/raid1/www/Hosts/bankrupt/TCR_Public/221207.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, December 7, 2022, Vol. 26, No. 340
Headlines
141 TROUTMAN: Reaches Restructuring Settlement with Senior Lender
96 WYTHE ACQUISITION: Trustee to Auction Hotel on Dec. 14
ACTIVA RESOURCES: Court Approves Disclosure Statement
AFFITO DOMUS: Case Summary & 10 Unsecured Creditors
ALPHARETTA LIFEHOPE: Case Summary & Three Unsecured Creditors
AQUA SHIELD: Unsecureds Settle for 21 Cents on Dollar in Plan
ASARCO LLC: Court Maintains Stay Until EPA's Remediation Plan
AUTOMATED RECOVER: Creditors' Bid for Abstention and Remand Denied
BERTUCCI'S RESTAURANTS: Case Summary & 20 Top Unsecured Creditors
BERTUCCI'S RESTAURANTS: Files Emergency Bid to Use Cash Collateral
BLACKJEWEL LLC: Kopper and INMET Bid to Dismiss Case Denied
BLACKSBURG PEDIATRICS: Taps Magee Goldstein Lasky as Legal Counsel
BROOKFIELD SQUARE: Seeks to Hire Paragon LLC as New Counsel
CABLEVISION LIGHTPATH: S&P Downgrades ICR to 'B', Outlook Stable
CD&R SMOKEY: Moody's Cuts CFR & $700MM Sec. First Lien Notes to B3
CHART INDUSTRIES: S&P Assigns 'B+' ICR on Acquisition of Howden
CLARUS THERAPEUTICS: Unsecureds to Recover 0.7% to 13% in Plan
COLORADO WORLD: Plan Set Aside, Seeks Case Dismissal
COMEDYMX LLC: Seeks Cash Collateral Access
CORE SCIENTIFIC: Olivares to Step Down as Director
CSC HOLDINGS: Moody's Cuts CFR to B2, Outlook Stable
DIOCESE OF HARRISBURG: Plan Has $18.25M for Abuse Claims
DIV005 LLC: Court OKs Interim Cash Collateral Access
DURA-METRICS INC: Case Summary & 20 Largest Unsecured Creditors
EASTERDAY RANCHES: Court Rules No Reduction of Pachulski Fees
EMERALD HOLLOW: Taps Iron Horse Auction to Conduct Asset Valuation
EMPIRE COUNTERTOPS: Case Summary & 20 Largest Unsecured Creditors
EVOKE PHARMA: Notice of Allowance Issued for Patent Application
FAST RADIUS: LBA LVF VII-Company Appointed to Committee
FENDER MUSICAL: Moody's Lowers CFR to B2, Outlook Negative
FRANCIS ROZELLE: Court Affirms Jennifer Rothe's Fee Award
FREEMANVILLE LIFEHOPE: Case Summary & Three Unsecured Creditors
GLOBAL MERCH: Case Summary & One Unsecured Creditor
GRAFTECH INTERNATIONAL: S&P Affirms 'BB-' ICR, Off Watch Negative
GWG HOLDINGS: Seeks to Hire Ernst & Young as Tax Advisor
HOLONG CS: Gets OK to Hire NewGen Advisory as Real Estate Broker
HOUSTON HOME: Case Summary & One Unsecured Creditor
INTERNATIONAL LAND: Incurs $978K Net Loss in Third Quarter
ISCM HOLDINGS: Claims to be Paid From Available Cash and Income
IVS COMM: Seeks Access to $117,409 of Cash Collateral
JCMC WEST: January 2023 Foreclosure Sale Set
KISSIMMEE CONDOS: To Seek Plan Confirmation on Dec. 14, 2022
KLAUSNER HOLDING: Case Summary & Two Unsecured Creditors
LEADING LIFE: Gets OK to Hire Omni as Claims and Noticing Agent
LEGACY LOFTS: Voluntary Chapter 11 Case Summary
LOUIS CAPRA: McCormick's Summary Judgment, Judicial Sale Affirmed
MACON DOOR: Lender Seeks to Prohibit Cash Collateral Access
MADISON IAQ: S&P Cuts ICR to 'B-' on High Leverage, Outlook Stable
MAGNOLIA OFFICE: Unsecureds to Get $150 per Month for 6 Months
MANITOBA CLINIC: Gets CCAA Stay of Proceedings Until February 2023
MARTINEZ QUALITY: Taps Michael Bowers of Middleswarth as Accountant
MARVIN KELLER: Unsecureds to Get $50K Per Year for 5 Years
MOBIQUITY TECHNOLOGIES: Receives Noncompliance Notice From Nasdaq
MOLDWORKS WORLDWIDE: Case Summary & 10 Unsecured Creditors
ON MARINE SERVICES: Unsecureds Owed $570 to Get 88% Under Plan
ORBIT ENERGY: Case Summary & 20 Largest Unsecured Creditors
REDSTONE BUYER: S&P Alters Outlook to Negative, Affirms 'B-' ICR
ROCK FITNESS: Seeks Cash Collateral Access
ROSIE'S LLC: Unsecureds Payout to Rely on Galinn Suit Outcome
SALEM MEDIA: S&P Alters Outlook to Negative, Affirms 'B-' ICR
SAN LUIS & RIO: Recreation Groups, Bidder to Derail Omnitrax Bid
SHAAN AND KHAN: Case Summary & Two Unsecured Creditors
STANDARD INDUSTRIES: S&P Alters Outlook to Stable, Affirms BB+ ICR
STORED SOLAR: Trustee Taps Bradley Woods & Co. as Financial Advisor
SUNQUEST PROPERTY: Voluntary Chapter 11 Case Summary
TRANSDERMAL SPECIALTIES: Court Approves Disclosure Statement
TRAVEL + LEISURE: Fitch Assigns BB+ Rating on New Secured Loan
VITAL PHARMACEUTICALS: UST Opposes Appointment of Second Committee
W.A. LYNCH: Seeks Cash Collateral Access
WC 8120 RESEARCH: U.S. Trustee Unable to Appoint Committee
WEWORK INC: Fitch Lowers LongTerm Issuer Default Ratings to 'CCC'
WICKAPOGUE 1 LLC: NY Property Auction Slated for January 2023
WILLIAM HOLDINGS: SBA Deal on Cash Collateral Access OK'd
WILMER TACORONTE ORTIZ: Court Denies Sec. 363 Sale of Property
*********
141 TROUTMAN: Reaches Restructuring Settlement with Senior Lender
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141 Troutman LLC, 243 Suydam LLC, and Union Residence LLC submitted
a Revised Amended Disclosure Statement in support of Revised
Amended Chapter 11 Plan of Reorganization dated December 1, 2022.
The Plan seeks to implement the Debtors' prime goal of retaining
their properties by a restructuring of the underlying mortgage debt
through a negotiated cure and reinstatement.
Following the Debtors' unsuccessful challenge to allowance of
pre-petition default interest and certain other amounts owed by the
Debtors to the Wells Fargo Bank, National Association, as trustee
for the Registered Holders of CSAIL 2019-C15 Commercial Mortgage
Trust, Commercial Mortgage Pass-Through Certificates, Series
2019C15 (the "Senior Lender") under the subject Loan Documents, the
Debtor and its senior secured lender have negotiated the framework
for a stipulation of settlement providing for the terms of an
agreed cure and reinstatement set forth in the stipulation of
settlement (the "Mortgage Restructuring Settlement").
The Mortgage Restructuring Settlement now forms the centerpiece of
the Plan and allows the Debtor the opportunity to retain the
Properties by effectuating a negotiated monetary cure in the
aggregate sum of $2,783,805.48, plus legal fees and costs. The cure
and reinstatement shall be funded by a capital contribution from
the Debtor's principals. In the event of an uncured default under
the Mortgage Restructuring Settlement, the Senior Lender is
entitled to pursue a sale of the Debtor's properties, and may
pursue additional remedies as set forth in the Mortgage
Restructuring Settlement and the underlying Loan Documents.
As part of the negotiated cure and reinstatement, the Debtors'
principals shall make a capital contribution which shall be applied
to interest arrears, other outstanding amounts due to Senior
Lender, and a principal pay-down of $500,000. The infusion of
capital reconfirms the Principals' commitment to maintain ownership
of the Properties and addresses any new value issues that could
possibly arise.
Class 2 consists of the allowed secured claim of the Senior Lender.
The overriding goal of the Plan is to restructure the Mortgage in a
manner that preserves the Debtors' ability to retain the
Properties. The Mortgage Restructuring Settlement with the Senior
Lender achieves this result.
The secured claim of the Senior Lender shall be cured and
reinstated consistent with the terms and conditions set forth in
the Mortgage Restructuring Settlement, which is expressly
incorporated under the Plan and governs the disposition of the
Senior Lender's claim. In accordance with the Mortgage
Restructuring Settlement, the Debtors shall pay the Senior Lender
the sum of $2,783,805.48 plus attorneys' fees and costs on the
Closing Date set forth therein, which brings all interest current
as of January 15, 2023 and includes the principal paydown of
$500,000 to reduce the principal debt to $13.5 million as of the
Effective Date.
Following the Cure, the Mortgage and Consolidated Note shall become
enforceable against the Debtors and the Reorganized Debtors as
modified by the Mortgage Restructuring Settlement in accordance
with their remaining terms, including a post-confirmation interest
rate of 5.60% per annum (subject to increase in the event of a
default pursuant to the terms of the Loan Documents). The Debtors
shall resume regular interest payments based upon the reduced
principal balance of $13.5 million pursuant to the Mortgage
Restructuring Settlement and Consolidated Note, as applicable,
beginning 30 days after the Effective Date and continuing until
maturity on January 6, 2029.
Like in the prior iteration of the Plan, each holder of an Allowed
Class 3 Unsecured Claim shall receive a pro rata dividend of
approximately 50% from the General Unsecured Creditor Fund in full
and final satisfaction of such holder’s allowed Unsecured Claim.
The Plan shall be funded through the New Value Contributions of the
Debtors' Principals to be deposited into escrow with the Disbursing
Agent prior to the start of the Confirmation Hearing. The New Value
Contribution shall be used to fund payments due under the Plan
itemized as follows:
a. Administrative Expense Claims $150,000
b. Priority Claims $2,217
c. Cure to Senior Lender $2,783,805
d. General Unsecured Creditor Fund $50,000
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Total $3,486,022
A full-text copy of the Revised Amended Disclosure Statement dated
December 1, 2022, is available at https://bit.ly/3UQ4TeF from
PacerMonitor.com at no charge.
Attorneys for the Debtors:
Kevin J. Nash, Esq.
GOLDBERG WEPRIN FINKEL GOLDSTEIN LLP
1501 Broadway, 22nd Floor
New York, NY 10036
About 141 Troutman, et al.
141 Troutman, LLC, 243 Suydam, LLC, and Union Residence, LLC, are
owners of residential buildings in Brooklyn, New York,
141 Troutman filed a petition for Chapter 11 protection (Bankr.
E.D.N.Y. Lead Case No. 22-40337) on Feb. 24, 2022, listing
$2,372,944 in total assets and $14,537,068 in total liabilities.
243 Suydam filed for Chapter 11 protection (Bankr. E.D.N.Y. Case
No. 22-40339) on Feb. 24, 2022, listing $4,605,790 in total assets
and $14,675,136 in total liabilities.
Union Residence filed for Chapter 11 protection (Bankr. E.D.N.Y.
Case No. 22-40342) on Feb. 24, 2022, listing $6,758,667 in assets
and $14,536,870 in liabilities.
The Debtors' cases are jointly administered.
Chaim Lefkowitz, manager, signed the petitions.
Judge Nancy Hershey Lord oversees the cases.
Goldberg Weprin Finkel Goldstein, LLP, serves as the Debtors' legal
counsel.
96 WYTHE ACQUISITION: Trustee to Auction Hotel on Dec. 14
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The U.S. Bankruptcy Court for the Southern District of New York
entered an order approving the bidding procedures for the sale of
certain or all of the assets of 96 Wythe Acquisition LLC.
If two or more qualified bids with respect to all of the assets are
received by the bid deadline, Stephen S. Gray, the court-appointed
trustee for the Debtor's case, will conduct an auction to determine
the highest or otherwise best qualified bid with respect to the
assets. The auction will take place on Dec. 14, 2022, at 11:00
a.m. (prevailing Eastern Time).
The hearing to consider approval of the successful bid with respect
to the sale in accordance with the bid procedures is scheduled to
take place on Dec. 20, 2022, at 2:00 p.m. (prevailing Easter Time).
Objections to the sale, if any, must be filed no later than (i)
5:00 p.m. (prevailing Eastern Time) on Dec. 12, 2022, with respect
to the proposed sale of the assets or (ii) 4:00 p.m. (prevailing
Eastern Time) on Dec. 16, 2022, with respect to sale of any of the
assets.
About 96 Wythe Acquisition
96 Wythe Acquisition, LLC operates the Williamsburg Hotel, an
eight-story hotel located at 96 Wythe Ave., Brooklyn, N.Y.
96 Wythe Acquisition sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-22108) on Feb. 23,
2021, disclosing zero assets and $79,990,206 in liabilities. CRO
David Goldwasser signed the petition.
Judge Sean H. Lane oversees the case.
The Debtor tapped Backenroth Frankel & Krinsky, LLP and Mayer
Brown, LLP as bankruptcy counsels; Fern Flomenhaft, PLLC as
insurance counsel; and B. Riley Advisory Services as litigation
support consultant. Getzler Henrich & Associates, LLC and Hilco
Real Estate, LLC serve as the Debtor's financial advisors.
Stephen Gray was appointed as Chapter 11 trustee. The trustee
tapped Togut, Segal & Segal, LLP; Fragomen Del Rey Bernsen & Loewy,
LLP; and Bernstein Redo & Savitsky PC as bankruptcy counsel,
special counsel, and special liquor license counsel, respectively.
Verdolino & Lowey PC is the trustee's tax accountant.
ACTIVA RESOURCES: Court Approves Disclosure Statement
-----------------------------------------------------
Judge Michael M. Parker has entered an order approving the
Disclosure Statement of Activa Resources, LLC, and Tiva Resources,
LLC.
The Debtors will file the Plan Supplement by December 2, 2022.
Dec. 15, 2022, is fixed as the last day for filing written
acceptances or rejections of the Plan.
Dec. 15, 2022, is fixed as the last day for filing and serving,
pursuant to Fed. R. Bankr. P. 3020(b)(1), written objections to
confirmation of the Plan.
Dec. 16, 2022, is fixed as the last day for filing the ballot
summary.
Dec. 19, 2022, is fixed as the last day for filing and serving
responses to any written objections to confirmation of the Plan.
Dec. 20, 2022, at 10:00 a.m., is fixed for the hearing on
confirmation of the Plan, which will be held before the Honorable
Michael M. Parker at the Hipolito F. Garcia Federal Building and
United States Courthouse, 615 E. Houston St., Courtroom #1, San
Antonio, Texas 78205.
About Activa Resources and Tiva Resources
Activa Resources, LLC, and Tiva Resources, LLC, operate in the oil
and gas extraction industry. Both companies are based in San
Antonio, Texas.
On Feb. 3, 2022, Activa Resources and Tiva Resources sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D.
Tex. Lead Case No. 22-50117). In the petitions signed by John
Hayes, president, Activa Resources disclosed as much as $50 million
in both assets and liabilities while Tiva Resources disclosed up to
$10 million in assets and up to $50 million in liabilities.
Judge Michael M. Parker oversees the cases.
The Debtors tapped Bernard R. Given II, Esq., at Loeb and Loeb, LLP
as legal counsel, and Haynie & Company as accountant and auditor.
Donlin, Recano & Company, Inc. is the claims, noticing and
solicitation agent.
On Aug. 19, 2022, the Debtors filed their proposed joint Chapter 11
plan of reorganization and disclosure statement.
AFFITO DOMUS: Case Summary & 10 Unsecured Creditors
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Debtor: Affito Domus Vendita Holdings LLC
2027 W. Division #702
Chicago, IL 60622
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Northern District of Illinois
Case No.: 22-14055
Judge: Hon. Timothy A. Barnes
Debtor's Counsel: Thomas B. Fullerton, Esq.
AKERMAN LLP
71 S. Wacker Drive, 47th Floor
Chicago, IL 60216
Tel: (312) 634-5726
Email: thomas.fullerton@akerman.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Phillip Ciaccio, manager of Authorized
Member, Larrabee Holdings LLC.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/AKFKTMQ/Affito_Domus_Vendita_Holdings__ilnbke-22-14055__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Six Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Peoples Gas Utilities $2,400
PO Box 94491
Chicago, IL 60690
2. ThyssenKrupp Elevator Services $2,315
3. Chicago Disposal Disposal $1,971
19244 177th Street
Lansing, IL 60438
4. City of Chicago Water $1,890
Utility Services
PO Box 6330
Chicago, IL 60680
5. ComEd Utilities $1,258
PO Box 6110
Carol Stream, IL 60197
6. Farmers Insurance Insurance $1,336
2533 N Ashland
Chicago, IL 60614
ALPHARETTA LIFEHOPE: Case Summary & Three Unsecured Creditors
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Debtor: Alpharetta Lifehope Land SPE, LLC
11680 Great Oaks Way
Suite 120
Alpharetta, GA 30022
Business Description: The Debtor is a Single Asset Real Estate
(as defined in 11 U.S.C. Section 101(51B)).
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Northern District of Georgia
Case No.: 22-59897
Debtor's Counsel: William Rountree, Esq.
ROUNTREE, LEITMAN, KLEIN & GEER, LLC
2987 Clairmont Road Suite 350
Atlanta, GA 30329
Tel: 678-587-8740
Email: wrountree@rlkglaw.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $10 million to $50 million
The petition was signed by Scott Honan as manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's three unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/QKLU5TI/Alpharetta_Lifehope_Land_SPE_LLC__ganbke-22-59897__0001.0.pdf?mcid=tGE4TAMA
AQUA SHIELD: Unsecureds Settle for 21 Cents on Dollar in Plan
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Aqua Shield, Inc., submitted an Amended Small Business Disclosure
Statement.
The Plan will be financed from continuing operating income,
reorganized business operations of the Debtors, from the timely
collections of outstanding receivables, as well as from funds
accumulated in the Debtors' Debtor in Possession accounts. The
payments under the Settlement agreement with Kroll & O'Connor was
made in full.
Under the Plan, Class II Unsecured Claim shall consist of the
unsecured claim of Krol & O'Connor, in the amount of $654,658. The
plan offers the unsecured creditor Krol & O'Connor a settlement
payment in the amount of $140,000, which represents 21% of its
general unsecured claim. In consideration of the mutually agreed
terms, Krol & O'Connor shall, upon the approval of the settlement
terms by the Bankruptcy Court return a consenting ballot in favor
of the Debtor's Plan of Reorganization. Further, following the
entry of the confirmation order by the Bankruptcy Court, the Debtor
plans to apply to the Supreme Court, New York County, for an order
vacating the judgment entered by the Clerk of the Supreme Court,
New York County, on October 28, 2020, in the action entitled Krol &
O'Connor v. Aqua Shield, Inc., Index no. 651928/2018. Kroll &
O'Connor shall neither oppose such application, nor be required to
take any steps in support thereof. The Settlement Agreement with
Kroll & O'Connor was approved by the Court order dated May 18,
2022. The payment under the Settlement agreement was made in full.
Class III Unsecured Claim shall consist of the unsecured claim of
Stephen Frampton and Korri Frampton in the amount of $100,000.
According to the terms of the Settlement agreement reached by and
between the parties, in full and final satisfaction of Stephen and
Korri Frampton's claim against the Debtor, the Debtor will pay to
Stephen Frampton and Korri Frampton the amount of $21,000.00 which
represents 21% of its general unsecured claim. On Nov. 18, 2022,
the Debtor filed a motion to approve the Settlement Agreement with
Stephen and Korri Frampton pursuant to Rule 9019 of the Federal
Rules Bankruptcy, on shortened notice.
Attorney for the Debtor Aqua Shield, Inc.:
Alla Kachan, Esq.
2799 Coney Island Ave., Suite 202
Brooklyn, NY 11235
Tel: (718) 513-3145
Fax: (347) 342-315
E-mail: alla@kachanlaw.com
A copy of the Disclosure Statement dated Nov. 18, 2022, is
available at https://bit.ly/3V9V4bR from PacerMonitor.com.
About Aqua
Shield
Aqua Shield, Inc., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 20-73191) on Oct. 16,
2020. The case was eventually transferred to the appropriate office
under Case No. 20-43635. Judge Nancy Lord oversees the case.
At the time of the filing, the Debtor had estimated assets of
between $100,001 and $500,000 and liabilities of between $500,001
and $1 million.
The Debtor is represented by the Law Offices of Alla Kachan, P.C.
Bruce Arthur Lean, CPA serves as the Debtor's accountant.
ASARCO LLC: Court Maintains Stay Until EPA's Remediation Plan
-------------------------------------------------------------
District Judge David Barlow denies Asarco, LLC's motion to lift
stay filed in the case styled ASARCO, LLC, a Delaware limited
liability company, Plaintiff, v. NORANDA MINING, INC., a Delaware
corporation, Defendant, Case No. 2:12-cv-00527-DBB, (D. Utah).
The Court previously granted Noranda Mining, Inc.'s motion for a
stay on July 11, 2017. In its 2017 order, the Court reasoned that a
stay would "promote judicial economy because the EPA, not the
court, is the proper agency to assess the correct cleanup plan;"
"avoid confusion and potentially inconsistent results if the EPA
selected a different cleanup plan than the one determined by the
experts;" and "cause minimal prejudice or undue hardship." The
Court decreed that the stay would be lifted after the EPA approved
a remediation plan for the Lower Silver Creek site.
The Court's 2017 order also reasoned that whether Asarco had "paid
more than its fair share" depended on the EPA's final cleanup plan
-- concluding that the EPA must approve a cleanup plan before it
could accurately allocate fault. The EPA has not yet done so.
Instead of waiting until the EPA determined the amount of pollution
and what parties are responsible, Asarco settled with the EPA due
to its bankruptcy. Asarco now seeks contribution from Noranda for
anticipated response actions in the future. Under the law, Asarco
was permitted to seek the protection of bankruptcy, but it then
faced a statute of limitations for filing a contribution claim, so
it filed its claim long before EPA, the subject matter expert, had
done the work that would allow the parties and the court the
benefit of an accurate fact record. Asarco's actions alone baked in
the likelihood that this action would take years longer than usual.
Then the party who had assumed responsibility for the cleanup
(United Park) failed, adding years more. And, of course, COVID-19
has delayed nearly everything and everyone, including EPA,
occasioning further delay.
After five years, Asarco now moves the Court to lift the stay.
Asarco asserts that one does not need to consider future
remediation to make a prima facie case for a CERCLA contribution
claim. Asarco makes two related arguments. First, it contends that
the claim against Noranda is justiciable even with unknown costs
because the court can issue a declaratory judgment for Asarco's and
Noranda's proportional liability. Second, it dismisses as
speculative Noranda's concern that the remediation plan may be
inconsistent with the National Contingency Plan because there is
purportedly a presumption that the cleanup actions are consistent
with the NCP.
For its part, Noranda argues that until the EPA approves a
remediation plan, Asarco cannot establish: (a) that funds spent on
cleanup are consistent with the NCP because the court cannot
"simply assume. . . given that the EPA has not finalized a cleanup
plan;" and accurately determine whether Asarco has "paid more than
its fair share." According to Noranda, without a final cleanup
plan, "it is impossible to determine whether Asarco's liability
requires apportionment of any orphan share attributable to United
Park's historical mining operations."
The Court defers to the EPA's expertise. The EPA has not yet
published its Site Characterization Report, EE/CA, or action
memorandum -- these documents would provide the parties and the
Court with a more accurate picture of environmental conditions at
the Lower Silver Creek site and consequently party liability. Thus,
until the EPA releases the EE/CA and remediation plan, the Court
and the Parties' experts have incomplete (and very likely
inaccurate) data.
Currently, the Court lacks key information that would help it make
an accurate decision. Should the Court proceed to summary trial
before the EPA completes its investigation, there is the potential
for duplicative efforts if the data changes the liability analysis,
whether by revealing additional PRPs or changing the balance
between Asarco and Noranda. The Court believes that waiting for the
EPA's remediation plan -- particularly the EE/CA -- will promote
judicial economy, avoid inconsistent results, and help the Court
make a more informed and accurate determination of liability.
Hence, the Court finds that the balance of factors weighs in favor
of maintaining the stay. The Court believes that the EPA's EE/CA
and action memorandum will better inform the Court's liability
apportionment decision -- it will be able to accurately determine
liability for Potentially Responsible Parties because the EPA's
findings will illuminate the quantity and extent of environmental
damage. The EPA's reports will also help the Court determine
whether Asarco has paid its fair share. Otherwise, Noranda may be
liable initially for a significant percentage of site cleanup and
then potentially stand relieved of that liability when the EPA
concludes its studies.
Asarco also contends that the five-year stay has become "immoderate
and hence unlawful" because the EPA has made no significant
progress in approving a remediation plan. Asarco further argues
that the Court's prediction that the EPA would soon promulgate a
plan has not materialized and thus the stay has "the impermissible
legal effect of preventing Asarco from proceeding with its claim in
federal court for an indefinite period of time, potentially for
years."
In response, Noranda contends that the Court can maintain a stay
"as long as it identifies a pressing need for the stay and then
balances the interests favoring a stay against interests frustrated
by the action." Noranda argues that the stay is necessary to
preserve judicial resources and to prevent confusion and
inconsistent results should the EPA use a cleanup plan different
from the one proposed by experts. Finally, Noranda contends that it
is reasonable for the Court to maintain the stay because the EPA
has made progress in the remediation plan and the court should
defer to the agency's expertise.
As the Court previously stated, "forecasting allocation of
liability before a formal Record of Decision may turn out to be
inaccurate and a waste of resources." As a result, the Court
ordered a stay until the EPA completed its studies and created a
remediation plan. The need for the EPA to provide more information
has not vanished simply because five years has elapsed. Part of the
delay is also attributable to the COVID-19 pandemic, something
which was unforeseen. The Court reasons that continuing the stay
here will prevent an inaccurate decision as to the liability
apportionment, help avoid piecemeal litigation, and provide needed
development of the record by EPA.
Contrary to Asarco's claims, the Court has not "nullified Asarco's
rights of contribution," nor has the Court "prohibited Asarco from
exercising its . . . right to seek contribution." Indeed, the stay
has not barred Asarco from seeking contribution. The Court has
merely delayed the case until the parties can efficiently litigate
their claims so that the Court can accurately determine liability.
The Court will settle Asarco's contribution claim against Noranda
once it lifts the stay.
Finally, the Court has not denied Asarco due process. Asarco has
already brought its contribution action before the Court -- Asarco
has not identified any case law to support the proposition that a
stay in a CERCLA contribution case is "tantamount to the denial of
due process." Additionally, the Court's postponement of a liability
determination does not cause Asarco undue hardship -- Asarco has
already declared bankruptcy and settled with the EPA for its
liability at the Lower Silver Creek site for a fixed sum.
A full-text copy of the Memorandum Decision and Order dated Nov.
23, 2022, is available at https://tinyurl.com/5a57sd6y from
Leagle.com.
About Asarco LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection (Bankr. S.D. Tex. Case
No. 05-21207) on Aug. 9, 2005. Attorneys at Baker Botts L.L.P., and
Jordan, Hyden, Womble & Culbreth, P.C. represented the Debtor in
its restructuring efforts.
On Dec. 9, 2009, Asarco Incorporated and Americas Mining
Corporation's Seventh Amended Plan of Reorganization for the
Debtors became effective and the ASARCO Asbestos Personal Injury
Settlement Trust was created and funded with nearly $1 billion in
assets, including more than $650 million in cash plus a $280
million secured note from Reorganized ASARCO. The Plan, which was
confirmed both by the bankruptcy and district courts, reintegrated
ASARCO LLC back to parent Grupo Mexico concluding the four-year
Chapter 11 proceeding.
AUTOMATED RECOVER: Creditors' Bid for Abstention and Remand Denied
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In the adversary case styled In re: AUTOMATED RECOVERY SYSTEMS OF
NEW MEXICO, INC., Debtor. MITCHELL AND VICTORIA HAWKES, Plaintiffs,
v. AUTOMATED RECOVERY SYSTEMS OF NEW MEXICO, INC., SAN JUAN
REGIONAL MEDICAL CENTER, INC., AND SAN JUAN HEALTH PARTNERS INC.,
Defendants, Case No. 22-10225, Adv. No. 22-1018, (Bankr. D.N.M.),
Bankruptcy Judge David T. Thuma denies the Plaintiffs Mitchell and
Victoria Hawkes' motion for abstention and remand.
On Jan. 21, 2022, the Creditors Mitchell and Victoria Hawkes, on
behalf of themselves and others similarly situated, filed a class
action complaint against the Defendants San Juan Regional Medical
Center, Inc., San Juan Health Partners, Inc. and the Debtor
Automated Recovery Systems of New Mexico, Inc. The complaint
initiated No. D-1116-CV-2021-00513 in the Eleventh Judicial
District Court, State of New Mexico. In this action, the Creditors
alleged that the Debtor had filed hundreds of debt collection
lawsuits in its own name, even though it did not own the claims --
which constituted the unauthorized practice of law.
In their amended complaint, the Creditors seek money damages and
declaratory and injunctive relief. If Creditors were awarded all
requested relief, the Debtor's main valuable asset (about 1,500
collection judgments against multiple debtors, scheduled at $10
million) would be worthless and the Defendants would owe a lot of
money to the Creditors and the class claimants.
The Debtor moved to dismiss the complaint, arguing that its actions
and procedures were entirely lawful and in accordance with a New
Mexico statute and rule of civil procedure for the New Mexico
magistrate courts, where all of the judgments were obtained.
However, the state court judge denied the Debtor's motion to
dismiss. Consequently, the Debtor filed this chapter 11 case.
On May 16, 2022, the Creditors filed a motion to apply Fed. R.
Bankr. P. 7023 to the claims allowance process, to set a schedule
for certifying class claims, and for an extension of time to file
an individual and/or class proof of claim. The Court entered a
stipulated order on June 6, 2022, which, inter alia, vacated the
bar date for the Creditors and other potential class members. The
parties mediated their disputes on July 28, 2022, but no settlement
was reached.
The Creditors withdrew the Class Claim Motion on Aug. 17, 2022 and
twelve days later, the Debtor removed this proceeding to the
bankruptcy court. There, the Creditors filed the motion for
abstention and remand, which the San Juan Defendants and the Debtor
opposed.
On Oct. 28, 2022, the Debtor filed its own motion to set a class
claim certification hearing and a bar date for the Creditors and
other class members. A preliminary hearing on that motion is
scheduled for Dec. 12, 2022.
The Court notes that the Creditors have been very active in this
case -- they filed a motion to dismiss or convert the case, and
also filed numerous objections to the Debtor's motions. Indeed, so
far, the Creditors have been the only active parties in the case.
However, given the nature of Debtor's assets and business and
Creditors' claims, the Court finds it impossible to "adjust the
debtor-creditor . . . relationship" without adjudicating the
Creditors' claims.
The Court finds and concludes that adjudicating the Creditors'
claims against the Debtor is within the Court's core jurisdiction.
Mandatory abstention therefore is neither required nor permitted.
The Court also concludes that mandatory abstention does not apply
to the Creditors' claims against the San Juan Defendants -- the
claims come within the Court's "related to" jurisdiction -- as the
claims are based on the same facts as those against the Debtor.
Furthermore, the Court notes that all counts in the Creditors'
amended complaint are brought against all three defendants jointly
and severally. The Court finds that the Creditors' claims against
the Debtor are core and need to be adjudicated as soon as
practicable in this subchapter V case. The Court also finds that
the reasons to keep the claims against the San Juan Defendants are
almost as compelling because they cannot be split from the claims
against Debtor. Accordingly, the Court elects not to abstain under
Section 1334(c)(1) for mandatory abstention is not required for any
of the Creditors' claims.
A full-text copy of the Opinion dated Nov. 22, 2022, is available
at https://tinyurl.com/37n58tc7 from Leagle.com.
About Automated Recover Systems of New Mexico
Automated Recovery Systems of New Mexico Inc. --
http://arscollect.com/-- is a debt collection agency in
Farmington, N.M.
Automated Recovery Systems filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D.N.M Case No.
22-10225) on March 23, 2022, listing up to $500,000 in assets and
up to $10 million in liabilities. Bryan Scott Perkinson serves as
Subchapter V trustee.
Judge David T. Thuma oversees the case.
The Debtor tapped Joseph Yar, Esq., at Velarde & Yar PC as legal
counsel and Patricia L. Simpson, Esq., at Simpson Law Office as
special counsel.
BERTUCCI'S RESTAURANTS: Case Summary & 20 Top Unsecured Creditors
-----------------------------------------------------------------
Debtor: Bertucci's Restaurants, LLC
d/b/a Bertucci's Brick Oven Pizza & Pasta
4700 Millenia Blvd., Ste. 400
Orlando, FL 32839
Business Description: The Debtor operates a restaurant
specializing in Italian food.
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Middle District of Florida
Case No.: 22-04313
Debtor's Counsel: R. Scott Shuker, Esq.
SHUKER & DORRIS, P.A.
121 S. Orange Avenue
Suite 1120
Orlando, FL 32801
Tel: (407) 337-2060
Email: rshuker@shukerdorris.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Jeffrey C. Sirolly as secretary.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/76QT5YY/Bertuccis_Restaurants_LLC__flmbke-22-04313__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. AFA Protective Trade Debt $111,523
Systems, Inc.
155 Michael Drive
Syosset, NY 11791
Matthew Jackson
Tel: 781-848-6200
Email: mjackson@afap.com
2. Best Petroleum LLC Rent $222,188
Country Manor
Norwood Trust
40 Grove St., Unit 430
Wellesley, MA 02482
Richard Salinsky
Tel: 751-593-3316
Email: rsalinsky@hotmail.com
3. C.H. Robinson Trade Vendor/ $220,561
Robinson Fresh Food Vendor
14701 Charlesto Rd
Ste 1400
Eden Prairie, MN
55347
Ryan Klusendorf
Tel: 800-447-4434
Email: Ryan.Klusendorf@chrobinson.com
4. Canton R2G Owner LLC Rent $145,367
PO Box 411261
Boston, MA
02241-1261
Riley Merritt
Tel: 248-592-6051
Email: rmerritt@rptrealty.com
5. CIL Walkers LLC Rent $188,829
c/o Bank of America, N.A.
PO Box 105576
Atlanta, GA 30348
Daniel Candee
Tel: 751-789-5235
Email: danielcandee@aol.com
6. D&H 402A Pad Rent $165,454
Partnership TS
c/o Caron & Bletzer
PO Box 969
Kingston, NH 03848
Cahterine Champaine
Tel: 603-658-8002
Email: ccaron@caronbletzerts.com
7. Frontier Dr Metro Rent $249,722
Center LP
Lockbox #283523
PO Box 713523
Philadelphia, PA
19171-3523
Pamm Grimm
Tel: 703-519-8333
8. Lincoln Plaza Assoc Rent $197,064
PO Box 829424
Philadelphia, PA
19182-9424
Anjanette Studer
Tel: 317-263-2461
Email: astuder@simon.com
9. Mall at Rockingham LLC Rent $559,442
Mall at Rockingham Park
14165 Collections
Ceter Dr
Chicago, IL 60693
Ashley Hager
Tel: 317-263-7056
Email: ashley.hager@simon.com
10. Mall at Solomon Rent $304,003
Pond, LLC
14199 Collections
Center Dr
Chicago, IL 60693
Scott Wides
Tel: 317-796-6437
Email: swides@cliftonrm.com
11. MNH Mall, LLC Rent $294,723
Mall of New Hampshire
14184 Collections
Center Dr
Chicago, IL 60693
Kevin Shrewbury
Tel: 317-263-7969
Email: kevin.shrewsbury@simon.com
12. MOBO Systems Marketing $138,476
285 Fulton St
Floor 82
New York, NY 18002
Ross Basalatan
Tel: 212-260-0895
Email: ross.basalatan@olo.com
13. NCR Corporation Trade Debt $179,838
P.O. Box 198755
Atlanta, GA
30384-8755
Earl Hayes
Tel: 727-647-6857
Email: earl.hayes@ncr.com
14. PB Restaurants, LLC Unsecured $14,859,000
11 West 42nd Street Loan
Orlando, FL 32839
Tom Avallone
Tel: 407-903-5555
Email: tavallone@planethollywoodintl.com
15. Reward Network Trade Debt $448,587
540 W Madison St
Suite 2400
Chicago, IL 60661
Thomas Wall
Tel: 508-915-1573
Email: twall@rewardsnetwork.com
16. Springfield Square Cent LP Rent $174,899
c/o Continental Dev. LLC
1604 Walnut St - 5th Floor
Philadelphia, PA
19103
RG Langer
Tel: 610-328-1700
Email: rlanger@ncrdelco.com
17. St. John Properties, Rent $170,507
Inc - B
Accounts Receivable
PO Box 62784
Baltimore, MD
21264-2784
Angela Cohen
Tel: 443-791-8553
Email: acohen@sjpi.com
18. SYSCO Corporation Trade Debt/ $1,181,936
1390 Enclave Parkway Food Vendor
Houston, TX 77077
Gregg Dadowski
Tel: 281-556-4547
Email: gregg.dadowski@sysco.com
19. TriMark United East Trade Debt/ $1,230,840
PO Box 845377 Supplies
Boston, MA
02284-5377
Amy Walters
Tel: 508-399-2386
Email: amy.walters@trimark.com
20. Wildwood Est. of Braintree Rent $205,758
PO Box 859059
Braintree, MA 02185
Arthur W. Stavris
Tel: 781-848-5000
Email: rcibotti@fxmessina.com
BERTUCCI'S RESTAURANTS: Files Emergency Bid to Use Cash Collateral
------------------------------------------------------------------
Bertucci's Restaurants, LLC asks the U.S. Bankruptcy Court for the
Middle District of Florida, Orlando Division, for authority to use
cash collateral and to provide adequate protection to PHL Holdings,
LLC.
The Debtor will require the use of approximately $6 million of cash
collateral to continue to operate its business for the next four
weeks, and, depending on the month, a greater or lesser amount will
be required for each comparable period thereafter. The Debtor will
use the cash collateral to pay its respective share of operating
expenses, pending a final hearing on the Motion.
As of the Petition Date, the Debtor owed approximately $21 million
on two credit facilities from PHL Holdings, LLC. The Loans are
secured by a blanket lien on the Debtor's assets. By virtue of its
purported lien, PHL may assert a first priority security interest
in the Debtor's cash on hand and funds to be received into its
operating accounts during normal operations.
As adequate protection for the use of cash collateral, the Debtor
proposes to grant the Lender a replacement lien to the extent of
any diminution in value, with such lien to have the same validity,
extent, and priority as its respective pre-petition lien but
subject to a lien in favor of a debtor-in-possession being
requested simultaneously hereto. The Debtor will maintain adequate
liquidity during the Interim Period and asserts all interests on
cash collateral are adequately protected by the replacement lien
and the ongoing value of the business.
A copy of the motion and the Debtor's budget is available at
https://bit.ly/3F4ezfG from PacerMonitor.com.
The budget provides for total operating disbursements, on a weekly
basis, as follows:
$2,242 for the week ending December 4, 2022;
$917 for the week ending December 11, 2022;
$1,780 for the week ending December 18, 2022;
$1,195 for the week ending December 25, 2022;
$2,068 for the week ending January 1, 2023;
$793 for the week ending January 8, 2023;
$1,428 for the week ending January 15, 2023;
$970 for the week ending January 22, 2023;
$1,970 for the week ending January 29, 2023;
$907 for the week ending February 5, 2023;
$1,626 for the week ending February 12, 2023;
$1,062 for the week ending February 19, 2023;
$2,073 for the week ending February 26, 2023;
$1,012 for the week ending March 5, 2023;
$1,624 for the week ending March 12, 2023;
$1,009 for the week ending March 19, 2023;
$1,976 for the week ending March 26, 2023;
$1,303 for the week ending April 2, 2023;
$1,681 for the week ending April 9, 2023; and
$1,055 for the week ending April 16, 2023.
About Bertucci's Restaurants, LLC
Bertucci's Restaurants, LLC is a Florida limited liability company
that was formed in May of 2018. The Debtor owns and operates
approximately 47 Italian-themed restaurants under the name
Bertucci's Brick Oven Pizza & Pasta.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 6:22-bk-04313) on
December 5, 2022. In the petition signed by Jeffrey C. Sirolly,
secretary, the Debtor disclosed up to $50,000 in assets and up to
$100 million in liabilities.
R. Scott Schuker, Esq., at Shuker and Dorris, P.A., is the Debtor's
legal counsel.
BLACKJEWEL LLC: Kopper and INMET Bid to Dismiss Case Denied
-----------------------------------------------------------
In the adversary case styled In re: Blackjewel L.L.C., et al.,
Chapter 11, Debtors. Blackjewel Liquidation Trust by and through
David J. Beckman, Trustee, Plaintiff, v. Kopper Glo Mining, LLC;
Inmet Mining, LLC; and LR-Revelation Holdings, L.P., Defendants,
Case No. 19-30289, (Jointly Administered), Adv. No. 22-3001,
(Bankr. S.D.W. Va.), Bankruptcy Judge Benjamin A. Kahn denies the
motion to dismiss for improper venue filed by the Defendants Kopper
Glo Mining, LLC and INMET Mining, LLC.
The Plaintiff Blackjewel Liquidation Trust, by and through its
Trustee David J. Beckman, as successor for certain purposes of the
estates of former Debtor Blackjewel L.L.C. and
debtors-in-possession in this chapter 11 case, commenced this
adversary proceeding against the Defendants Kopper Glo Mining, LLC
and INMET Mining, LLC and LR-Revelation Holdings, L.P. The
Plaintiff sought declaratory relief, specific performance, and
monetary damages for breach of contract by the Defendants and
LR-Revelation.
On Sept. 30, 2022, the Defendants filed the Motion to Dismiss for
Improper Venue, arguing that the claims arising out of the Base
Royalty Agreement and the Employee Royalty Agreement should be
dismissed for improper venue because the parties "unconditionally
and irrevocably consented to the exclusive jurisdiction of state
courts located in Fayette County, Kentucky." In the alternative,
the Defendants argue that the Complaint should be dismissed "for
improper venue for all claims arising out of the Royalty Agreements
and the Assignment and Assumption Agreement and Bill of Sale
Regarding Specific Assets" because it would be more appropriately
brought in Fayette County, Kentucky.
On Oct. 4, 2022, the Defendants filed a Supplement to their Motion
to Dismiss, stating that they do not consent to the entry of any
final orders or judgements by this Court. The Defendants also filed
a Motion for Determination that the Proceeding is Non-Core, arguing
that the Plaintiff's claims for relief are not listed in 28 U.S.C
Section 157(b)(2).
This dispute arises from the Debtors filing of a petition under
chapter 11 of the Bankruptcy Code. In that bankruptcy case, the
Court approved the Debtors' motion "requesting, among other things,
approval of bidding procedures, an auction process, and one or more
sales of their assets." Pursuant to the Court's order, the Debtors
and INMET entered three agreements relating to INMET's purchase of
"the Black Mountain and Lone Mountain mining operations and assets
in Harlan County, Kentucky; Letcher County, Kentucky; and Wise
County, Virginia." The agreements are:
(A) the Base Royalty Agreement, providing for Kopper Glo to make
six annual $2.74 million payments as part of the consideration paid
for the Purchased Mines;
(B) the Employee Royalty Agreement, relating to Kopper Glo
providing the Debtors with $550,000 of payments related to unpaid
wages of employees; and
(C) an Assignment and Assumption Agreement and Bill of Sale
Regarding Specific Assets.
The Royalty Agreements and the Assignment Agreement contain forum
selection clauses. The Assignment Agreement provides: ". . . The
Bankruptcy Court will retain exclusive jurisdiction to enforce the
terms of this Agreement. . . and the parties hereby consent to and
submit to the jurisdiction and venue of the Bankruptcy Court for
such purposes." While the Royalty Agreements provide: ". . . The
parties agree to unconditionally and irrevocably submit to the
exclusive jurisdiction of the State Courts located in Fayette
County, Kentucky. . ."
The Defendants contend that this matter is not statutorily core
because it is not included among those specifically listed core
matters in 28 U.S.C. Section 157(b)(2). The Court finds the
Defendants' contention incorrect for several reasons.
The Court reasons that it has subject matter jurisdiction over this
proceeding because a proceeding to enforce a contract entered with
the debtor-in-possession "arises in" a case under title 11. The
Court also explains that the confirmation of the Debtors' plan did
not divest its subject matter jurisdiction over core proceedings
arising in the case.
The Court holds that INMET entered all three of the Agreements with
the Debtors post-petition and under the auspices of a sale in which
they participated and requested approval by this Court. The claims
in the Complaint arise from the Agreements and the transactions
approved by this Court. Moreover, the Defendants expressly
consented to the jurisdiction and authority of the Court with
respect to disputes arising from the Assignment Agreement or the
transactions contemplated by it, including the Royalty Agreements.
Therefore, the Court has subject matter jurisdiction, statutory
authority, and constitutional authority to enter final judgments in
this proceeding.
The Defendants do not dispute that venue ordinarily would be
appropriate in this Court. Instead, the Defendants argue that venue
is inappropriate because the Royalty Agreements contain forum
selection provisions providing that any dispute arising out of such
agreements must be commenced in the state courts of Fayette County,
Kentucky.
Despite the clarity with which the parties agreed to jurisdiction
and venue in this Court in the Assignment Agreement, the Defendants
argue that the Court should dismiss the claims for breach of the
Royalty Agreements, and thereby give meaning to both conflicting
provisions. The Defendants also argue that the claims arose in
Fayette County, Kentucky because two of the three mines are located
in Kentucky.
The Court finds it inappropriate to bifurcate this dispute. The
Court reasons that the claims arise out of the same integrated
purchase of assets from the bankruptcy estate -- the entirety of
which was approved by the Court in the Sale Order and specifically
contemplated by the parties in the Assignment Agreement. The Court
also notes that the Agreements have the same effective date and
were executed by the same parties who were represented by the same
counsel for each agreement.
Accordingly, the Court finds and concludes that the forum selection
provision in the Assignment Agreement specifically contemplates
that exclusive jurisdiction will be appropriate not only for claims
arising from a breach of the Assignment Agreement itself, but also
for any dispute connected with the Assignment Agreement or the
transaction contemplated by the Assignment Agreement. The Court
reasons that it would be inefficient and a significant waste of
judicial and Trust resources -- that otherwise would be available
for creditors -- for this Court to transfer the claims under the
Royalty Agreements to a state court in Fayette County, Kentucky,
while keeping the agreed exclusive jurisdiction in this Court with
respect to the claims under the Assignment Agreement.
Lastly, the Court reasons that "all three contracts govern a
single, integrated acquisition of assets. None of the contracts
would have stood alone, and neither of the Royalty Agreements would
have existed but for the assignments contemplated in the Assignment
Agreement. . . the Assignment Agreement implicitly recognizes this
by specifically contemplating and reciting the central compensation
terms of the Royalty Agreements." The Court would not have approved
any one of the agreements without the other two. Therefore, the
Plaintiff's choice of this Court as proper venue should prevail.
A full-text copy of the Memorandum Opinion dated Nov. 23, 2022, is
available at https://tinyurl.com/yc8d8cxk from Leagle.com.
About Blackjewel LLC
Blackjewel LLC's core business is mining and processing
metallurgical, thermal and other specialty and industrial coals.
Blackjewel operates 32 properties, including surface and
underground coal mines, preparation or wash plants, and loadouts or
tipples. Combined, Blackjewel and its affiliates hold more than 500
mining permits. Operations are located in the Central Appalachian
Basin in Virginia, Kentucky and West Virginia and the Powder River
Basin in Wyoming.
Blackjewel L.L.C. and four affiliates filed voluntary petitions
seeking relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
W.Va. Lead Case No. 19-30289) on July 1, 2019. Blackjewel was
estimated to have $100 million to $500 million in asset and $500
million to $1 billion in liabilities as of the bankruptcy filing.
The Hon. Frank W. Volk is the case judge.
The Debtors tapped Squire Patton Boggs (US) LLP as bankruptcy
counsel; Supple Law Office, PLLC as local bankruptcy counsel; FTI
Consulting Inc. as financial advisor; Jefferies LLC as investment
banker; and Prime Clerk LLC as the claims agent.
The Office of the U.S. Trustee on July 3, 2019, appointed five
creditors to serve on the official committee of unsecured creditors
in the Chapter 11 case of Blackjewel LLC. Whiteford Taylor &
Preston LLP is the Committee's counsel.
BLACKSBURG PEDIATRICS: Taps Magee Goldstein Lasky as Legal Counsel
------------------------------------------------------------------
Blacksburg Pediatrics, PLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Virginia to hire Magee Goldstein
Lasky & Sayers, P.C. as its legal counsel.
The firm's services include:
(a) advising the Debtor with respect to its powers and duties
in the continued management and operation of its business and
properties;
(b) advising and consulting on the conduct of the Debtor's
Chapter 11 bankruptcy case;
(c) attending meetings and negotiating with representatives of
the Debtor's creditors and other parties-in-interest;
(d) taking all necessary actions to protect and preserve the
Debtor's estate;
(e) preparing legal papers;
(f) representing the Debtor in connection with obtaining
post-petition financing, if necessary;
(g) advising the Debtor in connection with any potential sale
of its assets;
(h) appearing before the court to represent the interests of
the Debtor's estate before the court;
(i) taking any necessary action on behalf of the Debtor to
negotiate, prepare and obtain approval of a Chapter 11 plan; and
(j) other necessary or otherwise beneficial legal services to
the Debtor.
The hourly rates of the firm's counsel and staff are as follows:
Attorneys $250 - $400 per hour
Paralegals $115 per hour
The firm agreed to accept $12,500 retainer, plus the filing fee of
$1,738 from the Debtor.
Andrew Goldstein, Esq., an attorney at Magee Goldstein Lasky &
Sayers, 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 S. Goldstein, Esq.
Magee Goldstein Lasky & Sayers, PC
P.O. Box 404
Roanoke, VA 24003-0404
Telephone: (540) 343-9800
Facsimile: (540) 343-9898
Email: agoldstein@mglspc.com
About Blacksburg Pediatrics
Blacksburg Pediatrics, PLC sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Va. Case No.
22-70696) on Nov. 18, 2022, with $100,001 to $500,000 in both
assets and liabilities. Andrew S Goldstein, Esq., at Magee
Goldstein Lasky & Sayers, P.C. represents the Debtor as counsel.
BROOKFIELD SQUARE: Seeks to Hire Paragon LLC as New Counsel
-----------------------------------------------------------
Brookfield Square Condominium Association, Inc. seeks approval from
the U.S. Bankruptcy Court from the Southern District of Florida to
hire Paragon, LLC to substitute for Wargo & French, LLP.
The Debtor requires the firm's legal services, which include:
(a) advising the Debtor with respect to its powers and duties
in the continued management and operation of its business and
properties;
(b) attending meetings and negotiating with representatives of
creditors and other parties, and advising on the conduct of the
case, including all of the legal and administrative requirements of
operating in Chapter 11;
(c) advising the Debtor on matters relating to the evaluation
of the assumption, rejection or assignment of unexpired leases and
executory contracts;
(f) advising the Debtor regarding legal issues arising in or
relating to the Debtor's ordinary course of business;
(g) taking all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions on its
behalf, the defense of any actions commenced against the estate,
negotiations concerning all litigation in which the Debtor may be
involved, and objections to claims filed against the estate;
(h) preparing legal papers;
(i) negotiating and preparing a plan of reorganization,
disclosure statement and all related documents, and taking any
necessary action to obtain confirmation of such plan;
(j) attending meetings with third parties and participating in
negotiations;
(k) appearing before the bankruptcy court, any appellate
courts, and the U.S. Trustee; and
(l) other necessary legal services.
The firm received a retainer in the amount of $10,000.
As disclosed in court filings, Paragon is a "disinterested person"
within the meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Kristopher Aungst, Esq.
Paragon Law, LLC
2000 S. Bayshore Dr., #11
Miami, FL 33133
Telephone: 305-812-5443
Email: ka@paragonlaw.miami
About Brookfield Square Condominium Association
Brookfield Square Condominium Association, Inc. is a not-for-profit
corporation in Lauderhill, Fla.
Brookfield filed a voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 12-34026) on Oct.
5, 2019, with up to $1 million in both assets and liabilities.
Judge Peter D. Russin oversees the case.
Kristopher Aungst, Esq., at Paragon Law, LLC represents the Debtor
as counsel.
CABLEVISION LIGHTPATH: S&P Downgrades ICR to 'B', Outlook Stable
----------------------------------------------------------------
S&P Global Ratings lowered all of its ratings on Cablevision
Lightpath LLC by one notch, including its issuer credit rating to
'B' from 'B+'. The outlook is stable.
Lightpath's stand-alone credit profile (SACP) remains 'b'.
The stable outlook reflects S&P's view that Lightpath's leverage
will remain in the low- to mid-6x area through 2023 on modest
earnings growth.
S&P lowered Lightpath's ICR because it no longer receives one notch
of support from its parent.
The credit profile for Cablevision Lightpath LLC's parent, Altice
USA Inc., has deteriorated. S&P lowered its issuer credit rating
(ICR) on Altice to 'B+' from 'BB-'. The outlook remains negative.
Therefore, Lightpath no longer benefits from a ratings uplift from
Altice.
S&P said, "We lowered the group credit profile, primarily driven by
our ratings at Altice given its considerable earnings contribution,
to 'b+' from 'bb-'. This in line with our recent downgrade of
Altice, which announced that it would not sell its SuddenLink
assets and thus removed the potential for meaningful credit metric
improvement over the next year. The negative outlook at Altice
reflects uncertainty around earnings and subscriber trends as well
as the potential for a more aggressive financial policy, which
could be caused by an inability to stabilize operating trends or a
take-private transaction.
"We revised Lightpath's status within the group to nonstrategic
from moderately strategic.
"This is because we believe there is a higher likelihood that
Lightpath could be sold in the near-term given Altice's recent
announcement not to sell SuddenLink. We believe that the sale of
Altice's stake in Lightpath could provide the company with $1.3
billion-$1.6 billion in proceeds that could be used toward modest
deleveraging. Still, Altice's residential network runs adjacent to
Lightpath's enterprise network, with considerable overlap that
could encourage Altice to retain control to ensure proper levels of
investment for reliable network performance."
The company's elevated capital spending for its fiber expansion
will likely cause its net leverage to remain low- to mid-6x through
2023, which is supportive of Lightpath's SACP.
S&P said, "We believe Lightpath will need to use $10 million-$20
million of balance sheet cash to partially finance its remaining
capital spending program for 2022. In 2023, we believe the company
will need $40 million-$60 million of incremental balance sheet cash
as its capital expenditure (capex) to revenue ratio increases to
the 40% area (from around 33% in 2022) on success-based spending to
support projects in Boston and New York. Our base-case forecast
assumes a low-single-digit percent increase in the company's
earnings will be offset with modestly higher adjusted net debt on
lower cash balances, keeping S&P Global Ratings-adjusted net
leverage around 6.3x through 2023.
The stable outlook reflects our expectation that adjusted leverage
will remain low- to mid-6x over the next 12 months on
low-single-digit percent earnings growth."
S&P could lower the rating:
-- If greater competition results in higher churn or pricing
pressure, leading to lower-than-expected EBITDA with leverage
sustained above 7x for a prolonged period and weakened free
operating cash flow (FOCF); or
-- Lightpath adopts a more aggressive financial policy, incurring
debt to fund acquisitions or dividends to its owners, and leverage
rises above 7x.
S&P could raise the rating if:
-- The company sustains adjusted leverage below 5.5x;
-- Lightpath's owners maintain a financial policy that allows for
leverage sustained comfortably at that level, even with more
acquisitions or shareholder return events; and
-- It sustains positive FOCF along with Altice maintaining a 'B+'
rating.
ESG credit indicators: E-2, S-2, G-2
CD&R SMOKEY: Moody's Cuts CFR & $700MM Sec. First Lien Notes to B3
------------------------------------------------------------------
Moody's Investors Service downgraded CD&R Smokey Buyer, Inc.'s (dba
"Radio Systems") ratings including its Corporate Family Rating to
B3 from B2, its Probability of Default Rating to B3-PD from B2-PD,
the rating on the company's $700 million senior secured first lien
notes due 2025 to B3 from B2, and the $75 million original
principal amount senior secured first lien term loan due 2025 to B3
from B2. The outlook is stable.
The ratings downgrade reflects Radio Systems' high financial
leverage due to weaker operating results and higher debt balance,
and its reduced liquidity due to sizable revolver borrowings, amid
a weakening demand environment. The company reported a
year-over-year revenue decline of -2.4% for the year-to-date period
through 3Q 2022, and its profitability was materially lower with
company-adjusted EBITDA declining -25% over the same period.
Revenue contribution of recent Invisible Fence dealer acquisitions
and pricing actions were more than offset by significant declines
in its retail segment. The retail segment experienced a material
volume decline during 3Q 2022, impacted by softening consumer
demand and lower replenishment orders as the company's retail
partners focused on reducing elevated inventory levels in the
channel. Profitability continued to be pressured by cost inflation
including historically high freight costs that are only partially
offset by price increases. At the same time, Radio Systems' debt
has increased over the past year, primarily to fund acquisitions
and to fund investments in higher cost inventory. As a result, the
company's debt/EBITDA leverage is high at around 7.8x for the last
twelve months (LTM) period ending September 30, 2022, up from 6.2x
at the end of fiscal 2021.
The company's liquidity is constrained by the reduced availability
on its $150 million asset-based lending (ABL) revolver due 2025
(unrated) with $108 million borrowings outstanding as of September
30, 2022. Revolver borrowings were used in part to help fund dealer
acquisitions over the past year, and to cover cash flow deficits in
2022 driven by lower earnings and elevated inventory levels.
Radio Systems' management team is focused on reducing the currently
elevated inventory levels, and has also initiated corporate
reorganization and product rationalization initiatives in efforts
to streamline its operations and focus investments in product
categories with better growth prospects. Inventory levels
sequentially declined in 3Q 2022, and the company anticipates this
will continue into year end. The company also anticipates its gross
margin will improve in 2023, benefitting from materially lower
freight costs versus the last twelve months.
The stable outlook reflects Moody's expectations that demand for
the company's products will decline over the next 12 months but to
a level that supports the reduction of currently elevated inventory
levels. This combined with EBITDA margin expansion benefitting from
lower freight costs will support positive free cash flows over the
next 12 months. The anticipated excess cash flow provides the
company with the financial flexibility to reduce revolver
borrowings and improve debt/EBITDA leverage to below 7.0x by the
end of fiscal 2023.
The following ratings/assessments are affected by the action:
Ratings Downgraded:
Issuer: CD&R Smokey Buyer, Inc.
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
Senior Secured 1st Lien Term Loan, Downgraded to B3 (LGD4) from B2
(LGD4)
Senior Secured 1st Lien Global Notes, Downgraded to B3 (LGD4) from
B2 (LGD4)
Outlook Actions:
Issuer: CD&R Smokey Buyer, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Radio Systems' B3 CFR broadly reflects its high financial leverage
with debt/EBITDA at 7.8x as of the LTM period ending September 30,
2022, and pro forma for acquisitions, and its relatively small
scale with LTM revenue of around $650 million. The company has a
narrow product focus as a designer and marketer of pet products and
has high customer concentration. Radio systems' pet products are
discretionary and exposed to cyclical consumer discretionary
spending. Moody's expects that persistently high inflation and
weaker economic conditions will persist into 2023 and will pressure
consumer demand for the company's products. Governance factors
primarily relate to the company's aggressive financial strategy
under private equity ownership, including operating with high
leverage and its debt-financed acquisition strategy amid a
weakening demand environment.
The credit profile also reflects Radio Systems' good market
position and brand recognition in the relatively stable pet
products industry, supported by innovative product offerings. The
company has moderate geographic and channel diversification, and
some barriers to entry including intellectual property ownership.
Pet ownership has increased after the coronavirus pandemic because
more people are staying home, and Moody's expects this will help
moderate the pressure on revenue from reductions in discretionary
consumer spending. The bulk of the company's portfolio consists of
durable products that have less frequent recurring purchases and
are discretionary. The company's adequate liquidity is supported by
Moody's expectations for positive free cash flow of $50 million
over the next year, which provides the company with the financial
flexibility to reduce revolver borrowings and improve debt/EBITDA
leverage to below 7.0x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company demonstrates a track
record of consistent organic revenue growth alongside EBITDA margin
expansion towards historical levels, and if debt/EBITDA is
sustained below 6.0x. A ratings upgrade will also require at least
adequate liquidity, highlighted by strong free cash flow relative
to debt and good revolver availability at all times, and financial
policies that support credit metrics at the above levels.
Ratings could be downgraded if the company's free cash flows and
profit margin do not improve next year, or if EBITDA minus capital
expenditures to interest falls below 1.5x. Ratings could also be
downgraded if liquidity deteriorates for any reason, including
higher reliance on revolver borrowings, or if the company completes
a large debt-financed acquisition that impedes deleveraging.
The principal methodology used in these ratings was Consumer
Durables published in September 2021.
Headquartered in Knoxville, Tennessee, CD&R Smokey Buyer, Inc. (dba
Radio Systems) through its subsidiaries, is a designer and marketer
of products for pets. Key product lines include pet containment
products (including electronic fences and collars), pet training
products, pet doors, and other various pet products (i.e. water and
feed, toy, and behavior products, etc.). The company's products are
sold through internet retailers, pet specialty stores, mass
retailers, and a dealer distribution network, among other channels.
Radio Systems was acquired by Clayton, Dubilier & Rice (CD&R) in a
July 2020 leverage buyout and it does not publicly disclose its
financial information. The company reported revenue of $639 million
for the twelve months ended September 30, 2022.
CHART INDUSTRIES: S&P Assigns 'B+' ICR on Acquisition of Howden
---------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issuer credit rating to Chart
Industries Inc., a 'B+' issue-level rating and '3' recovery rating
to the senior secured term loan and secured notes, and 'B'
issue-level rating and '5' recovery rating to the unsecured notes.
The stable outlook on Chart reflects S&P's expectations that
despite supply chain and inflation the company will benefit from
secular trends that will drive growth in its core end markets,
generate healthy positive free operating cash flow (FOCF), and
synergies from the business combination; resulting in adjusted
leverage in the 6x-7x range.
Chart, a global manufacturer of highly engineered equipment
servicing the industrial gas and clean energy industries, has
signed a definitive agreement to acquire Granite U.S. Holdings
Corp. (Howden) from KPS Capital Partners. S&P expects the
acquisition to close in the first half of 2023.
S&P said, "Our 'B+' issuer credit rating on Chart reflects the
combined company's high initial leverage, exposure to cyclical end
markets, and integration and execution risks associated with the
acquisition. Partially mitigating these weaknesses are the
company's increased scale and scope of operations, secular growth
trends of its end markets, and potential for healthy FOCF.
"Following the acquisition, Chart will have increased scale and
scope of operations, moderate customer concentration, and broad
geographic diversity. With the acquisition of Howden, coupled with
secular growth trends, we expect Chart's sales to reach the $4
billion area on a pro forma basis in 2023. In our opinion, the
breadth of operations will compare very favorably to similarly
rated peers. Howden manufactures engineered air and gas handling
solutions and related software for industrial applications. Chart
provides liquefication, transportation, and storage technologies.
The addition of Howden will bring mine ventilation, compression
technology, and new capabilities to the combined company. In our
view, both offer complementary products, with very limited overlap.
We believe the acquisition will also strengthen Chart's position
across the hydrogen value chain as the applications require
compression technology and a substantial subset require
liquefication. Howden's product portfolio includes a large
installed base of compressors and long-term experience in hydrogen
applications, which will benefit Chart.
"Chart has moderate customer concentration, in our view. Both
companies have a broad geographic reach relative to similarly rated
peers, which we view favorably. On a pro forma basis, Chart will
generate roughly 40% of revenue from the Americas, 35% from Europe,
the Middle East, and Africa, and 25% from Asia-Pacific.
"We expect Chart will benefit from secular trends that will drive
growth in its core end markets. Secular trends such as energy
transition, urbanization, infrastructure, sustainability, and
decarbonization will drive growth in Chart's core end markets of
energy transition and renewables (21% of pro forma 2021 revenue),
products for sustainability linked end markets (13%), urbanization
(4%), and electrification (3%). In our view, the increased focus on
water quality, increased carbon emissions reduction targets,
natural gas processing, and the replacement of aging infrastructure
will increase demand for Chart's products and services. While we
believe it remains exposed to cyclical end markets, volatility is
trending lower. The business combination will decrease exposure to
oil and gas (9% of pro forma 2021 revenue) and increase exposure to
aftermarket, repair, and services (31%). Furthermore, while we
believe there could still be quarter-to-quarter volatility given
the project-based nature, the company's focus on secular growth
trends should help soften the longer-term downside.
"We forecast Chart will operate with S&P Global Ratings-adjusted
pro forma leverage in the 6x-7x range, with average margins among
capital goods peers. Even factoring in volume growth, the reduction
in certain one-time expenses, and cost synergies, we believe pro
forma leverage will be high, in the 6x-7x range in 2023. In 2024,
the first full year of the combination, we believe the company will
reduce adjusted leverage to the 4x-5x range. Our calculation
includes the company's preferred shares as debt, given they are
owned by a single investor. Also, Chart's option to payment-in-kind
for preferred shares will slightly increase its debt. However, we
believe it can offset the increase with earnings growth and FOCF
generation to maintain leverage in line with the rating. Chart and
Howden both maintain S&P Global Ratings-adjusted EBITDA margins in
the mid-teens percent range, which we view as average for capital
goods peers. Chart's profitability has been volatile when including
certain start-up and acquisition costs that the company views as
one-time in nature. It has operated in the high-teens percent area
in the past, and we believe volume growth and certain cost
synergies will allow the company to return there in the next 12-18
months, with further upside over the longer term. However, there
could be periods of volatile revenue in the event of an economic
recession. Still, we believe increasing focus on higher-margin
products and aftermarket revenues will allow Chart to maintain
credit metrics in line with the rating.
"Bolt-on acquisitions are a part of Chart's strategic growth. Both
Chart and Howden have expanded their businesses through bolt-on
acquisitions. However, following the Howden acquisition, we expect
limited acquisition activity until it restores the financial
profile consistent with management's stated financial policies of
adjusted debt to EBITDA in the low-2x area. Similarly, we do not
expect the company to undertake sizable share repurchases over the
near term.
"We believe there is some integration and execution risks
associated with the large acquisition of Howden. Chart has a
dedicated team to oversee its integration efforts and maintains a
favorable recent track record of realizing cost synergies. However,
we believe there is some risk associated with integration and
execution of this large acquisition in 2023. We anticipate cost
synergies will primarily result from improvements related to
footprint consolidation, resource rationalization, improved
sourcing, and corporate expenses. If synergies and the integration
do not go as planned, it could increase S&P Global Ratings-adjusted
debt to EBITDA.
"We anticipate Chart will generate healthy positive FOCF over the
long term. While certain one-time costs associated with merging the
businesses could limit the ability to generate significant FOCF, we
expect in the next 12 months higher revenue driven by pricing
initiatives and synergies from the combined entity to increase
earnings. We forecast about $100 million annual capital expenditure
(capex) and FOCF in the $190 million-$210 million range over the
next 12 months.
"The stable outlook on Chart reflects our expectations that,
despite integration risk and the potential for weak macroeconomic
conditions, the company will benefit from secular trends that will
drive growth in its core end markets. Furthermore, we believe the
execution on certain synergies from the business combination will
result in adjusted leverage in the 6x-7x range."
S&P could lower the rating on Chart if:
-- Its operating performance significantly weakens or integration
and synergies from the acquisition don't go as planned, such that
S&P Global Ratings-adjusted debt to EBITDA remains above 6x over
the next 12 months;
-- It pursues a more aggressive financial policy, including
debt-funded acquisitions and/or shareholder returns; or
-- FOCF turns negative.
S&P could raise the raising on Chart if:
-- Stronger than expected operating performance sustains debt to
EBITDA comfortably below 5x; and
-- Management commits to a financial policy appropriate with such
leverage.
ESG credit indicators: E-2, S-2, G-2
S&P said, "ESG factors are a neutral consideration in our credit
rating analysis of Chart, a global manufacturer of highly
engineered equipment servicing multiple applications in the clean
energy and industrial gas markets. In our view, Chart remains
exposed to oil and gas end markets, however, we expect that the
longer-term trend toward more stringent regulations and consumer
safety will continue to benefit Chart, specifically with energy
transition, water, waste, and pollution."
CLARUS THERAPEUTICS: Unsecureds to Recover 0.7% to 13% in Plan
--------------------------------------------------------------
Debtors Clarus Therapeutics Holdings, Inc., and Clarus
Therapeutics, Inc., and the Official Committee of Unsecured
Creditors submitted a Combined Disclosure Statement and Chapter 11
Plan of Liquidation dated December 1, 2022.
Headquartered in Northbrook, Illinois, Clarus was founded in 2004
by Dr. Robert Dudley as a specialty pharmaceutical company focused
on developing androgen and metabolic therapies for men and women.
Holdings wholly owns Clarus, which is the entity that, prior to the
Sale, conducted substantially all of the Debtors' operations.
Holdings' primary asset is its 100% equity interest in Clarus. As
of the Petition Date, Clarus' assets consisted primarily of cash,
receivables, intellectual property related to JATENZO, inventory
(JATENZO capsules), contracts, leases and licenses, and business
opportunities arising in connection with JATENZO. Clarus' U.S.
patent portfolio on JATENZO included seven issued patents. In
addition, Clarus had several patent applications pending in the
United States and other countries.
On October 26, 2022, the Court entered the Sale Order, which
approved the Sale of substantially of the Debtors' assets pursuant
to the terms of the Asset Purchase Agreement by and among the
Debtors, the Purchaser and Tolmar Holdings, Inc. (as guarantor), as
well as a form of Transition Services Agreement.
Pursuant to the Asset Purchase Agreement, the Purchaser agreed to a
purchase price consisting of $7,250,000 in cash; royalty payments
during the Royalty Terms in the amount of 6% of net sales of
JATENZO within the United States up to $20 million, and 10% for
such net sales greater than $20 million, with a minimum royalty
payment of $500,000 for each year of the Royalty Terms; milestone
payments of $3 million, $5 million or $7 million if net sales of
JATENZO exceed $30 million, $50 million or $70 million,
respectively, during the Royalty Term; and assumption of Cure Costs
for all Contracts assumed and assigned to the Purchaser. The
Purchaser also committed to commercialization within 30 days
following Closing and dedicating no less than 75 people for the
commercialization, marketing and sales of JATENZO.
On October 27, 2022, the Sale closed in accordance with the terms
of the Sale Order and the Asset Purchase Agreement. In accordance
with the Cash Collateral Order and the Sale Order, the Net Cash
Sale Proceeds of the Sale, along with Clarus' excess cash after
funding the Wind-Down Budget, in the total amount of $8,342,586.31,
were paid to the Indenture Trustee for the benefit of the Secured
Parties.
Following the Sale, the Debtors are focused principally on winding
down their remaining operations, affairs and business, including
the final activities necessary in connection with the Transition
Services Agreement with the Purchaser. This Combined Disclosure
Statement and Plan provides for the Assets, to the extent not
Purchased Assets or already liquidated, to be liquidated over time
and the proceeds thereof to be distributed to Holders of Allowed
Claims in accordance with the terms of the Combined Disclosure
Statement and Plan and the treatment of Allowed Claims.
Following entry of the Cash Collateral Order, the Debtors, the
Committee and the Secured Parties engaged in extensive negotiations
and achieved a global resolution of their disagreements regarding
the validity of the Secured Parties' security interests and liens,
the allowance of the Prepetition Indenture Claims, and the
allocation of proceeds of the Debtors' assets. The Global
Settlement, which memorializes these resolutions, is designed to
achieve an economic settlement of Claims against the Debtors and an
efficient resolution of the Chapter 11 Cases. The Global Settlement
has been incorporated into the Combined Disclosure Statement and
Plan.
Pursuant to the Global Settlement, the Debtors, the Committee and
the Secured Parties have agreed as follows:
* On the Effective Date, a Creditor Trust will be established,
which shall: (i) administer the reserves established for
Unclassified Claims, (ii) administer the resolution, asset
administration, and distribution process for General Unsecured
Claims, (iii) prosecute the Retained Causes of Action transferred
to the Creditor Trust, and (iv) liquidate any assets transferred to
the Creditor Trust.
* The Secured Parties shall have Allowed Claims for all Claims
arising under or relating to the Indenture that remain unpaid and
outstanding as of the Effective Date, comprised of (i) a Secured
Claim, and (ii) to the extent the Allowed Claim is not paid in full
from the Asset Sale Proceeds and the Remaining Cash, an unsecured
deficiency Claim. For voting purposes only, the Secured Claim shall
be estimated at $7,250,000 and the unsecured deficiency Claim shall
be estimated at $35,875,000. The final amount of the deficiency
Claim shall be determined as soon as practicable following payment
to the Secured Parties of all Contingent Proceeds.
* On account of their Secured Claims, the Secured Parties
shall receive (i) all Remaining Cash and all Asset Sale Proceeds,
minus the GUC Priority Amount; (ii) the first D&O Policy Proceeds
in an amount equal to $3,019,000; and (iii) all proceeds of any
Prepetition Employee Payments Avoidance Actions.
* On account of their unsecured deficiency Claims, the Secured
Parties shall receive a pro rata share of the Creditor Trust
Interests, provided, however, that the GUC Priority Amount shall be
Distributed pro rata to Holders of Allowed General Unsecured Claims
other than the Secured Parties.
Class 4 consists of General Unsecured Claims. Each Holder of an
Allowed General Unsecured Claim, including the Prepetition
Indenture Deficiency Claim, shall receive in full and final
satisfaction, settlement, and release of and in exchange for such
Allowed General Unsecured Claim: (A) such Holder's pro rata share
of the Creditor Trust Interests; provided, however, that the first
Distribution up to the GUC Priority Amount, shall be Distributed
pro rata to Holders of Allowed General Unsecured Claims other than
Holders of the Prepetition Indenture Deficiency Claims; or (B) such
other treatment which the Debtors or the Creditor Trust, as
applicable, and the Holder of such Allowed General Unsecured Claim
have agreed upon in writing. The allowed unsecured claims total $50
million. This Class will receive a distribution of 0.7% - 13% of
their allowed claims.
The Combined Disclosure Statement and Plan constitutes a
liquidating Chapter 11 plan for the Debtors and provides for
Distribution of the Debtors' assets already liquidated or to be
liquidated over time to Holders of Allowed Claims in accordance
with the terms of the Combined Disclosure Statement and Plan and
the priority provisions of the Bankruptcy Code.
The Combined Disclosure Statement and Plan contemplates the
appointment of a Plan Administrator to, inter alia, implement the
terms of the Combined Disclosure Statement and Plan and make
distributions in accordance therewith. Except as otherwise provided
by an order of the Bankruptcy Court, Distributions, if any, will
occur at various intervals after the Effective Date as determined
by the Plan Administrator.
A full-text copy of the Combined Disclosure Statement and Plan
dated December 1, 2022, is available at https://bit.ly/3iG6iHb from
PacerMonitor.com at no charge.
Counsel for the Debtors:
Barry Z. Bazian, Esq.
Michael H. Goldstein, Esq.
Kizzy L. Jarashow, Esq.
Artem Skorostensky, Esq.
Goodwin Procter LLP
The New York Times Building
620 Eighth Avenue
New York, NY 10018
Phone: +1 212 813 8800
Fax: +1 212 355 3333
Email: mgoldstein@goodwinlaw.com
bbazian@goodwinlaw.com
kjarashow@goodwinlaw.com
askorostensky@goodwinlaw.com
-and-
L. Katherine Good, Esq.
Potter Anderson & Corroon LLP
1313 N. Market Street
Wilmington, DE 19801
Tel: 302.984.6049
Fax: 302.658.1192
Email: kgood@potteranderson.com
Counsel for the Official Committee of Unsecured Creditors:
Dennis O'Donnell, Esq.
DLA Piper LLP (US)
Telephone: (212) 335-4665
Facsimile: (917) 778-8665
Email: dennis.odonnell@dlapiper.com
- and -
DLA PIPER LLP (US)
Stuart M. Brown, Esq.
Aaron S. Applebaum, Esq.
1201 North Market Street, Suite 2100
Wilmington, Delaware 19801
Telephone: (302) 468-5700
Facsimile: (302) 394-2341
Email: stuart.brown@us.dlapiper.com
aaron.applebaum@us.dlapiper.com
About Clarus Therapeutics Holdings
Clarus Therapeutics Holdings, Inc. operates as a pharmaceutical
company focused on the commercialization of JATENZO (testosterone
undecanoate), the first oral testosterone replacement, or
testosterone replacement therapy, of its kind approved by the U.S.
Food and Drug Administration.
Clarus Therapeutics Holdings, Inc. and Clarus Therapeutics, Inc.
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D. Del. Case No. 22-10845) on Sept. 5, 2022. In the
petitions signed by Lawrence R. Perkins, chief restructuring
officer, the Debtors disclosed $48,940,000 in total assets and
$62,003,000 in total debts.
Judge Mary F. Walrath oversees the cases.
The Debtors tapped Goodwin Procter, LLP as bankruptcy counsel;
Potter Anderson & Corroon, LLP as local and conflicts counsel;
Raymond James & Associates, Inc. as investment banker; and
SierraConstellation Partners, LLC as restructuring advisor.
SierraConstellation CEO Lawrence R. Perkins serves as the Debtors'
chief restructuring officer. Stretto, Inc. is the claims and
noticing agent and administrative advisor.
On Sept. 16, 2022, the U.S. Trustee for Region 3 appointed an
official committee of unsecured creditors in these Chapter 11
cases. The committee tapped DLA Piper LLP (US) as legal counsel and
Alvarez & Marsal North America, LLC as financial advisor.
COLORADO WORLD: Plan Set Aside, Seeks Case Dismissal
----------------------------------------------------
Colorado World Resorts, LLC, won from the Bankruptcy Court an order
cancelling the hearing on the Disclosure Statement explaining its
Plan. At the behest of the Debtor, Judge Micheal E. Romero ordered
that the hearing and the deadlines are vacated, and the Court will
hold the Plan and Disclosure Statement in abeyance.
The Debtor is a limited liability company that owns real property
located at 19302 Cottonwood Drive in Parker Colorado.
On Nov. 1, 2022, the Debtor and BRMK Lending, LLC, entered into a
stipulation resolving the motion for relief from stay filed by BRMK
Lending, LLC. Under the provisions of the Stipulation, the
Bankruptcy Court entered an order granting immediate relief from
the automatic stay to enable BRMK Lending to proceed to exercise
any and all remedies that may be available to it including
proceeding to foreclose on the real property.
The Debtor accordingly sought dismissal of its Chapter 11 case
pursuant to 11 U.S.C. Sec. 1112(b). The Debtor submits that
dismissal rather than conversion is in the best interests of the
estate. The real property is the Debtor’s sole asset so there is
no value to creditors in a Chapter 7 case as its assets are subject
to secured liens which would take the assets through foreclosure.
Counsel for the Debtor:
Bonnie Bell Bond, Esq.
Law Office of Bonnie Bell Bond, LLC
8400 E Prentice Ave Ste 1040
Greenwood Village, CO 80111-2922
Tel: (303) 770-0926
E-mail: bonnie@bellbondlaw.com
About Colorado World Resorts
Colorado World Resorts, LLC, a company in Greenwood Village, Colo.,
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D. Colo. Case No. 22-12558) on July 15, 2022, listing $10
million to $50 million in both assets and liabilities. Ranko
Mocavic, manager and member of Colorado World Resorts, signed the
petition.
Judge Michael E. Romero oversees the case.
Bonnie Bell Bond, Esq., at the Law Office of Bonnie Bell Bond, LLC
is the Debtor's counsel.
COMEDYMX LLC: Seeks Cash Collateral Access
------------------------------------------
ComedyMX, LLC and ComedyMX, Inc. ask the U.S. Bankruptcy Court for
the District of Delaware for authority to use cash collateral and
provide adequate protection to the U.S. Small Business
Administration.
The Debtor requires the use of cash collateral to, among other
things, satisfy postpetition operating expenses of the Debtors as
more fully described in the Budget, and pay reorganization
expenses.
The Debtors seek to use the SBA's cash collateral to pay for
ordinary expenses such as content development, computer supplies,
telephone, internet, payroll and payroll tax, accounting and
business management and for continued monthly payments of $2,526 to
the SBA in accordance with the Loan Agreement and Note.
The SBA asserts an interest in the Cash Collateral under the
Prepetition Loan Authorization and Agreement between SBA and
ComedyMX LLC.
The Debtors filed for bankruptcy after longstanding litigation
commenced by Beyond Blond Productions, Inc., which sued the Debtors
and Edward Heldman, their president and chief executive officer, in
the United States District Court for the Central District of
California, Case No. 2:20-cv-05581 DSF. The Beyond Blonde Action
asserts a claim under 17 U.S.C. section 512(f) for alleged
misrepresentations in takedown notices under the Digital Millennium
Copyright Act, and claims for declaratory relief regarding
copyright issues and the Debtors' trademark.
The Debtors have asserted counterclaims against Beyond Blonde for
trademark infringement and unfair competition with respect to the
Design Mark, which the Debtors adopted in 2015 and thereafter
continuously and exclusively used in commerce in offering video
streaming services. Survey evidence shows that consumers of video
streaming services are confused by Beyond Blondes' use of a similar
composite design mark for identical services in identical marketing
channels -- confusion well above levels supporting an injunction
under the Lanham Act.
Nevertheless, the Debtors lost their request for a preliminary
injunction. The Debtors' principal, Mr. Heldman, is in recovery
from medical issues. The weight and pressure of the Beyond Blonde
Action coupled with mounting financial pressure resulting from the
cost of the litigation contributed to Mr. Heldman's relapse, which,
in turn, resulted in some very inappropriate emails that have
disadvantaged the Debtors in the litigation.
On July 19, 2022, the District Court for the Central District of
California issued an Order Granting Beyond Blond's Preliminary
Injunction. Pursuant to the Injunction Order, the District Court
prohibited the Debtors from "transferring or encumbering any
assets." However, the District Court did not issue the income
freeze requested by Beyond Blonde and ordered the parties to meet
and confer on the issue. The District Court has now stayed the
litigation. Therefore, pursuant to the Injunction Order, it is the
Debtors' position that they are permitted to utilize disposable
income to fund their cases and their plan(s) without violating such
order. The Debtors intend to use revenue generated by the business
to fund their contemplated joint plans of reorganization. It should
also be noted that Beyond Blonde is indebted to the Debtors in the
amount of approximately $65,000 pursuant to an outstanding order of
the District Court.
On August 6, 2020, ComedyMX LLC sought and obtained a $150,000
Economic Injury Disaster Loan from the SBA. The EIDL is for a term
of 30 years with an interest rate of 3.75% per annum and is
evidenced by a note and security agreement dated August 6, 2020.
The first payment of $731 was due to be paid on August 6, 2021. The
EIDL is secured by a blanket lien on LLC's collateral. LLC
thereafter submitted a request for an upward modification of the
EIDL from $150,000 to $500,000 which was approved on December 14,
2021, increasing the monthly principal and interest payment to the
SBA from $731 to $2,526. As of the Petition Date, LLC is current
with its payments to the SBA with respect to the EIDL.
The Debtors propose to provide adequate protection to the SBA,
subject in all respects to payment of the Carve-Out:
i. A continuing security interest in and lien on all
collateral of the Debtors of the same type and nature that exists
as of the Petition Date with the same validity (or invalidity) and
priority as exists as of the Petition Date, including the income
and proceeds thereof,
ii. Solely to the extent of any Diminution in Value, an
additional and replacement security interest in and lien on all
property and assets of the Debtors' estates, provided however, that
(a) the security interest and lien will be junior only to any
existing, valid, senior, enforceable and unavoidable prior
perfected security interests and liens, and (b) the security
interest and lien will not attach to any claims, defenses, causes
of action or rights of the Debtors arising under chapter 5 of the
Bankruptcy Code or applicable state fraudulent transfer law but
will, upon entry of the Final Order, attach to any proceeds of
Avoidance Actions except for any proceeds of Avoidance Actions
recovered from the SBA, and
iii. To the extent provided by sections 503(b) and 507(b) of
the Bankruptcy Code, an allowed administrative claim in the chapter
11 cases , provided however, that the claim will not extend to any
Avoidance Actions but will, upon entry of the Final Order, extend
to any proceeds of Avoidance Actions except for any proceeds of
Avoidance Actions recovered from the SBA.
In terms of adequate protection payments, the Interim Order
provides for monthly payment, up to the amounts set forth in the
Budget, of principal and interest due and owing under the Loan
Agreement and as such obligations are incurred. Specifically, the
interim Budget provides for monthly payments of $2,526 on account
of monthly principal and interest payments to the SBA.
The Debtors propose that their ability to use cash collateral
pursuant to the Interim Order will end on the earliest of: (i)
entry of the Final Order, (ii) 20 days following entry of the
Interim Order if the Final Order will not have been entered by such
date, (iii) the effective date of a confirmed plan of
reorganization in the chapter 11 cases, (iv) the closing of a sale
of all or substantially all assets of the Debtors; (v) the
dismissal of any of these chapter 11 cases or the conversion of any
of these chapter 11 cases to a case under chapter 7 of the
Bankruptcy Code, (vi) any material provision of the Interim Order
having ceased to be valid or binding for any reason, (vii) the
Debtors having attempted to modify the Interim Order without the
prior written consent of the SBA and (viii) five business days
following receipt by the Debtors and the United States Trustee for
the District of Delaware of a notice from the SBA of a breach by
any of the Debtors of (x) any of the terms or provisions of the
Interim Order or (y) any covenant or undertaking in any of the Loan
Agreement or the Note evidencing the SBA Loan relating to the
preservation or maintenance of the collateral so long as the SBA
does not take any action in violation of the Interim Order that
would prevent or hinder the Debtors from satisfying such covenant
or undertaking.
The Carve-Out means: (i) costs due the Clerk of the Court; (ii) the
unpaid and outstanding reasonable fees and expenses actually
incurred by Professionals on or after the Petition Date and through
the day of delivery of a Termination Notice under the Interim
Order, up to the amounts set forth for each Professional in the
Budget for such period, to the extent allowed by Court order and
payable under sections 326, 328, 330 and 331 of the Bankruptcy Code
and any interim procedures order; and (iii) the unpaid and
outstanding reasonable fees and expenses actually incurred by the
Professionals from or after the day following the delivery of a
Termination Notice under this Interim Order, to the extent allowed
by Court order and payable under sections 326, 328, 330, and 331 of
the Bankruptcy Code and any interim procedures order, in an
aggregate amount not to exceed $75,000.
The Debtors state that the Replacement Lien and the Adequate
Protection Lien will be valid, binding, enforceable, non- avoidable
and automatically perfected, notwithstanding the automatic stay,
without the necessity of filing or recording any financing
statement, deed of trust, mortgage, or other instrument or document
which otherwise may be required under the laws of any jurisdiction
to validate or perfect such security interests and liens.
A copy of the motion is available at https://bit.ly/3F3frRv from
PacerMonitor.com.
A copy of the budget is available at https://bit.ly/3iHJM0o from
PacerMonitor.com.
The Debtor projects $105,675 in total inflows and $87,360 in total
outflows for the 13-week period ending February 12, 2023.
About ComedyMX, LLC
ComedyMX, LLC operates the business of making classic cartoons
available to the public on various platforms such as YouTube, under
the name Cartoon Classics. The Debtor sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del Case No.
22-11181) on November 14, 2022. In the petition signed by Edward
Heldman, president and chief executive officer, the Debtor
disclosed up to $500,000 in assets and up to $1 million in
liabililties.
Lori A. Schwartz, Esq., at Leech Tishman Robinson Brog, PPC, is the
Debtor's legal counsel.
CORE SCIENTIFIC: Olivares to Step Down as Director
--------------------------------------------------
Stacie Olivares informed the Board of Directors of Core Scientific,
Inc., on November 21, 2022, of her intention to resign as a
director of the Board and any committees thereof effective November
21. Ms. Olivares' resignation was not due to any disagreement with
the Board, the Company or management on any matter relating to the
Company's operations, policies or practices.
About Core Scientific
Core Scientific, Inc. (NASDAQ: CORZ) is a large-scale operator of
dedicated, purpose-built facilities for digital asset mining
colocation services and a provider of blockchain infrastructure,
software solutions and services. Core mines Bitcoin, Ethereum and
other digital assets for third-party hosting customers and for its
own account at its six fully operational data centers in North
Carolina (2), Georgia (2), North Dakota (1) and Kentucky (1).
Core was formed following a business combination in July 2021 with
XPDI, a blank check company.
At September 30, 2022, the Company had total assets of US$1.4
billion and total liabilities of US$1.3 billion.
Core Scientific did not make payments that came due in late October
and early November 2022 with respect to several of its equipment
and other financings, including its two bridge promissory notes.
The Company hired Weil, Gotshal & Manges LLP, as legal advisers,
and PJT Partners LP, as financial advisers, to assist the Company
in analyzing and evaluating potential strategic alternatives and
initiatives to improve liquidity.
Meanwhile, a group of Core Scientific convertible bondholders is
working with restructuring lawyers at Paul Hastings.
CSC HOLDINGS: Moody's Cuts CFR to B2, Outlook Stable
----------------------------------------------------
Moody's Investors Service downgraded CSC Holdings, LLC's (CSC or
the Company) Corporate Family Rating to B2 from B1, the Probability
of Default Rating to B2-PD from B1-PD, the Senior Secured Credit
Facility and Senior Guaranteed Notes to B1 from Ba3, and the Senior
Unsecured Notes to Caa1 from B3. The Speculative Grade Liquidity
Rating was downgraded to SGL-2, from SGL-1. The outlook is stable.
Downgrades:
Issuer: CSC Holdings, LLC
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-2 from
SGL-1
Senior Secured Bank Credit Facility, Downgraded to B1 (LGD3) from
Ba3 (LGD3)
Gtd Senior Unsecured Regular Bond/Debenture, Downgraded to B1
(LGD3) from Ba3 (LGD3)
Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 (LGD5)
from B3 (LGD5)
Issuer: Neptune Finco Corp.
Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 (LGD5)
from B3 (LGD5)
Outlook Actions:
Issuer: CSC Holdings, LLC
Outlook, Remains Stable
The downgrade of the CFR to B2 reflects the weak operating trends
the Company has experienced in 2022 and the expectation that
earnings, cash flows and key credit metrics will remain under
pressure over at least the next 12 to 18 months and possibly
longer. Intense competition in CSC's markets has led to increasing
subscriber losses, though Moody's expects the pace of broadband
subscriber declines to moderate in the coming quarters. Coupled
with investments in sales and marketing, inflationary pressures,
higher interest, loss of contractual wholesale revenue (air strand)
and greater capital intensity, earnings and free cash flows have
fallen sharply in 2022. As a result, key credit metrics including
leverage (Moody's adjusted debt/EBITDA) and free cash flow (FCF) to
debt have deteriorated. The leverage ratio will rise to mid to high
6x, while FCF to debt will fall to very low single-digit percent in
2023. The company is executing a very costly multi-year capital
project to deploy fiber-to-the home in up to 75% of its footprint
which Moody's estimates will cost over $800 million annually.
Following the build, which should be completed in the next three
years (by the end of 2025), capital intensity should moderate
significantly (in the low teens percent range or better),
significantly lifting free cash flows to at least $1-$1.25 billion
annually. Moody's also expects the investments to steadily improve
the company's market position, yielding returns in terms of
customer acquisition and retention, supporting a recovery in both
revenue and earnings growth.
RATINGS RATIONALE
CSC's credit profile is supported by its large size (near $9-$10
billion in revenue) and somewhat diversified footprint. The
business model is profitable, generating steady EBITDA margins near
40% and providing a high degree of visibility given the very
predictable monthly recurring revenue from a diversified and large
base of residential and commercial customers. Broadband demand is a
favorable tailwind and opportunity, with positive and sustained
secular growth, though intensifying competition and execution
issues have led to weak broadband subscriber trends for the company
in 2022. The company also has good liquidity.
The credit profile is constrained by a less than conservative
financial policy that targets net leverage of 4.5x-5.0x but
tolerates a much higher ratio (Management Q3 LTM calculation,
approximately 6.3x Moody's adjusted gross leverage which excludes
collateralized debt obligations), and currently prioritizes capital
investments over debt repayment. Additionally, the video and voice
businesses are declining rapidly under secular pressure, shedding
subscribers in the low teens percent range. Broadband demand and
growth, a historical offset providing top-line support, has also
weakened considerably due to higher competitive intensity. Fixed
wireless access and or fiber providers are now taking share,
evident in the decline of data subscribers in the low single digit
percent range. As a result, the company is deploying an aggressive
and capital-intensive multi-year fiber build, driving capex to near
20% of revenue substantially constraining free cash flows which
could fall under $100 million in 2024.
The SGL-2 liquidity rating reflects good liquidity supported by
strong operating cash flow, a partially drawn but large revolving
credit facility with significant capacity, ample covenant headroom.
The company also benefits from a favorable maturity profile with
limited maturities over the next year.
Moody's rates CSC's senior secured bank debt facilities B1 (LGD3),
one notch above the B2 CFR. The secured debt is collateralized by a
stock pledge and is guaranteed by the operating subsidiaries of the
Company. Moody's also rates the senior unsecured guaranteed notes
at CSC B1 (LGD3), as the notes benefit from the same guarantee from
the restricted subsidiaries (as the credit facility creditors) and
Moody's view that the stock pledge for secured lenders provides no
additional lift/benefit as the equity collateral would likely be
worthless in a default scenario. Secured lenders benefit from
junior capital provided by the senior unsecured bonds at CSC (which
are not guaranteed) rated Caa1 (LGD5), two notches below the B2 CFR
given the subordination in the Company's capital structure. The
instrument ratings reflect the probability of default of the
Company, as reflected in the B2-PD Probability of Default Rating,
an average expected family recovery rate of 50% at default given
the mix of secured and unsecured debt in the capital structure, and
the particular instruments' rank in the capital structure.
Moody's maintains a B1 senior secured rating and a Caa1 senior
unsecured rating on certain debt that was originally issued by
Neptune Finco Corp. (Neptune, no outlook), an acquisition vehicle
used by Altice USA, Inc. (CSC's ultimate parent company, unrated)
to acquire the operating subsidiary D/B/A Cablevision. In 2015,
Neptune was merged with and into CSC, which effectively assumed all
of Neptune's obligations; however, Moody's internal databases
continue to reflect Neptune as a debt issuer.
The company's ESG Credit Impact Score is CIS-4, highly negative.
The CIS score primarily reflects the company's highly negative
governance risk driven by financial strategy and risk management
policies, specifically a tolerance for leverage up to at least 6x
(Management Q3 net debt to EBITDA calculation) dividends and
debt-financed M&A in the past, and highly concentrated ownership.
Social risk is also moderately negative reflecting data privacy
risks in its wireless service. Environmental risks are
neutral-to-low, having little effect (positive or negative) on the
CIS score.
Moody's outlook reflects a baseline expectation for revenue to
decline by low single digit percent over the next 12-18 months,
driving revenue under $9.5 billion. Moody's expects leverage to
rise and be sustained in mid to high 6x range, on debt averaging
$26 billion. EBITDA margins will be stable, near 40%, producing
$3.6-$3.7 billion in EBITDA. Net of capex (approaching 20% of
revenue) and average borrowing costs (rising over 6%), free cash
flows will be $50 - $150 million, covering low single digit percent
of debt. Moody's outlook reflects certain key assumptions including
a decline in broadband, video, and voice subscribers (approximately
flat, and low teens percent range respectively). Moody's expects
liquidity to remain very good.
Note: all figures are Moody's adjusted over the next 12-18 months
unless otherwise noted.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade is very unlikely at this time given the pressures on the
business. However, Moody's could consider an upgrade if conditions
improved substantially such that:
-- Leverage (Moody's adjusted Debt/EBITDA) is sustained below 6x,
and
-- Free cash flow to debt (Moody's adjusted, before dividends) is
sustained above 3%
An upgrade would also be considered on same or better liquidity,
return to revenue and EBITDA growth supported by stable subscriber
base driven by a sustained rise in broadband growth, and or a more
conservative financial policy.
Moody's could consider a downgrade if:
-- Leverage (Moody's adjusted Debt/EBITDA) is sustained above 7x,
or
-- Free cash flow to debt (Moody's adjusted, before dividends) is
sustained below 1%
A downgrade could also be considered if the scale of the company
declined, liquidity deteriorated, there was a material and
unfavorable change in operating performance, or the company adopted
a more aggressive financial policy.
Headquartered in Long Island City, New York, CSC Holdings, LLC
passes over 9.4 million homes in 21 states, serving approximately
4.9 million residential and business customers and about 8.6
million subscribers. The company is wholly owned by Altice USA
Inc., a public company majority owned and controlled by Patrick
Drahi. Revenues for the last twelve months ending September 30,
2022 were approximately $9.8 billion.
In 2020, Altice sold 49.99% of Lightpath Group (Cablevision
Lightpath LLC and its subsidiaries), its fiber enterprise business,
to Morgan Stanley Infrastructure Partners (MSIP) for an enterprise
value of $3.2 billion. Altice retains a 50.01% interest in
Lightpath Group, maintains control of the company, and consolidates
its financial results.
The principal methodology used in these ratings was Pay TV
published in October 2021.
DIOCESE OF HARRISBURG: Plan Has $18.25M for Abuse Claims
--------------------------------------------------------
The Roman Catholic Diocese of Harrisburg and the Official Committee
of Tort Claimants have filed a proposed Plan and Disclosure
Statement.
The Plan Proponents believe that confirmation of the Plan will
maximize value for the benefit of all creditors, including holders
of Survivor Claims.
The primary purpose of the Plan is to (a) provide holders of
Survivor Claims with reasonable and equitable compensation, by
channeling Survivor Claims asserted against the Debtor and other
Protected Parties to a trust, pursuant to section 105(a) of the
Bankruptcy Code, and (b) enable the Debtor, as a Reorganized
Debtor, to emerge from this Chapter 11 Case and continue the
Debtor's religious and charitable mission.
Under the terms of the Plan, Survivor Claims against the Debtor and
other Protected Parties will be permanently channeled by
injunctions provided for in Article XII of the Plan into the Trust
established under Section 105(a) of the Bankruptcy Code.
The Trust will have exclusive responsibility for processing,
liquidating, and making distributions on account of Survivor
Claims.
To fund the Trust, the Plan provides the (a) Debtor will make a
contribution in the amount of $5,500,000, (b) Parishes, Schools,
and Related Non-Debtor Entities will make contributions in the
aggregate amount of $2,000,000, and (c) Settling Insurers will make
contributions in the aggregate amount of $10,750,000, resulting in
funding for the Trust in the amount of $18,250,000. In addition,
the Debtor will contribute or cause to be contributed up to
$600,000 to the Trust, if and to the extent Unknown Survivor Claims
are filed in the Bankruptcy Case or with the Trust.
Within 10 business days after the Confirmation Order has become a
Final Order, the Debtor and Parishes, Schools, and Related
Non-Debtor Entities will make their contributions to the Trust. And
each Settling Insurer will pay its Insurance Settlement Amount to
the Trust within the time set forth in its respective Insurance
Settlement Agreement. The funds contributed to the Trust will be
utilized to resolve all Survivor Claims.
The Plan contemplates establishing Trust Distribution Procedures,
which will establish the methodology by which Survivor Claims will
be resolved, establish the process by which Survivor Claims will be
reviewed by the Survivor Claims Reviewer, and specify liquidated
values for compensable claims based on the underlying Abuse.
The Debtor is not proposing to solicit votes from holders of Claims
or Interests in Classes 1, 2, 3, 6, and 8. Under the Plan, holders
of: (a) Administrative Expense Claims and Priority Tax Claims are
unclassified (the "Unclassified Claims"); and (b) Class 1 Claims
(Other Priority Claims), Class 2 Claims (Other Secured Claims),
Class 3 Claims (General Unsecured Claims), Class 6 Claims
(Late-Filed Survivor Claims), and Class 8 Claims (Pension Plan Note
Claims) are unimpaired (the "Unimpaired Claims").
Holders of Class 3 general unsecured claims totaling $354,000 and
other unimpaired creditors are deemed to accept the Plan.
The Debtor proposes to solicit votes to accept or reject the Plan
from holders of Claims in Classes 4 (Known Survivor Claims), 5
(Unknown Survivor Claims), 7 (Non-Survivor LItigation Claims), and
9 (Parish and School Claims). The Plan creates a Trust to fund
payment for these claims.
Attorneys for the Debtor and Debtor in Possession:
Blake D. Roth, Esq.
Tyler N. Layne, Esq.
WALLER LANSDEN DORTCH & DAVIS, LLP
511 Union Street, Suite 2700
Nashville, TN 37219
Telephone: (615) 244-6380
Facsimile: (615) 244-6804
E-mail: blake.roth@wallerlaw.com
tyler.layne@wallerlaw.com
- and -
Matthew H. Haverstick, Esq.
Joshua J. Voss, Esq.
KLEINBARD, LLC
Three Logan Square
1717 Arch Street, 5th Floor
Philadelphia, PA 19103
Telephone: (215) 568-2000
Facsimile: (215) 568-0140
E-mail: mhaverstick@kleinbard.com
jvoss@kleinbard.com
Counsel for the Official Committee of Tort Claimants:
Robert T. Kugler, Esq.
Edwin H. Caldie, Esq.
STINSON LLP
50 South Sixth Street, Suite 2600
Minneapolis, MN 55402
Telephone: (612) 335-1500
Facsimile: (612) 335-1657
E-mail: robert.kugler@stinson.com
ed.caldie@stinson.com
About Roman Catholic Diocese
of Harrisburg
The Diocese of Harrisburg is comprised of 89 parishes in 15
counties in Central Pennsylvania.
The Roman Catholic Diocese of Harrisburg sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Pa. Case No.
20-00599) on Feb. 19, 2020, listing up to $10 million in assets and
up to $100 million in liabilities. Judge Henry W. Van Eck oversees
the case.
The Debtor tapped Waller Lansden Dortch & Davis, LLP as legal
counsel; Kleinbard, LLC as special counsel; Keegan Linscott &
Associates, PC as financial advisor; and Epiq Corporate
Restructuring, LLC as claims and noticing agent. The Hon. Michael
Hogan has been tapped as unknown abuse claims representative.
The U.S. Trustee for Regions 3 and 9 appointed a committee to
represent tort claimants in the Chapter 11 case of the Roman
Catholic Diocese of Harrisburg. The Tort Claimants' Committee is
represented by Stinson, LLP.
DIV005 LLC: Court OKs Interim Cash Collateral Access
----------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia,
Gainesville Division, authorized Div005, LLC to use cash collateral
on an interim basis in accordance with the budget through the date
of the final hearing setfor January 5, 2023 at 10:30 a.m.
The Debtor requires the use of cash collateral to pay its labor
force and its other operating expenses.
Truist Bank asserts an interest in the Debtor's cash collateral.
The Debtor is authorized to use cash collateral generated from the
Business and otherwise: (a) in accordance with the budget, the line
items of which Debtor may modify by no more than 15% and Debtor may
carry over any unused budgeted amount; and (b) or for other matters
pursuant to orders entered by the Court after appropriate notice
and hearing, except further provided that the Debtor may pay the
actual amount owed or deposit required to any utility, taxing
authority, or insurance company.
As adequate protection, Truist Bank is granted a valid, attached,
choate, enforceable, perfected and continuing security interest in,
and liens upon all postpetition assets of the Debtor. Truist Bank's
security interest in, and liens upon, the Post-Petition Collateral
will have the same validity as existed between Truist Bank, the
Debtor and all other creditors or claimants against the Debtor's
estate on the Petition Date. The replacement lien and security
interest granted are automatically deemed perfected upon entry of
the Order without the necessity of Truist Bank taking possession,
filing financing statements, mortgages or other documents.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3VCB5Dp from PacerMonitor.com.
The Debtor projects $664,400 in gross profit and $292,500 in total
expenses for the period from December 1, 2022 to January 5, 2023.
About Div005, LLC
Div005, LLC is primarily engaged in manufacturing iron and steel
pipe and tube, drawing steel wire, and rolling steel shapes, from
purchased steel. The Debtor sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-21202) on
November 23, 2022. In the petition signed by Harold Lerner,
manager, the Debtor disclosed up to $50,000 in assets and up to $10
million in liabilities.
Judge James R. Sacca oversees the case.
Cameron M. McCord, Esq., at Jones & Walden, LLC, represents the
Debtor as counsel.
DURA-METRICS INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Dura-Metrics, Inc.
d/b/a Dental Masters Labratory
d/b/a Dental Masters Lab
2628 El Camino Avenue, Suite B1
Sacramento, CA 95821
Business Description: The Debtor manufactures dental equipment
and supplies.
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Eastern District of California
Case No.: 22-23151
Judge: Hon. Christopher M. Klein
Debtor's Counsel: Gabriel E. Liberman, Esq.
LAW OFFICES OF GABRIEL LIBERMAN, APC
1545 River Park Drive, Ste 530
Sacramento, CA 95815
Tel: 916-485-1111
Fax: 916-485-1111
E-mail: attorney@4851111.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael Kulwiec as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/MVTTZXQ/Dura-Metrics_Inc__caebke-22-23151__0001.0.pdf?mcid=tGE4TAMA
EASTERDAY RANCHES: Court Rules No Reduction of Pachulski Fees
-------------------------------------------------------------
Bankruptcy Judge Whitman L. Holt of the Eastern District of
Washington overrules the U.S. Trustee's objection to the fourth
interim fee application of Pachulski Stang Ziehl & Jones LLP.
Easterday Ranches, Inc. was a Washington corporation engaged in,
among other things, cattle ranching activities in eastern
Washington. Easterday family members owned and managed Ranches.
Easterday Farms was a Washington general partnership engaged in,
among other things, farming activities in eastern Washington.
Easterday family members were general partners of the Farms
partnership and Farms' managers.
Over a period of several years, Cody Easterday -- an Easterday
family member and Ranches' president -- engaged in activity through
Ranches that defrauded Tyson Fresh Meats and Segale Properties out
of more than $244 million. Mr. Easterday accomplished this by
charging Tyson and Segale for approximately 265,000 head of
nonexistent, or "ghost," cattle. Soon after Mr. Easterday and Tyson
personnel met to discuss the fraud, Tyson sued Ranches in
Washington state court. This lawsuit, in turn, precipitated the
Ranches chapter 11 bankruptcy petition at issue here.
Farms was not part of the ghost-cattle fraud, but Farms was jointly
liable with Ranches on some funded debt. Because the Ranches
bankruptcy filing (among other possible events) triggered a default
of that debt, Farms followed Ranches' lead and filed its own
chapter 11 bankruptcy petition.
At the outset, it was apparent that Ranches, Farms, and their
respective stakeholders held certain diverging interests. As a
result, the UST determined it appropriate to appoint two official
committees of unsecured creditors -- one for each debtor. Each
committee retained capable counsel and financial advisors.
Unsatisfied with this structural divide, the UST also objected to
the proposed retention of common counsel and other professionals
for the Debtors. From the UST's perspective, the potentially
divergent interests created insoluble conflicts that necessitated
separate representation.
The Court overrules this objection, including because any
intercompany disputes were theoretical at the time and because the
dueling creditors' committees provided structural checks against
the dormant conflicts. The Court agrees with Debtors' counsel that
the common professionals could appropriately serve as a proverbial
"honest broker" to mediate and facilitate resolution of issues
among the various stakeholders. The Debtors' counsel also conceded,
however, that separate representation would be required if the need
for actual litigation between the Ranches and Farms arose.
The UST initiated the present dispute by objecting to the fourth
interim fee application of PSZJ, which sought compensation in the
firm's capacity as the Debtors' lead bankruptcy counsel. The thrust
of the UST's objection is that (i) the December 2021 and February
2022 plans impermissibly subordinated the interests of the Farms
stakeholders to those of the Ranches estate; (ii) giving rise to an
actual conflict between the estates; and (iii) therefore, the court
should deny PSZJ compensation for all related work.
Due to the same asserted conflict, the UST contends that all PSZJ's
work related to the Offending Plans amounted to the law firm
representing "an interest adverse to the interest of the estate
with respect to the matter on which such professional person is
employed." From these premises the UST further concludes that
PSZJ's associated "fees were not reasonable nor beneficial for the
Farms' case." The UST thus requests that the court "deny approval
of the fees for the time spent related to the plan(s) that favored
Ranches over Farms."
The UST's objection presents the central question whether PSZJ's
filing of the Offending Plans crossed the line dividing a potential
Ranches-Farms conflict from an actual Ranches-Farms conflict,
thereby implicating section 328(c). For several reasons, the Court
finds and concludes that the filings did not cross the line.
First, the Court finds that PSZJ's acts of filing the Offending
Plans comported with the interests of Farms and its stakeholders --
obtaining a comprehensive settlement that preserved estate value
and facilitated timely distributions to Farms' creditors is a goal
entirely compatible with PSZJ's fiduciary obligations to Farms. The
Court also finds that PSZJ filed the Offending Plans as part of a
dynamic, multiparty, multifactor negotiating framework for the
purpose of pressuring certain parties to bridge the remaining gaps
with other case participants. The strategy PSZJ executed on both
debtors' behalf proved successful and yielded an outcome greatly
benefitting the Farms estate and its stakeholders collectively,
even though the approach pointedly and deliberately pressured some
specific stakeholders.
The Court finds the UST's contrary position will unduly minimizes
the serious risks that Farms and its unsecured creditors faced in
the absence of a global settlement resolving troubling issues
related to substantively consolidating the two estates. Likewise,
the Court believes that the UST's position will also unduly
minimizes the time value of money for Farms' creditors. Absent
settlement, a fully-litigated determination of the allocation,
substantive consolidation, and other issues would have taken
several years and cost both estates millions of dollars.
The Court does not believe that either Offending Plan was facially
unconfirmable and, depending on the votes of Farms' creditors and
evidence presented at a confirmation hearing -- the Court may well
have confirmed one of those plans. Further, because PSZJ filed the
Offending Plans to tee up a settlement framework while advancing
fluid negotiations, the Court concludes that PSZJ's acts aligned
with the Farms estate's interests, particularly when considering
all relevant risks and the high premium bankruptcy places on
expediting creditor distributions.
Second, apart from Farms' standalone interests, the Court
determines that reaching a consensual resolution and ending the
Debtors' costly stay in bankruptcy was undoubtedly in the interest
of both debtors combined and the collective interest of all their
stakeholders.
Third, the Court points out to an important distinction -- one
perhaps possessing constitutional significance -- between pressing
affirmative litigation to determine the merits of a claim and
negotiating the settlement or release of that claim, including
through a bankruptcy plan.
Lastly, the Court concludes that PSZJ's representation of both
Ranches and Farms in the plan process was part of complex
negotiation among numerous represented stakeholders that eventually
produced a holistic settlement of intercompany and other disputes
-- this activity does not constitute an actual conflict triggering
Bankruptcy Code section 328(c). To the contrary, the Court points
to the record which makes clear that PSZJ "determined in good faith
and as an exercise of [their] professional judgment that the course
complies with the Bankruptcy Code and serves the best interests of
the estate," consistent with the firm's professional
"responsibility . . . to help lead the estate on a just, speedy,
inexpensive and lawful path out of bankruptcy." Moreover, because
the Farms estate ultimately and obviously benefitted in tangible
ways from PSZJ's work regarding the Offending Plans, the Court
concludes that the related professional fees are compensable under
Bankruptcy Code section 330(a) despite the fact that the Court
confirmed neither plan.
Moreover, the Court finds no evidence of injury or prejudice to
Farms. PSZJ's dual representation was obviously disclosed and known
by all negotiating stakeholders. The firm's proposed paths always
remained subject to the Court's independent review and analysis,
with all parties in interest having a full and fair opportunity to
express objections. As an end result of PSZJ's work, Farms'
unsecured creditors received a 100-cent recovery and any
impairments of the economic and legal rights of Farms' secured
creditors or the Easterday family were negotiated and agreed by
those parties.
Accordingly, the Court concludes that (i) PSZJ did not
inappropriately represent an interest adverse to either bankruptcy
estate; and (ii) in any event, no reduction of the requested fees
is warranted under Bankruptcy Code section 328(c) or 330(a).
A full-text copy of the Memorandum Opinion dated Nov. 23, 2022, is
available at https://tinyurl.com/2u76zvm9 from Leagle.com.
About Easterday Ranches and Easterday Farms
Easterday Ranches, Inc., is a privately held company in the cattle
ranching and farming business.
Easterday Ranches sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Wash. Case No. 21-00141) on Feb. 1,
2021. Its affiliate, Easterday Farms, a Washington general
partnership, filed a Chapter 11 bankruptcy petition (Bankr. E.D.
Wash. Case No. 21-00176) on Feb. 8, 2021. The cases are jointly
administered under Case No. 21-00141.
At the time of the filing, the Debtors disclosed assets of between
$100 million and $500 million and liabilities of the same range.
Judge Whitman L. Holt oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP as their lead
bankruptcy counsel, Bush Kornfeld LLP as local counsel, and Davis
Wright Tremaine LLP as special counsel. T. Scott Avila and Peter
Richter of Paladin Management Group serve as restructuring
officers.
On Feb. 16, 2021, the Office of the United States Trustee for the
Eastern District of Washington appointed a Ranches Official
Committee of Unsecured Creditors. The Ranches Committee initially
retained Dentons US LLP as its counsel and B. Riley Advisors as its
financial advisor. The Ranches Committee subsequently retained
Cooley LLP as its counsel, replacing Dentons US LLP.
On Feb. 22, 2021, the U.S. Trustee appointed a Farms Official
Committee of Unsecured Creditors. The Farms Committee retained
Buchalter, a Professional Corporation as its counsel and Dundon
Advisers LLC as its financial advisor.
EMERALD HOLLOW: Taps Iron Horse Auction to Conduct Asset Valuation
------------------------------------------------------------------
Emerald Hollow Mine, LLC received approval from the U.S. Bankruptcy
Court for the Western District of North Carolina to employ Iron
Horse Auction Company, Inc. to assist with the valuation of its
real property.
The firm will charge $250 per hour for its services.
William Lilly, Jr., president of Iron Horse, disclosed in a court
filing that he and his firm are "disinterested persons" within the
meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
William B. Lilly Jr.
Iron Horse Auction Company, Inc.
174 Airport Rd
Rockingham, NC 28379
Phone: 910-997-2248
Fax: 910-895-1530
Email: will@ironhorseauction.com
About Emerald Hollow Mine
Emerald Hollow Mine, LLC operates the Emerald Mine that is open to
the public for prospecting. The company is based in Statesville,
N.C.
Emerald Hollow Mine filed a petition under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. W.D.N.C. Case No. 22-50116) on May
16, 2022, with up to $500,000 in assets and up to $10 million in
liabilities. Cole Hayes serves as Subchapter V trustee.
Judge Laura T. Beyer oversees the case.
John C. Woodman, Esq., at Essex Richards, P.A. and Michael T.
Bowers serve as the Debtor's legal counsel and accountant,
respectively.
EMPIRE COUNTERTOPS: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Empire Countertops, LLC
1137 Enterprise Dr.
Pilot Point, TX 76258
Business Description: The Debtor fabricates and installs
countertops from many materials; such as
granite, quartz, solid surface, onyx,
marble, and quartzite. Its fabrication
facility is located in Pilot Point Texas.
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 22-41686
Debtor's Counsel: Clayton L. Everett, Esq.
NORRED LAW, PLLC
515 E. Border
Arlington, TX 76010
Tel: (817) 704-3984
Email: clayton@norredlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Curtis M. Mahoney as member/manager.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/V7CSN2I/Empire_Countertops_LLC__txebke-22-41686__0001.0.pdf?mcid=tGE4TAMA
EVOKE PHARMA: Notice of Allowance Issued for Patent Application
---------------------------------------------------------------
Evoke Pharma, Inc. announced the United States Patent and Trademark
Office (USPTO) issued a Notice of Allowance for U.S. Application
No. 17/100,664 for GIMOTI. Once issued, the patent, entitled
"Nasal Formulations of Metoclopramide" will expire in December
2029. This patent application is a continuation of several other
U.S. patent applications filed by the company over the last decade.
GIMOTI is the first and only FDA-approved novel nasal formulation
of metoclopramide that is commercially available and specifically
designed to deliver a non-oral dose of metoclopramide for the
relief of symptoms in adults with acute and recurrent diabetic
gastroparesis. Non-oral delivery is an important treatment option
as gastroparesis causes oral medications to be unpredictably
absorbed, and avoids vulnerability to vomiting, one of the key
symptoms of gastroparesis.
"We are thrilled and highly encouraged by the strides we have made
with the USPTO and its continued acknowledgement of the novel and
inventive nature of GIMOTI," said Matt D'Onofrio, chief business
officer of Evoke Pharma. Mr. D'Onofrio continued, "This newly
allowed patent application helps to ensure the availability of
GIMOTI amongst patients and health care providers in the U.S."
About Evoke Pharma
Headquartered in Solana Beach, California, Evoke Pharma, Inc. --
http://www.evokepharma.com-- is a specialty pharmaceutical company
focused primarily on the development of drugs to treat GI disorders
and diseases. The Company is developing Gimoti, a nasal spray
formulation of metoclopramide, for the relief of symptoms
associated with acute and recurrent diabetic gastroparesis in adult
women.
Evoke Pharma reported a net loss of $8.54 million for the year
ended Dec. 31, 2021, compared to a net loss of $13.15 million for
the year ended Dec. 31, 2020. As of Sept. 30, 2022, the Company
had $13.41 million in total assets, $7.88 million in total
liabilities, and $5.53 million in total stockholders' equity.
San Diego, California-based BDO USA, LLP, the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated March 8, 2022, citing that the Company has suffered recurring
losses and negative cash flows from operations since inception.
These factors raise substantial doubt about the Company's ability
to continue as a going concern.
FAST RADIUS: LBA LVF VII-Company Appointed to Committee
-------------------------------------------------------
The U.S. Trustee for Region appointed LBA LVF VII-Company XXXIII,
LLC as new member of the official committee of unsecured creditors
in the Chapter 11 cases of Fast Radius, Inc. and its affiliates.
Meanwhile, Palantir Technologies, Inc. and MasterGraphics have been
removed from the committee.
As of Dec. 2, the members of the committee are:
1. Stratasys, Inc.
Attn: John Folks
7665 Commerce Way
Eden Prairie, MN 55344
Phone: 952-917-6743
Email: john.folks@stratasys.com
2. LBA LVF VII-Company XXXIII, LLC
c/o LBA Realty
Attn: Perry Schonfeld
3347 Michelson Drive, Suite 200
Irvine, CA 92612
Phone: 949-955-9310
Email: pschonfeld@lbarealty.com
About Fast Radius
Fast Radius, Inc. is a cloud manufacturing and digital supply chain
company in Chicago, Ill.
Fast Radius, Inc. and affiliates, Fast Radius Operations, Inc. and
Fast Radius PTE Ltd., sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-11051) on
Nov. 7, 2022. In the petition signed by Patrick McCusker,
authorized signatory, Fast Radius, Inc. disclosed $69.329 million
in assets and $55.212 in liabilities.
The Debtors tapped DLA Piper LLP (US) and Bayard, P.A. as legal
counsels; Lincoln Partners Advisors, LLC as investment banker;
Alvarez & Marsal North, America, LLC as financial advisor; and
Stretto, Inc. as claims, administrative, solicitation, and
balloting agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases on Nov. 18,
2022. The committee is represented by Potter Anderson Corroon, LLP.
FENDER MUSICAL: Moody's Lowers CFR to B2, Outlook Negative
----------------------------------------------------------
Moody's Investors Service downgraded Fender Musical Instruments
Corporation's Corporate Family Rating to B2 from B1 and Probability
of Default Rating to B2-PD from B1-PD. Additionally, Moody's
downgraded Fender's senior secured term loan rating to B3 from B2.
The outlook is negative.
The rating downgrades reflect Fender's higher than anticipated
financial leverage driven by lower profitability during the first
nine months of 2022 amid a challenging operating environment.
Inflationary pressures and a normalization of out-of-home
activities as pandemic conditions ease are weakening consumer
demand for Fender's products and excess inventory in retail
channels will make it challenging for the company to reduce its
currently high financial leverage in the next 12 months. The
company's cash generation is significantly weaker, as Fender's
working capital investment, consisting of inventory investment, was
outsized relative to consumer demand. Moody's expects consumer
demand will remain depressed across North American and European
markets in 2023. The company sources a meaningful number of
products from South Asian suppliers and while supply chain
challenges will ease in 2023 for Fender, demand for entry level and
lower end guitars and musical equipment is weakening and
contributing to the inventory challenges. Fender's EBITDA margin
(Moody's adjusted) is contracting meaningfully because of higher
promotional activities, and lower absorption of fixed costs amid
lower unit volumes. As a result, the company's debt/EBITDA leverage
(Moody's adjusted) is high at about 5x as of LTM October 2, 2022
and is likely to increase further in the first half of 2023 before
beginning to moderate.
Fender's adequate liquidity is supported by good availability on
its recently upsized $183.8 million asset-based lending ("ABL")
revolving facility expiring December 2026 (unrated), and
expectation for a return to positive free cash flow generation in
2023 as inventory is worked down. Moody's estimates that on hand
raw materials and finished products can support a reduction in
investment during the first half of 2023, as the company will
continue to focus on reducing currently elevated inventory levels.
Moody's forecasts positive free cash flow of about $25 to $40
million in 2023, which Moody's anticipate will be used to partially
repay the outstanding balance on the ABL revolver. The company has
a modest term loan amortization and a good liquidity profile with
the revolver due in December 2026 and the term loan maturing in
December 2028.
Downgrades:
Issuer: Fender Musical Instruments Corporation
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Senior Secured Term Loan B, Downgraded to B3 (LGD4) from B2
(LGD4)
Outlook Actions:
Issuer: Fender Musical Instruments Corporation
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Fender's B2 CFR reflects the company's strong brand awareness and
market position in the musical instruments industry. The Fender
name is supported by its long-standing reputation and quality of
its guitars, the flagship product. About 59% of sales are generated
in the Americas, with the remainder split between EMEA and APAC.
Fender's credit profile also benefits from a well-diversified
retail distribution channel, including e-commerce. Fender is
further diversifying its narrow product portfolio and is expanding
its digital services, most recently through the December 2021
acquisition of PreSonus, a manufacturer of software and hardware
used for in-home recording and broadcasting. Governance
considerations include the company's financial policy that targets
debt/EBITDA leverage ratio of 3x (company calculated; 4.1x as of
September 2022). Moderate financial leverage would provide
flexibility to Fender given its high sensitivity to economic
downturns and periodic use of debt to finance acquisitions. The
credit profile also reflects the non-essential, highly
discretionary nature of consumer spending on musical instruments,
relatively small scale with annual revenue under $1.0 billion,
Fender's relatively narrow product focus, and considerable
concentration of revenues with its largest customer Guitar Center
Inc., the largest private retailer of musical products in the
United States.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects Fender's high financial leverage, and
Moody's concern that high inventories and softening consumer demand
across some of the company's product lines create uncertainty
around the company's ability to quickly reverse deterioration in
profitability, cash flows and credit metrics.
The ratings could be upgraded if the company demonstrates the
ability to generate strongly positive free cash flow, maintain good
liquidity, and operate with debt/EBITDA leverage sustained below
4x. An upgrade would also require a high degree of confidence on
Moody's part that consumer demand for musical instrument products
will improve and stabilize.
The ratings could be downgraded if earnings decline further, if
liquidity deteriorates for any reason, debt/EBITDA leverage is
sustained above 6x, or free cash flow does not improve. A more
aggressive financial policy could also lead to a downgrade.
The principal methodology used in these ratings was Consumer
Durables published in September 2021.
Fender Musical Instruments Corporation (headquartered in Los
Angeles, California) develops, manufactures, and distributes
musical instruments to wholesale and retail outlets globally. The
company's product portfolio includes fretted instruments (comprised
of electric, acoustic, and bass guitars), guitar amplifiers,
pedals, pro-audio and electronics & accessories, as well as digital
applications centered around musical education and in-home audio
recording. Fender is well-diversified across retail distribution
channels, including a growing direct-to-consumer e-commerce
segment. Fender's brands portfolio includes Fender, Fender Custom
Shop, Squier, Gretsch, and high-performance guitars such as
Jackson, Charvel and EVH (the company is a licensee of the Gretsch
and Eddie Van Halen brands), Bigsby and PreSonus. Servco Pacific
Capital, a long-term investor, acquired a majority stake from TPG
Growth in February 2020. The company generated revenue of
approximately $960 million in the LTM period ended October 2, 2022.
FRANCIS ROZELLE: Court Affirms Jennifer Rothe's Fee Award
---------------------------------------------------------
In the appealed case styled CLARITA SOMMERS JOHNSON, FRANCIS
McQUEEN ROZELLE, JR., Appellants, v. JOHN PATRICK LOWE, JENNIFER
ROTHE, Appellees, Case No. SA-21-CV-01264-XR, (W.D. Tex.), District
Judge Xavier Rodriguez affirms the bankruptcy court's order
allowing compensation for Jennifer Rothe and the order denying the
Debtors' motion to reconsider the fee award.
This is an appeal from the U.S. Bankruptcy Court for the Western
District of Texas. The Appellants Clarita Johnson and Francis
McQueen Rozelle appeal the bankruptcy court's (1) order allowing
compensation for Jennifer Rothe, as accountant to the bankruptcy
estates; and (2) order denying the Debtors' motion to reconsider
the fee award in the bankruptcy case In re Rozelle, No.
14-bk-51480-RBK (Bankr. W.D. Tex.).
In the seven years Ms. Rothe served as the accountant for the
bankruptcy estates in this matter, she filed two fee requests. On
July 20, 2017, she filed an interim application for $20,582 in fees
and $383 in expenses for services rendered between Sept. 17, 2014
and July 18, 2017. The Appellants objected. But after the
Appellants cross-examined Ms. Rothe, the bankruptcy court approved
her fees on an interim basis, subject to review upon her final fee
application.
Ms. Rothe filed her second and final fee application on Feb. 22,
2021, seeking (1) $19,512 in fees and $479 in expenses for services
rendered between July 19, 2017 and Feb. 15, 2021, and (2) final
approval of the interim award entered in 2017. The Appellants
submitted briefing in opposition to the fee request but failed to
offer any witnesses, present any evidence, or even appear at the
hearing on the fee request held on Nov. 16, 2021.
Ms. Rothe appeared at the hearing, along with the Trustee (John
Patrick Lowe) and the lawyer for the estates. Ms. Rothe testified
that, over the course of the seven years she had served as the
accountant for the bankruptcy estates, she had prepared 24 monthly
financial reports and 12 necessary fiduciary income tax returns,
ultimately recovering federal tax refunds of $157,006 -- 44% of the
income tax originally paid.
Upon finding that Ms. Rothe's request for fees and expenses --
totaling $40,957 -- was reasonable and necessary, the bankruptcy
court entered a written order approving the request on the day of
the hearing. The Appellants filed a motion for reconsideration of
the fee award, which was denied on Dec. 6, 2021. Hence, this
appeal.
On appeal, the Appellants assert that Ms. Rothe's rate of $200 per
hour was excessive, that she spent time reviewing documents she
received from the Trustee that did not have any tax consequences,
and that she artificially inflated her fees by personally
performing tasks, such as preparing monthly operating reports, that
could have been delegated to a bookkeeper. They further assert that
"the trustee's accountant is requesting $40,000 for doing perhaps
$5,000 worth of work as a CPA" and accuse Ms. Rothe of "flagrantly
and fraudulently padding her billing statements."
Even assuming that these objections had merit, the Appellants have
not recommended any specific downward adjustments to Ms. Rothe's
rate or hours that would, in their view, render her compensation
more reasonable. The Court finds that the Appellants failed to
establish that the bankruptcy court's approval of the fee
application was "based on an erroneous review of the law or on a
clearly erroneous assessment of the evidence." The Court also finds
that the Appellants have presumably failed to propose an
alternative basis for calculating Ms. Rothe's fees because they
believe that she is not entitled to any compensation for her work
in this matter -- this was also the basis for the Appellants'
motion for reconsideration of Ms. Rothe's fee award.
The Court further finds that the Appellants' allegations of fraud
and misrepresentation do not warrant reconsideration of or relief
from the bankruptcy court's judgment. In the course of their
bankruptcy proceedings, the Court notes that the Appellants have
filed numerous motions and appeals premised on an alleged
conspiracy between the Trustee and the various professionals he
hired to sell Appellants' real property -- they contend that there
was a plot to sell the property below market value and otherwise
defraud the bankruptcy estates through a scheme involving bribery,
kickbacks, and bid-rigging.
The Appellants do not explain why they believe the compensation
awarded . . is improper other than their continued belief that a
fraud was perpetrated in the sale of the debtors/appellants' real
property. They have persisted in presenting this argument to the
courts, even in the face of sanctions.
In fact, in 2019, in another appeal of a bankruptcy court order
awarding professional fees premised on the Appellants' bid-rigging
theory, Judge Lamberth invited the Appellee to file a motion for
sanctions for filing a frivolous appeal, observing that:
"Appellants have made this same argument on numerous occasions.
Appellants' argument has repeatedly been composed of conclusory and
unsupported allegations, and this Court has made clear that
appellants' allegations are not credible and have not provided a
basis for overturning any order issued by the bankruptcy court." --
Rozelle v. Autry, No. SA 17-CV-01237-RCL, 2019 WL 1333032, at *5
(W.D. Tex. Mar. 25, 2019). Over three years later, this
characterization of the Appellants' fraud allegations remains
true.
The Court concludes that the bankruptcy court did not abuse its
discretion in awarding Ms. Rothe's fees and expenses for her
professional services to the bankruptcy estates, nor did the
bankruptcy court err in denying Appellants' motion to reconsider
the award. Hence, the Court finds no reason to reverse the
bankruptcy court's orders on Ms. Rothe's fees.
A full-text copy of the Order dated Nov. 22, 2022, is available at
https://tinyurl.com/vhe85ttd from Leagle.com.
FREEMANVILLE LIFEHOPE: Case Summary & Three Unsecured Creditors
---------------------------------------------------------------
Debtor: Freemanville Lifehope House LLC
11680 Great Oaks Way, Suite 120
Alpharetta, GA 30022
Business Description: The Debtor is primarily engaged in renting
and leasing real estate properties.
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Northern District of Georgia
Case No.: 22-59875
Debtor's Counsel: Ian M. Falcone, Esq.
THE FALCONE LAW FIRM, P.C.
363 Lawrence Street
Marietta, GA 30060
Tel: (770) 426-9359
Fax: (770) 426-8968
Email: attorneys@falconefirm.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Scott Homan as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's three unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/UUZUKEY/Freemanville_Lifehope_House_LLC__ganbke-22-59875__0001.0.pdf?mcid=tGE4TAMA
GLOBAL MERCH: Case Summary & One Unsecured Creditor
---------------------------------------------------
Debtor: Global Merch Group LLC
2419 E. 28th St.
Vernon, CA 90058
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Central District of California
Case No.: 22-16624
Judge: Hon. Julia W. Brand
Debtor's Counsel: Michael A. Bowse, Esq.
BOWSE LAW GROUP, APC
811 Wilshire Blvd., 17th Floor
Los Angeles, CA 90017
Tel: (213) 344-4700
E-mail: mbowse@bowselawgroup.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael A. Bowse, executive general
counsel.
The Debtor listed New High Ltd. as its sole unsecured creditor
holding a claim of $2,541,205.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/R3T34IY/Global_Merch_Group_LLC__cacbke-22-16624__0009.0.pdf?mcid=tGE4TAMA
GRAFTECH INTERNATIONAL: S&P Affirms 'BB-' ICR, Off Watch Negative
-----------------------------------------------------------------
S&P Global Ratings removed the ratings on GrafTech International
Ltd. from CreditWatch, where S&P placed them with negative
implications on Sept. 22, 2022. At the same time, S&P affirmed its
'BB-' issuer credit rating and its 'BB' rating on GrafTech's senior
secured debt. The '2' recovery rating on the term loan is
unchanged.
The stable outlook reflects S&P's expectation that GrafTech will
maintain debt to EBITDA between 2x to 3x over the next 12 months,
as steel markets experience a slow down which it expects could
translate into weaker graphite electrode demand and prices.
The suspension notice at Graftech's manufacturing facility in
Mexico has been lifted, alleviating initial concerns about the
impact to profits and cashflows.
S&P said, "While uncertainties remain, we believe the risk to
profits and cash flow is lower after the suspension notice at one
of GrafTech's four graphite electrode manufacturing facilities was
lifted. The restart order is contingent on GrafTech completing an
environmental impact study for the facility's operations. While
there will be a modest impact to sales of 10,000 to 12,000 metric
tons (mt) in the fourth quarter, we see a lower risk of further
disruptions at the site as a result of the study. We anticipate the
facility will return to normalized sales volumes by the second half
of 2023.
"We anticipate softer market conditions and lower average sales
prices will result in higher leverage in 2023 and 2024. However,
the company has a cushion in its credit metrics, with debt to
EBITDA of about 1.5x as of the 12-months-ended Sept. 30, 2022. We
anticipate weaker steel production globally will lead to softer
graphite electrode prices. Steel market conditions are softening
heading into 2023 as demand appears to be slowing. This is
particularly the case in Europe where elevated energy prices are
leading to increased downtime and outages at steel mills which is
building up electrode inventories and suppressing demand for
GrafTech's products. Steel market conditions in the U.S. have been
more resilient and capacity utilization has remained above other
regions and above historical averages. However, steel mill downtime
and softer steel buying patterns in recent months have driven steel
prices lower signaling potential of a softening market.
"Additionally, we see the potential for lower earnings, relative to
the last several years, as the company's exposure to graphite
electrode spot prices increases due to its ongoing transition
toward spot sales and away from the long-term agreements set during
a period of higher prices. In 2023, we anticipate about 20% of
production will be sold under LTA's compared to roughly two thirds
in 2022.
"The stable outlook reflects our expectation that GrafTech will
maintain debt to EBITDA between 2x and 3x over the next 12 months,
as steel markets experience a slowdown, resulting in weaker
graphite electrode demand and prices.
"We could lower our rating on GrafTech over the next 12 months if
its debt to EBITDA rises significantly above 3x. This could occur
if weaker market conditions pressure its operating margins,
resulting in lower realized prices for several quarters.
"We could raise our rating on GrafTech over the next 12 months if
we expect it to maintain strong cash flow and modest debt leverage
even after the majority of its major long-term contracts roll off.
Under this scenario, we would expect the company to continue
repaying its outstanding debt, such that its S&P Global
Ratings'-adjusted debt to EBITDA remains below 2x and we don't
anticipate any large increases in its leverage after 2023."
ESG credit indicators: E-3, S-2, G-2
"Environmental factors are a moderately negative consideration in
our credit rating analysis of GrafTech. GrafTech manufactures and
sells graphite electrodes used to power EAF for steel production.
Petroleum needle coke and pitch needle coke, key raw materials used
in the production of graphite electrodes, could face increasing
environmental regulations and supply interruptions due to the
decarbonization of the global economy. This environmental risk is
partially offset by the rising demand for EAF steelmaking
operations that emit approximately 25% of the CO2 of blast furnace
operations."
GWG HOLDINGS: Seeks to Hire Ernst & Young as Tax Advisor
--------------------------------------------------------
GWG Holdings, Inc. and its affiliates seek approval from the U.S.
Bankruptcy Court for the Southern District of Texas to employ Ernst
& Young, LLP as tax advisor.
The Debtors require a tax advisor to assist with analyzing the
income tax consequences of their restructuring efforts, including
the filing of their Chapter 11 cases.
Ernst & Young will be advising the Debtors regarding:
a. any documents relating to the restructuring to the extent
such documents bear on the tax consequences to the Debtors;
b. the impact of any cancellation of debt for tax purposes;
c. the post-restructuring tax attributes (including tax basis
in assets, tax basis in subsidiary stock, and net operating loss
carryovers) available under the applicable tax regulations and the
reduction of any attributes based on Debtors' operating
projections;
d. the effects of tax rules under Internal Revenue Code (IRC)
sections 382(l)(5) and (l)(6) pertaining to the post-bankruptcy net
operating loss carryovers and limitations on their utilization, and
the Debtors' ability to qualify for IRC section 382(l)(5);
e. the treatment of post-petition interest for state and
federal income tax purposes;
f. the state and federal income tax treatment of
pre-bankruptcy and post-petition restructuring costs, including
restructuring-related professional fees and other costs, the
categorization and analysis of such costs, and the technical
positions related thereto;
g. the evaluation and modeling of the tax effects of the
Debtors' liquidating, disposing of assets, merging or converting
entities as part of the restructuring;
h. the tax structuring of the proposed restructuring;
i. the state income tax treatment and planning for the
restructuring in various jurisdictions, including cancellation of
indebtedness calculation, adjustments to tax attributes and
limitations on tax attribute utilization;
j. responses to audits and notices;
k. the income tax return reporting of bankruptcy issues and
related matters (but not any return preparation, which would be
covered under a separate engagement); and
l. other state or federal income tax questions.
If requested by the Debtors, Ernst & Young will provide written
memoranda or opinions that address the tax consequences of the
restructuring.
The firm will charge these hourly fees:
Partner/Principal $1,250 per hour
Managing Director $1,150 per hour
Senior Manager $950 per hour
Manager $850 per hour
Senior $600 per hour
Staff $400 per hour
As disclosed in court filings, Ernst & Young is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Richard Fung, Esq.
Ernst & Young LLP
725 South Figueroa Street,
Los Angeles, CA 90017-5418
Phone: +1 213 977 5856
Email: ricahrd.fung@ey.com
About GWG Holdings
Headquartered in Dallas Texas, GWG Holdings, Inc. (NASDAQ: GWGH)
conducts its life insurance secondary market business through a
wholly-owned subsidiary, GWG Life, LLC, and GWG Life's wholly-owned
subsidiaries.
GWG Holdings Inc. and affiliates sought Chapter 11 bankruptcy
protection (Bankr. S.D. Texas Lead Case No. 22-90032) on April 20,
2022. In the petition filed by Murray Holland, president and chief
executive officer, GWG Holdings disclosed between $1 billion and
$10 billion in both assets and liabilities.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Mayer Brown, LLP and Jackson Walker, LLP as
bankruptcy counsels; Tran Singh, LLP as special conflicts counsel;
FTI Consulting, Inc. as financial advisor; and PJT Partners, LP as
investment banker. Donlin Recano & Company is the Debtors' notice
and claims agent.
National Founders LP, a debtor-in-possession (DIP) lender, is
represented by Michael Fishel, Esq., Matthew A. Clemente, Esq., and
William E. Curtin, Esq., at Sidley Austin, LLP.
On June 20, 2022, the Debtors appointed Jeffrey S. Stein and
Anthony R. Horton as their independent directors. The Debtors
tapped Katten Muchin Rosenman, LLP as legal counsel and Province,
LLC as financial advisor for the independent directors.
The U.S. Trustee for Region 7 appointed an official committee to
represent bondholders in the Debtors' cases. The committee tapped
Akin Gump Strauss Hauer & Feld, LLP and Porter Hedges, LLP as legal
counsels; Piper Sandler & Co. as investment banker; and
AlixPartners, LLP as financial advisor.
HOLONG CS: Gets OK to Hire NewGen Advisory as Real Estate Broker
----------------------------------------------------------------
Holong CS, LLC received approval from the U.S. Bankruptcy Court for
the Southern District of Texas to employ NewGen Advisory CA, Inc.
as its real estate broker.
The Debtor needs to market and sell its real property operating as
the Comfort Suites Bush Intercontinental Hotel located at 15555
John F. Kennedy Blvd., in Houston.
The broker will receive as compensation 3 percent of the sales
price of the property.
As disclosed in court filings, NewGen is a "disinterested person"
within the meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
David Frank Bowman
NewGen Advisory CA, Inc.
1747 E Morten Ave STE 202
Phoenix, AZ 85020
Phone: +1 602-648-2700
Email: DBowman@newgenadv.com
About Holong CS
Holong CS, LLC filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Case No. 22-32935) on Oct. 3,
2022, with between $1 million and $10 million in both assets and
liabilities. Jarrod B. Martin has been appointed as Subchapter V
trustee.
Judge Christopher M. Lopez oversees the case.
The Debtor is represented by Joyce Williams Lindauer, Esq., at
Joyce W. Lindauer Attorney, PLLC.
HOUSTON HOME: Case Summary & One Unsecured Creditor
---------------------------------------------------
Debtor: Houston Home Relief Group LLC
20910 Baronsledge Ln.
Katy, TX 77449
Business Description: The Debtor is primarily engaged in renting
and leasing real estate properties.
Chapter 11 Petition Date: December 6, 2022
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 22-33647
Debtor's Counsel: William Haddock, Esq.
PENDERGRAFT & SIMON LLP
2777 Allen Parkway Suite 800
Houston, TX 77019
Tel: 713-528-8555
Email: whaddock@pendergraftsimon.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $100,000 to $500,000
The petition was signed by Otis Igunbor as manager.
The Debtor listed Eva Dafe, CPA as its sole unsecured creditor
holding a claim of $96,741 on account of monies loaned or
advanced.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/XXAGU3Q/Houston_Home_Relief_Group_LLC__txsbke-22-33647__0001.0.pdf?mcid=tGE4TAMA
INTERNATIONAL LAND: Incurs $978K Net Loss in Third Quarter
----------------------------------------------------------
International Land Alliance, Inc. has filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $978,052 on $16,973 of revenues and lease income for
the three months ended Sept. 30, 2022, compared to a net loss of
$642,057 on $8,340 of revenues and lease income for the three
months ended Sept. 30, 2021.
For the nine months ended Sept. 30, 2022, the Company reported a
net loss of $4.33 million on $50,919 of revenues and lease income
compared to a net loss of $3.61 million on $25,899 of revenues and
lease income for the same period in 2021.
As of Sept. 30, 2022, the Company had $6.05 million in total
assets, $6.05 million in total liabilities, $293,500 in preferred
stock series B, and a total stockholders' deficit of $291,246.
International Land stated, "Management evaluated all relevant
conditions and events that are reasonably known or reasonably
knowable, in the aggregate, as of the date the consolidated
financial statements were available to be issued and determined
that substantial doubt exists about the Company's ability to
continue as a going concern. The Company's ability to continue as
a going concern is dependent on the Company's ability to generate
revenues and raise capital. The Company has faced significant
liquidity shortages as shown in the accompanying financial
statements. As of September 30, 2022, the Company's current
liabilities exceeded its current assets by approximately $5.7
million. The Company has recorded a net loss of $4.3 million for
the nine months ended September 30, 2022, has an accumulated
deficit of approximately $19.0 million as of September 30, 2022.
Net cash used in operating activities for the nine months ended
September 30, 2022, was approximately $506,000. These factors
raise substantial doubt about the Company's ability to continue as
a going concern.
"The Company continues to raise additional capital through the
issuance of debt instruments and equity to fund its ongoing
operations, which may have the effect of potentially diluting the
holdings of existing shareholders.
"Management anticipates that the Company's capital resources will
significantly improve if its plots of land gain wider market
recognition and acceptance resulting in increased plot sales and
house construction. If the Company is not successful with its
marketing efforts to increase sales, the Company will continue to
experience a shortfall in cash, and it will be necessary to obtain
funds through equity or debt financing in sufficient amounts or to
further reduce its operating expenses in a manner to avoid the need
to curtail its future operations subsequent to September 30, 2022.
The direct impact of these conditions is not fully known.
"However, there can be no assurance that the Company would be able
to secure additional funds if needed and that if such funds were
available on commercially reasonable terms or in the necessary
amounts, and whether the terms or conditions would be acceptable to
the Company. In such case, the reduction in operating expenses
might need to be substantial in order for the Company to generate
positive cash flow to sustain the operations of the Company."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1657214/000149315222033071/form10-q.htm
About International Land Alliance
International Land Alliance, Inc. -- https://ila.company -- is an
international land investment and development firm based in San
Diego, California. The Company is focused on acquiring attractive
raw land primarily in Northern Baja California, often within
driving distance from Southern California. The Company's principal
activities are purchasing properties, obtaining zoning and other
entitlements required to subdivide the properties into residential
and commercial building lots, securing financing for the purchase
of the lots, improving the properties' infrastructure and
amenities, and selling the lots to homebuyers, retirees, investors
and commercial developers.
International Land reported a net loss of $5.06 million for the
year ended Dec. 31, 2021, compared to a net loss of $2.67 million
for the year ended Dec. 31, 2020. As of June 30, 2022, the Company
had $5.88 million in total assets, $5.02 million in total
liabilities, $293,500 in preferred stock Series B, and $568,472 in
total stockholders' equity.
Irvine, California-based Haskell & White LLP, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated April 15, 2022, citing that the Company has experienced
recurring losses from operations, has limited financial resources
to repay its obligations and will require substantial new capital
to execute its business plans, which raise substantial doubt about
its ability to continue as a going concern.
ISCM HOLDINGS: Claims to be Paid From Available Cash and Income
---------------------------------------------------------------
ISCM Holdings, LLC, and Inpatient Care Management Company, LLC,
submitted a Disclosure Statement for Joint Plan of Reorganization.
The Debtors shall continue as the Reorganized Debtors, with ISCM
acting as a holding company for Inpatient Care, and Inpatient Care
continuing to provide management services to the Managed Practices.
The Plan provides for the payment of the Secured Claims of Zions
over time based on the value of its collateral of both the Debtors
and of the Managed Practices, and for an injunction in favor of the
Managed Practices during the plan payment term as necessary for the
successful reorganization of the Debtors. The Plan provides for
distributions to holders of certain Unsecured Claims from the
proceeds of the New Value Contribution, to be made in exchange for
the Interests in the Reorganized Debtor. The Plan provides for the
issuance of the Reorganized Debtors Interests in exchange for the
New Value Contribution, and for the cancellation of existing
Interests in ISCM as part of the reorganization.
Under the Plan, holders of Allowed Class 4 Unsecured Claims will be
paid on account of their Allowed Unsecured Claims their pro rata
share of $50,000, equal to the amount of the New Value Contribution
less any amounts necessary to satisfy the amounts of Allowed
Professional Administrative Expense Claims. Payments to the Holders
of Allowed Class 4 Unsecured Claims shall be made as soon as
practicable after the occurrence of the Effective Date and shall be
made in accordance with Article 9 of the Plan. Class 4 is
impaired.
The Plan provides for distributions to Holders of Allowed Claims
from available Cash, proceeds from future operations of the Managed
Practices via the Debtors through their management fee arrangements
with the Managed Practices and any similar arrangements with other
entities in the future, and the proceeds of the New Value
Contribution. Creditors will receive payment in the manner set
forth in the Plan.
Attorneys for the Debtors:
Daniel R. Fogarty, Esq.
STICHTER, RIEDEL, BLAIN & POSTLER, P.A.
110 East Madison Street, Suite 200
Tampa, FL 33602
Telephone: (813) 229-0144
E-mail: dfogarty@srbp.com
A copy of the Disclosure Statement dated Nov. 18, 2022, is
available at https://bit.ly/3tQO08d from PacerMonitor.com.
About ISCM Holdings
ISCM Holdings, LLC's wholly owned subsidiary, InPatient Care
Management Company, LLC, is a physician management company that
provides management and administrative services including billing
and collection services, financial management services, contracting
services, and day-to-day business operating services for surgical
practices in the medical staffing industry. Management provides
these services to a number of physician practices in the medical
staffing industry, including The Surgicalist Group, PLLC and
others, in exchange for a management fee.
ISCM Holdings and InPatient sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. M.D. Fla. Lead Case No. 22-03601)
on Sept. 1, 2022. In the petition signed by Mit Desai, MD, chief
executive officer, ISCM Holdings disclosed up to $10 million in
both assets and liabilities.
Judge Roberta A. Colton oversees the cases.
Daniel R. Fogarty, Esq., at Stichter, Riedel, Blain & Postler, PA
is the Debtors' counsel.
IVS COMM: Seeks Access to $117,409 of Cash Collateral
-----------------------------------------------------
IVS Comm, Inc. asks the U.S. Bankruptcy Court for the Eastern
District of Michigan, Southern Division, for authority to use cash
collateral on an expedited basis and provide adequate protection.
The Debtor requires cash collateral to pay expenses to maintain
operations, including satisfying payroll and related taxes.
The Debtor anticipates it may need as much $117,409 per month to
operate its business, plus cost of sales.
There are four secured creditors that claim to have an interest in
cash collateral which are Keybank, Breakout Capital, Simple
Equities, LLC, and Spark Funding, LLC.
Pursuant to a Note and Security Agreement dated February 2017 and a
UCC lien filed by Keybank National Association on February 17, 2017
and timely renewed, Keybank claims a lien on all of the Debtor's
assets. Keybank is owed approximately $135,982 pursuant to a term
note in the amount of $36,288 and a line of credit note in the
amount of $99,288, both of which are subject to the Security
Agreement and lien. On information, the non-default interest rate
on both the line of credit and note are 5.2%. Keybank is fully
secured.
Pursuant to a Business Note and Security Agreement dated December
18, 2020, and a UCC lien filed by Breakout Capital on December 21,
2020, Breakout Capital claims a lien on personal property, accounts
and all cash and noncash proceeds. Breakout Capital is owed
approximately $135,982 pursuant to the note in the amount which are
subject to the Security Agreement and lien. Breakout Capital
appears be fully secured. Breakout Capital has liquidated its note
to the Debtor into a judgment, and the judgment bears an interest
rate of 6 percent.
Pursuant to a Future Receivables Sale and Purchase Agreement dated
April 8, 2021 and a UCC lien filed by Simple Equities, LLC on
February 1, 2021, Simple Equities claims a lien on all assets,
proceeds and products. Simple Equities is owed approximately
$90,500 pursuant to the Agreement in the amount which are subject
to the Security Agreement and lien. Simple Equities' default
interest rate on unrecovered Receivables is 9%. Simple Equities'
claim is partially secured in the amount of $28,950.
Pursuant to a Loan and Security Agreement dated May 2021 and a UCC
lien filed by Spark Funding, LLC on May 4,2021, Spark Funding
claims a lien on all assets, proceeds and products. Spark Funding
is owed approximately $66,856 pursuant to the Agreement in the
amount which are subject to the Security Agreement and lien. Spark
Funding's claim is not secured by any value of the Debtor's
interest in properly, and therefore is fully unsecured.
The Debtor offers the secured creditors these forms of adequate
protection:
a. Post-petition security interest and liens to the same
extent and with the same priority that they had by virtue of the
pre-petition perfected security interests as of the Petition Date;
b. Fully insured collateral;
c. Payment of post-petition interest on the amount of each
creditor's interest in the Estate's interest in property; and
d. Maintenance of expenditures within approved monthly
budget.
The Debtor estimates adequate protection payments as follows:
1. Key Bank: $135,982 @ 5.2%: $589.26 monthly;
2. Breakout Capital: $146,789.26 @ 6% $731.13 monthly; and
3. Simple Equities, LLC: $28,467.64 @ 9% $213.51 monthly.
A copy of the motion is available at https://bit.ly/3hayZeK from
PacerMonitor.com.
About IVS Comm, Inc.
IVS Comm is a provider of cloud communication services for small to
medium size companies that need the functionality and quality
offered to large companies at an affordable cost.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Mich. Case No. 22-49513) on December
5, 2022. In the petition signed by Richard Marc Browning,
president, the Debtor disclosed up to $1 million in assets and up
to $10 million in liabilities.
Donald C. Darnell, Esq., at Darnell Law Office, is the Debtor's
counsel.
JCMC WEST: January 2023 Foreclosure Sale Set
--------------------------------------------
Secured party Penn Hotel Junior LLC will offer for sale, at public
auction, all rights, title and interests of JCMC West 34 LLC, as
pledgor, in hand to (a) 100% of the limited liability membership
interests in JCMC West 34 Mezz LLC, and (b) all other collateral
pledged pursuant to a certain amended and restated pledged and
security agreement (junior mezzanine) dated Jan. 28, 2020, by
pledgor to secured party (as successor-by-assignment to Arbor
Realty Participation LLC ("prior pledgor")), pursuant to which the
pledgor pledged to secured party, among other things, all of the
pledgor's rights, title and interests in, to and under 100% of the
limited liability company membership interests in the Company.
The membership interests and the additional collateral are
collectively referred to as "collateral".
The public auction will be held on Jan. 28, 2023, at 1:00 p.m. (New
York Time) (i) in person at the offices of counsel for the secured
party, Katsky Korins LLP, 605 Third Avenue, 17th Floor, New York,
New York 10158, Attn: Steven H. Newman, Esq.; and (ii) by remote
auction via Cisco WebEx Remote Meeting, meeting link:
https://bit.ly/34thUCC2, Access Code 2566 290 0364, Password Pq9GW
(77949 from phones and video systems). The sale will be conducted
by Matthew D. Mannion.
The public sale of the collateral will be subject to the further
terms and conditions set forth in the "terms of sale", which are
available by contacting the broker for secured party, Brett
Rosenberg, managing director, Jones Lang LaSalle Americas Inc, 330
Madison Avenue, New York, New York 10017, Tel: (212) 812-5926,
brett.rosenberg@jll.com.
Parties interested in bidding must contact the broker well in
advance of the auction to receive the terms of sale, bidding
instruction ,and required deposit and registration information.
Parties who do not qualify to bid prior to 10:00 a.m. New York Time
on Jan. 11, 2023, and deliver a good faith deposit of $200,000 by
10:00 a.m. New York Time on Jan. 17, 2023, will forfeit their
opportunity to register and may be barred from bidding.
KISSIMMEE CONDOS: To Seek Plan Confirmation on Dec. 14, 2022
------------------------------------------------------------
Judge Grace E. Robson has entered an order conditionally approving
the Disclosure Statement of Kissimmee Condos Partnership, LLC.
A final hearing on the Disclosure Statement and confirmation of the
Plan will be held on Dec. 14, 2022, at 2:00 p.m. in Courtroom D,
Sixth Floor, of the United States Bankruptcy Court, 400 West
Washington Street, Orlando, Florida 32801.
Creditors and other parties in interest must file with the clerk
their written acceptances or rejections of the Plan (ballots) no
later than 7 days before the date of the Confirmation Hearing.
Any party objecting to the Disclosure Statement or confirmation of
the Plan must file and serve its objection no later than 7 days
before the date of the Confirmation Hearing.
In accordance with Local Bankruptcy Rule 3018-1, the Debtor's
counsel must file a ballot tabulation no later than 2 days before
the date of the Confirmation Hearing.
Amended Plan & Disclosures
According to the Amended Disclosure Statement, the Plan provides
for payment of Allowed Secured Claims in Classes 1 through 3 in
full, over time and under the terms as outlined in Article V.
Allowed Unsecured Claims in Class 4 shall be paid pro rata over
time after the secured creditors upon realization of income from
the condominium unit sales. The Allowed Class 5 Claim will be paid
based upon the resolution of a disputed equitable lien. The Allowed
Interests in Class 6 will carry forth after the Effective Date.
The Debtor believes the Plan provides the best means currently
available for its emergence from Chapter 11 and the best recoveries
possible for holders of claims and interests, and thus strongly
recommends Creditors vote to accept the Plan.
Under the Plan, holders of Class 4 Allowed General Unsecured Claims
will receive a pro rata distribution of the Net Proceeds after
Classes 1 through 3 are satisfied. The Debtor anticipates
sufficient funds to satisfy Class 4 upon full completion of the
Project and sale of the condominium units. In the event of a
conversion and liquidation, there would be likely no distribution
to Holders of Allowed Class 4 Claims as the debt encumbering assets
exceeds the value of such assets. Class 4 is impaired.
The Plan contemplates the Debtor will utilize the Exit Loan
proceeds to complete the Project development. According to the
Debtor's projections, the successful completion of the Project
should yield a sum available for creditors between $5,100,000 to
$8,300,000 depending upon the average selling price of the units.
Accounting for construction and selling costs, even a conservative
price of $309,000 per unit yields sufficient revenue to pay all
allowed claims while generating revenue beyond existing
liabilities.
The Debtor is not generating significant funds from operations
through the Effective Date; the Debtor's proceeds from the Exit
Loan will be utilized for payment of Administrative Expenses.
Counsel for the Debtor:
R. Scott Shuker, Esq.
Mariane L. Dorris, Esq.
SHUKER & DORRIS, P.A.
121 S. Orange Avenue, Suite 1120
Orlando, FL 32801
A copy of the Order dated Nov. 18, 2022, is available at
https://bit.ly/3USSZkU from PacerMonitor.com.
A copy of the Disclosure Statement dated Nov. 18, 2022, is
available at https://bit.ly/3gsjkqO from PacerMonitor.com.
About Kissimmee Condos Partnership
Kissimmee Condos Partnership, LLC, is a Florida limited liability
company formed on December 10, 2016, to hold and develop two
parcels of real property in Osceola County, Florida. Prepetition
Kissimmee Condos developed and initiated the Project, which
includes the Soho at Lakeside and Tribeca at Lakeside, which are
both residential townhome developments to be built over several
phases.
The SoHo Condos feature modern three-bedroom two and a half bath
townhomes with early development starting prices around $250,000
with numerous options to upgrade and customize the living spaces
including luxury appliances and high-end kitchen details. The last
unit sold for $304,900, and the highest sale price to date was
$325,900. The Tribeca Condos is built on Kissimmee Condos' second
real property parcel utilizing the same three-bedroom floor plan
and opportunities for customization.
Kissimmee Condos sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-00994) on March 21,
2022.
In the petition signed by Ricardo Benzecry, manager, the Debtor
disclosed up to $10 million in both assets and liabilities.
R. Scott Shuker, Esq., at Shuker and Dorris, PA is the Debtor's
counsel.
KLAUSNER HOLDING: Case Summary & Two Unsecured Creditors
--------------------------------------------------------
Debtor: Klausner Holding USA, Inc.
17152 46th Trace
Live Oak, FL 32060
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Middle District of Florida
Case No.: 22-02444
Debtor's Counsel: Bryan K. Mickler, Esq.
LAW OFFICES OF MICKLER & MICKLER, LLP
5452 Arlington Expy.
Jacksonville, FL 32211
Email: bkmickler@planlaw.com
Total Assets: $0
Total Debts: $3,077,008
The petition was signed by Leopold Stephan as CEO/CFO/SEC.
A full-text copy of the petition containg, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/YWIH2II/Klausner_Holding_USA_Inc__flmbke-22-02444__0001.0.pdf?mcid=tGE4TAMA
LEADING LIFE: Gets OK to Hire Omni as Claims and Noticing Agent
---------------------------------------------------------------
Leading Life Senior Living, Inc. received approval from the U.S.
Bankruptcy Court for the Northern District of Texas to hire Omni
Agent Solutions as claims and noticing agent.
Omni Agent 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 Leading Life Senior Living, Inc.
The firm will also provide bankruptcy administrative services.
The Debtor provided the firm a $5,000 retainer.
Paul Deutch, the executive vice president of Omni Agent, disclosed
in court filings 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:
Paul Deutch
Omni Agent Solutions, Inc.
1120 Avenue of the Americas, 4th Floor
New York, NY 10036
Tel: 212-302-3580
Fax: 212-302-3820
About Leading Life Senior Living
Leading Life Senior Living, Inc. owns two municipal-bond financed
memory care homes in Oklahoma.
Leading Life Senior Living filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Texas Case No.
22-42784) on Nov. 18, 2022. In the petition filed by its chief
restructuring officer, Joseph V. Pegnia of GlassRatner Advisory &
Capital Group, LLC, the Debtor reported between $10 million and $50
million in both assets and liabilities.
The Debtor is represented by Rachael L. Smiley, Esq., at Ferguson
Braswell Fraser Kubasta, PC.
LEGACY LOFTS: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Legacy Lofts on St. Mary's, LLC
1827 N. St. Mary's St.
San Antonio, TX 78212
Business Description: The Debtor is a Single Asset Real Estate (as
defined in 11 U.S.C. Section 101(51B)).
Chapter 11 Petition Date: December 5, 2022
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 22-51377
Judge: Hon. Craig A. Gargotta
Debtor's Counsel: Allen M. DeBard, Esq.
LANGLEY & BANACK, INC.
745 E Mulberry Ave. Suite 700
San Antonio, TX 78212
Tel: (210) 736-6600
Fax: (210) 735-6889
Email: adebard@langleybanack.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Robert T. Melvin as managing member &
CEO.
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/PDW2UEQ/Legacy_Lofts_on_St_Marys_LLC__txwbke-22-51377__0001.0.pdf?mcid=tGE4TAMA
LOUIS CAPRA: McCormick's Summary Judgment, Judicial Sale Affirmed
-----------------------------------------------------------------
In the appealed case titled McCormick 106, LLC, Plaintiff-Appellee,
v. LOUIS CAPRA; LOUIS CAPRA & ASSOCIATES, LLC; THE ALPINE
CONDOMINIUM OWNER'S ASSOCIATION; MIDWEST COMMUNITY BANK; CITY OF
ROCKFORD; ROCKFORD STOP-N-GO; UNKNOWN OWNERS and NON-RECORD
CLAIMANTS, Defendants, (Louis Capra and Louis Capra & Associates,
LLC, Defendants-Appellants), Case No. 2-21-0166, (Ill. App. Ct.),
the Appellate Court of Illinois affirms the trial court's (1) order
placing McCormick 106, LLC (the mortgagee) in possession of the
real property and appointing a receiver; (2) order denying Capra's
request to remove the receiver and dismissing his third-party
complaint against the receiver; (3) order granting McCormick
summary judgment; and (4) order confirming the judicial sale of the
remaining properties.
In 2008, Capra executed a real estate mortgage contract with
Northwest Bank of Rockford to purchase six parcels of
nonresidential real property, which were secured by a blanket
mortgage. McCormick acquired the contract in May 2018 and filed a
complaint for foreclosure in March 2019. The foreclosure complaint
listed five properties (the sixth was sold prior to the filing of
the complaint): (1) 3208 South Alpine Road, (2) 5811-5861 Forest
Hills Road, (3) 3392-3430 Lonergan Drive, (4) 4815 Creekview Road,
and (5) 4830 and 4836 Creekview Road.
In this mortgage foreclosure proceeding, the mortgagors, Louis
Capra and Louis Capra & Associates, LLC, appeal numerous rulings
entered in the trial court.
McCormick filed an amended petition to appoint receiver, asserting
that it was entitled to an order appointing a receiver because
Capra had failed to make the payment due on the date the notes
matured. On June 3, 2019, the trial court entered an order
appointing a receiver -- Eric Janssen of Chicago Real Estate
Resources -- concluding that McCormick had met its burden of
showing a reasonable probability of prevailing at a final hearing
of the cause and that Capra failed to show good cause as to why the
receiver should not be appointed.
Capra then filed a motion to remove the receiver on May 26, 2020,
and also sought leave to file a third-party complaint against him.
Capra alleged the receiver violated his duties by: (1) listing
McCormick as a "client" in his Broker Opinion of Value reports, (2)
failing to provide reports to Capra prior to February 2020, (3)
intentionally failing to actively market the properties between
July 2019 and March 31, 2020, resulting in three additional
vacancies in the Forest Hills property and additional vacancy in
the Lonergan property, (4) failing to respond to multiple inquiries
from a real estate agent about the Lonergan property, and (5)
seeking input from McCormick regarding, inter alia, insurance
coverage and when to market the properties.
On Oct. 26, 2020, the trial court entered a written order granting
the receiver's motion to dismiss the third-party complaint and
denying Capra's motion to remove the receiver. The court found that
Capra's allegations failed to show that the receiver was not acting
prudently or that he was not following the court's orders, thus
Capra did not show good cause for removal. As for the third-party
complaint, the court concluded that Capra failed to state a cause
of action in that the Illinois Mortgage Foreclosure Law does not
provide for direct suits by mortgagors against receivers.
Finally, a judicial sale for the South Alpine and Forest Hills
properties was held on Oct. 6, 2020. McCormick was the highest
bidder for each property. Consequently, McCormick filed a motion
requesting the trial court to confirm the judicial sales and enter
a deficiency judgment against Capra.
In his response, Capra highlighted a number of email exchanges
between the receiver and Cathey -- an agent of McCormick. According
to Capra, these correspondences showed that McCormick instructed
the receiver not to lease the subject properties purposely to
devalue them, to deprive him of rental income, and to limit the
pool of potential purchasers to cash purchasers, thus reducing the
fair, competitive bidding and maximizing the potential deficiency
judgment it could collect against Capra.
On Feb. 26, 2021, the trial court confirmed the judicial sales and
entered a deficiency judgment against Capra for $2.52 million. The
trial court rejected Capra's request to deny confirmation of the
judicial sale, finding "absolutely no evidence that the Plaintiffs
deliberately instructed the receiver not to lease at all" and
characterized the appraisal valuations as "hypothetical," noting
that market conditions had changed since the appraisal.
Capra did not dispute McCormick's claim that Capra defaulted on the
notes by failing to make payments on their maturity dates. The
claim was supported by copies of the promissory notes attached to
the complaint, which matured on Jan. 5, 2019; and by the verified
petition to appoint receiver, which asserted that, at the time of
the default, Capra owed approximately $4.7 million in principal and
failed to pay the loan in full. Rather, Capra filed affirmative
defenses that he asserts were sufficient to establish that
McCormick materially breached the mortgage contract, thus
precluding foreclosure. Instead, Capra asserted that McCormick
misused upwards of $200,000 in funds that were not applied to
indebtedness and caused damages in excess of $300,000.
In this appeal, Capra complains that (1) the trial court erred in
placing McCormick in possession of the real estate and appointing a
receiver, (2) the trial court erred in denying Capra's motion to
remove the receiver and granting the receiver's motion to dismiss
Capra's third-party complaint, (3) the trial court erred in
granting McCormick's motion for summary judgment, and (4) the trial
court abused its discretion when it confirmed the judicial sales of
the remaining properties.
The Court finds that Capra defaulted on the mortgage contract by
failing to make final payment on due date. The Court finds and
concludes that Capra's allegations contained in his affirmative
defenses were insufficient to show that McCormick materially
breached the mortgage contract in that no reasonable person would
conclude the alleged breaches were material. Accordingly, the trial
court did not err when it placed McCormick in possession of the
real estate, appointed a receiver, and granted McCormick's motion
for summary judgment -- over Capra's objection.
Viewing the documents on file liberally in Capra's favor, the Court
further concludes that Capra was on a trajectory to default
regardless of McCormick's alleged breaches. The Court also finds
that at the time of default, Capra still owed $2.6 million and $2.1
million in principal, respectively, plus accrued interest and other
costs, but tendered no payment on the maturity date of the notes.
Thus, the trial court did not err when it determined that Capra
raised no genuine issue of material fact as to whether McCormick
materially breached the contract, and that McCormick was entitled
to judgment as a matter of law.
Moreover, the Court points out that a receiver is an officer of the
court who secures and preserves the property for the benefit of all
concerned -- the receiver did not owe Capra a fiduciary duty. At
any rate, Capra does not support his implied contention that more
vacancies necessarily reduces the value or desirability of
nonresidential real property, which is sometimes purchased for
redevelopment. Hence, the trial court did not abuse its discretion
when it confirmed the judicial sale of the remaining properties.
A full-text copy of the Order dated Nov. 23, 2022, is available at
https://tinyurl.com/3zbzc9ky from Leagle.com.
The case is In re Louis John Capra (Bankr. N.D. Ill. Case No.
19-15935).
MACON DOOR: Lender Seeks to Prohibit Cash Collateral Access
-----------------------------------------------------------
Daniel R. Pike asks the U.S. Bankruptcy Court for the Middle
District of Georgia to prohibit Macon Door & Hardware, Inc. from
using Employee Retention Tax Credits that the Debtor collects.
As of the bankruptcy filing date, the Debtor was indebted to Pike,
as assignee of Capital City Bank, in the approximate amount of $1.8
million pursuant to seven separate promissory notes, including a
promissory note dated August 26, 2020, in the original principal
amount of $1.350 million, which note was modified by a change in
terms agreement executed February 11, 2022.
On August 26, 2020, the Debtor executed a Commercial Security
securing the Note granting Capital City Bank a security interest
in, among other things, general intangibles, and proceeds thereof.
To perfect its security interest in its collateral, Capital City
Bank filed a UCC Financing Statement, filed March 20, 2009, File
No. 11-09-0460, Bibb County, Georgia Records, as continued by UCC
Financing Statement Amendment filed on February 7, 2014, File No.
11-14-000205, said records, as further continued by UCC Financing
Statement Amendment filed December 12, 2018, File No. 11-18-003186,
and assigned to Pike by UCC Financing Statement filed October 10,
2022, File No. 11-22-002495, said records.
On June 2, 2022, Capital City Bank assigned the Note to Pike. As
of the petition date, the Debtor owed Pike $1.364 million on the
Note.
The Debtor is owed approximately $365,000 in prepetition tax
refunds generated by Employee Retention Tax Credits, which are
refundable tax credits payable under the CARES Act to eligible
employers whose businesses have been financially impacted by
COVID-19.
Pike has a lien on general intangibles, which courts have
consistently held to include tax refunds. The Debtor has not yet
received its ERTC payment.
Pike has not consented to the Debtor's use of the ERTCs.
The Debtor has not provided Pike with adequate protection of Pike's
security interest in the ERTCs. Further, it is not possible for the
Debtor to provide adequate protection if the Debtor uses the ERTCs
in the operation of its business.
A copy of the motion is available at https://bit.ly/3Healor from
PacerMonitor.com.
About Macon Door & Hardware
Macon Door & Hardware Inc. -- https://www.macondoor.com/ -- is a
distributor of division 8 & 10 materials in the Middle Georgia
area.
Macon Door & Hardware filed a petition for relief under Subchapter
V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Ga. Case
No.22-51044) on Sept. 9, 2022. In the petition filed by Daniel L.
Pike, as president, the Debtor reported assets and liabilities
between $1 million and $10 million.
Judge Austin E. Carter oversees the case.
Robert M. Matson has been appointed as Subchapter V trustee.
The Debtor is represented by Ward Stone, Jr., Esq., at Stone &
Baxter, LLP.
MADISON IAQ: S&P Cuts ICR to 'B-' on High Leverage, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings downgraded its ratings one notch, including its
issuer credit rating to 'B-' from 'B' on U.S.-based indoor air
quality solutions provider Madison IAQ LLC (MIAQ).
The stable outlook reflects S&P's expectation that MIAQ will be
able to partially limit the decline in its EBITDA over the next
year through pricing, productivity improvements, and some lower
input costs, and that it will continue to generate good free
operating cash flow (FOCF).
S&P said, "We believe the weakening macro environment will reduce
MIAQ's revenue and EBITDA in 2023 and prevent it from reducing its
high S&P Global Ratings-adjusted leverage. Our forecast that the
company's S&P Global Ratings-adjusted leverage will remain in the
high-7x area through 2023 incorporates our expectation its revenue
and EBITDA will decline modestly in 2023 because its volumes will
be negatively affected by softening demand in the residential and
non-residential construction markets. Residential housing accounts
for about a third of MIAQ's revenue base and it derives a large
portion of its revenue from new construction (both residential and
non-residential).
"We forecast the company's revenue will decline by the low- to
mid-single digit percent area in 2023 due to lower volumes for many
of its products (such as kitchen range hoods, ventilation, and
bathroom fans) that target the residential housing market and some
of its products aimed at the non-residential construction market.
We believe the reduction in the demand for its product categories
tied to new construction will be at least partially offset by some
continued demand for repair and remodel (R&R) activity and good
continued demand for its products targeting data centers, health
care, and some government applications because we view these end
markets as either expanding or less cyclical.
"Notwithstanding our forecast for a decline in its revenue in 2023,
we anticipate the drop in the company's EBTIDA may be limited. We
believe MIAQ will be successful in mitigating some of the reduction
in its EBITDA from its declining volumes. Specifically, we forecast
its S&P Global Ratings-adjusted EBITDA will be flat to down
modestly in 2023 and that its S&P Global Ratings-adjusted EBITDA
margin will remain stable. This incorporates our view that in 2023
MIAQ will realize the benefits from the manufacturing productivity
improvements it completed in 2022 and benefit from the cost-cutting
actions it exercised over the last few quarters. Furthermore, while
we expect the cost of some of the company's inputs will come down
in 2023, we believe it will maintain its pricing and continue to be
successful in passing through any elevated input costs to its
customers.
"While we forecast the company's S&P Global Ratings-adjusted
leverage will remain high, we expect it will continue to generate
good levels of FOCF and maintain excess cash. We forecast MIAQ's
FOCF generation will be moderately positive in 2022 and improve
further through 2023. While we expect the company's S&P Global
Ratings-adjusted EBITDA will decline in 2023, our forecast for its
FOCF incorporates our view that its working capital usage will
improve over the next few quarters and potentially become a modest
source of cash by the end of 2023. The company's working capital
was a material use of cash in the first three quarters of 2022 and
we believe this will improve as it reduces its receivables and
sells through some of its inventory on hand.
"Furthermore, we believe MIAQ's FOCF generation will be more than
sufficient to cover the required amortization under its term loan,
which will translate to excess cash on hand. While we have not
incorporated material acquisitions in our forecast, we believe the
company will continue to undertake modest bolt-on acquisitions,
which we anticipate it will fund with cash on hand.
"The stable outlook reflects our expectation that MIAQ will be able
to partially limit the decline in its EBITDA over the next year,
through pricing and productivity improvements and some lower input
costs, and that it will continue to generate good levels of free
operating cash flow (FOCF).
"We could lower our ratings on MIAQ if its EBITDA declines
significantly more than we currently forecast, resulting in minimal
FOCF generation, strained liquidity, and EBITDA interest coverage
trending toward 1x, or if we view its capital structure as
unsustainable. We could also lower our ratings if the pricing on
MIAQ's securities weakens to to the point that we view a distressed
exchange as likely.
"This scenario would likely occur if the demand for MIAQ's products
is materially weaker than we expect, the company cannot maintain
its pricing or continue to pass through elevated costs to its
customers, or it pursues acquisitions or shareholder returns that
increase its S&P Global Ratings-adjusted leverage to a level we do
not believe its EBITDA base can support over the long run.
"We could raise our ratings on MIAQ if we expect it will maintain
S&P Global Ratings-adjusted leverage of under 7x. This could occur
if its EBITDA over the next year outperforms our forecast by more
than 15%, which would likely occur due to higher-than-anticipated
demand."
ESG credit factors: E-3, S-2, G-2
Environmental factors are a moderately negative consideration in
our credit rating analysis of Madison IAQ LLC. While this is
typical for building materials and components manufacturers, S&P
views such risks as somewhat less significant for the company
because its focuses on indoor air quality solutions.
MAGNOLIA OFFICE: Unsecureds to Get $150 per Month for 6 Months
--------------------------------------------------------------
Magnolia Office Investments, LLC, filed with the U.S. Bankruptcy
Court for the Southern District of Florida a First Amended
Disclosure Statement for Plan of Liquidation dated December 1,
2022.
The Debtor, Magnolia Office Investments, LLC, owns an office
building which it leases to various tenants, primarily (but not
limited to) governmental agencies in Tallahassee, Florida.
Prior to the Debtor filing for Chapter 11 bankruptcy protection on
May 23, 2022 the Debtor operated this commercial office building
which it was also renovating to make it more attractive to
prospective tenants. While it worked to replace that tenant, two
lawsuits were filed against the company and building, which put the
building into a posture where certain tenants could not consider
the building due to compliance concerns, those being that they
could not enter into leases if a building was in foreclosure or
bankruptcy. These lease issues caused a strain on cash flow which
in turn impacted the Debtor's ability to service its secured debt,
thus requiring the filing of this case.
Class 1 is the Allowed Secured Claim of PS Funding, Inc. On the
Effective Date, the Class 1 Claim secured by the Debtor's
commercial office building (the sole real estate asset in this
case) shall continue to be paid, starting on the Effective Date,
$21,000.00 on the first of each month for 6 months including 10.0%
interest. No sale restrictions will be placed upon Anand Patel or
any entity he is involved in with respect to making a bid on the
Property. Furthermore, by agreement Anand Patel will have no
further liability to the Class 1 Creditor so long as the property
is sold for $3.6 Million or more.
Class 2 is the Claim of Swift Financial. Unless otherwise agreed to
by the Debtor and Swift Financial, on the Effective Date, the Class
2 Claim in the amount of $27,884.62, which is 100% undersecured by
the Debtor's assets as this lien, to the extent it ever existed, is
junior to that of the Class 1 claimant, PS Lending, Inc. The
entirety of Class 2 claims, which shall be subject to a
contemporaneously filed motion and objection, shall be paid, to the
extent allowed, as a part of the General Unsecured Class, Class 7.
The Class 2 Claim is impaired.
Class 3 is the Claims of Johnny Blue Craig, PA. On the Effective
Date, the Class 3 Claims in the amount of $197,552.37, and
$67,916.51 will receive relief from the automatic stay to prosecute
their rights, if any, in the state court, and the Debtor will also
have stay relief to prosecute its claims against Johnny Blue Craig,
PA in the state court as well. The entirety of Class 3 claims,
which shall be subject to a contemporaneously filed motion to value
and to bifurcate, shall be paid, to the extent allowed, as a part
of the General Unsecured Class, Class 7, once the state court has
adjudicated its rights to final judgment.
Class 4 is the Claim of Children's Forum. On the Effective Date,
the Class 4 Claim in the amount of $49,980.00, which is 100%
undersecured by the Debtor's assets as this lien, to the extent it
ever existed, is junior to that of the Class 1 claimant, PS
Lending, Inc. The entirety of Class 4 claims, which shall be
subject to a contemporaneously filed motion to value and shall be
paid, to the extent allowed, as a part of the General Unsecured
Class, Class 7.
Class 5 consists of the Allowed Taxing Authority Claims of the Leon
County Tax Collector (LCTC). Unless otherwise agreed to by the
Debtor and the LCTC on the Effective Date, Class 5 shall receive
$37,140.28, paid as a part of any closing (whether refinance, sale
or auction). On the Effective Date, all post-petition Allowed
Taxing Authority Claims are current and will be paid as they come
due via proceeds from refinance, sale or auction.
Class 6 consists of the Allowed Taxing Authority Claims of Keys
Funding, LLC. On the Effective Date, Class 6 shall receive
$124,229.30, paid as a part of any closing (whether refinance or
sale) as described in Class 1. On the Effective Date, all the
Allowed Taxing Authority Claims are current and will be paid as
they come due via refinance, sale or auction.
Class 7 consists of the Allowed General Unsecured claims. On the
Effective Date, holder of a Class 7 Claim will be paid a pro rata
share of $150.00 per month on their allowed claim in the event the
Property is refinanced, starting in Month 1. Class 7 Claims total
$13,832.51 (after the projected objections analysis and results),
which will be paid a total of $900.00 payable $150.00 monthly
beginning in Month 1 through Month 6 of the Plan with a final
payment, to the extent the sale proceeds permit the same after
payment of all superseding classes and administrative claims, of
the entire allowed claims ($13,832.51 less payments made) to be
made upon the sale or auction of the Property described in Class 1,
or in the 7th month.
The Debtor is committing its disposable income to the Plan over a 6
month period. In the event the holder of an allowed unsecured claim
objects to confirmation of the plan, the value of the property to
be distributed under the plan will not be less than the projected
disposable income of the debtor to be received during the 6 month
period beginning on the date that the first payment is due under
the plan, or during the period for which the plan provides
payments, whichever is longer. In the event any secured or
administrative claims are paid in full prior to month 6, payment in
the amount of the secured or administrative claim will be paid to
general unsecured commencing the month after such full payment and
in an amount equaling at least 90% of the prior payment made to
such secured or administrative claimant.
Class 8 consists of equity interest holders. The equity interest
holder of the Debtor is Anand Patel. The Plan does not violate the
Absolute Priority Rule since all allowed creditors are being paid
100% plus reasonable interest on their claims. No plan payments
will be made to this Class which will retain its interests except
in the event of sale or auction.
Funds to be used to make cash payments under the Plan shall derive
from income of the Debtor.
A full-text copy of the First Amended Disclosure Statement dated
December 1, 2022, is available at https://bit.ly/3VE7Ik0 from
PacerMonitor.com at no charge.
Attorneys for Debtor:
David Lloyd Merrill, Esq.
The Associates
2401 PGA Boulevard 280M
Palm Beach Gardens, FL 33410
Tel: 561-877-1111
Email: dlm@theassociates.com
About Magnolia Office Investments
Magnolia Office Investments, LLC, is a single asset real estate (as
defined in 11 U.S.C. Sec. 101(51B)). It owns the commercial office
building located at 1211 Governors Square Blvd., Tallahassee, Fla.,
which is valued at $5.5 million.
Magnolia Office Investments sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-14044) on May 24,
2022. In the petition signed by Anand Patel, as managing member,
Magnolia Office Investments listed as much as $10 million in both
assets and liabilities.
The case is assigned to Judge Erik P. Kimball.
David L. Merrill, Esq., at The Associates is the Debtor's legal
counsel.
MANITOBA CLINIC: Gets CCAA Stay of Proceedings Until February 2023
------------------------------------------------------------------
Manitoba Clinic Medical Corporation and The Manitoba Clinic Holding
Co. Ltd. commenced proceedings under the Companies' Creditors
Arrangement Act.
The Court of King's Bench of Manitoba, in Canada, signed on Nov.
30, 2022, an initial order granting a stay of proceedings and
approving the appointment of Alvarez & Marsal Canada Inc. as
monitor ("Monitor"), with enhanced powers, of the business and
financial affairs of the Companies.
The Amended and Restated Initial Order signed by the Honourable Mr.
Justice Kroft on Dec. 1, 2022, provides for, among other things, an
extension of the stay of proceedings to Feb. 24, 2023 ("Extended
Stay Period"). The stay period may be further extended by the
Court from time to time.
The Companies remain in control of their operations and will
continue to comply with all regulatory requirements associated with
their businesses, and in accordance with the Amended and Restated
Initial Order.
During the Extended Stay Period, parties are prohibited from
commencing or continuing any legal proceeding or enforcement,
action against the Companies and all rights and remedies of any
party against or in respect of the Companies or their assets are
stayed and suspended except in accordance with the Amended and
Restated Initial Order, or with the written consent of the
Companies and the Monitor, or with leave of the Court.
For further information, consult the Monitor's Website at
https://www.alvarezandmarsal.com/manitobaclinic
Should you wish to speak to a representative of the Monitor,
contact:
Stephen Oosterbaan
Alvarez & Marsal Canada Inc.
Bow Valley Square 4
Suite 1110
250 - 6th Avenue SW
Calgary, Alberta T2P 3H7
Tel: (403) 538-7527
(403) 538-7555
Fax: (403) 538-7551
Email: soosterbaan@alvarezandmarsal.com
Manitoba Clinic Medical Corporation --
https://www.manitobaclinic.com/ -- was founded in 1945. The
Company's line of business includes the practice of general or
specialized medicine and surgery for various licensed
practitioners.
MARTINEZ QUALITY: Taps Michael Bowers of Middleswarth as Accountant
-------------------------------------------------------------------
Martinez Quality Painting & Drywall, Inc. received approval from
the U.S. Bankruptcy Court for the Western District of North
Carolina to hire Michael Bowers, CPA, a partner at Middleswarth,
Bowers & Co. LLP.
The Debtor requires an accountant and financial advisor to assist
with bookkeeping, Chapter 11 plan formation, evaluation of tax
claims, review of payments under certain loan documentation, and
other matters related to its Chapter 11 case.
Mr. Bowers will charge $285 per hour for his services.
In court filings, Mr. Bowers disclosed that he and his firm are
"disinterested persons" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Michael T. Bowers, CPA
Middleswarth, Bowers & Co. LLP
219 Wilmont Dr
Gastonia, NC 28054
Telephone: (704) 867-2394
Fax: (704) 867-5303
Email: ebowers@mbcpafirm.com
About Martinez Quality Painting & Drywall
Martinez Quality Painting & Drywall, Inc. is a drywall and painting
contractor serving residential commercial customers. The company is
based in Charlotte, N.C.
Martinez sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. W.D.N.C. Case No. 22-30357) on Aug. 1, 2022, with up
to $1 million in assets and up to $10 million in liabilities.
Ricardo Martinez, president of Martinez, signed the petition.
Judge Craig J. Whitley oversees the case.
John C. Woodman, Esq., at Essex Richards, PA and Michael Bowers,
CPA, a partner at Middleswarth, Bowers & Co. LLP, serve as the
Debtor's legal counsel and accountant, respectively.
MARVIN KELLER: Unsecureds to Get $50K Per Year for 5 Years
----------------------------------------------------------
Marvin Keller Trucking, Inc., submitted a Plan and a Disclosure
Statement.
With authorization by order of the Bankruptcy Court, the Debtor has
continued its financial performance of leases for the real estate
that it occupies, the lease of its semi-trucks and trailers, and a
Comdata driver fleet services expense payment system. Also, with
authorization of the Bankruptcy Court, and by consent of the
Debtor's first position secured lender Scott State Bank, the Debtor
has continued to use cash collateral for its operations with
replacement liens against post-petition assets provided.
Under the Plan, Class 3 Unsecured Claims will receive annual
payments of $10,000 per year for five years. A Creditor Trust for
disbursement and investigation and pursuit of avoidance and other
available causes of action of the bankruptcy estate will be
established. Class 3 is impaired.
Payments and distributions under the Plan will come from
post-confirmation business operations of the reorganized Debtor and
capital contributions of the Equity Owner.
Attorney for the Debtor:
Sumner A. Bourne, Esq.
RAFOOL & BOURNE, P.C.
401 Main Street, Suite 1130
Peoria, IL 61602
Telephone: (309) 673-5535
E-mail: sbourne@rafoolbourne.com
A copy of the Disclosure Statement dated Nov. 18, 2022, is
available at https://bit.ly/3Ax3odI from PacerMonitor.com.
About Marvin Keller Trucking
Marvin Keller Trucking, Inc., operates a nationwide commercial
trucking operation, with its headquarters located in Sullivan,
Ill.
Marvin Keller Trucking sought Chapter 11 bankruptcy protection
(Bankr. C.D. Ill. Case No. 22-90165) on April 22, 2022. In the
petition filed by Joseph E. Keller, president and chief executive
officer, Marvin Keller Trucking listed up to $10 million in assets
and up to $50 million in liabilities.
Judge Mary P. Gorman oversees the case.
Sumner A. Bourne, Esq., at Rafool & Bourne, PC, is the Debtor's
legal counsel.
The U.S. Trustee for Region 10 appointed an official committee of
unsecured creditors on May 12, 2022. Faegre Drinker Biddle & Reath,
LLP and Dundon Advisers, LLC serve as the committee's legal counsel
and financial advisor, respectively.
MOBIQUITY TECHNOLOGIES: Receives Noncompliance Notice From Nasdaq
-----------------------------------------------------------------
Mobiquity Technologies, Inc. said it received a deficiency
notification from the Listing Qualifications Department of The
Nasdaq Stock Market LLC notifying the Company of its noncompliance
with the Nasdaq Listing Rule 5250 (c)(1) for continued listing due
to its failure to file its Form 10-Q for the period ended Sept. 30,
2022.
Under Nasdaq's Rules, the Company has 60 calendar days to submit a
plan to regain compliance.
It is anticipated that the Form 10-Q will be filed by the Company
on or about Dec. 8, 2022.
About Mobiquity
Headquartered in Shoreham, NY, Mobiquity Technologies, Inc. is a
next generation, Platform-as-a-Service (PaaS) company for data and
advertising. The Company maintains one of the largest audience
databases available to advertisers and marketers through its data
services division. Mobiquity Technologies' Advangelists subsidiary
(www.advangelists.com) provides programmatic advertising
technologies and insights on consumer behavior. For more
information, please visit: https://mobiquitytechnologies.com/
Mobiquity reported a net comprehensive loss of $34.95 million for
the year ended Dec. 31, 2021, a net comprehensive loss of $15.03
million for the year ended Dec. 31, 2020, and a net comprehensive
loss of $44.03 million for the year ended Dec. 31, 2019. As of
June 30, 2022, the Company had $5.11 million in total assets, $1.91
million in total liabilities, and $3.20 million in total
stockholders' equity.
Lakewood, Co-based BF Borgers CPA PC, the Company's auditor since
2018, issued a "going concern" qualification in its report dated
March 29, 2022, citing that the Company has suffered recurring
losses from operations and has a significant accumulated deficit.
In addition, the Company continues to experience negative cash
flows from operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
MOLDWORKS WORLDWIDE: Case Summary & 10 Unsecured Creditors
----------------------------------------------------------
Debtor: Moldworks Worldwide, LLC
385 New Brunswick Ave
Fords, NJ 08863-2136
Business Description: The Debtor specializes in manufacturing
intimate apparel, activewear, loungewear and
lingerie type products.
Chapter 11 Petition Date: December 6, 2022
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 22-19640
Debtor's Counsel: Edward Vaisman, Esq.
VAISMAN LAW OFFICES
33 Wood Ave S Ste 600
Iselin, NJ 08830-2717
Email: vaismanlaw@gmail.com
Total Assets: $1,037,191
Total Liabilities: $801,461
The petition was signed by Terry R. Hyams as chairman.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 10 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/W5OIGYA/Moldworks_Worldwide_LLC__njbke-22-19640__0001.0.pdf?mcid=tGE4TAMA
ON MARINE SERVICES: Unsecureds Owed $570 to Get 88% Under Plan
--------------------------------------------------------------
On Marine Services Company LLC submitted a First Amended Combined
Disclosure Statement and Plan of Liquidation.
This Chapter 11 Case was commenced as a result of the thousands of
asbestos personal injury claims that were pending against the
Debtor as of the Petition Date. Those claims, like hundreds of
thousands of similar claims that were resolved by the Debtor over
the decades prior to this Chapter 11 Case, arose from a line of
refractory products used exclusively in steelmaking that a division
of the Debtor (then known as Oglebay Norton Company, a Delaware
corporation) manufactured and sold between the 1940s and 1978. The
corporate division that manufactured and sold those products ceased
operations in 1998, and the Debtor itself ceased all active
business operations in 2010. Since then, the Debtor's only business
activity has been to manage the defense and resolution of asbestos
personal injury claims, and to pursue recoveries from its historic
insurance coverage profile to fund those efforts. The Combined Plan
and Disclosure Statement is intended to resolve the approximately
6,000 asbestos-related personal injury claims that are pending
against the Debtor, and to provide for an orderly wind-down of the
Debtor's Estate.
To accomplish these goals, the Combined Plan and Disclosure
Statement provides for the establishment of the Liquidating Trust
for the benefit of holders of Asbestos Claims and for the funding
of the Liquidating Trust through cash payments of approximately $28
million to be made by the Settling Asbestos Insurance Entities and
the Parent Entities as a result of the Insurance Settlement
Agreements and the Parent Entities Settlement, which are discussed
at length herein. The Liquidating Trust will assume liability for
all Asbestos Claims, use its assets to resolve the Asbestos Claims,
and compensate eligible holders of Asbestos Claims. The Plan
Proponents believe that approval of the Disclosure Statement,
confirmation of Plan, and approval of the related Insurance
Settlement Agreements will eliminate the possibility of protracted
litigation over the availability of insurance coverage and various
Released Causes of Action and will ensure a fair and equitable
distribution among holders of Asbestos Claims.
Under the Plan, Class 3 General Unsecured Claims total
approximately $570,000 and will recover 88% of their claims. Each
holder of an Allowed General Unsecured Claim will receive, in full
and complete settlement, release, and discharge of, and in exchange
for, such Claim, Cash in an amount equal to its Pro Rata share of
the General Unsecured Recovery Pool (Cash in the amount of
$500,000.00) subject to a maximum Distribution to each holder of an
Allowed General Unsecured Claim of 100% of the Allowed amount of
such Claim. Distributions will be made to holders of Allowed
General Unsecured Claims from the General Unsecured Recovery Pool
(i) on the Effective Date, or as soon as reasonably practicable
thereafter, and (ii) on or before the date that is thirty (30) days
after all Disputed General Unsecured Claims are Allowed or
Disallowed. Solely for purposes of calculating Distributions to
holders of Allowed General Unsecured Claims on the Effective Date,
all Disputed General Unsecured Claims will be treated as though
they are Allowed in the amounts asserted or as estimated by the
Bankruptcy Court pursuant to Section 502(c) of the Bankruptcy Code,
and a reserve will be set aside for such Disputed General Unsecured
Claims. Class 3 is impaired.
The Liquidating Trust Assets will include: (i) the proceeds from
the Fireman's Fund Insurance Settlement Agreement, in the aggregate
amount of $18.25 million, less certain fees and expenses and any
amounts that are required to be deducted under the terms of the
Fireman's Fund Insurance Settlement Agreement; (ii) the proceeds
from the Federal Insurance Settlement Agreement, in the aggregate
amount of $10 million; (iii) the Parent Entity Contribution, in the
aggregate amount of $1 million, $750,000 of which will be deemed to
be made for and on behalf of Fireman's Fund as a supplement to the
settlement amount payable by Fireman's Fund under the Fireman's
Fund Insurance Settlement Agreement; and (iv) any Cash remaining in
the Estate net of the Wind Down Reserve, after all Distributions
required under the Plan have been made to holders of Allowed
Non-Asbestos Claims, plus any funds remaining in the Wind Down
Reserve after payment of all fees and costs to be paid from the
Wind Down Reserve pursuant to the Plan.
The Liquidating Trust Assets described above are limited and must
be managed by the Liquidating Trustee to ensure that funds are
available to pay eligible holders of Asbestos Claims in
substantially the same manner.
For all the reasons detailed in the Combined Plan and Disclosure
Statement, the Plan Proponents believe that there will be
substantially more assets available to pay holders of Asbestos
Claims under the Plan than would be the case if there were no Plan.
Moreover, without the Liquidating Trust Distribution Procedures,
there likely would be years of costly and time consuming litigation
involving holders of Asbestos Claims that will be avoided through
the orderly administrative process established by the Plan and the
Liquidating Trust Distribution Procedures. Absent the Plan and the
accompanying Insurance Settlement Agreements, distributions to
holders of Asbestos Claims would be delayed and, due to the costs
of litigation, the funds actually available for holders of Asbestos
Claims would be reduced. For this and other reasons explained in
detail in the Combined Plan and Disclosure Statement, the Plan
Proponents believe that each holder of an Asbestos Claim who is
entitled to vote should vote to accept (vote in favor of) the
Plan.
On the Effective Date, the Liquidating Trust shall be created in
accordance with the Plan Documents. The Liquidating Trust is
intended to constitute a "qualified settlement fund" within the
meaning of section 468B of the Internal Revenue Code and the
regulations issued thereunder. The purpose of the Liquidating Trust
shall be to assume, liquidate, and resolve Asbestos Claims and to
use the Liquidating Trust Assets to pay holders of Asbestos Claims
in accordance with the terms of the Liquidating Trust Documents,
the Plan, and the Confirmation Order.
The Debtor will fund Distributions with Cash on hand as of the
Effective Date (other than Cash in the Wind Down Reserve).
On or before the Effective Date, from Cash on hand at the time
thereof, the Debtor shall establish the Wind Down Reserve. The Wind
Down Reserve shall be used to fund all actions necessary or
appropriate to fully administer and wind-down the Debtor's Estate,
to seek entry of the Final Decree and close the Chapter 11 Case,
and to dissolve and cancel the Debtor's corporate existence,
including, without limitation, the payment of the Debtor's
post-Effective Date fees and expenses relating to the foregoing.
The Wind Down Reserve shall be held and administered by the Debtor.
At any point after the Effective Date, to the extent that any funds
remain in the Wind Down Reserve after payment of all fees and costs
to be paid from the Wind Down Reserve pursuant to the Plan, such
excess funds shall be considered Excess Cash and transferred to the
Liquidating Trust.
Counsel to the Debtor:
Paul M. Singer, Esq.
Andrew J. Muha, Esq.
Luke A. Sizemore, Esq.
Victoria Sanford, Esq.
REED SMITH LLP
225 Fifth Avenue, Suite 1200
Pittsburgh, PA 15222
Telephone: (412) 288-3131
Facsimile: (412) 288-3063
E-mail: psinger@reedsmith.com
amuha@reedsmith.com
lsizemore@reedsmith.com
vsanford@reedsmith.com
A copy of the First Amended Combined Disclosure Statement and Plan
of Liquidation dated Nov. 18, 2022, is available at
https://bit.ly/3GsPEVi from PacerMonitor.com.
About ON Marine Services Company
ON Marine Services Company is the continuation of the entity
formerly known as Oglebay Norton Company, as part of which the
Ferro Division operated as an unincorporated division. In 1999,
Oglebay Norton Company changed its name to ON Marine Services
Company and became a wholly-owned subsidiary of a newly formed
company known as Oglebay Norton Company, an Ohio corporation. The
Ferro Division and/or ON Marine manufactured and sold refractory
products for use exclusively in steelmaking. ON Marine Services
Company ceased all active business operations in 2010.
ON Marine Services Company filed for Chapter 11 bankruptcy
protection (Bankr. W.D. Pa. Case No. 20-20007) on Jan. 2, 2020. In
its petition, the Debtor estimated $1 million to $10 million in
assets and $100,000 to $500,000 in liabilities. The petition was
signed by Kevin J. Whyte, senior vice president.
Chief Judge Carlota M. Bohm oversees the case.
The Debtor is represented by Paul M. Singer, Esq., at Reed Smith
LLP and Legal Analysis Systems, Inc. as its consultant. Epiq 11 is
the claims agent.
A committee of asbestos personal injury claimants has been
appointed in the Debtor's case. The asbestos committee is
represented by Caplin & Drysdale, Chartered.
ORBIT ENERGY: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Orbit Energy & Power, LLC
DBA Orbit Energy and Power, LLC
106 East Mantua Avenue
Wenonah, NJ 08090
Chapter 11 Petition Date: December 6, 2022
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 22-19628
Debtor's Counsel: Abert A. Ciardi III, Esq.
CIARDI CIARDI & ASTIN
1905 Spruce Street
Philadelphia, PA 19103
Tel: 215-557-3550
Email: aciardi@ciardilaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Sean Angelini as managing member.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/3KZSDJA/Orbit_Energy__Power_LLC__njbke-22-19628__0001.1.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/3MLONJY/Orbit_Energy__Power_LLC__njbke-22-19628__0001.0.pdf?mcid=tGE4TAMA
REDSTONE BUYER: S&P Alters Outlook to Negative, Affirms 'B-' ICR
----------------------------------------------------------------
S&P Global Ratings revised its rating outlook on Redstone Buyer LLC
(dba RSA) to negative from stable and affirmed its 'B-' issuer
credit rating, its 'B-' issue-level rating on the company's
first-lien credit facilities, and 'CCC+' issue-level rating on its
second-lien term loan.
S&P said, "The current affirmation of our rating on RSA is
supported by our view that the company has sufficient liquidity to
weather a period of negative free cash flow before margins improve
in fiscal 2024.
"Our negative outlook on RSA reflects meaningful risk that free
cash flow may remain negative in fiscal 2024 if the company cannot
significantly improve EBITDA margins and accelerate top-line growth
amid higher interest expense and weakening corporate information
technology (IT) spending."
Restructuring and other costs related to its effort to stand up
four independent business units continued to weigh on RSA's free
cash flow generation.
S&P said, "RSA reported significant cash burn for the first half of
fiscal 2023 (ending in January) and will end the year with negative
free cash flow, although we expect some recovery in the second
half. The company has been utilizing its revolving credit facility
(RCF) and proceeds from the sale of its RSA Conference business to
support its liquidity position amid elevated cash outflow. While we
believe RSA has made significant progress standing up its
independent business units and most of the one-time costs are
behind it, we expect there will still be some restructuring and
transitional spending that persists into the coming year. That will
continue to limit the rate of cash generation growth, albeit to a
lesser extent."
Demand for enterprise IT security software--particularly in
identity and access management--remains strong and should support
RSA's planned turnaround.
S&P said, "Notwithstanding the company's specific challenges and
costs related to its business unit separations, we believe RSA's
products will continue to benefit from strong demand for cyber
security and risk management software solutions. Renewal rates
remain strong across products. RSA has implemented pricing uplifts
that may enable better top-line performance going forward. We
forecast low- to mid-single-digit percent revenue growth in the
next fiscal year as these initiatives take hold, offset somewhat by
currency headwinds. However, we see risk that a significant
macroeconomic slowdown that pressures IT budgets could reduce
revenue a second year, particularly in the NetWitness and Outseer
segments."
An increasing interest burden will also challenge RSA's ability to
generate positive free cash flow, even with top-line improvement
and EBITDA margin expansion.
S&P said, "We forecast RSA will report S&P Global Ratings-adjusted
EBITDA margins in the low-20% area exiting fiscal 2023. It should
improve margins to the high-20% area as the restructuring and
business unit separations subside substantially in fiscal 2024,
along with benefit from synergies. While we expect the company to
expand margins considerably in the coming year absent a severe
recession, increasing interest payments will significantly
constrain RSA's cash flow generation. We now expect interest
expense to be approximately $200 million-$210 million in fiscal
2024. Given increasing uncertainty to return to positive free cash
flow, even a marginal underperformance over the next 12 months
could lead to another year of cash burn. A downgrade is likely if
we believe RSA's capital structure has become unsustainable."
S&P believes RSA has adequate liquidity to weather the near-term
disruptions caused by restructuring.
The company has combined liquidity of about $150 million as of July
29, 2022, including cash on hand and about $75 million availability
under its $175 million RCF. S&P said, "We believe the company has
enough cushion to maintain operations as it expands EBITDA margins
and starts generating modest operating cash flow over the next 12
months. We expect RSA will maintain enough headroom under its
covenant to keep access to its RCF. However, should the company
suffer from significant underperformance in the next couple of
quarters such that leads to a breaching covenant issue, RSA may
lose access to its revolver and face liquidity shortfall."
S&P said, "The negative outlook on RSA reflects our view that
restructuring expense, macroeconomic weakness, and higher interest
rates have increased the probability that the firm will face
negative free cash flow for an extended period of time. Although we
expect RSA to improve its top-line trend and EBITDA margins in
fiscal 2024, a significant increase in interest payments on its
approximately $2 billion floating-rate debt will likely limit free
cash flow close to break-even. Absent sustainable top-line positive
growth and meaningful EBITDA margin expansion, we believe RSA's
capital structure may be unsustainable over the longer term."
S&P could lower the rating on RSA to 'CCC+' if it:
-- Fails to return to positive revenue growth and improve EBITDA
margins due to continued significant business units stand-up costs,
prolonged restructuring and business optimization activities,
execution missteps during subscription revenue model transition,
increasing competitive pressures, or weaker customer demand such
that it is likely to generate meaningfully negative free cash flow
into fiscal 2024;
-- Loses access to its $175 million RCF due to covenant issues;
or
-- Total liquidity declines to approximately $100 million.
S&P could revise the outlook to stable if RSA:
-- Generates modest FOCF within the next 12 months; and
-- Sustains consistent revenue growth with substantial EBITDA
margin improvement.
ESG credit indicators: E-2, S-2, G-3
Governance factors are a moderately negative consideration in S&P's
credit rating analysis of the company, as is the case for most
rated entities owned by private-equity sponsors.
ROCK FITNESS: Seeks Cash Collateral Access
------------------------------------------
Rock Fitness II, LLC asks the U.S. Bankruptcy Court for the
Southern District of Florida, West Palm Beach Division, for
authority to use cash collateral in accordance with the budget and
provide adequate protection.
The Debtor requires the use of cash collateral to maintain the
business.
Navitas Credit Corp. holds a security interest in all of the
Debtor's assets including all accounts, receivables, future,
fixtures, equipment, etc. and is owed approximately $161,897.
Cloud Fund, LLC also holds a security interest in the assets of the
Debtor. It is owed approximately $30,000. Cloud Fund's interest is
inferior to Navitas. The estimated value of the secured assets at
the time of the filing of the case was $250,000.
The loan from Navitas was obtained in March 2020, immediately
before businesses were shut down do to COVID-19.
At the time of the filing, the Debtor is current with its
obligation to both Navitas and Cloud Fund.
As adequate protection, the Debtor is offering to pay Navitas
$2,700 per month. It is offering to pay Cloud Fund $500 per month.
A copy of the motion is available at https://bit.ly/3VBlNyI from
PacerMonitor.com.
A copy of the budget is available at https://bit.ly/3HbqcEb from
PacerMonitor.com.
The Debtor projects $66,000 in income and $64,298 in total
expenses.
About Rock Fitness II
Rock Fitness II, LLC sought protection for relief under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-18415) on Oct.
31, 2022, with up to $500,000 in both assets and liabilities.
Judge Erik P. Kimball oversees the case.
Brian K. McMahon, Esq., at Brian K. McMahon, PC is the Debtor's
legal counsel.
ROSIE'S LLC: Unsecureds Payout to Rely on Galinn Suit Outcome
-------------------------------------------------------------
Rosie's, LLC filed with the U.S. Bankruptcy Court for the District
of Colorado a Disclosure Statement to accompany Chapter 11 Plan
dated December 1, 2022.
The Debtor is a Colorado limited liability company which, on the
Petition Date, owned several pieces of real property.
On July 26, 2021, Galinn initiated a lawsuit against, inter alia,
Rosie's and certain of the Non-Debtor Affiliates, in Logan County,
Colorado District Court, Case No. 2021CV30030 captioned The Galinn
Fund LLC v. Botanix Equities LLC, et al. (the "Galinn Lawsuit").
The Galinn Lawsuit is stayed by operation of this Chapter 11 Case.
On August 2, 2021, Intergro, LLC, obtained a judgment in Logan
County, Colorado District Court, Case No. 2020CV30030 captioned
Intergro, LLC v. Rosie's et al. (the "Intergro Judgment").
Execution on the Intergro Judgment, as against the Debtor, is
stayed by operation of this Chapter 11 Case.
In furtherance of exercising its rights as a secured creditor, BOC
had further commenced foreclosures with the Logan County, Colorado
Public Trustee in the late summer for Scalva Property (August 18,
2021), JW Property (August 18, 2021), Wernsman Ranch (August 18,
2021), and Miller Property (August 18, 2021) (collectively, the
"BOC Foreclosure Sales"). Shortly after the Petition Date, one of
the Non-Debtor Affiliates had paid the remaining amounts due and
owing under the note secured by the Miller Property and BOC,
consequently, released its Lien as against that property only.
On August 16, 2021, as a result of the mounting pressure from the
Galinn Lawsuit, Intergro Judgment, and BOC Foreclosure Sales, along
with the inability to use its Real Properties by virtue of the
Receivership Order, the Debtor commenced this Chapter 11 Case when
it filed its voluntary petition for relief.
During the course of the case, BOC, Galinn and 59 Investments each
received relief from the automatic stay to pursue their claims
against each Rosie's property. The current status of each property
which existed on the Petition Date follows:
* Scalva, JW Property, and Wernsman Ranch were sold at
foreclosure sales initiated by BOC. Each property was redeemed by
Galinn.
* Monohan and Campbell were sold at foreclosure sales
initiated by Galinn, with Galinn as the purchaser.
* Miller is scheduled to be sold at a foreclosure sale
initiated by Galinn on December 14, 2022.
* CJ Frank and Pivonka Ranch were sold to J Capital. After J
Capital credit bid the full amount of its debt, J Capital paid cash
in the sum of $1,330,019.02 which is being held in escrow by
Northeast Colorado Title Company, LLC, pending further order of
this Court. Galinn's held a second position lien against both
properties, and its disputed lien attached to the proceeds.
In the event Rosie's prevails in the Galinn Adversary, those funds
will be disbursed to Rosie's and used to fund Rosie's Plan. If
Rosie's prevails in the Galinn Adversary it will also be entitled
to reclaim the JW Property, Monohan, and Campbell, which will then
be sold to fund Rosie's Plan.
In the event Galinn prevails in the Galinn Adversary, those funds
will be disbursed to Galinn and Rosie's will have no further right
in its former properties, now owned by Galinn. Rosie's also
received a lease payment during the course of the bankruptcy case
pursuant to a crop share agreement on CJ Frank.
Class 8 consists of Allowed General Unsecured Claims. Payment to
allowed general unsecured claims is dependent on whether Debtor
prevails in the Galinn Adversary. If Rosie's prevails, it will pay
general unsecured claims in full out of the net proceeds from the
sale of the Pivonka Ranch and CJ Frank properties. If Rosie's does
not prevail, no funds will be available to pay general unsecureds.
This Class is impaired.
Class 9 consists of the Equity interests in the Debtor – held 50%
by David Lebsock and 50% by Cheryl Lebsock. Because this is a
liquidating plan, in the event there are funds leftover after
paying Class 8 claims in full, Debtor will distribute the remaining
proceeds equally between David Lebsock and Cheryl Lebsock in
accordance with their ownership interests.
On the Effective Date of the Plan, David Lebsock, the Managing
Member of Rosie's, shall be appointed as the agent of the Debtor
for the purpose of carrying out the terms of the Plan and taking
all actions deemed necessary or convenient to consummating the
terms of the Plan.
The Debtor's Plan is feasible. This is a Liquidating Plan and if
the Galinn lien and claim are disallowed, there are sufficient
funds to pay general unsecured creditors in full. Because this is a
liquidating plan, and because Rosie's has no operations as a result
of the loss of its properties, no projections are included.
A full-text copy of the Disclosure Statement dated December 1,
2022, is available at https://bit.ly/3HvQPnB from PacerMonitor.com
at no charge.
Attorneys for Debtor:
Jonathan M. Dickey, Esq.
Kutner Brinen Dickey Riley, P.C.
1660 Lincoln Street, Suite 1720
Denver, CO 80264
Email: jmd@kutnerlaw.com
Telephone: 303-832-3047
Email: JMD@KutnerLaw.com
About Rosie's LLC
Rosie's, LLC, a Sterling, Colo.-based company engaged in renting
and leasing real estate properties, filed a voluntary petition for
Chapter 11 protection (Bankr. D. Colo. Case No. 21-14259) on Aug.
16, 2021, listing as much as $50 million in both assets and
liabilities. David W. Lebsock, the Debtor's manager, signed the
petition.
Judge Thomas B. Mcnamara oversees the case.
The Debtor is represented by Kutner Brinen Dickey Riley, P.C.
SALEM MEDIA: S&P Alters Outlook to Negative, Affirms 'B-' ICR
-------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on Salem
Media Group Inc. and revised the outlook to negative from stable.
S&P also lowered its issue-level rating on the company's $44.7
million senior secured notes due 2024 to 'CCC+' from 'B-'and
revised our recovery rating to '5' from '4'.
The negative outlook reflects S&P's expectation that Salem will
generate break-even FOCF in 2023 and approach 7x leverage which it
would view as unsustainable for the rating, absent EBITDA and cash
flow improvement. The outlook also reflects that if market
conditions worsen, Salem could have difficulty extending its ABL
before it matures in March 2024.
Salem's leverage will increase in a recession due to advertising
declines. S&P said, "We expect the U.S. to enter a shallow
recession in the first half of 2023. Broadcast radio advertising
revenue is highly correlated to GDP growth because expectations for
consumer spending drive advertising budgets. Radio advertising has
very short lead times and is one of the first advertising mediums
to decline when the economy slows. We expect Salem's broadcast
revenue to decline only 4%-6% next year compared to 15% for the
industry. The company's block programming, sold primarily to
Christian ministries, accounts for 40% of its broadcast revenue and
has shown more earnings resiliency than broadcast advertising. That
said, its block programming continues to face pressures from
alternative forms of media such as digital and could decline
substantially in a deep recession. The radio industry lost
significant portions of its advertising base in previous downturns,
failing to recover, and we believe it would face further losses in
a recession. Our negative outlook reflects the risk that Salem's
leverage could spike above 7x in a downturn and the company may not
be able to generate sufficient cash flow to reduce leverage back
below that level without a significant recovery in advertising."
S&P said, "We expect Salem will need to draw on its ABL in 2023 to
meet its financial commitments, raising leverage and credit risk as
it approaches maturity in March 2024. Salem has a $30 million ABL
($23.8 million current borrowing base) and would need to draw about
$10 million-$15 million in 2023 given our expectations for
break-even FOCF next year. Although FOCF is sufficient for Salem to
cover its interest payments and capital spending, the company has
two large cash outflows that it will not be able to fund through
cash flows. Salem recently announced two acquisitions that total
$10 million and a $5.3 million payment related to a legal
settlement subject to a court approval. Salem will need to draw on
its ABL to fund these payments, expected over the next few months,
adding close to half a turn of leverage. The ABL draw further
reduces the company's already thin liquidity given it typically
keeps minimal cash on the balance sheet. Additionally, Salem will
need to amend and extend its ABL before it expires in 2024. The
current economic environment may make it difficult for the company
to extend the ABL or force it to do so at less than favorable
terms. If performance deteriorates further than we expect and Salem
needs to draw additional funds, it may be unable to meet its
springing 1x fixed-charge covenant, which activates when ABL
availability is less than $4.5 million. We do not expect the
covenant to be tested under our current forecast, but if it were,
we'd expect headroom under its covenant would be less than 10%.
"The negative outlook reflects our expectation that Salem will
generate break-even FOCF in 2023 and approach 7x leverage, and that
FOCF could remain pressured even beyond 2023 without a robust
recovery in broadcast advertising. The outlook also reflects that
if market conditions worsen, Salem could have difficulty extending
its ABL before it matures in March 2024."
S&P could lower the rating over the next 12 months if it viewed the
company's capital structure as unsustainable. This could occur if:
-- The economy enters a deep and prolonged recession; and
-- S&P does not expect Salem will be able to generate sufficient
cash flow to reduce leverage back to 6X over the next few years.
Alternatively, S&P could also lower its rating if the company has
not addressed the outstanding debt on its ABL within 12 months of
its March 2024 maturity, and it does not expect the company has a
plan in place to do so in the near term.
S&P could revise the outlook back to stable if:
-- S&P believes the risk of an economic recession has passed and
that the broadcast industry sustains recovery;
-- Salem refinances or extends the maturity of its ABL facility;
and
-- Leverage approaches 6x and S&P expects the company to generate
consistently positive FOCF.
ESG credit indicators: E-2, S-2, G-2
SAN LUIS & RIO: Recreation Groups, Bidder to Derail Omnitrax Bid
----------------------------------------------------------------
Jason Blevins of The Colorado Sun reports that a late bidder and
the San Luis Valley recreation groups are challenging Denver-based
railroad company Omnitrax's planned acquisition of the San Luis &
Rio Grande Railroad.
Omnitrax last October 2022 announced it was buying the historic
155-mile railroad, marking its 26th rail operation. The owner of
the railroad, Iowa Pacific Holdings, filed for bankruptcy in 2021.
Omnitrax said last October 2022 that it planned to study the line
and plan upgrades with a focus on freight. A coalition of San Luis
Valley groups — including San Luis Valley Great Outdoors -- have
filed objections to Omnitrax's acquisition of the railroad.
"They are not very pedestrian friendly," said Mick Daniel with San
Luis Valley Great Outdoors, which has spent years trying to weave
trails between the valley's communities, many of which would either
parallel or cross the railroad tracks. "As we think about valley
connectivity and access to public lands and trails, we are thinking
Omnitrax should not get this."
Earlier this 2022, after announcing a June 2022 auction of the
railroad, bankruptcy trustee William Brandt fielded interest from
65 potential buyers. At least 41 of those signed nondisclosure
agreements with Brandt to study the railroad's assets and finances.
Six toured the railyard in Alamosa. Five submitted bids. None
finalized a deal by the June auction date and the sole bid
submitted before the June auction did not include a minimum
deposit, so the auction was delayed.
In September 2022, Brandt entered into a deal to sell the railroad
to Omnitrax for $5.75 million. Then came a higher bid from Stefan
Soloviev, a billionaire heir to an East Coast real estate empire.
Soloviev's Crossroads Agriculture farms 400,000 acres of land in
eastern Colorado, Kansas and New Mexico. His Colorado Pacific
Railroad along Colorado 96 east of Pueblo connects eastern Colorado
communities with the national rail network. An email to his
attorney was not returned this week.
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.
SHAAN AND KHAN: Case Summary & Two Unsecured Creditors
------------------------------------------------------
Debtor: Shaan and Khan Inc.
1703 Brookside Pine Lane
Kingwood, TX 77345
Business Description: The Debtor is in the property management
business.
Chapter 11 Petition Date: December 6, 2022
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 22-33639
Judge: Hon. Marvin Isgur
Debtor's Counsel: James Q. Pope, Esq.
THE POPE LAW FIRM
6161 Savoy Drive 1125
Houston, TX 77036
Tel: (713) 449-4481
Email: jamesp@thepopelawfirm.com
Total Assets: $1,175,000
Total Debts: $947,522
The petition was signed by Muhammad Shahbaz Khan as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/LGDNHOQ/Shaan_and_Khan_Inc__txsbke-22-33639__0001.0.pdf?mcid=tGE4TAMA
STANDARD INDUSTRIES: S&P Alters Outlook to Stable, Affirms BB+ ICR
------------------------------------------------------------------
S&P Global Ratings revised its outlook on Standard Industries
Inc.'s (recently renamed to Standard Building Solutions Inc.) to
stable from negative.
At the same time, S&P affirmed its 'BB+' issuer credit rating on
the company. S&P also affirmed its 'BBB-' issue-level ratings on
the secured term loan and our 'BB' issue level ratings on the
company's unsecured notes.
The stable outlook reflects S&P's expectation for adjusted net
leverage of 4x-5x in light of less favorable demand and pricing
environment over the next 12 months.
Solid end-market tailwinds have led to improved credit measures,
creating some cushion against weaker business conditions expected
over the next few quarters. Favorable demand and pricing resulted
in solid earnings growth over the last 12 months. That combined
with some debt reduction using cash has resulted in adjusted net
leverage improving to about 4x. S&P said, "We believe these
measures indicate some credit buffer compared against our 4x-5x
tolerance for the rating. Further, we expect slower market
conditions to create some earnings and margin compression in 2023,
though we believe earnings could potentially be less volatile
(compared with other discretionary building materials) in a weaker
housing environment. Despite expected slower earnings over the next
12 months, we believe the company could sustain adjusted net debt
leverage within our tolerance for the ratings. We also believe net
debt levels and credit measures could see support from
countercyclical free cash flows in a downturn, with lower demand
resulting in reduced working capital investments."
S&P said, "We expect the company's earnings to be less prone to
volatility from weaker housing markets due to nondiscretionary
reroofing demand drivers.We expect Standard's revenues and earnings
to grow about 10% and 8% in 2022, respectively. Thereafter in 2023,
we expect a mid-single-digit percent contraction in revenues and a
10%-15% decline in adjusted earnings. While volumes may be fairly
stable over the next two quarters due to backlogs, we expect
reduced construction activities to somewhat slow demand for the
company's products. Nonetheless, we believe nondiscretionary roof
replacement needs, which account for about three-fourths of the
revenues, will remain a fundamental growth driver for the business.
Therefore, we believe the company's revenues, earnings, and cash
flows to be less prone to swings from the housing market and
economic cycles compared with demand for other building materials
and products.
"We believe Standard's cash generation will remain solid and its
capital allocation and financial policies will support net debt
leverage commensurate with the rating.We expect the company to
generate $500 million-$600 million in operating cash this year and
$900 million-$1 billion in 2023. While OCF may be somewhat
depressed in 2022 from increased working capital investments, we
expect it to improve in 2023 from commodity deflation and possibly
slower demand. We also expect the company could use excess free
cash towards capital projects or shareholder returns. Nonetheless,
we expect the company will be cautious in maintaining its 4x-5x net
debt leverage tolerance through the business cycle while
undertaking such cash allocation decisions.
"The stable outlook on Standard reflects our expectations of
adjusted net leverage of 4x-5x over the next 12-24 months. We
expect the company to maintain these credit measures even through a
weaker macroeconomic and operating environment."
S&P may lower the ratings over the next 12-24 months if:
-- Adjusted leverage deteriorates to above 5x on a sustained
basis. This could occur if demand conditions weaken faster than
expected or higher costs result in EBITDA margins compressing by
more than 200 bps;
-- Free cash flow fails to improve as expected due to unexpected
large capital expenditures (capex), resulting in higher net debt
levels; or
-- The company increases debt to fund acquisitions or dividends to
the owners, resulting in worse credit measures.
Although highly unlikely, S&P could raise its ratings over the next
12-24 months if:
-- Adjusted leverage improves to well under 4x; and
-- S&P believes the company's financial policy actions
commensurate with maintaining it at that level
ESG credit indicators: E-3, S-2, G-3
S&P said, "Environmental factors have a moderately negative
consideration in our credit rating analysis because it is exposed
to greenhouse gasses, toxic emissions, and waste generation during
the production of asphalt-based roofing shingles. However, we
believe the credit impact is manageable and that the company will
continue to focus on reducing its emission levels and using
recycled materials in line with peers over the next few years."
Governance is a moderately negative consideration, reflecting
limited independent oversight.
STORED SOLAR: Trustee Taps Bradley Woods & Co. as Financial Advisor
-------------------------------------------------------------------
Anthony Manhart, the trustee appointed in the Chapter 11 case of
Stored Solar Enterprises, Series LLC, received approval from the
U.S. Bankruptcy Court for the District of Maine to employ Bradley
Woods & Co. Ltd. as his financial advisor.
The trustee requires a financial advisor to evaluate, market,
prepare for sale and auction the Debtor's property.
Bradley will be compensated as follows:
a. A non-refundable initial work fee of $12,500 upon execution
of the engagement agreement.
b. Upon the consummation of a sale excluding a sale pursuant
to the stalking horse purchase agreement (but, for avoidance of
doubt, including any sale to the stalking horse purchaser that
reflects a higher bid at an auction), Bradley shall be paid out of
closing funds a cash fee based on the "aggregate consideration,"
which is received or contributed in such sale transaction.
The cash fee shall be calculated by reference to a "hurdle amount"
as defined in court documents. For any sale transaction for
aggregate consideration of an amount greater than the hurdle
amount, Bradley shall be paid: (i) 100 percent of the first
$100,000, (ii) 10 percent of the amount above the hurdle amount,
plus $100,000 and less than $4 million, if any, plus (iii) 5
percent of the amount (Tier 2 incentive amount), if any, by which
aggregate consideration exceeds the sum of the hurdle amount and $4
million, provided that the Tier 2 incentive amount shall not exceed
$5 million, plus (iv) 3 percent of the amount, if any, by which
aggregate consideration exceeds the sum of the hurdle amount and $9
million.
As disclosed in court filings, Bradley is a disinterested person
within the meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Dan Zwelling
Bradley Woods & Co. Ltd.
805 3rd Ave 18th Floor
New York, NY 10022
Phone: +1 212-826-9191
Email: dan@rivermilladv.com
About Stored Solar Enterprises
Stored Solar Enterprises, Series, LLC owns and operates seven
biomass-fueled, renewable energy generating facilities located in
Maine, Massachusetts and New Hampshire. The plants produce electric
energy, which is transmitted into, and earns payments from, the ISO
New England power grid. Stored Solar has 87 employees.
Stored Solar sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Me. Case No. 22-10191) on Sept. 14,
2022. In the petition signed by its manager, William Harrington,
the Debtor disclosed $50 million to $100 million in assets and $10
million to $50 million in liabilities.
Judge Michael A. Fagone oversees the case.
The Debtor tapped George J. Marcus, Esq., at Marcus Clegg as its
legal counsel and Spinglass Management Group, LLC as its
restructuring advisor.
Anthony J. Manhart, the Chapter 11 trustee appointed in the
Debtor's case, tapped Preti Flaherty, LLP as legal counsel and
Bradley Woods & Co. Ltd. as financial advisor.
SUNQUEST PROPERTY: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Sunquest Property Services, LLC
503 W. Burk Avenue
PO Box 2081
Wildwood, NJ 08260
Business Description: The Debtor is engaged in activities
related to real estate.
Chapter 11 Petition Date: December 6, 2022
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 22-19630
Debtor's Counsel: Robert Loefflad, Esq.
FORD, FLOWER, HASBROUCK & LOEFFLAD
PO Box 405
Linwood, NJ 08221
Tel: 609-653-1500
Email: rloefflad@ffhlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Gary Stephen DeMarzo as managing
member.
The Debtor did not attach to 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/MHQ6XRY/Sunquest_Property_Services_LLC__njbke-22-19630__0001.0.pdf?mcid=tGE4TAMA
TRANSDERMAL SPECIALTIES: Court Approves Disclosure Statement
------------------------------------------------------------
Judge Magdeline D. Coleman has entered an order approving the
Disclosure Statement of Transdermal Specialties Global, Inc.
Dec. 30, 2022, is set as the last date by which ballots must be
received in order to be considered as acceptances or rejections of
the Plan of Reorganization.
In accordance with Bankruptcy Rule 3020(b)(1), Dec. 30, 2022, is
fixed as the date on or before which any written objection to
confirmation of the Plan of Reorganization is required to have been
filed with the Court and served upon counsel for the Debtors.
The Debtors must file its Report of Plan Voting with the Clerk of
the United States Bankruptcy Court on or before Jan. 4, 2023.
The hearing on confirmation of the Plan will be held on January 11,
2023, at 12:00 p.m., in the United States Bankruptcy Court, 900
Market Street, Courtroom #2, Philadelphia, Pennsylvania, via
telephone conference.
About Transdermal Specialties Global
Transdermal Specialties Global, Inc., sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa. Case No.
21-11425) on May 19, 2021. At the time of the filing, the Debtor
had $1 million to $10 million in both assets and liabilities. Judge
Magdeline D. Coleman oversees the case. Ciardi Ciardi & Astin
serves as the Debtor's legal counsel.
TRAVEL + LEISURE: Fitch Assigns BB+ Rating on New Secured Loan
--------------------------------------------------------------
Fitch Ratings has assigned a 'BB+'/'RR2' rating to Travel +
Leisure, Co.'s (TNL) proposed senior secured term loan. Fitch
expects the transaction to be leverage neutral and the proceeds to
be used to redeem TNL's $400 million in 3.90% secured notes due
March 2023.
KEY RATING DRIVERS
Focus on Reducing Leverage: Should timeshare sales continue to show
strength and exceed pre-pandemic levels in 2023, Fitch expects TNL
to reduce its leverage (total adjusted debt/operating EBITDAR)
below 5.0x by early 2024. Fitch's leverage calculation excludes
TNL's net interest margin from timeshare financing and the related
non-recourse debt but includes an adjustment to ensure proper
capitalization of the company's captive finance operations.
The forecasted deleveraging results from a combination of EBITDA
growth and Fitch's belief that there will be excess readily
available cash to allow for Fitch's captive finance adjustment to
be increasingly reflected as a reduction to readily available cash
rather than an increase in gross debt.
TNL has a public leverage target of 2.25x-3.0x "net debt to
adjusted EBITDA", which includes financing income and nets the
gross reported debt (excluding securitized debt) with cash. Fitch
estimates TNL's company calculated leverage was 3.7x at 3Q22.
Cash Flows Rebounding Quickly: Fitch expects TNL's total revenues
to exceed 2019 levels by 2023 due to a combination of strong
vacation ownership interest (VOI) sales growth, higher tours flow,
improving volume per guest (VPG), and increasing occupancy rates.
TNL's FY21 revenues and gross VOI sales were 78% and 63% of 2019
levels respectively.
Fitch notes that TNL generates a substantial portion of its
revenues from recurring sources (60% in FY21) including consumer
financing; service, membership, and exchange fees; and rental and
property management fees. Fitch expects TNL to generate substantial
FCF through the rating horizon due to limited development capex
under its 'just-in-time' model and modest inventory spend.
Recovery Meeting Expectations: As economies reopened through 2021,
domestic occupancy rates improved due to pent-up demand for
vacations. TNL's domestic resorts ended 3Q22 with occupancies in
line with or better than 2019 levels, while international resorts
occupancies continue slowly rebounding given travel challenges and,
to a lesser extent, customer risk aversion. Fitch notes that TNL's
provisions for loan losses and default rates in FY21 were in line
with FY19 levels, reflecting its focus on targeting higher-FICO
score customers and improved performance of its notes receivable
portfolio.
Increasing Focus on New Buyers: Fitch positively views TNL's
increasing focus on new owner sales, particularly to Gen-Xers and
millennials, and expects new owner sales as a percentage of total
sales to grow to more than 35% through 2025. New buyers are
particularly important in the timeshare industry as companies rely
heavily on existing owner purchases for revenue. Having a strong
exchange network is a major selling point for new buyers, who
contributed 28% of TNL's FY21 sales transactions. New buyers bring
lower VPG but are still profitable because of the relatively low
tour cost, commission structure, and the fact that new owners tend
to come back and purchase more points in the future.
Inflation Risks Manageable: Fitch's assumptions for the timeshare
industry include a heightened level of inflation and an increasing
prevalence of recessionary risks. However, Fitch expects inflation
risks to be manageable for the timeshare industry. Rising inflation
can improve the value proposition for timeshare properties relative
to the increased cost of alternative products such as hotels and
vacation rentals. Moreover, wages and other expenses at the
property level are borne by the homeowners' associations and TNL's
marketing and sales positions are commission-based. Fitch expects
inflation to have a limited impact on TNL's development spending as
no material construction projects are underway and it has ample
excess inventory with the ability to reacquire low cost inventory.
Well Positioned in a Competitive Industry: With 245 resorts
concentrated in destination cities, TNL is the largest timeshare
operator based on owner families, which provides some economies of
scale and facilitates third-party marketing relationships. TNL is
well positioned within the timeshare industry and has a diversified
portfolio of vacation ownership brands operating under the Wyndham
Destinations business line including Club Wyndham, WorldMark by
Wyndham, Shell Vacations Club, Margaritaville Vacation Club by
Wyndham and Presidential Reserve by Wyndham.
TNL also operates one of the two largest timeshare exchange
networks through its Resorts Condominium International (RCI)
subsidiary. Finally, TNL has one of the strongest loyalty programs
in the industry, Wyndham Rewards, with 92 million members. Loyalty
programs are crucial for chains like Wyndham, as these programs
drive repeat business which translates into repeat selling
opportunities in the timeshare industry.
Cyclicality of Timeshare Industry: The domestic timeshare market is
mature, with above average economic cyclical sensitivity owing to
the consumer discretionary nature of the product. During the Great
Financial Crisis, industry-wide VOI sales declined over 40%, which
exceeded most other Gaming, Lodging & Leisure sub-sectors' degrees
of cyclicality. The industry has limited barriers to entry as well
as a variety of competitive alternatives, including the rapid
growth and adoption of alternative lodging accommodation
businesses, such as Airbnb, Inc., Vrbo and FlipKey.
DERIVATION SUMMARY
TNL's ratings reflect its strong position in the timeshare industry
and the diversification benefits of its less capital-intensive
exchange business. The ratings also consider its moderately high
financial leverage and the discretionary nature of timeshare
sales.
TNL is the largest timeshare operator with close to 833,000 owner
families in its system. Hilton Grand Vacations (HGV; BB-/Negative)
is TNL's closest peer with 710,000 owner families, following by
Marriott Vacations Worldwide (VAC) with 700,000, Holiday Inn Club
Vacations with 345,000 and Bluegreen Vacations Holding Corp. with
219,000.
TNL and VAC's revenues are diversified relative to HGV due to the
inclusion of their timeshare exchange networks, RCI and Interval
International respectively. VAC gained access to Interval's network
through its 2018 acquisition of Interval Leisure Group (ILG).
Additionally, VAC has greater brand diversification relative to HGV
and TNL through its relationship with Marriott International and
ILG's exclusive licenses to use the Starwood and Hyatt timeshare
brands.
Under Fitch's Corporate Rating Criteria treatment for corporate
issuers with captive finance subsidiaries, Fitch calculates an
appropriate target debt-to-equity ratio for the finance subsidiary
based on its asset quality, funding, and liquidity. If the finance
subsidiary's target debt-to-equity ratio, based on Fitch's
calculations, is lower than the actual ratio, Fitch assumes that
the parent injects additional equity into the finance subsidiary to
bring the debt-to-equity ratio down to the appropriate target
level.
Fitch's Corporate Rating Criteria assumes that the corporate entity
(TNL) funds the capital injection either by an increase in gross
debt, a reduction in cash, or a combination of the two. On an
as-reported basis, Fitch considers the effect of this equity
injection in its analysis of TNL's credit profile vis-à-vis an
increase in gross debt.
For TNL's captive finance subsidiary, Fitch calculates an
appropriate target debt-to-equity ratio of 1.0x, which is below the
actual ratio in the high-single digits as of FYE 2021. As a result,
Fitch makes an adjustment by adding $852 million of non-recourse
timeshare receivable debt to its adjusted leverage calculation for
TNL. This represents the capital injection needed to bring its
captive finance subsidiary's debt-to equity ratio down to 1.0x.
Given the strong free cash flow profile of TNL, Fitch expects cash
will accumulate through the forecast years above an assumed minimum
amount required for operations through the cycle. On a forward
basis, Fitch assumes TNL will build readily available cash with
retained free cash flow after assumed share buybacks, net working
capital requirements and net acquisitions.
This results in Fitch's captive finance debt adjustment beginning
to be allocated in forecasted metrics as a reduction to cash rather
than solely an increase to gross debt. This is due to Fitch's
forecast of TNL having sufficient cash to support the hypothetical
capitalization of the finance subsidiary and what Fitch assumes to
be its operational cash needs.
KEY ASSUMPTIONS
- Revenues and net VOI sales exceed FY19 levels in 2023 due to a
recovery in timeshare industry fundamentals. Fitch forecasts total
revenues of 93%, 104%, 109% and 105% of FY19 levels in FY22, FY23,
FY24 and FY25 respectively;
- EBITDA margins maintained in the 17% to 20% range through 2025;
- Share repurchases of $200 million-$250 million annually through
2025;
- No material acquisitions or dispositions occur (e.g. >$50
million) through 2025.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Total adjusted debt/operating EBITDAR sustaining below 4.0x;
- Greater cash flow diversification by brand and/or business line;
- Evidence of through-the-cycle sustainability in the company's
capital light inventory sources such that it does not materially
affect TNL's financial flexibility and operational strategy.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Total adjusted debt/operating EBITDAR and FCF/debt above 5.0x
and/or lower than 5.5% respectively;
- Severe disruption in the asset-backed securities (ABS) markets
such that TNL needs to provide material support to its captive
finance subsidiary;
- Material decline in profitability leading to EBITDAR margins
sustaining below 15%;
- Consistently negative FCF.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity Profile: At 3Q22, TNL has $169 million in cash and
cash equivalents, and $988 million of available capacity, net of
letters of credit, under its $1.0 billion revolving credit
facility. TNL has a well-staggered debt maturity profile, with no
debt maturities until April 2024 (pro forma for the anticipated
redemption of the 2023 notes with these new debt proceeds).
Since TNL is reliant on the ABS market to help fund its timeshare
customer lending activities, Fitch notes that a significant
economic downturn resulting in tightened credit markets could
pressure TNL's securitization market access and potentially require
the company to provide support to its finance subsidiary. This risk
is mitigated by the company's annual extension of its two-year $600
million receivable securitization warehouse facility.
At 3Q22, TNL had $416 million of available liquidity across its USD
($600MM of total capacity) and AUD/NZD ($187MM of total capacity)
bank conduit facilities, which should provide sufficient liquidity
to finance the sale of VOIs through 2023. TNL completed a $275
million securitization of vacation ownership loans in March 2022 at
a weighted average interest rate of 3.84% and an advance rate of
98%.
TNL also completed a $275 million securitization of vacation
ownership loans in July 2022 at a weighted average interest rate of
5.70% and an advance rate of 91%. In October 2022, TNL completed an
additional securitization financing of $250 million of vacation
ownership loans at a weighted average interest rate of 6.91% and an
advance rate of 87.5%.
ISSUER PROFILE
Travel + Leisure, Co. (NYSE: TNL) is a timeshare company that
operates in two segments. Within its Vacation Ownership segment,
TNL develops, markets, sells and manages VOIs and provides consumer
financing in connection with the VOI sales. Through the Travel and
Membership segment, TNL operates the world's largest vacation
exchange network, RCI.
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
----------- ------ --------
Travel + Leisure Co.
senior secured LT BB+ New Rating RR2
VITAL PHARMACEUTICALS: UST Opposes Appointment of Second Committee
------------------------------------------------------------------
The U.S. Trustee for Region 21 who oversees the Chapter 11 case of
Vital Pharmaceuticals, Inc. asked a bankruptcy court to deny the
motion filed by a group of creditors to appoint a separate
committee that will represent creditors holding non-trade claims.
In her objection filed with the U.S. Bankruptcy Court for the
Southern District of Florida, Mary Ida Townson said the creditors
"all hold nothing more than general unsecured claims."
"There is no statutory basis or public policy supporting their
argument for separate disparate treatment from all creditors
holding unsecured claims," Ms. Townson said.
The U.S. Trustee described the appointment of a second official
committee of unsecured creditors as "counterintuitive."
"Such appointment would constitute needless duplication, overlap,
and redundancy of the official committee," Ms. Townson said.
The creditors, which include Vital Pharmaceuticals' largest
non-trade creditor Monster Energy Company, questioned the
composition of the official unsecured creditors' committee
appointed in the case, saying it consists mostly of trade
creditors.
The U.S. Trustee initially appointed a seven-member committee on
Nov. 1. On Nov. 23, the bankruptcy watchdog reconstituted the
committee by adding four members.
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Huron Consulting
Group, Inc. as CTO services provider; and Rothschild & Co US, Inc.
as investment banker. Stretto, Inc. is the notice, claims and
solicitation agent.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on Nov. 1, 2022. The committee is represented
by Lowenstein Sandler, LLP and Sequor Law, P.A.
W.A. LYNCH: Seeks Cash Collateral Access
----------------------------------------
W.A. Lynch Construction, 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.
The Debtor urgently needs working capital to continue its ordinary
course business operations.
The Debtor was formed by William A. Lynch in September 2013,
formally began operations at the same time, and has been operated
by him since then. Due to a temporary slowdown on the collection of
receivables, the Debtor required capital that was not available to
Mr. Lynch, which required him to lean on expensive and dangerous
forms of financing using internet lenders with direct access to
bank accounts, credit card sales and accounts receivable. The
Debtor has a core operating profitability that will allow it to
reorganize, and that profitability is what drives its ability to
leverage cash collateral for the benefit of all its creditors.
Prior to the Petition Date, the Debtor's liquidity needs were met
primarily through the daily operation of the Debtor's business and
the collection of its accounts receivable in the ordinary course.
When cash flow got tight the Debtor incurred short-term high-risk
loans from more than five lenders, only some of which perfected any
purported grant of a security interest in the Debtor's assets. The
Debtor defaulted and certain of the lenders have taken action and
sought to enforce their contractual rights to possession of
accounts including an attempted $27,000 attempted draw on the
Debtor's pre-petition bank accounts which resulted in an
overdraft.
As of the Petition Date, the Debtor had approximately $30,000 in
its operating accounts. The Debtor estimates that the total value
of outstanding accounts receivable is approximately $1.630 million
and the Debtor has been and continues to engage in efforts to
collect on the accounts.
The Debtor has performed a UCC search to prepare the Motion and
analyze the position of its secured creditors, but several such
creditors obscure their identity when filing financing statements
and the Debtor's inquiry into those identities is pending at this
time. In exchange for use of cash collateral and in demonstration
of the feasibility of the Debtor's ongoing operations, the Debtor
proposes to escrow an amount that would adequately protect any of
its secured creditors pending a further determination of which, if
any, are so entitled.
A copy of the motion is available at https://bit.ly/3VS3fKj from
PacerMonitor.com.
About W.A. Lynch Construction, LLC
W.A. Lynch Construction, LLC is a leader in the construction
industry focused on commercial concrete, construction, design, and
build. The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Ind. Case No. 22-04836) on December 1,
2022. In the petition signed by William A. Lynch, president, the
Debtor disclosed up to $50,000 in assets and up to $10 million in
liabilities.
Judge Jeffrey J. Graham oversees the case.
Harley K. Means, Esq., at Kroger, Gardis & Regas, LLP, represents
the Debtor as legal counsel.
WC 8120 RESEARCH: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------------
The U.S. Trustee for Region 6 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of WC 8120 Research, LP.
About WC 8120 Research
WC 8120 Research, LP is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)) based in Austin, Texas.
Amid a pandemic and a default of its secured obligations, WC 8120
Research first filed for Chapter 11 bankruptcy (Bankr. W.D. Texas
Case No. 20-11106) on Oct. 6, 2020. The court entered an order
confirming the Debtor's Second Amended Chapter 11 Plan of
Reorganization on June 1, 2021.
WC 8120 Research again filed a petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. W.D. Texas on Case No. 22-10725) on
Oct. 31, 2022. In the petition filed by Natin Paul, as authorized
signatory, the Debtor reported assets between $10 million and $50
million and liabilities between $1 million and $10 million.
Judge Tony M. Davis oversees the case.
The Debtor is represented by Todd Brice Headden, Esq., at Hayward
PLLC.
WEWORK INC: Fitch Lowers LongTerm Issuer Default Ratings to 'CCC'
-----------------------------------------------------------------
Fitch Ratings has downgraded WeWork Companies LLC and WeWork Inc.'s
(f/k/a The We Co) Long-Term Issuer Default Ratings (LT IDRs) to
'CCC' from 'CCC+'. Fitch has also downgraded WeWork Companies LLC's
senior unsecured notes one notch to 'CC'/'RR6' from 'CCC-'/'RR6'.
KEY RATING DRIVERS
Negative Profitability Constrains IDR: Fitch views WeWork's
sustained negative EBITDA and FCF as key limiting factors that
restrict its operating and financial profile and limit the IDR to
the 'CCC' rating category. Fitch is encouraged by meaningful
improvements in operating losses during 2022, but the current
estimates for 2022 EBITDA in the range of negative $435 million to
$455 million indicates the company still faces significant
challenges. These challenges may be exacerbated by deteriorating
macro conditions in 2023, and without additional restructuring,
Fitch is modelling continued negative EBITDA for the next 12 to 18
months.
Liquidity and Funding Plan: WeWork reported $460 million in cash
and equivalents on its balance sheet as of the end of September
2022 as well as commitments of $500 million (undrawn as of 3Q22) in
senior secured notes. Fitch expects this liquidity to be sufficient
for the next 12 months, assuming that WeWork continues its
trajectory of improving operating performance.
Flexible Workspace Demand Recovery: WeWork's occupancy rate has
continued to improve from 46% at the end of 2020 to 72% at the end
of 3Q22. Physical memberships reached 658K, which was the highest
reported number over the past two years. All Access Memberships are
also at the highest reported number over the past two years at 62K.
Consolidated revenue growth was also strong in the first half of
2022, but revenue was $815 million in both 2Q22 and 3Q22. Whether
or not this indicates a plateau remains to be seen. Companies
continue to evaluate their real estate footprints in light of
hybrid workplaces as an ongoing result of the pandemic. Brokers
including CRE and other continue to project that flexible office
space use will grow, and this likely increases WeWork's addressable
market. WeWork is targeting a return to pre-pandemic occupancy
levels of low- to mid-80% range, but achieving this goal in 2023
will be challenging and will likely require exiting additional
low-performing locations.
Recovery and Notching: Fitch's recovery analysis assumes that
WeWork would be considered a going-concern in bankruptcy and that
the company would be reorganized rather than liquidated. Under its
recovery scenario, Fitch expects significant defaults on lease
payments, resulting in draws on the secured LC facility. This would
reduce any amount available to the unsecured note holders.
Guarantor and non-guarantor leases are approximately proportional
to their estimated percentage of revenue. Assumed rejected
operating lease claims totaling approximately $700 million would be
pari passu with the senior unsecured notes. Fitch assumes WeWork
has fully drawn the availability under its $500 million senior
secured notes. Fitch also assumes $39 million of other loans as of
June 30, 2022 are senior secured claims.
Fitch estimates WeWork's going concern EBITDA by assuming a
substantially smaller footprint of continuing operations in line
with the assumptions regarding rejected leases. Fitch assumes 60%
of current domestic revenue and 40% of non-domestic revenue,
resulting in approximately $1.5 billion. Using a normalized 33%
location gross margin and an estimate of restructured overhead
expense of approximately $200 million results in an EBITDA margin
of approximately 20%. Fitch uses a 5x multiple, at the lower end of
the 4x-7x range of emergence multiples observed in past
restructurings, in reflection of the potential that WeWork's market
position and brand is compromised permanently in distress and that
the flexible workspace market experiences sustained structural
demand declines due to long-term effects of COVID-19. After
assumption of a 10% administrative claim, the distribution of value
yields a recovery ranked in the 'RR6' category for the rated senior
unsecured notes.
DERIVATION SUMMARY
Fitch considers factors for highly speculative issuers in a
relative fashion. WeWork's business model appears viable having
restructured during the past two years. FCF has remained
consistently negative but has improved over the past year. However,
the company's FCF outlook is subject to risks and uncertainties,
particularly to the extent office demand is structurally weak over
the medium term.
WeWork's financial policy while supportive of providing needed
liquidity may not be sufficient in the medium or longer term to
protect creditors. Fitch expects under its base case that WeWork
will either need to draw on its committed secured facility or raise
additional funds at some point in 2023. Fitch's base case also
assumes weakening office space demand in the next 12 to 18 months,
which will further reduce the company's liquidity.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- Approximately $3.2 billion in revenue in 2022 reflects strong
rebound from 2021 results;
- Slight top-line revenue decline (approximately 2%) in 2023 based
on Fitch expectations of difficult macro-economic conditions,
leading to some churn but modest relative to the impacts of COVID;
- Location expenses moderating as the company benefits from its
restructuring during the pandemic and ongoing plans to exit
underperforming locations;
- Overhead expense as a percentage of revenue improving to
approximately 25% in 2022 and around 20% thereafter in reflection
of run-rate restructuring and operating leverage;
- Approximately $300 million in gross capex in 2022 and $275
million in 2023, although the company may be able to reduce this
further due to successful location exits and continued trends in
tenant improvement allowance collections;
- Assuming a draw of senior secured notes at some point in 2023
with additional funding likely required in 2024.
KEY RECOVERY RATING ASSUMPTIONS
- The recovery analysis assumes that WeWork would be reorganized as
a going-concern (GC) in bankruptcy rather than liquidated;
- Fitch has assumed a 10% administrative claim.
Going Concern Approach
- The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which we base the valuation
of the company;
- Fitch estimates WeWork's going concern EBITDA by assuming a
substantially smaller footprint of continuing operations in line
with the assumptions regarding rejected leases. Fitch assumes 60%
of current domestic revenue and 40% of non-domestic revenue,
resulting in approximately $1.5 billion. Using a normalized 33%
location gross margin and an estimate of restructured overhead
expense of approximately $200 million results in an EBITDA margin
of approximately 20% or $313 million.
EV Multiple Approach
An EV multiple of 5x is used to calculate a post-reorganization
valuation. The estimate considered the following factors:
- The historical bankruptcy exit multiple for companies WeWork's
sector ranged from 4x-7x, with a median reorganization multiple of
6x;
- Current EV multiples of public companies in the Business Services
sector trade well above the historical reorganization range. The
median forward EV multiple for this sector is about 10x. Historical
multiples ranged from 6x-12x;
- WeWork does have unique characteristics that would allow for a
higher multiple in its unique brand and stake in JVs;
- However, uncertainty surrounding WeWork's business model and the
high degree of strategy and execution risk leads Fitch to utilize a
recovery multiple that is below the sector median.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Evidence of improving FCF profile such that a liquidity crunch
can be averted within the near term (approximately 12-24 months)
and a pathway to breakeven or better FCF is visible longer term
(approximately 24-48 months);
- Increase in liquidity position could provide more leeway with
respect to the concerns over the near-term liquidity crunch;
- Improved visibility on ability to refinance 2025 maturities.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- More acute risk of a default perceived by Fitch, which could come
in a way of tightening liquidity, discussions with restructuring
advisors or an announcement related to a debt exchange.
LIQUIDITY AND DEBT STRUCTURE
Near-Term Liquidity: WeWork had cash and cash equivalents of $460
million at Sept. 30, 2022. WeWork's available liquidity
availability totaled approximately $1.5 billion. This includes $500
million senior secured senior secured note commitment from SoftBank
and $500 million of secured debt covenant capacity.
Refinancing Risk: WeWork had $669 million of principal outstanding
on its May 2025 senior notes, limiting its immediate refinancing
risk. The $2.2 billion senior unsecured SoftBank notes also mature
in 2025. WeWork's access to the $500 million senior secured
SoftBank notes expires in 2025 and the company's LC facility
matures in 2024, but the company is in the process of extending
this maturity. WeWork remains subject to risk that it is unable to
access markets to meet liquidity needs to the extent its funding
requirements exceed the proposed financing.
ISSUER PROFILE
WeWork provides membership-based access to workspace and amenities.
WeWork had more than 500,000 memberships and more than 600
locations as of Sept. 30, 2022 excluding China, India, and Israel,
which were deconsolidated and began operating as franchises June 1,
2021.
ESG CONSIDERATIONS
WeWork Companies LLC has an ESG Relevance Score of '4' for
Management Strategy due to ongoing challenges to implement a
strategy to achieve sustainable profitability, which has a negative
impact on the credit profile, and is relevant to the ratings in
conjunction with other factors.
WeWork Companies LLC has an ESG Relevance Score of '4' for Group
Structure due to due to SoftBank ownership concentration, which has
a negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
WeWork Companies LLC has an ESG Relevance Score of '4' for
Governance Structure due to the complexity of its structure and
related-party transactions with SoftBank, 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.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
WeWork Inc. LT IDR CCC Downgrade CCC+
WeWork Companies LLC LT IDR CCC Downgrade CCC+
senior unsecured LT CC Downgrade RR6 CCC-
WICKAPOGUE 1 LLC: NY Property Auction Slated for January 2023
-------------------------------------------------------------
For default in payment and performance of obligations under a
certain pledged agreement by the defaulting debtor, William E.
Mannion or Matthew D. Mannion, on behalf of Blue Castle (Cayman)
Ltd., secured party, will sell at public auction on Jan. 12, 2023,
at 11:00 a.m., via the virtual Cisco WebEx Platform and in-person
at the offices of Offit Kurman P.A., attorney's for secured party,
located at 590 Madison Avenue, 6th Floor, New York, NY 10022, the
pledged membership interests in borrower Wickapogue 1 LLC, books
and records relating to the pledged membership interests and all
rights, distributions, certificates, options, securities, security
entitlements, and other investment property of financial assets
that may hereafter be received, receivable, distributed or
exercised in respect of, or exchange for, all or any of the pledged
membership interests, and all proceeds of all of the foregoing.
Only a bona fide bidder who wires 10% of its opening bid in an
amount not less than $500,000, lien holders and the Debtor will be
permitted to participate in the auction. The bid deadline is Jan.
10, 2023, at 5:00 p.m. (ET). The successful bidder must increase
its deposit to total at least 10% of the winning bid price, no less
than 24 hours after the auction.
Wickapogue 1 LLC is the owner of the real estate at 145 Wickapogue
Road, Southhampton, Suffolk County, NY 11986, subject to mortgages
in the aggregate amount outstanding principal amount of $5.75
million plus accrued fees and costs totaling an estimated $6.93
million as of Nov. 2, 2022, with accruing per diem interest
thereafter of $3,532 plus fees and costs of sale, in favor of the
secured party. The real estate is subject to a foreclosure action
pending in the United State District Court Eastern District of New
York, Case No. 2:22-cv-06422-GRB-LGD.
Upon execution of a confidentiality and non-disclosure agreement,
additional due diligence information will be made available by
contacting secured party's representative: Jason A. Nagi, Esq.,
OffitKurman, P.A., at jason.nagi@offitkurman.com or 212-380-4180,
Joyce A. Kuhns, Esq., Offit Kurman P.A., at jkuhns@offitkurman.com
or 410-209-6400, or Matthew D. Mannion at mdmannion@jpandr.com or
212-267-6698.
WILLIAM HOLDINGS: SBA Deal on Cash Collateral Access OK'd
---------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, authorized William Holdings, LLC to use cash
collateral on an interim basis in accordance with its agreement
with the U.S. Small Business Administration.
As previously reported by the Troubled Company Reporter, on June
20, 2020, the Debtor executed a U.S. Small Business Administration
Note, pursuant to which the Debtor obtained an Economy Injury
Disaster Loan in the amount of $150,000. The Original Note was
subsequently amended on April 12, 2022, increasing the SBA Loan
amount to a cumulative total of $473,200. The terms of the
Modification of Note require the Debtor to pay principal and
interest payments of $2,402 every month beginning 24 months from
the date of the Original Note over the 30-year term of the SBA
Loan, with a maturity date of July 20, 2050. The SBA Loan has an
annual rate of interest of 3.75% and may be prepaid at any time
without notice of penalty.
As evidenced by a Security Agreement executed on June 20, 2020, and
the Amended SBA Loan Authorization and Agreement executed on April
12, 2022, and a validly filed UCC-1 filing on June 29,2020 as
Filing Number 20-7799262822, the SBA Loan is secured by all
tangible and intangible personal property.
The parties agreed that the Debtor may use cash collateral through
February 28, 2023, for payment of the ordinary and necessary
expenses.
The Debtor's use of cash collateral may be renewed upon subsequent
stipulation with SBA or by order of this Court on Debtor's Cash
Collateral Motion.
As adequate protection, retroactive to the Petition Date, the SBA
will receive a replacement lien on all post-petition revenues of
the Debtor to the same extent, priority and validity that its lien
attached to the cash collateral. The scope of the replacement lien
is limited to the amount (if any) that cash collateral diminishes
post-petition as a result of the Debtor's post-petition use of cash
collateral.
The SBA will be entitled to a super-priority claim over the life of
the Debtor's bankruptcy case, pursuant to 11 U.S.C. sections
503(b), 507(a)(2) and 507(b), which claim shall be limited to any
diminution in the value of SBA's collateral, pursuant to the SBA
Loan, as a result of Debtor's use of cash collateral on a
post-petition basis.
The Debtor also will remit payments to the SBA in the amounts and
terms as set forth in the applicable SBA Loan documents, with the
first payment due on or before December 20, 2022.
A copy of the order is available at https://bit.ly/3Y3nwhG from
PacerMonitor.com.
About William Holdings LLC
William Holdings LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-14708) on August 29,
3033. In the petition filed by Kameron Segal, as CEO, the Debtor
reports estimated assets and liabilities between $10 million and
$50 million each.
Judge Deborah J. Saltzman oversees the case.
The Debtor is represented by the Law Offices of Michael Jay
Berger.
WILMER TACORONTE ORTIZ: Court Denies Sec. 363 Sale of Property
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Puerto Rico denies
Wilmer Tacoronte Ortiz's (a) motion to sell real and personal
property at private sale under 11 U.S.C Section 363 free and clear
of liens and (b) request for post-confirmation modification of the
joint chapter 11 plan. Moreover, the Court grants OSP Consortium
LLC's motion requesting the entry of order for the transfer of
properties E and F.
At the outset, the Court notes that all three matters are related
to a Joint Stipulation approved by the Court in this case on Aug.
30, 2021. The Stipulation was executed by OSP and Tacoronte, along
with the Debtor Hotel Cupido Inc. in case 19-03799 (MAG11) and
consolidated Debtors Remliw Inc. and Monte Idilio, Inc. in case
19-01179 (MAG11) and filed in all three cases, which were jointly
administered at the time. The joint chapter 11 plan filed by all
the Debtors in all three cases and confirmed on Jan. 12, 2022
provides that OSP's claim will be paid pursuant to the terms of the
Stipulation.
Pursuant to the terms of the Stipulation, the Debtors, jointly
(including Tacoronte), agreed to pay the reduced amount of $1.4
million in cash to OSP within 12 months of the entry of the order
approving the Stipulation. The Stipulation called for monthly
payments to be made by the Debtors and payments to be made from the
sale of real estate properties and from insurance claim proceeds.
Upon payment of the $1.4 million, OSP agreed under the Stipulation
to release the Debtors and cancel the liens over their properties.
On Aug. 22, 2022, Tacoronte moved the Court to sell free and clear
of liens under 11 U.S.C. Section 363(f) Property C located in
Aguadilla, Puerto Rico. Tacoronte explains that he seeks to
preserve and maximize the value of his operations by selling
Property C to Mr. Jose Acevedo Tacoronte and that the sale is a
sound business decision which is in the best interest of the estate
and its creditors. Tacoronte proposes to sell the property for a
total amount of $736,295, which if approved, would be paid by
Acevedo in cash. Upon the sale, $600,000 would be paid to OSP,
while the remaining $136,295 would be paid to CRIM for accrued
property taxes. Tacoronte further asserts that the remaining
balance of the stipulated payment of $1.4 million can be covered
with the sale of Property E. The motion for sale provides that the
closing date will be within 30 days after the Court's approval of
the sale or on such other date and time as may be agreed between
Tacoronte and the buyer in writing.
OSP opposes the sale of Property C, arguing that it is at odds with
the terms of the Stipulation, which are clear, unambiguous, and
carry res judicata effect. OSP asserts that the Debtors are in
default with the Stipulation and the proposed sale and the
resulting payment to OSP of $600,000 falls short of the balance
owed on the stipulated $1.4 million by $168,111. OSP further argues
that at this juncture the Court may not authorize a Section 363(f)
sale free and clear of liens because such section provides the
mechanism to sell property of the estate and upon the confirmation
of the joint plan -- which in this case, there is no estate,
property of the estate, or a debtor-in-possession.
The Court agrees with OSP that a sale under 11 U.S.C. Section
363(f) is inapplicable at this juncture. Undoubtedly, when the
Stipulation was executed on Aug. 4, 2021, it allowed sales free and
clear of liens because it was filed prior to the confirmation of
the joint plan in all three bankruptcy cases. However, after
confirmation of the joint plan on Jan. 14, 2022, all property of
the estate vested in the Debtors under 11 U.S.C. Section 1141(b).
More importantly, as argued by OSP, the Court finds that
Tacoronte's motion for sale contravenes with the terms of the
Stipulation for the treatment of OSP's claims -- to which the
Debtors agreed to be bound and which were incorporated into
Tacoronte's confirmed plan -- because it purports to extend the
deadline for the payment.
While Tacoronte correctly states that the motion for sale was filed
prior to the Aug. 30, 2022 deadline to complete the payment of $1.4
million, the Court finds, however, that the motion for sale
includes a closing date past the Aug. 30, 2022 payout deadline.
Furthermore, the Court points out that Tacoronte would still be in
default of the Stipulation upon the sale of Property C because it
would only allow payment to OSP of $600,000 of the $768,111 owed to
complete the $1.4 million obligation.
Tacoronte invokes the doctrine of rebus sic stantibus. However,
rebus sic stantibus may only be applied under extraordinary
circumstances. Termination of a contract under rebus sic stantibus
is not appropriate if the ensuing hardship is part of the normal
risks related to the contract. Tacoronte argues that he's been
acting in good faith, that OSP knew the difficulties motel
businesses face in today's economy, and that the motion for sale
was filed prior to the expiration of the stipulated deadline. The
Court finds that Tacoronte fails to allege, in any form, the
exceptional circumstances that warrant the application of the
doctrine or how the requirements of the rebus sic stantibus
doctrine are met in this case.
Meanwhile, OSP moves the Court for the entry of an order for the
transfer of Properties E and F free and clear of any and all
pre-transfer date liens, claims, interests, liabilities, and
contractual commitments of any kind or nature. OSP argues that
pursuant to the terms of the Stipulation and upon the Debtors'
default, Tacoronte is required to transfer these two properties and
requests that the Court issue an order transferring title and a
writ of cancellation of liens.
Tacoronte opposes OSP's motion, arguing that the transfer does not
serve the best interest of the estate, which would be better served
by the sale to a third party. Furthermore, he states that if the
transfer is approved by the court, it must be done under 11 U.S.C.
Section 363 and that the transferee must pay accrued property taxes
and notarial fees.
The Court finds that the transfer sought by OSP is under the terms
of the Debtors' joint chapter 11 plan that incorporated the terms
of the Stipulation. As a result, the Court grants OSP's motion
requesting entry of order for the transfer of Properties E and F.
Tacoronte also filed a post-confirmation modification, so that the
Court will permit the proposed sale of Property C for the partial
payment of OSP's claim. Tacoronte again proposes to pay OSP $600,00
in cash the day of the sale of Property C. He also proposes to pay
OSP the remaining balance of $168,111 by either selling Property E
to a third party, or in the alternative, transferring it to OSP.
OSP objects to the post-confirmation modification, arguing that the
limited scope for post-confirmation modifications in chapter 11
individual cases allowed by 11 U.S.C. Section 1127(e) does not
permit the type of modification proposed by Tacoronte.
The Court agrees with OSP that the modification sought by Tacoronte
goes further than 11 U.S.C. Section 1127(e) allows because it is a
modification of the total amount of OSP's claim. Per the confirmed
joint plan, which incorporates the terms of the Stipulation, the
Debtors had until Aug. 30, 2022 to pay jointly $1.4 million in
cash. Upon failure to comply with the $1.4 million payment by the
due date, the Debtors' obligations reverted to their original state
under the loan documents and their debt to OSP is no longer the
stipulated $1.4 million. The Court finds Tacoronte's
post-confirmation modification as an attempt at circumventing the
terms and conditions of the Stipulation by disregarding its default
provisions and extending the deadline for the payment of $1.4
million, which is no longer applicable. Therefore, the Court denies
Tacoronte's post-confirmation modification.
A full-text copy of the Opinion and Order dated Nov. 23, 2022, is
available at https://tinyurl.com/2p98xx7s from Leagle.com.
About Wilmer Tacoronte Ortiz
Wilmer Tacoronte Ortiz sought Chapter 11 protection (Bankr. D. P.R.
Case No. 19-01178) on March 2, 2019. The Debtor tapped Damaris
Quinones Vargas, Esq. at Bufete Quinonez Vargas & Assoc. as
counsel.
*********
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