/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/230102.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, January 2, 2023, Vol. 27, No. 1 Headlines 1982 INVESTMENT: Hits Chapter 11 Bankruptcy Protection 25 PRAIRE LANE: SARE Files for Chapter 11 Bankruptcy ACTION SECURITY: Gets OK to Hire RHM Law as Bankruptcy Counsel AEARO TECHNOLOGIES: 3M Fights Judge's Bid to Shift Blame AEARO TECHNOLOGIES: U.S. Chamber Supports 3M Unit Bankruptcy ALTA MESA: David Dunn's Claim for Injunctive Relief Granted in Part ALVARENGA TRANSPORT: Hires Wilkins Drolshagen as Defense Counsel AR TEXTILES: Seeks to Hire Buckmiller, Boyette & Frost as Counsel ARCHDIOCESE OF SANTA FE: Court Confirms Consensual Plan BAIS YAAKOV OF BROOKLYN: Seeks Chapter 11 Bankruptcy Protection BENNU ENTERPRISES: Hires Eric A. Liepins as Bankruptcy Counsel BERNARD L. MADOFF: Inteligo Bank's Move to Dismiss Case Denied BERNARD L. MADOFF: Kookmin Bank's Bid to Dismiss Case Denied BERNARD L. MADOFF: UKFP's Bid to Dismiss Trustee's Complaint Denied BLACK ANGUS: PhenixFIN Corp Marks $8.4M Loan at 80% Off CHOCTAW GENERATION: Fitch Cuts Rating on $161MM Series 1 Notes to D CHURCH OF GOD: Seeks to Hire Bronson Law Offices as Legal Counsel COMPOUND PRIME: S&P Withdraws 'B-' Rating on Senior Unsecured Debt CORE SCIENTIFIC: Gets Court Approval for $37.5-Mil. Bankruptcy Loan CUSTOM ALLOY: Taps SierraConstellation as Financial Advisor DCL HOLDINGS: Files for Chapter 11, CCAA to Pursue Sale DESERT VALLEY: Gets OK to Hire Mark J. Giunta as New Counsel DETAIL DESIGN: Gets OK to Hire Victor W. Dahar as Legal Counsel DIEBOLD NIXDORF: Moody's Alters Outlook on 'Caa2' CFR to Positive DPL INC: Fitch Alters Outlook on 'BB' LongTerm IDR to Stable EAGLE DUNES OWNERS: Files Chapter 11 Bankruptcy Protection EMPIRE COUNTERTOPS: Seeks to Hire Norred Law as Bankruptcy Counsel FAAVEE LLC: Case Summary & One Unsecured Creditor FIRST LINE TACTICAL: Taps Connolly Steele & Co. as Accountant FLOWER ONE: Implements Reorganization Plan Under CCAA FREE SPEECH: Court Allows Sandy Hook Cases vs. Jones to Proceed FREE SPEECH: Judge Lopez Willing to Raise Alex Jones' Salary FTX TRADING: Asks Court Intervention on $440-Mil. Robinhood Sharess FTX TRADING: Committee Taps Paul Hastings to Lead Legal Work GAME REPAIR SHOP: Gets OK to Hire NAI United as Real Estate Broker GIRARDI & KEESE: Erika Jane Deposed in $25-Mil. Bankruptcy Suit GREELEY LAND: Gets OK to Hire Brownstein as Legal Counsel HIGHPOINT LIFEHOPE: Seeks to Tap MCA Financial as Property Manager HIGHWAY 30 PHYSICAL: Case Summary & 16 Unsecured Creditors HONX INC: McNamara's Move to Remand Case Granted IVS COMM: Seeks to Hire Darnell Law Office as Bankruptcy Counsel KENNESAW LOFTBNB: Case Summary & Three Unsecured Creditors LEGACY LOFTS: Seeks to Hire Langley & Banack as Legal Counsel LYLES AND LEWIS: Taps Regional Bankruptcy Center as Legal Counsel MAGENTA BUYER: Fitch Affirms LongTerm IDR at 'B', Outlook Stable MONTGOMERY REALTY: Seeks Chapter 11 Bankruptcy Protection MORA HOUSE: Gets Court OK to Hire Real Estate Brokers MOUNTAIN MOVING: Seeks to Hire Hoover Penrod as Legal Counsel NECESSITY RETAIL: Fitch Cuts LongTerm IDR to 'BB', Outlook Stable NVTN LLC: PhenixFIN Corp Marks $19M Loan at 73% Off ORTHOPAEDIC SURGICAL: Case Summary & 20 Top Unsecured Creditors PACIFIC STEEL: Trustee Precluded From Recovering Against UHY LLP PHENOMENON MARKETING: Taps Michael Jay Berger as Litigation Counsel PHILLIPS SEABROOK: Case Summary & Four Unsecured Creditors POWER STOP: PhenixFIN Corp Marks $4.97M Loan at 18% Off REVLON INC: Bankruptcy Plan Could Hand Over Ownership to Lenders REVLON INC: Set to Exit Chapter 11 Bankruptcy in April 2023 RYMAN HOSPITALITY: Fitch Hikes IDR to 'BB-', Outlook Stable SILVER CREEK: Taps Law Offices of Marilyn D. Garner as Counsel SOUTH AMERICAN BEEF: Hires Bradshaw Fowler Proctor as Counsel SOUTH AMERICAN BEEF: Hires Moglia Advisors as Financial Advisor STRAIT CROSSING: DBRS Confirms BB(high) Issuer Rating SUNNOVA ENERGY: S&P Withdraws 'B-' Issuer Credit Rating SUPERIOR INDUSTRIES: Moody's Affirms B2 CFR, Outlook Stable SUPREME WORX: Gets OK to Hire Latham as Bankruptcy Counsel SWVL HOLDINGS: Committee to Explore Strategic Alternatives TELOGIA POWER: Seeks Approval to Hire Allen Turnage as Counsel TGPC PROPERTIES: Seeks Chapter 11 Bankruptcy Protection THOMAS AND THOMAS: Seeks to Hire Eric A. Liepins as Legal Counsel TK CLEANING & LAWN SERVICE: Commences Subchapter V Case VERIFIED AUDIT: Seeks Chapter 7 Bankruptcy Liquidation VOYAGER DIGITAL: Binance US to Buy Assets for $1.02 Billion VOYAGER DIGITAL: Customers to Recover 50% of Crypto Claims WESTERN GLOBAL: Fitch Alters Outlook on 'B+' LongTerm IDR to Neg. XTRA INC: Files for Chapter 11 Bankruptcy [^] BOND PRICING: For the Week from December 26 to 30, 2022 ********* 1982 INVESTMENT: Hits Chapter 11 Bankruptcy Protection ------------------------------------------------------ 1982 Investment LLC filed for chapter 11 protection in the Eastern District of Pennsylvania. The Debtor disclosed $1,016,251 in assets against $400,000 in total liabilities in its schedules. The Debtor owns the property at 1982 Street Rd Bensalem, PA 19020-3701, valued at $1,016,140. The Estate of Ali Elbanna, a secured creditor, is owed $400,000. According to court filings, 1982 Investment estimates 1 to 49 creditors, and that funds will be available to unsecured creditors. About 1982 Investment LLC 1982 Investment LLC is a Single Asset Reai Estate (as defined in 11 U.S.C. Sec. 101(518)). 1982 Investment LLC filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa. Case No. 22-13397) on Dec. 21, 2022. In the petition filed by Mark Allen, as manager, the Debtor reported assets between $1 million and $10 million and liabilities between $100,000 and $500,000. The Debtor is represented by: Michael A. Cibik, Esq. Cibik Law, P.C. 3601 Peach Tree Ln Bensalem, PA 19020-4660 25 PRAIRE LANE: SARE Files for Chapter 11 Bankruptcy ---------------------------------------------------- 25 Praire Lane Inc. filed for chapter 11 protection in the Northern District of Illinois without stating a reason. The Debtor owns the property at 25 Prairie Lane Chicago, IL 60638. According to court filings, 25 Praire Lane Inc. estimates between $1 million and $10 million in debt owed to 1 to 49 creditors. The petition states that funds will be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for Jan. 19, 2023, 11:00 AM. About 25 Praire Lane Inc. 25 Praire Lane Inc. is a Single Asset Real Estate (as defined in 11 U.S.C. Sec. 101(51B)). 25 Praire Lane Inc. filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 22-14675) on Dec. 20, 2022. In the petition filed by Jamal R. Jaber, as president, the Debtor reported assets and liabilities between $1 million and $10 million. The Debtor is represented by: Gregory K Stern Gregory K. Stern, P.C. 5251 S. Parkside Chicago, IL 60638 ACTION SECURITY: Gets OK to Hire RHM Law as Bankruptcy Counsel -------------------------------------------------------------- All Action Security Consulting Group, Inc. seeks approval from the U.S. Bankruptcy Court for the Central District of California to hire RHM Law LLP as its general bankruptcy counsel. The firm's services include: a. advice and assistance regarding compliance with the requirements of the United States Trustee; b. advice regarding matters of bankruptcy law, including the rights and remedies of the Debtor with respect to its assets and claims of its creditors; c. advice regarding cash collateral matters; d. examinations of witnesses, claimants or adverse parties, and the preparation of reports, accounts and pleadings; e. advice concerning the requirements of the Bankruptcy Code and applicable rules; f. negotiation, formulation and implementation of a Chapter 11 plan of reorganization; and g. court appearances. RHM Law will charge these fees: Matthew D. Resnik, Partner $585 per hour Roksana D. Moradi-Brovia, Partner $500 per hour Russell J. Stong Ill, Associate $350 per hour David M. Kritzer, Associate $350 per hour W. Sloan Youkstetter, Associate $350 per hour Pardis Akhavan, Associate $300 per hour Rosario Zubia, Paralegal $135 per hour Priscilla Bueno, Paralegal $135 per hour Rebeca Benitez, Paralegal $135 per hour Max Bonilla Paralegal $135 per hour Susie Segura, Paralegal $135 per hour The firm received an initial retainer fee of $25,000. Roksana Moradi-Brovia, Esq.., a partner at RHM Law, disclosed in a court filing that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Roksana D. Moradi-Brovia, Esq. Matthew D. Resnik, Esq. RHM Law, LLP 17609 Ventura Blvd., Suite 314 Encino, CA 91316 Phone: (818) 285-0100 Fax: (818) 855-7013 Email: roksana@RHMFirm.com matt@RHMFirm.com About All Action Security Consulting Group All Action Security Consulting Group, Inc. provides security guard services. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 22-11429) on Dec. 12, 2022. In the petition signed by its chief executive officer, John Ayam, the Debtor disclosed up to $1 million in both assets and liabilities. Judge Victoria S. Kaufman oversees the case. RHM Law, LLP serves as the Debtor's legal counsel. AEARO TECHNOLOGIES: 3M Fights Judge's Bid to Shift Blame -------------------------------------------------------- Martina Barash of Bloomberg Law reports that a federal judge overseeing 230,000 cases over defective earplugs, said 3M Co. has full potential liability, independent of its subsidiary Aearo Technologies LLC, for service members' hearing-loss injuries blamed on allegedly ineffective combat earplugs, and may not attempt to pin any portion of blame on Aearo. 3M engaged in "brazen abuse of the litigation process," Judge M. Casey Rodgers said in imposing the sanction of preventing future efforts by the company to contest its own liability as a successor to Aearo. The subsidiary and related companies are in bankruptcy proceedings. The multidistrict litigation will mostly be paused if 3M asks for an immediate appeal, Rodgers said. The service members allege their use of Aearo Combat Arms version 2 earplugs in noisy military environments led to hearing loss and tinnitus. After "losing its attempt to piggyback onto Aearo's bankruptcy protection, the company returned to the MDL and sought to rewrite the history of the CAEv2, its relationship with Aearo, and the litigation by asserting for the first time that it has neither independent nor successor liability for any alleged CAEv2-related injuries," Rodgers said. But that was after "nearly four years of affirmatively asserting, advocating, and wielding—to the detriment of Plaintiffs—the precise opposite position in the MDL," she said. For example, she said, it got punitive damages reduced in one case on the basis that the six defendants were really only one party. The service members raised the successor liability issue "from the very start of the litigation—both verbally and in the pleadings—but were met with repeated assurances that 3M alone was the responsible party," she said. The case is In re 3M Combat Arms Earplug Prods. Liab. Litig., N.D. Fla., No. 3:19-md-02885, 12/22/22. About Aearo Technologies Aearo Technologies -- https://earglobal.com/en -- is a 3M company that designs, manufactures, and sells personal protection equipment. The Company offers prescription and non-prescription safety eye wear, face shields, hard hats, and respirators. Aearo serves customers worldwide. To address claims related to the Combat Arms Earplugs Version 2, Aearo Technologies LLC and its affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Lead Case No. 22-02890) on July 26, 2022. In the petition filed by John R. Castellano, as authorized signatory, Aearo Technologies estimated assets and liabilities between $1 billion and $10 billion. 3M is not a debtor in the Chapter 11 cases. 3M has committed $1 billion to fund a trust allocated for Combat Arms claims. Kirkland & Ellis LLP is serving as legal counsel and AlixPartners LLP is serving as restructuring advisor to Aearo Technologies. Ice Miller LLP, is serving as bankruptcy co-counsel to the Debtors. Kroll is the claims agent. PJT Partners is serving as financial advisor and White & Case LLP is serving as legal counsel to 3M. AEARO TECHNOLOGIES: U.S. Chamber Supports 3M Unit Bankruptcy ------------------------------------------------------------ Alison Frankel of Reuters reports that the the U.S. Chamber of Commerce and the American Tort Reform Association told the 7th U.S. Circuit Court of Appeals on Monday, December 19, 2022, that bankruptcy is often the only way for an otherwise healthy company to resolve "catastrophic" mass torts exposure because Chapter 11 promotes fast, fair and global claims resolution. The pro-business groups urged the 7th U.S. Circuit Court of Appeals in an amicus brief to overturn a federal bankruptcy court ruling that allows tens of thousands of U.S. military veterans to continue litigating their hearing loss claims against 3M Co despite the Chapter 11 bankruptcy of the 3M subsidiary that manufactured allegedly defective earplugs. (Procedurally, the brief must still be accepted by the appeals court but was attached to a motion for leave to file.) The consolidated multidistrict litigation against 3M, the Chamber argued, has succeeded only in attracting more than 200,000 lawsuits of dubious merit that will take untold years to wend their way through the federal court system. It's vastly preferable, the brief insisted, to use the tools of bankruptcy -- including a claims estimation process to determine who is eligible for a payout and a settlement trust to assure orderly payments -- to resolve 3M's liability. That way, the brief said, the company can continue to "contribute to society" by manufacturing its products, providing jobs and paying taxes. This stance is hardly a surprise: The Chamber's Institute for Legal Reform issued a report earlier this month extolling the virtues of bankruptcy as an alternative to class actions and MDLs to resolve mass torts claims. The amicus brief backing 3M even quotes, self-referentially, from the report by the Chamber's affiliated group. Moreover, as leaders of the plaintiffs' steering committee in the gigantic earplug MDL pointed out in an email to me, a 3M executive, Eric Hammes, is on the U.S. Chamber's board. (Hammes, a 3M executive vice president is also on the board of the National Association of Manufacturers, which also filed an amicus brief backing 3M. That brief was not immediately available on the public docket.) In an email, MDL co-leaders Christopher Seeger of Seeger Weiss and Bryan Aylstock of Aylstock, Witkin, Kreis & Overholtz called 3M's amici "America's leading corporate front groups." The lead lawyer on the Chamber and ATRA brief, Ilana Eisenstein of DLA Piper, did not respond to my email query about the 3M executive on the Chamber's board. A 3M spokesperson sent an email statement in response to my query about Hammes' board membership. "The Chamber of Commerce determined what content to include in the brief," 3M said. The company said it "remains committed to efficiently, equitably, and expeditiously resolving" earplug claims through a global resolution. Here's what I still don't get after reading the 3M amicus brief and the Institute for Legal Reform report: What's the justification for companies' insistence that bankruptcy is a more effective way than litigation to distinguish between legitimate and meritless cases? Put aside the technicalities of the 3M appeal, which seeks to extend the automatic stay on litigation against the bankrupt 3M subsidiary Aearo Technologies LLC to halt MDL litigation against the parent company as well. I told you last week about 3M's deep-in-the-weeds legal arguments for why U.S. Bankruptcy Judge Jeffrey Graham of Indianapolis erred in refusing to allow the parent company to use its subsidiary's bankruptcy as an MDL escape hatch. Let's also concede the Chamber's point that more than 100 companies == most, though not all of which were facing asbestos liability == have used bankruptcy to resolve mass tort liabilities by channeling present and future mass tort claims into a separate trust. The Chamber, I'll note, has been complaining for years about abuses in the asbestos trust claim process, but its report argues that for all of its acknowledged flaws, claims trusts can still be the most efficient way for a viable company to disentangle themselves from mass tort liability. What 3M and its amici do not explain, though, is why bankruptcy is a quicker way to get to the merits of individual claims. It’s true, of course, that Chapter 11 encourages creditors -- including personal injury plaintiffs — to settle. But so does the MDL process. I don't have an exact count, but I'm confident that hundreds of MDL defendants have reached global settlements without resorting to bankruptcy. The judge presiding over the 3M earplug MDL, U.S. District Judge M. Casey Rodgers of Pensacola, Florida, ordered the two sides to engage in mediation in August, after the bankruptcy court rejected 3M's bid to halt the litigation. If 3M is truly interested in a global settlement, there's no reason why it can't make a deal through that process. (3M told me via email that it is participating in the mediation process.) The company, which insists its earplugs do not cause hearing loss, has long argued that the MDL is tainted by unjustified claims ginned up by plaintiffs' lawyers. The Chamber and ATRA brief similarly argued that MDL claims exploded because plaintiffs did not have to pay filing fees or to provide substantive information about their alleged injuries. How will bankruptcy cull the claims? The Chamber and ATRA said only that Chapter 11 can "provide mechanisms for determining the legitimacy of claims through claims estimation processes." The brief also said, however, that the trust claims process could make it easier for plaintiffs to recover money for low-value cases that "are difficult to prove in court." In other words, by the Chamber's own argument, the bankruptcy process might not eliminate weak claims against 3M and its subsidiaries. Chapter 11 might simply speed up payouts to plaintiffs with dubious claims. I suppose that's a benefit for the company, but 3M could arguably achieve the same resolution through a global settlement in the MDL. MDL plaintiffs' lawyers, meanwhile, told me that they believe 3M's intention is not to use bankruptcy to streamline the claims process but to eliminate their litigation leverage against 3M. "Bankruptcy courts are not designed for the valuation of tort claims, particularly when a court (in this case the MDL) has managed the process for nearly four years," Seeger and Aylstock said in an email statement. What's interesting about arguments by 3M and its amici is their assertion that bankruptcy will benefit not just the company and its subsidiaries but also MDL plaintiffs with well-founded claims. The Chamber and ATRA have certainly offered good arguments about how the bankruptcy process has helped some companies manage mass tort exposure. But without knowing how the claims estimation process will work in the Aearo bankruptcy, I'm left with a lot of questions about whether it's obviously a better route for the company or the veterans with claims. About Aearo Technologies Aearo Technologies -- https://earglobal.com/en -- is a 3M company that designs, manufactures, and sells personal protection equipment. The Company offers prescription and non-prescription safety eye wear, face shields, hard hats, and respirators. Aearo serves customers worldwide. To address claims related to the Combat Arms Earplugs Version 2, Aearo Technologies LLC and its affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Lead Case No. 22-02890) on July 26, 2022. In the petition filed by John R. Castellano, as authorized signatory, Aearo Technologies estimated assets and liabilities between $1 billion and $10 billion each. 3M is not a debtor in the Chapter 11 cases. 3M has committed $1 billion to fund a trust allocated for Combat Arms claims. Kirkland & Ellis LLP is serving as legal counsel and AlixPartners LLP is serving as restructuring advisor to Aearo Technologies. Ice Miller LLP, is serving as bankruptcy co-counsel to the Debtors. Kroll is the claims agent. PJT Partners is serving as financial advisor and White & Case LLP is serving as legal counsel to 3M. ALTA MESA: David Dunn's Claim for Injunctive Relief Granted in Part ------------------------------------------------------------------- In Re: Alta Mesa Resources, Inc., et al., Chapter 11, Debtors. David Dunn, Plaintiff, v. QBE Insurance Corporation, et al., Defendants, Case No. 19-35133, Adversary No. 21-3792, (Bankr. S.D. Tex.), Bankruptcy Judge Marvin Isgur for the Southern District of Texas dismisses David Dunn's claim for declaratory judgment without prejudice and grants in part his claim for injunctive relief. Certain former directors and officers of Alta Mesa Resources, Inc. and its debtor-affiliates are defendants in two proceedings: (i) the AMH Litigation Trust's claims for breach of fiduciary duty; and (ii) a securities class action suit against the directors and officers for misrepresentation. David Dunn, as the Trustee of the Alta Mesa Holdings Litigation Trust, filed this adversary proceeding to determine the rights of the various parties in relation to the insurance proceeds. Specifically, Dunn seeks (i) a declaratory judgment that non-covered class action claims are not contractually entitled to proceeds under the terms of the insurance policies and (ii) an injunction preventing the Insurers or directors and officers from making payments to class plaintiffs until Dunn's action against the directors and officers of Alta Mesa is resolved. The D&O policies at issue include both primary and excess coverage for the defendant directors and officers. In aggregate, the policies provide up to $80 million in insurance coverage. The policies explicitly exclude coverage for any claim arising from any act "actually or allegedly committed or attempted, in whole or in part, prior to February 9, 2018" -- the date of the business combination between Alta Mesa and a Special Purpose Acquisition Company (SPAC) which resulted in the organizational structure of the debtors at the petition date. The parties do not dispute that the express terms of the policies preclude coverage for claims arising from wrongful acts which occurred prior to the business combination. In their answers to the Complaint, the Insurers do not indicate any intention of using proceeds to pay uncovered claims. The class action plaintiffs filed a motion to dismiss this proceeding, arguing that their interest in the proceeds is not subordinate to the Litigation Trust as Dunn claims. The directors and officers then filed their motion to dismiss, arguing that Dunn lacks standing to request such relief, and, in any case, the relief requested is premature. As to the claims for declaratory judgment, the Court finds that Dunn's motion does no more than plead the conclusory allegation that the Insurers hypothetically could make payments on non-covered claims despite a lack of evidence of the likelihood of that occurring. Since Dunn has not shown that an actual controversy exists regarding payments on non-covered claims, the Court dismisses his claim for declaratory judgment for lack of subject matter jurisdiction. On the other hand, the Court finds that an actual controversy exists regarding Dunn's claim for permanent injunction. The Complaint seeks a permanent injunction preventing the payment of policy proceeds to the class plaintiffs until the Trust resolves its breach of fiduciary duty claims against the directors and officers of Alta Mesa. The Court finds this post-confirmation dispute involves a claim which was assigned to the AMH Litigation Trust as part of the Plan, arose pre-petition, and involves the determination of the parties' respective rights to insurance proceeds. The Court determines that it implicates the parties' bankruptcy-law rights and the disputed application of the provisions of a confirmed plan. The Plan established the AMH Litigation Trust for the purpose of evaluating and prosecuting causes of action for the benefit of the holders of Litigation Trust Interests, which includes certain creditors. The Plan is, at least in part, premised upon the understanding that certain of Alta Mesa's creditors could later recover from claims brought by Dunn, including the defendants' alleged breach of fiduciary duty. Executing the Plan necessarily involves the pursuit of those claims. The Court concludes that recovery on those claims necessarily involves the disputed insurance proceeds. Dunn argues that the Trust beneficiaries have a superior right to those proceeds. Therefore, the dispute pertains to the execution of the Plan, and the Court has "related to" jurisdiction over it. The directors and officers argue in the motion to dismiss that the Litigation Trustee lacks standing to bring claims against the Insurers under Texas's no direct action rule unless and until the directors' and officers' liability is established in the Litigation Trust's action. The Trust in this case is an "injured third-party" in the sense that it stands in the shoes of Alta Mesa as a tort claimant against the officers and directors. Dunn alleges that a shortfall of funds threatens to reduce the ultimate recovery of unsecured creditors, and the Plan's terms subordinate the claims of the class action plaintiffs to those of the Litigation Trust beneficiaries. The Court finds that the Litigation Trustee has a valid interest in seeking to enforce the Plan by ensuring the Trust has access to those proceeds. The Court determines that Dunn is seeking injunctive relief to preserve the Litigation Trust beneficiaries' rights under the Plan. Hence, Dunn has standing to pursue the injunctive relief requested. To survive the motion to dismiss, the Complaint must plausibly plead the substantial likelihood that Dunn will ultimately prevail in his claim against the directors and officers and that this would give rise to the situation where the Trust would be harmed by a shortage of policy proceeds. The directors and officers argue in their motion to dismiss that Dunn fails to plead a likelihood of success on the merits because, as they assert in their motion to dismiss the breach of fiduciary duty claims, they did not owe fiduciary duties to Alta Mesa. On the contrary, the Court determines that three of the directors and officers plausibly owed and breached fiduciary duties based on Dunn's factual allegations in the complaint against the directors and officers. By referencing those same allegations in his motion for injunctive relief, the Court concludes that Dunn plausibly pleads success on the merits. The Court explains that the purpose of a preliminary injunction is to preserve the status quo, even if the outcome of the lawsuit itself is uncertain. The Complaint specifically alleges that full recoveries on both causes of action would not be possible given the limits of the insurance coverage and limited personal resources of the directors and officers. The movants' argument that this is an inaccurate representation of the situation or of the parties' rights does not render the Complaint "speculative" in the sense that it should be dismissed. Rather, the Court determines that it presents a fact issue which should be preserved for further adjudication. The Court observes that the Complaint sufficiently pleads the two, over-arching factual bases necessary for his claim for injunctive relief to survive dismissal: (i) the Trust has at least an equal interest in the policy proceeds; and (ii) the proceeds are insufficient to satisfy both parties' claims against the directors and officers. However, as neither case has been reduced to judgment, it is premature for the Court to operate on the assumption that the proceeds will be insufficient. Therefore, the appropriate solution is to deny the motion to dismiss the claim for injunctive relief and preserve the issues addressed above for an evidentiary hearing. A full-text copy of the Memorandum Opinion dated Dec. 12, 2022, is available at https://tinyurl.com/29577urn from Leagle.com. About Alta Mesa Resources Alta Mesa Resources, Inc., is an independent energy company focused on the development and acquisition of unconventional oil and natural gas reserves in the Anadarko Basin in Oklahoma, and through Kingfisher Midstream, LLC, provides best-in-class midstream energy services, including crude oil and gas gathering, processing and marketing and produced water disposal to producers in the STACK play. Alta Mesa reported $1.4 billion in assets and $864 million in liabilities as of Dec. 31, 2018. Alta Mesa and six affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Case No. 19-35133) on Sept. 11, 2019. The Hon. Marvin Isgur is the case judge. The Debtors tapped Porter Hedges LLP and Latham & Watkins LLP as attorneys; and Perella Weinberg Partners LP and its affiliate Tudor Pickering Holt & Co Advisors LP as investment banker. Prime Clerk LLC is the claims agent. ALVARENGA TRANSPORT: Hires Wilkins Drolshagen as Defense Counsel ---------------------------------------------------------------- Alvarenga Transport, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of California to employ Wilkins Drolshagen & Czeshinski, LLP as its defense counsel. The firm will represent the Debtor in the accident claim. In 2019, the Debtor was sued based on allegations that one of its employees illegally parked a truck on the highway which in turn (allegedly) contributed to a serious auto accident. James H. Wilkins will be the lead attorney on the case. His customary rate in effect is $375 per hour. Wilkins Drolshagen does not hold or represent an interest adverse to the estate or of any class of creditors or equity security holders, according to court filings. The firm can be reached through: James H. Wilkins, Esq. Wilkins Drolshagen & Czeshinski, LLP 6785 N. Willow Avenue Fresno, CA 93710 Phone: (559) 438-2390 Fax: (559) 438-2393 Email: jhw@wdcllp.com About Alvarenga Transport Alvarenga Transport, LLC filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Calif. Case No. 22-11226) on July 18, 2022, listing as much as $1 million in both assets and liabilities. Judge Jennifer E. Niemann oversees the case. Fear Waddell, PC serves as the Debtor's legal counsel. AR TEXTILES: Seeks to Hire Buckmiller, Boyette & Frost as Counsel ----------------------------------------------------------------- AR Textiles Ltd. seeks approval from the U.S. Bankruptcy Court for the Eastern District of North Carolina to employ Buckmiller, Boyette & Frost, PLLC, on a contingency fee basis. The firm will investigate, pursue, and prosecute certain insurance claims and adversary proceeding against The Cininnati Insurance Companies and John Hackney Agency, Inc. The firm will receive these fees: a. Eighteen percent of any and all amounts recovered on behalf of Debtor up to $2,000,000, including any actual damages, punitive or exemplary damages, treble damages, interest, and any attorneys' fees; and b. Ten percent of any and all amounts recovered on behalf of the Debtor in excess of $2,000,000, including any actual damages, punitive damages, exemplary damages, treble damages, interest, and any attorneys' fees. Buckmiller neither represents nor holds any interest adverse to the Debtor or to the bankruptcy estate with respect to the matter on which it is to be employed, according to court filings. The firm can be reached through: Joseph Z. Frost, Esq. Matthew W. Buckmiller, Esq. Buckmiller, Boyette & Frost, PLLC 4700 Six Forks Road, Suite 150 Tel: 919-296-5040 Fax: 919-977-7101 Email: jfrost@bbflawfirm.com mbuckmiller@bbflawfirm.com About AR Textiles Robersonville, N.C.-based AR Textiles Ltd. filed a Chapter 11 petition (Bankr. E.D.N.C. Case No. 21-01441) on June 28, 2021, with $5,744,986 in assets and $22,227,509 in liabilities. Pasqual Alles, vice president, signed the petition. Judge David M. Warren oversees the case. Joseph Z. Frost, Esq., at Buckmiller, Boyette & Frost, PLLC is the Debtor's legal counsel. ARCHDIOCESE OF SANTA FE: Court Confirms Consensual Plan ------------------------------------------------------- Capping four years of intense work by the Official Creditors Committee ("OCC"), the fiduciary for all Survivors in the Chapter 11 case of the Archdiocese of Santa Fe ("ADSF"), Judge David T. Thuma, United States Bankruptcy Judge for the District of New Mexico, confirmed a consensual plan of reorganization settling the sexual abuse claims against the ADSF and several religious orders. The settlement, approved by 99% of the voting Survivors, provides for a payment of more than $121.5 million to a settlement trust that will be distributed to approximately 375 Survivors under a plan of reorganization. Additional funds will be distributed to survivors of abuse perpetrated by several religious orders. The settlement will be funded by the ADSF, its affiliates (including parishes) and the ADSF's insurance carriers. In exchange for the settlement payments, the ADSF will receive a discharge in bankruptcy and its affiliates and the insurance carriers will be released of their liabilities for the sexual abuse claims. Religious order settlements will be funded by the religious orders and their respective insurance carriers. In addition to the monetary settlements, the OCC negotiated for an unprecedented non-monetary agreement with the ADSF to create a public archive of documents regarding the history of the sexual abuse claims against the Archdiocese. "Our long journey through the bankruptcy proceeding is nearly at an end," said Charles Paez, Chair of the OCC. "Tragically, some survivors who started with us have passed away but their stories and the courage they exhibited throughout their lives will be documented in the public archive at the University of New Mexico. Through the hard work of the nine members of the Official Creditors Committee, the Archdiocese of Santa Fe has been held accountable to Survivors. The tenacity and courage of New Mexico Survivors empowered us to reach a recommended settlement endorsed by nearly every Survivor that voted on the plan." "The OCC always has stood for fair compensation and transparency. The nine members of the OCC have devoted thousands of hours over four years to getting the right result for all Survivors. This case posed unique challenges, including that all but one of the settling insurance carriers had reached settlement agreements with the Archdiocese that dated back to the 1990s. Each of the nine members of the OCC has contributed to making New Mexico a safer place for children," said James Stang of Pachulski Stang Ziehl & Jones LLP, bankruptcy counsel to the OCC. About The Archdiocese of Santa Fe The Roman Catholic Church of the Archdiocese of Santa Fe -- https://www.archdiosf.org/ -- is an ecclesiastical territory or diocese of the southwestern region of the United States in the state of New Mexico. At present, the Archdiocese of Santa Fe covers an area of 61,142 square miles. There are 93 parish seats and 226 active missions throughout this area. The Archdiocese of Santa Fe sought Chapter 11 protection (Bankr. D.N.M. Case No. 18-13027) on Dec. 3, 2018, to deal with child abuse claims. It reported total assets of $49,184,579 and total liabilities of $3,700,000 as of the bankruptcy filing. Judge David T. Thuma oversees the case. The archdiocese tapped Elsaesser Anderson, Chtd. and Walker & Associates, P.C., as bankruptcy counsel; Stelzner, Winter, Warburton, Flores, Sanchez & Dawes, P.A as special counsel; and REDW, LLC as accountant. BAIS YAAKOV OF BROOKLYN: Seeks Chapter 11 Bankruptcy Protection --------------------------------------------------------------- Bais Yaakov of Brooklyn Inc. filed for chapter 11 protection in the Eastern District of New York. According to court filings, Bais Yaakov of Brooklyn estimates between $1 million and $10 million in debt owed to 1 to 49 creditors. The petition states that funds will be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for Jan. 30, 2023, at 11:00 AM at Teleconference - Brooklyn. About Bais Yaakov of Brooklyn Bais Yaakov of Brooklyn Inc. owns and operates a school and charitable programs in Brooklyn, New York. Bais Yaakov of Brooklyn filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-43167) on Dec. 21, 2022. In the petition filed by Jehuda Herskovits, as trustee, the Debtor reported assets and liabilities between $1 million and $10 million each. The Debtor is represented by: Solomon Rosengarten, Esq. 443 EAST 5TH STREET BROOKLYN, NY 11218 BENNU ENTERPRISES: Hires Eric A. Liepins as Bankruptcy Counsel -------------------------------------------------------------- Bennu Enterprises, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Texas to hire Eric A. Liepins, PC as its bankruptcy counsel. The Debtor requires legal assistance to liquidate its assets, reorganize the claims of the estate, and determine the validity of claims asserted in the estate. The hourly rates of the firm's counsel and staff are as follows: Eric A. Liepins $275 Paralegals and Legal Assistants $30 - $50 In addition, the firm will seek reimbursement for expenses incurred. The firm has been paid a retainer of $5,000, plus filing fee. Mr. Liepins, the sole shareholder of the firm, 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: Eric A. Liepins, Esq. Eric A. Liepins, PC 12770 Coit Road, Suite 850 Dallas, TX 75251 Telephone: (972) 991-5591 Facsimile: (972) 991-5788 Email: eric@ealpc.com About Bennu Enterprises Bennu Enterprises, LLC sought protection for relief under Chapter of the Bankruptcy Code (Bankr. E.D. Tex. Case No. 22-41704) on Dec. 6, 2022, listing $50,001 to $100,000 in both assets and liabilities. Eric A Liepins, Esq. at Eric A. Liepins, P.C. represents the Debtor as counsel. BERNARD L. MADOFF: Inteligo Bank's Move to Dismiss Case Denied -------------------------------------------------------------- In the adversary case styled Securities Investor Protection Corporation, Plaintiff-Applicant, v. Bernard L. Madoff Investment Securities LLC, Defendant. In re: Bernard L. Madoff, Debtor. Irving H. Picard, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Plaintiff, v. Inteligo Bank Ltd., f/k/a Blubank Ltd, Defendant, Case No. 08-01789 (CGM), Adv. Pro. No. 11-02763 (CGM), (Bankr. S.D.N.Y.), Bankruptcy Judge Cecelia G. Morris denies the motion to dismiss files by the Defendant Inteligo Bank Ltd., f/k/a Blubank Ltd. Inteligo Bank Ltd., f/k/a Blubank Ltd. seeks to dismiss the complaint of Irving Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC. Inteligo seeks dismissal for lack of personal jurisdiction, and raises the "safe harbor" defense and the "mere conduit" defense. This adversary proceeding was filed on Oct. 6, 2011, in which the main underlying SIPA proceeding, Adv. Pro. No. 08-01789 (CGM), is pending. The SIPA Proceeding was originally brought in the District Court for the Southern District of New York as Securities Exchange Commission v. Bernard L. Madoff Investment Securities LLC et al., No. 08-CV-10791, and has been referred to this Court. The Trustee seeks to recover subsequent transfers allegedly consisting of BLMIS customer property. The subsequent transfers were derived from investments with BLMIS made by Fairfield Sentry Limited and Fairfield Sigma Limited. Fairfield Sentry is considered a "feeder fund" of BLMIS because the intention of the fund was to invest in BLMIS. Approximately $10.7 million of the money transferred from BLMIS to Fairfield Sentry was subsequently transferred by Fairfield Sentry to Inteligo. Additionally, approximately $752.27 million of the money transferred from BLMIS to Fairfield Sentry was subsequently transferred by Fairfield Sentry to Fairfield Sigma. Thereafter, the equivalent of at least $72,944 was transferred by Fairfield Sigma to Inteligo. Following BLMIS's collapse, the Trustee filed an adversary proceeding against Fairfield Sentry and related defendants to avoid and recover fraudulent transfers of customer property in the amount of approximately $3 billion. In 2011, the Trustee settled with Fairfield Sentry. As part of the settlement, Fairfield Sentry consented to a judgment in the amount of $3.054 billion but repaid only $70 million to the BLMIS customer property estate. The Trustee then commenced a number of adversary proceedings against subsequent transferees, like Inteligo, to recover the approximately $3 billion in missing customer property. Specifically, Trustee is seeking to recover $5.18 million in subsequent transfers made to Inteligo Bank Ltd by Fairfield Sentry. Inteligo objects to the Trustee's assertion of personal jurisdiction. But the Trustee argues in the Complaint that Inteligo purposefully availed itself of the laws of the United States and New York by directing funds to be invested with New York-based BLMIS through Fairfield Sentry and Fairfield Sigma, and receiving subsequent transfers from BLMIS by withdrawing money from Fairfield Sentry and Fairfield Sigma, both Fairfield Greenwich Group managed Madoff feeder funds. Inteligo further argues that the Trustee has failed to allege sufficient minimum contacts with the United States. But the Complaint suggests otherwise, the Court observes. In the Complaint, the Trustee alleges that Inteligo " knowingly directed funds to be invested with New York-based BLMIS through Fairfield Sentry" and "knowingly received subsequent transfers from BLMIS by withdrawing money from Fairfield Sentry." The Trustee has also alleged that "Fairfield Sentry invested almost all of its assets in BLMIS. . . "under Fairfield Sentry's offering memorandum, the fund's investment manager was required to invest no less than 95% of the fund's assets through BLMIS. . . The manager has established a discretionary account for the Fund at Bernard L. Madoff Investment Securities, Inc. . . . a registered broker-dealer in New York who utilizes a strategy described as "split strike conversion", to which it allocates the predominant portion of the Fund's assets." In addition, the Trustee has submitted additional evidence in response to the motion to dismiss: (a) evidence that Inteligo used bank accounts in New York to send subscription payments to and receive redemption payments from Fairfield Sentry's bank account at JP Morgan Chase in New York; (b) documents indicating that Inteligo communicated regularly with Fairfield Greenwich Group's New York office, via email; (c) a copy of Inteligo's subscription agreement with Fairfield Sentry, as well as subscription agreement with Fairfield Sigma, which incorporated Fairfield Sigma's Private Placement Memorandum; and (d) several emails Fairfield Greenwich Group sent to Inteligo regarding Fairfield Sentry's returns, including Inteligo's email to Fairfield Greenwich Group to get permission to invest €39,370 in Fairfield Sigma, and another email where Inteligo received Fairfield Sentry's offering memorandum from Veronica Barco with a signature that includes her New York address. The Court finds that the Trustee's subsequent transfer claims against Inteligo for monies they received from Fairfield Sentry and Fairfield Sigma are directly related to investment activities with Fairfield and BLMIS. The Court determines that the redemption and other payments that Inteligo received as direct investors in a BLMIS feeder fund arose from the New York contacts such as sending subscription agreements to New York, wiring funds in U.S. dollars to New York, sending redemption requests to New York, and receiving redemption payments from a Bank of New York account in New York, and were the proximate cause of the injuries that the Trustee sought to redress. The Court concludes that this suit is affiliated with the alleged in-state conduct. Having found sufficient minimum contacts, the Court determines that Inteligo is not burdened by this litigation. Inteligo has actively participated in the Court's litigation for over ten years. Inteligo is represented by highly competent U.S. counsel, filed claims in the SIPA litigation, and submitted to the jurisdiction of New York courts' when they signed subscription agreements with the Fairfield Funds. Hence, the forum and the Trustee both have a strong interest in litigating BLMIS adversary proceedings in this Court. Furthermore, the Court believes Inteligo will not be prejudiced if it allows the Trustee to incorporate the Fairfield Amended Complaint by reference. On the other hand, the Court believes that if it will dismiss the Complaint and permit the Trustee to amend his Complaint to include all of the allegations that are already contained in the Fairfield Amended Complaint, it would prejudice all parties by delaying the already overly prolonged proceedings. The Trustee pleaded the avoidability of the initial transfers (from BLMIS to Fairfield Sentry) by adopting by reference the entirety of the Fairfield Amended Complaint filed against Fairfield Sentry in Adversary Proceeding No. 09-01239. Through the adoption of the Fairfield Amended Complaint, the Trustee has adequately pleaded, with particularity, the avoidability of the initial transfers due to the Fairfield Funds' knowledge of BLMIS' fraud. On the issue of the safe harbor, the Court adopts the district court's reasoning in: Picard v. Multi-Strategy Fund Ltd. (In re BLMIS), No. 22-CV-06502 (JSR), 2022 WL 16647767 (S.D.N.Y. Nov. 3, 2022), where the Court held that "those defendants who claim the protections of Section 546(e) through a Madoff Securities account agreement but who actually knew that Madoff Securities was a Ponzi scheme are not entitled to the protections of the Section 546(e) safe harbor, and their motions to dismiss the Trustee's claims on this ground must be denied." To the extent that Inteligo seeks to apply Section 546(e) to a transfer made in connection with a securities contract between it and the Fairfield Funds not involving BLMIS, the Court rules that this issue is "fact-intensive" and better addressed at a later stage of litigation. According to Judge Morris, the "mere conduit" defense arises in the context of the safe harbor provision of the Bankruptcy Code. The Court repeats that "the safe harbor prohibits the trustee from avoiding transfers that are margin payments or settlement payments made by or to (or for the benefit of) certain entities including commodity brokers, securities clearing agencies, and financial institutions." The Court holds that the only entity that may claim to be a "mere conduit" would be an intermediary that assisted BLMIS in transferring the funds to Fairfield Sentry. A full-text copy of the Memorandum Decision dated Dec. 9, 2022, is available at https://tinyurl.com/akk3vhk9 from Leagle.com. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). From recoveries in lawsuits coupled with money advanced by SIPC, Mr. Picard has commenced distributions to victims. As of Jan. 31, 2021, and since his appointment in December 2008, the SIPA Trustee has amassed more than $14.413 billion as a result of recoveries and settlement agreements. These recoveries exceed similar efforts related to prior Ponzi scheme recoveries, in terms of dollar value and percentage of stolen funds recovered. Eligible BLMIS customers have now received almost 70% of their allowed claims, and the SIPA Trustee is optimistic that this figure will rise as the Trustee secure more recoveries and distributions in the future. BERNARD L. MADOFF: Kookmin Bank's Bid to Dismiss Case Denied ------------------------------------------------------------ In the adversary case styled Securities Investor Protection Corporation, Plaintiff-Applicant, v. Bernard L. Madoff Investment Securities LLC, Defendant. In re: Bernard L. Madoff, Debtor. Irving H. Picard, Trustee for the Substantively Consolidated SIPA Liquidation of Bernard L. Madoff Investment Securities LLC and the Chapter 7 Estate of Bernard L. Madoff, Plaintiff, v. Kookmin Bank, Defendant, Case No. 08-01789 (CGM), Adv. Pro. No. 12-01194 (CGM), (Bankr. S.D.N.Y.), Bankruptcy Judge Cecelia G. Morris denies the motion to dismiss files by the Defendant Kookmin Bank. Kookmin Bank seeks to dismiss the complaint of Irving Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC. Kookmin argues that (a) the Court lacks personal jurisdiction, (b) the safe harbor provision of the Bankruptcy Code bars the Trustee's recovery of this transfer, (c) the Trustee has failed to allege that they hold BLMIS customer property, and (d) the Trustee has failed to plead a cause of action under Rule 8 of the Federal Rules of Civil Procedure. This adversary proceeding was commenced in the Bankruptcy Court for the Southern District of New York on March 22, 2012, in which the main underlying SIPA proceeding, Adv. Pro. No. 08-01789 (CGM), is pending. The SIPA Proceeding was originally brought in the District Court for the Southern District of New York as Securities Exchange Commission v. Bernard L. Madoff Investment Securities LLC et al., No. 08-CV-10791, and has been referred to the Bankruptcy Court. In this adversary proceeding, the Trustee seeks to recover $42 million in subsequent transfers made to Kookmin Bank, which were derived from investments with BLMIS made by Fairfield Sentry Limited. Fairfield Sentry is referred to as a "feeder fund" because the intention of the fund was to invest in BLMIS. At the time it allegedly received the subsequent transfers, Kookmin is a bank organized under the laws of South Korea -- the largest bank of South Korea. Following BLMIS' collapse, the Trustee filed an adversary proceeding against Fairfield Sentry and related defendants to avoid and recover fraudulent transfers of customer property in the amount of approximately $3 billion. In 2011, the Trustee settled with Fairfield Sentry. As part of the settlement, Fairfield Sentry consented to a judgment in the amount of $3.054 billion but repaid only $70 million to the BLMIS customer property estate. The Trustee then commenced a number of adversary proceedings against subsequent transferees, like Kookmin, to recover the approximately $3 billion in missing customer property. Specifically, Trustee is seeking to recover $5.18 million in subsequent transfers made to Kookmin Bank Ltd by Fairfield Sentry. Kookmin objects to the Trustee's assertion of personal jurisdiction. But the Trustee argues in the Complaint that Kookmin purposefully availed itself of the laws of the United States and New York by directing funds to be invested with New York-based BLMIS through Fairfield Sentry and by withdrawing money from Fairfield Sentry. Kookmin further argues that the Trustee has failed to allege sufficient minimum contacts with the United States. The Complaint suggests otherwise, the Court observes. In the Complaint, the Trustee alleges that Defendant "directed funds to be invested with New York-based BLMIS through Fairfield Sentry" and "knowingly received subsequent transfers from BLMIS by withdrawing money from Fairfield Sentry." The Trustee has also alleged that Fairfield Sentry invested almost all of its assets in BLMIS. . . Under Fairfield Sentry's offering memorandum, the fund's investment manager was required to invest no less than 95% of the fund's assets through BLMIS." Likewise, in response to the motion to dismiss, the Trustee has provided evidence that Kookmin used bank accounts in New York to send subscription payments to and receive redemption payments from Fairfield Sentry. The Trustee has attached two subscription agreements that require redemption payments and wires to be made through an account held by Kookmin at Deutsche Bank Trust Company Americas, NY. Kookmin agreed in both agreements to send subscription payments to Fairfield Sentry's HSBC bank account in New York. Kookmin agreed in both agreements to send subscription payments to Fairfield Sentry's HSBC bank account in New York. The Fairfield placement memorandum that Kookmin submitted also disclosed BLMIS's role as the custodian for Fairfield Sentry. The Court finds that the Trustee's subsequent transfer claims against Kookmin for monies they received from Fairfield Sentry are directly related to investment activities with Fairfield and BLMIS. The Court determines that the redemption and other payments that Kookmin received as direct investors in a BLMIS feeder fund arose from the New York contacts such as sending subscription agreements to New York, wiring funds in U.S. dollars to New York, sending redemption requests to New York, and receiving redemption payments from a Bank of New York account in New York, and were the proximate cause of the injuries that the Trustee sought to redress. The Court concludes that this suit is affiliated with the alleged in-state conduct. Having found sufficient minimum contacts, the Court determines that Kookmin is not burdened by this litigation. Kookmin has actively participated in the Court's litigation for over ten years. It is represented by highly competent U.S. counsel, filed claims in the SIPA litigation, and submitted to the jurisdiction of New York courts' when they signed subscription agreements with Fairfield Sentry. Hence, the forum and the Trustee both have a strong interest in litigating BLMIS adversary proceedings in this Court. Furthermore, the Court believes that Kookmin will not be prejudiced if it allows the Trustee to incorporate the Fairfield Amended Complaint by reference. On the other hand, the Court believes that if it will dismiss the Complaint and permit the Trustee to amend his Complaint to include all of the allegations that are already contained in the Fairfield Amended Complaint, it would prejudice all parties by delaying the already overly prolonged proceedings. The Trustee pleaded the avoidability of the initial transfers (from BLMIS to Fairfield Sentry) by adopting by reference the entirety of the Fairfield Amended Complaint filed against Fairfield Sentry in Adversary Proceeding No. 09-01239. Through the adoption of the Fairfield Amended Complaint, the Trustee has adequately pleaded, with particularity, the avoidability of the initial transfers due to the Fairfield Funds' knowledge of BLMIS' fraud. On the issue of the safe harbor, the Court adopts the district court's reasoning in: Picard v. Multi-Strategy Fund Ltd. (In re BLMIS), No. 22-CV-06502 (JSR), 2022 WL 16647767 (S.D.N.Y. Nov. 3, 2022), that "those defendants who claim the protections of Section 546(e) through a Madoff Securities account agreement but who actually knew that Madoff Securities was a Ponzi scheme are not entitled to the protections of the Section 546(e) safe harbor, and their motions to dismiss the Trustee's claims on this ground must be denied. . . In circumstances in which a transferee was complicit in Madoff Securities' fraud, Section 546(e) does not apply as a matter of its express terms." A full-text copy of the Memorandum Decision dated Dec. 9, 2022, is available at https://tinyurl.com/e938n7ww from Leagle.com. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). From recoveries in lawsuits coupled with money advanced by SIPC, Mr. Picard has commenced distributions to victims. As of Jan. 31, 2021, and since his appointment in December 2008, the SIPA Trustee has amassed more than $14.413 billion as a result of recoveries and settlement agreements. These recoveries exceed similar efforts related to prior Ponzi scheme recoveries, in terms of dollar value and percentage of stolen funds recovered. Eligible BLMIS customers have now received almost 70% of their allowed claims, and the SIPA Trustee is optimistic that this figure will rise as the Trustee secure more recoveries and distributions in the future. BERNARD L. MADOFF: UKFP's Bid to Dismiss Trustee's Complaint Denied ------------------------------------------------------------------- In the adversary case styled Securities Investor Protection Corporation, Plaintiff-Applicant, v. Bernard L. Madoff Investment Securities LLC, Defendant. In re: Bernard L. Madoff, Debtor. Irving H. Picard, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Plaintiff, v. UKFP (Asia) Nominees Limited, Defendant, Case No. 08-01789 (CGM), Adv. Pro. No. 12-01566 (CGM), (Bankr. S.D.N.Y.), Bankruptcy Judge Cecelia G. Morris denies the motion to dismiss files by the Defendant UKFP (Asia) Nominees Limited. This is an adversary proceeding commenced in this Court on April 26, 2012, in which the main underlying SIPA proceeding, Adv. Pro. No. 08-01789 (CGM), is pending. The SIPA Proceeding was originally brought in the District Court for the Southern District of New York as Securities Exchange Commission v. Bernard L. Madoff Investment Securities LLC et al., No. 08-CV-10791, and has been referred to this Court. Irving Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC seeks to recover subsequent transfers allegedly consisting of BLMIS customer property. The subsequent transfers were derived from investments with BLMIS made by Fairfield Sentry Limited. Fairfield Sentry is considered a "feeder fund" of BLMIS because the intention of the fund was to invest in BLMIS. At the time of the alleged subsequent transfers, UKFP was a member of Henderson Group plc, a large investment management company. UKFP is a British Virgin Islands company with offices located in Tortola, British Virgin Islands, and a principal place of business in Hong Kong. Prior to March 2016, UKFP's name was Towry Law (Asia) Nominees Limited. Following BLMIS's collapse, the Trustee filed an adversary proceeding against Fairfield Sentry and related defendants to avoid and recover fraudulent transfers of customer property in the amount of approximately $3 billion. In 2011, the Trustee settled with Fairfield Sentry. As part of the settlement, Fairfield Sentry consented to a judgment in the amount of $3.054 billion but repaid only $70 million to the BLMIS customer property estate. The Trustee then commenced a number of adversary proceedings against subsequent transferees, like UKFP, to recover the approximately $3 billion in missing customer property. Specifically, Trustee is seeking to recover $5.18 million in subsequent transfers made to UKFP (Asia) Nominees Limited by Fairfield Sentry. In its motion to dismiss, UKFP argues that the Trustee has failed to plead personal jurisdiction. UKFP further argues that the Court should dismiss the complaint due to the safe harbor under Bankruptcy Code Section 546(e). But in his Complaint, the Trustee argues that UKFP purposefully availed itself of the laws of the United States and New York by directing funds to be invested with New York-based BLMIS through Fairfield Sentry and receiving subsequent transfers from BLMIS by withdrawing money from Fairfield Sentry. UKFP further argues that the Trustee has failed to allege sufficient minimum contacts with the United States. But the Court observes that the Complaint suggests otherwise. In the Complaint, the Trustee alleges that "the Defendants "directed funds to be invested with New York-based BLMIS through the Fairfield Funds" and "knowingly received subsequent transfers from BLMIS by withdrawing money from the Feeder Funds." The Trustee has also alleged that "Fairfield Sentry invested almost all of its assets in BLMIS. . . "under Fairfield Sentry's offering memorandum, the fund's investment manager was required to invest no less than 95% of the fund's assets through BLMIS. . . The manager has established a discretionary account for the Fund at Bernard L. Madoff Investment Securities, Inc. . . . a registered broker-dealer in New York who utilizes a strategy described as "split strike conversion", to which it allocates the predominant portion of the Fund's assets." In addition, the Trustee has submitted additional evidence in response to the motion to dismiss: (a) copies of share application forms signed by UKFP and acknowledging having read and received the Fairfield Sentry Information Memorandum; (b) evidence that UKFP used bank accounts in New York to send subscription payments to and receive redemption payments made by Fairfield Sentry; (b) documents indicating that UKFP communicated regularly with Fairfield Greenwich Group's New York office, via email and fax, about its investments with Fairfield Sentry; and (c) an internal Fairfield Greenwich Group email reports on a conference call with UKFP on April 22, 2003 that was held as a follow up to emails exchanged over the "last two weeks with regard to Fairfield Sentry." The Court finds that the Trustee's subsequent transfer claims against UKFP for monies received from Fairfield Sentry are directly related to investment activities with BLMIS via Fairfield Sentry. The Court determines that the redemption and other payments that the Defendants received as direct investors in a BLMIS feeder fund arose from the New York contacts such as sending subscription agreements to New York, wiring funds in U.S. dollars to New York, sending redemption requests to New York, and receiving redemption payments from a Bank of New York account in New York, and were the proximate cause of the injuries that the Trustee sought to redress. The Court concludes that this suit is affiliated with the alleged in-state conduct. Having found sufficient minimum contacts, the Court determines that UKFP is not burdened by this litigation. UKFP has actively participated in the Court's litigation for over ten years. They are represented by highly competent U.S. counsel, filed claims in the SIPA litigation, and submitted to the jurisdiction of New York courts' when they signed subscription agreements with Fairfield Sentry. Hence, the forum and the Trustee both have a strong interest in litigating BLMIS adversary proceedings in this Court. Furthermore, the Court believes UKFP will not be prejudiced if it allows the Trustee to incorporate the Fairfield Amended Complaint by reference. On the other hand, the Court believes that if it will dismiss the Complaint and permit the Trustee to amend his Complaint to include all of the allegations that are already contained in the Fairfield Amended Complaint, it would prejudice all parties by delaying the already overly prolonged proceedings. The Trustee pleaded the avoidability of the initial transfers (from BLMIS to Fairfield Sentry) by adopting by reference the entirety of the Fairfield Amended Complaint filed against Fairfield Sentry in Adversary Proceeding No. 09-01239. Through the adoption of the Fairfield Amended Complaint, the Trustee has adequately pleaded, with particularity, the avoidability of the initial transfers due to the Fairfield Funds' knowledge of BLMIS' fraud. On the issue of the safe harbor, the Court adopts the district court's reasoning in: Picard v. Fairfield Inv. Fund (In re BLMIS), No. 08-01789(CGM), Adv. No. 09-01239 (CGM), 2021 WL 3477479, at *3-*7 (Bankr. S.D.N.Y. Aug. 6, 2021), where the Court held that "those defendants who claim the protections of Section 546(e) through a Madoff Securities account agreement but who actually knew that Madoff Securities was a Ponzi scheme are not entitled to the protections of the Section 546(e) safe harbor, and their motions to dismiss the Trustee's claims on this ground must be denied." According to Judge Morris, the question on "whether the safe harbor applies to the initial transfers under the theory that BLMIS' transfers to Fairfield Sentry were made in connection with Fairfield Sentry's contracts with UKFP (rather than Fairfield Sentry's contract with BLMIS)" is not answerable on the pleadings. To the extent that UKFP seeks to apply Section 546(e) to a transfer made in connection with a securities contract between it and the Fairfield Funds not involving BLMIS, the Court rules that this issue is "fact-intensive" and better addressed at a later stage of litigation. A full-text copy of the Memorandum Decision dated Dec. 9, 2022, is available at https://tinyurl.com/2kup6ezw from Leagle.com. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). From recoveries in lawsuits coupled with money advanced by SIPC, Mr. Picard has commenced distributions to victims. As of Jan. 31, 2021, and since his appointment in December 2008, the SIPA Trustee has amassed more than $14.413 billion as a result of recoveries and settlement agreements. These recoveries exceed similar efforts related to prior Ponzi scheme recoveries, in terms of dollar value and percentage of stolen funds recovered. Eligible BLMIS customers have now received almost 70% of their allowed claims, and the SIPA Trustee is optimistic that this figure will rise as the Trustee secure more recoveries and distributions in the future. BLACK ANGUS: PhenixFIN Corp Marks $8.4M Loan at 80% Off ------------------------------------------------------- PhenixFIN Corp has marked its $8,412,596 loan extended to Black Angus Steakhouses LLC to market at $1,547,918, or 20% of the outstanding amount, as of September 30, 2022, according to a disclosure contained PhenixFIN Corp's Form 10-K for the fiscal year ended September 30, filed with the Securities and Exchange Commission on December 16. PhenixFIN Corp extended a Senior Secured First Lien Term Loan (SOFR + CSA + 9.00% PIK, 1.00% SOFR Floor) to Black Angus Steakhouses LLC. The loan is scheduled to mature on January 31, 2024. The loan was on non-accrual status as of September 30, 2022. PhenixFIN is an internally-managed non-diversified closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Until close of business on December 31, 2020, PhenixFIN was externally managed and advised by MCC Advisors LLC, a wholly owned subsidiary of Medley LLC, which is controlled by Medley Management Inc. (NYSE: MDLY), a publicly traded asset management firm, which in turn is controlled by Medley Group LLC, an entity wholly owned by the senior professionals of Medley LLC. Since January 1, 2021 the Company has been managed pursuant to an internalized management structure. Black Angus Steakhouses, LLC, founded in 1964 and headquartered in Los Altos, CA, operates restaurants across six states including California, Arizona, Alaska, New Mexico, Washington, and Hawaii. CHOCTAW GENERATION: Fitch Cuts Rating on $161MM Series 1 Notes to D ------------------------------------------------------------------- Fitch Ratings has taken the following rating actions on the debt of Choctaw Generation Limited Partnership, LLLP's (CGLP or the project): - $161 million outstanding Series 1 lessor notes due December 2031 downgraded to 'D' from 'CC'; - $108 million outstanding Series 2 lessor notes due December 2040 downgraded to 'C' from 'CC'. RATING RATIONALE The rating downgrade of CGLP's Series 1 notes to 'D' follows the failure to pay principal and interest due Dec. 15, 2022. The rating on the Series 1 notes have reached the lowest level on Fitch's rating scale. While debt service on the Series 2 notes is fully deferable to the period after the maturity of the Series 1 notes, cross-default provisions include the lender's ability to accelerate debt service, which drives the downgrade to 'C' on the Series 2 notes. KEY RATING DRIVERS Declining Performance & Lack of O&M Reserve - Operation Risk: Weaker The owner-lessor, a subsidiary of Southern Company, funded substantial modifications to improve plant performance that were complete in 2015, but failed to achieve adequate performance improvements. The operator, also a Southern subsidiary, is considered strong, but the facility continues to experience volatility in operations since completing the modifications including declining availability and increasing heat rate. Lack of a dedicated O&M reserve has additionally weakened the project's ability to withstand periods of underperformance. The major maintenance reserve balance was depleted as of YE 2021. Adequate Mine-mouth Coal Supply - Supply Risk: Weaker CGLP's mine-mouth location and reputable fuel supplier moderates supply risk. However, early termination or expiration of the supply agreement in 2032 with potentially less favorable pricing could lead to inadequate fuel cost recovery. Revenue Contract with Strong Counterparty - Revenue Risk (Series 1): Midrange CGLP has a PPA with Tennessee Valley Authority (TVA; AA/Stable) for the project's full capacity and energy output through mid-2032. The Series 1 notes mature four months prior to PPA expiration. While the project's contracted revenues are a stronger feature, cash flows are moderately sensitive to dispatch levels with some vulnerability to deterioration in the economic environment contributing to Fitch's midrange revenue risk assessment. Significant Merchant Exposure - Revenue Risk (Series 2): Weaker Series 2 debt matures in 2040, exposing debtholders to an entirely merchant revenue stream after the PPA expires in 2032. Debt Structure Lacks Typical Support Features - Debt Structure: Weaker Both series lack a dedicated debt service reserve. The ability to defer Series 2 target interest and principal payments introduces the risk of a high outstanding balance to be repaid after the PPA expires resulting in exposure to refinancing risk. Financial Profile Persistent underperformance combined with higher operating expenses have depleted liquidity and contributed to the current failure to meet debt service obligations. PEER GROUP There are no peers considering the 'D' rating RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: - The Series 2 notes would be further downgraded if payment demand is made and the payment is not met, or any future mandatory debt service payments are not met. Factors that could, individually or collectively, lead to positive rating action/upgrade: - Unlikely at this time considering the ratings. TRANSACTION SUMMARY In December 2002, SE Choctaw, LLC purchased the then new 440MW lignite-fired Red Hills Generation Facility from CGLP. Immediately following the acquisition, the owner leased the facility back to CGLP under a 45-year lease, expiring Dec. 20, 2047. Non-Fitch-rated lessor notes were issued in 2002 in accordance with the lease, but steady declines in performance prompted a restructuring of the original lessor notes in 2013. Fitch rated the 2013 notes issuance that was part of a restructuring to reduce interest rates, extend the debt term, and introduce a payment-in-kind feature to Series 2 notes. As part of the restructuring, the owner-lessor agreed to make approximately $60 million in equity investments for needed repairs and maintenance and to implement various modifications to improve the performance of the facility. SECURITY CGLP is structured as a leveraged lease transaction and the Series 1 and 2 notes are pass-through trust certificates secured by the project's rent payments. Although Series 2 is structurally subordinated in the payment waterfall, the two series of notes are pari passu. The security interests are typical of project finance transactions and include all project revenues and accounts, all project agreements (PPA and supply agreements), as well as the physical assets of CGLP. ESG CONSIDERATIONS Choctaw Generation Limited Partnership, LLLP has an ESG Relevance Score of '4' for Waste & Hazardous Materials Management; Ecological Impacts due to exposure to waste disposal related to coal ash management and pollution incidents, and is relevant to the ratings in conjunction with other factors. It is unclear how the project will fund lifecycle costs given the weak liquidity and this uncertainty has a negative impact on the credit profile. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Prior ----------- ------ ----- Choctaw Generation Limited Partnership, LLLP Choctaw Generation Limited Partnership, LLLP/Debt/1 LT LT D Downgrade CC Choctaw Generation Limited Partnership, LLLP/Debt/2 LT LT C Downgrade CC CHURCH OF GOD: Seeks to Hire Bronson Law Offices as Legal Counsel ----------------------------------------------------------------- Church of God of Corona Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of New York to hire Bronson Law Offices, P.C., as its legal counsel. The firm will render these services: (a) assist in the administration of the Debtor's Chapter 11 case; (b) prepare or review operating reports; (c) set a deadline for filing proofs of claim; (d) seek court approval to use cash collateral; (e) review claims and resolve claims, which should be disallowed; and (f) assist in reorganizing and confirming a Chapter 11 plan. Bronson Law Offices will be paid at these rates: H. Bruce Bronson, Esq. $495 per hour Paralegal or Legal Assistant $150 to $250 per hour The firm received a retainer in the amount of $7,500. As disclosed in court filings, Bronson Law Offices does not represent any interest adverse to the Debtor and its estate. Bronson Law Offices can be reached at: H. Bruce Bronson, Esq. Bronson Law Offices, P.C. 480 Mamaroneck Ave. Harrison, NY 10528 Tel: (914) 269-2530 Fax: )888) 908-6906 Email: hbbronson@bronsonlaw.net About Church of God of Corona Church of God of Corona Inc. filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-42488) on Oct. 6, 2022. In the petition filed by Blanca Giron, as president, the Debtor reported assets and liabilities between $1 million and $10 million each. The Debtor is represented by H. Bruce Bronson of Bronson Law Offices PC. COMPOUND PRIME: S&P Withdraws 'B-' Rating on Senior Unsecured Debt ------------------------------------------------------------------ S&P Global Ratings withdrew its 'B-' rating on Compound Prime LLC and on its senior unsecured debt at the issuer's request. At the time of the withdrawal, the rating was still on CreditWatch negative owing to a lack of clarity about new business prospects. CORE SCIENTIFIC: Gets Court Approval for $37.5-Mil. Bankruptcy Loan ------------------------------------------------------------------- Brian Quarmby of CoinTelegraph reports that a United State bankruptcy court has granted Bitcoin miner Core Scientific interim approval to access a $37.5 million loan from existing creditors to fund it amid liquidity issues. Core Scientific is one of the largest cryptocurrency mining companies in the United States, but it filed for Chapter 11 bankruptcy on Dec. 21, 2022, as a result of rising energy costs, declining revenue and the declining price of BTC in 2022. In a public statement made on that same day, Core Scientific outlined that it intends to "move swiftly through the restructuring process" and maintain its mining and hosting operations. The loan comes from a group of creditors who hold more than 50% of Core Scientific's convertible notes, which agreed to provide debtor-in-possession (DIP) facility commitment loans up to a total of $75 million, according to court filings. The firm's application was approved on Dec. 22, 2022 and court filings show that the DIP loan will have a 10% per annum interest rate attached. Core Scientific will be able to access $37.5 million immediately to keep the lights on, while it intends to apply to access the remaining $37.5 million in January 2023, Reuters reported Dec. 23, 2022 citing a company attorney. In the initial DIP budget, however, it forecast Core Scientific would apply for $12.5 million by Jan. 21, 2023. The Reuters report also suggests the creditors understand the challenges of the bear market and are looking at a long-term play with Core Scientific. Kris Hansen, a representative of the creditors, told the news outlet that the existing stakeholders "have faith" in the company's future despite its recent troubles. In its third-quarter financial report, Core Scientific reported having $1.4 billion worth of assets and $1.33 billion worth of liabilities as of Sept. 30, 2022 showing a tight balance sheet amid the bull market. Notably, the firm reports a loss of $434.8 million in the third quarter, with total losses reaching $1.71 billion so far this year. As such, the firm indicated in late November that it was most likely heading toward bankruptcy without a fresh injection of cash. The firm has reportedly mined almost 12,000 BTC this year, a significant improvement on the 5,769 BTC mined in 2021, however that of course has not been able to save Core Scientific from its financial woes. 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. Core Scientific Inc. filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-90340) on December 21, 2022. In the petition filed by Todd DuChene, as president, the Debtor reported assets and liabilities between $1 billion and $10 billion each. At Sept. 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. CUSTOM ALLOY: Taps SierraConstellation as Financial Advisor ----------------------------------------------------------- Custom Alloy Corporation and its affiliates seek approval from the U.S. Bankruptcy Court for the District of New Jersey to hire SierraConstellation Partners, LLC as their financial advisor. The Debtors require a financial advisor to: a. assist management, as needed, with the preparation and review of a 13-week rolling cash flow forecast, to be updated weekly, which will be used as a primary liquidity forecasting tool for management decision-making as well as communication with the Debtors' board and other stakeholders; b. assist management, as needed, with the preparation of an analysis to support the development of a plan of reorganization or sale process; c. support the preparation efforts, testimony, and ongoing administrative efforts required to execute a professional restructuring process; d. support the various workstreams from the operational aspects of the restructuring process as needed; and e. provide support to management and any investment banker related to operations, cash flow management, and identification and execution of strategic alternatives. The firm will charge these hourly fees: Lawrence Perkins $895 Partners $895 - $1,005 Managing Director $640 - $720 Senior Directors $580 - $640 Directors $445 - $525 Senior Associates $350 Associates $275 SierraConstellation received a retainer in the amount of $50,000. Lawrence Perkins, chief executive officer of SierraConstellation, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Lawrence Perkins SierraConstellation Partners, LLC 355 S Grand Ave. # 1450 Los Angeles, CA 90071 Tel: (213) 289-9060 Fax: 213 402 3548 Email: info@sierraconstellation.com About Custom Alloy Corporation Custom Alloy Corporation is a manufacturer of specialty metals for seamless and welded pipe fittings and forgings, predominantly for customers requiring time-critical maintenance or repair. Custom Alloy sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. N.J. Case No. 22-18143) on Oct. 13, 2022, with $10 million to $50 million in assets and $50 million to $100 million in liabilities. Adam M. Ambielli, chief executive officer and president, signed the petition. Judge Michael B. Kaplan oversees the case. Jonathan I. Rabinowitz, Esq., at Rabinowitz, Lubetkin & Tully, LLC and SierraConstellation Partners, LLC serve as the Debtors' legal counsel and financial advisor, respectively. The U.S. Trustee for Region 3 appointed an official committee of unsecured creditors on Nov. 4, 2022. The committee is represented by Fox Rothschild, LLP. DCL HOLDINGS: Files for Chapter 11, CCAA to Pursue Sale ------------------------------------------------------- DCL Holdings (USA) Inc., a pigment maker backed by HIG Capital, filed for Chapter 11 bankruptcy in Delaware along with its affiliates on Dec. 20, 2022. The Chapter 11 cases are brought in conjunction with a parallel proceeding in the Ontario Superior Court of Justice, Commercial List, in the Toronto, Ontario, Canada commenced by DCL Canada, an affiliate of the Debtors, pursuant to the CCAA. The Debtors are global manufacturers and resellers of high-performance specialty pigments and dispersions, with market-leading positions in a variety of attractive end markets, including specialty coatings, plastics and digital printing. Headquartered in Toronto, Canada, the Debtors operate six manufacturing facilities across the United States, Canada, the United Kingdom, and The Netherlands, and utilize multiple dedicated research and development centers in various locations. As of the Petition Date, the Debtors employ 184 employees and contractors, consisting of 62 full-time salaried employees, 122 full-time hourly employees, and 3 independent contractors. The Debtors' business was founded in Toronto, Canada in 1946 as Dominion Colour Corporation. DCC was acquired by its current owner in 2016, via a share purchase transaction between KNRV Investments Inc., as seller, DCC and Colour Acquisition Corporation, as purchaser, an acquisition vehicle beneficially owned by certain funds managed by HIG Capital, a Miami, Florida-based private equity and alternative assets investment firm. In 2018, the U.S.-based Lansco Holdings, Inc. and Lansco Colors, LLC were acquired by an affiliate of HIG and added to the DCL Group. These entities ultimately changed their names to DCL Holdings (USA), Inc. and DCL Corporation (USA) LLC, respectively, in 2020. Over the last two years, the Debtors have experienced declining revenues and increased operating expenses due to a combination of (i) supply chain and workforce staffing challenges, (ii) a steep increase in energy prices resulting from, among several factors, the ongoing Russia-Ukraine conflict, (iii) lack of accessible liquidity, and (iv) volatile fluctuations in currency exchange rates. These challenges (together with company-specific business challenges) have resulted in deteriorating financial performance. Sale Process After thoroughly exploring all options available to the Debtors to raise capital or commence an alternative sale or recapitalization transaction, and in light of the added challenges facing the Debtors, including, a dire lack of liquidity, volatile foreign exchange rates, and declining revenue, the Boards of Directors and Managers of the Debtors, as applicable, determined that commencement of the Chapter 11 Cases to implement a strategic asset sales strategy under section 363 of the Bankruptcy Code is in the best interest of all stakeholders. In September 2022, the Debtors engaged TM Capital Corp. for a potential marketing process to sell their assets on a going-concern basis, or to consummate another strategic, value-maximizing transaction that would resolve the Debtors' operational and financial challenges. In consultation with the Debtors and certain of their lenders, TM Capital developed a list of strategic parties whom they believed may be interested in a sale, and whom TM Capital reasonably believed would have the financial resources to consummate a sale. TM Capital prepared a confidential offering memorandum and virtual data room. Potential bidders were invited to management meetings to discuss the Debtors and their businesses as part of the diligence process. Indications of interest were due on November 30, 2022, and various parties submitted letters of intent by that date and an additional bidder submitted a letter of intent thereafter. The Debtors have also been engaged in extensive and ongoing discussions with their Pre-Petition Term Loan Lender regarding a potential credit bid for substantially all of the Debtors' assets. The sale strategy is the foundation of these Chapter 11 Cases and is critical to maximizing recoveries for all stakeholders. Through its various First Day Motions, the Debtors are requesting the Court to permit the Chapter 11 cases to move quickly and to culminate in a fair, open, and competitive Section 363 sale auction with a potential stalking horse bid as the baseline for the auction. About DCL Holdings DCL Holdings (USA) Inc. -- https://www.pigments.com/ -- offers the broadest range of colour pigments & preparations for the coatings, plastics & ink industries worldwide. The company is a global leader in the supply of color pigments and dispersions for the coatings, plastics and ink industries, according to its Web site. DCL Holdings (USA) Inc. and 5 affiliated debtors sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 22-11319) on Dec. 20, 2022. In the petition filed by Scott Davido, as chief restructuring officer, the Debtor reported assets and liabilities between $100 million and $500 million each. The Debtors tapped KING & SPALDING LLP as counsel; RICHARDS, LAYTON & FINGER, P.A., as Delaware counsel; TM CAPITAL CORP. as investment banker; and ANKURA CONSULTING GROUP, L.L.C., as restructuring advisor. KROLL RESTRUCTURING ADMINISTRATION LLC as claims agent. DESERT VALLEY: Gets OK to Hire Mark J. Giunta as New Counsel ------------------------------------------------------------ Desert Valley Steam Carpet Cleaning, LLC received approval from the U.S. Bankruptcy Court for the District of Arizona to employ the Law Office of Mark J. Giunta to handle its Chapter 11 case. The firm will be paid at these rates: Mark J. Giunta $525 per hour Senior Associate $350 per hour Associate $275 per hour Legal Assistant $125 per hour In addition, the firm will be reimbursed for out-of-pocket expenses incurred. The firm received from the Debtor a retainer of $20,000. Mark Giunta, Esq., disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Mark J. Giunta, Esq. Law Office of Mark J. Giunta 531 East Thomas Road, Suite 200 Phoenix, AZ 85012 Tel: (602) 307-0837 Fax: (602) 307-0838 Email: markgiunta@giuntalaw.com About Desert Valley Steam Carpet Cleaning Desert Valley Steam Carpet Cleaning, LLC was formed on Aug. 12, 2005, for the purpose of owning and operating a multi-family housing property located at 603 and 607 North D. St., Eloy, Ariz. Desert Valley Steam Carpet Cleaning sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-00570) on Jan. 16, 2020. Judge Brenda K. Martin oversees the case. Mark J. Giunta, Esq., at the Law Office of Mark J. Giunta serves as the Debtor's legal counsel. DETAIL DESIGN: Gets OK to Hire Victor W. Dahar as Legal Counsel --------------------------------------------------------------- Detail Design Builders, LLC received approval from the U.S. Bankruptcy Court for the District of New Hampshire to hire Victor W. Dahar, P.A., as its legal counsel. The firm's services include: a. assistance with the preparation and review of bankruptcy schedules and monthly operating reports; b. preparation of a Chapter 11 plan and disclosure statement; c. preparation of objections to motions for relief and post-petition or take-out financing issues; d. preparation of objections to motions and pending issues as they arise; e. representation for turnover, preference actions, and other avoidance or subordination actions; f. filing of motions to sell real estate; g. negotiation with the creditors committee, if any, and creditors, as necessary; and h. all other matters necessary and proper for the representation of the Debtor in its Chapter 11 case. Victor W. Dahar has agreed to be employed under a general retainer. As disclosed in court filings, Victor W. Dahar is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Eleanor Wm. Dahar, Esq. Victor W. Dahar, P.A. 20 Merrimack Street Manchester, NH 03101 Tel: (603) 622-6595 Fax: (603) 647-8054 Email: vdaharpa@att.net About Detail Design Builders Detail Design Builders, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.N.H. Case No. 22-10577) on Nov. 22, 2022, with $1 million to $10 million in both assets and liabilities. Robert L. MacDonald, Jr., a member of Detail Design Builders, signed the petition. Judge Bruce A. Harwood presides over the case. Eleanor Wm. Dahar, Esq., at Victor W. Dahar, P.A. represents the Debtor as legal counsel. DIEBOLD NIXDORF: Moody's Alters Outlook on 'Caa2' CFR to Positive ----------------------------------------------------------------- Moody's Investors Service has affirmed Diebold Nixdorf, Inc.'s corporate family rating of Caa2 following the closing of the company's debt capital restructuring. The Speculative Grade Liquidity Rating (SGL) is upgraded to SGL-3 from SLG-4. The outlook is revised to positive from negative. Concurrently, Moody's downgraded the probability of default rating to D-PD as Moody's considers the restructuring a distressed exchange. In a few business days, Moody's will upgrade Diebold PDR's to Caa2-PD, consistent with the probability of default expectation embedded in the Caa2 CFR. Affirmations: Issuer: Diebold Nixdorf, Inc. Corporate Family Rating, Affirmed Caa2 Senior Secured Regular Bond/Debenture, Affirmed Caa2 (LGD4) Senior Unsecured Regular Bond/Debenture, Affirmed Ca (LGD6) Issuer: Diebold Nixdorf Dutch Holding B.V. Senior Secured Regular Bond/Debenture, Affirmed Caa2 (LGD4) Downgrades: Issuer: Diebold Nixdorf, Inc. Probability of Default Rating, Downgraded to D-PD from Caa2-PD Senior Secured Bank Credit Facility, Downgraded to Caa3 (LGD5) from Caa2 (LGD4) Upgrades: Issuer: Diebold Nixdorf, Inc. Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 Assignments: Issuer: Diebold Nixdorf Holding Germany GmbH Backed Senior Secured Super Priority Term Loan, Assigned B3 (LGD2) Issuer: Diebold Nixdorf, Inc. Senior Secured First Lien Term Loan B, Assigned Caa2 (LGD4) Senior Secured Second Lien Global Notes, Assigned Ca (LGD6) Outlook Actions: Issuer: Diebold Nixdorf, Inc. Outlook, Changed To Positive From Negative Issuer: Diebold Nixdorf Dutch Holding B.V. Outlook, Changed To Positive From Negative Issuer: Diebold Nixdorf Holding Germany GmbH Outlook, Assigned Positive RATINGS RATIONALE The affirmation of the CFR reflects the extension of Diebold's near term maturities and infusion of liquidity, providing the company with an increased buffer to deliver on the company's sizable backlog and implement price increases and targeted costs savings in 2023, creating the potential for a stabilized financial profile entering 2024 when extended maturities go current. Diebold is increasing production at its domestic Ohio facility to reduce order fulfillment cycle time in the U.S. market which has ballooned to over 200 days from 90 days historically and its increased reliance on premium freight and spot market purchases, which have led to unbillable inflation. Diebold expects to further offset cost inflation in 2023 through low single digit price increases and approximately $130 million in efficiency programs. The positive outlook reflects Moody's expectation that Diebold will grow revenues in the mid to high single digits in 2023 as it delivers on record backlog in excess of $1.3 billion exiting 2022. Moody's expects supply chain constraints to ease, and adjusted EBITDA margins to improve by several points, driven by easing cost inflation and realized savings initiatives. This will reduce debt to EBITDA from approximately 9x at the end of 2022 to 6-7x at the end of 2023. Likewise, FCF to debt is expected to improve from approximately negative 15% to breakeven levels. These anticipated financial improvements are balanced by inherent execution risk and the extended July 2025 maturity wall that will necessitate sustained operational momentum in 2024, which is uncertain. The failure to deliver on these operational improvements in 2023 or sustain momentum into 2024 could lead to concerns about the sustainability of the restructured capital structure. Diebold's liquidity is expected to be adequate over the next year, based upon approximately $250 million cash and short term investments at September 30, 2022 pro forma for the restructuring transaction. Moody's anticipates cash of $370 million exiting 2022 based upon expected cash flow generation in the fourth quarter (noting that Moody's believes that Diebold requires minimum cash balances of around $150 million), while LTM cash flow at September 30, 2022 was negative $114 million. Moody's expects breakeven free cash flow in 2023 and positive free cash flow in 2024, inclusive of approximately $160 million in cash restructuring payments in total across both years. As part of the restructuring transaction, Diebold replaced its revolving credit facility with a $250 million ABL facility that is $182 million drawn at transaction close, and matures in July 2026 subject to a springing maturity 91 days prior to the maturity of other indebtedness in excess of $25 million, other than any existing non-extending term loans or notes in connection with the restructuring. The ABL's borrowing base was approximately $270 million as of June 2022. The B3 rating on Diebold's superpriority term loan B reflects its priority position with respect to the non-ABL foreign collateral and its pari passu position along with the extended and non-extended term loans with respect to the non-ABL US collateral. Approximately 77% of sales occur outside of the U.S. and the borrower of the superpriority term loan, Diebold Nixdorf Holding Germany GmbH, is the largest subsidiary by assets and holds Wincor Nixdorf International GmbH which holds substantially all IP rights for ex-Americas and is the third largest subsidiary by assets. The Caa2 ratings on the new and extended senior first lien secured instruments reflects their pari passu claim on non-ABL domestic collateral. The new extended term loans and notes also benefit from a second position claim on non-ABL foreign collateral, behind the new superpriority term loan. The existing non-extended term loans are rated Caa3 as Moody's ranks these claims behind the new and extended first lien term loans in its priority of claim waterfall because the non-extended term loans do not have a second position priority claim on foreign collateral. The Ca instrument ratings of the new second lien notes and non-extending unsecured notes reflects their weak expected recovery in a default scenario. The new second lien notes ranks behind the first lien term loans with respect to the non-ABL US collateral and has a third position claim on foreign collateral. Though the non-extending unsecured notes have the weakest recovery prospects at default, they are rated at the same level as the new second lien notes. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Diebold demonstrates strongly improving operating performance in 2023 and operational momentum is expected to be sustained in 2024 such that a refinancing of 2025 debt maturities appears likely. The ratings could be downgraded if operating performance fails to improve in 2023 as expected or liquidity weakens further resulting in an increased likelihood of an unsustainable capital structure, as currently restructured. Headquartered in Hudson, OH, Diebold is a leading global provider of ATM and POS equipment, services and software to financial institutions and enterprise retailers. Banking revenue represented approximately 69% of 2021 revenue, half of which was earned from the Americas and 40% from EMEA. By contrast, approximately 86% of 2021 retail revenue was earned in EMEA. Diebold acquired Wincor Nixdorf AG in 2016. Revenues in 2021 were approximately $3.9 billion and $3.6 billion in the LTM period ended September 30, 2022. The principal methodology used in these ratings was Diversified Technology published in February 2022. DPL INC: Fitch Alters Outlook on 'BB' LongTerm IDR to Stable ------------------------------------------------------------ Fitch Ratings has affirmed DPL Inc.'s (DPL) Long-Term (LT) Issuer Default Rating (IDR) at 'BB' and Dayton Power and Light Company (AES Ohio)'s LT IDR at 'BBB-'. The Rating Outlooks are revised to Stable from Negative. The Public Utility Commission of Ohio (PUCO) approved AES Ohio's distribution rate case last week providing a path to recovery. Key parameters of the order are constructive although rates will not take effect until a new electric security plan is approved. The rating affirmation and Outlook reflect Fitch's expectations that FFO leverage will improve to below DPL's downgrade sensitivity of 8.3x by 2025. The credit metric incorporates Fitch's estimate that capex will increase materially in the next two to three years. AES Ohio will continue to be well positioned for its ratings but is upward constrained by the DPL ownership. KEY RATING DRIVERS Rate Order Provides a Path for Recovery: AES Ohio is allowed a $75.6 million base rate increase on a 9.999% return on equity and 53.87% equity layer. The rate increase is approximately 62% of requested and higher than the staff recommendation in 2021. ROE and equity ratio are above industry average. The order primarily addressed the recovery for distribution investments since September 2015 and investments necessitated by the tornados in May 2019. However, rates will not take effect until the new electric security plan (ESP4) is approved. The rate freeze was based on a precedence set in 2009 that there shall be no rate increase when ESP 1 is in effect. ESP4 Could Reduce Lag: AES Ohio filed ESP4 in October 2022 to replace ESP1 and expects an order in the second half of 2023. ESP4 is requesting implementation of a distribution investment rider (DIR) to recover distribution investments between rate cases. If approved, the DIR will meaningfully mitigate regulatory lag. AES Ohio's financial performance has been weakened due to regulatory lag. If the approved distribution rates take effect in 2023, it would have been eight years since some of the investments were made. AES Ohio also requested a distribution decoupling mechanism in ESP4. Credit Metrics to Improve: Fitch expects DPL's FFO leverage to be weak in 2023 and 2024 and improve in 2025. In 2023, FFO leverage will be high primarily due to rate freeze, and Fitch's expectations that base distribution and transmission capex will be materially higher than previous years. AES Ohio will lose the rate stabilization charge of $70 million to $75 million under the ESP1. In 2024, the capex will continue to be elevated. AES Ohio's rate base growth has been low compared to peers. Fitch views rate base-accretive capex favorably. However, it will pressure credit metrics temporarily. By 2025, Fitch expects to FFO leverage to improve to be below 8.3x due to the cumulative effects of recovery from smart grid and DIR, new distribution rates and FERC investments. AES Ohio is estimated to produce FFO leverage of 5x on average over the next few years. Parent and Subsidiary Linkage: There is parent subsidiary linkage between DPL and AES Ohio. Fitch determines DPL's standalone credit profile based upon consolidated metrics. Fitch considers AES Ohio to have stronger credit profile on a standalone basis. As such, Fitch has followed the weaker parent/stronger subsidiary path. As regulated utilities and holding company, legal ring fencing for AES Ohio is considered porous given the general protections afforded by regulatory capital structure and other restrictions. Access and control are porous. AES Ohio is fully owned by DPL, but AES Ohio issues its own short-term and long-term debt, and it does not guarantee the debt at DPL. Due to these considerations, Fitch generally limits the IDR notching difference to two. Fitch doesn't apply parent subsidiary linkage between AES and its investments. Fitch considers AES a financial investor as AES considers its investments as nonrecourse. DERIVATION SUMMARY DPL is a nearly 100% regulated transmission and distribution (T&D) utility holding company after retiring and selling and closing its merchant operations. DPL operates a single-state regulated utility, similar to Cleco Corporate Holdings, LLC (Cleco; BBB-/Stable) and IPALCO Enterprises (IPALCO; BBB-/Stable). DPL's regulated T&D utility carries lower operating risks than Cleco's and IPALCO's utilities, which are exposed to coal generation. Cleco's acquired generating capacity in 2019 increased its footprint in the unregulated segment. Ohio regulation was constructive historically but is unpredictable in recent years. Fitch expects DPL's FFO leverage to continue to be elevated in the next two years and then improve to below 8.3x starting in 2025. Cleco Corp.'s FFO leverage could range from 5.0x to 6x, and IPALCO's FFO leverage could average 5.6x in the next three years. As a regulated T&D operating in Ohio, AES Ohio is weakly positioned compared with Ohio Power Co. (A-/Stable), Ohio Edison Co. (OE; BBB/Stable), Toledo Edison Co. (TE; BBB+/Stable), and Cleveland Electric Illuminating Company (CE; BBB/Stable). Similar to AES Ohio, OE, TE and CE's distribution modernization rider (DMR) were removed in 2019. The impact of the DMR removal is relatively more manageable for OE, TE and CE, as the DMR is a relatively small portion of their revenue and that the removal occurred near the end of the ESP period. However, OE, TE and CEIC were negatively affected by the political scandal in Ohio involving its parent FirstEnergy Corp. (FE) and HB6-related regulatory review are pending. OE's, CE's and TE's IDRs and Stable Outlooks reflect solid underlying credit metrics, constructive rate design in Ohio and anticipates a balanced outcome in the utilities' ESP IV and base rate case applications with the PUCO. Fitch estimates that average annual 2022-2024 FFO leverage in a range of 2.8x-3.1x for OE, 5.1x-6.6x for CE and 4.0x-5.7x for TE. Fitch estimates that AES Ohio's FFO leverage could average 5x in the next five years incorporating a substantially higher capex program from 2023 to 2025. AES Ohio's ratings are upwardly constrained by DPL, whereas its Ohio peers benefit from being part of large and diversified corporate families. KEY ASSUMPTIONS - Distribution rates and the DIR to be implemented in second half of 2023; - Capex from 2023 to 2025 is estimated to be higher than previous years. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: DPL - Given the expected weak credit metrics in the next two years, an upgrade is unlikely. Nevertheless, DPL can be upgraded if consolidated FFO leverage sustains below 7.3x. Factors that could, individually or collectively, lead to negative rating action/downgrade: DPL - FFO leverage above 8.3x on a sustained basis; - Deteriorating regulatory construct or successful challenges from stakeholders such as the OCC over approved rate plans in the future. Factors that could, individually or collectively, lead to positive rating action/upgrade: AES Ohio - If DPL is upgraded and if AES Ohio's FFO leverage sustains below 5.3x, as Fitch intends to maintain a two-notch IDR differential between DPL and AES Ohio. Factors that could, individually or collectively, lead to negative rating action/downgrade: AES Ohio - If AES Ohio's FFO leverage sustains above 6.3x; - Signs of deterioration of regulatory construct or successful challenges from intervenors against future rate orders; - If DPL is downgraded as Fitch intends to maintain a two-notch IDR differential between DPL and AES Ohio. ISSUER PROFILE DPL derives over 95% of its revenue from AES Ohio. AES Ohio is a public utility providing electric transmission and distribution services in West Central Ohio as well as retail Standard Service Offer electric service to customers who choose not to switch generation suppliers. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- The Dayton Power & Light Company LT IDR BBB- Affirmed BBB- senior secured LT BBB+ Affirmed BBB+ senior secured LT BBB+ Affirmed RR4 BBB+ DPL Inc. LT IDR BB Affirmed BB senior unsecured LT BB Affirmed RR4 BB DPL Capital Trust II junior subordinated LT BB- Affirmed RR5 BB- EAGLE DUNES OWNERS: Files Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Eagle Dunes Owners Association LLC filed for chapter 11 protection in the Middle District of Florida. In its schedules, the Debtor disclosed $625,000 in total assets, all on account of 50% interests in property in Florida, and $1,897,471 in total liabilities. According to court filings, Eagle Dunes says it has1 to 49 creditors, and that funds will be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for Jan. 23, 2023, at 9:00 AM. The U.S. Trustee (Orl) will hold the meeting telephonically. Call in Number: 877-801-2055. Passcode: 8940738#. Proofs of claim are due by Feb. 28, 2023. About Eagle Dunes Owners Association Eagle Dunes Owners Association LLC owns a 50% interest in each of the following real properties located at: (1) 2887 Sweetspire Cir, Kissimmee, FL; (2) 3789 Blackthorn Ct, Orange Park, FL, (3) 11565 Whispertin Brook Ln, Jacksonville, FL; and (4) 2621 Palmetto Ridge Cir Apopka, FL, having an aggregate current value of $625,000. Eagle Dunes Owners Association LLC filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-04489) on Dec. 21, 2022. In the petition filed by Oleh Vaselov, as authorized agent, the Debtor reported assets and liabilities between $1 million and $10 million. The Debtor is represented by: Erick Steffens, Esq. Steffens Law Firm, PLLC 2621 Palmetto Ridge Circle Apopka, FL 32712 EMPIRE COUNTERTOPS: Seeks to Hire Norred Law as Bankruptcy Counsel ------------------------------------------------------------------ Empire Countertops, LLC seeks approval from the U.S. Bankruptcy Code for the Eastern District of Texas to hire Norred Law, PLLC as its legal counsel. The firm's services include: a. advising the Debtor of its powers and duties in the management of its property; b. attending meetings and negotiating with representatives of creditors and other parties in interest; c. assisting the Debtor in the preparation of all administrative documents required to be filed; d. preserving the assets and interests of the estate; e. advising the Debtor in connection with any potential sales of assets; f. appearing before the court and the Office of the U.S. Trustee; g. assisting in the formulation of a disclosure statement and plan of reorganization; and h. performing all other necessary legal services for the Debtor. The hourly rates charged by the firm's attorneys and paraprofessionals are as follows: Attorneys $300 to $450 Paraprofessionals $90 to $120 The firm received a $16,738 retainer. As disclosed in court filings, Norred Law is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Warren V. Norred, Esq. Norred Law, PLLC 515 E. Border Arlington, TX 76010 Tel: (817) 704-3984 Email: warren@norredlaw.com About Empire Countertops Empire Countertops, LLC fabricates and installs countertops. Its fabrication facility is located in Pilot Point Texas. Empire Countertops sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Texas Case No. 22-41686) on Dec. 5, 2022, with up to $10 million in both assets and liabilities. Curtis M. Mahoney, member and manager, signed the petition. Judge Brenda T. Rhoades oversees the case. Clayton L. Everett, Esq., at Norred Law, PLLC is the Debtor's legal counsel. FAAVEE LLC: Case Summary & One Unsecured Creditor ------------------------------------------------- Debtor: Faavee, LLC 213 Mandan Street Buda, TX 78610 Business Description: Faavee is the owner in fee simple title of eight properties located in Texas having an aggregate current value of $2.84 million. Chapter 11 Petition Date: December 30, 2022 Court: United States Bankruptcy Court Western District of Texas Case No.: 22-10870 Judge: Hon. Tony M. Davis Debtor's Counsel: Stephen W. Sather, Esq. BARRON & NEWBURGER, P.C. 7320 N. MoPac Expressway 400 Austin, TX 78731 Tel: (512) 649-3243 Email: ssather@bn-lawyers.com Total Assets: $2,849,500 Total Liabilities: $1,939,105 The petition was signed by Alfredo Garza as sole member. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/YAY3I6I/Faavee_LLC__txwbke-22-10870__0001.0.pdf?mcid=tGE4TAMA Debtor's Unsecured Creditor: Entity Nature of Claim Claim Amount Przyborowski, Francis Funds Advanced $84,105 c/o Jonathan P. Fly 4901 Broadway Suite 235 San Antonio, TX 78209 FIRST LINE TACTICAL: Taps Connolly Steele & Co. as Accountant ------------------------------------------------------------- First Line Tactical, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Pennsylvania to employ Connolly, Steele & Company to provide accounting services, which include the preparation of payroll and monthly financial statements, bookkeeping services, and tax preparation. The firm will be paid at these rates: Payroll $105 per hour Bookkeeping/MOR $175 per hour Tax preparation $195 per hour Consulting/Partner $300 per hour As disclosed in court filings, Connolly is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Elizabeth S. Connolly, CPA Connolly, Steele & Company, P.C. 1010 Ohio River Boulevard Pittsburgh, PA 15202 Office: 412-761-9180 Fax: 412-761-9211 Email: info@connollysteele.com About First Line Tactical First Line Tactical, LLC, doing business as Steel City Ammo, offers guns, ammunition sales and training services in Pittsburgh. First Line Tactical filed a petition for Chapter 11 protection (Bankr. W.D. Pa. Case No. 22-22395) on Dec. 2, 2022, with up to $50,000 in assets and up to $10 million in liabilities. Nathan Swierkosz, member, signed the petition. Brian C. Thompson, Esq., at Thompson Law Group, PC and Connolly, Steele & Company serve as the Debtor's legal counsel and accountant, respectively. FLOWER ONE: Implements Reorganization Plan Under CCAA ----------------------------------------------------- Flower One Holdings Inc., the Canadian parent company, together with its Canadian subsidiaries Flower One Corp. and FO Labour Management Ltd. (collectively, the "Canadian Companies"), on Dec. 31 announced (i) the implementation of its previously announced plan of compromise, arrangement and reorganization (the "Plan") presented to affected creditors pursuant to the Companies' Creditors Arrangement Act (Canada) ("CCAA") and a Meeting Order of the Supreme Court of British Columbia ( "Canadian Court") granted on November 25, 2022, which Plan was approved by the requisite majorities of affected creditors at a meeting on December 19, 2022 and sanctioned by the Canadian Court on December 21, 2022; and (ii) the closing of the transactions contemplated by the Plan, including a Canadian restructuring transaction pursuant to which the Canadian Company has ceased to own any U.S. operating subsidiaries. Affected creditors entitled to distributions pursuant to the Plan will receive their respective distributions from PricewaterhouseCoopers Inc. in its capacity as the Canadian Companies' monitor under the CCAA (in such capacity, the "Monitor"), by no later than January 13, 2023. To the extent any affected creditor does not receive a distribution by January 13, 2023, it should notify the Canadian Companies and Monitor in accordance with the Plan. Shareholders of Flower One will not receive any distributions under the Plan in respect of their equity interests in Flower One. Pursuant to the Plan, the Canadian Companies will each make an assignment into bankruptcy and, accordingly, Flower One will remain non-compliant with applicable Canadian securities laws and regulations. Flower One's trading on the Canadian Securities Exchange (CSE) has been suspended and Flower One is expected to be de-listed from applicable stock exchanges. Additionally, there is a related U.S. Restructuring Plan that was also executed, but is subject to Nevada's Cannabis Compliance Board (the "CCB") approval. Further information regarding the CCAA proceedings and the Plan can be obtained by contacting the Monitor via email at ca_flowerone@pwc.com or on the Monitor's website: https://www.pwc.com/ca/FONE. About Flower One Holdings Flower One (CSE: FONE) (FSE: F11) -- https://flowerone.com/ -- is the largest cannabis cultivator, producer, and full-service brand fulfillment partner in the state of Nevada. By combining more than 20 years of greenhouse operational excellence with best-in-class cannabis operators, Flower One offers consistent, reliable, and scalable fulfillment to a growing number of industry-leading cannabis brands (Cookies, Kiva, Old Pal, Heavy Hitters, Lift Ticket's, HUXTON, and Flower One's leading in-house brand, NLVO, and more). Flower One currently produces a wide range of products from flower, full-spectrum oils, and distillates to finished consumer packaged goods, including a variety of: pre-rolls, concentrates, edibles, topicals, and more for top-performing brands in cannabis. Flower One's Nevada footprint includes its flagship facility, a 400,000 square-foot high-tech greenhouse and 55,000 square-foot production facility, as well as a second site with a 25,000 square-foot indoor cultivation facility and commercial kitchen. Flower One has built an industry-leading team focused on making high-quality cannabis accessible to all. The Canadian Company's common shares are traded on the Canadian Securities Exchange under the Canadian Company's symbol "FONE", and on the Frankfurt Stock Exchange under the symbol "F11". FREE SPEECH: Court Allows Sandy Hook Cases vs. Jones to Proceed --------------------------------------------------------------- The Associated Press reports that a bankruptcy judge permitted Sandy Hook cases against Alex Jones to proceed. Cases can move forward against Alex Jones regarding the nearly $1.5 billion he's ordered to pay families of Sandy Hook victims over his conspiracy theories about the 2012 school massacre, a federal bankruptcy judge ruled, but the families can't yet pursue collection efforts against the Infowars host. Judge Christopher Lopez approved an order that attorneys for Jones, his media company and the Sandy Hook families had all agreed to. The order lifts a stay that automatically halted the cases when Jones filed for bankruptcy. Free Speech Systems, Jones' media company, is also seeking bankruptcy protection. Judge Lopez approved the order, which prevents the families from pursuing collection efforts, during an hour and a half long hearing that Jones attended remotely. Alex Jones filed for Chapter 11 personal bankruptcy protection earlier this month in Texas, citing $1 billion to $10 billion in liabilities and $1 million to $10 million in assets. For years, Jones described the 2012 Sandy Hook massacre as a hoax. A Connecticut jury in October awarded victims' families $965 million in compensatory damages, and a judge later tacked on another $473 million in punitive damages. Earlier in the year, a Texas jury awarded the parents of a child killed in the shooting $49 million in damages. Jones has laughed at the awards on his Infowars show, saying he has less than $2 million to his name and won't be able to pay such high amounts. Those comments contradicted the testimony of a forensic economist at the Texas trial, who said Jones and Free Speech Systems have a combined net worth as high as $270 million. In documents filed in July in Free Speech Systems' bankruptcy case in Texas, a budget for the company for Nov. 26 to Dec. 23, 2022 estimated product sales will total nearly $3 million, while operating expenses will be nearly $739,000. Jones’ salary is listed at $20,000 every two weeks. Judge Lopez delayed taking up a motion by Jones' attorneys to force Free Speech Systems to pay the $1.3 million listed under his contract, which would amount to about $54,000 every two weeks. Lopez said he will take up the issue at a hearing next month. Sandy Hook families have alleged in another lawsuit in Texas that Jones hid millions of dollars in assets after victims' relatives began taking him to court. Jones' lawyer denied the allegation. A third trial over Jones' comments on Sandy Hook is expected to begin within the next two months in Texas, in a lawsuit brought by the parents of another child killed in the shooting. About Alex Jones and Free Speech Systems Free Speech Systems LLC is a broadcast media production and distribution company that provides broadcasting aural programs by radio to the public. Free Speech Systems is a family-run business founded by Alex Jones. FSS is presently engaged in the business of producing and syndicating Jones' radio and video talk shows and selling products targeted to Jones' loyal fan base via the Internet. Today, FSS produces Alex Jones' syndicated news/talk show (The Alex Jones Show) from Austin, Texas, which airs via the Genesis Communications Network on over 100 radio stations across the United States and via the internet through websites including Infowars.com. Conspiracy theorist Alex Jones has been sued by victims' family members over Jones' lies that the 2012 Sandy Hook Elementary School shooting was a hoax. Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet TV, LLC, filed petitions under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April 18, 2022. The Debtors agreed to the dismissal of the Chapter 11 cases in June 2022 after the Sandy Hook victim families dismissed the three bankrupt companies from their lawsuits. Free Speech Systems filed a voluntary petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-60043) on July 29, 2022. In the petition filed by W. Marc Schwartz, as chief restructuring officer, the Debtor reported assets and liabilities between $50 million and $100 million. Melissa A Haselden has been appointed as Subchapter V trustee. Alexander E. Jones filed for personal bankruptcy under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on Dec. 2, 2022, listing $1 million to $10 million in assets against liabilities of $1 billion to $10 billion in liabilities. Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC, is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C., led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan, and Antonio Ortiz are representing Alex Jones. FREE SPEECH: Judge Lopez Willing to Raise Alex Jones' Salary ------------------------------------------------------------ James Nani of Bloomberg Law reports that a bankruptcy judge indicated that he's willing to boost Alex Jones' salary, saying the conservative firebrand’s job is the lifeblood of his Infowars business. Mr. Jones is currently bringing in a $20,000 biweekly salary -- less than half of what he was making before his business' bankruptcy. Judge Christopher Lopez of the US Bankruptcy Court for the Southern District of Texas said at a Monday, Dec. 12, 2022, hearing that he needs more information before ruling on the request and pushed the decision to January 2023. The dispute over Jones' salary has become more salient since the conspiratorial host filed his own personal bankruptcy case. About Alex Jones and Free Speech Systems Free Speech Systems LLC is a broadcast media production and distribution company that provides broadcasting aural programs by radio to the public. Free Speech Systems is a family-run business founded by Alex Jones. FSS is presently engaged in the business of producing and syndicating Jones' radio and video talk shows and selling products targeted to Jones' loyal fan base via the Internet. Today, FSS produces Alex Jones' syndicated news/talk show (The Alex Jones Show) from Austin, Texas, which airs via the Genesis Communications Network on over 100 radio stations across the United States and via the internet through websites including Infowars.com. Conspiracy theorist Alex Jones has been sued by victims' family members over Jones' lies that the 2012 Sandy Hook Elementary School shooting was a hoax. Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet TV, LLC, filed petitions under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April 18, 2022. The Debtors agreed to the dismissal of the Chapter 11 cases in June 2022 after the Sandy Hook victim families dismissed the three bankrupt companies from their lawsuits. Free Speech Systems filed a voluntary petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-60043) on July 29, 2022. In the petition filed by W. Marc Schwartz, as chief restructuring officer, the Debtor reported assets and liabilities between $50 million and $100 million. Melissa A Haselden has been appointed as Subchapter V trustee. Alexander E. Jones filed for personal bankruptcy under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on Dec. 2, 2022, listing $1 million to $10 million in assets against liabilities of $1 billion to $10 billion in liabilities. Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC, is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C., led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan, and Antonio Ortiz are representing Alex Jones. FTX TRADING: Asks Court Intervention on $440-Mil. Robinhood Sharess ------------------------------------------------------------------- Aaryamann Shrivastava of FXStreet reports that FTX Group, in a court filing, demanded intervention from a US bankruptcy court over the ownership of $440 million worth of Robinhood shares. Since the exchange's bankruptcy, the shares that are attached to Alameda Research have been eyed by multiple entities, including FTX's creditors. BlockFi, along with another FTX creditor, has been trying to get their hands on these shares in a separate court filing in New Jersey and Antigua. Both of these entities have been claiming entitlement over the shares in order to recover their debts. In addition, Bankman-Fried also attempted to take control of the 56 million shares in total. However, he was arrested on fraud charges by the Bahamian authorities on December 11 before his plans could go any further. According to FTX, the former CEO's request in the Antigua court for the Robinhood shares has been made to help in paying his legal bills. Thus, FTX lawyers requested the bankruptcy court judge overseeing the exchange's insolvency to block creditors' access to the Robinhood shares until the true ownership is determined, which FTX claims is theirs. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal the next day amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At approximately 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. A total of 102 entities related to FTX have filed for Chapter 11 protection. FTX Trading and its affiliates each listed $10 billion to $50 million in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10 showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. Andrew G. Dietderich, James L. Bromley, Brian D. Glueckstein and Alexa J. Kranzley at Sullivan & Cromwell LLP in New York, serve as the Debtors' counsel. Adam G. Landis, Kimberly A. Brown and Matthew R. Pierce at LANDIS RATH & COBB LLP in Wilmington serve as local bankruptcy counsel to FTX Group. Alvarez & Marsal North America, LLC, is the Debtors' financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index Lawyers at Paul Weiss represented SBF but later renounced representing the entrepreneur due to a conflict of interest. FTX TRADING: Committee Taps Paul Hastings to Lead Legal Work ------------------------------------------------------------ Roy Strom of Bloomberg Law reports that law firm Paul Hastings won the competition to represent the creditors committee in the FTX bankruptcy, a lucrative position that gives the firm's lawyers a prominent role in the closely watched proceeding. Paul Hastings partners Kris Hansen and Chris Daniel are leading the representation, a firm spokesman confirmed. The Wall Street Journal first reported Paul Hastings' role. Multiple law firms made presentations in front of a judge to win the work. The official nine-member committee includes investment firms from around the world, a unit of digital asset firm Genesis, and an individual investor. FTX, once valued at over $30 billion, collapsed in spectacular fashion last November 2022. The collapse has led to lawsuits from the US Securities and Exchange Commission and the Commodities Futures Trading Commission, as well as criminal charges against co-founder Sam Bankman-Fried. Creditors committees form in large bankruptcies and are involved in most negotiations. They hire their own lawyers and financial advisors, whose fees are paid by the bankrupt estate. Committee lawyer fees are often among the highest in bankruptcies, typically trailing those paid to the debtor's lead law firm. For Paul Hastings, the assignment validates its hiring of more than 40 bankruptcy lawyers from Stroock & Stroock & Lavan earlier this year. Hansen was head of the restructuring group at Stroock before making the jump to Paul Hastings. FTX's co-founder Sam Bankman-Fried was extradited from the Bahamas to the US, where he faces criminal charges stemming from the collapse of the once-prominent crypto exchange. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal the next day amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At approximately 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. A total of 102 entities related to FTX have filed for Chapter 11 protection. FTX Trading and its affiliates each listed $10 billion to $50 million in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10 showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. Andrew G. Dietderich, James L. Bromley, Brian D. Glueckstein and Alexa J. Kranzley at Sullivan & Cromwell LLP in New York, serve as the Debtors' counsel. Adam G. Landis, Kimberly A. Brown and Matthew R. Pierce at LANDIS RATH & COBB LLP in Wilmington serve as local bankruptcy counsel to FTX Group. Alvarez & Marsal North America, LLC, is the Debtors' financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index Lawyers at Paul Weiss represented SBF but later renounced representing the entrepreneur due to a conflict of interest. GAME REPAIR SHOP: Gets OK to Hire NAI United as Real Estate Broker ------------------------------------------------------------------ Game Repair Shop LLC received approval from the U.S. Bankruptcy Court for the District of Nebraska to hire NAI United to sell its property located at 414 Pierce St, Sioux City, IA 51101. The realtor will receive a commission equal to 6 percent of the gross sale price. Erin Rooney, president of NAI, assured the court that the firm does not represent any interest adverse to the interests of the Debtor, or any other party in interest in this bankruptcy estate. The realtor can be reached through: Erin Rooney NAI UNITED 400 Gold Circle Suite 120 Dakota Dunes, SD 57049 Phone: +1 712 898 8372 Email: erin@naiunited.com About Game Repair Shop Game Repair Shop LLC -- https://gogamers.com/ -- purchases and sells used games and consoles and offers repair services. Game Repair Shop filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Neb. Case No. 22-80455) on June 15, 2022. In the petition filed by David Mitchell, as member and manager, the Debtor estimated assets between $100,000 and $500,000 and estimated liabilities between $500,000 and $1 million. Patrick Patino, of Patino King LLC, is the Debtor's counsel. GIRARDI & KEESE: Erika Jane Deposed in $25-Mil. Bankruptcy Suit --------------------------------------------------------------- Kim Stempel of Reality Tea reports that Real Housewives of Beverly Hills star Erika Jayne is still dealing with lawsuits from every side. Erika's estranged husband, Tom Girardi, is accused of embezzling settlement funds from his legal clients. The Girardi-Keese law firm was forced into bankruptcy, and according to the trustee, owes out $517 million in financial claims. Erika filed for divorce from her husband. Tom was diagnosed with Alzheimer's disease and is living in a senior care facility. Meanwhile, poor Erika was ordered to turn over her $1.4 million earrings so that they could be auctioned off to repay Tom's victims. Erika fought tooth and nail to keep those earrings. Why? That is so weird. Her RHOBH co-stars didn't understand why Erika refused to part with the jewelry. Or show sympathy for the victims. In October 2022, a judge ordered that the earrings be auctioned off. The "Pretty Mess" singer was sued by the bankruptcy trustee for $25 million in August of 2021. The lawsuit accused Erika of being aware that money was being taken from Girardi-Keese to fund her extravagant lifestyle. RELATED: Real Housewives Of Beverly Hills Star Diana Jenkins Distributes Funds To Tom Girardi's Alleged Victims According to Radar Online, Erika was deposed in the case. The trustee for the Girardi-Keese bankruptcy informed the court of the deposition. "The [trustee] has deposed [Jayne]. No other depositions have been taken or noticed," the trustee stated in court documents obtained by Radar Online. The trustee claimed that Girardi-Keese spent $14 million on the American Express bill for Erika's company, EJ Global. Erika has denied any knowledge of Tom's alleged crimes, and has moved to dismiss the case. Both parties are now preparing for trial. Erika has opted for a jury trial. But Erika has some other bad news to digest. Her earrings were recently sold at auction for $250k. Sorry, girl. That is much less than I expected. And Erika was recently slapped with a $2.2 million tax lien. Erika's fate on RHOBH is also up in the air since the franchise is taking a "pause" after an intense season. About Girardi & Keese Girardi and Keese or Girardi & Keese was a Los Angeles-based law firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It served clients in California in a variety of legal areas. It was known for representing plaintiffs against major corporations. An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No. 20-21022) was filed in December 2020 against GIRARDI KEESE by alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian, Erika Saldana, Virginia Antonio, and Kimberly Archie. The petitioners' attorneys: Andrew Goodman Goodman Law Offices, Apc Tel: 818-802-5044 E-mail: agoodman@andyglaw.com Elissa D. Miller, a member of the firm SulmeyerKupetz, has been appointed as Chapter 7 trustee for GIRARDI KEESE. The Chapter 7 trustee can be reached at: Elissa D. Miller 333 South Grand Ave., Suite 3400 Los Angeles, California 90071-1406 Telephone: (213) 626-2311 Facsimile: (213) 629-4520 E-mail: emiller@sulmeyerlaw.com An involuntary Chapter 7 petition was also filed against Thomas Vincent Girardi (Case No. 20-21020) on Dec. 18, 2020. The Chapter 7 trustee can be reached at: Jason M. Rund Email: trustee@srlawyers.com 840 Apollo Street, Suite 351 El Segundo, CA 90245 Telephone: (310) 640-1200 GREELEY LAND: Gets OK to Hire Brownstein as Legal Counsel --------------------------------------------------------- Greeley Land, LLC received approval from the U.S. Bankruptcy Court for the District of Colorado to employ Brownstein Hyatt Farber Schreck, LLP as its counsel. The firm's services include: a. assisting in the production of the Debtor's schedules and statement of financial affairs and other pleadings necessary to comply with the Bankruptcy Code; b. assisting in the preparation of the Debtor's plan of reorganization and disclosure statement; c. preparing legal papers; d. representing the Debtor in adversary proceedings and contested matters related to its bankruptcy case; e. providing legal advice with respect to the Debtor's rights, powers, obligations and duties in the continuing operation of its business and the administration of the estate; f. providing other necessary legal services to the Debtor. The firm's hourly rates are as follows: Michael J. Pankow $785 Amalia Sax-Bolder $455 Suzanne Daigle $380 Sheila Grisham, Paralegal $365 Brownstein was paid a retainer of $75,000. As disclosed in court filings, Brownstein is a "disinterested person" within the meaning of Bankruptcy Code Section 101(14). The firm can be reached through: Michael J. Pankow, Esq. Amalia Y. Sax-Bolder, Esq. Brownstein Hyatt Farber Schreck, LLP 410 17th Street, Suite 2200 Denver, CO 80202 Telephone: (303) 223-1100 Facsimile: (303) 223-1111 Email: mpankow@bhfs.com asax-bolder@bhfs.com About Greeley Land, LLC Greeley Land, LLC, an apartment building operator, filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 22-14864) on Dec. 13, 2022, with $10 million to $50 million in both assets and liabilities. Judge Michael E. Romero presides over the case. Michael J. Pankow, Esq., and Amalia Y. Sax-Bolder, Esq., at Brownstein Hyatt Farber Schreck, LLP are the Debtor's bankruptcy attorneys. HIGHPOINT LIFEHOPE: Seeks to Tap MCA Financial as Property Manager ------------------------------------------------------------------ Highpoint Lifehope SPE LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Texas to hire MCA Financial Group, Ltd. as its third-party property manager. MCA Financial is being retained to manage and operate two office buildings located at 8401 Datapoint Drive and 8415 Datapoint Drive, San Antonio, Texas. MCA Financial will be paid at these hourly rates: Senior Managing Directors $550 Managing Directors $450 Directors $375 Associates $295 Staff $125 As disclosed in court filings, MCA Financial is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code; and does not hold or represent any material interest adverse to the Debtor’s estate. The firm can be reached through: Morris C. Aaron MCA Financial Group, Ltd. 4909 North 44th Street Phoenix, AZ 85018 Tel: (602) 710-2500 Email: maaron@mca-financial.com About Highpoint Lifehope SPE Highpoint Lifehope SPE LLC, also known as Honan Property Management - Highpoint, is a Single Asset Real Estate (as defined in 11 U.S.C. Sec. 101(51B)). Highpoint Lifehope SPE LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Tex. Case No. 22-50929) on August 22, 2022. In the petition filed by Scott C. Honan, as manager, the Debtor reports estimated assets and liabilities between $50 million and $100 million each. The Debtor is represented by Natalie F. Wilson of Langley & Banack Inc. HIGHWAY 30 PHYSICAL: Case Summary & 16 Unsecured Creditors ---------------------------------------------------------- Debtor: Highway 30 Physical Therapy and Rehabilitation, LLC d/b/a OSC Physical Therapy 333 W. 89th Avenue Suite W4 Merrillville, IN 46410 Chapter 11 Petition Date: December 31, 2022 Court: United States Bankruptcy Court Northern District of Indiana Case No.: 22-21920 Debtor's Counsel: Daniel L. Freeland, Esq. DANIEL L. FREELAND & ASSOCIATES, P.C. 9105 Indianapolis Boulevard Highland, IN 46322 Tel: 219-922-0800 Email: Dlf9601@aol.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $100,000 to $500,000 The petition was signed by John J. Pomponi as member. A copy of the Debtor's list of 16 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/UTR7FYA/Highway_30_Physical_Therapy_and__innbke-22-21920__0003.0.pdf?mcid=tGE4TAMA A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/UKRSUWA/Highway_30_Physical_Therapy_and__innbke-22-21920__0001.0.pdf?mcid=tGE4TAMA HONX INC: McNamara's Move to Remand Case Granted ------------------------------------------------ James M. McNamara, Plaintiff, v. Hess Corporation and Hess Oil Virgin Islands Corp., Defendants, Civil Action No. 2020-0060, (D.V.I.), District Judge Wilma A. Lewis for the District of the Virgin Islands grants the motion to remand filed by the James M. McNamara. In June 2020, James M. McNamara filed this action in the Superior Court of the Virgin Islands St. Croix Division against Hess, a Delaware corporation based in New York, and Hess' wholly owned subsidiary, Hess Oil Virgin Islands Corp. ("HOVIC"), a Virgin Islands corporation with its principal place of business in the Virgin Islands. Apparently unknown to McNamara, Hess had merged HOVIC into HONYC, a new Hess subsidiary based in New York, less than one month before the Complaint was filed. McNamara, a former employee at HOVIC's oil refinery on St. Croix, asserts local law tort claims against the Defendants for injuries he allegedly sustained during his employment at the refinery. McNamara claims he was exposed to various forms of heavy metals, asbestos, silica, and catalyst dusts while working at HOVIC and that this exposure caused him to develop lung disease. McNamara alleges that the Defendants are responsible for his medical condition as a result of their actions relating to the refinery's operations. The claims in this case are similar -- if not identical -- to claims asserted in hundreds of other cases filed in the Superior Court over the course of many years against Hess, HOVIC, and other entities that have operated at the oil refinery. Hess timely removed the action to District Court. HOVIC -- then HONYC -- consented to the removal. McNamara filed a Motion to Remand the action, but later withdrew the Motion in order to conduct discovery on the issue of whether the merger of HOVIC and HONYC was done to collusively create federal jurisdiction. To this end, the parties exchanged written discovery and conducted various depositions. Ultimately, McNamara filed the instant Motion to Remand with a Memorandum in Support. In his Motion, McNamara argues that the merger of HOVIC -- Hess' Virgin Islands Corporation -- into HONYC -- Hess' New York Corporation -- was done in violation of 28 U.S.C. Section 1359 in order to create diversity jurisdiction in this case and other cases that the Hess Defendants knew were forthcoming. The Hess Defendants oppose the Motion arguing that the May 2020 HOVIC/HONYC merger does not violate 28 U.S.C. Section 1359 because: (1) HOVIC's merger and change in citizenship is final and unconditional; (2) the Hess Defendants have legitimate business purposes for the merger; and (3) HOVIC, the non-diverse entity, retains no interest in the litigation. On May 9, 2022, HONX, Inc. filed a "Suggestion of Bankruptcy For HONX, INC. and Notice of Stay of Proceedings" informing the Court that HONX -- "formerly known as "HONYC" and/or as Hess Oil Virgin Islands Corp." -- filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. In its Notice, the Hess Defendants state that pursuant to Section 362(a) of the Bankruptcy Code, HONX is granted an automatic stay of all proceedings. The Court finds that the automatic stay under 11 U.S.C. Section 362(a) of the Bankruptcy Code does not preclude it from ruling on the issue of remand. Since the instant action was filed prior to HONX's filing of bankruptcy, there is the issue as to whether addressing the issue of remand constitutes a "continuation of the action" pursuant to 11 U.S.C. Section 362(a). The Court's decision to remand this action to state court is essentially a lateral move to address a procedural issue, and it does not continue the case in any significant matter. Further, the Court finds that addressing the issue of remand does not affect HONX's financial status, assets, or creditors' standing in the bankruptcy proceeding which the automatic stay is designed to protect. The Court concludes that it may adjudicate the remand issue without violating the automatic stay triggered by the HONX bankruptcy proceeding. McNamara contends that Hess' decision to merge HOVIC with the newly created HONYC constitutes a collusive transfer in violation of 28 U.S.C. Section 1359. Because of the alleged violation, McNamara argues that the Court lacks jurisdiction in this matter. The Hess Defendants disagree, asserting that the absolute and complete transfer of HOVIC's assets to HONYC and the legitimate business purposes for the merger are sufficient to establish that no collusion existed within the meaning of Section 1359. The Court finds, however, that the merger of HOVIC into HONYC violates the anti-collusion statute. In seeking remand, McNamara relies heavily on decisions from various circuit and district courts that have applied a heightened scrutiny or presumption of collusion to assignments between parent companies and subsidiaries as well as assignments by corporations to their officers or directors that create diversity jurisdiction. In assessing the propriety of the transfer under the relevant factors, the Court must review the instant merger in the context of the history of Hess and HOVIC's operations on St. Croix. According to the record before the Court, HOVIC was incorporated in the Virgin Islands in 1965 as a wholly owned subsidiary of Hess with its principal place of business in Christiansted. HOVIC, allegedly under the control of Hess, operated an oil refinery on St. Croix from 1968 through at least 1998, and employed McNamara for part of that period. At some point, the refinery's operations ceased, but HOVIC continued to operate the facility as an oil terminal. Thereafter, HOVIC formed HOVENSA LLC with a Venezuelan company, which operated both the oil refinery and terminal. HOVENSA then filed for bankruptcy in 2015. The oil refinery and terminal operations were sold in January 2016 to unrelated parties during the bankruptcy proceedings. After early 2016, Hess and HOVIC's only operations in the Virgin Islands involved litigation. HOVIC was not conducting any business operations and had no employees, but was administratively filing annual tax returns and franchise tax filings with the Virgin Islands government. Hess created a new wholly owned subsidiary, HONYC, as a New York corporation on May 18, 2020. HONYC conducted no business other than merging with HOVIC on May 19, 2020-2-1/2 months after the new group of lawsuits was filed. HONYC has no separate operations and no employees. The directors and corporate officers of HONYC were the same as those that controlled HOVIC and who approved the HOVIC/HONYC merger. No value or consideration was exchanged for the merger. Directors of both HOVIC and HONYC executed a document stating that the merger would change HOVIC's state of incorporation to New York and that the "Reincorporation was expected to provide various operating and administrative efficiencies to the Corporation." Additionally, the Merger Agreement provided that HONYC would appoint the Virgin Islands Lieutenant Governor as its agent for service of process for any future litigation in the Virgin Islands. HONYC has admitted that its formation and merger with HOVIC would allow HONYC to appear and defend future litigation in the federal district court based on diversity jurisdiction. Based on an examination of the various factors used by courts when evaluating the "totality of the circumstances" under 28 U.S.C. Section 1359, the Court concludes that the HOVIC/HONYC merger in this case was collusive. This intra-corporate merger involved Hess' creation of a new wholly owned subsidiary corporation with the same directors and corporate officers who controlled HOVIC and whose only purpose was to fill HOVIC's shoes in the current and future litigation. HONYC has no other operations or employees. As a result, Hess' prior interest and control in defending against claims like McNamara's has not changed. Because the Hess Defendants have violated the anti-collusion statute -- 28 U.S.C. Section 1359 -- the Court is precluded by that statute from assuming jurisdiction over this matter. Accordingly, the Court remands this case to the Superior Court. A full-text copy of the Memorandum Opinion dated Dec. 12, 2022, is available at https://tinyurl.com/53s3keas from Leagle.com. About HONX Inc. HONX Inc. is a subsidiary of Hess Corporation, a publicly-traded global energy company. HONX is the corporate successor of Hess Oil Virgin Islands Corporation, which owned and operated an oil refinery in St. Croix, U.S. Virgin Islands from the beginning of its construction in 1965 until a non-operating entity with minimal assets consisting primarily of a 50% ownership in a joint venture from 1998 to 2016, and post-2016 it has continued its corporate existence solely to manage its alleged asbestos liabilities related to the refinery. HONX sought Chapter 11 bankruptcy protection (Bankr. S.D. Texas Case No. 22-90035) on April 28, 2022. In the petition signed by Todd R. Snyder, chief administrative officer, the Debtor disclosed $10 million to $50 million in assets and $500 million to $1 billion in liabilities. Judge Marvin Isgur oversees the case. The Debtor tapped Kirkland & Ellis and Jackson Walker, LLP as bankruptcy counsels; Piper Sandler Companies/TRS Advisors, LLC as investment banker and financial advisor; and Bates White, LLC as asbestos consultant. Stretto, Inc. is the claims, noticing and solicitation agent. The Honorable Barbara J. Houser (Ret.) was appointed as the legal representative for future asbestos claimants in this Chapter 11 case. Ms. Houser tapped Young Conaway Stargatt & Taylor, LLP as bankruptcy counsel; O'ConnorWechsler, PLLC as local counsel; FTI Consulting, Inc., as financial advisor; and NERA Economic Consulting as consultant. IVS COMM: Seeks to Hire Darnell Law Office as Bankruptcy Counsel ---------------------------------------------------------------- IVS Comm, Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of Michigan to hire Darnell Law Offices as its legal counsel. The firm's services include: a. representing the Debtor in its Chapter 11 case and advising the Debtor as to its rights, duties and powers; b. preparing and filing all necessary statements, bankruptcy schedules and other documents, and negotiating and preparing a plan of reorganization for the Debtor; c. representing the Debtor at all hearings, meetings of creditors, conferences, trials, and other proceedings in this case; and d. performing other necessary legal services in connection with the case. The firm will be paid at the rate of $325 per hour and will be reimbursed for work-related expenses. As disclosed in court filings, Darnell Law Office is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Donald Darnell, Esq. Darnell Law Office 8080 Grand St. Dexter, MI 48130 Tel: 734-424-5200 Fax: 734-786-1605 Email: dondarnell@darnell-law.com About IVS Comm IVS Comm, Inc. is a provider of cloud communication services for small to medium-sized companies that need the functionality and quality offered to large companies at an affordable cost. The company is based in Plymouth, Mich. IVS Comm sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Mich. Case No. 22-49513) on Dec. 5, 2022, with up to $1 million in assets and up to $10 million in liabilities. Richard Marc Browning, president of IVS Comm, signed the petition. Donald C. Darnell, Esq., at Darnell Law Office, is the Debtor's counsel. KENNESAW LOFTBNB: Case Summary & Three Unsecured Creditors ---------------------------------------------------------- Debtor: Kennesaw LoftBnB, LLC 2881 N. Main St., NW Kennesaw GA 30144 Business Description: The Debtor is part of the traveler accommodation industry. Chapter 11 Petition Date: December 30, 2022 Court: United States Bankruptcy Court Northern District of Georgia Case No.: 22-60646 Debtor's Counsel: Will Geer, Esq. ROUNTREE, LEITMAN, KLEIN & GEER, LLC 2987 Clairmont Road Suite 350 Atlanta GA 30329 Tel: 678-587-8740 Email: wgeer@rlkglaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Wayne Sisco as sole 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/KNCIUUI/Kennesaw_LoftBnB_LLC__ganbke-22-60646__0001.0.pdf?mcid=tGE4TAMA LEGACY LOFTS: Seeks to Hire Langley & Banack as Legal Counsel ------------------------------------------------------------- Legacy Lofts on St. Mary's, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Texas to hire Langley & Banack, Inc. as legal counsel. The firm will render these services: a. take all necessary action to protect and preserve the estate of the Debtor, including the prosecution of actions on the Debtor's behalf, the defense of any action commenced against the Debtor, the negotiation of disputes in which the Debtor is involved and the preparation of objections to claims filed against the Debtor's estate; b. prepare legal papers; c. advise the Debtor in respect of various bankruptcy issues and other services as requested from time to time; and d. perform all other necessary legal services in connection with the Debtor's Chapter 11 case. Langley & Banack will be paid at these rates: David S. Gragg, Shareholder $475 per hour Allen M. DeBard, Shareholder $425 per hour Stacy M. Foushee, Paralegal $100 per hour Catherine Johnston, Paralegal $100 per hour The firm received a $10,000 pre-bankruptcy retainer and a post-petition retainer payment of $15,000. As disclosed in a court filing, Langley & Banack is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: 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 About Legacy Lofts on St. Mary's Legacy Lofts on St. Mary's is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). Legacy Lofts on St. Mary's filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Texas Case No. 22-51377) on Dec. 5, 2022. The petition was signed by Robert T. Melvin as managing member and chief executive officer. At the time of filing, the Debtor estimated $50,000 in assets and $1 million to $10 million in liabilities. Judge Craig A. Gargotta presides over the case. Allen M. DeBard, Esq., at Langley & Banack, Inc. represents the Debtor as counsel. LYLES AND LEWIS: Taps Regional Bankruptcy Center as Legal Counsel ----------------------------------------------------------------- Lyles and Lewis Development LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Pennsylvania to hire Regional Bankruptcy Center of Southeastern PA, P.C. to serve as legal counsel in its Chapter 11 case. Regional Bankruptcy Center will be paid at its hourly rate of $300. Roger Ashodian, Esq., the firm's attorney who will be providing the services, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Mr. Ashodian can be reached at: Roger V. Ashodian, Esq. Regional Bankruptcy Center of Southeastern PA, P.C. 101 West Chester Pike, Suite 1A Havertown, PA 19083 Tel: (610) 446-6800 Email: ecf@schollashodian.com About Lyles and Lewis Development Lyles and Lewis Development LLC sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa. Case No. 22-13269) on Dec. 6, 2022, with as much as $1 million in both assets and liabilities. Roger V. Ashodian, Esq., at Regional Bankruptcy Center of Southeastern PA, P.C. represents the Debtor as counsel. MAGENTA BUYER: Fitch Affirms LongTerm IDR at 'B', Outlook Stable ---------------------------------------------------------------- Fitch Ratings has affirmed Magenta Buyer LLC's (dba Trellix and Skyhigh and fka McAfee Enterprise) Long-Term Issuer Default Rating (IDR) at 'B'. The first-lien secured revolving credit facility and secured term loan are affirmed at 'BB-'/'RR2' and the second-lien term loan is affirmed at 'CCC+'/'RR6'. The proposed incremental first-lien term loan is rated 'BB-'/'RR2'. The Rating Outlook remains Stable and considers the modest increase in leverage with the $415 million incremental term loan which will be used to fund a large dividend and modestly increase cash on the balance sheet. Magenta Buyer LLC's Long-Term IDR of 'B' is supported by its strong product offerings, resilient recurring sales and strong cash generative qualities. The IDR also reflects the fragmented state of the cybersecurity market with several competing brands and products. In addition, as a private equity owned entity, financial leverage is likely to remain elevated as shareholders prioritize ROE maximization limiting debt reduction. KEY RATING DRIVERS Debt Funded Dividend: Magenta Buyer intends to pay a debt funded dividend to its shareholder which will modestly increase leverage. Fitch sees leverage up about a half a turn a as a result of the increase in total debt. Fitch previously expected leverage to be in the range of 5.5x to 6.0x at the end of 2022 and now it expects leverage to be in the range of 6.0x to 6.5x. Fitch expects limited deleveraging as Magenta's private equity ownership would likely prioritize ROE maximization over debt prepayment. As the company optimizes efficiencies, EBITDA and margin have the potential to improve over time. Magenta Buyer's ability to execute its cost optimization plan will drive how much margins can improve. Strategy to Improve Margins: On a pro forma basis, recurring revenues were 76% in 2021 and the company's focus on increasing recurring revenues should ultimately result in improved EBITDA margins. Operating expenses as a percentage of revenues are forecasted to modestly improve in 2023 as the company improves efficiencies. Additionally, Magenta has made progress becoming a standalone company and it should be off of the remaining transaction service agreements by 1Q23. These factors should allow EBITDA growth and lead to modest declines in leverage over time. Ongoing Restructuring: In January 2022, the sponsors restructured the entity and the XDR segment was branded Trellix and the Data-Aware Cloud Security was branded Skyhigh Security. These are now two sister companies, each with its own top management. There is an agreement in place to share technologies for three years. Fitch expects significant restructuring during 2022 and modestly continuing into 2023. Over the last few quarters, there have been a lot of changes at the company. McAfee Enterprises was carved out of McAfee Corp. and it became a standalone entity focused on providing cyber-security products to enterprises. A consortium led by Symphony Technology Group (STG) acquired McAfee Enterprise from McAfee Corp. for $4 billion dollars in July 2021. Then in October 2021, STG combined McAfee Enterprises with FireEye Products which was purchased for $1.2 billion. Execution Risk in Operational Improvements: A substantial portion of projected profitability growth for Magenta Buyer depends on successful execution of planned operating efficiency improvements, as it has a low growth sales profile. While Fitch deems such plans as realistic, execution risk does exist. Delay or failure in executing such plan would adversely affect the company's projected profitability and credit protection metrics. Recurring Revenues: On a pro forma basis, Trellix had about 74% of revenues from recurring revenues while Skyhigh had about 84%. This helps provide visibility into future revenue streams for Magenta Buyer. Recurring revenues consisted of subscription sales as well as support revenues for customers with perpetual software licenses. Secular Cybersecurity Tailwinds: There are notable industry tailwinds over the intermediate term within the core segments for Magenta Buyer's solutions. The Endpoint Security market demand is expected to grow through increased sophistication, frequency, and overall cost of attacks as well as the proliferation of work from home policies which fuel growth in the number of endpoints. The Unified Cloud Edge market demand tailwinds include application consumption shifting from on-premise to SaaS-based (Software as a Service) applications and workloads increasingly operating outside of traditional corporate network perimeters. IT Security Threats Increasingly Complex: IT security threats have evolved from PC-centric to mobile devices, networks and user identities. The evolving threats enable a continuous stream of niche solutions to develop, addressing threats beyond the traditional PC-centric security to protect users, data and networks at various levels of the internet. While some of these solutions were developed by legacy cybersecurity providers, many were created by suppliers with narrow expertise. Magenta Buyer is a cybersecurity provider with a wide variety of offerings to address today's threat vectors. DERIVATION SUMMARY Magenta Buyer's 'B' Long-Term IDR reflects its ability to generate significant FCF, the recurring nature of ~75% of its total revenues, high net retention rates and long tenures among core enterprise customers. The IDR also reflects Magenta Buyer's strong market position as a vendor in the fragmented IT security industry and the benefits of the FireEye Products platform to the combined entity. On a pro forma basis, Magenta Buyer's EBITDA margins are lower compared to pureplay consumer cybersecurity companies such as higher rated NortonLifeLock, Inc. (NLOK; BB+/Negative). NLOK had EBITDA margins in the high 40's to low 50's in recent history. NLOK is also rated three notches above Magenta Buyer since NLOK is much larger and operates with low leverage which is currently expected to range from 3.5x-4x over the forecast period. Limitations to McAfee Enterprise's rating include its elevated leverage. Fitch expects the company to maintain some level of financial leverage as a private equity owned company as equity owners optimize the capital structure to maximize ROE. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer: - In the forecast years, revenues increase annually in the very low mid-single digits; - EBITDA margins are in the mid to high 30's; - Low capex which is just over 2.0% of revenues; - Fitch assumes that excess FCF is directed to dividends to the sponsors and that alternative uses could be for acquisitions. KEY RECOVERY RATING ASSUMPTIONS: The Recovery analysis assumes that Magenta Buyer would be reorganized as a going concern in bankruptcy rather than liquidated. A 10% administrative claim is assumed. Going-Concern (GC) Approach: Magenta Buyer's GC EBITDA is assumed to be pressured by license and support revenue churn without successful conversions to subscription products. The assumption is that actioned optimization plans and integration strategies have challenges and some customers do not renew contracts. Following emergence from bankruptcy, Fitch assumes the GC EBITDA is $500 million. An enterprise value (EV) multiple of 6.5x EBITDA is applied to the GC EBITDA to calculate a post-reorganization EV. The choice of this multiple considered the following factors: The historical bankruptcy case study exit multiples for technology peer companies ranged from 2.6x-10.8x. Of these companies, only three were in the Software sector: Allen Systems Group, Inc.; Avaya, Inc.; and Aspect Software Parent, Inc., which received recovery multiples of 8.4x, 8.1x and 5.5x, respectively. Magenta Buyer's resilient recurring sales profile with long customer relationships, mission critical nature of the product, brand recognition, leadership position in enterprise cybersecurity, and cash generative qualities supports the 6.5x recovery multiple. Offsets to the multiple include a relatively weaker organic growth profile compared to other software companies rated by Fitch. Fitch arrives at an EV of $3.25 billion on a going-concern basis. After applying the 10% administrative claim, adjusted EV of approximately $2.9 billion is available for claims by creditors. Fitch assumes a full draw on McAfee Enterprise's $125 million revolver. Fitch estimates strong recovery prospects for the first lien term loan and revolver and rates them 'BB-'/'RR2', or two notches above McAfee Enterprise's 'B' IDR. The second lien term loan is rated 'CCC+'/'RR6'. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch's expectation of total debt with equity credit/operating EBITDA at or below 5.5x on a sustained basis; - (Cash from operations-capex)/total debt with equity credit at or above 7.0% on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Fitch's expectation of total debt with equity credit/operating EBITDA at or above 7.0x on a sustained basis; - Operating EBITDA/interest paid below 1.5x on a sustained basis; - (Cash from operations-capex)/total debt with equity credit at or below 2.0% on a sustained basis; - Inability to successfully action the significant cost savings plan that drives improved operating efficiencies; - Deterioration in operating metrics, including sustained sales declines and/or customer churn. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: McAfee Enterprise's liquidity is supported by cash on hand of $305 million. Liquidity is further supported by the $125 million secured revolving credit facility and strong pre-dividend FCF generation. ISSUER PROFILE Magenta Buyer LLC is a provider of cybersecurity software that derives revenue from the sale of security products, subscriptions, SaaS, support and maintenance, and professional services. The company offers its solutions through Trellix which offers its XDR platform which detects and responds to threats across endpoints, email and networks. Skyhigh Security delivers cloud-based visibility and protects using zero trust principles. PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS ESG Considerations: Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Magenta Buyer LLC LT IDR B Affirmed B senior secured LT BB- New Rating RR2 Senior Secured 2nd Lien LT CCC+ Affirmed RR6 CCC+ senior secured LT BB- Affirmed RR2 BB- MONTGOMERY REALTY: Seeks Chapter 11 Bankruptcy Protection --------------------------------------------------------- Montgomery Realty Group LLC filed for chapter 11 protection in the Northern District of California. Montgomery Realty Group's sole significant asset is the real property located at 1675 Willow Pass Road, Concord, California. The Debtor has owned the Property for more than 15 years. The Property is a portion of a shopping center which consists generally of large "big box" retailers on the periphery of the Center, facing a central parking lot. Previously, the sole tenants of the portion of the Center constituting the Property were Jo Ann's Fabrics and Burlington Coat Factory. An Owners Association, not unlike a homeowner's association, handles common concerns such as the maintenance and repair of the parking lot, security, lighting, etc. In 2018, the Debtor refinanced the Property and obtained mortgage financing for the Property from Cathay Bank, with the mortgage to mature in November of 2023. The principal tenant at the Property is Jo Ann's Fabrics, which occupies the bulk of the ground floor retail space. Jo Ann's lease does not expire until after the maturity of the Cathay mortgage and generates monthly rent ($97,899.98) in excess of the monthly payment of principal and interest on the Cathay mortgage ($89,653.34). Jo Ann's is and has been an excellent tenant, always paying its rent on time. Previously, Burlington Coat Factory occupied the balance of the Property. The Burlington space was principally on the upper floor, accessed by a dedicated retail "front" with an escalator. Burlington vacated its premises at the conclusion of its lease term in September of 2019. In order to increase the revenues generated by the Property and to eliminate the appearance of a vacant store front, Montgomery Realty Group, LLC entered into a temporary license of the street-level store-front portion of the Burlington Coat Factory space to Tee Enterprises, LLC, f/k/a Jack Pot Bins, for the greater of $10,000 per month or a percentage of gross sales. As of early 2022, the Property was and had long been stable. Jo Ann's rent amply covered the mortgage payments to Cathay Bank, and even in the absence of a replacement tenant for the Burlington space, the aggregate annual cash needs of the Property were modest and readily met. The Property's monetary obligations were all timely met, and there was more than 18 months before the Cathay mortgage would mature in November of 2023, ample time to arrange for a refinance. Through a letter dated April 29, 2022, Cathay Bank asserted that "Bank believes in good faith that it is insecure with respect to the Loan" and on that basis declared the mortgage in default. Cathay asserted a demand for default interest, retroactive to Jan. 1, 2022. Cathay then asserted further defaults, including the failure to pay the default interest demanded. Cathay accelerated the mortgage and refused to accept mortgage payments. It then commenced judicial and non-judicial foreclosure proceedings against the Property. On Sept. 7, 2022, Cathay made written demand on the tenants that they pay all further rent to Cathay. That led the tenants to stop remitting rent to anyone. Through a second set of demand letters to the tenants dated Dec. 16, 2022, Cathay recited the non-payment of rent and threatened to sue the tenants to require the payment of rent to Cathay. This case was filed on the eve of Cathay's non-judicial foreclosure sale. As a result of the foregoing, the Property has been converted from a stable rental property capable of sustaining its debt service and operating expenses into the commercial equivalent of a wasteland, unable to generate any revenue, having accrued without payment months of operating expenses, including past-due utility bills and unpaid co-ownership expense charges. Intended Reorganization There are three aspects to the Debtor's intended reorganization. First, the Property must be restabilized, with the tenants persuaded to resume the payment of rent and the Debtor's resumption in the timely payment of operating expenses, including utility charges and co-ownership expense reimbursements. Any ultimate exit will require a stable and rent-producing Property. Second, the Debtor must obtain a judicial determination regarding the amount of Cathay's allowed secured claim, and specifically its asserted entitlement to default interest, currently in excess of a half-million dollars, and attorney's fees. Any ultimate exit, whether through an equity investment, a refinance or both, will be dependent on liquidating the amount of Cathay's claim. Finally, the Debtor will propose a Plan of Reorganization. While the Debtor is confident that it can fashion treatment of Cathay's claim which satisfies the requirements of Section 1129(b), it will be difficult to do that until the claim has been liquidated. Cathay's interference has left the Debtor in a financially weakened status without any source of rental income. If the Debtor causes the Tenants to resume their payment of rent, the Debtor intends to use such funds to pay the ordinary and necessary operating expenses of the Property, consistent with its prior usage. Questions about funding adequate protection payments to Cathay are premature at this juncture and can be addressed at some appropriate future juncture, According to court filings, Montgomery Realty estimates $10 million and $50 million in debt owed to 1 to 49 creditors. The petition states that funds will not be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for Jan. 23, 2022, at 10:00 AM via Tele/Videoconference - www.canb.uscourts.gov/calendars. Proofs of claim are due by April 24, 2023. About Montgomery Realty Group Montgomery Realty Group LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Sec. 101(51B)). Montgomery Realty Group filed a petition for relief Chapter 11 of the Bankruptcy Code (Bankr. N.D. Cal. Case No. 22-41290) on Dec. 20, 2022. In the petition filed by Raj Maniar, as manager, the Debtor reported assets and liabilities between $10 million and $50 million. The Debtor is represented by: Michael St. James, Esq. St. James Law 447 Battery Street, Suite 230 San Francisco, CA 94111 MORA HOUSE: Gets Court OK to Hire Real Estate Brokers ----------------------------------------------------- Mora House One, LLC received approval from the U.S. Bankruptcy Court for the Northern District of California to hire William Henry Haze and Omar Maissen of Compass Real Estate as brokers. The Debtor requires the services of a broker in connection with the sale of its real property located at 10718 Mora Drive, Los Altos, Calif. The firm will receive a total transaction commission of 6 percent, offering 3 percent to any buyer's agents. As disclosed in court filings, the brokers of Compass Real Estate are disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: William Henry Haze Omar Maissen Compass Real Estate 891 Beach Street San Francisco, CA 94109 Tel: 1-415-660-9955 About Mora House One Mora House One, LLC is a single asset real estate (as defined in 11 U.S.C. Section 101(51B)). Mora House One filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Calif. Case No. 22-50917) on Oct. 7, 2022. In the petition signed by its managing member, Melvin Vaughn, the Debtor listed $10 million to $50 million in both assets and liabilities. Arasto Farsad, Esq., at Farsad Law Office, P.C. represents the Debtor as counsel. MOUNTAIN MOVING: Seeks to Hire Hoover Penrod as Legal Counsel ------------------------------------------------------------- Mountain Moving, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Virginia to hire Hoover Penrod, PLC 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 the assets of its estate; (b) advising and consulting on the conduct of the Debtor's bankruptcy case, including all of the legal requirements of operating in Chapter 11; (c) attending meetings and negotiating with representatives of creditors and other parties in interest; (d) taking all necessary action to protect and preserve the Debtor's estate, including prosecuting actions on the Debtor's behalf, defending any actions commenced against the Debtor, and representing the Debtor's interests in negotiations concerning all litigation in which the Debtor is involved, including objections to claims filed against the Debtor's estate; (e) preparing legal papers; (f) advising the Debtor in connection with any potential sale of its assets; (g) appearing before the court; (h) taking any necessary action on behalf of the Debtor to negotiate and obtain approval of a Chapter 11 plan and documents related thereto; and (i) other necessary legal services. The firm will charge these hourly fees: Hannah W. Hutman $345 per hour C. Andrew Bolt $300 per hour Other attorneys $345 per hour Paralegal $100 per hour As disclosed in court filings, Hoover Penrod and its attorneys are "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Hannah W. Hutman, Esq. C. Andrew Bolt, Esq. Hoover Penrod, PLC 342 South Main Street Harrisonburg, VA 22801 Tel: 540/433-2444 Fax: 540/433-3916 Email: hhutman@hooverpenrod.com abolt@hooverpenrod.com About Mountain Moving Mountain Moving, LLC, a Virginia limited liability company, provides freight transport services on a regional basis. Its sole member is Thomas Powell. Mountain Moving sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Va. Case No. 22-50561) on Dec. 16, 2022, with up to $100,000 in assets and up to $1 million in liabilities. Hannah W. Hutman, Esq., at Hoover Penrod, PLC, represents the Debtor as legal counsel. NECESSITY RETAIL: Fitch Cuts LongTerm IDR to 'BB', Outlook Stable ----------------------------------------------------------------- Fitch Ratings has downgraded The Necessity Retail REIT, Inc. (RTL) and The Necessity Retail REIT Operating Partnership, L.P.'s Long-Term Issuer Default Ratings (IDRs) to 'BB' from 'BB+'. The Rating Outlook has been revised to Stable from Negative. The downgrades reflect Fitch's expectation that leverage will remain elevated following the $1.3 billion CIM portfolio acquisition. Material deleveraging will be difficult via equity issuance given the large and persistent discount at which RTL shares trade relative to consensus net asset value (NAV) estimates and via asset sales as the transaction market adjusts pricing expectations to reflect higher interest rates, given debt availability for buyers is less plentiful amid a weakening economic backdrop. The ratings also consider the expectation of generally durable cash flows from rental revenues, improving asset quality as it executes its strategic shift away from a primary focus on single-tenant retail properties and limited near-term debt maturities. These factors are offset in part by the indirect effects of its externally managed structure (e.g. Fitch's view of relative access to capital), declining unencumbered asset coverage of unsecured debt (UA/UD), and the REIT's limited operating history. KEY RATING DRIVERS Leverage Elevated Post-CIM Portfolio Acquisition: Fitch expects REIT leverage to increase to the mid-9x as of YE 2022, due to the timing effects of the CIM portfolio acquisition, and settle in the low- to mid-8x range through the remainder of the forecast period. Fitch considers leverage of 8x-9x for RTL at 'BB'. In Fitch's view, the issuer's plan to de-lever, which was to be achieved through continued lease-up within the portfolio, asset sales and equity issuance under its at-the-market (ATM) equity offering program, has and will continue to face headwinds. While there is minimal-to-moderate execution risk to RTL's asset sales during 2022 and 2023 (forecasted to be $402 million and $262 million, respectively), equity issuance has been challenging, given the large and persistent NAV discount (59%) at which RTL shares trade. Fitch's rating case assumes $108 million of equity issuance during 2022 and $75 million during 2023, compared to the previous expectation of $330 million and $250 million, respectively. The company's difficult position is further exacerbated by the current challenging economic and financial trends. In addition to higher capital costs, wider bid-ask spreads in cap rates, and increased uncertainty in both capital markets and commercial property transactions, Fitch expects growth to slow for the net lease sector, with moderated demand and leasing. Acquisition Represents A Favorable Strategy Shift: The CIM portfolio acquisition, which represented a strategic shift away from a primary focus on single-tenant retail properties, provides several benefits to RTL's credit profile. The transaction resulted in numerous portfolio enhancements, including increased multi-tenant occupancy (90.6% as of 3Q22 vs. 87.6% as of 4Q21, the last full quarter prior to the CIM portfolio acquisition), reduced top-10 tenant straight-line rent (SLR) concentration (28% annualized vs. 38%), reduced SLR derived from office assets (1% vs. 7%), and increased emphasis on necessity-based retail tenants, which now account for 55% of portfolio SLR. Moreover, the deal increased RTL's operating scale and portfolio granularity. Based on annualized rental income on a straight-line basis as of Sept. 30, 2022, single- and multi-tenant properties comprised 47% and 53% of its total portfolio, respectively. Externally Managed Structure: Fitch views RTL's external management structure as a modest credit negative that could result in persistent equity valuation discount, which challenges the execution of its acquisition-led growth strategy. Fitch believes institutional investors generally favor internally managed REIT structures given dedicated management and fewer related party transactions and potential conflicts of interest. RTL is managed by AR Global Investments, LLC, a $12 billion global real estate asset manager. Net Lease Mortgage Notes: RTL's ABS funding program has mixed implications for its credit profile. As the buyers are typically ABS-focused and not traditional commercial real estate lenders, RTL has access to an incremental source of capital compared to peers, which Fitch views as a credit positive. Moreover, as the structure is more flexible than CMBS in regard to asset sales and substitutions, it allows RTL to re-tenant or dispose of underperforming assets with greater ease than if held in a CMBS structure, thus better matching the investment strategy of focusing on non-rated entities. Further, the program demonstrates leveragability and contingent liquidity for the company's portfolio. Nonetheless, Fitch expects diminished capital market activity overall in 2023. Limited Operating History: RTL's rapid growth and shorter operating history result in limited comparable performance metrics, even more so with the CIM portfolio acquisition. Positively, the company's occupancy and collection rates have been strong during the pandemic, likely aided by its necessity-based service retail focus and high percentage of IG-rated tenants. DERIVATION SUMMARY RTL's 'BB' ratings consider the expectation of generally durable cash flows offset by higher leverage and weaker relative access to capital. Fitch views RTL's portfolio quality favorably and believes it has improved following the CIM portfolio acquisition. However, certain of the company's metrics, including occupancy, are weaker than its net lease peers and the weighted average lease term of 7 years is also lower than the Fitch-rated net lease average of 10 years. RTL's credit metrics are weaker than net lease peers Getty Realty Corp. (GTY; BBB-/Stable), Four Corners Property Trust, Inc. (FCPT; BBB/ Stable) and Essential Properties Realty Trust, Inc. (EPRT; BBB/Stable), which have leverage policies ranging from the mid-4x to 6.0x. RTL and Global Net Lease, Inc. (GNL; BB+/Stable) are relatively comparable from a leverage standpoint. Fitch rates the IDRs of the parent REIT and subsidiary operating partnership on a consolidated basis, using the weak parent/strong subsidiary approach and open access and control factors, based on the entities operating as a single enterprise with strong legal and operational ties. Fitch applies 50% equity credit to the company's perpetual preferred securities given the cumulative nature of coupon deferral with settlement through a manner other than equity (cash). Certain metrics calculate leverage including preferred stock. KEY ASSUMPTIONS - Negative SSNOI growth assumption in 2022, with low-single digit SSNOI growth in 2023-2025; - Approximately $1.4 billion of acquisitions in 2022, $75 million in 2023, and $300 million in 2024-2025 at 7%-9% yields; - Dispositions of over $400 million and $260 million in 2022 and 2023, respectively, with minimal dispositions in the following years; - Equity issuance of over $100 million in 2022, $75 million in 2023, and $175 million in 2024-2025. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - REIT leverage (net debt to recurring operating EBITDA) sustaining below 8.0x; - Greater demonstrated access to unsecured debt capital; - Unencumbered assets to unsecured debt (UA/UD) at or above 1.5x. Factors that could, individually or collectively, lead to negative rating action/downgrade: - REIT leverage (net debt to recurring operating EBITDA) sustaining above 9.0x; - UA/UD sustaining at or below 1.0x; - Portfolio operational underperformance with respect to occupancy, tenant retention and rent spreads. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Fitch estimates RTL's base case liquidity coverage at 1.0x for the Oct. 1, 2022 to Dec. 31, 2024 period, which is adequate for the rating. Of note, the company does not engage in development projects and the double- and triple-net lease nature of the business does not require material recurring maintenance capex, although Fitch expects capex needs to increase due to the CIM portfolio acquisition. As of Sept. 30, 2022, RTL had $41 million in cash and $478 million outstanding under its $815 million revolver. RTL does not have any material maturities, with 0%, 10%, 2% and 25% due in 2022, 2023, 2024 and 2025, respectively. The senior unsecured revolver is due in April 2026 (exclusive of two six-month extension options) and the notes are due in 2028. The company has established and used at-the-market issuance programs for common and preferred stock, which Fitch views favorably. However, RTL shares currently trade at a discount to NAV, which has and could continue to temper equity issuances. Fitch defines liquidity coverage as sources of liquidity divided by uses of liquidity. Sources include unrestricted cash, availability under unsecured revolving credit facilities, and retained cash flow from operating activities after dividends. Uses include pro rata debt maturities, expected recurring capex, and forecast (re)development costs. Contingent Liquidity: Fitch estimates RTL's net unencumbered asset coverage of unsecured debt at 1.5x based on a stressed cap rate of 10.0% at Sept. 30, 2022, which is expected for U.S. equity REITs in the 'BB' category. Fitch views contingent liquidity as an important ratings consideration as it allows the company to encumber its assets during periods of liquidity stress and access the secured mortgage market to service its debt maturities. ISSUER PROFILE The Necessity Retail REIT (RTL) is an externally managed REIT focusing on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution-related commercial real estate properties located primarily in the United States. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- The Necessity Retail REIT Operating Partnership, L.P. LT IDR BB Downgrade BB+ senior unsecured LT BB Downgrade RR4 BB+ The Necessity Retail REIT, Inc. LT IDR BB Downgrade BB+ senior unsecured LT BB Downgrade RR4 BB+ NVTN LLC: PhenixFIN Corp Marks $19M Loan at 73% Off --------------------------------------------------- NVTN LLC: PhenixFIN Corp Marks $19M Loan at 73% off PhenixFIN Corp has marked its $19,561,424 loan extended to NVTN LLC to market at $3,697,109, or 27% of the outstanding amount, as of September 30, 2022, according to a disclosure contained PhenixFIN Corp's Form 10-K for the fiscal year ended September 30, filed with the Securities and Exchange Commission on December 16. PhenixFIN Corp extended a Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor) to NVTN LLC, which is scheduled to mature on December 31, 2024. The loan was on non-accrual status as of September 30, 2022. PhenixFIN is an internally-managed non-diversified closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Until close of business on December 31, 2020, PhenixFIN was externally managed and advised by MCC Advisors LLC, a wholly owned subsidiary of Medley LLC, which is controlled by Medley Management Inc. (NYSE: MDLY), a publicly traded asset management firm, which in turn is controlled by Medley Group LLC, an entity wholly owned by the senior professionals of Medley LLC. Since January 1, 2021 the Company has been managed pursuant to an internalized management structure. NVTN LLC, d/b/a "Dick's Last Resort", established in 1985 and headquartered in Nashville, TN, is a "eatertainment" restaurant concept with locations throughout the US, mostly in budget friendly tourist destinations. NVTN LLC has developed an identifiable brand for its high-energy, unique themed restaurant concept that targets tourists and business travelers in high foot traffic locations. ORTHOPAEDIC SURGICAL: Case Summary & 20 Top Unsecured Creditors --------------------------------------------------------------- Debtor: Orthopaedic Surgical Consultants, P.C. 333 W. 89th Avenue Merrillville, IN 46410 Chapter 11 Petition Date: December 31, 2022 Court: United States Bankruptcy Court Northern District of Indiana Case No.: 22-21919 Debtor's Counsel: Daniel L. Freeland, Esq. DANIEL L. FREELAND & ASSOCIATES, P.C. 9105 Indianapolis Boulevard Highland, IN 46322 Tel: 219-922-0800 Email: Dlf9601@aol.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by John Pomponi as 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/2E4ARDA/Orthopaedic_Surgical_Consultants__innbke-22-21919__0003.0.pdf?mcid=tGE4TAMA A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/V7MWEDQ/Orthopaedic_Surgical_Consultants__innbke-22-21919__0001.0.pdf?mcid=tGE4TAMA PACIFIC STEEL: Trustee Precluded From Recovering Against UHY LLP ---------------------------------------------------------------- In the adversary proceeding titled In re Pacific Steel Casting Company LLC, Chapter 7, Debtor. Sarah L. Little, Ch. 7 Trustee, Plaintiff, v. Speyside Fund, LLC, et al., Defendants, Case No. 19-40193 RLE, Adversary Proceeding No. 19-4057 RLE, (Bankr. N.D. Calif.), Bankruptcy Judge Roger L. Efremsky grants the motion for summary judgment filed by UHY, LLC. In January 2019, Pacific Steel Casting Company, LLC filed this chapter 7 case and Sarah L. Little was appointed trustee. In November 2019, the Trustee commenced this adversary proceeding. In her First Amended Complaint, the Trustee alleges that the Debtor's managers -- the "Speyside Managers" -- breached the fiduciary duties they owed to the Debtor and its stakeholders, and the Debtor's members aided and abetted them in this. She also alleges that the Debtor's outside auditor, defendant UHY, LLP aided and abetted the breach of fiduciary duty committed by the Speyside Managers. UHY denies the Trustee's allegations. UHY's first argument is that it is entitled to summary judgment because, under California law, the defense of in pari delicto -- or unclean hands -- bars the Trustee's claim against it. The doctrine of in pari delicto dictates that when a participant in illegal, fraudulent, or inequitable conduct seeks to recover from another participant in that conduct, the parties are deemed in pari delicto, and the law will aid neither of them. Under this theory, the Trustee is deemed to be a participant in the alleged wrongdoing of the Speyside Defendants. UHY's second argument is that it is entitled to summary judgment because it has shown that there is an absence of evidence to support the Trustee's aiding and abetting claim. UHY contends that (1) the Trustee has not raised a triable issue of fact that UHY had actual knowledge of the specific wrongdoing she has alleged -- that the Speyside Defendants "looted" the Debtor; and (2) the Trustee has not raised a triable issue of fact that UHY knowingly gave substantial assistance to the Speyside Defendants in doing this "looting." UHY argues that, at most, the Trustee's case is one of professional malpractice because her case against UHY relies on alleged inadequate auditing of the Debtor's financial statements. In her opposition, the Trustee argues that the Debtor is a Delaware limited liability company and the breach of fiduciary duty and aiding and abetting claims implicate the internal affairs doctrine which means that Delaware law applies. Under Delaware law, the in pari delicto defense is not available to fiduciaries and is not available to a non-fiduciary such as UHY. In addition, the Trustee claims Delaware's interest in having its law applied is paramount to California's interest in having its law applied. The Trustee faults UHY for not performing a choice of law analysis, and for not recognizing that the internal affairs doctrine governs the outcome here. The Trustee also claims she has established there is ample evidence that UHY knowingly aided and abetted the Speyside Managers' breaches of fiduciary duty. In its reply, UHY points out that the Trustee previously argued -- and convinced the Court to hold -- that her fraudulent transfer claims against the Speyside Defendants were tort claims to which California law applied because California had the most significant relationship to these claims. UHY contends this is now the law of the case and principles of judicial estoppel preclude the Trustee's belated switch to Delaware law. The Court determines that "the Trustee based her case against UHY on California law until she filed her opposition to UHY's motion. UHY asserted unclean hands as an affirmative defense in its Answer. The Trustee relied on California law in responding to UHY's discovery and broadly took the position that California law applied to tort claims. If the Trustee intended to rely on Delaware law, this should have been made clear long ago. The position she has taken cannot now be casually discarded. Accordingly, under principles of estoppel and the law of the case doctrine, California law applies." The Trustee claims that because Debtor is organized under Delaware law, the internal affairs doctrine means that Delaware law applies to the breach of fiduciary duty claim against the Speyside Managers and also to the aiding and abetting claim against UHY. Based on the undisputed facts in this record showing that UHY was not a fiduciary to the Debtor and merely an outside auditor, the Court finds the internal affairs doctrine is not implicated here and does not determine the outcome of the choice of law question. The Trustee's alternative argument is that, if the internal affairs doctrine does not apply, Delaware has a paramount interest in having its law applied. Under Delaware law, the in pari delicto defense would not be available for UHY according to the Trustee. The Trustee does not explain, however, why the Debtor's operating agreement should play a central role in her claim against a non-fiduciary such as UHY. She contends only that Delaware law should be applied here despite the fact that the court previously held -- at her urging -- that for tort claims, California has a more significant relationship to the alleged conduct than Delaware. The Court points out that the Debtor was located in California, the alleged injury to the Debtor occurred in California, the conduct allegedly causing this injury occurred in California, the parties' relationship was centered in California. The Court also points out that UHY is registered as a limited liability partnership in New York with its principal place of business in Michigan -- and its audits took place in California. Many of the creditors are located in California and the Trustee acts on their behalf in pursuing the claims in this adversary proceeding. The Court sees none of the relevant events occurred in Delaware, hence, consideration of these factors does not show that the interest of Delaware is paramount to California's interest. The Court holds that the Trustee's aiding and abetting breach of fiduciary claim against UHY does not implicate the internal affairs of the Debtor -- Delaware does not have a paramount interest in having its law applied under a governmental interest analysis. In addition, the Trustee did not timely raise this choice of law issue and the Court sees no reason to allow the Trustee to depart from the position she took in her discovery responses to UHY or to depart from the position she took in response to the Speyside Defendants' motion to dismiss the fraudulent transfer claims. Aiding and abetting breach of fiduciary duty is a tort to which California law applies. UHY contends that the Trustee is deemed to have been a participant in the alleged wrongdoing of the Speyside Defendants and thus has unclean hands. In other words, standing in the shoes of the Debtor, the Trustee is in pari delicto with the Speyside Defendants and may not recover from them and, by extension, has no viable claim against UHY. The Court determines that the pari delicto defense applies. First, the Speyside Defendants allegedly "looted" the Debtor causing the Trustee's damages. Second, there is no allegation in the First Amended Complaint -- and nothing in the summary judgment record -- to suggest that the adverse interest exception applies. Finally, the First Amended Complaint alleges -- and the undisputed summary judgment evidence shows -- that the Speyside Defendants jointly controlled the Debtor, and there was, in effect, a sole actor. UHY has established that the alleged wrongdoing of the Speyside Defendants is imputed to the Debtor and by extension to the Trustee. A full-text copy of the Memorandum Decision dated Dec. 9, 2022, is available at https://tinyurl.com/2489nj7v from Leagle.com. About Pacific Steel Casting, Berkeley Properties Pacific Steel Casting Company and Berkeley Properties, LLC, separately filed Chapter 11 bankruptcy petitions (Bankr. N.D. Cal. Case Nos. 14-41045 and 14-41048) on March 10, 2014. Pacific Steel's petition was signed by Charles H. Bridges, Jr., chief financial officer and director. Michael W. Malter, Esq., at Binder & Malter, LLP serves as the Debtors' counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims, noticing and balloting agent. Burr Pilger Mayer, a certified public accounting firm, serves as financial consultants. Pacific Steel makes carbon, low-alloy and stainless steel castings for U.S. and international customers, largely for heavy-duty trucks and construction equipment. Tracy Hope Davis, the United States Trustee for Region 17, appointed seven creditors to serve on the Official Committee of Unsecured Creditors. The Committee is represented by Ori Katz, Esq., and Michael M. Lauter, Esq., at Sheppard, Mullin, Richter & Hampton LLP. The Debtors in July 2014 won court approval to sell their fourth-generation family-owned steel foundry for $11.3 million cash plus assumption of specified liabilities to Speyside Fund LLC. Bankruptcy Judge Roger L. Efremsky authorized the Debtors to revise case caption to reflect the name change after the sale of assets. The case caption now reflects: Second Street Properties, and Berkeley Properties, LLC. The Debtors stated that the assets sold included the trade name "Pacific Steel Casting Company" and the commonly used abbreviation and trademark "PSC". The Debtors agreed with the buyer that the Debtors would stop using that name immediately after the closing. PHENOMENON MARKETING: Taps Michael Jay Berger as Litigation Counsel ------------------------------------------------------------------- Phenomenon Marketing and Entertainment, LLC seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ the Law Offices of Michael Jay Berger as its litigation counsel. The firm will represent the Debtor in state court litigation entitled Phenomenon Marketing and Entertainment, LLC v. Cappello Global, LLC, et al.; Case No.: 20STCV16415; Los Angeles Superior Court, Stanley Mosk Courthouse, 111 North Hill St., Los Angeles, CA, Dept. 61. The firm will be paid at these hourly rates: Michael Jay Berger $595 Sofva Davtyan $525 Carolyn M. Afari $435 Robert Poteete $435 Law Clerks $225 Paralegals $200 Michael Jay Berger, Esq., sole owner of the firm, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Michael Jay Berger, Esq. Law Office of Michael Jay Berger 9454 Wilshire Blvd. 6th Floor Beverly Hills, CA 902 12-2929 Tel.: (310) 271-6223 Fax: (310) 271-9805 Email: michael.bergerbankruptcypower.com About Phenomenon Marketing and Entertainment Phenomenon Marketing & Entertainment, LLC, a Los Angeles-based company, filed a petition for Chapter 11 protection (Bankr. C.D. Calif. Case No. 22-10132) on Jan. 10, 2022, with $359,080 in assets and $2,289,737 in liabilities. Judge Ernest M. Robles oversees the case. The Debtor tapped the Law Office of Michael Jay Berger as its legal counsel and Morrison & Foerster, LLP as special litigation counsel. PHILLIPS SEABROOK: Case Summary & Four Unsecured Creditors ---------------------------------------------------------- Debtor: Phillips, Seabrook & Wilson, LLC 5268 Sandy Shores Court Lithonia GA 30038 Chapter 11 Petition Date: December 30, 2022 Court: United States Bankruptcy Court Northern District of Georgia Case No.: 22-60626 Judge: Hon. Barbara Ellis-Monro Debtor's Counsel: Howard Rothbloom, Esq. THE ROTHBLOOM LAW FIRM 309 E. Paces Ferry Road, NE Suite 400 Atlanta, GA 30305 Tel: 770-792-3636 Email: howard@rothbloom.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Lynette Wilson-Phillips, manager/member. A full-text copy of the petition containing, among other items, a list of the Debtor's four unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/JTJJAYY/Phillips_Seabrook__Wilson_LLC__ganbke-22-60626__0001.0.pdf?mcid=tGE4TAMA POWER STOP: PhenixFIN Corp Marks $4.97M Loan at 18% Off ------------------------------------------------------- PhenixFIN Corp has marked its $4,975,000 loan extended to Power Stop LLC to market at $4,029,750, or 82% of the outstanding amount, as of September 30, 2022, according to a disclosure contained PhenixFIN Corp's Form 10-K for the fiscal year ended September 30, filed with the Securities and Exchange Commission on December 16. PhenixFIN Corp extended a Senior Secured First Lien Term Loan (LIBOR + 4.75, 0.50% LIBOR Floor) to Power Stop LLC, which is scheduled to mature on January 26, 2029. PhenixFIN is an internally-managed non-diversified closed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Until close of business on December 31, 2020, PhenixFIN was externally managed and advised by MCC Advisors LLC, a wholly owned subsidiary of Medley LLC, which is controlled by Medley Management Inc. (NYSE: MDLY), a publicly traded asset management firm, which in turn is controlled by Medley Group LLC, an entity wholly owned by the senior professionals of Medley LLC. Since January 1, 2021 the Company has been managed pursuant to an internalized management structure. Power Stop LLC manufactures and distributes auto parts. The Company offers brake pads and calipers, rotor kits, sensors wires, and other braking systems for cars, trucks, SUVs, duty trucks and tows, and utility vehicles. REVLON INC: Bankruptcy Plan Could Hand Over Ownership to Lenders ---------------------------------------------------------------- Jeremy Hill of Bloomberg News reports that Ronald Perelman's Revlon Inc. will likely pursue a debt restructuring that hands ownership of the company to lenders and wipes out stockholders, according to an agreement between the bankrupt cosmetics giant and two key creditor groups. The company entered a restructuring support agreement with a critical lender group and its official committee of unsecured creditors on Monday, filings show. The deal calls for doling out ownership stakes in Revlon to secured lenders, while mostly wiping out the company's lowest-ranking creditors and leaving existing stockholders with nothing. The agreement assumes Revlon will seek bankruptcy court approval of the plan to hand ownership to lenders in the coming months, but allows the company to sell itself instead if a deep-pocketed buyer is found. Under the deal, Revlon must submit the plan to its bankruptcy judge this week and exit Chapter 11 protection in April. Revlon filed for bankruptcy in June after a more than $3.5 billion debt load proved too burdensome. The company, owned by billionaire Ron Perelman's MacAndrews & Forbes, has struggled in recent years to keep up with newer brands. The creditor agreement comes the same day that a long-running battle between Citigroup Inc. and some Revlon lenders over an accidental $900 million debt repayment finally came to a close. A lawsuit related to the fight was formally dismissed Monday after holdout lenders agreed to return their share of the mistaken payment. About Revlon Inc. Revlon Inc. manufactures, markets and sells an extensive array of beauty and personal care products worldwide, including color cosmetics; fragrances; skin care; hair color, hair care and hair treatments; beauty tools; men's grooming products; antiperspirant deodorants; and other beauty care products. Today, Revlon's diversified portfolio of brands is sold in approximately 150 countries around the world in most retail distribution channels, including prestige, salon, mass, and online. Since its breakthrough launch of the first opaque nail enamel in 1932, Revlon has provided consumers with high-quality product innovation, performance and sophisticated glamour. In 2016, Revlon acquired the iconic Elizabeth Arden company and its portfolio of brands, including its leading designer, heritage and celebrity fragrances. Revlon is among the leading global beauty companies, with some of the world's most iconic and desired brands and product offerings in color cosmetics, skin care, hair color, hair care and fragrances under brands such as Revlon, Revlon Professional, Elizabeth Arden, Almay, Mitchum, CND, American Crew, Creme of Nature, Cutex, Juicy Couture, Elizabeth Taylor, Britney Spears, Curve, John Varvatos, Christina Aguilera and AllSaints. Revlon sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 22-10760) on June 15, 2022. Fifty affiliates, including Almay, Inc, Beautyge Brands USA, Inc., and Elizabeth Arden, Inc., also sought bankruptcy protection on June 15 and June 16, 2022. Revlon disclosed total assets of $2,328,093,000 against total liabilities of $3,689,240,395 as of April 30, 2022. The Hon. David S. Jones is the case judge. The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP as bankruptcy counsel; Mololamken, LLC as special litigation counsel; PJT Partners, LP as investment banker; KPMG, LLP as tax services provider; and Alvarez & Marsal North America, LLC as restructuring advisor. Robert M. Caruso and Matthew Kvarda of Alvarez & Marsal serve as the Debtors' chief restructuring officer and interim chief financial officer, respectively. Meanwhile, Kroll Restructuring Administration, LLC is the Debtors' claims agent and administrative advisor. The U.S. Trustee for Region 2 appointed an official committee of unsecured creditors on June 24, 2022. Brown Rudnick, LLP, Province, LLC and Houlihan Lokey Capital, Inc., serve as the committee's legal counsel, financial advisor and investment banker, respectively. REVLON INC: Set to Exit Chapter 11 Bankruptcy in April 2023 ----------------------------------------------------------- Daphne Howland of Retail Dive reports that Revlon Inc.'s lenders have hammered out a deal to take over the company, according to documents filed with the U.S. Bankruptcy Court in the Southern District of New York. The restructuring support agreement provides $44 million for unsecured creditors that might not otherwise have been paid. A judge must approve the settlement by April 17, 2023, according to court papers. Saddled with debt, slow to adapt to new market realities and losing share, Revlon was ill-equipped to deal with the supply chain troubles that helped decimate its inventory. In June 2022, the company filed for bankruptcy and in October was delisted from the New York Stock Exchange. Before and after its bankruptcy, the company said it was evaluating a sale and other opportunities. Revlon now has an end date for its Chapter 11 proceeding, with a result that Jim Van Horn, partner and bankruptcy attorney at Barnes & Thornburg, said "appears to be a very comprehensive, well-thought out, likely very heavily negotiated plan." If the court approves it, which is likely, it resolves the many issues in dispute, including some that had been in litigation, Van Horn said. Still, Revlon's future remains uncertain. Stockholders would likely have no equity left, Van Horn noted. That includes Ron Perelman, who took over the company in a leveraged buyout in the 1980s and remained majority shareholder. A buyer may yet come along, and the company could proceed in a variety of ways. "If this plan gets approved, and the lenders are the new owners of the company, they, just like any owner of any company can decide what is its best business model," Van Horn said by phone. "They can shut the company down and just sell the brands off. It can keep everything together. It can license the brands, whatever it wants to do." Any new owner, whether it's the parties set to take over in April or a new suitor, would have to invest in new technologies and research and development in order to compete with rivals like L'Oreal, Apoorva Bajaj, practice head at GlobalData, said in a September research note. About Revlon Inc. Revlon Inc. manufactures, markets and sells an extensive array of beauty and personal care products worldwide, including color cosmetics; fragrances; skin care; hair color, hair care and hair treatments; beauty tools; men's grooming products; antiperspirant deodorants; and other beauty care products. Today, Revlon's diversified portfolio of brands is sold in approximately 150 countries around the world in most retail distribution channels, including prestige, salon, mass, and online. Since its breakthrough launch of the first opaque nail enamel in 1932, Revlon has provided consumers with high-quality product innovation, performance and sophisticated glamour. In 2016, Revlon acquired the iconic Elizabeth Arden company and its portfolio of brands, including its leading designer, heritage and celebrity fragrances. Revlon is among the leading global beauty companies, with some of the world's most iconic and desired brands and product offerings in color cosmetics, skin care, hair color, hair care and fragrances under brands such as Revlon, Revlon Professional, Elizabeth Arden, Almay, Mitchum, CND, American Crew, Creme of Nature, Cutex, Juicy Couture, Elizabeth Taylor, Britney Spears, Curve, John Varvatos, Christina Aguilera and AllSaints. Revlon sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 22-10760) on June 15, 2022. Fifty affiliates, including Almay, Inc, Beautyge Brands USA, Inc., and Elizabeth Arden, Inc., also sought bankruptcy protection on June 15 and June 16, 2022. Revlon disclosed total assets of $2,328,093,000 against total liabilities of $3,689,240,395 as of April 30, 2022. The Hon. David S. Jones is the case judge. The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP as bankruptcy counsel; Mololamken, LLC as special litigation counsel; PJT Partners, LP as investment banker; KPMG, LLP as tax services provider; and Alvarez & Marsal North America, LLC as restructuring advisor. Robert M. Caruso and Matthew Kvarda of Alvarez & Marsal serve as the Debtors' chief restructuring officer and interim chief financial officer, respectively. Meanwhile, Kroll Restructuring Administration, LLC is the Debtors' claims agent and administrative advisor. The U.S. Trustee for Region 2 appointed an official committee of unsecured creditors on June 24, 2022. Brown Rudnick, LLP, Province, LLC and Houlihan Lokey Capital, Inc. serve as the committee's legal counsel, financial advisor and investment banker, respectively. RYMAN HOSPITALITY: Fitch Hikes IDR to 'BB-', Outlook Stable ----------------------------------------------------------- Fitch Ratings has upgraded the Issuer Default Ratings (IDRs) of Ryman Hospitality Properties, Inc. and its operating partnership, RHP Hotel Properties, LP (collectively RHP) to 'BB-' from 'B+'. The Rating Outlook is Stable. Fitch assigned an IDR to Aurora Convention Center Hotel, LLC (Aurora) of 'BB-' after identifying an error related to the named issuer of the Rockies term loan. Correcting the error did not impact any ratings. Aurora's Rating Outlook is Stable. Fitch has affirmed RHP's senior secured debt at 'BB+'/'RR1' and upgraded RHP's senior unsecured debt to 'BB-'/'RR4' from 'B+'/'RR4'. Fitch has also upgraded Aurora's senior secured debt to 'BB+'/'RR1' from 'BB'/'RR2'. KEY RATING DRIVERS Significant Deleveraging Drives Upgrade: The upgrade and 'BB-' IDR reflect meaningful improvement in RHP's leverage YTD due to a continued rebound in EBITDA. Fitch forecasts leverage will improve below 5x in 2022. This is a significant improvement considering 1Q22 results were still severely impacted by the impact of the Omicron surge on business travel. This compares to the issuer's financial policy of 4x-4.5x net leverage. Fitch forecasts RHP will maintain leverage metrics in the 'BB-' range despite macroeconomic headwinds in 2023 thanks to solid forward-booking trends and the still recovering business & group travel segment. RHP has meaningful headroom to manage a more material economic downturn when considering its performance during the Global Financial Crisis of mid-teen declines in EBITDA and only marginal margin erosion. Strong Rebound Post-Pandemic: RHP's operations have outperformed Fitch's prior expectations, a trend that should continue into 1H'23 as group travel demand continues to gain momentum. RHP has captured leisure transient demand post-pandemic because the return of group travel has lagged due to program and amenity offerings. RHP was able to increase rates in 2021 and 2022 above 2019 levels, driving RevPAR recovery as occupancy has lagged (though it began accelerating in mid-2022). Fitch anticipates rate growth to flatten in FY23 in response to a pullback in discretionary travel due to recessionary and inflationary concerns. However, Fitch expects occupancy to continue to improve through the forecast period as group travel demand begins to return as evidenced by recent and forward booking trends. As announced on the most recent 3Q'22 earnings call, RHP has 46.6% of net group occupancy on the books for 2023 with an average rate of $221 and 36.7% on the books for 2024. Such trends support Fitch's expectation that RevPAR will continue to recover relative to 2019 levels through the forecast period despite macroeconomic concerns but more slowly than previously forecasted. High-Quality, Differentiated Portfolio: RHP owns a high-quality, concentrated portfolio of five specialized hotels with strong competitive positions in the large group destination resort market. The company's smallest hotel has 1,500 rooms, and each of its five properties ranks within the 10 largest U.S. hotels as measured by exhibit and meeting space square footage. RHP's portfolio also has the highest space-to-rooms ratio in the segment. Groups booking room blocks of 10 or more comprise roughly 70% of with multi-year advance bookings windows. High capital costs and long lead times provide some barriers to new supply in RHP's niche property type. Volatile Cash Flows: Hotel industry cyclicality is a key credit concern. Hotels re-price their inventory daily, resulting in the shortest lease terms and least stable cash flows within commercial real estate. Economic cycles and exogenous events (i.e. acts of terrorism) have historically caused or exacerbated industry downturns. The average large group bookings window is over two years, which provides RHP with better revenue visibility than most hotel REITs. Longer lead times can cause group demand to lag that of the overall industry, which can buffer cash flows during downturns and delay them during recoveries. RHP's Entertainment segment (a small but growing share of segment EBITDA) provides some additional cash flow diversification and stability. The segment includes unique, valuable entertainment content stemming from the Grand Ole Opry's nearly 100 years of history, as well as other branded entertainment and/or F&B assets. Strategic Growth Opportunities: Fitch believes RHP's M&A strategy, including the Block 21 acquisition and Atarios partnership, is well suited to its existing portfolio with synergy potential. Block 21 expands RHP's portfolio presence to Austin, TX where the complex spans an entire city block. It includes the 2,750-seat ACL Live at the Moody Theater, 251-room W Austin hotel, 3TEN at ACL Live club and about 53,000 square feet of other class A commercial space. The Atairos partnership provides an opportunity to further grow the entertainment segment as well as a path for future spinoffs. Initiatives undertaken through both transactions should largely take effect in 2023 and beyond, supplementing post-pandemic recovery growth. Fitch expects any future spin-off of the entertainment segment to be managed within the context of RHP's stated financial policies, as the loss of EBITDA could be offset by debt paydown with received proceeds. Parent Subsidiary Linkage: Fitch rates the IDRs of the parent REIT and subsidiary operating partnership on a consolidated basis, using the weak parent/strong subsidiary approach under its Parent and Subsidiary Linkage Criteria. Open access and control factors are strong, based on the entities operating as a single enterprise with strong legal and operational ties. For Aurora, Fitch applies the strong parent/weak subsidiary approach, and its ratings are equalized with the parent's. Fitch views legal incentives as medium given the existence of certain completion guarantees and RHP's 10% principal guarantee. Fitch views strategic and operational incentives as high given the asset's high quality, potential for growth, and common branding and management. In press releases dated Nov 8, 2021, Sept. 25, 2020, Apr. 8, 2020, and Sept. 19, 2019, Fitch rated the Aurora term loan out of the RHP Hotel Properties, L.P. entity, when in fact the named borrower is Aurora Convention Center Hotel, LLC. Fitch has since corrected this error, which resulted in no material changes to the underlying rating, and assigned an IDR to Aurora. DERIVATION SUMMARY RHP is more concentrated by assets, geography and chainscale (i.e. hotel quality) than its peer Host Hotels & Resorts (BBB-/ Stable). Additionally, RHP's focus on the large group segment differentiates it from its peers. While RHP's entertainment assets generate a small (but growing) portion of its overall EBITDA, Fitch views the diversification as a credit positive. RHP's high portfolio concentration by assets, markets, price/amenity level, brand and property manager are consistent with speculative grade ratings. RHP has demonstrated access to common equity, private placement unsecured bonds and bank debt, secured debt, and joint ventures. However, Fitch believes the company's access to many of these capital avenues is relatively weaker than more established REIT issuers that own portfolios with more stable, longer lease duration property types in core urban markets generally favored by institutional equity investors and lenders. RHP's credit facility is secured by first-lien interests in each of the company's owned Gaylord hotels (excluding Rockies, which is secured by a separate term loan). As a result, the company would likely be unable to access the secured mortgage market to bolster its liquidity during a downturn. This risk is partially mitigated by the company's liquidity position (undrawn $700 million revolver) and laddered maturity profile. KEY ASSUMPTIONS - Occupancy increase of 2% in 2023 and 2024, 1% growth in 2025 (Occupancy at 66% in '22F, 68% in '23'F, 70% in '24F, 71% in '25F); - ADR decline of -4% in 2023, 0% through remainder of forecast; - EBITDA margins of 31% through forecast with exception of 2023 at 30%; - Fitch assumes normalized dividends return in 2023 at $198 million annually in years 2023-2025; - Total capex spend between 9.5% and 11% through forecast period. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch's expectation and public commitment for net leverage to remain below 4.0x; - Greater portfolio diversification by market, asset, brand and manager; - Sustained improvement in EBITDA margins. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Fitch's expectation for net leverage to sustain above 5.0x; - Entertainment spinoff resulting in lower EBITDA and thus elevated leverage; - Prolonged retraction of corporate travel demand in impending recessionary environment; - Slower than expected return from Block 21. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of Sept. 30, 2022, RHP had $224.7 million of unrestricted cash and no amounts drawn under the revolving credit lines of its credit facility or the OEG credit facility, with $10 million in letters of credit, leaving $755 million of availability for borrowing under the two revolving credit lines. The nearest maturity is the $800 million Gaylord Rockies term loan in 2023, though the company has three one-year extension options that Fitch expects will be utilized. The next maturity is the term loan B due 2024 ($373 million outstanding as of Sept. 30, 2022). ISSUER PROFILE RHP is a lodging and hospitality REIT specializing in upscale convention center resorts and country music entertainment experiences. It owns five of the top 10 largest non-gaming convention center hotels in the U.S. under the Gaylord Hotels brand and managed by Marriott International. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Aurora Convention Center Hotel, LLC LT IDR BB- New Rating senior secured LT BB+ Upgrade RR1 BB Ryman Hospitality Properties, Inc. LT IDR BB- Upgrade B+ RHP Hotel Properties, L.P. LT IDR BB- Upgrade B+ senior secured LT BB+ Affirmed RR1 BB+ senior unsecured LT BB- Upgrade RR4 B+ SILVER CREEK: Taps Law Offices of Marilyn D. Garner as Counsel -------------------------------------------------------------- Silver Creek Investments, LLC seeks authority from the U.S. Bankruptcy Court for the Northern District of Texas to employ the Law Offices of Marilyn D. Garner as its bankruptcy counsel. The firm's services include: (a) providing the Debtor with legal advice regarding its powers and duties in the continued operation of its business and management of its property; (b) taking necessary action to investigate and recover fraudulent or preferential transfers of property before commencement of the Debtor's Chapter 11 proceedings and, where appropriate, to institute proceedings for sale of property free and clear of liens, and assist in obtaining post-petition financing; (c) defending the Debtor in contested matters or adversary proceedings as they are brought before the court under Chapter 11 administration; (d) preparing reports, disclosure statements, plans of reorganization and other legal papers; (e) providing general advice to the Debtor concerning its conduct and responsibilities; and (f) responding to and cooperating with the United States Trustee and creditors to facilitate confirmation of a plan of reorganization. The firm will charge these hourly fees: Attorney $450 Associate $250 Legal Assistant $150 In addition, the firm will seek reimbursement for its out-of-pocket expenses. Marilyn Garner, Esq., attorney at the Law Offices of Marilyn D. Garner, disclosed in a court filing that her firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Garner can be reached at: Marilyn D. Garner, Esq. Law Offices of Marilyn D. Garner 2007 E. Lamar Blvd., Suite 200 Arlington, TX 76006 Tel: (817) 505-1499 Fax: (817) 549-7200 Email: mgarner@marilyndgarner.net About Silver Creek Investments Silver Creek Investments, LLC filed a Chapter 11 petition (Bankr. N.D. Texas Case No. 22-42956) on Dec. 5, 2022, with up to $50,000 in both assets and liabilities. Judge Edward L. Morris oversees the case. The Debtor is represented by Marilyn D. Garner, Esq., at the Law Offices of Marilyn D. Garner. SOUTH AMERICAN BEEF: Hires Bradshaw Fowler Proctor as Counsel ------------------------------------------------------------- South American Beef, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Iowa to hire Bradshaw, Fowler, Proctor & Fairgrave, P.C. as its general reorganization counsel. The firm's services include: (a) advising and assisting the Debtor with respect to compliance with the requirements of the Office of the U.S. Trustee; (b) advising the Debtor concerning matters of bankruptcy law, including the rights and remedies of the Debtor with regard to its assets and with respect to the claims of creditors; (c) representing the Debtor in any proceedings or hearings in the bankruptcy court and in any action in other courts where the Debtor's rights under the Bankruptcy Code may be litigated or affected; (d) conducting examinations of witnesses, claimants or adverse parties, and preparing reports, accounts, and pleadings related to the Chapter 11 case; (e) advising the Debtor concerning the requirements of the Bankruptcy Code and applicable rules as the same affect the Debtor in the proceeding; (f) assisting the Debtor in the negotiation, formulation, confirmation, and implementation of a Chapter 11 plan; (g) making any court appearances on behalf of the Debtor; and (h) performing other necessary legal services for the Debtor. The firm's hourly rates are as follows: Jeffrey D. Goetz, Esq. $450 Associates $125 - $300 Jeanie Bouck $90 - $125 The firm received $75,000 as pre-bankruptcy funds from the Debtor. Jeffrey Goetz, Esq., the firm's attorney who will be providing the services, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Jeffrey D. Goetz, Esq. Bradshaw, Fowler, Proctor & Fairgrave, P.C. 801 Grand Avenue, Suite 3700 Des Moines, IA 50309-8004 Tel: 515-246-5817 Fax: 515-246-5808 Email: goetz.jeffrey@bradshawlaw.com About South American Beef Inc. South American Beef, Inc. specializes in the purchase, import, and sales of high-quality beef, lamb, goat, mutton, veal, seafood, and poultry game meats from well-known packing plants. South American Beef was established in 1999. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Iowa Case No. 22-01341) on December 13, 2022. In the petition signed by Alejandra M. Vidal-Soler, president, the Debtor disclosed up to $50 million in assets and liabilities. Judge Anita L. Shodeen oversees the case. Jeffrey D. Goetz, Esq., at Bradshaw, Fowler, Proctor & Fairgrave PC and Moglia Advisors serve as the Debtor's legal counsel and financial advisor, respectively. SOUTH AMERICAN BEEF: Hires Moglia Advisors as Financial Advisor --------------------------------------------------------------- South American Beef, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Iowa to hire Moglia Advisors as its financial advisor. The Debtor requires a financial advisor to: a. assist in the identification and implementation of cost reduction and operations improvement opportunities; b. assist the Debtor in managing its Chapter 11 case, including, without limitation, providing support with respect to the sale of the Debtor's assets and managing the preparation and development of a disclosure statement and plan of reorganization; c. coordinate with the "working group" professionals who are assisting the Debtor in the reorganization process or who are working for the Debtor's various stakeholders seeking alignment with the Debtor's overall restructuring goals; d. liaise with the Debtor's key constituents and creditors with respect to financial and operational matters; e. provide assistance in such areas as testimony before this court on matters that are within the scope of this engagement and within its area of testimonial competency; f. assist the Debtor and other engaged professionals in bankruptcy planning and preparation, including liquidity forecasting and planning, negotiations of debtor-in-possession financing and the use of cash collateral, "first day" matters, and court-required reporting and disclosures; g. assist in the discussions with and providing information to potential investors, secured lenders, official committees, and the Office of the United States Trustee for the Southern District of Iowa; h. assist in the overall financial reporting under the administrative requirements of the Bankruptcy Code, including post-petition reporting requirements and claim reconciliation efforts; i. assist with the case administration and reporting requirements associated with a chapter 11 filing, including, but not limited to, preparing schedules of assets and statements of financial affairs, monthly operating reports, budgets, including in connection with cash collateral, claims reconciliation, and assumption and rejection analyses; j. assist the Debtor and its other advisors in developing restructuring plans or strategic alternatives for maximizing the enterprise value of their various business lines; and k. perform such other services in connection with the restructuring process. The firm will be paid at these hourly rates: Alex D. Moglia $500 Jill K. Niese $425 Nate Jones $425 Alan R. Friedman $425 Karen Nandapreecha $200 Moglia Advisors is a "disinterested person" as that term is defined in Bankruptcy Code Section 101(14), according to court filings. The firm can be reached through: Alex D. Moglia, Esq. Moglia Advisors 1325 Remington Road, Suite H Schaumburg, IL 60173 Office: 847-884-8282 Email: amoglia@mogliaadvisors.com About South American Beef Inc. South American Beef, Inc. specializes in the purchase, import, and sales of high-quality beef, lamb, goat, mutton, veal, seafood, and poultry game meats from well-known packing plants. South American Beef was established in 1999. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Iowa Case No. 22-01341) on December 13, 2022. In the petition signed by Alejandra M. Vidal-Soler, president, the Debtor disclosed up to $50 million in assets and liabilities. Judge Anita L. Shodeen oversees the case. Jeffrey D. Goetz, Esq., at Bradshaw, Fowler, Proctor & Fairgrave PC and Moglia Advisors serve as the Debtor's legal counsel and financial advisor, respectively. STRAIT CROSSING: DBRS Confirms BB(high) Issuer Rating ----------------------------------------------------- DBRS Limited confirms Strait Crossing Development Inc.'s (SCDI or the Company) Issuer Rating at BB (high) and changes the trend to Positive from Stable, and confirms the rating of the 6.17% Revenue Bonds rating at BBB (low) with a Stable trend based on the unchanged recovery rating of RR1. This change in trend of the Issuer rating reflects a return of debt service coverage ratios (DSCRs) to investment-grade levels after a prolonged period of pressured financial metrics. Also, the General Revenue Account (GRA) funds available are now at pre-pandemic levels, supporting the trend change. The confirmation of the rating of the Revenue Bonds at BBB (low) reflects the Issuer rating of BB (high) combined with DBRS Morningstar's assessment of the likelihood of full recovery of outstanding debt principal in a case of bond default. The Issuer rating was downgraded on November 29, 2021, as a result of depressed DSCRs exacerbated by an expectation of low cash reserve balance at the time. Q1 2022 was affected by omicron and the resulting implementation of further containment measures by the Government of Prince Edward Island (PEI), resulting in a slower-than-expected recovery. For the rest of 2022, traffic has recovered significantly, rising to approximately 97% of pre-pandemic volumes in Q2 2022, and even surpassing 2019 levels (102%) during the summer high season months. DBRS Morningstar believes this pattern of good summer results points to continuing demand for tourism services and an eventual recovery to normalized demand now that the end of the pandemic is in sight. DBRS Morningstar views 2023 as the recovery year, with traffic and revenues back to 2019 levels, and further stimulated by the Canada Winter Games that will take place in PEI during Q1 2023. DBRS Morningstar rating case projects a DSCR for 2023 exceeding 1.3x, supporting the strength of the Company and the full recovery ahead of what DBRS Morningstar expected in the last review. DBRS Morningstar expects DSCRs to remain at BBB levels until the end of the concession, as well as a healthy GRA balance comparable to pre-pandemic levels. A positive rating action could occur if traffic and revenues continue to recover as expected in 2023. A negative rating action could occur if the coronavirus-related situation further affected the Company's business and financial profile, resulting in a materially lower GRA balance. The incurrence of large, unexpected maintenance or rehabilitation items could also put negative pressure on the ratings. DBRS Morningstar will consider a positive action on the Issuer rating provided that projections on traffic and revenues recovery are met and sustained, with resulting DSCRs that are commensurate with BBB-range metrics. Notes: All figures are in Canadian dollars unless otherwise noted. SUNNOVA ENERGY: S&P Withdraws 'B-' Issuer Credit Rating ------------------------------------------------------- S&P Global Ratings withdrew its 'B-' issuer credit and issue-level ratings on Sunnova Energy International Inc. at the issuer's request. The outlook was stable at the time of the withdrawal. SUPERIOR INDUSTRIES: Moody's Affirms B2 CFR, Outlook Stable ----------------------------------------------------------- Moody's Investors Service affirmed Superior Industries International, Inc.'s B2 corporate family rating, B2-PD Probability of Default Rating and Caa1 senior unsecured rating. At the same time, Moody's assigned a Ba2 senior secured rating to a new $60 million revolving credit facility and a Ba3 senior secured rating to a new $400 million term loan. The rating outlook is stable. The Speculative Grade Liquidity Rating is unchanged at SGL-3. The affirmation of ratings reflects Moody's expectation for steady improvement in operating results as global light vehicle volumes continue recovering through 2023. Superior is benefiting from secular industry trends, including OEM mandates toward electrification, improved fuel efficiency and consumer preference for premium finishes on larger diameter wheels for popular light trucks and SUV/CUV platforms. Margins will benefit from improving operating leverage and ongoing cost saving initiatives despite elevated raw material and labor costs. Free cash flow will be constrained by significantly higher interest expense on the new debt instruments. The Ba2 rating on the revolving credit facility reflects a super priority first lien on all assets while the Ba3 rating on the term loan reflects its first lien claim on all assets behind the revolving facility. The Ba3 senior secured ratings on the previous revolving credit facility and term loan B were withdrawn with this rating action. Affirmations: Issuer: Superior Industries International, Inc. Corporate Family Rating, Affirmed B2 Probability of Default Rating, Affirmed B2-PD Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD5) Assignments: Issuer: Superior Industries International, Inc. Senior Secured Revolving Credit Facility, Assigned Ba2 (LGD1) Senior Secured Term Loan, Assigned Ba3 (LGD3) Withdrawals: Issuer: Superior Industries International, Inc. Senior Secured Revolving Credit Facility,Withdrawn, previously rated Ba3 (LGD2) Senior Secured Term Loan B, Withdrawn, previously rated Ba3 (LGD2) Outlook Actions: Issuer: Superior Industries International, Inc. Outlook, Remains Stable RATINGS RATIONALE Superior's ratings reflect a leading position in North America as a supplier of aluminum wheels to automotive OEMs and a highly competitive position in Europe. Revenue is evenly split between these two regions with roughly 70% derived from higher margin pickup truck, SUVs and CUVs that continue to increase as a percentage of total vehicle production. The ratings are further supported by vehicle light weighting initiatives and the trend toward larger diameter wheels with premium finishes on light trucks, SUVs and CUVs. Consumer preference for premium finishes has resulted in an estimated 30% increase in content per wheel over the last 3+ years. Superior's debt-to-EBITDA at September 30, 2022 was roughly 6x (inclusive of Moody's adjustments, and including the redeemable preferred stock), modestly benefiting from stronger year-over-year earnings and a lower Euro exchange rate that reduced the reported balance on the Euro-denominated notes. Moody's expects leverage to remain flat in 2023 given recovering production volumes, a function of resilient demand, and still low vehicle inventory levels offset by a stronger Euro. Moody's notes that with the springing maturity on the new term loan, financing maturities/commitments could approach $1 billion in 2025 with the term loan in Q1, unsecured notes in Q2 and preferred stock in Q3. Lingering supply chain challenges will continue to compel customers to prioritize larger vehicles, which are typically equipped with larger diameter wheels and premium content. This along with cost saving actions will support gradual strengthening of Superior's credit metrics. Free cash flow will remain positive but more constrained than in 2022 with sharply higher interest expense from the recent refinancing. The stable outlook reflects Moody's expectation that the recovery of automotive industry production will be sustained through most, if not all, of 2023 with supply chain disruptions gradually easing over the course of the year. The stable outlook also anticipates that operating efficiencies will boost returns with excess cash flow used to strengthen financial flexibility and/or to opportunistically reduce debt as macroeconomic concerns mount in 2023. Superior's SGL-3 Speculative Grade Liquidity Rating reflects Moody's expectation of adequate liquidity, largely supported by a cash balance of around $175 million and free cash flow of at least $20 million annually. At only $60 million, the new revolving credit facility, set to expire December 2027, is modestly sized relative to the revenue base and projected capital expenditures and interest expense. The revolving facility contains a total net leverage ratio test, a secured net leverage ratio test and a minimum liquidity test. The term loan includes a secured net leverage ratio test and a minimum liquidity test. Moody's expects Superior to remain in compliance with these financial covenants through 2023. Cash contributed from accounts receivable factoring was nearly $120 million at September 30, 2022. The risk of this financing outlet becoming unavailable would likely shift reliance to the downsized revolving credit facility as well as cash from the balance sheet. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if debt-to-EBITDA is sustained below 4x (excluding the preferred stock), EBITA-to-interest exceeds 2.5x or retained cash flow-to-net debt eclipses 15%. The ratings could be downgraded with EBITA-to-interest falling below 2x, debt-to-EBITDA moving over 5x or the EBITA margin dropping below 5%. Deteriorating liquidity, including a sharply lower cash position considering the smaller revolving credit facility, could also result in negative rating action. Failure to proactively address the potentially large debt maturities in 2025, heightening refinancing risk, would also be viewed negatively. The principal methodology used in these ratings was Automotive Suppliers published in May 2021. Superior Industries International, Inc. designs and manufactures aluminum wheels for original equipment manufacturers and aftermarket customers. The company is one of the world's largest suppliers of cast aluminum wheels. Revenue for the twelve months ended September 30, 2022 was $1.6 billion. SUPREME WORX: Gets OK to Hire Latham as Bankruptcy Counsel ---------------------------------------------------------- Supreme Worx, LLC received approval from the U.S. Bankruptcy Court for the Middle District of Florida to hire Latham, Luna, Eden & Beaudine, LLP to handle its Chapter 11 case. Latham will charge $475 per hour for attorney's services and $105 per hour for paraprofessional services. In addition, the firm will seek reimbursement for its out-of-pocket expenses. The firm received from the Debtor an advance fee of $21,800. Daniel Velasquez, Esq., a partner at Latham, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Daniel A. Velasquez, Esq. Latham Luna Eden & Beaudine, LLP 201 S. Orange Ave., Suite 1400 Orlando, FL 32801 Tel: (407) 481-5800 Fax: (407) 481-5801 Email: dvelasquez@lathamluna.com About Supreme Worx Supreme Worx, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-04035) on Nov. 11, 2022. In the petition filed by its managing member, Raymond Torres, the Debtor disclosed up to $100,000 in assets and up to $1 million in liabilities. Judge Grace E. Robson oversees the case. Daniel A. Velasquez, Esq., at Latham Luna Eden and Beaudine, LLP is the Debtor's legal counsel. SWVL HOLDINGS: Committee to Explore Strategic Alternatives ---------------------------------------------------------- Swvl Holdings Corp, a global provider of transformative tech-enabled mass transit solutions, on Dec. 30 announced the formation of a special committee (the "Strategic Committee") comprised of independent directors of the Company's Board of Directors (the "Board") to explore and evaluate potential strategic alternatives that may be available to the Company. As part of the process, the Strategic Committee will consider a full range of strategic alternatives including corporate sale, merger or other business combination, a sale of all or a portion of the company's assets, strategic investment, new debt or equity financings or other significant transaction (collectively, "Potential Strategic Transactions"). The Strategic Committee will manage all expressions of interest relating to any proposed Potential Strategic Transactions that may be forthcoming, and will work with professional advisors to assess the fairness of Potential Strategic Transactions to shareholders and other stakeholders and make recommendations to the Company's Board in respect of all such matters. The Company has not set a timetable for completion of the process and does not intend to comment further with respect to the strategic review process unless and until it determines that additional disclosure is appropriate in the circumstances and in accordance with applicable securities laws. While the Company intends to evaluate all options fairly to maximize value for shareholders and other stakeholders, there can be no assurance that the strategic review process will result in any transaction, or if a transaction is undertaken, as to its terms or timing. The Company is taking these measures amid the continuing uncertainty in the global economic environment and volatility in capital markets, which potentially impact Swvl's ability to generate sufficient cash from operating activities and external financings to fund working capital and service its commitments. If the Company is unable to execute on any of these Potential Strategic Transactions or generate cash flows necessary to expand its operations and invest in continued innovation, it may not be able to compete successfully, and may need to scale back or discontinue parts or all of its operations in order to further reduce costs or seek bankruptcy protection. In parallel to this process, the Company will continue with previously announced and ongoing cost reduction measures including discontinuation of certain operations. The discontinuation can take the form of liquidation or insolvency of local entities. About Swvl Swvl (Nasdaq: SWVL) -- http://www.swvl.com/-- is a global provider of transformative tech-enabled mass transit solutions, offering intercity, intracity, B2B and B2G transportation. The Company's platform provides complimentary semi-private alternatives to public transportation for individuals who cannot access or afford private options. Every day, Swvl's parallel mass transit systems are empowering individuals to go where they want, when they want -- making mobility safer, more efficient, accessible, and environmentally friendly. Customers can book their rides on an easy-to-use proprietary app with varied payment options and access to high-quality private buses and vans. TELOGIA POWER: Seeks Approval to Hire Allen Turnage as Counsel -------------------------------------------------------------- Telogia Power, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Florida to hire Allen Turnage, P.A. to handle its Chapter 11 case. Allen Turnage, Esq., the firm's attorney who will be providing the services, will charge an hourly fee of $400. Mr. Turnage disclosed in a court filing that he has no connection with the Debtor's creditors or any "party in interest." The firm can be reached through: Allen P. Turnage, Esq. Allen Turnage P.A. P.O. Box 15219 Tallahassee, FL 32317 Voice: 850-224-3231 Fax: 850-224-2525 Email: service@turnagelaw.com About Telogia Power LLC Telogia is an electric utility company in Florida. The Debtor owns bio-fuel power plant and related equipment, including real estate as well as all generators, fuel handlers, and other equipment on site valued at $750,000. Telogia Power filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Fla. Case No. 22-40389) on Dec. 9, 2022. The petition was signed by Patrick James as owner and managing member. At the time of filing, the Debtor reported $750,000 in assets and $7,447,020 in liabilities. Allen P. Turnage, Esq., at Allen Turnage P.A. represents the Debtor as counsel. TGPC PROPERTIES: Seeks Chapter 11 Bankruptcy Protection ------------------------------------------------------- TGPC Properties LLC filed for chapter 11 protection in the District of Arizona without stating a reason. According to court filings, TGPC Properties estimates $1 million to $10 million in debt to 1 to 49 creditors. The petition states that funds will be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for Jan. 24, 2023, at 9:00 AM. The Debtor requests that a 60-day deadline be set for the proofs of claims to be filed with the Court. The Debtor propose Feb. 21, 2023, to be the last day for a proof of claim filing of all creditors. About TGPC Properties TGPC Properties LLC is primarily engaged in renting and leasing real estate properties. TGPC Properties LLC filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 22-08374) on Dec. 19, 2022. In the petition filed by Paul Johnson, as manager, the Debtor reported assets and liabilities between $1 million and $10 million each. The Debtor is represented by: D. Lamar Hawkins, Esq. GUIDANT LAW, PLC 5536 N. 6th Street Phoenix, AZ 85012 THOMAS AND THOMAS: Seeks to Hire Eric A. Liepins as Legal Counsel ----------------------------------------------------------------- Thomas and Thomas Freight Logistics, Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of Texas to hire Eric A. Liepins, PC as its bankruptcy counsel. The Debtor requires legal assistance to liquidate its assets, reorganize the claims of the estate, and determine the validity of claims asserted in the estate. The hourly rates of the firm's counsel and staff are as follows: Eric A. Liepins $275 Paralegals and Legal Assistants $30 - $50 In addition, the firm will seek reimbursement for expenses incurred. The firm received a retainer of $5,000, plus filing fee. Mr. Liepins, the sole shareholder of the firm, 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: Eric A. Liepins, Esq. Eric A. Liepins, PC 12770 Coit Road, Suite 850 Dallas, TX 75251 Telephone: (972) 991-5591 Facsimile: (972) 991-5788 Email: eric@ealpc.com About Thomas and Thomas Freight Logistics Thomas and Thomas Freight Logistics, Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Texas Case No. 22-32347) on Dec. 16, 2022, with up to $1 million in both assets and liabilities. Judge Michelle V. Larson oversees the case. Eric A. Liepins, Esq., at Eric A. Liepins, P.C. serves as the Debtor's legal counsel. TK CLEANING & LAWN SERVICE: Commences Subchapter V Case ------------------------------------------------------- TK Cleaning & Lawn Service LLC filed for chapter 11 protection in the District of South Carolina. The Debtor elected on its voluntary petition to proceed under Subchapter V of chapter 11 of the Bankruptcy Code. The Debtor operates a mostly commercial lawn care and cleaning business in the York County, South Carolina area. Heading into winter, its business can include snow removal. According to court filings, TK Cleaning estimates between $1 million and $10 million in debt owed to 1 to 49 creditors. The petition states that funds will be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Sec. 341(a) is slated for Jan. 27, 2023, at 09:30 AM at Telephone - 341. Proofs of claim are due by Feb. 27, 2023. About TK Cleaning & Lawn Service TK Cleaning & Lawn Service LLC -- https://tkcls.com/ -- offers landscaping design and implementation, with hardscaping and screened topsoil. TK Cleaning & Lawn Service LLC filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D.S.C. Case No. 22-03485) on Dec. 19, 2022. In the petition filed by Troy Kelley, as owner, the Debtor reported assets and liabilities between $1 million and $10 million. The Debtor is represented by: Jane H. Downey, Esq. Moore Bradley Myers Law Firm, P.A. PO Box 36853 Rock Hill, SC 29732 VERIFIED AUDIT: Seeks Chapter 7 Bankruptcy Liquidation ------------------------------------------------------ Sarah Klearman of San Francisco Business Times reports that Verified Audit Circulation, a longtime Bay Area-based circulation auditor whose clients once included The Washington Post and the Chicago Tribune, has filed for liquidation. San Rafael-based Verified Audit Circulation filed for Chapter 7 bankruptcy on Dec. 21, 2022, according to documents from the U.S. Bankruptcy Court for the Northern District of California. The firm, which was founded in 1951 as a circulation auditor for free community newspapers, said in the filings it had nearly $150,000 in liabilities and just more than $35,000 in assets. In the decades after its founding, Verified expanded its business — which helps media companies determine advertising rates based on how widely their content is read and distributed — to paid newspapers and magazines, according to Verified's website. In recent years the company had also added services such as website auditing and reporting on total audience in an effort to keep up with the changing print media landscape, which was quickly being overshadowed by the digital realm. Bennett G. Young, a partner at Jeffer Mangels Butler & Mitchell and the attorney representing Verified, said in an interview Thursday that business had been declining "for a number of years" alongside print media. The firm has let go of its employees, Young said; Verified's LinkedIn page says it had employed between 11 and 50 people. Verified CEO Tim Prouty could not immediately be reached for comment Thursday. December 22, 2022. The firm's current clients include the Alameda Sun, a local newspaper in the East Bay; the California News Publishers Association, a regional trade organization; Clint Reilly Communications, which owns, among other entities, the San Francisco Examiner and Nob Hill Gazette; and publications in Southern California and beyond. About Verified Audit Circulation San Rafael, California-based Verified Audit Circulation is a media company founded by Geraldine Knight in 1951 that conducts circulation audits of both free and paid print publications and of traffic figures for web sites. Verified Audit Circulation sought relief under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Cal. 22-30697) on Dec. 21, 2022. The Company listed nearly $150,000 in liabilities and just more than $35,000 in assets. The Hon. Hannah L Blumenstiel is the case judge. The Debtor's counsel: Bennett G. Young Jeffer Mangels Butler And Mitchell LLP Tel: 415-398-8080 E-mail: byoung@jmbm.com VOYAGER DIGITAL: Binance US to Buy Assets for $1.02 Billion ----------------------------------------------------------- Voyager Digital Ltd. (OTC Pink VYGVQ; FRA: UCD2) announced Dec. 19, 2022, that its operating company Voyager Digital LLC selected U.S. exchange BAM Trading Services Inc. (doing business as "Binance.US") as the highest and best bid for its assets after a review of strategic options with the core objective of maximizing the value returned to customers and other creditors on an expedited timeframe. Binance.US is headquartered in Palo Alto, CA, and is incorporated in Delaware. It is an independent legal entity and has a licensing agreement with Binance.com. The Binance.US bid, which sets a clear path forward for Voyager customer funds to be unlocked as soon as possible, is valued at approximately $1.022 billion and is comprised of (i) the fair market value of Voyager's cryptocurrency portfolio at a to-be-determined date in the future, which at current market prices is estimated to be $1.002 billion, plus (ii) additional consideration equal to $20 million of incremental value. The Company's claims against Three Arrows Capital remain with the bankruptcy estate, and any future recovery on these and other non-released claims will be distributed to the estate's creditors. The Binance.US bid aims to return crypto to customers in kind, in accordance with court-approved disbursements and platform capabilities. Binance.US will make a $10 million good faith deposit and will reimburse Voyager for certain expenses up to a maximum of $15 million. Should the deal not close by April 18, 2023 subject to a one-month extension, the agreement allows Voyager to immediately move to return value to customers. Voyager Digital LLC will seek Bankruptcy Court approval to enter into the asset purchase agreement between Voyager Digital LLC and Binance.US at a hearing on January 5, 2023. The sale to Binance.US will be consummated pursuant to a Chapter 11 plan, which will be subject to a creditor vote and is subject to other customary closing conditions. Binance.US and the Company will work to close the transaction promptly following approval of the chapter 11 plan by the Bankruptcy Court. This sale agreement follows Voyager's July 5, 2022 entrance into a voluntary restructuring process aimed at returning maximum value to customers. Additional information about the timeline and customer access to crypto will be shared as it becomes available. A copy of the asset purchase agreement and other pleadings filed in this case may be obtained free of charge by visiting the Voyager case website https://cases.stretto.com/Voyager. Voyager was advised by Kirkland & Ellis LLP, Moelis & Company LLC, and Berkeley Research Group. Binance.US was advised by Latham & Watkins LLP. * * * Reuters notes that nearly $2 trillion in value has been wiped out from the crypto sector this year on rising interest rates and exacerbating worries of an economic downturn. The slump has eliminated key industry players such as Three Arrows Capital and Celsius Network. However, the bigger blow came after larger crypto exchange FTX filed for bankruptcy protection last month. Its swift fall has also sparked tough regulatory scrutiny of how major exchanges hold user funds. In September 2022, Voyager Digital said FTX won an auction for its assets, in a bid valued at about $1.42 billion after Voyager filed for Chapter 11 bankruptcy protection in July. The new winning bidder, Binance.US, will acquire Voyager's assets in a deal valued at about $1 billion following a review. About Voyager Digital Holdings Based in Toronto, Canada, Voyager Digital Holdings Inc. -- https://www.investvoyager.com/ -- runs a cryptocurrency platform. Voyager claims to offer a secure way to trade over 100 different crypto assets using its easy-to-use mobile application. Through its subsidiary Coinify ApS, Voyager provides crypto payment solutions for both consumers and merchants around the globe. Voyager Digital Holdings Inc. and two affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-10943) on July 5, 2022. In the petition filed by Stephen Ehrlich, chief executive officer, the Debtors estimated assets and liabilities between $1 billion and $10 billion. Judge Michael E. Wiles oversees the cases. The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy counsel; Berkeley Research Group, LLC as financial advisor; Moelis & Company as investment banker; Consello Group as strategic financial advisor; Deloitte Tax, LLP as tax services provider; and Deloitte & Touche, LLP as accounting advisor. Stretto, Inc., is the claims agent. On July 19, 2022, the U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in these Chapter 11 cases. The committee tapped McDermott Will & Emery, LLP as bankruptcy counsel; FTI Consulting, Inc., as financial advisor; Cassels Brock & Blackwell, LLP as Canadian counsel; and Epiq Corporate Restructuring, LLC as noticing and information agent. The committee also tapped the services of Harney Westwood & Riegels, LP in connection with Three Arrows Capital Ltd.'s liquidation proceedings in British Virgin Islands. VOYAGER DIGITAL: Customers to Recover 50% of Crypto Claims ---------------------------------------------------------- Alex Wolf of Bloomberg Law reports that Voyager Digital Holdings Inc. customers are projected to recover about 50% on allowed claims against the bankrupt crypto trading platform following a pending sale of assets to Binance.US worth $1.022 billion. According to the report, Voyager provided updated creditor recovery estimates in a revised Chapter 11 plan filed Thursday, December 22, 2022, with the US Bankruptcy Court for the Southern District of New York. The company amended its plan in light of a deal reached this week with Binance.US, which stepped in to purchase Voyager's digital assets following the cancellation of Voyager's proposed sale to FTX. About Voyager Digital Holdings Based in Toronto, Canada, Voyager Digital Holdings Inc. -- https://www.investvoyager.com/ -- runs a cryptocurrency platform. Voyager claims to offer a secure way to trade over 100 different crypto assets using its easy-to-use mobile application. Through its subsidiary Coinify ApS, Voyager provides crypto payment solutions for both consumers and merchants around the globe. Voyager Digital Holdings Inc. and two affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-10943) on July 5, 2022. In the petition filed by Stephen Ehrlich, chief executive officer, the Debtors estimated assets and liabilities between $1 billion and $10 billion. Judge Michael E. Wiles oversees the cases. The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy counsel; Berkeley Research Group, LLC as financial advisor; Moelis & Company as investment banker; Consello Group as strategic financial advisor; Deloitte Tax, LLP as tax services provider; and Deloitte & Touche, LLP as accounting advisor. Stretto, Inc. is the claims agent. On July 19, 2022, the U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in these Chapter 11 cases. The committee tapped McDermott Will & Emery, LLP as bankruptcy counsel; FTI Consulting, Inc. as financial advisor; Cassels Brock & Blackwell, LLP as Canadian counsel; and Epiq Corporate Restructuring, LLC as noticing and information agent. The committee also tapped the services of Harney Westwood & Riegels, LP in connection with Three Arrows Capital Ltd.'s liquidation proceedings in British Virgin Islands. The Debtors filed their joint Chapter 11 plan of reorganization on July 6, 2022. WESTERN GLOBAL: Fitch Alters Outlook on 'B+' LongTerm IDR to Neg. ----------------------------------------------------------------- Fitch Ratings has affirmed Western Global Airlines, Inc's (WGA) Long-Term Issuer Default Rating (IDR) at 'B+'. The Rating Outlook has been revised to Negative from Stable. Fitch has also upgraded the rating on the senior unsecured notes to 'BB-'/'RR3' from 'B+/RR4'. The Negative Outlook reflects the tighter financial flexibility in 2022 that if persists could lead to higher liquidity and refinancing risks. WGA's revolver was fully drawn at Q3 and the company had $27 million of cash on the balance sheet. Fitch expects an improvement in FCF generation following a reduction in investment capex, including additional aircraft, and increase in operational utilization with the addition of pilot reaching around $40 million in 2023, which should bolster liquidity though Fitch remains cautious of the potential for a weaker than expected air freight environment and increase in fuel costs. WGA's existing ratings are supported by its relatively high level of profitability in comparison to other airline operators and its geographic flexibility which are weighed against its small operating scale and cyclicality associated with the air freight industry. The senior unsecured notes were upgraded by one notch to 'BB-'/'RR3' reflecting improved recovery prospects following an adjustment to Fitch's going-concern EBITDA estimate. A Higher EBITDA estimate reflects additional aircraft and equipment added to the fleet. KEY RATING DRIVERS Tighter Financial Flexibility: WGA's financial flexibility has tightened in 2022 with elevated capital investment levels and utilization- and fuel cost-linked EBITDA margin pressures driving a fully-drawn $47.5 million revolver at 3Q22. While EBITDAR/interest + rent is expected to be in the mid-2.0x to 3.0x, liquidity and refinancing risks could arise if FCF generation in 2023 is weaker than expected. Fitch forecasts FCF generation of about $40 million in 2023 and expects the proceeds to be used to paydown the fully-drawn revolver. However, cash flow generation is susceptible to an inability to return to operationally normalized levels that lead to lower aircraft utilization or higher maintenance costs, or a greater than expected deterioration in air freight conditions leading notably weaker block-hour rates. FCF in 2022 is expected to approach negative $50 million largely due to elevated capex, which Fitch estimates at nearly $120 million for FY2022 to support deposits for two new 777 freighters, engine investment and aircraft conformation, operating challenges such as pilot shortages that contributed to lower aircraft utilization, as well as heightened fuel costs. Challenged Operating Conditions: WGA's aircraft utilization decreased in 2022 due to flight cancellations and pilot shortages. Additionally, heightened fuel costs have pressured margins. Fitch expects some improvement in these trends as the company has made progress and continues to focus on adding pilot headcount to improve utilization and as less ferry flying increases the proportion of reimbursable fuel costs. Air freight rates are expected to decline with softer economic conditions and a return in commercial aircraft belly capacity, though Fitch's current expectation is that block-hour rates do not fall below pre-pandemic levels. Moderating concerns of a drop off in rate conditions is the prolonged reopening of China and increase in services for the military in connection with the conflict in Ukraine. Deleveraging Dependent on Cash Flow: Fitch expects adjusted debt/EBITDAR to peak at 4.2x in 2022, above the negative rating threshold, before improving to the low-3.0x range, assuming cash flow supports debt is repayment in 2023. Fitch remains cautious in its expectation given recently heightened non-reimbursable fuel costs for ferry flights and the potential for weaker than expected block-hour rates, which could moderate EBITDA and FCF, keeping leverage close to or above sensitivity. Further, WGA made deposits for two 777 freighter deliveries though production challenges at Boeing potentially push delivery to 2025. Fitch expects the two new aircraft to be leased. Small Scale Elevates Operational Impacts: Key constraining factors to WGA's ratings are its relatively small size and concentrated customer base. Unexpected downtime across a few planes could drive significant operating volatility as observed in mid-2021 and 2019. WGA also has significant customer concentration among large shippers, and while this is a common trait for the air cargo airlines, there is a risk of competitive pressures or expansion of customer's internal capacity. Concerns are somewhat softened by the blue-chip nature of WGA's large customers, and flexibility that WGA's services offer over internalizing. Volatile Demand Characteristics: WGA block-hour rates are susceptible to the cyclicality of the air freight industry which is caused by varying demand conditions, particularly where it transports excess cargo for large customers, and changes in industry capacity. Currently, Fitch expects a moderation in block-hour rates over the intermediate term as global economies slow in 2023 and belly capacity in commercial airlines recover. WGA also has a degree of one-time charter revenue which can also vary year-to-year. The concern is moderated by WGA's contracted service periods that may span under six months to one to two years. DERIVATION SUMMARY When comparing WGA to passenger airlines such as Spirit Airlines (B+), Air Canada (B+) and WestJet (B-), Fitch considers the business profile differences in freight airlines and industry structure. The passenger airline industry is recovering but remains below pre-pandemic levels due to the wide-scale decline in passenger travel which is contributing to a favorable demand and capacity imbalance for air cargo operations such as WGA. Looking through the cycle, Fitch believes WGA's rating of 'B+' reflects the relative strengths of its profitability and plan to manage with modest leverage, moderated by its relatively small aircraft fleet size, high concentration of large customers and secondary market position. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Agency's Rating Case for the issuer: - Aircraft utilization improves to about 55% in 2025 from an estimated 43% in 2022, in part due to new pilot headcount supporting improved up-time; - Temporarily strong air freight conditions that arose during the pandemic in 2020 unwind, characterized by a high-single digit decline in block-hour rates in 2023, followed by a low single-digit decline in 2024; - EBITDA margins contract in 2022 due to operational challenges due to pilot shortage, increased opex and higher fuel costs. Margins are improving in 2023 and 2024 as WGA reduces aircraft downtime and has completed heavy C-check and conformity of new aircraft; - Capex notably decreases in 2023 based on the expectation that significant growth investment is absent; - The company prioritizes paying down the revolver with FCF in 2023. Recovery Analysis The recovery analysis for WGA reflects Fitch's expectation that the enterprise value of the company, and recovery rates for creditors, would be maximized as a going concern rather than through liquidation. Fitch has assumed a 10% administrative claim. A going concern EBITDA estimate of approximately $100 million reflects Fitch's view of a sustainable post-reorganization EBITDA. Fitch considers a bankruptcy scenario that could be caused by increased competitive pressures, the loss of a large customer and aircraft maintenance challenges driving higher downtime. An enterprise value multiple of 4.0x is used to calculate the post-reorganization valuation. The multiple considers the planned acquisition of a larger peer, Atlas World Wide, at 5x. Additionally, Fitch considered various other airline bankruptcies which have historically reorganized around 3.1x-6.8x EBITDA with most of the airline multiples below the 6.1x cross-sector corporate median. The $47.5 million secured revolving credit facility is assumed to be fully drawn upon default. The credit facility and term loan are senior to the senior unsecured notes in the recovery waterfall. The analysis results in 'RR3' for the senior unsecured notes, corresponding to good recovery prospect of (51%-70%). RATING SENSITIVITIES Factors that could, individually or collectively, lead to a positive rating action/upgrade: - The Outlook could be stabilized if strength in operating performance supports expectations that FCF generation and capital allocation improves financial flexibility and supports adjusted debt/EBITDAR below 3.5x; - Adjusted debt/EBITDAR sustained around the low 2.0x; - Strong success in growth strategies that support sustainably higher capacity utilization rates and profitability; - Greater customer diversification; - Larger scale that reduces risk of severe impacts from unexpected aircraft downtime. Factors that could, individually or collectively, lead to a negative rating action/downgrade: - Adjusted debt/EBITDAR sustained above 3.5x; - The loss of a large customer leads to a sustainably smaller scale of operations; - Significant competitive pressures or persistent operating challenges drives EBITDA margins meaningfully lower and/or FCF margin in the single-digits or below. LIQUIDITY AND DEBT STRUCTURE Total liquidity was below normal levels at 3Q22, standing at $27 million made up of cash on the balance sheet. WGA's $47.5 million revolver was fully drawn. FCF generation is expected to be negative in 2022 but recover in 2023 with lower growth investment that will lead to liquidity improvement. Near-term maturities are minimal, made up of term loan amortization. The credit facilities and notes mature in 2025. WGA has one leased aircraft which Fitch has capitalized beginning in FY 2021. Fitch has included the lease liabilities in its calculation of adjusted debt/EBITDAR. ISSUER PROFILE Western Global Airlines, formed in 2013, is an international cargo airline that currently operates 21 long-range wide body jet freighters (17 MD-11s and 4 B747s). It provides air freight services to large e-commerce, express, airlines, logistics companies as well as governments and NGOs. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Western Global Airlines, Inc. LT IDR B+ Affirmed B+ senior unsecured LT BB- Upgrade RR3 B+ XTRA INC: Files for Chapter 11 Bankruptcy ----------------------------------------- XTRA Incorporated filed for chapter 11 protection in the Middle District of Florida. According to court filings, XTRA Inc. estimates between $1 million and $10 million in debt to 1 to 49 creditors. The petition states that funds will be available to unsecured creditors. A meeting of creditors under 11 U.S.C. Section 341(a) is slated for Jan. 18, 2023, at 10:00 AM at U.S. Trustees Meeting Room, Room 2009, Charleston. Proofs of claim are due by April 18, 2023. About XTRA Inc. Xtra Inc leases freight trailers on a short-term basis. The Company offers its services throughout North America with offices in the United States. XTRA Inc. filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. W.Va. Case No. 22-20194) on Dec. 20, 2022. In the petition filed by Nathan Phillips, as owner, the Debtor reported assets and liabilities between $1 million and $10 million. The Debtor is represented by: Joseph W. Caldwell, Esq. Caldwell & Riffee 700 Glendale Avenue South Charleston, WV 25303 [^] BOND PRICING: For the Week from December 26 to 30, 2022 ----------------------------------------------------------- Company Ticker Coupon Bid Price Maturity ------- ------ ------ --------- -------- AMC Entertainment Holdings Inc AMC 10.000 40.218 6/15/2026 AMC Entertainment Holdings Inc AMC 5.750 41.669 6/15/2025 AMC Entertainment Holdings Inc AMC 6.125 26.023 5/15/2027 AMC Entertainment Holdings Inc AMC 5.875 24.895 11/15/2026 AMC Entertainment Holdings Inc AMC 10.000 40.186 6/15/2026 AMC Entertainment Holdings Inc AMC 10.000 40.470 6/15/2026 Accelerate Diagnostics AXDX 2.500 92.320 3/15/2023 Air Methods Corp AIRM 8.000 5.769 5/15/2025 Air Methods Corp AIRM 8.000 7.351 5/15/2025 Audacy Capital Corp CBSR 6.500 19.396 5/1/2027 Audacy Capital Corp CBSR 6.750 16.977 3/31/2029 Audacy Capital Corp CBSR 6.750 18.281 3/31/2029 Avaya Inc AVYA 8.000 60.800 12/15/2027 BPZ Resources Inc BPZR 6.500 3.017 3/1/2049 Bed Bath & Beyond Inc BBBY 5.165 9.322 8/1/2044 Bed Bath & Beyond Inc BBBY 3.749 22.121 8/1/2024 Bed Bath & Beyond Inc BBBY 4.915 8.981 8/1/2034 Buckeye Partners LP BPL 6.375 85.196 1/22/2078 Carvana Co CVNA 5.625 46.040 10/1/2025 Carvana Co CVNA 5.625 46.286 10/1/2025 Clovis Oncology Inc CLVS 1.250 20.125 5/1/2025 Clovis Oncology Inc CLVS 4.500 19.875 8/1/2024 Clovis Oncology Inc CLVS 4.500 19.875 8/1/2024 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 11.412 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 6.625 1.826 8/15/2027 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 6.000 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 11.784 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 6.625 1.226 8/15/2027 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 3.365 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.375 11.906 8/15/2026 Diebold Nixdorf Inc DBD 8.500 57.763 4/15/2024 Energy Conversion Devices Inc ENER 3.000 7.875 6/15/2013 Energy Transfer LP ET 6.250 87.500 N/A Envision Healthcare Corp EVHC 8.750 27.847 10/15/2026 Envision Healthcare Corp EVHC 8.750 27.636 10/15/2026 Exela Intermediate LLC / Exela Finance Inc EXLINT 11.500 16.828 7/15/2026 Exela Intermediate LLC / Exela Finance Inc EXLINT 11.500 16.956 7/15/2026 Exela Intermediate LLC / Exela Finance Inc EXLINT 10.000 64.918 7/15/2023 Exela Intermediate LLC / Exela Finance Inc EXLINT 10.000 64.918 7/15/2023 GNC Holdings Inc GNC 1.500 0.819 8/15/2020 GTT Communications Inc GTTN 7.875 1.125 12/31/2024 GTT Communications Inc GTTN 7.875 1.802 12/31/2024 General Electric Co GE 4.200 78.000 N/A General Motors Financial Co Inc GM 4.738 99.936 1/5/2023 Goodman Networks Inc GOODNT 8.000 1.000 5/31/2022 ION Geophysical Corp IO 8.000 11.000 12/15/2025 Jackson National Life Global Funding JXN 4.278 99.706 1/6/2023 Jackson National Life Global Funding JXN 4.278 99.781 1/6/2023 Lannett Co Inc LCI 7.750 22.539 4/15/2026 Lannett Co Inc LCI 4.500 13.688 10/1/2026 Lannett Co Inc LCI 7.750 20.530 4/15/2026 Lightning eMotors Inc ZEV 7.500 20.250 5/15/2024 MAI Holdings Inc MAIHLD 9.500 34.734 6/1/2023 MAI Holdings Inc MAIHLD 9.500 34.734 6/1/2023 MAI Holdings Inc MAIHLD 9.500 34.734 6/1/2023 MBIA Insurance Corp MBI 15.339 7.672 1/15/2033 MBIA Insurance Corp MBI 16.027 7.429 1/15/2033 Macquarie Infrastructure Holdings LLC MIC 2.000 92.653 10/1/2023 Marathon Digital Holdings Inc MARA 1.000 23.750 12/1/2026 Morgan Stanley MS 1.800 70.641 8/27/2036 Morgan Stanley Finance MS 12.100 37.750 11/24/2023 National CineMedia LLC NATCIN 5.875 20.355 4/15/2028 National CineMedia LLC NATCIN 5.750 2.963 8/15/2026 National CineMedia LLC NATCIN 5.875 20.802 4/15/2028 OMX Timber Finance Investments II LLC OMX 5.540 0.850 1/29/2020 Party City Holdings Inc PRTY 8.750 29.474 2/15/2026 Party City Holdings Inc PRTY 8.061 26.624 7/15/2025 Party City Holdings Inc PRTY 6.625 2.452 8/1/2026 Party City Holdings Inc PRTY 8.750 29.318 2/15/2026 Party City Holdings Inc PRTY 6.625 2.452 8/1/2026 Party City Holdings Inc PRTY 8.061 24.984 7/15/2025 Pluralsight Inc PS 0.375 44.625 3/1/2024 Polar US Borrower LLC / Schenectady International Group Inc SIGRP 6.750 36.613 5/15/2026 Polar US Borrower LLC / Schenectady International Group Inc SIGRP 6.750 36.847 5/15/2026 Renco Metals Inc RENCO 11.500 24.875 7/1/2003 RumbleON Inc RMBL 6.750 31.605 1/1/2025 Sears Holdings Corp SHLD 8.000 3.872 12/15/2019 Sears Holdings Corp SHLD 6.625 2.880 10/15/2018 Sears Roebuck Acceptance SHLD 7.500 10.438 10/15/2027 Sears Roebuck Acceptance SHLD 7.000 9.081 6/1/2032 Sears Roebuck Acceptance SHLD 6.500 9.149 12/1/2028 Shift Technologies Inc SFT 4.750 14.213 5/15/2026 TMX Finance LLC / TitleMax Finance Corp TMXFIN 11.125 91.777 4/1/2023 TMX Finance LLC / TitleMax Finance Corp TMXFIN 11.125 92.734 4/1/2023 TMX Finance LLC / TitleMax Finance Corp TMXFIN 11.125 92.732 4/1/2023 TPC Group Inc TPCG 10.500 60.000 8/1/2024 TPC Group Inc TPCG 10.500 59.500 8/1/2024 Talen Energy Supply LLC TLN 6.500 47.500 6/1/2025 Talen Energy Supply LLC TLN 10.500 47.500 1/15/2026 Talen Energy Supply LLC TLN 6.500 41.767 9/15/2024 Talen Energy Supply LLC TLN 10.500 47.167 1/15/2026 Talen Energy Supply LLC TLN 6.500 41.767 9/15/2024 Talen Energy Supply LLC TLN 10.500 47.167 1/15/2026 TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019 Tricida Inc TCDA 3.500 9.000 5/15/2027 US Renal Care Inc USRENA 10.625 21.021 7/15/2027 US Renal Care Inc USRENA 10.625 21.114 7/15/2027 United Community Banks Inc/GA UCBI 4.500 97.125 1/30/2028 UpHealth Inc UPH 6.250 31.288 6/15/2026 Veeco Instruments Inc VECO 2.700 99.520 1/15/2023 WeWork Cos Inc WEWORK 7.875 36.443 5/1/2025 WeWork Cos Inc WEWORK 7.875 38.960 5/1/2025 WeWork Cos LLC / WW Co-Obligor Inc WEWORK 5.000 32.225 7/10/2025 WeWork Cos LLC / WW Co-Obligor Inc WEWORK 5.000 34.054 7/10/2025 Wesco Aircraft Holdings WAIR 8.500 49.708 11/15/2024 Wesco Aircraft Holdings WAIR 13.125 24.577 11/15/2027 Wesco Aircraft Holdings WAIR 13.125 24.577 11/15/2027 Wesco Aircraft Holdings WAIR 8.500 49.270 11/15/2024 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. 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