/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/221025.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, October 25, 2022, Vol. 26, No. 297 Headlines 162-164 82ND ST. LLC: Upper East Side Apartment Owner in Chapter 11 A.B. WON PAT: S&P Affirms 'BB' LT Senior-Lien Revenue Bonds Rating AEARO TECHNOLOGIES: Tort Panel Taps Mattingly as Indiana Counsel AEARO TECHNOLOGIES: Tort Panel Taps Rochelle McCullough as Counsel ALL FLORIDA SAFETY: Court OKs Interim Cash Collateral Access ALL FLORIDA SAFETY: Gets OK to Hire William Haeberle as Accountant ARMSTRONG FLOORING: Seeks to Hire ASK LLP as Special Counsel AVAYA HOLDINGS: Stephen Spears Steps Down as EVP, CRO AXYEHHO CORP: General Unsecureds Owed $4.4K to be Paid in Full BANROC CORP: Unsecureds to be Paid From Liquidation Proceeds BARNES ENTERPRISES: Seeks to Tap Clayton & Company as Accountant BASIC WATER: U.S. Trustee Unable to Appoint Committee BGS WORKS: Court Confirms First Amended Plan BGS WORKS: Unsecureds to Get 100% Plus 1.5% Interest in Plan BUCKEYE PARTNERS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable CALPLANT I: Seeks $10.2MM DIP Financing from BOKF CASA SYSTEMS: S&P Lowers ICR to 'CCC+', On CreditWatch Negative CELSIUS NETWORK: Gets Formal Testimony Request From Federal Jury CEREMONY SALON: Wins Cash Collateral Access Thru Oct 13 CHAZAR 410: Nov. 8, 2022 Bid Deadline for San Antonio Property CHICAGO DOUGHNUT: Court Approves Amended Disclosure Statement CONSOLIDATED ELEVATOR: Commences Subchapter V Case CONSOLIDATED ELEVATOR: Seeks Cash Collateral Access COPPER REALTY: Taps The Anderson Law Firm as Special Counsel CUSTOM ALLOY: Seeks Cash Collateral Access, $2MM DIP Loan DATG PIZZERIA: Files Emergency Bid to Use Cash Collateral EMPLOYBRIDGE HOLDING: Fitch Affirms 'B+' IDR Amid Bluecrew Deal EN DIAN DEVELOPMENT: Case Summary & One Unsecured Creditor ENDO INT'L: Judge Defers Approval of $98-Mil. in Bonuses ESTATE FINANCIAL: Tax Court Sustains Findings of Tax Deficiency EXECVISION INC: Mediafly Seeks to Validate Corporate Acts FIGUEROA MOUNTAIN: Has Deal on Cash Collateral Access FINANCE OF AMERICA: Fitch Cuts LongTerm IDR to 'B-', Outlook Neg. FIRST FRUITS: Taps Moore Bradley Myers as Bankruptcy Counsel FM SOLUTIONS: Wins Cash Collateral Access on Final Basis FORMA BRANDS: Considers Filing for Chapter 11 Bankruptcy FREEDOM MORTGAGE: Fitch Alters Outlook on 'BB-' IDR to Negative GIGA-TRONICS INC: Hires Marcum LLP as New Auditor GLOBAL PROCESSING: Voluntary Chapter 11 Case Summary GREYSTONE SELECT: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable GT REAL ESTATE: Court Battle With Rock Hill, York County Continues HELLER EHRMAN: Plan Administrator Taps BG Law as Special Counsel HOLLOWAY CROSSING: Unsecureds, If Any, Will be Paid in Full HOME POINT: Fitch Affirms LongTerm IDR at 'B', Outlook Negative HOME PRODUCTS: TNT Plastic Appointed as New Committee Member HOYOS INTEGRITY: Unsecureds Owed $7M Get 8% of New Equity in Plan HTP INC: Court Approves Disclosure Statement IAMGOLD CORP: S&P Downgrades ICR to 'CCC+', Outlook Negative IMPERIAL TRANSPORTATION: Seeks Cash Collateral Access IMPERIAL TRANSPORTATION: Taps Christopher A. Wood as Counsel IMPERVA INC: Fitch Alters Outlook on 'B-' LongTerm IDR to Negative JAB ENERGY: Seeks to Hire Stretto as Administrative Advisor JAF 27 LLC: Files Emergency Bid to Use Cash Collateral JOHN V. GALLY: Taps Hunter, Humphrey & Yavitz as Litigation Counsel K&N PARENT: S&P Corrects First-Lien Term Loan Rating to 'CCC-' KABBAGE INC: Seeks Approval to Hire 'Ordinary Course' Professionals KALOS CAPITAL: Gets OK to Hire Stretto as Claims and Noticing Agent KALOS CAPITAL: Seeks to Tap Burr & Forman as Bankruptcy Counsel LAKEPORT CF: Debtor Has Until Oct. 28 to File Plan Disclosures LBJ HEALTHCARE: 9th Cir. Affirms Dismissal of Charnetskys' Appeal LIBERTY POWER: Court OKs Deal on Cash Collateral Access LIZARD IN LOS ANGELES: Has Deal on Cash Collateral Access LOVING KINDNESS: Case Summary & Four Unsecured Creditors MAYFLOWER RETIREMENT: Fitch Puts 'BB+' IDR on Rating Watch Neg. MERCURITY FINTECH: Appoints Qian Sun as Chief Operating Officer MIDLAND ELECTRIC: Seeks Cash Collateral Access Thru Dec 2 MISTER ROBERTS: Files Emergency Bid to Use Cash Collateral MOTUS GROUP: Fitch Affirms LongTerm IDR at 'B-', Outlook Stable MUSE BROOKLYN: Taps Ronald D. Weiss PC as Bankruptcy Counsel NEW BETHEL BAPTIST: Taps Anchor Legal Group as Special Counsel NEWAGE INC: Stevens Global Logistics Out as Committee Member PACKABLE HOLDINGS: Bids for eCommerce Software Due Nov. 14 PARAMOUNT HEALTHCARE: May Use $137,500 in Cash Collateral Access PENNSYLVANIA AUTISM: Nov. 17 Hearing on Plan & Disclosures PHASEBIO PHARMACEUTICALS: Case Summary & 20 Unsecured Creditors PHASEBIO PHARMACEUTICALS: Hits Chapter 11 to Fend Off Co-Developer PHASEBIO PHARMACEUTICALS: Says It Has Buyer for Bentracimab Assets PILATES AND YOGA: Wins Interim Cash Collateral Access PROVIDENT FUNDING: Fitch Lowers LongTerm IDR to 'B', Outlook Neg. QUASH SELTZER: Bang Names Former PepsiCo Exec. Kathy Cole as COO R & E PETROLEUM: Seeks Approval to Retain Aridi Consulting ROSAMOND 5: Taps Totaro & Shanahan as Legal Counsel ROSAMUND 5 PROPERTIES: Seeks Cash Collateral Access SAN LUIS & RIO GRANDE: OmniTrax Buys Railroad Out of Bankruptcy SEARS HOLDINGS: Denial of Second-Lien Holders' Claims Affirmed SITEK PRODUCTIONS: Gets OK to Hire Teeling & Company as Accountant SUMMER AVE: Unsecured Creditors Owed $30.5K to Get $5K in Plan SUMMIT MIDSTREAM: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable SUNGARD AS: UST Opposes Exculpation Provisions in Plan THEOS FEDRO: 3rd Amended Complaint vs. Pender Dismissed THORCO INC: Seeks to Hire Andrew Johnson CPA PLLC as Accountant THUNDER INC: Seeks Cash Collateral Access THUNDER INC: Seeks to Hire David L. Brault as Litigation Counsel TRINITY AFFORDABLE: S&P Affirms 'B+' Long-Term Rev. Bonds Rating UNITED WHOLESALE: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable UNIVERSAL REHEARSAL: Files Emergency Bid to Use Cash Collateral VICTORIA TOWERS: Judgment Creditor Opposes Sanford Plan VILLAS OF COCOA: Taps Coldwell Banker Realty as Real Estate Agent VOYAGER DIGITAL: Equity Holders Claim They Are "In The Money" VOYAGER DIGITAL: Texas Authorities Object to Disclosure Statement W&T OFFSHORE: S&P Alters Outlook to Negative, Affirms 'CCC+' ICR WASHINGTON PRIME: Objections to Greenberg, FTI Fees Overruled WISE HEALTH: Fitch Lowers LongTerm IDR to 'BB+', Outlook Stable ZEOLI-BROWN LLC: Seeks Cash Collateral Access ZOHAR III: Approval of Global's Assets Sale Affirmed on Appeal [^] Large Companies with Insolvent Balance Sheet ********* 162-164 82ND ST. LLC: Upper East Side Apartment Owner in Chapter 11 ------------------------------------------------------------------- 162-164 82nd St, LLC, filed for chapter 11 protection in the Eastern District of New York. 162-164 82nd St LLC is the owner of a residential apartment building on the Upper East Side containing 37 units, most of which are free market. The property is located at 162 W 82nd St #164 New York, NY 10024-5502. The property has a monthly rent roll of $81,189. The Debtor's parent, 77 Varet Holding Corp., earlier filed for Chapter 11 bankruptcy (Case No. 22-42316) on Sept. 21, 2022. 77 Varet is a stock holding company whose sole assets is its 100% membership interest in 162-164 82nd St, LLC ("Fee Owner"). Lender East 82nd Holdco's predecessor, Dime Savings Bank, made a senior mortgage loan and mezzanine loan relating to the Property in 2017. The senior mortgage was in the principal amount of $10.5 million (since reduced to a principal balance of no more than $9,759,630) and has been in default since 2020 with substantial accrued interest of $2,287,173 as of April 2022. The mezzanine loan was in the original principal amount of $1.5 million (since reduced to the sum of no more than $1,382,027) and likewise has been in default since 2020 with accrued interest of at least $323,953 as of April 2022. The Property became subject to mortgage delinquencies during Covid, which were exacerbated by litigation and accounting issues involving the Managing Agent, Choice New York Management. A new property manager is being engaged in connection with the commencement of the Chapter 11 cases. In the interim, East 82nd Holdco ("the Lender") noticed a U.C.C. Article 9 foreclosure sale of the Equity Holder's membership in the Fee Owner. The sale has been adjourned from time to time following execution of a forbearance agreement in January 2022. The forbearance has expired, and the Lender is refusing to adjourn the foreclosure sale any longer. However, the Lender has consented to the commencement of bankruptcy proceedings and will afford the Debtor one last opportunity to refinance the Property based upon a negotiated pay-off, failing which the Property will be marketed for sale in Chapter 11, with the Lender to retain full credit bid rights. The Debtor disclosed $456,436 in assets against $14,226,000 in liabilities in its formal schedules. The petition states that funds will not be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for Nov. 14, 2022, at 1:00 PM at Teleconference - Brooklyn. (hrm) About 162-164 82nd St LLC 162-164 82nd St, LLC, is a Single Asset Real Estate (as defined in 11 U.S.C. Sec. 101(51B)). 162-164 82nd St, LLC, filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-42569) on Oct. 14, 2022. In the petition filed by Ruben Azrak, as member, the Debtor reported assets and liabilities between $10 million and $50 million each. The Debtor is represented by J Ted Donovan of Goldberg Weprin Finkel Goldstein LLP. A.B. WON PAT: S&P Affirms 'BB' LT Senior-Lien Revenue Bonds Rating ------------------------------------------------------------------ S&P Global Ratings revised the outlook to stable from negative and affirmed its 'BB' long-term rating and underlying rating (SPUR) on the A.B. Won Pat International Airport Authority (also known as the Guam International Airport Authority, GIAA, or the airport), Guam's senior-lien general revenue bonds. "The outlook revision reflects our view that, while activity levels remain significantly below pre-pandemic levels, the airport has demonstrated improving enplanements in recent months, combined with management's prudent budget adjustments, federal operating grants, and a recent strategic restructuring that reduced near-term debt service," said S&P Global Ratings credit analyst Paul Dyson. S&P said, "We believe environmental physical risks are moderately credit negative given GIAA's exposure to extreme weather events, namely typhoons but less so tsunamis, as a small island territory in the Pacific Ocean. Social health and safety risks are also moderately negative but somewhat abating as COVID-19 restrictions are relaxed and vaccination activity, particularly among populations from the airport's key markets, have supported improved enplanement trends in recent months. We believe the credit risks posed by environmental and social factors could lead to weakened activity that affects GIAA's financial and operational results. We view governance factors as credit neutral given the airport's long-term financial and capital planning and historical ability to cut costs." AEARO TECHNOLOGIES: Tort Panel Taps Mattingly as Indiana Counsel ---------------------------------------------------------------- The official committee of tort claimants appointed in the Chapter 11 cases of Aearo Technologies, LLC and its affiliates seeks approval from the U.S. Bankruptcy Court for the Southern District of Indiana to employ Mattingly Burke Cohen & Biederman, LLP as its Indiana counsel. The committee represents holders of tort claims related to the use of respirators manufactured by the Debtors. The firm's services include: a. assisting the respirator committee and its bankruptcy counsel, Rochelle McCullough, LLP, in preparing legal papers in accordance with the local rules and customs, and pursuing or participating in contested matters and proceedings if necessary; b. advising the committee with respect to its rights, powers and duties in the Debtors' bankruptcy cases; c. participating in in-person and telephonic meetings of the committee; d. representing the interests of the committee in proceedings before the bankruptcy court and other courts or tribunals, as appropriate; e. assisting and advising the committee in its meetings and negotiations with the Debtors and other parties in interest regarding the cases; f. responding to inquiries from similarly situated individuals whose interests are represented by the committee as to the status of, and developments in, the Debtors' cases; and g. performing other necessary legal services. The firm will be paid at these rates: Partners $405 per hour Senior Associates $375 per hour Associates $325 per hour Paraprofessionals $195 per hour Mattingly made the following disclosures in response to the request for additional information set forth in Paragraph D.1 of the Revised U.S. Trustee Guidelines: 1. Mattingly has not agreed to any variations from, or alternatives to, its standard or customary billing rates for this engagement. 2. Mattingly's professionals do not vary their rates based on the geographic location of the bankruptcy case. 3. The firm did not represent the committee in the 12 months prior to the Debtors' Chapter 11 filing. 4. The committee has not approved a prospective budget or staffing plan as of Oct. 7. Mattingly also disclosed that the firm and its attorneys neither hold nor represent any interest that is materially adverse to the interests represented by the committee. The firm can be reached through: Curt D. Hochbein, Esq. Mattingly Burke Cohen & Biederman, LLP 155 E. Market St., Suite 400 Indianapolis, IN 46204 Phone: (317) 759-5035 Email: curt.hochbein@mbcblaw.com About Aearo Technologies Aearo Technologies, LLC -- https://earglobal.com/en -- is a 3M company that designs, manufactures, and sells personal protection equipment. The Indianapolis-based company serves customers worldwide. To address claims related to the Combat Arms Earplugs Version 2, Aearo Technologies and its affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Lead Case No. 22-02890) on July 26, 2022. In the petition filed by John R. Castellano, as authorized signatory, Aearo Technologies listed $1 billion to $10 billion in both assets and liabilities. The Debtors tapped Kirkland & Ellis and Ice Miller, LLP as bankruptcy counsels; McDonald Hopkins, LLC as special counsel; Bates White, LLC as claims valuation consultant; AP Services, LLC as restructuring advisor; and Kroll, LLC as claims agent and noticing agent. John R. Castellano, managing director at AlixPartners LLP, an affiliate of AP Services, serves as the Debtors' chief restructuring officer. Judge Jeffrey J. Graham oversees the cases. The U.S. Trustee for Region 10 appointed two separate official committees to represent tort claimants in the Debtors' cases. The tort claimants assert claims related to the use of faulty combat arms earplugs and respirators manufactured by the companies. The tort committee related to use of combat arms version 2 earplugs tapped Houlihan Lokey Capital, Inc. as investment banker and Province, LLC as financial advisor. AEARO TECHNOLOGIES: Tort Panel Taps Rochelle McCullough as Counsel ------------------------------------------------------------------ The official committee of tort claimants appointed in the Chapter 11 cases of Aearo Technologies, LLC and its affiliates seeks approval from the U.S. Bankruptcy Court for the Southern District of Indiana to employ Rochelle McCullough, LLP as its legal counsel. The committee represents holders of tort claims related to the use of respirators manufactured by the Debtors. The firm's services include: a. advising the committee with respect to its rights, powers and duties in the Debtors' Chapter 11 cases; b. participating in in-person and telephonic meetings of the committee; c. representing the interests of the committee in proceedings before the bankruptcy court and other courts or tribunals, as appropriate; d. assisting and advising the committee in its meetings and negotiations with the Debtors and other parties in interest; e. responding to inquiries from similarly situated individuals whose interests are represented by the committee, as to the status of, and developments in, these bankruptcy cases; f. assisting the committee in preparing pleadings and applications, and pursuing or participating in contested matters and proceedings as may be necessary or appropriate in furtherance of the committee's duties; and g. performing other legal services for the committee. The firm will charge these hourly fees: Michael R. Rochelle, Counsel $900 Kevin D. McCullough, Partner $700 Gregory H. Bevel, Partner $700 Eric A. Policastro Sr., Associate $650 Shannon S. Thomas Sr., Associate $500 Wesley Gould, Associate $450 Zachary G. Levick, Associate $400 Will Cernosek, Associate $350 Emily Moon, Paralegal $195 Rochelle McCullough made the following disclosures in response to the request for additional information set forth in Paragraph D.1 of the Revised U.S. Trustee Guidelines: 1. Rochelle McCullough has not agreed to any variations from, or alternatives to, its standard or customary billing rates for this engagement. 2. No Rochelle McCullough professional involved in the engagement has varied his rate based on the geographic location of the cases. 3. The firm did not represent the committee and its members in the 12 months prior to the Debtors' Chapter 11 filing. 4. To date, the committee has not reviewed a prospective budget and staffing plan aside from the firm's engagement letter disclosing those attorneys (and their rates), which the firm anticipates working on this matter. Rochelle McCullough also disclosed that it is a "disinterested person" within the meaning of Bankruptcy Code Section 101(14). The firm can be reached through: Michael R. Rochelle, Esq. Kevin D. McCullough, Esq. Shannon S. Thomas, Esq. Rochelle McCullough, LLP 325 North Saint Paul St., Suite 4500 Dallas, TX 752028901 Telephone: (214) 580-2525 Facsimile: (888) 467-5979 Email: buzz.rochelle@romclaw.com kdm@romclaw.com sthomas@romclaw.com About Aearo Technologies Aearo Technologies, LLC -- https://earglobal.com/en -- is a 3M company that designs, manufactures, and sells personal protection equipment. The Indianapolis-based company serves customers worldwide. To address claims related to the Combat Arms Earplugs Version 2, Aearo Technologies and its affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Lead Case No. 22-02890) on July 26, 2022. In the petition filed by John R. Castellano, as authorized signatory, Aearo Technologies listed $1 billion to $10 billion in both assets and liabilities. The Debtors tapped Kirkland & Ellis and Ice Miller, LLP as bankruptcy counsels; McDonald Hopkins, LLC as special counsel; Bates White, LLC as claims valuation consultant; AP Services, LLC as restructuring advisor; and Kroll, LLC as claims agent and noticing agent. John R. Castellano, managing director at AlixPartners LLP, an affiliate of AP Services, serves as the Debtors' chief restructuring officer. Judge Jeffrey J. Graham oversees the cases. The U.S. Trustee for Region 10 appointed two separate official committees to represent tort claimants in the Debtors' cases. The tort claimants assert claims related to the use of faulty combat arms earplugs and respirators manufactured by the companies. The tort committee related to use of combat arms version 2 earplugs tapped Houlihan Lokey Capital, Inc. as investment banker and Province, LLC as financial advisor. ALL FLORIDA SAFETY: Court OKs Interim Cash Collateral Access ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida, Jacksonville Division, authorized All Florida Safety Institute, LLC to use cash collateral on an interim basis in accordance with the budget. The Debtor requires the use of cash collateral to continue operating the business and pay salaries. As of the Petition Date, the Debtor was indebted to the U.S. Small Business Administration in the approximate amount of $2,066,071 and Westlake Funding Company, LLC in the approximate amount of $500,000. The Debtor's obligation is evidenced by a Promissory Note, Security Agreement, Financing Statement, and Chattel Mortgage executed on or about May 27, 2020 to USA/SBA and July 21, 2021 to Westlake. The Debtor is permitted to pay only expenses necessary for the operation of the business and not any pre-petition expenses, officer salaries, professional fees, or insiders without further order of the Court. As additional adequate protection to each Lender's interest and the estate's interest in cash collateral, the Lender is granted a replacement lien to the same nature, priority, and extent that the Lender may have had immediately prior to the date that the case was commenced nunc pro tunc to the Petition Date. Further, the Lender is granted a replacement lien and security interest on property of the bankruptcy estate to the same extent and priority as that which existed pre-petition on all of the cash accounts, accounts receivable and other assets and property acquired by the Debtor's estate or by the Debtor on or after the Petition. The replacement lien will be deemed effective, valid and perfected as of the Petition Date, without the necessity of filing with any entity of any documents or instruments otherwise required to be filed under applicable non-bankruptcy law. The Debtor is directed to make adequate protection payments: a. $6,164 per month to the SBA commencing November 1, 2022 and on the first of the month thereafter or further Court order; b. $14,934 per month to Westlake commencing November 1, 2022 and on the first of the month thereafter or further Court order; and c. All other UCC-1 receivable Lenders including NewCo Capital Group, Samson, Cloudfund/Delta and IOU will receive no adequate protection at this time. The order is without prejudice to a later finding that the Lenders may be secured by receivables, personal property, inventory and/or equipment. As additional adequate protection of the Lender's interest in the cash collateral, the Debtor will (a) maintain all necessary insurance coverage on the Lender's collateral and under no circumstances will the Debtor allow its insurance coverage to lapse, (b) continue to pay such monthly insurance payment in a timely manner, and (c) within two days of the request of the Lender, the Debtor will provide to the Lender's counsel a written statement supported by evidence of Debtor's compliance with the foregoing. The Debtor's authority to use the cash collateral will terminate immediately and upon the earlier of (a) order of the Court; (b) the conversion of the case to a Chapter 7 case or the appointment of a Chapter 11 trustee without the consent of the Lender; (c) the entry of an Order that alters the validity or priority of the replacement liens granted to the Bank; (d) the Debtor ceasing to operate all or substantially all of its business; (e) the entry of an order granting relief from the automatic stay that allows any entity to proceed against any material assets of the Debtor that constitute cash collateral; (f) the entry of an Order authorizing a security interest under section 364(c) or 364(d) of the Bankruptcy Code in the collateral to secure any credit obtained or debt incurred that would be senior to or equal to the replacement lien; or (g) the dismissal of the Chapter 11 case. A continued hearing on the matter is set for November 16, 2022 at 1:30 p.m. A copy of the order is available at https://bit.ly/3eJVjuR from PacerMonitor.com. About All Florida Safety Institute, LLC All Florida Safety Institute, LLC offers driving lessons, driver's license testing and traffic school. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-01926) on September 22, 2022. In the petition signed by Mark Allen, manager, the Debtor disclosed $2,200,185 in assets and $5,618,570 in liabilities. Judge Jacob A. Brown oversees the case. Bryan K. Mickler, Esq., at the Law Offices of Mickler & Mickler, LLP, is the Debtor's counsel. ALL FLORIDA SAFETY: Gets OK to Hire William Haeberle as Accountant ------------------------------------------------------------------ All Florida Safety Institute, LLC received approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ William G. Haeberle, a certified public accountant practicing in Florida. Mr. Haeberle will prepare the Debtor's monthly operating reports at the rate of $300 per month. In court filings, Mr. Haeberle disclosed that he has no interest adverse to the Debtor or its estate in the matters upon which he is to be engaged. Mr. Haeberle can be reached at: William G. Haeberle, CPA 1440 Peachtree Street Jacksonville, FL 32207 Phone 904-536-9810 About All Florida Safety Institute All Florida Safety Institute, LLC -- https://allfloridasafetyinstitute.com/driving -- is an all-inclusive driving school serving Florida. All Florida Safety Institute filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code on Sept. 22, 2022, with $1 million to $10 million in both assets and liabilities. Aaron R. Cohen has been appointed as Subchapter V trustee. The Debtor tapped Bryan K. Mickler, Esq., at the Law Offices of Mickler & Mickler, LLP as counsel, and William G. Haeberle, CPA as accountant. ARMSTRONG FLOORING: Seeks to Hire ASK LLP as Special Counsel ------------------------------------------------------------ Armstrong Flooring, Inc. and its affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to employ ASK, LLP as their special counsel. The Debtors require a special counsel to analyze, prosecute or settle avoidance actions. ASK will be paid as follows: a. Pre-Suit. ASK shall earn legal fees on a contingency basis of 17.5 percent of the cash value of any recoveries and the cash equivalent value of any claim waiver obtained from a potential defendant of an avoidance action after firm issues a demand letter but prior to initiating an avoidance action proceeding against such defendant. b. Post Suit. ASK shall earn legal fees on a contingency basis of 25 percent of the cash value of any recoveries and the cash equivalent value of any claim waiver obtained in connection with the settlement of any avoidance action after the firm initiates such avoidance action proceeding but prior to the earlier of (i) obtaining a judgment against such defendant, or (ii) after a final pretrial is held. c. Post Judgment/Final Pre-Trial. ASK shall earn legal fees on a contingency basis of 30 percent of the cash value of any recoveries and the cash equivalent value of any claim waiver obtained from an avoidance action defendant the earlier of ASK obtaining a judgment against such defendant or after a final pretrial is held. Joseph Steinfeld, Jr., Esq., managing partner at ASK, disclosed in a court filing that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Steinfeld disclosed that: -- ASK has not agreed to any variations from, or alternatives to, its standard or customary billing arrangements for this engagement; -- No ASK professional included in the engagement has varied his rate based on the geographic location of the bankruptcy case; -- The firm has not represented the Debtor in the 12 months prior to its Chapter 11 filing; and -- Compensation is a contingency-based fee, plus reimbursement of expenses. The firm can be reached through: Joseph L. Steinfeld, Jr., Esq. ASK, LLP 2600 Eagan Woods Drive, Suite 400 St. Paul, MN 55121 Telephone: (651) 406-9665 Fax: (651) 406-9676 Email: jsteinfeld@askllp.com About Armstrong Flooring Armstrong Flooring, Inc. (NYSE: AFI) -- https://www.armstrongflooring.com/ -- is a leading global manufacturer of flooring products and one of the industry's most trusted and celebrated brands. The company continually builds on its resilient, 150-year legacy by delivering on its mission to create a stronger future for customers through adaptive and inventive solutions. Headquartered in Lancaster, Pennsylvania, Armstrong Flooring safely and responsibly operates eight manufacturing facilities globally. Armstrong Flooring and its affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10426) on May 8, 2022. In the petition signed by Michel S. Vermette, president and chief executive officer, Armstrong Flooring disclosed $517,000,000 in assets and $317,800,000 in liabilities. Judge Mary F. Walrath oversees the cases. Skadden, Arps, Slate, Meagher and Flom, LLP is the Debtors' counsel. Riveron Consulting, LP is the financial advisor, Houlihan Lokey is the investment banker, and Epiq Corporate Restructuring, LLC, is the claims and noticing agent and administrative advisor. On May 18, 2022, the Office of the U.S. Trustee for Region 3 appointed an official committee of unsecured creditors in these Chapter 11 cases. The committee tapped Cole Schotz, PC as legal counsel and Province, LLC as financial advisor. On June 17, 2022, the U.S. Trustee appointed a committee of non-represented retirees in these Chapter 11 cases. The committee tapped Jenner & Block, LLP and Saul Ewing Arnstein & Lehr, LLP as legal counsels; and AlixPartners, LLP as financial advisor. AVAYA HOLDINGS: Stephen Spears Steps Down as EVP, CRO ----------------------------------------------------- Stephen Spears will step down from his role as Avaya Holdings Corp.'s executive vice president and chief revenue officer, effective as of Oct. 18, 2022. Mr. Spears will remain an employee of the Company until Nov. 1, 2022 to support the transition of his responsibilities to Alan Masarek, the Company's president and chief executive officer, until Mr. Spears' successor is hired. Mr. Spears will be eligible to receive benefits under the Avaya Inc. Involuntary Separation Plan for Senior Executives, which is described in the Company's Proxy Statement filed with the Securities and Exchange Commission on Jan. 18, 2022. About Avaya Holdings Avaya offers digital communications products, solutions and services for businesses of all sizes delivering its technology predominantly through software and services. Avaya reported a net loss of $13 million for the year ended Sept. 30, 2021, a net loss of $680 million for the year ended Sept. 30, 2020, and a net loss of $671 million for the year ended Sept. 30, 2019. * * * As reported by the TCR on Aug. 15, 2022, S&P Global Ratings lowered its issuer credit rating on Avaya Holdings Corp. to 'CCC-' from 'CCC'. The negative outlook reflects that S&P could lower its rating on Avaya if it concludes a distressed restructuring or payment default are a virtual certainty. Also in August 2022, Moody's Investors Service downgraded the Corporate Family Rating of Avaya Holdings Corp. to Caa2 from B3. Moody's said Avaya's Caa2 CFR reflects the Company's unsustainably high financial leverage, sustained cash burn, and increased near term performance challenges that may worsen substantially as customers reassess Avaya's financial standing. AXYEHHO CORP: General Unsecureds Owed $4.4K to be Paid in Full -------------------------------------------------------------- AXYEHHO Corporation submitted a First Amended Chapter 11 Plan of Reorganization and an Amended Disclosure Statement on October 12, 2022. The Debtor is an entity that holds title to a single parcel of residential real property located at 2026 NE 32nd Avenue, Fort Lauderdale, FL 33305 (the "Property"). The Property was purchased in September 2019, for $1,175,000. In order to finance the acquisition of the Property, the Debtor and its then president, Alexander Istomin, borrowed $940,000 from Eric Platero, who secured his loan with a mortgage that was recorded on the Property. Alexander Istomin personally guaranteed the loan. The Debtor also borrowed $120,000 from Daniil Ageev, and $130,000 from Roman Moor. Neither the Ageev note nor the Moor note were ever secured under Florida law, as neither ever received, or recorded, a mortgage in the Official Records of Broward County, Florida, the county in which the Property is located. The Debtor's present president, Ekaterina Pushkarskaya, the wife of Alexander Istomin, also contributed some of her personal funds towards the purchase price prior to the DIP closing on the Property, which was also not secured in any way under Florida law. The Debtor will sell, transfer and otherwise convey all of its property, both real and personal, including all tangible and intangible interest. The extent of these interests is its real Property. Under the Plan, Class 2 General Unsecured Claims are impaired. The Debtor will pay the general unsecured creditors, whose claims are not related to the Real Property, in full upon the Effective Date of the Plan. General Unsecured Creditors whose claims are not related to the Real Property total $4,461.61, and will be paid without interest. The Debtor has reviewed the written agreement underlying the claim which entitles the holder to interest at the rate of 18% annually. Class 3 Claims of Real Property Related Unsecured Creditors are impaired. Daniil Ageev and Roman Moor are the only Real Property related unsecured creditors. Each of these individuals lent the DIP funds to purchase the Real Property, but neither perfected any security interest in the Real Property. Notwithstanding any subsequently filed Proofs of Claims by these creditors, the USA's lien subsumes all equity in the Real Property, which is the only asset of the DIP. These claimants shall have claims in their Allowed Amounts, but shall receive no distribution in this case. In the event either of these creditors, or any other party in interest with knowledge of these proceedings and/or the criminal proceeding who wishes to assert a claim to any balance of the Real Property sale proceeds, must do so in connection with Case No. 1:21CR76-JJM-LDA, in the United States District Court, District of Rhode Island, or any related more specific forfeiture proceeding. The Debtor will execute any and all documents necessary to liquidate its assets in accordance with the Plan. Pursuant to the prospective Order confirming the DIP's Plan, the DIP will execute a deed transferring all of its interest to the purchaser of the Real Property. Post-confirmation, the DIP will terminate all operations and activities, and dissolve with the Florida Secretary of State. A copy of the Amended Disclosure Statement dated October 12, 2022, is available at https://bit.ly/3T4vnZu from PacerMonitor.com. About AXYEHHO Corporation AXYEHHO Corporation is engaged in activities related to real estate. AXYEHHO Corporation filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-14717) on June 17, 2022. The petition was signed by Ekaterina Pushkarshkaya as president. At the time of filing, the Debtor estimated up to $50,000 in assets and $1 million to $10 million in liabilities. Judge Scott M. Grossman presides over the case. Stephen Breuer, Esq., at Breuer Law, PLLC, is the Debtor's counsel. BANROC CORP: Unsecureds to be Paid From Liquidation Proceeds ------------------------------------------------------------ Banroc Corp, d/b/a Solara Homes, submitted a First Amended Plan of Liquidation for Small Business under Chapter 11, Subchapter V, dated October 12, 2022. The Debtor owns the following real property (collectively the "Real Property"): (i) 25 townhome lots located on Pine Lily Lane Tract E2, Babcock Ranch, FL 33982; (ii) A certain single-family home lot located at Lake Timber Drive, Babcock Ranch, FL 33982 designated as lot 85; (iii) A certain single-family home lot located at Lake Timber Drive, Babcock Ranch, FL 33982 designated as lot 86; (iv) A certain single-family home lot located at 42186 Lake Timber Drive, Babcock Ranch, FL 33982 designated as lot 87, together with a partially constructed single-family home; (v) A certain single-family home lot located at 42178 Lake Timber Drive, Babcock Ranch, Florida 33982 designated as lot 88, together with a partially constructed single-family home; and (vi) A certain single family home lot located at 42170 Lake Timber Drive, Babcock Ranch, Florida 33982, designated as lot 89. Prepetition, the Debtor fell into financial disrepair when Lend More, LLC, the Debtor's prepetition secured lender, ceased funding in response to alleged defaults upon certain loan documents which, in turn, prevented the Debtor from developing and selling the Real Property. Thees Plan under chapter 11 of the Bankruptcy Code proposes to pay creditors of the Debtor from the sale of the Real Property. Under the Plan, Class 14 General Unsecured Claims consists of all allowed, non-priority, unsecured claims. The Debtor intends to make a lump sum distribution to the holders of allowed Class 14 claims from the Liquidation Proceeds after all allowed secured creditors with valid liens on Lot 85, Lot 86, and Lot 89 are paid in full and all administrative expenses of the estate are paid in full. The Debtor anticipates that such lump sum payment will be made within 1 year of the Effective Date. At this time the Debtor does not anticipate a distribution to holders of allowed Class 14 Claims. Class 14 is impaired. Payments required under the Plan will be funded from the Liquidation Proceeds. Counsel for Banroc Corp d/b/a Solara Homes: Michael R. Dal Lago, Esq. Christian Garrett Haman, Esq. Jennifer M. Duffy, Esq. DAL LAGO LAW 999 Vanderbilt Beach Road, Suite 200 Naples, FL 34108 Telephone: (239) 571-6877 Email: mike@dallagolaw.com chaman@dallagolaw.com jduffy@dallagolaw.com A copy of the First Amended Plan of Liquidation dated October 12, 2022, is available at https://bit.ly/3exoxwM from PacerMonitor.com. About Banroc Corp. Banroc Corp. is a Naples, Fla.-based company engaged in real estate business. Banroc Corp. filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 21-01258) on Sept. 22, 2021, listing $2,925,000 in assets and $4,261,913 in liabilities. Debra Jackson serves as Subchapter V trustee. Judge Caryl E. Delano oversees the case. Mike Dal Lago, Esq., at Dal Lago Law and NJ Law, PLLC, serve as the Debtor's bankruptcy counsel and special litigation counsel, respectively. BARNES ENTERPRISES: Seeks to Tap Clayton & Company as Accountant ---------------------------------------------------------------- Barnes Enterprises, LLP seeks approval from the U.S. Bankruptcy Court for the Middle District of Georgia to employ Clayton & Company, PC as accountant. The firm will render these services: (a) assist the Debtor in preparing all documents required for the federal and state tax returns; (b) assist the Debtor in the preparation of required financial disclosures, budgets, and reports, including monthly operating reports; (c) provide the Debtor with business-related bookkeeping services; and (d) provide any other accounting-related services that may be required or advisable for the Debtor. Clayton will bill $240 per hour for all services. Cliff Clayton, CPA, the owner of Clayton & Company, 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: Cliff Clayton, CPA Clayton & Company, PC 6501 Peake Rd. Macon, GA 31210 Telephone: (478) 475-5723 About Barnes Enterprises Barnes Enterprises LLP, a financial services company in Macon, Ga., filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Ga. Case No. 22-51155) on Oct. 3, 2022, with up to $50 million in assets and up to $10 million in liabilities. Jenny Martin Walker has been appointed as Subchapter V trustee. The Debtor tapped Matthew S. Cathey, Esq., at Stone & Baxter LLP as counsel and Clayton & Company, PC as accountant. BASIC WATER: U.S. Trustee Unable to Appoint Committee ----------------------------------------------------- The U.S. Trustee for Region 17 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 cases of Basic Water Company and Basic Water Company SPE 1, LLC. About Basic Water Company Basic Water Company, a water utility company in Nevada, and affiliate Basic Water Company SPE 1, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Nev. Lead Case No. 22-13252) on Sept. 10, 2022. In their petitions, Basic Water Company listed $10 million to $50 million in assets and $1 million to $10 million in liabilities while SPE 1 listed as much as $50 million in both assets and liabilities. Stephanne A. Zimmerman, president, signed the petitions. Judge Mike K. Nakagawa oversees the cases. The Debtors tapped Samuel A. Schwartz, Esq. at Schwartz Law, PLLC as legal counsel, and Force 10 Partners, LLC as financial advisor. BGS WORKS: Court Confirms First Amended Plan -------------------------------------------- Judge Victoria S. Kaufman has entered an order confirming and approving the First Amended Chapter 11 Plan of Reorganization of BGS Works, Inc. Consistent with the provisions of the Plan, the effective date of the Plan shall be the first business day that is 14 calendar days following the entry of this Order. On or before the 5th calendar day following the Effective Date, the Debtor must file and serve a notice of the effective date on all creditors and the U.S. Trustee. A post-confirmation Status Conference will take place on Jan. 19, 2023, at 1:00 a.m. p.m. Not later than Jan. 5, 2023, the Debtor must file a post-confirmation status report explaining what progress has been made toward consummation of the confirmed Plan. The post-confirmation status report shall be filed with the Court and served on the U.S. Trustee, all secured creditors, the 20-largest unsecured creditors, and those parties who have requested special notice. With respect to each class, every class has accepted the Plan or such class is not impaired under the Plan. At least one class of claims has accepted the Plan, determined without including any acceptance of the Plan by an insider holding a claim of such class. The judge ruled that confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Debtor or any successor to the Debtor under the Plan, unless such liquidation or reorganization is proposed in the Plan. Attorneys for the Debtor: Roksana D. Moradi-Brovia, Esq. W. Sloan Youkstetter, Esq. RHM LAW LLP 17609 Ventura Blvd., Suite 314 Encino, CA 91316 Telephone: (818) 285-0100 Facsimile: (818) 855-7013 E-mail: roksana@RHMFirm.com sloan@RHMFirm.com About BGS Works BGS Works, Inc., based in Woodland Hills, CA, filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 20-11237) on July 15, 2020. The petition was signed by Joseph Sternlib, owner. In its petition, the Debtor was estimated to have $1 million to $10 million in both assets and liabilities. The Hon. Victoria S. Kaufman presides over the case. RESNIK HAYES MORADI, LLP, serves as bankruptcy counsel to the Debtor. BGS WORKS: Unsecureds to Get 100% Plus 1.5% Interest in Plan ------------------------------------------------------------ BGS Works, Inc., filed a First Amended Disclosure Statement describing its First Amended Chapter 11 Plan of Reorganization. The Debtor is a California corporation created in January 2006 for the purpose of operating a construction company. Joseph Sternlib is the CEO/President, sole shareholder and custodian of records of the Debtor. The Debtor operates as a construction company and holds both contractor and electrical licenses. The Debtor owns about $138,000 in misc. tools, equipment and machinery. The Debtor also owns the property at 5099 Llano Drive, Woodland Hills, CA 91364, which has a house under construction that's 70% complete. The current fair market value of the property is $2,500,000 based on the Debtor's opinion. The Debtor obtained an appraisal that valued the property as$3,725,000 when construction is completed. The Chapter 11 case was filed in order to stop a foreclosure sale of the Debtor's real property by Danmor Investments, Inc. and for the Debtor to secure DIP financing in order to complete the project -- which will benefit the estate and inure to the benefit of the estate creditors. The sale proceeds will enable the DIP to reorganize its financial affairs and result in payment of all debts in full. Prior to the instant filing, the Debtor expected Danmor to provide the additional funds to complete the construction, however, Danmor inevitably refused to commit to the additional financing. Following the Financing Order, Danmor sought additional and detailed information from the Debtor regarding the cost of the completing the construction on the Property. This process was arduous and significantly delayed finalizing the loan documents. Danmor is ready and willing to fund the loan, and escrow has opened. However, the title company will not underwrite the financing based on the current form of the Financing Order, specifically regarding the alleged mechanics liens held by Sunbelt and Rivera that cloud title to the property. This is preventing escrow from closing and the funds from being disbursed. The Debtor will continue the state court litigation in order to clear title after confirmation of this Plan. The Debtor believes that it can obtain the financing while litigating because the liens can be removed during the litigation. Once the liens have been resolved, the Debtor believes that the financing will finally be funded. The Debtor anticipates escrow closing by the end of June 2023. The Debtor will then be able to resume the construction on its property and completing/selling it within 12 months. The anticipated net sale proceeds will pay all claims in full. The Plan provides for payment to holders of allowed claims. The Plan does not alter the proposed treatment for unsecured creditors and the equity holder: * Class 6 consists of the General Unsecured Claims. In the present case, the Debtor estimates that Class 6 general unsecured claims total approximately $127,124. Class 6 will be paid in full with 1.5% interest (est. $128,159) amortized over 12-months from the sale of the Property. * The Debtor's owner will retain his ownership interest in the Debtor. The Debtor will fund the Plan from the proceeds from the sale of the Property, its business operations, and the funds it has/will have accumulated in its Debtor-in-Possession bank accounts. The Debtor believes that with the additional financing of $760,000 available to it, it will be able to complete the construction. The Debtor will continue the state court litigation in order to resolve the mechanic's liens. Once the liens have been resolved, the Debtor believes that the financing will finally be funded. The Budget estimates that the Debtor will use $500,700 to finish construction. The revised Budget takes into account the increased cost of materials and labor due to the Covid-19 pandemic and overestimates the costs to ensure that the Debtor stays within budget. A full-text copy of the First Amended Disclosure Statement is available at https://bit.ly/3yJZVIG from PacerMonitor.com at no charge. Attorneys for the Debtor: Roksana D. Moradi-Brovia, Esq. W. Sloan Youkstetter, Esq. RHM LAW LLP 17609 Ventura Blvd., Suite 314 Encino, CA 91316 Telephone: (818) 285-0100 Facsimile: (818) 855-7013 E-mail: roksana@RHMFirm.com sloan@RHMFirm.com About BGS Works BGS Works, Inc., based in Woodland Hills, CA, filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 20-11237) on July 15, 2020. The petition was signed by Joseph Sternlib, owner. In its petition, the Debtor was estimated to have $1 million to $10 million in both assets and liabilities. The Hon. Victoria S. Kaufman presides over the case. RESNIK HAYES MORADI, LLP, serves as bankruptcy counsel to the Debtor. BUCKEYE PARTNERS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed Buckeye Partners, L.P.'s Long-Term Issuer Default Rating (IDR) at 'BB'. Fitch has also affirmed Buckeye's senior unsecured notes at 'BB'/'RR4', senior secured term loan and revolving credit facility at 'BBB-'/'RR1', and the junior subordinated notes at 'B+'/'RR6'. The Rating Outlook remains Stable. The ratings reflect Buckeye's diverse portfolio of assets as well as its size and scale. Leverage (total debt with equity credit/operating EBITDA) is expected to temporarily rise to approximately 6.5x in 2022 and remain elevated through 2023 primarily due to the lack of distributions received from its equity investment in FLNG Liquefaction 2, LLC (FLIQ2; BBB/Rating Watch Negative) following the accident at the Freeport LNG facility on June 8, 2022. EBITDA is expected to rebound back below 6.0x in 2024 driving deleveraging when Fitch anticipates Buckeye will receive a full year of distributions from FLIQ2. Buckeye continues to benefit from its diversified portfolio as the stronger recovery of pipelines and terminals throughput volumes provide a cushion for lower than expected segregated storage utilization. KEY RATING DRIVERS FLIQ2 Distribution Suspension Drives Elevated Leverage: Fitch expects leverage to increase to approximately 6.5x in 2022 and remain around this level in 2023. The rise in leverage is primarily driven by the interruption of full operations at FLIQ2, a liquefied natural gas (LNG) facility near Freeport, TX, and the suspension of distributions received by Buckeye. As Fitch calculates EBITDA by adding distributions received from FLIQ2, and Fitch estimates run-rate annual distributions received from FLIQ2 to range between $110 million-$130 million, the loss of this cash flow is material. Buckeye receives distributions from a FLIQ2 on a quarterly basis in arrears, so Fitch expects distributions will begin to be received by the end of 2023. By 2024, a full year of FLIQ2 distributions should drive leverage below 6.0x. Segregated Storage Utilization Weak: Beginning in 2Q22, utilization fell to approximate 62% for Buckeye's segregated storage assets. Peaking during the pandemic when demand for refined products fell sharply, the market was in contango and Buckeye's storage assets benefitted with utilization rates in the mid-to-high 80% range. As commodity prices have rebounded and the forward curve for crude oil now reflects normal backwardation market conditions, demand for storage has softened driving Buckeye's utilization rates to the low 60% range. Fitch does not expect segregated storage to see improved results in the near term. Pipeline Throughput Continues to Recover: In 2021, the Pipelines and Terminals (P&T) segment carried gasoline (55.7% of average daily volumes), jet fuel (16.0%), middle distillates (27.0%; this is diesel fuel and heating oil) and other products (1.3%). Average daily pipeline throughput was approximately 1.2 billion barrels per day in 2021, which was up 4.3% compared to 2020 levels but still down approximately 16% from pre-pandemic 2019 throughput volumes. As the economy has continued to re-open and demand returns, Buckeye's pipeline throughput volumes have rebounded from 2020 lows. Gasoline contributes approximately 53% and jet fuel contributes approximately 19% of Buckeye's daily average pipeline throughput volumes. These liquids still lag their pre-pandemic 2019 levels and have further room to recover. Jet fuel specifically is not expected to benefit until more international flights return. Fitch expects marginal improvement in pipeline volumes to continue over the forecast period. Diversified Asset Footprint: Buckeye's assets are located throughout the U.S. and in the Caribbean. The primary locations in the U.S. include Chicago, New York Harbor and the Gulf Coast. In the Caribbean, its assets are primarily in the Bahamas, and it also has assets in Puerto Rico and St. Lucia. In June 2022, Buckeye completed an acquisition of 21 refined products terminals in the Southeast region of the U.S. greatly expanding their presence in the region. In addition to the equity stake in FLIQ2, the company also owns a 50% equity interest in South Texas Gateway Terminal LLC, an export terminal in the Corpus Christi ship channel. Buckeye has also made investments into renewable energy projects further diversifying Buckeye's business, although not expected to make material contributions to EBITDA over the forecast period. Capital Allocation: Buckeye has been actively making growth investments and acquisitions across their legacy pipelines and terminal assets and venturing into alternative energy assets. While Buckeye does not have a formal distribution policy Buckeye's sponsor IFM has a history of being supportive of Buckeye's credit quality since the take-private transaction in 2019 with the contribution of the equity ownership of FLIQ2. In 2020, when demand for refined products and consequently Buckeye's EBITDA took a hit, IFM did not take a distribution beyond the dividend recapture related to the FLIQ2 contribution. Fitch expects that if Buckeye continues to make large investments in their business similar in size to investments made in 2021, funding may be an issue without a contribution from IFM. Notably, no distributions to IFM or equity contributions from IFM are currently forecast by Fitch. Alternative Energy Segment: Buckeye has been actively investing in alternative energy solutions since 2021 through both acquisitions and organic investments. These initiatives include equity interests into renewables focused Swift Current Energy and OneH2. Buckeye has two organic solar projects as well as Swift Current Energy's wind project under construction and expects these projects to come in-service beginning in early 2023. EBITDA from these projects is expected to be relatively small compared to their pipelines and terminals segment. DERIVATION SUMMARY The 'BB' rating reflects Buckeye's diverse asset base, size and scale, and elevated leverage with the addition of the secured debt for going private. Buckeye has a higher leverage profile than its investment-grade peers which operate in the crude oil, refined products pipelines and storage terminal segments, such as Plains All American LP (PAA), which is rated two notches above Buckeye at 'BBB-'. Fitch forecasts Buckeye's leverage (defined as total debt with equity credit to operating EBITDA) to be approximately 6.5x though 2023 before declining back under 6.0x in 2024. PAA is forecasted to have leverage of approximately 4.6x in 2022, that falls to approximately 4.3x in 2023. NuStar Energy, L.P. (NuStar) is rated one notch lower than Buckeye at 'BB-' and is less diverse than Buckeye which has the advantage of size and scale that provides operational and geographic diversification. NuStar's leverage compared well to Buckeye's at 5.3x in 2021 and is expected to range between 5.4x-5.6x through 2022. While Buckeye's leverage is expected to be higher than NuStar's over the near term, longer term leverage is expected to be comparable. In terms of EBITDA, Buckeye is close to twice as large as NuStar justifying the higher rating at Buckeye. Fitch expects Buckeye's leverage to be higher than 'BB-' issuers such as AmeriGas Partners, LP (AmeriGas; BB-/Stable) and Sunoco, LP (SUN; BB+/Stable). Fitch forecasts AmeriGas will have leverage of approximately 5.5x through the company's FYE 2023 as retail propane volumes remain challenged. SUN is expected to have leverage declining to around 4.2x though 2023 as the company continues to repay revolver borrowings and see improving EBITDA from recent acquisitions. Both AmeriGas and SUN have seasonal or cyclically exposed cash flow, although retail propane demand tends to be more seasonally affected and weather affected than motor fuel demand. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Throughput volumes continue to grow modestly and storage utilization rates range in the low-to-mid 60's% through 2023; - No further distributions received from FLIQ2 until 2H23; - Growth capital investment averaging between of $300 million-$500 million annually over forecast period; - Acquisitions and capex funded from borrowings on the upsized $1.2 billion senior secured revolver, divestitures, and/or internally generated cash flows; - No material EBITDA contribution from the Alternative Energy segment; - No distributions to or equity contributions from sponsor IFM over forecast period. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch may take positive rating action if leverage (defined as total debt with equity credit/operating EBITDA) is expected to be at or below 5.0x for a sustained period of time; - Favorable changes in the business mix or financial policies that result in a stronger credit profile. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Negative rating action may occur if Fitch expects leverage (defined as total debt with equity credit/operating EBITDA) to be near 6.0x for a sustained period of time; - Increases in capital spending and/or funding for acquisitions beyond Fitch's expectation that have negative consequences for the credit profile. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of June 30, 2022, Buckeye had approximately $1.1 billion of available liquidity. There was $99 million outstanding borrowings and $31.9 million LOCs on Buckeye's $1.2 billion senior secured revolver. Additionally, Buckeye had $20 million of cash on the balance sheet. Maturities are manageable as the next debt maturity is July 2023 when $500 million of senior unsecured notes become due, followed by $300 million of notes due in October 2024. ISSUER PROFILE Buckeye is a large liquid petroleum products pipeline operator in terms of volumes delivered, with approximately 5,500 miles of pipeline. Buckeye's terminal network comprises more than 135 liquid petroleum products terminals with aggregate tank capacity of over 130 million barrels across its portfolio of pipelines, inland terminals and marine terminals located primarily in the East Coast, Midwest, Gulf Coast and Southeast regions of the U.S. as well as in the Caribbean. Buckeye is wholly owned by IFM Global Infrastructure Fund. SUMMARY OF FINANCIAL ADJUSTMENTS Buckeye's junior subordinated debt that meets Fitch's criteria for 50% equity credit. Cash distributions from FLIQ2 and South Texas Gateway are added to adjusted EBITDA (equity earnings from both are excluded). ESG CONSIDERATIONS Buckeye has an ESG Relevance score of '4' for Financial Transparency. As a private company backed by a private equity fund, disclosures are limited when compared to public companies. This factor has a negative impact on its credit profile and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Debt Rating Recovery Prior ---- ------ -------- ----- Buckeye Partners, L.P. LT IDR BB Affirmed BB senior unsecured LT BB Affirmed RR4 BB junior subordinated LT B+ Affirmed RR6 B+ senior secured LT BBB- Affirmed RR1 BBB- CALPLANT I: Seeks $10.2MM DIP Financing from BOKF ------------------------------------------------- CalPlant I Holdco, LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to, among other things, use cash collateral and issue senior, secured, priming, "last in, first out" debtor-in-possession bonds. Debtor CalPlant I, LLC seeks to issue senior, secured, priming, LIFO debtor-in-possession bonds in an aggregate principal amount of $10.2 million pursuant to an Indenture dated as of November 2022 between CalPlant, as issuer, and BOKF, NA, as trustee to holders of bonds issued under the Existing DIP Facility. The LIFO DIP Facility would be provided on substantially the same terms as the Existing DIP Facility but would have senior priority. If approved, the Debtors will use the proceeds of the LIFO DIP Facility to fund one or more strategies currently under consideration by the Debtors (in consultation with the Funding Holders) for maximizing the value of their assets, including hiring an outside firm to reengineer the refiner component of their MDF plant, entering into a consulting arrangement with a liquidator to liquidate their equipment and other tangible assets (if necessary), and/or pursuing recoveries on account of estate claims and causes of action. The LIFO DIP Facility will mature on the earliest of (i) January 31, 2023; (ii) the effective date of a confirmed Plan of Reorganization; or (iii) the occurrence of an Event of Default under the Indenture. At the time the Debtors entered chapter 11 on October 5, 2021, they believed the serious engineering and design challenges faced by their plant would be resolved within a few months by Siempelkamp Maschinen-und Anlagenbau GmbH, their chief equipment supplier. The goal of the bankruptcy filing was to provide the Debtors with a breathing spell during which SICO would implement a handful of repairs to the Debtors' processing equipment, and the Debtors would then be able to market and sell their plant to the highest bidder under the Court's supervision. Unfortunately, those goals have not been reached. The Debtors' plant continues to operate far below guaranteed production levels, and at an operating loss, with production hampered by unresolved design flaws. And the Debtors' marketing efforts have failed to yield an acceptable bid for the plant. On October 3, 2022, the Debtors and their advisors met with the Consenting Holders to discuss the Debtors' ongoing liquidity needs and to request the remaining $17 million of funding contemplated by the September 2022 Funding Request. On October 5, the Debtors learned that certain of the Consenting Holders are currently unwilling to fund their remaining share of the September 2022 Funding Request. The other Consenting Holders are willing to continue funding these cases and have agreed to provide the LIFO DIP Facility on a senior priority basis. Recognizing it would take time to negotiate and obtain approval of the LIFO DIP Facility, the Funding Holders also agreed to fund $6.8 million of the September 2022 Funding Request under the Existing DIP Facility to bridge the Debtors to approval of the LIFO DIP Facility. Approximately $10 million of the funding contemplated under the LIFO DIP Facility has already been approved by the Court as part of the September 2022 Funding Request, and will now simply be made under the new facility rather than the old one. As of the filing of the Motion, the Debtors had an aggregate principal amount of $60.5 million of indebtedness outstanding under the Existing DIP Facility, plus accrued and unpaid interest and reimbursable costs and expenses. In addition, the Debtors had an aggregate principal amount of $343.85 million of prepetition secured bond debt, plus accrued and unpaid interest and reimbursable costs and expenses related thereto. The prepetition secured bond debt was incurred to finance the construction and operation of the Debtors' MDF plant and was issued by the California Pollution Control Financing Authority. Pursuant to the Indenture, dated as of October 14, 2021, by and between CalPlant and the Existing DIP Trustee, CalPlant issued an Existing DIP Bond in the principal amount of $7.2 million. Pursuant to a First Supplemental Indenture, dated as of November 2, 2021, by and between CalPlant and the Existing DIP Trustee, CalPlant issued an additional Existing DIP Bond in the principal amount of $30.2 million. Pursuant to the Second Supplemental Indenture, dated as of April 5, 2022, by and between CalPlant and the Existing DIP Trustee, CalPlant issued an additional Existing DIP Bond in the principal amount of $15 million. Pursuant to the Third Supplemental Indenture, dated as of September 29, 2022, by and between CalPlant and the Existing DIP Trustee, CalPlant issued an additional Existing DIP Bond in the principal amount $1.3 million. Pursuant to the Fourth Supplemental Indenture, dated as of October 12, 2022, by and between CalPlant and the Existing DIP Trustee, CalPlant issued an additional Existing DIP Bond in the principal amount of $6.8 million. The Postpetition Bridge Bonds were purchased only by the Funding Holders and the Debtors are seeking authority to treat the Postpetition Bridge Bonds as issued under the LIFO DIP Facility. The Existing DIP Bonds are secured by a senior, secured, priming lien on the Postpetition Collateral. The liens securing the LIFO DIP Facility have priority over all other liens against the Debtors' assets, both prepetition and postpetition. As set forth in the Existing DIP Orders, the Debtors have already provided the Collateral Agent and Other Lienholders with various forms of adequate protection to protect against the postpetition diminution in value of the Prepetition Senior Bond Collateral and the Other Collateral, respectively, including the provision of adequate protection liens and the adequate protection superpriority claims. The Debtors did not provide any express adequate protection to the holders of Permitted Liens because those liens were not subordinated to the Existing DIP Facility. The Debtors submit the funding provided by the LIFO DIP Facility will serve as additional adequate protection for their secured creditors, because it provides the liquidity needed for the Debtors to explore and implement a value-maximizing strategy for monetizing their assets and chart a path towards emergence from chapter 11. In addition, without the proposed LIFO DIP Facility, these estates could be required to undertake a liquidation process on a highly expedited basis and, in that scenario, secured creditor recoveries would likely be materially impaired. The proposed LIFO DIP Facility therefore mitigates the risk of an expedited liquidation and, by avoiding that possible near-term outcome, provides adequate protection to secured creditors. A copy of the motion is available at https://bit.ly/3F480eu from PacerMonitor.com. About CalPlant CalPlant I, LLC -- http://www.eurekamdf.com/-- is a Northern California-based company focused on manufacturing sustainably sourced building products, including the creation of the world's first no-added-formaldehyde, rice straw-based medium density fiberboard, Eureka MDF. CalPlant and its predecessor company, CalAg, LLC, have spent many years researching, developing, and patenting a process to make high-quality MDF using annually renewable rice straw as the feedstock, the disposal of which has posed environmental issues in California for decades. CalPlant I and CalPlant I Holdco, LLC sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11302) on Oct. 5, 2021. The cases are handled by Honorable Judge John T. Dorsey. CalPlant I Holdco listed up to $100 million in assets and up to $50,000 in liabilities as of the bankruptcy filing while CalPlant I listed as much as $500 million in both assets and liabilities. The Debtors tapped Morrison & Foerster, LLP as bankruptcy counsel; Morris James, LLP as local bankruptcy counsel; Paladin Management Group as financial advisor; and KCoe Isom, LLP as auditor and tax services provider. Prime Clerk, LLC is the claims, noticing and administrative agent. CASA SYSTEMS: S&P Lowers ICR to 'CCC+', On CreditWatch Negative --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Casa Systems Inc. to 'CCC+' from 'B-' and placed it on CreditWatch with negative implications. At the same time, S&P lowered its issue-level rating on its first-lien term loan to 'CCC+' from 'B-'. The '3' recovery rating on the term loan is unchanged. The CreditWatch negative placement signals an at least 50% chance that S&P could lower its ratings on Casa over the next 90 days if it fails to successfully refinance its upcoming maturity before going current on Dec. 14, 2022. The downgrade reflects Casa's continued underperformance and our view that its capital structure is not sustainable without a significant improvement in profitability. Casa's revenue declined roughly 38% over the first six months of fiscal 2022 primarily due to supply constraints. In addition, decreased operating leverage from lower revenue, inflationary pressures on its input costs arising from supply chain disruptions, and increased spending around research and development activities led to negative EBITDA and only modest levels of positive free cash flow. While this weak operating performance does not entirely reflect the strong demand, its order backlog, or the growth prospects its 5G and software solutions have, it does highlight that its operating prospects are largely dependent on external factors beyond Casa's control (the quantities and prices of raw materials and customer spending patterns). Considering that Casa now carries S&P Global Ratings-adjusted leverage of roughly 15x for the trailing 12 months ended June 30, 2022, and that it has withdrawn its fiscal 2022 outlook due to ongoing business and economic headwinds, prospects for near-term deleveraging are highly uncertain. S&P now considers its capital structure to be unsustainable. The CreditWatch negative placement reflects the elevated refinancing risk Casa is now facing with a looming debt maturity. Casa's first-lien term loan, totaling roughly $275 million as of June 30, 2022, will come due in less than 15 months, on Dec. 20, 2023. S&P said, "Since cash balances are currently insufficient to cover the maturity and we see limited prospects for free cash flow generation, we assume Casa will be required to refinance this obligation to avoid a default. Although we think that Casa's lenders should view the $200 million of cash it currently retains, its notable contract wins, and the growth potential of its 5G offerings favorably, continued business underperformance or economic and geopolitical uncertainties could complicate access to debt markets and challenge Casa's ability to execute a successful refinancing." CreditWatch In resolving the CreditWatch listing, S&P will be monitoring Casa's progress or lack thereof toward extending or refinancing its term loan and also plan to review the company's earnings release for the third quarter of fiscal 2022. The CreditWatch listing signals the potential for an at least one notch downgrade if it fails to successfully refinance its upcoming term loan maturity before going current on Dec. 20, 2022, in a manner that we believe its operating performance can support and would not view as distressed, which would be tantamount to a default. S&P intends to resolve the CreditWatch listing within the next 90 days. ESG credit indicators: E-2, S-2, G-2 CELSIUS NETWORK: Gets Formal Testimony Request From Federal Jury ---------------------------------------------------------------- Investing.com reports that according to a new finding by Bloomberg, the insolvent cryptocurrency lender Celsius Network Ltd. is under investigation by US authorities and various federal regulators. The probes, made public in court documents this month, give an insight into Celsius's difficulties with the law as it tries to restructure. In early October 2022, a paper presented by lawyers during Celsius' bankruptcy proceedings revealed that the company received a "federal grand jury subpoena" from the US District Court for the Southern District of New York. Contextually, a federal grand jury subpoena is a formal request for testimony, documents, or both issued by a federal district court judge at the request of a federal prosecutor. Bloomberg report also hinted that the company received inquiries from other financial regulatory bodies, including Commodity Futures Trading Commission, the Securities and Exchange Commission, and Federal Trade Commission. Although Celsius said in a press statement that it is "cooperating with all regulatory inquiries, and regulators are key stakeholders" in their reorganization. Recall that Celsius stopped client withdrawals in June to prevent a user panic run. The following month, the company filed for bankruptcy. Celsius has been one of the most well-known casualties of the dramatic selloff in digital assets, partially caused by the failure of the Terra blockchain in May 2022. The bankrupt business came under fire from consumers for its failed marketing and management. Recent reports suggest that the company is considering selling part or all of its assets to repay customers. Furthermore, Coin Edition reported last month that Celsius creditors were lamenting that the bankruptcy process was overly customer-focused. About Celsius Network Celsius Network LLC -- http://www.celsius.network/-- is a financial services company that generates revenue through cryptocurrency trading, lending, and borrowing, as well as by engaging in proprietary trading. Celsius helps over a million customers worldwide to find the path towards financial independence through a compounding yield service and instant low-cost loans accessible via a web and mobile app. Celsius has a blockchain-based fee-free platform where membership provides access to curated financial services that are not available through traditional financial institutions. The Celsius Wallet claims to be one of the only online crypto wallets designed to allow members to use coins as collateral to get a loan in dollars, and in the future, to lend their crypto to earn interest on deposited coins (when they're lent out). Crypto lenders such as Celsius boomed during the COVID-19 pandemic, drawing depositors with high interest rates and easy access to loans rarely offered by traditional banks. But the lenders' business model came under scrutiny after a sharp sell-off in the crypto market spurred by the collapse of major tokens terraUSD and luna in May 2022. New Jersey-based Celsius froze withdrawals in June 2022, citing "extreme" market conditions, cutting off access to savings for individual investors and sending tremors through the crypto market. The list of major crypto firms that have filed for bankruptcy protection in 2022 now includes Celsius Network, Three Arrows Capital and Voyager Digital. Celsius Network LLC and its subsidiaries sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 22-10964) on July 14, 2022. In the petition filed by CEO Alex Mashinsky, the Debtor estimated assets and liabilities between $1 billion and $10 billion. Kirkland & Ellis LLP is serving as legal counsel, Centerview Partners is serving as financial advisor, and Alvarez & Marsal is serving as restructuring advisor to Celsius. Stretto, the claims agent, maintains the page https://cases.stretto.com/celsius CEREMONY SALON: Wins Cash Collateral Access Thru Oct 13 ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of North Carolina, Durham Division, authorized Ceremony Salon, LLC to use cash collateral on an interim basis in accordance with the budget, with a 10% variance, through the earliest of: (i) the entry of a final order authorizing the use of cash collateral, (ii) the entry of a further interim order authorizing the use of cash collateral, (iii) December 14, 2022, (iv) the entry of an order denying or modifying the use of cash collateral, or (v) the occurrence of a Termination Event. These events constitute "Events of Termination": a. The effective date of any confirmed Chapter 11 plan in the proceeding; b. Conversion of the case to another Chapter of the Bankruptcy Code or removal of the Debtor from possession; c. The entry of further Court orders regarding the subject matter hereof; d. Dismissal of the proceeding; or e. Occurrence of an event of default that is not timely cured. The Secured Parties expressly reserved the right to seek further adequate protection of their interests and to seek a later determination that the provisions of this order do not constitute adequate protection of its interests. The Secured Parties expressly are reserved their rights to seek further relief under 11 U.S.C. sections 361, 362, and 363. The Debtor expressly reserves its rights to seek additional use of cash collateral beyond the stated term of the Order. The Debtor requires the use of cash collateral to pay its operational needs including the cost of maintaining the business, payment of adequate protection payments, and other normal expenses incurred in the ordinary course of the Debtor's business and as a result of the filing of the Chapter 11 proceeding. On May 26, 2020, the Debtor and the U.S. Small Business Administration entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's tangible and intangible personal property and perfected by UCC Financing Statement 20200061464G filed with the North Carolina Secretary of State. The Debtor is unsure what the balance of the loan is. On June 4, 2021, the Debtor and Expansion Group entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's assets "now or hereafter acquired" and perfected by UCC Financing Statement 20210084467F filed with the North Carolina Secretary of State on June 24, 2021. The Debtor believes the balance of the Expansion Group loan is approximately $33,950. On June 23, 2021, the Debtor and Fox Capital Group entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's accounts "now or hereafter owned or acquired" and perfected by UCC Financing Statement 20210095853G filed with the North Carolina Secretary of State on July 16, 2021. The Debtor believes the balance of the Fox loan is approximately $12,104. On July 14, 2021, the Debtor and Fox Capital Group entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's "present and future accounts" and perfected by UCC Financing Statement 20210110415J filed with the North Carolina Secretary of State on August 13, 2021. The Debtor believes the balance of this loan is approximately $11,716. On July 16, 2021, the Debtor and DeltaBridge Funding entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's "assets, including proceeds and products" and perfected by UCC Financing Statement 20210116647A filed with the North Carolina Secretary of State on August 26, 2021. The Debtor believes the balance of the Chrome Capital loan is approximately $5,914. On August 9, 2021, the Debtor and Chrome Capital Advance entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's "present and future accounts" and perfected by UCC Financing Statement 20210173528B filed with the North Carolina Secretary of State on December 29, 2021. The Debtor believes the balance of the Chrome Capital loan is approximately $17,353. On August 12, 2021, the Debtor and Capytal.com entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's future receivables and perfected by UCC Financing Statement 20210123874A filed with the North Carolina Secretary of State on September 13, 2021. The Debtor believes the balance of the Capytal loan is approximately $4,320. On August 25, 2021, the Debtor and Global Funding Experts entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's assets "now owned or thereafter acquired" and perfected by UCC Financing Statement 20210154103M filed with the North Carolina Secretary of State on November 15, 2021. The Debtor believes the balance of the Global Funding loan is approximately $16,787. On September 10, 2021, the Debtor and Green Grass Capital entered into a loan and security agreement. The loan was secured by a blanket lien on all the Debtor's assets "now owned or hereafter acquired" and perfected by UCC Financing Statement 20220013755J filed with the North Carolina Secretary of State on February 2, 2022. The Debtor believes the balance of the Green Grass loan is approximately $3,636. As adequate protection, the IRS will receive monthly payments of $2,065. The Secured Parties are granted a post-petition replacement lien in the Debtor's post-petition property of the same type which secured the indebtedness of the Secured Party pre-petition. The security interests and liens granted to the Secured Party: (i) are and will be in addition to all security interests, liens and rights of set-off existing in favor of the Secured Party on the Petition Date, if any; and (ii) will secure the payment of the indebtedness owing to the Secured Party in an amount equal to the aggregate cash collateral used or consumed by the Debtor. The Debtor will preserve, protect, maintain and adequately insure all its assets and continue to operate in the ordinary course of business. As additional adequate protection, the Debtor will keep all of its personal property insured for no less than the amounts of the pre-petition insurance and maintain appropriate workers compensation and general liability insurance. The Debtor will timely pay all insurance premiums related to any and all of the collateral securing the claims of the Secured Parties. A further cash collateral hearing is scheduled for December 14 at 9:30 a.m. A copy of the order and the Debtor's budget for the period from October 14 to December 14, 2022, is available at https://bit.ly/3gt0CPF from PacerMonitor.com. The Debtor projects $140,000 in revenue and $126,280 in total expenses for the period. About Ceremony Salon, LLC Ceremony Salon, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.C. Case No. 22-00492) on March 8, 2022. The case was transferred to the Middle District of North Carolina (Bankr. M.D.N.C. Case No. 22-00492) on March 21, 2022. In the petition signed by Rachel Lynn Radford, member-manager, the Debtor disclosed up to $50,000 in assets and up to $500,000 in liabilities. Judge Lena Mansori James oversees the case. Travis Sasser, Esq., at Sasser Law Firm is the Debtor's counsel. CHAZAR 410: Nov. 8, 2022 Bid Deadline for San Antonio Property -------------------------------------------------------------- Hilco Real Estate, LLC, announces November 8, 2022, as the qualified bid deadline for the bankruptcy sale of 52± acres of development land located in a fast-growing region of San Antonio, Texas. The property will be sold subject to a court-approved stalking horse bid of $5,835,000. Set along heavily-traveled Loop 410 with over 60,000 vehicles daily, this property offers both residential and commercial development opportunities in San Antonio's up-and-coming southside. The commercial portion totals approximately 12.5 acres and offers high visibility and easy access with 3,600 feet of interstate frontage. The residential segment totals almost 40 acres, separated into two distinct parcels measuring approximately 16 acres and 23 acres, respectively. The city of San Antonio is singularly-focused on this corridor as the next area for explosive growth, and, as such, has designated the region as a "Tax Incremental Reinvestment Zone" (TIRZ) and "Inner-City Reinvestment/Infill Policy" (ICRIP) area. The purpose of these incentives is to promote a vibrant mix of commercial, residential, educational and cultivate development within this portion of Loop 410. The incentives also provide large rebates that will significantly increase profitability for the property owner. The property is proximate to VIDA, a new 600-acre, mixed-use development that will include 1,600 single family residential lots, 1,400 multifamily units, 1,000 student housing units and 1,000,000 square feet of commercial space. Just 20 minutes from downtown San Antonio and minutes from Texas A&M University - San Antonio (an estimated 6,000 students enrolled annually), Palo Alto College (an estimated 9,850 students enrolled annually), and the Toyota Motor Manufacturing Texas facility (an estimate 2,000 current employees), this corridor benefits from an ideal mix of retail consumers and residential tenants and is expected to grow significantly in the coming years. According to the latest data from the U. S. Census Bureau, San Antonio was ranked as the fastest-growing U.S. city in terms of numeric population growth between 2021 and 2022 and the second from 1990 to 2000. San Antonio serves as the seat of Bexar County and the center of the San Antonio-New Braunfels metropolitan statistical area with a population exceeding an estimated 2.6 million as of 2021. Through a combination of affordable housing, low cost of living, proximity to major employers, rich cultural history/heritage, high safety rating and eclectic food scene, San Antonio provides an ideal backdrop to live, work and play. The sale is being conducted by Order of the U.S. Bankruptcy Court Northern District of Texas (Ft. Worth), Bankruptcy Case #: 21-42132-mxm11, and is subject to a minimum stalking horse overbid of $5,835,000. Qualified bids must be received on or before the deadline of November 8, 2022 at 4:00 p.m. (CT) and must be submitted on the court-approved purchase agreement in compliance with the bankruptcy court approved bid procedures available for review and download from Hilco Real Estate's website. Steve Madura, senior vice president at Hilco Real Estate, stated, "These development parcels are located within one of the hottest markets in the nation and provide an incredible opportunity for a variety of developers to get in on the action." He continued, "These sites represent large interstate development tracts with significant frontage along the sought-after Loop 410 corridor. They provide a variety of potential future uses together with city incentives – characteristics that should make this property very interesting to developers, investors and end users alike." About Chazar 410 Holdings Fort Worth, Texas-based Chazar 410 Holdings, LLC filed its voluntary petition for Chapter 11 protection (Bankr. N.D. Tex. Case No. 21-42132) on Sept. 3, 2021, listing as much as $10 million in both assets and liabilities. Judge Mark X. Mullin oversees the case. Forshey & Prostok, LLP serves as the Debtor's legal counsel. CHICAGO DOUGHNUT: Court Approves Amended Disclosure Statement ------------------------------------------------------------- Judge Natalie M. Cox has entered an order approving the Amended Disclosure Statement explaining the Plan of Chicago Doughnut Franchise Company, LLC. The Plan confirmation hearing will be held on Nov. 15, 2022 at 9:30 a.m. Any objections to confirmation of the Plan must be filed and served no later than Nov. 1, 2022. The deadline to file objections to Plan Confirmation will be on Nov. 1, 2022 by 10:00 p.m. Pacific Time. The deadline for Creditors to submit ballots will be on Nov. 1, 2022 by 10:00 p.m. Pacific Time. The deadline for the Debtor to file a confirmation brief will be on Nov. 8, 2022 by 10:00 p.m. Pacific Time. The deadline to file the ballot summary will be on Nov. 8, 2022 by 10:00 p.m. Pacific Time. Attorney for the Debtor: Gregory L. Wilde, Esq. WILDE & ASSOCIATES, LLC. 7473 W. Lake Mead Blvd., #100 Las Vegas, NV 89128 Tel: (702) 562-1202 E-mail: greg@wildelawyers.com About Chicago Doughnut Franchise Company Chicago Doughnut Franchise Company, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case No. 21-12278) on April 30, 2021. At the time of the filing, the Debtor disclosed total assets of up to $100,000 and total liabilities of up to $500,000. Judge Natalie M. Cox oversees the case. Wilde & Associates, LLC, serves as the Debtor's legal counsel. CONSOLIDATED ELEVATOR: Commences Subchapter V Case -------------------------------------------------- Consolidated Elevator Company Inc. filed for chapter 11 protection in the District of Central California. The Debtor elected on its voluntary petition to proceed under Subchapter V of chapter 11 of the Bankruptcy Code. The Debtor provides elevator repair services throughout Southern California. The Debtor maintains an office and shop in San Dimas, CA. David Sandoval is the Chief Financial Officer and 33.33% shareholder. Thomas G. Wallis and Thomas C. Wallis are the other shareholders (33.33% each) and officers. They are also employed as mechanics. The Debtor currently has 12 employees, and that number fluctuates from time to time. Events Leading to Bankruptcy From the inception, the Debtor has associated with the International Union of Elevator Constructors. The Debtor and the Union entered into a collective bargaining agreement on June 17, 2017, whereby the Union provides trainee mechanics ("helpers") and regular mechanics, and the Debtor pay pursuant to the terms of the Agreement. Initially, the Debtor requested two Helpers from the Union. The Debtor trained these Helpers. As the Debtor started to grow, it requested from the Union additional Union Mechanics. Thereafter, the Debtor started to have issues with the Union Mechanics. The Debtor was not provided with quality employees. Although these employees would work minimal hours, the Debtor was still required to pay full wages, plus the benefits and make the contribution payments to the Union pursuant to the Agreement. The Agreement became a significant liability for the Debtor. Not only did these Union Mechanics not work full-day, but they failed to complete jobs on time. This led the Debtor to operate in the negative on those projects. The Debtor attempted to resolve the situation by firing those employees, but the Union provided even less competent Union Mechanics. The Agreement prevented the Debtor from disciplining or cutting the hours of those employees. As the Covid-19 Worldwide pandemic hit in March 2022, the Debtor was short-handed with competent mechanics and work slowed significantly. The Debtor then fell behind on the contribution payments to the Union. Thereafter, the Debtor entered into an agreement with the Union to cure the arrears. The Debtor was making double payments for the regular contribution payments and the arrear payments. During Covid, the Union prevented the Debtor from cutting hours for the Union Mechanics, even though there was limited work. However, the Debtor was also in a situation where it did not want to lose quality mechanics, so it was forced to pay over scale in order to keep them employed. As such, this caused the Debtor's payroll to increase while its revenue decreased. The Debtor's mechanics were considered essential employees, which allowed it to keep its doors open. However, its customers and vendors were not. The Debtor lost jobs. Even with the jobs the Debtor maintained, it had difficulty finding vendors open to supply parts for those jobs. As a result, the Debtor fell behind and then stopped making its payments to the Union in early 2021. Although the Union took no action for nearly a year, in March 2022 in mid-2022, the Union pulled all of the Union Mechanics and expelled the Wallis from the Union. Thereafter, the Union sued and obtained a judgment against the Debtor and its three owners. Nonetheless, there is still some ambiguity as to whether the Debtor and the Union are bound by the Agreement because the Agreement provides that the parties must give 60-day notice to terminate, which was not done. The loss of the Union was ultimately a turning point for the Debtor. Because California lacks qualified mechanics, the State of California and the Union consented for the Debtor to convert their helpers into non-union temporary mechanics ("TMs"). The Debtor benefited in this system as it was able to train and teach their own mechanics through the TMs. The Debtor is now cash flow positive. According to court filings, Consolidated Elevator Company 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 meeting of creditors under 11 U.S.C. Section 341(a) is slated for Nov. 7, 2022, at 8:30 AM at UST-LA2, TELEPHONIC MEETING. CONFERENCE LINE:1-866-816-0394, PARTICIPANT CODE:5282999. Proofs of claim are due by Dec. 23, 2022. About Consolidated Elevator Company Based in San Dimas, California, Consolidated Elevator Company Inc. provides elevator maintenance services. The Company offers installations, modernizations, repairs, violations corrections, and building code compliance and licensed private inspection services. Consolidated Elevator Company Inc. filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-15611) on Oct. 14, 2022. In the petition filed by David J. Sandoval, as CFO, the Debtor reported assets and liabilities between $1 million and $10 million. Mark Sharf has been appointed as Subchapter V trustee. The Debtor is represented by Matthew D. Resnik of RHM Law LLP. CONSOLIDATED ELEVATOR: Seeks Cash Collateral Access --------------------------------------------------- Consolidated Elevator Company, Inc. asks the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, for authority to use cash collateral on an interim basis from October 14 through December 31, 2022. The Debtor requires the use of cash collateral to pay necessary expenses in the amount of $60,147. From the inception, the Debtor has associated with the International Union of Elevator Constructors. The Debtor and the Union entered into a collective bargaining agreement on June 17, 2017, whereby the Union provides trainee mechanics and regular mechanics, and the Debtor pay pursuant to the terms of the Agreement. As the COVID-19 Worldwide pandemic hit in March 2022, the Debtor was short-handed with competent mechanics and work slowed significantly. The Debtor then fell behind on the contribution payments to the Union. Thereafter, the Debtor entered into an agreement with the Union to cure the arrears. The Debtor was making double payments for the regular contribution payments and the arrear payments. During COVID-19, the Union prevented the Debtor from cutting hours for the Union Mechanics, even though there was limited work. However, the Debtor was also in a situation where it did not want to lose quality mechanics, so it was forced to pay over scale in order to keep them employed. As such, this caused the Debtor's payroll to increase while its revenue decreased. The Debtor's mechanics were considered essential employees, allowing the Debtor to keep its doors open. However, its customers and vendors were not. The Debtor lost jobs. Even with the jobs the Debtor maintained, it had difficulty finding vendors open to supply parts for those jobs. As a result, the Debtor fell behind and then stopped making its payments to the Union in early 2021. Although the Union took no action for nearly a year, in March 2022 in mid-2022, the Union pulled all of its member Mechanics and expelled Thomas G. Wallis and Thomas C. Wallis from the Union. Thereafter, the Union sued and obtained a judgment against the Debtor and its three owners. David Sandoval is the Debtor's Chief Financial Officer and 33.33% shareholder. Thomas G. Wallis and Thomas C. Wallis are the other shareholders (33.33% each) and officers. They are also employed as mechanics. Nonetheless, there is still some ambiguity as to whether the Debtor and the Union are bound by the Agreement because the Agreement provides that the parties must give 60-day notice to terminate, which was not done. The loss of the Union was ultimately a turning point for the Debtor. Because California lacks qualified mechanics, the State of California and the Union consented for the Debtor to convert their helpers into non-union temporary mechanics. The Debtor benefited in this system as it was able to train and teach their own mechanics through the TMs. The Debtor is now cash flow positive. The Debtor believes that Kalamata Capital Group LLC, U.S. Small Business Administration, an unknown entity, and the Union assert an interest in the Debtor's cash collateral. Kalamata and the SBA appear to have blanket liens on all assets of the estate. A creditor filed an UCC on October 29, 2020. However, the Debtor does not believe it is a debt of the estate and believes the UCC was filed by mistake. The Union, as a judgment creditor, appears to have a lien on the Debtor's cash on hand. The Debtor estimates the value of the cash collateral is $1,530,237 (per the balance sheet, as of September 30, 2022) and the liens secured on the cash collateral total $572,107. There is equity of at least $958,130, per the book value, with an equity cushion of 63% exceeding all liens. On the other hand, the Union, as a judgment creditor, can only assert a lien on the Debtor's cash on hand, which was $50,000, as of September 30, 2022. Thus, the Union will probably not be adequately protected by just the cash on hand at the petition date because the Secured Creditors have a higher priority than the Union and they would seek to collect from cash on hand first before attempting to liquidate other assets. However, the Debtor believes the judgement creditors are adequately protected by the continued and uninterrupted operation of the business. A copy of the motion is available at https://bit.ly/3CPmRa1 from PacerMonitor.com. About Consolidated Elevator Company, Inc. Consolidated Elevator Company, Inc. is a service company and provides elevator repairs services. Its employees consist of mechanics, salespeople, and support staff. It sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-15611) on October 14, 2022. In the petition signed by David J. Sandoval, CFO, the Debtor disclosed up to $10 million in both assets and liabilities. Matthew D. Resnik, Esq., at RHM Law, LLP, is the Debtor's counsel. Judge Sandra R. Klein oversees the case. COPPER REALTY: Taps The Anderson Law Firm as Special Counsel ------------------------------------------------------------ Copper Realty, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Texas to employ The Anderson Law Firm, PLLC as its special counsel. The Debtor requires a special counsel to handle various tenant matter and general corporate issues. Brian Anderson, Esq., the sole owner of the firm, will be paid at an hourly rate of $250, plus reimbursement for out-of-pocket expenses incurred. The firm has been paid a retainer of $500. Mr. Anderson 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: Brian Anderson, Esq. The Anderson Law Firm PLLC 5900 South Lake Forest Drive, Ste. 300 McKinney, TX 75070 Telephone: (972) 299-0833 Email: brian@andersonlawfirmpllc.com About Copper Realty Copper Realty, LLC is the fee simple owner of 15 real properties in Dallas and Irving, Texas, having an aggregate current value of $2.79 million. Copper Realty filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Texas Case No. 22-40820) on July 1, 2022, with $2,832,394 in assets and $2,686,750 in liabilities. Manish Shrivastava, managing member, signed the petition. Judge Brenda T. Rhoades oversees the case. The Debtor tapped Eric A. Liepins, Esq., as bankruptcy counsel and Brian Anderson, Esq., at The Anderson Law Firm PLLC as special counsel. CUSTOM ALLOY: Seeks Cash Collateral Access, $2MM DIP Loan --------------------------------------------------------- Custom Alloy Corporation asks the U.S. Bankruptcy Court for the District of New Jersey for authority to use cash collateral and obtain post-petition financing. The Debtor seeks to obtain secured, post-petition financing from Euro American Funding Inc., or its affiliate, consisting of a credit facility in the aggregate principal amount of up to $2 million. The DIP Loan will be for six months, subject to another six-month extension upon request of the Debtor and consent of the DIP Lender. The Debtor requires access to cash collateral and the DIP loan for the purpose of funding the Debtor's general operating and working capital needs and the administration of the Debtor's Chapter 11 case. The Debtor asserts it is well positioned for growth, given the significant barriers to entry in its market, and given the Navy's need for manufacturers for mission critical applications and the recent shift from castings to forgings and its preference for sourcing form domestic suppliers. The Debtor's current liquidity problems arise out of a decline in sales after calendar year 2019, the pivot from oil and gas to military and defense applications, and the COVID-19 pandemic. The Debtor has approximately 185 employees, and operates in New Jersey, in Michigan through a wholly owned subsidiary, CAC Michigan, LLC, who is also a debtor before the Court, and in North Carolina. The Debtor's assets are subject to a first priority, fully protected secured claim in favor of CIBC Bank USA. As of the commencement of the bankruptcy proceeding, CIBC was owed approximately $25 million. CIBC's lien attaches to substantially all of the Debtor's assets. CIBC also has a first priority collateral mortgage on non-debtor real property located at 3 Washington Avenue, High Bridge, NJ 08829, owned by an affiliate of the Debtor, 1742 Square Associates, Ltd., which serves as the Debtor's principal place of business. The value of the High Bridge property, based on an appraisal dated January 21, 2021, is $15.6 million. CIBC also is protected by the personal guarantees of Adam F. Ambielli; Adam M. Ambielli; Donald M. Burns; John Ambielli (deceased); and the corporate guarantees of the Debtor's two subsidiaries CAC New Jersey, LLC and CAC Michigan, LLC. Based on the results of an extensive marketing and sale process engaged in by CIBC in its capacity as a secured party seller, with the help of an investment banker, and with which the Debtor cooperated, and which has been ongoing since approximately April 2022, the Debtor notes, that maximum offer for the entirety of its assets on a going concern basis was approximately $19.3 million. That value represents the highest expression of interest generated to date through that sale process. If the marketing process is determinative of the value of the value of the Debtor's asset, the Debtor submits that CIBC is undersecured as of the commencement of the within bankruptcy proceeding, and that Barings is wholly unsecured. However, the Debtor's books and records reflect book value of accounts receivable and inventory of approximately $25.7 million and the Debtor's machinery and equipment was appraised in August 2021 for $8.8 million. The Debtor is analyzing this appraised value which may be adjusted downward by as much as $800,000. Based on these numbers, CIBC may be oversecured without consideration of the nondebtor real property. Notwithstanding the undersecured position of CIBC based on the purchase offers, due to the existence of more than $15 million in non-debtor collateral securing its claim, and the guarantees of numerous parties, the Debtor submits CIBC is more than adequately protected even in the unlikely event of the diminution of its cash collateral, or in circumstances of a subordination of its lien position by $2 million of DIP financing with priority senior to it. The non-debtor real property alone provides an equity cushion in favor of CIBC of approximately $10 million, calculated as the value of its claim against the Debtor, (approximately $25 million), less the value of the Debtor's collateral, leaving a $5.7 million deficiency after resort to the Debtor's assets, which deficiency is secured by $15.6 million in value of non-debtor real property. That protection in favor of CIBC is further enhanced by the guarantees. Barings BDC, Inc. is a junior priority secured creditor having a fully perfected lien on substantially all of the Debtor's assets, junior in priority to the senior priority lien of CIBC. As of the commencement of the bankruptcy proceeding, Barings is owed approximately $64.08 million. Based on the purchase offers, Barings is fully unsecured. Additionally, the Debtor is a party to numerous equipment financing agreements pursuant to which various lenders have perfected purchase money security interest in specific items of equipment. Those secured creditors include, based on the Debtor's counsel's review of filed financing statements: (i) Bank of the West; (ii) BB&T Commercial Equipment Capital Corp.; (iii) Cisco Systems Capital Corporation; (iv) ENGS Commercial Finance; (v) Financial Agent Services; (vi) HYG Financial Services, Inc.; (vii) Leaf Capital Funding, LLC; (viii) Lease Corporation of America; (ix) Midland States Bank; and (x) U.S. Bank Equipment Finance. The Debtor's unsecured claims, excluding the deficiency claims of secured creditors, are in an approximate amount of $6 million, and include amounts owed to trade suppliers, landlords, and utilities. Although the Debtor has not yet prepared its Schedules and Statement of Financial Affairs, its creditor matrix identifies approximately 662 creditors and parties in interest. The Debtor anticipates being able to satisfy its ordinary course operating expenses with the use of cash collateral, and while the cash collateral position of CIBC does not decline. Even if it does decline, the significant equity cushion provided by the High Bridge real property and the guarantees, adequately protects CIBC. Thus, the Debtor submits a replacement lien on its assets, and a superpriority administrative expense claim pursuant to 11 U.S.C. section 507(b) to the extent of any diminution in the value of CIBC's collateral, excluding avoidance actions, sufficiently provides CIBC with adequate protection. Because, based on the purchase offers, Barings is wholly unsecured, the Debtor does not believe adequate protection is required vis-a-vis Barings in connection with the use of cash collateral. Nevertheless, to the extent on any diminution in the value of its collateral, the Debtor is prepared to provide Barings with a junior priority replacement lien on its assets as adequate protection and a superpriority administrative expense claim pursuant to 11 U.S.C. section 507(b) to the extent of any diminution in value of Barings collateral, excluding avoidance actions, sufficiently provides Barings with adequate protection. A copy of the motion is available at https://bit.ly/3Slj6yE from PacerMonitor.com. About Custom Alloy Corporation Custom Alloy Corporation is a manufacturer of specialty metals for seamless and welded pipe fittings & forgings, predominantly for customers requiring time-critical maintenance or repair. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. N. J. Case No. 22-18143) on October 13, 2022. In the petition signed by Adam M. Ambielli, CEO and president, the Debtor disclosed up to $50 million in assets and up to $100 million in liabilities. Judge Michael B. Kaplan oversees the case. Jonathan I. Rabinowitz, Esq., at Rabinowitz, Lubetkin & Tully, LLC, is the Debtor's counsel. DATG PIZZERIA: Files Emergency Bid to Use Cash Collateral --------------------------------------------------------- Datg Pizzeria, Inc. asks the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Division, for authority to use cash collateral on which Western Alliance Bank a/k/a Alliance Bank of Arizona might claim to hold a lien. The Debtor requires the use of the cash collateral for the continued operation of its business in the ordinary course. Western Alliance filed a Uniform Commercial Code Financing Statement Form on September 20, 2011. The Financing Statement asserts a security interest in all of the Debtor's inventory, accounts, equipment, general intangibles and fixtures. The Debtor is a guarantor of a master loan agreement entered on or about August27, 2021, entitled Second Amended and Restated Loan Agreement. Pursuant to the terms of the loan, West Alliance agreed to loan up to $17,710,575 and the loan is cross collateralized against various entities, including the Debtor. Subsequently on August 27, 2021, a Fifth Amended and Restated Promissory Note was executed with Western Alliance. The principal amount of the loan is $15,939,517 including any interest. The October 5, 2022, Payment Guarantee provides that the Debtor is a guarantor of the Fifth Amended and Restated Promissory Note, but the obligation is contingent upon there being a default in the underlying loan. In order to (i) adequately protect Western Alliance, in connection with the Debtor's use of the cash collateral, and (ii) to provide Western Alliance with additional adequate protection in respect to any decrease in the value of its interests in the cash collateral resulting from the stay imposed under section 362 of the Bankruptcy Code or the use of the cash collateral by the Debtor, the Debtor would offer as adequate protection of any lien that Western Alliance may have on cash collateral, a priority post-petition lien on cash generated by the Debtor post-petition, in the same priority as any pre-petition lien, but only to the extent that Western Alliance has a pre-petition lien on cash collateral. A copy of the motion and the Debtor's budget is available at https://bit.ly/3THo2yY from PacerMonitor.com. The Debtor projects $1,810,275 in total income and $1,746,809 in total disbursements for six months. About Datzg Pizzeria, Inc. Datzg Pizzeria, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-17790-EPK) on October 6, 2022. In the petition signed by Joseph M. Ciolli, president, the Debtor disclosed up to $500,000 in both assets and liabilities. Alan R. Crane, Esq., at FurrCohen P.A., is the Debtor's legal counsel. EMPLOYBRIDGE HOLDING: Fitch Affirms 'B+' IDR Amid Bluecrew Deal --------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of EmployBridge Holding Company (EmployBridge) at 'B+' following the announcement that the company would acquire Bluecrew. The Rating Outlook remains Stable. Fitch has also affirmed the senior secured term loan at 'BB-'/'RR3'. The ratings affect approximately $920 million of term-loan debt outstanding. KEY RATING DRIVERS End Market Concentration, Customer Diversification: Fitch considers EmployBridge's product concentration a limiting factor for the IDR. The company generates nearly all of its revenue from U.S. staffing solutions for the light industrial market (e.g., warehouses, distribution centers, e-commerce fulfilment centers). The focus on these areas leaves it exposed to higher risk versus other more-diversified services companies. Customer concentration positively affects the IDR, as there is material diversification with no customer representing more than 3% of revenue. The Bluecrew acquisition has the potential to improve the company's addressable market sectors, but this will take some time. Fragmented Industry: EmployBridge has meaningful scale among staffing companies, with $4 billion in revenue, roughly 13,000 customers and a talent pool approaching 500,000. However, the $136 billion U.S. staffing industry is highly fragmented and competitive, which Fitch believes is reflected in the company's low- to mid-single digit percentage EBITDA margins. EmployBridge only competes in the industrial component of the market and is among the largest competitors but still has less than 15% market share. Industry Cyclicality: The highly cyclical nature of the staffing industry is a key credit consideration that limits the IDR. The company could experience material negative headwinds in a recession and/or during an industrial slowdown, given its meaningful exposure to industrial end markets. Peers in the staffing space experienced revenue declines as high as 30%-40% during 2008-2009. EmployBridge was much smaller during the 2008 recession but reported its revenue and adjusted EBITDA down 9% and 12%, respectively, during 2020. While the pandemic conditions affected U.S. economic output and the company's financials during 2020, a more prolonged recession could have a more material impact. Low Margins: Fitch views the company's low margins as a constraining factor for the IDR. Fitch calculates EBITDA in the 3% to 5% range in recent years, and it is unlikely that this margin profile will change materially in the next several years. EBITDA and FCF margins are below those of certain peers Fitch reviews in the business services area. Moderate Leverage: Fitch-calculates gross debt/EBITDA will be in the mid 4x range at YE 2022, pro forma for the pending Bluecrew acquisition. Fitch projects it will fall slowly in the coming years, which is manageable for the rating category given positive projected FCF. This depends, of course, on capital allocation choices, including whether the sponsor takes dividends. Industry cyclicality and the largely transactional nature of the business imply higher risk versus other business services issuers Fitch rates. Solid Liquidity: Fitch expects the company to continue to generate positive FCF in the coming years, which should limit liquidity risk over the medium-term horizon. Given the cyclical nature of the business model, cash flows would be negatively affected during a prolonged downturn. However, the largely variable cost structure of the business should provide some buffer in a downside scenario. The company also has significant availability on its asset-backed revolver even after drawing on it for the Bluecrew acquisition. DERIVATION SUMMARY Fitch's ratings and Outlook for EmployBridge are supported by the company's sizable presence in the U.S. industrial staffing market and its asset-light business model that enables strong FCF flow-through from EBITDA. Fitch compares the company with a variety of high-yield business services issuers. Relative to other business services companies Fitch reviews, EmployBridge relies more heavily on transactional revenues and does not have a meaningful mix of contractual sales (although its business is generally stable during non-recessionary periods). Similar to other staffing companies, it operates a low-margin business that increases risk during periods of macro weakness. While gross leverage projected in the 4.0x to 5.0x range is moderate for the rating category, industry cyclicality, low margins and small scale constrain the IDR to the 'B+' rating category versus other business services companies that Fitch rates. KEY ASSUMPTIONS - Revenue essentially flat, assuming the economy contracts in 2023 and has a slow recovery; - EBITDA margin held constant, although if the Bluecrew acquisition is successful this is likely too conservative; - No acquisitions modelled while Bluecrew is integrated; - Gross leverage largely remains in the mid-4.0x to 5.0x range, with fluctuations tied to capital allocation priorities that could lean toward dividends or M&A over time. KEY RECOVERY RATING ASSUMPTIONS For entities rated 'B+' and below -- where default is closer and recovery prospects are more meaningful to investors -- Fitch undertakes a tailored, or bespoke, analysis of recovery upon default for each issuance. The resulting debt instrument rating includes a Recovery Rating or published 'RR' (graded from 'RR1' to 'RR6'), and is notched from the Issuer Default Rating accordingly. In this analysis, there are three steps: (i) estimating the distressed enterprise value (EV); (ii) estimating creditor claims; and (iii) distribution of value. Fitch assumed EmployBridge would emerge from a default scenario under the going concern approach versus liquidation. Key assumptions used in the recovery analysis are as follows: - EmployBridge's going-concern EBITDA of $168 million used in the recovery analysis assumes deterioration resulting from major customer losses and significant erosion of the labor markets; - An EBITDA multiple of 6.0x is used to calculate a post-reorganization valuation, which is validated by comparable trading multiples in the staffing industry (current and historical), M&A transactions in the space historically and reorganization multiples Fitch has seen historically; - Fitch assumes a fully drawn revolver in its recovery analysis and partially drawn letters of credit. Fitch does not rate these facilities, but they are senior to the term loan and therefore required in the recovery analysis; - The recovery analysis results in a 'BB-'/'RR3' issue and recovery ratings for the term loan, implying expectations for 51%-70% recovery. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch-calculated gross leverage, or total debt with equity credit/EBITDA, sustained below 4.0x; - (CFO-capex)/total debt with equity credit sustained above 7.5%; - Fitch could also reassess the rating with a material increase in EBITDA scale. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Fitch-calculated gross leverage, or total debt with equity credit/EBITDA, expected to be sustained above 5.0x; - (CFO-capex)/total debt with equity credit sustained below 2.5%; - Sustained EBITDA margin pressure to 3% or below could also lead to a negative rating action. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity: EmployBridge is well positioned from a liquidity perspective, with cash on its balance sheet, a sizable ABL revolver in place and positive FCF projected in the coming years. The company has a sufficient cash balance for operations and a $360 million ABL revolver. In 2Q 2022 the company put a new $160 million letter of credit facility in place (also ABL). This enhances the company's liquidity by freeing up availability on the existing revolver. The company generated positive FCF in 2021 and Fitch forecasts the company could generate strong positive FCF from 2022-2024, which further supports liquidity. Debt Structure: The company has a relatively simple debt capital structure, with a $925 million term loan and a $360 million ABL revolving facility. The ABL facility expires in 2027 and the term loan matures in 2028. All of the company's debt is floating rate. ISSUER PROFILE EmployBridge is one of the largest flexible workforce providers in the U.S., with a focus on light industrial, supply chain jobs including skilled manufacturing, forklift operators, pickers and material handlers, assemblers, technicians and other manufacturing and logistics type roles. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Debt Rating Recovery Prior ---- ------ -------- ----- EmployBridge Holding Co LT IDR B+ Affirmed B+ senior secured LT BB- Affirmed RR3 BB- EN DIAN DEVELOPMENT: Case Summary & One Unsecured Creditor ---------------------------------------------------------- Debtor: En Dian Development, LLC 29 East Pembroke Rd Danbury, CT 06811 Business Description: The Debtor is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: October 24, 2022 Court: United States Bankruptcy Court District of Connecticut Case No.: 22-50573 Debtor's Counsel: Daniel S. DiBartolome, Esq. DIBARTOLOME LAW FIRM 300 Federal Rd, Unit 108 Brookfield, CT 08804 Tel: 203-797-9903 Email: dan@dblflaw.com Total Assets: $2,190,261 Total Liabilities: $2,909,000 The petition was signed by Liqing Lin as member. The Debtor listed the City of Danbury Tax Collector as its only unsecured creditor. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/KCFOGFI/En_Dian_Development_LLC__ctbke-22-50573__0001.0.pdf?mcid=tGE4TAMA ENDO INT'L: Judge Defers Approval of $98-Mil. in Bonuses -------------------------------------------------------- Bob Fernandez of The Philadelphia Inquirer reports that a bankruptcy judge on Thursday, October 13, 2022, approved paying $93,000 in short-term incentives to employees and sales reps at Endo International but delayed a broader decision on big bonuses to corporate insiders and others. Endo, based in Malvern, Pennsylvania, one of the nation's largest opioid makers, paid $94 million in bonuses to its top executives and high-level employees before it filed for bankruptcy in mid-August, and the company has proposed in its restructuring plan an additional $98 million in bonuses for Endo employees this year, according to court documents. A federal bankruptcy watchdog and a committee of opioid victims say the bonuses drain Endo's financial resources as it faces 3,100 opioid lawsuits. Attorneys for the committee estimate there could be 600,000 victims of Endo's opioid pain pills and say that Endo has set aside virtually nothing for them. Endo, best known for Percocet, sold Opana for severe pain. The drug firm pulled Opana from the consumer market in 2017 because of the potential for abuse and addiction. Former Tennessee Attorney General Herbert H. Slatery III claimed in a 2019 lawsuit that Endo was "substantially responsible for the opioid epidemic in Tennessee" when Opana pills flooded parts of the state. Bankruptcy Judge James L. Garrity Jr. approved the $93,000 in incentives for Endo employees as the drug firm continues to operate and scheduled a hearing over the bonuses for Nov. 10. Eighty attorneys attended Thursday's, October 13, 2022, 40-minute call-in hearing. Critics of the bonuses have argued with the company over who should be designated as an Endo "insider" and whether they can claw back bonuses if it's determined the individual participated in criminal activity involving opioids at Endo. Susan Arbeit, an attorney for the U.S. Trustee, the watchdog, said that the trustee could question Endo's chief human resources officer, Tracy Basso, over how she classified insiders as it regarded paying bonuses. Basso described in a court filing characterizing about 1,500 employees in bands from those with the highest responsibility to those with the lowest, or chief executive officer to overtime eligible administrators, operators and technicians. She identified 21 insiders. On Aug. 16, 2022 Endo filed for bankruptcy protection with slightly more than $1 billion of cash and billions of dollars in debt. A group of Endo lenders owed about $6 billion propose acquiring the drug firm in a "stalking-horse bid" in a bankruptcy auction, court documents say. They will bid for Endo what they are owed. Endo has a substantial drug portfolio with facilities in the United States and India. If successful, they will own the drug firm but without the legal liabilities of the opioid lawsuits. To settle the opioid liability, Endo's purchaser would create three trusts with about $550 million over a decade. The funds would be divided between states and government entities, private victims such as individuals and hospitals, and Native American tribes in this way: $450 million for states and government entities, $85 million for private victims, and $15 million for Native American tribes. A group of state attorneys general have described the pre-bankruptcy bonuses to Endo executives in court documents as "secret" and "excessive." A court filing by opioid victims, officially the Committee of Opioid Claimants, says the average nonexecutive Endo employee will receive 31 times more in bonus payments than the current restructuring proposal provides to private opioid claimants. On Thursday, October 13, 2022, Garrity also approved the sale of an Endo facility in Chestnut Ridge, N.Y., for $19 million. About Endo International Endo International plc (NASDAQ: ENDP) is a specialty harmaceutical company committed to helping everyone we serve live their best life through the delivery of quality, life-enhancing therapies. Its decades of proven success come from passionate team members around the globe collaborating to bring the best treatments forward. Together, we boldly transform insights into treatments benefiting those who need them, when they need them. On the Web: http://www.endo.com/ On August 16, 2022, Endo International plc and certain of its subsidiaries initiated voluntary prearranged Chapter 11 proceedings (Bankr. S.D.N.Y. Lead Case No. 22-22549). The Company's cases are pending before the Honorable James L. Garrity, Jr. The Company has put up a Web site dedicated to its restructuring: http://www.endotomorrow.com/ The Debtors tapped Skadden, Arps, Slate, Meagher & Flom LLP as legal counsel; PJT Partners LP as investment banker; and Alvarez & Marsal as financial advisor. Kroll is the claims agent. Roger Frankel, the legal representative for future claimants in these Chapter 11 cases, tapped Frankel Wyron LLP and Young Conaway Stargatt & Taylor, LLP as counsel and Ducera Partners LLC as investment banker. ESTATE FINANCIAL: Tax Court Sustains Findings of Tax Deficiency --------------------------------------------------------------- In the case captioned as JOSHUA M. YAGUDA AND JOELI YAGUDA, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent, Docket No. 19113-19S, (Tax), the U.S. Tax Court entered a decision for the Respondent Commissioner of Internal Revenue (CIR) as to the deficiency and for the Petitioners (the Yagudas) as to the accuracy-related penalty under section 6662(a). In a notice of deficiency dated July 31, 2019, the CIR determined a deficiency in the Petitioners' federal income tax of $29,201 and a Section 6662(a) accuracy-related penalty of $5,840 for taxable year 2015 (year in issue). The issues for decision are: (1) whether $7,188 in taxable interest of Estate Financial, Inc. (EFI), is includible in Petitioners' income for the year in issue; (2) whether a $97,565 distributive share of income of EFI is includible in petitioners' income for the year in issue; and (3) whether petitioners are liable for a section 6662(a) accuracy-related penalty for the year in issue. Estate Financial, Inc. (EFI) was incorporated in California in 1991. The Petitioners held a 10% shareholder interest in EFI, while petitioners' daughter, Isabella Yaguda (who is under the age of 18), held a 5% shareholder interest. During the taxable year 2015, as directed by the trustee, EFI engaged in business activity, including liquidating certain assets. The Tax Court sustains the CIR's determination with respect to the unreported taxable interest and distributive share of income attributable to the Petitioners from EFI. The Court concludes that the Petitioners retained the EFI ownership interest during the year in issue—the Petitioners have not established that their EFI ownership interest was transferred or abandoned. In a letter dated Aug. 31, 2016, the bankruptcy trustee informed the Petitioners that the receivership trustee had abandoned the EFI interest, leaving the shares in the ownership of the Petitioners. Also, the Petitioners have not presented any evidence demonstrating that the taxable interest and distributive share of income as reported in the EFI Schedule K-1 issued to them is not taxable to them. With regard their daughter's taxable interest in and distributive share of income of EFI, the Tax Court notes that the Petitioners have not presented any evidence demonstrating that their daughter's taxable interest and distributive share of income as reported in the EFI Schedule K-1 are not taxable to them. The Tax Court, however, overrules the CIR's determination as to the applicability of the accuracy-related penalty for the year in issue. The Court determines that the Petitioners made a reasonable, good faith effort to correctly assess their tax liability. In fact, the Petitioners timely filed their tax return, reported other passive income, and provided documentation in support. Further, they relied on the assistance of a CPA in preparing their return. It was not entirely clear from the proceedings in the California Superior Court and the bankruptcy court the tax treatment of the shares in EFI. Given the complexity of the interplay between the bankruptcy proceedings and the receivership, and further noting that the Petitioners did not actually receive any funds as a distribution from EFI, the Tax Court concludes that the Petitioners' failure to include the distributive share of income of EFI in the year in issue does not subject them to the penalty that respondent determined. An honest misunderstanding of the law that is reasonable in the light of the facts and circumstances may support a conclusion that a taxpayer acted with reasonable cause and in good faith with respect to a reported position. A full-text copy of the Summary Opinion dated Oct. 20, 2022, is available at https://tinyurl.com/43wy7zb4 from Leagle.com. About Estate Financial Estate Financial, Inc., was a licensed real estate brokerage firm since the later 1980's. EFI solicited funding for, and arranged and made, loans secured by various real property. EFI also was the sole manager of Estate Financial Mortgage Fund LLC ("EFMF"), which was organized for the purpose of investing in and funding loans originated by EFI which were secured by first deeds of trust encumbering commercial and real estate located primarily in California and has been funding such mortgage loans since 2002. Five creditors of EFI filed an involuntary Chapter 11 petition against the real estate broker (Bankr. C.D. Cal. Case No. 08-11457) on June 25, 2008. EFI consented to the bankruptcy petition on July 16, 2008. In its schedules, EFI disclosed total assets of $27.4 million, and total debt of $7.32 million. On July 1, 2008, a voluntary bankruptcy petition was filed by Estate Financial Mortgage Fund, LLC ("EFMF"), a limited liability company, commencing its bankruptcy case. EFI was its manager. EFMF is the largest investor in loans arranged by EFI. On July 28, 2008, Bradley D. Sharp accepted his appointment as chapter 11 trustee of EFMF and on July 30, 2008, Thomas P. Jeremiassen accepted his appointment as EFI Trustee. The EFI Trustee tapped Pachulski Stang Ziehl & Jones LLP as attorneys. The Official Committee of Unsecured Creditors in the EFI case tapped the Law Offices of David M. Meadows as counsel. * * * The EFI Trustee and official committee of unsecured creditors in the case filed a Liquidating Plan Under Chapter 11 of the Bankruptcy Code. EXECVISION INC: Mediafly Seeks to Validate Corporate Acts --------------------------------------------------------- Mediafily Inc., the current sole stockholder of ExecVision, has filed a petition in the Delaware Court for Chancery under Section 205 of the Delaware General CorporationLaw seeking validation of defective corporate acts related to the conversion of Vorsight LLC into Vorsight Inc., which subsequently changes its name to ExecVision Inc. The petition seeks to validate putative actions taken in December 2015 including: 1) the conversion of Vorsight LLC into a Delaware Corporation; 2) the conversion of ownership interests in Vorsight LLC into stock of ExecVision; 3) adoption of initial bylaws of ExecVision; and 4) the election of David Stillman, Stephen Richard, Mudar Yaghi and Robert Means as the initial directors or ExecVision. The legal proceeding is captioned: IN RE EXEVISION, C.A. No. 2022-0588-VCC. The petition and related filings are available for review during regular offices hours at the Office of the Register in Chancery in the Court of Chancery of the State of Delaware, 500 North King Street, Wilmington, Delaware 19801. If you have questions, contact the petitioner's counsel: R. Judson Scaggs, Jr. Morris Nichols Arsht & Tunnell LLP 1201 North Market Street PO Box 1347 Wilmington, DE 19899-1347 rscaggs@morrisnichols.com The Court will hold a hearing on the petition on Oct. 27, 2022, at 1:30 p.m., at the Courthouse. Any written objection to the Court granting validation of the defective acts requested in the petition must be received by the Court petitioner's counsel on or before 5:00 p.m. (EDT) on Oct. 25, 2022. Vorsight LLC is a sales training and sales performance improvement firm. FIGUEROA MOUNTAIN: Has Deal on Cash Collateral Access ----------------------------------------------------- Figueroa Mountain Brewing, LLC, advised the U.S. Bankruptcy Court for the Central District of California that it has reached an agreement regarding the use of cash collateral with these parties-in-interest: -- secured creditors White Winston Select Asset Funds, LLC; and SCS Acquisition LLC, which is the successor-in-interest to Montecito Bank & Trust; and -- Creekstone Mountain, LLC. The parties now desire to memorialize the terms of this agreement into an agreed order. The parties agree the Debtor is authorized to use cash collateral on a final basis through the earlier of (a) December 18, 2022, or (b) the date on which the Debtor's cash on hand falls below falls below the Cash Floor of $698,865. The Authorization Period will automatically be extended through December 31 without the need for further Court order upon written approval by the Secured Creditors of a supplemental Budget covering the period from December 19 through December 31, 2022. If the Debtor's cash on hand falls below $698,865, then the Debtor will: (a) immediately notify counsel for the Secured Creditors in writing; (b) if unable to reach further agreement with the Secured Creditors for the continued use of cash collateral, within two Court days of sending the Required Notification, file an emergency motion for continued authority to use cash collateral and request that the Court hear such motion at its earliest opportunity; and (c) be authorized to continue using cash collateral in accordance with the Stipulation and the Budget until the hearing on such emergency motion. The $698,865 will not be transferred to a third party, including the Secured Parties or Creekstone, other than payments of approved Budget expenses including in accordance with clause (c) above so long as they are not payments to the Secured Parties or Creekstone, without prior Court order entered after a hearing set on regular notice. During the Authorization Period, the Debtor may use cash collateral solely to pay the expenses set forth in the budget or such further budget that may be approved by the Parties or the Court, with a 25% variance. White Winston and SCS will continue to receive, as adequate protection, replacement liens in post-petition collateral for any diminution in their collateral as of the Petition Date arising from the Debtor's use of such collateral but only to the same extent, applicability and validity as the prepetition liens held by White Winston and SCS. As and for additional adequate protection to White Winston, the principal amount of the "CS Note" issued by Creekstone in favor of White Winston will be increased from $2 million to $2.05 million, and the Pre-Payment Sum will be increased from $1.50 million to $1.55 million. A copy of the stipulation and the Debtor's budget through the week of December 12, 2022, is available for free at https://bit.ly/3eNa3sE from PacerMonitor.com. The budget provides for total expenses, on a weekly basis, as follows: $254,276 for the week beginning September 19, 2022; $196,953 for the week beginning September 26, 2022; $250,649 for the week beginning October 3, 2022; $163,448 for the week beginning October 10, 2022; $244,555 for the week beginning October 17, 2022; $167,950 for the week beginning October 24, 2022; $281,863 for the week beginning October 31, 2022; $164,364 for the week beginning November 7, 2022; $242,205 for the week beginning November 14, 2022; $164,150 for the week beginning November 21, 2022; $279,155 for the week beginning November 28, 2022; $163,458 for the week beginning December 5, 2022; and $239,206 for the week beginning December 12, 2022. About Figueroa Mountain Brewing LLC Buellton, Calif.-based Figueroa Mountain Brewing, LLC -- https://www.figmtnbrew.com/ -- is a beer manufacturer founded in 2020. It sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-11208) on Oct. 5, 2020. Jaime Dietenhofer, the company's manager, signed the petition. At the time of filing, the Debtor had estimated assets of between $1 million and $10 million and liabilities of the same range. Judge Martin R. Barash oversees the case. Lesnick Prince & Pappas LLP is the Debtor's legal counsel. JEFFREY D. STERNKLAR LLC and LEVENE, NEALE, BENDER, YOO & GOLUBCHIK, L.L.P. represent White Winston Select Asset Funds, LLC. Marc A. Lieberman, Esq., at FREDMAN LIEBERMAN PEARL LLP, serves as counsel to SCS Acquisition LLC. David B. Shemano, Esq., at SHEMANOLAW, represents Creekstone Mountain, LLC. FINANCE OF AMERICA: Fitch Cuts LongTerm IDR to 'B-', Outlook Neg. ----------------------------------------------------------------- Fitch Ratings has downgraded the Long-Term Issuer Default Ratings (IDRs) of Finance of America Companies Inc. and its subsidiaries, Finance of America Equity Capital LLC and Finance of America Funding LLC (together FOA) to 'B-' from 'B+'. Fitch has also downgraded Finance of America Funding LLC's senior unsecured debt rating to 'CCC+'/'RR5' from 'B'/'RR5'. The Negative Rating Outlook has been maintained. The rating actions have been taken as part of a periodic peer review of non-bank mortgage companies, which is comprised of six publicly rated firms. KEY RATING DRIVERS The rating downgrade reflects Fitch's expectation that FOA's leverage will remain elevated over the medium term, driven by a continuation of relatively weak earnings and the impact of higher rates. Leverage (gross debt to tangible equity) was 10.2x at June 30, 2022; up from 8x in the prior quarter, as reduced origination volumes, market volatility and widening credit spreads resulted in negative fair value marks to the balance sheet of $207 million, predominantly for reverse mortgage assets. The Negative Outlook reflects Fitch's belief that there is execution risk and cash burn associated with FOA's plan to reduce expenses sufficiently to begin rebuilding capital to take leverage below 7.5x within the Outlook horizon. Recent covenant breaches, resulting from reduced profitability and higher leverage, are also viewed negatively and create some concern for the company's ability to extend debt maturities and secure future funding. FOA's rating remains supported by its track record as a U.S. non-bank mortgage originator and lender with a leading market position within the reverse mortgage lending sector, experienced senior management team, appropriate risk controls, sufficient reserves to cover potential repurchase claims, modest valuation risk associated with mortgage servicing rights, and good historical asset quality. Ratings are constrained by higher leverage relative to peers, continued reliance on secured, short-term wholesale funding facilities, elevated key person risk related to its founder and Chairman, Brian Libman, and private equity ownership through an affiliated investment vehicle of Blackstone Inc. (Blackstone; A+/Stable), which could impact the firm's strategic and financial targets. FOA reported a pretax loss of $246 million in 1H22; a sharp decline from pretax income of $111 million in 1H21. The reduction was due to negative fair value marks and lower origination volumes and decreased gain on sale (GOS) margin within the mortgage origination segment. Annualized pretax ROAA for 1H22 was -0.4% excluding the fair value marks. Net rate lock volume and GOS margins declined 40% and 101 bps, yoy, respectively through 1H22. FOA executed additional cost reduction initiatives in 3Q22, which could support more stable earnings in the future, but it could be some time before the run-rate impact is incorporated. FOA's leverage was 10.2x as of June 30, 2022 calculated as gross debt to tangible equity, excluding the liabilities associated with the firm's agency and private label reverse mortgage securitizations. FOA had been on a deleveraging path, using proceeds from interest rate hedge gains to repay secured credit lines in 2Q22, but this paydown was more than offset by fair value marks to the balance sheet resulting from rising rates and volatile market environment. While the fair value marks could reverse over time, Fitch does not expect that to occur during the Outlook horizon given persistently high inflation and softening economic outlook. Similar to other mortgage peers, FOA is reliant on the wholesale debt markets to fund operations, with unsecured debt representing 12% of total debt at June 30, 2022, which is at the lower end of peers. Roughly 53% of FOA's secured facilities were committed at June 30, 2022, which is at the higher end of peers but below that of finance and leasing companies more broadly. As of June 30, 2022, FOA had approximately $219 million of unrestricted cash and $144 million of available borrowing capacity on its non-funding secured credit facilities, which Fitch views as adequate relative to the rating category and operational needs and upcoming financial obligations but still a constraint to FOAs financial flexibility. FOA also had $2.9 billion of capacity under warehouse facilities to fund loan originations. Most of FOA's funding facilities mature within one year, which exposes it to increased liquidity and refinancing risk. Fitch would view an extension of the firm's funding duration and an increase in contingent liquidity resources favorably. FOA received waivers from its lenders related to profitability, debt service coverage and tangible net worth covenants in order to avoid technical default. Covenant breaches are viewed negatively by Fitch as it believes continued breaches could materially weaken FOA's financial flexibility and ability to fund originations. FOA is not subject to material asset quality risks because nearly all originated loans are sold to investors shortly after origination. However, FOA has exposure to potential losses due to repurchase or indemnification claims from investors under certain warranty provisions. Fitch expects FOA will continue to build reserves for loan production to account for this risk. FOA's historic repurchase claims have been minimal, and the company has had sufficient reserves to cover these charges, which Fitch expects to continue. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: - Inability to reduce leverage below 10x over the Outlook horizon; - Sustained operating losses and/or a further erosion of the tangible equity base; - Inability to refinance secured funding facilities or avoid covenant breaches; - Inability to maintain sufficient liquidity to effectively manage servicer advances or to meet margin call requirements; - Regulatory scrutiny resulting in FOA incurring substantial fines that negatively impact its franchise or operating performance; and/or - The departure of Brian Libman, who has led the growth and direction of the company. Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch believes the Negative Outlook could be revised to Stable if FOA successfully executes on its plan to improve profitability and earnings consistency and reduce leverage below 10x. Longer-term, upward rating momentum could be driven by: - Sustained reduction in leverage to below 7.5x; - An enhanced liquidity profile and improved funding flexibility, including an extension of funding duration and increased aggregate liquidity resources; - An increase in unsecured debt approaching 25% and a commensurate increase in unencumbered assets; - A continuation of strong asset quality performance; - Continued growth of the business that enhances FOA's franchise; and - Demonstrated effectiveness of corporate governance policies, including enhanced management team depth and/or clearly articulated succession planning for key management positions. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS The senior unsecured debt rating is one notch below the Long-Term IDR, reflecting the subordination of the debt to secured debt in the capital structure and a limited pool of unencumbered assets, which translates into weaker relative recovery prospects in a stressed scenario. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES The unsecured debt rating is primarily sensitive to changes in the Long-Term IDR and secondarily to the funding mix and available collateral. A material increase in unencumbered assets and recovery prospects could narrow the notching between the Long-Term IDR and the unsecured notes, while a material increase in secured debt could result in wider notching. SUBSIDIARY AND AFFILIATE RATINGS: KEY RATING DRIVERS The ratings of Finance of America Equity Capital LLC and Finance of America Funding LLC are equalized with the ratings of Finance of America Companies Inc. given they are wholly owned subsidiaries and represent substantially all of the parent assets. SUBSIDIARY AND AFFILIATE RATINGS: RATING SENSITIVITIES The ratings of Finance of America Equity Capital LLC and Finance of America Funding LLC are equalized with the ratings of Finance of America Companies Inc. and are expected to move in tandem. ESG CONSIDERATIONS FOA has an ESG Relevance Score of '4' for Governance Structure due to elevated key person risk related to its founder and Chairman, Brian Libman, who has led the growth and strategic direction of the company. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. FOA has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy and Data Security, due to its exposure to compliance risks that include fair lending practices, debt collection practices and consumer data protection. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Finance of America Companies Inc. LT IDR B- Downgrade B+ Finance of America Equity Capital LLC LT IDR B- Downgrade B+ Finance of America Funding LLC LT IDR B- Downgrade B+ senior unsecured LT CCC+ Downgrade RR5 B FIRST FRUITS: Taps Moore Bradley Myers as Bankruptcy Counsel ------------------------------------------------------------ First Fruits Business Ministry, LLC seeks approval from the U.S. Bankruptcy Court for the District of South Carolina to hire Moore Bradley Myers Law Firm, P.A. to handle its Chapter 11 case. Moore will charge $495 per hour for the services of its attorney, Jane Downey, Esq., $300 per hour for other attorneys, and $275 per hour for paraprofessionals. The firm will also receive reimbursement for out-of-pocket expenses incurred. Jane Downey, Esq., a partner at Moore, disclosed in a court filing that her firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Jane H. Downey, Esq. Moore Bradley Myers Law Firm, P.A. Post Office Box 5709 1700 Sunset Boulevard West Columbia, SC 29171 Tel: (803) 454-1983 Fax: (803) 791-8410 Email: jane@mbmlawsc.com About First Fruits Business Ministry First Fruits Business Ministry, LLC is a privately held company which focuses on health and fitness through patented and proprietary products that focus on losing body fat and building lean muscle. The company is based in Columbia, S.C. First Fruits Business Ministry sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.S.C. Case No. 22-02747) on Oct. 7, 2022. In the petition signed by its chief executive officer, Roger Catarino, the Debtor disclosed $23,348,908 in assets and $1,628,225 in liabilities as of July 31, 2022. Judge David R. Duncan oversees the case. Jane H. Downey, Esq., at Moore Bradley Myers Law Firm, P.A. is the Debtor's counsel. FM SOLUTIONS: Wins Cash Collateral Access on Final Basis -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona authorized FM Solutions Management, LLC to use cash collateral, on a final basis, to pay post-petition operating expenses in the ordinary course of its businesses in accordance with the budget. The Court finds it critical for the Debtor to continue operating and maintaining its business in order to preserve its value. As adequate protection, any creditor holding a valid and enforceable prepetition security interest in any pre-petition cash collateral will have a post-petition replacement lien on the same type of post-petition assets acquired by the Debtor after the Petition Date, if any, and in the same validity, priority, and extent as such creditor possessed a lien on the cash collateral on the Petition Date, and will have all the rights and remedies of a secured creditor in connection with the replacement liens granted by the Order, except to the extent that the Bankruptcy Code may affect such rights and remedies. The liens will be effective without perfection and as against any successors of the Debtor, including any trustee. The Debtor is authorized to pay the budgeted monthly adequate protection payment to Arizona Bank & Trust in the amount of $1,650 per month, beginning on November 1, 2022, as Arizona Bank & Trust has a valid and perfect, first position security interest in the cash collateral and no other creditor has opposed such lien priority at this time. A copy of the order is available at https://bit.ly/3scsCcS from PacerMonitor.com. A copy of the budget is available at https://bit.ly/3MNbaVX from PacerMonitor.com. The budget provides for total expenses, on a monthly basis, as follows: $40,715 for October 2022; $40,715 for November 2022; $33,715 for December 2022; $40,715 for January 2023; and $40,715 for February 2023. About FM Solutions Management, LLC FM Solutions Management, LLC is a small business that provides Architectural, Design, and Project Management services to multiple municipalities and utilities in Arizona. FM Solutions provides services that take an "owner's view" of facility needs. This includes everything from mission critical facilities to space planning and design of employee workspaces. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ariz. Case No. 22-06152) on September 14, 2022. In the petition signed by Curtis Slife, manager, the debtor disclosed up to $500,000 in assets and up to $1 million in liabilities. Judge Eddward P. Ballinger Jr. oversees the case. D. Lamar Hawkins, Esq., at Guidant Law, PLC, is the Debtor's counsel. FORMA BRANDS: Considers Filing for Chapter 11 Bankruptcy -------------------------------------------------------- Kathryn Hopkins of WWD reports, citing sources, that Forma Brands, the parent company of Morphe, Lipstick Queen and Jaclyn Hill's Jaclyn Cosmetics, is considering filing for Chapter 11 bankruptcy. People familiar with the process told WWD that such a move is under consideration, but stressed that nothing is certain and that other options are on the table, including out of court agreements with creditors. A spokesperson for Forma said: "Forma Brands is engaged in constructive discussions with our financial stakeholders regarding ways to strengthen the company financially and enable us to reinforce our focus on the opportunities we see ahead for our brands. We are excited about the products we will continue to bring to our customers." Majority owner, private equity firm General Atlantic, declined to comment. The news was first reported by Reorg Research. General Atlantic acquired a 60 percent stake in Morphe in 2019, which was at the time a popular brand run by brother and sister Chris and Linda Tawil that grew in large part due to partnerships with influencers. The deal valued the company at $2.2 billion. The Tawils had already taken Morphe from being a trade-show makeup brush brand into a full-fledged operation by aligning themselves with the early makeup influencers such as Jeffree Star and James Charles. When General Atlantic became involved, the business was at a high and profitable — at the time of its investment, Morphe was said to be doing about $500 million in net sales, with about $130 million in earnings before interest, taxes, depreciation and amortization. But then several factors occurred that weighed on Morphe's performance. First, COVID-19 struck, leading color cosmetics sales to decline industry wide. Then Morphe cut ties with Star and Charles amid allegations of inappropriate behavior. Plus, supply chain issues plagued the business. Forma, the parent company, was formed in 2020 as part of the business' diversification efforts. The business also launched a sub brand, Morphe 2, and made several acquisitions, including Lipstick Queen and Playa, and incubated brands, including Bad Habit. In March, former Too Faced executive Eric Hohl joined Forma as chief executive officer, taking over from Myles McCormick, who led the business through its growth era. Hohl was president at Too Faced when General Atlantic sold it to the Estee Lauder Cos. for $1.45 billion in 2016. In 2021, Forma landed at number 80 on the Beauty Inc Top 100 list, with an estimated $350 million in sales. About Forma Brands Forma Brands is the parent company of Morphe, Lipstick Queen and Jaclyn Hill's Jaclyn Cosmetics. Forma Brands claims to be an incubator, accelerator, and curator of today's beauty brands. FREEDOM MORTGAGE: Fitch Alters Outlook on 'BB-' IDR to Negative --------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of Freedom Mortgage Corporation (Freedom) at 'BB-'. The Rating Outlook has been revised to Negative from Stable. Fitch has also affirmed Freedom's senior unsecured debt rating at 'B+'. The rating actions have been taken as part of a periodic peer review of non-bank mortgage companies, which is comprised of six publicly rated firms. KEY RATING DRIVERS The revision of the Outlook reflects Fitch's expectation that Freedom's corporate leverage (corporate debt to tangible equity) will remain elevated over the medium-term, given expectations for continued weakness in earnings performance, driven by a sharp decline in mortgage origination volume, and an increase in corporate debt used to fund the acquisition of mortgage servicing rights (MSRs) associated with $116 billion of unpaid principal balances (UPB). Freedom's corporate leverage was 1.7x at June 30, 2022; above the long-term average of 1.3x and management's target of 1.5x. Fitch believes there is execution risk associated with Freedom's plan to improve profitability (which relates largely to cost reduction efforts) and reduce corporate debt sufficiently to take leverage below 1.5x over the Outlook horizon. Freedom's ratings remain supported by its historical track record through various cycles, which enhanced its franchise within the U.S. residential mortgage space, its dominant position within the government lending channel, experienced senior management team and a sufficiently robust and integrated technology platform. Fitch views Freedom's multichannel approach favorably and believes its servicing retained business model with high recapture rates may serve as a natural hedge, although not a full offset, to the cyclicality of the mortgage origination business. Ratings are constrained by Freedom's elevated exposure to Ginnie Mae loans with higher advancing needs and potentially higher regulatory scrutiny, and elevated key person risk related to its founder and Chief Executive Officer, Stanley Middleman, who sets the tone, vision and strategy for the company. Freedom is not subject to material asset quality risks as nearly all originated loans are government or agency eligible and sold shortly after origination. However, it has exposure to repurchase or indemnification claims from third parties under certain warranty provisions. Delinquencies of 60 days or more in the servicing portfolio declined to 3% at 2Q22, from 7.1% a year ago, reflecting the post-pandemic recovery and government mandated forbearance. Fitch believes asset quality metrics to normalize from here with macroeconomic deterioration. Annualized pre-tax returns on average assets was 0.2% in 2Q22, down from 2.5% a year ago and below the average of 4% from 2018-2021. Fitch expects operating performance will remained pressured in 2022 given the continued impact of rising rates on origination volumes and gain on sale margins and the time it will take to re-align the cost structure with business volumes. While the write-up in MSRs has benefitted reported earnings in 2022, Fitch believes there is more limited valuation upside in the near-term from additional rate rises. Freedom's consolidated leverage (gross debt to tangible equity) was 3.2x at June 30, 2022 compared to 3.0x a year ago. The decline reflects a reduction in warehouse borrowings given the drop in mortgage origination volume. Consolidated leverage is expected to remain at-or-near current levels over the medium-term. Secured debt was 77.2% of total debt at June 30, 2022, comprised of warehouse facilities and bank lines of credit secured by MSRs. As of the same date, approximately 29% of Freedom's secured warehouse lending capacity had a maturity tenor greater than a year and 29% of the facilities were committed, which compares favorably to peers. Still, Fitch believes the short tenor of the overall funding exposes the firm to liquidity and refinancing risk. Fitch views Freedom's liquidity profile as adequate, given available balance sheet cash and actions taken to access additional funding. In 2022, the company amended its multi-year KeyBank facility to increase the borrowing capacity to $1.252 billion and to extend the maturity until 2026. As of June 30, 2022, Freedom had $690.4 million of unrestricted cash, $162 million of availability under its KeyBank facility and $315 million available under its GMSR facility. Additionally, the company had $7.4 billion of capacity under warehouse facilities to fund loan originations. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: Negative rating action could be driven by an inability to reduce corporate debt to tangible equity leverage below 1.5x over the Outlook horizon, an inability to refinance secured funding facilities, insufficient liquidity to manage servicer advances or to meet margin call requirements, lack of appropriate staffing and resource levels relative to growth in the servicing portfolio, and a sustained increase in gross debt to tangible equity above 5.0x. Should regulatory scrutiny of the company or industry increase meaningfully, or if Freedom incurred substantial fines that negatively affect its franchise or operating performance, it could also drive negative rating momentum. Factors that could, individually or collectively, lead to positive rating action/upgrade: Fitch believes the Negative Outlook could be revised to Stable if Freedom successfully executes on its plan to improve profitability through a right-sizing of the cost structure, which results in a reduction in corporate debt to tangible equity below 1.5x. Longer-term, upward rating momentum could be driven by, a sustained reduction in gross debt to tangible equity below 3.0x, growth of the business that enhances the franchise and platform scale, improved earnings consistency, an increase in longer-duration secured and unsecured debt, an increase in the proportion of committed funding, and a stronger liquidity profile, as evidenced by a meaningful increase in the percentage of available liquidity resources (cash and available borrowing capacity) to total debt. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS The unsecured debt rating is one-notch below Freedom's Long-Term IDR, given the subordination to senior secured debt in the capital structure, reflecting weaker recovery prospects in a stress scenario. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES The unsecured debt rating is primarily sensitive to changes in Freedom's Long-Term IDR and would be expected to move in tandem. However, a material increase in unsecured funding and the size of the unencumbered asset pool could result in a narrowing of the notching between the unsecured debt and the Long-Term IDR. ESG CONSIDERATIONS Freedom has an ESG Relevance Score of '4' for Governance Structure due to elevated key person risk related to its founder and Chief Executive Officer, Stanley Middleman, who sets the tone, vision and strategy for the company. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Freedom also has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy and Data Security, due to its exposure to compliance risks that include fair lending practices, debt collection practices and consumer data protection, which has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Debt Rating Prior ---- ------ ----- Freedom Mortgage Corporation LT IDR BB- Affirmed BB- senior unsecured LT B+ Affirmed B+ GIGA-TRONICS INC: Hires Marcum LLP as New Auditor ------------------------------------------------- Giga-tronics Incorporated has engaged Marcum LLP as the Company's independent registered public accounting firm, effective Oct. 13, 2022, in order to audit, and express an opinion of the Company's consolidated financial statements for its fiscal year ending on Dec. 31, 2022. The Company's Audit Committee approved the engagement with Marcum on Sept. 29, 2022. The Company said that during the two most recent fiscal years and through the Engagement Date, the Company did not consult with Marcum regarding either: 1. application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report was provided to the Company nor oral advice was provided that Marcum concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or 2. any matter that was either the subject of a disagreement (as defined in Regulation S-K, Item 304(a)(1) (iv) and the related instructions) or reportable event (as defined in Regulation S-K, Item 304(a)(1)(v)). About Giga-tronics Inc. Headquartered in Dublin, California, Giga-Tronics Inc. is a publicly held company, traded on the OTCQB Capital Market under the symbol "GIGA". Giga-tronics -- http://www.gigatronics.com-- produces RADAR filters and Microwave Integrated Components for use in military defense applications as well as sophisticated RADAR and Electronic Warfare (RADAR/EW) test products primarily used in electronic warfare test & emulation applications. Giga-Tronics reported a net loss of $2.72 million for the year ended March 26, 2022, compared to a net loss of $393,000 for the year ended March 27, 2021. As of March 26, 2022, the Company had $8.06 million in total assets, $4.33 million in total liabilities, nd $3.73 million in total shareholders' equity. San Ramon, California-based Armanino LLP, the Company's auditor since 2018, issued a "going concern" qualification in its report dated June 24, 2022, citing that the Company's significant recurring losses and accumulated deficit raise substantial doubt about its ability to continue as a going concern. GLOBAL PROCESSING: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Global Processing, Inc. 945 150th Street Kanawha, IA 50447 Business Description: The Debtor processes food-grade soybeans. Chapter 11 Petition Date: October 24, 2022 Court: United States Bankruptcy Court Northern District of Iowa Case No.: 22-00669 Debtor's Counsel: Ronald C. Martin, Esq. DAY RETTIG MARTIN, P.C. PO Box 2877 Cedar Rapids, IA 52406-2877 Tel: (319) 365-0437 Fax: (319) 365-5866 E-mail: ronm@drpjlaw.com Estimated Assets: $10 million to $50 million Estimated Liabilities: $10 million to $50 million The petition was signed by David M. Wilcox 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/EZ4P2DY/Global_Processing_Inc__ianbke-22-00669__0001.0.pdf?mcid=tGE4TAMA GREYSTONE SELECT: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Greystone Select Financial LLC's (Greystone) Long-Term Issuer Default Rating (IDR) at 'BB-' and senior secured term loan rating at 'BB'. The Rating Outlook is Stable. KEY RATING DRIVERS The affirmation of Greystone's ratings reflects its solid franchise in the commercial real estate (CRE) origination and servicing market; experienced senior management team; historically strong asset quality performance; absence of exposure to hotel, retail and office assets; strong historical earnings generation; limited valuation risk associated with mortgage servicing rights (MSRs), given the presence of various prepayment protections; demonstrated access to diverse sources of funding; and solid liquidity profile. Fitch believes the company's extensive understanding of multifamily and senior housing is further complemented by the property development and management, special servicing and fund management capabilities within the Greystone group. Rating constraints include the monoline business model; a predominantly secured funding profile with relatively limited duration; and a weaker corporate governance structure given the private ownership by the Rosenberg family and key person risk associated with founder and Executive Chairman Stephen Rosenberg. Greystone is not subject to material asset quality risks as nearly all originated loans are government or agency eligible. The firm's risk-sharing arrangement with Fannie Mae caps Greystone's maximum loss exposure. Greystone's historical cumulative loss rate on Delegated Underwriting & Servicing (DUS) loans is 0.11% and the company has not had losses in the portfolio in the last three years. Greystone's earnings have been consistent over time, with a pretax ROAA of 5.9% for the six months ended June 30, 2022; in-line with a four-year average of 5.5%. Over the medium term, Greystone's performance will be largely dependent on the pace of new originations, although the loan servicing portfolio and investment management segment provide meaningful diversification of revenue. The lack of MSR volatility, given yield maintenance provisions, will provide more earnings stability over time relative to peers, in Fitch's view. Greystone's leverage (debt to tangible equity) was 1.8x at June 30, 2022. Leverage has come down substantially over the last 18 months, from a high of 7.9x at YE 2020 as proceeds from the delivery of mortgage loans held for sale were used to reduced borrowings. Greystone expects to maintain lower leverage going forward through increased earnings retention. Fitch believes a sustained reduction in leverage below 5.0x could drive positive rating momentum over time. Greystone has continued to demonstrate access to funding and maintains relationships with a diverse group of lenders. Still, the company's funding is relatively short-dated, consisting predominantly of agency warehouse and repurchase lines with maturities of one year or less. Almost 21% of gross debt matures in 2022 and another 42% matures in 2023. Fitch would view a further extension of the debt maturity profile favorably, as it would help to reduce refinancing risk. At June 30, 2022, approximately 3.6% of Greystone's outstanding debt was unsecured. Fitch views unsecured debt as an important component of a company's operational and financial flexibility, and would view an increase in the unsecured funding percentage, approaching 10%, favorably. Fitch views Greystone's liquidity as strong for its rating category. As of June 30, 2022, Greystone had $164.1 million of cash and $3.1 billion of borrowing capacity under its funding facilities. Greystone's pool of unencumbered assets, which amounted to $969 million at 2Q22, could be pledged or sold (subject to applicable haircuts) to provide additional liquidity, if necessary. Greystone's management team has strong industry experience, but Fitch believes that a moderate degree of key person risk is present with Executive Chairman and founder Stephen Rosenberg. The concentration of control with the Rosenberg family demonstrates a weaker-than-peer corporate governance structure and represents a rating constraint. The Stable Rating Outlook reflects Fitch's expectations that Greystone will maintain good asset quality, with delinquencies translating into only modest losses given the loss-sharing arrangements. The Rating Outlook also reflects expectations for the continued generation of strong earnings, while maintaining access to diversified funding and sufficient liquidity. Fitch also expects Greystone to maintain leverage below 5.0x over the medium term given management's strategy to increase retained earnings over the outlook horizon. The senior secured term loan rating is given a one-notch uplift from Greystone's IDR, reflecting good recovery prospects in a stress scenario. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade include an inability to extend financing facilities as they mature and/or maintain adequate funding diversity, a weakened liquidity profile, a sustained increase in leverage (gross debt/tangible equity) above 7.0x, and a material weakening in asset quality, as demonstrated by a significant increase in impaired loans. Negative rating momentum could also be driven by a sustained reduction in operating performance below historical levels. Factors that could, individually or collectively, lead to positive rating action/upgrade include an improvement in funding flexibility, as demonstrated by further extension of the maturity profile and an increase in the unsecured funding component, approaching 10%, and a sustained reduction in gross leverage to 5.0x or below. Positive rating momentum would also be conditioned upon the performance of the company's servicing portfolio and reduced reliance on gain-on-sale income, as well as the maintenance of solid asset quality, consistent earnings and sufficient liquidity. The senior secured term loan rating is sensitive to changes in the IDR and would be expected to move in tandem. However, material decreases in unencumbered assets could result in a wider notching of the senior secured term loan rating relative to Greystone's IDR. ESG CONSIDERATIONS Greystone Select Financial LLC has an ESG Relevance Score of '4' for Governance Structure due to elevated key person risk related to its founder and CEO, Stephen Rosenberg, who sets the tone, vision and strategy for the company, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Debt Rating Prior ---- ------ ----- Greystone Select Financial LLC LT IDR BB- Affirmed BB- senior secured LT BB Affirmed BB GT REAL ESTATE: Court Battle With Rock Hill, York County Continues ------------------------------------------------------------------ Steven Stone of WRHI AM 1340 reports that the court battles between companies owned by Carolina Panthers owner David Tepper and lawyers with York County and Rock Hill continued on Thursday, October 13, 2022. The argument continues to be over documents regarding lawsuits and the ongoing bankruptcy itself. The sides appear to be still at odds and far apart in resolving how much money, if any at all, would be returned after the failed project. The lawsuit was recently moved from South Carolina federal court to Delaware courts where the bankruptcy case is being handled. Per court filings, a lawyer for Rock Hill, Maris Kandestin said in the hearing that the Tepper companies did not meet a deadline earlier this week for turning over documents. York County Lawyer Kurt Gwynne said there was "an attempt to sandbag us" in court. He added that "As for gamesmanship in this case there has been a ton of it." A confirmation hearing dealing with creditors on the project is set for next month. Rock Hill and York County however still claim they should receive millions despite GT's stance that the county and city have no guarantee of any funds from the bankruptcy. About GT Real Estate Holdings GT Real Estate Holdings is a real estate company owned by David Tepper. It was created to own and develop a mixed-use, pedestrian-friendly community, sports, and entertainment venue, that would also include a new headquarters and practice facility for the Carolina Panthers, a National Football League team, situated on a 234-acre site located in Rock Hill, South Carolina. The company suspended further development of the Project in March 2022. GT Real Estate Holdings sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10505) on June 2, 2022. In the petition filed by Jonathan Hickman, as chief restructuring officer, the Debtor reports estimated assets and liabilities between $100 million and $500 million each. The Hon. Karen B. Owens is the case judge. The Debtor tapped White & Case LLP as restructuring counsel; Farnan LLP, as Delaware counsel; and Alvarez & Marsal as financial advisor. Kroll Restructuring Administration LLC is the claims agent. HELLER EHRMAN: Plan Administrator Taps BG Law as Special Counsel ---------------------------------------------------------------- Michael Burkhart, the plan administrator for Heller Ehrman LLP, seeks authority from the U.S. Bankruptcy Court for the Northern District of California to employ BG Law, LLP as his special counsel. BG Law's services will include the investigation into the whereabouts of stock and options received, purchased, retained, sold, or otherwise transferred by the Debtor or entities or persons related to the Debtor or Venture Law Group during the course of the Debtor's operations and after it filed for bankruptcy protection. After or concurrent with the investigation, BG Law will prepare a substantive and detailed "White Paper" detailing the results of the investigation, including, but not limited to, an analysis of liability issues, proximate cause, damages, and collectability. BG Law will receive a retainer in the amount of $100,000 upon court approval of its employment. The firm will charge a blended rate of $500 per hour. As disclosed in court filings, BG Law and its attorneys are "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Steven T. Gubner, Esq. BG Law, LLP 21650 Oxnard Street, Suite 500 Woodland Hills, CA 91367 Phone: +1 818-827-9000 Email: sgubner@bg.law About Heller Ehrman Headquartered in San Francisco, Calif., Heller Ehrman, LLP -- http://www.hewm.com/-- was an international law firm of more than 730 attorneys in 15 offices in the United States, Europe, and Asia. Heller Ehrman filed a voluntary Chapter 11 petition (Bankr. N.D. Cal., Case No. 08-32514) on Dec. 28, 2008. Members of the firm's dissolution committee led by Peter J. Benvenutti approved a plan dated Sept. 26, 2008, to dissolve the firm. According to reports, the firm had roughly $63 million in assets and 54 employees at the time of its filing. In its bankruptcy petition, the firm estimated assets and debt at $50 million to $100 million as of the Petition Date. The Hon. Dennis Montali presides over the case. Pachulski Stang Ziehl & Jones, LLP assisted the Debtor in its restructuring effort. The official committee of unsecured creditors is represented by Felderstein Fitzgerald Willoughby & Pascuzzi, LLP. On Aug. 13, 2010, the court confirmed the Debtor's joint Chapter 11 plan of liquidation. Under the plan, the Debtor retained the responsibility for claims review, dispute resolution and distribution. Michael Burkart is the duly appointed administrator under the plan and has been managing the Debtor since the plan went into effect. Mr. Burkart is represented by Felderstein Fitzgerald Willoughby Pascuzzi & Rios, LLP. HOLLOWAY CROSSING: Unsecureds, If Any, Will be Paid in Full ----------------------------------------------------------- Holloway Crossing, LLC, submitted a Plan of Reorganization and a Disclosure Statement dated Oct. 12, 2022. The Debtor is a Georgia limited liability company which owns that certain real property located at 77 Holloway Road, McDonough, GA 30253. The property has a scheduled value of $4,000,000. The source of funds for the payments pursuant to the Plan is Karen Mullins, the owner of 100% of the membership interests in Debtor. The Plan provides that Debtor will sell or refinance its real estate to pay claims under the Plan. Until such time if the Debtor has sold or refinanced its real estate, the Plan provides for monthly payments to the Holdings of Priority Tax Claims and Secured Claims (Synovus and Fairfield) (the "monthly payments"). Karen Mullins has agreed to make capital contributions to Debtor in the amounts necessary for Debtor to pay all such monthly payments. Those capital contributions by Karen Mullins shall ensure Debtor's ability to make plan payments until such time as the real estate is sold or refinanced which shall occur no later than the Maturity Date for the secured claims in Classes 4 and 5. With respect to Class 6 General Unsecured Claims, the Debtor is not aware of any general unsecured claims. Nonetheless, in the event any such claim exist, debtor shall pay the General Unsecured Creditors in full with interest accruing at the annual rate of 4.25% from the Effective Date. Class 6 is impaired. Attorneys for the Debtor: William D. Matthews, Esq. JONES & WALDEN, LLC 699 Piedmont Avenue, NE Atlanta, GA 30308 Tel: (404) 564-9300 A copy of the Disclosure Statement dated Oct. 12, 2022, is available at https://bit.ly/3VradX4 from PacerMonitor.com. About Holloway Crossing LLC Holloway Crossing LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Sec. 101(51B)). Holloway Crossing LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-56865) on August 31, 2922. In the petition filed by Karen Mullins, as manager, the Debtor reports estimated assets between $1 million and $10 million and estimated liabilities of $100,000 and $500,000. The Debtor is represented by Leon S. Jones of Jones & Walden, LLC. HOME POINT: Fitch Affirms LongTerm IDR at 'B', Outlook Negative --------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of Home Point Capital Inc. and its wholly-owned subsidiary, Home Point Financial Corporation (collectively Home Point), at 'B'. The Rating Outlook remains Negative. Concurrently, Fitch has also affirmed the senior unsecured debt rating of Home Point at 'B-'/'RR5'. The rating action has been taken as part of a periodic peer review of non-bank mortgage companies, which is comprised of six publicly rated firms. KEY RATING DRIVERS IDRs and SENIOR DEBT The ratings affirmation reflects Home Point's market position as a large wholesale lender in the U.S., an experienced management team with extensive industry background, adequate liquidity to cover any operational needs over the Outlook horizon, an appropriate risk control framework and strong asset quality performance. The Negative Outlook continues to reflect Home Point's weaker than expected financial performance and a stressed profitability outlook given rising interest rates and heightened competition in the mortgage origination market. Fitch believes that there is execution risk associated with Home Point's recently announced initiatives to right-size the business and its plan to specialize in the wholesale lending channel while maintaining adequate profitability. Furthermore, Home Point's liquidity profile has weakened significantly given ongoing operating losses, although Fitch believes liquidity remains sufficient for operating needs and there are no near-term maturities. As of June 30, 2022, Home Point had $136 million of unrestricted cash, $468.1 million of available capacity on its mortgage servicing right (MSR) facility, considering covenants and borrowing base requirements, and no available capacity on its operating line of credit. In addition, it has $4.1 billion of unused capacity under its warehouse lines of credit and $28.8 million of available capacity on its servicing advance facility to support its origination and servicing activities. Home Point reported a pre-tax operating loss and negative EBITDA in 1H22, a sharp decline from 2021 levels, which was driven by a significant reduction in origination volume and deteriorating gain on sale margins. Home Point's annualized pre-tax return on average assets (ROAA) declined to negative 1.0% in 1H22, relative to 3.5% for FY 2021, as cost reduction actions have lagged the reduction in revenues. For calculating ROAA, Fitch adjusts reported total assets to remove the Ginnie Mae loans eligible for repurchase and includes income from equity method investments if they relate to the core business. Fitch does not expect the competitive environment to ease in the near-term, thus maintaining downward pressure on profitability. Home Point has executed on some cost reductions and announced additional plans in response to the reduced volume and more competitive environment, which should support earnings in 2023. However, Fitch believes it is unlikely to accrete to tangible equity materially without a change in the margin or volume environment. Home Point's leverage (gross debt to tangible equity) decreased to 3.8x as of June 30, 2022; down from 7.8x at YE 2021, which is below the current covenant maximum under the company's MSR facility. Corporate non-funding leverage, which excludes funding-related debt declined to 1.2x at 2Q22, from 1.6x at YE 2021, driven by planned deleveraging actions by management, including MSR sales and divestitures of non-core businesses. Fitch expects gross leverage to remain relatively stable but corporate leverage is expected to grow with near-term operating losses until planned cost reduction actions take effect. Consistent with other mortgage companies, Home Point is reliant on the wholesale debt markets to fund its operations. Secured debt, which accounted for 80% of total debt at June 30th 2022, includes warehouse facilities, a servicing advance facility and a term loan facility secured by MSRs. Home Point is not subject to material asset quality risks as nearly all originated loans are government or agency eligible and sold to third parties shortly after origination. However, it has exposure to repurchase or indemnification claims from third-parties under certain warranty provisions. Fitch considers the asset quality performance of Home Point's servicing portfolio to be solid, as delinquencies have been low relative to the overall market. The unsecured debt rating is one notch below the Long-Term IDR with a recovery rating of 'RR5' reflecting below average recovery prospects, given the subordination to substantial secured debt in the capital structure and a limited pool of unencumbered assets mostly consisting of MSRs, which could have significant valuation volatility. SUBSIDIARY AND AFFILIATED COMPANY The ratings of Home Point Financial Corporation are equalized with the ratings of Home Point Capital Inc. given it is a wholly owned subsidiary and represents substantially all of the parent assets. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: Negative rating action could be driven by continued operating losses which result in a sustained increase in corporate non-funding leverage above 1.5x and/or an inability to maintain total leverage below 7.5x, an inability to maintain sufficient liquidity to manage future servicer advance requirements or margin calls, and/or an inability to refinance secured funding facilities. Should regulatory scrutiny of the company or industry increase meaningfully, or if Home Point incurred substantial fines that negatively impacted its franchise or operating performance, this could also drive negative rating momentum. Factors that could, individually or collectively, lead to positive rating action/upgrade: Fitch believes the Negative Outlook could be revised to Stable if Home Point successfully executes on its stated plan to improve profitability and maintain total and corporate leverage below negative sensitivities. While there is limited potential for further positive rating actions in the near term, an improvement in the broader economic and competitive backdrop, growth of the business that enhances Home Point's franchise, improved profitability and earnings consistency, a continuation of strong asset quality, a sustained reduction in total leverage below 5.0x, an increase in longer-duration funding and a stronger liquidity profile, including an increase in committed funding and maintenance of the proportion of unsecured funding, above 15%, could drive positive rating momentum over time. The unsecured debt rating is primarily sensitive to changes in the Long-Term IDR and secondarily to the funding mix and available collateral. A material increase in unencumbered assets and recovery prospects could narrow the notching between the Long-Term IDR and the unsecured notes, while a material increase in secured debt could result in a wider notching. ESG CONSIDERATIONS Home Point Financial Corporation has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to its exposure to compliance risks that include fair lending practices, debt collection practices and consumer data protection, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Home Point Financial Corporation has an ESG Relevance Score of '4' for Governance Structure due to its private equity ownership and board effectiveness as they relate to protection of creditor and shareholder rights, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Home Point Financial Corporation LT IDR B Affirmed B Home Point Capital Inc. LT IDR B Affirmed B senior unsecured LT B- Affirmed RR5 B- HOME PRODUCTS: TNT Plastic Appointed as New Committee Member ------------------------------------------------------------ The U.S. Trustee for Region 11 appointed TNT Plastic Molding as new member of the official committee of unsecured creditors in the Chapter 11 cases of Home Products International, Inc. and Home Products International North America, Inc. Meanwhile, Pinnacle Polymers, LLC has been removed from the committee. As of Oct. 22, the members of the committee are: 1. Braskem America, Inc. Representative: Roy Keeler Treasury & Credit Mgr. Braskem America, Inc. 1735 Market St., 28th Fl. Philadelphia, PA 19103 Attorney: Rosanne Ciambrone Duane Morris LLP 190 South LaSalle St., Ste. 3700 Chicago, IL 60603-3433 Phone: 312-499-0127 Email: rciambrone@duanemorris.com 2. Associated Steel Trading, LLC Representative: Ian Epstein Associated Steel Trading, LLC 12187 E. Cortez Drive Scottsdale, AZ 85259 Phone: 480-614-9333 Email: ijepstein@associatedsteeltrading.com 3. Scott Steel, LLC Representative: Nathan Rentz 125 Clark Ave. Piqua, OH 45356 Phone: 937-552-9670 Email: nathan.rentz@scottsteelllc.com 4. TMS Sales & Marketing Representative: Curtis Matheny TMS Sales & Marketing, Inc. 9950 W. Lawrence Ave., #400 Schiller Park, IL 60176 Attorney: Julia Jensen Smolka Robbins DiMonte, Ltd. 216 W. Higgins Road Park Ridge, IL 60068 Phone: 847-698-9600 Email: jsmolka@robbinsdimonte.com 5. TNT Plastic Molding Dennis Chadwick TNT Plastic Molding 725 E. Harrison Street Corona, CA 92879 Phone: 951-808-9700 Email: Dennis@tntplasticmolding.com About Home Products International Home Products International, Inc. -- https://www.homeproductsinternational.com/ -- is an American manufacturer of storage, home organization and laundry care products. Home Products International and affiliate Home Products International North America, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Lead Case No. 22-06276) on June 2, 2022. In the petition filed by James Auker, as chief financial officer, HPI estimated assets between $10 million and $50 million and liabilities between $50,000 and $100 million. Judge Janet S. Baer oversees the cases. Edward Green, Esq., at Foley & Lardner LLP, is the Debtors' counsel. The U.S. Trustee for Region 11 appointed an official committee of unsecured creditors in the Debtors' cases on June 16, 2022. The committee is represented by Freeborn & Peters, LLP. HOYOS INTEGRITY: Unsecureds Owed $7M Get 8% of New Equity in Plan ----------------------------------------------------------------- Hoyos Integrity Corporation submitted a Disclosure Statement for the Amended Plan of Reorganization, dated October 6, 2022. The Plan contemplates a restructuring of the Debtor through a debt for equity swap whereby the DIP Lenders receive 92.0 percent of the equity (pro rata per their individual percentage of the DIP) of the Reorganized Debtor, unsecured creditors receive 8.0 percent (pro rata based upon a creditor's unsecured debt percentage to the overall total of unsecured debt). Further, the Debtor will create a General Unsecured Creditors' Trust (the "GUC Trust") which will hold and prosecute to judgment or settle certain claims and causes of action of the Debtor or its estate (as more fully described in the Plan) (the "Estate Claims"). The Plan also contemplates the appointment of a GUC Trustee to direct the investigation into, and if appropriate, the prosecution to conclusion and collection or settlement of the Estate Claims and then to distribute the proceeds (after payment of GUC Trust Expenses) to the holders of Allowed GUC Claims, pro rata, up to the payment in full of all Allowed GUC Claims, with any funds in excess of that amount to be contributed to the Reorganized Debtor for its use in its operations. To be clear, the Debtor does not know if any of the Estate Claims are viable, valid claims or whether there is insurance covering such claims or absent that, whether the potential defendants have sufficient wherewithal to pay any recovery or settlement on account of such Estate Claims. The Plan contemplates the following transactions: * The issuance of the New Equity Security; * The distribution except to the extent the holder of an Allowed DIP Claim agrees to less favorable treatment, of the New Equity Security to the DIP Lenders on account of their respective Allowed DIP Claims. Each allowed DIP claim holder to receive Pro Rata share of 92.0 percent (approximately 90.0 percent after taking into consideration the dilution from the proposed equity grants) of the New Equity Security in full satisfaction of the Allowed DIP Claims. Further, each DIP Lender that is a holder of an Allowed DIP Claim shall be fully equitized and immediately prior to the Effective Date the DIP Creditors shall pay to the Reorganized Debtor the DIP Lenders Contribution which is the payment by the DIP Lenders to the Reorganized Debtor on the Effective Date in cash of all funds not yet borrowed by the Debtor under the DIP Financing Documents but available to be borrowed by the Debtor under the DIP Financing Documents as of the Effective Date (subject to dilution by the Management Incentive Plan as well as any other equity which the Reorganized Debtor chooses to grant to others which the Reorganized Debtor believes will be a significant benefit to the Reorganized Debtor). The total of equity grants the Reorganized Debtor may make under the Plan is between 7.5 percent and 10.0 percent of the New Equity Security. As of the filing of this Disclosure Statement, the Reorganized Debtor has committed to equity grants equal to 2.0 percent of the New Equity Security. In addition, distributions on account of New Equity Security will be further diluted by the compensation to be paid to the Debtor's CRO, David Kay, as his compensation is being assumed by the Reorganized Debtor under the Plan. Mr. Kay's compensation is set forth in the Order entered approving his employment in the Chapter 11 Case and the New Equity Security grants under the Management Incentive Plan, for the benefit of consultants, and issuance of warrants (if applicable) when granted and vested, shall be dilutive to the equity provided to the Holders of Allowed DIP Claims and Allowed GUC Claims. * The payment to the Debtor immediately prior to the Effective Date of any undrawn funds as of the Effective Date under the DIP Financing Documents to provide incremental liquidity; * The creation of the GUC Trust and the transfer into the trust of the GUC Trust Initial Fund and the Estate Claims, the proceeds realized from the prosecution or settlement of which will be used first to pay GUC Trust Expenses then Allowed GUC Claims up to the full amount of their Allowed GUC Claims with the remainder, if any, then distributed to the Reorganized Debtor for its use in its operations; and * Existing Interests in the Debtor being canceled and extinguished. Under the Plan, Class 3 GUC Claims total $7,000,000. Each Holder of an Allowed GUC Claim will receive its Pro Rata share of (i) 8.0 percent of the New Equity Security, plus (ii) up to the full amount of its Allowed Claim from its Pro Rata share of the GUC Trust Recovery Pool, if any. Class 3 is impaired. The Reorganized Debtor will fund distributions under the Plan with Cash held on the Effective Date by or for the benefit of the Debtor or Reorganized Debtor, including Cash from operations, proceeds from all Causes of Action not settled, released, discharged, enjoined, or exculpated (or transferred to the GUC Trust) under the Plan or otherwise on or prior to the Effective Date and the DIP Lender Contribution. The Bankruptcy Court has scheduled the Plan confirmation hearing for Nov. 21, 2022, at 2:00 p.m. (prevailing Eastern Time). Objections to confirmation of the Plan must be filed and served on the Debtor, and certain other parties, by no later than Nov. 15, 2022, at 4:00 p.m. (prevailing Eastern Time). The voting deadline is Nov. 15, 2022, at 4:00 p.m. (prevailing Eastern Time). Counsel to the Debtor: Raymond H. Lemisch, Esq. Domenic E. Pacitti, Esq. Sally E. Veghte, Esq. KLEHR HARRISON HARVEY BRANZBURG LLP 919 North Market Street, Suite 1000 Wilmington, DE 19801 Telephone: (302) 426-1189 Facsimile: (302) 426-9193 E-mail: rlemisch@klehr.com sveghte@klehr.com A copy of the Disclosure Statement dated October 12, 2022, is available at https://bit.ly/3ewhc0p from PacerMonitor.com. About Hoyos Integrity Hoyos Integrity Corporation is an information technology company that specializes in the fields of mobile, security, and technology. Hoyos Integrity sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10365) on April 21, 2022, listing up to $10 million in assets and up to $50 million in liabilities. Frank Tobin, president of Hoyos Integrity, signed the petition. Judge Mary F. Walrath oversees the case. Raymond H. Lemisch, Esq., at Klehr Harrison Harvey Branzburg, LLP, and Stout Capital, LLC serve as the Debtor's legal counsel and investment banker, respectively. HTP INC: Court Approves Disclosure Statement -------------------------------------------- Judge Timothy W. Dore has entered an order approving the Disclosure Statement for Plan of Reorganization of HTP, Inc. A hearing will be held commencing on Thursday, Nov. 10, 2022 at 9:30 a.m. for the Court's consideration of confirmation of the Plan and any objections thereto which have been timely filed pursuant to the terms of this Order. Any objections to confirmation of the Plan must be in writing, filed with this Court, and served on counsel for the Debtor no later than Thursday, Nov. 3, 2022. All acceptances or rejections of the Plan must be in writing and served on counsel for the Debtor no later than Thursday, Nov. 3, 2022 by 4:30 p.m. (PT). The Debtor's Summary of Ballots and Preconfirmation Report must be filed on Friday, Nov. 4, 2022. Attorneys for HTP, Inc.: Christine M. Tobin-Presser, Esq. BUSH KORNFELD LLP 601 Union St., Suite 5000 Seattle, WA 98101-2373 Telephone: (206) 292-2110 Facsimile: (206) 292-2104 About HTP Inc. HTP, Inc.'s assets and operations consist of holding 48% of Hytech, LLC and pursuing certain litigation against parties that have, among other things, misappropriated technology and usurped business opportunities. The company is based in Sammamish, Wash. HTP filed its voluntary petition for Chapter 11 protection (Bankr. W.D. Wash. Case No. 21-11611) on Aug. 24, 2021, listing $772 million in total assets and $10.45 million in liabilities. Judge Timothy W. Dore presides oversees the case. Bush Kornfeld, LLP, and Western Washington Law Group, PLLC, serve as the Debtor's bankruptcy counsel and special counsel, respectively. The U.S. Trustee for Region 18 appointed an official committee of unsecured creditors on Sept. 17, 2021. The committee is represented by Alan J. Wenokur, Esq., at Wenokur Riordan, PLLC. IAMGOLD CORP: S&P Downgrades ICR to 'CCC+', Outlook Negative ------------------------------------------------------------ S&P Global Ratings lowered its long-term issuer credit rating on Toronto-based gold producer IAMGOLD Corp. and its issue-level rating on the company's unsecured notes due 2028 to 'CCC+' from 'B-'. At the same time, S&P Global Ratings revised its recovery rating on the notes to '4' from '3'. The negative outlook primarily reflects the potential for IAMGOLD to face a liquidity deficit over the coming year as it incurs significant capital expenditures (capex) to complete its Cote Gold project. S&P said, "The downgrade reflects our view of the growing liquidity risk IAMGOLD faces over the next 12 months on its path to completing its Cote Gold development project. IAMGOLD is facing large free cash flow deficits through the end of 2023 as it advances its Cote Gold development project toward commercial production by early 2024. We estimate the company is facing a funding gap of about US$500 million (including Rosebel sale proceeds and expected minimum cash balance through project construction) based on its most recent capex estimates announced in August 2022. However, since then, gold prices have steadily trended downward, credit market conditions have materially weakened, and significant inflationary pressures have not eased. In our view, the environment for the company to secure additional sources of cash necessary for project completion has become increasingly challenging. Moreover, we believe IAMGOLD is vulnerable to further potential project cost overruns and/or lower realized gold prices at its producing assets that could lead to increased funding requirements at a critical point in Cote Gold's development next year. Therefore, we believe the company is dependent on favorable business and financial conditions to meet its targeted financial commitments, which is reflected by the 'CCC+' rating. "We do not envision the company will face near-term liquidity crisis within the next 12 months. IAMGOLD has a large cash position (about US$453 million) and revolving credit facility availability (US$348 million) as of June 30, 2022, although we assume liquidity has declined in the third quarter on continued capital spending. In addition, the company recently announced its planned divestiture of it Rosebel mine for US$360 million, which is expected to close in first-quarter 2023. We also believe the company could realize additional (albeit, modest) proceeds from the sale of certain of its nonproducing exploration and development assets. However, 40% of the Cote Gold project is yet to be completed and cash outflows over the coming quarters will be significant. In addition, the level and pace of spending is significant relative to the scale of the company. S&P said, "IAMGOLD will likely require debt or debt-like financing to bridge the looming estimated funding gap; we believe its access to capital on reasonable terms, at least at present, is constrained, as evidenced by the high prevailing yields on its unsecured notes. The introduction of new, high-cost debt or debt-like instruments could result in a capital structure that we view as unsustainable in the long term--although we acknowledge this likely depends on the completion and contributions from Cote Gold as well as prospective gold margins. Lastly, the departure of key senior executives since the beginning of the year, in our view, presents additional risk and uncertainty with respect to the execution of the company's strategic and financing plan." The company is increasingly reliant on its Essakane mine until the Cote Gold project enters commercial production. S&P expects the Essakane mine (Burkina Faso) will account for the bulk of the company's earnings and cash flow in 2023 following the closing of the Rosebel sale transaction. The mine's relatively favorable cost profile, including all-in sustaining costs estimated at US$1,300 per ounce (/oz) in 2022, enables it to generate positive free cash flows, which is an important contributor for Cote Gold development funding. Therefore, the company is heavily reliant on steady output from this mine, with no material decline in its gold margins during project construction. Cote Gold is a large project estimated to contribute about 370,000 ounces of gold annually (on a 100% basis) over its estimated 18-year mine life, with attractive life-of-mine cash cost expectations in the mid-US$600/oz area. S&P believes the completion of the project is critical for the company to increase its production size (after the sale of Rosebel), improve its consolidated cost profile, and reduce its exposure to operations in high-risk jurisdictions. The negative outlook reflects the potential for IAMGOLD to face a liquidity deficit in 2023 as it incurs significant capex to complete its Cote Gold project over a relatively short time frame. The company requires incremental funding, which could prove challenging amid weaker gold and credit market conditions. In the interim, S&P believes IAMGOLD is vulnerable to further project cost increases and/or lower-than-expected gold margins that would increase cash requirements over the next several quarters. S&P said, "We could lower the ratings if, over the next 12 months, we believe IAMGOLD will face a liquidity crisis to finish its Cote Gold project. For this to occur, we would expect further capital cost escalations and/or lower-than-expected gold margins, with no additional sources of funding secured by the company. We would expect IAMGOLD to also consider a distressed debt exchange in this scenario. "We could take a positive rating action if we expect IAMGOLD to complete its Cote Gold project with excess estimated liquidity and negligible risk of a distressed exchange. In this scenario, we would expect the company to secure incremental financing to complete the project. In addition, we would also require visibility on IAMGOLD's prospective production and cash flows to an extent that allays possible risks with respect to the sustainability of its long-term capital structure. We believe this is most likely as the company nears completion of its Cote Gold project." ESG credit indicators: E-3, S-4, G-3 IMPERIAL TRANSPORTATION: Seeks Cash Collateral Access ----------------------------------------------------- Imperial Transportation, LLC asks the U.S. Bankruptcy Court for the Western District of Oklahoma for authority to use cash collateral to: -- pay the day-to-day operating expenses associated with its business, -- pay contract drivers who provide the core service of the Debtors business of providing medical transportation, -- maintain its property interests, -- make payments authorized by the Court, -- cover the administrative costs incurred in this case including, but not limited to, the payment of professionals of the estate, and -- cover other expenses necessary to preserve the value of the Debtor's estate. The Debtor believes Shizoom LLC, has on file a UCC Financing Statement recorded in the records of the Oklahoma County Clerk with a file date of June 13, 2022, and a file number of 2022061302061552. The principal owners and operators of the Debtor went through a divorce, with Rodkesha Ford retaining the business. The Debtor was not aware of a loan to one or more creditors resulting in the creditors garnishing the bank account of the Debtor. The Debtor has sought protection in Chapter 11 to allow time to set up proper accounting controls, identifying all creditors and reorganize debt, paying creditors in an orderly fashion. A copy of the motion is available at https://bit.ly/3MZdlFW from PacerMonitor.com. About Imperial Transportation, LLC Imperial Transportation, LLC is an Oklahoma limited liability company with its principle place of business in Oklahoma City, Oklahoma, engaged the providing of medical transportation of patients. It sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Okla. Case No. 22-12265) on October 1, 2022. In the petition signed by Rodkesha Ford, president, the Debtor disclosed up to $50,000 in assets and up to $500,000 in liabilities. Christopher Wood, Esq., at Christopher A. Wood & Associates, P.C., is the Debtor's legal counsel. IMPERIAL TRANSPORTATION: Taps Christopher A. Wood as Counsel ------------------------------------------------------------ Imperial Transportation, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Oklahoma to hire Christopher A. Wood & Associates, P.C. as its legal counsel. The firm's services will include: a. representing the Debtor's interest in matters and proceedings arising in or relating to its Chapter 11 case; b. investigating and prosecuting causes of action belonging to the estate under applicable non-bankruptcy law; and c. preparing a business plan and confirmation of a Chapter 11 plan of reorganization. Christopher Wood, Esq., will charge an hourly fee of $250 and will seek reimbursement for work-related expenses. Mr. Wood disclosed in court filings that he is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Christopher A. Wood, Esq. Christopher A. Wood & Associates, P.C. 1133 N. Portland Avenue Oklahoma City, OK 73107 Telephone: (405) 525-5005 Facsimile: (405) 521-8567 Email: cawlaw@hotmail.com About Imperial Transportation Imperial Transportation, LLC sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Okla. Case No. 22-12265) on Oct. 1, 2022, with up to $50,000 in assets and up to $500,000 in liabilities. Judge Sarah A Hall presides over the case. Christopher A. Wood, Esq., at Christopher A. Wood & Associates, P.C. represents the Debtor as counsel. IMPERVA INC: Fitch Alters Outlook on 'B-' LongTerm IDR to Negative ------------------------------------------------------------------ Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) for Imperva, Inc. at 'B-'. The Rating Outlook is revised to Negative from Stable. Fitch has also affirmed the rating for Imperva's $100 million first-lien secured revolver and $882 million (June 2022) first-lien secured term loan at 'B'/'RR3', and the $290 million second-lien secured term loan at 'CCC'/'RR6'. The Negative Outlook reflects the significant investments the company is making in upgrading its product and technology platform and GTM organizations. Fitch expects the depressed revenue growth and profitability to persist through 2022 and return to normalized levels in 2023. While the private equity ownership is likely to optimize ROE by prioritizing acquisitions and shareholder return over accelerated debt repayment, it also enables the company to execute on strategic initiatives. Given the ongoing investments in the company's technology and operations in 2022, Fitch expects the company's credit protection metrics to be outside the 'B-' rating category temporarily. KEY RATING DRIVERS Strategic Initiatives Stress Near-Term Credit Metrics: Imperva is undergoing an investment cycle to upgrade its product and technology platform and its GTM organizations resulting in short-term depressed profitability. Fitch expects revenue growth and profitability to resume normalized levels beginning in 2023 as GTM efforts gain efficiency and upgraded technology platform regain long-term competitiveness. Elevated Leverage Profile: Imperva's financial leverage is high for the rating category. Beyond the near-term profitability pressure resulting from its strategic initiatives, Fitch expects the company's financial leverage to remain elevated over the rating horizon given its private equity ownership. Fitch expects excess cash flow to be prioritized towards incremental tuck-in acquisitions rather than voluntary debt reduction. Secular Tailwind Supporting Growth: Imperva is exposed to sub-segments of the IT security industry that are forecast to have CAGR in the mid-teens in a normal economic environment. These sub-segments include WAAP, DDoS, RASP and Data Security. The importance of these sub-segments has been elevated in recent years as user mobility and IT architecture have evolved and blurred the network boundaries between on-premise infrastructure and the cloud, resulting in traditional network firewalls being less effective. New threat detection methods are intended to complement legacy IT security measures. Fitch believes the rising adoption of cloud computing would continue to drive demand growth for these IT security services as IT workloads increasingly reside in a hybrid IT world. Leader in Niche Sub-segments: According to third-party industry research, Imperva is perceived as a leader in WAAP, DDoS, and RASP. Fitch believes Imperva's leadership position in these markets would enable the company to capitalize on the secular industry growth. While larger competitors such as Akamai Technologies, Inc., F5 Networks, Inc., Cloudflare, Fortinet, and Amazon Web Services (AWS) exist for different solutions, the competing solutions have generally evolved from adjacent services. Fitch believes Imperva's purpose-built solutions to address these niche sub-segments provide greater product performance. In Fitch's view, this is a competitive advantage for Imperva as demonstrated by its strong presence in various industry verticals. High Revenue Retention Rate and Recurring Revenue: Imperva's net revenue retention rate has consistently been high implying sticky products with high switching costs. In addition, the company has been shifting its revenue structure to be more recurring by migrating customers to subscriptions from licenses. The high revenue retention and recurring revenue enhances the predictability of Imperva's financial performance and increases the lifetime value of customers. Diversified Customer Base: The company's products are adopted by over 6,200 enterprise customers across a wide range of industry verticals, including: financial services, healthcare, technology, retail, and telecom. The diversification across customers and industry verticals effectively minimizes customer concentration risks and reduces revenue volatility through economic cycles. Fitch views such characteristics favorably as it reduces risks in the context of secular industry growth. DERIVATION SUMMARY Fitch's ratings are supported by Imperva's leadership in the growing enterprise IT and data security industry. Fitch expects the growth for the product category to see CAGR in the mid-teens in a normal economic environment. In the near term, the ongoing strategic initiatives are expected to temporarily stress Imperva credit protection metrics. The financial structure for the company is aggressive for the rating category and weakens the credit protection metrics. In the longer term, as a leader in this product category, Fitch expects Imperva to capitalize on the category growth. Imperva's purpose-built solutions complement existing network firewalls being used by enterprise customers to protect an increasingly mobile user base and evolving network architecture that incorporates cloud adoptions. Imperva's focus around the emerging niche category enables the company to offer products that are superior to competing products as demonstrated by its over 6,200 enterprise customers. The high revenue retention and increasing recurring revenue from subscription provide a high level of predictability for its operations. At the IT security industry level, Fitch believes the heightened awareness of IT security risks arising from high profile security breaches in recent years provide support for the secular growth of the industry. Imperva was acquired by Thoma Bravo in 1Q19 for $2.1 billion financed with $1.05 billion in term loans and remainder from equity contribution and cash on balance sheet. Fitch estimates Imperva's gross leverage to remain above 10x through 2022 and trend down to approximately 7x by 2025 primarily through EBITDA growth. Given the high financial leverage, Fitch views Imperva's financial flexibility relatively more constrained than peers in the technology sector. Imperva's industry expertise, revenue scale, leverage and liquidity profile are consistent with the 'B-' rating category. The Negative Outlook reflects the near-term strain on credit profile resulting from the company's strategic initiatives. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Revenue growth low-single digits in 2022 then return to normalized levels in high single digits starting in 2023; - EBITDA margins depressed in 2022 then return to normalized levels starting in 2023; - Capital intensity held near 2% of revenue; - No acquisitions or dividend payments throughout 2025; - Outstanding revolver balance fully repaid by 2024. KEY RECOVERY RATING ASSUMPTIONS - The recovery analysis assumes that Imperva would be reorganized as a going-concern in bankruptcy rather than liquidated. - Fitch has assumed a 10% administrative claim. Going-Concern (GC) Approach - In estimating a distressed enterprise value (EV) for Imperva, Fitch assumes a combination of higher customer churn and margin compression on lower revenue scale resulting in going concern EBITDA that is approximately 17% lower relative to 2021 EBITDA. This is higher than Fitch's estimated 2022 EBITDA as the company is incurring higher operating expenses due to ongoing strategic initiatives. - Fitch applies a 7x multiple to arrive at EV of $570 million. The multiple is higher than the median TMT enterprise value multiple, but is in line with other similar software companies that exhibit strong recurring revenue and FCF characteristics. - In the 21st edition of Fitch's Bankruptcy Enterprise Values and Creditor Recoveries case studies, Fitch notes nine past reorganizations in the Technology sector with recovery multiples ranging from 2.6x to 10.8x. Of these companies, only three were in the Software sector: Allen Systems Group, Inc.; Avaya, Inc.; and Aspect Software Parent, Inc., which received recovery multiples of 8.4x, 8.1x and 5.5x, respectively. The GC EBITDA estimate reflects Fitch's view of a sustainable, post reorganization EBITDA level upon which we base the enterprise valuation. - The allocation of value in the liability waterfall results in recovery corresponding to 'RR3' for the first lien revolver and term loan and 'RR6' for the second lien term loan. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - (CFO-Capex)/Total Debt with Equity Credit ratio sustaining above 3%; - Fitch's expectation that gross leverage (Total Debt with Equity Credit/Operating EBITDA) sustaining below 7.5x; - Sequential EBITDA margin expansion after 2022; - Organic revenue growth sustaining above high-single digits. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Fitch's expectation that (CFO-Capex)/Total Debt with Equity Credit ratio sustaining below 0%; - FFO Fixed Charge Coverage sustaining below 1.25x; - Organic revenue growth sustaining near or below 0%. - Evidence of eroding customer retention reflecting weakening market position. Fitch could stabilize the rating when the company demonstrates a return to normalized growth and profitability that is consistent with the 'B-' rating. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: The company has adequate liquidity as evidenced by over $50 million of cash on hand as of June 30, 2022. Imperva's FCF generation is currently suppressed due to strategic initiatives to invest in product and technology platform and GTM organizations. Fitch expects Imperva's FCF to reach near-normalized levels starting fiscal 2023. The company's liquidity is projected to be adequately supported by its FCF generation, over $75 million of available revolving credit facility, and over $50 million of readily available cash and cash equivalents as of June 2022. Imperva's cash flows will be supported by normalized EBTIDA margins and significant recurring cash flows. Liquidity is largely constrained by a significant interest expense burden. Debt Structure: Imperva has about $1.2 billion of outstanding debt on its books, separated into a secured first lien, secured second lien term loans and partial use of revolver. The $882 million first lien secured term loan is due January 2026, and the $290 million second lien secured term loan is due January 2027. Given the recurring revenue nature of the business, adequate liquidity, and favorable cost structure as a temporary increase in operating expenses in 2022, Fitch believes Imperva will be able to make their required debt payments. Fitch believes Imperva's operating profile remains strong. ISSUER PROFILE Founded in 2002, Imperva is a global provider of cyber-security solutions that protect business-critical data and applications whether on-premise, in the cloud, or in a hybrid environment. The Company specializes and is a leader in Web Application and API Protection ("WAAP"), Distributed Denial of Service (DDoS), and Runtime Application Self -protection (RASP) and has maintained it for the last several years. The company serves over 6,200 enterprise customers in more than 100 countries that represent banks, retailers, insurers, tech and telecom companies, hospitals as well as national, state and local government organizations. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Imperva Inc. LT IDR B- Affirmed B- senior secured LT B Affirmed RR3 B Senior Secured 2nd Lien LT CCC Affirmed RR6 CCC JAB ENERGY: Seeks to Hire Stretto as Administrative Advisor ----------------------------------------------------------- JAB Energy Solutions II, LLC seeks approval from the U.S. Bankruptcy Court for the District of Delaware to hire Stretto, Inc. as their administrative advisor. The firm's services include: (a) assisting with, among other things, solicitation, balloting and tabulation of votes, and preparing any related reports, as required in support of confirmation of a Chapter 11 plan; (b) preparing an official ballot certification and, if necessary, testifying in support of the ballot tabulation results; (c) assisting with the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs and gathering data in conjunction therewith, if necessary; (d) providing a confidential data room, if requested; and (e) managing and coordinating any distributions pursuant to a Chapter 11 plan. The firm will be paid as follows: Consultant (Associate/Senior Associate) $70 - $200 per hour Director/ Managing Director $210 - $250 per hour Solicitation Associate $230 per hour Director of Securities & Solicitations $250 per hour Sheryl Betance, a senior managing partner at Stretto, disclosed in a court filing that her firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Sheryl Betance Stretto, Inc. 410 Exchange, Ste. 100 Irvine, CA 92602 Telephone: (714) 716-1872 Email: Sheryl.betance@stretto.com About JAB Energy Solutions II JAB Energy Solutions II, LLC -- http://jabenergysolutions.com/-- is an EPIC (Engineering, Procurement, Installation & Commissioning) specialist providing comprehensive project management services for decommissioning, abandonment, construction and installation of offshore and onshore oil and gas facilities, platforms and pipelines. Based in Houston, with offices in Lake Charles, La., JAB Energy Solutions serves major and independent energy companies worldwide. JAB Energy Solutions filed a petition for Chapter 11 protection (Bankr. D. Del. Case No. 21-11226) on Sept. 7, 2021, listing as much as $50 million in both assets and liabilities. Judge Craig T. Goldblatt oversees the case. The Debtor tapped Pachulski Stang Ziehl & Jones, LLP as legal counsel and Traverse, LLC as restructuring advisor. Albert Altro, the founder of Traverse, serves as the Debtor's chief restructuring officer. The U.S. Trustee for Region 3 appointed an official committee to represent unsecured creditors in the Debtor's Chapter 11 case. The committee tapped Lugenbuhl, Wheaton, Peck, Rankin & Hubbard and Joyce, LLC as legal counsel and Matthews, Cutrer and Lindsay, P.A. as financial advisor. JAF 27 LLC: Files Emergency Bid to Use Cash Collateral ------------------------------------------------------ JAF 27 LLC asks the U.S. Bankruptcy Court for the District of Massachusetts for authority to use cash collateral and provide adequate protection. Specifically, the Debtor requires the use of cash collateral to: a. pay expenses incurred in the ordinary course of business of being a landlord to the six units at 621 Central Street; b. make payments to secured creditors upon the sale of the Debtor's three properties; and c. pay administrative costs associated with the Debtor's Chapter 11 case, including, but not limited to, Subchapter V Trustee's fees and the Debtor's counsel's fees, real estate broker's fees, real estate attorney's fees, and accountant's fees. The Debtor owns three properties located at 621-627 Central Street, 175 Dalton Street, and 44 Billerica Street, all in Lowell, Massachusetts. Two of the Debtor's properties are currently vacant and not generating income. At present, the Debtor is receiving $9,300 per month in total rental revenue paid by tenants in six units of 621 Central Street. The estimated value of the Properties are: a. 621 Central Street: $1,250,000; b. 175 Dalton Street: $425,000; and c. 44 Billerica Street: $85,000. The secured creditors holding a mortgage on 621 Central Street, with estimated balances, are: a. A first mortgage to Belvidere Capital, LLC in the amount of $770,000; b. A second mortgage to Carlos Borges in the amount of $88,000; c. Marc P. Gendreau in the amount of $50,000; d. A mortgage to Hooshmand S. Afshar and Zarrin S. Afshar in the amount of $50,000; e. Two mortgages to Christian Doherty in the total amount of $10,000; f. A mortgage to JMF Realty, LLC in the amount of $52,000; and g. A mortgage to Kevin J. Ahern, Jr. and Brad M. Pacheco in the amount of $37,000. The secured creditors holding a mortgage on 175 Dalton Street, with estimated balances, are: a. A first mortgage to Hardest Working Realty, LLC in the amount of $361,000; b. A mortgage to JMF Realty, LLC in the amount of $52,000. The secured creditors holding a mortgage on 44 Billerica Street, with estimated balances, are: a. A tax lien held by the City of Lowell in the amount of $689; b. A first mortgage to Belvidere Capital, LLC with the amount due of $85,000; c. A mortgage to Omar Rafik with the amount due of $20,000. Belvidere Capital, LLC, as the First Mortgagee on 621 Central Street, has alleged default under the terms of its Note and a foreclosure sale was scheduled for 621 Central Street on September 8, 2022. The foreclosure sale was delayed due to the Debtor's bankruptcy filing. However, the Security Agreement with Belvidere contains an assignment of rents/receivables. Prior to the filing of its Chapter 11 Bankruptcy case, the Debtor, with assistance of a real estate broker, was able to procure a buyer for 621 Central Street. In order to protect the interests of the Secured Creditors, the Debtor proposes to: a. maintain insurance on the Debtor's three Properties. At present, the properties are insured; b. grant to the Secured Creditors, replacements liens on the same types of post-petition property of the estate against which the Secured Creditors held as of September 7, 2022, the Chapter 11 petition date. Said replacement liens will maintain the same priority, validity and enforceability of the Secured Creditors' pre-petition liens. Said replacement liens will be recognized only to the extent of the diminution in value of the Secured Creditors' pre-petition collateral after the petition date resulting from the Debtor's use of cash collateral during the pendency of the case; c. effectuate a sale of the Debtor's three Properties that will result in the monies necessary to pay the outstanding creditors in full; and d. make the payments as set forth in the attached projected budget for the months of September 2022 to December 2022. A copy of the motion and the Debtor's budget is available at https://bit.ly/3TDie9G from PacerMonitor.com. The budget provides for total expenses, on a monthly basis, as follows: $7,000 for October 2022; $1,129,019 for November 2022; and $496,760 for December 2022. About JAF 27 LLC JAF 27, LLC is a Tewksbury, Mass.-based company engaged in renting and leasing real estate properties. JAF 27 filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Mass. Case No. 22-40648) on Sept. 7, 2022, with between $1 million and $10 million in both assets and liabilities. Steven Weiss serves as Subchapter V trustee. Christopher Murray, Esq., at Murray Law Firm, P.C. is the Debtor's legal counsel. JOHN V. GALLY: Taps Hunter, Humphrey & Yavitz as Litigation Counsel ------------------------------------------------------------------- The John V. Gally Family Protective Trust Inc. received approval from the U.S. Bankruptcy Court for the District of Arizona to employ Hunter, Humphrey & Yavitz, PLC as its litigation and appellate counsel. The firm will represent the Debtor in the Navajo County Superior Court Case No. CV2012-00208 and any appeals therefrom. On Aug. 26, the Debtor paid the firm a flat fee of $40,000 with respect to the anticipated appellate representation. The hourly rates of the firm's counsel and staff are as follows: Candess J. Hunter, Esq. $415 Isabel M. Humphrey, Esq. $385 Randy Yavitz, Esq. $425 Stacey Mosbrucker, Paralegal $195 Isabel Humphrey, Esq., an attorney at Hunter, Humphrey & Yavitz, 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: Isabel M. Humphrey, Esq. Hunter, Humphrey & Yavitz PLC 2633 E. Indian School Rd., Ste. 440 Phoenix, AZ 85016 Telephone: (602) 275-7733 Email: stacey@hhylaw.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 was appointed as Subchapter V trustee. The Debtor tapped Bradley David Pack, Esq., at Engelman Berger, PC as counsel; Stephens & Company, PLLC as accountant; Resolute Commercial Services, LLC as valuation expert; and Hunter, Humphrey & Yavitz, PLC as litigation and appellate counsel. K&N PARENT: S&P Corrects First-Lien Term Loan Rating to 'CCC-' -------------------------------------------------------------- S&P Global Ratings corrected its issue-level rating on K&N Parent Inc.'s first-lien term loan issue-level rating to 'CCC-' and its second-lien term loan issue-level rating to 'C'. Although these ratings were accurately reflected in its research update published Oct. 18, 2022, S&P's public website and the RatingsDirect platform incorrectly displayed a 'C' issue-level rating for the first-lien term loan and a 'CCC-' issue-level rating for the second-lien term loan. KABBAGE INC: Seeks Approval to Hire 'Ordinary Course' Professionals ------------------------------------------------------------------- Kabbage, Inc., doing business as KServicing, and its affiliates seek approval from the U.S. Bankruptcy Court for the District of Delaware to employ professionals in the ordinary course of business. The Debtors need these ordinary course professionals (OCPs) to provide a range of services relating to litigation, regulatory, government investigations, and tax and accounting issues and matters, as well as other issues and matters that have a direct and significant impact on their day-to-day operations. OCPs' total compensation and reimbursement shall not exceed $50,000 per month on average over any three-month period on a rolling basis. OCPs include: (a) Alston & Bird LLP, Litigation counsel (b) Davis Polk & Wardwell LLP, Government investigations counsel (c) Dentons US LLP, Regulatory counsel (d) Thomas E. Austin, Jr. LLC, Litigation counsel (e) Windham Brannon, LLC, Tax and accounting advisors About Kabbage Inc. 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. 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 Aug. 16, 2020, much of the Company's business was sold to American Express Travel Related Services Company, Inc. 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. To implement the wind down of their businesses, on Oct. 3, 2022, Kabbage, Inc. d/b/a KServicing and certain of its affiliates each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10951). Judge Craig T. Goldblatt oversees the cases. Kabbage Inc. estimated $500 million to $1 billion in assets and debt as of the bankruptcy filing. The Debtors tapped Weil, Gotshal & Manges, LLP as general counsel; Richards, Layton & Finger, PA as local counsel; AlixPartners, LLC as financial advisor; KPMG International Limited as fraud review services provider; and Jones Day, LLP as government investigations counsel. Greenberg Traurig is counsel to the Debtors' board of directors. Omni Agent Solutions, Inc. is the claims agent and administrative advisor. KALOS CAPITAL: Gets OK to Hire Stretto as Claims and Noticing Agent ------------------------------------------------------------------- Kalos Capital, Inc. received approval from the U.S. Bankruptcy Court for the Northern District of Georgia to employ Stretto as claims, noticing 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 case of the Debtor. Stretto will bill the Debtor no less frequently than monthly. The firm will be paid an advance of $40,000 upon execution of its agreement with the Debtor. Sheryl Betance, a senior managing director at Stretto, 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: Sheryl Betance Stretto, Inc. 410 Exchange, Ste. 100 Irvine, CA 92602 Telephone: (714) 716-1872 Email: sheryl.betance@stretto.com About Kalos Capital Kalos Capital, Inc. filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-58326) on Oct. 17, 2022. In the petition signed by its chief financial officer, Carol Wildermuth, the Debtor disclosed between $1 million and $10 million in both assets and liabilities. Judge Sage M. Sigler oversees the case. The Debtor tapped Burr & Forman, LLP as counsel and Stretto, Inc. as claims, noticing and solicitation agent. KALOS CAPITAL: Seeks to Tap Burr & Forman as Bankruptcy Counsel --------------------------------------------------------------- Kalos Capital, Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of Georgia to employ Burr & Forman, LLP as legal counsel. Burr & Forman will render these services: (a) prepare pleadings and applications; (b) conduct examination; (c) advise the Debtor of its rights, duties, and obligations; (d) consult with and represent the Debtor with respect to a Chapter 11 plan; (e) perform legal services necessary to the Debtor's business operations; and (f) take other actions incident to the proper preservation and administration of the Debtor's estate and business. The hourly rates of the firm's counsel and staff are as follows: Attorneys $350 - $695 Paralegals $260 In addition, the firm will seek reimbursement for expenses incurred. Marc Solomon, Esq., a partner at Burr & Forman, 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: Marc Solomon, Esq. Kelly Waits, Esq. Burr & Forman, LLP 171 17th Street, NW, Suite 1100 Atlanta, GA 30363 Telephone: (404) 815-3000 Facsimile: (404) 817-3244 Email: msolomon@burr.com kwaits@burr.com About Kalos Capital Kalos Capital, Inc. filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-58326) on Oct. 17, 2022. In the petition signed by its chief financial officer, Carol Wildermuth, the Debtor disclosed between $1 million and $10 million in both assets and liabilities. Judge Sage M. Sigler oversees the case. The Debtor tapped Burr & Forman, LLP as counsel and Stretto, Inc. as claims, noticing, and solicitation agent. LAKEPORT CF: Debtor Has Until Oct. 28 to File Plan Disclosures -------------------------------------------------------------- Judge Michael E. Romero has entered an order granting Lakeport CF, LLC, an extension of 30 days in which to file its initial disclosure statement, up to and including Oct. 28, 2022. About Lakeport CF Lakeport CF, LLC, a company in Elbert County, Colo., sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Colo. Case No. 22-11941) on May 31, 2022, listing $10 million to $50 million in both assets and liabilities. Judge Michael E. Romero oversees the case. Jeffrey A. Weinman, Esq., at Allen Vellone Wolf Helfrich & Factor, PC and Fairfield and Woods P.C. serve as the Debtor's bankruptcy counsel and special counsel, respectively. LBJ HEALTHCARE: 9th Cir. Affirms Dismissal of Charnetskys' Appeal ----------------------------------------------------------------- The U.S. Court of Appeals for the Ninth Circuit, on Thursday, Oct. 20, 2022, affirms the district court's dismissal of Appellant's appealed case In re: LBJ HEALTHCARE PARTNERS, INC., Debtor, LETICIA L. CHARNETSKY; et al., Appellants, v. LBJ HEALTHCARE PARTNERS, INC., Appellee. In re: BRIAN JAY BUENVIAJE, Debtor, LETICIA L. CHARNETSKY; et al., Appellants, v. BRIAN JAY BUENVIAJE, Appellee. In re: ROSALINDA BUENVIAJE, Debtor, LETICIA L. CHARNETSKY; et al., Appellants, v. ROSALINDA BUENVIAJE, Appellee, Nos. 21-56330, 21-56332, 21-56333, (9th Cir.) as equitably moot. Appellants (the Charnetskys) are secured creditors in the bankruptcy cases of Debtors LBJ Healthcare Partners Inc., Brian Buenviaje and Rosalinda Buenviaje. When the Debtors filed their joint plan of reorganization providing for payment of interest on the Charnetskys' three claims, they calculated the post-confirmation interest based on the value of the claim at the date the Debtors filed the petition in bankruptcy, not on the effective date of the plan. When the bankruptcy court confirmed the Debtors' joint plan of reorganization, Appellants appealed to the district court. They argued, among other objections, that the plan violated the Bankruptcy Code because it did not provide for the payment of plan interest on accrued pendency interest. The district court dismissed their appeal as equitably moot. On appeal, the Appellants demand an additional $250,115—which is a substantial sum equal to roughly 20% of the confirmation balance of their claims and to nearly 10% of the projected total outstanding debt at plan maturity. The Appellants contend that the plan can be modified without harming third parties or upsetting the plan because the debtors can raise additional funds when they refinance their outstanding debt on the properties at plan maturity, without clawing back or reducing payments to third parties. The Court mentions that in In re Thorpe Insulation Co., 677 F.3d at 881 "a court applying the four-factor test for equitable mootness must consider (1) whether appellants have sought a stay; (2) whether substantial consummation of the plan has occurred; (3) the effect of the remedy on third parties not before the court; and (4) whether the bankruptcy court can fashion effective and equitable relief "without completely knocking the props out from under the plan and thereby creating an uncontrollable situation for the bankruptcy court." Here, the Court finds that all four factors weigh in favor of mootness because: (1) Appellants never sought a stay of the bankruptcy court's order and have offered no reason, let alone an "adequate reason," for their failure to do so; (2) Appellants do not dispute that the plan has been substantially consummated; (3) modification of the plan would likely be inequitable to third-party creditors, because the additional money that Appellants demand would likely have to come from money paid out to or still owed to third parties—it might also unfairly privilege Appellants over other creditors; and (4) the bankruptcy court cannot fashion relief without unwinding the plan, because, as Appellants themselves argued before the district court, neither of the solutions Appellants have proposed during litigation—higher monthly payments or additional refinance—are feasible. In bankruptcy court, the Appellants argued that neither the payments under the existing plan nor the greater payments that they demanded were feasible. In district court, Appellants demanded not only an additional $250,115 in interest on accrued pendency interest, but also further interest based on the negative amortization of their claims since plan confirmation. They also denied that higher monthly payments or refinance were feasible. Appellants have failed to explain why additional refinance should now be possible. And without additional refinance, plan modification would inevitably "bear unduly on the innocent" and "knock the props out from under the plan." A full-text copy of the MEMORANDUM dated Oct. 20, 2022, is available at https://tinyurl.com/hvkmrvfz from Leagle.com. About LBJ Healthcare Headquartered in Whittier, Calif., LBJ Healthcare Partners Inc., formerly doing business as Bayshore Villa Healthcare Partners, Inc., filed for Chapter 11 bankruptcy protection (Bankr. C.D. Cal. Case No. 16-15197) on April 21, 2016, disclosing $49,370 in assets and $1.27 million in liabilities. The petition was signed by Brian Buenviaje, president and CEO. Judge Vincent P. Zurzolo oversees the case. Robert M. Aronson, Esq., at the Law Office of Robert M. Aronson, serves as the Debtor's bankruptcy counsel. Constance Doyle was appointed patient care ombudsman for the Debtor. Subsequently, Tamar Terzian was appointed as the PCO on February 21, 2018. LIBERTY POWER: Court OKs Deal on Cash Collateral Access ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida, Fort Lauderdale Division, entered an order authorizing Liberty Power Holdings, LLC, LPT, LLC and affiliates to use cash collateral in accordance with its agreement with Boston Energy Trading and Marketing, LLC. Pursuant to the terms of the Stipulation, (i) the Debtors are authorized to use the cash collateral of BETM through December 31, 2022 in accordance with the budget attached to the Stipulation, as such October Budget will be updated on a month-to-month basis. As adequate protection, BETM is granted continuing Replacement Liens in and upon all the personal property of the Debtors. The Replacement Liens will be junior and subordinate only to the DIP Liens and the Carve-Out but otherwise senior to all other liens and security interests. BETM is also granted an allowed, superpriority administrative expense claim in the amount of the Adequate Protection Obligation. The Adequate Protection Superpriority Claim will be junior to the DIP Superpriority Claim and the Carve-Out. The Debtors are authorized to pay BETM's fees, costs, and expenses, including without limitation, the fees and costs of its counsel, chargeable under the DIP Documents, pursuant to the terms of the Stipulation. As previously reported by the Troubled Company Reporter, prior to the commencement of the Cases, BETM provided financing and other credit support to the Debtors. As of the Petition Date, the Debtors were indebted to BETM in the amount of $121,031,961, plus interest, costs and attorneys' fees for advances and other financial accommodations extended by BETM to or for the benefit of the Debtors. On July 6, 2020, BETM protected its first-priority security interest by filing a UCC1 Financing Statement with the Delaware Secretary of State (U.C.C. Initial Filing No: 2020 4653442). BETM holds a properly perfected, duly enforceable, first priority lien on substantially all of the assets of the Debtors and a perfected first-priority lien on all of the equity interests of the Debtors. The Debtors and BETM have negotiated at arms' length and in good faith regarding the amount of the diminution in the value of BETM's Pre-Petition Collateral. In connection therewith, BETM has asserted that such diminution exceeded $20 million based on the Pre-Petition Collateral Stated Value set forth above and the remaining Pre-Petition Collateral as of the date hereof, after taking into account payments made on the Pre-Petition Obligations of owed to BETM. In response, the Debtors have asserted that such diminution might be as low as approximately $5 million. As a result of the good faith negotiations between the Debtors and BETM and in an effort to avoid costly and risky litigation with respect thereto, the parties have agreed that the amount of $11,515,000 represents the diminution in the value of BETM's Pre-Petition Collateral, and thus its failure of adequate protection. The Adequate Protection Obligation is secured by the Replacement Liens. The carve-out means: (a) the DIP Liens, (b) all fees required to paid by the Debtors to the Office of the United States Trustee pursuant to 28 U.S.C. section 1930(a), (c) all fees due the Clerk of the Court, and (d) up to $100,000 in fees and expenses incurred by the Debtors' professionals following the Maturity Date. A copy of the order is available at https://bit.ly/3TTq1R9 from Stretto, the claims agent. About Liberty Power Established in 2001 and headquartered in Fort Lauderdale, Florida, Liberty Power is one of the largest and longest-tenured owner-operated retail electricity provider in the United States. Liberty Power provides large and small businesses, government agencies and residential customers with competitively priced electricity, sustainability solutions and exceptional customer service. Liberty Power filed a voluntary petition for Chapter 11 reorganization (Bankr. S.D. Fla. Case No. 21-13797) on April 20, 2021. The Debtor estimated $50 million to $100 million in assets and at least $100 million in liabilities as of the bankruptcy filing. Judge Scott M. Grossman oversees the case. Genovese Joblove & Battista, P.A., is the Debtor's counsel. Boston Energy Trading and Marketing, LLC, as DIP Lender, is represented by Eversheds Sutherland (US) LLP. LIZARD IN LOS ANGELES: Has Deal on Cash Collateral Access --------------------------------------------------------- Lizard in Los Angeles, LLC asks the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, for authority to use cash collateral in accordance with its agreement with Westridge Lending Reit, LLC. The Debtor's primary asset is a parcel of real property located at 633 South Spring Street, Los Angeles, CA 90014. The Debtor believes the current fair market value of the Property is approximately $15.1 million. The Debtor purchased the Property and spent millions of dollars to entitle it to build a 170-unit hotel. Thereafter, the Debtor sought to secure "take out" financing and/or a development partner to fulfill its goal of (1) developing a hotel on the Property, and/or (2) placing the Property on the market for sale. In the meantime, the Debtor leased the Property to a third party in order for the third party to operate a parking lot thereon. To date, the third party continues to lease the Property from the Debtor at a rate of $12,000 per month. The Rent is the Debtor's sole source of income. Unfortunately, as the COVID-19 pandemic harmed the hospitality industry, the Debtor was unable to secured "take out" financing or find a development partner to accomplish its stated goals. Consequently, Westridge Lending Reit, LLC, the Debtor's senior secured lender, noticed up a foreclosure sale. On August 9, 2018, the Debtor entered into a loan agreement with Westridge in connection with a $5.5 million loan. Among other things, the Westridge Loan is evidenced by the Promissory Note also dated August 9, 2018. The Debtor's obligations under the Westridge Loan, the Westridge Note, and related documents are secured by, among other things, the Property. Westridge asserts that, as of the Petition Date, the Debtor owes it $7.13 million, including principal and interest, with interest, fees and other charges continuing to accrue according to the terms of the Westridge Loan Documents. In addition to Westridge, John Labib Structures asserts a $10,000 secured claim against the Debtor based on a recorded mechanic's lien. The Labib Claim arises from certain pre-petition engineering services Labib provided to the Debtor. The mechanic's lien provides for a security interest in the Property but not in the Rent. Since the Petition Date, the Debtor and Westridge have been engaged in extensive negotiations over the terms of a comprehensive cash collateral stipulation. The Stipulation authorizes the Debtor's use of cash collateral in accordance with the budget, with a 15% variance, through January 11, 2023. The Debtor is authorized to use cash collateral to pay "incidental or emergency expenses" not provided for in the Budget with a per item cost of $1,000 or less, or that must be paid on an emergency basis to prevent damage to the Property, without separate court approval. As adequate protection, Westridge is granted a valid, binding, enforceable and perfected first priority replacement lien in all property of Debtor's estate of any nature or type. The Debtor's authority to use cash collateral will terminate upon the expiration of the 90-day period from the date of the Stipulation (October 13, 2022). A hearing on the matter is set for November 23, 2022 at 9 a.m. A copy of the Debtor's motion and budget is available at https://bit.ly/3F5aJEB from PacerMonitor.com. The budget provides for total expenses, on a monthly basis, as follows: $9,620 for October 2022; $31,265 for November 2022; $120 for December 2022; $120 for January 2022; and $31,265 for February 2023. About Lizard In Los Angeles New York-based Lizard In Los Angeles, LLC is a boutique lifestyle hotel with a focus on design and culture, oriented towards high-end domestic and international business travelers. Lizard In Los Angeles sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 22-14049) on July 26, 2022. In the petition filed by Jack Deng, authorized representative, the Debtor estimated assets between $10 million and $50 million and liabilities between $1 million and $10 million. Judge Sandra R. Klein oversees the case. Levene, Neale, Bender, Yoo & Golubchik, LLP is the Debtor's counsel. LOVING KINDNESS: Case Summary & Four Unsecured Creditors -------------------------------------------------------- Debtor: Loving Kindness Healthcare Systems, LLC 155 North Craig Street Suite 160 Pittsburgh, PA 15213 Business Description: The Debtor is a home health care service in Pittsburgh, Pennsylvania. Chapter 11 Petition Date: October 22, 2022 Court: United States Bankruptcy Court Western District of Pennsylvania Case No.: 22-22092 Judge: Hon. Jeffery A. Deller Debtor's Counsel: Brian C. Thompson, Esq. THOMPSON LAW GROUP, P.C. 125 Warrendale-Bayne Road Suite 200 Warrendale, PA 15086 Tel: 724-799-8404 Fax: 724-799-8409 Email: bthompson@thompsonattorney.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Scott Taylor as director. A full-text copy of the petition containing, among other items, a list of the Debtor's four unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/7YG7NGA/Loving_Kindness_Healthcare_Systems__pawbke-22-22092__0001.0.pdf?mcid=tGE4TAMA MAYFLOWER RETIREMENT: Fitch Puts 'BB+' IDR on Rating Watch Neg. --------------------------------------------------------------- Fitch Ratings has placed Mayflower Retirement Center's (Mayflower) 'BB+' Issuer Default Rating on Rating Watching Negative. The 'BB+' revenue rating on the following Florida Development Finance Corporation bonds issued on behalf of the Mayflower have also been placed on Rating Watch Negative: - $60,135,000 Senior Living Revenue Bonds (The Mayflower Project), Series 2020A; - $53,650,000 Revenue Bonds (The Mayflower Retirement Community Project), Series 2021A; - $10,000,000 (Mayflower Retirement Community Project) senior living revenue bonds series 2021B-1; - $16,350,000 (Mayflower Retirement Community Project) senior living revenue bonds series 2021B-2. SECURITY The bonds are secured by a gross revenue pledge of obligated group and a mortgage on certain property. A fully funded debt service reserve fund provides additional bondholder security. ANALYTICAL CONCLUSION The Rating Watch Negative reflects issues from Hurricane Ian that are affecting the Mayflower's main independent living (IL) apartment building and the potential effect that may have on the Mayflower's financial profile. The Mayflower disclosed that the residents from that main IL building are safe and have been relocated to other living arrangements. Fitch has reached out to management of the Mayflower for additional clarity but have been unable to schedule a call. Fitch's concern is the potential financial strain that disruption to the Mayflower's main IL tower might cause. As of July 2022, the Mayflower was having a very strong year for net entrance fee receipts, with over 20 move ins as of July 2022 compared with 18 for all of 2021. This was offsetting a thinner year of operational performance. Additionally, the Mayflower reported having over 500 days cash in hand as of July 31, 2022, which would indicate an adequate amount of near-term liquidity, as the Mayflower assesses the damage and decides on the next steps. Fitch will resolve the Rating Watch Negative once the effect of the damage can be assessed. The Mayflower is in the latter stages of a major repositioning project that includes a 50-unit apartment expansion and a new skilled nursing building. In the public documents, the Mayflower disclosed that the new skilled nursing center was opened in early October and was functioning and serving residents. The document noted that the Mayflower continues to provide the full continuum of care on its campus, as well as some amenities. The Mayflower also disclosed that the construction site was not subject to the same damage as the main IL building and that all of its current stock of villas was also intact. As of Fitch's last rating action the IL expansion was expected to open in early-to-mid 2023. KEY RATING DRIVERS Revenue Defensibility: 'bbb' Operating Risk: 'bbb' Financial Profile: 'bb' RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: - Project or storm-related challenges that threaten to weaken the financial profile and the ability for Mayflower to paydown the short-term debt and cover its maximum annual debt service (MADS). The short-term debt is expected to be paid down in 2024, and the MADS of $7.2 million will not be tested until 2025. - Weakening in the financial profile such that cash to adjusted falls below 25%, and Mayflower fails to cover its lower actual debt service of $1.2 million during the campus repositioning project's construction and fill up period; - Weaker than expected cash to adjusted debt and MADS coverage post-project stabilization. Factors that could, individually or collectively, lead to positive rating action/upgrade: - Improved financial profile post-project stabilization such that cash to adjusted to debt is expected to stabilize above 40% and MADS coverage is consistently above 1.7x. CREDIT PROFILE Mayflower is a type-A Life Plan Community located on approximately 30 acres in Winter Park, Florida. The campus currently consists of 248 IL units (28 villas and 220 apartments), 31 assisted living units (all private, with 15 utilized as memory care units), and 60 private skilled nursing beds. Mayflower generated $27.2 million in total operating revenue in the fiscal year ended Dec. 31, 2021. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity Rating Prior ------ ------ ----- Mayflower Retirement Center, Inc. (FL) LT IDR BB+ Rating Watch On BB+ Mayflower Retirement Center, Inc. (FL) / General Revenues/1 LT LT BB+ Rating Watch On BB+ MERCURITY FINTECH: Appoints Qian Sun as Chief Operating Officer --------------------------------------------------------------- Mercurity Fintech Holding Inc. has appointed Qian Sun, one of the Company's directors, to be the Company's chief operating officer in connection with an employment agreement entered into between Qian Sun and the Company. Ms. Sun's employment is subject to a probationary period of three months continuous service, which also in part depends on her performance in her role as chief operating officer of the Company. The Company has agreed to pay Ms. Sun $2,500 per month. As previously disclosed in the Company's Current Report filed on Form 6-K with the Securities and Exchange Commission on Oct. 13, 2022, Ms. Qian Sun, age 34, has more than 10 years of experience in corporate management and industrial investment. In 2010, Ms. Sun joined Shenzhen Worldunion Group (SZ:002285), a publically traded real estate services company in China, as a Project Planner in Northern China, responsible for the project planning and marketing in Northern China. Thereafter, from 2012 to 2017, Ms. Sun worked at Bei Hui United Education, an online education company, as an assistant to the Chairman and Operation Director respectively, responsible for the development of the company's curriculum and daily operation management. From 2017 to 2020, Ms. Sun worked at Blockchainer, a blockchain consulting and incubation platform company, as a Partner responsible for providing one-stop consulting and incubation services in the blockchain field. From 2020 to 2022, Ms. Sun worked at Consensus Labs, a blockchain investment and research firm, as a partner responsible for industry research and post-investment management. Ms. Sun holds a bachelor's degree in Management from Beijing Normal University. About Mercurity Formerly known as JMU Limited, Mercurity Fintech Holding Inc. is a digital fintech group powered by blockchain technology. The Company's primary business scope includes digital asset trading, asset digitization, cross-border remittance and other services, providing compliant, professional, and highly efficient digital financial services to its customers. The Company recently began to narrow in on Bitcoin mining, digital currency investment and trading, and other related fields. This shift has enabled the company to deepen its involvement in all aspects of the blockchain industry, from production to circulation. Mercurity reported a net loss of $20.75 million for the year ended Dec. 31, 2021, a net loss of $1.65 million for the year ended Dec. 31, 2020, a net loss of $1.22 million for the year ended Dec. 31, 2019, a net loss of $123.24 million for the year ended Dec. 31, 2018, and a net loss of $161.90 million for the year ended Dec. 31, 2017. MIDLAND ELECTRIC: Seeks Cash Collateral Access Thru Dec 2 --------------------------------------------------------- Midland Electric Supply, LLC asks the U.S. Bankruptcy Court for the Southern District of Indiana, Indianapolis Division, for authority to use cash collateral and provide adequate protection through December 2, 2022. The Debtor requires the use of cash collateral for the continued payment of operating expenses, taxes, and other expenses incurred in the ordinary course of its business operations. Midland's assets consist of personal property such as inventory, office equipment and supplies, and cash collateral. The Debtor has performed a preliminary investigation and analysis of UCC filings, and based upon that investigation, believes these parties may assert a lien on the Debtor's cash collateral: i. Wells Fargo; ii. Michael Brown and Bonnie Brown; and iii. U.S. Small Business Administration. The Debtor, however, does not waive any rights to challenge the validity, priority, and extent of the liens. On May 19, 2021, the Browns filed a Complaint in Marion County Superior Court under Cause No. 49D02-2105-PL-016798. Michael Brown obtained a judgment against Midland on June 1, 2022. Bonnie Brown has not yet obtained judgment. At the risk of being garnished, Midland initiated its Chapter 11 proceeding. Wells Fargo, the Browns and the SBA may be entitled to adequate protection of their interests in the Debtor's cash collateral, for any diminution in value of cash collateral, including any diminution resulting from the use of cash collateral and the imposition of the automatic stay. The Debtor believes, in an exercise of its prudent business judgment and on an interim basis, that the proposed granting of replacement liens over Cash Collateral to the same extent, validity and priority of Wells Fargo's and the SBA's pre-petition liens is fair, reasonable and necessary under the circumstances. As additional adequate protection to Wells Fargo and the SBA, the Debtor agrees to operate under the weekly budgets which covers the Petition Date through December 2, 2022, as may be modified from time to time upon disclosure and approval of the Court or Wells Fargo, the Browns and the SBA. A copy of the motion is available at https://bit.ly/3TACVTC from PacerMonitor.com. About Midland Electric Supply, LLC Midland Electric Supply, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Case No. 22-04199) on October 19, 2022. In the petition signed by Matthew L. Johnson, owner/member, the Debtor disclosed up to $500,000 in assets and up to $10 million in liabilities. Judge Robyn L. Moberly oversees the case. David Krebs, Esq., at Hester Baker Krebs, LLC, is the Debtor's legal counsel. MISTER ROBERTS: Files Emergency Bid to Use Cash Collateral ---------------------------------------------------------- Mister Roberts Furniture, LLC asks the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, for authority to use cash collateral on an interim basis in accordance with the budget for October 20 to November 20, 2022. The Debtor requires the use of cash collateral to pay its necessary expenses of its business in the ordinary course. The creditors that purport to hold deeds of trust liens or security interests in inventory and accounts are IOU Financial, Kalamata Capital Group 9, Everest Business Funding, and Global Funding Experts. The Debtor proposes to adequately protect the interests of the Cash Collateral Lenders in the collateral in a number of ways. The Debtor proposes to grant to the Cash Collateral Lenders post-petition replacement liens in the same assets of the Debtor that such entity had prior to the filing of the chapter 11 bankruptcy case. In addition, the Debtor will provide the Cash Collateral Lenders with information relating to projected revenues and expenses, actual revenue and expenses, and variances from the interim budget. A copy of the motion is available at https://bit.ly/3slBJZ1 from PacerMonitor.com. About Mister Roberts Furniture, LLC Mister Roberts Furniture, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-33098) on October 18, 2022. In the petition signed by Robert Way, president, the Debtor disclosed up to $500,000 in both assets and liabilities. Reese W. Baker, Esq., at Baker & Associates, is the Debtor's counsel. MOTUS GROUP: Fitch Affirms LongTerm IDR at 'B-', Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed Motus Group, LLC 's Long-Term Issuer Default Rating (IDR) at 'B-'. In addition, Fitch has affirmed Motus' first lien term loan and first lien revolver at 'B+'/'RR2'. The Rating Outlook is Stable. Motus' rating reflects high leverage due to the Permira and Thoma Bravo leveraged buyout transaction. The two private equity firms placed significant debt into the company's capital structure in late 2021. The 'B-' rating also reflects Fitch's concern about near-term credit profile weakness because of recent increases in operating expenses, as the company invests in the business during a time of rising interest rates. The rating also reflects the company's strong gross margins, positive FCF generation, as well as high retention rates. KEY RATING DRIVERS Weak Interest Coverage: Motus had interest coverage (defined by Fitch as operating EBITDA/interest paid) of 3.4x for 2021. As the company invests for topline growth in 2022, Fitch expects operating expenses to rise. This is expected to cause EBITDA margins to decline while interest rates rise, and interest coverage is likely to be under 1.5x in 2022 by Fitch's calculations. In 2023, Fitch expects some margin improvement; however, average interest rates in 2023 should be higher than 2022. As a result, Fitch sees interest coverage below 1.5x in 2023 and improvement after that. Leverage Elevated: At the end of 2021, Motus had leverage (defined by Fitch as total debt with equity credit to operating EBITDA) of 9.0x. Fitch expects rising operating expenses to drive lower EBITDA for 2022 versus 2021, and leverage will increase by the end of 2022. With improved operating efficiencies in 2023 and beyond, Fitch expects margins to improve and leverage may modestly decline over time. Fitch notes that should Motus voluntarily prepay debt, leverage will be lower than forecast. However, the company's private equity ownership will likely prioritize ROE optimization over deleveraging. FCF Positive: Over the last few years, Motus has been FCF positive and Fitch expects the company to remain FCF positive in its forecast years; however, on average, FCF margins are expected to trend much lower than before the company levered up in November 2021. The FCF margin compression is largely driven by the significantly higher interest expense. Despite the expectation for much higher interest expense, Fitch forecasts the company will be a generator of FCF, which benefits the company's liquidity position. Liquidity Remains Sufficient: Given the company's FCF generation, full availability on its $50 million secured revolver, and cash on the balance sheet of over $40 million, Fitch believes Motus has sufficient liquidity. Furthermore, there are no debt maturities in the near term. The $50 million revolver is due in 2026 and the first lien term loan is due in 2028. High Recurring Revenues/Revenue Retention: For calendar year 2021, recurring revenues were over 95% and the net retention rate was more than 100%. Subscription revenues are strong and were over 80% of revenues for the LTM ending June 30, 2022. From 2018 until the LTM ended June 30, 2022, ARR's grew in the low double-digit range. These figures demonstrate that once a company becomes a customer, they generally renew, ensuring stability of cash flows. Motus' top 10 customers have been with the company for over 13 years. Revenue Diversity Increasing: In 2021, Motus had revenues from vehicle reimbursement programs for expense claims and distribution making up about 85% of total revenues; 10% from wireless device expense programs and 5% from relocation/remote work services. Expansion into wireless device expense programs began in 2019 when it acquired Wireless Analytics and in 2020 when it acquired Vision Wireless. Employee relocation/remote work reimbursements began with a product launch in 2020. Motus would like to further diversify its product offerings by branching into employer/employee payment solutions and pursue opportunities in reimbursement cards, payroll cards and corporate cards. Fitch believes that Motus may continue to make acquisitions to increase its size and diversity. Leading FAVR Provider: Motus is a leading employee vehicle reimbursement solutions provider. It has more than 2,000 customers and offers end-to-end cloud-based software solutions for fixed and variable rate reimbursements (FAVR), which allows companies to reimburse employees for personal vehicle use on a tax-free basis. Growth in the industry is expected as employers continue to shift toward having employees drive their own vehicles and expense tracking and costs. DERIVATION SUMMARY Motus' 'B-' rating is supported by its leading position in the vehicle reimbursement industry and reflects the company's elevated leverage. Fitch views its financial flexibility as relatively more constrained than peers in the technology sector. Its revenue scale, leverage and liquidity profile are consistent with the 'B-' rating. Cash flow metrics and leverage metrics remain in line with other similarly rated software companies. Like other private equity owned issuers, Fitch believes that the company's focus may be on ROE rather than debt reduction. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer: - Revenue growth in the low double digits in 2022 and mid-single digit beyond then; - EBITDA margins in the upper 30's to low 40's over the forecast horizon; - Capex at approximately 4% of revenue; - Working capital expected to remain in line with historical trends; - No dividends; - No acquisitions are assumed. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that the enterprise value of Motus would be maximized in a going-concern situation as opposed to a liquidation given limited tangible assets on the company's balance sheet. Fitch makes the following assumptions in its calculation of expected recovery: - 10% administrative claim applied to the Going Concern (GC) EBITDA; - GC EBITDA of $50 million; - TEV/EBITDA multiple of 7.0x. GC Rational: The recovery analysis assumes that Motus enters a distressed scenario due to challenges surrounding their main business line, vehicle reimbursement due to increased competition. Fitch also assumes their device and location solution segment experiences compressed margins as a result of direct peers ramping up their offerings and competing head-to head for market share resulting in price battles. Given these challenges, Fitch assumes a GC EBITDA of $50 million. TEV/EBITDA Multiple Rationale: Comparable Reorganizations - Per the 2021 TMT Bankruptcy Study, Fitch notes 10 past reorganizations in the Technology sector, where the median recovery multiple was 5.1x. Of these companies, only three were in the Software subsector: Allen Systems Group, Inc., Avaya, Inc., and Sungard Availability Services Capital, Inc., which received recovery multiples of 8.4x, 8.1, and 4.6x, respectively. Given the company's market position but weak financial metrics, Fitch believes that the TEV/EBTIDA multiple for Motus would fall somewhere near the center of this range, at 7.0x. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - (CFO-capex)/total debt in the mid-to high single digits and use of excess FCF for debt reduction; - End market or product diversification from expansion or acquisitions into adjacent markets; - Expectations for leverage below 7.5x on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: - (CFO-capex)/total debt with equity credit trending toward 0%; - Operating EBITDA/interest expense coverage below 1.5x on a sustained basis; - Organic revenue growth sustained near or below 0%, erosion of retention rates, or declines in annual recurring revenues (ARR); - Erosion of liquidity driven by aggressive spending or weaker economic conditions. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: As of June 30, 2022, the company had over $40 million of cash on the balance sheet and full revolver availability of $50 million for total liquidity of just over $90 million. This, coupled with moderate FCF, should provide the company with sufficient liquidity in the near term. Debt Structure: Motus has a first lien senior secured facilities including an undrawn $50 million revolver and a $374 million term loan which amortizes at 1% per annum. Motus also has a second lien senior secured term loan. The revolver matures in 2026, the first lien term loan in 2028, and the second lien term loan in 2029, providing the company ample headroom before the first maturity in 2026. ISSUER PROFILE Motus Group LLC is a leading provider of software solutions for vehicle reimbursement. It also offers reimbursement solutions for wireless devices and relocation/remote work. The company is privately owned by Thoma Bravo and Permira Advisors. Debt Rating Recovery Prior ---- ------ -------- ----- Motus Group, LLC LT IDR B- Affirmed B- senior secured LT B+ Affirmed RR2 B+ MUSE BROOKLYN: Taps Ronald D. Weiss PC as Bankruptcy Counsel ------------------------------------------------------------ The Muse Brooklyn, Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of New York to employ Ronald D. Weiss, PC as its bankruptcy counsel. The firm will render these legal services: (a) advise the Debtor with respect to its powers and duties in the continued management of its property; (b) represent the Debtor before the bankruptcy court and at all hearings on matters pertaining to its affairs; (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 Debtor paid the firm a retainer in the amount of $18,500. The hourly rates of the firm's counsel and staff are as follows: Attorneys $450 Paralegals $250 In addition, the firm will seek reimbursement for expenses incurred. Ronald Weiss, Esq., disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Ronald D. Weiss, Esq. Ronald D. Weiss, PC 734 Walt Whitman Road, Suite 203 Melville, NY 11747 Telephone: (631) 271-3737 Facsimile: (631) 271-3784 Email: weiss@ny-bankruptcy.com About Muse Brooklyn The Muse Brooklyn, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-42314) on Sept. 21, 2022, with up to $1 million in both assets and liabilities. Judge Nancy Hershey Lord oversees the case. Ronald D. Weiss, PC serves as the Debtor's legal counsel. NEW BETHEL BAPTIST: Taps Anchor Legal Group as Special Counsel -------------------------------------------------------------- New Bethel Baptist Church seeks approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Anchor Legal Group, PLLC as its special counsel. The firm's services include: a. reviewing corporate documents for New Bethel Baptist Church and New Bethel Development, LLC; b. drafting minutes and any resolutions needed to amend or correct organizational documents to reflect that New Bethel Baptist Church is the sole owner of New Bethel Development LLC; and c. drafting any supporting research or documentation to assist the Debtor. Anchor Legal Group will charge these hourly fees: Attorneys $350 - $400 Paralegals $100 - $195 The firm received an initial retainer in the amount of $3,000. Stephen Lentz, Esq., a member of Anchor Legal Group, disclosed in a court filing that the firm's attorneys are "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Stephen D. Lentz, Esq. Anchor Legal Group, PLLC 5101 Cleveland Street, Suite 100 Virginia Beach, VA 23462 Tel: 757-529-0000 Fax: 757-909-7241 About New Bethel Baptist Church New Bethel Baptist Church is an unincorporated religious association pursuant to the Constitution of the Commonwealth of Virginia. It is based in Portsmouth, Va. New Bethel Baptist Church filed a Chapter 11 petition (Bankr. E.D. Va. Case No. 19-73531) on Sept. 24, 2019, listing $1,449,207 in assets and $4,034,673 in liabilities. Judge Frank J. Santoro oversees the case. The Debtor tapped Joseph T. Liberatore, Esq., at Crowley Liberatore P.C., as bankruptcy counsel. The Verbena Askew Law Firm and Anchor Legal Group, PLLC serve as special counsels. NEWAGE INC: Stevens Global Logistics Out as Committee Member ------------------------------------------------------------ The U.S. Trustee for Region 3 disclosed in a notice filed with the U.S. Bankruptcy Court for the District of Delaware that as of Oct. 19, these creditors are the remaining members of the official committee of unsecured creditors in the Chapter 11 cases of NewAge, Inc. and its affiliates: 1. 2420 17th Street LLC Attention: Don Stage 4400 Macarthur Blvd., Suite 700 Newport Beach, CA 92660 Phone: (303) 839-5300 Fax: (303) 839-5302 Email: don.stage@cbre.com 2. Allen Flavors Inc. Attention: Ira Steinberg 230 St. Nicholas Ave. South Plainfield, NJ 07080 Phone: (908) 561-5995 Fax: (908) 548-0955 Email: ira@allenflavors.com 3. Cargo Link International Attention: Scott Ogden 881 So. 3760 West Salt Lake City, UT 84104 Phone: (801) 808-6154 Fax: (801) 975-9406; Email: sogden@cargolink.com 4. Vision 68th, LLC Attention: Marc Lippitt 400 S. Broadway Denver, CO 80209 Phone: (303) 905-5888 Fax: (303) 321-5889 Email: mlippitt@uniqueprop.com Stevens Global Logistics was previously identified as member of the creditors committee. Its name no longer appears in the new notice. About NewAge Inc. NewAge Inc. (Nasdaq: NBEV) -- http://www.NewAgeGroup.com/-- a Utah-based company, commercializes a portfolio of organic and healthy products worldwide primarily through a direct-to-consumer (D2C) route to market distribution system across more than 50 countries. The company competes in three major category platforms including health and wellness, inner and outer beauty, and nutritional performance and weight management. NewAge Inc. and certain of its subsidiaries, Ariix LLC, Morinda Holdings, Inc., and Morinda, Inc., sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10819) on August 30, 2022. NewAge reported total assets of $310,902,000 against total liabilities of $149,447,000 as of the bankruptcy filing. Judge Laurie Selber Silverstein oversees the cases. The Debtors tapped Greenberg Traurig, LLP as bankruptcy counsel and SierraConstellation Partners, LLC as financial advisor. Houlihan Lokey Capital, Inc. conducted the pre-bankruptcy marketing process for the Debtors. Stretto is the claims agent. The U.S. Trustee for Region 3 appointed an official committee of unsecured creditors in the Debtors' Chapter 11 cases on Sept. 14, 2022. Cole Schotz P.C. and Dundon Advisers LLC serve as the committee's legal counsel and financial advisor, respectively. PACKABLE HOLDINGS: Bids for eCommerce Software Due Nov. 14 ---------------------------------------------------------- Hilco Streambank presents the opportunity to acquire the intangible assets of Packable Holdings, LLC, including its software platform utilized to sell products on Amazon, Walmart and other third-party marketplaces. Packable is a leading, technology-driven eCommerce marketplace enablement platform providing consumer brands, distributors and digitally native brands with the connections, insights and services needed to enable and accelerate sales growth across multiple online marketplaces simultaneously. BID DEADLINE November 14, 2022 AUCTION November 16, 2022 View Opportunity The company was the #1 third-party seller on Amazon in North America (by number of reviews), and its software platform enabled more than 75 million transactions on 8 marketplaces, generating approximately 2 million reviews across all marketplaces and more than $427 million in revenue in 2021. The company's software platform also integrates with marketplaces run by Walmart, eBay, Target, Kroger and Google. Packable built its operations around its proprietary software platform, dubbed the "Brain". Developed in-house, without relying on third-party software other than MS SQL and IIS, the platform provides integrated, automated eCommerce services such as inventory onboarding, data flow management, shipping and vendor management, algorithmic pricing, bundling, data analytics and fulfillment. At its peak, the Brain facilitated more than 1.8 million orders per month, across more than 31,000 SKUs. Please contact Hilco Streambank to learn more. Contact information: GABE FRIED CEO 617.458.9355 gfried@hilcoglobal.com RICHELLE KALNIT SVP 212.993.7214 rkalnit@hilcoglobal.com JORDON PARKER VP 719.821.0894 jparker@hilcoglobal.com * Hilco Streambank's retention and the dates set forth herein are subject to approval of the bankruptcy court overseeing Packable's bankruptcy case. About Packable Holdings Packable Holdings LLC -- https://www.packable.com/ -- is a leading multi-marketplace e-commerce enablement platform. Packable Holdings and five affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 22-10797) on Aug. 29, 2022. In the petition filed by Maria Harris, chief legal officer, Packable Holdings reported between $100 million and $500 million in both assets and liabilities. Judge Craig T. Goldblatt oversees the cases. The Debtors tapped Cooley LLP and Potter Anderson & Corroon, LLP as legal counsels; Alvarez and Marsal North America, LLC as financial advisor; and Hilco Merchant Resources, LLC as liquidation agent. Epiq Corporate Restructuring, LLC is the claims agent. PARAMOUNT HEALTHCARE: May Use $137,500 in Cash Collateral Access ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, authorized Paramount Health Services, LLC to use cash collateral on an interim basis in accordance with the budget. The Debtor may use cash collateral in the amount of $137,500 per month, or in any different amount upon the written agreement of the Debtors and United States Small Business Administration. Any agreement between the Debtors and SBA varying the amount of cash collateral the Debtors may utilize on a monthly basis must be filed with the Court. To the extent the value of the SBA's security interest in the Debtor's assets is diminished by the Debtor's use of cash collateral, the SBA will receive valid, automatically perfected, and enforceable replacement liens on the same type and with the same priority as its pre-petition liens. The Debtor will make cash payments to the SBA in accordance with the terms of the parties' loan agreement. The requirements of 11 U.S.C. section 363(c)(4) are waived and the Debtor will not be required to segregate any cash collateral. As stipulated on the record, the monthly salary of Alireza Hashemi, the Debtor's president/manager, will be limited to $5,000 a month pending further Court order. A copy of the order is available at https://bit.ly/3DgsBLc from PacerMonitor.com. About Paramount Healthcare Group Inc. Paramount Healthcare Group Inc. is a licensed outpatient physical therapy practice formed in 1999, operating in Houston, Texas, and offering a full range of physical therapy services. Paramount assists patients in rehabilitating and recovering from injuries and surgeries, and offers physical therapy treatments for stroke recovery, chronic pain, and balance issues including vertigo. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-32623) on September 5, 2022. In the petition signed by Alireza Hashemi, president/manager, the Debtor disclosed up to $1 million in assets and up to $10 million in liabilities. Judge Eduardo V. Rodriguez oversees the case. Broocks M. Wilson, Esq., at Kean Miller LLP is the Debtor's counsel. PENNSYLVANIA AUTISM: Nov. 17 Hearing on Plan & Disclosures ---------------------------------------------------------- Judge Mark J. Conway has entered an order conditionally approving the Disclosure Statement of Pennsylvania Autism Action Center LLC aka Pennsylvania Autism Action Center, LLC a/k/a Pennsylvania Autism Action Center. The hearing on final approval of the Disclosure Statement (if a written objection has been timely filed) and for the hearing on confirmation of the Plan is scheduled for Thursday, Nov. 17, 2022 at 10:00 a.m. in the in the United States Bankruptcy Court for the Middle District of Pennsylvania, Max Rosenn U.S. Courthouse, Courtroom 2, 197 S. Main Street, Wilkes-Barre, PA 18701. The last day for filing and serving written objections to the Disclosure Statement and confirmation of the Plan is on or before Nov. 10, 2022. The last day for filing written acceptances or rejections of the plan is on or before Nov. 10, 2022. About Pennsylvania Autism Pennsylvania Autism Action Center LLC is a limited liability company. Since March 7, 2013, the Debtor has been in the business of behavioral therapy and counseling of children with autism spectrum disorders. The Debtor filed a Chapter 11 bankruptcy petition (Bankr. M.D. Pa. Case No. 22-01487) on Aug. 11, 2022. The Debtor is represented by Philip W. Stock, Esq. of LAW OFFICE OF PHILIP W. STOCK. PHASEBIO PHARMACEUTICALS: Case Summary & 20 Unsecured Creditors --------------------------------------------------------------- Debtor: PhaseBio Pharmaceuticals, Inc. 1 Great Valley Parkway Suite 30 Malvern, PA 19355 Business Description: The Debtor is engaged in the research and development of specialized, highly innovative therapies for patients with serious cardiovascular disease. Chapter 11 Petition Date: October 23, 2022 Court: United States Bankruptcy Court District of Delaware Case No.: 22-10995 Debtor's Lead Bankruptcy Counsel: COOLEY LLP Debtor's Delaware Bankruptcy Counsel: Daniel J. DeFranceschi, Esq. RICHARDS, LAYTON & FINGER, P.A. 920 North King Street Wilmington, DE 19801 Tel: (302) 651-7700 Email: defranceschi@rlf.com Debtor's Financial Advisor: SIERRACONSTELLATION PARTNERS LLC Debtor's Investment Banker: MILLER BUCKFIRE & CO. Debtor's Notice & Claims Agent: OMNI AGENT SOLUTIONS Total Assets as of August 31, 2022: $17,970,000 Total Debts as of August 31, 2022: $21,320,000 The petition was signed by Jonathan Mow, chief executive officer. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/TO2QNVY/PhaseBio_Pharmaceuticals_Inc__debke-22-10995__0001.0.pdf?mcid=tGE4TAMA List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. BioVectra Trade Vendor $22,225,810 11 Aviation Ave. Charlottetown C1E 0A1 Canada Attn: Andrea McCormick Tel: (902) 566-9116 Email: accounting@biovectra.com 2. Pharmaron, Inc. Trade Vendor $1,452,968 201 East Jefferson St. Suite 304 Louisville, KY 40202 United States Attn: Tianshu Wang Tel: (502) 569-1047 Email: billinginquiry@pharmaron.com 3. MLM Medical Labs, LLC Trade Vendor $929,448 140 Collins Street Memphis, TN 38112 United States Attn: Roger Gasper Tel: (484) 612-5680 Email: mvines@cirquestlabs.com 4. Keystone Research LLC Trade Vendor $852,278 dba VitaLink 2 Roper Corners Circle Greenville, SC 29615 United States Attn: Steve Clemons Tel: (864) 565-0891 Email: sclemons@vitalinkresearch.com 5. AcademicCME Trade Vendor $729,950 531 E. Lancaster Ave. Wayne, pA 19087 United States Attn: Patrick Hayes Tel: (610) 687-3300 Email: phayes@academiccme.com 6. The Cementworks Commercial $680,113 dba The Bloc 32 Old Slip 15th FL New York, NY 10005 United States Attn: Nathan Mecheli Tel: (212) 524-6296 Email: wleung@thebloc.com 7. AbSci Corporation Trade Vendor $650,000 18105 Southeast Mill Plain Blvd. Vancouver, WA 98683 United States Attn: Cheikh Soumare Tel: (360) 949-1041 Email: ar@abscibio.com 8. Joinn Laboratories Inc. Trade Vendor $645,000 (Suzhou) No. 1 Joinn Rd. Shaxi Town, Taicang Bio-industry Park Suzhou 215421 China Attn: Gu Jingliang Tel: +86 189 1186 2612 Email: gujingliang@joinnlab.com 9. Trinity Partners, LLC Commercial $629,000 Prospect Place 230 Third Ave. Waltham, MA 2451 United States Attn: Ewa Jezuit Tel: (781) 577-6300 Email: invoicing@trinitylifesciences.com 10. Inference Inc. Trade Vendor $552,944 701 Lee Rd Suite 102 Chesterbrook, PA 19087 United States Attn: Anuja Mitra Tel: (914) 207-5570 Email: anuja@inferenceinc.com 11. Berkshire Sterile Trade Vendor $409,147 Manufacturing, Inc. 480 Pleasant St. Lee, MA 1238 United States Attn: Jon Provost Tel: 413) 243-0330 Email: rnew@berkshiresterile.com 12. Canadian Medical & Trade Vendor $353,353 Surgical Knowledge 110 Yorkminster Rd. Toronto M2P 1M6 Canada Attn: Subodh Verma Tel: (416) 436-0244 Email: adrian.quan@unityhealth.to 13. ICON Clinical Research Ltd Trade Vendor $345,391 South County Business Park Leopardstown Dublin 18 Ireland Ireland Attn: Marjana Bevc Tel: +353 1 291 2412 Email: credit.controliconireland@iconplc.com 14. Drug Safety Navigator, LLC Trade Vendor $252,859 2605 Meridian Parkway Suite 115 Durham, NC 27713 United States Attn: Dana Engel Tel: (919) 225-4014 Email: dsninvoice@drugsafetynavigator.com 15. Brigham and Women's Trade Vendor $216,297 Hospital, Inc. Research Finance c/o Bank of America PO Box 3149 United States Attn: Emma McCabe Tel: (857) 307-4071 Email: emccabe3@bwh.harvard.edu 16. Certara USA, Inc. Trade Vendor $202,379 100 Overlook Center Suite 101 Princeton, NJ 08540 United States Attn: Tyler Roseman Tel: (314) 951-1099 Email: ashley.wolters@certara.com 17. BAR Advisors, LLC Commercial $137,200 3525 Del Mar Heights Road 784 San Diego, CA 92130 United States Attn: Mark Bubany Tel: (805) 328-1834 Email: fmanak@biobaradvisors.com 18. Mary Bordeaux Consulting Commerical $137,150 1350 Francisco Street San Francisco, CA 94123 United States Attn: Mary Bordeaux Tel: (415) 307-0873 Email: mary@bordeauxconsulting.com 19. PPD Development, LP Trade Vendor $131,892 26361 Network Place Chicago, IL 60673-1263 United States Attn: Michael Ragazoo Tel: (512) 747-5894 Email: michael.ragazzo@ppdi.com 20. New York Univerity Trade Vendor $125,322 School of Medicine PO Box 415026 Boston, MA 02241-5026 United States Attn: Queen Enidok Tel: (646) 754-7430 Email: queen.enidiok@nyulangone.org PHASEBIO PHARMACEUTICALS: Hits Chapter 11 to Fend Off Co-Developer ------------------------------------------------------------------ PhaseBio Pharmaceuticals, Inc., filed for chapter 11 protection in the District of Delaware. Founded in 2002, PhaseBio is a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapies for cardiovascular diseases. The Debtor has no subsidiaries, and its common stock is publicly traded and listed on the Nasdaq Global Market under the symbol "PHAS". The Debtor's principal office is located at 1 Great Valley Parkway, Suite 30, Malvern, Pennsylvania 19355. The Debtor leases research and development and administrative space at two locations in Malvern, Pennsylvania, as well as additional administrative space in San Diego, California. As of the Petition Date, the Debtor has approximately 49 employees, all of whom are full-time employees and located in the United States. Since inception, the Debtor has generally relied on a combination of the following sources of capital to fund operations: proceeds raised in its initial public offering and subsequent underwritten sales of its common stock; private placements of convertible debt and convertible preferred stock; borrowings under its prepetition term loan; and funds received under the CDA and pursuant to the Alfasigma Sublicense Agreement. The Debtor has incurred significant operating losses since its inception. Its net loss was $27.8 million for the six months ended June 30, 2022, and as of June 30, 2022, the Debtor had an accumulated deficit of $419.6 million. As of the Petition Date, the Debtor has approximately $589,135 of cash on hand. $9.1 Million Funded Debt As of the Petition Date, the Debtor has approximately $9.1 million in total funded debt obligations under an up to $15 million term loan originally provided by Silicon Valley Bank ("SVB") as administrative agent and collateral agent and lender, and SVB and SVB Innovation Credit Fund VIII, L.P. (formerly known as WestRiver Innovation Lending Fund VIII, L.P.) as lenders. The Debtor also has outstanding trade debt totaling $36 million. On Oct. 3, 2022, the prepetition first lien lender sold and assigned all its rights under the term loan to JMB Capital Partners Lending, LLC. Pursuant to the Assignment Agreement, SVB resigned as Prepetition First Lien Agent and JMB became the successor Prepetition First Lien Agent. Road to Bankruptcy To date, the Debtor estimates that it has invested approximately $192.9 million in pursuing the development and intended commercialization of bentracimab (which amount is separate and apart from any investment made by SFJ Pharmaceuticals, X, Ltd.) On Jan. 9, 2020, the Debtor entered into a Co-Development Agreement (the "CDA") with SFJ to obtain the investment funds needed to support the global development of bentracimab, the Debtor's lead drug candidate. In return for its investment of up to $120 million with the Debtor, SFJ is to receive certain Contingent Return-On-Investment Payments if the Debtor receives regulatory approvals of bentracimab. According to the Debtor, the CDA provides for a number of onerous financial penalties and remedies, including, in the event that SFJ disagrees in good faith with a matter that the JSC has decision-making authority over and that it has been unable to reach consensus on following escalation to the parties' respective Executive Officers, SFJ may, in its sole discretion, terminate the CDA and seek immediate repayment in full of its development costs paid under the CDA plus interest at a rate of 25% per annum from the date such costs were paid or incurred by SFJ. In addition, the CDA contains an unusual, and highly punitive, remedy that is triggered if (a) PhaseBio determines in accordance with GAAP that it is probable that PhaseBio will be unable to meet its obligations as they become due within a year, or (b) a "Going Concern" footnote is included in any of PhaseBio's financial statements (a "Going Concern Condition"). Developing and commercializing biopharmaceutical products, including launching new products into the marketplace and conducting preclinical studies and clinical trials, is a capital-intensive and uncertain process that takes years to complete. Prepetition, the Debtor was unable to raise additional funding needed to support that process, due principally to the significant overhang of the Contingent Return-On-Investment Payments required under the CDA and the significant spending commitments required to develop and commercialize bentracimab. The Debtor's distressed financial condition, resulting from this inability to obtain the funding needed to meet its obligations, led to the inclusion of a going concern qualifier in the Debtor's audited financial statements from the period ending December 31, 2021. This going concern qualifier constituted a Going Concern Condition under the CDA and initiated a 180-day Going Concern Cure Period beginning on March 24, 2022, when the Debtor provided notice of the qualifier to SFJ. The Debtor was already actively seeking to address its need for additional capital, but those efforts were accelerated upon the commencement of the Going Concern Cure Period. On Nov. 23, 2021, the Board appointed a Strategic Transactions Committee comprised of three independent board members (Clay Thorp, Richard van den Broek, and Alex Sapir), in response to a request from SFJ that the Debtor consider an early transfer of the Bentracimab Development Program. The Committee was delegated authority by the Board to review, consider and negotiate potential strategic transactions, including offers to purchase or exclusively license all or any significant assets of the company. The Committee met more than twenty times over the next seven months through June 2022. In February 2022, the Debtor engaged Cowen Investment Banking as investment banker to assist with the identification of potential counterparties for a strategic transaction that would allow the Debtor to obtain the additional funding needed to cure the Going Concern Condition, and the solicitation and negotiation of proposals for such a transaction. Cowen ran a broad process to identify potential strategic partners for the Debtor, contacting 26 parties regarding, among other things, the opportunity to acquire the company or enter into a US licensing transaction for bentracimab. However, no parties were willing to evaluate an acquisition of or equity investment in the Debtor unless SFJ agreed to modify the CDA or otherwise address the significant overhang on the market value of the Debtor's common stock caused by the potential Contingent Return-On-Investment Payments. Talks With SFJ In April 2022, SFJ presented the Debtor with an offer to acquire the Bentracimab Development Program for no additional cash consideration, with the Debtor to receive only a 12% interest in any profits. The Debtor rejected the original offer as the Debtor believed that SFJ's proposal did not reflect the significant investment that the Debtor had made in pursuing the development and intended commercialization of bentracimab. The Debtor and SFJ then engaged in extensive, additional discussions, eventually entering into a non-binding term sheet on July 12, 2022 (the "LOI"), which provided that (i) PhaseBio would only be entitled to receive a 12% share of NewCo’s profits, and SFJ would assume the Debtor's obligations under the BioVectra Agreement, including the Minimum Annual Commitments, and (ii) SFJ would reimburse the Debtor for the costs of employees supporting the Bentracimab Development Program as well as third-party vendor expenses On Sept. 21, 2022, the day after the Going Concern Cure Period expired, SFJ once again abruptly notified the Debtor that it was walking away from months of negotiations and the substantial progress the parties had made in documenting the transaction under the LOI that would provide for a negotiated transfer of the Bentracimab Development Program to SFJ. Simultaneously, SFJ delivered a notice (the "Program Transfer Notice") to the Debtor that, pursuant to CDA, SFJ had elected to cause the Bentracimab Development Program to be transferred to SFJ -- for no additional consideration -- as a result of the Debtor's failure to remedy its Going Concern Condition within the Going Concern Cure Period. SFJ demanded that the Debtor execute a Program Transfer Agreement (in the form attached to the CDA) within ten days following the delivery of the Program Transfer Notice (i.e., by Oct. 1, 2022) and transfer the Bentracimab Development Program to SFJ without stockholder approval, which the Debtor believed was required by Delaware law because the Bentracimab Development Program represents substantially all of the Debtor's assets. On Oct. 7, 2022, the Debtor received an additional notice from SFJ in which SFJ asserts that, in light of the Debtor’s failure to execute the Program Transfer Agreement by October 1, 2022, the Debtor was in material breach of the CDA. On that same date, SFJ commenced suit against the Debtor (SFJ Pharmaceuticals X, Ltd. v. PhaseBio Pharmaceuticals Inc., Case No. 2:22-cv-04027 (E.D. Pa. Oct. 7, 2022)), asserting claims for breach of contract, declaratory relief with respect to the validity and enforceability of the CDA and Program Transfer Notice, and injunctive relief. Chapter 11 Preparations Presented with mounting evidence that SFJ had been acting in bad faith to run out the Going Concern Cure Period so that it could issue the Program Transfer Notice, the Debtor, in consultation with its advisors, prepared to file for chapter 11 relief. As part of that process, the Debtor and Miller Buckfire engaged in negotiations with the Prepetition First Lien Lender, as well as with a number of third parties, with respect to their willingness to provide pre- and postpetition financing, and to serve as a stalking horse bidder in a sale of the Debtor's assets through a chapter 11 sale process. The Debtor also engaged SierraConstellation Partners LLC as financial advisor and subsequently appointed SCP founder Lawrence Perkins as CRO. Aware that the Debtor was considering bankruptcy, in late September 2022, SFJ proposed to provide financing in connection with a chapter 11 filing. Under its proposal, SFJ offered a total of $8.5 million in financing on incomplete terms that would not have provided the Debtor with a path to reorganize and emerge from chapter 11. Importantly, the proposed financing also required that the Debtor turn over the Bentracimab Development Program, including the IND, and transfer key employees to SFJ, prior to the commencement of chapter 11, without a marketing process or approval of the Bentracimab Development Program transfer by the Debtor's stockholders, which the Debtor believes is required by Delaware law. The proposal was untenable and the Debtor did not accept it. Under the onerous terms of the CDA, the Prepetition Term Loan Facility was the only potential source of additional funding available to the Debtor outside of chapter 11 that did not require SFJ's consent, making the Prepetition First Lien Lender the only feasible option for additional prepetition liquidity. While the Prepetition First Lien Lender was unwilling to provide the Debtor with additional funding, they did agree to assign their rights under the Prepetition First Lien Loan and Security Agreement to a third party who would provide such additional funding. On Oct. 3, 2022, SVB and SVB Innovation assigned the Prepetition First Lien Loan and Security Agreement to JMB, following which JMB made $6.5 million in Tranche A Growth Capital Advances to the Debtor. The Debtor used the liquidity provided by the Tranche A Growth Capital Advances to continue the Bentracimab Development Program and to finalize preparations for this chapter 11 filing. Chapter 11 Filing and Case Path The Debtor commenced this chapter 11 case to avail itself of the protections and "breathing room" that chapter 11 is intended to provide, including preserving its interest in the Bentricamab Development Program while it seeks to reorganize. Through this case, the Debtor intends to seek an expedited ruling from the Court resolving its ongoing dispute with SFJ. In particular, the Debtor anticipates seeking a determination by the Court that: (a) SFJ’s investment with the Debtor under the CDA constitutes equity contributions; (b) the security interest purporting to secure the Debtor's Contingent Return-On-Investment Payments on SFJ’s equity contributions is invalid; (c) the TDP is property of the Debtor's estate; and (d) certain other provisions of the CDA are unenforceable. The Debtor further intends to pursue a sale of the Bentracimab Development Program to the Counterparty (or to winning bidder submitting a higher or otherwise better offer) in a value-maximizing transaction for the benefit of creditors and other stakeholders. To support the Debtor's reorganization process, JMB has agreed to provide the Debtor up to $15.0 million in postpetition, superpriority secured funding (the "DIP Facility"). JMB will provide the Debtor with a superpriority senior secured multiple draw term loan credit facility, $12 million of which (less prepetition borrowings under the Prepetition Term Loan Facility proposed to be rolled up into the DIP Facility) will be made available upon interim approval by the Court, and the balance upon final approval by the Bankruptcy Court. The Debtor believes that an expeditious resolution to the Chapter 11 case is necessary to ensure that its work to develop drug therapies that stand to benefit millions of patients continues with minimal interruption. Further, the Debtor believes that the relief requested in the various First Day Motions appropriately balances the need for the Debtor to swiftly proceed with its reorganization with the due process and notice required under the Bankruptcy Code, Bankruptcy Rules, and Local Rules. According to court filings, PhaseBio Pharmaceuticals estimates $1 million to $10 million in debt to 100 to 199 creditors. The petition states that funds will be available to unsecured creditors. About PhaseBio Pharmaceuticals PhaseBio Pharmaceuticals, Inc. -- https://www.phasebio.com/ -- is focused on the development and commercialization of novel therapies to treat orphan diseases, with an initial focus on cardiopulmonary indications. PhaseBio Pharmaceuticals filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 22-10995) on October. 24, 2022. In the petition filed by Jonathan Mow, as chief executive officer, the Debtor reported $17,970,000 in assets and $21,320,000 in debt as of Aug. 31, 2022. The Debtor tapped COOLEY LLP as lead bankruptcy counsel; RICHARDS, LAYTON & FINGER, P.A., as Delaware bankruptcy counsel; SIERRACONSTELLATION PARTNERS LLC as financial advisor; and MILLER BUCKFIRE & CO. as investment banker. OMNI AGENT SOLUTIONS is the claims agent. PHASEBIO PHARMACEUTICALS: Says It Has Buyer for Bentracimab Assets ------------------------------------------------------------------ PhaseBio Pharmaceuticals, Inc., said in bankruptcy court filings that it is nearing a definitive agreement with a proposed buyer for its key assets. On Oct. 17, 2022, the Debtor executed a confidential Non-Binding Proposal with a large, well-capitalized pharmaceutical company (the "Counterparty") with decades of experience in the areas of research, development, production, and commercialization of novel and advanced therapies and other medicines, including in the hospital and critical care space in the United States and the rest of the world. In connection with a definitive asset purchase agreement anticipated to be executed as soon as possible, the Counterparty will be designated as the stalking horse bidder for the Debtor's bentracimab program assets. The Proposal provides the Counterparty with exclusivity as to that designation until the earlier of (a) the date the Court approves or rejects the Counterparty as the stalking horse bidder pursuant to the terms and conditions set forth in the Proposal or (b) the Counterparty terminates negotiations of the Purchase Agreement prior to the execution thereof. Under the Proposal, to be reflected in the Purchase Agreement, the Counterparty will (a) pay the Debtor cash in the amount of $40 million; (b) pay the Debtor cash in the total amount of $60 million upon the achievement of certain regulatory milestones with respect to bentracimab; (c) satisfy the cure amounts in connection with the assumption and assignment of designated executory contracts and leases; (d) assume any agreed-upon liabilities; and (e) provide cash consideration to be paid upon the Debtor's entry into and due performance under a transition services agreement for the purchase of the Debtor's bentracimab program assets. The Counterparty will provide a $4 million deposit into escrow and, if approved as the stalking horse bidder, would be entitled to a break-up fee of $2 million and reimbursement of expenses of up to $750,000, to be paid from the proceeds of a sale to an alternative purchaser. About PhaseBio Pharmaceuticals PhaseBio Pharmaceuticals, Inc. -- https://www.phasebio.com/ -- is focused on the development and commercialization of novel therapies to treat orphan diseases, with an initial focus on cardiopulmonary indications. PhaseBio Pharmaceuticals filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 22-10995) on Oct. 24, 2022. In the petition filed by Jonathan Mow, as chief executive officer, the Debtor reported $17,970,000 in assets and $21,320,000 in debt as of Aug. 31, 2022. The Debtor tapped COOLEY LLP as lead bankruptcy counsel; RICHARDS, LAYTON & FINGER, P.A., as Delaware bankruptcy counsel; SIERRACONSTELLATION PARTNERS LLC as financial advisor; and MILLER BUCKFIRE & CO. as investment banker. OMNI AGENT SOLUTIONS is the claims agent. PILATES AND YOGA: Wins Interim Cash Collateral Access ----------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach Division, authorized Pilates and Yoga Center, LLC to use cash collateral on an interim basis in accordance with the budget. First Citizens Bank & Trust has a valid first position blanket lien that is properly perfected and enforceable against all of Debtor's personal property securing aggregate indebtedness. First Citizens holds a security interest in all of the Debtor's assets including all accounts, receivables, future, fixtures, equipment, etc. As adequate protection for the aggregate diminution of the cash collateral resulting from the Debtor's use thereof, First Citizens will have, nunc pro tunc as of the commencement of these Chapter 11 cases, a replacement lien pursuant to 11 U.S.C. section 361(2) on and in all property of the Debtor acquired or generated after the Petition Date, but solely to the same extent and priority, and of the same kind and nature, as the property of the Debtor securing the prepetition obligations to First Citizens under the Pre-Petition Loan Documents. In the event of diminution in the value of the cash collateral, First Citizens will be granted an administrative claim under section 507(b) of the Bankruptcy Code, with priority over all other administrative expense claims, subject to a Carve Out. The Replacement Liens granted are valid and perfected without the need for the execution or filing of any further documents or instruments. Commencing September 15, 2022, and continuing on the 15th day of each month thereafter, until otherwise ordered by the Court, the Debtor will make adequate protection payments to First Citizens in the amount of $500 per month. The Debtor will maintain insurance coverage for its personal property and business operations in accordance with the requirements of the Pre-Petition Loan Documents and will furnish proof of current coverage to First Citizens within five business days after entry of the Order. A further hearing on the matter is set for November 30, 2022 at 1:30 p.m. A copy of the order is available at https://bit.ly/3TFQOAd from PacerMonitor.com. About Pilates and Yoga Center, LLC Pilates and Yoga Center, LLC owns and operates two pilates and yoga studios. The studios are operated in leased locations at 901 N Congress Ave, Unit D-103, Boynton Beach, FL and 223 Sunset Ave, Ste 160, Palm Beach, FL. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-16923-MAM) on September 6, 2022. In the petition signed by Holly Andronicescu, managing member, the Debtor disclosed up to $100,000 in assets and up to $500,000 in liabilities. Judge Erik P. Kimball oversees the case. Brian K. McMahon, Esq., at Brian K. McMahon, PA is the Debtor's counsel. PROVIDENT FUNDING: Fitch Lowers LongTerm IDR to 'B', Outlook Neg. ----------------------------------------------------------------- Fitch Ratings has downgraded the Long-Term Issuer Default Rating (IDR) of Provident Funding Associates, LP (Provident) to 'B' from 'B+'. Fitch has also downgraded the senior unsecured debt rating to 'B-'/'RR5' from 'B'/'RR5'. The Rating Outlook remains Negative. Today's rating actions have been taken as part of a periodic peer review of non-bank mortgage companies, which is comprised of six publicly rated firms. KEY RATING DRIVERS The downgrade and Negative Outlook reflect weakened profitability expectations in the near term for wholesale channel-focused originators like Provident, and reduced financial flexibility as a result. Additionally, Fitch believes the reduction in Provident's origination and servicing footprint, in response to the current environment, could weaken its long-term franchise value and earnings potential over time. The ratings also reflect Provident's long track record as an originator and servicer, its focus on higher quality, agency-eligible originations, maintenance of solid asset quality in the servicing portfolio, conservative leverage and adequate contingent financing, as well as an experienced management team with deep industry background through multiple business cycles. Rating constraints for Provident include its nominal market share within the wholesale and direct mortgage origination space, which is dominated by larger players, and elevated key person risk related to CEO Craig Pica, who, together with the Pica family, exercise significant control over the company as majority shareholders. Fitch believes Provident will experience lower origination volumes and compressed gain on sale (GOS) margins through the Outlook horizon given the rising interest rate environment and intense competition among mortgage lenders. However, Provident has weathered the challenging operating environment well through the first half of 2022, earning a pretax ROAA of 3.8%, which is strong relative to peers and attributable to its timely cost reduction efforts further aided by valuation gains in its mortgage servicing rights (MSR) portfolio. Excluding the MSR gains, ROAA is closer to break even reflecting the challenging operating environment. Provident's leverage metrics based on gross debt to tangible equity, which was 3.9x as of 2Q22; down from 4.7x at YE 2021. Recent deleveraging has been the result of reduced warehouse and MSR facility usage as well as opportunistic repurchases of portions of its own senior unsecured debt at a discount. In 2Q22, the company repurchased $29.2 million of the notes, bringing the total unpaid principal balance outstanding to $277.2 million. Fitch expects leverage to remain relatively consistent over the Outlook horizon as lower retained earnings growth is offset by a decline in balance sheet assets as the company may choose to sell a greater proportion of the MSRs on originated loans. Corporate non-funding leverage, which excludes balances under warehouse facilities from gross debt, was 1.4x at 2Q22, unchanged from YE 2021. Fitch expects this metric to remain in the 1.0x-1.5x range over the Outlook horizon. Consistent with other mortgage companies, Provident remains reliant on the wholesale debt market to fund operations. Secured debt, which was 72% of total debt at June 30, 2022, is comprised of bank warehouse facilities and an MSR backed credit facility. Approximately 40% of the facilities were committed at 2Q22, which is at the higher end of the peer group. Unsecured funding was 28% of total debt at 2Q22, also at the higher end of peers and a rating strength relative to Fitch's 'b' category benchmark range of 10%. However, Provident's funding tenor remains short, exposing the company to refinancing risk. Fitch would view a further extension of the funding duration favorably. Liquidity resources include $29.5 million in unrestricted cash as of June 30, 2022, as well as availability of $129 million on a recently upsized $225 million MSR line ($175 million of which is committed), which can act as a contingent resource, in addition to $1.6 billion in aggregate availability on warehouse facilities to fund originations. The company also has the ability to adjust the amount of servicing it retains on loans sold to improve current cash flows. Through the first half of 2022, the company retained 67% of MSRs created compared to 86% in 2019, improving its liquidity position and benefitting from high MSR valuations. Fitch views Provident's liquidity profile as adequate for the rating level and believes it has the ability to manage through potential margin calls and any servicing advance risk. Provident is not subject to material asset quality risks because nearly all originated loans are conforming agency eligible and sold to investors shortly after origination. The asset quality of the servicing portfolio is solid and delinquencies have historically been low relative to peers and the overall market. The company's repurchase and indemnification claims in recent years have been minimal and Provident has had sufficient reserves to cover these charges. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: Sustained negative earnings, which result in a sustained increased in corporate non-funding leverage above 1.5x, an increase in total leverage above 7.5x, a sustained reduction in the unsecured mix below 15%, erosion of the franchise strength as evidenced by significantly reduced market share, regulatory scrutiny resulting in Provident incurring substantial fines that negatively impact its franchise or operating performance, or the departure of Craig Pica, who as CEO and majority shareholder has led the growth and direction of the company, could all drive negative rating actions. Factors that could, individually or collectively, lead to positive rating action/upgrade: Improved profitability levels, as evidenced by an ROAA, excluding MSR write ups, of 1% or higher on a consistent basis and growth of origination and servicing market share from current levels could result in the Rating Outlook being revised to Stable. Beyond that, positive rating momentum could develop from leverage being sustained at-or-below 5.0x on a gross debt to tangible equity basis, further extension of the funding duration, enhanced liquidity as evidenced by liquid resources as a percentage of total debt above 20%, and demonstrated effectiveness of corporate governance policies. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS The senior unsecured debt rating is one notch below the Long-Term IDR, given a limited pool of unencumbered assets and, therefore, weaker relative recovery prospects in a stress scenario. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES The unsecured debt rating is primarily sensitive to changes in the Long-Term IDR and secondarily to the funding mix and available collateral. A material increase in unencumbered assets and recovery prospects could narrow the notching between the Long-Term IDR and the unsecured notes, while a material increase in secured debt could result in a wider notching. ESG CONSIDERATIONS Provident has an ESG Relevance Score of '4' for Governance Structure due to elevated key person risk related to its CEO, Craig Pica, who has led the growth and strategic direction of the company, as well as the presence of significant levels of ongoing transactions with affiliated parties. An ESG Relevance Score of '4' means Governance Structure is relevant to Provident's rating but not a key rating driver. However, it does have an impact on the rating in combination with other factors. Provident also has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy, and Data Security due to its exposure to compliance risks including fair lending practices, debt collection practices, and consumer data protection, which has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Debt Rating Recovery Prior ---- ------ -------- ----- Provident Funding Associates, L.P. LT IDR B Downgrade B+ senior unsecured LT B- Downgrade RR5 B QUASH SELTZER: Bang Names Former PepsiCo Exec. Kathy Cole as COO ---------------------------------------------------------------- Christopher Doering of FoodDive reports that Bang Energy named former PepsiCo executive Kathy Cole as its chief operating officer just a day after it filed for Chapter 11 bankruptcy. Cole, with nearly three decades of experience in the food and beverage space, will play a key role in integrating the energy drink's supply chain, distribution, operations, sales and finance, according to a press release. Cole joins Bang from Harvest Sherwood Food Distributors, the largest independent food distributor in the U.S., where she most recently served as president and COO. Previously, Cole held senior leadership positions at PepsiCo's Frito-Lay division where she spent 13 years in sales and finance roles. She also has 14 years of experience working in sales, finance and logistics at Coca-Cola Enterprises, a marketer, producer and distributor of the beverage giant's products. "We are confident that Kathy's skills and longtime industry relationships will fuel Bang Energy' strategic growth as we transition to a 100% vertically operated decentralized distribution model," Jack Owoc, Bang's founder and CEO, said in a statement. Cole will join Bang during what has been a tumultuous two years for the beverage brand and its parent Vital Pharmaceuticals. It culminated earlier this week when Vital, which produces Bang, filed for Chapter 11 protection in Florida as it seeks to recover following multiple costly lawsuits that have weighed on its business. Bang also plans to use bankruptcy protection to put in place a new distribution network that Cole will likely play a key role in implementing. Bang entered into what appeared to be a promising distribution deal with PepsiCo in March 2020, but the energy drink company announced it was terminating the partnership less than a year into the agreement. The decision resulted in a bitter and protracted period of litigation before the companies parted ways. During that time, Bang's market share plunged, a factor the energy drink maker blamed on PepsiCo in its bankruptcy filing. Then last month, Monster Energy won $293 million in a false advertising and trade secrets case against Bang. The brand owes Monster, identified in bankruptcy court papers as its largest unsecured creditor, and PepsiCo a total of more than $400 million. About Quash Seltzer LLC Quash Seltzer LLC -- https://www.bangenergy.com/ -- doing business as Mixx and Bang Energy, is a manufacturer of energy drinks. Quash Seltzer LLC filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-17848) on October 10, 2022. In the petition filed by JohnC.DiDonato, as chief restructuring officer, the Debtor reported assets between $10 million and $50 million and liabilities between $50 million and $100 million. The Debtor is Represented by Jordi Guso, Esq. R & E PETROLEUM: Seeks Approval to Retain Aridi Consulting ---------------------------------------------------------- R & E Petroleum, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Louisiana to continue to employ Aridi Consulting, LLC at a weekly compensation of $1,500. Aridi Consulting's members are Ray Chaar and his wife, Elsie Chaar. Mr. and Mrs. Chaar own 50 percent, respectively, of the ownership interests in the Debtors. Through Aridi Consulting, Mr. Chaar provides onsite management services (hiring and managing employees, working register, routine maintenance, business planning) seven days per week. Meanwhile, Mrs. Chaar works seven days per work providing data input, invoicing, payroll, inventory ordering and billing services. The Chaars have also been on-call and provided significant assistance in connection with the Debtor's bankruptcy case. The Debtor contends that it is necessary to retain and compensate the insiders due to their assistance in maintaining the continuity of its operations. Aridi can be reached through: Regheb Chaar Elsie Chaar Aridi Consulting, LLC 2320 Stall Drive Harvey, LA 70058 Phone: (504) 214-6567 About R & E Petroleum R & E Petroleum, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. La. Case No. 22-11087) on Sept. 20, 2022, with up to $50,000 in assets and up to $1 million in liabilities. Ragheb "Ray" Chaar, member and manager, signed the petition. Judge Meredith S. Grabill oversees the case. Leo D. Congeni, Esq., at Congeni Law Firm, LLC is the Debtor's counsel. ROSAMOND 5: Taps Totaro & Shanahan as Legal Counsel --------------------------------------------------- Rosamond 5 Properties LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of California to hire Totaro & Shanahan as its legal counsel. The firm's services include: a. assisting the Debtor with the completion of documents required by the Office of the U.S. Trustee, preparing status reports, reviewing monthly operating reports, and attending hearings; b. consulting with the Debtor's representative and other bankruptcy professionals concerning documents needed and reports to be prepared; c. assisting the Debtor in the preparation of documents for compliance with the requirements of the Office of the U.S. Trustee; d. negotiating with creditors regarding the amount and payment of their claims; e. discussing with the Debtor's representative concerning the formulation of disclosure statement and plan of reorganization; f. preparing the disclosure statement and Chapter 11 plan of reorganization and any amendments thereto; g. serving ballots to creditors, tallying ballots and submitting them to the court; h. responding to any objections to disclosure statement or plan; and i. representing the Debtor in cases where no litigation counsel is employed. The firm's hourly rates are as follows: David Brienza, Esq. $550 Michael R. Totaro, Esq. $550 Michael Totaro, Esq., one of the firm's attorneys who will be providing the services, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Michael R. Totaro, Esq. Totaro & Shanahan Pacific Palisades, CA 90272 Tel: (888) 425 2889 Email: ocbkatty@aol.com About Rosamond 5 Properties Rosamond 5 Properties, LLC, a California-based company, sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Calif. Case No. 22-02483) on Sept. 25, 2022, with between $1 million and $10 million in both assets and liabilities. Patrick Kealy, managing member, signed the petition. The Debtor is represented by Michael R. Totaro, Esq., at Totaro & Shanahan. ROSAMUND 5 PROPERTIES: Seeks Cash Collateral Access --------------------------------------------------- Rosamond 5 Properties, LLC asks the U.S. Bankruptcy Court for the Southern District of California for authority to use cash collateral in accordance with the budget, with a 10% variance. The Debtor seeks to use cash and cash equivalents on hand and thereafter received from each of the Debtor's properties: a. 1701 20th St. W, Rosamond, CA 93560, Kern County, APN 473-022-23-00 -- 16.4 acres of essentially vacant land with 1450 sq ft single family residence and 2400 sq ft clubhouse, approved for development of 176 units; b. 818 Palm Canyon Dr., Borrego Springs, CA 92004, San Diego, APN 1412-370-033-00 -- commercial/restaurant building, currently vacant; and c. 830-850 Palm Canyon Dr., Borrego Springs, CA 92004, San Diego County, APN 141-370-34-00 -- mobile home park with 40 spaces. The properties on Palm Canyon are collectively referred to as Borrego Springs Property. These properties are part of the cross-collateral for a $2,200,000 loan with Grimm Investments, LLC incurred by Debtor on August 11, 2017, and initially secured by properties of four entities; Rosamond 5 Properties, LLC, Kealy Construction, LLC, New Holland, LLC, and 8th St MB, LLC and a property owned by their common managing member Patrick Kealy. The three properties owned by Debtor are the only remaining properties that are claimed as security for the Grimm loan. Since 818 Palm is vacant there is no income or cash collateral. Likewise, Rosamond has minimal income from the rental of the residence as this property is intended for development. A copy of the motion is available at https://bit.ly/3MR98Uz from PacerMonitor.com. About Rosamond 5 Properties LLC Rosamond 5 Properties LLC is a limited liability company in California. Rosamond 5 Properties LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Cal. Case No. 22-02483) on September 25, 2022. In the petition filed by Patrick Kealy, as managing member, the Debtor reports estimated assets and liabilities between $1 million and $10 million each. The Debtor is represented by Michael R. Totaro, Esq., at Totaro & Shanahan. SAN LUIS & RIO GRANDE: OmniTrax Buys Railroad Out of Bankruptcy --------------------------------------------------------------- Liana Kramer of Local Today reports that OmniTrax, which is part of Denver-based The Broe Group -- which Broe founded in 1972 -- announced Wednesday, October 12, 2022, that it has agreed to buy a railroad in south-central Colorado that went bankrupt three years ago. The San Luis & Rio Grande Railroad short-distance travels through five counties. It sends cargo and previously tourists through Alamosa and over the Sangre de Cristo Mountains at La Veta Pass, 9,200 feet above sea level. While owned by Chicago-based Iowa Pacific Holdings, the railroad racked up millions of dollars in debt. In 2019, several companies to which she owed money convinced a federal judge to place them under bankruptcy protection and let a receiver operate them. Bankruptcy documents show OmniTrax agreed to pay $5.75 million for the railroad. "As a Colorado company, we know how important the SLRG has been to the San Luis Valley and the Colorado economy," OmniTrax CEO Dean Piacente said in a statement Wednesday, October 12, 2022. "SLRG is removing tens of thousands of trucks from Colorado's highways and scenic La Veta Pass of the Sangre de Cristo Range," he added. "Rail remains the most environmentally friendly overland freight solution, and that's especially important in such a vibrant part of our state." A spokeswoman for OmniTrax declined to answer questions about the company's plans for the railroad, including whether it will be bringing back scenic railroad tours or making changes to freight lines. The sale to OmniTrax is ongoing. On Wednesday, October 12, 2022, a railroad trustee asked William Brandt, a federal bankruptcy judge, to sign off on the sale but said he was still open to competing bids for the railroad and would hold an auction if he received any. According to Brandt, 65 companies have expressed an interest in buying the railway since 2020. Six went so far as to visit the marshalling yard and five submitted letters of intent to purchase, which they did not carry out. One company offered to pay $7 million but would not pay a deposit, which was turned down, Brandt said. Finally, in September 2022, OmniTrax offered $5.75 million. The sale will allow Iowa Pacific Holdings to repay a portion of the railroad's sizeable debt. According to Brandt, it owes a lender $5.6 million and a total of $3.8 million in unpaid property taxes to the five counties through which the railroad travels. The SLRG would be OmniTrax's 26th railroad company. It also owns the 80-mile Great Western Railway of Colorado, which runs through Fort Collins, Longmont, Loveland, and Greeley. Broe Real Estate Group, another division of Broe Group, is currently building an eight-story office project in Cherry Creek and plans to move OmniTrax's headquarters to the building. The Company previously developed Country Club Towers in the Wash Park neighborhood. About San Luis & Rio Grande Railroad San Luis & Rio Grande Railroad, Inc., operates the San Luis & Rio Grande Railroad. On Oct. 16, 2019, an involuntary Chapter 11 petition was filed against San Luis & Rio Grande Railroad by creditors, Ralco LLC, South Middle Creek Road Association and The San Luis Central Railroad Co. (Bankr. D. Colo. Case No. 19-18905). The petitioning creditors are represented by Brownstein Hyatt Farber Schrec and Graves Dougherty Hearon & Moody. Judge Thomas B. McNamara oversees the case. Williams A. Brandt Jr. was appointed as Chapter 11 trustee for San Luis & Rio Grande Railroad. The trustee tapped Markus Williams Young & Hunsicker LLC as bankruptcy counsel, and Fletcher & Sippel LLC and Hall & Evans P.C. as special counsel. Development Specialists, Inc. and D'Almeida Consulting, LLC serve as the trustee's accountant and financial consultant, respectively. SEARS HOLDINGS: Denial of Second-Lien Holders' Claims Affirmed -------------------------------------------------------------- In the appealed case, IN RE: SEARS HOLDINGS CORPORATION. ESL INVESTMENTS, INC., AND CERTAIN OF ITS AFFILIATED ENTITIES, JPP, LLC, JPP II, LLC, WILMINGTON TRUST, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE AND COLLATERAL AGENT, CYRUS CAPITAL PARTNERS, L.P., Appellants, v. SEARS HOLDINGS CORPORATION, Debtor-Appellee, SEARS HOME IMPROVEMENT PRODUCTS, INC., KMART HOLDING CORPORATION, SEARS, ROEBUCK AND CO., SEARS PROCUREMENT SERVICES, INC., SEARS PROTECTION COMPANY (PR) INC., SEARS PROTECTION COMPANY, SEARS ROEBUCK ACCEPTANCE CORP., SR-ROVER DE PUERTO RICO, LLC, BIG BEAVER OF FLORIDA DEVELOPMENT, LLC., CALIFORNIA BUILDER APPLIANCES, INC., KMART OF WASHINGTON LLC, SEARS BRANDS BUSINESS UNIT CORPORATION, SEARS HOLDINGS PUBLISHING COMPANY, LLC, SEARS PROTECTION COMPANY (FLORIDA), L.L.C., SHC DESERT SPRINGS, LLC, A&E HOME DELIVERY, LLC, SEARS OPERATIONS LLC, A&E LAWN & GARDEN, LLC, A&E SIGNATURE SERVICE, LLC, FBA HOLDINGS INC., INNOVEL SOLUTIONS, INC., SEARS HOLDINGS MANAGEMENT CORPORATION, SEARS HOME & BUSINESS FRANCHISES, INC., SEARS INSURANCE SERVICES, L.L.C., FLORIDA BUILDING APPLIANCES, INC., KMART STORES OF TEXAS LLC, KMART OF MICHIGAN, INC., SHC PROMOTIONS LLC, SYW RELAY LLC, A&E FACTORY SERVICE LLC, KMART.COM LLC, KMART OPERATIONS LLC, SHC LICENSED BUSINESS LLC, SERVICELIVE INC., SRE HOLDING CORPORATION, KMART CORPORATION, MAXSERV, INC, PRIVATE BRANDS, LTD., SEARS DEVELOPMENT CO., KBL HOLDING INC., KMART STORES OF ILLINOIS LLC, KLC, INC., WALLY LABS LLC, MYGOFER LLC, SOE, INC., TROY COOLIDGE NO. 13, LLC, SEARS BRANDS MANAGEMENT CORPORATION, STARWEST, LLC, BLUELIGHT.COM, INC., SEARS BUYING SERVICES, INC., STI MERCHANDISING, INC., SEARS BRANDS, L.L.C., OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF SEARS HOLDINGS CORPORATION, ET AL, SEARS, ROEBUCK DE PUERTO RICO, INC., FLORIDA BUILDER APPLIANCES, INC., Appellees, Nos. 20-3343(L), 20-3346(Con), 20-3349(Con), (2d Cir.), the U.S. Court of Appeals for the Second Circuit affirms the judgment of the district court, which in turn affirmed the judgment of the bankruptcy court denying the Second-Lien Holders' Section 507(b) claims. On Oct. 15, 2018, when the Sears Holdings Corporation and its affiliates filed their bankruptcy petition, they carried approximately $2.68 billion of debt. One set of priority creditors — the First-Lien Holders — have since been paid in full and do not challenge the value that they have been able to recoup from the Debtors. Another set of creditors — the Second-Lien Holders, who were entitled to payment only after the debts to the First-Lien Holders had been discharged — were not so satisfied. In the bankruptcy court, the Second-Lien Holders argued that the value of the collateral that secured their claims, as measured on the Petition Date, vastly exceeded what they have been paid, and that they are accordingly entitled to priority payment of the difference pursuant to section 507(b) of the Bankruptcy Code. The bankruptcy court disagreed, valuing the Second-Lien Holders' collateral at a sum less than what they had already been paid, and accordingly denied their claims for any additional payment. The district court affirmed the bankruptcy court's decision in full. The Second-Lien Holders appealed. The key question on appeal is the value of the Second-Lien Holders' collateral on the Petition Date, which, as the Second-Lien Holders agree, is the value that controls for purposes of adequate protection and section 507(b) administrative super-priority claims. The Second-Lien Holders are entitled to section 507(b) super-priority payment to the extent that the value of the Debtors' collateral on the Petition Date, minus the value of the First-Lien Holders claims on that date, exceeds the $433.5 million credit bid that the Second-Lien Holders already received. The Second-Lien Holders raise three challenges to the bankruptcy court's valuation of the collateral on the Petition Date. They argue that the bankruptcy court erred when it (1) valued the bulk of the Debtors' inventory using the inventory's net orderly liquidation value ("NOLV") — and an errantly low NOLV at that — rather than the inventory's book or replacement value; (2) set at zero the value of the Debtors' non-borrowing-base ("NBB") inventory; and (3) deducted the full-face value of the undrawn letters of credit. The Second Circuit finds that the bankruptcy court committed no legal or factual error in its decision to value the collateral based on NOLV. With respect to the valuation of the NBB inventory, the Court finds that the bankruptcy court reasonably concluded that the Second-Lien Holders failed to meet their burden of demonstrating the NBB's value, and therefore did not err by valuing the NBB at zero. Similarly, since the bankruptcy court was not presented with any reasonable means of discounting the letters of credit, the Court states that it did not err by deducting their full-face value from the value of the collateral. Accordingly, the bankruptcy court did not commit clear error by denying the Second-Lien Holders' section 507(b) claims. A full-text copy of the Decision dated Oct. 14, 2022, is available at https://tinyurl.com/3hnp8yny from Leagle.com. About Sears Holdings Corp. Sears Holdings Corporation -- http://www.searsholdings.com/-- began as a mail ordering catalog company in 1887 and became the world's largest retailer in the 1960s. At its peak, Sears was present in almost every big mall across the U.S., and sold everything from toys and auto parts to mail-order homes. Sears claims to be a market leader in the appliance, tool, lawn and garden, fitness equipment, and automotive repair and maintenance retail sectors. Sears and Kmart merged to form Sears Holdings in 2005 when they had 3,500 US stores between them. Kmart emerged in 2005 from its own bankruptcy. Unable to keep up with online stores and other brick-and-mortar retailers, a long series of store closings left it with 687 retail stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands as of mid-October 2018. At that time, the Company employed 68,000 individuals. As of Aug. 4, 2018, Sears Holdings had $6.93 billion in total assets against $11.33 billion in total liabilities. Unable to cover a $134 million debt payment due Oct. 15, 2018, Sears Holdings Corporation and 49 subsidiaries sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 18-23538) on Oct. 15, 2018. The Hon. Robert D. Drain is the case judge. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel; M-III Partners as restructuring advisor; Lazard Freres & Co. LLC as investment banker; DLA Piper LLP as real estate advisor; and Prime Clerk as claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors, including the Pension Benefit Guaranty Corp., and landlord Simon Property Group, L.P., to serve on the official committee of unsecured creditors. The committee tapped Akin Gump Strauss Hauer & Feld LLP as legal counsel; FTI Consulting as financial advisor; and Houlihan Lokey Capital, Inc. as investment banker. The U.S. Trustee for Region 2 on July 9, 2019, appointed five retirees to serve on the committee representing retirees with life insurance benefits in the Chapter 11 cases. * * * In February 2019, Bankruptcy Judge Robert Drain authorized Sears Holdings approval to sell the business to majority shareholder and CEO Eddie Lampert for approximately $5.2 billion. Lampert's ESL Investments, Inc., won an auction to acquire substantially all of Sears' assets, including the "Go Forward Stores" on a going-concern basis. The proposal allowed 425 stores to remain open and provided ongoing employment to 45,000 employees. The new parent is Transform SR Brands LLC, doing business as Transformco, referred to as "New Sears". Transform is an American privately held company formed on Feb. 11, 2019, to acquire some of the assets of Sears Holdings Corporation. The new company is owned by Eddie Lampert's ESL Investments. SITEK PRODUCTIONS: Gets OK to Hire Teeling & Company as Accountant ------------------------------------------------------------------ Sitek Productions Inc. and Sitek Logistics, Inc. received approval from the U.S. Bankruptcy Court for the Middle District of Florida to hire Teeling & Company, CPAs as their accountant. The firm's services include: (a) preparing 2020 and 2021 financial statements for Sitek Productions; (b) amending 2020 and 2021 Form 1120S filings for Sitek Productions; (c) preparing 2022 financial statements for Sitek Productions and Sitek Logistics; and (d) assisting with the preparation and go-forward plan for the monthly operating reporting (MOR) deliverables. Ashlie Teeling, CPA will be the primary accountant assigned to this matter and her current hourly rate is $175. Hourly rates for other professionals and staff range between $125 and $300. The firm requested a retainer in the amount of $5,000. As disclosed in court filings, Teeling is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Ashlie Teeling, CPA Teeling & Company, CPAs 110 E. Madison St., Suite 202 Tampa, FL 33602 Phone: (813) 200-5598 Email: ashlieteeling@teeling.co About Sitek Productions Sitek Productions, Inc. offers full-service technical solutions as well as quality AV rentals to service customers' next event. Sitek Productions and affiliate, Sitek Logistics, Inc., filed petitions for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Lead Case No. 22-03141) on Aug. 31, 2022. Judge Grace E. Robson has been assigned to oversee the cases while Aaron R. Cohen has been appointed as Subchapter V trustee. At the time of the filing, Sitek Productions listed as much as $1 million in both assets and liabilities while Sitek Logistics listed up to $50,000 in assets and up to $100,000 in liabilities. The Debtors tapped Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Postler, P.A. as legal counsel, and Teeling & Company, CPAs as accountant. SUMMER AVE: Unsecured Creditors Owed $30.5K to Get $5K in Plan -------------------------------------------------------------- Summer Ave LLC submitted a Second Amended Chapter 11 Plan of Reorganization for Small Business Debtor under Subchapter V, dated Oct. 12, 2022. The Debtor's principal asset is Sumner Ave, which is listed in his Schedule A/B filed with the Bankruptcy Court with a value of $775,000. The Debtor also listed in his Schedule A/B a bank account with $3,000, and miscellaneous lobby furniture of $100 in value. The Debtor did not list any back rents owed in his schedules, but upon further reflection these may total over $10,000; the Debtor did not keep up to date records of these amount due to the nature of the pandemic, so it does not have an accurate amount; further, the Debtor, again due to the nature of the pandemic, believes these various parties have various defenses to nonpayment. Finally, the collectability of any judgments should be questioned because the Debtor believes that these various parties have minimal funds -- business have suffered and residential tenants are notoriously impoverished, particularly for apartment rentals. In fact, the Debtor believes that he is fortunate to have tenants at this time who are relatively up to date postpetition. The end result is that the Debtor has concluded that any back rent, owed by current or former tenants has little practical value, if any – the cost of commencing litigation, procuring judgments, and the unlikely ability to collect on any judgments, lead the Debtor to conclude that these have no value; in any event, the Debtor will amend his schedules to include these assets, although note the inability to collect upon these receivables. Under the Plan, Class 7 General Unsecured Claims total $30,571. Each holder of the Allowed Class 6 Claim shall receive cash in an amount equal to such Claim's pro rata share of $5,000. The $5,000 shall be funded 1 year after the Effective Date. If the Debtor were to sell its real estate prior to one year after the Effective Date, these claims would be paid upon the sale of the property. Class 7 is impaired. This Plan will be funded from cash on hand, working capital, and cash from ongoing business operations. The Debtor will continue to operate in the ordinary course of business. Pursuant to s 1190(2) of the Code, the Plan provides for the submission of all or such portion of the future earnings of the Debtor as is necessary for the execution of the Plan. To the extent necessary, the Debtor's principal, Louis Masaschi, will make additional contributions to account for any shortfalls. Counsel for the Debtor: Louis S. Robin, Esq. LAW OFFICES OF LOUIS S. ROBIN 1200 Converse Street Longmeadow, MA 01106 Tel: (413) 567-3131 Fax: (413) 565-3131 E-mail: louis.robin@prodigy.net A copy of the Second Amended Chapter 11 Plan of Reorganization dated October 12, 2022, is available at https://bit.ly/3CyRdNN from PacerMonitor.com. About Summer Ave, LLC Summer Ave, LLC, is a limited liability company that owns commercial property, consisting of three buildings and two parking lots, each on a separate parcel, with building addresses of (i) 431-435 White Street, (ii) 429 White Street and 752 Sumner Avenue, and (iii) 760 Sumner Avenue, Springfield, Massachusetts. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Mass. Case No. 22-30140) on April 28, 2022. In the petition signed by Louis Masaschi, manager, the Debtor disclosed $778,100 in assets and $4,058,600 in liabilities. Judge Elizabeth D. Katz oversees the case. The Law Offices of Louis S. Robin is the Debtor's counsel. SUMMIT MIDSTREAM: Fitch Affirms 'B-' LongTerm IDR, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of Summit Midstream Partners, LP (SMLP) and Summit Midstream Holdings, LLC (Summit Midstream) at 'B-'. Fitch has also affirmed the instrument rating of Summit Midstream's second lien secured debt at 'B+'/'RR2'. The notes have been co-issued by Summit Midstream Finance Corporation. The Rating Outlook is Stable. The ratings reflect Fitch's expectation of EBITDA growth in 2023 driven by the recently announced Denver-Julesburg basin acquisition agreement, and by SMLP having almost all of its gross margin derived from fixed-fees under long-term acreage dedication contracts. Concerns include limited size and scale, presence in mature declining basins, a small amount of long-term minimum volume commitment (MVC) contracts, and largely debt financed acquisitions in a high interest rate environment. KEY RATING DRIVERS M&A Driving Near-Term Growth: On Oct. 17, 2022, SMLP announced the acquisitions of Sterling Energy Investments, LLC and affiliates (Sterling), and Outrigger Energy II, LLC (Outrigger), both gathering and processing businesses in the DJ Basin for a cash consideration of approximately $305 million. SMLP is expected to finance the acquisitions by making an approximately $220 million draw on the asset-based revolving credit facility and a $85 million add-on to the existing second lien notes. Fitch notes that in September 2022, SMLP closed on the sale of Bison Midstream, LLC (Bison) in North Dakota for approximately $40 million in cash. In the DJ basin, SMLP has historically outperformed the counties in which it operates, and it is one of the regions where SMLP expects long-term growth. Fitch expects the acquisitions to be cash flow accretive. Fitch, however, acknowledges the risks associated with M&A transactions and potential increase in interest expense, considering that the transaction is largely debt financed with a considerable amount drawn on the floating rate credit facility. Limited Size and Scale: SMLP generated a sizable portion, approximately 42% of LTM 2Q22 EBITDA from mature legacy basins including Piceance and Barnett, where Fitch expects SMLP to have limited activity. Furthermore, the company is expected to have limited activity in the Marcellus region. Fitch notes that Piceance and Barnett along with Marcellus are not core focus areas for SMLP. In the past two years, SMLP's volumes have been on a steady decline in the aforementioned regions. DJ, Utica and Williston are regions likely to garner most growth capex. Fitch expects most of the near-term organic growth to be driven by operations in the Utica. One of SMLP's key customer recently closed a bolt-on acquisition of additional acreage which is expected to drive growth in the region. Fitch expects a successful acquisition and integration of Outrigger and Sterling to offset some of the decline in the legacy basins. Interest Coverage: Fitch expects SMLP's interest coverage (operating EBITDA/interest paid) to trend closer to Fitch's negative sensitivity in 2022 before increasing in the following years due to the transaction being largely debt financed. Fitch expects SMLP's interest coverage to be approximately 2.4x in 2023. Leverage is expected to temporarily increase to approximately 6.8x in 2022, before declining to approximately 5.2x in 2023 and under over the forecast period. SMLP is expected to utilize excess FCF toward paying down outstanding debt on the asset-based credit facility. Fitch's expectations are based on SMLP's commitment toward deleveraging. Performance in 2023, including successful post-closing integration and demonstrated commitment to deleveraging will be key in recommending a rating or Outlook change. Volumetric and Counterparty Risks: The majority of SMLP's revenue is underpinned by fixed-fee contracts with a weighted average contract life of approximately eight years. Approximately 95% of the LTM 2Q22 gross margins were derived from fixed-fee contracts backed by acreage dedications, thereby reducing commodity price risks. Pro forma for the Outrigger and Sterling acquisition, SMLP will be approximately 90% fixed-fee. SMLP, however, remains exposed to considerable volumetric risks. SMLP has approximately 25% of gross-margins under MVCs, excluding operations in the Permian. SMLP's MVCs had a weighted average life of approximately four years as of December 2021. Some of SMLP's top customers are high-yield or non-rated counterparties. High-yield and non-rated customers are expected to contribute approximately over 50% to the company's 2022 gross margins. Though there has been some improvement in the counterparty credit profile in the last twelve months, the weighted average ratings for top customers remain non-investment-grade. Parent Subsidiary Linkage: There exists a parent subsidiary relationship between SMLP (parent) and Summit Midstream Holdings, LLC (Summit Midstream; subsidiary). Fitch determines SMLP's credit profile based on consolidated metrics and considers Summit Midstream to have a stronger credit profile that SMLP. Legal ring-fencing is considered open due to absence of regulatory ring-fencing and only certain limitations on intercompany flow of funds. Effective control is evaluated as open given that Summit Midstream is wholly owned and controlled by SMLP. Funding and Cash Management is evaluated as porous due to Summit Midstream's ability to obtain both internal and external funding. Due to the aforementioned linkage considerations, Fitch will rate both entities based on the consolidated credit profile and has assigned the same IDRs. DERIVATION SUMMARY SMLP owns and operates gathering and processing assets in multiple basins across the U.S. In LTM 2Q22, approximately 95% of the company's gross margins were generated under fixed-fee contracts largely with high-yield counterparties. Pro forma for the acquisitions, SMLP is expected to generate approximately 90% of gross-margins under fixed-fee contracts. EnLink Midstream, LLC (ENLC; BB+/Positive) is a peer insofar it operates G&P assets in three regions, namely, Oklahoma (Stack Play), Permian and the Barnett. Approximately 90% of ENLC's gross margin is generated under fixed-fee contracts primarily with investment-grade counterparties. ENLC has significantly greater size and scale compared to SMLP with EBITDA of over $1 billion. ENLC is also expected to have considerably lower leverage of approximately 4.5x or below compared with SMLP. ENLC's larger size, lower leverage and better counterparty credit profile are the key factors leading to difference in IDRs. Blue Racer Midstream, LLC (Blue Racer; B+/Stable), is another peer comparable with SMLP to an extent it operates G&P assets strategically located in the Appalachia basin. Blue Racer has slightly larger size and scale, and a greater proportion of revenue and EBITDA generated under fixed-fee contracts with MVCs providing a higher degree of cash flow stability. Blue Racer had an interest coverage of approximately 3.7x in 2021, and SMLP had an interest coverage of approximately 4.0x in 2021. Fitch expects Blue Racer's leverage to be approximately 4.5x in 2022, which is considerably lower than expectations for SMLP. Blue Racer's relatively higher geographic concentration is offset by SMLP's greater proportion of cash flow generated from mature and declining basins. SMLP's slightly smaller size and scale, higher leverage, inferior cash flow stability, and presence in more mature declining basins are the key drivers leading to a two-notch separation in IDRs versus Blue Racer. KEY ASSUMPTIONS - Oil and gas activity levels in the basins where SMLP operates is consistent with Fitch's base case price deck for West Texas Intermediate (WTI) and Henry Hub of $81/bbl and $5/mcf in 2023, falling to $50/bbl and $3/mcf in 2025 respectively; - Base interest rate applicable to the asset-based credit facility reflects the Fitch Global Economic Outlook, e.g., 4% for 2023 and 3.5% for 2024; - Successful acquisition of Outrigger and Sterling, and $85 million add-on to the second lien notes; - Flat to moderate volume growth, driven primarily by the Utica basin; - No new acreage dedication or producer customer assumed for the status quo business; - EBITDA margins consistent with historical margins and CAPEX consistent with management guidance; - Distributions on Series A Preferred and Common Units remain suspended throughout the forecast period; - Pro-active refinancing of the 2025 senior unsecured notes; - The recovery analysis assumes that Summit Midstream Partners, LP would be considered a going-concern in bankruptcy. Fitch has assumed a 10% administrative claim (standard). The going-concern EBITDA estimate of $180 million reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which we base the valuation of the company. As per criteria, the going concern EBITDA reflects some residual portion of the distress that caused the default; - Fitch used a 6x EBITDA multiple to arrive at SMLP's going-concern enterprise value. The multiple is in line with recent reorganization multiples in the energy sector. There have been a limited number of bankruptcies and reorganizations within the midstream space but in the limited sample such as bankruptcies of Azure Midstream and Southcross Holdco, the reorganization multiples were between 5x and 7x by Fitch's best estimates. In Fitch's recent bankruptcy case study report "Energy, Power and Commodities Bankruptcies Enterprise Value and Creditor Recoveries," published in September 2021, the median enterprise valuation exit multiplies for 51 energy cases for which this was available was 5.3x, with a wide range of multiples observed. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Leverage (total debt with equity credit/operating EBITDA) on a trailing twelve months (TTM) basis below and expected to sustain below 5.5x; - Material change to earnings stability profile in terms of greater proportion of EBITDA derived from high growth basins or decreased volumetric exposure. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Expected Leverage (total debt with equity credit/operating EBITDA) above 6.5x on a sustained basis; - Interest Coverage (operating EBITDA/interest paid) sustained below 2.2x; - Material change to contractual arrangement and operating practices that negatively impacts cash flow or earnings profile, including a move away from current majority of revenue being fee based; - Meaningful deterioration in customer credit quality or a significant event at a major customer that impairs cash flows; - Increases in capital spending beyond Fitch's expectation that have negative consequences for credit profile (e.g. if not funded with a balance of debt and equity); - Reduced liquidity. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: The company had a total liquidity of approximately $255 million as of June 30, 2022. SMLP had approximately $12 million cash on its balance sheet and $243 million (net of approx. $6 million outstanding letters of credit) available on its $400 million first lien secured asset-based credit facility. The credit facility has a maturity date of May 1, 2026. Covenants in the credit facility permit a maximum of first lien net leverage ratio (as defined in the credit agreement) of 2.5x and minimum interest coverage ratio of 2.0x in each fiscal quarter. As of June 30, 2022, SMLP was in compliance with the covenants. SMLP had a first lien net leverage ratio of 0.64x and interest coverage ratio of 2.73x as of June 30, 2022. The credit facility is subject to a borrowing base determination of eligible assets which was a total of $584.5 million as of June 30, 2022. SMLP has a $259 million 5.75% senior unsecured notes maturing on April 15, 2025. The remaining debt maturities is in 2026. Pro forma for the Outrigger and Sterling acquisition, Fitch expects SMLP to have a total liquidity of approximately $70 million as of year-end 2022. SMLP is expected to have approximately $69 million available on the credit facility (net of outstanding letters of credit) and approximately $1 million cash on its balance sheet. Fitch expects SMLP to generate positive free cash flows in the range of $80 million-$90 million, and remain compliant with the covenants. ISSUER PROFILE SMLP owns, develops and operates midstream energy infrastructure assets in unconventional resource basins, primarily shale formations in the continental United States. SMLP, through its 100% ownership of Summit Midstream Holdings, LLC (Summit Midstream) provides natural gas gathering, compression, treating, and processing services, as well as crude oil and produced water gathering services. SUMMARY OF FINANCIAL ADJUSTMENTS The values in the above Sensitivities and other metric values in this press release are calculated by de-consolidating the consolidated debt of Summit Permian Transmission Holdco, LLC (for leverage), and removing the interest expense related to this debt (for coverage). Further, no material flows related to Double E Pipeline, LLC are used in the aforementioned metrics. Fitch's calculation of adjusted EBITDA excludes equity in earnings from unconsolidated affiliates and includes cash distributions from those unconsolidated affiliates. Fitch gives 50% equity credit to SMLP's 9.50% Series A Preferred Cumulative Perpetual Units under Fitch's hybrid methodology, Corporates Hybrids Treatment and Notching Criteria. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Summit Midstream Finance Corp. Senior Secured 2nd Lien LT B+ Affirmed RR2 B+ Summit Midstream Partners, LP LT IDR B- Affirmed B- Summit Midstream Holdings, LLC LT IDR B- Affirmed B- Senior Secured 2nd Lien LT B+ Affirmed RR2 B+ SUNGARD AS: UST Opposes Exculpation Provisions in Plan ------------------------------------------------------ The United States Trustee for Region 7 filed a limited objection to the First Amended Combined Disclosure Statement and Joint Chapter 11 Plan of Sungard AS New Holdings, LLC and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code,. The U.S. Trustee asks the Court to deny confirmation unless the Debtor modifies the exculpation provisions which are inconsistent with the Bankruptcy Code and the Fifth Circuit's holding in NexPoint Advisors, L.P. v. Highland Capital Management (In re Highland Capital Management, L.P.). The United States Trustee points out that the Amended Plan extends exculpation to improper parties. Specifically, the Fifth Circuit in Highland Capital evaluated and rejected similar "Related Parties" language contained in the definitions and exculpation clause, holding that the exculpation should not be extended to "Related Parties." As it stands, the Plan's exculpation provision extends to Highland Capital and its employees and CEO; Strand; the Reorganized Debtor and HCMLP GP LLC; the Independent Directors; the Committee and its members; the Claimant Trust, its trustee, and the members of its Oversight Board; the Litigation Sub-Trust and its trustee; professionals retained by the Highland Capital and the Committee in this case; and all "Related Persons." Consistent with section 524(e), we strike all exculpated parties from the Plan except Highland Capital, the Committee and its members, and the Independent Directors. The United States Trustee further points out that the temporal limits in the exculpation clause are insufficient. The exculpation clause contained in Amended Plan Article XII.D violates the Bankruptcy Code because it contains wording that expands exculpation to a pre filing period ("and related prepetition transactions", "the prepetition negotiation and settlement of claims" and "or other occurrence taking place on or before the effective date"). Amended Plan Article XII.D should include a temporal limitation so that the scope of the exculpation is consistent with the Bankruptcy Code and precedent. About Sungard AS New Holdings Sungard Availability Services is a Wayne, Pa.-based information-technology services provider owned by Angelo Gordon, Blackstone Credit, FS/KKR Advisor LLC and Carlyle Group Inc. It provides disaster recovery services, colocation and network services, cloud and managed services and workplace recovery to customers in North America, Europe and Asia. The company and its affiliates filed for Chapter 11 protection twice in three years. Sungard filed for Chapter 11 bankruptcy in 2019 with a prepackaged plan that was approved by a New York bankruptcy court one day after it was filed. Sungard AS New Holdings, LLC and affiliates, including Sungard Availability Services, LP, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 22-90018) on April 11, 2022. Judge David R. Jones oversees the case. In the petition signed by Michael K. Robinson, CEO and president, Sungard AS disclosed up to $1 billion in both assets and liabilities. Sungard Availability Services (UK) Limited, an indirect subsidiary of Holdings, entered into administration in the UK on March 25, 2022. Meanwhile, Sungard Canada filed an application for recognition in Canada under the Companies Creditors' Arrangement Act of its Chapter 11 case. Akin Gump Strauss Hauer & Feld LLP and Jackson Walker serve as legal counsel to the Debtors. Cassels Brock & Blackwell LLP, serves as their Canadian legal counsel. DH Capital, LLC and Houlihan Lokey, Inc., act as investment bankers. FTI Consulting, Inc. serves as financial and restructuring advisor. Alvarez & Marsal Canada Inc., serves as Canadian court-appointed information officer and is represented by Bennett Jones, LLP as counsel in connection with the Canadian proceedings. Kroll Restructuring Administration, LLC serves as notice and claims agent. Proskauer Rose, LLP and Gray Reed & McGraw, LLP serve as counsel to Acquiom Agency Services LLC, the Term Loan DIP agent, and Term Loan DIP lenders. PNC Bank, National Association, serves as administrative agent and collateral agent, under the DIP ABL facility. PNC is represented by Thompson Coburn Hahn & Hessen LLP as counsel. THEOS FEDRO: 3rd Amended Complaint vs. Pender Dismissed ------------------------------------------------------- Bankruptcy Judge Dennis Montali grants the motion to dismiss (without leave to amend) the adversary case titled In re THEOS FEDRO HOLDINGS, LLC, Chapter 11, Debtor. PHILIP ACHILLES, individually and in his capacity as trustee of the Achilles Revocable Trust dated May 27, 2003, and THEOS FEDRO HOLDINGS, LLC, a California LLC, Plaintiffs, v. PENDER CAPITAL, INC., a California Corporation, PENDER CAPITAL ASSET LENDING FUND 1, LP; LABOR COMMISSIONER OF THE STATE OF CALIFORNIA; AND DOES 1 through 30, inclusive, Defendants. PENDER CAPITAL ASSET LENDING FUND I, LP, Counter-Claimant, v. PHILIP ACHILLES, individually and in his capacity as trustee of the Achilles Revocable Trust dated May 27, 2003, and THEOS FEDRO HOLDINGS, LLC, a California LLC, Counter-Claim Defendants. PENDER CAPITAL ASSET BASED LENDING FUND I, LP, Cross-Claimant, v. JOHN A. WISE & ASSOCIATES, PLLC, and AMY P. FRYAR, Cross-Claim Defendants, Adversary Case No. 21-03023-DM, (Bankr. N.D. Cal.). On July 13, 2022, the Court entered a Tentative Ruling on Alternative Motion to Dismiss. The Court's Tentative Ruling made clear that any amended complaint must allege that the Debtor was not in breach of contract, or excused from performance, at the time that the Trustee alleges that Pender blocked the transfer of the $515,000 holdback or did anything else that might support a breach of contract or "good faith and fair dealing" theory of relief. The Tentative Ruling also stated that an amended complaint must allege more facts as to the other claims against Pender. On July 14, 2022, upon the Parties' acceptance of the Tentative Ruling, the Court entered an Order dismissing the chapter 11 trustee Janina Hoskins' Second Amended Complaint with leave to amend. On Aug. 10, 2022, the Trustee filed a Third Amended Complaint. Now, the Defendant Pender Capital Asset Based Lending Fund I, LP filed a Motion to Dismiss Third Amended Complaint. According to the Trustee, Pender breached the contract when Pender or its agent refused to release the holdback funds to the Debtor. However, the Third Amended Complaint does not address that Debtor was in default from the outset of the making of the loan under the terms of the Loan Documents—it does not address the reality of the Debtor's default. Hence, the Trustee did not respond to the Court's request regarding Debtor's own performance or excuse from performance under the Loan Documents. In addition, the Third Amended Complaint does not allege that the conditions precedent to release the funds had been met independent of the Debtor's default, only that the funds were not disbursed and therefore Pender was in breach. The Trustee also alleges a variety of acts by Pender, including a scheme to have the Debtor unknowingly enter a "loan to own" debt that the Debtor would inevitably default upon, and conspiring with John Wise & Associates, PLLC to steer the Debtor into a doomed deal. Pender notes that, "in order to state a claim for breach of an implied covenant of good faith and fair dealing, the specific contractual obligation from which the implied covenant of good faith and fair dealing arose must be alleged." The Court finds that Trustee alleges no specific contractual obligation from which the implied covenant and fair dealing arose, and instead alleges a general motive of wrongdoing in originating the loan at all, under the conclusory "loan to own" label. The Trustee further claims that Pender has breached Business and Professions Code by virtue of Pender's breach of contract and breach of the covenant of good faith and fair dealing. Because the Court has determined that insufficient facts regarding either claim have been plead, so too is this claim insufficient. As the Court stated in its Tentative Ruling that the Trustee needed to "bolster her allegations of her aiding and abetting, negligence and conspiracy claims," the Court expects that in any amended complaint, the claims, if plead again, should contain enough facts for the court to infer that Pender is liable for those claims. Upon review of the Third Amended Complaint, however, the Court concludes that the Trustee has not and cannot plead sufficient facts necessary to make any facially plausible claim of negligence, aiding and abetting, or conspiracy. The Trustee does not dispute that the plain text of the Loan Documents incorporated a holdback of certain funds subject certain conditions precedent being met. The Court determines that the thrust of the Trustee's arguments regarding either aiding and abetting or conspiracy is that the contractually held-back funds were not disbursed but Pender continued to charge the Debtor interest. However, the Trustee does not allege that this interest was somehow contrary to the Loan Documents (they were not) and does not connect this charging of interest to a breach of Wise's duties or to a broader conspiracy to cause Debtor to default. In her opposition to the motion to dismiss, the Trustee proposes a Fourth Amended Complaint. The Trustee's recent attempt failed to set forth the specific facts the Court determined would be necessary for a successful amended complaint. The Trustee's proposed amendments set forth in the Opposition and at the hearing still do not contemplate addressing the Debtor's initial default under the Loan Documents. The Trustee did not assert these facts even with specific prompting from the court, and the Trustee still has not proposed asserting these facts in an amended complaint. Accordingly, the Court concludes that the Trustee lacks ability to set forth a complaint that corrects the defects addressed here. A full-text copy of the Memorandum Decision dated Oct. 18, 2022, is available at https://tinyurl.com/bdeay7yj from Leagle.com. About Theos Fedro Holdings San Francisco, Calif.-based Theos Fedro Holdings, LLC, provides support services to the transportation industry. It filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Calif. Case No. 21-30202) on March 16, 2021. Philip Achilles, managing member, signed the petition. In its petition, the Debtor disclosed $1 million to $10 million in both assets and liabilities. Judge Dennis Montali oversees the case. The Law Offices of Stuppi & Stuppi serves as the Debtor's legal counsel. Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP serves as counsel for Pender Capital Asset Based Lending Fund I, LP, creditor. Janina M. Hoskins serves as the Debtor's Chapter 11 Trustee, while NRT West, Inc. serves as the real estate broker. THORCO INC: Seeks to Hire Andrew Johnson CPA PLLC as Accountant --------------------------------------------------------------- Thorco Inc. seeks approval from the U.S. Bankruptcy Court for the District of Montana to employ Andrew Johnson CPA, PLLC as accountant. The firm will render these services: (a) prepare income tax returns; (b) provide income tax consulting; (c) provide general accounting assistance; and (d) assist with monthly and quarterly reports as necessary. Andrew Johnson, CPA, will be compensated at an hourly rate of $125, plus expenses. Mr. Johnson 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 Johnson, CPA Andrew Johnson CPA, PLLC Fairfield, WA 99012 Telephone: (818) 825-5669 Facsimile: (509) 497-7066 Email: ajohnsontaxcpa@gmail.com About Thorco Inc. Thorco, Inc. is classified under heavy and civil engineering construction and has been in business for more than 10 years. It is located in Kalispell, Mont. Thorco filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Mont. Case No. 22-90119) on July 29, 2022, with as much as $50,000 in both assets and liabilities. Christy L. Brandon serves as Subchapter V trustee. Judge Joseph M. Meier oversees the case. The Debtor tapped Matt Shimanek, Esq., at Shimanek Law, PLLC as legal counsel and Andrew Johnson CPA, PLLC as accountant. THUNDER INC: Seeks Cash Collateral Access ----------------------------------------- Thunder, Inc. asks the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, for authority to use cash collateral to continue operating its business. The entities that have recorded a UCC Financing Statement claiming a personal property security interest in the Debtor's assets and may therefore claim a perfected security interest in "cash collateral" are: -- Argonaut Insurance Company, -- BSD Capital, LLC dba Lendistry, -- Century 21 Real Estate LLC, and -- U.S. Small Business Administration They all claim a blanket interest and lien against the Debtor's assets. Their claims total $518,561 as of the Petition Date. As set forth in the Debtor's Projected Cash Flow Budget, its monthly expenses are projected to total from approximately $83,973 to $90,661 per month, and include ordinary and necessary operating expenses as loan payments, payroll and insurance, and to fund the postpetition retainer for the Debtor's proposed general insolvency counsel. The Debtor submits that the interests of the claimants who assert a perfected security interest and lien in cash collateral are adequately protected because of the substantial $1.137 million equity cushion the creditors enjoy in the Debtor's cash and accounts receivable. In the unlikely event the Court determines that the interests of these entities are not adequately protected, the Debtor says it can provide a replacement lien on after acquired assets, such as accounts receivable, to the extent the use of cash collateral results in a decrease of value of their interest in the property. A copy of the motion is available at https://bit.ly/3eZWlCY from PacerMonitor.com. About Thunder Inc. Thunder Inc., doing business as Escobar Construction, is a construction company in California. Thunder Inc. filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-bk-15357) on Sept. 30, 2022. In the petition filed by Ronald O. Escobar, as chief executive officer, the Debtor reported assets and liabilities between $1 million and $10 million each. The case is overseen by the Honorable Bankruptcy Judge Barry Russell. Gregory K. Jones has been appointed as Subchapter V trustee. The Debtor is represented by Raymond H. Aver, Esq., at the Law Offices of Raymond H. Aver. THUNDER INC: Seeks to Hire David L. Brault as Litigation Counsel ---------------------------------------------------------------- Thunder Inc. seeks approval from the U.S. Bankruptcy Court for the Central District of California to hire the Law Offices of David L. Brault as its special litigation counsel. The firm will represent the Debtor in two pending state court actions: Thunder Inc. v. Old Republic Surety and J's Gardenworld, LLC, et al.; and Thunder Inc. v. Marina Landscape, Inc., et al. The firm will also provide the Debtor with construction law advice. The firm will be paid at these hourly rates: David L. Brault, Shareholder $250 Associates $225 Paralegal $105 The Brault Firm neither holds nor represents an interest adverse to the estate with respect to matters on which it is to be employed, according to court filings. The firm can be reached through: David L. Brault, Esq. Law Offices of David L. Brault 6B Liberty Ste 240 Aliso Viejo, CA 92656-5840 Phone: 949-458-3560 Email: dlbrault@dlblaw.net About Thunder Inc. Thunder Inc., doing business as Escobar Construction, is a construction company in California. Thunder Inc. filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-bk-15357) on Sept. 30, 2022, with between $1 million and $10 million in both assets and liabilities. Gregory K. Jones has been appointed as Subchapter V trustee. The case is overseen by Judge Barry Russell. The Debtor tapped the Law Offices of Raymond H. Aver as bankruptcy counsel and the Law Offices of David L. Brault as special litigation counsel. TRINITY AFFORDABLE: S&P Affirms 'B+' Long-Term Rev. Bonds Rating ---------------------------------------------------------------- S&P Global Ratings revised its outlook to stable from negative and affirmed its 'B+' long-term rating on the Public Finance Authority, Wis.' series 2016A and taxable series 2016A-T multifamily housing revenue bonds, issued for Trinity Affordable Housing Corp. (TAHC), Ill.'s The Estates at Eagle's Pointe apartments project. "The outlook revision reflects our view of improving coverage and liquidity measured by debt service coverage of 1.21x in fiscal 2021" said S&P Global Ratings credit analyst Jessica Pabst. The series 2016A and 2016A-T were issued in the par amounts of $16.79 million and $8.905 million, respectively, for a total issuance of $25.695 million. The bonds were issued pursuant to and secured by a trust indenture dated Nov. 1, 2016. Proceeds of the bonds were loaned to the borrower to finance the acquisition and rehabilitation of 583 family housing units known as The Estates at Eagle's Pointe in Peru, Ind. The rating reflects S&P's view of the following credit characteristics: -- Weak-to-very weak coverage and liquidity; -- Weak-to-very weak management and governance assessment; and -- Weak-to-very weak market position. The stable outlook reflects our view that S&P Global Ratings-calculated DSC will remain stable between 1.10x and 1.25x and the project will not see material pressure within the outlook period related to market position. UNITED WHOLESALE: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has affirmed United Wholesale Mortgage, LLC's (United Wholesale) Long-Term Issuer Default Rating (IDR) and unsecured debt rating at 'BB-'. The Rating Outlook is Stable. The rating action has been taken as part of a periodic peer review of non-bank mortgage companies, which is comprised of six publicly rated firms. KEY RATING DRIVERS The rating affirmation reflects United Wholesale's strong market position and corporate profile as a leader in the wholesale residential mortgage segment, a strong financial profile with improved capitalization and liquidity, solid asset quality of the servicing portfolio, a robust and integrated technology platform, and an experienced management team with extensive industry background. Rating constraints include a reliance on short term, uncommitted funding and elevated key person risk related to the CEO and president, Mat lshbia, who, together with the lshbia family, exercises significant control over the company as majority shareholders. Additionally, the company's exclusive focus on the wholesale channel acts as a rating constraint if further market share gains are limited. The company's TTM earnings through June 30, 2022 moderated to a pretax return on average assets (ROAA) of 7.4% from a peak of 37.5% in 2020, illustrating the cyclicality inherent in the mortgage origination business. Earnings were impacted by a reduction in origination volumes following the increase in mortgage rates, coupled with compression of gain on sale margins due to resulting industry overcapacity, intense competition in the wholesale channel, and the firm's strategy to prioritize market share gains over profits. These factors were partially offset by lower amortization as well as valuation gains on the mortgage servicing rights (MSR) portfolio due to lower prepayment speeds. Pretax ROAA was 3.2% for the TTM period adjusting for the impact of MSR fair value marks. Fitch expects earnings to be pressured in the near term as volume and margin outlooks are lower for the remainder of 2022 and into 2023 and there is more limited MSR valuation upside from additional rate rises. United Wholesale's leverage (gross debt to tangible equity) was 2x at 2Q22, down from 4.7x a year ago, given the reduction in warehouse borrowings and growth in tangible equity from retained earnings. Fitch expects leverage to trend up by YE 2022 due to seasonality, as the company warehouses more loans in 4Q, but to remain under 4x over the Outlook horizon as retained earnings should grow net of any shareholder distributions and additional borrowing needs are limited. Corporate leverage, which excludes balances under warehouse facilities from gross debt, was 0.65x at 2Q22; up from 0.55x a year ago, but at the lower-end of the peer group and well-below the net debt incurrence covenant of 2x in the unsecured notes. Consistent with other mortgage companies, United Wholesale utilizes short term wholesale funding for its operations and secured debt was 70% of total debt at 2Q22, comprised mainly of warehouse facilities. Committed facilities declined to 3% of secured borrowing capacity at 2Q22, from 14% a year ago, which remains below peers as the company has deemphasized committed funding in a lower volume environment. United Wholesale's unsecured funding mix was 30% at 2Q22; up from 12% a year ago, primarily driven by a decline is warehouse borrowings, and is now at higher-end of the peer group. Fitch would view further increases in unsecured funding as well as an extension of the funding duration and increase in the committed amount favorably. United Wholesale increased its contingent liquidity resources through the addition of a $1.5 billion MSR-backed line of credit in 3Q22. Liquidity resources include approximately $959 million of unrestricted cash as of 2Q22 and the $1.5 billion capacity on its MSR line in addition to undrawn warehouse capacity to fund originations. It also has access to a $500 million unsecured uncommitted line of credit from its principal shareholder (SFS Corp) that it entered into earlier in 2022. Fitch views the liquidity position to be strong relative to the peer group and adequate in light of potential margin calls, servicing advancing needs and near-term profitability pressures. United Wholesale is not subject to material asset quality risks because nearly all originated loans are government or agency eligible and sold to investors shortly after origination. The servicing portfolio's asset-quality performance remains solid, however, Fitch expects delinquencies to normalize from here with macroeconomic deterioration. The company's repurchase and indemnification claims have been minimal so far, and it has had sufficient reserves to cover these charges. The Stable Outlook reflects Fitch's expectation that United Wholesale will maintain relatively stable leverage levels, moderating shareholder payouts to match the reduced profitability outlook and sufficient liquidity and access to funding to manage MSR portfolio growth. Fitch also expects the company will take actions, including cost cuts and/or gain on sale margin adjustments, to ensure adequate profitability over the intermediate term. The senior unsecured debt rating is equalized with the IDR given the funding mix and adequate unencumbered assets available to the noteholders, suggesting average recovery prospects in a stressed scenario. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: - Sustained profitability challenges that erode tangible equity and the firm's market position; - Gross leverage sustained above 5.0x; corporate leverage sustained above 1.5x; --A decrease in aggregate liquidity resources or reduction in unencumbered assets that constrain the company's funding flexibility; and/or increased utilization of secured funding that reduces the unsecured funding mix below 10%; - Regulatory scrutiny resulting in United Wholesale incurring substantial fines that negatively impact its franchise or operating performance; and - The departure of Mat lshbia and/or reduced involvement of the Ishbia family, who have led the growth and direction of the company. Factors that could, individually or collectively, lead to positive rating action/upgrade: - Improvement in the funding profile, including an extension of funding duration and/or the proportion of committed funding and the maintenance of unsecured debt above 25% of total debt; - Leverage maintained at-or-below 3x on a gross debt to tangible equity basis; corporate leverage maintained under 1x; - Maintenance of strong liquidity and contingent resources above 30% of total debt; - Enhanced consistency of operating performance with demonstrated profitability through the cycle; - Maintenance of market position and leadership in the wholesale origination channel; and - Demonstrated effectiveness of corporate governance policies. The rating on the unsecured notes is primarily sensitive to changes in the Long-Term IDR and would be expected to move in tandem. However, a material decrease in unencumbered assets and/or an increase in the proportion of secured funding could result in a widening of the notching between United Wholesale's Long-Term IDR and the unsecured notes. ESG CONSIDERATIONS United Wholesale Mortgage, LLC has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to its exposure to compliance risks including fair lending practices, debt collection practices, and consumer data protection, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. United Wholesale Mortgage, LLC has an ESG Relevance Score of '4' for Governance Structure due to elevated key person risk related to its CEO, Mat lshbia, who has led the growth and strategic direction of the company in recent years, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- United Wholesale Mortgage, LLC LT IDR BB- Affirmed BB- senior unsecured LT BB- Affirmed BB- UNIVERSAL REHEARSAL: Files Emergency Bid to Use Cash Collateral --------------------------------------------------------------- Universal Rehearsal Partners, Ltd. asks the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for authority to use cash collateral and provide adequate protection. The Debtor requires the use of cash collateral to fund working capital, operating expenses, capital expenditures, fixed charges, compensation, and all other general corporate purposes arising in the Debtor's ordinary course of business, as set forth in the Budget. PlainsCapital Bank, a Texas state bank, asserts an interest in the Debtor's cash collateral. As of the Petition Date, the Debtor was a party to a Note, Security Agreement, and Deed of Trust and other Loan Documents with PlainsCapital Bank, the Lender. As of the Petition Date, the Debtor is liable to the Lender in the amount of $706,807. The Maturity Date of the Loan is March 16, 2023. The Debtor admits, acknowledges, and does not dispute that, as security for repayment of the Prepetition Indebtedness, the Lender holds valid, senior, perfected, and enforceable liens in all of the collateral described in the various Loan Documents, which include substantially all of the tangible and intangible personal property assets of the Debtor as of the Petition Date. The Debtor further admits, acknowledges, and does not dispute that: (a) all of the amounts owing to the Lender pursuant to the Loan Documents are legally binding and enforceable obligations of the Debtor; (b) the Loan Documents are valid and enforceable against the Debtor in accordance with their terms; (c) the liens of the Lender in, to, and against all of the Prepetition Collateral are valid, enforceable and properly perfected, and are not subject to avoidance under any state or federal law; and (d) there are no existing claims or causes of action of the Debtor, whether liquidated or unliquidated, direct or indirect, and whether arising under state or federal law against the Lender, arising from the relationship between the Debtor, on one hand, and the Lender, on the other hand.; and (v) the Lender's Prepetition Collateral. As adequate protection, the Debtor will deliver to the Lender monthly payments due under the Loan Documents at the non-default rate as set forth therein as they come due. The Lender will also be granted, from and after the Petition Date, replacement liens and security interests in all of the Debtor's assets, including assets acquired after the Petition Date, specifically including all cash proceeds, in the same nature, extent, priority, and validity that such liens existed on the Petition Date. To the extent the Replacement Liens granted do not provide the Lender with adequate protection of its interests in the cash collateral, the Lender will have superpriority administrative expense claims in each of the Bankruptcy Cases under Bankruptcy Code section 507(b) with priority over every other administrative claim of any kind except the Carve Out. The Carve-Out means the sum of (i) all fees and expenses required to be paid to the Clerk of the Bankruptcy Court and the U.S. Trustee pursuant to 28 U.S.C. section 1930(a) plus interest at the statutory rate; (ii) to the extent allowed at any time, whether by interim order, procedural order, or otherwise, all unpaid fees and expenses accrued or incurred by persons or firms retained by the Debtor pursuant to section 327, 328, or 363 of the Bankruptcy Code before or on the first business day following delivery by the Lender of a written notice delivered by email to the Debtor, its lead restructuring counsel, and the U.S. Trustee, which notice may be delivered following the occurrence and during the continuation of an Event of Default under the Interim Order that is not cured during the Cure Period stating that the Post-Carve-Out Trigger Notice Cap has been invoked; and (iii) Professional Fees in an aggregate amount not to exceed $50,000 incurred after the first business day following delivery by the Lender of the Carve-Out Trigger Notice, to the extent allowed at any time, whether by interim order, procedural order, or otherwise. The events that constitute an "Event of Default" include: a. If the Debtor fails to timely deliver to the Lender the Adequate Protection Payments described in the Interim Order; b. If the Debtor's actual operating disbursements under the Budget exceed the amounts set forth in the Budget by more than the Budget Variance causing the Debtor to be incapable of making the Adequate Protection Payments, unless with the prior written consent of the Lender or further authority from the Court; c. If the Debtor pays obligations not shown on the Budget without the prior written consent of the Lender or further authority from the Court; and d. If any representation made by the Debtor after the commencement of the Bankruptcy Case in any report or financial statement delivered to the Lender proves to have been knowingly false or misleading in any material respect as of the time when made or given. A copy of the motion is available at https://bit.ly/3Fr3DdV from PacerMonitor.com. About Universal Rehearsal Partners, Ltd. Universal Rehearsal Partners, Ltd. is a Texas limited partnership formed in 2001 between John Kirtland and Vince Barnhil for the acquisition of certain real property and the operation at that property of a business that leases practice rooms and rehearsal spaces to musicians and bands. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 22-31966) on October 21, 2022. In the petition signed by Marcus Morriss, managing member of general partner, the Debtor disclosed up to $10 million in assets and liabilities. The Debtor is represented by John J. Kane, Esq., S. Kyle Woodard, Esq., and JaKayla J. DaBera, Esq., at KANE RUSSELL COLEMAN LOGAN PC in Dallas. VICTORIA TOWERS: Judgment Creditor Opposes Sanford Plan ------------------------------------------------------- Abraham Leser, an undisputed judgment creditor of debtor Victoria Towers Development Corp., submitted an objection to the (a) First Amended Disclosure Statement for the First Amended Joint Chapter 11 Plan of Liquidation sponsored by Sanford Avenue Partner, LLC, and American Chengyi Investment Management Group Inc.; and (b) Debtor's Objection to Mr. Leser's Claim. Mr. Leser asserts that the Court must deny approval of the First Amended Disclosure Statement and the Debtor's Objection to Mr. Leser's Claim because: * The First Amended Joint Plan cannot be confirmed since it is not fair and equitable and violates the Absolute Priority Rule because, inter alia, it seeks to distribute $417,365.00 in debtor funds to Bai, a Class 6 Unsecured Creditor, ahead of Mr. Leser, an undisputed Class 5 judgment creditor, who will receive nothing. * The Debtor's objection to Mr. Leser's secured claim, which seeks to reclassify it as unsecured because he is allegedly out of the money, is defective because it ignores Mr. Leser's right to receive the $417,365 in debtor funds. * Even if Mr. Leser's secured claim is reclassified or treated as unsecured, the First Amended Joint Plan still cannot be confirmed because it would violate 11 U.S.C. Section's 1123(a)(4) and 1129(a)(1). Attorneys for Judgment Creditor Abraham Leser: Scott Krinsky, Esq. BACKENROTH, FRANKEL & KRINSKY, LLP 800 Third Avenue, 11th Floor New York, NY 10022 Tel: (212) 593-1100 About Victoria Towers Development Flushing, N.Y.-based Victoria Towers Development Corp. is the owner of fee simple title to 29 residential condo units located at 133 38 Sanford Avenue, Flushing N.Y., having an appraised value of $33.37 million. Victoria Towers filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No. 20-73303) on Oct. 30, 2020. In its petition, the Debtor is closed $33,370,000 in assets and $39,217,115 in liabilities. The petition was signed by Myint J. Kyaw, president. The Hon. Robert E. Grossman presides over the case. Rosen & Kantrow, PLLC, serves as the Debtor's bankruptcy counsel. VILLAS OF COCOA: Taps Coldwell Banker Realty as Real Estate Agent ----------------------------------------------------------------- The Villas of Cocoa Village, LLC seeks approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Coldwell Banker Realty as real estate agent. The Debtor needs a real estate agent to assist in the marketing and sale of its property located at Lot 4, the Cottages of Cocoa Village, 880 Florida Ave., Cocoa, Fla. Coldwell Banker Realty will be paid a commission in the amount of $345 and 4.5 percent of the total purchase price. The firm will cooperate with and compensate a broker from its commission through the multiple listing service of 2.25 percent of the total purchase price. Lisa Streetman, a real estate agent at Coldwell Banker Realty, 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: Lisa Streetman Coldwell Banker Realty 7100 N. Atlantic Ave. Cape Canaveral, FL 32920 Telephone: (407) 766-7116 Email: Linda@LindaStreetman.com About The Villas of Cocoa Village The Villas of Cocoa Village LLC filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-03286) on Sept. 12, 2022. In the petition filed by Robert D. Harvey, authorized member, the Debtor disclosed between $500,000 and $1 million in assets and between $1 million and $10 million in liabilities. Robert Altman has been appointed as Subchapter V trustee. Judge Tiffany P. Geyer oversees the case. Winderweedle, Haines, Ward & Woodman, PA serves as the Debtor's counsel. VOYAGER DIGITAL: Equity Holders Claim They Are "In The Money" ------------------------------------------------------------- The Ad Hoc Group of Equity Holders of Voyager Digital Ltd. ("TopCo") submitted an objection to the Debtors' Motion for Entry of an Order approving the adequacy of the Disclosure Statement. The Equity Holders say that their interests are "in the money," based upon publicly available information disclosed in the Chapter 11 Cases. Yet, the Debtor's Disclosure Statement provides no mention of the potential value that could and should be available for Holders of TopCo Interests. Worse yet, the Plan is structured to allow for the elimination of any such value. The Plan is designed, based upon the Debtors' own admissions, for the benefit of Account Holders resulting in prejudice to the detriment of TopCo Interests. The Plan strips TopCo of its assets, and the Disclosure Statement fails to explain this sham. The Plan does not provide for substantive consolidation of TopCo with the other Debtors. And the Disclosure Statement reveals that the sole material obligation of TopCo is being negated, leaving TopCo with no significant obligations. That sole material obligation is TopCo's guaranty of the Alameda Loan, which loan obligation is being cancelled through the Plan thereby eliminating TopCo's guaranty obligation and leaving TopCo without any material liabilities. On the other hand, TopCo has significant and valuable assets. TopCo holds over $230 million of intercompany claims against OpCo. TopCo owns equity interests in its nondebtor subsidiaries. TopCo holds significant direct and derivative claims against its directors and officers. TopCo's assets are easily worth hundreds of millions of dollars. Yet the Disclosure Statement either fails to explain why this value is not being made available to the TopCo Interest Holders or discloses Plan provisions that will impermissibly result in the elimination of such value to the detriment of the TopCo Interest Holders. The over $230 million in intercompany claims that TopCo holds against OpCo are equal in priority to the claims of Account Holders. Both the intercompany claims and the claims of Account Holders are general unsecured claims. The treatment for Account Holders' claims is discussed in detail in the Disclosure Statement. The treatment for TopCo's intercompany claims is not, other than to say such claims will receive 0%. The Debtors propose a multitude of possible outcomes for TopCo's intercompany claims, all in accordance with a "Restructuring Transactions Memorandum" that is not included in the Disclosure Statement. TopCo Interest Holders have no role in negotiating the Restructuring Transactions Memorandum. Shockingly, the Restructuring Transactions Memorandum could simply provide that TopCo's $230 million of intercompany claims are worthless, without any justification or explanation for such treatment. TopCo owns equity interests in its non-debtor subsidiaries. The Disclosure Statement fails to disclose how that value will be provided to TopCo. For example, the Disclosure Statement discusses the sale of a TopCo non-debtor subsidiary, Coinify. Disclosure Statement section VII.I. OpCo owns no interest in Coinify. There is no mention in the Disclosure Statement as to how the proceeds of the Coinify sale will inure to the benefit of TopCo. Nor does the Disclosure Statement discuss the value of any other non-debtor subsidiary or how that value may inure to the benefit of TopCo. TopCo holds significant direct and derivative claims against its directors and officers. As further evidence of the validity of these claims, on the Petition Date, TopCo voted to appoint independent directors and establish a Special Committee to investigate certain of the Debtors' transactions. As of August 31, 2022, the Debtors had incurred over $1.6 million in professional fees just in the investigation of these claims. The Disclosure Statement fails to reveal any findings from this Special Committee investigation, other than to provide that if there are claims, such claims will be retained by the Wind-Down Entity and carved out of the proposed releases. Not surprisingly, the proposed Wind-Down Entity fails to include a mechanism to represent the TopCo Interest Holders. To make matters worse, the Wind-Down Entity will operate as if the Debtors' Estates are substantively consolidated even though they are not being consolidated, elevating creditor claims of the non-consolidated Debtor entities ahead of TopCo Interests. Additionally, the Debtor's proposal to carve out from the Plan's releases any claims identified by the Special Committee is a red herring. The one claim that has already been carved out of the proposed release, a claim related to the 3AC Loan, has many conditions that could result in such claim having no value. For example, the 3AC Loan claim can only be asserted against the Debtors' Chief Executive Officer (the "CEO") and only to the extent of the Debtors' available insurance coverage. The Disclosure Statement fails to provide the amount of coverage provided by the insurance policies or explain if any coverage will be remaining after litigation costs are first deducted from the coverage. No claim can be collected from the CEO personally, even if the value of the claim exceeds the amount of available insurance coverage, and this despite the fact that the CEO has assets including $40 million realized from the sale of TopCo equity. Thus, the Debtors' proposal to carve out from the proposed releases any additional claims identified from the Special Committee investigation leaves little hope that such claims will result in value for the TopCo Interests. TopCo Interests are further harmed by the breadth and depth of the proposed releases. The Disclosure Statement fails to value any of the releases and reveals that no consideration was provided by the released parties in exchange for the extensive releases. The only activity that was set forth in the Disclosure Statement to justify the proposed releases was the administration of the Chapter 11 Cases, which activities the released parties are already being compensated for in salaries and professional fees. The Plan now includes an "opt in" provision for the releases. No explanation is provided in the Disclosure Statement as to how the "opt in" works or what it means. For example, if the class representative for the Class Action does not opt in to the releases, does that mean the releases will have no impact on the class representative proceeding with the Class Action against the non-Debtor defendants following termination of the stay? In addition to the lack of adequate information which warrants denial of the Disclosure Statement Motion in and of itself, the proposed Plan is patently unconfirmable, which also warrants denial of the Disclosure Statement Motion. According to the Equity Holders, the Plan is patently unconfirmable for three reasons: * First, the Plan's treatment of TopCo Interests amounts to unfair discrimination and is not fair and equitable. The Plan effectively proposes to cancel TopCo Interests by stripping TopCo of its assets. Although the Plan provides that TopCo Interest Holders retain their interests, such treatment is in name only. The practical effect of the Plan is that TopCo Interests will be impermissibly wiped out. It is no surprise that the Plan provides that TopCo Interest Holders are "deemed to reject." * Second, section 502(b) of the Bankruptcy Code requires that claims be valued as of the petition date, known as "dollarization" as applied to cryptocurrency. Here, the Debtors are not proposing to value claims of Account Holders as of the Petition Date. Rather, the Debtors have not yet disclosed as of what date such claims will be valued, a clear violation of section 502(b) of the Bankruptcy Code. * Third, the release and exculpation provisions in the proposed Plan are simply impermissible. The Disclosure Statement fails to set forth information to satisfy the standard set forth by the Second Circuit for non-debtor releases in a plan. And the exculpation portion far exceeds that permitted by Section 1125 of the Bankruptcy Code. Counsel to the Ad Hoc Group of Equity Holders of Voyager Digital Ltd.: David M. Posner, Esq. Kelly E. Moynihan, Esq. KILPATRICK TOWNSEND & STOCKTON LLP The Grace Building, 1114 Avenue of the Americas New York, NY 10036 Telephone: (212) 775-8700 Facsimile: (212) 775-8800 E-mail: dposner@kilpatricktownsend.com kmoynihan@kilpatricktownsend.com - and - Paul M. Rosenblatt, Esq. KILPATRICK TOWNSEND & STOCKTON LLP 1100 Peachtree Street NE, Suite 2800 Atlanta, GA 30309 Telephone: (404) 815-6500 Facsimile: (404) 815-6555 E-mail: prosenblatt@kilpatricktownsend.com About Voyager Digital Holdings 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. VOYAGER DIGITAL: Texas Authorities Object to Disclosure Statement ----------------------------------------------------------------- CoinTelegraph reports that the Texas authorities object to Voyager Digital's disclosure statement in its current form. The Texas State Securities Board (SSB) and the Texas Department of Banking (DOB) raised an objection in court against Voyager Digital's disclosure statement, questioning the various methodologies and calculations used to estimate the fair market value of the bankrupt exchange's crypto assets. In a pleading filed with the United States Bankruptcy Court for the Southern District of New York, the attorneys for the SSB and DOB objected to the order approving the adequacy of Voyager's amended disclosure statement. The Debtors started this bankruptcy on a two-track process by which the Debtors would either restructure as set out in its First Amended Joint Plan of Reorganization or sell the company. Pursuant to the court-approved bid procedures, the Debtors solicited offers for the assets, and West Realm Shires, Inc. ("FTX"), was selected as the winning bidder at the auction. The sale to FTX will be consummate through confirmation of a plan, and the sale to FTX is the keystone of the Debtors' plan. "While the Disclosure Statement asserts that creditors may get a 70% return, this is only hypothetical amount and the return could be much lower because the 70% estimate is based off of an "estimated total fair market value of Voyager's cryptocurrency assets based on 20-day average coin prices as of September 29, 2022. . ."; however, the Debtors fail to explain the methodology used in calculating this average, leaving the creditors at a loss to understand how this the average was derived and how and what sources it will be derived in the future for initial distributions;," the TSB said in court filings. "The Disclosure Statement fails to provide adequate information regarding the broad third-party releases, including, who will be the beneficiaries of these releases; what claims are being released; why do the Debtors seek to release these parties; the type and value of claims being released; and what the Debtors will receive in exchange for giving these releases. Further, the broad releases of the Debtors officers and directors are improper because the Debtors are receiving no consideration for these releases, and once released, valuable causes of action against the officers and directors are no longer available to potentially increase the return to unsecured creditors by a significant amount." The Texas Regulators also note that the Debtors and FTX are not in compliance with state law. Voyager has received cease-and-desist letters from many states. Voyager remains unlicensed by the SSB and DOB in the State of Texas. Likewise, FTX is not licensed by the SSB or the DOB and, as such, cannot legally transact business in Texas. About Voyager Digital Holdings 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, chief executive officer, the Debtors estimated assets and liabilities between $1 billion and $10 billion. Michael E. Wiles oversees the cases. 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. On July 19, 2022, the U.S. Trustee for the Southern District of New York appointed an official committee of unsecured creditors in these Chapter 11 cases. The committee tapped Epiq Corporate Restructuring, LLC as noticing and information agent. W&T OFFSHORE: S&P Alters Outlook to Negative, Affirms 'CCC+' ICR ---------------------------------------------------------------- S&P Global Ratings revised the outlook to negative from stable and affirmed the 'CCC+' issuer credit rating and 'B' senior secured rating on Houston-based exploration and production company W&T Offshore Inc. The negative outlook reflects the upcoming maturity of W&T's senior secured notes, $552.5 million outstanding, at a time of uncertain capital markets that may make refinancing at acceptable terms challenging. W&T faces challenging capital markets that could hinder its ability to address its upcoming debt maturity at acceptable terms. W&T's remaining $552.5 million 9.75% senior secured notes mature on Nov. 1, 2023, and refinancing on acceptable terms could pose a significant challenge given current capital markets. Although W&T's significant cash balance, $377.7 million as of June 30, and expectations for material free cash flow for the remainder of 2022 and 2023 could be used to address a significant portion of the notes, S&P believes uncertainty over rising interest rates and generally cautious capital markets for speculative-grade oil and gas companies may make it difficult to refinance the notes in a timely manner. The senior notes trade near par and W&T has publicly stated intention to repay or purchase the notes at par. S&P also believes W&T's much improved financial measures and cash cushion provide a measure of support for a refinancing. W&T's financial measures and cash flow should be strong for the rating. S&P said, "Under our base case assumptions, we expect funds from operations (FFO) to debt to be around 55% and debt to EBITDA to approach 1.5x in 2022, and, assuming a full refinancing of the senior notes, 30%-35% and about 2.5x, respectively, under our lower price assumptions in 2023. Including the monetization of hedges, W&T could generate over $200 million of cash flow in 2022 and over $100 million in 2023, providing funds to help address the senior note maturity." The negative outlook reflects the potential to lower ratings if W&T fails to address its senior note maturity on a timely basis, or uses a material portion of its cash reserves for other purposes other than debt repayment. S&P said, "We would lower ratings if we believed a near-term resolution to the 2023 senior note maturity would not occur. Additionally, we could lower ratings if cash flows materially weakened from our expectations, there was a significant use of cash prior to addressing the senior notes, or if we thought there was the potential for a distressed exchange. "We could raise the ratings if W&T is able to address the senior note maturity in full. If successful, we believe this would most likely occur through a combination of repayment and refinancing." WASHINGTON PRIME: Objections to Greenberg, FTI Fees Overruled ------------------------------------------------------------- Bankruptcy Judge Marvin Isgur overrules Kevin Barnes' objections to the fee applications of Greenberg Traurig and FTI Consulting, Inc. Kevin Barnes, a shareholder of Washington Prime Group Inc., filed objections to the fee applications of Greenberg Traurig and FTI Consulting, Inc. Both Greenberg Traurig and FTI provided the Committee with professional services beginning around June 28, 2021. Mr. Barnes bases his objections on an alleged failure to disclose changes to the composition of the Official Committee of Unsecured Creditors during the period from July 26 to Aug. 6, 2021. Mr. Barnes' concern seems to lie in his suspicion that the plan sponsor leveraged its position as an unsecured noteholder to replace U.S Bank with Wilmington Savings Fund as the indenture trustee to exert influence over the Committee. Mr. Barnes alleges that the sole Committee member had connections to the debtor's plan sponsor. The Committee initially consisted of U.S. Bank National Association (which acted as indenture trustee for certain noteholders), Nationwide Janitorial Services, Inc., and Parking Lot Services LLC. Parking Lot Services and U.S. Bank resigned from the Committee. Wilmington Savings Fund joined the Committee after replacing U.S. Bank as the indenture trustee for certain noteholders, as reflected in a notice filed by the Trustee on July 6, 2021. The Committee then amended its bylaws to state that the Committee could consist of only one member. On July 26, Nationwide Janitorial Services resigned from the Committee after being paid in full by the debtor, leaving Wilmington Savings Fund as the only creditor on the Committee. The Court finds that Mr. Barnes' objections are not rooted in any purported misconduct by the professionals. Though the Committee at one point only had one member, the Court maintains that this alone does not suggest misconduct on the part of the Committee or its professionals. It is undeniable that the professionals timely filed their retention and fee applications under the Local Rules. In fact, the U.S. Trustee performed its oversight duties and did not raise any objection to the Committee, its membership, or the nature and quality of the services rendered by the professionals it retained. Mr. Barnes offered no evidence that Greenberg Traurig and FTI's representation of the Committee was tainted in any way that would show that they are not owed the fees incurred between July 26 and Aug. 6, 2021. In addition, Mr. Barnes did not provide any evidence to support his theory that the plan sponsor unduly influenced the Committee, and he did not come forward with any evidence to support it at the hearing on this matter. A full-text copy of the Memorandum Opinion dated Oct. 18, 2022, is available at https://tinyurl.com/4s4fj3f5 from Leagle.com. About Washington Prime Group Washington Prime Group Inc. (NYSE: WPG) -- http://www.washingtonprime.com/-- is a retail REIT and a recognized leader in the ownership, management, acquisition and development of retail properties. It combines a national real estate portfolio with its expertise across the entire shopping center sector to increase cash flow through rigorous management of assets and provide new opportunities to retailers looking for growth throughout the U.S. Washington Prime Group and its affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 21-31948) on June 13, 2021. At the time of the filing, Washington Prime Group's property portfolio consists of material interests in 102 shopping centers in the United States totaling approximately 52 million square feet of gross leasable area. The company operates 97 of the 102 properties. As of March 31, 2021, Washington Prime Group had total assets of $4.029 billion against total liabilities of $3.471 billion. Judge Marvin Isgur oversees the cases. The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis International, LLP as lead bankruptcy counsel; Jackson Walker, LLP as co-counsel; Alvarez & Marsal North America, LLC as restructuring advisor; Guggenheim Securities, LLC as investment banker; Deloitte Tax, LLP as tax services provider; and Ernst & Young, LLP as auditor. Prime Clerk LLC is the claims agent, maintaining the page http://cases.primeclerk.com/washingtonprime SVPGlobal, the Debtors' lender, tapped Davis Polk & Wardwell, LLP and Evercore Group, LLC as its legal counsel and investment banker, respectively. The U.S. Trustee for Region 6 appointed an official committee of unsecured creditors in the Debtors' cases on June 25, 2021. Greenberg Traurig, LLP and FTI Consulting, Inc. serve as the committee's legal counsel and financial advisor, respectively. On July 15, 2021, the U.S. Trustee appointed an official committee of equity security holders. The equity committee tapped Porter Hedges, LLP and Brown Rudnick, LLP as legal counsel; Province, LLC, as financial advisor; and Newmark Knight Frank Valuation & Advisory, LLC as real estate appraiser and valuation advisor. WISE HEALTH: Fitch Lowers LongTerm IDR to 'BB+', Outlook Stable --------------------------------------------------------------- Fitch Ratings has downgraded to 'BB+' from 'BBB-' Wise Health System's (Wise) Issuer Default Rating (IDR) and the ratings on series 2014A, 2021A, 2021B and 2021C hospital revenue bonds issued by Decatur Hospital Authority on behalf of Wise. The Rating Outlook is Stable. SECURITY The bonds are secured by the gross revenues of the Decatur Hospital Authority's hospital facilities, a fully funded debt service reserve fund, and a first lien and mortgage on certain property and land on which the Decatur Hospital Authority's hospital facilities are located. ANALYTICAL CONCLUSION The downgrade reflects the change in Fitch's assessment of Wise's operating risk and financial profiles to 'bb' from 'bbb' due to deterioration in the hospital's operating performance through six-months (ended June 30) and the expectation of sizable operating and net losses in 2022. Further weakening of Wise's weak operating performance in 2022, after losses in 2021, reflects unfavorable changes to two of Wise's major commercial payor agreements, the absence of new Federal stimulus, inpatient volumes which have yet to return to pre-pandemic levels, and inflationary pressures on wages and supplies. Additionally, outpatient volumes and revenues were reduced by the closure of 15 secondary market outpatient locations which became less economically viable following the commercial payor rate cuts. While inpatient and outpatient volumes were lower, increased surgical volumes including growth in Wise's bariatric surgery program partially mitigated the effects of the reduction in of other volumes. The downgrade further reflects just adequate balance sheet metrics with elevated leverage and light liquidity and expectation for sustained wage pressures over the next 18 months-24 months, even with the health system's mid-year reduction in force. The Stable Outlook is supported by a more constrained but still favorable payor mix, and Wise's leading market position in a rural but growing service area located about 40 miles northwest of Fort Worth, TX. While Fitch expects liquidity and leverage to remain constrained for the next several years, operating performance should begin to recover once same-facility volumes are restored to pre-pandemic levels, newly recruited physicians ramp up, and as expense pressures moderate, particularly once the effects of staffing cuts and productivity initiatives are fully realized. However, Fitch expects the return to historical levels of operating profitability to be several years away. Through the first six months of 2022, Wise posted a negative 0.4% operating EBITDA margin. Fitch expects the operating EBTIDA margin to be negative for the full fiscal year and for Wise to breach its 1.2x rate covenant, which will require that an outside consultant be engaged. While debt service coverage is expected to be below 1.0x, it does not rise to an event of default provided Wise maintains at least 75 days of operating and maintenance expenses in cash. In all cases Wise must maintain at least 60 days cash on hand and at least 40% unrestricted cash-equivalents to debt. Wise expects to exceed the minimum required liquidity and leverage thresholds through year- end and to meet all covenant requirements in 2023. Failure to achieve 1.0x debt service coverage in 2023 would result in an event of default. Fitch's forward look shows Wise's operating performance stabilizing at just above 4% over the next few years, which along with the financial profile consistent with the 'BB' category and as Wise funds its stated capital program. Wise has very limited portfolio stress sensitivity as investments are entirely allocated to cash and cash equivalents. KEY RATING DRIVERS Revenue Defensibility: 'bbb' Leading Market Share; Favorable Payor Mix Wise's favorable payor mix with a low 15.7% of combined Medicaid and self-pay and its leading inpatient market share of approximately 59% in its primary service of Wise County, from where over 82% of its inpatient admissions are derived, support its midrange revenue defensibility. The market share is an increase from the 57% in 2019. No other hospital or system accounts for more than 5% of the inpatient market in Wise County with the closest competing hospital located 29 miles away. Management has worked to increase its market presence and grow its outpatient volumes through the construction and operation of new hospital locations and clinics over the past few years although with recent changes to two of its major commercial payor contracts, Wise has materially reduced its outpatient presence in the secondary service area, as those facilities are no longer economically viable. Earlier this year, Wise terminated its affiliation agreement with Baylor Health Care System. The 2007 agreement provided Wise with a group purchasing organization sponsorship, advisory services, physician recruitment services, and continuing medical education. Wise's management concluded that it would be able to acquire these services more cost effectively outside of the confines of the affiliation agreement. Demographic trends in Wise County support Fitch's expectation of stability for Wise's payor mix. Five-year population growth is well above state and national averages at 11.3% (2020) and median household income of $67,726 (2020) is favorable to state and national averages. The area serves as a bedroom community for the D/FW metroplex with the local economy also supported by manufacturing, petroleum production, agriculture, and retail businesses. Operating Risk: 'bb' Challenged Operations; Manageable Capital Needs The weak operating risk assessment reflects the deterioration in Wise's underlying operating performance and constrained operating EBITDA margin in 2022, resulting from a major and unfavorable change in two commercial payor agreements with an approximately $7 million revenue impact, and patient volumes that (except for surgeries) that remain below pre-pandemic levels. While surgical volumes have been volatile over the past few years due to physician turnover, the pandemic, and a major statewide winter storm in 2021, total surgery volumes improved by about 9% in 2022 through the first six months over the same period for fiscal 2021, reflecting Wise's success in recruiting surgeons, volume growth at Wise's Argyle facility, and post-pandemic rebound for bariatric procedures. Surgery is a key service line for the system. Constrained margins are also the product of inflationary pressures on wages, purchased services and supplies expense. While Wise implemented a reduction in staff in June, management expects labor and other inflationary pressures to continue to weigh on operations at least through fiscal 2022 and likely into fiscal 2023. In addition to reducing staff and closing no longer profitable outpatient facilities, management is undertaking a productivity study to assess proper staffing levels and opportunities for operating and clinical efficiencies, with targeted savings of $5 million to $8 million per year on top of the $4 million of annualized savings from the reduction in staff. As the reduction of operating expenses is only one component of its path to improve operating margins, Wise continues to recruit in key specialties to retain patients in market and grow the revenue base, particularly after the closures of its secondary service area facilities. Recent physician recruitments, including an orthopedic surgeon, two cardiologists, and an electrophysiologist should help to stabilize and grow volumes as well as the future urgent care center in Rhome. While a certain level of physician turnover, external events such as the pandemic or extreme weather as occurred across Texas in February 2021, and other cost pressures create the potential for margin volatility, Fitch expects Wise to generate operating EBTIDA margins of 2.5% to 4.0% over the next two to four years. At those levels, Wise's operating cost flexibility is weak and consistent with a 'bb' operating risk assessment. Fitch considers Wise's lifecycle investment needs to be moderate. Wise's age of plant of 9.5 years is relatively young, reflecting significant capital previously deployed to open new facilities (Wise Health Surgical Hospital at Parkway - 2014, Wise Health Surgical Hospital at Argyle - 2018). In an effort to preserve liquidity Wise scaled back its capital to 32% in 2020 and to 51% of depreciation in fiscal 2021. Planned spending for 2022 and over the next few years is also expected to be below depreciation with the only major project being a new urgent care facility to be built in Rhome, a growing area northwest of Fort Worth, likely to occur in fiscal 2024. Fitch believes that Wise will continue to manage its capital spending at a level that will allow it to incrementally grow unrestricted liquidity over the next few years. While Wise's moderately low age of plant and strong market position afford it the ability to underspend for the period of time, an extended period of investment below depreciation would be viewed by Fitch unfavorably. Financial Profile: 'bb' Stable but Weaker Financial Profile through the Cycle Wise's unrestricted cash position of about $118 million (which excludes about $3 million of remaining Medicare Advance Payments) represented 73% of adjusted debt at YE 2021 and about 59% of its adjusted debt as of the six months ended June 30, 2022. Total debt of $202 million in fiscal 2022 includes $80 million in lease liabilities, following Wise's adoption of GASB 87. Fitch's base case scenario utilizes operating EBITDA margins in the 2.5%-4.1% between fiscal 2023 and fiscal 2026 and capital expenditures ranging from $10 million to $13 million. Due to a very conservative asset allocation, with 100% of its investment portfolio invested in cash and cash equivalents, Fitch's investment portfolio stress places no negative effect on Wise's liquidity in the base and stress case. Wise's cash to adjusted debt grows to just over 60% by year four of the stress case, which remains consistent with a 'bb' financial profile assessment. Asymmetric Additional Risk Considerations There are no asymmetric additional risk considerations. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: - Sustained period of weak unrestricted liquidity such that cash to adjusted debt stabilizes below 75% in the out years of the forward-looking base case scenario; - Failure to return to and sustain operating EBITDA margins of at least 6% over time, or should operating EBITDA margins not improve to a level sufficient to meet all required covenants by the end of fiscal 2023. Factors that could, individually or collectively, lead to positive rating action/upgrade: - Improvement in operating EBITDA to a level consistently at or above 8.5%; and - Growth in Wise's unrestricted cash and investments such that cash to adjusted debt is expected to stabilize above 100%. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Wise Health System (TX) LT IDR BB+ Downgrade BBB- Wise Health System (TX) /General Revenues/1 LT LT BB+ Downgrade BBB- ZEOLI-BROWN LLC: Seeks Cash Collateral Access --------------------------------------------- Zeoli-Brown LLC asks the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, for authority to use cash collateral and provide adequate protection. An immediate need exits for the Debtor to obtain approval of the use of cash collateral to meet key expenses identified in the Budget, totaling $54,190. The bankruptcy filing came as the result of the Debtor's failure to remain current on its obligations owed to the Internal Revenue Service and the State of Michigan and threatened legal action by its creditors. The Debtor has additional borrowing that it cannot service. The Debtor's debt secured by a lien on cash collateral are: Huntington Bank ~ $550,000 Huntington Bank ~ $60,000 NXGen Bank ~ $25,000 State of Michigan $44,328 The Debtor intends to provide adequate protection, to the extent of the aggregate diminution in value of cash collateral from and after the Petition Date, to the Lenders for the use of the cash collateral by: a. maintaining the going concern value of the Debtor's business by using the cash collateral to continue to operate the business and administer the Chapter 11 Case; and b. providing to Huntington Bank, NXGen Bank and the State of Michigan a postpetition replacement lien pursuant to 11 U.S.C. section 363(p)(2) in the accounts receivable of the Debtor, including cash generated or received by Debtor subsequent to the Petition Date. c. Monthly payments as follows: 1. Huntington Bank $3,000 2. Huntington Bank $1,000 3. NXGen Bank $0 4. State of Michigan $0 The Debtor contends the orderly operation of its business generates sufficient revenues to protect any diminution in value of the cash collateral. A copy of the Debtor's request and proposed budget is available at https://bit.ly/3VO5Rti from PacerMonitor.com. The Debtor projects $19,900 in gross sales and $9,870 in total expenses. About Zeoli-Brown LLC Zeoli-Brown LLC is an Italian restaurant in Clawson, Michigan. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Mich. Case No. 22-48133) on October 18, 2022. In the petition filed by Scott Brown, owner/sole member, the Debtor disclosed $123,998 in assets and $1,150,346 in liabilities. Judge Maria L. Oxholm oversees the case. George E. Jacobs, Esq., at Bankruptcy Law Offices, is the Debtor's legal counsel. ZOHAR III: Approval of Global's Assets Sale Affirmed on Appeal -------------------------------------------------------------- In the appealed case IN RE ZOHAR III, CORP., et al., Chapter 11, Debtors. ZOHAR III CORP., et al., Appellants, v. LYNN TILTON, et al., Appellees, Case No. 18-10512-KBO, Civ. No. 21-628-TLA, (D. Del.), Circuit Judge Thomas L. Ambro affirms the bankruptcy court's approval of the sale of Global Automotive Systems, LLC's estate assets. The Debtors are investment entities created by Lynn Tilton. The key parties—the Debtors, Tilton along with her affiliates, and the Debtors' most significant secured lenders—entered into a Settlement Agreement. It required the Debtors (through their Chief Restructuring Officer) and Tilton to monetize jointly the Portfolio Companies. Global Automotive Systems, LLC ("Global") was one of the Portfolio Companies to be monetized. Tilton was its manager and CEO. The Debtors owned 100% of its common membership interests, while Tilton indirectly owned 100% of its Class A membership interests. Tilton and the Debtors agreed Global would go to market in December 2020. With the Debtors' and Tilton's agreement, Global hired investment banker Donnelly Penman & Partners Inc. In May 2020 to facilitate a sale of the company. Also in December 2020, Global hired Mark Berger to serve as its Independent Sales Process Manager. By Jan. 15, 2021, Global had 14 initial offers ranging from $26 to $80 million, including one from Tilton affiliate Advanced Vehicle Assemblies, LLC ("AVA"). The Debtors did not submit an offer. Before accepting AVA's offer, Donnelly Penman analyzed the two other pending bids as well as a potential liquidation scenario. It concluded that AVA's bid with a proposed purchase price of $32 million remained the "highest and best offer for Global's assets." Global and AVA signed an Asset Purchase Agreement on March 23, 2021. Global then filed with the bankruptcy court a motion seeking approval of the sale per the Settlement Agreement. The Court has evaluated the evidence relevant to the Global sale and has determined it was "fair and designed to be value-maximizing" — there was "no meaningful alternative" likely to yield a better result for the Debtors. The Debtors say they were shut out of the process. The evidence, however, indicates that Donnelly Penman held weekly update calls with the Debtors or their financial advisors, plus "numerous impromptu meetings" and the exchange of "countless emails." Berger also had regular calls and meetings with the Debtors' advisors. Indeed, their own investment banker testified that Donnelly Penman was responsive in keeping the Debtors updated on the sale process. The Court also found that when negotiating the rescue financing terms, Donnelly Penman disclosed to Tilton that there were no other actionable bids that could close within 30 days. And, after Berger signed AVA's letter of intent for $36 million, Tilton received a transaction update prepared to impart current information about the sale to one of Global's customers. The Court concluded that none of that information renders the transaction fundamentally unfair, as Donnelly Penman presented evidence showing that AVA's final bid offered the best relative outcome available to Global at the time. The Debtors also challenged the Court's conclusion that, because it had authority to approve a nonconsensual sale, it could also order the Debtors to release their liens for no consideration. But they point to no express language or other evidence suggesting that was the parties' intent and, as the Court noted, the joint monetization process would be frustrated if it could not order a release of the Debtors' liens to consummate a nonconsensual sale. The Court held that their frustration is understandable: the hope would be that every Portfolio Company sale yields value for the Debtors' estates. But that doesn't mean the bankruptcy court erred in ordering this sale, where the process was fair, and the accepted offer was the best result available under the circumstances. A full-text copy of the MEMORANDUM OPINION dated Oct. 19, 2022, is available at https://tinyurl.com/4jx8fc8m from Leagle.com. About the Zohar Funds New York-based Patriarch Partners, LLC, is a private equity firm specializing in acquisition, buyouts, and turnaround investment in distressed American companies and brands. Patriarch Partners was founded by Lynn Tilton in 2000. Lynn Tilton and her affiliates held substantial equity stakes in portfolio companies, which include iconic American manufacturing companies with tens of thousands of employees. The Zohar funds were created to raise money through selling a form of notes called collateralized loan obligations to investors that was then used to extend loans to dozens of distressed mid-size companies, often in connection with the acquisition of those companies out of bankruptcy. Patriarch bought "distressed" companies via funding from a series of collateralized loan obligations (CLOs) marketed through Patriarch via its $2.5 billion "Zohar" funds. Tilton placed the funds into bankruptcy in 2018 in an attempt to keep Patriarch's portfolio from being liquidated by Zohar creditors including bond insurer MBIA, which insured $1 billion worth of Zohar notes. Combined debt of the funds is estimated at $1.7 billion. Zohar CDO 2003-1, Zohar CDO 2003-1 Corp., Zohar II 2005-1, Limited, Zohar II 2005-1 Corp., Zohar III, Limited, and Zohar III, Corp. (collectively, the "Zohar Funds"), sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case Nos. 18-10512 to 18-10517) on March 11, 2018. In the petition signed by Lynn Tilton, director, the Debtors were estimated to have $1 billion to $10 billion in assets and $500 million to $1 billion in liabilities. Young Conaway Stargatt & Taylor, LLP, is the Debtors' bankruptcy counsel. [^] Large Companies with Insolvent Balance Sheet ------------------------------------------------ Total Share- Total Total Holders' Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ -------- ------- 7GC & CO HOLD-A VII US 230.8 219.4 -1.2 7GC & CO HOLDING VIIAU US 230.8 219.4 -1.2 ACCELERATE DIAGN AXDX* MM 58.7 -62.0 37.3 AEMETIS INC DW51 GR 178.5 -122.7 -45.3 AEMETIS INC AMTX US 178.5 -122.7 -45.3 AEMETIS INC AMTXGEUR EZ 178.5 -122.7 -45.3 AEMETIS INC AMTXGEUR EU 178.5 -122.7 -45.3 AEMETIS INC DW51 GZ 178.5 -122.7 -45.3 AEMETIS INC DW51 TH 178.5 -122.7 -45.3 AEMETIS INC DW51 QT 178.5 -122.7 -45.3 AERIE PHARMACEUT AERI US 385.3 -141.1 191.7 AERIE PHARMACEUT AERIEUR EU 385.3 -141.1 191.7 AERIE PHARMACEUT 0P0 GR 385.3 -141.1 191.7 AERIE PHARMACEUT 0P0 GZ 385.3 -141.1 191.7 AERIE PHARMACEUT 0P0 TH 385.3 -141.1 191.7 AERIE PHARMACEUT 0P0 QT 385.3 -141.1 191.7 AIR CANADA AC CN 30,364.0 -1,458.0 1,369.0 AIR CANADA ADH2 GR 30,364.0 -1,458.0 1,369.0 AIR CANADA ACEUR EU 30,364.0 -1,458.0 1,369.0 AIR CANADA ADH2 TH 30,364.0 -1,458.0 1,369.0 AIR CANADA ACDVF US 30,364.0 -1,458.0 1,369.0 AIR CANADA ADH2 QT 30,364.0 -1,458.0 1,369.0 AIR CANADA ADH2 GZ 30,364.0 -1,458.0 1,369.0 ALPHA ENERGY INC APHE US 2.0 -3.3 -2.9 ALPINE SUMMIT EN ALPS/U CN 247.4 -15.8 -165.4 ALPINE SUMMIT EN ALPS US 247.4 -15.8 -165.4 ALTICE USA INC-A 15PA GZ 33,119.6 -474.6 -1,901.6 ALTICE USA INC-A ATUS* MM 33,119.6 -474.6 -1,901.6 ALTICE USA INC-A ATUS US 33,119.6 -474.6 -1,901.6 ALTICE USA INC-A ATUSEUR EU 33,119.6 -474.6 -1,901.6 ALTICE USA INC-A 15PA TH 33,119.6 -474.6 -1,901.6 ALTICE USA INC-A 15PA GR 33,119.6 -474.6 -1,901.6 ALTICE USA INC-A ATUS-RM RM 33,119.6 -474.6 -1,901.6 ALTIRA GP-CEDEAR MOC AR 36,746.0 -2,403.0 -4,225.0 ALTIRA GP-CEDEAR MOD AR 36,746.0 -2,403.0 -4,225.0 ALTIRA GP-CEDEAR MO AR 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MO US 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MO SW 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MO* MM 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC PHM7 TH 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MO TE 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MOEUR EU 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC PHM7 QT 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC PHM7 GR 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC ALTR AV 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MO CI 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC PHM7 GZ 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC 0R31 LI 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MOEUR EZ 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MOUSD SW 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP INC MO-RM RM 36,746.0 -2,403.0 -4,225.0 ALTRIA GROUP-BDR MOOO34 BZ 36,746.0 -2,403.0 -4,225.0 AMC ENTERTAINMEN AMC US 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN AH9 GR 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN AMC* MM 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN AMC4EUR EU 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN AH9 TH 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN AH9 QT 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN AH9 GZ 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN AH9 SW 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN AMC-RM RM 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN A2MC34 BZ 9,818.3 -2,326.8 -405.3 AMC ENTERTAINMEN APE* MM 9,818.3 -2,326.8 -405.3 AMERICAN AIR-BDR AALL34 BZ 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE AAL US 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE AAL* MM 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE A1G GR 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE A1G TH 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE A1G QT 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE AAL11EUR EU 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE AAL AV 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE AAL TE 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE A1G SW 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE 0HE6 LI 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE AAL11EUR EZ 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE A1G GZ 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE AAL-RM RM 66,652.0 -7,893.0 -4,593.0 AMERICAN AIRLINE AAL_KZ 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TUP1EUR EU 1,105.9 -159.1 127.3 TUPPERWARE BRAND TUP1EUR EZ 1,105.9 -159.1 127.3 UBIQUITI INC UI US 844.7 -382.9 310.6 UBIQUITI INC 3UB GR 844.7 -382.9 310.6 UBIQUITI INC UBNTEUR EU 844.7 -382.9 310.6 UBIQUITI INC 3UB TH 844.7 -382.9 310.6 UNISYS CORP USY1 GR 2,154.4 -98.5 308.3 UNISYS CORP USY1 TH 2,154.4 -98.5 308.3 UNISYS CORP UIS US 2,154.4 -98.5 308.3 UNISYS CORP UIS SW 2,154.4 -98.5 308.3 UNISYS CORP UISEUR EU 2,154.4 -98.5 308.3 UNISYS CORP USY1 GZ 2,154.4 -98.5 308.3 UNISYS CORP USY1 QT 2,154.4 -98.5 308.3 UNITI GROUP INC 8XC TH 4,955.2 -2,075.2 0.0 UNITI GROUP INC UNIT US 4,955.2 -2,075.2 0.0 UNITI GROUP INC 8XC GR 4,955.2 -2,075.2 0.0 UNITI GROUP INC 8XC GZ 4,955.2 -2,075.2 0.0 UROGEN PHARMA LT URGNEUR EU 146.1 -40.9 121.6 UROGEN PHARMA LT UR8 GR 146.1 -40.9 121.6 UROGEN PHARMA LT URGN US 146.1 -40.9 121.6 VECTOR GROUP LTD VGR US 994.6 -830.9 296.9 VECTOR GROUP LTD VGR GR 994.6 -830.9 296.9 VECTOR GROUP LTD VGR QT 994.6 -830.9 296.9 VECTOR GROUP LTD VGREUR EU 994.6 -830.9 296.9 VECTOR GROUP LTD VGREUR EZ 994.6 -830.9 296.9 VECTOR GROUP LTD VGR TH 994.6 -830.9 296.9 VECTOR GROUP LTD VGR GZ 994.6 -830.9 296.9 VERISIGN INC VRS TH 1,762.5 -1,455.0 -5.0 VERISIGN INC VRSN US 1,762.5 -1,455.0 -5.0 VERISIGN INC VRS GR 1,762.5 -1,455.0 -5.0 VERISIGN INC VRS QT 1,762.5 -1,455.0 -5.0 VERISIGN INC VRSNEUR EU 1,762.5 -1,455.0 -5.0 VERISIGN INC VRS GZ 1,762.5 -1,455.0 -5.0 VERISIGN INC VRSN* MM 1,762.5 -1,455.0 -5.0 VERISIGN INC VRSNEUR EZ 1,762.5 -1,455.0 -5.0 VERISIGN INC VRSN-RM RM 1,762.5 -1,455.0 -5.0 VERISIGN INC-BDR VRSN34 BZ 1,762.5 -1,455.0 -5.0 VERISIGN-CEDEAR VRSN AR 1,762.5 -1,455.0 -5.0 VIVINT SMART HOM VVNT US 2,908.3 -1,715.6 -482.5 W&T OFFSHORE INC WTI US 1,439.8 -124.4 164.2 W&T OFFSHORE INC UWV GR 1,439.8 -124.4 164.2 W&T OFFSHORE INC WTI1EUR EU 1,439.8 -124.4 164.2 W&T OFFSHORE INC UWV TH 1,439.8 -124.4 164.2 W&T OFFSHORE INC UWV GZ 1,439.8 -124.4 164.2 WAYFAIR INC- A W US 4,098.0 -2,145.0 242.0 WAYFAIR INC- A 1WF GR 4,098.0 -2,145.0 242.0 WAYFAIR INC- A 1WF TH 4,098.0 -2,145.0 242.0 WAYFAIR INC- A WEUR EU 4,098.0 -2,145.0 242.0 WAYFAIR INC- A W* MM 4,098.0 -2,145.0 242.0 WAYFAIR INC- A 1WF GZ 4,098.0 -2,145.0 242.0 WAYFAIR INC- A 1WF QT 4,098.0 -2,145.0 242.0 WAYFAIR INC- A WEUR EZ 4,098.0 -2,145.0 242.0 WEBER INC - A WEBR US 1,721.7 -243.0 228.7 WEWORK INC-CL A WE* MM 19,638.0 -2,317.0 -889.0 WINGSTOP INC WING1EUR EU 395.4 -415.5 156.8 WINGSTOP INC WING US 395.4 -415.5 156.8 WINGSTOP INC EWG GR 395.4 -415.5 156.8 WINGSTOP INC EWG GZ 395.4 -415.5 156.8 WINMARK CORP WINA US 33.7 -60.4 9.6 WINMARK CORP GBZ GR 33.7 -60.4 9.6 WW INTERNATIONAL WW US 1,390.6 -456.1 57.2 WW INTERNATIONAL WW6 GR 1,390.6 -456.1 57.2 WW INTERNATIONAL WW6 TH 1,390.6 -456.1 57.2 WW INTERNATIONAL WTWEUR EU 1,390.6 -456.1 57.2 WW INTERNATIONAL WW6 QT 1,390.6 -456.1 57.2 WW INTERNATIONAL WW6 SW 1,390.6 -456.1 57.2 WW INTERNATIONAL WTWEUR EZ 1,390.6 -456.1 57.2 WW INTERNATIONAL WW6 GZ 1,390.6 -456.1 57.2 WW INTERNATIONAL WTW AV 1,390.6 -456.1 57.2 WW INTERNATIONAL WW-RM RM 1,390.6 -456.1 57.2 WYNN RESORTS LTD WYR TH 11,788.5 -1,374.3 753.9 WYNN RESORTS LTD WYNN US 11,788.5 -1,374.3 753.9 WYNN RESORTS LTD WYNN* MM 11,788.5 -1,374.3 753.9 WYNN RESORTS LTD WYR GR 11,788.5 -1,374.3 753.9 WYNN RESORTS LTD WYR QT 11,788.5 -1,374.3 753.9 WYNN RESORTS LTD WYNNEUR EU 11,788.5 -1,374.3 753.9 WYNN RESORTS LTD WYR GZ 11,788.5 -1,374.3 753.9 WYNN RESORTS LTD WYNNEUR EZ 11,788.5 -1,374.3 753.9 WYNN RESORTS LTD WYNN-RM RM 11,788.5 -1,374.3 753.9 WYNN RESORTS-BDR W1YN34 BZ 11,788.5 -1,374.3 753.9 YELLOW CORP YEL GR 2,503.9 -324.1 255.7 YELLOW CORP YEL1 TH 2,503.9 -324.1 255.7 YELLOW CORP YELL US 2,503.9 -324.1 255.7 YELLOW CORP YRCWEUR EZ 2,503.9 -324.1 255.7 YELLOW CORP YRCWEUR EU 2,503.9 -324.1 255.7 YELLOW CORP YEL QT 2,503.9 -324.1 255.7 YELLOW CORP YEL GZ 2,503.9 -324.1 255.7 YUM! BRANDS -BDR YUMR34 BZ 5,790.0 -8,568.0 246.0 YUM! BRANDS INC TGR TH 5,790.0 -8,568.0 246.0 YUM! BRANDS INC TGR GR 5,790.0 -8,568.0 246.0 YUM! BRANDS INC YUMEUR EU 5,790.0 -8,568.0 246.0 YUM! BRANDS INC TGR QT 5,790.0 -8,568.0 246.0 YUM! BRANDS INC YUM SW 5,790.0 -8,568.0 246.0 YUM! BRANDS INC YUM* MM 5,790.0 -8,568.0 246.0 YUM! BRANDS INC TGR GZ 5,790.0 -8,568.0 246.0 YUM! BRANDS INC YUM US 5,790.0 -8,568.0 246.0 YUM! BRANDS INC YUMEUR EZ 5,790.0 -8,568.0 246.0 YUM! BRANDS INC YUMUSD SW 5,790.0 -8,568.0 246.0 YUM! BRANDS INC YUM AV 5,790.0 -8,568.0 246.0 YUM! BRANDS INC TGR TE 5,790.0 -8,568.0 246.0 YUM! BRANDS INC YUM-RM RM 5,790.0 -8,568.0 246.0 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA. Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2022. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. *** End of Transmission ***