO Stephen Ehrlich and chief
commercial officer (formerly chief financial officer) Evan
Psaropolous keep their jobs and not be sued.
The court filing describes the due diligence process for the 3AC
loan:
"On February 13, 2022, 3AC provided Voyager with a statement signed
by one of its founders, Kyle Davies, containing only a single
sentence stating that 3AC's NAV [net asset value] as of January 1,
2022, was $3.729 billion. Unlike other substantial borrowers of
Voyager's assets, 3AC did not provide a balance sheet (audited or
unaudited). In response to Voyager's formal due diligence
questionnaire, 3AC subsequently provided a description of its
corporate structure, certificates of good standing and
incorporation, and a copy of its Anti-Money Laundering policies and
controls."
The committee did not find any evidence of fraud in the executives'
actions. According to the court filing, Ehrlich and Psaropolous
are "making additional contributions to the [Reorganization] Plan
pursuant to the settlements reached with the Special Committee."
According to Bloomberg, Ehrlich will pay the company $1.125 million
in cash under the committee's proposal, which is subject to
approval by the bankruptcy judge. The company has $20 million in
directors' and officers' liability insurance to make claims against
as well.
Crypto exchange Voyager Digital made an unsecured loan of 15,250
Bitcoin (BTC tickers down $19,025) and 350 million USD Coin (USDC
tickers down $1.00) to Singaporean crypto hedge fund 3AC in March,
with the approval of Ehrlich and Psaropolous. When 3AC was unable
to repay the loan in late June, Voyager Digital issued the firm a
notice of default. 3AC was forced into liquidation by the Voyager
Digital action on June 27. Voyager Digital first cut withdrawal
amounts and then froze trading, deposits, withdrawals and rewards
the same week. Voyager Digital filed for bankruptcy on July 6,
2022.
According to reports, executives' immunity from the lawsuit was
part of the agreement that allowed FTX US to purchase Voyager
Digital's assets at auction on Sept. 26, 2022.
About Voyager Digital
Based in Toronto, Canada, Voyager Digital Holdings Inc. --
https://www.investvoyager.com/ -- runs a cryptocurrency platform.
Voyager claims to offer a secure way to trade over 100 different
crypto assets using its easy-to-use mobile application. Through its
subsidiary Coinify ApS, Voyager provides crypto payment solutions
for both consumers and merchants around the globe.
Voyager Digital Holdings Inc. and two affiliates sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead
Case No. 22-10943) on July 5, 2022. In the petition filed by
Stephen Ehrlich, as chief executive officer, the Debtor estimated
assets and liabilities between $1 billion and $10 billion.
The Debtors tapped KIRKLAND & ELLIS LLP as general bankruptcy
counsel; BERKELEY RESEARCH GROUP, LLC, as financial advisor; MOELIS
& COMPANY as investment banker; and CONSELLO GROUP as strategic
financial advisor. STRETTO, INC., is the claims agent.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
-------------------------------------------------------
In re Sherlock Estates LLC
Bankr. E.D.N.Y. Case No. 22-42508
Chapter 11 Petition filed October 9, 2022
See
https://www.pacermonitor.com/view/NGK2JNQ/Sherlock_Estates_LLC__nyebke-22-42508__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Roy F. Thomas and Katherine L. Romines
Bankr. D. Ariz. Case No. 22-06819
Chapter 11 Petition filed October 11, 2022
represented by: D. Lamar Hawkins, Esq.
GUIDANT LAW, PLC
In re Atlantic West One, Inc.
Bankr. C.D. Cal. Case No. 22-15535
Chapter 11 Petition filed October 11, 2022
See
https://www.pacermonitor.com/view/FLGNPGY/Atlantic_West_One_Inc__cacbke-22-15535__0001.0.pdf?mcid=tGE4TAMA
represented by: Giovanni Orantes, Esq.
THE ORANTES LAW FIRM, A.P.C.
E-mail: go@gobklaw.com
In re Emilio Ferrari
Bankr. C.D. Cal. Case No. 22-15540
Chapter 11 Petition filed October 11, 2022
represented by: Sheila Esmaili, Esq.
In re National Association of Television Program Executives, Inc.
Bankr. C.D. Cal. Case No. 22-11181
Chapter 11 Petition filed October 11, 2022
See
https://www.pacermonitor.com/view/EZCZTPA/National_Association_of_Television__cacbke-22-11181__0001.0.pdf?mcid=tGE4TAMA
represented by: Leslie Cohen, Esq.
LESLIE COHEN LAW PC
E-mail: leslie@lesliecohenlaw.com
In re 29 North Main, LLC
Bankr. D. Conn. Case No. 22-30642
Chapter 11 Petition filed October 11, 2022
See
https://www.pacermonitor.com/view/7YJKNQI/29_North_Main_LLC__ctbke-22-30642__0001.0.pdf?mcid=tGE4TAMA
represented by: Stuart H. Caplan, Esq.
LAW OFFICE OF NEIL CRANE, LLC
E-mail: stuart@neilcranelaw.com
In re 31 Northville Corp.
Bankr. E.D.N.Y. Case No. 22-72770
Chapter 11 Petition filed October 11, 2022
See
https://www.pacermonitor.com/view/SN55THI/31_Northville_Corp__nyebke-22-72770__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Wang Lee, Inc.
Bankr. S.D.N.Y. Case No. 22-11363
Chapter 11 Petition filed October 11, 2022
See
https://www.pacermonitor.com/view/RQCWQ3A/WANG_LEE_INC__nysbke-22-11363__0001.0.pdf?mcid=tGE4TAMA
represented by: Yimin Chen, Esq.
CHEN & ASSOCIATES, P.C.
E-mail: chenattorney@yahoo.com
In re International Marketplace, Inc.
Bankr. D. Utah Case No. 22-23972
Chapter 11 Petition filed October 11, 2022
See
https://www.pacermonitor.com/view/JNW7PZI/International_Marketplace_Inc__utbke-22-23972__0001.0.pdf?mcid=tGE4TAMA
represented by: Steven M. Rogers, Esq.
ROGERS & RUSSELL
E-mail: paralegal@roruss.com
In re E. Richard Siaw
Bankr. N.D. Cal. Case No. 22-30548
Chapter 11 Petition filed October 12, 2022
represented by: Arasto Farsad, Esq.
In re Mythri LLC
Bankr. D. Colo. Case No. 22-13950
Chapter 11 Petition filed October 12, 2022
See
https://www.pacermonitor.com/view/ZMTBAJQ/Mythri_LLC__cobke-22-13950__0001.0.pdf?mcid=tGE4TAMA
represented by: Stuart J. Carr, Esq.
STUART J. CARR, P.C.
E-mail: stuartjcarr@hotmail.com
In re Alexander Custom Homes II, Inc.
Bankr. M.D. Fla. Case No. 22-04112
Chapter 11 Petition filed October 12, 2022
See
https://www.pacermonitor.com/view/KBNRU4Q/Alexander_Custom_Homes_II_Inc__flmbke-22-04112__0001.0.pdf?mcid=tGE4TAMA
represented by: Buddy D. Ford, Esq.
BUDDY D. FORD, P.A.
E-mail: All@tampaesq.com
In re Emerald City LLC
Bankr. N.D. Ga. Case No. 22-58186
Chapter 11 Petition filed October 12, 2022
Case Opened
In re Wye River Foods Products LLC
Bankr. D. Md. Case No. 22-15641
Chapter 11 Petition filed October 12, 2022
See
https://www.pacermonitor.com/view/BNYWOYI/Wye_River_Foods_Products_LLC__mdbke-22-15641__0001.0.pdf?mcid=tGE4TAMA
represented by: Steven H. Greenfeld, Esq.
LAW OFFICES OF STEVEN H. GREENFELD, LLC
E-mail: steveng@cohenbaldinger.com
In re Drivergent, Inc.
Bankr. E.D. Mich. Case No. 22-47987
Chapter 11 Petition filed October 12, 2022
See
https://www.pacermonitor.com/view/4L5NPUQ/Drivergent_Inc__miebke-22-47987__0001.0.pdf?mcid=tGE4TAMA
represented by: Charles D. Bullock, Esq.
STEVENSON & BULLOCK, P.L.C.
E-mail: cbullock@sbplclaw.com
In re Dimitri Pamphile
Bankr. D. Nev. Case No. 22-13652
Chapter 11 Petition filed October 12, 2022
In re Saddle Brook Farm Animal Rescue, Inc.
Bankr. S.D.N.Y. Case No. 22-35644
Chapter 11 Petition filed October 12, 2022
See
https://www.pacermonitor.com/view/LYFCKEI/Saddle_Brook_Farm_Animal_Rescue__nysbke-22-35644__0001.0.pdf?mcid=tGE4TAMA
represented by: Michael D. Pinsky, Esq.
LAW OFFICE OF MICHAEL D. PINSKY, P.C.
E-mail: michael.d.pinsky@gmail.com
In re Starfish Pool Service LLC
Bankr. E.D. Tex. Case No. 22-41354
Chapter 11 Petition filed October 12, 2022
See
https://www.pacermonitor.com/view/3QMIQBI/Starfish_Pool_Service_LLC__txebke-22-41354__0001.0.pdf?mcid=tGE4TAMA
represented by: David Henshaw, Esq.
HENSHAW LAW OFFICE
E-mail: david@henshawlaw.com
In re Dustin Johnson Exteriors, LLC
Bankr. W.D. Tex. Case No. 22-10673
Chapter 11 Petition filed October 12, 2022
See
https://www.pacermonitor.com/view/327SCEY/Dustin_Johnson_Exteriors_LLC__txwbke-22-10673__0001.0.pdf?mcid=tGE4TAMA
represented by: Ron Satija, Esq.
HAYWARD PLLC
E-mail: rsatija@haywardfirm.com
In re Andrew Maury King
Bankr. N.D. Cal. Case No. 22-30551
Chapter 11 Petition filed October 13, 2022
In re Energy Daiquiri Bar and Grill
Bankr. N.D. Ga. Case No. 22-58247
Chapter 11 Petition filed October 13, 2022
Case Opened
In re Mary G. Broussard
Bankr. W.D. La. Case No. 22-20355
Chapter 11 Petition filed October 13, 2022
represented by: Thomas St. Germain, Esq.
In re Tycoon Productions LLC
Bankr. D. Md. Case No. 22-15669
Chapter 11 Petition filed October 13, 2022
See
https://www.pacermonitor.com/view/YDK3JGI/Tycoon_Productions_LLC__mdbke-22-15669__0001.0.pdf?mcid=tGE4TAMA
represented by: Damani K. Ingram, Esq.
THE INGRAM FIRM, LLC
E-mail: ingramlawfirm@gmail.com
In re 53 Glenmere Corp.
Bankr. E.D.N.Y. Case No. 22-42561
Chapter 11 Petition filed October 14, 2022
See
https://www.pacermonitor.com/view/VLHOJLA/53_Glenmere_Corp__nyebke-22-42561__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re 53 Glenmere Corp.
Bankr. E.D.N.Y. Case No. 22-72819
Chapter 11 Petition filed October 14, 2022
See
https://www.pacermonitor.com/view/26N32XY/53_Glenmere_Corp__nyebke-22-72819__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Segundo Carchipulla
Bankr. E.D.N.Y. Case No. 22-42571
Chapter 11 Petition filed October 14, 2022
represented by: Alla Kachan, Esq.
In re Backyard Workroom, LLC
Bankr. E.D. Tex. Case No. 22-41366
Chapter 11 Petition filed October 14, 2022
See
https://www.pacermonitor.com/view/KB4LNEY/Backyard_Workroom_LLC__txebke-22-41366__0001.0.pdf?mcid=tGE4TAMA
represented by: Eric A. Liepins, Esq.
ERIC A. LIEPINS
E-mail: eric@ealpc.com
In re Pepperoni Grill, LLC
Bankr. S.D. W.V. Case No. 22-20161
Chapter 11 Petition filed October 15, 2022
See
https://www.pacermonitor.com/view/AOJM6NI/Pepperoni_Grill_LLC__wvsbke-22-20161__0001.0.pdf?mcid=tGE4TAMA
represented by: Joseph W. Caldwell, Esq.
CALDWELL & RIFFEE
E-mail: joecaldwell@frontier.com
chuckriffee@frontier.com
In re Florida International Associates, Inc., WY
Bankr. N.D. Fla. Case No. 22-10165
Chapter 11 Petition filed October 16, 2022
See
https://www.pacermonitor.com/view/YDB553A/Florida_International_Associates__flnbke-22-10165__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Konstro Designs & Engineering Inc
Bankr. C.D. Cal. Case No. 22-15649
Chapter 11 Petition filed October 17, 2022
See
https://www.pacermonitor.com/view/PNNMAYY/Konstro_Designs__Engineering__cacbke-22-15649__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Jitendrakumar Girishbhai Patel
Bankr. N.D. Ga. Case No. 22-58333
Chapter 11 Petition filed October 17, 2022
represented by: Thomas McClendon, Esq.
In re Elevated Construction and Remodeling, LLC
Bankr. S.D. Ind. Case No. 22-90939
Chapter 11 Petition filed October 17, 2022
See
https://www.pacermonitor.com/view/XV4TS6Q/Elevated_Construction_and_Remodeling__insbke-22-90939__0001.0.pdf?mcid=tGE4TAMA
represented by: William P. Harbison, Esq.
SEILLER WATERMAN LLC
E-mail: harbison@derbycitylaw.com
In re Jumas Food Mart, LLC
Bankr. M.D.N.C. Case No. 22-80201
Chapter 11 Petition filed October 17, 2022
See
https://www.pacermonitor.com/view/KJI5TXI/Jumas_Food_Mart_LLC__ncmbke-22-80201__0001.0.pdf?mcid=tGE4TAMA
represented by: Laurie B. Biggs, Esq.
BIGGS LAW FIRM PLLC
E-mail: lbiggs@biggslawnc.com
*********
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
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Each Tuesday edition of the TCR contains a list of companies with
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liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
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then-ending.
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
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