/raid1/www/Hosts/bankrupt/TCR_Public/230116.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 16, 2023, Vol. 27, No. 15
Headlines
2ND CHANCE INVESTMENT: Has Deal on Cash Collateral Access
307 ASSETS: Seeks to Hire Backenroth Frankel & Krinsky as Counsel
35 CLAVER LLC: Interest in Building Owner Set for Jan. 20 Auction
942 PENN RR: UST Says Amended Disclosures Approval Premature
ACPRODUCTS INC: Calamos DCIF Marks $103,900 Loan at 29% Off
ACPRODUCTS INC: Calamos DCIF Marks $34,300 Loan at 29% Off
ACPRODUCTS INC: Calamos GDIF Marks $26,900 Loan at 29% Off
ACPRODUCTS INC: Calamos GDIF Marks $81,600 Loan at 29% Off
ALL AMERICA: Seeks to Hire Pamela Bomba of Pivot CPAs as Accountant
ALL YEAR HOLDINGS: Plan Hearings to Begin on Jan. 31
APPALACHIAN VALLEY TRANSPORT: Wins Final OK on Cash Collateral Use
ASTORIA ENERGY: S&P Affirms 'B+' Debt Rating, Outlook Stable
BAUSCH HEALTH: Calamos DCIF Marks $64,100 Loan at 25% Off
BERTUCCI'S RESTAURANTS: Wins Cash Collateral Access Thru Feb 7
BLACKBERRY LIMITED: Egan-Jones Retains CCC Sr. Unsecured Ratings
BOLTA US: Case Summary & 20 Largest Unsecured Creditors
BOYD GAMING: Egan-Jones Retains BB- Senior Unsecured Ratings
BRIGHTHOUSE CLEANING: Wins Interim Cash Collateral Access
BSPV-PLANO LLC: Unsecureds Owed $1.9M to Get Full Payment
C PERRY & SONS: Seeks to Hire John Rhyne as Bankruptcy Counsel
CALIFORNIA-NEVADA: Taps Senior Living Valuation as Appraiser
CAPITOL PRESORT: Court Confirms Amended Plan
CARMAX INC: Egan-Jones Retains BB+ Senior Unsecured Ratings
CARNIVAL CORP: Egan-Jones Retains CCC+ Senior Unsecured Ratings
CENTERPOINTE HOTELS: Court OKs Cash Collateral Access Thru Jan 31
CENTRAL FLORIDA POLE: Seeks to Tap Buddy D. Ford as Legal Counsel
CITY BREWING: S&P Downgrades ICR to 'CCC', Outlook Negative
CITY LIVING KC: Unsecured Creditors to Get 100% Under Plan
CLEAN ENERGY: Bid to Use Cash Collateral Denied as Moot
COINBASE GLOBAL: S&P Lowers Long-Term ICR to 'BB-', Outlook Neg.
CREATION TECHNOLOGIES: Moody's Alters Outlook on B3 CFR to Stable
DECORSTANDARD CORP: Case Summary & Three Unsecured Creditors
DISPENSER BEVERAGES: Files Emergency Bid to Use Cash Collateral
DIV005 LLC: Court OKs Interim Cash Collateral Access
DUNWOODY LABS: Gets OK to Hire Morris Manning & Martin as Counsel
DYNASTY ACQUISITION: Fitch Affirms B- LongTerm IDR, Outlook Stable
EMPIRE COUNTERTOPS: Wins Cash Collateral Access on Final Basis
ENDO INTL: Proposed Sale to Lenders Experiences Pushback
ENERPAC TOOL: Egan-Jones Retains BB+ Senior Unsecured Ratings
ENTERCOM MEDIA: Calamos DCIF Marks $420,000 Loan at 23% Off
ENTERCOM MEDIA: Calamos GTR Marks $43,000 Loan at 23% Off
EXWORKS CAPITAL: Court Confirms Liquidating Plan
FAIRFIELD MEDICAL: Moody's Lowers Revenue Bond Rating to Ba3
FARMERS COOPERATIVE: Seeks Cash Collateral Access for Wind-Up
FLORENCE CATTLE: Seeks to Tap E.P. Bud Kirk as Bankruptcy Counsel
FORD MOTOR: Egan-Jones Retains B+ LC Senior Unsecured Rating
FREE SPEECH: Suspended Lead Atty Removed from Capitol Riot Case
FTX TRADING: Sullivan & Cromwell Unfitting for Role, Say Senators
FUELCELL ENERGY: Unit Extends Lease With 52nd Street Until 2028
GIRARDI & KESSE: Trustee Sues Erika, Former CFO Thomas Kamon
GREELY LAND: Court OKs Deal on Cash Collateral Access Thru Jan 31
GULF FINANCE: S&P Affirms 'B-' ICR, Outlook Stable
HANOVER COLLEGE: Moody's Cuts Issuer Rating to Ba1, Outlook Neg.
HIDALGO COUNTY EMS: Businessman Pays Back $90K in Chapter 11 Case
HIGHWAY 30: Seeks to Hire McMahon & Associates as Accountant
INFOVINE INC: Wins Cash Collateral Access Thru March 31
JO-ANN STORES: Moody's Cuts CFR to Caa2, Outlook Negative
JOHN V. GALLY: Gets OK to Tap UR Home Realty as Real Estate Broker
KANSAS CITY RVS: Seeks to Hire Evans & Mullinix as Legal Counsel
KTS SOLUTIONS: Wins Cash Collateral Access Thru Jan 31
MAGNOLIA OFFICE: Johnny Blue Rejects Proposed Treatment in Plan
MAYAN POOLS: Unsecureds' Recovery Lowered to 37% of Claims
MCCLAIN INVESTMENTS: Seeks to Tap Scout Realty as Real Estate Agent
MGM RESORTS: S&P Affirms 'B+' Issuer Credit Rating, Outlook Neg.
MIRACLE CENTER: Court OKs Deal on Cash Collateral Access
MIWD HOLDCO II: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
NASSAU PHARMACY: Court OKs Cash Collateral Access Thru Jan 25
NASSAU PHARMACY: Taps Gleason, Dunn, Walsh & O'Shea as Counsel
NB HOTELS: Exclusivity Period Extended to Jan. 31
NESV ICE: DIP Loan from Shubh Patel Wins Court OK
NEW CONSTELLIS: Moody's Lowers CFR to Caa2, Outlook Negative
NUVO TOWER: Unsecured Claims Unimpaired in Plan
ORBIT ENERGY: Wins Cash Collateral Access Thru Jan 21
ORTHOPAEDIC SURGICAL: Taps McMahon & Associates as Accountant
PARAMOUNT AIR: Court OKs Final Cash Collateral Access
PARAMOUNT RESTYLING: Commences Subchapter V Bankruptcy Proceeding
PARTY CITY HOLDCO: In Talks for Potential Bankruptcy Loan
PATAGONIA HOLDCO: Calamos DCIF Marks $260,000 Loan at 19% Off
PATAGONIA HOLDCO: Calamos GDIF Marks $200,000 Loan at 19% Off
PELLETIER MANAGEMENT: Unsecureds to Get 3.7432% in Liquidating Plan
PENTA STATE: Court OKs Cash Collateral Access
PEOPLE SPEAK: Court Confirms Third Amended Plan
PM GENERAL: Moody's Lowers CFR to Caa1, Outlook Negative
POST HOLDINGS: Moody's Affirms 'B1' CFR, Outlook Remains Stable
PREMIER GRILLING: Court OKs Interim Cash Collateral Access
PRODUCE DEPOT: Feb. 9 Hearing on Disclosure Statement and Plan
QUANTUM CORP: Appoints Kenneth Gianella as Chief Financial Officer
RAMARAMA INC: Case Summary & 14 Unsecured Creditors
REGIONAL HOUSING: Taps Senior Housing Services as Broker Agent
REMER & GEORGES-PIERRE: Seeks Approval to Hire Bankruptcy Counsel
RITE AID: Egan-Jones Retains CCC- Senior Unsecured Ratings
SAFETY FIRST: Voluntary Chapter 11 Case Summary
SAINT ANNE'S RETIREMENT: Fitch Alters Outlook on 'BB+' IDR to Neg.
SAN LUIS & RIO: Feb. 21 Hearing on Disclosure Statement
SAVVA HOLDINGS: Seeks Cash Collateral Access
SENIOR CARE: Wins Cash Collateral Access Thru Feb 13
SERVICE CORP: Moody's Affirms 'Ba2' CFR, Outlook Stable
SOTERA HEALTH: S&P Alters Outlook to Stable, Affirms 'BB-' ICR
SPL PARTNERS: Reaches Settlement with Signature; Files Amended Plan
ST. CLAIR COUNTY SD 189: Moody's Upgrades Issuer Rating to Ba1
SUMMIT LLC: Gets More Time for Bankruptcy Plan
SUPERIOR PLUS: DBRS Confirms BB(high) Issuer Rating
SUPREME WORX: Court OKs Cash Collateral Access Thru Feb 15
TACORA RESOURCES: S&P Downgrades ICR to 'CCC-', Outlook Negative
TALCOTT RESOLUTION: S&P Upgrades LT ICR to 'BB+', Outlook Stable
TEAM HEALTH: Calamos DCIF Marks $688,000 Loan at 16% Off
TEAM HEALTH: Calamos GDIF Marks $641,000 Loan at 16% Off
TIMES SQUARE JV: Disclosure Statement Hearing Set for February 1
TK CLEANING: Taps Newpoint Advisors Corp. as Financial Advisor
TRITON WATER: S&P Affirms 'B' Issuer Credit Rating, Outlook Neg.
UNDER ARMOUR: Egan-Jones Retains BB Senior Unsecured Ratings
UNITED FURNITURE: Wants to Convert Chapter 7 to Chapter 11
US SILICA: Egan-Jones Hikes Senior Unsecured Ratings to CCC+
VALCOUR PACKAGING: Moody's Lowers CFR to Caa1, Outlook Stable
VITAL PHARMACEUTICALS: $335MM DIP Loan from Truist Wins Final OK
VOLUNTEER ENERGY: Unsecureds to Get 9% to 25% in Liquidating Plan
VOYAGER DIGITAL: Alameda Says Plan Suffers Confirmability Issues
VOYAGER DIGITAL: Sale of Cryptocurrency Customer Accounts Okayed
VOYAGER DIGITAL: States Say Plan Disclosures Inaccurate
WEST CAMPUS: S&P Lowers Long-Term Rating on 2015 Rev. Bonds to 'B'
WEST DEPTFORD: Moody's Lowers Rating on Senior Secured Debt to B3
WESTBANK HOLDINGS: Unsecureds to Get 100% in Fannie Mae Plan
WILLIAM HOLDINGS: Trustee Taps Menchaca & Co. as Financial Advisor
WW INTERNATIONAL: Calamos DCIF Marks $444,000 Loan at 35% Off
YELLOW CORP: Egan-Jones Retains CC LC Senior Unsecured Rating
ZAPPELLI BODY SHOP: Unsecured Creditors to Recover 5% Under Plan
ZEKELMAN INDUSTRIES: Moody's Upgrades CFR to Ba2, Outlook Stable
ZELIS HOLDINGS: S&P Alters Outlook to Positive, Affirms 'B' ICR
[*] Austin Office Portfolio Slated for Sale on Feb. 14
[^] BOND PRICING: For the Week from January 9 to 13, 2023
*********
2ND CHANCE INVESTMENT: Has Deal on Cash Collateral Access
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2ND Chance Investment Group, LLC and LMF 2, LP advised the U.S.
Bankruptcy Court for the Central District of California, Santa Ana
Division, that they have reached an agreement regarding the
Debtor's use of cash collateral and now desire to memorialize the
terms of this agreement into an agreed order.
The Debtor requires the use of cash collateral to protect and
preserve property of the bankruptcy estate.
The Debtor owns or has an interest in 13 parcels of real property.
Five of those parcels are subject to assignment of rent liens by
LMF, which are serviced by FCI Loan Servicing Inc.
The parties agreed that the Debtor may use LMF's cash collateral on
a final basis.
The Debtor is permitted to use cash collateral for expenses
incurred in connection with each of the parcels of real property of
the bankruptcy estate.
The use of cash collateral is valid from January 6, 2023, forward.
LMF agrees that it is adequately protected by equity for each of
the real property parcels.
A copy of the motion is available at https://bit.ly/3W4QueT from
PacerMonitor.com.
About 2ND Chance Investment Group, LLC
2ND Chance Investment Group, LLC owns in fee simple title 13 real
properties located in various locations in California and
Washington having an aggregate value of $7.02 million.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-12142) on December
21, 2022. In the petition signed by Rayshon A. Foster, managing
member, the Debtor disclosed $7,221,261 in assets and $11,002,949
in liabilities.
Amanda G. Billyard, Esq., at Financial Relief Law Center, APC, is
the Debtor's legal counsel.
307 ASSETS: Seeks to Hire Backenroth Frankel & Krinsky as Counsel
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307 Assets, LLC seeks approval from the U.S. Bankruptcy Court for
the Southern District of New York to employ Backenroth Frankel &
Krinsky, LLP as its bankruptcy counsel.
The firm will render these legal services:
(a) advise the Debtor regarding its powers and duties in the
continued operation of its business and management of its property
during the Chapter 11 case;
(b) prepare legal papers;
(c) formulate and negotiate a plan of reorganization with
creditors; and
(d) perform such other legal services for the Debtor as
required during the Chapter 11 case.
On December 22, 2022, the Debtor paid the firm $30,000 as initial
retainer.
The hourly rates of the firm's counsel and staff are as follows:
Scott A. Krinsky $625
Mark A. Frankel $685
Abraham J. Backenroth $750
Paralegal $125
Mark Frankel, Esq., a member of Backenroth Frankel & Krinsky,
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:
Mark A. Frankel, Esq.
Backenroth Frankel & Krinsky, LLP
800 Third Avenue
New York, NY 10022
Telephone: (212) 593-1100
Facsimile: (212) 644-0544
Email: mfrankel@bfklaw.com
About 307 Assets
307 Assets LLC is a single asset real estate as defined in 11
U.S.C. Section 101(51B). The company is the fee simple owner of a
property located at 307 Sixth Avenue New York, valued at $14.5
million.
307 Assets filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y.
Case No. 23-10027) on Jan. 9, 2023. In the petition signed by its
chief restructuring officer, David Goldwasser, the Debtor disclosed
$14,500,000 in assets and $22,699,338 in liabilities.
Judge James L. Garrity Jr. oversees the case.
Backenroth Frankel & Krinsky, LLP, led by Mark Frankel, Esq., is
the Debtor's counsel.
35 CLAVER LLC: Interest in Building Owner Set for Jan. 20 Auction
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Jones Lang LaSalle, on behalf of BIG Real Estate Capital I LLC
("secured party"), will offer for sale at public auction on Jan.
20, 2023, at 12:00 p.m. (Eastern Prevailing Time) in front of the
Delaware Court of Chancery located at 500 North King Street,
Wilmington, Delaware 19801, all right, title and interest of the
secured party in the collateral, as such term defined in the
certain mezzanine loan agreement dated as of Nov. 1, 2018, by and
between 35 Claver LLC ("Debtor"), and the secured party, as
lender.
It is the understanding and belief of the secured party, but
without any warranty or representation by the secured party as to
accuracy of completeness, that the collateral consist of, among
other things, 100% of the membership interests of the Debtor in
Claver NY LLC ("mortgage borrower"), the owner of the land and
building knowns as 35 Claver Place, Brooklyn, New York.
All interested prospective purchasers are invited bidders and their
duly appointed agents and representatives may participate at the
public auction. The terms of sale may be obtained by contacting:
Brett Rosenberg
JLL Capital Markets
Tel: +1 212 812 5926
Cel: +1 646 413 4861
Email: Brett.Rosenberg@am.jll.com
Attorneys for the secured party:
Sills Cummis & Gross PC
Robert Hempstead, Esq.
101 Park Avenue, 28th Floor
New York, NY 10178
Tel: (973) 643-5689
Fax: (973) 643-6500
Email: rhempstead@sillscummis.com
942 PENN RR: UST Says Amended Disclosures Approval Premature
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Mary Ida Townson, the United States Trustee for Region 21 (the
"UST"), objects to the Debtor's Disclosure Statement for Third
Amended Plan of Reorganization of 942 Penn RR, LLC.
The UST points out that the Debtor's seeking approval for the
Amended Disclosure Statement is still premature. The Amended
Disclosure Statement is still deficient in several critical
respects and cannot be approved in its current state. Rather than
recite all the bases raised by the UST in its first objection to
the previous iteration of the Disclosure Statement, this Objection
will focus principally on the Debtor's proposed financing. The
U.S. Trustee has demonstrated the infirmities with the Debtors'
lack of historical information regarding operations, lack of books
and records, failure of specificity for determining priority tax
claims, inconsistencies regarding the classification of claims and
interests, and when certain Plan payments might be made. The UST
will rely on those well-stated arguments. In this iteration, the
Debtor proposes to obtain Plan funding from Limitless Capital that
will be sufficient to pay all Allowed Claims, with such loan
collateralized by the Property. Or if the proposed Plan Funding is
not available on the Effective Date, then the Property will be
sold, but no such process is explained in the Amended Disclosure
Statement.
The UST further points out that as was a problem with the prior
Disclosure Statement, the Third Amended Disclosure Statement still
(a) does not adequately disclose firm Plan Funding terms because
the Exhibit attached to the Amended Disclosure Statement is not an
executed loan commitment, but only an "Expression of Interest," and
(b) the default sale process that would, presumably, take place if
the financing is not obtained is that already central to the
Trustee's Plan of Liquidation. This, however, is a supposition by
the UST because the Amended Disclosure Statement provides no sale
process details.
The UST asserts that the Amended Disclosure Statement does not
attach financial projections or a liquidation analysis that
demonstrates how creditors are better off under the Debtor's Plan
than they would be if the case is converted to a chapter 7 or the
Property is sold pursuant to the Trustee's Liquidating Plan. The
Amended Disclosure Statement merely asserts that creditors would
receive 100% of their claim amounts under either scenario.
Accordingly, according to the U.S. Trustee, the Debtor's Amended
Disclosure Statement appears again to be premature because the
Debtor lacks a firm funding commitment upon which creditors can
rely. The funding, however, if such were firmly committed appears
adequate to the claims as filed because the known claims universe
appears to be less than the $5.5 million loan proposed loan
proceeds. Currently unknown tax claims could complicate this
calculation, however, and any excess proceeds should,
hypothetically, be reserved for such unknown tax claims.
About 942 Penn RR
942 Penn RR, LLC, owns a short-term luxury apartment building
located at 942 Pennsylvania Ave., Miami Beach, Fla.
942 Penn RR filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-14038) on
May 23, 2022, with $1,617,630 in total assets and $27,179,541 in
total liabilities. Raziel Ofer, manager, signed the petition.
Judge Robert A. Mark oversees the case.
The Law Office of Mark S. Roher, PA is the Debtor's legal counsel.
On June 29, 2022, the Court appointed Barry E. Mukamal as the
Debtor's Chapter 11 trustee. Bast Amron, LLP and KapilaMukamal,
LLP, serve as the Trustee's legal counsel and accountant,
respectively.
ACPRODUCTS INC: Calamos DCIF Marks $103,900 Loan at 29% Off
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Calamos Dynamic Convertible and Income Fund has marked its $103,950
loan extended to ACProducts, Inc to market at $73,328 , or 71% of
the outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos DCIF's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos DCIF is a participant in a Bank Loan that accrues interest
at a rate of 7.127% per annum (6 mo. LIBOR + 4.25%) to ACProducts,
Inc. The loan is scheduled to mature on May 17, 2028.
Calamos Dynamic Convertible and Income Fund was organized as a
Delaware statutory trust on March 11, 2014 and is registered under
the Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
March 27, 2015.
ACProducts, Inc., headquartered in The Colony, TX, is a national
manufacturer and distributor of kitchen and bathroom cabinetry.
American Industrial Partners, through its affiliates, is the
primary owner of ACProducts, having acquired it in 2012.
ACPRODUCTS INC: Calamos DCIF Marks $34,300 Loan at 29% Off
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Calamos Dynamic Convertible and Income Fund has marked its $34,300
loan extended to ACProducts, Inc to market at $24,196 or 71% of the
outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos DCIF's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos DCIF is a participant in a Bank Loan that accrues interest
at a rate of 7.924% per annum (3 mo. LIBOR + 4.25%) to ACProducts,
Inc. The loan is scheduled to mature on May 17, 2028.
Calamos Dynamic Convertible and Income Fund was organized as a
Delaware statutory trust on March 11, 2014 and is registered under
the Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
March 27, 2015.
ACProducts, Inc., headquartered in The Colony, TX, is a national
manufacturer and distributor of kitchen and bathroom cabinetry.
American Industrial Partners, through its affiliates, is the
primary owner of ACProducts, having acquired it in 2012.
ACPRODUCTS INC: Calamos GDIF Marks $26,900 Loan at 29% Off
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Calamos Global Dynamic Income Fund has marked its $26,950 loan
extended to ACProducts, Inc to market at $19,011, or 71% of the
outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos GDIF's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos GDIF is a participant in a Bank Loan that accrues interest
at a rate of 7.127% per annum (6 mo. LIBOR + 4.25%) to ACProducts,
Inc. The loan is scheduled to mature on May 17, 2028.
Calamos Global Dynamic Income Fund was organized as a Delaware
statutory trust on April 10, 2007 and is registered under the
Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
June 27, 2007.
ACProducts, Inc., headquartered in The Colony, TX, is a national
manufacturer and distributor of kitchen and bathroom cabinetry.
American Industrial Partners, through its affiliates, is the
primary owner of ACProducts, having acquired it in 2012.
ACPRODUCTS INC: Calamos GDIF Marks $81,600 Loan at 29% Off
----------------------------------------------------------
Calamos Global Dynamic Income Fund has marked its $81,675 loan
extended to ACProducts, Inc to market at $57,615, or 71% of the
outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos GDIF's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos DCIF is a participant in a Bank Loan that accrues interest
at a rate of 7.127% per annum (6 mo. LIBOR + 4.25% to ACProducts,
Inc. The loan is scheduled to mature on May 17, 2028.
Calamos Global Dynamic Income Fund was organized as a Delaware
statutory trust on April 10, 2007 and is registered under the
Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
June 27, 2007.
ACProducts, Inc., headquartered in The Colony, TX, is a national
manufacturer and distributor of kitchen and bathroom cabinetry.
American Industrial Partners, through its affiliates, is the
primary owner of ACProducts, having acquired it in 2012.
ALL AMERICA: Seeks to Hire Pamela Bomba of Pivot CPAs as Accountant
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All America Trading, LLC seeks approval from the U.S. Bankruptcy
Court for the Middle District of Florida to employ Pamela Bomba, a
tax partner at Pivot CPAs, as its accountant.
The Debtor requires the services of an accountant for the purpose
of improving its financial management.
Ms. Bomba and her team will be paid as follows:
Tax Partner $300 per hour
IRS Manager $200 per hour
Accounting Work $120 per hour
Ms. Bomba disclosed in a court filing that she is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The accountant can be reached at:
Pamela Bomba
Pivot CPAs
238 Ponte Vedra Park Dr., Suite 201
Ponte Vedra Beach, FL 32082
Telephone: (904) 395-8122
Email: PBomba@PivotCPAs.com
About All America Trading
All America Trading, LLC is a Florida limited liability company
whose primary place of business is in Orlando, Orange County, Fla.
AAT exports bananas globally. It works virtually out of the
apartment of the principal of AAT, Joe Mudar, who is the 100% owner
of AAT.
All America Trading filed a petition for relief under Subchapter V
of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
22-02876) on Aug. 11, 2022. In the petition filed by Mudar Y.
Mahmoud, owner, the Debtor disclosed between $500,000 and $1
million in both assets and liabilities. Aaron R. Cohen has been
appointed as Subchapter V trustee.
Judge Grace E. Robson oversees the case.
The Debtor tapped Adina L. Pollan, Esq., at McGlinchey Stafford,
PLLC as counsel and Pamela Bomba at Pivot CPAs as accountant.
ALL YEAR HOLDINGS: Plan Hearings to Begin on Jan. 31
----------------------------------------------------
The Honorable Martin Glenn of the U.S. Bankruptcy Court for the
Southern District of New York will convene a hearing on Jan. 31,
2023, and Feb. 1, 2023, at 9:00 a.m. (Eastern Time), to consider
confirmation of the Third Amended Chapter 11 Plan of Reorganization
of All Year Holdings Limited, dated December 9, 2022.
Early this month, Judge Martin Glenn entered an order that the
deadline for eligible holders of Class 4 Remaining Unsecured Claims
to submit votes to accept or reject the Plan, which was previously
set for Jan. 6, 2023, at 5:00 p.m. (Eastern Time), is extended to
5:00 p.m. on Jan. 10, 2023.
The deadline to submit responses or objections to confirmation of
the Plan, which was previously set as Jan. 6, 2023, at 5:00 p.m.
(Eastern Time), is extended to 5:00 p.m. on Jan. 10, 2023.
About All Year Holdings Limited
All Year Holdings Limited is a real estate development company
founded by American real estate developer Yoel Goldman. It operates
as a holding company, which, through its direct and indirect
subsidiaries, focuses on the development, construction,
acquisition, leasing and management of residential and commercial
income producing properties in Brooklyn, N.Y. The company's
portfolio includes 1,648 residential units and 69 commercial units
in Bushwick, Williamsburg, and Bedford-Stuyvesant.
All Year Holdings sought Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case No. 21-12051) on Dec. 14, 2021. At the time of the
filing, the Debtor listed $1 billion to $10 billion in assets and
liabilities. Judge Martin Glenn oversees the case.
Weil, Gotshal & Manges LLP, led by Matthew Paul Goren, Esq., is the
Debtor's bankruptcy counsel while Koffsky Schwalb, LLC and Bartov &
Co. serve as special counsels. Donlin Recano & Company, Inc. Is the
Debtor's administrative agent.
On Dec. 16, 2021, the Debtor filed an application under the laws of
the British Virgin Islands with the Eastern Caribbean Supreme Court
in the High Court of Justice, Commercial Division Virgin Islands
(the "BVI Court") seeking the appointment of Paul Pretlove and
Charlotte Caulfield of Kalo (BVI) Limited as joint provisional
liquidators under the applicable provisions of the BVI Insolvency
Act 2003 (the "BVI Proceeding"). The BVI Court entered an order
appointing the JPLs on December 20, 2021 (the "JPL Order").
In addition, on April 14, 2022, with the consent of the JPLs and
the approval of the BVI Court, the Debtor commenced a proceeding in
the District Court of Tel Aviv Yafo for recognition of the Chapter
11 Case as a foreign main proceeding under the applicable
provisions of Chapter I, Part C of the Insolvency and
Rehabilitation Law 5778-2018. The Israeli Court entered an order
recognizing the Chapter 11 Case on May 4, 2022.
APPALACHIAN VALLEY TRANSPORT: Wins Final OK on Cash Collateral Use
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The U.S. Bankruptcy Court for the Northern District of Georgia,
Newnan Division, authorized Appalachian Valley Transport, Inc. and
its debtor-affiliates to use cash collateral on a final basis, in
accordance with the budget.
The Debtor requires access to cash collateral to fund critical
operations.
As previously reported by the Troubled Company Reporter, Stearns
Bank, N.A. and the U.S. Small Business Administration assert liens
on the Debtor's cash collateral. Stearns is in first priority
position regarding any alleged cash collateral according to the
oldest UCC-1 Financing Statement.
As adequate protection, the lenders are granted a valid and
properly-perfected replacement lien in post-petition collateral of
the same kind, extent, and priority as the liens existing
pre-petition except that the Adequate Protection Lien will not
extend to the proceeds of any avoidance actions received by the
Debtor or the estate pursuant to chapter 5 of the Bankruptcy Code.
A copy of the order is available at https://bit.ly/3CJodUF from
PacerMonitor.com.
About Appalachian Valley Transport, Inc.
Appalachian Valley Transport, Inc. provides express delivery
services. The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr.. N.D. Ga. Case No. 22-11359) on December 7,
2022. In the petition signed by Gina Hobbs-Wood, CEO, the Debtor
disclosed up to $100,000 in assets and up to $10 million in
liabilities.
Judge Paul Baisier oversees the case.
Paul Baisier, Esq., at Rountree, Leitman, Klein & Geer, LLC, is the
Debtor's legal counsel.
ASTORIA ENERGY: S&P Affirms 'B+' Debt Rating, Outlook Stable
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S&P Global Ratings affirmed its 'B+' rating on the Astoria Energy
LLC's (AEI) debt outstanding. S&P Global Ratings also removed the
UCO designation as a result of this rating action.
The stable outlook reflects S&P's expectation of strong debt
service coverage during the remaining term loan B (TLB) period and
debt service coverage ratios (DSCRs) of about 1.6x-1.7x during the
post-TLB period (2028-2038), based on its refinancing assumptions;
as well as our outlook on the energy and capacity markets.
AEI is a nominal 615-megawatt (MW) combined-cycle natural gas-fired
power plant in Zone J (NYC), a highly constrained and competitive
electricity region in NYISO. The power plant commenced commercial
operations in mid-2006, supplying most of its power to Consolidated
Edison Inc. (ConEdison) under a 10-year power purchase agreement
through mid-2016, and became a fully merchant generator when that
contract expired. The facility consists of two GE PG7241 combustion
turbine generator sets, two Alstom heat recovery steam generators
with supplemental firing capability, and one Alstom Model STF25
steam turbine generator. Natural gas is the primary fuel. Low
sulfur distillate fuel oil is stored onsite and serves as backup
fuel. Astoria Power Partners Holding LLC (APPH) owns the facility.
In addition, APPH owns an approximately 55% interest in Astoria
Energy II LLC (AEII), a dual fuel-fired combined-cycle facility
with a nominal capacity of 615 MW. The facility began commercial
operations on July 1, 2011. Natural gas is the primary fuel and low
sulfur distillate fuel oil is stored onsite as backup fuel. AEII is
fully contracted through June 30, 2031, under a 20-year tolling
agreement with the New York Power Authority (NYPA). NYPA is
responsible for all fuel and emissions costs and holds title to all
products made available by the facility. AEI will rely on
approximately 55% of the distributions from AEII to service its
debt.
S&P's revised project finance criteria do not affect its view of
AEI's credit quality.
On Dec. 14, 2022, S&P Global Ratings published its revised criteria
for project finance transactions, "General Project Finance
Methodology" and "Sector-Specific Project Finance Rating
Methodology," and placed ratings on several project finance
issuers' debt, including that of AEI, on UCO. The revised criteria
contemplate atypical transaction structures, such as that of AEI,
where project debt is serviced via operating cash flows of the
primary asset (AEI), as well as a subordinated and residual income
stream from a secondary source (AEII). AEI's lenders also do not
benefit from a physical pledge of AEII's assets, as they have been
secured for the benefit of AEII's senior secured lenders. S&P
continues to view this feature as a security weakness compared with
typical project finance structures, which provide a fulsome
security package that encompasses all income-producing assets, and
therefore it lowers AEI's preliminary operations phase stand-alone
credit profile (SACP) by one notch.
S&P said, "The stable outlook reflects our expectation of strong
debt service coverage during the TLB period and a minimum DSCR of
about 1.6x in the refinancing period (2028-2038), based on our
refinancing assumptions; and our forward-looking view of the energy
and capacity markets.
"We would consider a negative rating action if we expect the
minimum DSCR will fall below 1.4x during the project's life
(including the refinancing period) on a sustained basis. This could
result from lower-than-expected capacity factors, weaker energy
margins, depressed capacity prices, and operational issues such as
forced outages and lower plant availability. We would also consider
a negative rating action if the project's cash flow sweeps were
materially lower than we expect, which would increase the residual
debt outstanding at TLB maturity, and potentially weaken the
projected DSCRs in the post-refinancing period, absent any
improvement in market conditions.
"We would consider an upgrade if we envisioned the project
achieving DSCRs above 1.8x throughout the debt life, including the
post-refinancing period (2028-2035), or if the average DSCR
improved to above 2.5x with reasonable headroom. This could occur
if our long-term outlook for capacity prices improves, or if the
project's financial performance exceeds our forecast due to any
other factors (such as improved energy margins or higher dispatch),
leading to lower-than-expected debt outstanding at TLB maturity. We
would also consider a positive rating action if we believed that
market conditions for generators in Zone J had improved materially
and the improvement was sustainable in the long term."
BAUSCH HEALTH: Calamos DCIF Marks $64,100 Loan at 25% Off
---------------------------------------------------------
Calamos DCIF has marked its $64,188 loan extended to Bausch Health
Companies, Inc. to market at $48,233 or 75% of the outstanding
amount, as of October 31, 2022, according to a disclosure contained
Calamos DCIF's Form N-CSR for the fiscal year ended October 31,
2022, filed with the Securities and Exchange Commission on December
29, 2022.
Calamos DCIF is a participant in a Bank Loan that accrues interest
at 8.624% per annum (1 mo. SOFR +5.25%) to Bausch Health Companies,
Inc. The loan is scheduled to mature on February 1, 2027.
Calamos Dynamic Convertible and Income Fund was organized as a
Delaware statutory trust on March 11, 2014 and is registered under
the Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
March 27, 2015.
Bausch Health Companies Inc. develops drugs for unmet medical needs
in central nervous system disorders, eye health, and
gastrointestinal diseases, as well as contact lenses, intraocular
lenses, ophthalmic surgical equipment, and aesthetic devices.
BERTUCCI'S RESTAURANTS: Wins Cash Collateral Access Thru Feb 7
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Orlando Division, authorized Bertucci's Restaurants, LLC to use
cash collateral on an interim basis in accordance with the budget
through the date of the final hearing set for February 7, 2023 at
10:30 a.m.
The Debtor is permitted to use cash collateral to pay:
a. amounts expressly authorized by the Court, including
payments to the United States Trustee for quarterly fees; and
b. the current and necessary expenses set forth in the budget,
plus an amount not to exceed 10% for the expenses.
During the interim period, PHL Holdings, LLC and Rewards Network
will each have a perfected post-petition lien against cash
collateral to the same extent and with the same validity and
priority as its respective prepetition lien, without the need to
file or execute any documents as may otherwise be required under
applicable non-bankruptcy law. The replacement lien(s) granted will
secure all obligations owing from the Debtor to PHL and Rewards
Network, as the case may be.
Pursuant to the Stipulation between Debtor and C.H. Robinson
Worldwide, Inc, the Debtor has agreed to pay $50,000 per week
against the pre-petition claims of Robinson related to claims under
the PACA Trust.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3QCaowV from PacerMonitor.com.
The budget provides for total operating cash inflows, on a weekly
basis as follows:
$1,842 for the week ending January 15, 2023;
$1,292 for the week ending January 22, 2023;
$1,693 for the week ending January 29, 2023;
$1,283 for the week ending February 5, 2023;
$2,016 for the week ending February 12, 2023;
$1,566 for the week ending February 19, 2023;
$1,764 for the week ending February 26, 2023; and
$1,623 for the week ending March 5, 2023.
About Bertucci's Restaurants, LLC
Bertucci's Restaurants, LLC is a Florida limited liability company
that was formed in May 2018. The Company owns and operates
approximately 47 Italian-themed restaurants under the name
Bertucci's Brick Oven Pizza & Pasta.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-04313) on December 5,
2022. In the petition signed by Jeffrey C. Sirolly, secretary, the
Debtor disclosed up to $50,000 in assets and up to $100 million in
liabilities.
Judge Grace E. Robson oversees the case.
R. Scott Schuker, Esq., at Shuker and Dorris, P.A., is the Debtor's
legal counsel.
BLACKBERRY LIMITED: Egan-Jones Retains CCC Sr. Unsecured Ratings
----------------------------------------------------------------
Egan-Jones Ratings Company on December 30, 2022, maintained its
'CCC' foreign currency and local currency senior unsecured ratings
on debt issued by BlackBerry Limited. EJR also maintained its C
rating on commercial paper issued by the Company.
Headquartered in Waterloo, Ontario, BlackBerry Limited is a
Canadian software company specializing in cybersecurity.
BOLTA US: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: Bolta US Ltd.
1650 Boone Blvd.
Northport, AL 35476
Business Description: Bolta is an auto parts manufacturer in
Tuscaloosa, Alabama.
Chapter 11 Petition Date: January 13, 2023
Court: United States Bankruptcy Court
Northern District of Alabama
Case No.: 23-70042
Judge: Hon. Jennifer H. Henderson
Debtor's Counsel: Stephen Gross, Esq.
McDONALD HOPKINS LLC
600 Superior Ave Suite 2100
Cleveland OH 44114
Tel: 216-348-5785
Email: sgross@mcdonaldhopkins.com
Debtor's
Local
Bankruptcy
Co-Counsel: ROSEN HARWOOD, P.C.
Debtor's
Special
Counsel: WINTER McFARLAND, LLC
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Jeffrey Truitt as chief restructuring
officer.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/PT26HTA/Bolta_US_Ltd__alnbke-23-70042__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Deutsche Bank AG, Notes Payable $7,239,668
New York Branch
60 Wall Street
New York, NY 10005
Contact: Counsel
Tel: 212-250-2500
Email: kevin.mcbrien@db.com
2. SMP Automotive Systems Notes Payable $6,422,658
Alabama Inc.
10799 Ed Stephens Road
Cottondale, AL 35453
Contact: Char Zawadzinkski
Email: dipin.sharma@smp-automotive.com
3. Commerzbank Notes Payable $4,299,366
Aktiengesellschaft
New York Branch
225 Liberty St
New York, NY 10286
Contact: John Geremia,
Managing Director
Tel: 212-266-7200
Email: info@commerzmarkets.com
4. Rehau Automotive, LLC Notes Payable $3,554,648
Attn: Mark Mullins, Esq.
1501 Edwards Ferry Rd, N.E.
Leesburg, VA 20176
Contact: Mark Mullins, Esq.
Tel: 256-737-3028
Fax: 256-685-7010
Email: mark.mullins@rehau.com
5. Volkswagen Group of America Notes Payable $2,312,551
Chattanooga Operations, LLC
8001 Volkswagen Drive
c/o John Critchfield
Chattanooga, TN 37416
Contact: John Critchfield
Tel: 423-582-5140
Fax: 423-582-5945
Email: john.critchfield@gw.com
6. Mercedes-Benz U.S. Sums Due for $1,941,000
International, Inc. Tooling
Attn: Steven W. Nichols Advances
1 Mercedes Drive
Vance, AL 35490
Contact: Steven W. Nichols
Email: keith.stephens@mbusi.com
7. Synergi Partners Inc. Trade Payable $947,855
151 W. Evans St.
Florence, SC 29051
Contact: Jim Brown, CEO
Tel: 843-519-0808
Email: info@synergipartners.com
8. Active PTM, LLC Trade Payable $470,714
c/o Husch Blackwell LLP
Attn: Dieter Juedes
511 North Broadway, Suite 1100
Milwaukee, WI 53202
Tel: (414) 978-5361
Fax: 734-547-7397
Email: dieter.juedes@huschblackwell.com
9. DCS Diversified Trade Payable $451,392
Coating Systems Inc.
309 Echelon Rd
Geenville, SC 29605
Contact: Gary Lizanich,
Controller
Email: support@diversified-coatings.com
10. Gerhardi Inc. Trade Payable $300,000
855 Industrial Park Blvd
Montgomery, AL 36117
Contact: Tzahi Sella, CEO
Email: info@gerhardi.com
11. Morrison Express Corporation Trade Payable $219,367
5148 Kennedy Road
Forest Park, AL 30297
Contact: John Simpson
Tel: 404-366-8848
Fax: 404-366-8801
Email: john_simpson@morrisonexpress.com
12. Harcros Chemicals Inc. Trade Payable $117,946
1496 Hwy 150
Bessemer, AL 35022
Contact: Counsel
Tel: 913-321-3131
Fax: 913-621-7818
Email: press@harcros.com
13. MS Companies Trade Payable $106,355
6610 N. Shadeland Ave
Indianapolis, IN 46220
Contact: David Kmita, EVP
Tel: 317-322-9311
Email: sales@mscompanies.com
14. Baxter Bailey as Agent Trade Payable $99,060
for TA Services/Standridge
c/o Davidson Law Firm
6000 Poplar Ave., Suite 250
Memphis, TN 38119
Contact: Edgar Davidson
Tel: (901) 230-7749
Email: edgar@davidsonlawfirm.net
15. Robert Half Finance & Trade Payable $93,100
Accounting
865 S. Figueroa St., Ste 2600
Los Angeles, CA 90017
Contact: Counsel
Tel: 213-270-6763
Email: amber.baptiste@roberthalf.com
16. Naos Staffing, LLC Trade Payable $88,430
1000 Peachtree Industrial Blvd.
Suite 6-153
Suwanee, GA 30024
Contact: Counsel
Tel: 678-387-2880
17. Industrial Chemicals, Inc. Trade Payable $79,864
2042 Montreat Drive
Birmingham, AL 30024
Contact: Counsel
Tel: 800-476-2042
Email: customerservice@
industrialchem.com
18. Averitt Express Inc. Trade Payable $71,936
1415 Neal St
Cookeville, TN 38502
Contact: Jason Whitaker
Regional Vice President
Tel: 800-283-7488
Email: customerservice@averitt.com
19. Arab Cartage & Express Co. Trade Payable $59,920
c/o Frawley Boliek Lawyers, LLC
Attn: John R. Frawley, Jr.
Post Office Box 101493
Irondale, AL 35210
Contact: John R. Frawley, Jr.
Tel: (205) 956-9749
Fax: 256-586-8881
Email: frawleyj@bellsouth.net
20. Creative Liquid Coatings (CLC) Trade Payable $58,787
2620 Marion Dr
Kendallville, IN 46755
Contact: Stephen Geist,
President/CEO
Tel: 260-349-1862
Email: sgeist@creativeliquidcoatings.com
BOYD GAMING: Egan-Jones Retains BB- Senior Unsecured Ratings
------------------------------------------------------------
Egan-Jones Ratings Company on December 28, 2022, maintained its
'BB-' foreign currency and local currency senior unsecured ratings
on debt issued by Boyd Gaming Corporation.
Boyd Gaming Corporation is an American gaming and hospitality
company based in Paradise, Nevada.
BRIGHTHOUSE CLEANING: Wins Interim Cash Collateral Access
---------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Tennessee,
Nashville Division, authorized Brighthouse Green Home Cleaning, LLC
to use cash collateral on a interim basis in accordance with the
budget, with a 10% variance.
The Debtor requires immediate use of cash collateral to continue
its business operations without interruption, and to avoid
immediate and irreparable harm to the estate.
The U.S. Small Business Association, Cadence Bank, Rapid Finance,
and the LCF Group are the only creditors believed to assert a lien
on the Debtor's cash collateral.
As adequate protection, the Secured Creditors will receive a
replacement security interest under Section 361 (2) of the
Bankruptcy Code in the Debtor's post-petition property and proceeds
thereof (excluding the Debtor's rights under Sections 544, 545,
546, 547, 548, 549, and 550 of the Bankruptcy Code), to the same
extent and priority as their purported security interest in the
Debtor's pre-petition property and the proceeds thereof.
The replacement liens and security interests granted will be deemed
perfected upon entry of the Order without the necessity of the
Secured Creditors taking possession of any collateral or filing
financing statements or other documents.
The Debtor is granted a carve-out and authority to use cash
collateral for payment of: (i) allowed professional fees and
disbursements to professionals whose employment has been approved
by the Court; (ii) allowed fees and disbursements, including monies
to be escrowed, to the Subchapter V Trustee appointed in the case;
and (iii) any fees payable to the Clerk of the Bankruptcy Court.
The final hearing on the matter is set for February 8, 2023 at 11
a.m.
A copy of the order is available at https://bit.ly/3w5NyEy from
PacerMonitor.com.
About Brighthouse Green Home Cleaning, LLC
Brighthouse Green Home Cleaning, LLC is locally operated provider
of maid service in Nashville, Brentwood and Franklin. The Company
prides itself in using all-natural and allergy-reducing products,
including HEPA filtrations, microfiber and recyclable packaging.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Tenn. Case No. 23-00035) on June 6,
2023. In the petition signed by Jason Adkins, managing owner, the
Debtor disclosed $52,590 in assets and $2.814 milion in
liabilities.
Judge Charles M. Walker oversees the case.
Robert Gonzales, Esq., at Emergelaw, PLC, represents the Debtor as
legal counsel.
BSPV-PLANO LLC: Unsecureds Owed $1.9M to Get Full Payment
---------------------------------------------------------
BSPV-Plano, LLC, submitted a Plan of Reorganization and a
Disclosure Statement.
The Plan is a proposed plan of reorganization under Chapter 11 of
the United States Bankruptcy Code, whereby the Debtor seeks to
restructure its debt obligations to all of its Creditors and to
reorganize. As such, if confirmed, the Plan would constitute a new
contract between the Debtor and all of its Creditors and would
replace prepetition contractual and other rights, except to the
extent preserved in the Plan, with all such rights restructured by
the Plan.
The principal asset of the Debtor is the Project, the real property
and improvements owned by the Debtor and the Estate consisting of
approximately 31.5 acres known as "The Bridgemoor at Plano" and
generally located at 1109 Park Vista Road, Plano, Texas.
At present, and on a fair market valuation, the Debtor believes
that the Project has more than enough value to pay all Creditors in
full, over time, and that this value will only grow, thus
protecting the rights of all Creditors and holders of Equity
Interests. The Project is not yet finished and is approximately 2
years from stabilization, at which point it will reach its true
market value. Approximately $1.5 million is needed to complete the
Project, and a significant additional amount of funding is required
to properly market and open the Project, all of which the Debtor's
Equity Interest holders are funding and have committed to do. Thus,
if the Debtor is afforded sufficient time to complete the Project
and ramp-up the leasing at the Project, all Creditors will be paid
in full, most with interest, and all Creditors will be protected
against non-payment. This is why the Debtor filed the Bankruptcy
Case—to preserve value for all stakeholders and to complete the
Project—and this is why the Debtor urges all creditors to vote to
accept the Plan.
The alternative is very likely that Unsecured Creditors, junior M&M
lien claimants, and even the subordinated class or classes of the
Bond debt (Bond Series C and Bond Series D), will not be paid
anything. This is because any realistic alternative would result
in a foreclose by the senior Bond holders Bond Series A and Bond
Series B) against the Project and a sale at liquidation value,
which is much less than present fair market value and certainly
much less than future market value, since any buyer wanting to
purchase the Project will have to assume the risks and large
construction and carrying costs to get the Project to completion
and stabilization. The Estate does not have other readily
monetizable assets of sufficient value to pay much, if anything, to
any other Creditor in such a situation.
The Debtor believes that the Plan and the Project are feasible, and
that there is sufficient fair market value to pay all Creditors in
full, is best evidenced by the contributions that the Debtor's
Equity Interest holders have made towards the Project and the
Bankruptcy Case, including: approximately $7 million to fund
construction prior to the Petition Date once the Bond Trustee froze
access to the Debtor's funds, approximately $1.5 million under the
DIP Loan to fund the Bankruptcy Case; approximately $2 million
after the Petition Date to fund construction; and an additional
$1.5 million and more in present and future construction funding.
Those Equity Interest holders are not seeking to "profit" on the
"backs" of their Creditors. On the contrary, they have spent and
will continue to spend substantial funds to protect the rights of
all Creditors and stakeholders against the alternative of a
foreclosure.
Under the Plan, Class 10 Unsecured Claims total $1,900,000, this
amount includes Claims that the Debtor does not believe will be
Allowed, after objections to the same. The Debtor believes that
the more accurate amount of Unsecured Claims in the Bankruptcy Case
that will be Allowed is approximately $1,000,000, including taking
into account approved post-petition payments made on prepetition
claims. The Plan proposes to pay Allowed Unsecured Claims, without
interest, in full through quarterly payments over 4 years.
Creditors will recover 100% of their claims. Class 10 is
impaired.
The Plan provides an option to each holder of an Allowed Unsecured
Claim whereby the Debtor will pay the claim in full through a
one-time payment of 33% of the allowed amount of the claim.
Attorneys for the Debtor:
Jay H. Ong, Esq.
Davor Rukavina, Esq.
Thomas D. Berghman, Esq.
MUNSCH HARDT KOPF & HARR, P.C.
500 N. Akard Street, Suite 3800
Dallas, TX 75202-2790
Telephone: (214) 855-7500
Facsimile: (214) 855-7584
A copy of the Disclosure Statement dated Dec. 31, 2022, is
available at https://bit.ly/3ZcRnVJ from PacerMonitor.com.
About BSPV-Plano, LLC
BSPV-Plano, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Tex. Case No. 22-40276) on March 1,
2022. In the petition signed by Richard Shaw, manager, the Debtor
disclosed up to $100 million in both assets and liabilities.
At the time of filing, BSPV-Plano, LLC was developing a 31.5-acre,
"55+" Independent Senior Luxury Apartment Community with 318 units
of apartment inventory, that is known and branded as "The
Bridgemoor at Plano," and located at 1109 Park Vista Road in Plano,
Texas.
Thomas D. Berghman, Esq., at Munsch Hardt Kopf and Harr, PC, is the
Debtor's counsel.
C PERRY & SONS: Seeks to Hire John Rhyne as Bankruptcy Counsel
--------------------------------------------------------------
C Perry & Sons Trucking, LLC seeks approval from the U.S.
Bankruptcy Court for the Eastern District of North Carolina to
employ John Rhyne, Esq., an attorney practicing in Wilson, N.C.
Mr. Rhyne will render these services:
(a) undertake any and all steps and actions necessary to
authorize the use of cash collateral pursuant to 11 U.S.C. Sec.
363, if applicable;
(b) advise the Debtor with respect to its powers and duties in
the continued management, operation, and reorganization of its
business;
(c) review claims asserted against the Debtor by its
creditors, equity holders, and parties in interest;
(d) represent the Debtor's interests at the meeting of
creditors and at any hearing or conference scheduled in the Chapter
11 case before the court related to the Debtor;
(e) attend meetings, conferences and negotiations with
representatives of creditors, the trustee, and other parties in
interest;
(f) review and examine, if necessary, any and all transfers,
which may be avoided including preferential or fraudulent transfer
under the appropriate provisions of the Bankruptcy Code;
(g) take any and all necessary actions to protect and preserve
the Debtor's estate;
(h) prepare legal papers;
(i) prepare any plan of reorganization and take any necessary
actions on behalf of the Debtor to obtain confirmation of such
plan;
(j) represent the Debtor in connection with any potential
post-petition financing;
(k) advise the Debtor in connection with the sale or
liquidation, if applicable, of any assets and property to third
parties;
(l) appear before the bankruptcy court or any appellate
court;
(m) represent the Debtor with respect to any general,
corporate or transactional matters that arise during the course of
the administration of the bankruptcy case; and
(n) assist and advise the Debtor with respect to negotiation,
documentation, implementation, consummation, and closing of any
corporate transactions.
The attorney received a retainer in the amount of $6,738 from the
Debtor.
Mr. Rhyne disclosed in a court filing that he is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The attorney can be reached at:
John G. Rhyne, Esq.
P.O. Box 8327
Wilson, NC 27893
Telephone: (252) 234-9933
Facsimile: (252) 991-5567
Email: johnrhyne@johnrhynelaw.com
About C Perry & Sons Trucking
C Perry & Sons Trucking, LLC filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No.
23-00054) on Jan. 9, 2023, with as much as $1 million in both
assets and liabilities. Clarence Perry, managing member, signed the
petition.
Judge Pamela W. McAfee oversees the case.
John G. Rhyne, Esq., serves as the Debtor's counsel.
CALIFORNIA-NEVADA: Taps Senior Living Valuation as Appraiser
------------------------------------------------------------
California-Nevada Methodist Homes seeks approval from the U.S.
Bankruptcy Court for the Northern District of California to employ
Senior Living Valuation Services, Inc.
The Debtor requires an appraiser and consultant to:
(a) provide a comprehensive, self-contained narrative
appraisal report for each of the Debtor's continuing care
retirement community (CCRCs); and
(b) provide additional consulting or expert witness services
pertaining to the valuation of the assets, if required by the
Debtor.
The firm will be paid a flat fee of $24,000 for preparing the two
appraisal reports requested by the Debtor.
The hourly rates of the firm's professionals are as follows:
Michael G. Boehm $295
Research Assistants $60
Office Staff $25
Michael Boehm, chief executive officer of Senior Living Valuation
Services, disclosed in a court filing that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Michael G. Boehm
Senior Living Valuation Services, Inc.
1458 Sutter St.
San Francisco, CA 94109
Telephone: (415) 385-2832
Email: mboehm@slvsinc.com
About California-Nevada Methodist Homes
California-Nevada Methodist Homes -- http://www.cnmh.org/-- is a
California non-profit public benefit corporation that operates
nursing homes and long-term care facilities. It presently operates
two continuing care retirement communities, one known as Lake Park,
in Oakland Calif., and the other, known as Forest Hill, in Pacific
Grove, Calif.
On March 16, 2021, California-Nevada Methodist Homes filed a
Chapter 11 petition (Bankr. N.D. Calif. Case No. 21-40363), with
$10 million to $50 million in assets and $50 million to $100
million in liabilities.
The Hon. Charles Novack is the case judge.
The Debtor tapped Hanson Bridgett LLP, led by Neal L. Wolf, Esq.,
as legal counsel; and Silverman Consulting and B.C. Ziegler and
Company as financial advisors. Stretto, LLC is the claims agent.
CAPITOL PRESORT: Court Confirms Amended Plan
--------------------------------------------
Judge Henry W. Van Eck has entered an order confirming the Amended
Plan of Reorganization of Capitol Presort Services, LLC.
Objections to claims and interests may be filed by the Debtor up to
120 days subsequent to the entry of this Order, unless such date is
extended by the Court.
No later than 14 days after the Plan's substantial consummation,
the Debtor must file the Notice required under Section 1183(c)(2).
Classes 4, 5 and 7 have voted to accept the Plan. Class 6 did not
vote.
The Plan is deemed modified as follows:
i. Section 5.1.4 is modified to provide as follows:
a. As of the Effective Date, the amount owed on the Firstrust Loan
will be calculated. This amount, which will include principal,
interest at the contract rate, late charges accrued prior to the
Petition Date and any allowed costs and allowed reasonable fees,
will be determined and set as the new Firstrust Secured Claim ("New
Firstrust Secured Claim"). No late charges that accrued after the
Petition Date and prior to the Effective Date will be paid or
included on the balance owed on the New Firstrust Secured Claim.
b. The New Firstrust Secured Claim will be paid in equal monthly
installments of $12,000.00 per month, which shall include interest
at the rate of 6% per annum. Such payments shall continue until the
New Firstrust Secured Claim is paid in full. Such payments will
begin 30 days after the Effective Date and shall continue on the
first day of each calendar month thereafter. A late charge in the
amount of 5% of the amount of any delinquent installment shall be
due from the Debtor on any monthly installment not paid within 15
days after the date such payment is due and owing. Notwithstanding
anything to the contrary above, all amounts then owed on the New
Firstrust Secured Claim will become due and payable within 60
months after the Effective Date (the "Firstrust Term"). The Debtor
may pay the New Firstrust Secured Claim prior to maturity without
payment of any prepayment fee or penalty. Except as modified by the
terms of this Plan, if the Plan is confirmed, all terms and
provisions of the Firstrust Loan Documents shall remain in full
force and effect.
ii. Section 7.1 of the Plan is hereby amended to provide as
follows:
a. Debtor has a lease with 1400 Hagy Way Holdings, LLC, with
respect to its business space at 1400 Hagy Way, Harrisburg,
Pennsylvania. The lease is between the Debtor as tenant and 1400
Hagy Way Holdings, LLC, as the landlord of the Debtor's Business
property. The lease shall be assumed as of the Effective Date of
the Plan.
b. All arrears owed to 1400 Hagy Way Holdings, LLC, consisting of
(1) the sum of $83,448.43, relating to the period prior to the
Petition Date; and (2) any additional post-Petition amounts which
are due and unpaid as of the Effective Date of the Plan, shall be
paid on or before the Effective Date of the Plan. In the event
there is any dispute between the parties as to the post-Petition
amounts due, the Bankruptcy Court shall determine the appropriate
amount.
About Capitol Presort Services
Capitol Presort Services, LLC is a corporation engaged in mail
presorting services. The Debtor sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. M.D. Pa. Case No. 22-01406) on
July 29, 2022. In the petition signed by Philip E. Gray, Esq.,
member, the Debtor disclosed up to $1 million in both assets and
liabilities.
Judge Henry W. Van Eck oversees the case.
Robert E. Chernicoff, Esq., at Cunningham, Chernicoff & Warshawsky
PC, is the Debtor's counsel.
CARMAX INC: Egan-Jones Retains BB+ Senior Unsecured Ratings
-----------------------------------------------------------
Egan-Jones Ratings Company on December 28, 2022, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by CarMax, Inc.
Headquartered in Richmond, Virginia, CarMax, Inc. is a used vehicle
retailer.
CARNIVAL CORP: Egan-Jones Retains CCC+ Senior Unsecured Ratings
---------------------------------------------------------------
Egan-Jones Ratings Company, on December 27, 2022, maintained its
'CCC+' foreign currency and local currency senior unsecured ratings
on debt issued by Carnival Corporation. EJR also maintained its 'B'
rating on commercial paper issued by the Company.
Headquartered in Miami, Florida, Carnival Corporation is the
world's largest leisure travel company with 87 ships sailing under
9 brands including Princess, famously known as the line of the Love
Boat, and Cunard which built the world's biggest ocean liner at the
time, Queen Mary 2, even boasting a planetarium on board.
CENTERPOINTE HOTELS: Court OKs Cash Collateral Access Thru Jan 31
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized CenterPointe Hotels @ Texas II, LP and
debtor-affiliates to use cash collateral on an interim basis in
accordance with the budget, with a 15% variance, through January
31, 2023.
The Debtors are permitted to use cash collateral to pay the
expenses described in the budget, except that direct or indirect
compensation paid by the debtors to James O. Guillory will not
exceed $5000 and no management fees may be paid to Gibson Hotel
Management.
The Debtors have an immediate and critical need to use the cash
collateral to continue the Debtors' ordinary course business
operations and to maintain the value of the bankruptcy estates.
As adequate protection, the Debtors will maintain the value of
their business as a going-concern; (ii) comply at all times with
the Budget, subject to reasonable variances; (iii) make monthly
payments to the SBA at the contract rate on the EIDL Note; and (iv)
make interest only payments to the holder of the SBA 504 Financing
debt in the amount of $18,100 per month.
To the extent of any Diminution in Value, each Secured Lender, is
granted valid, automatically perfected and enforceable additional
adequate protection replacement subject to the Carve-Out and only
in collateral of the same type as such Secured Lender has a valid
prepetition lien.
Subject to the Carve-Out, and to the extent of any Diminution in
Value, the Secured Lenders are further granted an allowed
superpriority administrative expense claim, as provided and to the
full extent allowed by sections 503(b) and 507(b) of the Bankruptcy
Code, with priority over all administrative expense claims and
unsecured claims against the Debtor and its estate, now existing or
hereafter arising, of any kind or nature whatsoever.
The Carve-Out means (a) quarterly fees required to be paid pursuant
to 28 U.S.C. section 1930(a)(6) plus interest at the statutory rate
pursuant to 31 U.S.C. section 3717; and any fees payable to the
Clerk of the Bankruptcy Court; (b) actually incurred expenses
included in the Budget but unpaid as of the termination of the
Debtors' right to use cash collateral under the Interim Order; and
(c) the aggregate amount of any fees and expenses of any estate
professionals included in the Budget which are actually incurred,
but unpaid as of the termination of the Debtors' right to use cash
collateral under the Interim Order, but only to the extent incurred
and unpaid, such fees and expenses have been previously or
subsequently are approved by the Court and only to the extent such
incurred and unpaid fees and expenses exceed any retainer held by
any such Professional at the time of such termination.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3H2j50i from PacerMonitor.com.
The budget provides for total expenses, on a weekly basis, as
follows:
$56,090 for the week ending January 7, 2023;
$20,634 for the week ending January 14, 2023;
$56,090 for the week ending January 21, 2023; and
$68,116 for the week ending January 28, 2023.
About CenterPointe Hotels @ Texas II, LP
CenterPointe Hotels @ Texas II, LP is primarily engaged in renting
and leasing real estate properties.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-30023) on January 2,
2023. In the petition signed by James O. Guillory Jr., president,
the Debtor disclosed up to $50 million in assets and up to $10
million in liabilities.
Judge Jeffrey P. Norman oversees the case.
David L. Curry, Jr., Esq., at Okin Adams Bartlett Curry LLP,
represents the Debtor as counsel.
CENTRAL FLORIDA POLE: Seeks to Tap Buddy D. Ford as Legal Counsel
-----------------------------------------------------------------
Central Florida Pole Barns, Inc. seeks approval from the U.S.
Bankruptcy Court for the Middle District of Florida to employ the
law firm of Buddy D. Ford, PA as its bankruptcy counsel.
The firm will render these legal services:
(a) advise the Debtor regarding its powers and duties in the
continued operation of the business and management of the estate's
property;
(b) prepare and file schedules of assets and liabilities,
statement of affairs, and other documents required by the court;
(c) represent the Debtor at the Section 341 creditors'
meeting;
(d) advise the Debtor with respect to its responsibilities in
complying with the United States Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
(e) prepare legal papers;
(f) protect the interest of the Debtor in all matters pending
before the court;
(g) represent the Debtor in negotiation with its creditors in
the preparation of a Chapter 11 plan; and
(h) perform all other necessary legal services for the
Debtor.
The hourly rates of the firm's counsel and staff are as follows:
Buddy D. Ford, Esq. $450
Senior Associate Attorneys $400
Junior Associate Attorneys $350
Senior Paralegal Services $150
Junior Paralegal Services $100
In addition, the firm will seek reimbursement for expenses
incurred.
Prior to the commencement of its Chapter 11 case, the Debtor paid
the firm an advance fee of $7,000.
Buddy Ford, Esq., disclosed in a court filing that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Buddy D. Ford, Esq.
Jonathan A. Semach, Esq.
Heather M. Reel, Esq.
Buddy D. Ford, PA
9301 West Hillsborough Avenue
Tampa, FL 33615-3008
Telephone: (813) 877-4669
Email: Buddy@tampaesq.com
Jonathan@tampaesq.com
Heather@tampaesq.com
About Central Florida Pole Barns
Central Florida Pole Barns, Inc. sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-04970) on
Dec. 16, 2022, with as much as $1 million in both assets and
liabilities. Glenn T. Staub, president of Central Florida Pole
Barns, signed the petition.
Buddy D. Ford, PA serves as the Debtor's counsel.
CITY BREWING: S&P Downgrades ICR to 'CCC', Outlook Negative
-----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on City Brewing
Co. LLC to 'CCC' from 'B-'. S&P concurrently lowered its
issue-level rating on the company's $850 million senior secured
term loan B to 'CCC' from 'B-'.
The negative outlook reflects the heightened risk that the company
could default or pursue a debt restructuring in the next 12
months.
The downgrade reflects much weaker-than-expected operating
performance and S&P's view that liquidity could come under pressure
in the coming quarters, increasing the risk of a default.
S&P said, "City Brewing's third quarter results were well below our
previous expectations, as it has remained pressured by both
softening demand and supply chain difficulties. As a result of
further weakening profitability and cash flow, we believe it could
face a near-term liquidity constraint. The company's $122 million
revolving credit facility is subject to springing maximum
first-lien leverage covenant of 7.15x that triggers when borrowings
exceed 30% of aggregate revolving commitments (or $36.6 million).
As of Sept. 30, 2022, there was $36 million drawn under the
revolver and the leverage was very close to the maximum threshold,
leaving the company with very little borrowing capacity without
potentially triggering and violating the covenant. The company
alleviated liquidity pressures through a $75 million sale leaseback
in October, the proceeds of which it used to pay down the revolver.
This followed a $58 million sale leaseback transaction in the
spring, in addition to other lease financing activity during 2022,
to support its growth capex needs. Because of its still weak
profits in 2022, we believe the company would likely not be in
compliance with the springing leverage covenant (if triggered)
until the second half of the year, as it may take time to realize
the benefits from the ramp up of its Irwindale, Calif. facility."
In addition, rising labor costs, higher interest rates (the term
loan is not hedged) and still high capex will likely continue to
significantly pressure free operating cash flow (FOCF). As such,
S&P expects the company will require incremental revolver
borrowings, likely weighted to the first half of the year. Absent
alternative sources of financing for its growth capex, the company
may face a liquidity crisis if profitability and cash flow do not
improve, as revolver borrowing capacity remains constrained by the
covenant.
Operating performance has suffered on many fronts resulting in
unsustainably high leverage.
S&P said, "The company's poor performance has been driven by both
demand and supply challenges. Already softening demand in the hard
seltzer category was even weaker than we expected in the third
quarter and we expect continued softness in the fourth quarter.
Exacerbating this issue, one of the company's key customers also
lost market share in the category, while another has been taking
some production in house. Capacity utilization rates also remain
poor because of lingering labor challenges and supply chain
disruptions. These difficulties, combined with high conversion
costs (labor, energy, utilities, etc.) that the company could not
pass onto its customers during 2022 led to significant margin
deterioration. The company is also still behind schedule onboarding
new customers at its Irwindale, Calif. production facility after
supply chain disruptions delayed the delivery of new production
equipment. Some of these customers resumed their existing
outsourcing arrangements until the beginning of 2023. As a result
of these factors, revenue and profits declined more than we
expected, resulting in S&P Global Ratings' adjusted leverage in the
mid-teens as of Sept. 30, 2022. We expect a similarly weak fourth
quarter will cause leverage to remain around or above that level at
Dec. 31, 2022."
Manufacturing volumes and margins could improve materially over the
course of 2023 but may not be sufficient to address near-term
liquidity pressures.
S&P said, "We believe operating performance will improve in 2023 as
new customers at Irwindale are onboarded and fees under most
customer contracts reset to account for the higher conversion costs
the company incurred in 2022. We expect the onboarding of new
customers in the beer, premium non-alcoholic beverages, and
ready-to-drink spirits categories will continue to diversify the
company's customer mix, which we view as a credit positive. We also
assume labor and supply chain pressures will gradually abate, and
that the hard seltzer category will eventually stabilize, though
these headwinds could be prolonged for longer than we expect, and
weakening macroeconomic conditions add further risk to our forecast
for 2023. Regardless, with Irwindale still in early ramp up stages,
and some other production facilities continuing to operate below
optimal capacity utilization rates, we expect FOCF to be negative
once again in 2023, leverage to remain unsustainable, and near-term
liquidity to be pressured."
The negative outlook reflects the heightened risk that City Brewing
could default over the next 12 months.
S&P could lower the ratings if it views a default or restructuring
over the next six months as inevitable. This could occur if the
company either:
-- Fails to materially turnaround operating performance as it
ramps up its Irwindale facility, onboards new business, and passes
on conversion costs through contract resets;
-- Triggers and breaches its springing leverage covenant because
of high cash burn and revolver borrowing needs;
-- Cannot meet its debt service requirements; or
-- Pursues a debt restructuring.
S&P could take a positive rating action if City Brewing stabilizes
operating performance, EBITDA interest coverage increases well
above 1x, and we no longer view a default or restructuring over
next 12 months as likely. This could occur if the company:
-- Successfully staffs, trains, and retains talent, resulting in
improved throughput at its plants;
-- Completes the ramp up of its Irwindale facility and onboards
new customers without additional unforeseen costs; and
-- Prudently manages its capex and working capital to avoid the
need to seek additional non-operating sources of liquidity.
ESG credit indicators: E2, S2, G2
CITY LIVING KC: Unsecured Creditors to Get 100% Under Plan
----------------------------------------------------------
City Living KC, LLC, submitted a First Amended Plan of
Reorganization for Small Business Under Chapter 11 dated Jan. 3,
2023.
The Debtor intends to rehabilitate and sell properties as necessary
to complete proposed plan payments. To the extent necessary,
Quashena Wallace will make additional capital contributions.
This Plan of Reorganization under chapter 11 of the Bankruptcy Code
proposes to pay creditors of City Living KC, LLC from ongoing
operations, sale of properties, capital contributions, and
refinance of debt.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 100 cents on the dollar.
Under the Plan, Class 8 Non-priority Unsecured Claims will be paid
in full over 60 months beginning April 1, 2023. There are
currently no unsecured claims. Class 8 is impaired.
A copy of the First Amended Plan of Reorganization dated Jan. 4,
2023, is available at https://bit.ly/3ifGi5F from
PacerMonitor.com.
About City Living KC
City Living KC, LLC, sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Mo. Case No. 22-41170) on Sept. 20,
2022. In the petition signed by Quashena Wallace, owner, the
Debtor disclosed up to $10 million in assets and up to $1 million
in liabilities.
Judge Brian T. Fenimore oversees the case.
Colin Gotham, Esq., at Evans & Mullinix, P.A., is the Debtor's
counsel.
CLEAN ENERGY: Bid to Use Cash Collateral Denied as Moot
-------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of Illinois,
Peoria Division, denied as moot the motion to use cash collateral
filed by Clean Energy Renewables, LLC.
As previously reported by the Troubled Company Reporter, the Debtor
sought authority to use cash collateral to remain a going concern
for the benefit of the bankruptcy estate.
According to records of the Debtor, these pre-petition creditors
lent funds to the Debtor through "Merchant Cash Advances," whereby
funds are lent based on a volume or percentage of anticipated
accounts receivable rather than assigning (or "factoring") specific
accounts receivable:
* Bizfund LLC,
* CFG Merchant Solutions, LLC,
* Everest Business Funding,
* Fox Capital Group,
* KTK Capital LLC,
* Secured Lender Solutions LLC, and
* The Avanza Group LLC
The Debtor asserted that the Specified Creditors do not hold valid
and perfected liens against cash collateral, as defined by section
363.
A copy of the order is available at https://bit.ly/3CK7alm from
PacerMonitor.com.
About Clean Energy Renewables, LLC
Clean Energy Renewables, LLC provides instrument tower installation
and maintenance services on a nationwide basis, with 26 employees
that travel to customer locations, from its headquarters location
in Moline, Illinois.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Court (Bankr. C.D. Ill. Case No. 22-80432) on July 18,
2022. In the petition signed by Matthew Cumberworth, Sr., the
Debtor disclosed up to $10 million in both assets and liabilities.
Judge Thomas L. Perkins oversees the case.
Sumner A. Bourne, Esq., at Rafool & Bourne, P.C. is the Debtor's
counsel.
COINBASE GLOBAL: S&P Lowers Long-Term ICR to 'BB-', Outlook Neg.
----------------------------------------------------------------
S&P Global Ratings lowered the long-term issuer credit rating and
senior unsecured debt ratings on Coinbase Global Inc. to 'BB-' from
'BB'. The outlook is negative.
S&P said, "The downgrade reflects our view that weakened trading
volumes in the aftermath of FTX's collapse will continue to
pressure Coinbase's profitability. Our 'BB-' issuer credit rating
on Coinbase incorporates our expectation of very weak profitability
and rising regulatory risks, balanced by a comfortable (although
potentially eroding) unrestricted cash cushion over gross debt and
low risk profile overall.
"We believe FTX's bankruptcy in November has severely hit the
crypto industry's perceived credibility, causing a lack of retail
engagement. As a result, trading volumes across exchanges,
including Coinbase, have declined sharply. We estimate that
Coinbase's trading volumes reached a low point in December 2022 and
have remained weak so far in January 2023. Coinbase's revenues
depend heavily on trading volumes, with transaction revenues
representing approximately 80% of total revenues in the first nine
months of 2022. Three-quarters of total revenue is from retail
transaction revenue.
"To counteract headwinds from weakened trading volumes, the company
recently announced it was reducing its workforce by approximately
950 employees to lower certain operating expenses by 25% in the
first quarter of 2023, compared with the fourth quarter of 2022.
With the increase in the federal funds rate to 4.25%-4.5% from zero
before March 2022, and additional rate increases expected in the
coming months, we expect a sizable uptick in interest income in the
fourth quarter of 2022 and full-year 2023. The company earns
interest income and corporate interest and other income on
customers' fiat balances ($6.6 billion as of Sept. 30), its own
corporate cash ($5 billion), and from a revenue-sharing agreement
with Circle, the issuer of USDC stablecoin. As part of its
agreement with Circle, Coinbase generates income based on the USDC
held on its platform and on the amount of USDC minted by Coinbase
into the ecosystem (which may or may not be held on its platform).
With approximately $44 billion in market capitalization for USDC,
USDC's position as a prominent stablecoin provides Coinbase with
sizable and growing interest income since rising rates boost
revenues on the short-term U.S. Treasuries that back the USDC on a
one-to-one basis. Nevertheless, we believe that in the absence of a
meaningful uptick in retail engagement, the cost cuts, as well as
the tailwinds from rising interest rates, will only partially
offset the downdraft in revenues.
"Our rating analysis of Coinbase previously acknowledged the higher
cyclical variations--peak-to-trough changes in revenue, EBITDA, and
EBITDA margin--compared with traditional exchanges that operate in
asset classes exhibiting lower volatility. These cyclical
variations are reflected in our assessment of the company's
business risk, which is weaker than that of most rated traditional
exchanges. However, we now believe these cyclical variations exceed
what we had previously anticipated, resulting in weaker
profitability and credit metrics. We therefore revised our
assessment of Coinbase's financial risk by applying an additional
volatility adjustment.
"Absent a recovery in trading volumes, we expect Coinbase's
profitability to remain pressured in 2023. Assuming trading volumes
remain at the low level observed in December 2022 and January 2023
so far, we project the company could post very small positive S&P
Global adjusted EBITDA in 2023, following the company's guidance of
a negative $500 million in 2022, after adding back stock-based
compensation. Should trading volumes continue to slump from the
already low levels, we anticipate S&P Global adjusted EBITDA to
remain solidly in negative territory over the year.
"Regulatory risks remain elevated for Coinbase. We believe that the
collapse and alleged fraud at FTX, one of the leading crypto
exchanges, is likely to accelerate regulatory scrutiny and increase
the likelihood of tightened regulation that could affect the
business model negatively, at least in the short-term. The New York
Department of Financial Services (NYDFS) recently announced a
consent order regarding investigation into the company's 2018-2019
compliance program and the compliance backlogs related to its
growth in 2021. As part of the consent order, Coinbase is required
to pay a $50 million penalty and invest $50 million in compliance
programs over the next two years. The SEC is also investigating the
company's staking programs and the classification of certain listed
assets. We think tighter regulation could slow revenue growth in
the short term, for example, by forcing Coinbase to de-list some
products (if the SEC were to qualify them as "securities") or by
curtailing the growth of its staking programs. Staking activities,
where users earn rewards by using tokens as collateral to validate
transactions and create blocks, accounted for 8% of total revenue
in the first nine months of 2022, compared with 2% in the prior
year."
Coinbase continues to maintain a low credit risk profile. The
company has stated it does not lend out customers' crypto assets to
crypto firms without their consent. Despite a series of recent
bankruptcy filings by several crypto players (crypto lender
Celsius, hedge fund Three Arrows Capital, crypto broker Voyager
and, more recently FTX and BlockFi), Coinbase did not incur any
losses from its financing activities.
At the end of the third quarter, credit and counterparty risk
primarily stemmed from $117 million in loan receivables
(principally from retail borrow product), secured by bitcoin (with
conservative loan-to-values levels), and $168 million of cash
deposits at third-party venues (including crypto venues) to
facilitate client trades. The company reportedly had very small
exposure to FTX ($15 million), and it did not have any exposure to
FTT (FTX's proprietary token) or Alameda Research, the
market-making arm of FTX. We view Coinbase's credit risk exposures
(and vulnerability to more defaults in the sector) as lower than
peers in the crypto space.
S&P said, "We expect the pace of cash burn to decelerate in 2023.
The company burnt an outstanding $1.8 billion of USD resources
(includes cash, USDC, and custodial account overfunding) in the
first three quarters of 2022. Following the company's announcement
to reduce operating expenses and support from higher rates, we
expect lower cash burn this year compared with 2022. If trading
volumes were to stabilize or rebound, we believe the company could
start reconstituting cash reserves later this year. We estimate in
our base-case scenario that the company will continue to operate
with excess cash over the about $3.5 billion of S&P Global
Ratings-adjusted gross debt (with S&P Global Ratings adjusted
leverage of 0.0x) over our 12-month outlook. However, a further
decline in trading volumes from the already low December and
January levels could accelerate the pace of cash burn resulting in
unrestricted cash falling below S&P Global adjusted gross debt,
potentially weighing on our financial risk assessment."
The negative outlook indicates continued uncertainties about the
depth and duration of the crypto market downturn, insufficient
visibility around the path of trading volumes following the
collapse of FTX, and heightened regulatory risk.
S&P could lower the ratings by at least one notch over the next 12
months if:
-- Cash burn in the coming quarters materially exceeds our
base-case expectations, for example, because trading volumes remain
more depressed than we expect in response to materially worse
industry conditions;
-- Increased regulation proves disruptive for the company's
business model; or
-- The credit risk profile were to weaken vis-a-vis similarly
rated peers, contrary to our current expectations.
S&P could revise the outlook to stable if it was to see signs of a
sustained improvement in trading volumes on Coinbase's platform.
CREATION TECHNOLOGIES: Moody's Alters Outlook on B3 CFR to Stable
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Creation
Technologies Inc., including the B3 Corporate Family Rating, B3-PD
Probability of Default Rating, and B3 rating on the term loan due
2028. The outlook is stable.
The change in Creation's outlook to stable from positive reflects
Moody's expectation for continued elevated leverage of around 6x
and pressure on cash flow generation in the next 12 months. This
pressure is largely driven by continued supply chain disruptions
and component shortages, which are negatively impacting revenue and
earnings as well as elevating inventory levels with unfinished
goods. Although there are sporadic signs of easement in the supply
chain, the timing of significant improvement and subsequent cash
flow generation is uncertain over the next year.
The B3 CFR and stable outlook also acknowledge recessionary
pressures in 2023, with Moody's expecting that the US economy will
likely contract in a couple of quarters this year, with interest
rates remaining elevated until inflation is reliably under control.
The credit profile benefits from signs of operational improvement,
with sequential margin expansion in the past few quarters driven by
cost management and a slowdown in working capital cash outflow.
Moody's acknowledges the continued share of wallet wins, new
customers, and continued demand for Creation's offerings with a
good backlog secured by purchase orders. Creation's $130 million
ABL and ability to leverage vendors and customers to support
working capital needs further support the affirmation.
Affirmations:
Issuer: Creation Technologies Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured 1st Lien Term Loan, Affirmed B3 (LGD4)
Outlook Actions:
Issuer: Creation Technologies Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
The B3 CFR reflects the company's high financial leverage, moderate
customer concentration with the top 10 customers accounting for
around a third of pro forma revenue, and niche business focus on
the tech enabled industrial, medical and aerospace and defense
(A&D) end markets. The rating is constrained by ongoing supply
chain disruptions and component shortages and the uncertainty of
when these industry-wide challenges will subside. Moody's expects
the supply chain disruptions will continue to pressure Creation's
operating performance in 2023, but begin to alleviate during the
year.
Creation benefits from the specialty nature of its high-mix,
low-to-mid volume assembly services, which support EBITDA margins
that are well above its larger tier 1 peers and typical for tier 2
providers. The company also maintains long-term, strategic
relationships with core customers. Creation has demonstrated the
ability to leverage client relationships and receive cash advances
from customers to finance working capital needs, providing a
partial mitigant against current supply chain challenges.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Creation sustains organic revenue
growth, enhances its liquidity profile, and expands EBITDA such
that adjusted debt/EBITDA is expected to be sustained at around 5x
and free-cash-flow/debt at 5%, respectively.
The ratings could be downgraded if Creation's liquidity profile
diminishes, revenue decreases on an organic basis, debt/EBITDA
remains elevated, or if free-cash-flow/debt declines on a more than
temporary basis. The ratings could also be downgraded if the
company adopts more aggressive financial policies.
Creation's liquidity profile is adequate, pressured by working
capital stress stemming from ongoing supply chain disruptions and
one-time cash integration costs. The company maintains a $130
million asset-based revolving credit facility due 2026 (upsized
from $90 million). The company has $60 million drawn on this
facility as of September 2022. Moody's expects that Creation will
benefit from a large, reciprocal cash inflow once supply chain
pressures ease and inventory unwinds, which will support strong
free cash flow and allow for some revolver repayment. Creation will
need less than $3 million in growth capital expenditures in the
next 12-18 months. Moody's projects the Company will generate just
under $30 million of annual free-cash-flow in a normalized
operating environment.
ESG considerations have a highly negative impact (CIS-4) on
Creation Technologies' credit profile. This reflects the company's
aggressive financial strategy, and controlling private equity
ownership. Social risks are moderate reflecting the company's lack
of consumer exposure balanced by its reliance on highly skilled
personnel. Environmental risks are moderately negative reflecting
the company's position in the global technology supply chain.
Creation Technologies, an EMS provider, has moderately negative
environmental exposure (E-3). This reflects the company's use of
energy at operating sites and creation of waste resulting from
manufacturing processes. The company generally can pass costs to
its customers, including freight and environmental taxes.
Creation Technologies' social exposure is moderately negative
(S-3). This reflects the company's reliance on highly skilled
technical talent.
Creation Technologies' governance risk is highly negative (G-4).
This reflects the company's aggressive financial strategy and
controlled ownership by a financial sponsor. The company's
management team has been in place since the LBO and its reporting,
while not public, is comparable to similarly situated peers.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
Creation Technologies Inc., founded in 1991 and headquartered in
Boston, MA, is a specialty electronic manufacturing services
("EMS") provider, offering OEMs end-to-end services and advanced
design and manufacturing capabilities for high complexity,
low-to-medium volume electronic systems. The Company specializes in
product development and engineering, prototyping, lean
manufacturing, logistics and aftermarket services with a focus in
the Tech Industrial, Medical and Aerospace & Defense end markets.
Pro forma revenue for the twelve months ending September 2022 was
approximately $916 million.
DECORSTANDARD CORP: Case Summary & Three Unsecured Creditors
------------------------------------------------------------
Debtor: Decorstandard Corp
161 Woodbine Street, Unit D-1
Bergenfield, NJ 07621
Business Description: Decorstandard designs, manufactures and
distributes peel and stick home decoration
solutions.
Chapter 11 Petition Date: January 13, 2023
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 23-10321
Debtor's Counsel: David Stevens, Esq.
SCURA, WIGFIELD, HEYER, STEVENS & CAMMAROTA LLP
1599 Hamburg Turnpike
Wayne, NJ 07470
Tel: 201-490-4777
Email: dstevens@scura.com
Total Assets: $894,952
Total Liabilities: $1,653,933
The petition was signed by Soon Kim as president.
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/KHAFXAA/Decorstandard_Corp__njbke-23-10321__0001.0.pdf?mcid=tGE4TAMA
DISPENSER BEVERAGES: Files Emergency Bid to Use Cash Collateral
---------------------------------------------------------------
Dispenser Beverages, Inc. asks the U.S. Bankruptcy Court for the
Middle District of Florida, Tampa Division, for authority to use
cash collateral and provide adequate protection to BankUnited, N.A.
and, to the extent necessary, the U.S. Small Business Association
and Jim Lyons.
The Debtor requires the use of cash collateral to support normal
business operations.
As of the Petition Date, the Debtor listed in its Schedules
personal property with an aggregate value of approximately $2.355
million. For purposes of cash collateral, the Debtor listed in its
Schedules approximately $43,999 in cash and cash equivalents and
$135,629 in accounts receivable.
BankUnited may claim a first-priority lien on the Debtor's cash
collateral pursuant to a UCC Statement filed December 11, 2015,
which secures a loan that BankUnited asserts has a value of
approximately $466,051, as of the Petition Date. The SBA may claim
an inferior lien on the Debtor's cash collateral pursuant to a UCC
Statement filed on June 17, 2020, which secures indebtedness owed
by the Debtor to the SBA in the approximate amount of $150,000, as
of the Petition Date.
Lyons may also claim an inferior lien on the Debtor's cash
collateral pursuant to a UCC Statement filed June 18, 2021, which
secures indebtedness owed by the Debtor to Lyons in the approximate
amount of $1,494,299, as of the Petition Date.
As adequate protection for the use of the cash collateral, the
Debtor proposes to grant the Creditors replacement liens with the
same validity, extent, and priority as their respective prepetition
liens.
A copy of the motion and the Debtor's budget is available at
https://bit.ly/3CJS7Ic from PacerMonitor.com.
The budget provides for total operating expenses, on a weekly
basis, as follows:
$7,976 for Week 1;
$29,350 for Week 2;
$5,700 for Week 3;
$41,017 for Week 4;
$1,075 for Week 5;
$29,650 for Week 6;
$5,700 for Week 7;
$37,017 for Week 8;
$1,075 for Week 9;
$29,300 for Week 10;
$6,050 for Week 11; and
$39,718 for Week 12.
About Dispenser Beverages, Inc.
Dispenser Beverages, Inc. provides "one stop" beverage solutions
for those in the Education, Military, Healthcare, and Hospitality
industries. The Company's DispenServe service offers managed
service programs for the installation, repair and maintenance of
beverage dispensers.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-00088) on January 12,
2023. In the petition signed by Vincent Bacolini, director, the
Debtor disclosed up to $10 million in both assets and liabilities.
Christopher R. Thompson, Esq., at Burr & Forman LLP, is the
Debtor's legal counsel.
DIV005 LLC: Court OKs Interim Cash Collateral Access
----------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia,
Gainesville Division, authorized Div005, LLC to use cash collateral
on an interim basis in accordance with the budget through the date
of the continued hearing set for February 2, 2023 at 10:30 a.m.
The Debtor requires the use of cash collateral to pay its labor
force and its other operating expenses.
Truist Bank asserts an interest in the Debtor's cash collateral.
The Debtor is authorized to use cash collateral generated from its
business and otherwise: (a) in accordance with the budget, the line
items of which Debtor may modify by no more than 15% and Debtor may
carry over any unused budgeted amount; and (b) or for other matters
pursuant to orders entered by the Court after appropriate notice
and hearing, except further provided that the Debtor may pay the
actual amount owed or deposit required to any utility, taxing
authority, or insurance company.
As adequate protection, Truist Bank is granted a valid, attached,
choate, enforceable, perfected and continuing security interest in,
and liens upon all postpetition assets of the Debtor. Truist Bank's
security interest in, and liens upon, the Post-Petition Collateral
will have the same validity as existed between Truist Bank, the
Debtor and all other creditors or claimants against the Debtor's
estate on the Petition Date. The replacement lien and security
interest granted are automatically deemed perfected upon entry of
the Order without the necessity of Truist Bank taking possession,
filing financing statements, mortgages or other documents.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3WjZNIk from PacerMonitor.com.
The Debtor projects $1,035,810 in gross profit and $459,301 in
total expenses for 30 days.
About Div005, LLC
Div005, LLC is primarily engaged in manufacturing iron and steel
pipe and tube, drawing steel wire, and rolling steel shapes, from
purchased steel. The Debtor sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-21202) on
November 23, 2022. In the petition signed by Harold Lerner,
manager, the Debtor disclosed up to $50,000 in assets and up to $10
million in liabilities.
Judge James R. Sacca oversees the case.
Cameron M. McCord, Esq., at Jones & Walden, LLC, represents the
Debtor as counsel.
DUNWOODY LABS: Gets OK to Hire Morris Manning & Martin as Counsel
-----------------------------------------------------------------
Dunwoody Labs, Inc. and Gezim Agolli received approval from the
U.S. Bankruptcy Court for the Northern District of Georgia to
employ Morris, Manning & Martin, LLP as special litigation
counsel.
The firm will render these services:
(a) represent the Debtors in connection with disputes with
BlueCross BlueShield of Tennessee, Inc. (BCBS) and Liberty Wellness
Services, LLC;
(b) represent the Debtors in connections with disputes related
to the UnitedHealthcare proof of claim (POC);
(c) represent the Debtors in connection with any other
healthcare insurance disputes that may arise during the pendency of
their Chapter 11 cases;
(d) prepare legal papers and conduct examinations; and
(e) represent the Debtors at hearings and other proceedings in
connection with the bankruptcy cases.
The firm will be compensated for its services at hourly rates,
together with reimbursement of its actual and necessary expenses.
Robert Threlkeld, Esq., a partner at Morris, Manning & Martin,
disclosed in a court filing that his firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Robert C. Threlkeld, Esq.
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, GA 30326
Telephone: (404) 504-7757
Facsimile: (404) 365-9532
Email: rthrelkeld@mmmlaw.com
About Dunwoody Labs
Dunwoody Labs, Inc., doing business as Precision Point Diagnostics,
is a medical laboratory in Dunwood, Ga.
Dunwoody Labs and its chief executive officer, Gezim Agolli, filed
their voluntary petitions for relief under Chapter 11, Subchapter V
of the Bankruptcy Code (Bankr. N.D. Ga. Lead Case No. 22-53775) on
May 17, 2022. Dunwoody Labs listed up to $10 million in both assets
and liabilities at the time of the filing. Cameron M. McCord serves
as Subchapter V trustee.
The Hon. Jeffery W. Cavender is the case judge.
The Debtors tapped Paul Reece Marr, Esq., at Paul Reece Marr, PC as
bankruptcy counsel; MendenFreiman, LLP as special tax counsel; and
Morris, Manning & Martin, LLP as special litigation counsel.
DYNASTY ACQUISITION: Fitch Affirms B- LongTerm IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed Dynasty Acquisition Co. Inc.'s
(StandardAero [SA]) 'B-' Long-Term Issuer Default Rating (IDR).
Fitch has also affirmed the long-term ratings of the company's ABL
revolver at 'BB-'/'RR1', and first lien secured revolver and first
lien term loans at 'B+'/'RR2'. The Rating Outlook is Stable.
The rating and Outlook are supported by SA's strong market
position, diversification, expectation that FCF will return to
positive territory in 2023, and the high degree of regulation on
aircraft maintenance, which is likely to increase over time.
Revenue is also typically highly visible, which allows the company
to manage working capital effectively.
Concerns to the rating include the company's high leverage along
with the potential weakness and fragility of the cyclical aviation
industry's recovery from the pandemic. Airlines retiring older
aircraft, which typically require much greater maintenance, repair
and operation (MRO) services, is also a concern, though Fitch
incorporates steadily paced retirements into its forecasts.
KEY RATING DRIVERS
Deleveraging Toward 6.0x: Fitch forecasts SA's EBITDA leverage
(debt/EBITDA) will steadily decline toward the low 6.0x level by
year-end 2024 as air traffic continues the climb back to 2019
levels. The agency assigns a relatively high importance to the
company's financial structure given the relative fragility of the
aviation industry, although Fitch also believes this concern is
partially offset by the company's strategic profile, strong market
position, and capacity to reduce debt over the next few years given
its cash flow generation.
Risks to deleveraging include potential debt-funded acquisitions,
potentially terming out future ABL balances, failure to execute on
outstanding contracts, or extended periods of negative FCF.
Predictable Revenue: SA's ratings in the 'B' category are supported
by its predictable revenue during a normal operating environment
due to highly regulated aircraft and engine maintenance
requirements. While this visibility was temporarily disrupted
during the pandemic due to airlines taking a significant portion of
their fleets out of service and delaying external maintenance by
utilizing a greater proportion of spares, overall visibility on
customers' needs has improved materially since mid-2020.
Strong Market Position, Supported by Certifications: Fitch believes
SA's market position is strong and defensible. It is one of the
largest independent commercial aviation MRO companies in the world,
and has longstanding relationships with the largest aerospace
engine OEMs. Performing such work requires OEM authorizations and
regulatory certifications -- one for each engine program -- that
are expensive and take a significant amount of time for new
entrants to acquire.
Fitch believes the company's wide range of program certifications
and strong OEM relationships are major differentiators compared
with peers and creates a defensible barrier against competition.
Most of SA's contracts span more than 10 years and often last
through the life of an engine. When the contacts come up for
re-negotiation, SA has been able to retain all of its contracts due
to the company's consistent execution and longstanding customer
relationships.
Positive FCF Expected Beyond 2022: Fitch projects SA will generate
positive FCF over the next three to four years on average despite a
near-term drag from working capital fluctuations, which were
previously expected in the base case. As revenue and EBITDA
continues to recover in 2023 and 2024, these working capital flows
should level out and result in overall FCF around breakeven to
positive over the next few years.
Contract and Geographic Diversification: Fitch believes
diversification across programs, geography and end markets further
reduces the risks arising from a loss of any individual contract.
The company estimates it has a top three market share on more than
a dozen of the world's largest engine programs, including the CF34,
PW 100/150 and CFM56, which should continue to grow over the next
several years. Expansion into new programs as they become mature
would further improve the company's position.
Execution Risk: Fitch considers continued operational execution to
be a priority for SA. Fitch expects instances of poor execution
would likely diminish the company's currently strong reputation and
could result in customers switching to SA's competitors. Mitigating
this risk is the fact that SA does not have a history of material
contract cancellations over the past several years and has a very
experienced management team, which Fitch believes would be capable
of navigating potential challenges.
Customer Concentration Enhances Execution Risk: Fitch believes the
likelihood of significant customer loss is negligible in the near
term, though the potential future risk is amplified by the
company's degree of customer concentration, despite its diversified
portfolio of contracts and certifications. Fitch estimates around
40% of revenue is derived from the company's top four customers,
with Rolls Royce representing up to 25% of sales.
Supplemental Acquisitions: Fitch expects SA will continue to
supplement organic growth with incremental bolt-on acquisitions, in
line with its strategy over the past few years. Fitch believes the
company will be able to partially fund future purchases with
internally generated cash, but could incur additional debt for
larger transactions. Fitch believes the company could pursue
tactical transactions to acquire additional certifications or
improve diversification over time. The company has historically
drawn on its ABL facility to fund transactions, and the facility
could remain a funding source depending on the magnitude of the
transactions, though Fitch anticipates it would subsequently repay
those shorter-term borrowings.
Necessity of Future Authorizations: While the company has
historically maintained strong relationships with customers and
OEMs, Fitch recognizes the company must continue to win future
authorizations over the long term to maintain operations. Fitch
believes the OEMs benefit from SA absorbing much of the required
demand for MRO services on maturing engines so OEMs can focus their
resources on new development programs. However, the OEMs maintain a
certain degree of buying power over SA, and a change in the
relationship could hinder the company's ability to win future
authorizations as maturing engines exit the fleet.
DERIVATION SUMMARY
The rating and Stable Outlook are supported by the company's lesser
degree of cyclicality compared with OEs, and its stable and
predictable revenue stream, which Fitch considers strong for the
rating. The company's leverage and financial structure are
important factors to the rating, and have remained weak since
mid-2020. The company's leading market position was also a
consideration in deriving the rating, and is reinforced by the
company's portfolio of certifications and diversification. No
country ceiling, parent/subsidiary linkage or operating environment
factors were in effect for these ratings.
StandardAero is well positioned as the largest independent MRO
provider in the world, although competition exists from OEMs and
in-house airline MRO operations. The NORDAM Group LLC (CCC+) is
also a peer, though SA maintains a more diversified product
portfolio, stronger cash flow and a stronger market position.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer:
- Revenue continues to grow by double digits in 2023 as air traffic
and flight capacity improves;
- EBITDA margins impacted somewhat by inflation, but remain
relatively steady;
- Cash outflows from working capital continues in 2023 as the
company builds inventory back up to meet demand;
- Growth capex increases in 2022;
- Forecast debt repayment only includes scheduled amortization;
- Modest incremental acquisitions are possible, but not explicitly
assumed; small purchases around $30 million would be funded with
cash from balance sheet; larger transactions would require
incremental debt;
- No dividends are projected in Fitch's forecasts.
Recovery Assumptions:
The recovery analysis assumes that SA would be considered a
going-concern in bankruptcy and that the company would be
reorganized rather than liquidated. A 10% administrative claim is
assumed in the recovery analysis.
Fitch assumes $410 million as the going-concern EBITDA in the
analysis. The agency's assumption represents a reasonable
going-concern expectation upon emergence from a hypothetical
bankruptcy following severe distress similar to the effect of the
pandemic on the aviation industry. Fitch believes a GC EBITDA
greater than 2021 EBITDA is appropriate in this instance, due to
the highly cyclical nature of the industry, particularly following
one of the greatest aviation downturns in history as a result of
the coronavirus pandemic.
In Fitch's recovery analysis, the agency assumes the catalyst for a
restructuring would likely be liquidity/refinancing issues stemming
in part to temporary deterioration in the business that would
recover post-emergency. However, other scenarios could contribute
to the company's significant deterioration, including one or more
of: poor contract execution causes several periods of significant
cash outflows and a materially negative hit to the company's
reputation; or the company incurs significant cash costs resulting
from failure to integrate one or more acquisitions.
Fitch assumes SA will receive a going-concern recovery multiple of
6.5x EBITDA under this scenario. Fitch considers this multiple to
be toward the upper middle range of recovery multiples assigned to
companies in the Aerospace & Defense sector.
Fitch's recovery assumptions are based on SA's industry-leading
reputation, variable cost structure, solid and predictable backlog,
diversified contract and certification portfolio, strong market
position, and high industry barriers to entry. Each of these
factors would likely support the company's ability to recover from
severe distress in the case of bankruptcy, at a level greater than
2021 EBITDA. Fitch also considered the meaningful execution risk
and potential for cost overruns, though unlikely. Most of the
defaulters in the Aerospace & Defense sector observed by Fitch in
recent bankruptcy case studies were smaller in scale, had less
diversified product lines or customer bases and were operating with
highly leveraged capital structures.
Fitch generally assumes a fully drawn first lien revolver in its
recovery analyses since credit revolvers are tapped as companies
are under distress. Fitch assumed the company's $400 million ABL
revolver was 85% drawn, which demonstrates the contraction of the
borrowing base as a company becomes distressed. This is in line
with other examples observed in bankruptcy studies.
The 'BB-' rating and Recovery Rating of 'RR1' on the ABL revolver
are based on Fitch's recovery analysis under a going-concern
scenario, which indicates outstanding recovery prospects. The 'B+'
rating and Recovery Rating of 'RR2' on the company's first lien
term loan and senior secured revolver would indicate strong
recovery prospects for the credit facility.
RATING SENSITIVITIES
Factors That May, Individually or Collectively, Lead to Positive
Rating Action
- EBITDA leverage (total debt/EBITDA) around or below 6.0x for a
sustained period, coupled with a corresponding financial policy by
management to maintain these levels;
- Structural improvement in the aviation market contributes to
sustained positive FCF;
- EBITDA interest coverage ratio greater than 2.0x over a sustained
period.
Factors That May, Individually or Collectively, Lead to Negative
Rating Action
- Material contract cancellations caused by weakened reputation or
inability to secure certifications on future engine programs;
- Sustained negative FCF or weakened liquidity position, which
could include greater than 50% draw on its ABL facility;
- EBITDA interest coverage ratio less than 1.5x over a sustained
period.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Fitch believes that StandardAero's liquidity
will fluctuate between $500 million and $650 million over the
rating horizon, comprised of between $75 million and $150 million
in cash, as well as a combination of availability under its ABL
facility and revolving credit facility. Liquidity, along with
internally generated cash, should be sufficient to cover near-term
expenses such as working capital growth, debt amortization and
capex. The company's capital structure includes a senior secured
ABL facility, senior first lien revolver, senior first lien term
loan B and senior first lien incremental term loan. The company
also has private unsecured notes outstanding.
ISSUER PROFILE
StandardAero, Inc. is the world's largest independent provider of
maintenance, repair and overhaul (MRO) services for the commercial,
business jet and military aviation markets.
ESG CONSIDERATIONS
Dynasty Acquisition Co., Inc. has an ESG Relevance Score of '4' for
Financial Transparency due to the timing and disclosure of
financial statements, which could have a negative impact on the
credit profile, and is relevant to the ratings in conjunction with
other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Dynasty Acquisition
Co., Inc. LT IDR B- Affirmed B-
senior secured LT B+ Affirmed RR2 B+
senior secured LT BB- Affirmed RR1 BB-
EMPIRE COUNTERTOPS: Wins Cash Collateral Access on Final Basis
--------------------------------------------------------------
The U.S. Bankruptcy Code for the Eastern District of Texas, Sherman
Division, authorized Empire Countertops, LLC to use cash collateral
on a final basis in accordance with the budget.
As of the Petition Date, Origin Bank asserts the Debtor owes it
under a prepetition credit facility and that the Debtor's
obligations are evidenced by these loan documents:
1. The Assignment of Life Insurance Policy as Collateral
executed by the Debtor in favor of Origin, dated
July 19, 2022;
2. The Business Loan Agreement executed by the Debtor and
Origin, dated July 19, 2022;
3. The Note executed by the Debtor in favor of Origin, dated
July 19, 2022, in the original principal amount of $3.6
million;
4. The Notice of Final Agreement executed by the Debtor and
Origin, dated July 19, 2022;
5. The Commercial Security Agreement executed by the Debtor
in favor of Origin, dated July 19, 2022;
6. The Note executed by the Debtor in favor of Origin, dated
December 18, 2018, in the original principal amount of
$5 million;
7. The Note executed by the Debtor in favor of Origin, dated
December 18, 2019, in the original principal amount of
$5 million;
8. The Change in Terms Agreement executed by the Debtor and
Origin, dated December 18, 2020;
9. The Change in Terms Agreement executed by the Debtor and
Origin, dated March 30, 2022;
10. The Change in Terms Agreement executed by the Debtor and
Origin, dated May 31, 2022;
11. The Commercial Security Agreement executed by the Debtor
in favor of Origin, dated December 18, 2018;
12. The Commercial Security Agreement executed by the Debtor
in favor of Origin, dated December 18, 2019;
13. The Commercial Security Agreement executed by the Debtor
in favor of Origin, dated December 18, 2020;
14. The Commercial Security Agreement executed by the Debtor
in favor of Origin, dated March 30, 2022;
15. The Commercial Security Agreement executed by the Debtor
in favor of Origin, dated May 31, 2022;
16. The UCC Financing Statement, Filing Number 18-0044474375,
filed by Origin against the Debtor; and
17. The UCC Financing Statement, Filing Number 19-0001128042,
filed by Origin against the Debtor.
As of the Petition Date, Eagle Eye asserts the Debtor owes it under
a prepetition agreement and that the Debtor's obligations are
evidenced by a Standard Merchant Cash Advance Agreement dated March
24, 2022 and all riders executed in connection therewith.
As of the Petition Date, LCF asserts the Debtor owes it under a
prepetition agreement and that the Debtor's obligations are
evidenced by a Merchant Agreement dated April 8, 2022 and all
riders executed in connection therewith.
As of the Petition Date, the Prepetition Obligations are legal,
valid, binding, fully perfected, and non-avoidable obligations in
the estimated aggregate liquidated amount of not less than (i)
$3.649 million with respect to Origin, (ii) no less than $540,479
as of May 6, 2022 with respect to Eagle Eye; and (iii) $179,420
with respect to LCF, (b) the Prepetition Obligations and the
Prepetition Liens constitute legal, valid, binding, fully
perfected, and non-avoidable obligations of the Debtor.
As partial adequate protection and in the same priority and to the
same extent and validity as existed prepetition, the Secured
Parties are granted: (a) automatic perfected replacement liens on
all property now owned or hereafter acquired by the Debtor; and (b)
superpriority administrative claims pursuant to sections 361(2),
363(c)(2), 503(b)(1), 507(a)(2), and 507(b) of the Bankruptcy Code.
The Replacement Liens granted will not attach to any Chapter 5
causes of action under the Bankruptcy Code. The Replacement Liens
and the Superpriority Claims are granted solely to the extent that
the Debtor's use of cash collateral results in a diminution in
value of the Prepetition Collateral securing the Prepetition
Obligations and shall constitute legal, valid, binding, fully
perfected, and non-avoidable obligations of the Debtor.
The Debtor's right to use cash collateral will expire upon the
occurrence of a Termination Event that is not otherwise waived in
writing by the Secured Parties.
The Debtor will immediately cease using cash collateral after the
Cure Period upon the occurrence of any of these events:
a. May 31, 2023;
b. The Debtor violates any term of the Interim Order;
c. The entry of an order:
i) converting the Debtor's Bankruptcy Case to a case
under chapter 7 of the Bankruptcy Code;
ii) dismissing the Debtor's Bankruptcy Case;
iii) reversing, vacating, or otherwise amending,
supplementing, or modifying the Interim Order; or
iv) terminating or modifying the automatic stay for any
creditor other than the Secured Parties asserting a
lien in the Collateral.
As additional partial adequate protection for the use of the cash
collateral, the Debtor will make monthly payments to Origin of
$35,000. The first half of the first Origin Payment was due and
payable on or before December 27, 2022, in the amount of $17,500
and the second half of the first Origin Payment will be due on
January 12, 2023 and each subsequent Origin Payment of $35,000 will
be due and payable on the 20th day of every month thereafter. In
addition, the Debtor will make a one-time payment of $2,500 each to
both LCF and Eagle Eye on or before December 23, 2022 and will make
two weekly payments of $500 each, one to LCF and one to Eagle Eye,
which payments will be due and payable starting on December 30,
2022 and continuing every seven days thereafter.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3k6lP3H from PacerMonitor.com.
The Debtor projects $260,000 in revenue and $181,432 in total
expenses for one month.
About Empire Countertops, LLC
Empire Countertops, LLC fabricates and installs countertops from
many materials; such as granite, quartz, solid surface, onyx,
marble, and quartzite. Its fabrication facility is located in
Pilot Point Texas.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Tex. Case No. 22-41686) on December 5,
2022. In the petition signed by Curtis M. Mahoney, member/manager,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Brenda T. Rhoades oversees the case.
Clayton L. Everett, Esq., at Norred Law, PLLC, is the Debtor's
counsel.
ENDO INTL: Proposed Sale to Lenders Experiences Pushback
--------------------------------------------------------
Alex Wolf of Bloomberg News reports that bankrupt drug manufacturer
Endo International PLC's proposal to hand its business over to
senior lenders in a sale worth more than $6 billion amounts to an
unjust giveaway of assets that should be rejected, opioid victims
and other creditors said.
Endo's path to reorganization is bound to be litigious if it
continues pursuing a deal with first-lien lenders that swaps their
debt for equity. Officially appointed committees for unsecured
creditors and opioid claimants told the US Bankruptcy Court for the
Southern District of New York in court filings that the Chapter 11
sale process, as currently proposed, would unjustly harm.
About Endo International
Endo International plc is a generics and branded pharmaceutical
company. It develops, manufactures, and sells branded and generic
products to customers in a wide range of medical fields, including
endocrinology, orthopedics, urology, oncology, neurology, and other
specialty areas. On the Web: http://www.endo.com/
On August 16, 2022, Endo International and certain of its
subsidiaries initiated voluntary prearranged Chapter 11 proceedings
(Bankr. S.D.N.Y. Lead Case No. 22-22549). The cases are pending
before Judge James L. Garrity, Jr. The Debtors have put up a Web
site dedicated to its restructuring: http://www.endotomorrow.com/
The Debtors tapped Skadden, Arps, Slate, Meagher & Flom, LLP as
legal counsel; PJT Partners, LP as investment banker; and Alvarez &
Marsal North America, LLC as financial advisor. Kroll Restructuring
Administration, LLC is the claims agent and administrative
advisor.
Roger Frankel, the legal representative for future claimants in
these Chapter 11 cases, tapped Frankel Wyron LLP and Young Conaway
Stargatt & Taylor, LLP as legal counsels, and Ducera Partners, LLC
as investment banker.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors on Sept. 2, 2022. The committee tapped Kramer
Levin Naftalis & Frankel as legal counsel; Lazard Freres & Co. LLC
as investment banker; and Dundon Advisers, LLC and Berkeley
Research Group, LLC as financial advisors.
Meanwhile, the official committee representing the Debtors' opioid
claimants tapped Cooley, LLP as bankruptcy counsel; Akin Gump
Strauss Hauer & Feld, LLP as special counsel; Province, LLC as
financial advisor; and Jefferies, LLC as investment banker.
ENERPAC TOOL: Egan-Jones Retains BB+ Senior Unsecured Ratings
-------------------------------------------------------------
Egan-Jones Ratings Company, on December 27, 2022, maintained its
'BB+' local currency senior unsecured rating on debt issued by
Carnival Corporation.
Headquartered in Menomonee Falls, Wisconsin, Enerpac Tool Group
Corporation, formerly Actuant Corporation, is a diversified
industrial company serving customers in more than 30 countries.
ENTERCOM MEDIA: Calamos DCIF Marks $420,000 Loan at 23% Off
-----------------------------------------------------------
Calamos Dynamic Convertible and Income Fund has marked its $420,000
loan extended to Entercom Media Corp, to market at $325,401 or 77%
of the outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos DCIF's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos DCIF is a participant in a Bank Loan that accrues interest
at a rate of 6.132% per annum (1 mo. LIBOR + 2.50%) to Entercom
Media Corp. The loan is scheduled to mature on November 18, 2024.
Calamos Dynamic Convertible and Income Fund was organized as a
Delaware statutory trust on March 11, 2014 and is registered under
the Investment Company Act of 1940, as a diversified, closed-end
management investment company. The Fund commenced operations on
March 27, 2015.
Entercom Media Corp is in the broadcasting industry.
ENTERCOM MEDIA: Calamos GTR Marks $43,000 Loan at 23% Off
---------------------------------------------------------
Calamos Global Total Return Fund has marked its $43,000 loan
extended to Entercom Media Corp, to market at $33,351, or 77% of
the outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos GTR's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos GTR is a participant in a bank loan that accrues interest
at a rate of 6.132% per annum (1 mo. LIBOR + 2.50%) to Entercom
Media Corp. The loan is scheduled to mature on November 18, 2024.
Calamos Global Total Return was organized as a Delaware statutory
trust on March 30, 2004 and is registered under the Investment
Company Act of 1940 as a diversified, closed-end management
investment company. The Fund commenced operations on October 27,
2005.
Entercom Media Corp is in the broadcasting industry.
EXWORKS CAPITAL: Court Confirms Liquidating Plan
------------------------------------------------
The Court has entered an order approving and confirming the
Combined Disclosure Statement and Third Amended Chapter 11 Plan of
Liquidation of ExWorks Capital, LLC.
Any objections to Confirmation of the Combined Disclosure Statement
and Plan, or any reservations of rights thereto, to the extent not
withdrawn, waived, or resolved herein, are overruled and denied on
the merits.
Classes 2, 4, 5, 6 and 8 have voted to accept the Combined
Disclosure Statement and Plan. Classes 1 is not Impaired under the
Combined Disclosure Statement and Plan and is, therefore, deemed to
have accepted the Combined Disclosure Statement and Plan under
section 1126(f) of the Bankruptcy Code, thus satisfying section
1129(a)(8) of the Bankruptcy Code. Class 2 has voted to reject the
Combined Disclosure Statement and Plan. Class 7 did not vote to
either accept or reject the Combined Disclosure Statement and Plan.
Class 9 is Impaired by the Combined Disclosure Statement and Plan
and, therefore, is deemed to have rejected the Combined Disclosure
Statement and Plan pursuant to section 1126(g) of the Bankruptcy
Code. As found and determined below, pursuant to section 1129(b)(1)
of the Bankruptcy Code, the Combined Disclosure Statement and Plan
may be confirmed notwithstanding the fact that such Classes are
Impaired and are deemed to have rejected the Combined Disclosure
Statement and Plan.
Holders of Claims in Class 2 and Equity Interests in Class 9 have
rejected or are deemed to have rejected the Combined Disclosure
Statement and Plan. Based upon the evidence proffered, adduced, and
presented by the Debtor at the Confirmation Hearing, the Combined
Disclosure Statement and Plan does not discriminate unfairly and is
fair and equitable with respect to the aforementioned Class, as
required by sections 1129(b)(1) and (b)(2) of the Bankruptcy Code.
Thus, the Combined Disclosure Statement and Plan may be confirmed
notwithstanding the rejection or deemed rejection of the Combined
Disclosure Statement and Plan by the Holders of Claims in Class 2
or Equity Interests in Class 9.
About Exworks Capital
ExWorks Capital, LLC, a company engaged in financial investment
activities, filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. D. Del. Case No. 22-10213) on March 14,
2022, listing up to $500,000 million in assets and up to $10
million in liabilities. David M. Klauder serves as Subchapter V
trustee.
Judge Brendan Linehan Shannon oversees the case.
The Debtor tapped Baker & Hostetler, LLP as bankruptcy counsel, and
King & Spalding, LLP, as special counsel.
FAIRFIELD MEDICAL: Moody's Lowers Revenue Bond Rating to Ba3
------------------------------------------------------------
Moody's Investors Service has downgraded Fairfield Medical Center's
(OH) revenue bond rating to Ba3 from Ba2. The outlook has been
revised to negative from stable at the lower rating. The
organization has approximately $125 million of debt outstanding.
RATINGS RATIONALE
The downgrade to Ba3 reflects a meaningful decline in Fairfield
Medical Center's (FMC) operating performance through September
2022, which will be difficult to reverse. Despite operating
challenges, management currently expects to meet its financial
covenant requirements for fiscal 2022, but headroom will remain
limited through fiscal 2023, since operating margin improvement
will be challenged by continued industry-wide labor pressures,
exacerbated by FMC's underlying recruitment difficulties. Margins
will continue to be impaired by staffing shortages, which have
contributed to volume disruptions and have necessitated the use of
expensive agency staff and other premium labor. Already thin
liquidity metrics will remain pressured, although further declines
will be somewhat mitigated by minimal capital spending plans.
Furthermore, FMC will remain challenged as a relatively small
provider with high levels of debt relative to cash and an above
average dependence on government payors. Despite these challenges,
FMC will continue to benefit from its leading market position in
the Lancaster, Ohio area, as well as its conservative debt
structure with mostly fixed rate debt and no pension liability.
RATING OUTLOOK
The negative outlook reflects Moody's belief that FMC will face
heightened challenges in reversing trends given the severity of
industry-wide labor pressures. This will contribute to protracted
weakness in margins and cash metrics and, combined with the
system's high leverage and small size, will result in greater
uncertainty.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
-- Material and sustained improvement in operating performance,
which provides better headroom to financial covenants
-- Significantly improved liquidity
-- Material reduction in balance sheet and operating leverage
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
-- Inability to improve operating cash flow margins and/or further
decline in days cash beyond expectations
-- Further narrowing of headroom to financial covenants
-- Incremental leverage as measured by cash to debt or debt to
cash flow
LEGAL SECURITY
The bonds are secured by a gross revenue pledge of Fairfield
Medical Center (sole obligated group member) as well as a
lease-hold and sub-lease-hold mortgage pledge. The lease shall not
under any circumstances terminate so long as the Series 2013 Bonds
are outstanding. Additionally, there is a debt service reserve fund
in place.
PROFILE
FMC is a 220 bed general acute-care hospital in the City of
Lancaster, Ohio, located about 30 miles southeast of Columbus.
METHODOLOGY
The principal methodology used in this rating was Not-For-Profit
Healthcare published in December 2018.
FARMERS COOPERATIVE: Seeks Cash Collateral Access for Wind-Up
-------------------------------------------------------------
Farmers Cooperative Association #301 asks the U.S. Bankruptcy Court
for the Eastern District of Missouri, Eastern Division, for
authority to use cash collateral.
The Debtor requires limited use of cash collateral to protect and
secure the real estate and business equipment located at N. Church
Street; and fund the liquidation of the Real Estate, store
inventory and equipment. The Debtor does not anticipate operating
the store beyond March 15, 2023.
The Debtor's only secured creditor is First State Community Bank.
As of the Petition Date, the Debtor was indebted to the Lender
under these promissory notes:
a. Promissory Note dated February 1, 2016 in the principal
amount of $475,000 plus interest and other charges from Borrower
payable to First State Community Bank designated by Loan Number
33045795. The approximate outstanding balance of the Term Note is
$324,531; and
b. Promissory Note with an approximate outstanding balance of
$200,741 plus interest and other charges from Borrower payable to
First State Community Bank designated by Loan Number 33081389. The
LOC Note has matured.
The approximate total Pre-Petition Indebtedness on the Petition
Date was $524,495.
The Debtor asserts the Lender's interest in the cash collateral is
adequately protected. The business assets are well in excess of the
Pre-Petition Indebtedness.
Further, adequate protection will be provided to the Lender by (i)
granting a replacement lien in any proceeds and/or new assets
subject to the Lender's pre-petition lien; (ii) paying the contract
monthly payment of $2,881 on the Term Note beginning with the
January 2023 payment; (iii) paying the monthly accrued interest on
the LOC Note; and (iv) a monthly sweep of any excess cash over
$15,000 held by the Debtor.
To the extent of the diminution of value in the Pre-Petition
Collateral, the Secured Lenders will have a claim against the
Debtor that constitutes expenses of administration under sections
503(b)(1), 507(a) and 507(b) of the Bankruptcy Code with priority
over any and all administrative expenses of the kinds specified or
ordered pursuant to any provision of the Bankruptcy Code.
A hearing on the matter is set for January 24, 2023 at 2 p.m.
A copy of the motion and the Debtor's budget is available at
https://bit.ly/3H0AfeI from PacerMonitor.com.
The Debtor projects $50,000 in total deposits and $22,218 in total
expenses.
About Farmers Cooperative Association #301
Farmers Cooperative Association #301 is a local feed cooperative
that offers its customers full lines of feed, minerals, lime, and
fertilizers.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Mo. Case No. 22-43908) on December 16,
2022. In the petition signed by Bill Manion, president, the Debtor
disclosed up to $10 million in assets ad up to $1 million in
liabilities.
Judge Bonnie L. Clair oversees the case.
Spencer Desai, Esq., at the Desai Law Firm, is the Debtor's legal
counsel.
FLORENCE CATTLE: Seeks to Tap E.P. Bud Kirk as Bankruptcy Counsel
-----------------------------------------------------------------
Florence Cattle Group, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Texas to employ the law firm of
E.P. Bud Kirk as its bankruptcy counsel.
The firm will render these services:
(a) advise the Debtor regarding its power and duties in the
continued operation of its business and management of its
properties;
(b) review the various contracts entered by the Debtor;
(c) represent the Debtor in collection of its accounts
receivable, if needed;
(d) prepare all necessary legal papers;
(e) assist the Debtor in formulation and negotiation of a
Chapter 11 plan with its creditors;
(f) review all presently pending litigation in which the
Debtor is a participant;
(g) review the Debtor's pre-bankruptcy transactions;
(h) examine all tax claims filed against the Debtor; and
(i) perform all other legal services.
The hourly rates of the firm's counsel and staff are as follows:
E.P. Bud Kirk, Partner $300
Maura Casas, Paralegal $125
In addition, the firm will seek reimbursement for expenses
incurred.
The firm received a retainer of $7,500 from the Debtor.
E.P. Bud Kirk, Esq., disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
E.P. Bud Kirk, Esq.
600 Sunland Park Drive
Bldg. Four, Suite 400
El Paso, TX 79912
Telephone: (915) 584-3773
Facsimile: (915) 581-3452
Email: budkirk@aol.com
About Florence Cattle Group
Florence Cattle Group, LLC filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Texas Case No.
22-31081) on Dec. 16, 2022, with as much as $1 million in both
assets and liabilities.
Judge H. Christopher Mott oversees the case.
E.P. Bud Kirk, Esq. serves as the Debtor's counsel.
FORD MOTOR: Egan-Jones Retains B+ LC Senior Unsecured Rating
------------------------------------------------------------
Egan-Jones Ratings Company on December 28, 2022, maintained its
'B+' local currency senior unsecured rating on debt issued by Ford
Motor Company.
Ford Motor Company is an American multinational automobile
manufacturer headquartered in Dearborn, Michigan.
FREE SPEECH: Suspended Lead Atty Removed from Capitol Riot Case
---------------------------------------------------------------
Aaron Keller of Law360 reports that a lead attorney for Infowars
host Alex Jones will not represent an alleged member of the Proud
Boys in a seditious conspiracy case as the lawyer fights back
against a six-month suspension in Connecticut, a federal court
docket revealed Tuesday, January 10, 2023.
According to Reuters, Mr. Pattis was the defense lawyer for Joseph
Biggs, a co-defendant in the government's case charging members of
the far-right Proud Boys with seditious conspiracy -- or conspiring
to use force to overthrow or put down the U.S. government -- over
the siege of the Capitol building by supporters of former President
Donald Trump.
Reuters reported that in early January 2023, Judge Barbara Bellis
in Connecticut suspended Norman Pattis' law license in that state
for six months, after the personal medical information of families
of the Sandy Hook Elementary School mass shooting victims was
shared with opposing counsel last year in another defamation trial
in Texas.
A Connecticut jury in October directed Jones to pay nearly $1
billion in damages over his past claims the Sandy Hook mass
shooting was a hoax, and Judge Bellis later tacked on an additional
$473 million in punitive damages.
Mr. Pattis represented Jones in the Connecticut defamation case,
where that sensitive information was under a protective order.
Judge Bellis said Mr. Pattis improperly released the records to
lawyers defending Jones in Texas, where Mr. Jones lost a bid to
reduce a nearly $50 million defamation verdict.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones was 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: Sullivan & Cromwell Unfitting for Role, Say Senators
-----------------------------------------------------------------
Justin Wise of Bloomberg Law reports that FTX lead bankruptcy
counsel Sullivan & Cromwell is wrong for its role because the
firm’s prior work for the crypto exchange raises impartiality
concerns, four US senators said.
"The firm is simply not in a position to uncover the information
needed to ensure confidence in any investigation or findings," Sen.
John Hickenlooper (D-Col.) and three colleagues wrote.
They questioned whether Sullivan & Cromwell could effectively
investigate current and former partners who were central in FTX's
conduct. "Given their longstanding legal work for FTX, they may
well bear a measure of responsibility for the damage wrecked on the
company's victims," the senators said.
Sullivan & Cromwell has said in court filings that it earned about
$8.5 million in the 16 months before FTX's bankruptcy filing for
legal work primarily relating to transactions and regulatory
inquiries.
The firm did not immediately return a request for comment on the
senators' Monday, January 9, 2022, letter to Delaware bankruptcy
Judge John Dorsey, also signed by Thom Tillis (R-NC), Elizabeth
Warren (D-Mass.), and Cynthia Lummis (R-Wyo.).
Dorsey should support a U.S. Trustee's motion for an independent
examiner to review activities that led to FTX's collapse, the
senators said.
The senators' missive comes just days after an FTX creditor made a
similar push for the firm to be kicked off the matter due to
perceived conflicts relating to its past work.
Warren Winter, a creditor who allegedly lost hundreds of thousands
of dollars in FTX's collapse, argued in a January 4, 2023 motion
that Sullivan & Cromwell's conflicts were "obvious and extensive."
Punchbowl News first reported on the senators' letter.
FTX Ties
FTX and more than a hundred of its affiliates filed for bankruptcy
November 11, 2022 listing at least $10 billion in assets and
liabilities. Former FTX leader Sam Bankman-Fried is facing criminal
charges, including for allegedly misusing billions of dollars in
customer assets.
Sullivan & Cromwell has taken a lead advisory role in the
proceedings. Andrew Dietderich and James Bromley, heads of the
firm's restructuring pratice, have led a team including partners
Brian Glueckstein and Steven Peikin, a former Securities and
Exchange Commission director of enforcement.
Prior to being arrested on eight criminal charges, Bankman-Fried
planned to testify to Congress that the firm applied "extreme
pressure" to file for Chapter 11, according to a leaked transcript
of prepared comments.
Sullivan & Cromwell was behind restructuring expert John Ray, now
in charge at FTX, running the "Chapter 11 team," Bankman-Fried
planned to say, according to the transcript.
The firm, whose ex-partner Ryne Miller serves as general counsel of
FTX US, has acknowledged receiving a $12 million retainer from an
FTX-controlled company shortly before the bankruptcy filing,
according to court records.
The disclosure came in Sullivan & Cromwell's December 21, 2022
application for an order authorizing its role as FTX's bankruptcy
counsel moving forward. The request, signed by Dietderich, also
noted its prior outside legal work for FTX on a "limited number of
matters."
The firm's lawyers last year advised Alameda Research, the sister
trading firm of FTX, in bankruptcy proceedings involving crypto
brokerage Voyager Digital Ltd.
Sullivan & Cromwell also served as lead counsel for FTX US in its
successful bid in September 2022 for Voyager's assets, according to
a statement on the auction.
Dietderich said in the December 2022 court filing that the firm
qualifies under the US Bankruptcy Code as a "disinterested person,"
meaning it has no interest adverse to the estate or class of
creditors and other parties.
The senators said the firm made its disinterested person claim
"somewhat shockingly." There are "significant questions about the
firm's involvement," including whether Sullivan & Cromwell
suspected fraud at FTX, they said.
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 4:30 a.m. on Nov. 11, 2022, 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.
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.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as 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.
Morris, Nichols, Arsht & Tunnell LLP and Eversheld Sutherland (US)
LLP are representing the Ad Hoc Group of Non-U.S. Customers of
FTX.com.
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel.
FUELCELL ENERGY: Unit Extends Lease With 52nd Street Until 2028
---------------------------------------------------------------
Versa Power Systems Ltd., a wholly owned subsidiary of FuelCell
Energy, Inc., and 52nd Street Business Centre LP, by its General
Partner, 52nd Street Business Centre GP Inc. ("Landlord") entered
into a Lease Expansion, Extension and Amending Agreement to the
existing lease between the parties, which was originally entered
into on May 20, 2005, by the Landlord's predecessor in interest,
Westpen Properties Ltd., amended on April 20, 2006, renewed on Nov.
11, 2010, and extended and amended on Oct. 29, 2013, Nov. 9, 2016,
and Jan. 10, 2020 and which relates to the premises comprised of
approximately 32,000 square feet located at 4800 - 52nd Street SE,
Calgary, Alberta, Canada and currently used as an office, research
and development center and cell stack manufacturing facility for
the Company's solid oxide platform.
Versa and the Landlord entered into the 2023 Lease Amendment to
extend the term of the Lease through Sept. 30, 2028 and to expand
the space to be leased by Versa under the Lease to include an
additional space located at the same address and consisting of
approximately 48,000 square feet, for a total of approximately
80,000 square feet of space under the Lease. The Additional
Premises will be used to accelerate research and development
efforts, create additional manufacturing capacity for solid oxide
fuel cell stacks and establish a center of excellence for solid
oxide cell and stack research and manufacturing supporting hydrogen
generation, hydrogen power generation, long duration hydrogen
storage, and multi-fuel distributed power generation.
Under the Lease (as amended by the 2023 Lease Amendment), the term
of Lease with respect to the Original Premises has been extended
for a period of 5 years and 8 months, commencing on Feb. 1, 2023
and expiring on Sept. 30, 2028, and the term of the Lease with
respect to the Additional Premises is expected to commence on Oct.
1, 2023 and will expire on Sept. 30, 2028 (at the same time as the
term of the Lease with respect to the Original Premises). The
Lease does not include an option to further extend the term, so any
further extensions would require the mutual agreement of the
parties and further amendment of the Lease. Although the parties
have mutually agreed to extend the term of the Lease on several
occasions, there can be no assurance that future extensions will be
granted by the Landlord or that the parties will be able to
successfully negotiate further amendments to the Lease.
As of Jan. 5, 2023, the Additional Premises was occupied by a third
party pursuant to a lease that expires on March 31, 2023. The
Landlord has agreed to use commercially reasonable efforts to
obtain vacant possession of the Additional Premises on March 31,
2023. However, under the terms of the Lease, the Landlord will not
be responsible for any liabilities, losses, costs, damages or
expenses whatsoever resulting from a delay of the delivery of
vacant possession of the Additional Premises or delay of the
commencement date of the lease of the Additional Premises (which is
initially expected to be Oct. 1, 2023) and any such delay would not
extend the Lease term beyond Sept. 30, 2028.
Under the terms of the Lease (as amended by the 2023 Lease
Amendment), beginning on Feb. 1, 2023, Versa is obligated to pay
annual base rent for the Original Premises of approximately
C$260,000 per year and, beginning on Oct. 1, 2023, Versa is
obligated to pay an annual base rent for the Additional Premises of
approximately C$386,000. The base rent for both the Original
Premises and the Additional Premises will increase annually on
October 1st by approximately three percent of the then-current base
rent. Versa will also be responsible for its proportional share of
operating expenses, real estate taxes and other charges provided
for in the Lease.
The Lease contains customary default provisions allowing the
Landlord to terminate the Lease if Versa fails to remedy a breach
of any of its obligations under the Lease, or upon bankruptcy or
insolvency of Versa.
About FuelCell Energy
Headquartered in Danbury, Connecticut, FuelCell Energy, Inc. --
http://www.fuelcellenergy.com-- is a global developer of
distributed baseload power solutions through its proprietary fuel
cell technology. The Company's current commercial technology
produces electricity, heat, hydrogen, and water while separating
carbon for utilization and/or sequestration.
FuelCell reported a net loss of $147.23 million for the year ended
Oct. 31, 2022, a net loss of $101.02 million for the year ended
Oct. 31, 2021, a net loss of $89.11 million for the year ended Oct.
31, 2020, a net loss of $77.57 million for the year ended Oct. 31,
2019, and a net loss of $47.33 million for the year ended Oct. 31,
2018.
GIRARDI & KESSE: Trustee Sues Erika, Former CFO Thomas Kamon
------------------------------------------------------------
Joyce E. Cutler of Bloomberg Law reports that the Girardi Keese law
firm's bankruptcy trustee filed a series of adversary proceedings
eeking to claw back millions of dollars funds paid to ex-firm
attorneys, its jailed former chief financial officer, and Thomas
Girardi's celebrity ex-wife, Erika Jayne, and others.
The defunct firm drained money from its accounts through various
means including fraudulent transfers and paying numerous American
Express charge cards for purchases that didn't benefit the firm,
trustee Elissa D. Miller said in the filings in the US Bankruptcy
Court for the Central District of California. Fourteen such
complaints were added to the court's docket on Monday, January 9,
2022.
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
GREELY LAND: Court OKs Deal on Cash Collateral Access Thru Jan 31
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado authorized
Greeley Land, LLC to use cash collateral on an interim basis in
accordance with its agreement with Pathfinder 501, LLC and
Pathfinder Crismon, LLC.
The Debtor is permitted to use cash collateral in accordance with
the budget, with a 15% variance.
The Court directed the Debtor to provide Pathfinder with a complete
accounting, on a monthly basis, of all revenue, expenditures, and
collections through the filing of the Debtor's Monthly Operating
Reports.
The Debtor's authorization to use cash collateral terminates on
January 31, 2023; provided, however, that the Budget may be
extended by agreement of the parties without further order of the
Court. If and to the extent so extended, the Debtor's use of cash
collateral may continue, governed by the terms of the Order and the
Budget, and the protections afforded to Pathfinder under the Order
will continue to apply.
Pathfinder is authorized to seek a claim if there is a failure of
adequate protection. To the extent necessary under applicable law,
Pathfinder will be deemed to have requested an administrative
expense claim in respect thereof.
A copy of the order is available at https://bit.ly/3X9NoaR from
PacerMonitor.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.
GULF FINANCE: S&P Affirms 'B-' ICR, Outlook Stable
--------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating (ICR) on
Gulf Finance LLC (Gulf). S&P Global Ratings also affirmed its 'B'
issue-level rating on the company's remaining $445 million term
loan B (TLB). The '2' recovery rating indicates its expectation of
substantial (70%-90%; rounded estimate: 80%) recovery in the event
of a payment default.
The stable outlook reflects S&P's expectation of adjusted debt to
EBITDA of 10.6x in 2022, decreasing to 5.0x-6.0x in 2023 and 2024
as the company reduces total leverage by paying down debt.
Gulf intends to sell five terminals to Global Partners L.P. and
will use the net proceeds to pay down its TLB and asset-based
lending (ABL) facility.
Asset sales will lead to materially improved leverage, with
proceeds going to toward debt repayment.
S&P said, "We expect that leverage will decline to 5.5-6.0x in 2023
and 5.0-5.5x in 2024, from 10.6x in 2022, as Gulf uses proceeds
from the terminal sales to pay down the TLB and ABL facility. We
expect Gulf will pay down $260.7 million of the TLB and about $79
million of the ABL, with the ABL paydown dependent on market prices
of working capital at transaction close. In addition, as inventory
is reduced due to the sale, about $17.7 million in letters of
credit outstanding will be returned to Gulf.
"We expect EBITDA to increase from 2022 levels due to lower carried
inventory costs associated with the terminals.
"We expect EBITDA will increase on a net basis as carried inventory
costs at the terminal assets being sold were resulting in a loss of
EBITDA. The carried inventory costs were due to hedging losses
arising from basis differentials, occurring in a backwardated
market. Gulf had intentionally limited its wholesale volumes and
terminal throughput volumes to reduce these losses in 2022. Those
lower volumes also negatively affected results in 2022, which
resulted in lower-than-expected EBITDA. However, with this
transaction, we expect EBITDA will improve from our estimated 2022
level due to lower hedging losses. We expect leverage will decline
during the forecast period as a result of reduced debt and
improving EBITDA."
The asset sales will limit Gulf's scale and diversity.
Gulf expects to sell five of its 16 terminals, with the remaining
terminals solely in Pennsylvania, which will further reduce the
company's limited scale and diversity in terms of asset type and
geography. S&P notes that Gulf does have numerous wholesale
customers across central and eastern U.S. To continue to serve
wholesale customers, Gulf will enter a multi-year supply contract
with Global Partners L.P.
The stable outlook reflects Gulf's improved leverage, its
sustainable capital structure, and our expectation that covenants
will not be breached. S&P now expects debt to EBITDA of 5.0x-6.0x
in 2023 and 2024 once the transaction closes.
S&P said, "We could take a negative rating action on Gulf if we
viewed the capital structure as unsustainable resulting from
leverage remaining above 8x over the long term or if it cannot
maintain compliance with its 1.1x debt service coverage ratio
covenant test. In addition, if liquidity becomes constrained, we
could take a negative rating action.
"Although unlikely in the near term, we could take a positive
rating action if EBITDA generation improved materially, such that
we expect leverage to remain below 5.0x on a sustained basis."
ESG credit indicators: E-3, S-2, G-3
S&P said, "Environmental factors are a moderately negative
consideration in our credit rating of Gulf reflecting the
above-average transition risk for the midstream industry. As a
refined product storage terminaling company, Gulf faces potential
declining volumes associated with the energy transition over the
longer term. However, Gulf may demonstrate resiliency due to
renewable fuels. Governance factors are a moderately negative
consideration, as is the case for most rated entities owned by
private-equity sponsors. We view financial sponsor-owned companies
with highly leveraged financial risk profiles as demonstrating
corporate decision-making that prioritizes the interests of the
controlling owners, typically with finite holding periods and a
focus on maximizing shareholder returns."
HANOVER COLLEGE: Moody's Cuts Issuer Rating to Ba1, Outlook Neg.
----------------------------------------------------------------
Moody's Investors Service has downgraded Hanover College's (IN)
issuer and revenue bond ratings to Ba1 from Baa3. This action
affects approximately $19.2 million of outstanding debt from the
college's Series 2013 and Series 2019 revenue bonds. The bonds were
issued through the Indiana Finance Authority. The Series 2013
revenue bonds have an expected final maturity in 2043 and the
Series 2019 bonds have an expected final maturity in 2049. The
outlook has been revised to negative from stable.
RATINGS RATIONALE
The downgrade of Hanover College's issuer rating to Ba1 from Baa3
is driven by its continued fiscal imbalance, with budget deficits
forecast for at least the next two fiscal years, following an
already extended period of weak operating results. Deficits will be
driven by a combination of ongoing student market difficulties and
strategic investments in new health science programs as the college
seeks to reorient its programs. As the college makes these
investments, it will continue elevated endowment draws to cover
operating deficits, which will further reduce liquidity and limit
financial flexibility. The ultimate ability of the college to
strengthen its brand and strategic position in a highly competitive
environment is speculative. A small scale additionally limits
optionality around cost reductions without further impairing its
competitive profile. Social and governance considerations are key
drivers of this rating action, including weak regional demographics
and shifting student preferences contributing to declining
undergraduate enrollment in Hanover's traditional liberal arts
degree programs. Additionally, financial strategy and risk
management carry additional risk with planned use of liquidity,
limited recent capital investment, and a relatively high proportion
of illiquid and potentially volatile investment strategies in the
endowment portfolio.
Hanover College's Ba1 issuer rating incorporates its still good
wealth, with total cash and investments of $156 million in fiscal
2022 providing some cushion as it works to address its structural
financial imbalance. Early results from strategic programmatic
investments provide some prospects for gradual improvement of its
market position. While Hanover's debt burden remains low, with
total adjusted debt at $24 million in fiscal 2022, shrinking annual
debt service coverage to below 0.69x exemplifies its strained
financial position.
The college's Ba1 revenue bond rating is based on the issuer rating
and the unsecured general obligation to pay debt service.
RATING OUTLOOK
The negative outlook reflects Hanover College's ongoing student
market difficulties and challenging regional demographics. It also
incorporates the difficulties in executing a strategy of investing
in new graduate programs while restoring structurally balanced
operations and maintaining liquidity. The outlook further reflects
the unknown all-in cost of accreditation and alumni support needed
for strategic initiatives.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Sustained improvement in annual operating performance driven by
net tuition revenue growth and expense reductions
-- Healthier liquidity which will provide stronger coverage of
debt and continued investments in strategic programs
-- Material growth in total wealth and financial reserves
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Further reduction in unrestricted liquidity and declining debt
service coverage
-- Inability to make substantial progress towards achieving
balanced operations in fiscal 2023 and beyond
-- Declining enrollment for the fall 2023 semester and delays in
the implementation of new graduate health programs
-- Issues or delays with achieving accreditation for new and
existing graduate health programs
-- Material additional debt issuance and increased financial
leverage
LEGAL SECURITY
Rated bonds are unconditional general obligations of the college
with a secured interest in general revenue.
PROFILE
Hanover College, a small liberal arts college located in Hanover,
IN, is the oldest private college in the state of Indiana. Hanover
generated operating revenue of $43 million in fiscal 2022 and
enrolled 1,121 full-time equivalent (FTE) students as of fall
2022.
METHODOLOGY
The principal methodology used in these ratings was Higher
Education Methodology published in August 2021.
HIDALGO COUNTY EMS: Businessman Pays Back $90K in Chapter 11 Case
-----------------------------------------------------------------
Dave Hendricks of Progress Times reports that a businessman who
received more than $500,000 from Hidalgo County EMS before the
company declared bankruptcy agreed to pay back $90,000 in December
but admitted no wrongdoing.
U.S. Bankruptcy Judge David R. Jones approved the settlement
agreement between McAllen businessman Jose Luis Trejo and trustee
Christopher Murray, who is handling the Hidalgo County EMS case, on
Dec. 19, 2022.
Trejo agreed to pay $90,000 and drop a $62,000 claim against
Hidalgo County EMS. In exchange, the trustee agreed to drop all
claims against Trejo.
After filing for Chapter 11 in 2019, Hidalgo County EMS shut down
in May 2021.
About Hidalgo County EMS
Edinburg, Texas-based Hidalgo County Emergency Service Foundation
d/b/a South Texas Air Med and d/b/a Hidalgo County EMS --
https://www.hidalgocountyems.org -- is a provider of emergency
ambulatory services.
Hidalgo County Emergency Service Foundation filed for Chapter 11
bankruptcy (Bankr. S.D. Tex. Case No. 19-20497) on Oct. 8, 2019,
listing between $1 million to $10 million in both assets and
liabilities. The petition was signed by Kenneth B. Ponce, sole
managing member. The Hon. David R. Jones presides over the case.
Lawyers at Jordan, Holzer & Ortiz, P.C., serve as counsel to the
Debtor.
On Sept. 29, 2020, the Court appointed of Richard S. Schmidt as the
Debtor's CRO.
HIGHWAY 30: Seeks to Hire McMahon & Associates as Accountant
------------------------------------------------------------
Highway 30 Physical Therapy and Rehabilitation, LLC seeks approval
from the U.S. Bankruptcy Court for the Northern District of Indiana
to employ McMahon & Associates, Certified Public Accountants, PC as
accountant.
The Debtor requires an accountant to:
(a) prepare and file all annual and quarterly tax returns,
both federal and state;
(b) prepare financial reporting documents; and
(c) assist with monthly operating reports.
The hourly rates of the firm's professionals are as follows:
Partner $250
Staff Accountant $180
Payroll Clerk Processing $100
Karen McMahon, a partner at McMahon & Associates, disclosed in a
court filing that her firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Karen McMahon
McMahon & Associates Certified Public Accountants PC
10010 Calumet Avenue
Munster, IN 46321
Telephone: (219) 924-3450
Facsimile: (219) 924-1640
About Highway 30 Physical
Therapy and Rehabilitation
Highway 30 Physical Therapy and Rehabilitation LLC, doing business
as OSC Physical Therapy, LLC, filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ind.
Case No. 22-21920) on Dec. 31, 2022. In the petition filed by John
J. Pomponi, member, the Debtor disclosed up to $10 million in
assets and up to $500,000 in liabilities. Douglas R. Adelsperger
has been appointed as Subchapter V trustee.
The Debtor tapped Daniel L. Freeland & Associates, PC as legal
counsel and McMahon & Associates, Certified Public Accountants, PC
as accountant.
INFOVINE INC: Wins Cash Collateral Access Thru March 31
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Infovine, Inc. to use cash collateral
on a final basis in accordance with the budget.
The Debtor is permitted to use cash collateral for necessary
business expenses incurred in the ordinary course of business for
monthly expenses starting on January 24, 2023 to February 14, 2023.
Expenditures are allowed in the amounts listed if the debtor on a
monthly [calendar] basis has total cash revenue of $210,000 as
projected. Monthly amounts that are allowed as expenses are
proportionally reduced, however, if revenue does not meet the
projection of $210,000. The order expires on March 31, 2022, and
may be extended or modified by motion.
The Court said these entities will continue to have the same liens,
encumbrances and security interests in the cash collateral
generated or created post filing, plus all proceeds, products,
accounts, or profits thereof, as existed prior to the filing date:
Wells Fargo Equipment Finance, Inc.; Connext Financial LTD; Bank of
the West; PNC Equipment Finance, LLC; Hewlett-Packard Financial
Services Company; TCF Equipment Finance, a Division of TCF National
Bank; Liberty Capital Group, Inc.; Allegiance Bank; Frost Bank; CT
Corporation System, as Representative; U.S. Small Business
Administration; ENGS Commercial Finance CO.; Financial Pacific
Leasing, Inc.; Hitachi Capital America Corp.; LCA Bank Corporation;
Braun Enterprises; Financial Pacific Leasing; CT Corporation
System; TFC (Hanmi Bank); CIT Bank, N.A.; Arvest Bank; ARVEST
Equipment Finance; Frank E. Hood, Jr.; GFE.; Pawnee Leasing
Corporation; Corporation Service Company, as Representative; SBA
EIDL; Commercial Capital Company, LLC; Academy Bank, N.A.; Summit
Funding Group; Fundamental Capital, LLC; the Huntington National
Bank.
A copy of the order is available at https://bit.ly/3iEedVL from
PacerMonitor.com.
About InfoVine
Founded in 1999, InfoVine provides direct mail operations for both
for-profit and non-profit organizations.
InfoVine filed a petition for relief under Subchapter V of Chapter
11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-33393) on
Nov. 15, 2022. In the petition filed by Lorena Igesias, as
president and CEO, the Debtor reported assets and liabilities
between $1 million and $10 million each.
Judge Jeffrey P. Norman oversees the case.
Brendon D Singh has been appointed as Subchapter V trustee.
The Debtor is represented by Reese W Baker, Esq. at Baker &
Associates.
JO-ANN STORES: Moody's Cuts CFR to Caa2, Outlook Negative
---------------------------------------------------------
Moody's Investors Service downgraded Jo-Ann Stores LLC.'s corporate
family rating to Caa2 from B3, its probability of default rating to
Caa2-PD from B3-PD. And its senior secured first lien term loan B1
to Caa2 from B3. Its speculative grade liquidity rating (SGL) was
downgraded to SGL-4 from SGL-3. The outlook remains negative.
The downgrades reflects Moody's view that Jo-Ann's credit metrics
will remain weak despite expected improvement in freight and
product costs in 2023 as the consumer environment continues to be
uncertain. Jo-Ann's interest costs are also increasing with higher
rates. The downgrade also reflects governance considerations
including its controlling private equity ownership and aggressive
financial strategy. Although Jo-Ann's recently suspended its
payment of common dividends, it paid the dividend through much of
2022 which contributed to its liquidity deteriorating. Jo-Ann's
nearest debt maturity is not until 2026. However, with funded
debt/EBITDA at around 12.4x, Moody's views its capital structure as
unsustainable which increases the likelihood of a potential
distressed exchange.
Jo-Ann's speculative grade liquidity rating was downgraded to SGL-4
from SGL-3 as the company's weaker operating performance and
working capital needs are expected by Moody's to result in trough
availability of around $70 million during 2023 excluding usage to
invoke testing of its fixed charge coverage ratio. Jo-Ann will need
to reduce costs and capital expenditures, and generate cash from
its working capital to preserve liquidity as rising rates lead to
higher interest expense.
Jo-Ann's CIS score was lowered to CIS-5 from CIS-4 as a result of
its governance score being lowered to G-5 from G-4. The change in
its governance score to G-5 from G-4 is related to both its
financial strategy and risk management as well as its management
credibility and track record.
Downgrades:
Issuer: Jo-Ann Stores LLC.
Corporate Family Rating, Downgraded to Caa2 from B3
Probability of Default Rating, Downgraded to Caa2-PD from B3-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from
SGL-3
Senior Secured 1st Lien Term Loan B1, Downgraded to Caa2 (LGD4)
from B3 (LGD4)
Outlook Actions:
Issuer: Jo-Ann Stores LLC.
Outlook, Remains Negative
RATINGS RATIONALE
Jo-Ann's Caa2 corporate family rating reflects the high likelihood
of a distressed exchange given Jo-Ann's currently very high
leverage and financial sponsor ownership. Jo-Ann's operating
results have been hurt since the latter half of 2021 by supply
chain challenges as freight costs dramatically increased and higher
costs were incurred to secure product on a timely basis. Demand for
its products also remains vulnerable as consumers contend with
inflationary pressures and price increases are taken to offset
higher product and supply chain costs. Although these elevated
costs are expected to decline next year, funded debt/reported
EBITDA is expected by Moody's to be over 12x at the end of the
fiscal year. Governance risk is also a key rating constraint.
Despite being a public company, the company is majority owned by a
financial sponsor and completed a distressed exchange in 2020. The
company recently cut its common dividend payment of approximately
$18 million. The company's liquidity is weak as muted free cash
flow has left revolver borrowings elevated at approximately $409
million at the end Q3 2023. The company's interest expense has also
risen substantially and is expected by Moody's to approach $80
million in 2023.
The negative outlook reflects the risk that although EBITDA is
expected to improve as elevated freights costs and product costs
subside, it will remain well below historical levels. The outlook
also reflects the increased risk that liquidity will remain weak
and its unsustainable capital structure could be addressed through
a distressed exchange.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Rating could be upgraded to the extent top line growth consistently
grows, cost pressures prove transitory, and operating margins
revert toward pre-pandemic levels. Additionally, ratings could be
upgraded if the company has adequate liquidity and financial
strategies prioritize debt reduction. Quantitatively, an upgrade
would require EBIT/interest to be to approach 1.0x and debt/EBITDA
approaches 6.5x.
Ratings could be downgraded if liquidity deteriorates further for
any reason or if the probability of default, including a financial
restructuring increases or distressed exchange, increases for any
reason or expected recovery levels decline.
JOANN, Inc. (formerly Jo-Ann Stores Holdings Inc.) is the parent
company of Jo-Ann Stores LLC. and a leading retailer of fabrics and
craft supplies offering a wide range of products for quilting,
apparel, craft and home decor sewing. Jo-Ann operates 840 retail
stores in 49 states as of October 29, 2022. Revenue for the latest
twelve months ended October 29, 2022 was approximately $2.26
billion. JOANN, Inc. is a publicly traded company on the NASDAQ
under the symbol "JOAN" and is majority owned by affiliates of
Leonard Green & Partners, L.P. which owns in excess of 66% of its
equity.
The principal methodology used in these ratings was Retail
published in November 2021.
JOHN V. GALLY: Gets OK to Tap UR Home Realty as Real Estate Broker
------------------------------------------------------------------
The John V. Gally Family Protective Trust, Inc. received approval
from the U.S. Bankruptcy Court for the District of Arizona to
employ UR Home Realty, LLC as its real estate listing broker.
The Debtor requires a broker to sell its real property assets in
Winslow, Ariz.
UR Home will be paid a commission of 5 percent on the gross sale
price of the Debtor's properties.
Karen Chapman, a broker at UR Home Realty, disclosed in a court
filing that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Karen Chapman
UR Home Realty, LLC
4089 Canyon Loop
Flagstaff, AZ 86005
Telephone: (928) 699-9269
About The John V. Gally Family
Protective Trust Inc.
The John V. Gally Family Protective Trust Inc., a domestic business
trust in Ariz., filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz.
Case No. 22-05770) on Aug. 30, 2022. In the petition signed by
Caryn K. Mangisi, trustee, the Debtor disclosed between $1 million
and $10 million in both assets and liabilities. James E. Cross of
the Cross Law Firm, PLC is the Subchapter V trustee.
Judge Daniel P. Collins oversees the case.
The Debtor tapped Bradley David Pack, Esq., at Engelman Berger PC
as bankruptcy counsel; Hunter, Humphrey & Yavitz, PLC as litigation
and appellate counsel; and Stephens & Company, PLLC as accountant.
KANSAS CITY RVS: Seeks to Hire Evans & Mullinix as Legal Counsel
----------------------------------------------------------------
Kansas City RVs, LLC seeks approval from the U.S. Bankruptcy Court
for the Western District of Missouri to employ Evans & Mullinix, PA
to handle its Chapter 11 case.
The hourly rates of the firm's counsel and staff are as follows:
Colin N. Gotham $300
Paralegals $125
In addition, the firm will seek reimbursement for expenses
incurred.
The firm received a retainer in the amount of $9,262 plus the
filing fee of $1,738 from the Debtor.
Colin Gotham, Esq., a member of Evans & Mullinix, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Colin N. Gotham, Esq.
Evans & Mullinix, PA
7225 Renner Road, Suite 200
Shawnee, KS 66217
Telephone: (913) 962-8700
Facsimile: (913) 962-8701
Email: cgotham@emlawkc.com
About Kansas City RVs
Kansas City RVs, LLC, a recreational vehicle sales and services
company, sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. W.D. Mo. Case No. 23-40026) on Jan. 9, 2023, with
$256,500 in assets and $2,002,880 in liabilities. JE Cornwell,
president of Kansas City RVs, signed the petition.
Judge Cynthia A. Norton oversees the case.
Colin Gotham, Esq., at Evans & Mullinix, PA serves as the Debtor's
legal counsel.
KTS SOLUTIONS: Wins Cash Collateral Access Thru Jan 31
------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Virginia
authorized KTS Solutions, Inc. to use cash collateral on an interim
basis in accordance with the budget through January 31, 2023.
The Debtor is permitted to use cash collateral for ordinary course
purposes in accordance with the terms and conditions of the Interim
Order and the Debtor's budget, provided, however, that (a) Action
Capital Corporation is granted adequate protection and (b) except
on the terms of the Interim Order, the Debtor will be enjoined and
prohibited at any time from using the Alleged Prepetition
Collateral, including the cash collateral.
As previously reported by the Troubled Company Reporter, Action
Capital asserts a first priority lien secured claim against the
Debtor pursuant to a Factoring and Security Agreement dated July
11, 2011, as amended. Net of reserves, Action Capital asserts an
unpaid balance as of the Petition Date in the amount of not less
than $813,300.
Action Capital asserts a security interest in and lien upon, among
other things, a first priority lien on substantially all assets of
the Debtor.
The Debtor is directed to continue making payments to Action
Capital, or cause payments to be made to Action Capital, under the
Factoring and Security Agreement in the same manner payments were
made prior to the Petition Date.
To the extent the cash collateral is used by the Debtor and the use
results in a diminution of the value of the cash collateral, Action
Capital is entitled to a replacement lien in and to the Alleged
Prepetition Collateral to the same extent and with the same
priority as Action Capital's interest in the Alleged Prepetition
Collateral.
The liens and security interests granted will become and are duly
perfected without the necessity for the execution, filing or
recording of financing statements, security agreements and other
documents which might otherwise be required pursuant to applicable
non-bankruptcy law for the creation or perfection of such liens and
security interests.
A final hearing on the matter is set for January 31 at 11 a.m.
A copy of the order is available at https://bit.ly/3GvWAzk from
PacerMonitor.com.
About KTS Solutions, Inc.
KTS Solutions, Inc. is a Virginia corporation that provides
transportation services for disabled veterans, to and from medical
appointments, under a series of contracts with the United States
Department of Veterans Affairs.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Va. Case No. 22-11694) on December 9,
2022. In the petition signed by Kelvin Smith, chief executive
officer, the Debtor disclosed up to $10 million in both assets and
liabilities.
Judge Brian F. Kenney oversees the case.
Justin P. Fasano, Esq., at McNamee Hosea, P.A., is the Debtor's
legal counsel.
MAGNOLIA OFFICE: Johnny Blue Rejects Proposed Treatment in Plan
---------------------------------------------------------------
Creditor Johnny Blue Craig, P.A., objects to the First Amended
Disclosure Statement for Plan of Liquidation Magnolia Office
Investments, LLC Plan Proponent filed by the Debtor, Magnolia
Office Investments, LLC on Dec. 1, 2022.
Johnny Blue rejects the treatment of Johnny Blue's Claims in the
Amended Disclosure Statement in its entirety. As the Court is
aware, the Debtor failed to object to Johnny Blue's Claims by the
Court's given deadline. Accordingly, Johnny Blue's Claims are now
deemed allowed as filed.
Johnny Blue points out that the Debtor's attempt to provide Johnny
Blue stay relief to prosecute its rights in state court is an
inappropriate attempt to circumvent this Court's orders and
deadlines and should not be permitted. Johnny Blue does not
require, nor does it want, stay relief as it properly and timely
filed the Johnny Blue Claims which should be deemed allowed against
the Debtor.
Johnny Blue objects to the Plan on the basis that the Debtor has
asserted that the Creditor's secured claims (Claims 4-1 and 5-1,
totaling $265,468.88) are undersecured and that these claims will
be subject to objection and paid, to the extent allowed, as a part
of the general unsecured class.
Johnny Blue asserts that due to the Debtor's failure to timely
object to Johnny Blue's Claims, and the fact that Johnny Blue's
secured claims (Claim Nos. 4-1 and 5-1) are not undersecured, based
upon the Debtor's valuation of the Real Property as set forth in
the Plan Objection, the Creditor's secured claims are deemed
allowed as filed.
Johnny Blue complains that the Debtor's Amended Disclosure fails to
recognize Claim No. 6-1 as an unsecured claim under Class 7. To the
extent the Debtor failed to file an objection to Claim No. 6-1, it
should be deemed allowed and entitled to the same payment terms as
other creditors in Class 7.
According to Johnny Blue, paragraph 8(b) of the Amended Disclosure
Statement provides that "the Plan does not violate the Absolute
Priority Rule since all allowed creditors are being paid 100% plus
reasonable interest on their claims in accordance with 11 U.S.C.
section1129(b)(2)(A) and (b)." However, on the face of the Amended
Disclosure Statement this is inaccurate. The Amended Disclosure
Statement attempts to permit the Debtor's principle to retain his
equity in the Debtor while not paying senior creditors in full,
i.e. not paying Johnny Blue's Claims.
Counsel for the Creditor:
Brian G. Rich, Esq.
Michael J. Niles, Esq.
BERGER SINGERMAN LLP
313 North Monroe Street, Suite 301
Tallahassee, FL 32301
Tel: (850) 561-3010
Fax: (850) 561-3013
E-mail: brich@bergersingerman.com
mniles@bergersingerman.com
About Magnolia Office Investments
Magnolia Office Investments, LLC, is a single asset real estate (as
defined in 11 U.S.C. Sec. 101(51B)). It owns the commercial office
building located at 1211 Governors Square Blvd., Tallahassee, Fla.,
which is valued at $5.5 million.
Magnolia Office Investments sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-14044) on May 24,
2022. In the petition signed by Anand Patel, as managing member,
Magnolia Office Investments listed as much as $10 million in both
assets and liabilities.
The case is assigned to Judge Erik P. Kimball.
David L. Merrill, Esq., at The Associates, is the Debtor's legal
counsel.
MAYAN POOLS: Unsecureds' Recovery Lowered to 37% of Claims
----------------------------------------------------------
Mayan Pools & Sports Construction, LLC, submitted an Amended Plan
of Reorganization under Subchapter V dated January 10, 2023.
This Plan deals with all property of the Debtor and provides for
treatment of all Claims against the Debtor and its property.
Class 5 shall consist of General Unsecured Claims including any
potential deficiency claims. This Class will receive a
distribution of 37% of their allowed claims. If the Plan is
confirmed under 11 U.S.C. Sec. 1191(a), the Debtor shall pay the
General Unsecured Creditors $85,000 pro rata in quarterly
installments commencing on the first day of the full quarter
immediately following the Effective Date and continuing on the 1st
day of each quarter through and including the 20th quarter
following the Effective Date. General Unsecured Creditors will
receive 20 disbursements of $4,250.00.
If the Plan is confirmed under 11 U.S.C. Sec. 1191(b), Class 5
shall be treated the same as if the Plan was confirmed under 11
U.S.C. Sec. 1191(a). Notwithstanding anything else in this document
to the contrary, any claim listed above shall be reduced by any
payment received by the creditor holding such claim from any third
party or other obligor and Debtor's obligations hereunder shall be
reduced accordingly. The Claims of the Class 5 Creditors are
Impaired by the Plan.
Each holder of a priority tax claim, if one exists, will be paid
upon terms consistent with Sec. 1129(a)(9)(C) of the Code. The
Internal Revenue Service has filed a proof of claim asserting a
$222.13 priority claim. If valid, it will be paid upon terms
consistent with Sec. 1129(a)(9).
Upon confirmation, the Debtor will be charged with administration
of the Plan. Debtor will be authorized and empowered to take such
actions as are required to effectuate the Plan. The Debtor will
file all post-confirmation reports required by the United States
Trustee's office or by the Subchapter V Trustee.
The source of funds for the payments pursuant to the Plan is the
Debtor's continued business operations.
Income and expense numbers are based on fully executed project
contracts, contracts currently being negotiated, and historical
expenses. Plan payments are scheduled to begin in March except for
those monthly payments based upon leases which begin in January.
Post-petition administrative claim payments, attorneys' fees and
subchapter V trustee's fees, are paid in full in March.
As the economy is expected to begin rebounding in 2027, expenses
are increased by 3% to account for small, continued price
increases. Income continues to be increased only by 5% until
empirical evidence supports increased disposable income spending
and homeowners willing to risk borrowing in a more stable market.
A full-text copy of the Amended Plan of Reorganization dated
January 10, 2023 is available at https://bit.ly/3CON3SY from
PacerMonitor.com at no charge.
Attorney for Debtor:
William A. Rountree, Esq.
Will B. Geer. Esq.
Caitlyn Powers, Esq.
Rountree Leitman Klein & Geer, LLC
Century Plaza I
2987 Clairmont Road, Suite 350
Atlanta, GA 30329
Telephone: (404) 584-1238
Facsimile: (404) 704-0246
Email: wrountree@rlkglaw.com
wgeer@rlkglaw.com
cpowers@rlkglaw.com
About Mayan Pools & Sports
Mayan Pools & Sports Construction, LLC, provides commercial and
residential swimming pool construction and remodeling services and
other outdoor living construction services.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-40744) on June 20,
2022. In the petition signed by Jeff Anderson, managing member, the
Debtor disclosed up to $500,000 in assets and up to $1 million in
liabilities.
Judge Barbara Ellis-Monro oversees the case.
William A. Rountree, Esq., at Rountree, Leitman Klein & Geer, LLC,
is the Debtor's counsel.
MCCLAIN INVESTMENTS: Seeks to Tap Scout Realty as Real Estate Agent
-------------------------------------------------------------------
McClain Investments TN, LLC seeks approval from the U.S. Bankruptcy
Court for the Middle District of Tennessee to employ Scout Realty
as real estate agent.
The Debtor requires a real estate agent to assist in the marketing,
sale and closing of its real estate properties.
Pursuant to the Listing Agreements, the agent is entitled to a flat
fee commission of $5,000 on any procured sale of each of the
Debtor's properties.
Alyson Bennett, a real estate agent at Scout Realty, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Alyson Bennett
Scout Realty
110 30th Avenue South
Nashville, TN 37212
Telephone: (615) 868-9000
Email: office@scoutrealty.com
About McClain Investments TN
McClain Investments TN, LLC is in the business of owning and
contracting for the development of residential real estate in
Nashville and the immediate surrounding area in Tenn.
McClain Investments TN filed a petition for relief under Subchapter
V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Tenn. Case No.
22-03142) on Sept. 29, 2022, with $1 million to $10 million in both
assets and liabilities. Courtney Hunter Gilmer has been appointed
as Subchapter V trustee.
Judge Randal S. Mashburn oversees the case.
The Debtor is represented by R. Alex Payne of Dunham Hildebrand,
PLLC.
MGM RESORTS: S&P Affirms 'B+' Issuer Credit Rating, Outlook Neg.
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' issuer credit rating on global
gaming operator MGM Resorts International and its subsidiaries and
affirmed all issue-level ratings. S&P removed its ratings from
CreditWatch, where S&P placed them with negative implications on
Sept. 30, 2021.
The negative outlook reflects continued stress on MGM's revenue and
cash flow in Macao, S&P's forecast for its Macao free operating
cash flow (FOCF) to remain negative in the first half of 2023, the
risk of a U.S. recession, and high lease-adjusted leverage relative
to our 7.5x downgrade threshold because of acquisitions and real
estate sales completed last year.
S&P said, "We affirmed the rating because of the strong recovery in
MGM's domestic cash flow in 2022, the addition of new properties to
its portfolio that expand scale and the strength of its asset base,
improved profitability, our re-evaluation of our downgrade
thresholds, and MGM's commitment to maintain ample liquidity
because of its large lease obligation. MGM's U.S. properties
accounted for about 80% of the company's pro forma property-level
EBITDAR pro forma for its completed acquisitions and announced
divestitures and incorporating a recovering MGM China. Property
EBITDAR in Las Vegas, which represents over 70% of MGM's domestic
EBITDAR, in the second and third quarters of 2022 was higher than
pre-pandemic levels. This is despite lower Las Vegas visitation and
hotel occupancy because of a slow convention and group recovery.
Visitor volumes to Las Vegas through November 2022 remain 9% and
hotel occupancy 10% below the same period in 2019. This is largely
the result of convention attendance that was 24% below 2019.
Despite lower visitor volume, gaming revenue and average daily room
rates exceeded 2019 levels by about 25%, supporting the market and
MGM's recovery. Like other gaming companies, MGM's cost efforts,
including cost efficiency programs initiated prior to the pandemic,
have supported good margin expansion at both its Las Vegas and
regional properties. Much of this improved profitability will be
sustainable. MGM expects that at least 400-600 basis points (bps)
of its improved margins is sustainable as its markets stabilize.
"The strength and scale of MGM's portfolio of resorts in Las Vegas
and across regional gaming markets, the addition of high-quality
resorts such as the Cosmopolitan of Las Vegas and City Center over
the past year, and MGM's improved profitability enhance the
company's competitive position in our view. This allows it to
support higher lease-adjusted leverage. As a result, we widened our
lease-adjusted downgrade threshold at the 'B+' rating to 7.5x from
6.5x. Furthermore, we expect the company will maintain healthy
liquidity of at least $3 billion, including cash and revolver
availability. The company believes this provides sufficient cushion
to absorb volatility that its U.S. fixed lease obligations can
introduce.
"Our measure of lease-adjusted leverage is likely materially higher
than MGM's financial policy calculation. MGM's measurement of its
lease obligation on the balance sheet compares unfavorably to other
large, diversified gaming operators such as PENN Entertainment Inc.
and Caesars Entertainment Inc., both of which have sizable lease
obligations. We believe this is primarily due to the lower discount
rate MGM uses to value its lease obligation and to the longer
initial term of MGM's leases. In measuring lease-adjusted leverage,
we use the obligation that companies report on their balance
sheets, which results in very high adjusted leverage of about 7.5x
in 2023. The very high lease adjustment also partly contributes to
our willingness to tolerate a higher 7.5x downgrade threshold at
the 'B+' rating, as long as our measure of lease-adjusted EBITDA
coverage of interest expense is also sustained at about 2x."
However, many market participants use a rent multiple approach and
MGM's financial policy and its financial maintenance covenant is
based on this approach. Thus, MGM's lease on its balance sheet is
nearly double what MGM estimates and uses in calculating its
lease-adjusted financial policy range of 4x-5x.
Macroeconomic factors that could impede discretionary spending are
rising and pose risks to MGM's strong U.S. cash flow, but
convention and group visitation recovery in Las Vegas may be an
offset. As the U.S. economy heads into 2023, rising prices and
interest rates eat away at household purchasing power. S&P said,
"As a result, we lowered our U.S. GDP forecast to negative 0.1% for
2023, as the economy falls into a shallow recession in the first
half of the year. While our baseline now includes a recession, we
can't rule out the chances of an even harder landing if the U.S.
Federal Reserve becomes more aggressive with interest rate hikes to
quell inflation." Although the shift in spending to experiences
from products may continue for a while longer, the surge in leisure
spending in Las Vegas and good regional gaming revenue may begin to
slow if consumers' willingness to spend on travel and entertainment
in 2023 is hit by reduced accumulated savings, ongoing high
inflation, and higher unemployment. Acceleration in convention and
group business in Las Vegas in 2023 could partly replace a
moderation in leisure demand, but a weakening macroeconomic
environment could slow the pace of recovery if corporate travel
budgets fall.
While destination markets such as Las Vegas tend to be more
volatile in a downturn than regional gaming markets, continued
group and convention recovery, the return of international travel,
and investment in new attractions including the opening of
Allegiant Stadium (2020) and the MSG Sphere (slated to open in
2023) should continue to support recovery in visitation. The
convention segment accounts for approximately 20% of MGM's room
nights in Las Vegas. In addition, supply growth in the market is
relatively modest and much lower than in 2008-2010. As a result, we
expect the impacts of a shallow recession on Las Vegas in 2023
would be less dramatic than during the financial crisis. In
addition, the first quarter of 2023 will likely be an easy
comparison with the first quarter of 2022 due to the negative
impact the omicron variant of the COVID-19 virus had on travel and
hotel demand in Las Vegas, especially the group and convention
segment and CES held every January. CES drew about 44,000 attendees
in 2022 and event organizers preliminarily estimate attendance rose
to 115,000 this year, approximately 33% below 2020. A favorable
event calendar in 2023 should also help. The market will benefit
this year from the return of CONEXPO-CON/AGG, a construction trade
show held every three years that attracted just under 130,000 in
March 2017, as well as Formula 1's Las Vegas Grand Prix auto race
in November 2023.
New resort developments and financial policy decisions around share
repurchases also add risk, although healthy domestic liquidity and
cash flow generation are an offset. MGM intends to continue to
invest in new resort developments, with the most likely near-term
projects in Japan and New York. MGM's joint venture consortium with
Orix was selected by Osaka prefecture/city as its partner to
develop an integrated resort in Japan. S&P said, "Based on the
current timeline and the likelihood that Japan will not issue a
license until 2023, we do not expect material spending to begin
before late 2023 or 2024. The project will likely take several
years to complete. If the MGM-Orix consortium receives a license,
MGM anticipates opening the resort in the second half of this
decade. We believe MGM's ownership in the consortium will be no
more than 50%." The company expects it and Orix will each own 40%
of the consortium and local investors will own the remaining 20%.
However, if the consortium does not bring in additional investors,
MGM's and Orix's ownership would each increase to 50%. Based on the
estimated $10 billion development cost and MGM's expectation that
the project could be funded at 55% debt to equity, MGM's equity
contributions could be $2 billion-$2.5 billion. MGM believes its
equity contribution could be spread over several years, perhaps
2024-2026. MGM's sizable equity contribution represents a possible
leveraging risk over the next few years as MGM will not receive any
cash flow benefits from the project. Nevertheless, if successful,
the resort could broaden MGM's geographic reach and scale and
enhance its global brand reputation as an integrated resort
developer.
S&P said, "Additionally, we expect MGM would redevelop its Empire
City Casino into a full-scale casino resort if it were awarded a
casino license in the New York City area. New York recently opened
the application process for three licenses, and we expect a
decision could be made later this year. Under that timeline, MGM
would need to make the $500 million license payment this year, but
most of the spending would occur in 2024 and 2025. MGM estimates
its investment to expand its Empire City Casino could cost $2
billion-$2.2 billion, including the license fee. MGM has also used
liquidity from asset sales to make sizable share repurchases
totaling $4.4 billion from 2021 through its third-quarter earnings
call. We expect it will continue to repurchase shares, although the
pace may moderate as investments in new developments ramp up."
Nevertheless, MGM's domestic liquidity as of Sept. 30, 2022, was
significant with approximately $6 billion in cash and revolver
availability adjusted for the use of cash to repay $1.3 billion of
near-term debt maturities, an estimated $815 million of net
proceeds received from the sale of The Mirage's operations which
closed in December 2022, and $350 million of net proceeds from the
sale of the operations of Gold Strike (expected to close in the
first half of 2023).
A more rapid easing of COVID-19 control measures in China than
anticipated should support Macao's GGR recovery in 2023. In
December 2022, mainland China and Macao shifted away from their
previous zero-COVID-19 policy and relaxed travel restrictions,
including testing and quarantine requirements. This was earlier
than S&P Global Ratings' prior expectation of a gradual relaxation
starting in the second quarter of 2023. Reduced testing and removal
of quarantine measures, coupled with the reinstatement of
electronic visas on Nov. 1, 2022, will lower entry hurdles for
individuals entering Macao and support a recovery in visitation.
S&P said, "As a result, we believe Macao's GGR recovery could
improve more sustainably, assuming the current virus wave begins to
subside over the coming weeks. Therefore, we updated our base-case
forecast for Macao mass GGR to recover to 60%-70% of 2019 levels in
2023, the upper end of our previously published 50%-70%
expectation. We expect the recovery could be gradual in the first
few months because high caseloads in China could make people
reluctant to venture out at least initially. However, we believe
the recovery in mass GGR could accelerate more significantly in the
second half (to above 80% of 2019 levels) based on the recovery we
have observed in other gaming markets such as Las Vegas and
Singapore."
S&P said, "The biggest downside risk to our 2023 Macao GGR forecast
is that, with high COVID-19 cases, fear among the public will lead
to more voluntary social distancing and suspension of activity and
spending. We also can't fully rule out renewed restrictions. This
could slow ramp-up in Macao's mass GGR recovery. MGM is less
exposed to Macao than other operators because MGM China accounted
for only about 20% of the company's 2019 property-level EBITDAR pro
forma for its completed acquisitions and announced divestitures
over the past year.
The award of a new concession in Macao eliminated licensing
uncertainty, but investments could slow deleveraging. The
government of Macao and MGM Grand Paradise, the concession holder
of MGM China, entered into a new 10-year gaming concession contract
on Dec. 16, 2022. S&P said, "This was in line with our expectation
that the six incumbent licensees would secure new concessions. As
part of the agreement, MGM China will invest about $2 billion. We
believe these commitments will include a mixture of nongaming
capital expenditure and operating expenses to support nongaming
amenities and events. MGM has preliminarily indicated it expects
about half of the investment will be capital expenditure and about
half will be operating expenses, with about 90% of the spending
targeted to developing nongaming projects and programing and
international tourist markets. Although MGM China's investment
commitment represents a greater multiple of its 2019 Macao
property-level EBITDA than other operators because of its smaller
scale, we still believe such investment is likely manageable for
MGM China as long as Macao's GGR begins to recover this year. We
believe the investment commitments, especially operating expenses,
will likely be spread across the 10 year-term of the new
concession." In addition, MGM China's cash flow should also benefit
from a 36% increase in its allotted tables, bringing its total
table count to 750 as the company received an additional 200 under
its new concession. Furthermore, MGM has demonstrated its
willingness to use liquidity at parent MGM Resorts to support MGM
China. However, depending on the timing and pace of spending, these
investments could slow improvement in MGM China's cash flow and
credit measures.
Environmental, social, and governance (ESG) credit factors for this
change in credit rating/outlook and/or CreditWatch status:
-- Social - Health and safety
S&P said, "The negative outlook reflects continued stress on MGM's
revenue and cash flow in Macao, our forecast for Macao's FOCF to
remain negative in the first half of 2023, the risk of a U.S.
recession, and high lease-adjusted leverage relative to our 7.5x
downgrade threshold because of acquisitions and real estate sales
completed last year.
"We could lower the rating if we no longer believe the company's
EBITDAR in 2023 will continue improving in a manner that supports
leverage reduction, allowing the company to improve leverage to or
below our 7.5x downgrade threshold and EBITDA interest coverage to
about 2x." This could be the result of:
-- Weaker than expected recovery in Macao;
-- A greater than expected impact from a possible U.S. recession
on Las Vegas or regional casinos;
-- Greater than expected capital investments in its portfolio or
new developments;
-- Additional acquisitions; or
-- Higher than forecast returns to shareholders.
S&P said, "We could revise our outlook to stable once MGM's cash
flow in Macao begins to recover in a sustainable fashion and if we
believe its U.S. cash flow generation will support S&P Global
Ratings lease-adjusted leverage improving to 7.5x or below and
EBITDA coverage of interest of about 2x."
S&P believes an upgrade is unlikely over the next year given its
forecast, and the company's financial policy. However, S&P could
raise the rating if:
-- S&P expects MGM's leverage would improve to 6.5x or below;
-- It sustains EBITDA interest coverage above 2x; and
-- It sustains discretionary cash flow (DCF) to debt above 2%.
ESG credit indicators: To E-2, S-3, G-2; from E-2, S-4, G-2
S&P said, "Health and safety factors have improved in our view and
are now a moderately negative consideration in our credit analysis.
As a result, we revised our social credit indicator to S-3 from
S-4. Although the COVID-19 pandemic severely affected MGM's cash
flow because of property closures, operating and capacity
restrictions, travel restrictions, a slower recovery in conventions
and group meetings and limited international visitation to Las
Vegas, the company's U.S. revenue and cash flow has recovered
strongly. This is supported by strong leisure demand for Las Vegas
and regional gaming. Nevertheless, while we view the pandemic as a
rare and extreme disruption that is unlikely to recur at the same
magnitude, health and safety scares are an ongoing risk factor."
Furthermore, MGM's cash flow in Macao remains severely impaired
because of the impact China's zero-COVID-19 policy had on
operations over the past three years. While a recent shift in this
policy should support an acceleration of the market's recovery in
the second half of 2023, uncertainties related to rising virus
cases in China and their impact on the shape of the recovery in
Macao gaming revenue remain substantial. However, Macao accounts
for only about 20% of MGM's overall cash flow.
MIRACLE CENTER: Court OKs Deal on Cash Collateral Access
--------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Northern Division, authorized Miracle Center Church of Ventura
County, Inc. to use cash collateral in accordance with its
agreement with the U.S. Small Business Administration.
On July 25, 2020, Miracle Center Christian Church, Inc. executed a
U.S. Small Business Administration Note, pursuant to which MCCCI
obtained a $68,000 loan. The terms of the Note require MCCCI to pay
principal and interest payments of $291 every month beginning 12
months from the date of the Note over the 30-year term of the SBA
Loan, with a maturity date of July 25, 2050. The SBA Loan has an
annual rate of interest of 2.75% and may be prepaid at any time
without notice of penalty.
Pursuant to the SBA Loan Authorization and Agreement executed on
July 25, 2020, MCCCI is required to "use all the proceeds of this
Loan solely as working capital to alleviate economic injury caused
by disaster occurring in the month of January 31, 2020 and
continuing thereafter and to pay Uniform Commercial Code lien
filing fees and a third-party UCC handling charge of $100 which
will be deducted from the Loan amount."
The parties agreed that any and all of the Personal Property
Collateral constitutes the cash collateral of the SBA pursuant to
11 U.S.C. section 361, 362, 363(a), (c)(2), and (e). The SBA
consents to the Debtor’s use of cash collateral. The Debtor
represented to the SBA that it will make no additional or
unauthorized use of cash collateral retroactive from the SBA Loan
date until March 31, 2023.
As adequate protection, the SBA will receive a replacement lien on
all post-petition revenues of the Debtor to the same extent,
priority and validity that its lien attached to the cash
collateral. The scope of the replacement lien is limited to the
amount (if any) that cash collateral diminishes post-petition as a
result of the Debtor’s post-petition use of cash collateral.
The Debtor will commence monthly payments of $291 to the SBA on
January 25, 2023, continuing until further Court order or entry of
an Order Confirming the Debtor's Plan of Reorganization, whichever
occurs earlier.
A copy of the stipulation is available at https://bit.ly/3QGoCN5
from PacerMonitor.com.
A copy of the order is available at https://bit.ly/3GK1EQP from
PacerMonitor.com.
About Miracle Center Church of Ventura County, Inc.
Miracle Center Church of Ventura County, Inc. is a tax-exempt
religious organization. The Debtor sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 22-10664)
on August 29, 2022. In the petition signed by Alonzo McCowan, CEO
and president, the Debtor disclosed $3,472,792 in assets and
$3,387,733 in liabilities.
Judge Ronald A. Clifford III oversees the case.
John K. Rounds, Esq., at Rounds & Sutter LLP is the Debtor's
counsel.
MIWD HOLDCO II: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed MIWD Holdco II LLC's and MIWD Holding
Company LLC's (dba MITER Brands; MITER) ratings, including the
companies' Long-Term Issuer Default Ratings (IDR) at 'BB-'. Fitch
has also affirmed the 'BB+'/'RR2' rating on MIWD Holdco II LLC's
senior secured term loan and 'BB-'/'RR4' rating on the company's
senior unsecured notes. The Rating Outlook is Stable.
MITER's IDR reflects the company's top four position in the highly
fragmented U.S. windows and doors market. The company's strong
profitability metrics and consistently strongly positive FCF
generation are credit positives relative to similarly-rated peers.
Fitch expects EBITDA leverage to rise from its current low level
and situate between 3.5x and 4.0x during the rating horizon. The
IDRs also reflect the company's high exposure to the residential
new construction market, concentrated product portfolio within a
fragmented and competitive subsector, and limited geographic
diversification.
KEY RATING DRIVERS
Weaker Demand Environment: Fitch expects a tougher operating
environment for building products companies in 2023. Fitch expects
MITER's revenues to decline low-teen percentages next year, driven
predominantly by lower volumes and modest price declines. Higher
mortgage rates have shocked the residential construction market,
which Fitch expects will remain subdued into 2024. Fitch forecasts
organic revenues to decline mid-single digit percentages in 2024,
with the potential for improvement in the latter half of the year.
Fitch expects EBITDA margins to decline considerably in 2023,
returning closer to 2020-2021 levels at around 16.0%. While supply
chain issues are easing, Fitch expects the company's input costs to
remain somewhat elevated while softer end-market demand will
challenge MITER's ability to successfully implement additional
price increases. Longer term, Fitch expects EBITDA margins to
situate in the 14.0%-15.0% range, supporting positive FCF
generation.
Modest Leverage Levels: Fitch projects YE 2022 EBITDA leverage,
which does not include preferred equity as rated-entity debt (see
Summary of Financial Adjustments) to be about 2.2x. Fitch expects
EBITDA leverage to increase to about 3.7x in 2023, and remain in
the 3.5x to 4.0x range thereafter, which is appropriate for the
'BB-' rating. Fitch's leverage forecast assumes that the company
will continue to make bolt-on acquisitions and opportunistically
redeem preferred equity, funded primarily with FCF.
Management aims to maintain net leverage (excluding preferred
equity) below 3.0x over the long term, but may exit this range from
time to time for opportunistic acquisition opportunities. Fitch
expects management to adhere to its leverage target on a long-term
basis.
Concentrated Product Portfolio: MITER's product portfolio is highly
concentrated within vinyl windows. Fitch views the domestic windows
market as highly susceptible to competitive pressures and earnings
cyclicality, which weighs negatively on the credit profile. The
company's product portfolio spans price points, and the company has
a strong national market position, providing it with some
competitive advantages relative to smaller peers.
End Market Exposure: The company is predominantly exposed to the
residential repair and remodel (R&R) and new residential
construction end-markets in the U.S. Management estimates that
about 50% of sales come from the U.S. residential R&R market and
the remaining 50% of sales come from the U.S. new residential
construction market.
Fitch views R&R activity as a more stable end-market through
economic cycles than new construction activity. The company's
exposure to new residential construction demand is high relative to
Fitch-rated building products peers and is expected to result in
more volatile earnings and credit metrics in the near-term as that
end-market experiences a downturn.
Strong Profitability and FCF: MITER generates strong EBITDA margins
relative to similarly-rated peers and competitors within the
windows and doors market. Fitch believes the company's margins
reflect prudent cost management, customer focus and successfully
executed M&A and integration under current ownership. Despite the
risk that margins contract in a modestly weaker demand environment,
Fitch expects the company to maintain consistently positive FCF
over the intermediate-term due to the limited working capital and
capex intensity of the business, supporting the credit profile of
the company.
Limited Geographic Diversity: The company operates within the
United States and has sales exposure to all 50 states. The company
operates through 10 domestic manufacturing facilities and three
domestic internal supply facilities. Fitch views the company's
geographic exposure as relatively concentrated relative to
similarly-rated and higher-rated peers, which tend to have more
international sales exposure. However, the company's strong
national presence provides it with better diversity than
lower-rated peers, which tend to be more highly concentrated within
certain states.
Ownership and Distributions: MITER is a majority-family owned and
operated business with Koch Equity Development (KED) participating
as a minority shareholder and holder of preferred equity. Fitch
expects the company to opportunistically redeem preferred shares
with FCF or debt proceeds and upstreamed cash from the operating
entities during the rating horizon, to the extent allowable under
the secured debt's restricted payment covenants.
DERIVATION SUMMARY
MITER's 'BB-' rating reflects is relatively strong market position
in the U.S. domestic windows and doors market, its above-average
profitability metrics, modest leverage levels, and concentrated
product portfolio within a cyclical sector. The company is strongly
positioned relative to 'B'-category Fitch-rated building products
and distributor peers, including New AMI I (dba Associated
Materials; B/Stable), Doman Building Materials Ltd. (Doman;
B/Stable), Chariot Holdings, LLC (dba Chamberlain; B-/Stable) and
LBM Acquisition, LLC (LBM; B/Stable).
MITER has stronger credit metrics, profitability metrics, and lower
sales exposure to commodified product offerings than Doman and LBM.
MITER's leverage levels and financial policy are more conservative
than Associated Materials' and Chariot's. Compared to higher rated
investment-grade peers, MITER has significantly smaller scale,
higher than average exposure to new residential construction,
higher leverage levels and a more concentrated product portfolio,
which are constraining factors to the credit profile.
Fitch applies its Parent and Subsidiary Linkage Rating Criteria to
arrive at ratings for each entity in the group, using the Stronger
Subsidiary (MIWD Holdco II LLC), Weaker Parent (MIWD Holding
Company LLC) path. Fitch considers Holdco II a stronger credit
profile than Holding Company due to the former's unrestricted
access to group cash flows. MIWD Holding Company LLC is the issuer
of the financial statements and has no operations and does not
issue Fitch-defined debt.
Fitch categorizes 'Legal ring-fencing' as 'Porous' under the
criteria due to Holdco II's limitations on upstreaming dividends
based on short-dated term loan documentation. Fitch considers
'Access & Control' 'Open' primarily due to Holding Company's direct
ownership over Holdco II.
Fitch assesses both the standalone credit profile of Holdco II and
the consolidated group credit profile as 'BB-'. Therefore, no up
notching of Holdco II applies and both Holding Company and Holdco
II are rated 'BB-'.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within The Rating Case for the Issuer:
- Revenues decline 14% in 2023 and EBITDA margins compress over
700bps, returning to around 16.0% of revenues;
- Organic revenues decline low- to mid-single digit percentages in
2024, which incorporates Fitch's assumption for continued weakness
in demand in residential end-markets. EBITDA margins situate in the
14.0%-15.0% range;
- Capex as a % of revenues remain in the 3.5%-4.0% range;
- FCF margins peak at close to 10% in 2022 and return to the mid-
to high-single digit percentages over the intermediate-term;
- FCF applied towards M&A activity and preferred equity redemption
during the rating horizon;
- EBITDA leverage (excluding preferred equity) increases from 2.2x
at YE 2022 to 3.7x and 4.0x at YE 2023 and YE 2024, respectively.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch's expectation that EBITDA leverage will be sustained below
3.0x;
- The company improves the diversity of its business by
meaningfully reducing its exposure to residential new construction
activity, broadening its product offerings or significantly
increasing its scale.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Fitch's expectation that EBITDA leverage will be sustained above
4.0x or EBITDA net leverage will be sustained above 3.5x
- Sustained deterioration in operating performance resulting in
EBITDA margins contracting to the low-double digit percentages,
resulting low-single digit FCF margins.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: MITER has an adequate liquidity position,
supported by its readily available cash balance of $205.7 million
and $126.0 million of availability under its $150 million ABL
revolving credit facility at the end of 3Q22. MITER also has $54.7
million of marketable securities. The company's nearest material
maturity is not until December 2027, when the company's term loan
comes due. The ABL is set to mature in December 2025. Fitch expects
the company's seasonal working capital usage to be limited and
annual FCF generation to remain positive, further supporting the
liquidity position in the intermediate term.
ISSUER PROFILE
MITER Brands is one of the largest manufacturers of vinyl,
aluminum, and fiberglass windows and patio doors in the U.S.,
selling its products into the new construction and R&R residential
markets through third-party distribution.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch considers outstanding preferred equity issued by MIWD Holding
Company LLC as non-debt of the rated entity, per Section 7 of
Appendix 1: Main Analytical Adjustments under its Corporate Rating
Criteria. Fitch considers the preferred shares a shareholder loan,
as they are held by KED. Fitch determined that the presence of
these preferred equity instruments does not increase the
probability of default under rated-entity debt, resulting in the
non-debt classification.
Fitch adjusts historical reported EBITDA by adding back non-cash
stock-based compensation expense, non-cash inventory step-up
charges and one-time transaction fees to adjusted EBITDA.
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
----------- ------ -------- -----
MIWD Holdco II LLC LT IDR BB- Affirmed BB-
senior
unsecured LT BB- Affirmed RR4 BB-
senior secured LT BB+ Affirmed RR2 BB+
MIWD Holding
Company LLC LT IDR BB- Affirmed BB-
NASSAU PHARMACY: Court OKs Cash Collateral Access Thru Jan 25
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of New York
authorized Nassau Pharmacy Inc. to use cash collateral on an
interim basis for the period beginning December 23, 2022 until
January 25, 2023.
The Debtor is permitted to use cash collateral for necessary
expenses including utilities and wages.
Creditors with security interests in the Debtor's cash collateral
will be granted replacement liens, effective as of the Petition
Date and in accordance with their relative priority, perfected
replacement security interests in and valid, binding, enforceable,
and perfected liens on all Postpetition Collateral.
The Debtor will also continue to make regular ongoing principal and
interest loan payments to the Creditors pursuant to the prepetition
loan documents, or at such other, less-than-contract adjusted rate
as agreed upon by the Debtor and the Creditor.
A final hearing on the matter is set for January 25 at 10:30 a.m.
A copy of the order is available at https://bit.ly/3W7EsBI from
PacerMonitor.com.
About Nassau Pharmacy
Nassau Pharmacy Inc. is a single-location pharmacy located in
Rensselaer County, New York. The Debtor filed a Chapter 11 petition
(Bankr. N.D.N.Y. Case No. 22-11188) on December 22, 2022. At the
time of filing, the Debtor disclosed $100,001 to $500,000 in assets
and liabilities.
Judge Robert E. Littlefield, Jr. oversees the case.
Michael L. Boyle, Esq., at Boyle Legal, LLC, is the Debtor's legal
counsel.
NASSAU PHARMACY: Taps Gleason, Dunn, Walsh & O'Shea as Counsel
--------------------------------------------------------------
Nassau Pharmacy, Inc. seeks approval from the U.S. Bankruptcy Court
for the Northern District of New York to employ Gleason, Dunn,
Walsh & O'Shea as its business counsel.
The firm will render these services:
(a) advise the Debtor with respect to the sale of its business
to Walgreens Co. or such other buyer that may materialize during
the pendency of its Chapter 11 proceedings;
(b) review and draft relevant documents necessary to
consummate a sale of the Debtor's business to a buyer;
(c) represent the Debtor during the closing process of the
sale transaction; and
(d) perform all other legal services for the Debtor.
The firm received payments from the Debtor during the year prior to
the petition date in the amount of $1,061,830 for pre-bankruptcy
services.
The hourly rates of the firm's counsel and staff are as follows:
Principals $400
Associates $250 - $300
Paralegals $100
Thomas Gleason, Esq., a founding partner of Gleason, Dunn, Walsh &
O'Shea, disclosed in a court filing that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Thomas F. Gleason, Esq.
Gleason, Dunn, Walsh & O'Shea
40 Beaver St.
Albany, NY 12207
Telephone: (518) 432-7511
Facsimile: (518) 432-5221
About Nassau Pharmacy
Nassau Pharmacy Inc., a single-location pharmacy located in
Rensselaer County, N.Y., filed a Chapter 11 petition (Bankr.
N.D.N.Y. Case No. 22-11188) on Dec. 22, 2022, with $1 million in
both assets and liabilities.
The Debtor tapped Michael L. Boyle, Esq., at Boyle Legal, LLC as
bankruptcy counsel and Thomas F. Gleason, Esq., at Gleason, Dunn,
Walsh & O'Shea as business counsel.
NB HOTELS: Exclusivity Period Extended to Jan. 31
-------------------------------------------------
NB Hotels Dallas, LLC received court approval to remain in control
of its bankruptcy until Jan. 31.
The ruling by Judge Scott Everett of the U.S. Bankruptcy Court for
the Northern District of Texas gives the company more time to
solicit votes on its proposed plan to exit Chapter 11 protection.
NB Hotels Dallas filed its Chapter 11 plan of reorganization in
July last year, which proposes to pay in full claims of large
general unsecured creditors in 84 months, and claims of small
general unsecured creditors in 48 months.
About NB Hotels Dallas
NB Hotels Dallas, LLC owns and operates the Le Meridien Hotel
Dallas located at 13402 Noel Road, Dallas, Texas.
NB Hotels Dallas sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Texas Case No. 22-30681) on April 18,
2022, with $50 million to $100 million in both assets and
liabilities. Nadir Badruddin, president of NB Hotels Dallas, signed
the petition.
Judge Scott W. Everett oversees the case.
Joyce W. Lindauer, Esq., at Joyce W. Lindauer Attorney, PLLC is the
Debtor's legal counsel.
Wells Fargo Bank, National Association, trustee for Morgan Stanley
Capital Trust 2019-22 for the benefit of the Commercial Mortgage
Pass-Through Certificate Holder, as lender, is represented by Bruce
J. Zabarauskas, Esq., at Holland & Knight LLP.
On July 27, 2022, the Debtor filed its proposed Chapter 11 plan of
reorganization and disclosure statement.
NESV ICE: DIP Loan from Shubh Patel Wins Court OK
-------------------------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts,
Eastern Division, authorized NESV Ice, LLC and its
debtor-affiliates to, among other things, obtain secured
debtor-in-possession financing from Shubh Patel LLC and grant
consensual mortgages and security interests to the DIP Lender on
the Debtors' assets. Shubh Patel's interests will be junior to the
liens of the City of Attleboro, SHS ACK, LLC, and Construction
Source Management, LLC, and senior to the lien of Ashcroft Sullivan
Sports Village Lender.
The Debtors are in need of the DIP Loan to preserve the value of
their assets.
The Debtors are permitted to obtain up to $3,489 to pay monthly
interest for the non-Ice Debtors to Attleboro and the United States
Trustee's fees owed by the non-Ice Debtors, each as set forth in
the budget plus, in the DIP Lender's sole discretion, up to an
additional $100,000 to pay the expenses set forth in the Debtors'
approved cash collateral budget and the monthly interest payment to
SHS in the amount of $56,766 due for the month of January 2023. The
amount of the DIP Loan will include the principal amount advanced
by DIP Lender, interest on such amounts at the rates provided for
in the Term Sheet, all reasonable attorneys' fees incurred in
connection with the negotiation, documentation and Court approval
of the DIP Loan, and any reasonable attorneys' or other
professional's fees and expenses incurred by DIP Lender in
connection with the enforcement of DIP Lender's rights under the
DIP Loan.
To secure the amounts borrowed by the Debtors, the DIP Lender is
granted:
(a) A mortgage on and security interest in the assets of NESV
Ice, LLC which is junior to the lien of the City, the lien of SHS,
and the lien of CSM, and senior to the lien of ASVL; and
(b) Mortgages on and security interests in the assets of each
of NESV Swim, LLC, NESV Tennis, LLC, NESV Land East, LLC, NESV
Field, LLC, NESV Hotel, LLC, and NESV Land, LLC, which is junior to
the lien of the City and the lien of SHS and senior to the lien of
ASVL. The liens in favor of the DIP Lender will not attach to nor
be satisfied from the proceeds of the Debtors' claims and causes of
action arising under chapter 5 of the Bankruptcy Code, and the
terms "Ice Collateral" and "Non-Ice Collateral" will not include
the proceeds.
While the Non-Ice Collateral will secure all amounts borrowed by
the Debtors pursuant to the order, the DIP Lender may only assert
an unsecured deficiency claim against any Non-Ice Debtor to the
extent that amounts borrowed were actually used to pay obligations
of that Non-Ice Debtor.
Each of the DIP Liens granted to the DIP Lender will be deemed to
be valid, perfected and enforceable without any necessity of the
DIP Lender complying with any perfection or other requirements
under any otherwise applicable state, federal or other
non-bankruptcy law.
A copy of the order is available at https://bit.ly/3w4dP62 from
PacerMonitor.com.
About NESV Ice, LLC
NESV Ice, LLC and affiliates NESV Swim, LLC, NESV Field, LLC, NESV
Hotel, LLC, NESV Tennis, LLC, NESV Land, LLC, and NESV Land East,
LLC, offer fitness and sports training services. The Debtor sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Mass. Lead Case No. 21-11226) on August 26, 2021. The petitions
were signed by Stuart Silberberg as manager.
Judge Christopher J. Panos oversees the case.
William McMahon, Esq., at Downes McMahon LLP is the Debtor's
counsel.
NEW CONSTELLIS: Moody's Lowers CFR to Caa2, Outlook Negative
------------------------------------------------------------
Moody's Investors Service downgraded its ratings for New Constellis
Borrower LLC, including the corporate family rating to Caa2 from
Caa1 and probability of default rating to Caa2-PD from Caa1-PD.
Concurrently, Moody's downgraded the ratings on the company's
senior secured first lien term loan to Caa2 from Caa1 and senior
secured second lien term loan to Ca from Caa2. The ratings outlook
is negative.
Downgrades:
Issuer: New Constellis Borrower LLC
Corporate Family Rating, Downgraded to Caa2 from Caa1
Probability of Default Rating, Downgraded to Caa2-PD from Caa1-PD
Senior Secured 1st Lien Term Loan, Downgraded to Caa2 (LGD4) from
Caa1 (LGD3)
Senior Secured 2nd Lien Term Loan, Downgraded to Ca (LGD5) from
Caa2 (LGD5)
Outlook Actions:
Issuer: New Constellis Borrower LLC
Outlook, Remains Negative
The ratings downgrades reflect the company's ongoing weak financial
performance. Additionally, Moody's projects 2023 to be another year
of negative free cash flow and expects a multi-year effort for
Constellis to achieve and sustain positive free cash flow. Unless
renewed, covenant relief via the existing waiver is set to expire
at the end of second quarter 2023. Absent a renewed waiver or
renegotiation of the covenant, Moody's believes the company would
experience a covenant default.
The negative outlook reflects the potential for additional
downgrades if the company does not receive an extension of the
existing covenant waiver or if Moody's believes refinancing the
first lien term loan before its maturity on March 27, 2024 will be
problematic. The current trading prices of the first and second
lien instruments near 80 and 50 cents on the dollar are also at
level(s) that could lead to a distressed exchange ("DE"). However,
the probability of a DE is less certain as compared to borrowers
with owners independent of credit providers. Constellis is owned by
entities that also are holders of its debt.
RATINGS RATIONALE
The Caa2 CFR reflects the company's challenges in restoring
profitability and free cash flow since its latest debt
restructuring. Moody's expects negative free cash flow, which will
continue to pressure the company's liquidity, notwithstanding that
there is no amortization required by its debt agreements. With very
low EBITDA, credit metrics are quite weak and will remain so absent
the company sustaining positive earnings and cash flow. Moody's
believes that a turnaround in the company's operations remains more
than 12 months away. The pricing of the debt instruments are also
onerous because of atypically high spreads (margins), leaving the
company with a large interest burden and limited interest coverage.
Despite the modest absolute debt burden as a percent of revenue,
financial leverage will remain high because of the weak earnings
profile.
Moody's expects modest revenue growth as the company receives new
and recompete awards of contracts at improved pricing. The
expiration of loss-making contracts will also contribute to
improved operating results.
Liquidity remains weak because of expected negative cash flow, the
need for the waiver from the covenant and the uncertainty of
ongoing access to the revolver beyond the expiration of the current
waiver late in second quarter 2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Moody's expects the refinancing
of the term loans to be problematic or a distressed exchange
becomes likely.
The ratings could be upgraded if the company successfully
refinances its term loans and Moody's expects it to sustain
operating profits and free cash flow that is used to deleverage the
capital structure.
Headquartered in Herndon, Virginia, New Constellis Borrower LLC is
a provider of essential risk management services, such as security,
training, and global support services to government and commercial
clients throughout the world. Revenues for the twelve months ended
September 30, 2022 were $1.3 billion. The company is majority-owned
by the former first lien lenders of Constellis Holdings, LLC
following a financial restructuring that concluded March 27, 2020.
The principal methodology used in these ratings was Aerospace and
Defense published in October 2021.
NUVO TOWER: Unsecured Claims Unimpaired in Plan
-----------------------------------------------
Nuvo Tower, LLC submitted a Second Amended Disclosure Statement in
connection with its Second Amended Plan of Reorganization dated
Dec. 7, 2022.
The Debtor owns 4 contiguous lots located at 2954-2958 Brighton 6th
Street and 6-7 Brighton Fifth Place in the Brighton Beach section
of Brooklyn, which lots are intended for construction of a 23-unit
condominium complex (the "Property"). The Property is zoned for
multi-residential use and the lots have been consolidated into one
tax lot by the City of New York.
During the Chapter 11 Case, the Debtor has been seeking out various
sources of capital as well as talking to potential brokers and
purchasers to either refinance or sell the Property. Subject to the
time deadlines set forth in the Second Amended Plan, the Debtor
shall market the Property immediately, and the Debtor has agreed to
retain a licensed real estate broker, subject to Court approval, to
refinance or sell and liquidate the Property for the highest and
best price on or before April 15, 2023. Upon closing, the proceeds
of refinance or sale shall be distributed to holders of Claims and
Interests in the same manner as provided for in the Second Amended
Plan.
Under the Plan, Class 4 Allowed General Unsecured Claims in the
approximate amount of $1,618, together with any unpaid statutory
interest, costs and reasonable attorneys' fees accrued thereon
through the Sale' Auction Closing Date, will be paid in full, in
cash, from the Distribution Fund upon the earlier of a
post-Effective Date refinance or the Sale/Auction Closing Date.
Class 4 is unimpaired.
Subject to the time deadlines set forth in this Article IV, the
Debtor shall continue through a licensed real estate broker, to
market the Property in order to refinance or sell and liquidate the
Property for the highest and best price on or before April 15.
2022. Upon Closing, the proceeds of refinance or sale shall be
distributed to holders of Claims and Interests in the same manner
as provided for in Article II herein.
Attorneys for the Debtor:
Robert L. Rattet, Esq.
Jonathan S. Pasternak, Esq.
DAVIDOFF HUTCHER & CITRON LLP
605 Third Avenue
New York, NY 10158
Tel: (212) 557-7200
A copy of the Disclosure Statement dated Jan. 4, 2023, is available
at https://bit.ly/3GKwxWs from PacerMonitor.com.
About Nuvo Tower
Nuvo Tower LLC is a single asset real estate (as defined in 11
U.S.C. Sec. 101(51B)). It owns four contiguous building lots
located at 2954-2958 Brighton 6th St. and 6-7 Brighton Fifth Place
in the Brighton Beach section of Brooklyn, which lots are intended
for construction of 23-unit condominium complex.
Nuvo Tower sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-41444) on June 22,
2022, listing $1 million to $10 million in both assets and
liabilities. Haim Pinhas, manager, signed the petition.
Judge Nancy Hershey Lord oversees the case.
Robert L. Rattet, Esq., at Davidoff Hutcher & Citron, LLP, is the
Debtor's counsel.
ORBIT ENERGY: Wins Cash Collateral Access Thru Jan 21
-----------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey authorized
Orbit Energy & Power, LLC to use cash collateral on an interim
basis in accordance with the budget, with a 10% variance, through
January 21, 2023.
The Debtor requires immediate authority to use cash collateral to
continue its business operations without interruption toward the
objective of formulating an effective plan of reorganization.
The Debtor represents that as of the Petition Date, the claims and
liens of Republic Bank were (a) valid, binding, enforceable,
non-avoidable, and properly perfected and were granted to, or for
the benefit of, Republic Bank for fair consideration and reasonably
equivalent value; (b) senior in priority over any and all other
liens on its prepetition collateral; (c) enforceable in accordance
with the terms of the prepetition loan documents; and (d)
constitute allowed, secured claims within the meaning of sections
502 and 506 of the Bankruptcy Code.
As adequate protection, the Debtor will make $5,000 in monthly
payments.
As further adequate protection, Republic Bank is granted a
replacement perfected security interest under Section 361(2) of the
Bankruptcy Code to the extent the cash collateral is used by the
Debtor, to the extent and validity and with the same priority in
the Debtor's post-petition collateral, and proceeds thereof, that
Republic Bank may have held in the Debtor's pre-petition
collateral.
To the extent the adequate protection provided for proves
insufficient to protect the interest of Republic Bank in and to the
cash collateral, Republic Bank will have a super-priority
administrative expense claim, pursuant to Section 507(b) of the
Bankruptcy Code, senior to any and all claims against the Debtor
under Section 507(a) of the Bankruptcy Code, whether in this
proceeding or in any superseding proceeding, subject to payments
due under 28 U.S.C. section 1930(a)(6).
The replacement liens and security interests granted are
automatically deemed perfected upon entry of the Order without the
necessity of Republic Bank taking possession, filing financing
statements, mortgages or other documents only to the same extent
priority and validity as existed pre-petition.
A further interim hearing on the matter is set for January 19 at 2
9.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3ZCuc7d from PacerMonitor.com.
The Debtor projects $693,000 in total cash collections and $667,509
in total cash disbursements.
About Orbit Energy & Power, LLC
Orbit Energy & Power, LLC is a renewable energy company.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.N.J. Case No. 22-19628) on December 6,
2022. In the petition signed by Sean Angelini, managing member, the
Debtor disclosed up to $10 million in assets and up to $50 million
in liabilities.
Judge Andrew B. Altenburg, Jr., oversees the case.
Abert A. Ciardi III, Esq., at Ciardi Ciardi & Astin, represents the
Debtor as counsel.
ORTHOPAEDIC SURGICAL: Taps McMahon & Associates as Accountant
-------------------------------------------------------------
Orthopaedic Surgical Consultants, PC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Indiana to employ
McMahon & Associates, Certified Public Accountants, PC as
accountant.
The Debtor requires an accountant to:
(a) prepare and file all annual and quarterly tax returns,
both federal and state;
(b) consult and advise the Debtor on tax implications as
necessary;
(c) prepare financial reporting documents;
(d) assist with payroll and check processing, bank
reconciliations, A/P invoices; and
(e) assist with monthly operating reports.
The hourly rates of the firm's professionals are as follows:
Partner $250
Staff Accountant $180
Payroll Clerk Processing $100
Karen McMahon, a partner at McMahon & Associates, disclosed in a
court filing that her firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Karen McMahon
McMahon & Associates Certified Public Accountants PC
10010 Calumet Avenue
Munster, IN 46321
Telephone: (219) 924-3450
Facsimile: (219) 924-1640
About Orthopaedic Surgical Consultants
Orthopaedic Surgical Consultants, PC filed a petition for relief
under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr.
N.D. Ind. Case No. 22-21919) on Dec. 31, 2022, with up to $10
million in both assets and liabilities. John J. Pomponi, member of
Orthopaedic Surgical Consultants, signed the petition.
The Debtor tapped Daniel L. Freeland & Associates, PC as legal
counsel and McMahon & Associates, Certified Public Accountants, PC
as accountant.
PARAMOUNT AIR: Court OKs Final Cash Collateral Access
-----------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of North
Carolina, Greensboro Division, authorized Paramount Air Solutions,
LLC, to use cash collateral on a final basis in accordance with the
budget, with a 10% variance.
The Debtor requires the use of cash collateral to pay its
operational needs.
In August 2021, the Debtor purchased a commercial HVAC company,
which proved devastating to the Debtor. In preparation of the
Chapter 11 filing, the Debtor terminated eight employees in October
2022 and made the decision to revert to solely providing
residential and light commercial HVAC services, which was extremely
profitable.
The Debtor anticipates that its plan, when filed, will be one of
partial reorganization and partial liquidation, as the Debtor no
longer needs much of the equipment that it purchased in August 2021
to operate its commercial HVAC arm. In addition, the Debtor plans
to vacate the building from which it currently operates in the next
2-3 months, as the Debtor no longer needs the space it currently
vacates.
The Debtor owes approximately $455,083 to Truliant Federal Credit
Union pursuant to a properly perfected first priority lien
encumbering the Debtor's inventory, equipment, accounts, accounts
receivable and certain vehicles pursuant to Promissory Note,
Security Agreement and UCC Financing Statement dated on or about
August 5, 2021.
The Debtor owes approximately $149,991 to Pinnacle Bank pursuant to
a properly perfected second priority lien encumbering the Debtor's
inventory, equipment, accounts, and accounts receivable pursuant to
Promissory Note, Security Agreement and UCC Financing Statement
dated on or about February 1, 2022.
IDEA 247, Inc. appears to maintain a UCC Financing Statement with
the North Carolina Secretary of State, that would, if valid,
encumber the Debtor's cash and accounts. However, the debt owed to
Idea has been paid in full. The Debtor asserts that Idea does not
have an interest in cash collateral as defined in 11 U.S.C. section
363(a).
To the extent the Debtor uses the cash collateral of the Secured
Parties, pursuant to and consistent with 11 U.S.C. section 363(e)
and section 361, the Secured Parties are granted a postpetition
replacement lien in the Debtor's post-petition property of the same
type which secured the indebtedness of the Secured Parties
pre-petition, with such liens having the same validity, priority,
and enforceability as the Secured Parties had against the same type
of such collateral as of the Petition Date.
The security interests and liens herein granted to the Secured
Parties are and will be in addition to all security interests,
liens and rights of set-off existing in favor of the Secured
Parties on the Petition Date, if any.
During the Usage Period, the Debtor will make an adequate
protection payment and in compliance with 11 U.S.C. section
363(c)(3), to Truliant in the amount of $700 on or before February
1, 2023 and on the 1st day of the month thereafter during the Usage
Period. In addition, the Debtor will deposit into the trust account
of Debtor’s counsel $350 per month, beginning February 1, 2023
and each month thereafter during the Usage Period, which will be
earmarked as a potential adequate protection payment to Pinnacle
Bank. Disbursement of the Pinnacle Funds will occur upon resolution
of Pinnacle’s claim classification.
These obligations of the Debtor are continuing in nature, will
survive the term of the Order, and will remain in effect until the
earlier of:
(i) The effective date of any confirmed Chapter 11 plan in the
proceeding;
(ii) Conversion of the case to another Chapter of the
Bankruptcy Code;
(iii) The entry of further orders of the Court regarding the
subject matter hereof; or
(iv) Dismissal of the case.
These events constitute an "Event of Default":
(i) The Debtor fails to comply with any of the terms or
conditions of the Order;
(ii) The Debtor uses cash collateral other than as agreed in
the Order;
(iii) Cancellation or lapse of the Debtor's applicable insurance
coverage;
(iv) Cessation of business operations by Debtor; or
(v) Conversion to chapter 7 or dismissal of the case.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3QDqGFC PacerMonitor.com.
The budget provides for total expenses, on a weekly basis, as
follows:
$27,850 for the week ending January 13, 2023;
$25,272 for the week ending January 20,2023;
$33,051 for the week ending January 27,2023;
$23,642 for the week ending February 3, 2023;
$27,719 for the week ending February 10, 2023;
$23,668 for the week ending February 17, 2023; and
$30,701 for the week ending February 4, 2023.
About Paramount Air Solutions, LLC
Paramount Air Solutions, LLC offers residential and light
commercial HVAC maintenance, emergency service, repairs and system
change outs. Paramount currently has 215 service plan customers who
hold maintenance agreements with the company, with Paramount
performing routine HVAC maintenance biannually. The company
services customers from South Charlotte, Gastonia, Waxhaw, the Lake
Norman area and the Piedmont Triad.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D.N.C. Case No. 22-10635) on December 16,
2022. In the petition signed by Jeramy Lee Goodman, member-manager,
the Debtor disclosed up to $500,000 in assets and up to $10 million
in liabilities.
Judge Lena Mansori James oversees the case.
Samantha K. Brumbaugh, Esq., at Ivey, McClellan, Siegmund,
Brumbaugh & McDonough, LLP, is the Debtor's legal counsel.
PARAMOUNT RESTYLING: Commences Subchapter V Bankruptcy Proceeding
-----------------------------------------------------------------
Paramount Restyling Automotive Inc. and affiliate Warner Science
Applications filed for chapter 11 protection in the District of
Central California. The Debtors elected on their voluntary
petitions to proceed under Subchapter V of chapter 11 of the
Bankruptcy Code.
Paramount was founded and incorporated by Mingfa Yang ("M. Yang")
in January 2008 and Warner was founded and incorporated by M. Yang
in 2001. M. Yang is the Chief Executive Officer of Paramount and
Warner. Mr. Yang’s son, Samson Yang, is a Vice President of
Paramount and Warner and is largely responsible for day-to-day
operations.
Paramount sells innovative, stylish, high-quality after-market
products for trucks, Jeeps, and SUVs at extremely competitive
pricing. As a leading industry manufacturer, Paramount has
integrated robotic welding and CNC equipment into its pursuit of
increasing product quality and reliability. Paramount generally
sells its Products to distributors and other businesses, and
Paramount often ships products to end users on behalf of
Paramount's distributor and business customers. A smaller part of
Paramount's sales come from direct purchases by end users from
Paramount's website
at: https://paramount-automotive.com/.
Warner sells Paramount's Products directly to customers through
Amazon's marketplace. When Warner receives an order, it issues a
purchase order to Paramount, which ships Products to purchasers on
Warner's behalf. Warner collects on the account receivable for its
sales and, in turn, pays Paramount amounts owed for its purchase
orders for Products.
Paramount's 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. 31, 2023 at 10:00 AM at UST-RS1, TELEPHONIC MEETING.
CONFERENCE LINE:1-866-822-7121, PARTICIPANT CODE:6203551.
Proofs of claim are due by March 20, 2023.
About Paramount Restyling Automotive
Paramount Restyling Automotive Inc. is a manufacturer of automotive
parts, accessories, and tires.
Paramount Restyling Automotive Inc. and affiliate Warner Science
Applications each filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case Nos.
23-10069 and 23-10070) on Jan. 10, 2023. In the petition filed by
Mark Allen, as manager, the Paramount reported assets and
liabilities between $1 million and $10 million.
PARTY CITY HOLDCO: In Talks for Potential Bankruptcy Loan
---------------------------------------------------------
Eliza Ronalds-Hannon and Reshmi Basu of Bloomberg News report that
Party City Holdco Inc. has sought funding for a potential Chapter
11 bankruptcy, according to people with knowledge of the
preparations.
The company, which is preparing to enter bankruptcy protection
within weeks, is sharing information with potential providers of
debtor-in-possession financing, said the people, who asked not to
be identified because the matter is private.
Rockaway, New Jersey-based Party City has been negotiating with a
creditor group that includes Capital Group Cos Inc. and Silver
Point Capital ahead of the potential filing, Bloomberg reported.
The company will likely miss a coupon payment due in mid-February
2023 and could seek reprieve from its creditors to negotiate a
restructuring, according to Bloomberg's sources.
About Party City
Party City Holdco Inc. (NYSE: PRTY) is the leading party-supply
retailer in the U.S., with 761 company-owned stores as of September
2022, e-commerce operations, and a large wholesale operation that
supplies retail operations and third parties.
Party City reported $2.869 billion in total assets against $3.022
billion in total liabilities as of Sept. 30, 2022.
The Company said net sales were $1.463 billion in the nine months
ended Sept. 30, 2022, slightly down from $1.473 billion in the same
period in 2021. It incurred a net loss of $237.7 million in the
nine months ended Sept. 30, 2022, compared with net profit of $12.9
million in the same period in 2021.
PATAGONIA HOLDCO: Calamos DCIF Marks $260,000 Loan at 19% Off
-------------------------------------------------------------
Calamos Dynamic Convertible and Income Fund has marked its $260,000
loan extended to Patagonia Holdco LLC to market at $209,300, or 81%
of the outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos DCIF's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.\
Calamos DCIF is a participant in a Bank Loan that accrues interest
at a rate of 8.386% per annum (3 mo. SOFR + 5.75%) to Patagonia
Holdco LLC. The loan is scheduled to mature on August 1, 2029.
Calamos Dynamic Convertible and Income Fund was organized as a
Delaware statutory trust on March 11, 2014 and is registered under
the Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
March 27, 2015.
Patagonia Holdco LLC is a holding company fully owned and
established by Stonepeak Partners LP, a private equity firm
specializing in infrastructure and real estate investments, to hold
the Latin American assets acquired from Lumen Technologies, Inc.
PATAGONIA HOLDCO: Calamos GDIF Marks $200,000 Loan at 19% Off
-------------------------------------------------------------
Calamos Global Dynamic Income Fund has marked its $200,000 loan
extended to Team Health Holdings, Inc to market at $161,000, or 81%
of the outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos GDIF's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos GDIF is a participant in a Bank Loan that accrues interest
at a rate of 8.979% per annum (1 mo. SOFR + 5.25%) to Team Health
Holdings, Inc. The loan is scheduled to mature on August 1, 2029.
Calamos Global Dynamic Income Fund was organized as a Delaware
statutory trust on April 10, 2007 and is registered under the
Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
June 27, 2007.
Patagonia Holdco LLC is a holding company fully owned and
established by Stonepeak Partners LP, a private equity firm
specializing in infrastructure and real estate investments, to hold
the Latin American assets acquired from Lumen Technologies, Inc.
PELLETIER MANAGEMENT: Unsecureds to Get 3.7432% in Liquidating Plan
-------------------------------------------------------------------
Pelletier Management and Consulting LLC submitted a First Amended
Plan of Liquidation dated January 10, 2023.
This amended Plan provides for liquidation of the assets of the
Debtor, including sale and distribution to Real Estate Holdings LLC
an Oklahoma Series Limited Liability Company for the benefit of its
Series B on terms negotiated with the assistance of the Subchapter
V Trustee for what is anticipated to be a consensual Plan.
The anticipated sale of the Ohio Real Estate is anticipated to be
the subject of a separate order pursuant to 11 U.S.C. Section 363
to a related entity for an agreed upon amount and subject to terms
in accordance with this Plan providing for mutual waiver between
the Debtor's related parties on the one hand and Real Estate
Holdings LLC and related parties on the other hand.
The Plan provides for a distribution of the actual net proceeds but
projects an anticipated distribution to general unsecured creditors
under the Plan of 3.7432%, with such distribution being made as
soon as the North Dakota Real Estate is liquidated. The creditors
benefit under the Plan through exclusion of any unsecured claim of
REH and reduction of anticipated administrative expenses -- since
there will be no Chapter 7 Trustee fee/commission paid.
Further, the creditors under the Plan may receive distribution
under the Plan faster than they would under a hypothetical Chapter
7 liquidation, since the Chapter 7 process would require the
holding of another 341 meeting of creditors and setting of a new
claims bar date, the Chapter 7 Trustee to become educated on the
issues and assets in the case and noticing requirements pursuant to
the Trustee Final Report process (an additional 30 days prior to
distribution). Accordingly, the Plan satisfies the requirements of
Section l129(a)(7).
The Debtor's primary hard assets are the Ohio Real Estate, which
was the subject of a pre-petition foreclosure proceeding, and the
North Dakota Real Estate. The Ohio Real Estate is zoned commercial
and has model log homes on the premises, which are in varying
states of disrepair. In the foreclosure proceeding on the Ohio
Real Estate, the secured creditor obtained a judgment in the amount
of $1,476,578 plus continuing interest and expenses on its mortgage
note and the real property subject to that mortgage was appraised
with a value of $900,000.
Debtor intends to liquidate the Ohio Real Estate and the North
Dakota Real Estate and discontinue all operations. The net
proceeds from the sale of the North Dakota Real Estate (net of
Administrative Expenses, including capital gains taxes on the sale
of the North Dakota Real Estate) is intended to be distributed to
Class 5 claimants.
Applewood Log Home Sales, Inc., is owned by Ashlyn Byrne (the
daughter of Nancy Pelletier and Gaetan Pelletier) and her husband.
The sale of the Ohio Real Estate contemplated by this Plan is
anticipated to be included in a separate motion and order pursuant
to 11 U.S.C. Sec. 363 and on terms that provides for sale to
Applewood Log Home Sales, Inc. for payment of $575,000.
While the sale at $575,000 may be less than the value of the Ohio
Real Estate (given the appraisal in foreclosure of $900,000), the
value of the Ohio Real Estate is believed to be much less than the
judgment amount obtained by REH ($1,476,578) and less than the
proof of claim filed by REH as a secured claim (Proof of Claim No.
3 filed in the amount of $1,651,560 plus interest from Sept. 16,
2022 at the rate of 6.5% and fees, expenses and collection costs).
The limited value of the Ohio Real Estate is confirmed by the
willingness of REH to accept $600,000 in accordance with the other
terms and conditions of the Plan.
Class 4 consists of Secured Claim of REH, which is the subject of
the filing of Proof of Claim Number 3 by REH and secured by a
mortgage on the Ohio Real Estate and the rents collected relating
thereto. The Debtor agrees that REH will have an Allowed Secured
Claim in the full amount set forth in Proof of Claim Number 3. The
Debtor further agrees that it will not file any objections to REH's
secured claim. In addition, within 5 days of the entry of the
Confirmation Order, the Debtor shall dismiss the appeal captioned
Real Estate Holdings v. Pelletier Management and Consulting, et
al., Ohio Second District Court of Appeals, Case No. CA 029541 (the
"Ohio Appeal"), and all other pending litigation involving REH or
InterBank.
REH has agreed it will timely vote to accept the Plan, as currently
proposed, and shall be paid under the Plan as follows:
* $575,000 from the funds to be held in escrow by REH's
counsel pending entry of an order confirming the Plan. These funds
shall be placed on deposit by Applewood Log Home Sales, Inc.
pursuant to a separate agreement of the parties, which further
contemplates the sale of the Ohio Real Estate by warranty deed and
in accordance with a further order to be entered by this Court
pursuant to 11 U.S.C. Section 363); and
* $25,000 from the funds on hand of the Debtor.
Class 5 consists of General Unsecured Claims. This Class will
receive a distribution of 3.7432% of their allowed claims. The
Debtor agrees REH will have an Allowed Unsecured Claim in the full
amount set forth in Proof of Claim Number 4. The Debtor further
agrees that it will not file any objections to REH's unsecured
claim. Allowed Class 5 Claims shall be paid pro rata the following
amounts:
* The net sale proceeds from the sale of the North Dakota Real
Estate (net of sale expenses, including realtor's commissions,
payoff of any liens and encumbrances, and estimated capital gains
taxes and any other Allowed Administrative Expenses), which shall
be transferred to the Distribution Agent at closing of the sale of
each parcel of the North Dakota Real Estate and distributed pro
rata to the Allowed Class 5 Claims other than the REH Unsecured
Claim shall be distributed within 30 days of the closing on the
last of the sales of the North Dakota Real Estate; and
* Any other funds remaining on hand and owned by the Debtor,
after payment of all Allowed Administrative Expenses, shall be
distributed along with the net sale proceeds identified in the
foregoing paragraph within 30 days of the closing on the last of
the sales of the North Dakota Real Estate.
Debtor does not anticipate any continued operations as it will be
liquidating following confirmation of the plan.
Immediately upon entry of the Confirmation Order, the Debtor shall
be authorized and ordered to proceed with the sale of the Ohio Real
Estate. Applewood Log Home Sales, Inc., has agreed to purchase the
Ohio Real Estate from the Debtor for the sum of $575,000.00, plus
closing costs. The closing (the "Closing") for this sale shall
occur within 5 calendar days following entry of the Confirmation
Order. Applewood Sales Inc. shall receive insurable title to the
Property.
Elite Land Title, an Ohio title company, shall conduct the Closing
and prepare all necessary documents for the transaction. Applewood
Sales Inc. shall be responsible for all closing costs, prorations,
etc. so that the amount to be distributed to REH from the sale is
equal to $575,000.00. The Closing shall be conducted at the offices
of McNamee & McNamee, PLL, or any other location to which the
Parties agree. After the Effective Date, the Liquidating Debtor
will seek authority to proceed with sales of its remaining real
property to ensure good title is able to be distributed and all
creditors and parties in interest will receive notice of the sale
terms.
A full-text copy of the First Amended Liquidating Plan dated
January 10, 2023 is available at https://bit.ly/3w8stJi from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Patricia J. Friesinger, Esq.
Coolidge Wall Co., LPA
33 W. First Street, Ste. 200
Dayton, OH 45402
Telephone: (937) 449-5776
Facsimile: (937) 223-6705
Email: friesinger@coollaw.com
About Pelletier Management and Consulting
Pelletier Management and Consulting LLC filed a petition for relief
under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr.
S.D. Ohio Case No. 22-31296) on Sept. 16, 2022. In the petition
filed by Gaetan Pelletier, chief executive manager, the Debtor
reported assets between $500,000 and $1 million and estimated
liabilities between $1 million and $10 million.
Donald W. Mallory has been appointed as Subchapter V trustee.
The Debtor is represented by Patricia J. Friesinger, Esq., at
Coolidge Wall Co., LPA.
PENTA STATE: Court OKs Cash Collateral Access
---------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Penta State LLC and affiliates to use the cash
collateral of Fifth Third Bank, National Association, on a final
basis in accordance with the budget.
The Debtors are permitted to use cash collateral through and
including the Termination Date for working capital, general
corporate purposes, and administrative costs and expenses of the
Debtors incurred in the chapter 11 case.
As of the Petition Date, the Debtors and the Secured Lender were
parties to the Credit Agreement, dated as of March 28, 2022,
pursuant to which the Secured Lender made a term loan to the
Debtors in the aggregate principal amount of $23 million and agreed
to make available to the Debtors advances under a revolving loan
facility in an aggregate amount of up to $5 million as evidenced by
the Term Loan Promissory Note and Revolving Credit Promissory
Note.
As of the Petition Date, the Debtors were indebted to the Secured
Lender in the aggregate amount of not less than $27.424 million,
consisting of principal plus accrued and unpaid interest,
penalties, fees, expenses, and reimbursements.
Prior to the Petition Date, the Debtors drew the total available
amount under the Revolver and deposited the proceeds in Bank of
America account number ending 6989. Prior to the date of the Term
Loan, the Debtors had approximately $350,000 in Bank of America
account number ending 1419. The Revolver Proceeds and the Zayd Cash
are not subject to a control agreement required to perfect the lien
granted in them pursuant to the Security Agreement.
As adequate protection, the Secured Lender is granted a valid,
binding, continuing, enforceable, fully-perfected, non-voidable
first priority lien and replacement lien on, and security interest
in, all of the Debtors' now owned and hereafter acquired real and
personal property, tangible and intangible assets, and rights of
any kind or nature.
The Adequate Protection Liens are deemed perfected without the
necessity of the execution (or recordation or other filing) by the
Debtors of security agreements, control agreements, pledge
agreements, financing statements, mortgages, or other similar
documents.
Beginning February 3 and continuing on the first Friday of every
month thereafter for so long as the Final Order is in effect,
Debtors will pay to Secured Lender $50,000.
Beginning April 7 and within 5 business days following the first
day of each calendar quarter thereafter for so long as the Final
Order is in effect, the Debtors will pay to Secured Lender the Cash
Sweep Amount calculated based on the amount of Debtors' cash as of
the last day of the immediately preceding calendar quarter;
provided, that no Cash Sweep Amount will be payable if Debtors'
cash is less than $1 million on the applicable Calculation Date.
Cash Sweep Amount means the sum of (i) 30% of the amount of
Debtors' cash from $1 million up to and including $1.5 million,
plus (ii) 100% of Debtors' Cash in excess of $1.5 million.
The Adequate Protection Payments will not be applied to payment of
professional fees or expenses incurred by the Secured Lender in
connection with, or in any way related to, any claim against Dr.
Saad Alsaab or Amit K. Gupta.
The Adequate Protection Liens are deemed perfected without the
necessity of the execution (or recordation or other fil ing) by the
Debtors of security agreements, control agreements, pledge
agreements, fin ancing statements, mortgages, or other similar
documents, or the possession or control by the Secured Lender of
any Adequate Protection Collateral.
The Debtors' right to use cash will terminate five business days
following the delivery of a written notice by the Secured Lender to
the Debtors, the U.S. Trustee, and Committee appointed in the
bankruptcy cases, if any, of the occurrence of any of the
termination events.
The termination events include:
a. Failure of the Debtors to comply with any material
provisions of the Proposed Interim Order;
b. The use of the Debtors' Cash for any purpose not authorized
by the Proposed Interim Order or in excess of the limitations set
forth in the Proposed Interim Order;
c. An order is entered reversing, amending, supplementing,
staying, vacating, or otherwise modifying the Proposed Interim
Order without the written consent of the Secured Lender, or the
Proposed Interim Order ceases to be in full force and effect for
any reason.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3IJD6dj from PacerMonitor.com.
The budget provides for total operating disbursements, on a weekly
basis, as follows:
$458 for the week ending January 21, 2023;
$112 for the week ending January 28, 2023;
$324 for the week ending February 4, 2023;
$113 for the week ending February 11, 2023;
$324 for the week ending February 18, 2023;
$290 for the week ending February 25, 2023;
$301 for the week ending March 4, 2023;
$116 for the week ending March 11, 2023;
$301 for the week ending March 18, 2023;
$518 for the week ending March 25, 2023;
$276 for the week ending April 1, 2023;
$116 for the week ending April 8, 2023; and
$276 for the week ending April 8, 2023.
About Penta State
Penta State, LLC is a Tomball, Texas-based company formed by Dr.
Saad Alsaab. Penta State units, Elite Medical Laboratory
Solutions, LLC and Graham Tomball, LLC (each doing business as DIAX
Labs), operate two independent laboratories based near Houston,
Texas. DIAX Labs offers a suite of services, including (a)
toxicology, (b) molecular diagnostics, (c) genetics, and (d) blood
and wellness testing for patients with commercial insurance and
Medicare beneficiaries.
Penta State, along with affiliates Nationwide Laboratory Partners
LLC, Elite Medical Laboratory Solutions, Graham Tomball, and Zayd
Assets, LLC, filed for Chapter 11 bankruptcy protection (Bankr.
S.D. Texas Lead Case No. 22-90331) on Oct. 11, 2022. Amit Gupta,
president of Penta State, signed the petition. In the petition,
Penta State reported $10 million to $50 million in both assets and
liabilities.
Judge David R. Jones oversees the cases.
Munsch Hardt Kopf & Harr, P.C. and Spencer Fane, LLP serve as
theDebtors' bankruptcy counsel and special counsel, respectively.
PEOPLE SPEAK: Court Confirms Third Amended Plan
-----------------------------------------------
Judge Meredith S. Grabill has entered an order confirming the Third
Amended Plan of Reorganization of People Speak, LLC.
All objections to the Disclosure Statement and Plan, to the extent
not withdrawn, resolved, waived, or settled prior to the
Confirmation Hearing or incorporated into this Order, are overruled
on the merits.
The Plan provides that all executory contracts and unexpired leases
not previously assumed and assigned pursuant to Section 365 of the
Bankruptcy Code or assumed and assigned pursuant to the Prevailing
Bidder, are assumed. Additionally, Article IX of the Plan provides
that if the rejection by the Debtor (pursuant to the Plan or
otherwise) of an executory contract or unexpired lease results in a
Claim on account of such rejection, then such Claim must be filed
no later than the latter of 30 days after entry of the order
confirming the Plan, or 30 days after the unexpired lease or
executory contract is rejected.
Allowed Claims that are not Impaired within the meaning of 11
U.S.C. section 1124 and the Holders thereof are conclusively
presumed to have accepted the Plan under 11 U.S.C. section 1126(f).
Classes 1 and 2 under the Plan are not Impaired. Classes 3, 4, 5,
6, and 7 under the Plan are Impaired and entitled to vote and have
each rejected the Plan. Although Classes 3, 5, 6, and 7 voted to
accept the Plan, no vote was received with respect to any Class 4
claim and Class 4 is deemed to reject the Plan. Therefore, Section
1129(a)(8) of the Bankruptcy Code is not satisfied.
Classes 3, 5, 6, and 7, each an Impaired Class under the Plan, have
accepted the Plan. Therefore, Section 1129(a)(10) of the Bankruptcy
Code is satisfied.
About People Speak
People Speak, LLC, a privately held company that operates in the
traveler accommodation industry, sought protection under Chapter 11
of the Bankruptcy Code (Bankr. E.D. La. Case No. 21-10315) on March
11, 2021. Rachele Riley, owner, and member signed the petition.
The Debtor disclosed $1 million to $10 million in both assets and
liabilities in the petition.
Judge Meredith S. Grabill oversees the case.
Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, led by Stewart F. Peck,
Esq., serves as the Debtor's counsel.
PM GENERAL: Moody's Lowers CFR to Caa1, Outlook Negative
--------------------------------------------------------
Moody's Investors Service downgraded PM General Purchaser LLC's
("AM General") corporate family rating to Caa1 from B3, probability
of default rating to Caa1-PD from B3-PD and senior secured rating
to Caa1 from B3. The outlook is negative.
The ratings downgrades reflect the continued deterioration in the
company's operating performance and weak liquidity. The downgrade
also incorporates the rating agency's concern over AM General's
ability to restore vehicle sales amid ongoing supply chain
challenges that diminish the prospect of rapid improvement in
earnings. The high risk of default is supported by Moody's
expectation of break-even free cash flow at best through at least
2023 while having limited access to the revolver. This is because
the company's springing covenant would be breached if triggered.
Downgrades:
Issuer: PM General Purchaser LLC
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD
Senior Secured Regular Bond/Debenture, Downgraded to Caa1 (LGD4)
from B3 (LGD4)
Outlook Actions:
Issuer: PM General Purchaser LLC
Outlook, Remains Negative
RATINGS RATIONALE
AM General's Caa1 CFR reflects the company's very high financial
leverage and weak liquidity. Moody's expects the company's adjusted
debt/EBITDA (calculated as per Moody's standard adjustments) to
decline to roughly 9 times by the end of 2023, down from 13.7 times
at September 30, 2022. The earnings recovery that Moody's
anticipates is unlikely to restore AM General's operating profit to
its pre-pandemic level, thereby leaving financial leverage very
high. The CFR is also constrained by the company's narrow product
focus as a sole-source provider of High Mobility Multipurpose
Wheeled Vehicle (HUMVEE) to the Department of Defense (DoD) and
international markets. Demand for these vehicles could fluctuate
from year to year as the contract with US Army specifies no annual
minimum order requirement. In addition, rising competition from the
next-generation tactical vehicles could also erode AM General's
market share over time.
Nonetheless, the Caa1 CFR is supported by AM General's
well-entrenched market position given its ownership of technical
data rights for HUMVEE and that it manufactures both the engine and
transmission. The installed base of 250,000 vehicles globally
affords the company the opportunity for meaningful upgrades and
parts orders. The US Army has also indicated that the HUMVEE will
continue to play a large role within the light tactical vehicle
fleet through 2045, notwithstanding the recent introduction of a
modernized light tactical vehicle ("JLTV") from a competitor.
AM General's ESG considerations reflects the company's high
governance risk given the high financial leverage and exposure to
future leveraging risk. Environmental and social risks are moderate
and in in line with the general manufacturing sector.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects the company's weak liquidity and the
potential risk of a covenant breach. The outlook also reflects the
challenges in improving earnings given the ongoing supply chain
constraints.
The ratings could be upgraded if the company's vehicle sales
improve resulting in higher earnings and positive free cash flow.
Sustaining interest coverage (EBIT/ Interest) in excess of 1.0 time
while maintaining good liquidity could also result in an upgrade.
The ratings could be downgraded if the company's liquidity erodes
or the company breaches its covenant levels. A ratings downgrade
could also be prompted if Moody's view on the probability of a
restructuring or distressed exchange increases.
The principal methodology used in these ratings was Aerospace and
Defense published in October 2021.
AM General, LLC, headquartered in South Bend, Indiana, designs,
engineers, manufactures, supplies and supports specialized vehicles
for commercial and military customers. Revenues for the last twelve
months ended September 2022 were $423 million. The company is owned
by entities of financial sponsor KPS Capital Partners LP.
POST HOLDINGS: Moody's Affirms 'B1' CFR, Outlook Remains Stable
---------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Post Holdings,
Inc., including the company's B1 Corporate Family Rating, the B1-PD
Probability of Default Rating, the Ba1 rating on the company's
senior secured $750 million revolver due 2025, and the B2 rating on
the company's senior unsecured notes. The SGL-1 Speculative Grade
Liquidity Rating is unchanged. The outlook remains stable.
The affirmation and stable outlook reflect Moody's expectation that
Post will continue to maintain high financial leverage as it
pursues growth through acquisitions. In the absence of
acquisitions, Moody's expects debt/EBITDA leverage (on a Moody's
adjusted basis) to decline from 6.9x for the fiscal year ended
September 30, 2022 to 5.5-6.5x over the next 12-18 months, driven
by EBITDA growth as operating performance continues to improve.
Moody's projects Post will generate more than $200 million of free
cash flow in both fiscal 2023 and fiscal 2024 and maintain very
good liquidity, and that following leveraged acquisitions, the
company would apply free cash flow to debt repayment.
As with most of US packaged food companies, Post faced substantial
inflationary pressure since mid-2021 across inputs, freight, and
labor, while labor shortages and supply chain disruptions led to
manufacturing inefficiencies and service level reductions. These
headwinds resulted in a 6% adjusted EBITDA decline in fiscal 2021,
despite a modest recovery in Foodservice. Post's adjusted EBITDA
rebounded by 8% in fiscal 2022 as the company benefitted from the
pricing actions taken to offset inflation, and the continued volume
recovery in Foodservice. Supply chain headwinds have also eased,
although supply chain disruptions remain, resulting in lower than
optimal performance. Moody's projects the company's adjusted EBITDA
to grow at a roughly mid-single digit rate in both fiscal 2023 and
fiscal 2024 as the company should benefit from pricing and
continued improvements in supply chain performance.
Affirmations:
Issuer: Post Holdings, Inc.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Senior Secured Revolving Credit Facility, Affirmed Ba1 (LGD1)
Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD4)
Outlook Actions:
Issuer: Post Holdings, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Post's B1 CFR reflects its aggressive financial policy including
its growth-through-acquisitions strategy, high financial leverage,
and large share repurchase program. Products tend to be mature with
some such as cereal experiencing modest long-term decline that
creates growth challenges and leads to acquisition event risk as
the company expands the portfolio. The strategy and portfolio
shifting also creates some uncertainty about the asset base and
thus the overall business risks. Share repurchases weaken the
credit profile but are more discretionary than dividends. Post does
not pay a dividend and the company can redirect free cash flow to
repay debt and reduce leverage. The company's credit profile is
supported by good product diversity, solid brand equities in high
margin product categories, strong free cash flow and very good
liquidity. The free cash flow provides good reinvestment
flexibility and the ability to repay debt.
Post fully exited its ownership stake in BellRing Brands, Inc.
("BellRing") in November 2022 following various transactions in
fiscal 2022 and fiscal 2023 to complete the separation. While the
separation from BellRing weakens Post's credit profile because of
the reduction in scale, product diversity, and exposure to the
attractive health and wellness category, this is partially offset
by Post's reduction in debt funded by the proceeds from the
monetization of its BellRing stake. Debt/EBITDA leverage (on a
Moody's adjusted basis) remains elevated at 6.9x for the fiscal
year ended September 30, 2022, but Moody's projects leverage to
decline over the next 12-18 months to 5.5-6.5x driven by EBITDA
growth as operating performance continues to improve.
Post's SGL-1 Speculative Grade Liquidity rating reflects the
company's very good liquidity, including access to $730 million
under its undrawn $750 million senior secured revolving credit
facility (net of $20 million in letters of credit) and a cash
balance of $587 million as of September 30, 2022. Post's large cash
balance and the revolver positions the company well to pursue
acquisitions in a challenging financing environment. Moody's
expects the company to generate at least $200 million of free cash
flow over the next 12 months. The forecast reflects an elevated
level of capital expenditures of $300-325 million in fiscal 2023
which includes $100-110 million investment in ready-to-drink shake
manufacturing, precooked and cage-free eggs and manufacturing
optimization. Capital expenditures are projected to increase to
more than $400 million in fiscal 2024 as spending on these projects
steps up. The company does not pay dividends on its common stock.
The revolver is governed by a springing senior secured net leverage
covenant of 4.25x that is tested if 30% of the facility is drawn.
Moody's does not expect the covenant to be tested in the next 12-18
months, but if it were to be triggered, Moody's expects the company
to have ample cushion as the only secured debt is the revolving
credit facility, which is largely unutilized. Post has no material
near-term debt maturities other than the revolving credit facility
that expires in March 2025.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating downgrade could occur if operating performance
deteriorates, debt/ EBITDA is sustained above 6.5x, or if free cash
flow or liquidity deteriorate.
A rating upgrade could occur if organic sales growth is good, the
operating profit margin remains stable, free cash flow remains
strong and the company sustains debt/EBITDA below 5.5x.
ESG CONSIDERATIONS
Post's ESG Credit Impact Score is highly negative (CIS-4). The CIS
score reflects the weight placed on its aggressive financial
strategy as the company operates with high leverage and pursues
growth through acquisitions that have historically led to leverage
increases. Post is also moderately negatively exposed to
environmental and social risks.
Post's credit exposure to environmental risks is moderately
negative (E-3). Moderately negative exposure to natural capital
risks reflects the company's reliance on many agricultural inputs
(including wheat, oats, rice, corn and others) that require use of
land and fertilizers that could harm the environment, and which
could additionally be affected by climate change. Post also has
moderately negative exposure to waste and pollution risks as the
company creates waste in food manufacturing, packaging, and
disposal. Regulations and consumer preferences are likely to evolve
to reduce packaging or improve recyclability or biodegradability of
packaging, which could increase the cost of compliance in the
future. Post is managing these risks by diversifying its portfolio
to reduce reliance on any one particular ingredient. Further, many
of its primary agricultural products such as wheat and corn are
more readily available than other raw materials. On waste and
pollution, Post has various initiatives to minimize food waste,
promote consumer recycling and increase the use of recycled and
recyclable content in its packaging. Post also continues to
undertake efforts to improve energy efficiency, reduce emissions,
and reduce water use intensity.
Post's credit exposure to social risks is moderately negative
(S-3). Moderately negative exposure to customer relations and
responsible production risks reflects the need to invest in product
development and marketing to maintain relevance with consumers and
minimize exposure to potential litigation related to product
labeling, marketing, recalls, and contamination. Post's brand
concentration in Post Consumer Brands, Weetabix, and other brands
also exposes the company to brand perception risk related to these
issues. Post has more risk around responsible production (viewed as
moderately negative) than a typical packaged food manufacturer as
the company owns multiple layer facilities for its egg products
business, meat processing facilities, and sausage production
plants. The ownership of these businesses exposes Post to
heightened regulations and animal welfare issues. Post is also
moderately negatively exposed to demographic and societal trends as
the company sells ready to eat cereal, which has historically
generated weak organic growth as consumers have increasingly
shifted to healthier and more on-the-go breakfast alternatives. The
Post Consumer Brands and Weetabix segments (both primarily cereal
based products) together make up approximately 40% of consolidated
sales. The weaker organic growth profile of the core business has
led Post to pursue an acquisitive strategy to drive revenue growth.
Moderately negative health & safety risks reflect Post's exposure
as a food manufacturer to protect employees from workplace injuries
and from health concerns that could arise from contact with raw
materials and chemicals. Human capital risks are neutral-to-low
although potential labor strikes pose a modest risk if they were to
escalate.
Post's credit exposure to governance risks is highly negative
(G-4). This score reflects Posts' high tolerance for risk, as the
company maintains high leverage and pursues growth through
acquisitions that have historically increased leverage. The company
does not pay a dividend and the preferred mode of distributing cash
to shareholders is stock buybacks. Share repurchases weaken the
credit profile but are more discretionary than dividends, which
allows the company flexibility to redirect free cash flow to debt
reduction. Post also has some moderately negative complexity in its
organizational structure, driven by its ownership stakes in 8th
Avenue, and more recently Post Holdings Partnering Corporation.
Also, less than 75% of the board members are independent and there
is also some concentrated ownership in Post shares, including by
Route One Investment Company, which owned more than 11% of Post
shares as of September 30, 2022.
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
Based in St. Louis, Missouri, Post Holdings manufactures, markets,
and distributes food products in categories including RTE cereal,
retail and foodservice egg and potato products, and retail side
dishes, sausage, cheese and other dairy and refrigerated products.
Some of the company's well-known brands include Honey Bunches of
Oats, Pebbles, Weetabix, Alpen, Peter Pan, Papetti's, Abbotsford
Farms, Egg Beaters, Simply Potatoes, Bob Evans, and Crystal Farms.
The company is publicly-traded under the ticker "POST". Revenue for
the 12 months ended September 30, 2022 was $5.9 billion, excluding
BellRing.
PREMIER GRILLING: Court OKs Interim Cash Collateral Access
----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Texas,
Sherman Division, authorized Premier Grilling LLC and Premier
Grilling Outdoors LLC to use cash collateral on a final basis and
obtain secured credit from 13 Horizon Point LLC.
As previously reported by the Troubled Company Reporter, over the
past several years, the Debtors' management have developed a close
relationship with the owner of 13 Horizon Point. The lender and its
owner have attempted to assist the Debtors through their financial
difficulties by funding several million dollars in working capital
to the Debtors on an unsecured basis. 13 Horizon Point intends to
continue in its efforts to assist the Debtors with their working
capital needs and has agreed to loan the Debtors up to $500,000 in
working capital.
The Debtors need funds to fill customer orders, which the Debtors
estimate total approximately $350,000. This amount will be funded
within five days of entry of an interim order and the remaining
amounts to be funded after the Interim Order has become a final
order and within five days of the Debtors' written request. Amounts
funded by the Lender on the Loan will accrue interest at a rate of
6% per annum.
Accrued interest on the Principal Amount will be payable in monthly
installments, with the first such Interest Payment commencing on
April 1, 2022. Each Interest Payment is due by the 1st day of each
month. The Loan will mature on December 31, 2023, at which point
the Principal Amount and any accrued unpaid interest will be paid
in full.
According to the Court, upon funding, the Lender is granted a
first-priority lien on all assets of the Borrowers to secure the
amounts owed under the Agreement, subordinate only to (i) valid,
senior, perfected, and unavoidable liens existing as of the
Petition Date; (ii) valid statutory liens of any ad valorem taxing
authority, and (iii) adequate protection liens granted to any
secured creditor pursuant to a cash collateral order entered in the
Bankruptcy Case.
The liens contemplated by the Agreement and granted will be deemed
perfected upon filing in the above-captioned Bankruptcy Cases a
notice indicating that the Agreement has been duly executed of
record and that the initial $350,000 funding has occurred.
A copy of the order is available at https://bit.ly/3vZ14cY from
PacerMonitor.com.
About Premier Grilling LLC
Premier Grilling LLC is a grill store in Texas offering BBQ
smokers, charcoal grills, flat- top grills & griddles, gas grills,
infrared grills, kamado grills, and pellet grills.
Premier Grilling LLC and Premier Grilling Outdoors LLC sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
E.D. Tex. Lead Case No. 22-41727) on December 9, 2022. In the
petitions signed by Brian Rush as CEO of Premier Grilling LLC and
Dan Ferguson as president of Premier Grilling Outdoors, the Debtor
disclosed up to $10 million in both assets and liabilities.
Judge Brenda T. Rhoades oversees the case.
Melissa S. Hayward, Esq., at Hayward PLLC, is the Debtors' legal
counsel.
PRODUCE DEPOT: Feb. 9 Hearing on Disclosure Statement and Plan
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey has
entered an order conditionally approving Produce Depot USA LLC's
Disclosure Statement dated Dec. 22, 2022.
A hearing will be held on Feb. 9, 2023, at 11:00 a.m., for final
approval of the Disclosure Statement (if a written objection has
been timely filed) and for confirmation of the Plan before the
Honorable Vincent F. Papalia, United States Bankruptcy Court,
District of New Jersey, 50 Walnut Street, Newark, NJ 07102, in
Courtroom 3B.
Feb. 2, 2023, is fixed as the last day for filing and serving
written objections to the Disclosure Statement and confirmation of
the Plan.
Feb. 2, 2023, is fixed as the last day for filing written
acceptances or rejections of the Plan.
About Produce Depot USA
Produce Depot, LLC, is a merchant wholesaler of grocery and related
products in Brooklyn, N.Y.
Produce Depot sought Chapter 11 bankruptcy protection (Bankr.
E.D.N.Y. Case No. 22-40412) on March 2, 2022, listing $1,660,488 in
liabilities. On June 9, 2022, the case was transferred to the U.S.
Bankruptcy Court for the District of New Jersey (Bankr. D.N.J. Case
No. 22-14771).
Alla Kachan, Esq., at the Law Offices of Alla Kachan, P.C., is the
Debtor's counsel.
QUANTUM CORP: Appoints Kenneth Gianella as Chief Financial Officer
------------------------------------------------------------------
Quantum Corporation announced the appointment of Kenneth Gianella
as its chief financial officer effective Jan. 12, 2023. Ken
succeeds Mike Dodson, who will remain with the Company to assist in
the transition in an advisory role until August 2023.
"I'm very pleased to add Ken to our executive team. His deep
background in operational finance makes him well-suited to help
lead us through the next phase of our strategic priorities, which
include driving EBITDA expansion and consistent operating results
in support of delivering improved value to our shareholders,"
commented Jamie Lerner, Quantum's president and chief executive
officer.
Lerner continued by saying, "We all owe Mike a tremendous debt of
gratitude for his transformational work during his time at Quantum.
Mike's skilled leadership and oversight provided stability and
financial acumen that were critical to overcoming the challenges we
faced at the time he joined the Company and throughout our efforts
to transition Quantum's business model."
Dodson said, "It has been a privilege to work alongside such a
talented team for the past four years. The strategic and financial
actions initiated over that time period have greatly improved the
Company's balance sheet and established a solid foundation for
future growth and profitability. I believe Quantum is well
positioned to achieve its goals and look forward to assisting Ken
in the transition and watching the Company's continued success."
Gianella has extensive finance and operational experience in
technology companies as a CFO, IRO, treasurer, or as the senior
vice president of Finance. Most recently he had been with Itron,
Inc. leading Investor Relations; Mergers, Divestitures, &
Acquisitions; and their Environmental, Social & Governance (ESG)
strategy. Gianella joined Itron in January 2018 through the
acquisition of Silver Spring Networks where he previously held
various senior finance positions including interim CFO. Prior to
SSNI, Gianella held various senior finance roles at Sensity
Systems, Inc. and KLA-Tencor. Gianella holds a bachelor's degree
from Duquesne University and an MBA from the University of
Pittsburgh's Katz Graduate School of Business.
"I am extremely excited about the opportunity ahead for Quantum and
I look forward to advancing the strategy started by Jamie, Mike,
and the rest of the leadership team. I believe the Company is
strongly positioned to hit its goals and I look forward to
contributing to the Company's future success and driving long term
shareholder value," said Gianella.
In connection with his appointment as chief financial officer, Mr.
Gianella entered into an offer letter with the Company setting
forth the terms of his employment and compensation. Pursuant to
the Offer Letter, Mr. Gianella will receive an annual base salary
of $400,000 and will participate in the Company's annual bonus
program with a target bonus equal to 50% of his base salary, with
the actual payout to be based on company and individual
performance. Mr. Gianella will receive 175,000 restricted stock
units, which will vest in three equal installments on each
anniversary of the grant date, subject to his continued employment.
In addition, Mr. Gianella will also receive 75,000
performance-based RSUs, which will vest annually in three equal
installments, subject to continued employment and achievement of
specific performance metrics approved by the Leadership and
Compensation Committee. Mr. Gianella will also be eligible for
follow-on grants in the summer of 2023, subject to the Committee's
approval.
Third Quarter Fiscal 2023 Preliminary Results
Quantum also announced certain preliminary unaudited financial
results for its third quarter of fiscal year 2023 ended Dec. 31,
2022. Based on preliminary data, the Company expects revenue to be
approximately $110 million, exceeding its original revenue guidance
of $103 million, plus or minus $3 million, and earnings to be at or
above guidance.
About Quantum Corp.
Based in San Jose, California, Quantum Corp. (NYSE:QTM) --
http://www.quantum.com-- provides technology and services that
stores and manages video and video-like data delivering streaming
for video and rich media applications, along with low cost, high
density massive-scale data protection and archive systems. The
Company helps customers capture, create and share digital data and
preserve and protect it for decades.
Quantum reported a net loss of $32.28 million for the year ended
March 31, 2022, a net loss of $35.46 million for the year ended
March 31, 2021, and a net loss of $5.21 million for the year ended
March 31, 2020. As of Sept. 30, 2022, the Company had $209.68
million in total assets, $289.02 million in total liabilities, and
a total stockholders' deficit of $79.34 million.
RAMARAMA INC: Case Summary & 14 Unsecured Creditors
---------------------------------------------------
Debtor: Ramarama, Inc.
1012 Carpenter Fletcher Road
Durham, NC 27713
Business Description: The Debtor acquires, develops, and sells
distressed residential and commercial
properties.
Chapter 11 Petition Date: January 13, 2023
Court: United States Bankruptcy Court
Eastern District of North Carolina
Case No.: 23-00107
Judge: Hon. David M. Warren
Debtor's Counsel: Joseph Z. Frost, Esq.
BUCKMILLER, BOYETTE & FROST, PLLC
4700 Six Forks Road, Suite 150
Raleigh, NC 27609
Tel: 919-296-5040
Fax: 919-890-0356
Email: jfrost@bbflawfirm.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Mark Bullock as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 14 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/BLLGPUQ/Ramarama_Inc__ncebke-23-00107__0001.0.pdf?mcid=tGE4TAMA
REGIONAL HOUSING: Taps Senior Housing Services as Broker Agent
--------------------------------------------------------------
Regional Housing & Community Services Corp. and its affiliates seek
approval from the U.S. Bankruptcy Court for the Northern District
of Georgia to employ Senior Housing Services, LLC as their
exclusive broker agent.
The Debtor requires a broker agent to assist in marketing the
estates' assets for sale; identify potential buyers; and negotiate
terms for one or more potential sale transactions.
The firm will be compensated as follows:
(a) Transaction advisory fee will be due at the closing of a
transaction for any or all of these facilities and will be computed
by multiplying the total purchase price received by the company or
any selling interest owners by 4.75 percent.
(b) The Debtor shall deduct from the transaction advisory fee
any fee paid to SLIB II, Inc. doing business as Senior Living
Investment Brokerage, the Debtors' investment broker, to the extent
such fee may be owed pursuant to the Representation Agreement dated
March 18, 2022.
Daniel Owens, a manager at Senior Housing Services, disclosed in a
court filing that the firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Daniel Owens
Senior Housing Services, LLC
338 S. Sharon Amity Road, Ste. 199
Charlotte, NC 28211
Telephone: (704) 641-1469
About Regional Housing & Community Services
Regional Housing & Community Services Corp. and its affiliates
filed their voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ga. Lead Case No. 21-41034) on Aug.
26, 2021. At the time of the filing, Regional Housing & Community
Services listed as much as $100,000 in both assets and
liabilities.
Judge Paul W. Bonapfel oversees the cases.
The Debtors tapped Scroggins & Williamson, PC as legal counsel; GGG
Partners, LLC as interim management services provider; Gorefine,
Schiller & Gardyn, PA as accountant; and SLIB II, Inc., doing
business as Senior Living Investment Brokerage, as investment
banker. Kurtzman Carson Consultants, LLC is the claims, noticing
and balloting agent.
Greenberg Traurig, LLP serves as counsel for indenture trustee, UMB
Bank, N.A.
Melanie S. McNeil has been appointed as the patient care ombudsman
in the Debtors' cases.
REMER & GEORGES-PIERRE: Seeks Approval to Hire Bankruptcy Counsel
-----------------------------------------------------------------
Remer & Georges-Pierre, PLLC seeks approval from the U.S.
Bankruptcy Court for the Southern District of Florida to employ
Kingcade, Garcia & McMaken, PA and Leiderman Shelomith +
Somodevilla, PLLC as its counsel.
The firms will render these services:
(a) advise the Debtor of its powers and duties;
(b) advise the Debtor with respect to its responsibilities in
complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
(c) prepare legal papers;
(d) protect the interests of the Debtor in all matters pending
before the court;
(e) represent the Debtor in negotiation with its creditors in
the preparation of a Chapter 11 plan; and
(f) perform all other legal services for the Debtor.
The hourly rates of the firms' counsel and staff are as follows:
Timothy S. Kingcade $500
Zach B. Shelomith $500
Jessica McMaken $400
Paraprofessionals $100 - $125
In addition, the firms will seek reimbursement for expenses
incurred.
Prior to the petition date, Kingcade received a fee and cost
retainer in the amount of $25,000 from the Debtor.
Timothy Kingcade, Esq., a member of Kingcade, and Zach Shelomith,
Esq., a member of Leiderman, disclosed in a court filing that their
firms are "disinterested persons" as that term is defined in
Section 101(14) of the Bankruptcy Code.
The firms can be reached through:
Timothy S. Kingcade, Esq.
Kingcade, Garcia & McMaken, PA
1370 Coral Way
Miami, FL 33145
Telephone: (305) 285-9100
Email: scanner@miamibankruptcy.com
- and -
Zach B. Shelomith, Esq.
Leiderman Shelomith + Somodevilla, PLLC
2699 Stirling Road, Suite C401
Ft. Lauderdale, FL 33312
Telephone: (954) 920-5355
Facsimile: (954) 920-5371
Email: zbs@lss.law
About Remer & Georges-Pierre
Remer & Georges-Pierre, PLLC filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
23-10114) on Jan. 6, 2023. In the petition filed by its managing
member, Jason Remer, the Debtor disclosed as much as $1 million in
both assets and liabilities.
Judge Laurel M. Isicoff oversees the case.
Timothy S. Kingcade, Esq., at Kingcade Garcia & McMaken, PA and
Zach B. Shelomith, Esq., at Leiderman Shelomith + Somodevilla,
PLLC, doing business as LSS Law, serve as the Debtor's counsel.
RITE AID: Egan-Jones Retains CCC- Senior Unsecured Ratings
----------------------------------------------------------
Egan-Jones Ratings Company, on December 27, 2022, maintained its
'CCC-' foreign currency and local currency senior unsecured ratings
on debt issued by Rite Aid Corporation. EJR also maintained its 'D'
rating on commercial paper issued by the Company.
Rite Aid Corporation is an American drugstore chain based in
Philadelphia, Pennsylvania.
SAFETY FIRST: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Safety First Express, LLC
2525 Wilmer Ave
Anniston, AL 36201
Chapter 11 Petition Date: January 13, 2023
Court: United States Bankruptcy Court
Northern District of Alabama
Case No.: 23-40044
Debtor's Counsel: C. Taylor Crockett, Esq.
C. TAYLOR CROCKETT, P.C.
2067 Columbiana Road
Birmingham, AL 35216
Tel: (205) 978-3550
Email: taylor@taylorcrockett.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Theron S. Johnson as managing member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/CZOCFOY/Safety_First_Express_LLC__alnbke-23-40044__0001.0.pdf?mcid=tGE4TAMA
SAINT ANNE'S RETIREMENT: Fitch Alters Outlook on 'BB+' IDR to Neg.
------------------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' rating on the following bonds
issued by the Lancaster County Hospital Authority on behalf of
Saint Anne's Retirement Community, PA (SARC):
- $12.54 million series 2022 revenue bonds;
- $36.3 million revenue bonds, series 2020.
Fitch has also affirmed SARC's Issuer Default Rating (IDR) at
'BB+'. The Rating Outlook has been revised to Negative from
Stable.
ANALYTICAL CONCLUSION
The Negative Outlook reflects the significant operating challenges
that SARC has faced over the last two years, due mainly to
lingering challenges from the coronavirus pandemic, which were
exacerbated in SARC's case due to its heavy reliance on SNF
operations, and financial market volatility. These challenges have
thinned SARC's already relatively slim financial cushion, rendering
the rating highly sensitive to any additional stress over the
Outlook period.
The 'BB+' rating reflects SARC's considerably improved debt burden
following the refinancing of its series 2012 bonds during FY22,
which has resulted in a strengthening of SARC's MADS coverage and
capital-related metrics. This improvement to some degree mitigates
Fitch's concerns about SARC's high exposure to Medicaid, which
historically averaged about 35% but improved in FY21 and FY22. The
rating also reflects Fitch's expectations for SARC's revenue mix to
shift over time as the community continues to invest in new ILU
construction. Fitch expects new construction would fill
successfully as did SARC's previous ILU expansion project completed
in FY21.
Entity/Debt Rating Prior
----------- ------ -----
Saint Anne's
Retirement
Community (PA) LT IDR BB+ Affirmed BB+
Saint Anne's
Retirement
Community (PA)
/General
Revenues/1 LT LT BB+ Affirmed BB+
SECURITY
The bonds are secured by a pledge of gross revenues of the
obligated group, mortgage interest in certain properties and a
master debt service reserve fund.
KEY RATING DRIVERS
Revenue Defensibility - bbb
Solid Occupancy, Competitive Market Area, High SNF Exposure
SARC is a single site Life Plan Community (LPC) with a track record
of solid demand, operating in a competitive primary market area
(PMA) of Lancaster County. The PMA's economic and demographic
characteristics are mixed, which makes SARC's modest entrance fee
and rental component affordable and appealing to a broad base of
prospective residents and supportive of a moderate degree of
pricing flexibility in its ILUs. With the opening of its new ILUs,
SARC is making strides toward improving its revenue mix to be less
reliant on its SNF beds, although SARC still derives the majority
of its net revenues from its SNF, pressuring its overall revenue
defensibility.
SARC's skilled nursing facility (SNF) and personal care unit (PCU)
occupancy continues to be pressured by the coronavirus pandemic,
with a COVID-19 outbreak in October 2022 stalling out their
admissions process and greatly limiting their ability to refill
empty beds. Management notes SNF and PCU occupancy showed signs of
recovery in November and December and expects census to be on
budget by the end of January 2023.
Operating Risk - bbb
Solid Operations, Moderated Debt Burden
As a predominantly fee-for-service LPC, SARC has historically
maintained solid core operations. Operations were significantly
challenged in FY22 due to a wage adjustment SARC implemented as a
staff recruitment/retention strategy but have shown improvement in
FY23. Fitch expects SARC's operations to stabilize at an improved
level as its new ILUs fill and SNF/PCU census recovers to budgeted
levels. SARC's capex has been robust, resulting in an improved
average age of plant and supporting strong demand. SARC also
recognized significant debt service savings from the refinancing of
its series 2012 bonds, which considerably moderated its debt
burden, with expectations for continued moderation as new ILU
cottages are constructed and filled.
To some degree, these improvements alleviate Fitch's concerns about
SARC's high exposure to Medicaid, which historically averaged well
above 25% of SNF net revenues but improved in FY21 and FY22. Fitch
will monitor SARC's Medicaid exposure and would consider stabilized
levels of below 25% of SNF net revenues as no longer having
negative implications for the rating.
Financial Profile - bb
Weakened Financial Cushion, Despite Expected Improvement in MADS
Coverage
Despite considerable improvement in SARC's maximum annual debt
service (MADS) coverage, the operational challenges and financial
market volatility experienced in FY22 have weakened SARC's already
slim financial cushion, with cash-to-adjusted debt declining to
24.3% in FY22 from 29.5% in FY21 and days cash on hand declining to
173 days in FY22 from 237 days in FY21. While Fitch expects
liquidity metrics to remain stable to improving over the next
several years as it continues to execute on its strategic capital
plan, this volatility has nevertheless thinned SARC's financial
cushion to a point where the rating would come under pressure in
the face of any additional stress over the next year.
MADS coverage was solid at 2.2x in FY22, but somewhat weaker than
SARC's five-year average of 2.6x (through 1Q of FY23) due to the
operational challenges specific to that year. MADS coverage overall
has improved since the refinancing of the series 2012 debt compared
to 1.4x MADS coverage as FY21 using previous MADS. Fitch expects
MADS coverage to remain at this improved level as SARC constructs
and fills new ILU cottages, which should be additive to the
community's cash flows.
Asymmetric Additional Risk Considerations
No asymmetric risk considerations are relevant to the rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- The rating will be downgraded if days cash on hand remains below
200 or cash-to-adjusted debt is sustained at levels below 25% in
FY23.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Improved cash-to-adjusted debt to levels over 25% and days cash
on hand over 200, coupled with sustained MADS coverage in excess of
2.0x in FY23 would result in a revision of the Outlook to Stable.
PROFILE
SARC is a fee-for-service LPC located outside of Columbia, PA in
the Township of West Hempfield, approximately 35 miles southwest of
Harrisburg and 10 miles west of Lancaster. SARC is sponsored by the
Religious Congregation of Sisters of the Adorers of the Blood of
Christ, United States Region (ASC). SARC consists of 167 ILUs (119
apartments, 48 cottages), 51 personal care units (PCUs), 51 memory
care units and 58 skilled nursing facility (SNF) beds. SARC offers
type-C contracts for its villas and cottages, with 30% refundable,
60% refundable and fully amortizing entrance fee plans available.
For its ILU apartments, SARC offers primarily type-D (rental)
contracts, which require a one-time community fee upon entry. Fitch
calculates SARC's total operating revenues at about $18.1 million
in FY22 (year-end June 30).
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.
SAN LUIS & RIO: Feb. 21 Hearing on Disclosure Statement
-------------------------------------------------------
William A. Brandt, Jr., the Chapter 11 Trustee of the San Luis &
Rio Grande Railroad, Inc., filed a Disclosure Statement and a
Second Plan of Liquidation on December 22, 2022.
Judge Thomas B. McNamara will convene a hearing to consider the
adequacy of and to approve the Disclosure Statement on Tuesday,
Feb. 21, 2023, at 10:00 a.m., in Courtroom E, United States
Bankruptcy Court for the District of Colorado, United States Custom
House, 721 19th Street, Denver, Colorado.
Objections to the Disclosure Statement must be filed and served,
not less than 14 days prior to the Hearing.
On or before January 10, 2023, the Plan Proponent must
a. mail the Notice of Hearing in the form attached to all
creditors and indenture trustees, all equity security holders, and
other parties in interest; and,
b. mail a copy of the Plan, the Disclosure Statement, and the
Notice of Hearing to the U.S. Trustee, counsel for the Creditors'
Committee, the Trustee in the case, if any, and if the Debtor is
not the Plan Proponent, to the Debtor and Debtor's counsel, and to
applicable regulatory authorities, including without limitation,
the Securities and Exchange Commission and the Commissioner of
Securities for the State of Colorado.
About San Luis & Rio Grande Railroad
San Luis & Rio Grande Railroad, Inc., operates the San Luis & Rio
Grande Railroad.
On Oct. 16, 2019, an involuntary Chapter 11 petition was filed
against San Luis & Rio Grande Railroad by creditors, Ralco LLC,
South Middle Creek Road Association and The San Luis Central
Railroad Co. (Bankr. D. Colo. Case No. 19-18905). The petitioning
creditors are represented by Brownstein Hyatt Farber Schrec and
Graves Dougherty Hearon & Moody.
Judge Thomas B. McNamara oversees the case.
Williams A. Brandt Jr. was appointed as Chapter 11 trustee for San
Luis & Rio Grande Railroad.
The Trustee tapped Markus Williams Young & Hunsicker LLC as
bankruptcy counsel, and Fletcher & Sippel LLC and Hall & Evans P.C.
as special counsel. Development Specialists, Inc. and D'Almeida
Consulting, LLC serve as the trustee's accountant and financial
consultant, respectively.
SAVVA HOLDINGS: Seeks Cash Collateral Access
--------------------------------------------
SAVVA Holdings Inc. asks the U.S. Bankruptcy Court of the Central
District of California, Los Angeles Division, for authority to use
the cash collateral of its secured creditors, Automotive Finance
Corporation and HFC Acceptance, LLC.
The Debtor needs access to cash collateral to pay the reasonable
expenses it incurs during the ordinary course of its business.
The Debtor blamed the bankruptcy filing on uncollected revenue that
has been assigned to third party collection companies in an
approximate amount of $150,000, delayed payments on fleet damage
claims in an amount exceeding $200,000 -- approximately 80 open
claims with several carriers, including credit card insurers,
personal auto insurance companies, and third party travel insurance
carriers -- and HFC's request that SAVVA catch up on past due
payments in an amount greater than $106,000 on or before January
10, 2023, or face repossession of the fleet securing HFC's claim,
which would have destroyed the Debtor's business and cause it to
shut down. As a result, SAVVA was forced to file an emergency
Chapter 11 petition to avoid repossession of its fleet, get a
breathing spell and work with counsel to put together a
reorganization plan.
The Debtor is optimistic it can enter into plan treatment
stipulations with its creditors. The Debtor has changed its
business location from Gardena to LAX area. SAVVA's business plan
includes extending the hours of operation and expanding ancillary
products and services to increase its revenue to support a feasible
reorganization plan. The Debtor plans to also actively pursues its
collection of past due accounts, awards, and judgments, and
insurance claims totaling over $350,000.
In June 2021, the Debtor entered into Fleet Finance Agreement with
Automotive Finance Corporation. On June 30, 2021, AFC filed a UCC
Financing Statement with the Secretary of State, U2100612401,
giving AFC a security interest in all of the Debtor's assets and
properties. AFC is currently secured by 36 vehicles that the Debtor
has financed with AFC. The estimated monthly obligation is $26,000
which varies from month to month depending on the number of
vehicles the Debtor sells each month within the ordinary course of
its business, which in turn reduces the principal balance owed to
AFC. The Debtor proposes to start making adequate protection
payments to AFC effective February 1, 2023, and continue on monthly
basis as summarized in the Debtor's cash collateral budget.
In September 2021, the Debtor entered into Fleet Finance Agreement
with HFC Acceptance, LLC. On September 7, 2021, HFC filed a UCC
Financing Statement with the Secretary of State, U210083747630,
giving HFC a security interest in all of the Debtor's assets and
properties. HFC is currently secured by 73 vehicles that the Debtor
has financed with I-IFC. The estimated monthly obligation is
$53,000 which varies from month to month depending on the number of
vehicles the Debtor sells each month within the ordinary course of
its business, which in turn reduces the principal balance owed to
HFC. The Debtor proposes to start making adequate protection
payments to HFC effective February 1, 2023 and continue on monthly
basis as summarized in the Debtor's cash collateral budget.
A copy of the motion is available at https://bit.ly/3W621ut from
PacerMonitor.com.
About SAVVA Holdings, Inc.
SAVVA Holdings, Inc.is a passenger vehicle rental company 5
operating in the Los Angeles Airport vicinity. SAVVA started as a
neighborhood car rental operation in Gardena, California, in
December 2020. Ever since its incorporation, SAVVA has acquired
approximately 110 vehicles and vehicle usage rights for its
operation.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 23-10135) on January 10,
2023. In the petition signed by Nikita Gromyko, chief executive
officer, the Debtor disclosed up to $10 million in both assets and
liabilities.
Michael Jay Berger, Esq., at the Law Offices of Michael Jay Berger,
is the Debtor's legal counsel.
SENIOR CARE: Wins Cash Collateral Access Thru Feb 13
----------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida, Tampa
Division, authorized Senior Care Living VII, LLLC to use cash
collateral on an interim basis in accordance with the budget, with
a 10% variance.
The Debtor is permitted to use cash collateral until the earlier of
February 13, 2023, or the occurrence of a Termination Event, but
only on the terms of the Interim Order. The Debtor's cash
collateral access will be limited solely to the amounts, times, and
categories of expenses listed in the Budget.
Validus Senior Living will remain as manager of the Debtor's
assisted living facility.
As adequate protection of the Trustee's interests in its
collateral, the Trustee will have a valid, perfected, and
enforceable replacement lien and security interest in all assets of
the Debtor existing on or after the Petition Date of the same type
as set forth in the Bond Documents.
The Debtor will provide, or will cause Validus to provide, the
Trustee with (a) a weekly census of residents residing at the ALF
and (b) a weekly summary of all receipts and disbursements as
compared to the Budget. The Weekly Reporting will be provided to
the Trustee by 5 p.m. E.T. on the second business day of each week
with respect to the week ending the prior Friday.
The Debtor will maintain insurance coverage for its property in
accordance with the obligations under the loan and security
documents with the Trustee. The Debtor will provide proof of
insurance upon written request.
A Termination Event will be deemed to have occurred three days
after written notice sent by the Trustee to the Debtor, its
counsel, and the United States Trustee of the occurrence of any of
the following pursuant to the Order:
a. The Debtor fails to comply with the Budget (subject to the
Permitted Variance) and terms governing the Budget;
b. The Debtor terminates Validus as manager of the ALF and/or
fails to satisfy its postpetition payment obligations to Validus;
or
c. The Debtor fails to comply with, keep, observe, or perform
any of its agreements or undertakings under the Interim Order.
A further hearing on the matter is scheduled for February 13 at
2:30 p.m.
A copy of the order is available at https://bit.ly/3XcV1NK from
PacerMonitor.com.
About Senior Care Living VII
Senior Care Living VII, LLC sought Chapter 11 bankruptcy protection
(Bankr. M.D. Fla. Lead Case No. 22-00103) on Jan. 10, 2022, listing
up to $50 million in both assets and liabilities.
Judge Caryl E. Delano oversees the case.
Michael C. Markham, Esq., at Johnson Pope Bokor Ruppel & Burns,
LLP, is the Debtor's legal counsel while SC&H Group, Inc. serves as
the Debtor's financial advisor.
SERVICE CORP: Moody's Affirms 'Ba2' CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service affirmed Service Corporation
International's ("SCI") Ba2 Corporate Family Rating, Ba2-PD
Probability of Default rating, and Ba3 senior unsecured note
rating. The Speculative Grade Liquidity rating ("SGL") remains
SGL-1. Moody's also assigned a Baa3 rating to the company's senior
unsecured credit facility consisting of a $1.5 billion revolving
credit facility expiring January 2028 and a $675 million term loan
due January 2028. The outlook remains stable. SCI is North
America's largest provider of funeral, cemetery and cremation
products and services.
Proceeds from the term loan, a drawdown on the new revolver, and
cash on hand were used to refinance SCI's existing term loan, repay
the outstanding balance on the existing revolver and pay
transaction-related fees and expenses. The affirmation of the Ba2
CFR reflects Moody's expectation that SCI will maintain modest free
cash flow generation capacity, moderately high financial leverage
and a stable revenue base.
Affirmations:
Issuer: Service Corporation International
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD5)
Assignments:
Issuer: Service Corporation International
Senior Unsecured Term Loan, Assigned Baa3 (LGD2)
Senior Unsecured Revolving Credit Facility, Assigned Baa3 (LGD2)
Outlook Actions:
Issuer: Service Corporation International
Outlook, Remains Stable
RATINGS RATIONALE
The Ba2 CFR reflects SCI's position as the leading deathcare
provider in North America with a combined portfolio of 1,463
funeral home locations and cemetery properties, significant scale
advantages and a $13.3 billion revenue backlog as of September 30,
2022. Moody's expects 2023 revenue to be flat-to-slightly-positive
over the prior year, driven by low-single-digit pre-need funeral
and cemetery production growth, offset by a normalization of
at-need demand towards pre-pandemic levels. Moody's also expects
SCI's current financial leverage, as expressed by debt-to-EBITDA,
of 3.2x as of LTM September 30, 2022 to remain in the 3-4x range in
2023, driven by EBITDA margins declining towards pre-pandemic
levels and opportunistic debt-funded share repurchases. Due to
increased operating performance primarily driven from the
coronavirus pandemic, SCI opportunistically completed $1.7 billion
of common stock share repurchases from the beginning of 2020 to
September 30, 2022, which is much higher than the $235 million of
average annual share repurchases made from 2016 to 2018. If this
pace of share repurchase activity continues through 2023, Moody's
projects financial leverage would increase to the high 3x range and
liquidity would continue to deteriorate with a likely increase of
revolver usage to fund portions of its share repurchase activity.
An aging baby boomer population and tangible assets including
investment trusts, real estate holdings and insurance contracts
providing coverage of debt and other liabilities also support the
rating.
All financial metrics cited reflect Moody's standard adjustments.
The SGL-1 speculative grade liquidity rating reflects SCI's very
good liquidity profile, which has nevertheless weakened due to
Moody's expectations for lower free cash flow in 2023 driven by
elevated bonus payments related to strong performance in 2022,
higher interest expense from rising interest rates, and capital
spending in line with 2022 levels. Moody's also expects that SCI
will continue drawing down on the revolver to opportunistically
fund portions of its share repurchase activity. For 2023, Moody's
expects SCI to generate at least $150 million of free cash flow and
maintain at least $120 million of cash. Moody's expects SCI should
have at least $800 million available under its new revolving credit
facility through 2023. SCI must comply with a 5x maximum net
leverage ratio. The company has the option to exercise no more than
two times the consummation of a qualified acquisition (a permitted
acquisition for which the cash consideration is greater than or
equal to $250 million) that increases the maximum net leverage
ratio to 5.5x for each of the three full fiscal quarters following
the acquisition close. Moody's also expects SCI to be well in
compliance with its financial covenant. The company's next
meaningful maturity is $688 million of unsecured notes maturing in
2027. The term loan has required annual amortization payments of
$16.875 million over the next 12 months.
The Baa3 rating on the senior unsecured revolving credit facility
and term loan reflects both the probability of default of the
company, expressed by the Ba2-PD PDR, and a Loss Given Default
assessment of LGD2. The revolver and term loan are guaranteed by
substantially all of the domestic operating subsidiaries of the
company. The subsidiary guarantees are unsecured. The LGD
assessment benefits from the significant amount of junior ranking
debt in the form of non-guaranteed unsecured senior notes.
The Ba3 rating on the senior unsecured (non-guaranteed) notes
reflects both the probability of default of the company, expressed
by the Ba2-PD PDR, and a Loss Given Default assessment of LGD5.
These notes are structurally subordinated to all of the liabilities
and obligations of each of SCI's operating subsidiaries, including
the unsecured subsidiary guarantees of SCI's revolving credit
facility and term loan.
The stable outlook incorporates Moody's expectations for 2023 that
annual revenue growth will be relatively flat and financial
leverage, measured by debt-to-EDITDA, will remain in the 3-4x
range, driven by opportunistic debt-funded share repurchases.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A rating upgrade could occur if Moody's expects: 1) profitable
revenue growth of at least 4% per year; 2) financial leverage,
measured by debt-to-EBITDA, is sustained around 3x; and 3) free
cash flow to debt will be maintained above 10%.
The ratings could be downgraded if Moody's anticipates: 1) weaker
than expected operating performance; 2) EBITA margins will be
sustained below 17%; 3) evidence of a more aggressive financial
policy, such that debt-to-EBITDA sustainably increases above 4.5x,
and free cash flow to debt is sustained in the low-single-digit
percentages; or 4) a deterioration in its liquidity profile.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
SCI is North America's largest provider of funeral, cemetery and
cremation products and services. The company operates an
industry-leading network of 1,463 funeral service locations and 488
cemeteries, which includes 300 funeral service/cemetery combination
locations, as of September 30, 2022. Moody's anticipates revenue of
about $4.1 billion in 2023.
SOTERA HEALTH: S&P Alters Outlook to Stable, Affirms 'BB-' ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook on Sotera Health Holdings
LLC to stable from negative and affirmed its 'BB-' issuer credit
and issue-level ratings.
S&P said, "The stable outlook reflects a cushion within the rating,
of about 0.5x turns of leverage, for 2023, which we expect to be
more than adequate to cover any residual legal exposure, not
covered by the settlement, such as in other states. We expect the
company to generate robust revenue growth, very strong EBITDA
margins, and significant free cash flow in 2023, resulting in
leverage of about 4.5x for 2023."
S&P views Sotera's settlement agreement as a material positive for
creditworthiness despite the substantial cost as it greatly reduces
the uncertainty around further adverse judgements, ongoing legal
expenses, and management's distraction from the core business. This
settlement agreement includes settlement of the outstanding
judgment against Sotera for about $360 million which is pending
appeal. It also alleviates the need for Sotera to fund a reserve of
about $540 million, equal to 150% of the outstanding $360 million
(Kamuda) judgment, while appealing that case, as required in
Illinois.
Although the agreement, entered into with the lawyers representing
the plaintiffs, is subject to consent by at least 98.5% of the over
850 plaintiffs, our understanding is that the settlement is highly
likely to be consummated as outlined.
S&P said, "We expect the company will fund the settlement payment
with about $400 million of incremental debt, rather than utilizing
the revolver or cash on balance sheet.
"While some residual litigation exposure remains, including
plaintiffs in other states, we see the cushion within the rating,
of about 0.5x turns of leverage, for 2023, as well as robust cash
balances as likely to be adequate to absorb those amounts.
The ratings reflect the strength of the company's core business
operations and its resilience to macroeconomic and geopolitical
risks. S&P said, "As the company expands its capacity, we expect it
to continue benefitting from increasing demand for outsourced
sterilization services and for it to leverage its competitive
position to support price increases that sustain or increase
margins, even in the context of rising costs, particularly within
its Sterigenics and Nordion businesses. We note that, despite
current geopolitical issues, Nordion has not had any issues with
its use of Russian nuclear reactors for Co-60 and that the company
continues making progress with diversifying its cobalt sourcing."
S&P said, "Given uncertainty regarding the size and priority of
potential debt issuance to fund the settlement, we have not
incorporated that into our recovery analysis. We expect to update
recovery analysis once those details are announced.
"The stable outlook reflects a cushion within the rating, of about
0.5x turns of leverage, for 2023, which we expect to be more than
adequate to cover any residual legal exposure, not covered by the
settlement, such as in other states. It also reflects, our
expectations for the company to generate robust revenue growth,
very strong EBITDA margins, and significant free cash flow in 2023,
resulting in leverage of about 4.5x for 2023.
"We could lower the rating if we expect Sotera's S&P Global
Ratings-adjusted leverage will be sustained above 5x for more than
12 months. Such a scenario is possible if the company faces
additional legal or environmental setbacks that increase legal
liabilities or weaken operational or financial performance, or if
the company pursues significant debt-financed acquisitions.
"Although unlikely over the next 12 months, we could upgrade Sotera
if leverage declines materially below 4x, providing we expect it
will sustain leverage at that level. In addition, we would need to
see a material decrease in financial sponsor ownership (to about
40% or less) and further advances in the resolution of EtO
litigation matters."
ESG credit indicators: E-2, S-3, G-3
S&P said, "Social factors are a moderately negative consideration
in our credit rating analysis of Sotera Health Holdings LLC. We
expect the company to spend over $400 million in 2023 to settle
litigation in Illinois relating to allegations that EtO emissions
contributed to health issues. We see risk of incremental legal
costs, primarily relating to cases in other states and we expect
regulators to increase control on EtO emissions, which may burden
the company with incremental costs. Although this issue involves
both health (social) and pollution (environmental) elements, we
primarily viewed it as health-related, and reflected this in our
scoring of 'S'.
"Governance factors are also a moderately negative consideration.
Our assessment of the company's financial risk profile as
aggressive reflects its corporate decision-making that prioritizes
the interests of its controlling owners, in line with our view of
the majority of rated entities owned by private-equity sponsors.
Our assessment also reflects private-equity owners' generally
finite holding periods and focus on maximizing shareholder returns,
despite the recent partial IPO."s
SPL PARTNERS: Reaches Settlement with Signature; Files Amended Plan
-------------------------------------------------------------------
SPL Partners LLC submitted an Amended Disclosure Statement for the
Amended Plan of Reorganization dated January 10, 2023.
The Plan provides, among other things, for the implementation of a
settlement reached by and between the Debtor and Signature
regarding the resolution of Signature's senior mortgage on the
Debtor's Property and the Claim relating thereto.
The Debtor disputed the entitlement and calculation of default
interest asserted by Signature based upon a number of grounds
including a dispute over the default date and the refusal by both
NYCB and Signature to provide a payoff. The Debtor also disputed
the calculation of the prepayment penalty.
On May 26, 2022, the Debtor filed an objection to Signature's Claim
seeking to reduce the amount asserted. Signature opposed the
Objection and moved for the appointment of an operating trustee in
the bankruptcy case. Thereafter, the Court directed, and the
parties agreed, to mediate the dispute over Signature's Claim and
on Nov. 3, 2022 the Court entered an Order appointing Lori Lapin
Jones as the replacement mediator in this matter.
The parties engaged in an all-day mediation on November 16, 2022
which continued in the weeks thereafter. Ultimately, they were
able to successfully negotiate a settlement which is the basis for
the Plan. The settlement has been memorialized in a Stipulation of
Settlement. The parties intend to seek approval of the terms of the
Stipulation of Settlement simultaneously with confirmation of the
Plan. The Settlement provides an opportunity for the Debtor to
refinance the Property at a discounted amount by Feb. 28, 2023,
failing which the Property will be sold and Signature permitted to
credit bid at an agreed amount.
Class 1 shall consist of New York City's secured real estate tax
claims and unpaid water charges, which are secured by a superior
lien on the Property, shall be paid in full plus interest at the
applicable statutory rate on the Closing Date by the Debtor or
Debtor's estate. The Class 1 Claim is estimated in the amount of
$1,300,000. The City of New York as the holder of the sole Class 1
Claim is unimpaired and is deemed to accept the Plan.
Class 2 consists of Allowed Secured Claim of Signature. The
Allowed Secured Claim of Signature shall be paid in accordance with
the terms of the Settlement. In summary, the Settlement provides as
follows:
* Discounted Payoff: The Debtor may payoff the Allowed Class 2
Claim, in the reduced amount of $21,000,000, provided such payoff
is received by Signature on or before February 28, 2023.
* Alternative Sale Process: If Signature does not receive the
Discounted Payoff on or before the Payoff Deadline, Signature shall
be entitled to pursue the Alternative Sale Process which
contemplates the marketing and sale of the Property at public
auction.
* Credit Bid: Signature shall be permitted to assert a credit
bid at the auction in an amount up to $25,080,894.23, plus
additional post-petition interest at a rate of 12% percent per
annum accrued after February 28, 2023 through closing, plus
additional legal fees and expenses.
* Plan Funding Following Auction: If Signature is the winning
bidder at auction, it shall be required to fund only the following:
(i) the Allowed Class 3 Claim, (ii) all Allowed Priority and
Administrative Expenses, inclusive of the DIP Loan (as that term is
defined in the Settlement) and Allowed Receiver's fees and
commissions, plus any outstanding U.S. Trustee fees; and (iii) the
Class 4 Initial Class Distribution of $25,000 (which shall not
include any distributions to insiders).
Class 3 consists of Allowed subordinate Secured Claim of Freda
Spiropoulos which was authorized by Order of the Bankruptcy Court
in connection with a post-Petition Date Loan to the Debtor in the
amount of $50,000, plus interest at 2% per annum. Per the Court's
Order, the authorized lien held by the Allowed Class 3 Claimant is
subordinate only to the Class 1 and Class 2 Creditors. The Allowed
Class 3 Claim shall be paid in full, with interest at the
applicable contract rate, on the Closing Date. The Allowed Class 3
Claim is not Impaired under the Plan.
Class 4 shall consist of Allowed General Unsecured Claims which
shall be paid up to 100% of their Allowed amounts, without
interest. The Debtor estimates that the Class 4 Claims total
approximately $532,000 in the aggregate. Initially the holders of
Allowed Class 4 Claims shall receive an initial distribution in the
amount of $25,000 (the "Initial Class 4 Distribution"), pro rata,
within 10 Business Days of the Closing Date. Thereafter, the
holders of Allowed Class 4 Claims, together with Allowed Class 5
Claims, shall potentially receive, pro rata, from the Net Recovery,
if any, realized by the Debtor or Debtor's estate from the estate
Causes of Action. Holders of Allowed Class 4 Claims are Impaired
under this Plan.
Class 5 shall consist of the Allowed subordinated Claims of
Insiders. Class 5 includes the Claims of Demetrios Spiropoulos in
the amount of $533,979, Robert Silvestri in the amount of $200,000
and the Disputed Claim of Xemex in the amount of $3,379,201. The
holders of Allowed Class 5 Claims, together with Allowed Class 4
Claims, shall potentially receive up to 100% of their Allowed
Claims, pro rata, from the Net Recovery, if any, realized by the
Debtor or Debtor's estate from the pursuit of estate Causes of
Action. Holders of Allowed Class 5 Claims are Impaired.
Class 6 shall consist of the Debtor's Interest Holder. In the
event that the Discounted Payoff is remitted timely and in full and
an Alternative Sale Process does not commence, the Interest
Holder's interest in the Debtor will be cancelled and new interest
will be issued in favor of the Funder. In the event that an
Alternative Sale Process is commenced, the Debtor's Interest Holder
will retain its interest and shall receive any surplus generated
from Net Proceeds of estate Causes of Action realized by the
Debtor's estate, after the payment in full of all Allowed Class 4
and Class 5 Claims.
Payments under the Plan due on the Closing Date shall be paid from
the following, or a combination thereof, (i) Exit Financing
obtained by the Debtor, (ii) the Debtor’s cash on hand on the
Closing Date, and (iii) an equity infusion, as needed, from the
Funder. On the Effective Date the Property shall revest in the
Reorganized Debtor free and clear of all liens, claims and
encumbrances, subject to the obligations of the Reorganized Debtor
as set forth in the Plan and the Settlement.
In the event of an Alternative Sale Process, and no higher or
better bid is received from a bona-fide third-party than that of
Signature, the Plan shall automatically toggle, and Signature shall
then fund the cash obligations due on the Closing In the event of
an acceptable third-party bid obtained during the Alternate Sale
Process, the Plan shall then be funded from the ensuing sale
proceeds with the Class 2 Claims of Signature to be paid first up
to the Total Signature Claim, or such lesser amount as Signature
may agree in writing.
In the event that the Debtor does not fully and timely remit the
Discounted Payoff by the Payoff Deadline, Signature shall be
authorized to market and sell the Property on behalf of the
Debtor's estate for the highest and best price, in a single lot
with a closing to occur no later than April 14, 2023. Signature
shall pursue a sale of the Property in accordance with conventional
Bidding Procedures to be approved by the Bankruptcy Court, likewise
with the support of the Debtor. In the event of an auction,
Signature shall have the right to credit bid up to the full amount
of the Signature Total Claim without any discount for pre-petition
or post-petition default interest or other fees and charges. The
sale of the Property pursuant to the Alternative Sale Process shall
be free and clear of all liens, Claims, interests and
encumbrances.
A full-text copy of the Amended Disclosure Statement dated January
10, 2023 is available at https://bit.ly/3X938eg from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Dawn Kirby, Esq.
Erica R. Aisner, Esq.
KIRBY AISNER & CURLEY LLP
700 Post Road, Suite 237
Scarsdale, NY 10583
Tel: (914) 401-9500
Email: dkirby@kacllp.com
eaisner@kacllp.com
About SPL Partners LLC
Brooklyn, N.Y.-based SPL Partners LLC is a single asset real estate
debtor (as defined in 11 U.S.C. Section 101(51B)).
On Aug. 31, 2021, Xemex LLC, Stacey Angelides and Angelo Gerosavas
filed an involuntary petition against SPL Partners pursuant to
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No.
21-42248). The creditors are represented by Ralph E. Preite, Esq.,
at Koutsoudakis & Iakovou Law Group, PLLC.
Judge Elizabeth S. Stong presides over the case.
Melissa A. Pena, Esq., at Norris McLaughlin, P.A., serves as the
Debtor's legal counsel.
ST. CLAIR COUNTY SD 189: Moody's Upgrades Issuer Rating to Ba1
--------------------------------------------------------------
Moody's Investors Service has upgraded St. Clair County School
District 189 (East St. Louis), IL's issuer rating to Ba1 from Ba2
and assigned a Ba1 general obligation unlimited tax (GOULT) rating
to the district's General Obligation School Bonds, Series 2023 with
an estimated par amount of $10 million. The issuer rating reflects
the district's ability to repay debt and debt-like obligations
without consideration of any pledge, security or structural
features. Post-sale, the district will have about $10.1 million in
GOULT debt outstanding. The outlook is stable.
RATINGS RATIONALE
The upgrade to Ba1 reflects the district's improved financial
position supported by ongoing oversight and growing revenue from
the State of Illinois (Baa1 stable). The state recently renewed
their state oversight term for the district for another four years,
increasing stability of the district's finances and governance.
Additionally, the district's credit profile is challenged by a
severely stressed economic base characterized by low resident
income and full value per capita, high poverty, weak property tax
collections and declining enrollment. Leverage of the district is
low due in part to state support for contributions to an
underfunded State of Illinois Teachers Retirement System (TRS),
though debt and pensions obligations of overlapping entities
remains elevated.
The Ba1 GOULT rating is equivalent to the Ba1 issuer rating based
on the district's general obligation full faith and credit pledge
and the authority to levy an unlimited property tax.
RATING OUTLOOK
The stable outlook is based on the district's very healthy
financial position that provides a buffer against its weak tax
base.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Strengthening of the economic base including enrollment, median
family income and full value per capita
Strong financial performance with recurring revenues
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Declines in operating reserves or liquidity
Indications of weakened state support including a cut state
aid or a pension cost shift
Increased long-term liabilities
LEGAL SECURITY
The district's Series 2023 bonds are supported by a pledge to levy
a property tax unlimited as to rate or amount to cover debt
service.
USE OF PROCEEDS
The Series 2023 bonds will be used to refund the district's
outstanding General Obligation Bonds (Alternate Revenue Source),
Series 2007 and General Obligation Refunding Bonds (Alternate
Revenue Source), Series 2008.
PROFILE
Located across the Mississippi River from St. Louis, MO (A3
stable), the district provides pre-kindergarten through 12th grade
education to about 4,500 students serving the City of East St.
Louis, the Village of Washington Park and portions of eight other
communities in St. Clair County (Aa3).
METHODOLOGY
The principal methodology used in these ratings was US K-12 Public
School Districts Methodology published in January 2021.
SUMMIT LLC: Gets More Time for Bankruptcy Plan
----------------------------------------------
Summit, LLC has until this week to pursue its own Chapter 11 plan
and remain in control of its bankruptcy case.
The U.S. Bankruptcy Court for the Central District of California
extended the exclusivity period for the company to file its
bankruptcy plan to Jan. 20, allowing the company to evaluate the
validity of claims and provide projections to support feasibility
of its plan.
About Summit LLC
Summit, LLC, a California-based company, sought bankruptcy
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
C.D. Calif. Case No. 22-13853) on July 15, 2022. In the petition
filed by its managing member, Moussa Kashani, the Debtor listed
assets between $10 million and $50 million and liabilities between
$10 million-$50 million.
Judge Ernest M. Robles oversees the case.
David R. Haberbush, Esq., at Haberbush, LLP is the Debtors' legal
counsel.
SUPERIOR PLUS: DBRS Confirms BB(high) Issuer Rating
---------------------------------------------------
DBRS Limited confirmed the Issuer Rating of Superior Plus LP
(Superior Plus or the Company) at BB (high) and the Senior
Unsecured Debentures rating at BB (recovery rating of RR5), with
Stable trends. The rating confirmations are underpinned by the
Company's leading position and strong brand in the
energy-distribution market and moderately high medium-term
financial risk profile. The rating confirmations also reflect DBRS
Morningstar's expectation that Superior Plus' credit metrics would
remain within the BB (high) range after the completion of the
potential acquisition of Certarus Limited (Certarus) for $1.05
billion (the Acquisition). Superior Plus will finance the
Acquisition with a drawdown from revolving credit facilities of
approximately $600 million and the rest by an equity issuance to
the shareholders of Certarus. The Acquisition is subject to
regulatory approval and satisfaction of customary conditions, which
are expected to be finalized in the first quarter of 2023.
Certarus is a fast growing North American private energy
distributer, headquartered in Alberta, Canada. It provides
transportable infrastructure for distribution of compressed natural
gas and other gases (e.g., hydrogen, biogas) to industrial and
commercial customers. It has developed a network of more than 600
mobile storage units to supply approximately300 customers in energy
(utilities), mining, and other sectors. The Acquisition is aligned
with Superior Plus strategic expansion in a fragmented energy
distribution market. The Acquisition would improve supply,
customer, and geographical diversification, with an expectation of
modest dilution of weather-linked seasonality, which is more
pronounced with a high share of residential end-use. In addition,
the Acquisition will strengthen Superior Plus' footprint in the
U.S. market, and will enable the Company to offer a lower carbon
alternative to propane. Certarus' earnings and cash flow
contribution (excluding cost synergies) are expected to materialize
immediately and therefore not create a lag versus the debt funding
raised for the Acquisition. In 2022 to date, Superior Plus
completed eight acquisitions totaling $522.8 million, notably the
California-based retail and wholesale businesses, Kamps Propane,
Inc. and Kiva Energy, Inc., for $302 million. The Certarus
acquisition is, however, the largest transaction by value since the
NGL Energy Partners LP acquisition in 2018.
Superior Plus funded the 2022 acquisitions mostly with the
revolving credit facilities, and this caused a notable elevation in
the Company's net leverage above its long-term target of 4 times
(x). The Company made a modest reduction in indebtedness from the
proceeds of $287.5 million equity issuance in April 2022. However,
the softer operational performance in the second and third quarter
resulted in stretched credit metrics. Year-to-date through to
September 2022, EBITDA grew 4% year-on-year because of higher
contribution from the U.S. propane distribution and the Wholesale
segment, but was negatively affected by higher corporate costs,
inflation, and expenses relating to the integration of tuck-in
acquisitions. Canadian EBITDA was lower primarily because of a
reduction in Canada Emergency Wage Subsidy benefits, compared with
the prior period. DBRS Morningstar expects full-year 2022 EBITDA to
be within the management guided range, reflecting realization of
acquisition-related synergies in the U.S. propane distribution
business and the seasonal workforce optimization initiatives
undertaken by the Company. Looking ahead into 2023, DBRS
Morningstar forecast EBITDA is expected to be flat vis-à-vis 2022,
or 25% to 30% higher with the Acquisition.
Pro forma medium-term gross leverage is expected to remain elevated
above 4.5x and cash flow-to-debt below 20%, post the Acquisition.
DBRS Morningstar anticipates a slowdown in acquisition activity
beyond 2023 (after the Certarus transaction), in a path to
deleverage. The Company has in the past demonstrated an ability to
reduce debt within two years following large acquisitions.
Overall, Superior Plus' strong business risk profile continues to
support the current ratings. However, DBRS Morningstar could
consider a negative rating action under the following conditions:
(1) a prolonged weak performance or (2) difficulties in integrating
newly acquired businesses that would cause leverage metrics to
deteriorate beyond what is considered acceptable within the current
rating range for an extended period of time, particularly gross
debt to EBITDA at or above 4.5x and cash flow to debt at or below
13%. Conversely, DBRS Morningstar would likely consider a positive
rating action only if the Company demonstrated a commitment to a
materially stronger financial profile over a longer period.
Notes: All figures are in Canadian dollars unless otherwise noted.
SUPREME WORX: Court OKs Cash Collateral Access Thru Feb 15
----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Orlando Division, authorized Supreme Worx, LLC, d/b/a Supreme Pools
to use cash collateral on an interim basis in accordance with the
budget, through February 15, 2023.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court, including payments to the
Subchapter V Trustee and payroll obligations incurred post-petition
in the ordinary course of business; (b) the current and necessary
expenses set forth in the budget, plus an amount not to exceed 10%
for each line item; and (c) such additional amounts as may be
expressly approved in writing by Global Merchant.
As adequate protection, the Secured Creditors will have a perfected
post-petition lien against cash collateral to the same extent and
with the same validity and priority as the prepetition lien,
without the need to file or execute any documents as may otherwise
be required under applicable non-bankruptcy law.
The Debtor will maintain insurance coverage for its property in
accordance with the obligations under all applicable loan and
security documents.
A hearing on the matter is set for February 15 at 11 a.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3ISBqOC from PacerMonitor.com.
The budget provides for total expenses, on a weekly basis, as
follows:
$10,831 for the week of January 16, 2023;
$20,728 for the week of January 23, 2023;
$17,040 for the week of January 30, 2023;
$17,040 for the week of February 6, 2023; and
$18,040 for the week of February 13, 2023.
About Supreme Worx LLC
Supreme Worx LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 6:22-bk-04035) on
November 11, 2022. In the petition filed by Raymond Torres,
managing member, 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.
TACORA RESOURCES: S&P Downgrades ICR to 'CCC-', Outlook Negative
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Tacora
Resources Inc. to 'CCC-' from 'CCC+' and its issue-level rating on
the company's senior secured notes due 2026 to 'CCC-' from 'B-'.
S&P also revised its recovery rating on the notes to '3' from '2',
reflecting our assumption of additional pari passu secured
obligations (advance payment facility).
At the same time, S&P removed the ratings from CreditWatch, where
they had been placed with negative implications Dec. 7, 2022.
The negative outlook on Tacora reflects the risk of a default or
debt restructuring within the next six months given difficult
capital market conditions and weak cash flows.
S&P said, "We expect Tacora will require additional funding to meet
its liquidity requirements beyond the next several months. Our
downgrade on Tacora reflects the heightened risk that the company
will exhaust its liquidity beyond the next few months, increasing
the risk of a default or debt restructuring transaction, which we
could view as tantamount to a default. The company has minimal cash
on the balance sheet but recently closed a US$35 million advance
payment facility that provides them enough liquidity until May
2023. Part of the proceeds are expected to be used for various
hedging options to protect cash flows through this period. Beyond
that, Tacora will need to secure alternate funding to repay the
obligations under the US$35 million facility (on May 1, 2023),
upcoming interest payments (semiannual US$9 million interest
payment due on May 15, 2023, on its 2026 senior secured notes),
fund potential losses, and address longer-term liquidity. In our
view, Tacora has limited capacity to repay advance payment facility
obligations and honor its ongoing interest obligations on its 2026
senior secured notes. Funding options are limited, in our opinion,
given the company's diminished credit quality (2026 bonds yield
about 20%) and currently difficult capital market environment;
however, we understand that the company is considering alternative
options including equity sales, strategic partnerships, and/or
asset sale to raise longer-term capital. We view the timing, size,
and viability of such alternative financing options as highly
speculative at present. Therefore, in our view, there is a
heightened possibility that Tacora could default on its financial
obligations or pursue a restructuring transaction in the near
term.
"Operational challenges have exacerbated near-term liquidity
concerns. In our opinion, the deterioration in the company's
liquidity is primarily linked to cash burn from operational
disruptions over the past several months in part owing to the
commissioning a mining screen equipment, which was acquired to ramp
up production at Tacora's Scully mine. The company has faced
challenges in the past two years to increase production output
beyond the low-3 metric tons per year (mtpy) of iron ore, and we
expect production will remain flat in 2023. Iron ore prices, while
having stabilized somewhat, are lower and will likely remain
volatile. Therefore, we expect Tacora will remain vulnerable to
cash burn given the elevated cash costs (due to lower production
levels) and our downward view on iron ore prices in 2023.
"The negative outlook reflects the heightened risk that Tacora
might not be able to raise sufficient funding, leading it to pursue
a debt restructuring within the next six months that we could view
as a default.
"We could lower the rating if the company missed an interest
payment or announced a debt restructuring we viewed as distressed.
"We could raise the rating if we no longer believe there is a high
probability of a default, distressed exchange, or other form of
debt restructuring. This would most likely occur if Tacora secured
the necessary funding to cover its ongoing operational expenses,
fixed charges, and financial obligations within at least the next
12 months."
ESG credit indicators: E-4, S-3, G-3
Environmental factors are a negative consideration and social
factors are a moderately negative consideration in S&P's credit
rating analysis of Tacora. The company's exposure to environmental
factors is more negative than that of the broader mining industry.
Tacora is a smaller-scale producer of iron ore, a key input in
blast furnace steel production, with reliance on one mine and
limited reporting on sustainability factors. Governance factors are
a moderately negative as is the case for most rated entities owned
by private-equity sponsors. S&P believes the company's highly
leveraged financial risk profile points to corporate
decision-making that prioritizes the interests of the controlling
owners. This also reflects the generally finite holding periods and
a focus on maximizing shareholder returns.
TALCOTT RESOLUTION: S&P Upgrades LT ICR to 'BB+', Outlook Stable
----------------------------------------------------------------
On Jan. 11, 2023, S&P Global Ratings raised its long-term issuer
credit rating on Talcott Resolution Life Inc. to 'BB+' from 'BB'.
S&P also raised its long-term issuer credit and financial strength
ratings on Talcott Resolution Life Insurance Co. and Talcott
Resolution Life and Annuity Insurance Co. to 'BBB+' from 'BBB'. The
outlook is stable.
The upgrade indicates S&P's improved view of Talcott's business
risk led by its growth strategy and transformation to an aggregator
of blocks of annuity and life liabilities from a run-off entity
since its acquisition by Sixth Street. This is demonstrated by its
track record of closing new transactions with life and annuity
insurers like Lincoln National Corp, Allianz Life Insurance Co. of
North America, Principal Financial Group, and The Guardian Life
Insurance Co. of America. With these transactions, Talcott's total
assets under management increased from $94 billion to $130 billion
and its general account assets increased from $15 billion to $60
billion on a pro forma basis as of June 30, 2022. As a relatively
new player in the highly competitive annuity reinsurance market,
management has a strong value proposition, providing clients with
both flow and block risk transfer solutions and strong liability
and risk management capabilities. The company's block
administration capabilities differentiate it from its similar-size
peers.
Talcott Resolution Life Inc. was acquired by Sixth Street, a
leading global investment firm, in 2021. The company has since
pursued growth and business diversification opportunities with
strategic and capital support from the new ownership. The company
has also established an offshore business unit to optimize capital
resources and be more competitive in the block merger and
acquisition market.
With the recent business development activities, the company has
also diversified its liabilities. Prior to 2021, liabilities were
concentrated in variable annuities. Now it has a more balanced
profile with the addition of liabilities related to fixed indexed
annuities, fixed annuities, and secondary guarantee universal life.
S&P continues to monitor the integration of blocks of business the
company has acquired (via reinsurance) and the prospective growth
and operating performance. These recent acquisitions are subject to
policyholder behavior assumptions and other market-related risks,
which require some further seasoning.
S&P said, "The stable outlook reflects our view of Talcott's
continuity of growth strategy and philosophy while managing
profitability and robust risk management. We also expect the
company will maintain at least 'A' capital adequacy.
"We could lower the ratings over the next 12-24 months if
capitalization falls below 'A' and we believe it will remain there.
We could also lower the ratings if Talcott, on a stand-alone basis
or combined with affiliated companies, increases its risk position
or financial risk to a level that we think is inconsistent with its
strategy, philosophy, or ability to manage, or if, in our view, its
enterprise risk management program weakens.
"We could raise the ratings on Talcott over the next 12-24 months
if the company develops its competitive position--via acquisitions
or block reinsurance transactions--such that it enhances and
diversifies earnings meaningfully, and if the company maintains
favorable operating performance with a demonstrated track record of
capital adequacy under current ownership."
ESG credit indicators: E-2, S-2, G-2
TEAM HEALTH: Calamos DCIF Marks $688,000 Loan at 16% Off
--------------------------------------------------------
Calamos Dynamic Convertible and Income Fund has marked its $688,336
loan extended to Team Health Holdings, Inc, to market at $576,482
or 84% of the outstanding amount, as of October 31, 2022, according
to a disclosure contained Calamos DCIF's Form N-CSR for the fiscal
year ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos DCIF is a participant in a Bank Loan that accrues interest
at a rate of 8.979% per annum (1 mo. SOFR + 5.25) to Team Health
Holdings, Inc. The loan is scheduled to mature on March 2, 2027.
Calamos Dynamic Convertible and Income Fund was organized as a
Delaware statutory trust on March 11, 2014 and is registered under
the Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
March 27, 2015.
Team Health Holdings, Inc. is a provider of physician staffing and
administrative services to hospitals and other healthcare providers
in the U.S.
TEAM HEALTH: Calamos GDIF Marks $641,000 Loan at 16% Off
--------------------------------------------------------
Calamos Global Dynamic Income Fund has marked its $641,424 loan
extended to Team Health Holdings, Inc to market at $537,193, or 84%
of the outstanding amount, as of October 31, 2022, according to a
disclosure contained Calamos GDIF's Form N-CSR for the fiscal year
ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos GDIF is a participant in a Bank Loan that accrues interest
at a rate of 8.979% per annum (1 mo. SOFR + 5.25%) to Team Health
Holdings, Inc. The loan is scheduled to mature on March 2, 2027.
Calamos Global Dynamic Income Fund was organized as a Delaware
statutory trust on April 10, 2007 and is registered under the
Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
June 27, 2007.
Team Health Holdings, Inc. is a provider of physician staffing and
administrative services to hospitals and other healthcare providers
in the U.S.
TIMES SQUARE JV: Disclosure Statement Hearing Set for February 1
----------------------------------------------------------------
The Hon. John P. Mastando, III, of the U.S. Bankruptcy Court for
the Southern District of New York will hold a hearing on Feb. 1,
2023, at 10:00 a.m. (ET), One Bowling Green, Courtroom 510, New
York, New York 10004, to consider approval of the adequacy of the
disclosure statement filed by Times Square JV LLC and its
debtor-affiliates, explaining the Debtors' Chapter 11 plan
Objections to the approval of the Debtors' Disclosure Statement, if
any, must be filed no later than 4:00 p.m. (ET) on Jan. 25, 2023.
According to the Troubled Company Reporter on Jan. 9, 2023, the
Debtors filed together with the petitions a Joint Chapter 11 Plan
that incorporates the terms of their restructuring support
agreement.
In weighing their options and ultimately determining to pursue a
chapter 11 filing, the Debtors engaged with certain entities with
interests in the Premises to formulate a consensus regarding the
terms of the Debtors' restructuring. The Debtors entered into a
restructuring support agreement with Vornado Capital Partners,
L.P., Vornado Capital Partners Parallel, L.P. and Argent
(collectively, the "RSA Parties"). Importantly, the RSA provides a
path to a restructuring, through the Plan, which outlines the
pursuit of the sale of the Premises and related rights (via the
Plan or under section 363 of the Bankruptcy Code) or an
equitization of the Mortgage Lender's secured debt. After
extensive discussions, on Dec. 28, 2022, the RSA Parties executed
the RSA regarding the material terms of a chapter 11 filing that
would conclude in a sale transaction or restructuring.
The RSA Parties have agreed to support the restructuring
transactions set forth in the Chapter 11 Plan. Among other things,
the Mortgage Lender agreed to permit the Debtors to use cash
collateral on a consensual basis and to provide post-petition
financing to enable the Debtors to implement their restructuring
process through confirmation of the Chapter 11 Plan, including to
commence a marketing process for the sale of all or substantially
all of the Debtors’ assets through the Chapter 11 Plan or
separately under section 363 of the Bankruptcy Code.
The RSA provides that all parties thereto will use commercially
reasonable efforts to take such steps as are necessary or
appropriate to implement or support the Plan, and the related
restructuring transactions, as applicable, and includes a variety
of other commitments from the parties, including that 1605 Broadway
LLC (in such capacity, the "DIP Lender") shall provide DIP
financing in the amount of up to $10,000,000, subject to the
Bankruptcy Court's entry of an order approving such DIP financing
(the "DIP Order").
The RSA also requires the Debtors to file certain documents and
satisfy certain objectives within a specified period of time. These
Milestones include, among others, the Debtors' commitment to:
(i) file a disclosure statement and the Chapter 11 Plan, in
form and substance reasonably acceptable to the Mezzanine Lender,
the Mortgage Lender and the DIP Lender, within one business day
after the Petition Date,
(ii) file a motion seeking approval of bidding procedures, in
form and substance reasonably acceptable to the Mezzanine Lender,
the Mortgage Lender and the DIP Lender, no later than one day after
the Petition Date,
(iii) obtain entry of the DIP Order on an interim basis, no later
than three business days after the Petition Date, and on a final
basis, no later than 35 business days after the Petition Date,
(iv) obtain entry of the Bankruptcy Court's order approving the
bidding procedures within 25 business days after the Petition Date,
(v) obtain approval of a disclosure statement within 35 days of
the Petition Date,
(vi) select a stalking horse bidder, if any, for a sale of the
Premises and related assets no later than 28 days after the
Petition Date,
(vii) commit to a bid deadline no later than 35 days after the
Petition Date,
(viii) conduct an auction, if necessary, no later than two
business days after the bid deadline,
(ix) schedule a hearing to obtain entry of an order approving
the sale and entering an order approving the sale of the Debtors'
assets to the successful bidder, if applicable, within 75 business
days from the Petition Date,
(x) obtain confirmation of a chapter 11 plan within 75 days of
the Petition Date, and
(xi) ensure occurrence of the effective date of the chapter 11
plan within ninety (90) days of the Petition Date
About Times Square JV LLC
Times Square JV LLC owns a building (the "Premises") located at
1605 Broadway, New York, NY 10019, in central Times Square (between
West 48th and 49th Streets). The Premises is a total of 840,000
square feet and consists, among other things, of certain hotel
space on the 15th through 46th floors, currently branded as the
Crowne Plaza Times Square Manhattan Hotel; 196,300 square feet of
commercial office space, portions of which are currently leased to
three third-party tenants; 17,800 square feet of ground floor
retail space; certain billboard spaces; and a parking garage.
Debtor TJV leases the Premises to affiliate CPTS Hotel Lessee LLC
pursuant to an Agreement of Lease dated as of Jan. 1, 2017, as
amended. Affiliates 1601 Broadway Owner LLC and 1601 Broadway
Holdings LLC directly or indirectly own or lease certain real
property underlying the Premises.
Vornado is the ultimate indirect majority parent of non-debtor CPTS
Mezz Borrower, which is the sole legal and beneficial owner of 100%
of the issued and outstanding limited liability company membership
interests in Debtor CPTS.
On Dec. 28, 2022, CPTS Hotel Lessee LLC ("CPTS"), Times Square JV
LLC ("TSJV"), 1601 Broadway Owner LLC and 1601 Broadway Holdings
LLC filed voluntary petitions for relief under chapter 11 of the
Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-11715) on Dec.
27, 2022. In the petition filed by Richard Shinder, as president,
treasurer and sole director, TSJV reported assets and liabilities
between $100 million and $500 million.
The Debtors are represented by:
John R. Ashmead, Esq.
Seward & Kissel, LLP
15 East Putnam Avenue
Suite 406
Greenwich, CT 06830
TK CLEANING: Taps Newpoint Advisors Corp. as Financial Advisor
--------------------------------------------------------------
TK Cleaning and Lawn Services, LLC seeks approval from the U.S.
Bankruptcy Court for the District of South Carolina to employ
Newpoint Advisors Corporation as its financial advisor.
The Debtor needs a financial advisor in preparing monthly operating
reports, preparing budgets, assistance with financial information
related to the schedules and plan and possibly its annual tax
returns.
The firm will be employed at $225 - $285 per hour depending on the
professional.
Carin Sorvik, CPA, a director at Newpoint Advisors Corporation,
disclosed in a court filing that the firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Carin Sorvik, CPA
Newpoint Advisors Corporation
750 Old Hickory Blvd. Building 2, Suite 150
Brentwood, TN 37027
Telephone: (800) 306-1250
Facsimile: (702) 543-3881
About TK Cleaning and Lawn Services
TK Cleaning and Lawn Services, LLC offers land clearing, screened
topsoil, mulch, snow removal, tree removal, lawn maintenance,
hardscaping, storm cleanup, and other landscape services.
TK Cleaning and Lawn Services filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. D.S.C. Case No.
22-03485) on Dec. 19, 2022, with $1 million to $10 million in both
assets and liabilities. Troy Kelley, owner of TK Cleaning and Lawn
Services, signed the petition.
The Debtor tapped Jane H. Downey, Esq., at Moore Bradley Myers Law
Firm, PA as legal counsel and Newpoint Advisors Corporation as
financial advisor.
TRITON WATER: S&P Affirms 'B' Issuer Credit Rating, Outlook Neg.
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on Triton
Water Holdings Inc. At the same time, S&P affirmed its 'B'
issue-level rating on the company's $2.8 billion senior secured
first-lien term loan due 2028 and its 'CCC+' issue-level rating on
its $770 million senior unsecured notes due 2029. The recovery
ratings on the debt are '3' and '6', respectively.
S&P said, "The outlook remains negative since we need more evidence
that the company has reached an operating performance inflection
point. We could lower the rating over the next few quarters if
Triton cannot successfully strengthen profitability and credit
measures in line with our forecast."
Triton's credit metrics remained weak during 2022. Higher raw
material, fuel, and freight costs pressured gross margin
performance last year. Moreover, since the leveraged buyout (LBO),
Triton has incurred a host of costs associated with its IT cutover
from the former parent, as well as significant management,
restructuring, and legal expenses that pressured EBITDA
performance. S&P said, "We expect a number of these other operating
expenses to moderate in 2023 as one-time costs start to fall off.
We believe that higher advertising and promotion (A&P) spend will
persist as Triton operates the business for growth. We recognize
that operating performance will likely hit a trough in the first
quarter of 2022, and two rounds of significant price increases
bolstered EBITDA in the second and third quarter of 2022. It is our
understanding that a third round of pricing also took effect in the
fourth quarter. Additionally, we expect that some input cost
inflation, particularly polyethylene terephthalate resin (the main
input in plastic bottles), may have peaked in mid-2022. Our
base-case forecast for 2023 includes modest recapture of the gross
margin lost in 2022, and we also believe that the magnitude of
other separation-related operating costs will be lower next year.
These factors should be a tailwind for EBITDA performance."
The challenging macroeconomic outlook for 2023 could slow the path
to deleveraging. Waning macroeconomic momentum and the increasing
likelihood of a shallow recession with weaker consumers in 2023
present downside risk to S&P's expectation for volume growth next
year. As such, increased promotional activity could slow progress
from price increases that Triton implemented over the last few
quarters. S&P Global Ratings economists currently expect a shallow
recession in the first half of 2023, and the risk of consumers
opting for private-label and tap water alternatives is higher.
Transition away from the Nestle-branded packaging on the company's
Pure Life brand (19% of sales in U.S. retail) further exacerbates
private-label risk. Supply chain disruptions, resulting from
challenges in the company's transition to a new enterprise resource
planning (ERP) system, negatively impacted fill rates in 2022,
which could influence customer relationships and order behavior
from its retailing partners--especially given the recent propensity
for destocking among the largest players.
Financial policy under the ownership of One Rock Capital Partners
is highly aggressive. Despite already high S&P Global
Ratings-adjusted leverage at the close of the LBO transaction,
Triton executed a debt-funded shareholder distribution at the end
of 2021 and a sale leaseback transaction of owned properties that
resulted in incrementally higher lease liabilities and rent
expense. S&P cannot rule out the possibility of future debt-funded
mergers and acquisitions (M&A) or dividends, which could result in
elevated leverage for a longer period of time.
The negative outlook reflects the potential for a lower rating over
the next few quarters if Triton is unable to meaningfully improve
profitability.
S&P could lower its ratings if the company does not delever in line
with our expectations, and S&P Global Ratings-adjusted leverage is
sustained above 7x. This could happen if:
-- Operational challenges relating to its IT cutover process
persist;
-- Increasing competition from private-label rivals or the loss of
major customers result in lower demand for the company's products;
or
-- The company's financial policy becomes more aggressive, with
significant debt-financed shareholder distributions or
acquisitions.
S&P could revise its outlook to stable if the company improves
operating performance, such that adjusted leverage is sustained
below 7x and S&P forecasts materially positive free operating cash
flow (FOCF). This could happen if:
-- The company successfully recaptures gross margin with pricing
momentum and moderating inflationary pressures.
-- Demand for the company's products remains satisfactory and
volumes grow; and
-- Separation-related costs decrease as expected and Triton fully
realizes cost savings.
ESG Credit Indicators: E-,2 S-2, G-3
UNDER ARMOUR: Egan-Jones Retains BB Senior Unsecured Ratings
------------------------------------------------------------
Egan-Jones Ratings Company, on December 27, 2022, maintained its
'BB' foreign currency and local currency senior unsecured ratings
on debt issued by Under Armour Inc.
Headquartered in Baltimore, Maryland, Under Armour Inc. is an
American sports equipment company that manufactures footwear,
sports and casual apparel.
UNITED FURNITURE: Wants to Convert Chapter 7 to Chapter 11
----------------------------------------------------------
Jean Marie Layton of Furniture Today reports that approximately 30
minutes before the U.S. Bankruptcy Court in the Northern District
of Mississippi was set to hear Wells Fargo N.A.'s petition for
involuntary bankruptcy proceedings and to appoint an interim
trustee to oversee the dissolution of United Furniture Industries'
assets, UFI presented a motion to dismiss the petition and to
convert the Chapter 7 filing to a Chapter 11 bankruptcy in order to
liquidate its assets.
In its filing, attorneys for United stated:
"Despite allegations to the contrary, the Company [United] has
management, employees, a chief restructuring officer, an
independent director, an outside general counsel, and a host of
experienced restructuring professionals, all of whom have been
actively working for the past month-plus to preserve the Company's
assets, prevent loss to the estate, and develop a strategy to
maximize the Company's value for all stakeholders, a strategy that
includes a chapter 11 filing."
The filing stated that United has developed and will implement a
process to preserve and sell its assets to maximize the recovery
for its creditors.
In addition, United noted that it has funding in place in the
amount of $10 million to run a sale process for its real estate
portfolio, which United said has potentially in excess of $50
million in unencumbered value.
Given the recent filings, the hearing was postponed until Friday,
January 13, 2023 at 10 a.m. Central time.
About United Furniture Industries
United Furniture Industries manufactures and sells upholstery. It
offers bonded leather and upholstery fabric recliners, reclining
sofas and loveseats, sectionals, and sofa sleepers, as well as
stationary sofas, loveseats, chairs, and ottomans.
United Furniture Industries was subject to an involuntary Chapter 7
bankruptcy petition (Bankr. N.D. Miss. Case No. 22-13422) filed on
Dec. 30, 2022. The petition was signed by alleged creditors
Wells Fargo Bank, National Association, Security Associates of
Mississippi Alabama LLC, and V & B International, Inc.
Wells Fargo is represented by:
R. Spencer Clift, III
901-526-2000
sclift@bakerdonelson.com
Security Associates is represented by:
Andrew C Allen
The Law Offices Of Andrew C. Allen
aallen@acallenlaw.com
US SILICA: Egan-Jones Hikes Senior Unsecured Ratings to CCC+
------------------------------------------------------------
Egan-Jones Ratings Company, on December 28, 2022, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by US Silica Holdings Inc. to CCC+ from CCC. EJR also
upgraded the rating on commercial paper issued by the Company to B
from C.
Headquartered in Katy, Texas, US Silica Holdings Inc. is a global,
diversified performance materials and logistics leader.
VALCOUR PACKAGING: Moody's Lowers CFR to Caa1, Outlook Stable
-------------------------------------------------------------
Moody's Investors Service downgraded Valcour Packaging LLC's (d/b/a
Mold-Rite) corporate family rating one notch to Caa1 from B3 and
Probability of Default Rating to Caa1-PD from B3-PD. Moody's also
downgraded Mold-Rite's first lien and second lien term loans to B3
from B2 and Caa3 from Caa2, respectively. The outlook is stable.
"Leverage remains very high, as lower overall volumes and shipments
of a less sophisticated product mix due to elevated system-wide
inventory have negatively impacted cash flow. In addition, the
rise in interest rates has materially increased the debt service
cost of the company's floating rate debt, resulting in weakened
interest coverage. A return to more normalized business conditions
is necessary for Mold-Rite to enhance cash flow generation and
credit metrics. While Moody's are anticipating an inflection to
improved market conditions in the back half of 2023, the cadence to
which this occurs is uncertain," said Scott Manduca, Vice President
at Moody's.
Downgrades:
Issuer: Valcour Packaging LLC
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD
Senior Secured 1st Lien Term Loan, Downgraded to B3 (LGD3) from B2
(LGD3)
Senior Secured 2nd Lien Term Loan, Downgraded to Caa3 (LGD5) from
Caa2 (LGD5)
Outlook Actions:
Issuer: Valcour Packaging LLC
Outlook, Remains Stable
RATINGS RATIONALE
Mold-Rite's Caa1 CFR reflects the company's very high leverage,
weak interest coverage, and lack of free cash flow. Right-sizing
of elevated customer inventory, which resulted from supply chain
challenges, is necessary to foster improvement in volumes and the
quality of the product mix sold. The company has small scale, in a
very fragmented industry, with revenue of less than $500 million.
Mold-Rite benefits from a high-valued add and specialized product
mix that produces healthy EBITDA margins over 20%. The company
serves stable, rapidly growing end markets, like health and
wellness. In addition, Mold-Rite's innovation capabilities create
stickiness with customers and have facilitated development into
longstanding relationships.
Moody's expects liquidity to be adequate over the next 12 to 18
months. Proceeds from a sale/leaseback transaction in the second
quarter of 2022, helped the company enhance its cash position by
$50 million and finish the quarter with cash of $49 million. In
addition, Mold-Rite has no drawings under its $35 million
asset-based revolving credit facility (borrowing base of $30
million) expiring in 2026. Total liquidity at the end of the third
quarter of 2022 is $79 million. Moody's expect the company to be
free cash flow negative in 2023 and minimally free cash flow
positive in 2024, as capital expenditures are tampered down and
business fundamentals pivot to anticipated improvement in the back
half of 2023. The asset-based revolver, first lien, and second
lien senior secured term loans mature in 2026, 2028 and 2029,
respectively, eliminating any near-term refinancing risk.
The B3 rating on the first lien senior secured term loan is one
notch above the CFR reflecting the superior position in the capital
structure. While subordinated to the revolver, the first lien term
loan benefits in a distressed scenario from loss absorption
provided by the second lien debt. The Caa3 rating on the second
lien senior secured term loan reflects its effective subordination
to both the first lien term loan and the revolver
The stable outlook reflects an eventual work through of elevated,
system-wide inventory, resulting in more normalized business
conditions that will enhance cash flow generation prospects.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Moody's changed the governance risk score for Mold-Rite to G-5
(very highly negative) from G-4 (highly negative) and the credit
impact score to CIS-5 (very highly negative) from CIS-4 (highly
negative). The change in governance risk and credit impact scores
reflect very aggressive financial policies under private equity
ownership, as evidenced by very high debt leverage and significant
exposure to floating rate debt, which limits cushion under the
rating category and leads to a significant negative impact on
interest coverage in the rising interest rate environment.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could downgrade the rating if the company fails to improve
its cashflow generation. Specifically, a downgrade could occur if
EBITDA-to-interest expense falls below 1.0x, the company's
liquidity profile deteriorates, or the likelihood of a
restructuring increases.
Moody's could upgrade the rating if the company improves cashflow
generation and credit metrics. Specifically, an upgrade could
occur if debt-to-EBITDA trends below 8.0x and EBITDA-to-interest
expense improves above 1.5x. The demonstration of a trend of
consistent free cash flow generation is also necessary.
Headquartered in Plattsburgh, NY, Valcour Packaging LLC, d/b/a
"Mold-Rite", is a manufacturer of specialty caps, closures, and
jars. The product portfolio includes child-resistant closures,
continuous thread caps, dispensing closures, jars, and liner
options. The company has been a portfolio company of Clearlake
since September 2021.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers published in
December 2021.
VITAL PHARMACEUTICALS: $335MM DIP Loan from Truist Wins Final OK
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, authorized Vital Pharmaceuticals, Inc.
and affiliates to use cash collateral and obtain postpetition
financing on a final basis, in order to, among other things,
administer and preserve the value of their estates.
The Debtors are authorized to obtain total advances in an amount
not to exceed a maximum outstanding principal amount of $335
million under a Superpriority Secured Debtor-in-Possession Credit
Agreement by and among Vital Pharmaceuticals and its
debtor-affiliates as borrowers and guarantors; Truist Bank, as
administrative agent for and on behalf of the lenders party
thereto; and the DIP Lenders.
They are also authorized to roll up a portion of their prepetition
debt in the aggregate amount of $235 million.
The Debtors previously obtained interim court approval to borrow
$34 million under the DIP Facility.
As reported by the Troubled Company Reporter, the Debtors initially
sought authority to obtain total advances in an amount not to
exceed a maximum outstanding principal amount of $454.7 million
from Truist Bank.
Debtor Vital Pharmaceuticals as borrower, certain of its
subsidiaries and affiliates as guarantors, the lenders from
time-to-time party thereto, and Truist Bank as administrative agent
and issuing bank, are parties to an Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of August 14, 2020.
The Credit Agreement provides two separate credit facilities, each
maturing on August 14, 2025: (a) a revolving credit facility and
(b) a term loan. As of the Petition Date, the Prepetition Lenders
are owed on account of the Prepetition Loans:
* $240 million in revolving loan principal obligations,
* $104.19 million in term loan principal obligations,
* $6.35 million in respect of unpaid interest accrued through
October 9, 2022,
* $4.19 million in respect of unpaid forbearance fees accrued
through October 9, 2022, and
* $41,883 in respect of unpaid commitment fees accrued through
October 9, 2022.
As adequate protection of:
(a) the interests of the Prepetition Secured Parties in the
Prepetition Collateral against any Diminution in Value of the
interests in the Prepetition Collateral, the Debtors grant to the
Prepetition Agent, for the benefit of itself and the other
Prepetition Secured Parties, continuing valid, binding, enforceable
and perfected postpetition security interests in and liens on all
of the Debtors' assets; and
(b) the interests of the holders of mechanics' liens and/or
materialmen's liens arising under applicable Arizona law against
any Diminution in Value of the Arizona Mechanics' Lienholders'
interest, if any, in the real property of Debtor JHO Real Estate
Investment, LLC located at 1635 S. 43rd Avenue, Phoenix, AZ 85009,
the Debtors grant to the Arizona Mechanics' Lienholders continuing
valid, binding, enforceable and perfected postpetition security
interests in and liens on the DIP Collateral.
The Adequate Protection Liens will be senior to all other security
interests in, liens on, or claims against any of the Debtors'
assets. As between the Prepetition Secured Parties Adequate
Protection Liens and the Arizona Mechanic's Lienholders Adequate
Protection Liens, the Prepetition Secured Parties Adequate
Protection Liens will be senior.
As further adequate protection of the interests of:
(a) the Prepetition Secured Parties in the Prepetition
Collateral against any Diminution in Value of such interests in the
Prepetition Collateral, the Prepetition Agent, on behalf of itself
and the other Prepetition Secured Parties, is to be granted, as and
to the extent provided by section 507(b) of the Bankruptcy Code,
an allowed superpriority administrative expense claim in each of
the Cases and any Successor Cases; and
(b) the Arizona Mechanics' Lienholders against any decrease in
the value of the Arizona Mechanics' Lienholders' interest, if any,
in the Arizona Real Property, the Arizona Mechanics' Lienholders is
to be granted, as and to the extent provided by section 507(b) of
the Bankruptcy Code, an allowed super-priority administrative
expense claim in each of the Cases and any Successor Cases.
The occurrence of any of these events, unless waived in writing in
accordance with the DIP Documents, will constitute a "Termination
Event":
(a) The failure of the Debtors to perform, in any respect, any
of the terms, provisions, conditions, covenants, or obligations
under the Final Order;
(b) Any Debtor seeks any modification or extension of the
Interim Order or this Final Orde r without the consent of the
Requisite DIP Lenders and the Requisite Prepetition Lenders;
(c) Any application is filed by any Debtor for the approval of
(or an order is entered by the Court approving) any claim arising
under section 507(b) of the Bankruptcy Code or otherwise, or any
lien in any of the Cases, which is pari passu with or senior to the
DIP Obligations, the DIP Liens, the DIP Superpriority Claim, the
Prepetition Obligations, the Adequate Protection Liens or the
Adequate Protection Superpriority Claims (except to the extent
granted by this Final Order);
(d) The (i) commencement of any action by any Debtor or (ii)
support by any Debtor of the commencement of any action by any
other party-in-interest with standing against any of the DIP Agent,
the DIP Lenders or the Prepetition Secured Parties, or their
respective agents and employees, to subordinate or avoid any liens
made in connection with the Prepetition Credit Documents or the DIP
Documents or to avoid any obligations incurred in connection with
the Prepetition Credit Documents or the DIP Documents;
(e) Any order will be entered granting relief from the stay
arising under section 362 of the Bankruptcy Code to the holder or
holders of any security interest, lien or right of setoff to permit
foreclosure (or the granting of a deed in lieu of foreclosure or
similar instrument), possession, set-off or any similar remedy with
respect to any assets of the Debtors with an aggregate value of
more than $5 million;
(f) Any Debtor will assert in any pleading filed in any court
that any material provision of the Final Order is not valid and
binding for any reason;
(g) Any Debtor files, withdraws or modifies a motion to approve
the sale of all or substantially all of the Debtors' assets without
the prior written consent of the Requisite DIP Lenders and the
Requisite Prepetition Lenders;
(h) Any Debtor will fail in any material respect to comply with
any provisions in the DIP Credit Agreement or the Prepetition
Credit Agreement governing the maintenance of the Debtors'
insurance coverage on the DIP Collateral; or
(i) The occurrence of an "Event of Default" under the DIP
Credit Agreement.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3iEvGNO from PacerMonitor.com.
The budget provides for total operating disbursements, on a weekly
basis, as follows:
$6.8 million for the week ending January 6, 2023;
$15.8 million for the week ending January 13, 2023;
$7.8 million for the week ending January 20, 2023; and
$11.5 million for the week ending January 27, 2023.
About Vital Pharmaceuticals
Since 1993, Florida-based Vital Pharmaceuticals, Inc., d/b/a Bang
Energy and as VPX Sports, has developed performance beverages,
supplements, and workout products to fuel high-energy lifestyles.
VPX Sports is the maker of Bang energy drinks, among other consumer
products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped LATHAM & WATKINS LLP as general bankruptcy
counsel; BERGER SINGERMAN LLP as co-bankruptcy counsel; HURON
CONSULTING GROUP INC., as financial advisor; and ROTHSCHILD & CO US
INC. as investment banker. STRETTO is the claims agent.
VOLUNTEER ENERGY: Unsecureds to Get 9% to 25% in Liquidating Plan
-----------------------------------------------------------------
Volunteer Energy Services, Inc., submitted a Revised Disclosure
Statement for its Chapter 11 Plan of Liquidation.
The Plan of Liquidation establishes a mechanism by which assets of
the Estate will be distributed to holders of claims and interests
in the order set forth in the Plan.
Under the Plan, Class 5 General Unsecured Claims total $23 million
to $31 million. Each Holder of an Allowed General Unsecured Claim
in Class 5, except to the extent that a Holder of an Allowed
General Unsecured Claim agrees to less favorable treatment, shall
receive one or more Distributions equal to its pro rata share of
the General Unsecured Creditor Interests as such Distributions
become available as is reasonably practicable in the reasonable
discretion of the Liquidating Trustee. The Liquidating Trust, in
the Liquidating Trustee's discretion, shall make periodic
Distributions of available Cash from the Liquidating Trust Assets
to the Holders of Allowed General Unsecured Creditor Interests at
any time after the Effective Date. Creditors will recover 9% to 25%
of their claims. Class 5 is impaired.
The Plan will be funded from the Effective Date Cash and any other
Assets of the Estate, except as expressly set forth in the Plan.
Counsel to the Debtor:
Darren Azman, Esq.
Natalie Rowles, Esq.
MCDERMOTT WILL & EMERY LLP
One Vanderbilt Avenue
New York, NY 10017-3852
Telephone: (212) 547-5400
Facsimile: (212) 547-5444
- and -
David M. Whitaker, Esq.
Philip K. Stoval, Esq.
ISAAC WILES & BURKHOLDER, LLC
Two Miranova Place, Suite 700
Columbus, OH 43215-5098
Telephone: (614) 221-2121
Facsimile: (614) 365-9516
A copy of the Revised Disclosure Statement dated Jan. 4, 2023, is
available at https://bit.ly/3jTCHKT from PacerMonitor.com.
About Volunteer Energy Services
Volunteer Energy Services, Inc., an electric power provider based
in Pickerington, Ohio, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Ohio Case No. 22-50804) on March 25,
2022. In the petition signed by David Warner, chief financial
officer, the Debtor disclosed up to $100 million in both assets and
liabilities.
Judge C. Kathryn Preston oversees the case.
McDermott Will & Emery, LLP, and Isaac Wiles and Burkholder, LLC,
serve as the Debtor's lead bankruptcy counsel and local counsel,
respectively. GlassRatner Advisory & Capital Group, LLC, doing
business as B. Riley Advisory Services, is the Debtor's financial
advisor. Epiq Corporate Restructuring, LLC, is the claims agent
and administrative advisor.
VOYAGER DIGITAL: Alameda Says Plan Suffers Confirmability Issues
----------------------------------------------------------------
Alameda Research Ltd., Maclaurin Investments Ltd. (f/k/a Alameda
Ventures Ltd.) and certain of their affiliates submitted an
objection to the Voyager Digital Holdings, Inc., et al.' motion for
entry of an order scheduling a combined disclosure statement
approval and plan confirmation hearing, conditionally approving the
adequacy of the debtors' disclosure statement, approving procedures
for solicitation, forms of ballots and notices, procedures for
tabulation of votes, and procedures for objections.
On Nov. 11, 2022, Alameda Research, Alameda Ventures and over 100
of their affiliates filed voluntary petitions for relief under
chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for
the District of Delaware (the "Alameda Chapter 11 Cases"). Prior to
the commencement of the Alameda Chapter 11 Cases and the
commencement of the Voyager chapter 11 cases, Alameda and the
Debtors maintained a number of business relationships: beginning in
September 2021, Voyager made loans to Alameda Research; in June
2022, less than two weeks before the Debtors filed for bankruptcy
protection, Alameda Ventures provided rescue financing to Voyager;
and Alameda is a substantial shareholder of Voyager. While both
Alameda's and Voyager's circumstances are notably different today
than they were when the parties entered in these business
arrangements, including as a result of the commencement of both the
Debtors' chapter 11 cases and the Alameda Chapter 11 Cases, the
Debtors have no justification for proposing a Plan that ignores
fundamental requirements and protections of the Bankruptcy Code
with respect to, among other things, the treatment of Alameda's
claims against the Debtors.
Because of those infirmities, Alameda asserts that the Voyager Plan
is patently unconfirmable and otherwise falls short of the
disclosure requirements under Section 1125 of the Bankruptcy Code.
Alameda asks the Court to deny conditional approval of the
Disclosure Statement.
While the Plan suffers from numerous confirmability issues that
would be fatal at confirmation (if the Plan were to reach that
stage), there are three defects that render the Plan patently
unconfirmable and require denial of conditional approval of the
Disclosure Statement:
* First, the Plan does not comply with section 1129(b) of the
Bankruptcy Code because it unfairly discriminates against holders
of Alameda Loan Facility Claims and violates the absolute priority
rule with respect to the Alameda Loan Facility Claims. The Plan
provides recoveries to claims that are either of the same priority
level or structurally junior to the Alameda Loan Facility Claims
ahead of recoveries on Alameda Loan Facility Claims (and is
ambiguous as to the relative priority of distributions to the
Alameda Loan Facility Claims and distributions to Existing Equity
Interests and Section 510(b) Claims) without any legal basis.
* Second, the Plan fails the best interests of creditors test
under section 1129(a)(7) of the Bankruptcy Code by failing to
provide Alameda Loan Facility Claims with a recovery not less than
the recovery to which such claims would be entitled in a
hypothetical chapter 7 liquidation. In a hypothetical chapter 7
liquidation, Alameda Loan Facility Claims would be entitled to
participate pro rata in distributions on account of OpCo General
Unsecured Claims and TopCo General Unsecured Claims, each of which
are estimated to recover some value in the Debtors' Liquidation
Analysis, but are estimated to receive no recovery under the Plan.
Accordingly, the Plan fails the best interests test.
* Third, the Plan impermissibly gerrymanders classes of Claims
by separately classifying the Alameda Loan Facility Claims (which
Alameda has asserted against each Debtor) from each of OpCo General
Unsecured Claims, HoldCo General Unsecured Claims, and TopCo
General Unsecured Claims with no legitimate business purpose in an
artificial attempt to obtain an impaired consenting class from the
General Unsecured Claims Classes.
In addition to the patent unconfirmability of the Plan, Alameda
asserts that the Court should deny conditional approval of the
Disclosure Statement for the additional reason that it fails to
provide adequate (or, in some cases, any) information concerning a
number of material issues, including (i) the basis for the
discrimination against and otherwise improper treatment of the
Alameda Loan Facility Claims under the Plan and whether the Debtors
are able to confirm a plan absent such treatment; (ii) the
avoidability pursuant to section 547(b) of the Bankruptcy Code of
no less than approximately $445 million of preference payments made
by Alameda to OpCo in the 90-day period prior to the Alameda
Petition Date in connection with certain pre-petition loans made by
OpCo to Alameda, which constitute an administrative expense claim
under section 503(b) of the Bankruptcy Code, and the corresponding
impact on the Debtors' ability to confirm the Plan and provide
creditor recoveries in light of such administrative claim; (iii)
key details with respect to the claims considered by the Special
Committee and proposed to be compromised through the D&O
Settlement; and (iv) the value attributable to each source of
recovery for each Class, including the value of and likelihood of
recovery on the Wind-Down Trust Assets, and the treatment and
resolution of Intercompany Claims under the Plan.
Counsel for Alameda Research LLC and Affiliates:
Andrew G. Dietderich, Esq.
Brian D. Glueckstein, Esq.
Benjamin S. Beller, Esq.
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004
Tel: (212) 558-4000
Fax: (212) 558-3588
About Voyager Digital Holdings
Based in Toronto, Canada, Voyager Digital Holdings Inc. --
https://www.investvoyager.com/ -- runs a cryptocurrency platform.
Voyager claims to offer a secure way to trade over 100 different
crypto assets using its easy-to-use mobile application. Through its
subsidiary Coinify ApS, Voyager provides crypto payment solutions
for both consumers and merchants around the globe.
Voyager Digital Holdings Inc. and two affiliates sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead
Case No. 22-10943) on July 5, 2022. In the petition filed by
Stephen Ehrlich, chief executive officer, the Debtors estimated
assets and liabilities between $1 billion and $10 billion.
Michael E. Wiles oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy
counsel; Berkeley Research Group, LLC as financial advisor; Moelis
& Company as investment banker; 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: Sale of Cryptocurrency Customer Accounts Okayed
----------------------------------------------------------------
Steven Church of Bloomberg News reports that Voyager Digital Ltd.
won court approval to sell its crypto platform to Binance.US for
$20 million as part of Voyager's plan to liquidate in bankruptcy.
Under terms of the deal, about $1 billion worth of assets that
Voyager holds on behalf of customers would be taken over by
Binance, which will then give account holders the option to cash
out. The deal cannot close until US Bankruptcy Judge Michael E.
Wiles approves the related bankruptcy liquidation plan.
Customers will have the right to vote on the Binance deal in the
coming weeks.
About Voyager Digital Holdings
Based in Toronto, Canada, Voyager Digital Holdings Inc. --
https://www.investvoyager.com/ -- runs a cryptocurrency platform.
Voyager claims to offer a secure way to trade over 100 different
crypto assets using its easy-to-use mobile application. Through
its subsidiary Coinify ApS, Voyager provides crypto payment
solutions for both consumers and merchants around the globe.
Voyager Digital Holdings Inc. and two affiliates sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead
Case No. 22-10943) on July 5, 2022. In the petition filed by
Stephen Ehrlich, chief executive officer, the Debtors estimated
assets and liabilities between $1 billion and $10 billion.
Michael E. Wiles oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy
counsel; Berkeley Research Group, LLC as financial advisor; Moelis
& Company as investment banker; 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: States Say Plan Disclosures Inaccurate
-------------------------------------------------------
The Vermont Department of Financial Regulation (Vermont) and the
states of Alabama, Arkansas, California, the District of Columbia,
Hawaii, Maine, North Dakota, Oklahoma, and South Carolina
(collectively the "Objecting States") object to the adequacy of
Voyager Digital Holdings, Inc., et al.' Second Amended Disclosure
Statement dated December 22, 2022 and to the Debtors' proposal that
it be approved on a conditional basis for distribution in
connection with the solicitation of votes for the Debtor's plan.
In the Objecting States' view, there are sufficient concerns about
the accuracy and the adequacy of the information provided, such
that the document in its current form would be misleading rather
than helpful to the creditors in choosing how to cast their votes.
They say that if an inadequate disclosure statement is sent to
creditors and later rejected by the Court, this process will have
been a waste of time the case can ill afford. The Objecting States
submit that taking additional time at this stage to fully review
the document would be more efficient in the long run.
The Objecting States object to the adequacy of the Second DS.
Although Debtors claim to seek only conditional approval, the
reality is that if it is conditionally approved, this Second DS is
the document that will be sent to creditors with the Plan, the
Asset Purchase Agreement with Binance US and the ballots and is the
document on which creditors will rely in deciding how to vote on
the Plan. Because the Second DS fails to provide adequate and
accurate information, voters will be misled, and the final vote
will be subject to attack and may need to be repeated to the
detriment of all parties in the case.
The Objecting States point out that a further substantial problem
is that a significant aspect of the Plan, i.e., the specific
process by which customers will have the option of either having
their accounts retained at and administered by Binance US or
returned to them is unclear. Art. V(C)(6) of the Second DS states
that customers that do not become Transferred Creditors (i.e. those
holding accounts at Binance DS) within three months of the Closing
Date will have their coins liquidated and returned in cash of the
PA. However, paragraph 6.12(e)(iv) of the Purchase Agreement
indicates that nothing in the agreement precludes the prior Voyager
customers from withdrawing any "Coins" they have on the platform.
While it appears customers will have three months to reclaim their
Coins in kind, this is not entirely clear. Perhaps there will be
additional details about these processes when the Plan Supplement
with the Customer Onboarding Protocol is distributed, but that will
not occur until several weeks after the plan solicitation process
has begun. To the extent the Objecting States have concerns about
the substantive appropriateness of Binance US as a purchasing
entity, those concerns may be mitigated if customers have a fully
informed, timely, and effective way of reclaiming their assets
before they come under the control of Binance. Without adequate
information as to what that Protocol will provide and what
protections will be extended to allow customers to withdraw their
Coins in kind if they so choose, neither the customers nor the
Objecting States have any clear basis at this point to assess the
validity of this proposed transaction.
The Objecting States further point out that there are several other
aspects in which the Second DS is inadequate or at least
misleading. The initial discussion of the terms of the overall
transaction are summary and conclusory, in many cases doing nothing
but referring the customers to the Purchase Agreement, itself a
dense and at times nearly impenetrable document. The problem is
compounded by the fact that even the most relevant portions of the
Purchase Agreement are not clearly referenced, much less explicitly
set out in the Second DS, nor is the Purchase Agreement itself an
attachment to the Second DS. Indeed, there is not even a link to
that document to assist the customers in assessing this proposed
transaction. The overall description of the Purchase Agreement
suggests that the actual crypto coins are being sold, whereas a
closer reading makes clear that, as a functional matter, it is only
custody that is being transferred and the relatively minimal
consideration being paid ($20 million) is being offered by Binance
US to allow it to acquire the right to try to retain those Voyager
customers as its own customers. Any other characterization of the
proposed transactions would involve the Court and the parties in
the same complex arguments being pursued in the Celsius Network
LLC, et al bankruptcy, Case No. 22-10964 (Bankr. S.D. N.Y.)
(hereafter "Celsius.") as to whether the debtors there actually
"own" the crypto currency at issue. The transfer process here does
not require any such determination -- indeed, the Purchase
Agreement explicitly states that, at least initially, "such coins
shall be held by Purchaser solely in a custodial capacity in trust
and solely for the benefit of Seller or the applicable User or
Eligible Creditor."
The Objecting States assert that the Second DS is also inadequate
in its description of when, whether, and how, customers' accounts
will actually be transferred to or retained by Binance US, It fails
to describe why separate treatment is provided to the holdings of
accounts in the so-called "Unsupported Jurisdictions." The Second
DS also provides no information at all about the nature of the
accounts that Binance US will create for the users and what the
"terms of use" will be for such accounts. That latter point is one
that has been of huge import in the Celsius case with respect to
what rights various parties have in the cryptocurrency at stake
there. The absence of any discussion of those issues in the Second
DS is striking. It may be that such information may be provided in
the Plan Supplement and the Customer Onboarding Protocol but it is
impossible to know at this point. In any case, the fact that such
crucial matters are left unresolved at this point underscores the
lack of clarity and specificity in the Second DS its current form.
Attorney for Alabama Securities Commission, Arkansas Securities
Department, California Department of Financial Protection and
Innovation, District of Columbia, Department of Insurance,
Securities and Banking, Hawaii Department of Commerce and Consumer
Affairs, Securities Enforcement Branch, Maine Securities
Administrator, North Dakota Securities Department, Oklahoma
Department of Securities and South Carolina Attorney General
Office:
Karen Cordry, Esq.
Bankruptcy Counsel,
National Association of Attorneys General
1850 M St., NW, 12th Floor
Washington, DC 20036
Telephone: (301) 933-3640
E-mail: kcordry@naag.org
About Voyager Digital Holdings
Based in Toronto, Canada, Voyager Digital Holdings Inc. --
https://www.investvoyager.com/ -- runs a cryptocurrency platform.
Voyager claims to offer a secure way to trade over 100 different
crypto assets using its easy-to-use mobile application. Through
its subsidiary Coinify ApS, Voyager provides crypto payment
solutions for both consumers and merchants around the globe.
Voyager Digital Holdings Inc. and two affiliates sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead
Case No. 22-10943) on July 5, 2022. In the petition filed by
Stephen Ehrlich, chief executive officer, the Debtors estimated
assets and liabilities between $1 billion and $10 billion.
Michael E. Wiles oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP, as general bankruptcy
counsel; Berkeley Research Group, LLC, as financial advisor; Moelis
& Company as investment banker; 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.
WEST CAMPUS: S&P Lowers Long-Term Rating on 2015 Rev. Bonds to 'B'
------------------------------------------------------------------
S&P Global Ratings lowered its long-term rating on the New Jersey
Economic Development Authority's series 2015 tax-exempt student
housing revenue bonds, issued for West Campus Housing LLC (WCH) to
'B' from 'BB-'. The outlook is negative.
"The downgrade and outlook reflect low occupancy that has led to
pressured operations," said S&P Global Ratings credit analyst
Steven Sather. "As a result, the project has relied on support from
New Jersey City University for the past few years to ensure it met
the debt service coverage covenant of 1.2x. In addition, in June
2022, NJCU declared a 'financial emergency,' which has added to the
uncertainty of continued support.
"Credit factors that we believe could lead to a negative rating
action during the next year include lower-than-targeted occupancy
levels resulting in pressured net pledged revenue and debt service
coverage (DSC). In addition, further enrollment declines at New
Jersey City University (NJCU) leading to weaker occupancy at WCH
could lead to a negative rating action. In addition, further
indications that NJCU's financial status is questionable which
could lead to diminishing support for the project, resulting in DSC
below that of the 1.2x covenant.
"While not anticipated, we could revise the outlook to stable if
the housing project improves occupancy levels so that DSC
consistently improves to a minimum of 1.2x through operating
revenue absent continued support from the from the university. In
addition, we could revise the outlook to stable if the university's
enrollment and financial situation improve significantly, thereby
enabling continuing support of the project."
Total project debt outstanding as of June 30, 2022, was $48.0
million.
WEST DEPTFORD: Moody's Lowers Rating on Senior Secured Debt to B3
-----------------------------------------------------------------
Moody's Investors Service downgraded West Deptford Energy Holdings,
LLC's (WDE or the Borrower) senior secured credit facilities to B3
from B2. The debt facilities consist of a $445 million 7-year
senior secured term loan due 2026 and a $55 million 5-year senior
secured revolving credit facility due 2024. The outlook remains
negative.
The Borrower owns the West Deptford Energy Station (West Deptford
or the Project), a 744 MW gas-fired combined cycle electric
generating facility located in West Deptford Township, New Jersey,
in PJM Interconnection's EMAAC capacity pricing zone.
Downgrades:
Issuer: West Deptford Energy Holdings, LLC
Senior Secured Bank Credit Facilities, Downgraded to B3 from B2
Outlook Actions:
Issuer: West Deptford Energy Holdings, LLC
Outlook, Remains Negative
RATINGS RATIONALE
The rating downgrade to B3 reflects Moody's view that financial
metrics will continue to underperform as low PJM capacity auction
prices weigh on future cash flows in combination with continued
weak energy margin contributions owing to the impact of the
Regional Greenhouse Gas Initiative (RGGI) on New Jersey based
plants' competitive position relative to non-RGGI neighbor states.
Despite a financially strong third quarter and high energy prices
during the year, financial performance in 2022 remains weak.
Moody's project 2022 credit metrics around a 1.1x debt service
coverage ratio (DSCR), 4% project cash from operations to debt
(PCFO/Debt), and 11x leverage. These projections incorporate a 2022
forecasted capacity factor of 25-30% for the plant.
Throughout the debt's remaining life, Moody's project modest
forward deleveraging amid continued energy margin uncertainty and
weak capacity pricing.
West Deptford's weak energy margin contributions are a critical
negative credit factor. While the plant produced a 62% capacity
factor in the third quarter of 2022 and generated roughly $19
million in energy margins for the quarter (net of hedges, VOM, and
RGGI), capacity utilization on an annual basis is expected at
around 28% in 2022; which is well short of the 60-70% utilization
anticipated at the loan's financing. The lower capacity factor is a
result of management cycling the unit off to optimize run time
during economic periods, in the face of softer spark spreads. The
spark spread compression, which is unique to the West Deptford
plant, is caused by the Project's location on the New Jersey side
of the NJ/PA border, which puts it at a cost disadvantage to its
PA-based competitors because New Jersey gas plants are required to
pay an emissions charge under RGGI. New Jersey is a current
participant in RGGI, while Pennsylvania is not expected to join
RGGI until mid-2023. West Deptford will remain at a competitive
disadvantage until Pennsylvania joins RGGI. Moody's view this as an
environmental consideration under Moody's Environmental, Social,
and Governance risk assessment.
The decline in capacity pricing in PJM Interconnection's EMAAC zone
where West Deptford is located is another critical negative credit
factor. Recent auction prices in EMAAC fell to $49 per MW-day for
the June 2023-May 2024 planning year, a severe decline from the
prices of $97 per MW-day seen in the June 2022-May 2023 planning
year and $166 per MW-day for the 2021-22 planning year. Moody's
expect the 2024/25 auction results to be flat relative to the
2023-24 pricing result.
Absent substantial market improvement, the Project may struggle to
generate sufficient cash flow to cover debt service in 2023 and
2024 under Moody's current projections due to declining capacity
prices, backwardated energy futures and $3.1 million of major
maintenance planned in 2023. An additional concern that could
impact 2022 results and future 2023 cash flows is whether the plant
will be assessed capacity performance penalties following winter
storm Elliott in December 2022, which could have negative credit
implications. While the timing of some expenses may shift, which
could improve annual cash flow, it may also be necessary for the
Project's ownership group to take action to support debt
obligations through equity cures during this period.
Factors supporting WDE's credit quality include its asset quality
and solid operational track record, which are both supportive of
the Project's long term value. The plant is a 2014-vintage combined
cycle gas turbine that is capable of producing a competitive -7,000
BTU/kWh baseload heat rate. It has operated with low forced outage
rates and solid availability metrics in recent years. The plant is
located in PJM's EMAAC capacity pricing zone, which affords it
premium pricing, albeit at lower levels than in prior years. The
project also enjoys pipeline diversity with physical access to
natural gas from both the Transco and Columbia pipelines, with firm
transportation contracted with South Jersey Resources Group and
Mercuria Energy America, Inc. The plant's fuel supply pricing point
is Transco Z6 Non-NY. WDE's credit profile also benefits from a
financially strong sponsor group.
RATING OUTLOOK
The negative outlook reflects Moody's expectations for the
Project's capacity factors to remain weak in 2023 given increased
merchant risk and ongoing exposure to RGGI.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a rating upgrade
In light of the negative outlook, limited prospects exist for the
rating to be upgraded in the short-term. The rating could be
stabilized if WDE is able to maintain a modest cushion over its
covenant and sustain metrics in-line with Moody's 2022 projections,
which are in the B rating category. The rating could also be
stabilized if the 2024-2025 PJM capacity auction result for EMAAC
produces significantly higher pricing, which is not Moody's base
case. Credit upside could also occur if Pennsylvania's entrance
into RGGI occurs sooner than Moody's 2023 base case and results in
sustained annual average utilization levels greater than 60%.
Factors that could lead to a rating downgrade
The rating could be downgraded further if the plant has an
sustained unplanned outage or other events occur that cause
financial performance or liquidity to weaken leading to potential
covenant issues or the need for equity cures.
PROFILE
West Deptford Energy Holdings, LLC owns the West Deptford Energy
Station, a 744 MW 2014-vintage gas-fired combined cycle electric
generating facility located in West Deptford Township, NJ. It is a
merchant power plant located in PJM Interconnection's EMACC
capacity price zone. West Deptford's sponsor group includes LS
Power, which built the plant, along with subsidiaries of Marubeni
Corporation (Baa2 positive), Kansai Electric Power Company,
Incorporated (A3 negative), Ullico, Arctic Slope,
Prudential/Lincoln, and Sumitomo Corporation (Perennial, Baa1,
stable).
METHODOLOGY
The principal methodology used in these ratings was Power
Generation Projects Methodology published in January 2022.
WESTBANK HOLDINGS: Unsecureds to Get 100% in Fannie Mae Plan
------------------------------------------------------------
Federal National Mortgage Association, the largest creditor in this
bankruptcy cases of Westbank Holdings, LLC, et al., filed a
Disclosure Statement for its Creditor's Plan of Reorganization.
The Bankruptcy Court has approved procedures to govern the bidding
on and an auction for the Debtors' Real Property. The Plan
provides a mechanism for the distribution of the proceeds of the
sale of the Debtors' Real Property. The Plan also provides for the
orderly liquidation of the Debtors' other assets, such as insurance
and litigation claims, through the establishment of a Liquidating
Trust and appointment of a Liquidating Trustee to administer such
assets. When claims and assets in the Liquidating Trust have been
liquidated, the funds in the Liquidating Trust will be distributed
in accordance with the Bankruptcy Code's priority scheme and the
terms of the Plan.
The Plan is a liquidating plan. It provides for the distribution
of the proceeds of the sale of the Debtors' Real Property with
funds paid to the secured creditor (Fannie Mae) and a portion of
the funds carved-out to cover sale expenses, administration of the
Bankruptcy Case, and to fund Distributions under the Plan. The
carve-out funds, along with other assets such as insurance and
litigation claims, shall be deposited into a Liquidating Trust.
The Liquidating Trustee shall make an initial Distribution to
holders of General Unsecured Claims (excluding Fannie Mae) within
30 days of the Effective Date of the Plan. The Liquidating Trustee
shall make subsequent distributions to remaining holders of General
Unsecured Claims on a pro rata basis following the liquidation of
the Debtors' Assets.
Class 2 General Unsecured Claims will be treated as follows:
* All Allowed Claims of General Unsecured Creditors other than
Fannie Mae and the Sewerage and Water Board (the "SWB") will be
paid in full within days of the Effective Date. At this time, the
SWB will receive an amount agreed between the SWB and Fannie Mae
which shall be at least [__], with the balance of the SWB's Allowed
Claim to be included in the pool for subsequent Distributions.
Fannie Mae shall not receive any distribution on account of its
General Unsecured Claim in this initial distribution.
* Projected Distribution: 100% to all general unsecured
creditors other than the SWB and Fannie Mae; SWB to receive agreed
amount in initial Distribution; balance of Distribution to SWB, and
Distribution to Fannie Mae, are uncertain.
* Subsequent Distributions to be made to all remaining General
Unsecured Creditors on a pro rata basis following liquidation of
Assets by the Liquidating Trustee. Class 2 is impaired.
An evidentiary hearing on the motion to determine cure amount has
been scheduled for Jan. 30, 2023. A hearing on final approval of
the Disclosure Statement will take place before the Bankruptcy
Court on Feb. 1, 2023, at 1 p.m. (prevailing Central Time). The
voting deadline to accept or reject the Plan is 5:00 p.m.
(prevailing Central Time) on [__], 2023.
Attorneys for Federal National Mortgage Association, d/b/a Fannie
Mae:
Edward H. Arnold, III, Esq.
Katie Dysart, Esq.
Lacey E. Rochester, Esq.
Christopher Vitenas, Esq.
BAKER DONELSON BEARMAN CALDWELL & BERKOWITZ, PC
201 St. Charles Ave., Suite 3600
New Orleans, LA 70170
Telephone: (504) 566-5204
Facsimile: (504) 636-3904
E-mail: harnold@bakerdonelson.com
A copy of the Disclosure Statement dated Jan. 4, 2023, is available
at https://bit.ly/3k0vloM from PacerMonitor.com.
About Westbank Holdings
Westbank Holdings, LLC is a New Orleans, La.-based company
primarily engaged in renting and leasing real estate properties.
Westbank Holdings and its affiliates filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. La.
Lead Case No. 22-10082) on Jan. 27, 2022. In its petition, Westbank
Holdings listed as much as $50 million in both assets and
liabilities. Joshua Bruno, manager, signed the petition.
Judge Meredith S. Grabill oversees the cases.
Frederick L. Bunol, Esq., at The Derbes Law Firm, LLC, Alvendia
Kelly & Demarest, LLC and G Rowland CPA & Associates, serve as the
Debtors' bankruptcy counsel, special counsel and accountant,
respectively. Richard W. Cryar, a partner at F M Reed Company, is
the Debtors' chief restructuring officer.
Dwayne M. Murray, the Chapter 11 trustee appointed in the Debtors'
cases, tapped Fishman Haygood, LLP as legal counsel and Patrick J.
Gros, CPA, as accountant.
WILLIAM HOLDINGS: Trustee Taps Menchaca & Co. as Financial Advisor
------------------------------------------------------------------
Howard Ehrenberg, the trustee appointed in the Chapter 11 case of
William Holdings, LLC, seeks approval from the U.S. Bankruptcy
Court for the Central District of California to employ Menchaca &
Company, LLP.
The trustee requires a financial advisor and consultant to:
(a) identify and investigate potential assets of the estate;
(b) analyze the Debtor's books and records and perform any
necessary tax and business advisory work required for the estate;
(c) analyze and investigate avoidable transfers made by the
Debtor;
(d) examine the estate's financial activity and assist the
trustee with the preparation of monthly operating reports and
financial analysis;
(e) provide litigation support, valuation, and expert witness
services; and
(f) provide such other financial advisory and consulting
services as requested by the trustee.
The hourly rates of the firm's counsel and staff are as follows:
Jane H. Downey $495
Other Attorneys $300
Assistants/Law Clerks $275
Jeffrey Sumpter, a managing director at Menchaca & Company,
disclosed in a court filing that his firm is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Jeffrey L. Sumpter
Menchaca & Company, LLP
835 Wilshire Boulevard, Suite 300
Los Angeles, CA 90017
Telephone: (213) 683-3317
Facsimile: (213) 683-1883
Email: jsumpter@menchacacpa.com
About William Holdings
Los Angeles-based William Holdings, LLC sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No.
22-14708) on Aug. 28, 2022. In the petition signed by its chief
executive officer, Kameron Segal, the Debtor disclosed between $10
million and $50 million in both assets and liabilities.
Judge Deborah J. Saltzman oversees the case.
The Law Offices of Michael Jay Berger serves as the Debtor's
counsel.
Howard M. Ehrenberg, the Chapter 11 trustee appointed in the
Debtor's case, is represented by Greenspoon Marder, LLP. Menchaca &
Company LLP is his financial advisor and consultant.
WW INTERNATIONAL: Calamos DCIF Marks $444,000 Loan at 35% Off
-------------------------------------------------------------
Calamos Dynamic Convertible and Income Fund has marked its $444,150
loan extended to WW International, Inc. to market at $289,253 or
65% of the outstanding amount, as of October 31, 2022, according to
a disclosure contained Calamos DCIF's Form N-CSR for the fiscal
year ended October 31, 2022, filed with the Securities and Exchange
Commission on December 29, 2022.
Calamos DCIF is a participant in a Bank Loan that accrues interest
at a rate of 7.260% per annum (1 mo. LIBOR + 3.50%) to WW
International, Inc. The loan is scheduled to mature on April 13,
2028.
Calamos Dynamic Convertible and Income Fund was organized as a
Delaware statutory trust on March 11, 2014 and is registered under
the Investment Company Act of 1940 as a diversified, closed-end
management investment company. The Fund commenced operations on
March 27, 2015.
WW International, Inc., formerly Weight Watchers International,
Inc., is a global company headquartered in the U.S. that offers
weight loss and maintenance, fitness, and mindset services such as
the Weight Watchers comprehensive diet program.
YELLOW CORP: Egan-Jones Retains CC LC Senior Unsecured Rating
-------------------------------------------------------------
Egan-Jones Ratings Company, on December 27, 2022, maintained its
'CC' local currency senior unsecured rating on debt issued by
Yellow Corporation. EJR also maintained its 'C' rating on LC
commercial paper issued by the Company.
Yellow Corporation is an American transportation holding company
headquartered in Overland Park, Kansas.
ZAPPELLI BODY SHOP: Unsecured Creditors to Recover 5% Under Plan
----------------------------------------------------------------
Zappelli Body Shop, Inc., submitted a Second Amended Plan of
Reorganization for Small Business Under Chapter 11 dated Dec. 30,
2022.
The Plan Proponent's financial projections show that the Debtor
will have projected monthly disposable income for the period
described in section 1191(c)(2) of $10,346.00.
The final Plan payment is expected to be paid within 60 months from
the effective date of the Plan thus the final payment is expected
to be on or before March 31, 2028. The Debtor's level of business
has steadily increased since COVID restrictions have lessened and
more people are back on the road commuting to and from work
resulting in more accidents. The level of business is back to
pre-pandemic levels. The company year to date (January through
November) averaged $118,046 in Revenue. Monthly Expenses can be
brought to $107,700. In order to accomplish this, the company may
be reducing the amount of rent it pays for the commercial space to
its owner Samantha Zappelli and may be reducing salaries of
owner-employees in order to find the plan. Also, the company may
need to reduce its workforce. They will also negotiate better
terms with vendors and suppliers or find more affordable supplies.
This Plan of Reorganization under chapter 11 of the Bankruptcy Code
proposes to pay creditors of Zappelli Body Shop from revenues
received from autobody repair and painting services rendered to
customers.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 5 cents on the dollar.
Under the Plan, Class 3 Non-priority Unsecured Creditors, payments
totaling $516 will be made monthly and distributed on a pro-rata
basis. The payments will total a 5% distribution to claim holders.
Payments shall begin 30 days after the effective date of the plan
and will be monthly for 60 months [five years] paid by the 20th of
every month. Class 3 is impaired.
A copy of the Second Amended Plan of Reorganization dated Jan. 4,
2023, is available at https://bit.ly/3igco0Y from
PacerMonitor.com.
About Zappelli Body Shop
Zappelli Body Shop, Inc., a company based in Santa Rosa, Calif.,
filed its voluntary petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Cal. Case No. 21-10510) on Dec. 16,
2021, listing up to $500,000 in assets and up to $10 million in
liabilities. Samantha Zappelli, chief executive officer, signed the
petition.
Judge Charles Novack oversees the case.
Brian A. Barboza, Esq., at the Law Offices of Brian A. Barboza,
serves as the Debtor's legal counsel.
ZEKELMAN INDUSTRIES: Moody's Upgrades CFR to Ba2, Outlook Stable
----------------------------------------------------------------
Moody's Investors Service upgraded Zekelman Industries, Inc.'s
corporate family rating to Ba2 from Ba3, its probability of default
rating to Ba2-PD from Ba3-PD. The rating on the company's senior
secured term loan rating was affirmed at Ba3. The outlook is
stable.
Governance considerations were key drivers of this rating action.
Moody's changed the company's governance issuer profile score to
G-3 from G-4 to indicate moderate governance risks and the
governance subcategories of financial strategy and risk management
and management credibility and track record were also changed to
moderate risk from high risk to reflect the company's stronger
credit profile and reduced governance risks. The company is
pursuing a somewhat aggressive expansion of its Z Modular business
which will be partly funded with non-recourse debt. However, the
company plans to limit the amount of non-recourse debt it will
incur and the continued robust historical performance and free cash
flow of its core and much larger pipe and tube business will enable
it to maintain credit and profitability metrics that are strong for
the rating. In addition, the company's Credit Impact Score was
changed to CIS-3 from CIS-4 to reflect the moderately negative
impact on its credit profile from ESG considerations.
"The upgrade of Zekelman's ratings reflects the significant
improvement in the company's operating performance and credit
metrics and the expectation they will remain commensurate with the
Ba2 rating due to its strengthened competitive position after the
consolidation of the steel pipe and tube sector. The ratings also
reflect the risks associated with the non-recourse debt financing
used to fund a portion of the growth of its Z Modular business,"
said Michael Corelli, Moody's Senior Vice President and lead
analyst for Zekelman Industries.
Upgrades:
Issuer: Zekelman Industries, Inc.
Corporate Family Rating, Upgraded to Ba2 from Ba3
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Affirmations:
Issuer: Zekelman Industries, Inc.
Senior Secured Bank Credit Facility, Affirmed Ba3 (LGD4)
Outlook Actions:
Issuer: Zekelman Industries, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Zekelman Industries credit profile benefits from its low leverage,
ample interest coverage, good liquidity and leading market position
for a number of structural tubing, standard pipe and electrical
conduit products. It also incorporates Moody's expectation for its
operating performance to remain at a historically strong level due
to rational competitive dynamics resulting from sector
consolidation. The rating also reflects its moderate size and
somewhat limited diversity versus higher rated companies in the
steel products sector, as well as its sensitivity to fluctuating
steel prices and reliance on nonresidential construction activity,
which drives demand for most of its tubular products. It also
considers the competitive markets in which the company operates and
its limited product differentiation, as well as the risks
associated with the speculative real estate investments in its Z
Modular business.
Zekelman Industries achieved a record level operating performance
in fiscal 2022 (ended September 2022) driven by wider spreads
between steel purchases for inventory and final product prices
despite a double-digit decline in its pipe and tube volumes and
larger losses in its Z Modular business. Zekelman has been able to
widen its material spreads due to consolidation in the industrial
pipe and tube sector combined with its focus on cost cutting and
productivity improvement initiatives. The steel tubular products
sector has experienced significant consolidation with Nucor
acquiring Independence Tube, Southland Tube and Republic Conduit
and Zekelman acquiring Western Tube & Conduit and American Tube
Manufacturing. Zekelman also completed the acquisition of EXLTUBE
in December 2022, further consolidating the sector. Sector
consolidation along with surging product prices led to Zekelman's
operating results improving dramatically over the past two fiscal
years with adjusted EBITDA of $1.13 billion in fiscal 2022 and
$1.07 billion in fiscal 2021 versus $453 million in fiscal 2019 and
$524 million in fiscal 2018 and a range of $155 million - $196
million in fiscal years 2013-2015.
The substantially improved operating performance has enabled the
company to produce significantly stronger credit metrics despite
increased debt levels related to sizeable investments in working
capital and its Z Modular business. The company has invested about
$775 million in working capital and around $640 million in its Z
Modular business over the past two fiscal years. It has utilized
its operating cash flows and about $125 million of mortgage
financing to support these investments. Its credit metrics are
currently strong for its rating with an adjusted leverage ratio
(Debt/EBITDA) of 0.9x and interest coverage (EBIT/Interest Expense)
of 42.5x as of September 2022. However, these metrics are expected
to weaken as pricing and demand soften due to lower economic growth
and the impact of higher interest rates on nonresidential
construction activity and as borrowings rise to support the
aggressive expansion of its Z Modular business. The company is
partly funding the expansion of this business with non-recourse
mortgage loans, but Moody's believe the company would honor these
obligations to avoid reputational risks. The company will benefit
from reduced working capital investments in fiscal 2023 and should
generate free cash flow from its pipe and tube business, but this
will be used to partly fund its Z Modular expansion. Nevertheless,
its credit metrics should remain at a level that supports the
current rating. Zekelman's upside ratings potential is constrained
by its moderate scale, limited end market diversity and the risks
associated with the Z Modular expansion.
Zekelman Industries has a good liquidity profile with a cash
balance of $378 million and borrowing availability of $570 million
as of September 24, 2022. The company had no borrowings on its $600
million revolver (unrated) and $30 million of letters of credit
issued. The senior secured revolving credit facility matures in
September 2026.
Zekelman Industries' $600 million ABL credit facility has a first
priority pledge on the company's most liquid assets, inventory and
receivables. The $866 million senior secured term loan is secured
by a first lien on the company's fixed assets and a second priority
lien on the ABL collateral. The term loan rating was affirmed at
Ba3 reflecting its second priority position on the ABL collateral,
the upsizing of the revolver from $400 million to $600 million in
September 2021 and the addition of mortgage financing to partly
fund the expansion of Z Modular.
The stable outlook incorporates Moody's expectation that Zekelman's
operating performance and credit metrics will weaken over the next
12 to 18 months but remain commensurate with the current rating.
Any increase in the scope of the Z Modular business including debt
funding beyond Moody's current expectation or investments in
non-income producing properties could cause the outlook to come
under downside pressure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of Zekelman's rating could occur if it increases its
scale and diversity, successfully executes the growth of its Z
Modular business and sustains a leverage ratio below 2.5x, an
interest coverage ratio above 5.0x, (CFO-dividends)/debt above 35%
and a good liquidity profile.
A downgrade could be considered should Zekelman's operating results
and credit metrics weaken, or its liquidity position deteriorates.
Downside triggers would include the leverage ratio above 3.5x,
interest coverage ratio below 3.5x and (CFO-dividends)/debt
sustained below 25%.
Headquartered in Chicago, Illinois, Zekelman Industries, Inc.
manufactures steel pipe, hollow structural sections (HSS),
electrical conduit and tubular products at thirteen manufacturing
facilities in the US and Canada. The company includes the Wheatland
and Western Tube & Conduit, Sharon Tube and Picoma brands and has
leading market positions in key product areas including hollow
structural sections, standard pipe, electrical conduit and
galvanized mechanical tubing. Its products are sold principally to
steel service centers and plumbing and electrical distributors. The
company is also continuing to develop a new modular construction
business called Z Modular, which purchases land and constructs and
operates multi-family rental properties using its proprietary
VectorBloc system. The Z Modular business currently has four
assembly facilities in the United States and Canada. Zekelman's
revenues for the twelve months ended September 24, 2022 were
approximately $4.7 billion.
The principal methodology used in these ratings was Steel published
in November 2021.
ZELIS HOLDINGS: S&P Alters Outlook to Positive, Affirms 'B' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook on Zelis Holdings L.P. and
its subsidiary to positive from stable. S&P also affirmed its 'B'
issuer credit rating on the companies and its 'B' debt ratings on
Zelis' $200 million revolver due 2026 and $2.05 billion first-lien
term loan due 2026. The recovery rating on the debt remains '3',
indicating its expectation of meaningful recovery (50%-70%; rounded
estimate: 50%).
For year-end 2022 S&P expects total revenue to grow by 30% and for
debt to EBITDA and EBITDA interest coverage to be 5.0x–5.5x and
3.0x–3.5x, respectively. These results would reflect performance
at or above expectation for 2022 and represent a period of
meaningful deleveraging following Zelis' 2019 combination with
RedCard, which S&P viewed as transformational to its business
profile. That deal, combined with its more recent but meaningfully
smaller acquisitions in 2021-2022, is expected to improve market
share across its reportable segments and enhance its business line
diversity through 2024.
S&P said, "We believe that Zelis is making progress strengthening
its competitive position as its focuses on building scale while
expanding and deepening its presence across its product segments.
In addition, sustained organic business development across its
reportable segments could drive an upward revision to the company's
competitive position assessment, which is presently constrained by
the still-developing nature of its operations within a fragmented
market and key customer concentrations.
"We expect debt to EBITDA and EBITDA interest coverage to remain
relatively conservative for the rating category (in part due to an
effective interest rate hedging program) through 2024 as the
company benefits from sustained top line growth combined with its
intent and capacity to support its strategic development and
underlying operations with internally generated cash flow. As a
result, we expect key credit metrics to strengthen.
"The positive outlook indicates the ratings may be raised by one
notch in 2024 in connection with an improved credit profile,
particularly if we consider it to be enduring. We expect top line
growth to be driven primarily by organic development and
supplemented by cash-funded acquisitions through next year. If
Zelis were to meet our performance expectations, we'd expect debt
to EBITDA and EBITDA interest coverage to be 4.0x-4.5x and about
4.0x for 2023 and 2024.
"We could raise our ratings if we expect Zelis to meet our growth
and performance expectations through 2024 and if we viewed the
underlying deleveraging as sustaining, providing basis for us to
assess the risk of releveraging (to above 5.0x debt to EBITDA) as
low.
"We could revise outlook to stable if operating performance was to
meaningfully deteriorate relative to our performance expectations
or if the company were to materially alter its capital structure,
perhaps in connection with a material transaction involving a
dividend payment, change in ownership, or the pursuit of a more
aggressive acquisition-oriented growth strategy. We believe that
such developments would likely result in meaningful credit metric
deterioration relative to our baseline (run-rate) expectation
through 2024, likely pushing financial leverage (debt to EBITDA)
meaningfully above a key 5.0x threshold."
Zelis Holdings is a health care technology company and
market-leading provider of integrated health care-claims cost
management, payments optimization, and communications solutions to
price, pay, and explain health care claims.
-- Total revenue growth of 20% in 2023 and 15% in 2024 driven
primarily by organic development
-- Stable margins at 30% through 2024
-- Cash-funded acquisition spending of $240 million annually
-- No incremental debt issuances/revolver draw through 2024
-- Financial leverage (debt to EBITDA) of 4.0x–4.5x for 2023 and
2024
S&P assesses Zelis' liquidity as adequate based on its expectation
that sources will exceed uses of cash by at least 1.2x during the
next 12 months and net sources to be positive even with a 15%
decline in EBITDA.
Principal liquidity sources:
-- $364 million in cash as of Sept. 30, 2022
-- $200 million revolver (undrawn)
-- Cash funds from operations about $225 million in 2023 and $280
million in 2024
Principal liquidity uses:
-- Required mandatory principal amortization of $20 million per
year
-- Capital expenditures of $40 million to $50 million annually
-- Discretionary cash-funded acquisition spending
-- There are no covenants on the term loan, though the revolver is
subject to a springing consolidated first-lien leverage ratio
covenant of 8.5x that activates when its utilization exceeds 40% of
total commitments. Currently, the company's revolver is undrawn.
Environmental, Social, And Governance
ESG credit indicators: E-2: S-2; G-3
Governance is a moderately negative consideration in S&P's rating
of Zelis, as it is for most rated entities owned by private-equity
sponsors. S&P believes the company's highly leveraged financial
risk points to corporate decision-making that prioritizes the
interests of the controlling owners. This also reflects
private-equity sponsors' generally finite holding periods and focus
on maximizing shareholder returns.
For the insurance services companies we rate, S&P generally have
assessed environmental and social indicators as neutral (E-2 and
S-2, respectively) while governance indicators reflect a negative
bias, with many moderately negative assessments (G-3) in connection
with private-equity ownership.
-- S&P has updated its recovery analysis on Zelis.
-- S&P has valued the company on a going-concern basis using a
5.5x multiple over our projected emergence EBITDA.
-- S&P's simulated default scenario contemplates a default in 2026
stemming from intense competition, a slowdown in claim volumes due
to deferred elective procedures, and significantly lower margins
from competitive pressures.
-- S&P believes lenders would achieve the greatest recovery value
through reorganization rather than liquidation of the business.
-- Year of default: 2026
-- EBITDA at emergence: $211.5 million
-- Implied enterprise value (EV) multiple: 5.5x
-- Net EV (after 5% administrative costs): $1.104 billion
-- Valuation split (% obligors/non-obligors): 100/0
-- Collateral value available to secured creditors: $1.104
billion
-- Estimated first-lien claims: $2.112 billion
--Recovery expectations: (50%-70%) 50%
[*] Austin Office Portfolio Slated for Sale on Feb. 14
------------------------------------------------------
Keen-Summit Capital Partners will offer for sale at a public
auction on Feb. 14, 2023, via a higher and better auction a
portfolio of 13 office buildings and 1 strip center. This
portfolio is located in Austin, TX. These factors provide a steady
cash flow for an investor:
a) The portfolio consists of approximately 544,497 sq. ft. of
office space and a 15,302 sq. ft. retail strip center
b) Located in the second fastest growing city according to CNBC
c) Located near the regional headquarters of Amazon, IBM and
Charles Schwab
d) The portfolio generates significant net income with value add
opportunity
e) Austin is very affordable to live, below the national average
and significantly below many major markets
f) No personal state income tax
A stalking horse credit bid is set at $75,461,418, with a minimum
over bid of $75,836,418.
For further information on the sale, contact Keen-Summit Capital
Partners:
Chris Mahoney
Tel: (646) 381-9205
Heather Milazzo
Tel: (646) 381-9207
Harold Bordwin
Tel: (646) 381-9201
Matt Bordwin
Tel: (646) 381-9202
In addition, information concerning the interests, the requirements
for
obtaining information and bidding on the interests and the terms
of
sale can be found at
https://www.AustinTX-OfficePortfolio-BankruptcySale.com
[^] BOND PRICING: For the Week from January 9 to 13, 2023
---------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
AMC Entertainment
Holdings Inc AMC 5.750 47.768 6/15/2025
AMC Entertainment
Holdings Inc AMC 6.125 31.534 5/15/2027
AMC Entertainment
Holdings Inc AMC 5.875 35.910 11/15/2026
Accelerate Diagnostics AXDX 2.500 91.907 3/15/2023
Air Methods Corp AIRM 8.000 4.811 5/15/2025
Air Methods Corp AIRM 8.000 4.133 5/15/2025
Allen Media LLC /
Allen Media
Co-Issuer Inc ALNMED 10.500 39.808 2/15/2028
American Airlines
2013-2 Class A
Pass Through Trust AAL 4.950 99.295 1/15/2023
Audacy Capital Corp CBSR 6.500 19.624 5/1/2027
Audacy Capital Corp CBSR 6.750 17.676 3/31/2029
Audacy Capital Corp CBSR 6.750 17.998 3/31/2029
Avaya Inc AVYA 8.000 35.500 12/15/2027
BPZ Resources Inc BPZR 6.500 3.017 3/1/2049
Bed Bath & Beyond Inc BBBY 3.749 8.870 8/1/2024
Bed Bath & Beyond Inc BBBY 5.165 4.882 8/1/2044
Bed Bath & Beyond Inc BBBY 4.915 6.097 8/1/2034
Buckeye Partners LP BPL 6.375 85.523 1/22/2078
Carvana Co CVNA 5.625 45.331 10/1/2025
Carvana Co CVNA 5.625 46.006 10/1/2025
Clovis Oncology Inc CLVS 1.250 18.000 5/1/2025
Clovis Oncology Inc CLVS 4.500 19.875 8/1/2024
Clovis Oncology Inc CLVS 4.500 17.375 8/1/2024
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 6.625 0.127 8/15/2027
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 8.948 8/15/2026
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 9.223 8/15/2026
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 6.625 -0.171 8/15/2027
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 2.143 8/15/2026
Diamond Sports Group
LLC / Diamond Sports
Finance Co DSPORT 5.375 9.390 8/15/2026
Diebold Nixdorf Inc DBD 8.500 66.289 4/15/2024
EIDP Inc CTVA 4.286 97.467 2/15/2038
Endo Finance LLC /
Endo Finco Inc ENDP 5.375 5.250 1/15/2023
Endo Finance LLC /
Endo Finco Inc ENDP 5.375 4.728 1/15/2023
Energy Conversion
Devices Inc ENER 3.000 7.875 6/15/2013
Energy Transfer LP ET 6.250 87.750 N/A
Envision Healthcare EVHC 8.750 27.246 10/15/2026
Envision Healthcare EVHC 8.750 27.039 10/15/2026
Exela Intermediate
LLC / Exela
Finance Inc EXLINT 11.500 16.647 7/15/2026
Exela Intermediate
LLC / Exela
Finance Inc EXLINT 10.000 64.924 7/15/2023
Exela Intermediate
LLC / Exela
Finance Inc EXLINT 11.500 16.869 7/15/2026
Exela Intermediate
LLC / Exela
Finance Inc EXLINT 10.000 64.924 7/15/2023
Federal Farm Credit
Banks Funding Corp FFCB 0.460 99.328 1/18/2023
GNC Holdings Inc GNC 1.500 0.819 8/15/2020
General Electric Co GE 4.200 82.000 N/A
Goodman Networks Inc GOODNT 8.000 1.000 5/31/2022
Innoviva Inc INVA 2.125 99.813 1/15/2023
International
Game Technology IGT 5.350 99.632 10/15/2023
Lannett Co Inc LCI 7.750 24.083 4/15/2026
Lannett Co Inc LCI 4.500 14.204 10/1/2026
Lannett Co Inc LCI 7.750 22.972 4/15/2026
Lightning eMotors Inc ZEV 7.500 20.250 5/15/2024
MAI Holdings Inc MAIHLD 9.500 35.291 6/1/2023
MAI Holdings Inc MAIHLD 9.500 35.291 6/1/2023
MAI Holdings Inc MAIHLD 9.500 35.291 6/1/2023
MBIA Insurance Corp MBI 16.052 7.672 1/15/2033
MBIA Insurance Corp MBI 16.052 7.149 1/15/2033
Macquarie
Infrastructure
Holdings LLC MIC 2.000 95.000 10/1/2023
Mashantucket Western
Pequot Tribe MASHTU 7.350 42.124 7/1/2026
Merck Sharp &
Dohme Corp MRK 4.224 96.712 2/18/2043
Morgan Stanley MS 0.529 99.420 1/25/2024
Morgan Stanley MS 1.800 74.327 8/27/2036
Morgan Stanley MS 3.408 98.835 1/28/2023
Morgan Stanley Finance MS 12.100 37.750 11/24/2023
National CineMedia LLC NATCIN 5.875 23.209 4/15/2028
National CineMedia LLC NATCIN 5.750 2.318 8/15/2026
National CineMedia LLC NATCIN 5.875 22.983 4/15/2028
OMX Timber Finance
Investments II LLC OMX 5.540 0.850 1/29/2020
Party City Holdings Inc PRTY 8.750 18.771 2/15/2026
Party City Holdings Inc PRTY 10.130 26.624 7/15/2025
Party City Holdings Inc PRTY 8.750 18.787 2/15/2026
Party City Holdings Inc PRTY 10.130 21.016 7/15/2025
Polar US Borrower
LLC / Schenectady
International
Group Inc SIGRP 6.750 41.430 5/15/2026
Polar US Borrower
LLC / Schenectady
International
Group Inc SIGRP 6.750 41.507 5/15/2026
Precision Castparts PCP 2.500 99.976 1/15/2023
Renco Metals Inc RENCO 11.500 24.875 7/1/2003
RumbleON Inc RMBL 6.750 37.023 1/1/2025
Sears Holdings Corp SHLD 8.000 5.500 12/15/2019
Sears Holdings Corp SHLD 6.625 6.150 10/15/2018
Shift Technologies Inc SFT 4.750 11.000 5/15/2026
SunPower Corp SPWR 4.000 99.875 1/15/2023
TMX Finance LLC /
TitleMax Finance Corp TMXFIN 11.125 91.778 4/1/2023
TMX Finance LLC /
TitleMax Finance Corp TMXFIN 11.125 93.178 4/1/2023
TMX Finance LLC /
TitleMax Finance Corp TMXFIN 11.125 93.177 4/1/2023
Talen Energy Supply LLC TLN 6.500 44.500 6/1/2025
Talen Energy Supply LLC TLN 10.500 44.500 1/15/2026
Talen Energy Supply LLC TLN 6.500 40.458 9/15/2024
Talen Energy Supply LLC TLN 10.500 44.250 1/15/2026
Talen Energy Supply LLC TLN 6.500 40.458 9/15/2024
Talen Energy Supply LLC TLN 10.500 44.250 1/15/2026
TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019
Tricida Inc TCDA 3.500 11.250 5/15/2027
US Renal Care Inc USRENA 10.625 27.884 7/15/2027
US Renal Care Inc USRENA 10.625 26.202 7/15/2027
United Community
Banks Inc/GA UCBI 4.500 97.125 1/30/2028
UpHealth Inc UPH 6.250 31.632 6/15/2026
Veeco Instruments Inc VECO 2.700 99.087 1/15/2023
WeWork Cos Inc WEWORK 7.875 41.295 5/1/2025
WeWork Cos Inc WEWORK 7.875 41.236 5/1/2025
WeWork Cos LLC /
WW Co-Obligor Inc WEWORK 5.000 35.172 7/10/2025
WeWork Cos LLC /
WW Co-Obligor Inc WEWORK 5.000 34.884 7/10/2025
Wesco Aircraft
Holdings Inc WAIR 8.500 49.000 11/15/2024
Wesco Aircraft
Holdings Inc WAIR 13.125 25.107 11/15/2027
Wesco Aircraft
Holdings Inc WAIR 13.125 25.107 11/15/2027
Wesco Aircraft
Holdings Inc WAIR 8.500 48.843 11/15/2024
*********
Monday's edition of the TCR delivers a list of indicative prices
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