/raid1/www/Hosts/bankrupt/TCR_Public/230208.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, February 8, 2023, Vol. 27, No. 38
Headlines
3B ENTERPRISES: Gets OK to Hire CliftonLarsonAllen as Accountant
ACERUS PHARMACEUTICALS: Gets Initial Stay Order; E&Y as Monitor
AHIA TAXI: Unsecureds Will Get 100 Cents on Dollar in Plan
AIG FINANCIAL: Hires Debevoise & Plimpton as Special Counsel
ALAMO RANCH: U.S. Trustee Unable to Appoint Committee
ALBERTSONS COS: S&P Rates Senior Unsecured Guaranteed Notes 'BB'
ALLIANT HOLDINGS: S&P Assigns 'B' Rating on New Debt Tranches
AMERICAN AIRLINES: S&P Assigns 'B-' Rating on $1BB Term Loan B
AMERICAN GREETINGS: Moody's Cuts New Term & Revolver Loans to 'B1'
AMYNTA GROUP: S&P Rates New First-Lien Credit Facilities 'B-'
AVENTIS SYSTEMS: Seeks Cash Collateral Access
AXOS FINANCIAL: Moody's Downgrades LongTerm Issuer Rating to Ba1
BLACK DIAMOND: Property Sale Proceeds to Fund Plan
BLOCKFI INC: Gets Court Okay to Auction Mining Assets
BRENTWOOD AUTO: Wins Interim Cash Collateral Access
BUFFALO STATION: Court OKs Interim Cash Collateral Access
CARROLL COUNTY ENERGY: S&P Affirms 'BB-' on Senior Secured Debt
CHARLES DEWEESE: Real Estate Entities File for Chapter 11
CMB SQUARED INC: Hires Green Life Business Group as Business Broker
CORE SCIENTIFIC: U.S. Trustee Appoints 2 New Committee Members
CQP HOLDCO: $275MM Incremental Debt No Impact on Moody's B1 CFR
CRANE MAN: Unsecureds Will Get 15% of Claims over 60 Months
DAMON CAPITAL: Seeks Use of Cash Collateral
DENDON INC: Gets OK to Hire M. Denise Dotson as New Counsel
DEVILLE CORP: Hires Gunster Yoakly & Stewart as Special Counsel
DIVERSIFIED PROPERTIES 2: Case Summary & One Unsecured Creditor
DIVERSIFIED PROPERTY: Voluntary Chapter 11 Case Summary
EDPASS NY INC: Hires Latham Luna Eden & Beaudine as Legal Counsel
EFS COGEN I: S&P Affirms 'B+' Secured Debt Rating, Outlook Stable
ENDO INTERNATIONAL: Fee Examiner Hires Bielli & Klauder as Counsel
ENTSORGA WEST: Case Summary & 20 Largest Unsecured Creditors
ESJ TOWERS: Hires CPA Luis R. Carrasquillo as Financial Advisor
FARMERS COOPERATIVE: Gets OK to Hire Desai Law Firm as Counsel
FIGUEROA MOUNTAIN: Has Deal on Cash Collateral Access
FORUM ENERGY: Moody's Raises CFR to B3 & Alters Outlook to Stable
GARUDA HOTELS: Wins Interim Cash Collateral Access Thru Feb 16
GENESIS GLOBAL: U.S. Trustee Appoints Creditors' Committee
GOLDEN KEY: Court OKs Cash Collateral Access Thru Feb 16
GOLDEN KEY: U.S. Trustee Appoints Creditors' Committee
GRAHAM ENT LLC: Seeks to Hire Gregory Messer as Legal Counsel
GREATBATCH LTD: Moody's Affirms Ba3 CFR, Outlook Stable
H.B. FULLER: Moody's Rates New Revolver & Term Loans 'Ba1'
HANESBRANDS INC: S&P Downgrades ICR to 'BB-', Outlook Negative
HI-POINT CONSTRUCTION: Seeks Cash Collateral
I&A DEVELOPMENT: Seeks to Hire Wisdom Professional as Accountant
I&A DEVELOPMENT: Seeks to Tap Law Offices of Alla Kachan as Counsel
INDICOR LLC: Moody's Assigns First Time 'B2' Corp. Family Rating
INVACARE CORP: $97MM in DIP Loans Win Interim Court OK
ISF PROPERTIES: Seeks to Hire Law Offices of Alla Kachan as Counsel
ISF PROPERTIES: Seeks to Hire Wisdom Professional as Accountant
JESS HALL'S: Seeks to Hire Lain Faulkner & Co., Appoint CRO
JESS HALL'S: Taps Wick Phillips Gould & Martin as Legal Counsel
K&N PARENT: Moody's Lowers CFR to Ca & Alters Outlook to Stable
KANSAS CITY RVS: Court OKs Final Cash Collateral Access
KEVIN G. SAUNDERS: Files Emergency Bid to Use Cash Collateral
KTS SOLUTIONS: Hires Legal Meets Practical as Special Counsel
L'ADRESSE LLC: Court OKs Cash Collateral Access on Final Basis
LTL MANAGEMENT: Court Tosses Move to Contain Talc Liabilities
MACON DOOR: Amends Secured & Unsecured Claims Pay Details
MEDICINE RIVER: U.S. Trustee Unable to Appoint Committee
METROPOLITAN OPERA: Moody's Cuts 2012 Taxable Bonds Rating to Ba2
NAME YOUR SPORT: Unsecureds Will Get 100% of Claims over 36 Months
NATIONAL ADVANCE: Seeks to Tap Morris & Morris Attorneys as Counsel
NAUTICAL SOLUTIONS: Jackson Walker Serving as Co-Counsel
ORIGINAL TRADERS: Seeks Creditor Protection Under CCAA
PAR PETROLEUM: Moody's Rates New $550MM Term Loan 'B1'
PARAMOUNT RESTYLING: Has Deal on Cash Collateral Access
PARLEE CYCLES: Files Emergency Bid to Use Cash Collateral
PBF LOGISTICS: Moody's Withdraws 'B1' CFR Following Debt Repayment
PEABODY ENERGY: Moody's Affirms 'B2' CFR, Outlook Stable
PUREGANIC CAFE: Seeks Cash Collateral Access
PUREGANIC LLC: Seeks to Hire Davidoff Hutcher & Citron as Counsel
QVA9 MANAGEMENT: Seeks to Hire Jacobs P.C. as Legal Counsel
REMODEL 615: Case Summary & 20 Largest Unsecured Creditors
REMODEL 615: Files Emergency Bid to Use Cash Collateral
RENAISSANCE PUBLIC SCHOOL: S&P Raises Rev Bond Rating to 'BB+'
SAVESOLAR CORP: Seeks Cash Collateral Access
ST. CHARLES MEMORY: Seeks Cash Collateral Access
TAMPA HYDE PARK: Case Summary & 10 Unsecured Creditors
THUNDER INC: Court OKs Interim Cash Collateral Access
TIMES SQUARE: Gets OK to Hire Eastdil Secured as Real Estate Broker
TIMES SQUARE: Gets OK to Hire Seward & Kissel as Legal Counsel
TIMES SQUARE: Gets OK to Hire Stretto as Administrative Advisor
TOURADJI PRIVATE: Chapter 15 Case Summary
TOWER HEALTH: S&P Lowers Long-Term Bond Rating to 'B'
TRADER CORP: Moody's Withdraws 'B2' Corp. Family Rating
TRAVERSE MIDSTREAM: S&P Affirms 'B+' ICR, Outlook Stable
UNITED TALENT: Moody's Rates New $250MM First Lien Term Loan 'B2'
UNITI GROUP: Moody's Rates New $1.75BB Senior Secured Notes 'B2'
VANGUARD WINES: Cash Collateral Access, $100,000 DIP Loan OK'd
VARSITY BRANDS: Moody's Rates New Extended 1st Lien Term Loan 'B2'
WOLVERINE WORLD: Moody's Lowers CFR to Ba3 & Unsecured Notes to B1
WYTHE BERRY: Court OKs Deal on Cash Collateral Access
*********
3B ENTERPRISES: Gets OK to Hire CliftonLarsonAllen as Accountant
----------------------------------------------------------------
3B Enterprises, LLC received approval from the U.S. Bankruptcy
Court for the Eastern District of California to employ
CliftonLarsonAllen, LLP as its accountant.
The firm's services include:
a. assistance with annual and stub period close processes;
b. accounting process improvements;
c. development of cash flow reporting for internal purposes;
and
d. assistance with data gathering for management review and
the preparation of monthly operating reports.
The firm will be paid based upon its normal and usual hourly
billing rates. The firm will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Heather Lyons, a partner at CliftonLarsonAllen LLP, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Heather Lyons
CliftonLarsonAllen LLP
915 Highland Pointe Drive Suite 300
Roseville, CA 95678
Tel: (916) 784-7800 / (916) 266-8448
Email: heather.lyons@claconnect.com
About 3B Enterprises
3B Enterprises, LLC, a company in Elverta, Calif., sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
E.D. Calif. Case No. 22-22999) on Nov. 18, 2022. In the petition
signed by its general manager, Shawn Hayse, the Debtor disclosed up
to $10 million in both assets and liabilities.
Judge Christopher M. Klein oversees the case.
Stephen Reynolds, Esq., at Reynolds Law Corp. and
CliftonLarsonAllen, LLP serve as the Debtor's legal counsel and
accountant, respectively.
ACERUS PHARMACEUTICALS: Gets Initial Stay Order; E&Y as Monitor
---------------------------------------------------------------
Acerus Pharmaceuticals Corporation, Acerus Biopharma Inc., Acerus
Labs Inc., and Acerus Pharmaceuticals USA LLC ("Companies")
commenced court-supervised restructuring proceedings under the
Companies' Creditors Arrangement Act ("CCAA").
Ernst & Young Inc. has been appointed as monitor of the Companies
for these CCAA proceedings ("Monitor") pursuant to the Order of the
Ontario Superior Court of Justice (Commercial List) dated Jan, 26,
2023 ("Initial Order").
The Initial Order grants, among other things, an initial 10-day
period ("Stay Period"), which may be extended by further Order of
the Court from time-to-time. During the Stay Period, all parties
are prohibited from commencing or continuing any legal proceedings
against the Companies, and all rights and remedies of all parties
against or in respect of the Companies, its assets, business or
current officers and directors are stayed and suspended, except
with the written consent of the Companies and the Monitor or with
leave of the Court.
Except as permitted in the Initial Order, the Initial Order directs
the Companies to make no payments of principal, interest or
otherwise on account of amounts owing by the Companies to its
creditors as of Jan. 26, 2023.
No claims procedure has yet been submitted to or approved by the
Court and creditors are therefore not required to file proofs of
claim at this time.
On Jan. 29, 2023, Companies also commenced ancillary insolvency
proceedings under Chapter 15 of Title 11 of the United States Code
("Chapter 15 Cases") in the United States Bankruptcy Court for the
District of Delaware. An initial hearing in the Chapter 15 Cases
was scheduled for Jan. 31, 2023.
Copies of the Initial Order and other related documents in
connection with these CCAA proceedings have been posted on the
Monitor's website at: https://www.ey.com/ca/acerus.
The Monitor's contact details for information specific to the CCAA
proceedings are:
Ernst & Young Inc., in its capacity as
Court-Appointed Monitor of the Companies
100 Adelaide Street West, P.O. Box 1
Toronto, ON, M5H 0B3
Tel: 613-598-4841
Email: acerus.monitor@ca.ey.com
Alex Morrison
Tel: 416-941-7743
Email: Alex.F.Morrison@parthenon.ey.com
Michael Hayes
Tel: 416-575-9089
Email: Michael.Hayes@parthenon.ey.com
Allen Yao
Tel: 416-943-3470
Email: Allen.Yao@parthenon.ey.com
Lawyers for the Companies:
Stike Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, ON M5L 1B9
Elizabeth Pillon
Tel: 416-869-5623
Email: lpillon@stikeman.com
Lee Nicholson
Tel: 416-869-5604
Email: leenicholson@stikeman.com
Philip Yang
Tel: 416-869-5593
Email: pyang@stikeman.com
Lawyers for the Monitor:
Fasken Martineau Dumoulin LLP
Bay-Adelaide Centre
333 Bay Street, Suite 2400
P.O. Box 20
Toronto, ON M5H 2T6
Stuart Brotman
Tel: 416-865-5419
Email: sbrotman@fasken.com
Dylan Chochla
Tel: 416-868-3425
Email: dchochla@fasken.com
Mitch Stephenson
Tel: 416-868-3502
Email: mstephenson@fasken.com
Acerus Pharmaceuticals Corporation is a pharmaceutical company
whose head office is located in Mississauga, Ontario. Directly and
through its subsidiaries Acerus Biopharma Inc., Acerus Labs Inc.,
and Acerus Pharmaceuticals USA, LLC, APC holds intellectual
property rights over pharmaceutical products and various methods of
treatment and manufacturing, and carries on a business researching,
trialing, and bringing said products to market for distribution.
The Company filed for Chapter 15 protection on Jan. 29, 2023
(Bankr. D. Del. Case No. 23-10111).
Naveed Manzoor is the authorized foreign representative of Acerus
Pharmaceuticals Corporation. Jennifer R. Hoover, Esq., Michael J.
Barrie, Esq., Jennifer R. Hoover, Esq., and Steven L. Walsh, Esq.,
of Benesch, Friedlander, Coplan & Aronoff LLP, and William E.
Curtin, Esq., and Michael A. Sabino, Esq., of Sidley Austin LLP,
represent Mr. Manzoor.
AHIA TAXI: Unsecureds Will Get 100 Cents on Dollar in Plan
----------------------------------------------------------
Ahia Taxi, LLC, filed with the U.S. Bankruptcy Court for the
Southern District of New York a Subchapter V Chapter 11 Plan dated
January 31, 2023.
The Debtor is a corporation, who operates a taxicab with the
referenced taxi medallion, #7B50 at 3089 Decatur Avenue, Bronx, New
York 10467.
The Action stems from a dramatic decline in the value of the taxi
medallions, which constituted the collateral of the BGW Holdings,
LLC ("Lender") loan. Furthermore, the COVID-19 Pandemic exacerbated
an already declining market decimated the Yellow Taxi Cab industry.
The Debtor filed this Sub Chapter V Chapter 11 Bankruptcy case on
July 18, 2022, in order to reach fair and equitable, feasible terms
of settlement, within the context of a Sub Chapter V Chapter 11
Plan of Reorganization.
This Plan of Reorganization proposes to pay creditors of the Debtor
the value of the medallion, on date to the filing in the amount of
$135,000.00.
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. This Plan also provides
for the payment of administrative and priority claims.
Class 1 shall consist of secured claim of the creditor, of BGW
Holdings, LLC ("Lender"), in the amount of $135,000.00. The Debtor
will make an initial payment of $69,000.00 along with the TLC Taxi
Medallion Relief Program Grant of $30,000.00 for a total initial
payment of $99,000.00. The remaining balance of $36,000.00 will be
paid within n90 after confirmation. The Debtor is retaining the
taxi medallion, #7B5 this is satisfying the Class I claimant in
full satisfaction of Debtor's secured obligations under the claim.
Class 2 consists of All non-priority unsecured claims allowed under
§ 502 of the Code consists of one proof of claim filed by Capital
One Bank (USA) by American InfoSource as agent, in the amount of
$2,434.82 and paid in full upon confirmation to the Class II
claimant in full satisfaction of Debtor's unsecured obligations
under the claim.
Class 3 Interest Holder will retain their interests in the Debtor.
The funds required for confirmation and the payment of claims
required to be paid on the Effective Date, shall be provided by the
Debtor and the Reorganized Debtor from the Debtor's employment as a
taxicab driver and from third parties, commencing on the effective
date of the plan.
A full-text copy of the Subchapter V Plan dated January 31, 2023 is
available at https://bit.ly/3HzfIwI from PacerMonitor.com at no
charge.
Attorney for the Debtor:
Thomas A. Farinella, Esq.
Law Office of Thomas A. Farinella, P.C.
260 Madison Avenue, 8th
New York, New York 10016
Email: tf@lawtaf.com
About Ahia Taxi
Ahia Taxi, LLC, is a corporation, who operates a taxicab, with the
referenced taxi medallion, #7B50 from May 24, 2017 to present. The
Debtor is a corporation located at 3089 Decatur Avenue, Bronx, New
York 10467.
Ahia Taxi, LLC, filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No.
22-10987) on July 18, 2022.
The Debtor is represented by Thomas A. Farinella, Esq. of the LAW
OFFICE OF THOMAS A. FAIRNELLA, PC.
AIG FINANCIAL: Hires Debevoise & Plimpton as Special Counsel
------------------------------------------------------------
AIG Financial Products Corp. received approval from the U.S.
Bankruptcy Court for the District of Delaware to employ Debevoise &
Plimpton, LLP as its special litigation counsel.
The firm will represent the Debtor in litigation and related
matters, including the litigation pending in the Connecticut
Superior Court involving executives who are participants under the
Debtor's Deferred Compensation Plan.
The firm will be paid at these rates:
Partners $1,190 to $2,275 per hour
Associates $555 to $990 per hour
Paralegals $345 per hour
During the 90 days prior to the Debtor's bankruptcy filing, the
firm received $6,241,520.51 from the Debtor or one of its
affiliates, which included an advanced payment retainer of $1.5
million.
Zachary Saltzman, Esq., a partner at Debevoise & Plimpton,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases,
Debevoise & Plimpton disclosed the following:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: No.
Question: Did any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
pre-petition, disclose your billing rates and material financial
terms for the pre-petition engagement, including any adjustments
during the 12 months pre-petition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference.
Response: As disclosed above, Debevoise & Plimpton represented
the Debtor for several years prior to the petition date. During
that time period, the firm charged its standard rates, subject to
the customary annual rate increases applicable to all clients.
Prior to any consideration of a bankruptcy filing, Debevoise &
Plimpton had agreed to apply a 10% discount for certain types of
services as specified. Such discounts expressly did not cover any
services relating to litigation, exit transactions (e.g., a sale of
the company) or bankruptcy matters. The post-petition billing rates
and the material financial terms of Debevoise & Plimpton's
employment are consistent with those in place prior to the petition
date. Debevoise & Plimpton intends to continue its pre-bankruptcy
billing practices during the Chapter 11 case.
Question: Has your client approved your prospective budget and
staffing plan, and, if so, for what budget period?
Response: The Debtor will be approving a prospective budget and
staffing plan for Debevoise & Plimpton's engagement for the
post-petition period as appropriate. In accordance with the U.S.
Trustee Guidelines, the budget may be amended as necessary to
reflect changed or unanticipated developments.
The firm can be reached at:
Zachary H. Saltzman, Esq.
Debevoise & Plimpton, LLP
919 Third Avenue
New York, NY 10022
Tel: (212) 909-6690
Email: zhsaltzm@debevoise.com
About AIG Financial Products Corp.
AIG Financial Products Corp. is a wholly- owned, direct subsidiary
of American International Group, Inc. It is a Delaware corporation
founded in 1987 and based in Wilton, Conn., is a financial products
company. It was founded for the purpose of trading in the capital
markets and offering corporate finance, structured finance, and
financial risk management products, including complex derivatives
transactions.
AIG Financial Products filed a petition under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Case No. 22-11309) on Dec. 14,
2022, with $100 million to $500 million in assets and $10 billion
to $50 billion liabilities.
Judge Mary F. Walrath oversees the case.
The Debtor tapped Young Conaway Stargatt & Taylor, LLP and Latham &
Watkins, LLP as bankruptcy counsels; Debevoise & Plimpton, LLP as
special litigation counsel; and Alvarez & Marsal North America, LLC
as financial advisor. William C. Kosturos, managing director at
Alvarez & Marsal, serves as the Debtor's chief restructuring
officer. Epiq Corporate Restructuring, LLC is the claims and
noticing agent.
ALAMO RANCH: U.S. Trustee Unable to Appoint Committee
-----------------------------------------------------
The U.S. Trustee for Region 20 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Alamo Ranch Partners Real Estate, LLC.
About Alamo Ranch Partners Real Estate
Alamo Ranch Partners Real Estate LLC filed its voluntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Kan.
Case No. 22-11079) on Dec. 23, 2022. The petition was signed by
Harry W. Dawson, manager and sole member. At the time of filing,
the Debtor estimated $100,001 to $500,000 in assets and $100,001 to
$500,000 in liabilities.
The case was assigned to Judge Mitchell L. Herren.
J. Michael Morris, Esq. at Klenda Austerman LLC represents the
Debtor as counsel.
ALBERTSONS COS: S&P Rates Senior Unsecured Guaranteed Notes 'BB'
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating and '3'
recovery rating to Albertsons Cos. Inc.'s (ACI) proposed $750
million senior unsecured notes due 2028. The '3' recovery rating
indicates our expectation for meaningful recovery to lenders
(50%-70%; rounded estimate: 65%).
S&P's issuer credit rating (BB/Watch Pos/--) on the company and all
other issue-level ratings are unchanged. Albertsons says it will
use the proceeds to refinance its existing 3.5% $750 million senior
unsecured notes due 2023 and it therefore views the refinancing as
leverage neutral.
Albertsons' earnings for the third quarter ended December 3, 2022
included 7.9% identical sales and a 70 basis point contraction in
gross margin. The contraction was primarily driven by increases in
product, shrink and supply chain costs. As a result, S&P Global
Ratings' lease-adjusted leverage for the fiscal year 2022 and 2023
should remain in the 4x area.
S&P said, "We anticipate Albertsons' strong operating performance
and cash flow generation will persist this year, and separately
note digital sales growth of 33% in the latest quarter. We will
continue to monitor the company's financial policy as it nears its
anticipated acquisition by Kroger Co., expected to close in early
2024."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors:
-- S&P's recovery rating on the unsecured ACI notes is unchanged
and capped at '3' and an issue-level rating of 'BB', in conjunction
with the issuer rating to 'BB'.
-- At the 'BB' category, recovery ratings on unsecured debt are
typically capped at '3' to reflect that in distressed situations, a
company in the 'BB' category would more likely be able to incur
additional debt, which would dilute recovery prospects for lenders
in the event of a payment default.
-- S&P said, "We take into consideration real estate assets
previously transferred to unrestricted subsidiaries that secure
preferred equity. We also consider any residual value unencumbered
and available to satisfy ACI's guaranteed unsecured senior notes
after it repays the ABL facility. We do not estimate any residual
value after these are repaid that would indirectly flow up to
unsecured debtholders."
-- The Safeway and NALP notes do not benefit from the subsidiary
and parent guarantees that the ACI notes have. The recovery rating
on those notes remains '6', though the Safeway recovery percentage
band falls at 5%.
-- S&P's simulated default scenario contemplates that cash flow
problems from an economic downturn, combined with new competitors
stepping up their entry into the company's markets, lead to a
significant decline in ACI's revenue and profitability.
Simulated default assumptions:
-- Simulated year of default: 2028
-- EBITDA at emergence: $1 billion
-- EBITDA multiple: 5.0x
Real estate valuation:
-- Implied rent income: $586 million
-- Capitalization rate: 8.05%
Simplified waterfall:
-- Net enterprise value (after administrative costs): $11.4
billion
-- Less: Priority Claims (ABL revolver outstanding and mortgage
debt): $2.2 billion
-- Less: Preferred Shares: $1.75 billion
-- Net available to ACI unsecured notes: $7.4 billion
--Recovery expectations: Capped at 50%-70%; rounded estimate:
65% (capped at '3' recovery rating)
-- No net residual value available to Safeway and NALP unsecured
senior notes
--Recovery expectations (Safeway and NALP notes): 0%-10%; ('6'
ALLIANT HOLDINGS: S&P Assigns 'B' Rating on New Debt Tranches
-------------------------------------------------------------
S&P Global Ratings assigned its 'B' rating to Alliant Holdings
Intermediate LLC's proposed new debt tranches, including a $1.25
billion term loan B-5 due November 2027 and $1.25 billion senior
secured notes due April 2028. S&P also assigned a '3' recovery
rating to the issuances, indicating its expectation for meaningful
(50%-70%; rounded estimate: 50%) recovery of principal in the event
of a default. All existing ratings, including the 'B' issuer credit
ratings on Alliant Holdings L.P. and Alliant Holdings Intermediate
LLC, are unchanged as a result of the new issuances.
Alliant is using the proceeds to refinance its existing $2.5
billion term loans maturing in May 2025. As part of the
transaction, the company is also planning to upsize its revolver to
$550 million and extend the maturity to November 2027. As a result,
the company will not have any debt maturing until 2027.
Following the refinancing, debt levels will remain unchanged
relative to December 2022 levels. S&P expects the transaction will
have a slightly positive effect on interest cost because the
expected pricing on the proposed fixed-rate notes is modestly below
the pricing on the existing term debt being refinanced when
factoring in the current variable benchmark rates. Pro forma for
the leverage-neutral transaction, debt to EBITDA is 7.3x excluding
preferred equity (7.9x including preferred equity) in the 12 months
ended Sept. 30, 2022, and EBITDA coverage (using current variable
benchmark rates) is around 2x, within our bounds for the current
rating.
Alliant's healthy performance trends overall persisted in 2022,
with revenue growth of 32.5% and S&P Global Ratings-adjusted
margins of 31.8% for the 12 months ended Sept. 30, 2022. Total
organic growth--which excluded Confie, acquired in June 2021--was
strong at 15.2% for the nine months ended September 2022 on solid
new business and record retention, success in its lateral hire
strategy, and a positive market impact from insurance rates and
exposures. Confie revenue declined about 6% for the 12 months ended
September 2022 on macroeconomic headwinds and difficult
underwriting conditions across the non-standard auto market. S&P
expects overall performance at Alliant to remain healthy in 2023 on
continued strength across its retail and specialty segments,
stabilizing performance at Confie, and a continued positive net
market impact as tailwinds from above-trend inflation and insurance
pricing offset a weakening economy.
AMERICAN AIRLINES: S&P Assigns 'B-' Rating on $1BB Term Loan B
--------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '3'
recovery rating to U.S.-based global airline company American
Airlines Group Inc.'s (B-/Stable/--) proposed new $1 billion term
loan B due 2028. The '3' recovery rating indicates our expectation
for meaningful (50%-70%; rounded estimate: 60%) recovery in its
simulated default scenario. S&P understands American is considering
a substantially concurrent issuance of US$750 million of senior
secured debt that will rank pari passu with the new term loan B
(although S&P does not have further details at this point). The new
term loan and potential additional secured debt are expected to
have the same collateral as American's 2013 $1.8 billion term loan
B due 2025, which is secured by the company's South American
routes, slots, and gates. Proceeds from the new term loan B, in
tandem with proceeds any concurrent issuance of new secured debt,
are expected to be applied toward the repayment of American's 2013
term loan B, and result in no change to net debt.
S&P said, "Our 'B-' issuer credit rating on American is unchanged,
but we consider the planned maturity extension as a positive
development for the company. In our view, it is a proactive step to
address its significant and most onerous debt repayment obligations
in 2025 (which should decline by about 20% in that year).
Completion of the extension and new issuance transactions would
also demonstrate a degree of financing flexibility amid a period of
difficult credit market conditions, particularly for lower-rated
issuers.
"However, in our view, American's scheduled maturities continue to
present refinancing risk and will need to be addressed in the next
couple of years. In addition, the company's total debt is
substantial (more than US$40 billion in total reported debt and
leases) and will not change from these transactions. American's
operating results materially strengthened in 2022 and we expect
further improvement this year, but its large debt load underpins
our highly leveraged financial risk assessment on the company."
AMERICAN GREETINGS: Moody's Cuts New Term & Revolver Loans to 'B1'
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Moody's Investors Service downgraded the ratings of greeting cards
maker American Greetings Corporation's proposed senior secured term
loan as well as the existing revolving credit facility to B1 from
Ba3. Moody's also affirmed all the other existing ratings of the
company, including its B2 Corporate Family Rating, B2-PD
Probability of Default Rating, and the Caa1 rating of the senior
unsecured notes that matures in April 2025. The outlook is stable.
The ratings downgrade of the senior secured term loan and revolving
credit facility to B1 from Ba3 reflects the increase of senior
secured debt in the capital structure following the company's
upsize of the proposed term loan to $402 million from $282 million
with the company planning to utilize the incremental proceeds to
repay $120 million senior unsecured notes due in 2025. The
remaining portion of the proposed term loan will replace all of the
existing $282 million secured term loan that matures in April 2024.
As a result, the senior unsecured notes will be a smaller portion
of the total debt balance, and provide less loss absorption to the
higher amount of senior secured debt in the event of a default. The
affirmation of the Caa1 rating on the senior unsecured notes
reflects the notes effective subordination to the secured credit
facilities. The Ba3 rating on the existing term loan maturing in
April 2024 is not affected and Moody's expects to withdraw the
rating if the term loan is repaid as anticipated.
Nevertheless, Moody's views the term loan B extension to April 2028
as credit positive for the overall company because there is minimal
effect on leverage and it improves liquidity by addressing the
maturity of the company's 2024 term loan and reduces the amount of
2025 unsecured notes to refinance. Moody's expects the company to
proactively address the remaining portion of senior unsecured notes
and anticipates the rating of the senior secured term loan could be
reduced to a level in line with the B2 CFR if the unsecured notes
are replaced by senior secured debt or repaid with cash.
Moody's affirmed the company's B2 CFR because the American
Greetings' credit metrics are expected to be in line with the
rating agency's expectations for the ratings over the next 12 to 18
months. Specifically, Moody's anticipates debt-to-EBITDA will
decline to 3.6x from 3.8x as of the 12 months ended November 25,
2022. Retained cash flow (RCF)-to-net debt of 6.4% LTM as of
November 25, 2022 is currently weak for the rating with the
additional cash interest creating downward pressure. However,
RCF-to-net debt should improve to above 10% in fiscal 2024 because
Moody's does not expect a repeat of the $100 million dividend that
was paid in May 2022.
Affirmations:
Issuer: American Greetings Corporation
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD5)
Downgrades:
Issuer: American Greetings Corporation
Senior Secured Term Loan B, Downgraded to B1 (LGD3) from
Ba3 (LGD2)
Senior Secured Revolving Credit Facility, Downgraded to B1 (LGD3)
from Ba3 (LGD2)
Outlook Actions:
Issuer: American Greetings Corporation
Outlook, Remains Stable
RATINGS RATIONALE
American Greetings' B2 CFR broadly reflects its narrow product
focus, exposure to the risks inherent in a mature and highly
competitive greeting card industry, characterized by declining
volume, low growth, high customer concentration and weak end
customer loyalty. The company's revenue was in decline since fiscal
2018 (ending February 2018) partially because of net customer
losses and sluggish retail traffic both in the US and UK markets,
which were further impacted by coronavirus-related disruptions.
However, revenue reverted back to growth in fiscal 2022 as a result
of customer wins in the US and UK, its broader celebrations product
strategy, and the sunset of prior year customer losses. In fiscal
2023, American Greetings continues to win new customer overseas,
but revenue modestly declined as customers are more cautious on
discretionary spending due to rising costs. In the next 12-18
months, Moody's expects roughly flat revenue and a slight
improvement in the EBITDA margin, supported by the company's
ongoing cost reduction efforts and expectation that the company
will be able to further increase pricing to offset higher costs and
secular volume declines. American Greetings' ratings also reflect
its solid position in the US and UK greeting card markets, the
relatively stable demand for the company's products driven by
everyday life events and holidays, as well as the long-standing
relationships with many of its retail customers, supported by the
highly profitable nature of greeting cards for retailers and its
long operating history of over 100 years.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that the company
will maintain its revenue and EBITDA over the next 12 to 18 months,
and that the company will generate $60-$90 million of free cash
flow in fiscal 2024 (absent dividends).
The ratings could be upgraded if the company demonstrates
consistent organic revenue growth with a stable or expanding EBITDA
margin, sustains retained cash flow-to-net debt above 12.5%,
maintains a more balanced financial policy with debt-to-EBITDA
sustained below 3.5x, and maintains good liquidity.
The ratings could be downgraded if the company's operating
performance weakens such as the loss of a major customer or volume,
or the company undertakes more aggressive strategic or financial
policies, which may include large leveraged acquisitions or sizable
distributions. Debt-to-EBITDA sustained above 5x, retained cash
flow-to-net debt sustained below 7.5% or a deterioration in
liquidity for any reason could also lead to a downgrade.
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
American Greetings is a leading designer, manufacturer and
distributor of both everyday and seasonal greeting cards and other
social expression products, including gift packaging, party goods,
and stationery products. In April 2018, private equity firm
Clayton, Dubilier, and Rice acquired a 60% majority stake in the
company via a $204 million preferred equity investment, with the
Weiss family (descendants of the founders) maintaining a 40% stake
in the business. The company is private and does not publicly
disclose financial information. American Greetings Corporation
generated revenue of approximately $1.2 billion for the 12-month
period ended November 25, 2022.
AMYNTA GROUP: S&P Rates New First-Lien Credit Facilities 'B-'
-------------------------------------------------------------
S&P Global Ratings assigned its 'B-' debt ratings to Amynta Agency
Borrower Inc.'s and Amynta Warranty Borrower Inc.'s (subsidiaries
of Amynta Holdings LLC; collectively Amynta Group) proposed
first-lien credit facilities consisting of a new $110 million
revolving credit facility due 2027 and a new $1,040 million
first-lien term loan due 2028. The recovery ratings are '3',
indicating our expectation for meaningful (50%-70%; rounded
estimate: 65%) recovery of principal in the event of default.
S&P said, "We expect the new financing to be priced on a SOFR
benchmark with proceeds to be used to refinance existing first-lien
debt (including a $110 million undrawn revolver due 2024, a $828
million first-lien term loan due 2025, and a $175 million
incremental first-lien term loan due 2025) and pay related
transaction fees and expenses. We will withdraw ratings on existing
first-lien facilities due 2024 and 2025 once the debt has been
repaid.
"Our existing long-term issuer credit rating of 'B-' on Amynta
Holdings LLC is unaffected by the refinancing.
"Leverage for the 12 months ended Sept. 30, 2022, is approximately
6.9x pro forma for the new first-lien credit facilities, operating
leases, preferred shares, contingent earnouts, and annualized
earnings contributions from closed acquisitions and the announced
acquisition of Ambridge Group (expected to close second-quarter
2023). We expect the company to operate with leverage of 6.5x-7.0x
in 2023 as strength in Amynta's managing general agent (MGA) and
specialty risk businesses offset weaknesses in warranty.
Additionally, we expect Amynta to keep expanding through
debt-funded acquisitions, with future deals focusing more within
MGA, Amynta's leading business, which has grown--organically and
inorganically--to represent 68% of net revenue in the 12 months
ended Sept. 30, pro forma for Ambridge.
"Although we forecast steady to improving leverage over the next 12
months, with expected pricing on new credit facilities slightly
higher than current spread, increasing interest rates, and neither
hedges nor interest-rate caps in place, we anticipate higher
debt-servicing costs will pressure EBITDA interest coverage. We
forecast Amynta to operate with EBITDA interest coverage of
1.3x-1.7x over 2023, below 'B' rated peers and in line with 'B-'
rating."
AVENTIS SYSTEMS: Seeks Cash Collateral Access
---------------------------------------------
Aventis Systems, Inc. asks the U.S. Bankruptcy Court for the
Northern District of Georgia, Atlanta Division, for authority to
use cash collateral and provide adequate protection.
The Debtor requires the use of cash collateral to meet its ordinary
operating expenses and to continue its business operations.
In addition to United Community Bank, the Debtor's traditional,
primary secured lender, the Debtor has borrowed from a variety of
sources to obtain inventory to sell to its customers, related to
which said lenders may have a lien on the Debtor's cash collateral
and have recorded UCC Financing Statements in the following date
order from earliest to latest: Funding Circle/FC Marketplace, LLC,
Amazon Capital Services, Inc., UCB, PayPal/Swift Financial, LLC,
Ouiby Inc. d/b/a Kickfurther, First Citizens Bank & Trust Company
d/b/a CIT, and 8fig, Inc.
Further, the Debtor signed documents with several merchant cash
advance companies, which have recorded UCC-1s in the following date
order from earliest to latest date: Fox Capital Group, Inc., Cedar
Advance, LLC, Skyinance, Inc., Diverse Capital, LLC, and Zahav
Asset Management, LLC. Fox was the first MCA to record a UCC-1 and
it was recorded after FC, Amazon, UCB and Paypal.
Two UCC-1s were recorded on February 15, 2022 (after Cedar/before
Skyinance), and July 21, 2022 (after Kingdom Kapital/before Diverse
Capital), via CT Corporation as representative of other entities.
Based on the dates of recording, the Debtor is unsure of which
creditor these UCC-1s relate.
The Debtor requested the identify of the creditors from CT
Corporation but has not received a response from CT Corporation to
date.
The Debtor proposes the following as adequate protection:
1) ACS (Debt – approx. $690,000) -- continue to allow ACS
setoff against Debtor’s seller’s account with Amazon in the
normal course (approx. $174,000 per month) and replacement lien to
the same extent validity and priority as it had pre-petition;
2) All other Lenders -- replacement lien to the same extent
validity and priority as each Lender had pre-petition; and
3) MCAs -- replacement lien only to the same extent validity
and priority as it had pre-petition and only to the extent there
was an indebtedness owed.
A copy of the motion is available at https://bit.ly/40B45hO from
PacerMonitor.com.
About Aventis Systems, Inc.
Aventis Systems, Inc. offers custom IT solutions to build and
operate complete physical and virtual infrastructures. The
comprehensive solutions include refurbished and new hardware,
system and application software, and an array of in-depth managed
services including infrastructure consultation, cloud hosting and
migration, virtualization deployment, data and disaster recovery,
security consultation, hardware relocation, and equipment buyback.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-51162) on February 6,
2023. In the petition signed by Hessam Lamei, CEO, the Debtor
disclosed up to $50 million in assets and up to $10 million in
liabilities.
Anna Humnicky, Esq., at Small Herrin, LLP, represents the Debtor as
legal counsel.
AXOS FINANCIAL: Moody's Downgrades LongTerm Issuer Rating to Ba1
----------------------------------------------------------------
Moody's Investors Service has downgraded the long-term ratings and
assessments of Axos Financial, Inc. and its lead bank, Axos Bank
(collectively "Axos"). Moody's downgraded Axos Financial's
long-term issuer rating to Ba1 from Baa3, subordinate debt rating
to Ba1 from Baa3, senior unsecured and subordinate shelf ratings to
(P)Ba1 from (P)Baa3. Moody's changed the outlook on Axos
Financial's long-term issuer rating to stable from ratings under
review. Moody's also downgraded Axos Bank's standalone Baseline
Credit Assessment (BCA) and Adjusted BCA to baa3 from baa2,
long-term issuer rating to Ba1 from Baa3, long-term deposit rating
to Baa1 from A3 and long-term counterparty risk assessment to
Baa2(cr) from Baa1(cr). Moody's also downgraded Axos Bank's long-
and short-term counterparty risk ratings to Baa3/Prime-3 from
Baa2/Prime-2 (local and foreign currency). Moody's affirmed Axos
Bank's short-term deposit rating of P-2 and short-term counterparty
risk assessment of P-2(cr). Moody's changed the outlook on Axos
Bank's long-term issuer rating and long-term deposit rating to
stable from rating under review.
RATINGS RATIONALE
This rating action concludes Moody's review for downgrade initiated
on November 16, 2022 focused on the firm's governance and risk
management of its securities and clearing businesses and its new
strategic initiatives in developing digital asset banking. The
downgrade reflects Moody's views that Axos faces high governance
risks from its aggressive growth, signaling an elevated risk
appetite and increasing the uncertainty of its risk profile.
Moody's said the evolution of Axos' strategy over the last few
years has highlighted some risk management and governance
challenges arising from the bank's approach to new initiatives and
ongoing growth in its CRE concentrations that can increase the
bank's exposure to adverse developments.
Positively, Axos has decided not to pursue new initiatives in
cryptocurrency owing to ongoing uncertainty in that sector and
evolving regulatory guidance. However, Moody's said the downgrade
takes into account its assessment of risks in Axos' clearing
business that could pose operational and liquidity risks if not
adequately managed.
Furthermore, in Moody's view, Axos has demonstrated a more elevated
risk appetite in its willingness to grow its commercial real estate
(CRE) and construction concentrations, including its concentrations
to large single borrowers. Its CRE concentration level is among the
highest of Moody's rated US regional banks, accounting for 5.0
times its capital, as measured by Moody's tangible common equity
(TCE) as of September 30, 2022. This concentration has increased
significantly in recent years, from 2.4 times its TCE at year-end
2016. Furthermore, the construction concentration has increased
notably to 1.9 times TCE at September 30, 2022 from 0.2 times TCE
at year-end 2017. Moody's notes that much of this portfolio is
well-structured and underwritten at low loan-to-value and low
loan-to-cost, which provides some protection for Axos. Even so,
Moody's said Axos' CRE concentration exposes it to material credit
risk, particularly as the credit cycle is shifting, because the
rapid pace of its CRE loan growth in recent years presents
unseasoned asset risk.
Axos has strengthened its capital position in the three months
ended December 31, 2022 with its Common Equity Tier 1 (CET1) ratio
improving to 10.6% from 10.0% at September 30, 2022. This
improvement will help to support the bank's ability to absorb
unexpected losses. Moody's said the stable outlook reflects its
expectation that Axos will maintain the current level of
capitalization.
Reflecting Moody's views of the aforementioned high governance
risks Axos faces, Moody's introduced a one-notch negative
qualitative adjustment to the bank's BCA and changed Axos'
governance issuer profile score to G-4 from G-3 and Axos' ESG
credit impact score to CIS-4 from CIS-3 to reflect the negative
impact this risk has on Axos' ratings.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the downgrade, upward rating action is unlikely at this time.
However, Axos' ratings and assessments could be upgraded if Moody's
observed a more modest risk appetite evidenced by stronger
liquidity risk management in its clearing business, lower CRE
concentration, and maintained improved capitalization.
Additionally, upward ratings pressure could emerge if Moody's
observed less strategy-related risk while Axos maintained its
strong financial performance.
Downward rating pressure could emerge if Axos resumed pursuit of
cryptocurrency banking initiatives without robust risk management
and compliance frameworks and without a clearer regulatory
environment. Additionally, reduction in its capitalization, weaker
than expected asset quality performance, or exacerbation of its CRE
concentration would drive negative rating pressure.
The principal methodology used in these ratings was Banks
Methodology published in July 2021.
BLACK DIAMOND: Property Sale Proceeds to Fund Plan
--------------------------------------------------
Black Diamond Developers, LP, and CCC Operations, LLC, filed with
the U.S. Bankruptcy Court for the Southern District of Texas a
Joint Plan of Reorganization dated January 31, 2023.
On August 23, 2019, Black Diamond Developers, LLC, was formed as a
Texas limited liability company. On August 7, 2020, Black Diamond
purchased the real property and improvements from The Club at
Cimarron, Inc., a Texas corporation (the "Prior Owner").
The real property consists of approximately 200 acres of real
property with improvements thereon located generally at 1200 S.
Shary Road, Mission, Hidalgo County, Texas 78572. There are four
structures on the Property: a clubhouse with a
cafeteria/restaurant, a sports center, a golf pro shop, and a
storage building.
The Debtors were unable to pay ad valorem taxes on the Property and
were forced to take out a loan to pay the property taxes for 2021.
In late 2021, it became apparent to the Debtors that they would
face foreclosure of the Property for failure to repay the tax loan.
In addition, the Debtors were unable to pay their sales taxes to
the Texas Comptroller or their employee withholding taxes to the
Internal Revenue Service. The Debtors abandoned their goal of
redeveloping the Property themselves, and realized they would need
to sell at least a portion of the Property to repay creditors.
This Debtors' Joint Plan of Reorganization proposes to pay
creditors of the joint Debtors from the sale of a portion of the
real property of Black Diamond.
Class 2 consists of Priority Unsecured Claims of CCC Operations.
The allowed Class 2 priority unsecured tax claims of CCC Operations
will be paid the present value of their allowed claim within 5
years after the petition date, in cash, in full, plus interest at
the appropriate statutory rate in regular installment payments. The
holders of equity interests in Black Diamond and CCC Operations
shall fund the regular installment payments if and when needed.
Class 3 consists of NonPriority Unsecured Claims of Black Diamond
and Class 3 NonPriority Unsecured Claims of CCC Operations. These
Class 2 non priority unsecured creditors of Black Diamond and CCC
Operations will be paid the allowed amount of their claims in cash,
in full, plus interest at a rate of 4.5% per annum.
Class 4 consists of Equity Interests in Black Diamond and Class 4
Equity Interests in CCC Operations. These holders of Class 4
interests will retain their interests in exchange for their
contributions to plan payments.
The Debtors shall submit a portion of their future income to the
supervision and control of the Sub-V Trustee as necessary for
making the required plan payments. In addition, as needed to fund
payments under the Plan, the holders of equity interests in the
Debtors shall make contributions to the Debtors which shall be
submitted to the Sub-V Trustee as necessary to fund required plan
payments.
Black Diamond shall market for sale its golf course machinery.
Whatever machinery cannot be sold through a controlled, marketed
sale process will be submitted to auction. At closing of sales, the
proceeds shall be disbursed to the Sub-V Trustee for distribution
to the holders of allowed Class 1 secured tax claims of CCC
Operations and to the holders of allowed Class 2 secured tax claims
of Black Diamond, pro rata.
Black Diamond shall market its clubhouse and sports center for
lease. An amount of the proceeds of the lease payments sufficient
to make the monthly payments to FGMS Holdings, LLC, the holder of
the Allow Class 1 secured tax claim of Black Diamond, and to make
the other installment payments called for under the Plan. The
proceeds shall be disbursed to the Sub-V Trustee for distribution
to the holders of allowed claims for regular installment payments
as called for under the Plan. The Debtors will also continue to
attempt to rezone the real property surrounding the buildings to be
a mixed use development, and if successful, the Debtors may list
and sell all or part of the real property to assist performance of
the Plan.
A full-text copy of the Joint Plan dated January 31, 2023 is
available at https://bit.ly/3YzJKYp from PacerMonitor.com at no
charge.
Attorneys for Debtors:
Matthew B. Probus, Esq.
The Probus Law Firm
10497 Town & Country Way, Suite 930
Houston, Texas 77024
Tel: (713) 258-2700
Fax: (713) 258-2701
Email: matthewprobus@theprobuslawfirm.com
About Black Diamond Developers
Black Diamond Developers, LP, owns and operates a golf course and
country club called The Cimarron Country Club, in Mission, Texas.
Black Diamond and an affiliate, CCC Operations, LLC, filed for
relief under Subchapter V of Chapter 11 of the Bankruptcy Code
(Bankr. S.D. Texas Lead Case No. 22-70179) on Nov. 3, 2022.
Catherine Stone Curtis has been appointed as Subchapter V trustee.
At the time of the filing, Black Diamond reported up to $10 million
in assets and up to $500,000 in liabilities while CCC Operations
reported up to $50,000 in assets and up to $500,000 in
liabilities.
Judge Eduardo V. Rodriguez oversees the cases.
Matthew Brian Probus, Esq., at The Probus Law Firm and Moore Lyles
McCarty & McGilvray, LLP, serve as the Debtors' legal counsel and
accountant, respectively.
BLOCKFI INC: Gets Court Okay to Auction Mining Assets
-----------------------------------------------------
Mrinalini Krishna of Investopedia reports that BlockFi, the crypto
lender that declared bankruptcy after the failure of FTX, won
approval from a New Jersey bankruptcy court to start auctioning its
cryptocurrency mining assets -- and says it has suitors seeking to
buy all or part of the company.
The firm said in a filing earlier January that it had approached
106 potential buyers to sell a part or all of its business.
According to BlockFi's petition, it aims to receive buyer bids by
Feb. 20, 2023, and complete the auction a week later. The company
will then file the motion of sale for any deal it reaches before
the court by March 1, 2023.
"We've received substantial interest in the market for bidding
purposes," BlockFi's lawyer, Francis Petrie, said during a hearing
on Monday, according to Bloomberg.
In its Chapter 11 bankruptcy filing in November 2022, BlockFi said
its assets and liabilities were in the range of $1 billion to $10
billion and that it owed money to more than 100,000 creditors.
Court documents show BlockFi owes FTX $275 million, making the
embattled crypto exchange BlockFi's second-largest creditor.
The crypto-lender had been struggling even before the collapse of
FTX. In July 2022, FTX extended a $400 million line of credit to
BlockFi.
The sudden drop in cryptocurrency prices caused a liquidity crunch
for BlockFi.
BlockFi's relationship with FTX is complicated. According to CNBC,
BlockFi has up to $1.2 billion of assets stuck with FTX and its
associated entities. Once FTX went belly up last November 2022,
BlockFi was forced to suspend activity and client withdrawals. As
a part of the bankruptcy proceedings, BlockFi asked the courts to
allow withdrawals for some customers in December 2022.
About BlockFi Inc.
BlockFi is building a bridge between digital assets and traditional
financial and wealth management products to advance the overall
digital asset ecosystem for individual and institutional
investors.
BlockFi was founded in 2017 by Zac Prince and Flori Marquez and in
its early days had backing from influential Wall Street investors
like Mike Novogratz and, later on, Valar Ventures, a Peter
Thiel-backed venture fund as well as Winklevoss Capital, among
others. BlockFi made waves in 2019 when it began providing
interest-bearing accounts with returns paid in Bitcoin and Ether,
with its program attracting millions of dollars in deposits right
away.
BlockFi grew during the pandemic years and had offices in New York,
New Jersey, Singapore, Poland and Argentina.
BlockFi worked with FTX US after it took an $80 million hit from
the bad debt of crypto hedge fund Three Arrows Capital, which
imploded after the TerraUSD stablecoin wipeout in May 2022.
BlockFi had significant exposure to the companies founded by former
FTX Chief Executive Officer Sam Bankman-Fried. BlockFi received a
$400 million credit line from FTX US in an agreement that also gave
FTX the option to acquire BlockFi through a bailout orchestrated by
Bankman-Fried over the summer. BlockFi also had collateralized
loans to Alameda Research, the trading firm co-founded by
Bankman-Fried.
BlockFi is the latest crypto firm to seek bankruptcy amid a
prolonged slump in digital asset prices. Lenders Celsius Network
LLC and Voyager Digital Holdings Inc. also filed for court
protection this year. Kirkland & Ellis is also advising Celsius and
Voyager in their separate Chapter 11 cases.
BlockFi Inc. and eight affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D.N.J. Lead Case No. 22-19361) on
Nov. 28, 2022. In the petitions signed by their chief executive
officer, Zachary Prince, the Debtors reported $1 billion to $10
billion in both assets and liabilities.
Judge Michael B. Kaplan oversees the cases.
The Debtors taped Kirkland & Ellis and Haynes and Boone, LLP as
general bankruptcy counsels; Walkers (Bermuda) Limited as special
Bermuda counsel; Cole Schotz, P.C., as local counsel; Berkeley
Research Group, LLC as financial advisor; Moelis & Company as
investment banker; and Street Advisory Group, LLC as strategic and
communications advisor. Kroll Restructuring Administration, LLC is
the notice and claims agent.
BRENTWOOD AUTO: Wins Interim Cash Collateral Access
---------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Tennessee,
Nashville Division, authorized Brentwood Auto Brokers, LLC to use
cash collateral on an interim basis in accordance with the budget.
The Debtor requires immediate use of cash collateral to continue
winding down its business operations, and avoid immediate and
irreparable harm to the estate pending a final hearing on the
request.
NextGear Capital, Inc., City Auto Finance, Claritas Private Credit
Fund, I, LP and the Small Business Administration are the only
entities the Debtor is aware of that may rightfully claim a
security interest in cash collateral.
The Debtor is permitted to use up to $3,000 of cash collateral,
payable at $1,000 per week, as salary for the Debtor's title clerk,
whose continued employment is necessary to finish processing
vehicle titles and registrations and up to $40,000 to pay
outstanding sales taxes and title and registration fees.
As for adequate protection, the Secured Creditors are granted a
replacement liens in accordance with 11 U.S.C. sections 361(2) and
552(b) to the extent of cash collateral actually expended, and on
the same assets and in the same order of priority as currently
exists.
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.
A final hearing on the matter is set for February 28, 2023 at 9:30
a.m.
A copy of the order is available at https://bit.ly/3DNeqNF from
PacerMonitor.com.
About Brentwood Auto Brokers, LLC
Brentwood Auto Brokers, LLC sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. M.D. Tenn. Case No. 23-00272) on
January 26, 2023. In the petition signed by Sam Karaman, its
principal dealer, the Debtor disclosed up to $1 million in assets
and up to $10 million in liabilities.
Judge Randal S. Mashburn oversees the case.
Robert Gonzales, Esq., at EmergeLaw, PLC, is the Debtor's legal
counsel.
NextGear Capital, Inc., as lender, is represented by:
Bryan J. Sisto, Esq.
Frost Brown Todd LLP
400 W. Market Street, 32nd Floor
Louisville, KY 40202
Tel: (502) 589-5400
Fax: (502) 581-1087
E-mail: bsisto@fbtlaw.com
City Auto Finance, as lender, is represented by:
Evan Nahmias, Esq.
City Enterprises, LLC
5000 Meridian Boulevard, Suite 700
Franklin, TN 37067
Tel: (901) 213-6738
E-mail: evan@cityllc.com
Claritas Private Credit Fund I, LLC, as lender, is represented by:
Paul G. Jennings, Esq.
Bass, Berry & Sims PLC
150 Third Avenue South, Suite 2800
Nashville, TN 37201
Tel: (615) 742-6200
Fax: (615)-742-6293 fax
E-mail: pjennings@bassberry.com
BUFFALO STATION: Court OKs Interim Cash Collateral Access
---------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas, Fort
Worth Division, authorized David Wallace, the Chapter 11 trustee of
Buffalo Station, LLC and affiliates, to use cash collateral on an
interim basis in accordance with his agreement with Revere Tactical
Opportunities REIT, LLC, successor-in-interest to Revere Tactical
Opportunities TRS, LLC.
The Trustee requires the use of cash collateral to operate the
Estates' businesses.
The Debtors were indebted to Revere Tactical Opportunities REIT,
LLC, successor-in-interest to Revere Tactical Opportunities TRS,
LLC under prepetition credit facilities.
The Prepetition Facility Obligations are legal, valid, binding,
first priority, fully perfected, and non-avoidable obligations in
the estimated, aggregate liquidated amount of not less than $23.215
million as of the Petition Date.
As adequate protection for the use of cash collateral, the Lender
is granted:
(a) automatic perfected Replacement Liens on all Rental
Proceeds, accounts, and receivables related to the use or occupancy
of the Real Property; and
(b) Superpriority Claims under sections 361(2), 363(c)(2),
503(b)(1), 507(a)(2), and 507(b) of the Bankruptcy Code.
The Replacement Liens 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
Trustee's or Estate's use of cash collateral results in a
diminution in value of the Prepetition Facility Collateral securing
the Prepetition Facility Obligations.
As additional partial adequate protection, the Trustee will each
make monthly payments to the Lender in the amount of at least
$146,640 to be allocated equally among the Debtors' estates. The
first Payment will be due and payable on or before March 1, 2023,
and each subsequent Payment will be due and payable on the first
day of every month thereafter.
As additional partial adequate protection, the Trustee will
maintain adequate insurance coverage on the Prepetition Facility
Collateral and the Collateral.
The Replacement Liens are valid, perfected, enforceable and
effective as of the entry of the Interim Order without the need for
any further action by the Trustee or the Lender, or the necessity
of execution or filing of any instruments or agreements.
The Trustee's right to use cash collateral will expire and the
Trustee will immediately cease using cash collateral upon the
earlier of:
(a) the occurrence of an uncured or incurable Termination
Event that is not otherwise timely cured by the Trustee or waived
in writing by the Lender; or
(b) 11:59 P.M. (Central Time) on February 28, 2023, in the
event the Court has failed to enter the Final Order.
A copy of the order is available at https://bit.ly/3Ywi5Yl from
PacerMonitor.com.
About Buffalo Station
Buffalo Station, LLC -- https://buffalostationapts.com/ -- doing
business as Winchester, is primarily engaged in renting and leasing
real estate properties. The company is based in Burleson, Texas.
Buffalo Station and four affiliates filed petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Lead Case
No. 22-42943) on Dec. 5, 2022. The affiliates are Premier 82, LLC,
Remington Station, LLC, Ventura Heights, LLC, and Windsor at 82nd
for Pinewood, LLC.
In the petition filed by its managing member, Bo Fontana, Buffalo
Station reported $1 million to $10 million in both assets and
liabilities.
Judge Edward L. Morris oversees the cases.
The Debtors are represented by Joyce W. Lindauer Attorney, PLLC.
David Wallace, the Chapter 11 trustee appointed in the Debtors'
cases, is represented by Ross, Smith & Binford, PC.
CARROLL COUNTY ENERGY: S&P Affirms 'BB-' on Senior Secured Debt
---------------------------------------------------------------
On Dec. 14, 2022, S&P Global Ratings published its revised criteria
for rating Project Finance Transactions, "General Project Finance
Rating Methodology" and "Sector-Specific Project Finance Rating
Methodology".
Under the new criteria, S&P completed the review of four merchant
power project finance transactions: Carroll County Energy LLC,
Mesquite Generation Holdings LLC, Oregon Clean Energy LLC, and West
Deptford Energy Holdings LLC. As a result, S&P affirmed all the
ratings and corresponding outlooks.
Rating Action Rationale
For Carroll County, S&P affirmed its 'BB-' rating and stable
outlook on its senior secured debt following the new criteria
implementation. This is due to its preliminary stand-alone credit
profile 'b+', which S&P adjusted up one notch because of a more
favorable credit profile compared with its peers.
For Mesquite, S&P affirmed its 'B' rating and stable outlook on its
debt, reflecting its operations phase stand-alone credit profile
'b' with no other adjustments.
For Oregon, S&P affirmed its 'B+' rating and stable outlook on its
senior secured notes, reflecting its preliminary stand-alone credit
profile 'b' adjusted to 'b+' for downside liquidity.
Finally, for West Deptford, S&P affirmed its 'B-' rating based on
its stand-alone credit profile 'b-' with no further adjustments.
Outlook
Carroll County: S&P said, "The stable outlook reflects our
expectation for a minimum debt service coverage ratio (DSCR) of
1.43x in the post-refinancing period, with an average DSCR of
1.54x. Under current and forecast market conditions in PJM, we
project realized spark spreads of $14.00-$16.00 per megawatt-hour
(MWh) through 2023, with a capacity factor of 80%-85% over the next
five years. Under these assumptions, we now project $337 million
debt outstanding at maturity in February 2026."
Mesquite: The stable outlook reflects S&P's expected minimum DSCR
of 2.2x in December 2027 with support from the debt paydown of $50
million and its expected excess cash sweep of about $40 million in
2023. Significant improvement of forward power prices in ERCOT
supports the project's deleveraging.
Oregon: S&P said, "The stable outlook reflects our expectation of
good operational and financial performance in the near term. We
project the term loan will have a balance of $340 million
outstanding at maturity in 2026, and we expect the project to
generate a minimum DSCR of 1.23x, which will occur in the
post-refinancing period, and an average DSCR of 1.47x through the
asset life."
West Deptford: The negative outlook reflects S&P's view that West
Deptford's minimum DSCRs could drop below 1.0x on a sustained
basis. This could occur if the project sweeps materially less cash
than forecast in 2023 or experiences weaker-than-expected energy
margins that cause debt outstanding at maturity to exceed $350
million. At present, S&P expects average DSCR of about 1.16x over
the life of the project and a minimum DSCR of 1.0x in 2027
(post-refinancing period).
Downside scenario
Carroll County: S&P could consider a negative rating action if
Carroll County does not maintain DSCR above 1.35x on a sustained
basis or if realized cash sweeps are far lower than its
expectations. This could occur if:
-- Weaker realized spark spreads, lower PJM capacity prices, or
unfavorable hedge settlements for delivery year 2023 and beyond
constrain liquidity;
-- Unplanned outages substantially affect generation;
-- Economic factors cause the power plants to dispatch materially
less than S&P's base-case expectations; or
-- The project's excess cash flows do not translate into expected
debt paydowns.
Mesquite: S&P could take a negative rating action if power price
volatility in ERCOT results in the minimum DSCR falling below
1.5x.
Oregon: S&P could lower the rating if Oregon sustains DSCRs below
1.2x. This would most likely happen due to weaker-than-expected
operational performance, spark spreads, or capacity prices.
West Deptford: S&P could lower its rating if it views West
Deptford's capital structure as unsustainable. This would likely
occur if the project fails to sweep cash prior to maturity, such
that its expected DSCRs fall below 1.0x on a sustained basis, or if
we expect debt outstanding at maturity will materially exceed $350
million. This would likely be due to lower-than-expected energy
margins, higher-than-anticipated emission cost, unplanned
operational outages, or weaker-than-forecast capacity prices.
Upside scenario
Carroll County: S&P said, "Although unlikely in the near term, we
could raise the rating if we expect the project will maintain a
minimum base-case DSCR greater than 1.85x in all years, including
the post-refinancing period. We would only expect this from
significant improvement in spark spreads and uncleared capacity
prices in PJM's AEP zone, while the project continues to procure
inexpensive fuel while maintaining adequate liquidity."
Mesquite: S&P could take a positive rating action if
-- Mesquite maintains minimum DSCR above 2.25x in all years;
-- Its downside resilience improves such that it is commensurate
with a 'bb' resilience stress; and
-- The project does not add material debt.
Oregon: S&P would consider a higher rating if it forecasts Oregan
to generate DSCRs above 1.4x in each period of our forecast.
West Deptford: Although S&P considers an upgrade unlikely in the
near term, it could raise its rating on West Deptford's debt if
-- The minimum DSCR rises above 1.1x on a sustained basis in S&P's
base case, including the refinancing period; and
-- The project deleverages through its cash flow sweep mechanism
over the next several quarters.
Ratings Score Snapshot – Carroll County Energy LLC
Operations phase SACP (senior debt)
Operations phase business assessment: 10
Preliminary operations phase SACP: b+
Downside resiliency assessment and impact: Modest (+1 notch)
Median DSCR impact: Neutral
Debt structure impact: -1 notch
Liquidity impact: Neutral
Refinancing impact: Neutral
Future value modifier impact: Neutral
Holistic analysis impact: Positive (+1 notch)
Structural protection impact: neutral
Counterparty assessment impact: Neutral
Operations phase SACP: bb-
Parent linkage and external influences (senior debt)
Parent linkage: Delinked
Project SACP: bb-
Extraordinary government: None
Sovereign rating limits: AA+; no impact
Full credit guarantees: Neutral
Senior debt issue rating: BB-
Ratings Score Snapshot – Mesquite Generation Holdings LLC
Operations phase SACP (senior debt)
Operations phase business assessment: 11
Preliminary operations phase SACP: b
Downside resiliency assessment and impact: Low (no adjustments)
Median DSCR impact: Neutral
Debt structure impact: Neutral
Liquidity: Neutral
Future value modifier impact: Neutral
Holistic analysis impact: Neutral
Counterparty assessment impact: Neutral
Operations phase SACP: b
Parent linkage and external influences (senior debt)
Parent linkage: Delinked
Project SACP: b
Extraordinary government: None
Sovereign rating limits: AA+; No impact
Full credit guarantees: None
Senior debt issue rating: B
Ratings Score Snapshot – Oregon Clean Energy LLC
Operations phase SACP (senior debt)
Operations phase business assessment: 10
Preliminary operations phase SACP: b
Downside resiliency assessment and impact: Modest (+1 notch)
Median DSCR impact: Neutral
Debt structure impact: Neutral
Liquidity impact: Neutral
Refinancing impact: Neutral
Future value modifier: Neutral
Holistic analysis impact: neutral
Counterparty assessment: neutral
Operations phase SACP: b+
Parent linkage and external influences (senior debt)
Parent linkage: Delinked
Project SACP: b+
Extraordinary government: None
Sovereign rating limits: AA+; No impact
Full credit guarantees: None
Senior debt issue rating: B+
Ratings Score Snapshot – West Deptford Energy Holdings LLC
Operations phase business assessment: 10
Preliminary operations phase SACP: b-
Downside resiliency assessment and impact: Modest (+1 notch)
Median DSCR impact: Neutral
Debt structure impact: Neutral
Liquidity impact: Neutral
Refinancing impact: Neutral
Future value modifier: Neutral
Holistic analysis impact: Negative (-1 notch)
Counterparty assessment: neutral
Operations phase SACP: b-
Parent linkage and external influences (senior debt)
Parent linkage: Delinked
Project SACP: b-
Extraordinary government: None
Sovereign rating limits: AA+; No impact
Full credit guarantees: None
Senior debt issue rating: B-
CHARLES DEWEESE: Real Estate Entities File for Chapter 11
---------------------------------------------------------
Charles Weldon Deweese and Penny Whitfield Deweese and certain
entities they own filed voluntary petitions for relief under
chapter 11 of the Bankruptcy Code in Bowling Green, Kentucky. The
affiliated entities that also sought Chapter 11 protection are CoCo
LLC, Drakes Creek Holding Company, LLC, Jed Holding Company LLC,
and Weldon Inc.
Pursuant to 11 U.S.C. Secs. 1107 and 1108, the Debtors continue to
manage their property and affairs as debtors-in-possession.
The Deweeses are longtime residents of Franklin County who have
invested in and developed residential and commercial properties
throughout the county and farmed the land, among other things, and,
until recently, employed hundreds of community members through
Charles Deweese Construction, Inc. ("CDC"), which is a debtor in a
chapter 7 proceeding (Bankr. W.D. Ky. Case No. 22-10355).
The Deweeses and the affiliated debtors filed their petitions for
relief in order to address their obligations arising from their
exposure to CDC's debts.
Residential Portfolio
The Debtors have long maintained a portfolio of residential rental
properties, most of which they developed themselves. In addition,
the Debtors have sought and will continue to explore other sources
of revenue for the estate.
The Deweeses own and rent the properties in Franklin, Kentucky:
Monthly
Address Rent Mortgagee
------- ---- ---------
1207 Blackjack Rd. $1,200 Farmers Bank, US Fire
503 Meadowlawn Dr. $1,000 Farmers Bank
519 Meadowlawn Dr. $850 Farmers Bank
500 Sunset Circle $750 Farmers Bank
205A Quail Ridge Road $675 Farmers Bank
205B Quail Ridge Road $650 Farmers Bank
300 Macedonia Road $800 Farmers Bank, US Fire
302 Macedonia Road $750 Farmers Bank, US Fire
304 Macedonia Road $975 Farmers Bank, US Fire
400 Macedonia Road $975 Farmers Bank
402 Macedonia Road $975 Farmers Bank
309 McGoodwin Ave. $700 Farmers Bank
424 Morris Street $650 Farmers Bank
5215 Scottsville Road $400 Farmers Bank
26 Trotter Lane $1,500 Farmers Bank
The Deweeses also own a house at 402 Macedonia Road. This property
is also mortgaged to Farmers Bank.
In addition, the Deweeses have leased a portion of their 363-acre
homestead -- including a showplace barn with stables, outbuildings,
and pastureland -- to their granddaughter, Langstone Harvey, in
exchange for cash rent of $3,000 per month and Ms. Harvey's
assumption of the considerable costs of maintaining the leased
property, in excess of $3,200 per month. Ms. Harvey plans to board
her own horses on the leased premises and rent stable space to
others. Franklin Bank and Trust Company has a mortgage on the
leased property.
Debtor Jed Holding Company LLC owns three properties that generate
rent:
Monthly
Address Rent Mortgagee
------- ---- ---------
122 N. Fairway Road $900 Farmers Bank
5655 Nashville Road $550 Farmers Bank
721 Blackjack Road $8,500 Franklin Bank, German American
Bank
In addition, Jed owns the seller's interest in a real estate
purchase contract for a residential property, for which the buyer
makes monthly payments:
Monthly
Address Rent Mortgagee
------- ---- ---------
120 Widener Circle $2,500 Farmers Bank
Debtor CoCo LLC owns two properties that generate rent:
Monthly
Address Rent Mortgagee
------- ---- ---------
626 S. Main St. $1,500 Farmers Bank
703 Tyler St. $850 Farmers Bank
Debtor Weldon Inc. owns three properties that generate rent:
Monthly
Address Rent Mortgagee
------- ---- ---------
141 Kinnaird Road $750 Farmers Bank, US Fire
202 Poplar St. $1,250 American Bank, Farmers Bank, US
Fire
408 Macedonia Road $850 Farmers Bank, US Fire
In addition, the Deweeses own a residence at 133 Hollywood Street
in Miramar Beach, Florida, which they have used as a personal
residence since they acquired it in 1999. The property is mortgaged
to Franklin ank. The Debtors intend to travel to Florida in the
near future to prepare the property for short-term rentals by
vacationers to generate additional funds. The Debtors believe that
beginning soon, they can realize $5,000 per month from short-term
rental of this property.
From the foregoing sources, then, the Debtors receive approximately
$35,000 in monthly rents, and expect that this amount will grow to
approximately $41,200 within the first 13 weeks of filing.
About the Dewesees
The Deweeses are longtime residents of Franklin County, Kentucky
who have invested in and developed residential and commercial
properties throughout the county.
Charles Weldon Deweese and Penny Whitfield Deweese sought Chapter
11 bankruptcy protection (Bankr. W.D. Ky. Case No. 23-10072) on
Jan. 27, 2023.
Real estate owning entities of the Deweeses also sought Chapter 11
protection: CoCo LLC (Case No. 23-10073); Drakes Creek Holding
Company, LLC (Case No. 23-10074); Jed Holding Company LLC (Case No.
23-10075); and Weldon Inc. (Case No. 23-10076).
The Debtors' Chapter 11 cases are jointly administered under Case
No. 23-10072.
The Debtors are represented by:
Neil Charles Bordy, Esq.
Seiller Waterman LLC
519 Gregory Road
Franklin, KY 42134
CMB SQUARED INC: Hires Green Life Business Group as Business Broker
-------------------------------------------------------------------
CMB Squared, Inc. received approval from the U.S. Bankruptcy Court
for the Central District of California to employ Green Life
Business Group, Inc. as business broker.
The firm will assist in the marketing and sale of the Debtor's
laboratory in Riverside, Calif., which the Debtor uses to test
food, water, soil and plant products for safety and purity.
Green Life will be paid a commission of 6.5 to 7 percent of the
selling price.
Andrew Matthews, principal at Green Life, disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Andrew Matthews
Green Life Business Group, Inc.
2878 Camino Del Rio South, No. 302
San Diego, CA 95108
Tel: (619) 653-0483
Email: ceo@glbgroupinc.com
About CMB Squared Inc.
CMB Squared, Inc. operates in the pharmaceuticals manufacturing
industry. The company is based in Riverside, Calif., and conducts
business under the name Canalyte Laboratories.
CMB Squared filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. C.D. Calif. Case No. 22-14787) on
Dec. 23, 2022, with $1 million to $10 million in both assets and
liabilities. Cheryl Bucsit, president and chief executive officer
of CMB Squared, signed the petition.
Judge Magdalena Reyes Bordeaux presides over the case.
Alan W. Forsley, Esq., at FLP Law Group, LLP represents the Debtor
as counsel.
CORE SCIENTIFIC: U.S. Trustee Appoints 2 New Committee Members
--------------------------------------------------------------
The U.S. Trustee for Region 7 appointed MP2 Energy, LLC and Tenaska
Power Services Co. as new members of the official committee of
unsecured creditors in the Chapter 11 cases of Core Scientific,
Inc. and its affiliates.
Meanwhile, BRF Finance Co., LLC resigned as committee member.
As of Feb. 3, the members of the committee are:
1. Dalton Utilities
c/o Matthew R. Brooks
Troutman Pepper Hamilton Sanders, LLP
600 Peachtree Street NE, Suite 3000
Atlanta, GA 30308
2. Sphere 3D Corp.
10 Glenville St.
Greenwich, CT 06831
3. MP2 Energy LLC d/b/a Shell Energy Solutions
21 Waterway Avenue, Ste. 450
The Woodlands, TX
4. Tenaska Power Services Co.
300 E. John Carpenter, Ste. 1000
Irving, TX 75062
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Core Scientific
Core Scientific, Inc. (OTCMKTS: CORZQ) is the largest U.S.
publicly-traded Bitcoin mining company in computing power. Core
Scientific, which was formed following a business combination in
July 2021 with blank check company XPDI, is a large-scale operator
of dedicated, purpose-built facilities for digital asset mining
colocation services and a provider of blockchain infrastructure,
software solutions and services. Core mines Bitcoin, Ethereum and
other digital assets for third-party hosting customers and for its
own account at its six fully operational data centers in North
Carolina (2), Georgia (2), North Dakota (1) and Kentucky (1). Core
was formed following a business combination in July 2021 with XPDI,
a blank check company.
In July 2022, one of the Company's largest customers, Celsius
Mining LLC, filed for Chapter 11 bankruptcy in New York.
With low Bitcoin prices depressing mining revenue to a record low,
Core Scientific first warned in October 2022 that it may have to
file for bankruptcy if the company can't find more funding to repay
its debt that amounts to over $1 billion. Core Scientific did not
make payments that came due in late October and early November 2022
with respect to several of its equipment and other financings,
including its two bridge promissory notes.
Core Scientific Inc. and its affiliates filed petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. TexasLead Case
No. 22-90340) on Dec. 21, 2022. As of Sept. 30, 2022, Core
Scientific had total assets of US$1.4 billion and total liabilities
of US$1.3 billion.
Judge David R. Jones oversees the cases.
The Debtors hired Weil, Gotshal & Manges, LLP as legal counsel; PJT
Partners, LP as investment banker; and AlixPartners, LLP as
financial advisor. Stretto is the claims agent.
A group of Core Scientific convertible bondholders is working with
restructuring lawyers at Paul Hastings.
On Jan. 9, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent unsecured creditors in the Debtors'
Chapter 11 cases. The committee is represented by Willkie Farr &
Gallagher, LLP.
CQP HOLDCO: $275MM Incremental Debt No Impact on Moody's B1 CFR
---------------------------------------------------------------
Moody's Investors Service says that CQP Holdco LP's proposed $275
million senior secured term loan will not affect the company's
ratings or stable outlook.
The incremental debt will be issued as an add-on to the company's
previously issued $2.5 billion term loan facility due June 5, 2028.
Proceeds from this debt offering will be used to make a one-time
cash distribution to CQP Holdco's two private owners.
"This debt funded distribution is credit negative as it increases
CQP Holdco's total debt by 7% and weakens leverage metrics," said
Elena Nadtotchi, Moody's Senior Vice President. "However, the
incremental leverage can be accommodated under the B1 rating based
on the strong outlook for global LNG markets and the company's
continued good collateral coverage of its debt."
The add-on debt is fungible with the existing term loan, and
together, they will be treated as a single class of loan. CQP
Holdco's senior secured term loan facility and senior secured notes
are both rated B1, at the same level as the B1 Corporate Family
Rating (CFR). The term loan and the notes represent all of the debt
of the company, rank pari passu, and benefit from the first-lien
pledge of CQP Holdco's equity interests in Cheniere Energy
Partners, L.P. (CQP, Ba1 stable).
CQP Holdco LP is a private holding company jointly owned by
Blackstone Infrastructure Partners and Brookfield Infrastructure
Partners L.P., and CQP Holdco currently owns roughly 42% of CQP's
common units.
CRANE MAN: Unsecureds Will Get 15% of Claims over 60 Months
-----------------------------------------------------------
Crane Man, Inc., filed with the U.S. Bankruptcy Court for the
Southern District of West Virginia a Small Business Plan of
Reorganization dated January 31, 2023.
Crane Man was formed in April 2010 by Steve and Joyce Clegg, a
married couple. The Debtor is a much-needed, specialized equipment
repair company that is helping heavy equipment operators to meet
their needs.
This Plan proposes to pay creditors of the Debtor from cash flow
from operations and future income.
This Plan provides for three classes of secured claims, one class
of priority unsecured claims and one class of general unsecured
claims. Unsecured creditors holding allowed claims will receive
distributions, which the proponent of this Plan has valued at $.15
on the dollar.
This Plan also provides for the payment of administrative and
priority claims to the extent permitted by the Code in 60
installments.
Class 5 consists of all unsecured claims including both SBA loans.
Allowed unsecured general claims will be paid a total of 15% of
their claim over 60 months without interest payable in equal
quarterly payments.
Debtor will commence making its payments under the plan on the
first day of the calendar month that follows the effective date of
the plan. It will fund the plan payments from its income made in
the ordinary course of its business.
The Debtor contemplates the secured creditors will accept this plan
and that the unsecured creditors will receive fair and equitable
treatment. The Debtor buys motor vehicles and improves them for
resale which activity will continue to generate cash flow to fund
plan payments.
A full-text copy of the Plan of Reorganization dated January 31,
2023 is available at https://bit.ly/3jDxneV from PacerMonitor.com
at no charge.
Counsel for Debtor:
Andrew S. Nason, Esq.
Emmett Pepper, Esq.
Pepper and Nason
8 Hale Street
Charleston, WV 25301
Tel: (304) 346-0361
Fax: (304) 346-1054
Email: info@PepperNason.com
About Crane Man Inc.
Crane Man, Inc., is a specialized equipment repair company that is
helping heavy equipment operators to meet their needs. The Debtor
filed a Chapter 11 bankruptcy petition (Bankr. S.D. W.Va. Case No.
22-20172) on Nov. 8, 2022, with as much as $1 million in both
assets and liabilities. Judge B. Mckay Mignault oversees the case.
The Debtor is represented by Pepper and Nason.
DAMON CAPITAL: Seeks Use of Cash Collateral
-------------------------------------------
Damon Capital, Ltd. asks the U.S. Bankruptcy Court for the Western
District of Texas, Austin Division, for authority to use cash
collateral and provide adequate protection.
The Debtor requires the use of cash collateral to continue the
operation of its business.
The creditors that have liens against the Debtor's only asset, a
commercial building in Georgetown, Texas, are First National Bank
of Ft. Stockton, Williamson County Tax, Beau Budde, David Hays and
JRey Properties, and Judith Manriquez.
First National Bank of Ft. Stockton is the secured lender on the
Building. Beau Budde, David Hays and JRey Properties furnished
monies for replacement of the roof and are secured by a deed of
trust. Williamson County's claims are based on ad valorem taxes for
the Building. Judith Manriquez was granted a lien in Chris Damon's
divorce proceeding. However, the lien is not perfected.
The Building is posted for foreclosure on February 7, 2023. The
Debtor has fallen behind on payments to its creditors due to an
unforeseen series of vacancies in the Building and issues with late
collection of commercial rental payments from its tenants.
The Building generates approximately $18,000 to $20,000 in cash
flow on any given month.
The Debtor proposes to provide adequate protection to the parties
with an interest in cash collateral in the following manner:
a. The Debtor will provide all creditors with an interest in
cash collateral with a replacement lien upon assets obtained
post-petition to the same extent, priority and validity as their
pre-petition liens.
b. The Debtor will maintain insurance upon its assets.
As the Debtor obtains better information about its cash flow and
the relative positions of its lenders, it anticipates to be able to
negotiate more detailed adequate protection arrangements.
A copy of the Debtor's motion is available at
https://bit.ly/3jCejO8 from PacerMonitor.com.
About Damon Capital, Ltd.
Damon Capital, Ltd. is primarily engaged in renting and leasing
real estate properties. The Debtor sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. W.D. Tex. Case No. 23-10063)
on February 6, 2023. In the petition signed by Chris Damon,
president, the Debtor disclosed up to $10 million in both assets
and liabilities.
Stephen W. Sather, Esq., at Barron & Newburger, P.C., represents
the Debtor as legal counsel.
DENDON INC: Gets OK to Hire M. Denise Dotson as New Counsel
-----------------------------------------------------------
Dendon, Inc. received approval from the U.S. Bankruptcy Court for
the Northern District of Georgia to employ M. Denise Dotson, LLC to
substitute for Waggoner Hastings LLC.
The firm will be paid at an hourly rate of $295 for its legal
services.
M. Denise Dotson, Esq., disclosed in court filings that she and her
firm neither hold nor represent any interest adverse to the Debtor
and its bankruptcy estate.
The firm can be reached through:
M. Denise Dotson, Esq.
M. Denise Dotson, LLC
125 Clairemont Avenue, Suite 440
Decatur, GA 30030
Tel: (404) 210-0166
Email: ddotsonlaw@me.com
About Dendon Inc.
Dendon, Inc. filed a petition for Chapter 11 protection (Bankr.
N.D. Ga. Case No. 21-55796) on Aug 4, 2021, with up to $50,000 in
assets and up to $1 million in liabilities. Judge Paul W. Bonapfel
oversees the case.
M. Denise Dotson, LLC represents the Debtor as legal counsel.
DEVILLE CORP: Hires Gunster Yoakly & Stewart as Special Counsel
---------------------------------------------------------------
Deville Corp. received approval from the U.S. Bankruptcy Court for
the Middle District of Florida to employ Gunster Yoakly & Stewart,
P.A. as its special litigation counsel.
The Debtor needs the firm's legal assistance in connection with a
litigation involving Savannah Capital, LLC or other parties that
are or were subject to pending pre-bankruptcy litigation with the
Debtor.
The firm will be paid at these rates:
Thomas G. Long $500 per hour
Scott Stigall $450 per hour
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
Thomas Long, Esq., a partner at Gunster Yoakly & Stewart, disclosed
in a court filing that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Thomas G. Long, Esq.
Gunster Yoakly & Stewart, P.A.
601 Bayshore Blvd., #700
Tampa, FL 33606
Tel: (800) 330-1980/(813) 253-2020/(813) 785-9899
Email: tlong@gunster.com
About Deville Corp.
Deville Corp. is a single asset real estate (as defined in 11
U.S.C. Sec. 101(51B)). The company is based in Savanah, Ga.
Deville Corp. filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-04930) on Dec. 14,
2022, with $10 million to $50 million in assets and $1 million and
$10 million in liabilities. Edgar L.T. Gay, Deville Corp. president
and director, signed the petition.
Judge Catherine Peek Mcewen oversees the case.
Daniel R. Fogarty, Esq., at Stichter, Riedel, Blain & Postler, P.A.
and Gunster Yoakly & Stewart, P.A. serve as the Debtor's bankruptcy
counsel and special litigation counsel, respectively.
DIVERSIFIED PROPERTIES 2: Case Summary & One Unsecured Creditor
---------------------------------------------------------------
Debtor: Diversified Properties 2, LLC
6000 A Pelhman Road
Greenville, SC 29615
Chapter 11 Petition Date: February 6, 2023
Court: United States Bankruptcy Court
District of South Carolina
Case No.: 23-00351
Debtor's Counsel: Robert H. Cooper, Esq.
THE COOPER LAW FIRM
150 Milestone Way, Ste B
Greenville, SC 29615
Tel: 864-271-9911
Fax: 864-232-5236
Email: thecooperlawfirm@thecooperlawfirm.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Kevin Murdock as managing member.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/MSIVZRA/Diversified_Properties_2_LLC__scbke-23-00351__0001.0.pdf?mcid=tGE4TAMA
Debtor's One Unsecured Creditor:
Entity Nature of Claim Claim Amount
Raby Construction Renovations $450,000
311 Haywood Rd
Greenville, SC 29607
DIVERSIFIED PROPERTY: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Diversified Property Ventures, LLC
6000A Pelham Road
Greenville, SC 29615
Chapter 11 Petition Date: February 6, 2023
Court: United States Bankruptcy Court
District of South Carolina
Case No.: 23-00352
Judge: Hon. Helen E. Burris
Debtor's Counsel: Robert H. Cooper, Esq.
THE COOPER LAW FIRM
150 Milestone Way, Ste B
Greenville, SC 29615
Tel: 864-271-9911
Fax: 864-232-5236
Email: thecooperlawfirm@thecooperlawfirm.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Kevin Murdock as managing member.
The Debtor stated it has no creditors holding unsecured claims.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/NRW56YQ/Diversified_Property_Ventures__scbke-23-00352__0001.0.pdf?mcid=tGE4TAMA
EDPASS NY INC: Hires Latham Luna Eden & Beaudine as Legal Counsel
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Edpass NY, Inc. received approval from the U.S. Bankruptcy Court
for the Middle District of Florida to employ Latham Luna Eden &
Beaudine, LLP as its legal counsel.
The firm's services include advising as to the Debtor's rights and
duties in its Chapter 11 case; preparing pleadings, including a
plan of reorganization; and taking all other necessary actions
incident to the proper preservation and administration of the
Debtor's estate.
Latham will charge $475 per hour for attorney's services and $105
per hour for paraprofessional services. Daniel Velasquez, Esq., the
attorney primarily working on the bankruptcy case, charges $250 to
$475 per hour.
In addition, the firm will seek reimbursement for its out-of-pocket
expenses.
The firm received from the Debtor an advance fee of $21,738.
Justin Luna, Esq., a partner at Latham, disclosed in a court filing
that his firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Daniel A. Velasquez, Esq.
Latham Luna Eden & Beaudine, LLP
201 S. Orange Ave., Suite 1400
Orlando, FL 32801
Tel: (407) 481-5800
Fax: (407) 481-5801
Email: dvelasquez@lathamluna.com
About Edpass NY
Edpass NY, Inc. is a privately owned freight transport company,
which provides freight transport and logistics services throughout
the United States for a fee. Edpass NY conducts its operations from
a residential apartment in Orlando, Fla., which it leases to its
chief executive officer, Eduard Pashishniuk.
Edpass NY sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. M.D. Fla. Case No. 23-00025) on Jan. 4, 2023, with up
to $100,000 in assets and up to $1 million in liabilities. Mr.
Pasishuniuk signed the petition.
Judge Tiffany P. Geyer oversees the case.
Daniel A. Velasquez, Esq., at Latham Luna Eden and Beaudine, LLP is
the Debtor's legal counsel.
EFS COGEN I: S&P Affirms 'B+' Secured Debt Rating, Outlook Stable
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S&P Global Ratings affirmed its ratings on the senior secured debt
outstanding of EFS Cogen I LLC (EFS Cogen), Generation Bridge LLC
(Generation Bridge), CPV Maryland LLC (CPV Maryland), CPV Shore
Holdings LLC (CPV Shore), and St. Joseph Energy Center LLC (SJEC).
The outlooks are stable for EFS Cogen I LLC, Generation Bridge, CPV
Maryland, and SJEC. The outlook for CPV Shore Holdings LLC is
negative.
The actions followed the update to its criteria for rating project
finance issuances.
S&P said, "We affirmed our 'B+' rating on EFS Cogen I LLC's senior
secured debt, our 'BB' rating on Generation Bridge's debt, our
'BB-' rating on CPV Maryland's debt, our 'B+' rating on CPV Shore's
debt, and our 'BB-' rating on SJEC's debt. An affirmation implies
that the updated criteria do not change our view of the credit risk
associated with the projects. We will continue to monitor
developments pertaining to these entities and provide an updated
credit opinion, as and when necessary.
"The stable outlook on EFS Cogen I LLC reflects our expectation of
strong debt service coverage during the term loan B (TLB) period,
as well as a minimum debt service coverage ratio (DSCR) of about
1.21x during the refinancing period (2028-2035) based on our
assumptions, and our forward-looking view of the energy and
capacity markets. Although we anticipate a weaker DSCR for 2022, at
about 1.10x-1.20x, we also expect the ratio will improve
considerably for the remainder of the TLB period, as capital
spending will return to normal levels, and capacity markets will
likely recover with the anticipated retirement of peakers, starting
in 2023.
"The stable outlook on Generation Bridge reflects our view that its
operational and financial performance will remain aligned with
expectations and the portfolio will generate sufficient cash flows
through its life to pay debt service obligations. Under our
base-case scenario, we forecast a minimum DSCR of 2.5x during the
remaining debt life (2023-2028).
"The stable outlook on CPV Maryland reflects our expectation that
it will continue to operate in line with historical performance and
will generate DSCRs of 1.50x-2.50x through the TLB term. We also
expect that the minimum DSCR will remain above 1.35x during the
project's life, which includes the post-refinancing period
(2028-2041). Finally, we forecast about $230 million outstanding on
the TLB at maturity in mid-2028 and a 1.50x minimum DSCR over the
life of the asset.
"The negative outlook on CPV Shore reflects the potential for
further underperformance due to softening spark spreads, higher
emission costs, or further deterioration in capacity prices in the
upcoming PJM auctions. Based on our energy and capacity price
assumptions, we expect the project will repay about $40 million
through the remaining TLB period, leading to a debt balance at
maturity of about $330 million. We would lower the rating if debt
repayment was projected to be weaker than we expect, absent any
offsetting improvement in market conditions.
"The stable outlook on SJEC reflects our expectation that DSCRs
will average about 1.50x during the asset life, with a minimum of
about 1.37x in the post-refinancing period. We expect the project
will have about $320 million outstanding at maturity on its TLB."
ENDO INTERNATIONAL: Fee Examiner Hires Bielli & Klauder as Counsel
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David Klauder, Esq., the fee examiner in the bankruptcy cases of
Endo International plc and its affiliates, received approval from
the U.S. Bankruptcy Court for the Southern District of New York to
employ Bielli & Klauder, LLC as his legal counsel.
The firm's services include:
a. reviewing with the fee examiner fee applications and
related invoices for compliance with applicable provisions of the
Bankruptcy Code, the Bankruptcy Rules, the U.S. Trustee Guidelines,
and the Local Rules and orders of the court;
b. assisting the fee examiner in any hearings or other
proceedings before the court to consider fee applications,
including, without limitation, advocating positions asserted in the
reports filed by the fee examiner;
c. assisting the fee examiner with legal issues raised by
inquiries to and from the professionals retained or proposed to be
retained in the Debtors' Chapter 11 cases and related adversary
proceedings;
d. where necessary, attending meetings between the fee
examiner and retained professionals;
e. assisting the fee examiner in the preparation of
preliminary and final reports regarding professional fees and
expenses;
f. assisting the fee examiner in developing protocols and
making reports and recommendations;
g. assisting the fee examiner in conducting such discovery as
may be pertinent and necessary to the performance of his other
duties and responsibilities after first securing approval of the
court;
h. assisting the fee examiner in communicating concerns
regarding any application to the retained professionals to whom
such application pertains and to provide him such supplemental
information as he may reasonably require in order to evaluate the
reasonableness of any particular fee item; and
i. such other services as the fee examiner may request.
The firm will be paid at the rates of $225 to $450 per hour for
attorneys and $100 to $175 per hour for paraprofessionals.
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
Thomas Bielli, Esq., a partner at Bielli and Klauder, disclosed in
a court filing that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
In response to the request for additional information set forth in
Paragraph D.1. of the Revised U.S. Trustee Guidelines, Mr. Bielli
also disclosed the following:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: Yes. The proposed monthly rate structure is different
from Bielli & Klauder's customary billing arrangements for similar
engagements.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and material financial
terms for the prepetition engagement, including any adjustments
during the 12 months prepetition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference?
Response: Bielli & Klauder represents the fee examiner in his
capacity as the fee examiner in other cases. In some of those
cases, Bielli & Klauder has billed at hourly rates for those
engagements at its customary hourly fee structure of $225 to$450
per hour for attorneys, and $100 to $175 per hour for
paraprofessionals. In the Purdue Pharma cases now pending in the
United States Bankruptcy Court for the Southern District of New
York, Bielli & Klauder is billing a flat fee of $55,000 per month
in those cases, which includes the costs of the fee data software.
Question: Has your client approved your prospective budget and
staffing plan, and, if so, for what budget period?
Response: The fee examiner and Bielli & Klauder will develop a
prospective budget and staffing plan to comply with the U.S.
Trustee's requests for information and additional disclosures, and
will work with the U.S. Trustee to provide the appropriate
information in this instance.
Thomas D. Bielli, Esq., a partner at Bielli and Klauder, LLC,
disclosed in a court filing that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Thomas D. Bielli, Esq.
Bielli and Klauder, LLC
1905 Spruce Street
Philadelphia, PA 19103
Telephone: (215) 642-8217
About Endo International plc
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.
David M. Klauder, Esq., the court-appointed fee examiner, is
represented by Bielli & Klauder, LLC.
ENTSORGA WEST: Case Summary & 20 Largest Unsecured Creditors
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Debtor: Entsorga West Virginia, LLC
119 Recovery Way
Martinsburg, WV 25405
Chapter 11 Petition Date: February 6, 2023
Court: United States Bankruptcy Court
Northern District of West Virginia
Case No.: 23-00046
Judge: Hon. David L. Bissett
Debtor's Counsel: Brian R. Blickenstaff, Esq.
TURNER & JOHNS, PLLC
808 Greenbrier Street
Charleston, WV 25311
Tel: 304-720-2300
Fax: 304-720-2311
Email: bblickenstaff@turnerjohns.com
Total Assets: $7,337,352
Total Liabilities: $37,808,554
The petition was signed by Brian C. Essman as managing member.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/SCDJTZA/Entsorga_West_Virginia_LLC__wvnbke-23-00046__0001.0.pdf?mcid=tGE4TAMA
ESJ TOWERS: Hires CPA Luis R. Carrasquillo as Financial Advisor
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ESJ Towers, Inc. received approval from the U.S. Bankruptcy Court
for the District of Puerto Rico to employ CPA Luis R. Carrasquillo
& Co., P.S.C. as its financial advisor.
The Debtor needs a financial advisor to assist in the financial
restructuring of its affairs by providing advice in strategic
planning; assist in the preparation of a plan of reorganization,
disclosure statement and business plan; participate in negotiations
with creditors; and assist the Debtor's legal counsel in
investigating financial transactions and disbursements and
undertake the corresponding actions.
The firm will be paid at these rates:
Partners $175 per hour
Seniors $90 to $125 per hour
Juniors $45 to $60 per hour
Administrative Support $35 per hour
The retainer fee for the firm's services is $15,000.
As disclosed in court filings, the firm and its members are
disinterested persons within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Luis R. Carrasquillo, CPA
CPA Luis R. Carrasquillo & Co., P.S.C.
28Th Street, # TI-26
Turabo Gardens Ave.
Caguas, P.R. 00725
Tel: (787) 746-4555/(787) 746-4556
Fax: (787) 746-4564
Email: luis@cpacarrasquillo.com
About ESJ Towers
ESJ Towers, Inc. owns the ESJ Towers in Carolina, P.R. The luxury
apartments and condo units at ESJ Towers have direct access to Isla
Verde Beach, widely considered one of the best in Puerto Rico.
ESJ sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D.P.R. Case No. 22-01676) on June 10, 2022, with as much as
50 million in both assets and liabilities. ESJ President Keith St.
Clair signed the petition.
Judge Enrique S. Lamoutte Inclan oversees the case.
The Debtor tapped Charles A. Cuprill, Esq., at Charles A. Cuprill,
PSC Law Offices as legal counsel; Ramon Luis Nieves, Esq., at RL
Legal Consulting Services, LLC as special counsel; Dage Consulting
CPAS, PSC as financial advisor; and De Angel & Compania, PA, LLC as
auditor.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on Sept. 12, 2022. MRO Attorneys at Law, LLC
and Dage Consulting CPAS, PSC serve as the committee's legal
counsel and financial advisor, respectively.
FARMERS COOPERATIVE: Gets OK to Hire Desai Law Firm as Counsel
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Farmers Cooperative Association #301 received approval from the
U.S. Bankruptcy Court for the Eastern District of Missouri to
employ The Desai Law Firm, LLC as counsel.
The firm's services include:
a. advising the Debtor with respect to its rights, power and
duties in this Chapter 11 case;
b. assisting and advising the Debtor in its consultations with
the Subchapter V trustee;
c. assisting the Debtor in analyzing the claims of creditors and
negotiating with such creditors;
d. assisting in the investigation of the assets, liabilities and
financial condition of the Debtor and reorganizing the Debtor's
business;
e. advising the Debtor in connection with the sale of its assets
or business;
f. assisting the Debtor in its analysis of and negotiation with
any third-party concerning matters related to, among other things,
the terms of a plan of reorganization;
g. assisting and advising the Debtor with respect to any
communications with the general creditor body regarding significant
matters in this case;
h. commencing and prosecuting necessary and appropriate actions
and proceedings on behalf of the Debtor;
i. reviewing, analyzing or preparing legal documents;
j. representing the Debtor at all hearings and other
proceedings;
k. conferring with other professional advisors in providing
advice to the Debtor;
l. performing all other necessary legal services in this case as
may be requested by the Debtor; and
m. assisting and advising the Debtor regarding pending
litigation matters in which it may be involved.
Desai Law Firm will be paid at these rates:
Partners $385 per hour
Associates $250 per hour
Paralegals $125 per hour
The firm received advance payment of $10,000.
Spencer Desai, Esq., a partner at Desai Law Firm, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Spencer P. Desai, Esq.
The Desai Law Firm, LLC
13321 North Outer Forty Road, Suite 300
St. Louis, MO 63017
Tel: (314) 666-9781
Fax: (314) 448-4320
Email: spd@desailawfirmllc.com
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.
Farmers Cooperative Association sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. E.D. Mo. Case No. 22-43908) on
Dec. 16, 2022, with up to $10 million in assets and up to $1
million in liabilities. Bill Manion, president of Farmers
Cooperative Association, signed the petition.
Judge Bonnie L. Clair oversees the case.
Spencer Desai, Esq., at the Desai Law Firm is the Debtor's legal
counsel.
FIGUEROA MOUNTAIN: Has Deal on Cash Collateral Access
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Figueroa Mountain Brewing, LLC, advised the U.S. Bankruptcy Court
for the Central District of California that it has reached an
agreement regarding the use of cash collateral with these
parties-in-interest:
-- secured creditors White Winston Select Asset Funds, LLC;
and SCS Acquisition LLC, which is the successor-in-interest to
Montecito Bank & Trust; and
-- Creekstone Mountain, LLC.
The parties now desire to memorialize the terms of this agreement
into an agreed order.
The parties agree the Debtor is authorized to use cash collateral
on a final basis through February 25, 2023.
During the Authorization Period, the Debtor may use cash collateral
solely to pay ordinary business expenses, taxes, expenses owing to
the Clerk of the Bankruptcy Court and fees owing the Office of the
United States Trustee as they come due, roughly in accordance with
prior Budgets attached to previous approved cash collateral
stipulations among the Parties.
White Winston and SCS will continue to receive, as adequate
protection, replacement liens in post-petition collateral for any
diminution in their collateral as of the Petition Date arising from
the Debtor's use of collateral but only to the same extent,
applicability and validity as the prepetition liens held by White
Winston and SCS.
As additional adequate protection, White Winston's consent to the
use of cash collateral pursuant to the Stipulation is conditioned
on Creekstone paying White Winston $20,000 no later than two
business days after the Stipulation is filed.
A copy of the stipulation is available for free at
https://bit.ly/3HAXVVZ from PacerMonitor.com.
About Figueroa Mountain Brewing LLC
Buellton, Calif.-based Figueroa Mountain Brewing, LLC --
https://www.figmtnbrew.com/ -- is a beer manufacturer founded in
2020. It sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. C.D. Cal. Case No. 20-11208) on Oct. 5, 2020. Jaime
Dietenhofer, the company's manager, signed the petition.
At the time of filing, the Debtor had estimated assets of between
$1 million and $10 million and liabilities of the same range.
Judge Martin R. Barash oversees the case.
Lesnick Prince & Pappas LLP is the Debtor's legal counsel.
Jeffrey D. Sternklar LLC and Levene, Neale, Bender, Yoo &
Golubchik, L.L.P. represent White Winston Select Asset Funds, LLC.
Marc A. Lieberman, Esq., at Fredman Lieberman Pearl LLP, serves as
counsel to SCS Acquisition LLC.
David B. Shemano, Esq., at ShemanoLaw, represents Creekstone
Mountain, LLC.
FORUM ENERGY: Moody's Raises CFR to B3 & Alters Outlook to Stable
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Moody's Investors Service upgraded Forum Energy Technologies,
Inc.'s Corporate Family Rating to B3 from Caa1 and secured notes
rating to Caa1 from Caa2. Forum's Speculative Grade Liquidity (SGL)
rating remains SGL-3. The outlook was changed to stable from
positive.
"The upgrade of Forum's ratings reflects growing EBITDA and
improving financial leverage, accelerated by the mandatory
conversion of a large amount of debt into Forum common stock,"
commented Jonathan Teitel, a Moody's analyst.
Upgrades:
Issuer: Forum Energy Technologies, Inc.
Corporate Family Rating, Upgraded to B3 from Caa1
Probability of Default Rating, Upgraded to B3-PD from Caa1-PD
Senior Secured Notes, Upgraded to Caa1 (LGD4) from Caa2 (LGD4)
Outlook Actions:
Issuer: Forum Energy Technologies, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
Forum's upgrade to a B3 CFR reflects improving financial leverage,
due in part to meaningful debt reduction resulting from the
mandatory conversion of $123 million of convertible senior secured
notes into Forum common stock, triggered by the average of the
daily volume-weighted average share prices measured over a 20
consecutive trading day period exceeding $30. The mandatory
conversion also reduces interest expense, thereby improving free
cash flow. The remaining $134 million of notes outstanding are not
subject to any optional or further mandatory conversion
provisions.
Forum's B3 CFR reflects growing EBITDA and declining financial
leverage amid a supportive industry backdrop. Moody's expects that
Forum will grow revenue and EBITDA through 2023, driving
debt/EBITDA lower, while generating positive free cash flow. Forum
operates in a cyclical industry and its revenue is highly
correlated to the volatile US rig count. Forum benefits from
exposure to both domestic and international markets, as well as
diversification of its business segments across the well life
cycle. These positive attributes are tempered by the competitive
nature of oilfield equipment sales, where Forum competes against
much larger competitors.
The SGL-3 rating reflects Moody's expectation for Forum to maintain
adequate liquidity into 2024. As of September 30, 2022, the company
had $20 million of cash and $11 million drawn on its ABL revolver
with a $160 million borrowing base ($22 million in letters of
credit were outstanding). Revolving lender commitments are $179
million. The revolver matures in September 2026, unless the secured
notes due August 2025 are still outstanding three months prior to
their maturity, in which case the revolver will mature then. The
revolver has a minimum springing fixed charge coverage ratio
covenant of 1x (springing is based on excess availability). Moody's
expects the company to maintain compliance with this covenant into
2024.
Forum's $134 million of senior secured notes due 2025 (amount
outstanding pro forma for the mandatory conversion of $123 million
of notes) are rated Caa1, one notch below the CFR. The notes are
secured by a first lien except with respect to ABL revolver
priority collateral which includes cash, receivables and inventory.
The notes have a second lien with respect to the ABL revolver
priority collateral.
The stable outlook reflects Moody's expectation that Forum will
grow revenue and EBITDA into 2024, driving debt/EBITDA lower, while
generating positive free cash flow.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include meaningful growth in
EBITDA, sustained low leverage, EBITDA/interest sustained above 6x,
and consistent positive free cash flow generation.
Factors that could lead to a downgrade include EBITDA/interest
below 3x, negative free cash flow, weakening liquidity or more
aggressive financial policies.
Forum, headquartered in Houston, Texas is a publicly traded company
with equipment sales primarily to the oil and gas industry.
The principal methodology used in these ratings was Oilfield
Services published in January 2023.
GARUDA HOTELS: Wins Interim Cash Collateral Access Thru Feb 16
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The U.S. Bankruptcy Court for the Northern District of New York
authorized Garuda Hotels, Inc. and Welcome Motels II, Inc. to use
cash collateral on an interim basis in accordance with the budget,
with a 10% variance and provide adequate protection, through
February 16, 2023.
Absent further Court order or written consent of RSS Comm 201-LC15
Y GHI LLC, no payments of cash collateral will be made to insiders
or affiliates including a salary to Jay Bramhandkar, on and after
August 1, 2022.
The Debtors acknowledge that RSS holds a duly perfected senior
security interest in all of their personal property, including the
proceeds thereof, by virtue of a Mortgage Note in the original
principal amount of $7,970,000, secured by, among other things,
liens on the Debtors' real and personal property pursuant to a Loan
Agreement, Mortgage and Assignment of Rents, each dated February
28, 2014 and UCC-1 Financing Statements filed in connection
therewith.
The Court said that, in addition to the existing rights and
interests of RSS and for the purpose of adequately protecting RSS
from diminution in value of the Collateral, RSS is granted
replacement liens in the cash collateral, to the extent the liens
were valid, perfected and enforceable as of the Petition Date and
in the continuing order of priority of the Pre-Petition Liens
without determination as to the nature, extent and validity of said
pre-petition liens and claims, and solely to the extent Collateral
Diminution occurs during the Bankruptcy Cases.
The replacement liens are subject to: (i) any United States Trustee
fees incurred by the Debtors pursuant to 28 U.S.C. Section 1930 and
interest thereon pursuant to 31 U.S.C. Section 3717; (ii) the
payment of any claim of any subsequently appointed Chapter 7
Trustee to the extent of $10,000; and (iii) estate causes of action
and the proceeds of any recoveries of estate causes of action under
Chapter 5 of the Bankruptcy Code. No portion of the cash collateral
may be used to challenge, attack or otherwise seek to avoid RSS's
liens under chapter 5 of the Bankruptcy Code or applicable
non-bankruptcy law.
As additional adequate protection, the Debtors will pay to RSS
monthly payments of interest-only, at the contract (non-default)
rate of interest (per diem of $1,056), as set forth in the RSS Loan
Documents.
To the extent the Replacement Liens fail to adequately protected
RSS for the diminution in the cash collateral, RSS reserves all
rights to request allowance of a superpriority administrative
expense claim to the extent provided in 11 U.S.C. section 507(b),
subject only to the Carve-Outs.
The Replacement Liens and security interests granted are
automatically deemed perfected upon entry of the Order without the
necessity of RSS having to take possession, file financing
statements, mortgages or other typical security documents.
The Debtors' authorization to use cash collateral will immediately
terminate without further Court Order on the earlier of: (a)
February 16, at 5 p.m. EST; (b) the entry of and order granting any
party relief from the automatic stay with respect to any property
of the Debtors in which RSS claims a lien or security interest,
whether pursuant to this Order or otherwise; (c) the entry of an
order dismissing the Bankruptcy Cases or converting the proceedings
to cases under Chapter 7 of the Bankruptcy Code; (d) the entry of
an order confirming a plan or plans of reorganization; or (e) the
entry of an order by which the Order is reversed, revoked, stayed,
rescinded, modified or amended without the consent of RSS thereto.
A further hearing on the matter is scheduled for February 16 at
11:30 a.m.
A copy of the order is available at https://bit.ly/3HzKoxX from
PacerMonitor.com.
About Garuda Hotels, Inc.
Garuda Hotels, Inc. is the operator of a Country Inn and Suites
Hotel and owns the real property upon which the hotel is located at
110 Danby Road, Ithaca, NY.
Welcome Motels II, Inc. is the operator of an Econolodge Hotel and
owns the real property upon which the hotel is located at 2303
Triphammer Road, Ithaca, NY.
Garuda Hotels, Inc. and Welcome Motels II, Inc. sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D.N.Y. Case
Nos. 22-30296 and 22-30296) on May 13, 2022.
In the petitions signed by Jay Bramhandkar, their president, each
of the Debtors disclosed up to $10 million in both assets and
liabilities.
Judge Wendy A. Kinsella oversees the cases.
Erica Aisner, Esq., at Kirby Aisner & Curley LLP is the Debtors'
counsel.
GENESIS GLOBAL: U.S. Trustee Appoints Creditors' Committee
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The U.S. Trustee for Region 2 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Genesis
Global Holdco, LLC and its affiliates.
The committee members are:
1. SOF International, LLC
30 N Gould Street, Suite S
Sheridan, WY 82801
Email: genesisucc1@gmail.com
2. Teddy Andre Amadeo Gorisse
Email: genesis.creditor@gmail.com
3. Digital Finance Group Co.
23 Lime Tree Bay Avenue
Grand Cayman, Cayman Island, KY1-1104
Email: Dfg96031@gmail.com
4. Richard R. Weston
Email: richardwestondc@gmail.com
5. Mirana Corp.
House of Francis, Room 303, ILe Du Port Mahe
SC, Seychelles
Email: genesisucc@mirana.tech
6. Amelia Alvarez
Email: aaucc@proton.me
7. Bitvavo Custody B.V.
Keizersgracht 281
1016 ED Amsterdam
The Netherlands
Email: ucc@bitvavo.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Genesis Global
Genesis Global Holdco, LLC, through its subsidiaries, and Global
Trading, Inc., provide lending and borrowing, spot trading,
derivatives and custody services for digital assets and fiat
currency.
Genesis Global Capital, LLC (GGC) and Genesis Asia Pacific PTE.
LTD. (GAP) provide lending and borrowing, spot trading, derivatives
and custody services for digital assets and fiat currency. Genesis
Global Holdco, LLC owns 100% of GGC and GAP.
Genesis Global Holdco, LLC, GGC and GAP each filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
S.D.N.Y. Lead Case No. 23-10063) on Jan. 19, 2023, . The cases are
pending before the Honorable Sean H. Lane.
At the time of the filing, Genesis Holdco reported $100 million to
$500 million in both assets and liabilities.
Genesis Holdco is a sister company of Genesis Global Trading, Inc.
("GGT") and 100% owned by Digital Currency Group, Inc. ("DCG").
GGT, DCG and certain of the Holdco subsidiaries are not included in
the Chapter 11 filings. The non-debtor subsidiaries include Genesis
UK Holdco Limited, Genesis Global Assets, LLC, Genesis Asia (Hong
Kong) Limited, Genesis Bermuda Holdco Limited, Genesis Custody
Limited ("GCL"), GGC International Limited ("GGCI"), GGA
International Limited, Genesis Global Markets Limited, GSB 2022 II
LLC, GSB 2022 III LLC and GSB 2022 I LLC.
The Debtors tapped Cleary Gottlieb Steen & Hamilton, LLP as legal
counsel; Alvarez & Marsal Holdings, LLC as financial advisor; and
Moelis & Company, LLC as investment banker. Kroll Restructuring
Administration is the claims agent.
An Ad Hoc Group of Creditors is represented by:
Joshua A. Sussberg, P.C., Esq.
Christopher Marcus, P.C., Esq.
Ross J. Fiedler, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
E-mail: joshua.sussberg@kirkland.com
christopher.marcus@kirkland.com
ross.fiedler@kirkland.com
An Ad Hoc Group of Genesis Lenders is represented by:
Brian S. Rosen, Esq.
Vincent Indelicato, Esq.
Megan R. Volin, Esq.
PROSKAUER ROSE LLP
Eleven Times Square
New York, NY 10036
Telephone: (212) 969-3000
E-mail: brosen@proskauer.com
vindelicato@proskauer.com
mvolin@proskauer.com
- and -
Jordan E. Sazant, Esq.
PROSKAUER ROSE LLP
70 West Madison, Suite 3800
Chicago, IL 60602
Telephone: (312) 962-3550
E-mail: jsazant@proskauer.com
GOLDEN KEY: Court OKs Cash Collateral Access Thru Feb 16
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland, Greenbelt
Division, authorized Golden Key Group, LLC to use the cash
collateral of Associated Receivables Funding, Inc. and Libertas
Funding, LLC on an interim basis in accordance with the budget,
with a 5% variance, through February 16, 2023.
The Debtor requires the use of cash collateral to meet its ordinary
and necessary expenses.
The Debtor is authorized to use cash collateral for these
purposes:
(a) maintenance and preservation of its assets;
(b) the continued operation of its businesses by payment of
its actual expenses including, but not limited to, ordinary and
necessary overhead expenses, taxes, insurance, utilities, payroll,
and other routine and necessary vendors and other expenses as
reflected in the Budget; and
(c) payment of fees owed to the Office of the United States
Trustee.
As adequate protection for the use of cash collateral, the Debtor
will grant the Lenders replacement liens upon and security
interests in all of the properties and assets of the Debtor. Any
replacement lien will at all times be subordinate to the payment of
the quarterly fees paid to the United State Trustee pursuant to 28
U.S.C. section 1930, and to the compensation and expense
reimbursement (excluding professional fees) allowed to any trustee
thereafter appointed in the case.
The security interests granted by the Debtor in favor of the
Lenders will be deemed perfected without the necessity for the
filing or execution of documents which otherwise might be required
under non-bankruptcy law.
In the event the Lenders' respective interest in the Collateral is
diminished as a result of the Debtor's use of the cash collateral
during the Interim Period, the respective Lender will be granted,
pursuant to Section 507(b) of the Bankruptcy Code, an
administrative claim against the Debtor's bankruptcy estate.
These events constitute an "Event of Default":
(a) any default, violation or breach of any of the terms of
the Interim order, including the failure of the Debtor to use the
cash collateral in strict compliance with the Interim Order and
Budget,
(b) the failure of the Debtor to file timely monthly operating
reports in the Bankruptcy Case,
(c) conversion of the Case to a case under Chapter 7 of the
Bankruptcy Code,
(d) the appointment of a Chapter 11 trustee in the Case,
(e) the appointment of an examiner in the Case,
(f) the dismissal of the Case,
(g) the discontinuation of the Debtor's business or the
issuance of an Order for the Debtor to discontinue its business.
A second interim hearing on the matter is set for February 15 at 11
a.m.
A copy of the order is available at https://bit.ly/3XbJ1eC from
PacerMonitor.com.
About Golden Key Group, LLC
Golden Key Group, LLC is a professional services firm dedicated to
helping federal and commercial clients solve today's strategic,
organizational and operational challenges while addressing their
future needs. Founded in 2002, Golden Key Group's solution
offerings include Human Capital Management Support, Human Resources
Operations, Employee Training and Leadership Development,
Professional Consulting Services, Program Management Office,
Acquisition and Category Management, Analytics and Information
Technology, Executive Search Services, and Select Solutions.
The Debtor sought protection under U.S. Bankruptcy Code (Bankr. D.
Md. Case No. 23-10414) on January 20, 2023. In the petition signed
by Gretchen McCracken as CEO and managing member, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
Judge Maria Elena Chavez-Ruark oversees the case.
Paul Sweeney, Esq., at Yumkas, Vidmar, Sweeney and Mulrenin, LLC,
represents the Debtor as legal counsel.
GOLDEN KEY: U.S. Trustee Appoints Creditors' Committee
------------------------------------------------------
John Fitzgerald, III, Acting U.S. Trustee for Region 4, appointed
an official committee to represent unsecured creditors in the
Chapter 11 case of Golden Key Group, LLC.
The committee members are:
1. OBAN Corporation
8300 Boone Blvd, Suite 500
Vienna, VA 22182
2. KAA Federal Solutions
13800 Coppermine Road, 1st Floor
Herdon, VA 20171
3. Communication Technologies, Inc.
11710 Plaza America Drive, Suite 2000
Reston, VA 20190
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Golden Key Group
Golden Key Group, LLC is a professional services firm dedicated to
helping federal and commercial clients solve today's strategic,
organizational and operational challenges while addressing their
future needs. Founded in 2002, Golden Key Group's solution
offerings include Human Capital Management Support, Human Resources
Operations, Employee Training and Leadership Development,
Professional Consulting Services, Program Management Office,
Acquisition and Category Management, Analytics and Information
Technology, Executive Search Services, and Select Solutions. The
company is based in Landover, Md.
Golden Key Group filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case No. 23-10414)
on Jan. 20, 2023, with 1 million to $10 million in assets and $10
million to $50 million in liabilities. Gretchen McCracken, Golden
Key Group's chief executive officer and managing member, signed
the
petition.
Judge Maria Ellena Chavez-Ruark oversees the case.
Paul Sweeney, Esq., at YVS Law, LLC represents the Debtor as
counsel.
GRAHAM ENT LLC: Seeks to Hire Gregory Messer as Legal Counsel
-------------------------------------------------------------
Graham Ent, LLC seeks approval from the U.S. Bankruptcy Court for
the Eastern District of New York to employ the Law Office of
Gregory Messer, PLLC.
The Debtor requires legal counsel to:
a. provide advice in connection with the operation of the
Debtor's business during the Chapter 11 case and the Debtor's
responsibilities and duties;
b. represent the Debtor in all proceedings before the
bankruptcy court and the U.S. Trustee;
c. review and prepare legal documents;
d. assist the Debtor in negotiations with its current and
future landlords; and
e. perform all other legal services for the Debtor, which may
be necessary to obtain a successful conclusion of the Chapter 11
case, including negotiating an agreement for the use of cash
collateral with the Debtor's secured lender.
The firm's billing rate for bankruptcy and real estate matters is
$600 per hour.
The Law Office of Gregory Messer does not bill for paraprofessional
time but will seek reimbursement for out-of-pocket expenses
incurred.
The firm received from the Debtor a retainer of $10,000.
Gregory Messer, Esq., founding partner, disclosed in a court filing
that his firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Gregory Messer, Esq.
Mark Bernstein, Esq.
Law Offices of Gregory Messer
26 Court Street, Suite 2400
Brooklyn, NY 11242
Tel: (718) 858-1474
Email: gremesser@aol.com
About Graham Ent
Graham Ent, LLC is a single asset real estate (as defined in 11
U.S.C. Sec. 101(51B)). The company is based in Brooklyn, N.Y.
Graham Ent filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 22-42961) on Nov. 30,
2022. In the petition filed by its managing member, George Graham,
the Debtor reported between $1 million and $10 million in both
assets and liabilities.
Judge Nancy Hershey Lord oversees the case.
The Debtor is represented by the Law Office of Gregory Messer,
PLLC.
GREATBATCH LTD: Moody's Affirms Ba3 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service affirmed Greatbatch Ltd.'s ("Greatbatch",
a wholly-owned subsidiary of Integer Holdings Corporation)
Corporate Family Rating at Ba3 and Probability of Default Rating at
Ba3-PD. Moody's also upgraded the ratings on the senior secured
debt facilities (revolver and term loan A) to Ba2 from Ba3. The
company's Speculative Grade Liquidity ("SGL") rating is unchanged
at SGL-1. The outlook is stable.
The ratings actions follow Greatbatch's issuance of $500 million of
new 2.125% senior unsecured convertible notes due in 2028
(unrated). Greatbatch will use the proceeds to paydown the $350
million term loan B ($347 million outstanding at September 30,
2022). There is no action on the rating on the term loan B and the
rating will be withdrawn at transaction's close. Moody's expects
excess proceeds above what is needed to pay down the term loan B
and cover transaction expenses will be used to pay down the
revolver.
The upgrade of the ratings on the senior secured first lien
revolving credit facility and senior secured first lien term loan
A, reflect the relatively large proportion of unsecured debt now in
the capital structure following the convertible note issuance and
term loan B paydown. Moody's affirmation of the CFR reflects the
company's solid market position in the highly fragmented medical
device outsourcing sector and the stickiness of its business
relationships due to very high switching costs.
Moody's estimates that debt/EBITDA was approximately 4.1x at the
end of the fourth quarter of 2022. While the convertible note
issuance will increase leverage slightly, Moody's views the
transaction positively as it reduces the percentage of floating
rate debt in the company's capital structure and materially reduces
interest expense. Moody's expects leverage to decline into the
3.5-4.0x range over the next 12-18 months from approximately 4.3x
on a pro forma basis at December 31, 2022 from both EBITDA growth
and debt paydown.
Affirmations:
Issuer: Greatbatch Ltd.
Corporate Family Rating, Affirmed Ba3
Probability of Default Rating, Affirmed Ba3-PD
Upgrades:
Issuer: Greatbatch Ltd.
Senior Secured 1st Lien Term Loan A, Upgraded to Ba2 (LGD3) from
Ba3 (LGD4)
Senior Secured 1st Lien Revolving Credit Facility, Upgraded to Ba2
(LGD3) from Ba3 (LGD4)
Outlook Actions:
Issuer: Greatbatch Ltd.
Outlook, Remains Stable
RATINGS RATIONALE
Greatbatch's Ba3 CFR reflects its solid market position in the
highly fragmented medical device outsourcing sector and the
stickiness of its business relationships due to very high switching
costs. Leverage is currently moderately high with debt/EBITDA at
4.1x (4.3x pro forma the convertible debt issuance and term loan B
and revolver paydowns) at December 31, 2022. Moody's expect that
the company will reduce its leverage in the next 12-18 months to
the 3.5-4.0x range. The rating is constrained by the company's
moderate scale and high dependence on a small group of very large
customers (-50% of fiscal 2021 revenues came from the top three
customers). This concentration risk is somewhat mitigated by the
company's long-standing customer relationships and large number of
programs with the company's largest customers. The rating is also
constrained by the company's customers cost reduction efforts,
which trickles down as price cuts for contract manufacturers.
The stable outlook reflects Moody's expectation that the company
will reduce leverage as recent acquisitions are fully integrated,
through top line growth, margin improvement and debt reduction.
Specifically, Moody's expects debt/EBITDA to improve to 3.5x-4.0x
over the next 12-18 months.
The company's SGL-1 Speculative Grade Liquidity rating reflects
Moody's expectations that the company will generate $60-80 million
of free cash flow over the next year and more than $110 million
excluding transaction costs associated with the convertible note
issuance. Along with internal cash of approximately $24 million at
December 31, 2022, Greatbatch will have ample cushion to cover
mandatory debt amortization of approximately $15 million over the
next year. The company had $140 million drawn on its $400 million
revolver at September 30, 2022. Moody's expects excess proceeds
from the convertible note offering, above what's needed to pay down
the term loan B and cover transaction expenses, to be used to pay
down the revolver.
ESG CONSIDERATIONS
Greatbatch's ESG Credit Impact Score is moderately negative
(CIS-3). The score reflects moderately negative exposure to both
social risks (S-3) and governance risk considerations (G-3). The
moderately negative exposure to social risks reflects the company's
exposure to potential product safety litigation and recalls and
risks linked to the fact that its manufacturing processes are
subject to regulatory oversight. The moderately negative exposure
to governance risk considerations, reflects the company's track
record of consistent financial policy, including an opportunistic
tuck-in acquisition strategy. Greatbatch sold its orthopedic
business a few years ago and used the proceeds to de-lever.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company increases its scale
and diversity and enhances the technological sophistication of its
product portfolio. In addition, the company would need to sustain
its debt/EBITDA below 3.0x and manage customer concentration risk
effectively.
The ratings could be downgraded if the company's earnings or
liquidity deteriorate or its financial policies become more
aggressive. A loss of key customer/contract(s) can also lead to a
rating downgrade. Quantitatively, ratings could be downgraded if
debt/EBITDA is sustained above 4.0x.
Headquartered in Plano, Texas, Integer Holdings Corporation (the
parent of Greatbatch Ltd.) performs medical device outsourcing and
contract manufacturing services, primarily for companies within the
medical device industry. The company provides technologies and
manufacturing contract services to medical device original
equipment manufacturers in cardiac, neuromodulation, and vascular
markets. Revenues for the last twelve months were approximately
$1.4 billion.
The principal methodology used in these ratings was Medical
Products and Devices published in October 2021.
H.B. FULLER: Moody's Rates New Revolver & Term Loans 'Ba1'
----------------------------------------------------------
Moody's Investors Service assigned Ba1 ratings to H.B. Fuller
Company's ("Fuller's") $700 million amended and extended senior
secured revolving credit facility due 2028, its $500 million senior
secured term loan A due 2028 and its $800 million senior secured
term loan B due 2030. Proceeds from the issuance will be used to
repay Fuller's existing term Loan B, amounts outstanding under the
revolver, add over $100 million in cash to the balance sheet and
pay fees and expenses. The outlook remains stable. The ratings on
the existing credit facility will be withdrawn once the refinancing
is completed and the debt is repaid.
"This refinancing is viewed as prudent and timely as it will
eliminate Fuller's 2024 maturities and push out the nearest
maturity to 2027," according to John Rogers, Senior Vice President
at Moody's and lead analyst for H.B. Fuller Company.
Assignments:
Issuer: H.B. Fuller Company
Senior Secured Term Loan A, Assigned Ba1 (LGD3)
Senior Secured Term Loan B, Assigned Ba1 (LGD3)
Senior Secured Multi Currency Revolving Credit
Facility, Assigned Ba1 (LGD3)
RATINGS RATIONALE
Fuller's Ba1 secured debt ratings reflect the company's moderate
scale and modest but improving margins and credit metrics. The
profile is supported by Fuller's diverse global operations and
revenues, leading positions in the relatively stable hygiene,
health and consumable (HHC) adhesive markets, established customer
relationships and barriers to entry based on formulation and
application expertise. The HHC segment is Fuller's largest
representing about 45% of revenues and this is important as this
segment tends to be much more stable, which is important given the
weaker economic outlook for 2023.
The Ba1 ratings on Fuller's secured debt are one notch above its
Ba2 Corporate Family Rating ("CFR"). The one notch upgrade reflects
the size of the secured debt relative to $600 million of unsecured
notes due in 2027 and 2028.
Fuller's credit metrics are a bit weak due to recent acquisitions
and elevated raw material prices, which peaked in the second
quarter of 2022 and should be a tailwind heading into 2023. As of
December 3, 2022, Debt/EBITDA was 3.8x and Retained Cash Flow/Debt
was 15%. In 2023, Moody's expects that metrics will weaken modestly
as the raw material tailwinds partially offset the decline in
volumes due to a slowing economy. Fuller's performance should also
benefit from relatively stable performance in the HHC segment in
2023. Volume declines in Europe will likely be more significant;
Europe accounts for roughly 27% of total sales. Also the impact
from recent acquisitions should help metrics in 2023. Post-2023,
Moody's expects that Fuller will improve credit metrics largely
through organic growth and smaller bolt-on acquisitions, and that
management will continue to target net leverage of 2.0-3.0x on an
unadjusted basis.
Management is targeting EBITDA margins of 17-18% compared to
current EBITDA margins of roughly 14%. In 2022, EBITDA margins have
been challenged by significant increases in raw material costs in
2021 and the first half of 2022 and the intrinsic delays in passing
through selling price increases to its customers.
Fuller's SGL-2 speculative grade liquidity rating reflects good
liquidity supported by pro forma balance sheet cash of over $200
million and at least $100 million of free cash flow in fiscal 2023.
The company's secondary liquidity is provided by the amended and
extended $700 million secured revolving credit facility due 2028
that should have no amounts outstanding once the refinancing is
completed. The amended revolver has a maximum secured leverage
covenant and a minimum interest coverage covenant. Moody's expects
the company to be well in compliance with these covenants over the
next 12 months. Annual amortization of the term loan A ($25
million) is not expected to be material relative to free cash flow
over the next two years.
The stable outlook anticipates that the company will continue to
generate free cash flow and use it for bolt-on acquisitions, modest
share repurchases and debt reduction, when necessary. The stable
outlook also considers that management will continue to target net
leverage (net debt-to-EBITDA) of 2.0-3.0x range on a net unadjusted
basis. Finally, the stable outlook reflects expectations that the
company will refrain from large debt-financed acquisitions that
spike leverage beyond the company's target range for an extended
time period.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if adjusted leverage were to improve
to below 3.0x and RCF/TD above 20%, both on a sustained basis, and
the company demonstrates its ability to sustain EBITDA margins in
the high teen percentage range. Fuller's ratings could be
downgraded if leverage is sustained above 4.0x, or if free cash
flow is diminished or turns negative for more than one year. The
ratings could also be downgraded if the company undertakes
additional meaningful debt-financed acquisitions that stress
metrics for an extended period of time.
ESG CONSIDERATIONS
Environmental, social and governance (ESG) risk factors are not
material factors in the rating assignment, but are important
considerations in the credit profile as the company utilizes some
toxic and hazardous chemicals in its processes. Overall, ESG
considerations have a moderately negative impact (CIS-3) on
Fuller's rating. The company's environmental and social risks are
considered moderately negative (E-3 and S-3) similar to most other
specialty chemical companies. Environmental risks are lower than
the industry heat map as Fuller is largely a formulator of
adhesives and sealants, and undertakes more limited chemical
processing in its manufacturing plants. Governance risk is also
moderately negative (G-3), reflecting modestly elevated balance
sheet leverage, an improving credit profile and a good track record
since the aggressive use of the balance sheet debt to fund the
Royal acquisition in 2017.
H.B. Fuller Company ("Fuller", NYSE: FUL), headquartered in St.
Paul, Minnesota, is a formulator, manufacturer and marketer of
adhesives and sealants. It is predominantly focused on the
engineering adhesives, durable assembly, construction, packaging,
and hygiene sub-segments of the adhesives market. Fuller generated
revenues of nearly $2.8 billion for the twelve months ended August
31, 2020.
The principal methodology used in these ratings was Chemicals
published in June 2022.
HANESBRANDS INC: S&P Downgrades ICR to 'BB-', Outlook Negative
--------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
Hanesbrands Inc. to 'BB-' from 'BB'.
S&P said, "We assigned a 'BB+' issue-level rating and '1' recovery
rating to the proposed $750 million senior secured term loan B due
in 2030. We lowered our rating on the company's 3.5%
euro-denominated unsecured notes to 'BB-' from 'BB' with a '3'
recovery rating. And we lowered our rating on the company's 4.875%
and 4.625% senior unsecured notes to 'BB-' from 'BB' and revised
the recovery rating to '4' from '3'.
"The negative outlook reflects that we could lower our ratings in
the next 12 months if the company does not maintain leverage below
5x and make progress toward generating positive free operating cash
flow (FOCF).
"The downgrade reflects our expectation for leverage to remain in
the 4.5x-5x range by the end of 2023 despite a change in capital
allocation strategy.
"Hanesbrands reported financial results for fiscal 2022 lower than
our previous expectations. The company began 2022 with strong
demand for its products and was unable to fulfil all orders.
However, consumers abruptly pulled back on spending in the second
half as inflation in consumer staples cut into discretionary
income. Additionally, spending on apparel shifted to dressier
attire for returning to work, occasions, and travel, categories
Hanesbrands does not supply. Lastly, inventory rebalancing at
retailers in North America created excess inventory for many
apparel issuers, resulting in a more promotional end of the year
and increased warehousing costs. Credit metrics significantly
deteriorated to leverage near 5x for 2022 and negative FOCF of
about $470 million. Year-over-year EBITDA margins fell about 300
basis points to the low-teens percent, in line with our
expectations."
Given elevated leverage, management has made substantial changes to
its capital allocation strategy, including publicly committing to a
full suspension of its dividend, despite its credit agreement
dividend basket allowing for greater flexibility. Its recently
amended credit facility restricts dividends to $75 million per
year, a significant reduction from its previous $250 million
dividend basket, and typical annual payout of $200 million, which
was 45% of FOCF in 2021. The suspension of the dividend will enable
the company to allocate cash flow to repay debt. In S&P's 2023
forecast, it assumes FOCF is used to reduce revolver borrowings by
$325 million, leading to some leverage reduction to 4.8x in 2023.
Despite the weak cash flow generation in 2022, the company is not
pulling back on its $150 million of capital expenditure (capex) and
technology investments for its Full Potential Plan. This plan
involves significant capital for automation and to increase
capacity to reduce lead time and lower operating costs. Hanesbrands
will also expand its U.S. west coast fulfillment center to reach
customers more efficiently. Speed to market is a competitive
differentiator for the direct to consumer channel and younger
consumers, all necessary to achieve its long-term plan to reach $8
billion in revenue.
Hanesbrands is also barred from buying back shares under its credit
agreement during the covenant relief period. The company has an
authorization of $600 million over the next three-years and
repurchased $25 million worth of shares in 2022. Given the
company's focus on leverage reduction, we do not expect it to buy
back shares until its leverage is in line with its target levels.
We still expect the company to operate with a preference to
dispositions over acquisitions with proceeds used to repay debt.
The proposed refinancing will significantly increase interest
costs, but S&P still forecasts an FOCF recovery in 2023.
Hanesbrands' management has indicated it will refinance its 2024
unsecured debt consisting of $900 million, 4.625% notes and $535
million (adjusted for foreign exchange), 3.5% euro notes in the
first quarter of 2023. S&P said, Concurrent with this rating
action, we assigned ratings to the proposed $750 million term loan
B, which will take out a portion of the 2024 notes with the
expectation that another near-term debt issuance will take out the
remainder of the 2024 notes. Given the Secured Overnight Financing
Rate of 4.3%, we believe the company's proposed and upcoming
issuance will be at rates significantly higher than those for its
existing debt, which will eat into cash flow generation. Despite
higher interest costs, we forecast about $450 million of FOCF in
2023 mainly due to inventory winding down as the company cut
production in the second half and account payable reversals because
it still had to pay vendors despite stopping production."
The weaker than expected operating performance will push out
Hanesbrands' long-term plan targets to 2026 from 2024.
Hanesbrands reported an 8% net revenue decline for 2022 compared to
2021, driven by 10.7% declines in the innerwear segment and 7.4%
declines in the activewear and international segments from weakness
in demand and inventory fluctuations, but also due to the European
innerwear business being sold, foreign exchange and a ransomware
attack. Furthermore, this year hurt the company's ability to hit
its 2024 $8 billion revenue target laid out on its end of 2021
investor day. Management has pushed out its targets to 2026. The
increase in sales is largely contingent on the Champion brand
reaching $3.2 billion in global revenues, but its declines are
derailing progress. S&P said, "Although we expect the casualization
and health and fitness trends to continue to support growth for
activewear longer term, near-term volume pressure will likely
continue as the economy slows and inflation persists. Sales volumes
also face difficult year-over-year comparisons as activewear demand
last year benefitted from more remote working and stronger consumer
discretionary income. We believe the brand still has equity,
pricing power, and the ability to enter into new product categories
and expand its geographic reach, making its targets still
achievable."
The negative outlook reflects that S&P could lower the ratings on
Hanesbrands over the next 12 months.
S&P could lower ratings if Hanesbrands sustains leverage of 5x or
higher. This could occur if:
-- Innerwear sales decline further due to consumers trading down
or the company cannot expand the Champion brand globally, possibly
because of lower demand as inflation reduces consumers' purchasing
power or increased competition.
-- Demand decreases substantially due to its brands falling out of
favor and the company continues to hold onto higher inventory,
leading to sustained negative FOCF.
-- Performance deteriorates and puts pressure on the company's
ability to comply with its net leverage financial covenant.
-- It adopts more aggressive financial policies, including
pursuing a debt-financed acquisition, share buybacks, or dividends
before restoring credit measures to its target.
S&P could revise the outlook to stable if the company sustains
leverage below 5x and maintains 15% cushion on its financial
maintenance covenants through its peak borrowing periods. This
could occur if Hanesbrands:
-- Consistently generates FOCF and applies the proceeds to debt
repayment; and
-- Returns to revenue growth, primarily from increased demand of
Champion.
ESG credit indicators: E-2, S-2, G-2
HI-POINT CONSTRUCTION: Seeks Cash Collateral
--------------------------------------------
Hi-Point Construction Co. asks the U.S. Bankruptcy Court for the
Eastern District of Michigan to use cash collateral to meet its
immediate and near-term obligations.
The Debtor seeks authority to use cash collateral during the period
commencing on the date of the Bankruptcy Court's entry of the
Interim Order and ending on the earlier of (a) the date the
Bankruptcy Court enters a Final Order relative to the Motion and
(b) the date on which the Debtor's right to use cash collateral
terminates under the terms of the Interim Order.
The first to file lender which claims to hold a perfected all asset
lien on the Debtor's property is Broad Street Capital. Broad Street
Capital was granted a lien in connection with a short-term loan
with an interest rate of 103.46% APR, so this is not a normal bank
loan. No other secured claims of a traditional nature exist in the
case. However, the Debtor previously entered into agreements with
several lenders which purport to have "purchased" certain
receivables of the Debtor. These entities may also claim an
interest in cash collateral.
The entities that may claim an interest in the cash collateral are
Broad Street Capital, NFG Advance LLC, Eagle Eye Advance LLC,
Capital Assist, LLC, Reliant Account Management, Clearstone Fund
LLC, and Family Funding.
These lenders have filed UCC financing statements.
The Debtor has very limited assets to which a lien could attach.
The Debtor estimates the total amount of the cash collateral
encumbered by Broad Street Capital's lien is $13,033. This is
inclusive of $13,033 of earned job receivables as of the petition
date.
The Debtor does have funds in a bank account, totaling $70,520 as
of the petition date, however, no third party has control over that
account and as such any alleged lien on the funds in the account as
of the petition date would be unperfected.
The Debtor also has unsecured obligations to various other
creditors, including ordinary trade creditors, vendors, and alleged
claims associated with pending or threatened lawsuits against the
Debtor.
The Debtor estimates it has $1,813,876 in outstanding unsecured
obligations.
The Debtor proposes the first perfected lienholder be granted a
post-filing lien on the Debtor's cash collateral arising
post-petition to replace the lienholder's pre-petition cash
collateral used post-petition. Said post-petition lien would be
limited to the extent of the value of any perfected lien which
existed as of the filing date in favor of the first perfected
lienholder and hold the same priority held in the pre-petition cash
collateral.
The Debtor will also maintain insurance on its truck and trailer.
A copy of the Debtor's motion is available at
https://bit.ly/3DJPmHh from PacerMonitor.com.
About Hi-Point Construction Co.
Hi-Point Construction Co. is a construction company in Michigan.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Mich. Case No. 23-30135) on January
20, 2023. In the petition signed by Jeremy Huntoon, owner, the
Debtor disclosed up to $100,000 in assets and up to $10 million in
liabilities.
Zachary R. Tucker, Esq., at Winegarde, Haley, Lindholm, Tucker and
Himelboch PLC, represents the Debtor as legal counsel.
I&A DEVELOPMENT: Seeks to Hire Wisdom Professional as Accountant
----------------------------------------------------------------
I&A Development, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of New York to employ Wisdom Professional
Services, Inc. as its accountant.
The Debtor requires an accountant to gather and verify information
necessary to compile and prepare its monthly operating reports.
The firm will be paid at the rate of $200 per report.
Michael Shtarkman, a certified public accountant at Wisdom
Professional 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 Shtarkman, CPA
Wisdom Professional Services, Inc.
626 Sheepshead Bay Road, Suite 640
Brooklyn, NY 11224
Telephone: (718) 554-6672
Facsimile: (718) 954-8994
Email: michael@shtarkmancpa.com
About I&A Development
I&A Development, LLC, a company in Staten Island, N.Y., filed a
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
E.D.N.Y. Case No. 22-42953) on Nov. 29, 2022, with $1 million to
$10 million in both assets and liabilities. Greg Fleyshmakher,
president of I&A Development, signed the petition.
Judge Jil Mazer-Marino oversees the case.
Alla Kachan, Esq., at the Law Offices of Alla Kachan P.C. and
Wisdom Professional Services, Inc. serve as the Debtor's legal
counsel and accountant, respectively.
I&A DEVELOPMENT: Seeks to Tap Law Offices of Alla Kachan as Counsel
-------------------------------------------------------------------
I&A Development, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of New York to employ the Law Offices of
Alla Kachan, PC as its legal counsel.
The Debtor requires legal counsel to:
(a) assist in administering the Debtor's Chapter 11 case;
(b) make such motions or take such actions as may be
appropriate or necessary under the Bankruptcy Code;
(c) represent the Debtor in prosecuting adversary proceedings
to collect assets of the estate and such other actions as the
Debtor deems appropriate;
(d) take such steps as may be necessary for the Debtor to
marshal and protect the estate's assets;
(e) negotiate with creditors in formulating a plan of
reorganization;
(f) draft and implement the Debtor's plan of reorganization;
and
(g) render such additional services as the Debtor may require
in this case.
The firm will be paid at these rates:
Attorney $475 per hour
Clerks and Paraprofessionals $250 per hour
In addition, the firm will receive reimbursement for expenses
incurred.
The Debtor paid the firm an initial retainer of $18,000.
Alla Kachan, Esq., a member of the Kachan Law Office, 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:
Alla Kachan, Esq.
Law Offices of Alla Kachan, PC
2799 Coney Island Avenue, Suite 202
Brooklyn, NY 11235
Telephone: (718) 513-3145
Email: alla@kachanlaw.com
About I&A Development
I&A Development, LLC, a company in Staten Island, N.Y., filed a
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
E.D.N.Y. Case No. 22-42953) on Nov. 29, 2022, with $1 million to
$10 million in both assets and liabilities. Greg Fleyshmakher,
president of I&A Development, signed the petition.
Judge Jil Mazer-Marino oversees the case.
Alla Kachan, Esq., at the Law Offices of Alla Kachan P.C. and
Wisdom Professional Services, Inc. serve as the Debtor's legal
counsel and accountant, respectively.
INDICOR LLC: Moody's Assigns First Time 'B2' Corp. Family Rating
----------------------------------------------------------------
Moody's Investors Service assigned first-time ratings to Indicor,
LLC including a B2 corporate family rating and a B2-PD probability
of default rating. In addition, Moody's assigned a B1 rating to
Indicor's first lien credit facilities, comprising a $300 million
revolving credit facility, a $1,230 million first lien term loan
and a EUR300 million first lien term loan. The outlook is stable.
Proceeds from the first lien term loans, along with a $475 million
second lien term loan (unrated) and new equity will be used to
finance the initial purchase of a 51% stake in Roper Technologies,
Inc.'s ("Roper Technologies") (Baa2, Stable) industrial products
businesses by Clayton, Dubilier & Rice ("CD&R"). The original
purchase price was about $2.6 billion. Roper Technologies retained
a 49% minority stake.
Moody's took the following actions:
Assignments:
Issuer: Indicor LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured First Lien Revolving Credit Facility, Assigned B1
(LGD3)
Senior Secured First Lien Term Loan, Assigned B1 (LGD3)
Outlook Actions:
Issuer: Indicor LLC
Outlook, Assigned Stable
RATINGS RATIONALE
The ratings reflect Indicor's leading market position as a provider
of preparation & testing equipment, sensors & controls and flow
control systems to an assortment of end markets globally. With a
focus on niche applications for highly critical components, the
company has been able to sustain industry leading operating margins
through the use of an asset-light business model. Additionally, the
company's global footprint is structured to be close to its
customers thus minimizing both supply chain disruptions and
significant currency translation. While Indicor has meaningful
exposure to infrastructure and oil & gas spending cycles, demand
for its products ensure compliance with critical safety and
efficiency standards, with revenue from aftermarket services (55%)
being quite steady.
However, Indicor will have very high initial leverage. Moody's
estimates pro forma debt to EBITDA at 6.7x at December 31, 2022.
Moody's expects leverage to gradually improve over the next 18
months to below 6.0x, through a combination of debt repayment and
improved earnings performance. The rating also reflects Moody's
belief that Roper Technologies' continued ownership and disciplined
approach to its remaining investment will support the plan to
reduce leverage.
The ratings also reflect Indicor's presence in multiple end
markets, some of which are cyclical and susceptible to industrial
and economic downturns. A further concern is that many of the
company's manufacturer suppliers are experiencing rising costs
associated with a tight labor market, rising fuel prices, higher
transportation costs and a shortage of materials. So far Indicor
has been able to pass along those rising costs, while also
capturing a small margin gain. However, there remains a concern
that as the general economy slows those margin gains could
reverse.
Liquidity is adequate and supported by cash balance of about $75
million and a new $300 million revolving credit facility, with $235
million available at transaction close. It is also supported by
Moody's expectation of free cash flow of around $50 million in
2023. The new revolver has a maximum springing first lien secured
leverage ratio of 9.7x, tested when 40% is drawn and tested at
quarter-end, which is unlikely to be tested in the near term.
Alternate sources of liquidity are limited given that all assets
are pledged to the new senior secured facilities and second lien
facilities.
The B1 rating on the first lien credit facilities, one notch above
the B2 corporate family rating, reflects the priority of first lien
claims with respect to the collateral securing the loans and the
support provided by the second lien term loan (unrated) in the
liability waterfall.
The stable outlook reflects Moody's expectations that credit
metrics will continue to improve, building on the revenue and
earnings momentum from a large order backlog and continued strong
demand in the end markets Indicor sells into. The outlook also
reflects Moody's expectation that the company will maintain at
least adequate liquidity.
Indicor's Credit Impact Score is high (CIS-4). This primarily
reflects the negative credit impact due to high governance risk
factors that pressure the rating. The degree of impact over time
will primarily depend on the evolving financial policy of the
company's new owners, Indicor's ability to improve returns to
support de-levering the balance sheet while at the same time
keeping an adequate liquidity profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with consistent revenue growth, while
sustaining current strong margins and Moody's expectation that
debt-to-EBITDA will remain below 5.0x. Maintenance of conservative
financial policies that support lower leverage would also be needed
to support an upgrade. A stronger liquidity profile would also be
expected for higher ratings, including ample revolver
availability.
The ratings could be downgraded if the company is unable to
de-lever from pro forma levels or has difficulty establishing
operations on a standalone basis. Additionally, if liquidity
deteriorates, including diminishing revolver availability, or the
company prioritizes shareholder friendly distributions, especially
if funded with debt, or other aggressive financial policies
including meaningful debt financed acquisitions, the ratings could
be downgraded.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
Indicor LLC, is a collection of businesses carved out from the
process technologies and the measurement and analytical solutions
business lines of Roper Industries. It comprises 15 distinct
brands serving the materials preparation and testing, sensors and
controls, and flow control applications globally. Revenue was $1.0
billion for fiscal year ended December 31, 2022.
INVACARE CORP: $97MM in DIP Loans Win Interim Court OK
------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Invacare Corporation and its
debtor-affiliates to use cash collateral and obtain postpetition
financing, on an interim basis.
The Debtors have obtained funding commitments of:
* $70 million in term loans under in an aggregate principal
amount pursuant to the terms and conditions set forth in the
Superpriority Secured Debtor-in-Possession Credit Agreement with
banks and other financial institutions or entities led by Cantor
Fitzgerald Securities, as administrative agent, and GLAS Trust
Corporation Limited, as collateral agent;
* $27.7 million under a superpriority, senior secured and
priming debtor-in-possession asset-based revolving credit facility,
subject to the terms and conditions set forth in the ABL DIP Credit
Agreement, by and among the Borrower, Freedom Designs, Inc.,
Medbloc, Inc., Invacare Canada L.P., Motion Concepts L.P. and
Perpetual Motion Enterprises Limited, as borrowers; the banks and
other financial institutions or entities from time to time party
thereto as "Lenders"; and PNC Bank, National Association, as agent
for the ABL DIP Lenders.
The DIP Term Loan consists of:
-- new money term loans in the aggregate principal amount of
$35 million from the Term DIP Lenders, of which $17.5 million will
be available immediately upon entry of the Interim Order, and the
remainder to be available no later than two business days following
the date of entry of the Final Order; and
-- term loans in an aggregate principal amount of $35 million,
which will consist of the Interim Rolled-Up Term Loans and the
Final Rolled-Up Term Loans.
On the date of the Interim Order, concurrently with the making of
the Initial Draw of the DIP New Money Term Loans, $17.5 million in
aggregate principal amount of Prepetition Term Loans will be deemed
substituted and exchanged for DIP Roll-Up Term Loans, and $17.5
million of DIP Roll-Up Term Loans will be deemed funded on the date
of the Interim Order, without constituting a novation, and will
satisfy and discharge $17.5 million in aggregate principal amount
of Interim Rolled-Up Term Loans.
Subject to the entry of and the terms of the Final Order, on the
Final Funding Date, concurrently with and automatically upon the
Final Draw of the DIP New Money Term Loans, $17.5 million in
aggregate principal amount of Prepetition Term Loans will be deemed
substituted and exchanged for DIP Roll-Up Term Loans, and $17.5
million of DIP Roll-Up Term Loans will be deemed funded on the
Final Funding Date, without constituting a novation, and will
satisfy and discharge $17.5 million in aggregate principal amount
of Final Rolled-Up Term Loans.
The DIP Revolving Loan consists of new money asset-based revolving
credit facility loans in the aggregate principal amount of the
unused Revolving Commitments in an aggregate principal amount equal
to $17.4 million from the ABL DIP Secured Parties, which amount
will be available immediately upon entry of the Interim Order.
The roll up and conversion of all Prepetition Revolving Obligations
and any unused Revolving Commitments into the ABL DIP Facility
pursuant to commitments of the ABL DIP Lenders in an aggregate
principal amount equal to $10.3 million, consisting of revolving
advances and letters of credit issued or deemed issued under the
ABL DIP Facility, with the entire amount of the ABL DIP Loans to be
fully drawn in accordance with the terms of the ABL DIP Credit
Agreement and applied automatically in full satisfaction of the
outstanding Prepetition Revolving Obligations.
The loans mature on May 1, 2023.
The Debtors are required to comply with these milestones:
(a) obtain court approval of the Final Order within 40 days of
the Petition Date;
(b) on or before the date that is 110 days -- or, (i)
following the occurrence of an Initial Maturity Extension, 140
days, and (ii) following the occurrence of a Second Maturity
Extension, 200 days -- after the Petition Date, the Bankruptcy
Court will have entered an order confirming the Reorganization
Plan; and
(c) within 15 days -- or, (i) following the occurrence of an
Initial Maturity Extension, 45 days, and (ii) following the
occurrence of a Second Maturity Extension, 105 days -- after entry
of the Confirmation Order, the confirmed Reorganization Plan will
have been consummated.
Before filing for bankruptcy, the Debtors were parties to these
loan agreements:
A. July 2022 Prepetition Term Loan Credit Facility with a
syndicate of lenders led by Cantor Fitzgerald Securities, as
administrative agent, and GLAS Trust Corporation Limited, as
collateral agent;
B. July 2022 Prepetition Secured Notes Indentures with
Invacare Corporation, as Prepetition Secured Tranche I Issuer;
Computershare Trust Company, N.A., as trustee; and GLAS Trust
Corporation Limited, as notes collateral agent, wherein Invacare
issued 5.68% Convertible Senior Secured Notes due 2026, Tranche I;
C. July 2022 Prepetition Secured Tranche II Notes Indenture
with Invacare Corporation, as Prepetition Secured Tranche II
Issuer; Computershare as trustee; and GLAS as notes collateral
agent, wherein Invacare issued 5.68%
Convertible Senior Secured Notes due 2026, Tranche II; and
D. Second Amended and Restated Revolving Credit and Security
Agreement, dated as of July 26, 2022, among (a) Invacare
Corporation, Freedom Designs, Inc., Medbloc, Inc., Invacare Canada
L.P., Motion Concepts L.P. and Perpetual Motion Enterprises
Limited, as borrowers, (b) the Guarantors party thereto, (c) PNC
Bank as agent for the Lenders, (d) the Lenders party thereto.
The Debtors owed these amounts under the prepetition credit
facilities:
-- not less than $90.5 million under the Prepetition Term
Loan;
-- not less than $41.475 million under the Prepetition Secured
Notes, including (a) $20.739 million in outstanding principal
amount of Prepetition Secured Tranche I Notes; and (b) $20.736
million in outstanding principal amount of Prepetition Secured
Tranche II Notes; and
-- not less than $10.257 million, including, without
limitation, (a) $5.828 million in outstanding principal amount of
Prepetition Revolving Loans, (b) outstanding letters of credit in
the aggregate amount of $4.428 million, and (c) all accrued and
accruing charges and obligations in respect of Cash Management
Products and Services.
As adequate protection, the Prepetition Secured Parties are granted
a valid, perfected replacement security interest in and lien upon
all of the DIP Collateral.
A final hearing on the matter is set for February 28, 2023 at 2:30
p.m.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/3HuzhGs from PacerMonitor.com.
The Debtor projects total operating disbursements, on a weekly
basis, as follows:
$5,758,000 for the week ending February 3,2023;
$2,401,000 for the week ending February 10,2023;
$3,569,000 for the week ending February 17,2023; and
$2,667,000 for the week ending February 24,2023.
About Invacare Corporation
Invacare Corporation is engaged in the manufacturing of home
medical devices. It also provides clinical solutions for post-acute
care, rehab, homecare, and respiratory markets.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 23-90068) on
January 31, 2023. In the petition signed by Kathleen Leneghan,
senior vice president and chief financial officer, the Debtor
disclosed up to $1 billion in both assets and liabilities.
The Debtors tapped Kirkland and Ellis, LLP and Kirkland and Ellis
International LLP as bankruptcy counsel, McDonald Hopkins, LLC as
bankruptcy co-counsel, Huron Consulting Group as restructuring
advisor, Miller Buckfire and Co. as financial advisor and
investment banker, and Epiq Corporate Restructuring, LLC, as
claims, noticing, and solicitation agent and administrative
advisor.
The DIP Term Loan Lenders led by Cantor Fitzgerald Securities, as
administrative agent, and GLAS Trust Corporation Limited, as
collateral agent, have retained Davis Polk & Wardwell LLP, Ducera
Partners, Porter Hedges LLP, Baker & McKenzie LLP, McDermott Will &
Emery LLP, Shipman & Goodwin LLP as advisors.
PNC Bank, National Association, and the ABL DIP Lenders, have
retained Blank Rome LLP, and B. Riley Advisory Services as
advisors.
ISF PROPERTIES: Seeks to Hire Law Offices of Alla Kachan as Counsel
-------------------------------------------------------------------
ISF Properties, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of New York to employ the Law Offices of
Alla Kachan, PC as its legal counsel.
The Debtor requires legal counsel to:
(a) assist in administering the Debtor's Chapter 11 case;
(b) make such motions or take such actions as may be
appropriate or necessary under the Bankruptcy Code;
(c) represent the Debtor in prosecuting adversary proceedings
to collect assets of the estate and such other actions as the
Debtor deems appropriate;
(d) take such steps as may be necessary for the Debtor to
marshal and protect the estate's assets;
(e) negotiate with creditors in formulating a plan of
reorganization;
(f) draft and implement the Debtor's plan of reorganization;
and
(g) render such additional services as the Debtor may require
in this case.
The firm will be paid at these rates:
Attorney $475 per hour
Clerks and Paraprofessionals $250 per hour
In addition, the firm will receive reimbursement for expenses
incurred.
The Debtor paid the firm an initial retainer of $18,000.
Alla Kachan, Esq., a member of the Kachan Law Office, 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:
Alla Kachan, Esq.
Law Offices of Alla Kachan, PC
2799 Coney Island Avenue, Suite 202
Brooklyn, NY 11235
Telephone: (718) 513-3145
Email: alla@kachanlaw.com
About ISF Properties
ISF Properties, LLC, a company in Staten Island, N.Y., filed a
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
E.D.N.Y. Case No. 22-42954) on Nov. 29, 2022, with $1 million to
$10 million in both assets and liabilities. Greg Fleyshmakher,
president of ISF Properties, signed the petition.
Judge Jil Mazer-Marino oversees the case.
Alla Kachan, Esq., at the Law Offices of Alla Kachan P.C. and
Wisdom Professional Services, Inc. serve as the Debtor's legal
counsel and accountant, respectively.
ISF PROPERTIES: Seeks to Hire Wisdom Professional as Accountant
---------------------------------------------------------------
ISF Properties, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of New York to employ Wisdom Professional
Services, Inc. as its accountant.
The Debtor requires an accountant to gather and verify information
necessary to compile and prepare its monthly operating reports.
The firm will be paid at the rate of $200 per report.
Michael Shtarkman, a certified public accountant at Wisdom
Professional 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 Shtarkman, CPA
Wisdom Professional Services, Inc.
626 Sheepshead Bay Road, Suite 640
Brooklyn, NY 11224
Telephone: (718) 554-6672
Facsimile: (718) 954-8994
Email: michael@shtarkmancpa.com
About ISF Properties
ISF Properties, LLC, a company in Staten Island, N.Y., filed a
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
E.D.N.Y. Case No. 22-42954) on Nov. 29, 2022, with $1 million to
$10 million in both assets and liabilities. Greg Fleyshmakher,
president of ISF Properties, signed the petition.
Judge Jil Mazer-Marino oversees the case.
Alla Kachan, Esq., at the Law Offices of Alla Kachan P.C. and
Wisdom Professional Services, Inc. serve as the Debtor's legal
counsel and accountant, respectively.
JESS HALL'S: Seeks to Hire Lain Faulkner & Co., Appoint CRO
-----------------------------------------------------------
Jess Hall's Serendipity, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Texas to employ Lain
Faulkner & Co., P.C. and designate the firm's director, Brian
Crisp, as its chief restructuring officer.
The firm's services include:
a. preparation of bankruptcy schedules, statements of financial
affairs, and creditor matrix;
b. preparation of monthly operating reports;
c. claims analysis and objections;
d. analysis of financial data necessary to obtain confirmation
of a plan of reorganization or liquidation;
e. securing and maintaining financial records;
f. accounting for all receipts and disbursements from the estate
and the preparation of all necessary reports;
g. analysis of tax and taxation issues and the filing of any
necessary income tax returns;
h. coordination with the Debtors' legal counsel and pursuit of
litigation, if necessary;
i. testimony at hearings or trials, if necessary;
j. identification and analysis of avoidable transactions; and
k. other accounting and financial consulting services.
Lain Faulkner & Co. will be paid at these rates:
Directors $400 to $530 per hour
Accounting Professionals $220 to $325 per hour
IT Professionals $290 per hour
Staff Accountants $180 to $265 per hour
Supporting Personnel $95 to $125 per hour
The firm received a retainer from the Debtor, with a balance of
$50,100 on the petition date.
Mr. Crisp disclosed in a court filing that his firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Brian Crisp
Lain Faulkner & Co., P.C.
400 North St. Paul Street, Suite 600
Dallas, TX 75201
Tel: (214) 720-1929
About Jess Hall's Serendipity
Jess Hall's Serendipity, LLC is a Fort Worth-based manufacturer of
spice blends and hot sauces.
Jess Hall's filed its voluntary petition for Chapter 11 protection
(Bankr. N.D. Texas Case No. 23-40073) on Jan. 9, 2023, with
$500,000 to $1 million in assets and $1 million to $10 million in
liabilities. Brian Crisp, chief restructuring officer of Jess
Hall's, signed the petition.
Judge Mark X. Mullin oversees the case.
Scott D. Lawrence, Esq., at Wick Phillips Gould & Martin, LLP and
Lain Faulkner & Co., P.C. serve as the Debtor's legal counsel and
restructuring advisor, respectively. Brian Crisp, a director at
Lain Faulkner & Co., serves as the Debtor's chief restructuring
officer.
JESS HALL'S: Taps Wick Phillips Gould & Martin as Legal Counsel
---------------------------------------------------------------
Jess Hall's Serendipity, LLC seeks approval from the U.S.
Bankruptcy Court for the Northern District of Texas to employ Wick
Phillips Gould & Martin, LLP to serve as legal counsel in its
Chapter 11 case.
The firm's services include:
a. advising the Debtor on the conduct of the case, including
all of the legal and administrative requirements of operating in
Chapter 11;
b. attending meetings and negotiating with representatives of
creditors and other parties in interest;
c. taking all necessary actions to protect and preserve the
estate, including prosecuting actions on the Debtor's behalf,
defending any action commenced against the Debtor, and representing
the Debtor in negotiations concerning litigation in which it is
involved;
d. preparing legal papers;
e. representing the Debtor in connection with obtaining
post-petition financing, if any;
f. advising the Debtor in connection with any potential sale
of assets of the estate;
g. analyzing and, as appropriate, challenging the validity of
liens against assets of the estate;
h. appearing before the bankruptcy court and any other court;
i. formulating, drafting and seeking confirmation of a Chapter
11 plan; and
j. performing all other necessary legal services for the
Debtor.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Jason M. Rudd, Partner $695 per hour
Scott D. Lawrence, Partner $500 per hour
Catherine A. Curtis, Associate $455 per hour
Brenda Ramirez, Paralegal $180 per hour
The firm received from the Debtor a retainer in the amount of
$50,000.
Scott Lawrence, Esq., a partner at Wick Phillips Gould & Martin,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
Scott D. Lawrence, Esq.
Wick Phillips Gould & Martin, LLP
100 Throckmorton Street, Suite 1500
Fort Worth, TX 76102
Tel: (817) 332-7788
Fax: (817) 332-7789
Email: scott.lawrence@wickphillips.com
About Jess Hall's Serendipity
Jess Hall's Serendipity, LLC is a Fort Worth-based manufacturer of
spice blends and hot sauces.
Jess Hall's filed its voluntary petition for Chapter 11 protection
(Bankr. N.D. Texas Case No. 23-40073) on Jan. 9, 2023, with
$500,000 to $1 million in assets and $1 million to $10 million in
liabilities. Brian Crisp, chief restructuring officer of Jess
Hall's, signed the petition.
Judge Mark X. Mullin oversees the case.
Scott D. Lawrence, Esq., at Wick Phillips Gould & Martin, LLP and
Lain Faulkner & Co., P.C. serve as the Debtor's legal counsel and
restructuring advisor, respectively. Brian Crisp, a director at
Lain Faulkner & Co., serves as the Debtor's chief restructuring
officer.
K&N PARENT: Moody's Lowers CFR to Ca & Alters Outlook to Stable
---------------------------------------------------------------
Moody's Investors Service downgraded K&N Parent, Inc.'s probability
of default rating to D-PD from Caa3-PD as Moody's expects the
company to complete an out-of-court debt restructuring. Further,
Moody's downgraded K&N's corporate family rating to Ca from Caa3,
the rating on the company's senior secured first lien credit
facilities to Ca from Caa3 and the rating on the second lien term
loan to C from Ca. The outlook was revised to stable from
negative.
The rating action reflects K&N's agreement with its creditors and
equity sponsors to complete a comprehensive restructuring of its
capital structure in which all existing debt is impacted. The
out-of-court restructuring, initially announced in early January
2023 and expected to close shortly, will reduce total funded debt
over 50% and improve liquidity. The change in the instrument
ratings on the defaulted first and second lien credit facilities
reflect recovery rates based on the proposed equitization of those
respective debt tranches.
Governance considerations were a factor in the rating action as
Moody's views negatively the development that required creditors to
take significant losses. A combination of financial policies,
including very high leverage, and other macro and operational
factors resulted in the company's inability to address upcoming
maturities.
Following the closing of the restructuring transaction, Moody's
will withdraw K&N's existing debt ratings and reevaluate K&N's CFR
and new debt structure. Moody's will likely raise the CFR several
notches given K&N's lower debt burden and reduced interest costs,
but notes that K&N's business prospects may remain challenged
through 2023 given current macroeconomic conditions.
Downgrades:
Issuer: K&N Parent, Inc.
Corporate Family Rating, Downgraded to Ca from Caa3
Probability of Default Rating, Downgraded to D-PD from Caa3-PD
Senior Secured Second Lien Term Loan, Downgraded to C (LGD5) from
Ca (LGD5)
Senior Secured First Lien Term Loan, Downgraded to Ca (LGD3) from
Caa3 (LGD3)
Senior Secured First Lien Revolving Credit Facility, Downgraded to
Ca (LGD3) from Caa3 (LGD3)
Outlook Actions:
Issuer: K&N Parent, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
K&N's unsustainably high financial leverage, persistently negative
free cash flow and declining demand for its products during 2022
made it challenging for the company to address its scheduled debt
maturities in 2023 and resulted in a planned comprehensive debt
restructuring.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings are unlikely to be upgraded or downgraded if K&N
completes the planned out-of-court restructuring as contemplated.
The current ratings reflect Moody's expectation of recovery based
on the agreed upon restructuring plan.
K&N is a domestically focused designer and manufacturer of
performance automotive aftermarket products. The company's products
include air filters, air intakes, oil filters, exhausts and
accessories. Net revenue for the twelve months ended September 2022
was approximately $209 million.
The principal methodology used in these ratings was Automotive
Suppliers published in May 2021.
KANSAS CITY RVS: Court OKs Final Cash Collateral Access
-------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
authorized Kansas City RVs, LLC to use cash collateral on an final
basis in accordance with the budget.
The Debtor requires the use of cash collateral to pay its operating
and business expenses.
While the Debtor has not fully analyzed all of its creditors'
liens, the Debtor does believe Legacy Bank and Trust holds duly
perfected liens on the Debtor's accounts receivables, inventory,
and accounts.
The Debtor is indebted to Legacy Bank and Trust, who asserts a
security interest in and liens upon Debtor's assets.
Legacy Bank and Trust claims a secured interest in cash collateral
of the Debtor by virtue of Liens filed on various dates.
The Debtor will make these adequate protection payments:
a. Legacy Bank and Trust, $500 a month beginning February 28,
2023 and the 28th of each month until further Court Order; and
b. NBKC, regular monthly mortgage payment of $1550.
Legacy Bank and Trust is granted replacement security interests in,
and liens on, all post-Petition Date acquired property of the
Debtor and the Debtor's bankruptcy estate that is the same type of
property that Legacy Bank and Trust hold a pre-petition interest,
lien or security interest to the extent of the validity and
priority of such interests, liens, or security interests. The
amount of each of the Replacement Liens will be up to the amount of
any diminution of Legacy Bank and Trust's Collateral positions from
the Petition Date. The priority of the Replacement Liens will be in
the same priority as Legacy Bank and Trust's pre-petition
interests, liens and security interests in similar property.
To the extent that the Replacement Liens prove inadequate to
protect Legacy Bank and Trust from a demonstrated diminution in
value of Collateral positions from the Petition Date, Legacy Bank
and Trust is granted an administrative expense claim under Code
section 503(b) with priority in payment under Code section 507(b).
A copy of the order is available at https://bit.ly/40A9vtp from
PacerMonitor.com.
About Kansas City RVs, LLC
Kansas City RVs, LLC is in the business of recreational vehicle
sales and services.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Mo. Case No. 23-40026) on January 9,
2023. In the petition signed by JE Cornwell, president, the Debtor
disclosed $256,500 in assets and $2,002,880 in liabilities.
Judge Cynthia A. Norton oversees the case.
Colin Gotham, Esq., at Evans & Mullinix, P.A., is the Debtor's
legal counsel.
KEVIN G. SAUNDERS: Files Emergency Bid to Use Cash Collateral
-------------------------------------------------------------
Kevin G. Saunders Photography, Inc. asks the U.S. Bankruptcy Court
for the Western District of Texas, San Antonio Division, for
authority to use cash collateral and provide adequate protection.
It is critical for the Debtor to have access to its cash and other
business property to continue operating in the ordinary course of
business, and pay normal operating expenses.
The Debtor was originally formed in October 2007, and has been
conducting its business operations for more than 15 years. In 2016,
the Debtor invested in a business plan for color portraits from
Bradford Rowley, who had a "platinum group" that he built up to
collectively help studios build big sales organizations.
The Debtor set up kgsmasterpieceportraits.com and built up a direct
mail partnership studio with staff. It was a lower price point than
the Debtor's signature work, but more of the work would
theoretically be delegated so Mr. Saunders could focus on
international work.
In 2019, the Debtor capitalized heavily to build a second studio in
San Antonio, separating the "Signature" and "Masterpiece" business
lines. However, COVID-19 occurred in 2020 and the Debtor had to
close the studio and layoff the staff.
Thereafter, Mr. Saunders came to the conclusion that a remote
studio was necessary because the high-end nature of product being
marketed required him to travel to customers, rather than expect
them to travel to the studio in San Antonio.
The Debtor financed the acquisition of this equipment which is
essential to the operation of the business on a national and
international level. The Debtor also obtained an SBA EIDL
disaster-relief loan in 2020 which assisted in keeping the business
afloat; however, sales have not returned to pre-COVID levels as of
the filing of the case.
The Debtor owns no real property. Its primary assets consist of
certain photography and studio equipment, much of which is financed
through lease to purchase agreements. As of the petition date, the
Debtor had no accounts receivable. In fact, the Debtor's business
model requires payment in full prior to the commencement of
services. However, as of the Petition Date, the Debtor had $13,300
in cash and funds on deposit, and an undeposited check in the
amount of $20,504 for services to be rendered for a customer. The
Debtor's office furniture and equipment is valued at $19,000 with
the Bexar Appraisal District, although many of the items are fully
depreciated. The Debtor does not own any vehicles.
The Debtor does not owe any federal income or payroll taxes as of
the petition date, but once it files its sales tax return with the
Texas Comptroller's office for the months of December 2022 and
January 2023, it expects to owe approximately $8,595 in sales
taxes. The Debtor is current on its ad valorem property taxes.
The Debtor's primary secured lender is the U.S. Small Business
Association which loaned the Debtor $331,000 through an EIDL
disaster relief loan in 2021. The SBA is believed to maintain first
lien status on all the Debtor's assets which fully encumbers those
assets.
Based upon current estimates, total unsecured and undersecured
creditors' debt in the case will likely amount to between $900,000
and $1.1 million.
The Debtor proposes to provide adequate protection to all parties
with an interest in cash collateral in the following manner:
a. All creditors with an interest in cash collateral will be
granted a replacement lien to the same extent, priority and
validity as its pre-petition lien(s);
b. The Debtor will continue to operate its business in the
ordinary course of business thus generating additional cash
collateral; and
c. The Debtor will maintain insurance upon the property giving
rise to the cash collateral.
A copy of the motion is available at https://bit.ly/3Y8JSht from
PacerMonitor.com.
About Kevin G. Saunders Photography, Inc.
Kevin G. Saunders Photography, Inc. is in the business of
commercial photography. The Debtor sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. W.D. Tex. Case No. 23-50100)
on February 1, 2023. In the petition signed by Kevin G. Saunders,
its president, the Debtor disclosed up to $100,000 in assets and up
to $10 million in liabilities.
Judge Craig A. Gargotta oversees the case.
The Law Office of H. Anthony Hervol is the Debtor's legal counsel.
KTS SOLUTIONS: Hires Legal Meets Practical as Special Counsel
-------------------------------------------------------------
KTS Solutions, Inc. received approval from the U.S. Bankruptcy
Court for the Eastern District of Virginia to employ Legal Meets
Practical, LLC as special counsel.
The Debtor needs the firm's legal assistance in connection with a
bid protest case (Case No. 1:22-cv-01037-LAS) filed in the Court of
Federal Claims.
The firm will be compensated on an hourly basis for professional
services rendered, plus reimbursement of actual and necessary
expenses incurred.
The retainer fee is $4,000.
Sarah Reida, Esq., a partner at Legal Meets Practical, disclosed in
a court filing that her firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Sarah Reida, Esq.
Legal Meets Practical, LLC
2475 Northwinds Pkwy, Ste 200
Alpharetta, GA 30009
Tel: (703) 552-3220
Email: scs@legalmeetspractical.com
About KTS Solutions
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.
KTS Solutions sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Va. Case No. 22-11694) on Dec. 9,
2022. In the petition signed by its chief executive officer, Kelvin
Smith, 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. and Legal Meets
Practical, LLC serve as the Debtor's bankruptcy counsel and special
counsel, respectively.
L'ADRESSE LLC: Court OKs Cash Collateral Access on Final Basis
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized L'Adresse, f/k/a Coffeemania Bryant Park, LLC, to use
cash collateral on a final basis.
The Debtor requires the use of cash collateral for ordinary and
necessary operating expenses in accordance with the budget.
The Debtor has an "EIDL" loan with the U.S. Small Business
Administration in the amount of $500,000, which accrues interest at
3.75% per annum with a 30-year repayment term. As of the Petition
Date, the outstanding balance due and owing to the SBA is $500,000
plus accrued and unpaid interest in the amount of $30,873.
New York State Department of Taxation and Finance filed a secured
claim against the Debtor in the amount of $98,662 representing a
tax warrant issued and perfected for unpaid pre-petition sales tax
due for the period May 2018 and November 2019.
As adequate protection, the SBA and NYSTAF are granted a valid,
enforceable, fully-perfected, security interest, effective as of
the Petition Date, to the extent of, and as security for any
decrease in the value of the SBA's and NYS's interest in the cash
collateral since the Petition Date in, to and upon all existing and
hereafter acquired property of the Debtor, subordinate only to: (i)
the United States Trustee fees pursuant to 28 U.S.C. section 1930
and any interest thereon pursuant to 31 U.S.C. section 3717, and
(iii) the payment of any allowed claim of any subsequently
appointed Chapter 7 trustee to the extent of $10,000; and will not
extend to estate causes of action and the proceeds of any
recoveries of estate causes of action under Chapter 5 of the
Bankruptcy Code.
The Replacement Lien granted to the SBA and NYSTAF will be in
addition to, and not in substitution of, any and all security
interests, liens, encumbrances, rights of set-off or other rights
of the SBA and NYSTAF currently existing or hereafter arising.
The SBA will receive monthly payments of $2,140 commencing December
18, 2022, and each additional monthly payment thereafter will be
due on the 18th of the month, as adequate protection for any
diminution in the value of any collateral securing the secured
claim as a result of the use of cash collateral.
The occurrence of any of the following events, unless waived in
writing by the Prepetition Lender, will constitute a "Termination
Event":
(a) the entry of an order of the Court converting or
dismissing the Chapter 11 case;
(b) the entry of an order of the Court confirming a plan of
reorganization in the Chapter 11 Case;
(c) the failure of Debtor (i) to perform any of its
obligations under the Order, and (ii) failure to cure such Default
within 10 business days after the giving of written notice thereof
to Debtor, its attorneys, the United States Trustee and any
official committee appointed in the Chapter 11 Case;
(d) the amendment, supplementation, waiver or other
modification of all or part of the Order without the Government
having been given at least 72 hours advance, written notice, by
overnight service upon the Government and the SBA.
(e) the termination of all or substantially all of the
operations of the Debtor, whether by voluntary act(s) or
omission(s) of the Debtor, or otherwise, except in the event of a
shutdown by governmental order.
A copy of the order is available at https://bit.ly/3I197gf from
PacerMonitor.com.
About L'Adresse, LLC
L'Adresse, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. N.Y. Case No. 22-11583-jlg) on
November 29, 2022. In the petition signed by Evgeny Zhuravlev,
managing member, the Debtor disclosed up to $500,000 in assets and
up to $10 million in liabilities.
L'Adresse, LLC operates a publicly acclaimed restaurant styled as
an "American Bistro" located in Bryant Park in Manhattan.
L'Adresse operates seven days a week serving breakfast, lunch and
dinner.
A separate sister restaurant is located in Nomad and is not part of
the proceeding.
Judge James L. Garrity, Jr. oversees the bankruptcy case.
Heath S. Berger, Esq., at Berger, Fischoff, Shumer, Wexler &
Goodman, LLP, is the Debtor's legal counsel.
LTL MANAGEMENT: Court Tosses Move to Contain Talc Liabilities
-------------------------------------------------------------
A federal appeals court on Monday, Jan. 30, 2023, rejected a
bankruptcy filing by a Johnson & Johnson subsidiary, LTL
Management, dealing a setback to the company's attempt to limit its
exposure to a flood of lawsuits over its talcum-powder products.
More than 40,000 plaintiffs have sued Johnson & Johnson, with some
claiming that the company had known for decades that its baby
powder and other talc-based products could have contained traces of
asbestos, a carcinogen. Others claim the talc itself was an
irritant that led to cancer. The plaintiffs include women who say
their use of baby powder caused ovarian cancer, as well as people
who say it led to mesothelioma, a disease of the lungs that can be
caused by exposure to asbestos.
Johnson & Johnson could face billions of dollars in payouts from
the cases it has lost, and in 2021 the company created a
subsidiary, called LTL Management, that would be liable for those
claims. Days after it was created, LTL filed for bankruptcy
protection, a move that immediately faced legal challenges from
plaintiffs who saw it as a way for the company to limit what it
would ultimately have to pay out in the talcum-powder cases.
On Monday, Jan. 30, 2023, LTL Management's Chapter 11 filing was
dismissed by the U.S. Court of Appeals for the Third Circuit in
Philadelphia, which said LTL Management's ties to Johnson & Johnson
meant it wasn't facing the kind of distress that a bankruptcy was
meant to address.
"Given Chapter 11's ability to redefine fundamental rights of third
parties, only those facing financial distress can call on
bankruptcy's tools to do so," Thomas Ambro, the circuit judge,
wrote in the decision.
Johnson & Johnson said on Monday, Jan. 30, 2023, that it would
appeal the decision, and that its intention was to "efficiently
resolve the cosmetic talc litigation for the benefit of all
parties, including current and future claimants."
The decision could also discourage other companies from trying to
use bankruptcy courts to limit what they would have to pay out
after losing lawsuits, said Douglas G. Baird, professor of law at
the University of Chicago and chair of the National Bankruptcy
Conference.
The tactic, which has come to be known as the Texas Two Step
because of its origins in a Texas business law, has rarely been
used since its inception in 1989. A ruling favorable to Johnson &
Johnson would have meant that "bankruptcy law could become the form
of choice to deal with mass tort liabilities" held by otherwise
solvent companies, Mr. Baird said, adding, "That pathway is now
seriously less likely because of this opinion."
Leigh O'Dell, a lawyer for the plaintiffs, welcomed the decision
and said it would allow the cases to be returned to federal and
state district courts.
"The doors to the courthouse, which had been slammed shut by
J.&J.'s cynical legal strategy, are once again open, as they should
be," Ms. O'Dell said. "Given that, we will immediately seek to
return these cases to their rightful venues in federal and state
district courts."
Johnson & Johnson, which makes Band-Aids and Listerine mouthwash as
well as vaccines and other pharmaceuticals, on Monday, January 30,
2023, repeated its assertion that its baby powder "does not contain
asbestos and does not cause cancer." The company has stopped
selling talc-based baby powder globally, after switching to
cornstarch as the primary ingredient of the product.
About LTL Management
LTL Management, LLC, is a subsidiary of Johnson & Johnson (J&J),
which was formed to manage and defend thousands of talc-related
claims and oversee the operations of Royalty A&M. Royalty A&M owns
a portfolio of royalty revenue streams, including royalty revenue
streams based on third-party sales of LACTAID, MYLANTA/MYLICON and
ROGAINE products.
LTL Management filed a petition for Chapter 11 protection (Bankr.
W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was
transferred to New Jersey (Bankr. D.N.J. Case No. 21-30589) on Nov.
16, 2021. The Hon. Michael B. Kaplan is the case judge. At the
time of the filing, the Debtor was estimated to have $1 billion to
$10 billion in both assets and liabilities.
The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as
bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon
LLP as special counsel; McCarter & English, LLP as litigation
consultant; Bates White, LLC as financial consultant; and
AlixPartners, LLP as restructuring advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
An official committee of talc claimants was formed in the Debtor's
Chapter 11 case on Nov. 9, 2021. On Dec. 24, 2021, the U.S. Trustee
for Regions 3 and 9 reconstituted the talc claimants' committee and
appointed two separate committees: (i) the official committee of
talc claimants I, which represents ovarian cancer claimants, and
(ii) the official committee of talc claimants II, which represents
mesothelioma claimants.
The official committee of talc claimants I tapped Genova Burns LLC,
Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its
legal counsel. Meanwhile, the official committee of talc claimants
II is represented by the law firms of Cooley LLP, Bailey Glasser
LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and
Sherman Silverstein Kohl Rose & Podolsky P.A.
MACON DOOR: Amends Secured & Unsecured Claims Pay Details
---------------------------------------------------------
Macon Door & Hardware, Inc., submitted a First Amended Subchapter V
Plan of Liquidation dated January 31, 2023.
The Plan, as amended, shall be deemed accepted by all creditors and
equity security holders who have previously accepted the Plan.
Debtor amends its Plan by revising the following section of Article
I.A:
* This Plan provides for the liquidation and abandonment of
the Debtor's Assets, with the proceeds being paid to Debtor's
creditors in accordance with the priority scheme established by the
Bankruptcy Code. Such payments will occur through sales or other
Dispositions of the Debtor's Assets (both encumbered and
unencumbered). The Assets include available cash, collection, and
the liquidation proceeds of Debtor's assets, including liquidation
of the Debtor's personal property, accounts receivable, other
receivables, and possible Avoidance Actions. Administrative
Expenses will be paid first, including the fees and expenses of the
Subchapter V Trustee and Debtor's Professionals. Secured Claims
shall receive cash equal to the allowed amount of such Holder's
Secured Claim from the sale of collateral securing such claim.
Priority Claims will be paid next. Then General Unsecured Claims
will be paid Pro Rata from any cash available for distribution. If
General Unsecured Claims are paid in full, any remaining proceeds
will be distributed to equity.
Debtor amends its Plan by revising the following section of Article
III.A:
* To that end, the Debtor proposes to cease operation of its
business as of the Effective Date, liquidate certain assets in
which the Debtor believes there to be equity, and abandon all other
encumbered property to the applicable secured creditor holding the
highest priority secured claim against such property. The Debtor
proposes to collect on the Causes of Action and liquidate the
following: 2020 Dodge RAM 2500 (VIN 0385), 2019 Dodge RAM 2500 (VIN
2917), 2021 Dodge Ram 1500 (VIN 4653), 2006 Ford F650 Box Truck
(VIN 6967), 2014 Dodge RAM Chassis 5500 (VIN 4306).
Debtor amends its Plan under Article III.E for the following
classes:
* Class 2 Secured Claims. Except to the extent the Holder has
agreed to a different treatment of its claim, Allowed Secured
Claims shall be paid as follows: (i) With the exception of such
collateral, on the Effective Date the Debtor shall abandon all
non-Cash assets serving as collateral to the applicable Holder of
such Allowed Secured Claim having a first priority interest on such
collateral, with such abandonment being deemed, pursuant to 11
U.S.C. § 1129(b), the indubitable equivalent of such Holder's
Allowed Secured Claim; and (ii) The Debtor, with respect to the
remaining collateral consisting of a 2020 Dodge RAM 2500 (VIN
0385), a 2019 Dodge RAM 2500 (VIN 2917), and a 2021 Dodge Ram 1500
(VIN 4653), shall within fortyfive (45) days of the Effective Date
market and sell such vehicles free and clear of liens, claims, or
interests pursuant to 11 U.S.C. § 1123(b)(4), with such liens,
claims, or interests attaching to the proceeds of the sale and
Debtor and the applicable Holder of such Class 2 Claim shall comply
with 11 U.S.C. § 1142(b) with respect to the transfer of such
non-cash collateral free and clear of liens, claims, and
interests.
* Class 3 Allowed Unsecured Claims. Each Holder of an Allowed
Unsecured Claim in Class 3 will be paid by the Reorganized Debtor
on the Final Distribution Date, its Pro-rata share of the Net
Proceeds of Debtor's estate remaining following payments to
Unclassified Claims and Classes 1-2. To the extent that a Class 3
Claim is based upon a deficiency of a claim originally classified
as a Class 2 Secured Claim, the Holder of such Claim must file a
proof of claim no later than July 1, 2023, in order to receive
distributions as a Class 3 Allowed Unsecured Claim. The Final
Distribution Date means the date the Reorganized Debtor has fully
collected on the liquidation of its remaining Assets, including the
Causes of Action.
Debtor amends its Plan by revising the following section of Article
III.F.1:
* The Plan is a liquidating Subchapter V Chapter 11 plan. The
funds required for implementation of the Plan and the distributions
hereunder shall be provided from the Disposition of the Debtor's
assets, both encumbered and unencumbered, through private sale,
auction, abandonment, or otherwise. The Disposition of the Debtor's
assets, not including liquidation of the Avoidance Actions, shall
take place no later than the day that is 45 days from the Effective
Date with proceeds from the Dispositions to be paid pursuant to the
priority scheme established by the Bankruptcy Code.
A full-text copy of the First Amended Liquidating Plan dated
January 31, 2023 is available at https://bit.ly/3DOA0S2 from
PacerMonitor.com at no charge.
Counsel to Debtor:
Ward Stone, Esq.
Matthew S. Cathey, Esq.
Stone & Baxter, LLP
577 Third Street
Macon, Georgia 31201
Tel: (478) 750-9898
Fax: (478) 750-9899
Email: wstone@stoneandbaxter.com
mcathey@stoneandbaxter.com
About Macon Door & Hardware
Macon Door & Hardware Inc. -- https://www.macondoor.com/ -- is a
distributor of division 8 & 10 materials in the Middle Georgia
area.
Macon Door & Hardware filed a petition for relief under Subchapter
V of Chapter 11 of the Bankruptcy Code (Bankr. M.D. Ga. Case
No.22-51044) on Sept. 9, 2022. In the petition filed by Daniel L.
Pike, as president, the Debtor reported assets and liabilities
between $1 million and $10 million.
Judge Austin E. Carter oversees the case.
Robert M. Matson has been appointed as Subchapter V trustee.
The Debtor is represented by Ward Stone, Jr., Esq., at Stone &
Baxter, LLP.
MEDICINE RIVER: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------
The U.S. Trustee for Region 20 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Medicine River Ranch & Oil Company, LLC.
About Medicine River Ranch & Oil Co.
Medicine River Ranch & Oil Company, LLC sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Case No.
22-11078) on Dec. 23, 2022, with up to $50,000 in assets and up to
$500,000 in liabilities. Judge Mitchell L. Herren oversees the
case.
J. Michael Morris, Esq., at Klenda Austerman, LLC is the Debtor's
legal counsel.
METROPOLITAN OPERA: Moody's Cuts 2012 Taxable Bonds Rating to Ba2
-----------------------------------------------------------------
Moody's Investors Service has downgraded the Metropolitan Opera
Association, NY's Taxable Bonds, Series 2012 to Ba2 from Ba1. At
year end fiscal 2022 the Metropolitan Opera had around $167 million
of debt outstanding. The rating outlook has been revised to stable
from negative.
RATINGS RATIONALE
The downgrade to Ba2 from Ba1 reflects a weaker liquidity position
with additional draws and borrowing from the endowment in addition
to continued heavy reliance on an operating line of credit. While
recovering from the covid-19 pandemic, operating performance will
remain very thin and potentially volatile, tied to meeting high
levels of fundraising. As a result, the Metropolitan Opera has a
minimal cushion to manage unforeseen circumstances, elevating its
risk profile.
The Ba2 rating incorporates the Opera's very good global brand and
considerable scope for a cultural nonprofit with $316 million in
operating revenue in fiscal 2022. It also acknowledges strong donor
support for operations with $191 million in total gift revenue in
fiscal 2022. Total cash and investments reached $353 million in
fiscal 2022, although over 70% of that represents permanent
endowment funds. The opera has calibrated revenue and expenses for
close to breakeven operations over the last few years, with small
deficits in some years and EBIDA margins remain low limiting
financial flexibility. The Met Opera's practice of operating with
limited liquidity and a greater and substantial reliance on an
operating line of credit in recent years drive Moody's assessment
of a challenging financial strategy and is the primary credit risk.
Recovery in attendance following the material operational and
financial disruptions due to the coronavirus pandemic is gradual
and shifting consumer preferences add some uncertainty to the pace
of attendance, which Moody's consider a social risk in Moody's ESG
taxonomy. Management has been successful in managing labor
relations over the last several years and is implementing changes
in its programming to achieve savings but the Met's programs remain
relatively high cost. Other challenges include material pension
exposure and limited ability to fund ongoing capital needs.
RATING OUTLOOK
The stable outlook incorporates continued strength in fundraising
as box office cash receipts and other revenues continue to recover,
and, over time, Moody's expectation that there will be an easing of
the reliance on the line of credit for operations.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
-- Material gains in unrestricted liquidity with significantly
reduced reliance on operating line
-- Sustained growth of total wealth including spendable cash
and investments
-- Strengthened and consistent operating performance with
improved debt service coverage from core operations
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
-- Narrowing of headroom above financial covenants or
potential disruption to access to operating line for
working capital
-- Material erosion of financial reserves including
unrestricted liquidity
-- Inability to repay extraordinary draws from the endowment
or additional draws on the endowment in fiscal 2024 and
beyond; increase in operating line of credit and use of
line of credit
-- Inability to sustainably improve operating performance
LEGAL SECURITY
The Taxable Bonds, Series 2012 are unsecured general obligations of
the Metropolitan Opera Association. There are no additional bonds
tests or financial covenants.
PROFILE
The Metropolitan Opera is one of the largest cultural organizations
in the US with fiscal 2022 operating revenue of $316 million. The
Met was founded in 1883 and moved to its current home in 1966 as it
became part of Lincoln Center. Its opera house, with 3,786 seats,
is owned by Lincoln Center for the Performing Arts (LCPA). A long
term Constituency Agreement defines the Met's relationship with
LCPA, including its use of the hall If the Met exercises its
remaining optional renewal period, which is likely, the agreement
will run through 2066.
METHODOLOGY
The principal methodology used in this rating was Nonprofit
Organizations (Other Than Healthcare and Higher Education)
published in May 2019.
NAME YOUR SPORT: Unsecureds Will Get 100% of Claims over 36 Months
------------------------------------------------------------------
Name Your Sport, LLC, filed with the U.S. Bankruptcy Court for the
District of New Jersey a Small Business Plan of Reorganization
dated December 31, 2023.
The Debtor is a sports entertainment complex in Runnemede, NJ. It
houses batting cages, golf simulators, and other various athletic
practice arenas.
In or about April/May 2022, the 3 roof-top HVAC Units affecting the
Debtor's Demised Premises ceased working and constant roof-leaks
commence which negatively affected the Debtor's business
operations. The Debtor began to fall behind in rent. The Landlord
filed an eviction complaint on September 16, 2022 (the "LL/T
Matter"). The LL/T Matter was not able to be resolved prior to the
final hearing date on the matter and the Debtor filed this Chapter
11 the day before the final hearing in the LL/T Matter.
This Plan of Reorganization assumes the lease between the Debtor
and GA Nanak Investors, LLC ("Landlord") for the retail space
located at 835 East Clements Bridge Road, Suite 9, Runnemede, NJ
08078 (the "Demised Premises") pursuant to 11 U.S.C. Sec. 365(b).
The Debtor will cure the pre-petition past due amount of $38,357.91
and continue to occupy the Demised Premises in accordance with the
terms of the lease dated November 15, 2018.
The Debtor will pay the 1 priority claim to the Internal Revenue
Service ("IRS") in the amount of $1,028.84 prior to the Effective
Date of the Plan as that claim is for 4th quarter post-petition
payroll taxes that are paid in the ordinary course.
The Debtor proposes to pay 100% of the general unsecured debt
through the collection of $19,500 of the $23,771 account
receivable; and payments of $1000/month over the first thirty-five
months of the Plan (with no payments in the months of July of
August each year), with a final payment of $1036 in the thirty
sixth month of the plan.
Class 1 consists of Allowed general unsecured claims. The allowed
unsecured claims total $49,536. The claims will be paid 100% over
the course of the Debtor's 36-month plan. Commencing on the
Effective Date, the Debtor will make $1000 payments/month to its
Class 1 creditors for 35 months (except the months of July and
August). Then, in the 36-month, the Debtor will make a payment in
the amount of $1036.
The Debtor expects to collect $1,500 of its outstanding A/R prior
to the Effective Date and will pay this amount in addition to the
first payment of $1000 to the Class 1 Creditors on the Effective
Date. The Debtor expect to collect $18,000 of its outstanding A/R
in or around April 1, 2023. When this amount is collected, it will
be distributed pro rata to the Class 1 Creditors. This Class is
Impaired to the extent that all claims will not be paid on the
Effective Date.
Class 2 consists of General Unsecured Creditors who are Insiders.
No payments will be made to Class 2 Creditors until all Class 1
Creditors are paid in full.
Michael Palcko is the 100% sole member of the Debtor and the only
Equity Interest Holder. He will retain 100% of his interest in the
Debtor.
The Debtor's Plan is have sufficient cash on hand on the Effective
Date of the Plan to commence monthly payments. The principal of the
Debtor will contribute to the section 365(b) cure to the landlord
in furtherance of the lease assumption if necessary.
The Debtor proposes to fund the plan through future business
operations, collection of $19,500 of its outstanding Accounts
Receivable, and contributions from the principal of the Debtor if
necessary.
A full-text copy of the Plan of Reorganization dated January 31,
2023 is available at https://bit.ly/3x9Bbrf from PacerMonitor.com
at no charge.
The Debtor is represented by:
Carrie J. Boyle, Esq.
Boyle & Valenti Law, P.C.
1940 Rt. 70 East, Suite 4
Cherry Hill, NJ 08003
856-499-3335 ph
Email: cboyle@b-vlaw.com
About Name Your Sport
Name Your Sport, LLC, is a sports entertainment complex in
Runnemede, NJ. The Debtor filed a Chapter 11 petition (Bankr.
D.N.J. Case No. 22-18730) on Nov. 2, 2022. The Debtor is
represented by Carrie J. Boyle, Esq. of BOYLE & VALENTI LAW P.C.
NATIONAL ADVANCE: Seeks to Tap Morris & Morris Attorneys as Counsel
-------------------------------------------------------------------
National Advanced Medical Management, LLC seeks approval from the
U.S. Bankruptcy Court for the Eastern District of Michigan to
employ Morris & Morris Attorneys, PLLC as its legal counsel.
The Debtor requires legal services to administer its bankruptcy
estate and prepare a Chapter 11 plan of reorganization.
Morris & Morris will be paid at these rates:
Thomas R. Morris $300 per hour
David R. Morris $150 per hour
In court filings, Morris & Morris disclosed that it is a
"disinterested person" within the meaning of Bankruptcy Code
Section 101(14).
The firm can be reached through:
Thomas R. Morris, Esq.
Morris & Morris Attorneys, PLLC
3258 Broad Street, Suite 2
Dexter, MI 48130
Tel: (734) 221-0077
Email: tmorris@morrispllc.com
About National Advance Medical Management
National Advanced Medical Management, LLC provides operational,
administrative and technical healthcare management services to
large physician organizations, government agencies, and health
plans. It is based in Farmington Hills, Mich.
National Advanced Medical Management filed a petition for relief
under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Mich. Case No. 22-50022) on Dec. 22, 2022, with up to $50,000
in assets and $1 million to $10 million in liabilities. Deborah L.
Fish has been appointed as Subchapter V trustee.
Judge Maria L. Oxholm oversees the case.
The Debtor is represented by Thomas R. Morris, Esq., at the Morris
& Morris Attorneys, PLLC.
NAUTICAL SOLUTIONS: Jackson Walker Serving as Co-Counsel
--------------------------------------------------------
Jackson Walker is partnering with lead counsel Kirkland & Ellis to
represent Nautical Solutions, L.L.C. and its debtor affiliate in
their Chapter 11 reorganization. On January 8, 2023, Nautical
Solutions and its Texas affiliate filed prepackaged Chapter 11
bankruptcy cases in the Southern District of Texas – Houston
Division, with estimated assets totaling $500 million to $1
billion.
Based in Louisiana, Nautical Solutions provides vessel support
services to offshore drillers in the Gulf of Mexico. The company is
a unit of Edison Chouest Offshore, an international marine
transportation solution provider.
The Jackson Walker team is led by Matthew D. Cavenaugh, Jennifer F.
Wertz, Victoria Argeroplos, Javier Gonzalez, and Beau Butler.
"We are honored to serve as co-counsel in this case," Matt stated.
"We are also excited that Victoria led our involvement during the
first day of hearings and was the face of our case in the
courtroom. Jackson Walker, more than most large firms, is committed
to ensuring its female associates like Victoria take on leadership
roles in complex cases. It’s a tangible reflection of our
commitment to serving our clients with a diverse legal team."
"Jackson Walker, more than most large firms, is committed to
ensuring its female associates like Victoria take on leadership
roles in complex cases. It’s a tangible reflection of our
commitment to serving our clients with a diverse legal team."
The case marks the first complex case filing in the Southern
District of Texas in 2023. Notably, this was Judge Chris Lopez's
first complex case assignment since joining the complex panel on
January 1, 2023.
About Nautical Solutions
Nautical Solutions is a leading provider of marine operational
support services and solutions to petroleum exploration,
extraction, and production, oilfield service, and offshore
construction customers.
Nautical Solutions, L.L.C and Nautical Solutions (Texas) LLC each
filed a petition for relief under Chapter 11 of the Bankruptcy
Code
(Bankr. S.D. Tex. Lead Case No. 23-90002) on Jan. 9, 2023. In the
petition filed by Charles F. Comeaux, as chief financial officer,
Nautical Solutions reported assets and liabilities between $500
million and $1 billion.
The Hon. Christopher M. Lopez oversees the cases.
KIRKLAND & ELLIS LLP and KIRKLAND & ELLIS INTERNATIONAL LLP serve
as the Debtors' general bankruptcy counsel. JACKSON WALKER LLP is
the local counsel. JEFFERIES LLC is the Debtors' investment
banker
and ANKURA CONSULTING GROUP is the financial advisor. KURTZMAN
CARSON CONSULTANTS LLC is the claims agent.
ORIGINAL TRADERS: Seeks Creditor Protection Under CCAA
------------------------------------------------------
Scotland, Ontario-based Original Traders Energy Ltd., 2496750
Ontario Inc., OTE Logistics LP, and Original Traders Energy LP
("OTE Group") obtained CCAA protection in Ontario, Canada, on Jan.
30, 2023.
The Ontario Superior Court of Justice (Commercial List) ("Court")
issued an initial order granting the OTE Group protection under the
Companies' Creditors Arrangement Act ("CCAA"). Pursuant to the
Initial Order, KPMG Inc. has been appointed as Monitor ("Monitor")
in OTE Group's CCAA proceedings.
The Initial Order provides for a stay of proceedings against the
OTE Group and its officers and directors until and including Feb.
9, 2023. The stay of proceedings was granted to protect OTE Group,
their assets and business and the interests of their creditors, and
to give the OTE Group breathing room to formulate and implement its
restructuring plan and potentially a plan of arrangement for its
creditors. A hearing date for, among other things, OTE Group's
motion for an extension of the stay of proceedings has been
scheduled for Feb. 9, 2023.
According to court documents, the OTE Group is balance sheet
insolvent, as the OTE Group is likely unable to fulfill upcoming
liabilities anticipated to come due in the first quarter of 2023.
The OTE Group's total assets are estimated by the Proposed Monitor
to be $67,523,927 with total liabilities of $95,392,669. It is
expected that the OTE Group will have sufficient cash to sustain
operations throughout the ongoing CCAA proceeding, but will have
insufficient funds to cover all outstanding liabilities.
Furthermore, the liabilities faced by the OTE Group were triggered
by alarming executive misconduct which threatens the survival of
the OTE Group, arising from the actions of the former president of
OTE GP, Glenn Page ("Page") among other of his associates and
entities. The OTE Group is missing significant portions of their
books and records due to Page's and others' misconduct. Financial
information and records of the OTE Group for the entire period from
January of 2021 to August of 2022 are unreliable and incomplete.
The Proposed Monitor's role will include recovering and analyzing
existing financial records.
Except as permitted in the Initial Order, the Initial Order directs
OTE Group to make no payments relating to the supply of goods or
services made prior to Jan. 30, 2023.
To date, no claims procedure has been approved by the Court, and
accordingly creditors are not required to file a proof of claim at
this time.
A copy of the Initial Order, the application materials, and a
preliminary list of known creditors are posted on the Monitor's
website at: http://home.kpmg/ca/OTEGroup.
Interested persons may contact the Monitor directly toll free at 1
(833) 665-0666, locally at (416) 468-7000, or OTEGroup@kpmg.ca.
The Monitor:
KPMG Inc.
Bay Adelaide Centre
333 Bay Street, Suite 4600
Toronto, ON M5H 2S5
Duncan Lau
Tel: 416-476-2184
Email: duncanlau@kpmg.ca
Paul Van Eyk
Tel: 647-622-6586
Email: pvaneyk@kpmg.ca
Tahreem Fatima
Tel: 647-777-5283
Email: tahreemfatima@kpmg.ca
Chris Gard
Tel: 416-777-8214
Email: cgard@kpmg.ca
Lawyers for Companies:
Aird & Berlis LLP
Brookfield Place
181 Bay Street , Suite 1800
Toronto, ON M5J 2T9
Steven Graff
Tel: 416-865-7726
Email: sgraff@airdberlis.com
Miranda Spence
Tel: 416-865-3414
Email: mspence@airdberlis.com
Tamie Dolny
Tel: 647-426-2306
Email: tdolny@aridberlis.com
Samantha Hans
Tel: 437-880-6105
Email: shans@airdberlis.com
Lawyers for the Monitor:
Bennett Jones LLP
Attn: Raj S. Sahni
3400 One First Canadian Place
P.O. Box 130
Toronto, ON M5X 1A4
Tel: 416-777-4804
Email: sahnir@bennettjones.com
Original Traders Energy Ltd. -- https://originaltradersenergy.com/
-- supplies and distributes high quality gasoline and diesel fuel
products exclusively to First Nations across Canada.
PAR PETROLEUM: Moody's Rates New $550MM Term Loan 'B1'
------------------------------------------------------
Moody's Investors Service affirmed Par Petroleum, LLC's Corporate
Family Rating at B1 and assigned a B1 rating to the company's
proposed $550 million senior secured term loan due 2030. Par's
Speculative Grade Liquidity (SGL) rating remains SGL-3. The outlook
was changed to positive from stable.
Par will use net proceeds from its term loan to refinance its
senior secured term loan due 2026, senior secured notes due 2025
and senior secured notes due 2026.
"The change in Par Petroleum's outlook to positive reflects the
benefits from increased scale and asset diversification expected
from the acquisition of the Billings refinery and associated assets
while maintaining solid credit metrics," commented Jonathan Teitel,
a Moody's analyst. "This refinancing transaction will term out the
company's debt maturity profile, also strengthening the company's
credit profile."
Affirmations:
Issuer: Par Petroleum, LLC
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Assignments:
Issuer: Par Petroleum, LLC
Backed Senior Secured Term Loan B, Assigned B1 (LGD4)
Outlook Actions:
Issuer: Par Petroleum, LLC
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Par's B1 CFR reflects improved credit metrics driven by high crack
spreads, increased demand and constrained supply. Par has modest
scale but its pending acquisition of the refinery in Billings,
Montana and associated marketing and logistics assets will increase
size and diversification of the company's portfolio of assets.
Profitability will remain strong in 2023 on high crack spreads,
though crack spreads in 2023 will be lower than the extraordinary
levels experienced in 2022. The refining business is highly
cyclical, but the company benefits from its integrated asset base
across refining, logistics and retail which provides for
diversification across the value chain and provides a more stable
source of earnings outside of refining. A risk to Par's earnings is
its cost to comply with the Renewable Fuel Standard (RFS). Costs to
settle obligations with renewable identification numbers (RINs) can
be substantial.
The addition of the Billings refinery will increase Par's active
throughput capacity to about 218,000 barrels per day (bpd) from
about 154,000 bpd and support the realization of synergies. Par is
acquiring the Billings' refinery and related assets from Exxon
Mobil Corporation (Aa2 stable). The base purchase price is $310
million, and Par will acquire hydrocarbon and other inventory
valued at closing. The acquisition increases Par's existing
footprint in the western United States where it has refineries in
Washington and Wyoming. Par also has a strong niche market position
in Hawaii. The company expects to close on the acquisition of the
Billings refinery in the second quarter of 2023 and Moody's expects
the acquisition to be majority funded with cash on hand, and
therefore improve the company's leverage metrics on a pro forma
basis.
The SGL-3 rating reflects Moody's expectation for Par to maintain
adequate liquidity into 2024. The company plans to refinance its
existing ABL revolver due 2025 (unrated) with a new $150 million
facility due 2028, which it expects to increase to approximately
$550 million upon the closing of the Billings acquisition. This
would support the financing of inventory for the Billings refinery
and be important to support liquidity. As of September 30, 2022,
Par had $409 million of cash on the balance sheet (and $491 million
as of December 31, 2022) and an undrawn ABL revolver. Currently,
the company can borrow up to the lesser of the borrowing base and
$142.5 million. As of September 30, 2022, the company had $31
million of letters of credit outstanding under its revolver. The
revolver has a springing minimum fixed charge coverage ratio (based
on availability under the facility). The proposed term loan will
not have financial covenants. Important to supporting the company's
liquidity are inventory financing facilities, which had $864
million outstanding as of September 30, 2022.
Par's proposed $550 million senior secured term loan due 2030 is
rated B1, the same as the CFR. The term loan is secured by first
liens on assets except for those on which the ABL revolver has a
first lien. Par Pacific Holdings, Inc. (Par's parent company) will
guarantee the term loan on a senior unsecured basis as to the
payment of principal and interest. Factoring in the expected
increase in the ABL revolver concurrent with the close of the
Billings acquisition, Moody's views the B1 rating as more
appropriate than the rating suggested by its Loss Given Default
framework based on the benefits from increased scale and asset
diversification reflected in the positive ratings outlook and the
potential for the CFR to be upgraded. An upgrade of the CFR to Ba3
would likely leave the term loan rating unchanged at B1. However,
if the benefits from the acquisition are not realized as expected
and the CFR is not upgraded then the term loan could be
downgraded.
The positive outlook reflects the benefits to Par from increased
scale and asset diversification expected from the acquisition of
the Billings refinery while maintaining solid credit metrics and
adequate liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include completion of the
Billings acquisition as well as its successful integration and
operation under Par; sustained low leverage; retained cash flow
(RCF) to debt above 20% at mid-cycle levels; and positive free cash
flow.
Factors that could lead to a downgrade include debt/EBITDA above
4.5x, RCF/debt below 10% or weakening liquidity.
Par Petroleum, LLC, headquartered in Houston, Texas, is a
subsidiary of Par Pacific Holdings, Inc., a publicly traded energy
company with refining, logistics and retail operations across
several states including Hawaii, Washington and Wyoming.
The principal methodology used in these ratings was Refining and
Marketing published in August 2021.
PARAMOUNT RESTYLING: Has Deal on Cash Collateral Access
-------------------------------------------------------
Paramount Restyling Automotive Inc., GemCap Holdings, LLC and the
U.S. Small Business Administration advised the U.S. Bankruptcy
Court for the Central District of California, Riverside 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.
GemCap asserts a claim in the approximate amount of $2.123 million
and its claim is secured by first priority security interests and
liens upon substantially all of the Debtor's assets.
The SBA asserts a claim in the approximate amount of $503,129 and
that its claim is secured by second priority security interests and
liens upon substantially all of the Debtor's assets.
The Secured Creditors consent to the Debtor's use of cash
collateral on a final basis on substantially the same terms set
forth in the Interim Order, provided that (a) the monthly adequate
protection payments to GemCap will be increased to from $23,787 to
$36,000 for all payments set forth in the Budget and (b) the
monthly adequate protection payments to the SBA will be increased
from $2,458 to $2,485, which is the contract rate.
As adequate protection, the Secured Creditors will be granted
replacement liens on, and security interests in, the assets of the
bankruptcy estate of the Debtor, with the same extent, validity,
and priority (if any) as the pre-petition liens of the Secured
Creditors.
A hearing on the matter is set for February 21, 2023 at 1:30 p.m.
A copy of the stipulation is available at https://bit.ly/3I0Psgk
from PacerMonitor.com.
About Paramount Restyling Automotive Inc.
Paramount Restyling Automotive Inc. is a manufacturer of automotive
parts, accessories, and tires.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. C.D. Cal. Case No. 23-10069) on January 9,
2023. In the petition signed by Samson Yang, vice president and
authorized signatory, the Debtor disclosed up to $10 million in
both assets and liabilities.
Judge Wayne Johnson oversees the case.
David L. Neale, Esq., at Levene, Neale, Bender, Yoo & Golubchik,
LLP, represents the Debtor as legal counsel.
PARLEE CYCLES: Files Emergency Bid to Use Cash Collateral
---------------------------------------------------------
Parlee Cycles, Inc. asks the U.S. Bankruptcy Court for the District
of Massachusetts, Eastern Division, for authority to use cash
collateral and pay adequate protection.
The Debtor requires the use of cash collateral on an emergency
basis as it needs to fund ongoing expenses, including payroll, by
February 9, 2023.
The Debtor has three secured creditors asserting liens on
substantially all of its assets, which are, in order of priority:
(a) Bank Gloucester, which is currently owed approximately
$876,711; (b) Mass Growth Capital Corp., which is owed
approximately $52,631; and (c) the U.S. Small Business Association,
which is owed approximately $2,060,000 in connection with an EIDL
loan obtained during the COVID-19 pandemic. The Debtor believes a
portion of the SBA debt may be unsecured.
The Debtor's only other secured creditor is Beneficial/New Lane
Finance (formerly Encore Leasing), which is owed approximately
$2,600, secured by a cutting machine used to cut carbon fiber.
The Debtor has approximately $1.2 million in general unsecured debt
(not including the SBA unsecured portion), comprised primarily of
vendor/trade debt. In addition, the Debtor has approximately
$125,000 in obligations to customers for deposits on bicycles and
other merchandise, a large portion of which is entitled to priority
under Section 507(a)(7) of the Bankruptcy Code. The Debtor
anticipates filing a plan that propose to deliver to the creditors
the merchandise they ordered.
In 2021, the Debtor had sales of approximately $4.7 million, but
sustained losses of approximately $250,000. In 2022, the Debtor's
sales decreased dramatically to approximately $3.6 million, but
sustained losses of approximately $523,000. The Debtor attributes
the loss in sales, and the subsequent need for this Chapter 11, to
a series of events related primarily to the supply-chain crisis
brought on by COVID-19. In 2021 and 2022, the Debtor had open
orders of approximately $2 million, most of which it could not fill
because vendors, who were primarily in Asia, could not deliver the
materials that the Debtor needed to manufacture the bikes. By the
time the materials were delivered, the sales disappeared.
The Debtor proposes to grant Bank Gloucester, MGCC and the SBA the
following as additional adequate protection:
a. The Debtor will grant to Bank Gloucester, MGCC and the SBA
continuing replacement liens and security interests to the same
validity, extent and priority that each would have had in the
absence of the bankruptcy filing;
b. The Debtor will remain within its Budget, within an overall
margin of 10%; and,
c. The Debtor will make monthly adequate protection payments
on account of its obligations to Bank Gloucester in the amount of
$7,309, MGCC in the amount of $369 and the SBA in the amount of
$$3,372 in accordance with the terms of the Budget.
In addition, the Debtor proposes to make the regular contractual
payments due to Beneficial on account of its loan. There are only
two payments remaining on that obligation, in the amount of
$1,344.
A copy of the motion is available at https://bit.ly/3YrRJ9z from
PacerMonitor.com.
About Parlee Cycles, Inc.
Parlee Cycles, Inc. was founded in 2000 by its principal, Bob
Parlee. Parlee Cycles, a manufacturer of high-performance bikes
located in Beverly, Massachusetts, pioneered a unique process to
create the first fully customizable carbon-fiber road racing
frames. Parlee prides itself on leading the industry with
breakthrough designs and innovations to improve the ride quality
and performance of road bicycles.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Banker. D. Mass. Case No. 23-10161) on February 6,
2023. In the petition signed by Robert K. Parlee, president, the
Debtor disclosed up to $10 million in both assets and liabilities.
David B. Madoff, Esq., at Madoff & Khoury LLP, represents the
Debtor as legal counsel.
PBF LOGISTICS: Moody's Withdraws 'B1' CFR Following Debt Repayment
------------------------------------------------------------------
Moody's Investors Service withdrew all of PBF Logistics LP's
ratings, including its B1 Corporate Family Rating and senior
unsecured notes rating of B2. The outlook was changed to ratings
withdrawn from stable. These withdrawals follow the redemption of
the senior notes due 2023.
Withdrawals:
Issuer: PBF Logistics LP
Corporate Family Rating, Withdrawn, previously rated B1
Probability of Default Rating, Withdrawn, previously rated B1-PD
Speculative Grade Liquidity Rating, Withdrawn, previously rated
SGL-3
Senior Unsecured Regular Bond/Debenture, Withdrawn, previously
rated B2 (LGD5)
Outlook Actions:
Issuer: PBF Logistics LP
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
PBF Logistics has fully repaid its senior unsecured notes due 2023.
All of PBF Logistics' ratings have been withdrawn since it no
longer has rated debt outstanding.
PBF Logistics, which is owned by PBF Energy Inc., owns and operates
midstream infrastructure relating to PBF Energy's refineries. PBF
Energy Inc.'s refineries are owned by its subsidiary PBF Holding
Company LLC (Ba3 stable).
PEABODY ENERGY: Moody's Affirms 'B2' CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service affirmed Peabody Energy Corporation's B2
corporate family rating and its B2-PD probability of default
rating. Moody's upgraded the rating on Peabody's convertible senior
notes to B2 from B3. The senior secured ratings for its bank credit
facility debt and the ratings for the senior secured term loan
co-issued by PIC AU Holdings Corporation and PIC AU Holdings LLC
– an Australian subsidiary of Peabody Energy Corporation - have
all been withdrawn due to reduced trading activity. The rating
outlook remains stable for Peabody Energy Corporation.
"The upgrade of Peabody's convertible notes rating reflects Moody's
expectation for the paydown of all secured debt in its capital
structure over the rating horizon", said Sandeep Sama, Moody's Vice
President - Senior Analyst and lead analyst for Peabody Energy
Corporation.
Affirmations:
Issuer: Peabody Energy Corporation
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Upgrades:
Issuer: Peabody Energy Corporation
Senior Unsecured Conv./Exch. Bond/Debenture, Upgraded to
B2 (LGD4) from B3 (LGD5)
Withdrawals:
Issuer: PIC AU Holdings Corporation
Senior Secured Bank Credit Facility, Withdrawn, previously rated
Ba3 (LGD3)
Issuer: Peabody Energy Corporation
Senior Secured Bank Credit Facility, Withdrawn , previously rated
B1 (LGD3)
Outlook Actions:
Issuer: Peabody Energy Corporation
Outlook, Remains Stable
Issuer: PIC AU Holdings Corporation
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
Moody's upgraded Peabody's CFR to B2 on Dec 5, 2022. The rating
upgrade was driven by significant gross debt reduction using free
cash flow that resulted from a strong price environment for both
thermal and metallurgical coal over the past year. Moody's expects
Peabody to continue to generate strong free cash flow and fully
retire all secured debt in its capital structure over the rating
horizon. Proforma for that, Peabody will have reduced gross debt by
nearly 70%, or around $830 million since year-end 2021. This puts
Peabody in a stronger position even in a normalized coal price
environment in the future. Additionally, the rating upgrade also
took into account Peabody's ongoing efforts to address its asset
retirement obligation by pre-funding it with excess cash flow in
2023.
Peabody's B2 CFR is supported by a diverse portfolio of thermal and
metallurgical coal assets located in Australia and the United
States, and an improved credit profile following substantial debt
reduction in 2022. Most of the company's US thermal coal is sold to
domestic utilities and all the US-produced metallurgical coal is
sold into the seaborne market. Most of the company's coal produced
in Australia is sold into the seaborne thermal and metallurgical
coal markets in Asia. The rating is constrained by substantial
non-debt liabilities and access to capital issues faced by the
industry driven by substantial ESG-related risks. The company
reported about $1.4 billion of surety bonds, supporting asset
retirement obligations of about $726 million, and additional
non-debt liabilities as of September 30, 2022.
The SGL-2 rating reflects good liquidity to support operations over
the next 12-18 months. Moody's expects Peabody to continue to
generate strong free cash flow in 2023, although incremental cash
is expected to be initially used to pre-fund asset retirement
obligations, before turning to shareholder distributions. At
September 30, 2022, Peabody had $1.35 billion of cash and cash
equivalents. Peabody does not maintain a traditional revolver.
Peabody has a -$300 million letter of credit facility (cannot make
cash borrowings) and a $175 million accounts receivable
securitization facility. These facilities are used primarily to
support letters of credit and the letter of credit facility
contains a minimum liquidity covenant of $125 million.
The stable outlook assumes that the company will generate positive
free cash flow over the next 12-18 months, and initially use that
for pre-funding its asset retirement obligation before turning to
shareholder returns, while maintaining good liquidity to support
operations.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the rating with continued strength in coal
pricing for more than two years, and any further material reduction
in non-debt liabilities. However, the magnitude of rating upside
remains constrained by the ESG and funding challenges faced by the
sector over the long-run.
Moody's could downgrade the rating with expectations for meaningful
cash burn, erosion in liquidity, or a significant adverse operating
event at a key mine.
Peabody Energy Corporation is a leading global pure-play thermal
and metallurgical coal producer with coal mining operations in the
US and Australia and about 2.5 billion tons of proven and probable
reserves. The company generated $4.6 billion in revenues during the
LTM period ending September 30, 2022.
The principal methodology used in these ratings was Mining
published in October 2021.
PUREGANIC CAFE: Seeks Cash Collateral Access
--------------------------------------------
Pureganic Cafe, LLC asks the U.S. Bankruptcy Court for the Southern
District of New York for authority to use cash collateral and
provide adequate protection to Webster Bank, N.A., the Debtor's
senior prepetition lender, and other junior asserted secured
creditors.
The Debtor requires the use of Webster's cash collateral on a
continued basis to pay ordinary operating expenses relating to its
business.
Webster provided the Pureganic Cafe and Pureganic LLC with a loan
of $250,000, and holds a lien on substantially all the Debtors'
assets, including their cash, accounts, personal property and cash
equivalents, which property constitutes cash collateral within the
meaning of Section 363 of the Bankruptcy Code. Pureganic LLC ceased
operations on November 30, 2022. Cafe is the only operating entity
as of the filing of the Chapter 11 cases.
As of the Petition Date, the Debtors acknowledged they owe the
Lender not less than $243,133 plus interest, costs, fees,
attorneys' fees and other charges.
Up until November 30, 2022, Pureganic operated a vegan restaurant
under the name, The Pureganic Cafe, located at 46 Purchase Street,
Rye, NY 10580. After Pureganic's cessation of operations, Cafe
opened its own vegan restaurant, albeit under the same trade name,
at 305 Halstead Avenue, Harrison, NY 10528.
As adequate protection, Webster will be granted a valid, perfected
and enforceable post-petition replacement lien on and security
interest in all assets of the Debtors and the proceeds thereof.
In addition to the Replacement Liens granted to Webster, Pureganic
will further grant replacement liens and security interests in all
assets of Pureganic (but not Cafe) to CAN Capital and any other
party who filed prior to the Petition Date a UCC-1 financing
statement against Pureganic with the Secretary Of the State of New
York, with such Replacement Liens to continue in the same order and
priority that existed as of the Petition Date.
As additional adequate protection for Cafe's use of cash
collateral, the Lender will be granted a superpriority
administrative claim, to the extent of any post-Petition Date
diminution in value of its Collateral arising from Cafe's use of
the cash collateral. The Superpriority Claim will have priority
over all other administrative expense claims and unsecured claims
against the Debtors' estates, now existing or hereafter arising, of
any kind or nature whatsoever.
A copy of the motion is available at https://bit.ly/3DMpF91 from
PacerMonitor.com.
About Pureganic, LLC
Pureganic, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-22011) on January 7,
2023. In the petition signed by Robert L. Deak, managing member,
the Debtor disclosed up to $50,000 in assets and up to $1 million
in liabilities.
Robert L. Rattet, Esq., at Davidoff Hutcher & Citron LLP,
represents the Debtor as legal counsel.
PUREGANIC LLC: Seeks to Hire Davidoff Hutcher & Citron as Counsel
-----------------------------------------------------------------
Pureganic, LLC and Pureganic Cafe, LLC seek approval from the U.S.
Bankruptcy Court for the Southern District of New York to employ
Davidoff Hutcher & Citron, LLP as their legal counsel.
The Debtors require legal counsel to:
a. give advice with respect to the Debtors' powers and duties
and the continued management of their property and affairs;
b. negotiate with creditors, work out a plan of reorganization
and take the necessary legal steps in order to effectuate such a
plan;
c. prepare legal papers;
d. appear before the bankruptcy court;
e. attend meetings and negotiate with representatives of
creditors and other parties in interest;
f. advise the Debtors in connection with any potential
refinancing of secured debt and any potential sale of their
business;
g. represent the Debtors in connection with obtaining
post-petition financing;
h. take any necessary action to obtain approval of a disclosure
statement and confirmation of a plan of reorganization; and
i. perform all other necessary legal services.
The firm will be paid at these rates:
Attorneys $250 to $775 per hour
Paraprofessionals $195 to $260 per hour
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
Robert Rattet, Esq., a partner at Davidoff, disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Robert L. Rattet, Esq.
Davidoff Hutcher & Citron, LLP
120 Bloomingdale Road
White Plains, NY 10605
Tel: (914) 381-7400
Fax: 212-286-1884
Email: rlr@dhclegal.com
About Pureganic
Pureganic, LLC and Pureganic Cafe, LLC filed Chapter 11 bankruptcy
petitions (Bankr. S.D.N.Y. Lead Case No. 23-22011) on Jan. 7, 2023,
with as much as $1 million in both assets and liabilities. Judge
Sean H. Lane oversees the cases.
The Debtors are represented by Robert L. Rattet, Esq., at Davidoff
Hutcher & Citron, LLP.
QVA9 MANAGEMENT: Seeks to Hire Jacobs P.C. as Legal Counsel
-----------------------------------------------------------
QVA9 Management, Inc. seeks approval from the U.S. Bankruptcy Court
for the Eastern District of New York to employ Jacobs P.C. as its
legal counsel.
The Debtor requires legal counsel to:
a) assist in administering the Debtor's Chapter 11 case;
b) make motions or take action as may be appropriate or
necessary under the Bankruptcy Code;
c) take such steps as may be necessary for the Debtor to
marshal and protect the estate's assets;
d) negotiate with creditors in formulating a plan of
reorganization for the Debtor;
e) draft and prosecute the confirmation of the Debtor's plan
of reorganization; and
f) render such additional services as the Debtor may require
in this case.
The firm will be paid as follows:
Partners $650 - $1,000 per hour
Counsels $500 - $1,200 per hour
Associates $400 - $800 per hour
Law Clerks $175 per hour
Leo Jacobs, Esq., a partner at Jacobs P.C., disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Leo Jacobs, Esq.
Jacobs P.C.
595 Madison Avenue, 39th Floor
New York, NY 10022
Tel: (212) 229-0476
Email: leo@jacobspc.com
About QVA9 Management
QVA9 Management, Inc. is a New York-based company primarily engaged
in renting and leasing real estate properties.
QVA9 Management filed its voluntary petition for Chapter 11
protection (Bankr. E.D.N.Y. Case No. 22-42582) on Oct. 18, 2022,
with $500,000 to $1 million in assets and $1 million to $10 million
in liabilities. Avraam Borukhov, as chief executive officer, signed
the petition.
Judge Nancy Hershey Lord oversees the case.
Leo Jacobs, Esq., at Jacobs P.C. serves as the Debtor's legal
counsel.
REMODEL 615: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Remodel 615, LLC
1500 Medical Center Parkway, #3A-27
Murfreesboro, TN 37129
Chapter 11 Petition Date: February 6, 2023
Court: United States Bankruptcy Court
Middle District of Tennesse
Case No.: 23-00435
Judge: Hon. Randal S. Mashburn
Debtor's Counsel: Michael G. Abelow, Esq.
SHERRARD ROE VOIGT & HARBISON, PLC
150 3rd Avenue South
Suite 1100
Nashville, TN 37201
Tel: (615) 742-4532
Email: mabelow@srvhlaw.com
Total Assets: $314,745
Total Liabilities: $1,724,280
The petition was signed by Robert Adam Baughman as sales and
marketing director & co-owner.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 20 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/C6KBTZY/Remodel_615_LLC__tnmbke-23-00435__0001.0.pdf?mcid=tGE4TAMA
REMODEL 615: Files Emergency Bid to Use Cash Collateral
-------------------------------------------------------
Remodel 615, LLC asks the U.S. Bankruptcy Court for the Middle
District of Tennessee, Nashville Division, for authority to use
cash collateral on an emergency basis in accordance with the
budget, with a 10% variance.
The Debtor also requests a hearing date of February 8, 2023 at 9
a.m.
The Debtor requires the use of cash collateral to fund normal
business operations.
Per a UCC lien search, four creditors claim to be secured
creditors, but Remodel 615 believes only the U.S. Small Business
Administration and Fox Capital Group are in fact secured in cash
collateral. Fox is believed to be only partially secured.
The SBA's debt is believed to be in the amount of $62,000 as of the
Petition Date.
Remodel 615 proposes to use cash collateral subject to the SBA's
lien and to provide SBA with a replacement lien.
The second financing statement was by Corporation Service Company,
as Representative, by virtue of financing statement # 434690846
filed June 3, 2021. Remodel 615 believes that CSC is representative
for NEWCO Capital Group, which made a loan to Remodel 615 on June
1, 2021. Remodel 615 believes that NEWCO's loan was paid in full
from the proceeds of the IOU Central Inc. loan dated November 10,
2021. However, CSC/NEWCO has not filed a UCC financing statement
termination.
Remodel 615's UCC lien search did not show a financing statement
for IOU Central, Inc. for the November 10, 2021 loan. Based on
this, Remodel 615 does not believe that IOU Central, Inc. loan is
secured. The IOU Central, Inc. loan agreement includes a general
security agreement, but Remodel 615 does not have evidence that IOU
Central is perfected. Based on this, Remodel 615 takes the position
that IOU is unsecured.
The third financing statement was by UCC Filer 6269 by virtue of
financing statement # 437285028 filed September 9, 2022. Remodel
615 believes this entity is Fox Capital Group, Inc., in the amount
of $88,442. Assuming that IOU Central, Inc., is unsecured, then Fox
Capital Group, Inc. would be partially secured assuming all of the
other requirements for security and perfection are met.
The fourth financing statement was by Corporation Service Company,
as Representative, by virtue of financing statement # 437372915
filed September 27, 2022. Remodel 615 believes that this entity is
Small Business Financial Solution, LLC d/b/a Rapid Finance in the
amount of $56,494. Remodel 615 believes this entity is unsecured at
least with respect to cash collateral.
As of the Petition Date, Remodel 615 has bank accounts in an
approximate amount of $33,750, and accounts receivable in an
approximate amount of $102,402, both as of February 2, 2023.
Remodel 615 proposes to provide to the alleged secured creditors
replacement liens in accordance with 11 U.S.C. sections 361(2) and
552(b) to the extent of cash collateral actually expended, and on
the same assets and in the same order of priority as currently
exists.
Any replacement lien will be to the same extent and with the same
validity and priority as the secured creditors' pre-petition liens,
without the need to file or execute any document as may otherwise
be required under applicable non-bankruptcy law.
A copy of the motion is available at https://bit.ly/3RDdQry from
PacerMonitor.com.
About Remodel 615, LLC
Remodel 615, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Tenn. Case No. 23-00435) on February
6, 2023. In the petition signed by Robert Adam Baughman, sales and
marketing director and co-owner, the Debtor disclosed up to
$500,000 in assets and up to $10 million in liabilities.
Michael G. Abelow, Esq., at Sherrard Roe Voigt & Harbison, PLC, is
the Debtor's legal counsel.
RENAISSANCE PUBLIC SCHOOL: S&P Raises Rev Bond Rating to 'BB+'
--------------------------------------------------------------
S&P Global Ratings raised its rating to 'BB+' from 'BB' on
Renaissance Public School Academy (Renaissance), Mich.'s series
2012 revenue bonds. The outlook is stable.
"The upgrade reflects material improvements in the school's
financial position in fiscal years 2021 and 2022, which we expect
will be sustained," said S&P Global Ratings credit analyst
Alexander Enriquez.
S&P said, "The stable outlook reflects our expectation that over
the outlook period, Renaissance will maintain financial metrics in
line with the rating level. Additionally, we expect Renaissance to
preserve its market position and maintain its high academic
standards and debt profile, reflecting an overall credit profile
consistent with the current rating.
"We could consider taking a negative rating action if enrollment
declines, if the school's unrestricted reserves decline from
current levels, or if weakened operations begin to notably pressure
lease-adjusted maximum annual debt service coverage. Material
additional debt plans would also be viewed negatively.
"In our view, a higher rating is unlikely over the outlook period.
Beyond the period, we could consider a positive rating action if
Renaissance were able to increase enrollment and improve MADS
coverage and liquidity to levels more consistent with a higher
rating."
SAVESOLAR CORP: Seeks Cash Collateral Access
--------------------------------------------
Savesolar Corporation, Inc. and Savesolar Alpha Holdco LLC ask the
U.S. Bankruptcy Court for the District of Columbia for authority to
use the cash collateral of LRC SaveSolar Investco, LLC in
accordance with the budget, with a 10% variance.
SaveSolar Alpha Holdco LLC, as borrower, and Leyline, as lender,
are party to the Investment Agreement and Security Agreement, dated
as of April 23, 2021 and a Security Agreement dated as of April 23,
2021, which provide for a first lien secured loan. The Secured Loan
was extended for purposes of developing a number of solar
photovoltaic projects located in the District of Columbia metro
area.
The Debtors are informed that as of September 30, 2022,
approximately $8.704 million in principal and $1.282 million in
interest were outstanding under the Security Agreement.
The Debtor requires the use of cash collateral to complete solar
photovoltaic projects.
Leyline has a security interest in substantially all of the
personal property of Alpha Holdco and specified Project Entities
owned by Alpha Holdco pursuant to the Investment Agreement and
Security Agreement. Leyline does not have any deposit account
control agreements with the Debtors.
Leyline has a pledge of membership interests in specified Project
Entities owned by Alpha Holdco pursuant to a Pledge Agreement dated
as of April 23, 2021. Leyline has a pledge of the membership
interest in Alpha Holdco pursuant to a Guaranty Agreement and a
Pledge Agreement, each dated as of April 23, 2021, executed by
SaveSolar Corporation, Inc.
Debtor SaveSolar Corporation, Inc. is the guarantor under a
Guaranty in favor of SA TEC, LLC and Project Alpha TE JV, LLC, and
Alpha Holdco and Purchaser are parties to a Master Purchase
Agreement dated as of October 18, 2021, by which Purchaser buys
Solar Projects developed by Alpha Holdco. SSC SR JV Holdco, LLC is
a wholly owned subsidiary of Corp., and is the Class B member of
Purchaser.
The Alpha Holdco's contributions to purchases of the Solar Projects
under the Master Purchase Agreement are financed by loans from
Amalgamated Bank pursuant to that certain Loan and Security
Agreement dated as of July 27, 2022 by and among the Class B Member
and Amalgamated. To secure indebtedness and obligations to
Amalgamated, Corp. and the Class B Member entered into a Pledge and
Security Agreement dated as of July 27, 2022 in favor of
Amalgamated. Pursuant to the Amalgamated Pledge Agreement, Corp.
pledged its membership interest in the Class B Member to
Amalgamated.
Amalgamated and the SaveSolar Alpha Holdco LLC also are parties to
a Deposit Account Control Agreement dated April 23, 2021.
The purposes for use of cash collateral are:
a. Funding operating expenses of the Debtors, including
without limitation payment of salaries and wages of employees and
contractors.
b. Payment of post-petition taxes.
c. Payment of U.S. Trustee quarterly fees.
d. Payment of insurance premiums.
e. Payment of utility expenses and interconnection fees and
costs.
f. Payment of filing fees for the Debtors and their Project
Entities.
g. Funding payment of professional fees of the Debtors in
accordance with Article XVI of the Court's Complex Case
Procedures.
h. Funding development and operating expenses of the Debtors'
Project Entities.
To secure any diminution in the value of cash collateral, the
Secured Lenders will be given a replacement lien and security
interest in the Debtors' assets to the same asset classes in which
they have liens and security interests pre-petition, in the same
order of priority, and subject to any claims, defenses or offsets.
A copy of the Debtor's motion is available at
https://bit.ly/3YpHJyl from PacerMonitor.com.
About SaveSolar Corporation
SaveSolar Corporation is a solar energy company in Washington, D.C.
SaveSolar sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.D.C. Case No. 23-00045) on February 2,
2023. In the petition signed by Karl Unterlechner, president, the
Debtor disclosed up to $10 million in both assets and liabilities.
Judge Elizabeth L. Gunn oversees the case.
Bradford F. Englander, Esq., at Whiteford, Taylor, and Preston LLP,
is the Debtor's legal counsel.
ST. CHARLES MEMORY: Seeks Cash Collateral Access
------------------------------------------------
St. Charles Memory Care, LLC asks the U.S. Bankruptcy Court for the
Northern District of Texas, Fort Worth Division, for authority to
use the cash collateral of BMO Harris Bank N.A.
An immediate and critical need exists for the Debtor to obtain
funds to continue the operation of its business.
The Debtor asserts it has no outside sources of funding available
to it and must rely on the use of cash collateral to continue its
operations.
BMO Harris Bank is the Debtor's secured creditor claiming liens on
the Debtor's personal property including rents.
The Debtor can adequately protect the interests of the Secured
Lender by post-petition liens, a priority claim in the Chapter 11
bankruptcy case, and cash flow payments.
A copy of the Debtor's motion is available at
https://bit.ly/3I07bo7 from PacerMonitor.com.
A copy of the Debtor's budget is available at
https://bit.ly/3lbP3yK from PacerMonitor.com.
The Debtor projects $271,298 in total operating revenue and
$270,730 in total operating expenses.
About St. Charles Memory Care, LLC
St. Charles Memory Care, LLC operates a continuing care retirement
community and assisted living facility for the elderly.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Tex. Case No. 23-40253) on January 27,
2023. In the petition signed by Tracy Bazzell, agent, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
Judge Mark X. Mullin oversees the case.
Joyce W. Lindauer, Esq., at Joyce W. Lindauer Attorney, PLLC,
represents the Debtor as legal counsel.
TAMPA HYDE PARK: Case Summary & 10 Unsecured Creditors
------------------------------------------------------
Debtor: Tampa Hyde Park Cafe Properties, LLC
1806 W Platt St
Tampa FL 33606
Chapter 11 Petition Date: February 7, 2023
Court: United States Bankruptcy Court
Middle District of Florida
Case No.: 23-00448
Debtor's Counsel: W. Bart Meacham, Esq.
W. BART MEACHAM, ATTORNEY AT LAW
308 E. Plymouth St.
Tampa FL 33603
Tel: 813-223-6334
Email: wbartmeacham@yahoo.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Peter Peter Hannouche as managing
member.
A copy of the Debtor's list of 10 unsecured creditors is available
for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/JKASMHA/Tampa_Hyde_Park_Cafe_Properties__flmbke-23-00448__0002.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/JPWUCLY/Tampa_Hyde_Park_Cafe_Properties__flmbke-23-00448__0001.0.pdf?mcid=tGE4TAMA
THUNDER INC: Court OKs Interim Cash Collateral Access
-----------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, authorized Thunder, Inc. to use cash
collateral on an interim basis in accordance with the budget, with
a 10% variance.
The Court said the Debtor may not use any payments from project
owners of the Argonaut Bonded Projects, including, but not limited
to, a $466,542 payment from the LA State Historic Park project. The
Debtor is instructed to safeguard the Argonaut Bonded Project
Payments so the funds are not used unless and until a further order
is issued by the Court.
To the extent the Court has permitted use of cash collateral, the
Debtor will continue to make the regular monthly payments due to
the United States Small Business Administration under the Amended
Loan Authorization and Agreement and other loan documents entered
into by and between the Debtor and the SBA, dated April 4, 2020 (as
amended April 16, 2020) attached to the SBA's proof of claim filed
on October 28, 2022, in the amount of $650 per month beginning for
the month of October of 2022.
Although Argonaut asserts it has equitable liens on the Debtor's
property, at the present time Argonaut has not established a right
to an equitable lien which must be done through an adversary
proceeding. Therefore, Argonaut is not entitled to adequate
protection on these asserted equitable liens.
The SBA, Century 21 Real Estate LLC, and PACE Finance Corporation
will have additional and replacement valid, binding, enforceable,
non-avoidable, and automatically perfected, post-petition security
interests in and liens, effective as of petition date.
The Debtor has agreed that the liens securing the obligations of
the SBA and PACE are valid, binding, enforceable, non-avoidable,
and properly perfected and were granted to, or for the benefit of,
these creditors.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/3Y5EQCl from PacerMonitor.com.
The Debtor projects $1,176,546 in total income and $92,009 in total
expenses for February 2023.
About Thunder Inc.
Thunder Inc., doing business as Escobar Construction, is a
construction company in California.
Thunder Inc. filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
22-15357) on Sept. 30, 2022. In the petition filed by Ronald O.
Escobar, as chief executive officer, the Debtor reported assets and
liabilities between $1 million and $10 million each.
The case is overseen by the Honorable Bankruptcy Judge Barry
Russell.
Gregory K. Jones has been appointed as Subchapter V trustee.
The Debtor is represented by Raymond H. Aver, Esq., at the Law
Offices of Raymond H. Aver.
TIMES SQUARE: Gets OK to Hire Eastdil Secured as Real Estate Broker
-------------------------------------------------------------------
Times Square JV, LLC and its affiliates received approval from the
U.S. Bankruptcy Court for the Southern District of New York to
employ Eastdil Secured, LLC.
The Debtors require a real estate broker to:
a. assist with a sale transaction including the preparation of a
confidential descriptive memorandum describing the Debtors and the
transaction;
b. solicit interest for a sale transaction with potential
strategic and financial buyers and conduct a sale process
consistent with market business practices;
c. assist the Debtors, as requested, with other analyses and
communications relating to a sale transaction;
d. participate in negotiations regarding a sale transaction with
prospective interested parties; and
e. provide testimony to support the Debtors' objectives during
these Chapter 11 cases.
The firm will be paid as follows:
a. .30% of the first $400 million of the gross sale price of the
Debtors' property, plus 0.85% of that portion of the gross sale
price of the property that exceeds $400 million and is less than
$450 million, plus 3.0% of that portion of the gross sale price of
the property that equals or exceeds $450 million;
b. if a bidder acquires the property, either through a credit
bid or an equitization of its debt, then the compensation to
Eastdil shall be as determined above but discounted by 50%;
c. in no event will the compensation to Eastdil, if earned, be
less than $500,000;
d. Eastdil shall also be entitled to the compensation set forth
above if the Debtors elect to enter into an exchange, assignment or
other transfer option or refinance so long as a purchase offer or
offer to enter into an alternative transaction was accepted by the
Debtors prior to the end of the exclusive period; and
e. in addition, the Debtors may, in their sole discretion, pay
Eastdil a discretionary bonus if, in the Debtors' sole and absolute
judgment, superior service and superior results were obtained
through Eastdil's efforts.
Scott Ellman, a managing director at Eastdil Secured, disclosed in
a court filing that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Scott Ellman
Eastdil Secured, L.L.C.
40 West 75th Street 23rd Floor
New York, NY 10019
Tel: (212) 315-7200
About Times Square JV
Times Square JV, LLC owns a building located at 1605 Broadway, New
York, 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, Times Square JV LLC, CPTS Hotel Lessee LLC, 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.
Judge John P. Mastando III oversees the cases.
The Debtors tapped Seward & Kissel, LLP as bankruptcy counsel and
Emerald Capital Advisors Corp. as financial advisor. Stretto, Inc.
is the notice, claims and balloting agent and administrative
advisor.
On Jan. 10, 2022, the U.S. Trustee for Region 2 appointed an
official committee to represent unsecured creditors in the Debtors'
Chapter 11 cases. The committee is represented by DLA Piper LLP
(US).
TIMES SQUARE: Gets OK to Hire Seward & Kissel as Legal Counsel
--------------------------------------------------------------
Times Square JV, LLC and its affiliates received approval from the
U.S. Bankruptcy Court for the Southern District of New York to
employ Seward & Kissel, LLP as their legal counsel.
The firm's services include:
a. advising the Debtors with respect to their powers and duties
in the continued management and operation of their businesses
and property;
b. advising and consulting on the conduct of the Debtors'
Chapter 11 cases, including all of the legal and administrative
requirements of operating in Chapter 11;
c. attending meetings and negotiating with representatives of
creditors and other parties in interest;
d. taking all necessary actions to protect and preserve the
Debtors' estates, including prosecuting actions on the Debtors'
behalf, defending any action commenced against the Debtors, and
representing the Debtors in negotiations concerning litigation in
which the Debtors are involved, including objections to claims
filed against the estates;
e. preparing pleadings;
f. representing the Debtors in connection with obtaining
authority to continue using cash collateral and post-petition
financing;
g. advising the Debtors in connection with any potential sale of
assets;
h. appearing before the bankruptcy court and any appellate
courts;
i. advising the Debtors regarding tax matters;
j. taking any necessary action to negotiate, prepare and obtain
approval of a disclosure statement and confirmation of a Chapter 11
plan or a sale transaction, as applicable, and all documents
related thereto; and
k. other necessary legal services including: (i) analyzing the
Debtors' leases and contracts and the assumption and assignment or
rejection thereof, (ii) analyzing the validity of liens against the
Debtors' assets, and (iii) advising the Debtors on corporate and
litigation matters.
Seward & Kissel will be paid at these rates:
Partners $1,050 - $1,775 per hour
Associates $500 - $975 per hour
Paralegals $250 - $505 per hour
In addition, the firm will receive reimbursement for out-of-pocket
expenses incurred.
The firm received from the Debtor an advance retainer of $100,000.
John Ashmead, Esq., a partner at Seward & Kissel, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
In response to the request for additional information set forth in
Paragraph D.1. of the Revised U.S. Trustee Guidelines, Mr. Ashmead
also disclosed the following:
a. Question: Did Seward & Kissel agree to any variations from,
or alternatives to its standard billing arrangements for this
engagement?
Answer: No. Seward & Kissel and the Debtors have not agreed
to any variations from, or alternatives to, the firm's standard
billing arrangements for this engagement. The rate structure
provided by the firm is appropriate and is not significantly
different from (a) the rates that it charges for other
non-bankruptcy representations or (b) the rates of other comparably
skilled professionals.
b. Question: Do any of the Seward & Kissel professionals in
this engagement vary their rate based on the geographic location of
the Debtors' Chapter 11 cases?
Answer: No. The hourly rates used by Seward & Kissel in
representing the Debtors are consistent with the rates that the
firm charges other comparable clients involved in chapter 11
proceedings regardless of the location of the Chapter 11 cases.
c. Question: If Seward & Kissel has represented the Debtors in
the 12 months prepetition, disclose te firm's billing rates and
material financial terms for the prepetition engagement, including
any adjustments during the 12 months prepetition.
If Seward & Kissel's billing rates and material financial terms
have changed postpetition, explain the difference and the reasons
for the difference.
Answer: Seward & Kissel represented the Debtors before the
petition date, using the hourly rates listed below:
Billing Category 2022 Range
---------------- ----------
Partners $985 - $1,500
Counsel $975 - $1,050
Associates $500 - $950
Paraprofessionals $225 - $465
d. Question: Have the Debtors approved Seward & Kissel's
budget and staffing plan, and, if so, for what budget period?
Answer: Yes, for the period from Dec. 28, 2022 to March 31,
2023.
The firm can be reached at:
John R. Ashmead, Esq.
Robert J. Gayda, Esq.
Catherine V. LoTempio, Esq.
Andrew J. Matott, Esq.
Seward & Kissel, LLP
One Battery Park Plaza
New York, NY 10004
Tel: (212) 574-1200
Fax: (212) 450-8421
Email: ashmead@sewkis.com
gayda@sewkis.com
lotempio@sewkis.com
matott@sewkis.com
About Times Square JV
Times Square JV, LLC owns a building located at 1605 Broadway, New
York, 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, Times Square JV LLC, CPTS Hotel Lessee LLC, 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.
Judge John P. Mastando III oversees the cases.
The Debtors tapped Seward & Kissel, LLP as bankruptcy counsel and
Emerald Capital Advisors Corp. as financial advisor. Stretto, Inc.
is the notice, claims and balloting agent and administrative
advisor.
On Jan. 10, 2022, the U.S. Trustee for Region 2 appointed an
official committee to represent unsecured creditors in the Debtors'
Chapter 11 cases. The committee is represented by DLA Piper LLP
(US).
TIMES SQUARE: Gets OK to Hire Stretto as Administrative Advisor
---------------------------------------------------------------
Times Square JV, LLC and its affiliates received approval from the
U.S. Bankruptcy Court for the Southern District of New York to
employ Stretto, Inc. as administrative advisor.
The Debtors require an administrative advisor to:
a. assist with, among other things, solicitation, balloting, and
tabulation of votes, and prepare any related reports in support of
confirmation of a Chapter 11 plan;
b. prepare an official ballot certification and, if necessary,
testify in support of the ballot tabulation results;
c. assist with the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs and
gather data in conjunction therewith;
d. assist with the preparation of the Debtors' monthly operating
reports and gather data in conjunction therewith;
e. provide a confidential data room;
f. manage and coordinate any distributions pursuant to a Chapter
11 plan if designated as distribution agent under such plan; and
g. provide other administrative services.
The firm received from the Debtor an advance retainer of $10,000.
Sheryl Betance, a senior managing director at Stretto, disclosed in
a court filing that her firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Sheryl Betance
Stretto, Inc.
410 Exchange, Ste. 100
Irvine, CA 92602
Tel: (714) 716-1872
Email: Sheryl.betance@stretto.com
About Times Square JV
Times Square JV, LLC owns a building located at 1605 Broadway, New
York, 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, Times Square JV LLC, CPTS Hotel Lessee LLC, 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.
Judge John P. Mastando III oversees the cases.
The Debtors tapped Seward & Kissel, LLP as bankruptcy counsel and
Emerald Capital Advisors Corp. as financial advisor. Stretto, Inc.
is the notice, claims and balloting agent and administrative
advisor.
On Jan. 10, 2022, the U.S. Trustee for Region 2 appointed an
official committee to represent unsecured creditors in the Debtors'
Chapter 11 cases. The committee is represented by DLA Piper LLP
(US).
TOURADJI PRIVATE: Chapter 15 Case Summary
-----------------------------------------
Debtors: Touradji Private Equity Master Fund Ltd.
Touradji Private Equity Onshore Fund Ltd.
Touradji Private Equity Offshore Fund Ltd.
c/o Michael Pearson & Nicola Cowan
FFP Limited
10 Market Street
PO Box 769
Camana Bay
Grand Cayman, KY1-9006, Cayman Islands
Michael.pearson@ffp.ky
Nicola.cowan@ffp.ky
Business Description: The Debtors are three investment funds
incorporated and registered under the
laws of the Cayman Islands.
Foreign Proceeding: FSD Cause No. 244, 245, and 246 of 2022
(IKJ), Financial Svcs. Div, Grand Court
of Cayman Is.
Chapter 15 Petition Date: February 6, 2023
Court: United States Bankruptcy Court
Southern District of New York
Three affiliates that concurrently filed voluntary petitions for
relief under Chapter 15 of the Bankruptcy Code:
Debtor Case No.
------ --------
Touradji Private Equity Master Fund Ltd. 23-10172
Touradji Private Equity Onshore Fund Ltd. 23-10173
Touradji Private Equity Offshore Fund Ltd. 23-10174
Judge: Hon. Philip Bentley
Foreign Representatives: Michael Pearson and Nicola Cowan, both
of FFP Limited
2nd Floor, Harbour Centre, 159 Mary St.
George Town
Grand Cayman
Foreign
Representatives'
Counsel: Katherine Rose Catanese, Esq.
FOLEY & LARDNER LLP
90 Park Avenue
New York NY 10016
Tel: (212) 338-3496
Email: kcatanese@foley.com
Estimated Assets: Unknown
Estimated Debt: Unknown
A full-text copy of Touradji Private Equity Offshore's Chapter 15
petition is available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/ZCCILEY/Touradji_Private_Equity_Offshore__nysbke-23-10174__0001.0.pdf?mcid=tGE4TAMA
TOWER HEALTH: S&P Lowers Long-Term Bond Rating to 'B'
-----------------------------------------------------
S&P Global Ratings lowered its long-term rating on Tower Health,
Pa.'s bonds outstanding to 'B' from 'BB-'. The outlook is
negative.
"The downgrade reflects Tower Health's significant ongoing
operating losses that are expected to continue in fiscal 2023, and
a steep decline in unrestricted reserves to a level that we view as
highly vulnerable," said S&P Global Ratings credit analyst Anne
Cosgrove. In addition, the rating action incorporates S&P's view of
cash flow pressures that stem from elevated labor costs and
management's legacy inability to execute on meaningful operational
improvements and strategic priorities.
S&P said, "The negative outlook reflects a one-in-three chance that
we could lower the rating during the outlook period if management
is unable to stem the operating losses and execute on a plan to
stabilize the organization, or if unrestricted reserves decline
further. In addition, the negative outlook reflects our expectation
for continued operating losses in fiscal 2023; and ongoing industry
challenges, notably elevated labor costs and inflation.
"We could lower the rating if Tower Health fails to continue
narrowing operating losses or if unrestricted reserves weaken
further. If there is an inability to execute on strategic
priorities to stabilize and improve the financial profile, there
could be ratings pressure. We could also lower the rating if Tower
Health violates its debt service coverage covenant under the master
trust indenture.
"Although unlikely in the short term, we could revise the outlook
to stable if Tower Health achieved a multiyear trend of operating
performance nearing breakeven and improved unrestricted reserves.
In addition, we would view a stable management team that is able to
execute favorably."
TRADER CORP: Moody's Withdraws 'B2' Corp. Family Rating
-------------------------------------------------------
Moody's Investors Service has withdrawn Trader Corporation's B2
corporate family rating and the B2-PD probability of default
rating. At the time of withdrawal the outlook was negative.
Withdrawals:
Issuer: Trader Corporation
Corporate Family Rating, Withdrawn, previously rated B2
Probability of Default Rating, Withdrawn, previously rated B2-PD
Outlook Actions:
Issuer: Trader Corporation
Outlook, Changed To Rating Withdrawn From Negative
RATINGS RATIONALE
Moody's has withdrawn the ratings because Trader Corporation's debt
previously rated by Moody's has been fully repaid.
Trader Corporation, headquartered in Toronto, Canada, provides a
marketplace platform for automobile listings (primarily through the
autoTrader.ca website), web traffic and solution services as well
as inventory management services.
TRAVERSE MIDSTREAM: S&P Affirms 'B+' ICR, Outlook Stable
--------------------------------------------------------
S&P Global Ratings affirmed its 'B+' issuer credit rating on
Traverse Midstream Partners LLC. At the same time, S&P assigned its
'B+' issue-level rating to Traverse's term loan B with a '3'
recovery rating, indicating meaningful recovery (50%-70%; rounded
estimate 50%).
The stable outlook on Traverse reflects S&P's expectation that it
will continue to reduce debt via the excess cash sweep and maintain
debt to EBITDA of about 6x in 2023 and 2024.
Traverse announced a new $1.28 billion term loan B, the proceeds of
which will be used to repay the existing term loan B and $50
million in outstanding borrowings on the super-senior revolving
credit facility.
Following close of the transaction, Traverse will have a new $1.28
billion term loan B and $50 million super-senior revolving credit
facility. The proceeds will be used to repay the $1.2 billion
outstanding on the existing term loan and fully drawn $50 million
revolver. The new revolver will remain undrawn, therefore overall
debt outstanding will be relatively unchanged. The existing
revolving facility existing facilities had a maturity date November
2023 and term loan B in September 2024. Both will now mature in
2028, mitigating near-term refinancing risk. The semiannual excess
cash flow sweeps will be modified to 75% from 100%, stepping down
to 50% if leverage falls below 4.5x.
S&P said, "We now forecast S&P Global Ratings-adjusted debt to
EBITDA to be about 6x through 2024. We continue to assume Traverse
will receive steady distributions from Rover Pipeline and Ohio
River System (ORS) over the next few years. We expect adjusted
EBITDA to be between $195 million and $215 million over our
forecast period. Both Rover and ORS' contract profiles are about
90% backed by take-or-pay agreements, which contributes to
predictable cash flows to Traverse. We expect both to benefit from
additional volume flows given limited takeaway capacity and as
commodity prices remain supportive, resulting in additional
incremental EBITDA benefit to Traverse. We also project EBITDA
interest coverage of about 1.75x-2.25x over the next 24 months.
While we expect some improvement to leverage metrics compared to
our prior review, we continue to assess financial ratios as
negative.
"We base our rating on Traverse on the differentiated credit
quality between Traverse and its investee companies. We expect
Traverse to receive stable distributions with support from Rover's
high utilization rate, long-term take-or-pay contracts, and low
maintenance capital requirements. Traverse also has substantial
governance rights over Rover, including right to veto any changes
to Rover's distribution policy and incurrence of debt above a
certain threshold. We do not expect Rover to assume any fixed debt.
In addition, Rover is required to distribute its free cash flow to
Traverse and ET Rover Pipeline LLC, a joint venture between BCP
Renaissance Parent LLC and Energy Transfer L.P. While Traverse's
governance rights over Ohio River are not as strong, our assessment
of its corporate governance and financial policy remain positive
because the pipeline accounts for less than 20% of its cash flows.
We view Traverse's ability to liquidate its investments in Rover
and ORS as negative because of their private ownership status.
"The stable outlook on Traverse reflects our expectation that it
will continue to reduce debt via the excess cash sweep and maintain
debt to EBITDA of about 6x in 2023 and 2024. Our outlook is also
supported by the company's stable distributions from the Rover
Pipeline and ORS, underpinned by take-or-pay contracts and letters
of credit posted by certain shippers."
S&P could take a negative rating action on Traverse if:
-- S&P expects it to maintain debt to EBITDA of more than 7.5x,
which could occur with a lower-than-anticipated excess cash sweep
or decline in distributions from Rover Pipeline; or
-- The company's liquidity deteriorates.
Although unlikely in the near term, S&P could raise its rating on
Traverse if:
-- It maintains interest coverage of more than 3x and debt to
EBITDA of less than 4x; and
-- S&P's view of Rover's credit quality is unchanged.
ESG credit indicators: E-3, S-2, G-2
S&P said, "Environmental factors are a moderately negative
consideration in our credit rating analysis of Traverse Midstream
Partners. Traverse holds a 35% noncontrolling interest in Rover
Pipeline and a 25% noncontrolling interest in Ohio River System.
Rover is a 713-mile natural gas pipeline extending from
southeastern Ohio to southern Michigan, while ORS is a 48-mile
natural gas trunk line in southeast Ohio. This exposes the company
to climate transition risks that could affect long-term gas
supplies. Other direct environmental risks relate to potential gas
leakage and damages to the environment.
UNITED TALENT: Moody's Rates New $250MM First Lien Term Loan 'B2'
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to United Talent
Agency, LLC's (UTA) new $250 million senior secured first lien term
loan. The B2 corporate family rating, existing B2 senior secured
first lien credit facility rating, and all other ratings remain
unchanged. The outlook is stable.
The net proceeds of the new term loan will be used to repay the
existing revolver balance and add approximately $60 million of cash
to the balance sheet. The new term loan is expected to be
non-fungible with the existing term loan that will remain
outstanding. The senior secured revolving credit facility will also
be increased to $215 million from $200 million as part of the
transaction. Pro forma leverage increases to 5.7x from 5.3x as of
Q3 2022 as a result of the transaction. The additional cash to the
balance sheet and full revolver availability will further bolster
UTA's liquidity position. Moody's expects a significant portion of
the cash will be used for future acquisitions to further enhance
UTA's existing service offerings or further diversify operations.
Assignments:
Issuer: United Talent Agency, LLC
Senior Secured 1st Lien Term Loan B, Assigned B2 (LGD3)
LGD Adjustments:
Issuer: United Talent Agency, LLC
Senior Secured 1st Lien Bank Credit Facility, Adjusted to (LGD3)
from (LGD4)
RATINGS RATIONALE
UTA's B2 CFR reflects the very high pro forma leverage level (5.7x
including Moody's standard adjustments as of Q3 2022) and Moody's
expectation that leverage will decline to below the mid 5x level in
2023 absent any additional debt funded transactions. A potential
strike by the Writers Guild of America could increase volatility in
operating performance depending on the length of time that scripted
content production is disrupted, but UTA has diversified operations
over the past several years with a cost structure that is largely
variable. UTA will benefit from the increasing value of original
content worldwide given the ongoing demand for content from
traditional media companies and streaming services, but Moody's
expects the pace of growth to moderate from existing levels.
Concert related revenue is likely to continue to contribute to
growth through 2024 given the strong demand for live entertainment.
Sports related revenues benefit from largely contractual revenue
streams and will likely expand further as athletes' compensation
continues to rise due to strong demand for sports content. The cost
structure is relatively variable which limits the impact of
fluctuations in performance. In addition, expenses can be reduced
if results in any one business segment underperforms. UTA is the
third largest representation agency and
Moody's expects the company will continue to evaluate additional
purchases to further increase its scale, geographic footprint, and
the range of services offered.
ESG CONSIDERATIONS
UTA's ESG Credit Impact Score is highly-negative (CIS-4) driven by
the company's exposure to governance risks (G-4). Moody's expects
UTA will pursue an aggressive financial profile including
additional acquisitions to expand and diversify operations with
distributions to unit holders that will result in modestly negative
free cash flow (FCF) in the near term. UTA is a private company
owned by the partners of the firm with a minority ownership
position held by EQT Private Equity.
Moody's expects that UTA will maintain a good liquidity position as
a result of approximately $160 million of pro forma cash on the
balance sheet as of Q4 2022 and access to an undrawn $215 million
revolving credit facility due 2026 following completion of the
transaction. The $15 million revolver that was outstanding at
another subsidiary (not rated by Moody's) was cancelled and
replaced by the upsize of the existing revolver to $215 million.
Free cash flow after distributions to partners is likely to be
modestly negative in 2023 and 2024. Capex was $15 million LTM Q3
2022, but will increase in 2023 as UTA expands its office space at
several locations. In April 2022, UTA received $32 million in
proceeds from the sale of a prior investment. Cash on the balance
sheet will likely be used largely for acquisitions and to fund
negative FCF after distributions.
The term loan is covenant lite. The revolver is subject to a
maximum senior secured net leverage ratio covenant when greater
than 35% of the revolver is drawn of 7.25x until Q4 2022 with a
step down to 4.5x starting in Q1 2023. Moody's expects UTA will
remain within compliance with the revolver covenant over the next
twelve months.
The stable outlook incorporates Moody's expectation of continued
revenue and EBITDA growth aided by synergies from recent
acquisitions that will lead to a decrease in leverage to below the
mid 5x range. While Moody's expects continued positive media
spending growth overall, a strike by the Writers Guild of America
has the potential to increase volatility in 2023. UTA will also
continue to be acquisitive going forward. Purchases funded with
cash on the balance sheet would likely lead to additional profit
growth and contribute to a reduction in leverage. However,
additional debt funded purchases have the potential to increase
leverage and lead to negative rating pressure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if UTA's leverage was sustained below
4x (including Moody's standard adjustments) with FCF as a
percentage of debt in the mid- single digits after distributions.
Continuing positive organic growth and confidence that UTA would
pursue a financial policy in line with a higher rating would also
be required.
The ratings could be downgraded if UTA's leverage was sustained
above 6x (including Moody's standard adjustments) due to additional
debt funded acquisitions or poor operating underperformance. A
weakened liquidity position may also lead to negative rating
pressure.
United Talent Agency, LLC (UTA) is a diversified client
representation agency that represents writers, producers,
directors, actors, and public speakers as well as others. In
addition, the company's music touring business represents musicians
in live touring as well as services representing social
influencers, streamers, and brands in esports. UTA also provides
investment advisory services in media and entertainment and
expanded its sports representation business through the acquisition
of a significant stake in Klutch Sports Group in 2019 as well as
the purchases of other sports representation agencies. In December
2021, UTA completed the acquisition of marketing and consultancy
firm, Media Link, LLC. and in June 2022, UTA acquired UK based
literary and talent group, Curtis Brown Group. UTA's revenue as of
LTM Q3 2022 was well over $600 million.
The principal methodology used in this rating was Business and
Consumer Services published in November 2021.
UNITI GROUP: Moody's Rates New $1.75BB Senior Secured Notes 'B2'
----------------------------------------------------------------
Moody's Investors Service has assigned a B2 to Uniti Group Inc.'s
(Uniti) proposed $1.75 billion senior secured notes due 2028 which
will be issued jointly and severally by Uniti Group LP, Uniti Fiber
Holdings Inc., Uniti Group Finance 2019 Inc. and CSL Capital, LLC.
The B2 rating is the same as the rating on the company's existing
senior secured debt. Uniti operates through a customary up-REIT
structure under which it holds its assets through Uniti Group LP, a
partnership that Uniti controls as general partner; Uniti Fiber
Holdings Inc., Uniti Group Finance 2019 Inc. and CSL Capital, LLC
are subsidiaries of Uniti Group LP. The net proceeds from the sale
of the senior secured notes will be used to fund the partial
redemption of the company's 7.875% senior secured notes due 2025,
repay outstanding borrowings under the company's revolving credit
facility and for general corporate purposes. All other ratings
including Uniti's B3 corporate family rating and stable outlook are
unchanged.
Assignments:
Issuer: Uniti Group LP
Backed Senior Secured Regular Bond/Debenture, Assigned B2 (LGD3)
RATINGS RATIONALE
Uniti's B3 CFR rating reflects the stronger linkage between Uniti's
credit profile and Windstream Services, LLC (Windstream, B3 stable)
following Windstream's 2020 bankruptcy exit. Windstream is Uniti's
largest tenant and the source of 68% of its revenue and a greater
percentage of EBITDA for the nine months ended September 30, 2022.
Windstream's post-bankruptcy reduction of more than $4 billion of
funded debt improved its financial flexibility and improved the
certainty of future cash flows to Uniti. Under renegotiated master
lease agreements which are now in effect with post-bankruptcy
Windstream, Uniti retains the same annual lease payment it
continued to receive throughout Windstream's bankruptcy and under
the original master lease agreement's payment terms. Uniti also
benefits from strengthened lease terms, including the addition of
guarantees from subsidiaries of Windstream. In return, Uniti is
also now contractually committed to providing up to $1.75 billion
of growth capital investment (GCI) reimbursements, subject to
project identification and meeting certain underwriting standards,
to Windstream through 2030, the expiration year of the master lease
agreements. While Moody's expects Uniti to earn a market or
near-market yield on its funding of these leasehold improvements,
the sustained success of Windstream's execution of its business
improvement plan and market share growth objectives will also
largely determine Uniti's credit trajectory. Moody's believes the
contractual nature of this post-bankruptcy arrangement more firmly
links Uniti's credit profile to that of Windstream's credit profile
than the linkage that existed between the two companies before
Windstream's 2019 bankruptcy. Windstream will need to maintain
compliance under certain financial covenants for Uniti to be
obligated to annually fund the GCI reimbursements to Windstream.
Uniti will essentially be improving its own leasehold assets under
this arrangement, and the investments in fiber and fiber-related
assets that Windstream will make on Uniti's behalf with these GCI
reimbursements will aid and enable Windstream to accelerate fiber
upgrade investments into residential portions of the copper-based
network under the lease with Uniti and improve its competitive
positioning. The degree of linkage between Uniti's credit profile
and Windstream will only meaningfully diverge when Uniti
significantly diversifies its sources of revenue and EBITDA.
Post Windstream's bankruptcy emergence, the innovative bifurcation
of Uniti's pre-bankruptcy master lease agreement with Windstream
into a consumer ILEC network lease and a CLEC network lease could
facilitate the potential future sale of either of these two
Windstream businesses focused on different end markets. A potential
sale of either business would accelerate Uniti's lessee and revenue
diversification objectives as the current concentrated exposure to
Windstream would effectively be reduced. The renegotiated leases
are cross-guaranteed and cross-defaulted unless Windstream ceases
to be the tenant. Under terms of a broader settlement with
Windstream, Uniti also agreed to pay approximately $490 million to
Windstream under a cash settlement agreement assuming quarterly
installments over 20 quarters; the amount payable under this
settlement had been reduced through numerous scheduled payments and
prepayments to $235 million as of September 30, 2022. Moody's
treats this settlement payable (which is amortized quarterly or
reduced with prepayments) as an amortizing litigation-related
liability and adds it to Moody's adjusted debt calculation for
Uniti; Moody's adjusted EBITDA calculation is not affected.
Uniti's need to meet future GCI reimbursements under renegotiated
terms of its master lease agreements with Windstream, its minimum
dividend required to maintain REIT status and currently high
leverage constrain the company's rating. The company's refinancing
activity over the last few years has nominally aided financial
flexibility and lengthened debt maturity profiles. Pro forma for
this refinancing, Moody's expects debt/EBITDA (Moody's adjusted) of
approximately 6.0x at year-end 2022, reflecting debt-funded cash
flow deficits. Moody's estimates similar debt/EBITDA (Moody's
adjusted) at a slightly higher 6.2x in 2023 as the company delivers
incremental EBITDA improvement. More balanced external debt and
equity funding for organic growth and capital spending obligations
is less certain given the company's current public stock valuation.
Uniti's access to capital and cost of capital are critical inputs
to its ability to both drive and sustain more significant future
growth beyond the capacity of its existing assets. Uniti's
acquisitions of fiber networks in recent years have aided nominal
revenue diversification, and additional tenant lease-up
opportunities on those networks remain a viable means for
increasing cash flow generation without additional capital
spending. The company has streamlined its portfolio over the last
few years to better focus on its core leasing and fiber
businesses.
The instrument ratings reflect the probability of default of Uniti,
as reflected in the B3-PD probability of default rating, an average
expected family recovery rate of 50% at default given the mix of
secured and unsecured debt in the capital structure, and the loss
given default (LGD) assessment of the debt instruments in the
capital structure based on a priority of claims. Moody's rates
Uniti's senior secured credit facilities and senior secured notes
at B2 (LGD3), reflecting their enhanced collateral and priority
claim on assets. A one notch differential between Uniti's B2 senior
secured credit facilities and B2 senior secured notes and the LGD
model implied rating reflects the potential for an increase in the
proportion of secured debt in the capital structure over time.
Uniti's senior unsecured notes are rated Caa2 (LGD5), reflecting
their junior position in the capital structure. The company's two
exchangeable unsecured notes are not rated.
Moody's views Uniti's liquidity as adequate as reflected by its
SGL-3 speculative grade liquidity rating. As of September 30, 2022,
and pro forma for this refinancing and net additional convertible
debt issuance in December 2022 of about $100 million, Uniti is
expected to have balance sheet cash of approximately $120 million
and full borrowing availability under a $500 million revolving
credit facility that matures in December 2024. Negative free cash
flow is expected in 2022 and 2023 as a result of Uniti's dividend
payout, steady but high capital intensity and GCI reimbursements
and settlement payments to Windstream. The company is expected to
have capital spending (Moody's adjusted) of around $420 million in
2022 and 2023; these capital spending adjustments include the
annual GCI reimbursements Uniti is committed to advancing to
Windstream through 2030. Moody's expects the company will draw on
its revolver to help fund its cash deficits from capital spending
over the near term. Over the longer term Uniti aims to refinance
from a combination of capital raised in the both the debt and
equity markets when appropriate and consistent with stated
financial policy.
The stable outlook reflects Moody's expectations over the next
12-18 months for marginal increases in recurring revenue, stable
EBITDA margin trends and consistent capital intensity including
growth capital improvements reimbursements to Windstream. An
expectation for stable to slightly declining debt leverage (Moody's
adjusted) and liquidity to support manageable cash flow deficits
further support the stable outlook.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given Uniti's revenue and EBITDA concentration with Windstream and
dependency on Windstream's sustained execution of its business
improvement plan and market share growth strategy, an upgrade is
unlikely in the near term. Over the medium term, the ratings could
be subject to upward pressure if (i) Windstream's credit profile
improves, (ii) Uniti diversifies its revenue base such that its
master lease agreements with Windstream comprise a substantially
lower percentage of its revenue and EBITDA and (iii) Uniti
demonstrates improving leverage and cash flow metrics.
Moody's could lower Uniti's ratings if leverage were sustained
above 6.5x or if there is credit profile weakening at Windstream or
if the company's liquidity deteriorates.
Uniti Group Inc. is a publicly traded, real estate investment trust
(REIT) that was spun off from Windstream Holdings, Inc. in April of
2015. The majority of Uniti's assets are comprised of a physical
distribution network of copper, fiber optic cables, utility poles
and real estate which are under long term, exclusive master lease
to Windstream. Over time, Uniti has acquired additional fiber
assets that it operates as a standalone carrier, serving enterprise
and communications customers.
The principal methodology used in this rating was Communications
Infrastructure published in February 2022.
VANGUARD WINES: Cash Collateral Access, $100,000 DIP Loan OK'd
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Ohio,
Eastern Division, authorized Vanguard Wines, LLC to use cash
collateral and obtain postpetition financing, on a final basis,
through June 4, 2023.
As previously reported by the Troubled Company Reporter, the Debtor
sought to obtain senior secured post-petition financing up to the
amount of $100,000 from RBR QL3 LLC. The proceeds of the DIP
Financing and access to cash collateral will fund the Debtor's
operations for at least the next four and a half months of its
bankruptcy case while it evaluates its options to seek and obtain
plan confirmation allowing it to emerge from Chapter 11.
The DIP Lender is an assignee of Crossroads Financial Group, LLC, a
North Carolina limited liability company. The Debtor's obligations
arise out of its debt facility with Crossroads having a balance of
$983,290 as of August 22, 2022.
The U.S. Small Business Administration and Libertas Funding LLC are
also lien claimants.
The Debtor has proposed, and the DIP Lender has approved, the
budget for the period beginning on January 16 and continuing
through June 4, 2023.
As adequate protection, the DIP Lender is granted replacement liens
as security for any diminution in value of its security interest in
cash collateral, a superpriority administrative expense claim
pursuant to section 364(c)(1) of the Bankruptcy Code, and rights to
which it may be entitled under section 507(b), subject in all
respects to the Carve Out.
The Junior Lienholders are each granted, as security for (i) any
interest that they might have in cash collateral and (ii) any
diminution in value of their respective security interests in cash
collateral and other Collateral, if any, resulting from the
Debtor's use of such cash collateral and other Collateral, valid,
binding, enforceable, and perfected replacement liens in the
Additional Collateral junior in all respects to the DIP Liens and
Replacement Liens granted to the DIP Lender and having the same
priority as the Junior Lienholders' existing liens have to one
another and the Prepetition Liens now held by the DIP Lender as of
the Petition Date.
As set forth in the Approved Budget, starting on the week beginning
January 23, the Debtor will make bi-weekly payments (on the
Wednesday of each week) of $3,700 to the DIP Lender.
The Debtor's authorization to use cash collateral, and the DIP
Lender's consent to the same and obligation to extend the DIP
Financing, will immediately cease upon the earliest occurrence of
any of these Termination Events:
a. The time as the Debtor makes any transfer or payment not
authorized by the Interim Order and not of a character or type of
expense contemplated in the Approved Budget to be incurred by the
Debtor during the case, unless the DIP Lender provides written
consent to such transfer or payment;
b. The Debtor's case is converted to a case under chapter 7 of
the Bankruptcy Code, unless the conversion is consented to in
writing by the DIP Lender, or the duties of the Subchapter V
Trustee are expanded to include those duties as provided under
section 1183(b)(2);
c. The entry of any order materially modifying, reversing,
revoking, staying, rescinding, vacating or amending the Interim
Order without the DIP Lender's prior written consent;
d. Any other person or party-in-interest is granted or is to
be granted an interest, adequate protection or assurance, whether
pursuant to sections 361, 362, 363, 364, or 365 of the Bankruptcy
Code, under applicable law, by voluntary act of the Debtor, or
otherwise, in any property in which the DIP Lender has an interest,
including the Collateral and/or Cash Collateral which interest is
senior to, or granted equal priority with, the interests of the DIP
Lender therein; or
e. Upon five business days' written notice from the DIP Lender
to the Debtor, the Subchapter V Trustee, the U.S. Trustee and the
Junior Lienholders in the event that the Debtor violates or
breaches any of its other covenants or obligations in the Interim
Order.
A copy of the Court's order and the Debtor's 20-week budget is
available at https://bit.ly/3juTNPB from PacerMonitor.com.
For February, the Debtor projects total cash paid out, on a weekly
basis, as follows:
$52,075 for the week ending February 6, 2023;
$72,007 for the week ending February 13, 2023;
$56,925 for the week ending February 20, 2023; and
$58,708 for the week ending February 27, 2023.
About Vanguard Wines, LLC
Vanguard Wines, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ohio Case No. 22-51200) on October 10,
2022. In the petition signed by Eric Stewart, president, the Debtor
disclosed $1,408,580 in total assets and $5,063,797 in total
liabilities.
Vanguard Wines, LLC is an independently owned importer and
distributor of fine wines and spirits in Ohio, Kentucky and
Indiana. Vanguard operates primarily from its leased warehouse
facility in Columbus, Ohio, as well as smaller facilities in
Indianapolis, Indiana and Louisville, Kentucky. On a company-wide
basis, Vanguard has 26 employees as of the filing of its chapter 11
case.
Judge Alan M. Koschik oversees the case.
Richard K. Stoval, Esq., at Allen Stovall Neuman & Ashton LLP, is
the Debtor's counsel.
VARSITY BRANDS: Moody's Rates New Extended 1st Lien Term Loan 'B2'
------------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Varsity Brands
Holding Co., Inc.'s proposed amended and extended senior secured
first lien term loan due December 2026. Moody's took no action on
Varsity Brands' B3 Corporate Family Rating, B3-PD Probability of
Default Rating, or B2 rating on the senior secured first lien notes
due December 2024. The outlook is stable.
Varsity Brands plans to amend its existing senior secured first
lien term loan and extend the maturity by two years to 2026 of
which $1,331.4 million is outstanding. Consenting owners will be
rolled into a new first lien term loan tranche maturing December
2026 from December 2024. The amendment will also increase the
margin on the first lien term loan and move the first lien term
loan to SOFR from LIBOR with a flat credit spread adjustment
("CSA").
Concurrently, Varsity Brands will extend the maturity on its asset
based revolving credit facility. The company also plans to increase
the borrowing capacity from $180 million to $350 million but put in
place various limitations on ABL uses including ABL proceeds cannot
be used to repay the second lien term loan and a limit on the
amount of debt drawn on its ABL for any consecutive 90 day period.
Varsity Brands will also extend the maturity of the unrated senior
secured second lien term loan to April 2027, which is 120 days past
the proposed new first lien term loan maturity. The company will
also move the second lien term loan to SOFR with a flat CSA and
increase the margin. The incremental interest on the second lien
term-loan will be paid-in-kind ("PIK").
Moody's views the amend and extend transaction as a credit positive
as it addresses the significant December 2024 debt maturities and
refinancing need. Higher debt and interest expense are credit
negative but can be accommodated within Moody's expectations for
the B3 CFR and stable outlook. Leverage may modestly increase at
close as the company may fund financing fees with revolver
borrowings. The estimate $20 million increase in annual interest
will reduce free cash flow and interest coverage. The amendment
also puts in place first lien lender protections against aggressive
restructuring transactions including subordination of existing
lenders through new priority debt exchanges, collateral stripping
or transfers to unrestricted subsidiaries, and release of
guarantees by non-wholly owned subs. Moody's expects solid demand
across end-markets served by BSN Sport and Varsity Spirt and strong
operational performance to more than offset a weaker but improving
EBITDA margin at Herff Jones. Moody's expects debt to EBITDA to
improve to just north of 7.0x over the next twelve months from 8.6x
as of September 2022 and return to positive free cash flow in the
$5 to $15 million range as working capital headwinds moderate.
Assignments:
Issuer: Varsity Brands Holding Co., Inc.
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
RATINGS RATIONALE
Varsity Brands' B3 CFR reflects the company's very high financial
leverage and weak free cash flow. Seasonality causes volatility in
operating results and cash flow. Further, the mature Herff Jones
business segment faces secular headwinds as consumer demand for
affinity products gradually erodes. However, Moody's expects debt
to EBITDA to decline to around 7.2x over the next 12 to 18 months
from 8.6x for the last twelve months ending September 30, 2022
supported by strong demand and operating performance across BSN and
Varsity Spirit and EBITDA margin improvement at Herff Jones as
recent investment into operational efficiency start to yield
results. Sales and EBITDA have largely recovered since the pandemic
when school closures and cancellation of sports and cheer
competitions and camps disrupted the business. Moody's also expects
positive free cash flow in 2023 of around $5 to $15 million as
working capital improves. Varsity Brands has a strong position
within niche school apparel, athletic and achievement markets and
decent diversification across its segments. Products are relatively
nondiscretionary due to their key role in school milestones or
utilization in sporting/cheer events that generally remain steady
regardless of economic conditions. Moody's expects debt-funded
acquisitions will likely continue to supplement growth over time.
Varsity Brands has high governance risks primarily related to its
aggressive financial strategy under private equity ownership,
including operating with high leverage and use of debt to fund
acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The stable outlook reflects Moody's expectation that demand for the
company's products over the next 12-18 months will remain strong
due to the high levels of in-person school activities, sporting and
cheer events, and cheer camps, resulting in improving revenue and
earnings and a reduction in debt to EBTIDA leverage below 8.0x. The
stable outlook also reflects Moody's expectation that the company
will generate positive free cash flow in 2023 with further
acceleration in 2024.
An upgrade of the ratings would require strong organic revenues and
EBITDA growth or meaningful reduction in outstanding debt such that
debt to EBITDA is sustained below 7.0x. An upgrade would also
require stronger and more stable free cash flow.
The ratings could be downgraded if operating performance or EBITDA
margin deteriorates and free cash flow does not improve. The rating
may also be downgraded if debt to EBITDA is sustained above 8.0x
either due to a lower EBITDA margin or more aggressive financial
policy, the company completes debt funded acquisitions or
shareholder distributions, or liquidity deteriorates.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FACTORS
Varsity Brands' ESG Credit Impact Score is (CIS-4), mainly driven
by the highly negative exposure to governance risks, including its
majority ownership by private equity sponsors and aggressive
financial strategy including high financial leverage and propensity
for debt funded M&A. The company is moderately negatively exposed
to environmental risks principally related to natural capital
through raw material utilization in the manufacturing processes as
well as carbon and energy and transition risks. Social risks are
also moderately negative and stem from societal shift away from
school affinity products and consumer preference for digital media
in lieu of print-based.
The principal methodology used in this rating was Consumer Durables
published in September 2021.
Headquartered in Farmers Branch, Texas, Varsity Brands Holding Co.,
Inc. ("Varsity Brands"), through its affiliates, is a provider of
sports, cheerleading and achievement related products to schools,
colleges and youth organizations in the US. The company operates
through its three complementary businesses: BSN Sports, providing
sports apparel and equipment to schools and consumers; Herff Jones,
supplying graduation-related items and recognition rewards through
its Yearbook and Achievement divisions; and Varsity Spirit,
offering cheerleading uniforms and apparel and hosting cheerleading
camps and competitions. The company was acquired in 2018 in an LBO
transaction by Bain Capital for a total implied enterprise value of
approximately $2.9 billion, with prior PE owners Charlesbank
Capital Partners and some co-investors retaining a minority stake
in the entity. The company reported revenue of $2.35 billion for
the twelve months period ending September 2022.
WOLVERINE WORLD: Moody's Lowers CFR to Ba3 & Unsecured Notes to B1
------------------------------------------------------------------
Moody's Investors Service downgraded Wolverine World Wide, Inc.'s
ratings including the corporate family rating to Ba3 from Ba2,
probability of default rating to Ba3-PD from Ba2-PD, and senior
unsecured notes rating to B1 from Ba3. The outlook remains negative
and the SGL-2 speculative grade liquidity rating remains
unchanged.
The downgrades reflect the company's updated Q4 2022 guidance,
which was lower than previously projected by Moody's, as well as
Moody's expectation that leverage will remain high over the next
12-18 months. As a result of the updated guidance, Moody's now
projects adjusted debt/EBITDA increasing to 6.1x in Q4 2022 from
5.9x as of Q3 2022 (including standard adjustments for the accounts
receivable securitization program). However, Moody's expects this
spike in leverage to be temporary and that leverage is likely to
decline in 2023 to the high-4x range, driven by revolver paydown
with free cash flow and potential proceeds from the planned sales
of the Keds and Wolverine Leather businesses. In addition, earnings
are likely to recover in the second half of 2023, reflecting lower
freight costs, reduced clearance activity and cost reduction.
However, free cash flow excluding working capital will remain
modest because of increased interest expense and ongoing costs for
environmental remediation and litigation.
The outlook remains negative, reflecting the risk to earnings and
cash flow prompted by the highly uncertain consumer spending
environment, which may prevent Wolverine from improving credit
metrics to a level that is appropriate for the Ba3 corporate family
rating.
Moody's took the following rating actions for Wolverine World Wide,
Inc.:
Corporate Family Rating, Downgraded to Ba3 from Ba2
Probability of Default Rating, Downgraded to Ba3-PD
from Ba2-PD
Senior Unsecured Regular Bond/Debenture, Downgraded to
B1 (LGD5) from Ba3 (LGD5)
Outlook, Remains Negative
RATINGS RATIONALE
Wolverine's Ba3 CFR benefits from its diversified distribution in
the global footwear industry and the dependable replenishment
demand cycle of the footwear category due to normal product wear
and tear. The company's product portfolio appeals to a broad range
of consumer needs and demographics, further mitigating earnings
volatility. Wolverine's credit profile is also supported by the
strength of its global brands Merrell and Saucony, which represent
about 45% of sales. The ratings also benefit from the company's
balanced overall financial strategies and good liquidity.
At the same time, the rating is constrained by Wolverine's high
leverage, relatively small revenue scale, narrow product focus
primarily in the footwear segment, and fashion risk. While
Wolverine's overall financial policies are balanced, the company
made relatively aggressive decisions to finance the Sweaty Betty
acquisition with revolver borrowings in Q3 2021 and continue share
repurchases through Q2 2022, rather than reduce debt levels.
Wolverine is also subject to social and environmental risks related
to responsible sourcing, waste and pollution including PFAS
remediation and litigation, the treatment of work force, natural
capital and customer relations.
The company's overall liquidity profile for the next 12-18 months
is good, as indicated by the SGL-2 liquidity rating. Moody's
expects positive free cash flow driven by inventory reduction, good
excess revolver capacity, and adequate covenant cushion.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if earnings, financial leverage and
cash flow generation recover on a sustained basis. Quantitative
measures include Moody's-adjusted debt/EBITDA sustained below 4x,
EBITA/interest expense sustained above 3.5x and FFO/net debt above
25%.
The ratings could be downgraded if liquidity is weaker than
forecast, including lower than expected cash generation or tight
covenant cushion. The ratings could also be downgraded if there are
material adverse regulatory or litigation developments related to
the company's environmental liabilities. More aggressive financial
strategies, including share repurchases prior to material
deleveraging, could also result in a downgrade. Quantitative
measures include Moody's-adjusted debt/EBITDA sustained above 4.75x
or EBITA/interest expense below 2.5x.
Headquartered in Rockford, Michigan, Wolverine World Wide, Inc. is
a designer and marketer of casual, active lifestyle, work, outdoor
sport, athletic, and uniform footwear and apparel. The company's
portfolio of brands includes Merrell, Saucony, Sperry, Sweaty
Betty, Hush Puppies, Wolverine, Keds, Chaco, Bates, HYTEST and
Stride Rite. The company also is the global footwear licensee of
the Cat and Harley-Davidson brands. Revenue for the latest twelve
months ended October 1, 2022 was $2.7 billion.
The principal methodology used in these ratings was Apparel
published in June 2021.
WYTHE BERRY: Court OKs Deal on Cash Collateral Access
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
authorized Wythe Berry Fee Owner LLC to use cash collateral on an
interim basis in accordance with its agreement with Mishmeret Trust
Company Limited.
The Debtor executed an Amended and Restated Promissory Note, dated
February 28, 2017, in favor of All Year Holdings Limited in the
stated principal amount of $166.320 million.
The Note is secured inter alia by an Agreement of Modification of
Mortgage, Security Agreement, Assignment of Rents and Fixture
Filing, dated as of February 28, 2017, between the Debtor, as
borrower, and AYH, as lender.
AYH assigned all of its rights under the Mortgage to Mishmeret
pursuant to the Assignment of Consolidated Leasehold Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture
Filing, dated as of March 16, 2021 between AYH, as assignor, and
Mishmeret, as assignee.
Pursuant to the Assignment of Loan Documents dated as of March 16,
2021 between AYH, as assignor, and Mishmeret, as assignee, AYH
assigned all of its rights under the Note, Mortgage and the Loan
Documents to Mishmeret.
On December 6, 2021, the Hon. Judge Reginald Boddie entered an
order requiring Zelig Weiss, the Debtor's lessee, to make
semi-annual use and occupancy payments of $7.5 million, payable on
the first day of February and August while the Debtor's state court
action against Weiss is pending.
On August 1, 2022, Weiss failed to make the second scheduled use
and occupancy payment of $7.5 million.
Weiss has indicated to the Debtor he is willing to make the August
Payment and the upcoming payment due on February 1, 2023.
Any Rent Payments received by the Debtor from Weiss constitute
Rents assigned to Mishmeret pursuant to the Loan Documents. All
such payments will constitute the "cash collateral" of Mishmeret.
A copy of the order is available at https://bit.ly/3lgMNX6 from
PacerMonitor.com.
About Wythe Berry Fee Owner LLC
A group of noteholders, Mishmeret Trust Company Ltd., solely in its
capacity as Trustee for the Series C Notes; Yelin Lapidot Provident
Funds Management Ltd.; The Phoenix Insurance Company Limited; and
Klirmark Opportunity Fund III L.P., filed an involuntary Chapter 11
bankruptcy petition against Wythe Berry Fee Owner LLC (Bankr.
S.D.N.Y. Case No. 22-11340) on Oct. 6, 2022. The creditors are
represented by Michael Friedman, Esq.,. at Chapman and Cutler LLP.
Bankruptcy Judge Martin Glenn, who presides over the case, entered
an Order for Relief in January 2023, allowing the bankruptcy
proceedings against Wythe Berry Fee Owner LLC to proceed. Judge
Glenn denied a request by hotel operator Zelig Weiss to dismiss the
involuntary petition.
Wythe Berry Fee Owner LLC is the titular owner of a commercial real
property complex located in Brooklyn, New York, that includes The
William Vale Hotel, one of Brooklyn's few luxury hotels. Wythe
Berry Fee Owner is co-owned, indirectly, by Zelig Weiss and YGWV
LLC, a wholly owned, direct subsidiary of All Year Holdings
Limited, which is a debtor in a chapter 11 case also pending before
Judge Glenn.
Weiss and YGWV each hold 50% of the membership interests in Member
LLC, which, in turn, is the direct parent, and sole member, of
Wythe Berry Fee Owner. YGWV purports to be the designated managing
member of Member LLC and, thus, purports to control Wythe Berry Fee
Owner.
Wythe Berry Fee Owner LLC is represented by law firm Herrick,
Feinstein LLP.
All Year Holdings Limited filed for Chapter 11 bankruptcy
protection (Bankr. S.D.N.Y. Case No. 21-12051) on Dec. 14, 2021,
and is represented by Matthew Paul Goren, Esq., at Weil, Gotshal &
Manges LLP.
Weiss is represented by lawyers at Paul Hastings LLP.
*********
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