/raid1/www/Hosts/bankrupt/TCR_Public/230222.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 22, 2023, Vol. 27, No. 52
Headlines
3B ENTERPRISES: Unsecured Creditors to Split $100K over 5 Years
78-80 ST. MARKS: Trustee Wins Bid for Property Turnover
8TH AVENUE FOOD: Gladstone Capital Marks $3.6M Loan at 46% Off
AAD CAPITAL: Affiliate Has Deal to Extend Cash Collateral Access
ALL WAYS CONCRETE: Files Emergency Bid to Use Cash Collateral
ALLEGIANCE COAL: Voluntary Chapter 11 Case Summary
ALTISOURCE: Davis Polk Advises Lenders on Term Loan Amendment
API HOLDINGS III: Moody's Cuts CFR to 'Caa3', Outlook Negative
ARUZE GAMING: U.S. Trustee Appoints Creditors' Committee
ASTROTECH CORP: Court Dismisses Delaware Class Suit
ASTROTECH CORP: Incurs $2.4 Million Net Loss in Second Quarter
AVAYA INC: $500MM DIP Term Loan from Wilmington Has Interim OK
AVAYA INC: Seeks Approval of $128-Mil. Citibank ABL Loan
BEAM & COMPAN: In Chapter 11 Two Years After Purchase
BENZRENT 7: Hearing on Exclusivity Extension Set for Feb. 23
BIRCHINGTON LLC: Case Summary & 20 Largest Unsecured Creditors
BLACKSBURG PEDIATRICS: Unsecureds to Get Income Share for 5 Years
BOY SCOUTS: Judge Andrews Questions Large Releases in Ch.11 Plan
CASH CLOUD: U.S. Trustee Appoints Creditors' Committee
CCS-CMGC HOLDINGS: Ares Capital Marks $33.6M Loan at 22% Off
CENTER FOR AUTISM: Ares Capital Marks $2.1M Loan at 57% Off
CENTER FOR AUTISM: Ares Capital Marks $6.8M Loan at 57% Off
CENTER FOR AUTISM: Ares Capital Marks $600,000 Loan at 67% Off
CENTER FOR AUTISM: Ares Capital Marks $9.5M Loan at 58% Off
COMPUTE NORTH: Joint Liquidating Plan Confirmed by Judge
CORELOGIC INC: Ares Capital Marks $155.7M Loan at 17% Off
CREATIVE INVESTORS: U.S. Trustee Unable to Appoint Committee
CSTN MERGER: Moody's Assigns B3 Rating to New $450MM Secured Notes
CYXTERA DC: Moody's Cuts CFR to Caa2 & Alters Outlook to Negative
DKI VENTURES: Gladstone Capital Marks $5.9M Loan at 25%Off
DRIVERGENT INC: Unsecured Creditors to Split $270K in Plan
DUNBAR PARTNERS: Case Summary & Four Unsecured Creditors
E QUALCOM: Reaches Settlement Agreement with Secured Lender
EDGE ADHESIVES: Gladstone Capital Marks $6.1M Loan at 60% Off
FRONTIER FINANCIAL: Gladstone Marks $198,000 Loan at 77% Off
FS ENERGY: Moody's Lowers CFR & Senior Secured Debt Rating to B1
GLOBAL MEDICAL: Ares Capital Marks $12.1M Loan at 30% Off
GLOBAL MEDICAL: Ares Capital Marks $25.7M Loan at 30% Off
GLOBAL MEDICAL: Ares Capital Marks $95.4M Loan at 30% Off
HOLLEY INC: Moody's Lowers CFR to B3 & Alters Outlook to Negative
INVACARE CORP: U.S. Trustee Appoints Creditors' Committee
JDC HEALTHCARE: Ares Capital Marks $4.8M Loan at 46% Off
JDC HEALTHCARE: Ares Capital Marks $40.9M Loan at 46% Off
JDI DATA: Files Emergency Bid to Use Cash Collateral
JLK CONSTRUCTION: Seeks Chapter 11 Bankruptcy Protection
JRT340ASSOCIATES: Voluntary Chapter 11 Case Summary
K&N PARENT: Moody's Assigns Caa1 CFR, Outlook Stable
LATHAN EQUIPMENT: Amends Navitas & Channel Secured Claims Pay
LIFESCAN GLOBAL: Ares Capital Marks $14.3M Loan at 28% Off
LTL MANAGEMENT: Thousands of J&J Talc Suits in N.J. Get New Judge
MERIDIAN INVENTORY: Case Summary & Seven Unsecured Creditors
MICROSTRATEGY INC: Widens Net Loss to $1.5 Billion in 2022
MITCHELL INTERNATIONAL: Ares Capital Marks $98M Loan at 17% Off
MMJS ENGINEERING: Unsecureds' Recovery Hiked to 16.81% in 60 Months
NELLSON NEUTRACEUTICAL: Moody's Withdraws 'B3' Corp. Family Rating
NEW MONARCH: Fine-Tunes Plan Documents
NIELSEN & BAINBRIDGE: U.S. Trustee Appoints Creditors' Committee
NORTHWEST SENIOR: Judge Gives Ruling on Discovery Requests
NOVA WILDCAT: U.S. Trustee Appoints Creditors' Committee
OI S.A.: Brazilian Restructuring Completed, U.S. Cases Closed
OLYMPIA ACQUISITION: Ares Capital Marks $50.9M Loan at 25% Off
OLYMPIA ACQUISITION: Ares Capital Marks $8.7M Loan at 24% Off
PACIFIC GREEN: Posts $2.2 Million Net Loss in Third Quarter
PARAGON DESIGNER: Settles Westbrook Unsecured's Claim for $200K
PAXE LATITUDE: Voluntary Chapter 11 Case Summary
PG&E CORP: Victims' Trust to Get $25-Mil. Settlement from McKinsey
PLURALSIGHT INC: Ares Capital Marks $200,000 Loan at 50% Off
PWM PROPERTY: HNA Says Turnover Order Is Barred Under Del., NY Law
REMER & GEORGES-PIERRE: U.S. Trustee Unable to Appoint Committee
SEARS HOMETOWN: Former Directors, Investors Reach $3.1-Mil. Deal
SEARS HOMETOWN: Seeks Chapter 7 Conversion as Sales Underwhelm
SS&C TECHNOLOGIES: Moody's Alters Outlook on 'Ba3' CFR to Positive
STARRY GROUP: Has $43MM New Money DIP Loan from ArrowMark
TEHUM CARE SERVICES: Files for Chapter 11, Removes Suit
TG HOLDINGS: Cannon's Chophouse in Chapter 11, Remains Open
TIBCO SOFTWARE: Ares Capital Marks $85.3M Loan at 18% Off
TRINSEO PLC: Moody's Affirms Ba3 CFR & Alters Outlook to Negative
TUESDAY MORNING: Hits Chapter 11 Bankruptcy Again
UPSTART SECURITIZATION 2022-2: Moody's Cuts C Notes Rating to B1
WHIDBEY ISLAND HOSP: Moody's Affirms Ba3 Rating on GOULT Bonds
WYTHE BERRY: Weiss' Move to Dismiss Petition Denied
YS GARMENTS: Moody's Puts 'Caa1' CFR Under Review for Upgrade
*********
3B ENTERPRISES: Unsecured Creditors to Split $100K over 5 Years
---------------------------------------------------------------
3B Enterprises LLC filed with the U.S. Bankruptcy Court for the
Eastern District of California a Plan of Reorganization under
Subchapter V dated February 16, 2023.
The Debtor provides underground construction services to a variety
of private and government clients. The primary business is
excavating trenches and installing conduits for electric or gas
transmission.
In 2018 all of Debtor's business were either direct contracts with
Pacific Gas & Electric Company ("PG&E") or subcontracts performing
work for PG&E. The filing of the second PG&E bankruptcy on January
19, 2019 was devastating to the Debtor. In the months prior to the
filing Debtor compromised change orders to obtain cash prior to the
PG&E filing.
In response, the Debtor obtained new non-PG&E work. Today Debtor
performs no direct PG&E contract work. However, the transition was
costly, and the Debtor struggled with cash-flow issues. Creditors
obtained judgments and the carrying charges for necessary credit
became unsustainable. The present case was filed to allow for an
orderly rehabilitation under Chapter 11.
The Debtor has both secured and unsecured debt. As of Petition Date
November 18, 2022, the Debtor's Schedules listed $4,643,466.59 in
secured debt obligations and $5,133,326.83 in unsecured claims.
By the Plan, the Debtor proposes to pay Mechanic Bank's secured
claim in full at the contract rate over the term of this Plan; pay
Operating Engineers' Health and Welfare Trust Class Two secured
claim in full over the five years of the Plan with post-petition
interest at the Federal Judgment rate; pay Paradigm Leasing its
Class Three claim according to contract terms; pay Momentum
Commercial Funding, LLC its class Four secured claim in full over
the five years of the Plan with post-petition interest at the
Federal Judgment rate; and pay the US Small Business Administration
(EIDL) secured claim pursuant to the contract terms.
In addition, the Debtor shall pay the secured Class Six claim of
The California Employment Development Department in full over the
five years of the Plan; pay the Class 7 secured claim of Momentum
Commercial Funding, LLC in full over the five years of the Plan
with post-petition interest at the Federal Judgment rate; pay the
Class 8 secured claim of Almendariz Consulting, Inc. in full over
the five years of the Plan with post-petition interest at the
Federal Judgment rate; pay the Class 9 allowed secured claim of the
Internal Revenue Service over the five years of the Plan with
post-petition interest at the Federal Judgement rate; and pay the
Class 10 claim of Fletcher's Plumbing and Contracting, Inc. over
the five years of the Plan with post-petition interest at the
Federal Judgement rate.
Moreover, the Debtor shall also pay the Class 11 secured claim of
allowed secured claim of the California Employment Development
Department over the five years of the Plan with post-petition
interest at the Federal Judgement rate; pay the Class 12 secured
claim of Franklin Capital over the five years of the Plan with
post-petition interest at the Federal Judgement rate; pay the three
Class 14 claims of Ally Bank secured by three vehicles according to
the contract terms; pay Class 15 unsecured creditors the total sum
of $100,000 over the five years of the Plan.
Debtor's unsecured creditors will receive the balance of the
Projected Disposable Income of the Debtor as contemplated by 11
U.S.C. 1191(d), available after the payment of allowed secured
claims and priority administrative and tax claims. The proposed
payments to Classes One through Fifteen reflect the Projected
Disposable Income of the Debtor through the term of the Plan. The
Debtor will make no distributions to holders of Equity Interests
(other than employment compensation and reimbursement of expenses)
unless and until all payments required under this Plan have been
paid current and there is a reasonable expectation that payments
under the Plan will remain current.
The Debtor will use the cash generated from operation of its
business to make payments directly to holders of Allowed Claims and
meet its responsibilities on its assumed executory contracts and
leases on the terms and conditions provided in this Plan. The
Debtor will complete and file quarterly distribution reports until
the case is closed.
A full-text copy of the Plan of Reorganization dated February 16,
2023 is available at https://bit.ly/3XPl9xU from PacerMonitor.com
at no charge.
Attorneys for Debtor:
Stephen Reynolds, Esq.
Reynolds Law Corporation
424 Second Street, Suite A
Davis, CA 95616
Telephone: (530) 297-5030
Email: sreynolds@lr-law.net
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.
78-80 ST. MARKS: Trustee Wins Bid for Property Turnover
-------------------------------------------------------
In the adversary proceeding captioned In re: 78-80 ST MARKS PLACE
LLC, Chapter 7, Debtor. MARIANNE T. O'TOOLE, ESQ., solely in her
capacity as the Chapter 7 Trustee of the estate of 78-80 St. Marks
Place, LLC, Plaintiff, v. LAWRENCE V. OTWAY, a/k/a LAWRENCE LORCAN
OTWAY, a/k/a LORCAN OTWAY, EUGENIE OTWAY a/k/a EUGENIE
GILMORE-OTWAY a/k/a EUGENIE GILMORE, SCHEIB'S PLACE, INC. D/B/A
WILLIAM BARNACLE TAVERN, EXHIBITION OF THE AMERICAN GANGSTER, INC.,
THEATRE 80, LLC, and JOHN DOE CORPORATIONS "1" THROUGH "100," OTHER
JOHN DOE ENTITIES "1" THROUGH "100," Defendants, Case No. 21-12139
(MG), Adv. Proc. No. 22-01152 (MG), (Bankr. S.D.N.Y.), Chief
Bankruptcy Judge Martin Glenn grants the Trustee's motion for
summary judgment, as well as the Trustee's motion to dismiss the
Defendants' counterclaims.
On August 25, 2022, Marianne T. O'Toole, Esq., solely in her
capacity as Chapter 7 Trustee of the estate of 78-80 St. Marks
Place, LLC, filed a motion in Lawrence V. Otway's personal
bankruptcy seeking relief from the automatic stay against Otway,
and Otway's companies to compel the turnover of possession of
property of the Debtor's estate -- the real property known as and
located at 78-80 St. Marks Place, New York, New York 10003.
In her Lift Stay Motion, the Trustee claimed that neither Otway nor
Otway's companies had leases or agreements for their occupancy of
the Property and continued to remain in possession of the Property
without paying rent to the Debtor, lowering the value and impeding
the Trustee's ability to liquidate. The Court granted the Trustee's
Lift Stay Motion on Sept. 30, 2022.
With the stay lifted, the Trustee initiated this adversary
proceeding for: (i) the turnover of property of the estate under
the Bankruptcy Code; and (ii) unjust enrichment under New York
state law. In their answer, the Defendants asserted three
counterclaims against the Trustee for: (i) wrongful interference
with third party's business; (ii) tortious interference with
prospective economic advantage; and (iii) attempted illegal
eviction. And on Jan. 13, 2023, the Defendants withdrew their third
counterclaim.
The Court finds that the Defendants do not contest that the Debtor
owns the Property, and as such, the Property is decidedly property
of the estate. In turn, the Property is then the proper subject of
a turnover action by a trustee. The Court further finds that the
Defendants also do not appear to contend that they are excepted
from delivering property to a trustee as "custodian" rightfully in
possession.
Instead of contesting the elements above, the Defendants claim that
there are multiple leases in existence, and that those leases are
rent-controlled. The Trustee claims that this is entirely
inconsistent with the representations Defendants agreed to in the
Forbearance Agreement and the Consent Order. Furthermore, the
Trustee observes that the Debtor did not list the leases in its
schedules in this case.
The Consent Order makes no mention of lease to Otway dating back to
1970, and the two written leases commencing in 2019 that the
Defendants attach in support have different dates than the 2019
leases listed in the Consent Order. Nevertheless, the Consent Order
states that "there are no leases or licenses to use any part of the
Property other than the following leases . . ." Thus, the Court
considers that Defendants' assertion of previously undisclosed
leases outside those explicitly listed in the Consent Order is
still inconsistent with that Consent Order. In sum, the Court finds
that the Defendants are estopped from asserting the existence and
validity of leases for portions of the Property.
The Trustee further argues that even if the Defendants are not
estopped from asserting the existence of rent-controlled leases as
a legal matter, the Defendants have failed to raise a genuine
factual dispute as to the leases' existence. The Court agrees with
the Trustee's claim that summary judgment is warranted on the
turnover claim. In fact, the Trustee puts forth overwhelming
evidence that the Property was not subject to any rent-controlled
leases, and the Defendants' evidence regarding retroactive,
speculative, eligibility for rent-control does not actually create
a dispute of material fact.
The Court grants the motion to dismiss for failure to state a
claim, and independently, because the Trustee is immune from suit
for the alleged conduct. The Court notes that while dismissal is
proper on the foregoing grounds, the Trustee generally finds less
support in the third "wrong party" argument, and the opposing brief
does little to sharpen the potential issues.
A full-text copy of the Memorandum Opinion and Order dated Feb. 6,
2023, is available at https://tinyurl.com/5yd338u8 from
Leagle.com.
About 78-80 St Mark's Place
78-80 St Mark's Place, LLC filed a petition for Chapter 11
protection (Bankr. S.D.N.Y. Case No. 21-12139) on Dec. 29, 2021,
listing $15,012,427 in assets and $8,128,713 in liabilities.
Lawrence V. Otway, sole member, signed the petition.
Judge Martin Glenn oversees the case.
The Debtor tapped Andrew R. Gottesman, Esq., at Mintz & Gold, LLP,
as legal counsel.
8TH AVENUE FOOD: Gladstone Capital Marks $3.6M Loan at 46% Off
--------------------------------------------------------------
Gladstone Capital Corporation has marked its $3,698,000 loan
extended to 8th Avenue Food & Provisions, Inc to market at
$1,998,000 or 54% of the outstanding amount, as of December 31,
2022, according to a disclosure contained in Gladstone Capital's
Form 10-Q for the quarterly year ended December 31, 2022, filed
with the Securities and Exchange Commission on February 6, 2023.
Gladstone Capital is a participant in a Secured Second Lien Term
Debt to 8th Avenue Food & Provisions, Inc. The loan accrues
interest at a rate of 12.1% (L + 7.8%) per annum. The loan matures
October 2026.
Gladstone Capital Corporation was incorporated under the Maryland
General Corporation Law on May 30, 2001 and completed an initial
public offering on August 24, 2001. Gladstone Capital is an
externally managed, closed-end, non-diversified management
investment company that has elected to be treated as a business
development company under the Investment Company Act of 1940, as
amended.
8th Avenue Food & Provisions, Inc. provides food catering services.
The Company supplies organic and conventional peanut and other nut
butters, baking nuts, raisins, other dried fruit, and trail mixes
to leading grocery retailers, top food service distributors, and
industrial bakeries.
AAD CAPITAL: Affiliate Has Deal to Extend Cash Collateral Access
----------------------------------------------------------------
Market Street Shreveport LLC, a subsidiary of AAD Capital Partners,
LLC, asks the U.S. Bankruptcy Court for the Northern District of
Georgia, Atlanta Division, for authority to continue using cash
collateral on a final basis in accordance with its agreement with
Arena Limited SPV LLC.
Immediately following the filing of its chapter 11 petition, the
Debtor requested that Arena Limited consider a consensual
stipulation that would permit the Debtor to use Arena's alleged
cash collateral to, inter alia, fund the upkeep of the Standard
Lofts. On November 28, 2022, the Stipulated Order became a final
order.
The Stipulated Order authorized the Debtor to use cash collateral
through a "Termination Date" of January 31, 2023.
Pursuant to Paragraph 14 of the Stipulated Order, the Termination
Date may be reasonably extended by agreement of the Debtor and
Arena. On January 5, 2023, the Debtor and Arena executed a written
Stipulation to extend the Termination Date from January 31 through
and including February 24, 2023.
On February 17, 2023, the Debtor and Arena executed a written
Stipulation to extend the Termination Date under the Stipulated
Order from February 24 through and including the later of March
21.
Except as set forth in the Stipulation, the Stipulated Order will
remain in effect according to its terms.
A copy of the Debtor's request is available at
https://bit.ly/3ImwsYu from PacerMonitor.com.
About AAD Capital Partners
AAD Capital Partners LLC, doing business as Peachtree Battle
Business Services, is a domestic limited liability company.
AAD Capital Partners LLC filed a petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 22-58223) on
Oct. 12, 2022. In the petition filed by Edward Chen, as managing
member and owner, the Debtor reported assets and liabilities
between $10 million and $50 million.
The Debtor is represented by Ashley Reynolds Ray of Scroggins &
Williamson, P.C.
Arena Limited SPV, LLC, as secured creditor is represented by Eric
W. Anderson, Esq. at Parker Hudson Rainer & Dobbs, LLP and R.
Joseph Naus, Esq. at Wiener, Weiss & Madison, a Professional
Corporation.
ALL WAYS CONCRETE: Files Emergency Bid to Use Cash Collateral
-------------------------------------------------------------
All Ways Concrete Pumping, LLC asks the U.S. Bankruptcy Court for
the Northern District of New York for authority to use cash
collateral and provide adequate protection, through March 10,
2023.
The Debtor requires the use of cash collateral and credit cards to
pay employee wages and other ordinary course operating expenses as
well as administrative expenses incurred in this Subchapter V Case.
The prepetition secured creditor who has an interest in the cash
collateral is Five Star Bank.
As of the Petition Date, the Debtor is indebted to secured creditor
Five Star, pursuant to the transactions and documents:
(i) On February 28, 2020, the Debtor executed and delivered to
Five Star a Promissory Note in the original principal amount of
$2.3 million. As of the Petition Date, the principal amount due and
owing under the Term Note, exclusive of interest, fees, and other
charges, is approximately $1.358 million.
(ii) On September 29, 2021, the Debtor executed and delivered
to Five Star a Promissory Note in the original principal amount of
$492,000. As of the Petition Date, the principal amount due and
owing under the 3821 Note, exclusive of interest, fees, and other
charges, is approximately $408,458.
(iii) On December 27, 2021, the Debtor executed and delivered
to Five Star a Promissory Note in the original principal amount of
$675,000. As of the Petition Date, the principal amount due and
owing under the 56M Note, exclusive of interest, fees, and other
charges, is approximately $583,924.
In addition, the Debtor utilizes credit cards issued by Elan
Financial Services in partnership with Five Star to manage business
expenses for the Debtor and its employees. The aggregate credit
limit for the Debtor's Credit Card program is $47,000, however,
each card issued to the Debtor's personnel has a lower individual
limit, with most cards limited to $500 or less. On average, the
Debtor incurs approximately $6,000 per month in charges on the
Credit Cards, and the balances on the Credit Cards have
traditionally been paid in full at the end of each billing cycle in
the ordinary course of business.
As of the Petition Date, the Debtor anticipates the balance on the
Credit Cards will be approximately $2,000. The Debtor intends to
seek agreement from Elan to allow the Debtor to continue using the
Credit Cards, subject to the Court's entry of an order authorizing
the continued use and payment of the Credit Cards in the ordinary
course of business and in accordance with the Budget.
As adequate protection, the Debtor proposes to continue to make
regular monthly payments of principal and accrued and unpaid
interest at the regular rate set forth in, and to the extent due
under, the Five Star Credit Documents and the Credit Cards.
The Debtor proposes to grant Five Star, effective as of the
Petition Date, perfected replacement security interests in, and
valid, binding, enforceable and perfected liens on, all
Postpetition Collateral, to the same extent of Five Star's
prepetition liens, subject only to the Carve-Out.
To the extent that the Rollover Liens are inadequate to protect
Five Star against any diminution in value of the Prepetition
Collateral, the Debtor proposes to grant the claims of Five Star
administrative priority, with priority over any and all other
claims against the Debtor.
The Debtor proposes to provide additional forms of adequate
protection to Five Star in recognition of its status as senior
first lien lender:
(i) The Debtor proposes to maintain its bank accounts at Five
Star and grant to Five Star a pledge of and lien on such accounts,
including any debtor in possession operating account and other
accounts.
(ii) The Debtor proposes to grant to Five Star the right to
credit bid the full amount of its claim, in whole or in part, in
connection with any sale or disposition of any assets of the
Debtor, whether by an auction, under a chapter 11 plan, or
otherwise, without opposition from the Debtor.
Five Star will be additionally protected as a result of the
Debtor's continued business operations.
A copy of the motion is available at https://bit.ly/3kd4pTB from
PacerMonitor.com.
About All Ways Concrete Pumping, LLC
All Ways Concrete Pumping, LLC is a family owned and operated
concrete pump company.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. N.Y. Case No. 23-30069) on February
17, 2023. In the petition signed by Diana L. Sroka, president,
manager, and member, the Debtor disclosed up to $10 million in both
assets and liabilities.
Judge Wendy A. Kinsella oversees the case.
Stephen A. Donato, Esq., at Bond, Schoeneck & King, PLLC,
represents the Debtor as legal counsel.
ALLEGIANCE COAL: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Four affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
====== ========
Allegiance Coal USA Limited 23-10234
12250 Highway 12
Weston CO 81091
Black Warrior Minerals, Inc. 23-10235
2 Office Park Circle
Suite 205
Mountain Brook, AL 35223
New Elk Coal Holdings LLC 23-10236
12250 Highway 12
Weston CO 81091
New Elk Coal Company LLC 23-10237
Business Description: Allegiance Coal is a listed Australian
company focused on seaborne met coal mine
development and operations, with operating
mines in southeast Colorado, central
Alabama, as well as a development project in
northwest British Columbia.
Chapter 11 Petition Date: February 21, 2023
Court: United States Bankruptcy Court
District of Delaware
Debtors' Counsel: Robert J. Dehney, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 N. Market Street, 16th Floor
Wilmington, DE 19899-1347
Tel: (302) 658-9200
Email: rdehney@morrisnichols.com
Allegiance Coal's
Estimated Assets: $50 million to $100 million
Allegiance Coal's
Estimated Liabilities: $10 million to $50 million
Black Warrior's
Estimated Assets: $10 million to $50 million
Black Warrior's
Estimated Liabilities: $10 million to $50 million
New Elk Coal Holdings'
Estimated Assets: $50 million to $100 million
New Elk Coal Holdings'
Estimated Liabilities: $50 million to $100 million
The petitions were signed by Jonathan Romcke as chief executive
officer.
The Debtors failed to include in the petitions lists of their 20
largest unsecured creditors.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/OB3WRAA/Allegiance_Coal_USA_Limited__debke-23-10234__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/KZZEC3Y/Black_Warrior_Minerals_Inc__debke-23-10235__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/PMGSFEA/New_Elk_Coal_Holdings_LLC__debke-23-10236__0001.0.pdf?mcid=tGE4TAMA
ALTISOURCE: Davis Polk Advises Lenders on Term Loan Amendment
-------------------------------------------------------------
Davis Polk advised an ad hoc group of term loan lenders to
Altisource in connection with amendments extending the maturity of
its $247.2 million term loan facility and $15 million revolving
credit facility. Participating lenders holding approximately 99.8%
of Altisource's term loans agreed to extend the maturity of the
term loan facility to April 2025 (with an option for Altisource to
extend the maturity to April 2026 upon making specified prepayments
funded by equity raises within the first year) and received their
pro rata share of warrants for an aggregate amount of up to 19.99%
of the outstanding number of shares of Altisource immediately prior
to the closing, subject to reduction based on the amount of
prepayments funded by equity raises made by the company within the
first year. The company also closed on a confidentially marketed
public offering generating net proceeds of approximately $21.2
million in conjunction with the amendment of the term loan
facility.
Altisource is a leading provider and marketplace for the real
estate and mortgage industries, offering portfolio management and
technology products, asset recovery and customer relationship
management services.
The Davis Polk restructuring team included partner Damian S.
Schaible, counsel Jon Finelli and Robert (Bodie) Stewart and
associates Dylan A. Consla and Stella Li. The finance team included
associate Jonathan B. Markowitz. The corporate team included
partner Stephen Salmon and associate Alex DeGroat. The equity
derivatives team included partner Caitlin L. Wood and counsel
Justin Michael. The tax team included partner Corey M. Goodman and
counsel Tracy L. Matlock. Members of the Davis Polk team are based
in the New York and Northern California offices.
Davis Polk refers to Davis Polk & Wardwell LLP, a New York limited
liability partnership, and its associated entities.
API HOLDINGS III: Moody's Cuts CFR to 'Caa3', Outlook Negative
--------------------------------------------------------------
Moody's Investors Service downgraded API Holdings III Corp.'s
Corporate Family Rating to Caa3 from Caa1 and its Probability of
Default Rating to Caa3-PD/LD from Caa1-PD. API Holdings III Corp.
is the parent holding company of Spectrum Control ("Spectrum"),
formerly known as API Technologies Corp. Concurrently, Moody's
downgraded the ratings on the company's first lien term loan and
revolving credit facility to Caa3 from B3. Moody's also appended a
limited default designation ("/LD") to the PDR. The "/LD"
designation follows the change in terms under the company's
recently amended second lien term loan (unrated) that now allows
for interest payments to be paid-in-kind ("PIK") through the end of
2023. The /LD designation reflects Moody's view that the agreement
by lenders to approve the option to PIK interest in lieu of cash
payments is a distressed exchange and a limited default under
Moody's definition. Moody's will remove the "/LD" designation from
the company's PDR in 3 business days. The outlook is negative.
The downgrades reflect the untenable capital structure, weak
liquidity and heightened probability for another distressed
exchange over the near to medium term. The company's revolving
credit facility, fully drawn as of February 17, 2023, expires in
May 2024, and will need to be either repaid or refinanced by that
time. The company's first lien term loan matures in 2026. Given
that it is unlikely that lenders under the revolving credit
facility will extend their expiration past the maturity of the term
loan, it is highly likely that Spectrum will need to refinance all
of its first lien credit facilities within the next year. Given the
company's very weak operating performance and liquidity, such a
refinancing on acceptable terms will likely prove difficult. This
could lead Spectrum to pursue a transaction which Moody's would
consider a distressed exchange, and hence a default. Spectrum
amended its second lien term loan credit agreement to convert cash
interest payments to principal through 2023. The downgrades also
reflect Spectrum's weak operating performance relative to Moody's
expectations and continual negative free cash flow.
Downgrades:
Issuer: API Holdings III Corp.
Corporate Family Rating, Downgraded to Caa3 from Caa1
Probability of Default Rating, Downgraded to Caa3-PD/LD
from Caa1-PD (/LD appended)
Backed Senior Secured Bank Credit Facility, Downgraded
to Caa3 (LGD3) from B3 (LGD3)
Outlook Actions:
Issuer: API Holdings III Corp.
Outlook, Remains Negative
RATINGS RATIONALE
The Caa3 rating reflects the high probability for a distressed
exchange and very weak credit metrics. The company's financial
leverage reflects an untenable capital structure, while its EBITA
does not cover its interest expense. Liquidity remains weak, with
limited cash and no availability under the revolver. The rating
also reflects the company's very high governance risk.
The company will continue to be a supplier to US defense prime
contractors and maintain a healthy backlog. Customers cannot easily
switch suppliers because of the demanding specifications of
products as well as high customer demand for Spectrum's products.
The negative outlook reflects Moody's expectation for weak
operating performance and challenged liquidity over the next 12-18
months. It also reflects Moody's view that ongoing initiatives to
rejuvenate Spectrum's business have yet to translate into
meaningful improvements to financial performance.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if the company significantly improves its
liquidity and establishes a sustainable capital structure.
The ratings could be downgraded if the probability of default or
loss given default further increases.
The principal methodology used in these ratings was Aerospace and
Defense published in October 2021.
API Holdings III Corp., headquartered in Marlborough, MA, is a
holding company whose main operating subsidiary is API Technologies
Corp. The company is a tier three or tier four supplier of radio
frequency (RF) and performance components and subsystems for the US
aerospace and defense industry. API is majority owned by affiliates
of AEA Investors.
ARUZE GAMING: U.S. Trustee Appoints Creditors' Committee
--------------------------------------------------------
The U.S. Trustee for Region 17 appointed an official committee to
represent unsecured creditors in the Chapter 11 case of Aruze
Gaming America, Inc.
The committee members are:
1. Bartlit Beck LLP
Attn: Adam Hoeflich
Courthouse Place
54 West Hubbard Street
Chicago, IL 60654
Tel: (312) 494-4473
Email: adam.hoeflich@bartlitbeck.com
Counsel:
Garman Turner Gordon, LLP
Attn: Gregory Garman, Esq.
7251 Amigo St., Suite 210
Las Vegas, NV 89119
Tel: (725) 777-3000
Email: ggarman@gtg.legal
2. Gaming Laboratories International
Attn: Robert Cox
600 Airport Road
Lakewood, NJ 08701
Tel: (732) 942-3999
Email: R.Cox@gaminglabs.com
Counsel:
Blank Rome, LLP
Attn: Evan J. Zucker, Esq.
One Logan Square
130 North 18th Street
Philadelphia, PA 19103
Tel: (212) 885-5207
Email: evan.zucker@blankrome.com
3. Klarquist Sparkman, LLC
Attn: Todd M. Siegel
121 SW Salmon Street, Suite 1600
Portland, OR 97204
Tel: (503) 595-5300
Email: todd.siegel@klarquist.com
4. JCM American Corporation
Attn: Dana Talich
925 Pilot Road
Las Vegas, NV 89119
Tel: (702) 651-3432
Email: dana.talich@jcmglobal.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 Aruze Gaming America
Las Vegas-based Aruze Gaming America, Inc. designs, develops and
manufactures gaming machines.
Aruze Gaming America sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Nev. Case No. 23-10356) on Feb. 1, 2023.
In the petition signed by its chief executive officer, Yugo
Kinoshita, the Debtor disclosed up to $10 million in assets and up
to $50 million in liabilities.
The bankruptcy filing is a part of Aruze's efforts to seek
financial restructuring in the wake of a recent garnishment
judgment against Aruze resulting from a separate judgment against
Aruze's shareholder.
Judge August B. Landis oversees the case.
Matthew C. Zirzow, Esq., at Larson & Zirzow, LLC is the Debtor's
legal counsel.
ASTROTECH CORP: Court Dismisses Delaware Class Suit
---------------------------------------------------
On April 15, 2021, a putative stockholder of Astrotech Corporation
commenced a class action and derivative lawsuit in the Delaware
Court of Chancery, titled Stein v. Pickens, et al., C.A. No.
2021-0322-NAC. The Plaintiff in the Delaware Action alleged, among
other things, that the Company improperly included broker non-votes
in the tabulation of votes counted in favor to approve an amendment
to the Company's Certificate of Incorporation and, thus the 2020
Certificate Amendment was defective. As previously disclosed, any
potential defect in the 2020 Certificate Amendment was remedied
through a Validity Order entered by the Court on Oct. 6, 2021,
pursuant to Section 205 of the Delaware General Corporation Law.
On Feb. 11, 2022, the parties to the Delaware Action entered into a
Stipulation and Agreement of Settlement to resolve the Delaware
Action and subsequently amended the Settlement Agreement on Dec.
22, 2022. The Settlement Agreement, as amended, contained
customary releases and requires the Company to implement certain
corporate governance measures as reflected therein. On Feb. 13,
2023, the Court approved the settlement, awarded the Plaintiff's
attorneys' fees and expenses of $290,000, and entered a final order
and judgment dismissing the Delaware Action with prejudice. The
parties to the settlement recognize that entry into the settlement
does not constitute an admission of liability, wrongdoing, or any
matter of fact or law.
About Astrotech
Astrotech Corporation (NASDAQ: ASTC) --
http://www.astrotechcorp.com-- is a mass spectrometry company that
launches, manages, and commercializes scalable companies based on
its innovative core technology through its wholly-owned
subsidiaries. 1st Detect develops, manufactures, and sells trace
detectors for use in the security and detection market. AgLAB is
developing chemical analyzers for use in the agriculture market.
BreathTech is developing a breath analysis tool to provide early
detection of lung diseases. Astrotech is headquartered in Austin,
Texas.
Astrotech reported a net loss of $8.33 million for the year ended
June 30, a net loss of $7.60 million for the year ended June 30,
2021, a net loss of $8.31 million for the year ended June 30, 2020,
and a net loss of $7.53 million for the year ended June 30, 2019.
As of Sept. 30, 2022, the Company had $52.85 million in total
assets, $2.13 million in total liabilities, and $50.72 million in
total stockholders' equity.
* * *
"This concludes the Troubled Company Reporter's coverage of
(Astrotech Corp.) until facts and circumstances, if any, emerge
that demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage."
ASTROTECH CORP: Incurs $2.4 Million Net Loss in Second Quarter
--------------------------------------------------------------
Astrotech Corporation has filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $2.42 million on $263,000 of revenue for the three months ended
Dec. 31, 2022, compared to a net loss of $2.18 million on $561,000
of revenue for the three months ended Dec. 31, 2021.
For the six months ended Dec. 31, 2022, the Company reported a net
loss of $4.95 million on $301,000 of revenue compared to a net loss
of $4.21 million on $748,000 of revenue for the six months ended
Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $51.33 million in total
assets, $2.62 million in total liabilities, and $48.71 million in
total stockholders' equity.
As of Dec. 31, 2022, the Company held cash and cash equivalents of
$15.9 million, and its working capital was approximately $47.2
million. As of June 30, 2022, the Company had cash and cash
equivalents of $26.4 million, and its working capital was
approximately $52.3 million. Cash and cash equivalents decreased
$10.6 million as of Dec. 31, 2022, compared to June 30, 2022, due
to the purchases of short-term time deposit investments as well as
continuing operating expenses.
Management Commentary
"We are very excited about introducing the D2-MVP to the
fast-growing hemp and cannabis industries. The D2-MVP has
demonstrated that our highly versatile ATI mass spectrometer
technology can significantly improve customer processing results in
many applications throughout the chemical manufacturing industry.
With our rugged mass-spec and automatic calibration-tuning, the
D2-MVP can be placed on the factory floor and typically produces
processing results in less than a minute. This technological
advancement makes it possible for the operator to perform many
adjustments throughout the batch process while fine tuning for
yields, color, and quality," stated Thomas B. Pickens, III,
Astrotech's chairman, chief executive officer and chief technical
officer. "We are also excited to have determined that the
BreathTest-1000 can differentiate between healthy and infected
breath samples. We are continuing to collect additional diseased
and blank breath samples so that the artificial intelligence system
can learn to detect against diverse and challenging breath
backgrounds with the ultimate objective of the detection algorithm
being able to meet the criteria needed to obtain approval from the
U.S. Food and Drug Administration. Lastly, the Astrotech Board of
Directors is pleased to have Bob McFarland join the Board. We look
forward to Bob's guidance and perspective as the Company continues
to pursue its goals in the mass-spec industry," concluded Mr.
Pickens.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1001907/000143774923003171/astc20221231_10q.htm
About Astrotech
Astrotech Corporation (NASDAQ: ASTC) --
http://www.astrotechcorp.com-- is a mass spectrometry company that
launches, manages, and commercializes scalable companies based on
its innovative core technology through its wholly-owned
subsidiaries. 1st Detect develops, manufactures, and sells trace
detectors for use in the security and detection market. AgLAB is
developing chemical analyzers for use in the agriculture market.
BreathTech is developing a breath analysis tool to provide early
detection of lung diseases. Astrotech is headquartered in Austin,
Texas.
Astrotech reported a net loss of $8.33 million for the year ended
June 30, a net loss of $7.60 million for the year ended June 30,
2021, a net loss of $8.31 million for the year ended June 30, 2020,
and a net loss of $7.53 million for the year ended June 30, 2019.
As of Sept. 30, 2022, the Company had $52.85 million in total
assets, $2.13 million in total liabilities, and $50.72 million in
total stockholders' equity.
* * *
"This concludes the Troubled Company Reporter's coverage of
(Astrotech Corp.) until facts and circumstances, if any, emerge
that demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage."
AVAYA INC: $500MM DIP Term Loan from Wilmington Has Interim OK
--------------------------------------------------------------
Avaya, Inc., and its debtor-affiliates won interim approval from
the U.S. Bankruptcy Court for the Southern District of Texas to
obtain senior secured postpetition financing on a superpriority
basis, consisting of a non-amortizing term loan facility in an
aggregate principal amount of up to $500 million from a syndicate
of lenders led by Wilmington Savings Fund Society, FSB, as
administrative agent and collateral agent. With the entry of the
interim court order, Avaya is permitted to use up to $400 million
of the DIP term loan. The remaining undrawn portion of the DIP
Facility will be made available to the Debtors upon entry of a
final court order.
Avaya, Inc., and Avaya Holdings also obtained authority from the
Court to enter into a DIP-to-Exit ABL Commitment Letter and pay
necessary fees and expenses.
The Debtors are also allowed on an interim basis to indefeasibly
repay in full in cash all of the indebtedness outstanding under
their Prepetition ABL Credit Agreement, including to cash
collateralize all obligations in respect of letters of credit
issued and secured hedging agreements.
The Court also authorized Debtor Sierra Communications
International LLC to use proceeds of the Initial DIP Loans to fund
an intercompany loan in an amount not to exceed $50 million to
non-Debtor Avaya International Sales Ltd.
Avaya Inc. is also authorized to transfer up to $40 million of
proceeds of the Initial DIP Loans to a segregated account held by
Avaya, Inc. for purposes of backstopping the liquidity of certain
foreign non-Debtor affiliates to the extent necessary to preserve
the value of the Debtors' international business operations.
The Debtors are also permitted on an interim basis to use cash
collateral of their prepetition secured lenders and grant adequate
protection, subject to a Carve Out, to the extent of any diminution
in value of their respective interests in the Prepetition
Collateral.
The maturity date with respect to the DIP Facility will be the
earliest of:
(a) six months after the Closing Date (or if such day shall
not be a Business Day, the next succeeding Business Day);
(b) 45 days after the Petition Date if the Final Order has not
been entered prior to the expiration of such 45-day period, unless
otherwise extended by the Required Lenders;
(c) the Consummation Date;
(d) the acceleration of the Loans and the termination of the
Commitments with respect to the Term Facility;
(e) the consummation of a sale of all or substantially all of
the assets of the Borrower (or the Borrower and the Guarantors)
pursuant to section 363 of the Bankruptcy Code; and
(f) the termination of the Debtors' Restructuring Support
Agreement with certain lender groups.
The Debtors are required to comply with these milestones:
(a) The Interim Order will have been entered by no later than
three days after the Petition Date;
(b) The Escrow Payment will occur no later than the date when
the Interim DIP Order is entered by the Bankruptcy Court;
(c) The Final Order will have been entered by no later than 45
days after the Petition Date;
(d) The Rights Offering will have been commenced by no later
than 10 days after the Petition Date;
(e) The 2023 PBGC Settlement will have been approved by the
Court no later than confirmation of the Plan;
(f) The order provisionally approving the adequacy of the
Disclosure Statement, in form and substance acceptable to the
Debtors and the Required Lenders, will have been entered no later
than three days after the Petition Date;
(g) The Plan and Disclosure Statement will have been filed no
later than one day after the Petition Date;
(h) The order approving the adequacy of the Disclosure
Statement will have been entered no later than 60 days after the
Petition Date;
(i) The order confirming the Plan will have been entered by no
later than 60 days after the Petition Date;
(j) The substantial consummation of the Plan will have
occurred no later than 90 days after the Petition Date.
Avaya's prepetition capital structure includes approximately $3.4
billion in funded debt as of the Petition Date, consisting of:
Indebtedness Balance Outstanding
------------ -------------------
Prepetition ABL Facility $56,000,000
B-1 Term Loans $800,000,000
B-2 Term Loans $743,000,000
B-3 Term Loans $350,000,000
Legacy Notes $1,000,000,000
Senior Exchangeable Secured Notes $250,000,000
HoldCo Convertible Notes $221,000,000
-------------------
Total $3,420,000,000
Legacy Liabilities Balance Outstanding
------------------ -------------------
US Pension (underfunded
liability) $111,000,000
International Pension
(underfunded liability) $319,000,000
OPEB (underfunded liability) $115,000,000
-------------------
Total $545,000,000
The Debtors are borrowers under these prepetition facilities:
(a) the Prepetition ABL Facility, dated as of December 15,
2017, with Citibank, N.A., as administrative agent and collateral
agent;
(b) the Term Loan Credit Facility, dated as of December 15,
2017, with Goldman Sachs Bank USA, as administrative agent and
collateral agent;
(c) the Legacy Notes, which are 6.125% senior secured first
lien notes issued by Avaya, Inc. pursuant to the Indenture, dated
as of September 25, 2020, with Wilmington Trust, National
Association, as trustee and as notes collateral agent. The Legacy
Notes mature on September 15, 2028;
(d) the Secured Exchangeable Notes issued by Avaya Inc.,
pursuant to the Indenture dated July 12, 2022, with Wilmington
Trust, National Association, as trustee. The Secured Exchangeable
Notes mature on December 15, 2027; and
(e) Convertible Notes issued by Avaya Holdings pursuant to the
Indenture dated June 11, 2018, with The Bank of New York Mellon
Trust Company N.A., as trustee. The HoldCo Convertible Notes
mature on June 15, 2023.
The prepetition indebtedness is subject to two intercreditor
agreements, generally referred to as (i) the ABL Intercreditor
Agreement and (ii) the First Lien Pari Intercreditor Agreement.
The ABL Intercreditor Agreement governs the relative contractual
rights of lenders under the ABL Credit Facility, on the one hand,
and the Term Loan Credit Facility, on the other hand and, pursuant
to certain joinders, the relative contractual rights of Holders of
Legacy Notes and Secured Exchangeable Notes.
As adequate protection, each of the Prepetition Term Loan Secured
Parties, the Prepetition Legacy Notes Parties and the Prepetition
Secured Exchangeable Notes Parties are granted allowed
superpriority administrative expense claims as provided for in
Bankruptcy Code section 507(b) in the amount of the First Lien
Adequate Protection Claim, which Prepetition First Lien 507(b)
Claims will have recourse to and be payable from all of the DIP
Collateral, including, without limitation, subject to entry of the
Final Order, the Avoidance Proceeds. The Prepetition First Lien
507(b) Claims will be subject and subordinate to the Carve Out and
the DIP Superpriority Claims.
The Prepetition First Lien Agents (for the benefit of the
applicable Prepetition Secured Parties) are granted valid,
perfected replacement security interests in and liens upon all of
the DIP Collateral including, without limitation, subject to entry
of the Final Order, the Avoidance Proceeds, in each case, junior to
the Carve Out, the DIP Liens and any other liens that are senior to
DIP Liens.
A final hearing on the matter is set for March 7, 2023 at 3 p.m.
A copy of the Court's order is available at https://bit.ly/3k9G7d1
from PacerMonitor.com.
About Avaya
Morristown, New Jersey-based Avaya offers digital communications
products, solutions and services for businesses of all sizes.
Avaya delivers its technology predominantly through software and
services, both on-premise and through the cloud in a diverse range
of industries, including financial services, manufacturing, retail,
transportation, energy, media and communications, healthcare,
education, and government.
Avaya, Inc., and 20 affiliated entities, including Avaya Holdings
Corp., filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex.
Lead Case No. 23-90088) on February 14, 2023. The Hon. David R.
Jones oversees the cases.
Avaya Inc. and 17 affiliates first sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 17-10089) on Jan. 19, 2017. The
2017 debtors emerged from bankruptcy and their second amended joint
Chapter 11 plan of reorganization was declared effective on Dec.
15, 2017. The 2017 Plan provides holders of first-lien debt with
90.5% of stock in the reorganized company and holders of
second-lien notes with a pro rata share of 4% of stock and warrants
for an additional 5.1% of the shares. Avaya projected to have
$2.925 billion of funded debt and a $300 million senior secured
asset-based lending facility available following emergence.
The 2023 petitions were signed by Eric Koza as chief restructuring
officer. The Debtors estimated $1 billion to $10 billion in both
assets and liabilities on a consolidated basis.
Avaya Holdings' most recent financial report filed with the
Securities and Exchange Commission was for the three-month period
end March 31, 2022. In its Form 10-Q report, Holdings disclosed
$5.8 billion in total consolidated assets against $5.2 billion in
total consolidated liabilities.
In the 2023 bankruptcy filing, the Debtors have retained Kirkland &
Ellis LLP and Jackson Walker LLP as bankruptcy co-counsel; Evercore
Group LLC as investment banker; AlixPartners LLP as restructuring
advisor; PricewaterhouseCooopers LLP as auditor; and Kurtzman
Carson Consultants LLC as claims and noticing agent.
Counsel to Wilmington Savings Fund Society, FSB, as administrative
agent and collateral agent under the DIP Term Loan:
Mark Somerstein, Esq.
Patricia Chen, Esq.
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036-8704
E-mail: mark.somerstein@ropesgray.com
patricia.chen@ropesgray.com
A group of lenders are represented by Akin Gump Strauss Hauer &
Feld LLP, Centerview Partners LP and Alvarez & Marsal North
America, LLC. Counsel to the Akin Ad Hoc Group:
Ira S. Dizengoff, Esq.
Philip C. Dublin, Esq.
Naomi Moss, Esq.
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
Bank of America Tower
New York, NY 10036
E-mail: idizengoff@akingump.com
pdublin@akingump.com
nmoss@akingump.com
A group of lenders are represented by Paul, Weiss, Rifkind, Wharton
& Garrison LLP, Glenn Agre Bergman & Fuentes LLP, and FTI
Consulting, Inc. Counsel to the PW Ad Hoc Group:
Andrew N. Rosenberg, Esq.
Brian S. Hermann
Brian Bolin, Esq.
Joseph M. Graham, Esq.
Xu Pang, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison LLP
E-mail: arosenberg@paulweiss.com
bhermann@paulweiss.com
bbolin@paulweiss.com
jgraham@paulweiss.com
xpang@paulweiss.com
Counsel to Goldman Sachs Bank USA, as administrative agent and
collateral agent under the Prepetition Term Loan:
Brian M. Resnick, Esq.
Michael Pera, Esq.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
E-mail: brian.resnick@davispolk.com
michael.pera@davispolk.com
AVAYA INC: Seeks Approval of $128-Mil. Citibank ABL Loan
--------------------------------------------------------
Avaya, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court
for the Southern District of Texas to issue a Second Interim Order
and a Final Order that authorize Avaya Inc., in its capacity as
borrower, to obtain a $128.125 million senior secured post-petition
asset-based financing on a superpriority basis, with a group of
lenders syndicated by Citibank, N.A., as administrative agent and
collateral agent.
The DIP ABL Facility includes:
-- a $100 million letter of credit sub-facility; and
-- a $15 million swing line sub-facility.
A hearing on this request is scheduled for February 23.
AlixPartners' Eric Koza, who serves Avaya's Chief Restructuring
Officer, and Evan Levine, Restructuring Vice President of Evercore
Group, enumerate the importance of the DIP ABL Facility:
1. The DIP ABL Facility provides the Debtors with access to
additional cash on hand that would otherwise remain needlessly tied
up collateralizing certain letters of credit and cash management
obligations. Pursuant to the First Interim Order, the Debtors used
proceeds from the DIP Term Loan to cash collateralize certain
letters of credit, significantly diminishing accessible incremental
liquidity. The DIP ABL Facility will "de-cash collateralize" these
letters of credit and secure them under the DIP ABL Facility, along
with certain other cash management obligations, freeing up
approximately $43 million of liquidity.
2. By leveraging the DIP ABL Facility to secure such
obligations, the Debtors can decrease the inter-day risk exposure
of certain of their Cash Management Banks, such as Citibank, who
would otherwise require excessive cash collateral to support the
Debtors' day-to-day ordinary course transactions (e.g., foreign
exchange and ACH transactions) in connection with the Debtors'
satisfaction of operational obligations, including payroll and
inventory expenses.
3. The DIP ABL Facility is an important component of the
overall Restructuring Support Agreement.
4. The DIP ABL Facility will pave the way for the Debtors to
access post-emergence liquidity on better terms than they would be
able to obtain without first incurring the DIP ABL Facility. Absent
incurrence of the DIP ABL Facility, the Debtors likely would have
to access post-emergence liquidity at a considerably higher cost
and heightened risk profile, pursuant to an exit facility
negotiated later in these Chapter 11 Cases or on a post-emergence
basis. The Debtors and their advisors were able to leverage their
extensive prepetition marketing process to "lock in" exit financing
under favorable terms, and incurrence of the DIP ABL Facility is a
required first step toward obtaining exit financing. Further, the
DIP ABL Facility's excess borrowing base allows for flexibility
such that the facility can be upsized if other lenders become
interested in funding in the near term. This flexibility will allow
the Debtors to remain adaptive to their global business environment
and operational liquidity needs.
5. The DIP ABL Facility will not prejudice or otherwise harm
any of the Debtors' stakeholders. Rather, the DIP ABL Facility will
provide the Debtors with additional liquidity to continue to
satisfy their ordinary course obligations and reassure their
stakeholders that the Debtors can emerge from these Chapter 11
Cases with a right-sized capital structure and well-developed
go-forward business plan, as contemplated by the RSA.
Koza relates that the Debtors entered the Chapter 11 Cases with
approximately $45 million in cash on hand, which was gravely
insufficient to meet the Debtors' liquidity needs both in the
near-term and throughout the Chapter 11 Cases. The Court's approval
of the DIP Term Loan Facility and the Debtors' entry into the
DIP-to-Exit ABL Commitment Papers provided the Debtors necessary
incremental liquidity to, among other things, meet their payroll
obligations and reassure other stakeholders, including channel
partners, landlords, customers, and employees, that the Debtors
have sufficient funds to emerge from chapter 11 while continuing to
operate in the ordinary course. The DIP-to-Exit Commitment Papers,
however, expire Friday, February 24, 2023.
The DIP ABL Loans will bear interest at a rate equal to: (i) for
Term SOFR Loans, Adjusted Term SOFR plus 3.00% and (ii) for ABR
Loans, ABR plus 2.00%.
The DIP ABL Loans mature on the earliest to occur of:
(a) August 15, 2023, or if the Conversion Date has occurred,
the third anniversary of the Conversion Date (or if such day shall
not be a Business Day, the next succeeding Business Day);
(b) the date that is 45 days after the Petition Date if the
Final Order has not been entered prior to the expiration of such
45-day period, unless otherwise extended by the Required Lenders;
(c) the Consummation Date;
(d) the acceleration of the Loans and the termination of the
Commitments with respect to the Facilities in accordance with the
DIP ABL Credit Agreement;
(e) the consummation of a sale of all or substantially all of
the assets of the Borrower (or the Borrower and the Guarantors)
pursuant to section 363 of the Bankruptcy Code; and
(f) the termination of the Restructuring Support Agreement.
Avaya, Inc., must comply with these Milestones:
-- The Final DIP Order must have been entered by no later
than 45 days after the Petition Date.
-- A Rights Offering as provided under the Restructuring
Support Agreement must have been commenced by no later than 10 days
after the Petition Date.
-- The 2023 PBGC Settlement must have been approved by the
Bankruptcy Court no later than confirmation of the Plan.
-- The Plan and related disclosure statement must have been
filed no later than one day after the Petition Date.
-- The order approving the adequacy of the Disclosure
Statement, in form and substance acceptable to the Debtors and the
Required Lenders, must have been entered no later than 60 days
after the Petition Date.
-- The order confirming the Plan, in form and substance
acceptable to the Debtors and the Required Lenders, must have been
entered by no later than 60 days after the Petition Date.
-- The substantial consummation of the Plan must have
occurred no later than 90 days after the Petition Date.
According to the Debtors, the DIP Liens securing the DIP ABL
Obligations are valid, automatically perfected, non-avoidable,
senior in priority, and superior to any security, mortgage,
collateral interest, lien, or claim to any of the DIP Collateral,
except that the DIP ABL Liens will be subject to the Carve Out in
all respects and shall otherwise be junior only to:
(i) as to the DIP ABL Priority Collateral as provided in the
DIP ABL Intercreditor Agreement, the Permitted Liens;
(ii) as to the DIP Term Priority Collateral that was
Prepetition Collateral, (A) the Permitted Liens, (B) the DIP Term
Loan Liens, (C) the Prepetition First Lien Adequate Protection
Liens and (D) the Prepetition First-Priority Liens; and
(iii) as to the DIP Term Priority Collateral that was
Unencumbered Property, (A) the Permitted Liens, (B) the DIP Term
Loan Liens and (C) the Prepetition First Lien Adequate Protection
Liens.
The DIP Liens securing the DIP Term Loan Obligations are
continuing, valid, automatically perfected, non-avoidable, senior
in priority, and superior to any security, mortgage, collateral
interest, lien, or claim to any of the DIP Collateral, except that
the DIP Term Loan Liens will be subject to the Carve Out in all
respects and shall otherwise be junior only to (i) as to the DIP
Term Priority Collateral, the Permitted Liens and (ii) as to the
DIP ABL Priority Collateral, (A) the Permitted Liens and (B) the
DIP ABL Liens.
The Second Interim Order provides for a challenge period no later
than the earlier of (w) the commencement of a hearing to consider
confirmation of a chapter 11 plan and (x) 60 days after the
Petition Date; provided that any Trustee appointed prior to the
expiration of the Challenge Period will have the longer of (y) the
remaining Challenge Period or (z) 45 days from the date of the
Trustee's appointment to commence a Challenge; provided, further
that so long as the Tolling Conditions are met, the Challenge
Period will be tolled with respect to the Creditors’ Committee
and, upon the failure of the Tolling Conditions, the Creditors'
Committee will have 60 days from the date of such failure to bring
any Challenge.
About Avaya
Morristown, New Jersey-based Avaya offers digital communications
products, solutions and services for businesses of all sizes.
Avaya delivers its technology predominantly through software and
services, both on-premise and through the cloud in a diverse range
of industries, including financial services, manufacturing, retail,
transportation, energy, media and communications, healthcare,
education, and government.
Avaya, Inc., and 20 affiliated entities, including Avaya Holdings
Corp., filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex.
Lead Case No. 23-90088) on February 14, 2023. The Hon. David R.
Jones oversees the cases.
Avaya Inc. and 17 affiliates first sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 17-10089) on Jan. 19, 2017. The
2017 debtors emerged from bankruptcy and their second amended joint
Chapter 11 plan of reorganization was declared effective on Dec.
15, 2017. The 2017 Plan provides holders of first-lien debt with
90.5% of stock in the reorganized company and holders of
second-lien notes with a pro rata share of 4% of stock and warrants
for an additional 5.1% of the shares. Avaya projected to have
$2.925 billion of funded debt and a $300 million senior secured
asset-based lending facility available following emergence.
The 2023 petitions were signed by Eric Koza as chief restructuring
officer. The Debtors estimated $1 billion to $10 billion in both
assets and liabilities on a consolidated basis.
Avaya Holdings' most recent financial report filed with the
Securities and Exchange Commission was for the three-month period
end March 31, 2022. In its Form 10-Q report, Holdings disclosed
$5.8 billion in total consolidated assets against $5.2 billion in
total consolidated liabilities.
In the 2023 bankruptcy filing, the Debtors have retained Kirkland &
Ellis LLP and Jackson Walker LLP as bankruptcy co-counsel; Evercore
Group LLC as investment banker; AlixPartners LLP as restructuring
advisor; PricewaterhouseCooopers LLP as auditor; and Kurtzman
Carson Consultants LLC as claims and noticing agent.
Wilmington Savings Fund Society, FSB, as administrative agent and
collateral agent under the DIP Term Loan, is represented by Ropes &
Gray LLP.
A group of lenders are represented by Akin Gump Strauss Hauer &
Feld LLP, Centerview Partners LP and Alvarez & Marsal North
America, LLC.
A group of lenders are represented by Paul, Weiss, Rifkind, Wharton
& Garrison LLP, Glenn Agre Bergman & Fuentes LLP, and FTI
Consulting, Inc.
Goldman Sachs Bank USA, as administrative agent and collateral
agent under the Prepetition Term Loan, is represented by Davis Polk
& Wardwell LLP.
BEAM & COMPAN: In Chapter 11 Two Years After Purchase
-----------------------------------------------------
Beam & Company Inc. filed for chapter 11 protection in the Eastern
District of California. The Debtor elected on its voluntary
petition to proceed under Subchapter V of chapter 11 of the
Bankruptcy Code.
Before September of 2020, Debtor was owned by Alain Jaschien. In
September of 2020, the Debtor was sold a new owner, Brandon Cooper.
Mr. Cooper is the current owner and president of Debtor. At the
time of the sale, the business of Debtor had three divisions. The
first division does federal low income housing rehabilitation (the
"Construction" part of the business). The second division does
maintenance, which involves maintaining commercial properties for
landlords (the "Maintenance" part of the business). The third
division is insurance restoration, where Debtor will restore
property that has been damaged and insurance is paying for the
restoration (the "Insurance Restoration" part of the business).
Approximately 50% of Debtor's gross income came from the
Construction business, 40% of the business was from Insurance
Restoration, and 10% was from the Maintenance part of the
business.
The sale of the business included a commercial building (the
"Commercial Building"), and was financed by a $3.129 million SBA
loan from Hanmi Bank (the "Hanmi Loan"), along with a seller carry
note (from Mr. Jeschein) in the approximate amount of $858,200 (the
"Jeschien Loan").
In the fall of 2021, Mr. Cooper was planning to sell his personal
home and purchase a different home. Since the Hanmi Loan was
secured by his personal residence, he contacted Hanmi Bank about
moving the security interest to the new residence. Hanme Bank
indicated that that should not be a problem, so Mr. Cooper moved
forward with these plans.
Due to several market factors, he was able to purchase a new home
before he was able to sell the old home. To make that feasible, he
took a loan from Debtor in the amount of approximately $157,000,
with the intention that this loan would be repaid to Debtor from
the sale of the prior residence. Before doing this transaction,
however, Mr. Cooper discussed this scenario with Hanmi Bank and
they explained that this would work fine, the $157,000 could be
repaid to Debtor from the sale, Hanmi Bank would take the rest of
the net proceeds and Hanmi Bank would take a loan on the new
residence. With these assurances, Mr. Cooper moved forward with
this transaction.
However, when the time came to close sale of the prior residence,
Hanmi Bank insisted on being paid the entirety of the net proceeds
from that sale, which amounted to approximately $325,000, instead
of allowing the $157,000 to be paid back to Debtor. This created a
significant problem for Debtor because Debtor's management was
counting on that $157,000 being available as capital and cash flow
for the business.
The interest rate on the Hanmi Loan was a floating interest rate
based on the WSJ Prime Rate. At the inception of the Hanmi Loan,
the WSJ Prime Rate was 3.25%. The WSJ Prime Rate is currently
7.75%. This substantial increase in the interest rate on the Hanmi
Loan, combined with now inadequate capitalization, made it very
difficult to make payments on the Hanmi Loan and pay Debtor's usual
expenses.
To try to reduce expenses, in approximately June of 2022, Mr.
Cooper agreed to sell the Commercial Building and all of the net
proceeds from that sale were paid to Hanmi Bank to pay down the
Hanmi Loan. However, due to the increasing interest rates, the
payment on the Hanmi Loan actually increased.
The most capital-intensive portion of Debtor's business was the
Construction division. The Debtor did not have sufficient capital
to
continue this area of the business, and ceased bidding on
construction jobs in approximately June 2022. The Debtor completed
its final Construction job in November 2022. This will likely
reduce Debtor’s gross income by approximately 50% from what
Debtor grossed previously.
In approximately June of 2022, Mr. Cooper also made the decision to
cease the Maintenance division because cash flow to keep this
division operating was not adequate.
This leaves Debtor with only its Insurance Restoration division,
and it is anticipated that Debtor's gross income will be
approximately 50% of what it was able to bring in previously.
However, Debtor believes that this part of the business will allow
Debtor to survive and is the best way to maximize the value of
Debtor and generate a return for creditors of Debtor.
In approximately June of 2022, Debtor was no longer able to make
payments on the Jeschein Loan. Mr. Jeschein had signed a noncompete
agreement with Debtor, but due to Debtor's breach of the Jeschein
Loan, Mr. Jeschein started a company that began providing services
similar to those previously offered by Debtor. However, at this
time, Mr. Jeschein is only doing work that competes with the
Construction and Maintenance divisions, and since the Debtor is no
longer operating those divisions, his company is not directly
competing with
Debtor. The loan to Mr. Jeschein does not appear to be secured by
any asset of Debtor.
According to court filings, Beam & Company estimates between $1
million and $10 million in debt owed to 1 to 49 creditors. The
petition states that funds will not be available to unsecured
creditors.
About Beam & Company
Beam & Company Inc. is a full service general contractor focusing
on commercial real estate remodels.
Beam & Company Inc. filed a petition for relief under Subchapter V
of Chapter 11 of the Bankruptcy Code (Bankr. E.D. Cal. Case No.
23-10244) on February 11, 2023. In the petition filed by Brandon
Cooper, as president, the Debtor reported assets between $100,000
and $500,000 and liabilities between $1 million and $10 million.
The case is overseen by Honorable Bankruptcy Judge Rene Lastreto
II.
.
The Subchapter V trustee appointed in the case:
Walter R. Dahl
2304 "N" Street
Sacramento, CA 95816
Phone: (916) 446-8800
Email: wdahl@dahllaw.net
The Debtor is represented by:
Peter L Fear, Esq.
Fear Waddell, P.C.
221 M Street
Fresno, CA 93721
Tel: (559) 436-6575
Email: pfear@fearlaw.com
BENZRENT 7: Hearing on Exclusivity Extension Set for Feb. 23
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida is
set to hold a hearing on Feb. 23 to consider the motion filed by
Benzrent 7, LLC to extend the time it can keep exclusive control of
its bankruptcy case.
The motion seeks to extend the company's exclusive periods to file
a Chapter 11 plan and solicit votes on the plan to May 5 and July
5, respectively.
Benzrent needs more time to negotiate with creditors, resolve
issues in its bankruptcy case, and then pursue its own plan without
the threat of a rival plan from creditors.
About Benzrent 7
Benzrent 7, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-15165) on July 5,
2022, with as much as $1 million in both assets and liabilities.
Judge Robert A. Mark oversees the case.
Joel M. Aresty, Esq., at Joel M. Aresty, PA serves as the Debtor's
legal counsel.
BIRCHINGTON LLC: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Birchington, LLC
d/b/a Holiday Inn Express Washington DC Downtown
4710 14th St., NW
Ste. 200
Washington DC 20011
Business Description: The Debtor operates a hotel in Washington,
DC.
Chapter 11 Petition Date: February 20, 2023
Court: United States Bankruptcy Court
District of Columbia
Case No.: 23-00057
Judge: Hon. Elizabeth L. Gunn
Debtor's Counsel: John D. Burns, Esq.
THE BURNS LAW FIRM, LLC
6305 Ivy Lane, Ste 340
Greenbelt, MD 20770
Tel: 301-441-8780
Email: jburns@burnsbankruptcyfirm.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $50 million to $100 million
The petition was signed by Habte Sequar as manager.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/VAGXI7Y/Birchington_LLC__dcbke-23-00057__0001.1.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/VHMDNHY/Birchington_LLC__dcbke-23-00057__0001.0.pdf?mcid=tGE4TAMA
BLACKSBURG PEDIATRICS: Unsecureds to Get Income Share for 5 Years
-----------------------------------------------------------------
Blacksburg Pediatrics, PLC filed with the U.S. Bankruptcy Court for
the Western District of Virginia a Plan of Reorganization under
Subchapter V dated February 16, 2023.
Dr. David Berry worked as a pediatrician with HCA Lewis Gale
Physicians until September 2016. At that time, his employer
encouraged him to open his own pediatric practice and, as a result,
Dr. Berry started Blacksburg Pediatrics PLC, and that entity has
operated as a pediatric practice in Blacksburg, Virginia since that
time.
The Debtor has continued to operate as a pediatric practice since
the filing of the bankruptcy case. Dr. Berry is the primary
pediatrician for the practice, which also has a nurse practitioner,
seven certified clinical medical assistants, two clerical staff,
and its controller. Post-petition, the practice has seen its
patients in the ordinary course of business, and has remained
current on all of its post-petitions obligations, including payment
of payroll related taxes.
It is also important to note that both prior to the bankruptcy
filing and post-petition, the Debtor was and has remained current
with its secured creditors and its vendors. The Debtor also has
multiple contracts and leases for equipment and services; the
Debtor was and is current on these obligations also. As evidenced
by its monthly operating reports for December and January, the
Debtor has operated at close to a breakeven basis since its
bankruptcy filing.
Class 6 consists of General Unsecured Claims. Upon a review of its
chapter 11 schedules and the claims that have been filed in this
case as of the claims bar date of January 27, 2023, the Debtor
estimates its general unsecured claims to be approximately
$120,000.00. On a quarterly basis commencing the first calendar
quarter that begins after the Effective Date and for a period of 5
years following or the date that all class 6 claims are paid in
full, whichever is sooner, the Debtor will commit all of its
disposable income, on a cash basis, to the Blacksburg Pediatrics
Reorganization Fund.
The fund will initially be held by Debtor's counsel, and ultimately
as designated by the Debtor. From the Blacksburg Pediatrics
Reorganization Fund the Debtor will make quarterly pro rata
distributions to allowed general unsecured claims. The Debtor will
fund its obligation to the Blacksburg Pediatrics Reorganization
Fund with its aggregate disposable income on a cash basis within 30
days from the end of each quarter. Assuming an Effective Date after
March 31, 2023 but before June 30, 2023, the first payment will be
due October 30, 2023.
Class 7 consists of Executory Contracts and Unexpired Lease Claims.
The Debtor assumes the executory contracts and unexpired leases.
The Debtor is current on each of the executory contracts and
unexpired leases as of the petition date, has remained current
post-petition, and will remain current post confirmation.
Class 8 consists of Equity Interests. Equity interests of Dr. David
Berry shall remain in place during the pendency of this case and
post confirmation. In addition to being the principal and president
of the Debtor and primary physician of Blacksburg Pediatrics, PLC,
Dr. Berry is also employed as a contract hospitalist with HCA Lewis
Gale Physicians. He earns a salary from HCA Lewis Gale Physicians
in addition to his salary from the Debtor. For purposes of this
case, Dr. Berry will commit his earnings from his contract
hospitalist position to the Debtor to the extent that the Debtor
experiences cash flow difficulties and is otherwise unable to
satisfy its operating obligations or its obligations for Classes 1,
2, 3, 4, 5, and 7 pursuant to this Plan.
Because of Dr. Berry's role as primary physician for the Debtor and
his willingness to contribute his non-debtor salary to the Debtor's
operational obligations and Plan obligations, the Debtor asserts
that Dr. Berry is a critical, integral, and necessary component of
its Plan of Reorganization and any likelihood that it will
successfully reorganize. Accordingly, should any creditor of the
Debtor choose to sue Dr. Berry personally to satisfy obligations
that are primarily and originally those of the Debtor, the Debtor
will file the appropriate pleadings with this Court, and ask this
Court to enjoin such collection activity. No distributions will be
made to Dr. Berry towards his equity during the 5-year period of
this plan.
The Debtor hereby provides the following means for execution of
this Plan:
* The Debtor will continue its operations as a pediatric
medical practice servicing its patients in the ordinary course of
business. Dr. David Berry will continue in his role as
pediatrician, pursuant to the terms of his pre-petition
employment.
* The Debtor will pursue avoidable preferences and other
avoidance actions as it deems appropriate.
* Dr. Berry will use his non-debtor hospitalist income to
subsidize the Debtor as needed.
A full-text copy of the Plan of Reorganization dated February 16,
2023 is available at https://bit.ly/3Sjtbh6 from PacerMonitor.com
at no charge.
Counsel for the Debtor:
Andrew S. Goldstein, Esq.
Magee Goldstein Lasky & Sayers, PC
P.O. Box 404
Roanoke, VA 24003-0404
Telephone: (540) 343-9800
Facsimile: (540) 343-9898
Email: agoldstein@mglspc.com
About Blacksburg Pediatrics
Blacksburg Pediatrics, PLC operated as a pediatric practice in
Blacksburg, Virginia. The Debtor sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Va. Case No.
22-70696) on Nov. 18, 2022, with $100,001 to $500,000 in both
assets and liabilities. Andrew S Goldstein, Esq., at Magee
Goldstein Lasky & Sayers, P.C. represents the Debtor as counsel.
BOY SCOUTS: Judge Andrews Questions Large Releases in Ch.11 Plan
----------------------------------------------------------------
Becky Yerak of The Wall Street Journal reports that an appellate
judge weighing the Boy Scouts of America's 2022 bankruptcy plan
said he was struck by the large number of entities that stand to
receive protection in the youth group's restructuring from
liability for past childhood sex abuse.
U.S. District Judge Richard Andrews noted during an appeals hearing
Friday that the Boy Scouts' chapter 11 case is unusual due to the
large number of liability releases it gives to local councils,
sponsors, insurers and others that themselves aren't bankrupt.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC, as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is
represented
by Kramer Levin Naftalis & Frankel, LLP.
CASH CLOUD: U.S. Trustee Appoints Creditors' Committee
------------------------------------------------------
The U.S. Trustee for Region 17 appointed an official committee to
represent unsecured creditors in the Chapter 11 case of Cash Cloud,
Inc.
The committee members are:
1. Genesis Global Holdco, LLC
Attn: Andrew Tsang
250 Park Ave South 5th Floor
New York, NY 10003
Phone: (551) 242-6865
Email: atsang@genesistrading.com
Counsel:
Jan VanLare
Cleary Gottlieb Steen & Hamilton, LLP
One Liberty Plaza
New York, NY 10006
Phone: (212) 225-2872
Email: jvanlare@cgsh.com
2. Cole Kepro International, LLC
Attn: Frederick Cook
4170-103 Distribution Circle
Las Vegas, NV 89030
Phone: (702) 633-270
Email: fred@colekepro.com
Counsel:
Paul R. Hage
Taft Stettinius & Hollister, LLP
27777 Franklin Rd., Suite 2500
Southfield, MI 48034
Phone: (248) 351-3000
Email: phage@taftlaw.com
3. Brink's U.S., a Division of Brink's, Incorporated
Attn: Tara Team & Kevin Boland
555 Dividend Drive, Suite 100
Coppell, TX 75019
Phone: (469) 549-6476 (Team)
Phone: (469) 549-6064 (Boland)
Email: tara.team@brinksinc.com
Email: kevin.boland@brinksinc.com
Counsel:
Robert Westermann and Brittany Falabella
Hirschler Fleischer, P.C.
2100 East Cary Street
Richmond, VA 23223
Phone: (804) 771-9549 (Falabella)
Phone: (804) 771-5610 (Westermann)
Email: bfalabella@hirsherlaw.com
Email: rwestmann@hirschlerlaw.com
4. National Services, LLC
315 Trane Drive
Knoxville, TN 37919
Phone: (865) 588-1558
Email: evans@nsafieldservice.com
Counsel:
Matthew Graves
Hodges Doughty & Carson
617 Main St.
P.O. Box 869
Knoxville, TN 37901
Phone: (865) 292-2244
Email: mgraves@hdclaw.com
5. OptConnect MGT, LLC
Attn: Chris Baird
865 W. 450 N., Suite 1
Kaysville, UT 84037
Phone: (801) 660-8921
Email: chris.baird@optconnect.com
Counsel:
Craig Druehl
Dechert LLP
Three Bryant Park, 1095 Avenue of Americas
New York, NY 10036
Phone: (212) 698-3601
Email: craig.druehl@dechert.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 Cash Cloud
Coin Cloud Inc., doing business as Coin Cloud, operates automated
teller machines for buying and selling Bitcoin, Ethereum, Dogecoin,
and more than 40 other digital currencies with cash, card and
more.
Coin Cloud Inc. sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Nev. Case No. 23-10423) on Feb. 7, 2023.
In the petition filed by Chris McAlary, as president, the Debtor
reported assets between $50 million and $100 million and estimated
liabilities between $100 million and $500 million.
The case is overseen by Honorable Bankruptcy Judge Mike K.
Nakagawa.
The Debtor tapped Fox Rothschild, LLP as legal counsel, and
Province, LLC as financial advisor. Stretto is the claims agent.
CCS-CMGC HOLDINGS: Ares Capital Marks $33.6M Loan at 22% Off
------------------------------------------------------------
Ares Capital Corporation has marked its $33.6 million loan extended
to CCS-CMGC Holdings, Inc to market at $26.2 million or 78% of the
outstanding amount, as of December 31, 2022, according to a
disclosure contained in Ares Capital's Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission on February 2, 2023.
Ares Capital is a participant in a First lien senior secured loan
to CCS-CMGC Holdings, Inc. The loan accrues interest at a rate of
9.91% (LIBOR (Q) + 5.50) per annum. The loan matures in October
2025.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
CCS-CMGC Holdings, Inc is a correctional facility healthcare
operator.
CENTER FOR AUTISM: Ares Capital Marks $2.1M Loan at 57% Off
-----------------------------------------------------------
Ares Capital Corporation has marked its $2.1M loan extended to
Center for Autism and Related Disorders, LLC to market at $900,000
or 43% of the outstanding amount, as of December 31, 2022,
according to a disclosure contained in Ares Capital's Form 10-K for
the fiscal year ended December 31, 2022, filed with the Securities
and Exchange Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured loan
to Center for Autism and Related Disorders, LLC. The loan matures
October 2023. The loan was on non-accrual status as of December
31, 2022.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Center for Autism and Related Disorders, LLC is an autism treatment
and services provider specializing in applied behavior analysis
therapy.
CENTER FOR AUTISM: Ares Capital Marks $6.8M Loan at 57% Off
-----------------------------------------------------------
Ares Capital Corporation has marked its $6.8 million loan extended
to Center for Autism and Related Disorders, LLC to market at $2.9
million or 43% of the outstanding amount, as of December 31, 2022,
according to a disclosure contained in Ares Capital's Form 10-K for
the fiscal year ended December 31, 2022, filed with the Securities
and Exchange Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured
revolving loan to Center for Autism and Related Disorders, LLC. The
loan matures November 2023. The loan was on non-accrual status as
of December 31, 2022.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Center for Autism and Related Disorders, LLC is an autism treatment
and services provider specializing in applied behavior analysis
therapy.
CENTER FOR AUTISM: Ares Capital Marks $600,000 Loan at 67% Off
--------------------------------------------------------------
Ares Capital Corporation has marked its $600,000 loan extended to
Center for Autism and Related Disorders, LLC to market at $200,000
or 33% of the outstanding amount, as of December 31, 2022,
according to a disclosure contained in Ares Capital's Form 10-K for
the fiscal year ended December 31, 2022, filed with the Securities
and Exchange Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured
revolving loan to Center for Autism and Related Disorders, LLC. The
loan matures November 2023. The loan was on non-accrual status as
of December 31, 2022.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Center for Autism and Related Disorders, LLC is an autism treatment
and services provider specializing in applied behavior analysis
therapy.
CENTER FOR AUTISM: Ares Capital Marks $9.5M Loan at 58% Off
-----------------------------------------------------------
Ares Capital Corporation has marked its $9.5M loan extended to
Center for Autism and Related Disorders, LLC to market at $4M or
42% of the outstanding amount, as of December 31, 2022, according
to a disclosure contained in Ares Capital's Form 10-K for the
fiscal year ended December 31, 2022, filed with the Securities and
Exchange Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured loan
to Center for Autism and Related Disorders, LLC. The loan matures
October 2023. The loan was on non-accrual status as of December
31, 2022.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Center for Autism and Related Disorders, LLC is an autism treatment
and services provider specializing in applied behavior analysis
therapy.
COMPUTE NORTH: Joint Liquidating Plan Confirmed by Judge
--------------------------------------------------------
Judge Marvin Isgur has entered findings of fact, conclusions of law
and order confirming the Third Amended Joint Liquidating Plan of
Mining Project Wind Down Holdings, Inc. (f/k/a Compute North
Holdings, Inc.), et al.
The Plan satisfies the requirements of Section 1123(a)(6) of the
Bankruptcy Code. Under the Plan, and pursuant to the Wind-Down
Transactions, certain of the Debtors will be merged into Compute
North LLC, and the governing corporate documents of each surviving
Debtor will be amended and restated to provide that each such
entity is prohibited from issuing non-voting equity securities. As
such, the Plan satisfies section 1123(a)(6) of the Bankruptcy
Code.
The Debtors have satisfied their burden with respect to the
propriety of the Debtor Release. The Debtor Release appropriately
offers protection to parties that provided consideration to the
Debtors and that participated in the Debtors' restructuring
process. The Released Parties made significant concessions and
contributions to the Chapter 11 Cases, including by actively
supporting the Plan and the Chapter 11 Cases. The scope of the
Debtor Release is appropriately tailored under the facts and
circumstances of the Chapter 11 Cases.
The Plan satisfies the requirements of section 1129(a)(3) of the
Bankruptcy Code. The Debtors have proposed the Plan in good faith
and not by any means forbidden by law. In so determining, the Court
has examined the totality of the circumstances surrounding the
filing of these Chapter 11 Cases, the Plan itself, the Wind Down
Restructuring, and the process leading to Confirmation of the Plan,
including the support of Holders of Claims and Interests for the
Plan, and the transactions to be implemented pursuant thereto.
The Debtors proposed the Plan with legitimate purposes including
(1) facilitating the sale of the Debtors' remaining Assets; (2)
providing a prompt and efficient liquidation under chapter 11; and
(3) maximizing the recovery to Holders of Claims and Interests
under the circumstances. All unresolved objections, statements, or
informal objections, if any, related to the Plan, the Disclosure
Statement, or Confirmation of the Plan are overruled on the
merits.
The Plan satisfies the requirements of section 1129(a)(11) of the
Bankruptcy Code. The Plan provides for the distribution of the
proceeds from the sale of substantially all of the Debtors' Assets
in accordance with the priority scheme of the Bankruptcy Code and
the terms of the Plan. Any assets remaining in the Debtors' Estates
as of the Effective Date will vest in the Reorganized Debtors, for
the administration, liquidation and distribution by the Plan
Administrator, in accordance with the Plan Administrator
Agreement.
A copy of the Confirmation Order dated February 16, 2023 is
available at https://bit.ly/3xDBHhL from PacerMonitor.com at no
charge.
Counsel to the Debtors:
James T. Grogan III, Esq.
PAUL HASTINGS LLP
600 Travis Street, 58th Floor
Houston, TX 77002
Telephone: (713) 860-7300
Facsimile: (713) 353-3100
E-mail: jamesgrogan@paulhastings.com
- and -
Luc Despins, Esq.
Sayan Bhattacharyya, Esq.
Daniel Ginsberg, Esq.
200 Park Avenue
New York, NY 10166
Telephone: (212) 318-6000
Facsimile: (212) 319-4090
E-mail: lucdespins@paulhastings.com
sayanbhattacharyya@paulhastings.com
danielginsberg@paulhastings.com
- and -
Matthew Micheli, Esq.
Michael Jones, Esq.
71 South Wacker Drive, Suite 4500
Chicago, IL 60606
Telephone: (312) 499-6000
Facsimile: (312) 499-6100
E-mail: mattmicheli@paulhastings.com
michaeljones@paulhastings.com
About Compute North Holdings
Computer North Holdings, Inc. -- https://www.computenorth.com/ --
is a crypto mining data center company. Compute North has four
facilities in the U.S. -- two in Texas and one in both South Dakota
and Nebraska, according to its website.
While cryptocurrency prices skyrocketed during the pandemic (with
bitcoin surging by 300% in 2020), the Federal Reserve's decision to
curb rising inflation by hiking interest rates has since ushered in
some of the crypto market's biggest losses in history. After
amassing a record value above $3 trillion in November 2021, the
cryptocurrency market posted its worst first half ever --
plummeting more than 70% through July. Terra's luna token, a once
top cryptocurrency worth more than $40 billion, lost virtually all
its value within a week in May after sister token TerraUSD, a
stablecoin meant to hold a price of $1, broke its dollar peg as
markets collapsed.
Crypto lenders such as Celsius boomed during the COVID-19 pandemic,
drawing depositors with high interest rates and easy access to
loans rarely offered by traditional banks. But the lenders'
business model came under scrutiny after a sharp sell-off in the
crypto market spurred by the collapse of major tokens terraUSD and
luna in May 2022. New Jersey-based Celsius froze withdrawals in
June 2022, citing "extreme" market conditions, cutting off access
to savings for individual investors and sending tremors through the
crypto market.
The list of major crypto firms that have filed for bankruptcy
protection in 2022 now include crypto lenders Celsius Network,
Three Arrows Capital, Voyager Digital, and crypto mining firm
Compute North.
Compute North Holdings and 18 affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Lead Case
No. 22-90273) on Sept. 22, 2022. In the petitions signed by Harold
Coulby, as authorized signatory, the Debtors reported assets and
liabilities between $100 million and $500 million.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Paul Hastings, LLP as bankruptcy counsel;
Jefferies, LLC as investment banker; and Portage Point Partners as
financial advisor. Epiq Corporate Restructuring, LLC is the claims,
noticing and solicitation agent.
On Oct. 6, 2022, the Office of the U.S. Trustee for Region 7
appointed an official committee of unsecured creditors in these
Chapter 11 cases. The committee tapped McDermott Will & Emery LLP
as its counsel.
CORELOGIC INC: Ares Capital Marks $155.7M Loan at 17% Off
---------------------------------------------------------
Ares Capital Corporation has marked its $155.7 million loan
extended to CoreLogic, Inc. and T-VIII Celestial Co-Invest LP, Inc.
to market at $129.2 million or 83% of the outstanding amount, as of
December 31, 2022, according to a disclosure contained in Ares
Capital's Form 10-K for the fiscal year ended December 31, 2022,
filed with the Securities and Exchange Commission on February 7,
2023.
Ares Capital is a participant in a Second lien senior secured loan
to CoreLogic, Inc. and T-VIII Celestial Co-Invest LP. The loan
accrues interest at a rate of 10.09% (LIBOR (Q) + 6.50%) per annum.
The loan matures June 2029.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
CoreLogic, Inc. and T-VIII Celestial Co-Invest LP provide
information, insight, analytics, software and other outsourced
services primarily to the mortgage, real estate and insurance
sectors.
CREATIVE INVESTORS: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------------
The U.S. Trustee for Region 21, until further notice, will not
appoint an official committee of unsecured creditors in the Chapter
11 case of Creative Investors, Inc., according to court dockets.
About Creative Investors
Creative Investors, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-10171) on Jan. 10,
2023, with $500,001 to $1 million in assets and $100,001 to
$500,000 in liabilities. Judge Laurel M. Isicoff oversees the
case.
Joel M. Aresty, P.A. is the Debtor's legal counsel.
CSTN MERGER: Moody's Assigns B3 Rating to New $450MM Secured Notes
------------------------------------------------------------------
Moody's Investors Service assigned B3 ratings to CSTN Merger Sub,
Inc.'s (dba Cornerstone Chemical Company or Cornerstone) $450
million senior secured notes due 2027. The outlook remains stable.
Cornerstone's other ratings remain unchanged and the ratings on the
existing global senior secured notes will be withdrawn upon close
of the transaction.
"The refinancing of the 2024 maturity should provide the company
with enough runway to improve operating performance and establish a
longer track record of free cash flow generation prior to having to
refinance its capital structure again," said John Rogers, Senior
Vice President at Moody's and lead analyst for Cornerstone.
Assignments:
Issuer: CSTN Merger Sub, Inc.
Senior Secured Regular Bond/Debenture, Assigned B3 (LGD4)
RATINGS RATIONALE
Cornerstone's B3 secured debt rating reflects the company's
elevated debt balance, single site operating risk, limited product
diversity, and the potential for weather related or other unplanned
outages on the Gulf Coast. The company is exposed to greater margin
volatility than most rated chemical companies due their limited
number of commodity chemicals produced. However, it does benefit
from cost advantages associated with synergistic manufacturing by
third party tenants located on its site (although unexpected
outages at these units have added to the volatility in profits),
improved access to low-cost raw materials, long-term customer
relationships, and meaningful portion of sales tied to
formula-based customer contracts. The company should also continue
to benefit from its position as the sole producer of melamine in
North America and the ongoing import tariffs imposed on melamine
from China.
Cornerstone is the second largest producer of acrylonitrile and
sole producer of melamine in the US. Cornerstone's operations are
considered critical to the supply/demand dynamics in the US for
both of these products. Cornerstone has an advantaged position in
melamine relative to European producers, who are incurring much
higher energy and ammonia costs. Consolidated Energy Limited (B2
positive) who produces melamine in Trinidad has a similar cost
position to Cornerstone.
Financial performance should improve in 2023 despite lower selling
prices based upon improved volumes and the absence of material
unplanned outages that adversely impacted performance in 2022.
Moody's expects that selling prices and demand for melamine will be
down due to a weaker housing and remodeling demand, but that
profitability will improve due to higher production volumes, lower
ammonia prices and better end market demand as the year progresses.
Profitability in sulfuric acid should be more stable although
volumes may be down a bit due to weaker industrial demand. Market
conditions and margins for acrylonitrile have worsened over the
past three quarters and are expected to remain weak throughout
2023.
Moody's expects that the company experienced a rocky fourth quarter
of 2022 due to declining commodity prices and material destocking
in the industry, which probably reduced sales volumes.
The weaker fourth quarter results will stress both credit metrics,
and to a lesser degree, liquidity, but the company's refinancing of
their senior secured notes is a strong credit positive, as it
provides the company with more time to establish a track record of
improved operating performance and free cash flow generation prior
to having to refinance its capital structure again. With the
refinancing completed, the company also has time to lower leverage
and keep it below 6x on a sustained basis, while demonstrating the
ability to generate meaningful free cash flow on a more consistent
basis. However, the increased interest cost from the new notes is a
modest negative.
The other credit issue facing Cornerstone is that its large
customer who has operations at the site that are highly integrated
with Cornerstone's processes, Roehm Holding GmbH (B3 negative),
wants to renegotiate the terms of a number of agreements expiring
in 2024 and 2025. Roehm is building a new facility in Texas using
what is expected to be a lower cost process to produce methyl
methacrylate ("MMA") and is likely trying to lower its costs at
Cornerstone's site and improve its operating flexibility. To
support future growth Moody's expects Roehm to need both
facilities, but may want the flexibility to lower production rates
at Cornerstone's site when necessary. The renegotiation of these
contract could have a meaningful impact on Cornerstone's future
profitability.
The stable outlook reflects the projected recovery in financial
metrics and the absence of material unplanned outages in 2023,
despite a more difficult operating environment with lower commodity
prices and some uncertainty over demand volumes.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's would likely consider an upgrade if Cornerstone is able to
sustain leverage below 6.5x, generates meaningful free cash flow in
most years and the renegotiation of agreements with Roehm do not
have a material negative impact on the company's operations.
Moody's would consider a downgrade, if Cornerstone's liquidity fall
below $15 million, leverage remains above 8.0x and free cash flow
continues to be negative.
ESG CONSIDERATIONS
Environmental, social, and governance factors are important
considerations in Cornerstone's credit quality but not a factor in
the action. CSTN's ESG risks have a negative impact on the rating
similar to most other companies owned by private equity sponsors,
as governance is viewed as weak from a credit standpoint due to the
tolerance for elevated leverage. In addition, environmental and
social risks reinforce the CIS-4 score. Environmental risks (E-5)
are very high for chemical companies due to the amount of waste and
pollution generated on an annual basis relative to most other
industries. Physical climate risks for CSTN are very high due to
the location of its sole facility on the US Gulf Coast. Social
risks (S-4) are high due to risks related to responsible production
and health and safety risks similar to most other commodity
chemical companies. Cornerstone is exposed to other environmental
and social risks that are typical for a chemical company, such as
accidental chemical spills or releases and social concerns due to
the size and location of its production facility.
Headquartered in Waggaman, LA, CSTN Merger Sub, Inc., more commonly
known as Cornerstone Chemical Company, produces base chemicals such
as acrylonitrile, urea, melamine, and sulfuric acid, as well as a
number of more specialty amines. Private equity firm Littlejohn &
Co. bought Cornerstone in August 2017 from H.I.G. Capital, which
has owned the company since the carve-out from Cytec Industries in
February 2011. Revenues are usually between $500 million to $1
billion depending on commodity prices.
The principal methodology used in this rating was Chemicals
published in June 2022.
CYXTERA DC: Moody's Cuts CFR to Caa2 & Alters Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service downgraded Cyxtera DC Holdings, Inc.'s
corporate family rating to Caa2 from B3 and its probability of
default rating to Caa2-PD from B3-PD. Cyxtera's senior secured
first lien credit facility, consisting of a $120.1 million revolver
due November 2023 and approximately $869 million of outstanding
term loans due May 2024, were downgraded to Caa2 from B3. The
outlook was changed to negative from stable.
The downgrades and change in outlook to negative reflect, in part,
Cyxtera's governance weaknesses, including aggressive financial
strategy and risk management practices and an inconsistent track
record as evidenced by the company's protracted and still
unsuccessful efforts to facilitate a refinancing of its revolver
well in advance of a November 1, 2023 maturity ($42 million was
outstanding as of September 30, 2022) as Moody's had previously
expected. Recently, Cyxtera's term loan lenders and the company
itself both hired advisors and legal counsel to assist in ongoing
refinancing negotiations. While Moody's believes Cyxtera's
underlying business fundamentals, bookings trends and demand-driven
capital spending remain solid growth drivers, the company's
near-term debt maturities and negative free cash flow over the next
two years heighten liquidity pressures. Cxytera's capital structure
is currently untenable without better visibility into its
refinancing path progress. Moody's believes the possibility of
default via distressed debt exchanges or a restructuring over the
next few months is a significant and increasing risk.
Downgrades:
Issuer: Cyxtera DC Holdings, Inc.
Corporate Family Rating, Downgraded to Caa2 from B3
Probability of Default Rating, Downgraded to Caa2-PD
from B3-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4
from SGL-3
Senior Secured First Lien Bank Credit Facility,
Downgraded to Caa2 (LGD3) from B3 (LGD3)
Outlook Actions:
Issuer: Cyxtera DC Holdings, Inc.
Outlook, Changed to Negative from Stable
RATINGS RATIONALE
Cyxtera's Caa2 CFR reflects elevated leverage, negative free cash
flow, heightened liquidity pressures tied to near-term debt
maturities, apparent diminishing capital market access
opportunities and a currently untenable capital structure that
implies a high risk of distressed debt exchanges or outright
default. The company's negative free cash flow is largely tied to
demand-driven capital intensity related to expansion objectives in
Tier 1 markets. Cyxtera continues to face risks inherent to the
industry, including intense competition and funding the high level
of capital investing necessary to meet rising customer demand and
to drive stronger top line growth. These factors are offset by
Cyxtera's relative scale as a large publicly traded global retail
colocation provider and its solid market position operating data
centers in major Tier 1 markets providing retail colocation and
interconnection services to a sizable customer base of large
enterprise and global service providers. In addition, the company's
contracted recurring revenue, sustained improvement in bookings and
churn trends, solid mid-single digit revenue growth, growing
interconnection revenue, rising capacity utilization and increased
productivity from a reorganized and regionally-focused sales force
and strengthened channel partner relationships are all foundational
strengths that can support steady credit profile improvement
assuming access to a balanced mix of both debt and equity capital.
Cyxtera's plans to convert to a real estate investment trust (REIT)
for federal income tax purposes by a January 1, 2024 target date
could enhance and diversify funding sources.
Moody's views Cyxtera's liquidity as weak, as reflected by its
SGL-4 speculative grade liquidity rating. As of September 30, 2022,
Cyxtera had $86 million of cash and cash equivalents, but committed
capital spending will cause balance sheet cash to decrease to
around $25 million for the fourth quarter ending December 31, 2022
in Moody's estimation. Cyxtera's current balance sheet cash and
available liquidity is insufficient to fully fund cash deficits
through year-end 2023, raising risks of a near-term default.
Assuming current debt levels remain approximately the same, Moody's
forecasts 8.5x debt leverage (Moody's adjusted) at year-end 2023,
falling to around 7.5x by year-end 2024. However, without a
successful equity capital infusion and full refinancing over the
next few months, Moody's believes Cyxtera is at very high risk for
default via distressed debt exchanges or a restructuring.
Cyxtera's existing $120 million revolver maturing November 1, 2023
contains a first lien net leverage ratio covenant of 7x that is
tested at the end of any quarter for which more than 35% of
revolver capacity is utilized. Cyxtera has additional liquidity
under a three-year $37.5 million accounts receivable securitization
facility which matures August 31, 2025, and of which $19.6 million
was drawn as of September 30, 2022.
The instrument ratings reflect both the probability of default of
Cyxtera, as reflected in the Caa2-PD probability of default rating,
an average expected family recovery rate of 50% at default, and the
loss given default (LGD) assessment of the debt instruments in the
capital structure based on a priority of claims. The senior secured
first lien credit facilities, which include the company's revolver
and term loans, are rated Caa2 (LGD3), in line with the Caa2
corporate family rating. The uncertainty around the level of
unsecured operating and capital lease rejection claims in a default
scenario results in a one notch lower rating to Caa2 for these
senior secured first lien credit facilities than indicated in
Moody's LGD model.
Governance was a factor in this rating downgrade. Cyxtera's ESG
Credit Impact Score was changed to CIS-5 (Very Highly Negative)
from CIS-4 (Highly Negative). The score reflects moderately
negative environmental risk (an Environmental Score of E-3),
neutral-to-low social risk (a Social Score of S-2) and very highly
negative governance risk (a Governance Score of G-5). The company's
Governance Score was changed to G-5 (Very Highly Negative) from G-4
(Highly Negative) to reflect Cyxtera's increasingly aggressive
financial strategy and risk management practices operating with
elevated debt leverage in a growing, capital intensive and
competitive industry, as well as an inconsistent track record as
recently evidenced by the company's protracted efforts to
facilitate a refinancing of its partially drawn revolver at least
12 months in advance of its maturity. The company benefits from
sizable public shareholders now since the July 31, 2021 merger with
publicly listed Starboard Value Acquisition Corp., a publicly
traded special purpose acquisition company, as well as a more
diversified group of equity investors that also includes public
retail equity investors. A consortium of private equity owners,
which maintains a slim majority of economic control in the company,
is balanced by a Board of Directors with solid representation among
independent members.
The negative outlook reflects heightening liquidity pressures and
elevated and rising debt leverage tied to capital intensity
inherent in the data center industry, compounded by capital market
access difficulties and a currently untenable capital structure.
Without improved financial flexibility in the very near term,
including access to a more balanced mix of debt and equity capital
sources to facilitate refinancing needs, Cyxtera's near term
ability to maintain and expand its market position and customer
base and service its sizable debt obligations will be severely
impaired.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade Cyxtera's ratings if: 1) the company
successfully completes a refinancing that results in a more
sustainable capital structure, 2) solid operating performance and
bookings and churn trends continue and 3) adequate liquidity is
maintained.
Moody's could downgrade Cyxtera's ratings if Moody's assessment of
the probability of default increases or the expectations for
recovery in default deteriorates.
The principal methodology used in these ratings was Communications
Infrastructure published in February 2022.
Headquartered in Coral Gables, FL, Cyxtera consists of 66
carrier-neutral data centers providing colocation services across
33 markets on three continents to over 2,300 leading enterprises,
service providers and government agencies.
DKI VENTURES: Gladstone Capital Marks $5.9M Loan at 25%Off
----------------------------------------------------------
Gladstone Capital Corporation has marked its $5,915,000 loan
extended to DKI Ventures, LLC to market at $4,407,000 or 75% of the
outstanding amount, as of December 31, 2022, according to a
disclosure contained in Gladstone Capital's Form 10-Q for the
quarterly year ended December 31, 2022, filed with the Securities
and Exchange Commission on February 6, 2023.
Gladstone Capital is a participant in a Secured First Lien Term
Debt to DKI Ventures, LLC. The loan accrues interest at a rate of
12.4% (S + 8.0%) per annum. The loan matures December 2023.
Gladstone Capital Corporation was incorporated under the Maryland
General Corporation Law on May 30, 2001 and completed an initial
public offering on August 24, 2001. Gladstone Capital is an
externally managed, closed-end, non-diversified management
investment company that has elected to be treated as a business
development company under the Investment Company Act of 1940, as
amended.
DKI Ventures, LLC provides emergency response and restoration
services. The Company offers water damage, fire and smoke, storm
damage, mold remediation, catastrophe response, personal items,
tree removal, and health care services.
DRIVERGENT INC: Unsecured Creditors to Split $270K in Plan
----------------------------------------------------------
Drivergent, Inc., filed with the U.S. Bankruptcy Court for the
Eastern District of Michigan a Plan of Reorganization dated
February 16, 2023.
The Debtor is a transportation logistics company located in Fraser,
MI that specializes in pupil transportation for school districts
across the Metro Detroit area.
The Debtor is solely owned by David Holls and employs its own
sales, mechanical, and operations staff. The Debtor offers numerous
services to its customers, including school bus route services,
sedan route services, athletic transportation and field trip
transportation services, and school bus driver staffing.
The Debtor was obviously struck hard during the Covid-19 pandemic
and resulting shut down orders from the State of Michigan; however,
the Debtor believes it has a viable reorganization path forward
through the Chapter 11 process. The Debtor commenced this Case as a
means to facilitate an orderly restructuring of its outstanding
obligations and believes its efforts will maximize recovery to all
constituents.
Class VIII consists of the Holders of Allowed Unsecured Claims.
Neither pre-confirmation interest nor post confirmation interest on
Allowed Class VIII Claims will be paid. A Creditor in this Class
shall receive a pro rata distribution incident to it's Allowed
Unsecured Claim based on the following payment structure until
either the respective Claim is paid in full or December 31, 2027.
This Class is Impaired.
Payment Due Date Amount
---------------- ------
December 31, 2023 $15,000
March 31, 2024 $15,000
June 30, 2024 $15,000
September 30, 2024 $15,000
December 31, 2024 $15,000
March 31, 2025 $16,250
June 30, 2025 $16,250
September 30, 2025 $16,250
December 31, 2025 $16,250
March 31, 2026 $16,250
June 30, 2026 $16,250
September 30, 2026 $16,250
December 31, 2026 $16,250
March 31, 2027 $16,250
June 30, 2027 $16,250
September 30, 2027 $16,250
December 31, 2027 $16,250
Proceeds available to prepetition unsecured creditors under the
Plan shall be $270,000.
Class IX shall consist of the Interests of the Debtor. Holders of
the Interests shall retain their interests in the Debtor and
Reorganized Debtor in the same manner as percentage upon
confirmation of the Plan. This Class is Unimpaired.
On the Effective Date, all of the Debtor's rights, titles, and
interests in and to all Assets shall revest in the Reorganized
Debtor to be operated and distributed by the Reorganized Debtor
pursuant to the provisions of this Plan.
A full-text copy of the Plan of Reorganization dated February 16,
2023 is available at https://bit.ly/3Z2X9by from PacerMonitor.com
at no charge.
Counsel for Debtor:
Elliot G. Crowder, Esq.
Ernest M. Hassan, III, Esq.
Stevenson & Bullock, P.L.C.
26100 American Drive, Suite 500
Southfield, MI 48034
Tel: (248) 354-7906
Fax: (248) 354-7907
Email: ecrowder@sbplclaw.com
Email: ehassan@sbplclaw.com
About Drivergent Inc.
Fraser, Mich.-based Drivergent, Inc., offers numerous services to
its customers, including school bus route services, sedan route
services, athletic transportation and field-trip transportation
services, and school bus driver staffing across the Metro Detroit
area. The company is solely owned by David Holls and employs its
own sales, mechanical and operations staff.
Drivergent filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. E.D. Mich. Case No. 22-47987) on Oct. 12,
2022, with up to $500,000 in assets and up to $1 million in
liabilities. Charles M. Mouranie has been appointed as Subchapter
V trustee.
Charles D. Bullock, Esq., at Stevenson & Bullock, P.L.C, is the
Debtor's counsel.
DUNBAR PARTNERS: Case Summary & Four Unsecured Creditors
--------------------------------------------------------
Debtor: Dunbar Partners BSD LLC
c/o Jeffrey Zwick & Associates
Suite 403
266 Broadway
Brooklyn, NY 11211
Business Description: Dunbar Partners is engaged in activities
related to real estate. The Debtor is a
limited liability company that is the
purchaser pursuant to a contract of sale and
certain amendments thereto between
it and Dunbar Owner LLC as seller for the
real property and improvements thereon
located at 2802 Frederick Douglass
Boulevard, New York, NY.
Chapter 11 Petition Date: February 21, 2023
Court: United States Bankruptcy Court
Eastern District of New York
Case No.: 23-40575
Judge: Hon. Nancy Hershey Lord
Debtor's Counsel: Fred R. Ringel, Esq.
LEECH TISHMAN ROBINSON BROG, PLLC
875 Third Avenue
New York, NY 10022
Tel: (212) 603-6300
Total Assets: $95,500,000
Total Liabilities: $92,395,000
The petition was signed by David Goldwasser, Sole Member of Preston
Ct. Shares, sole member of Debtor.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/BSKCA7Y/Dunbar_Partners_BSD_LLC__nyebke-23-40575__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Four Unsecured Creditors:
Entity Nature of Claim Claim Amount
1. Benjamin Neuman $3,000,000
1238 57th St.
Brooklyn, NY 11219
2. Dunbar Owner LLC Seller Under $89,250,000
250 West 55th Street Contract of Sale
35th Fl.
New York, NY 10019
3. Jeffrey Zwick & Assocs. $120,000
266 Broadway
Suite 403
Brooklyn, NY 11211
4. Joe Safdie $25,000
164 Suffolk Street
New York, NY 10002
E QUALCOM: Reaches Settlement Agreement with Secured Lender
-----------------------------------------------------------
E Qualcom, Corp., submitted a Revised Second Amended Plan of
Reorganization dated February 16, 2023.
This Plan of Reorganization proposes to pay creditors of the Debtor
from cash flow from operations and from rental income.
As demonstrated by the liquidation analysis, if the Debtor was
liquidated, creditors would not receive any recovery, the
employees' jobs would be terminated, and approximately customers
would no longer be serviced on the Debtor. Further, pursuant to
relevant provisions of Florida Statute 718.116, Class 2 would
receive $0 in a liquidation.
This Plan provides for two classes of secured claims; one class of
unsecured claims; and one class of equity security holders.
Unsecured creditors holding allowed claims will receive
distributions, which the proponent of this Plan has valued at
approximately 5 cents on the dollar. This Plan also provides for
the payment of administrative and priority claims.
Class 1 consists of Secured Claim of Eric and Barbara Castro. The
Secured portion of the Castros' claim has been fixed by agreement
at $820,000.00 and will be paid in 6 equal monthly payments, in the
amount of $5,500.00, with a balloon payment of $820,000.00 due in
month 7. Distributions to the Castros on their secured claim shall
commence within 14 days after the entry of an order confirming this
Second Amended Plan (the "Confirmation Order"), and shall be due
and payable on that day for each month thereafter.
In the event that the Debtor has received a written loan
commitment, within 6 months of the entry of the Confirmation Order,
the amount of which, combined with the Debtor's funds on hand, is
sufficient to pay the Secured Claim in full, the Debtor shall have
an additional 60 days to close the loan and pay the Secured Claim
in full; provided, however, that during such 60-day period, Debtor
shall make an additional $5,500.00 on the first day of the 7 month.
The remaining portion of the Castros' claim will be included in
Class 4 – General Unsecured Creditors.
Subject to a 21-day cure period, in the event that the Debtor fails
to make timely distributions on the Secured Lender's Class 1
Secured Claim, or fails to keep adequate insurance protecting the
Property, the Secured Lender shall be entitled to immediately
record a deed, transferring ownership of the Property to the
Lender, and proceed immediately with a sale of the Property.
The agreement between the Debtor and the Secured Lender is further
memorialized in a Settlement Agreement between the parties of even
date, which is incorporated by reference. In the event the terms of
this Plan and the Settlement Agreement conflict, the terms of the
Settlement Agreement shall control.
Like in the prior iteration of the Plan, all unsecured claims
allowed under §502 of the Code will be paid 10% of the allowed
claim in 60 equal monthly payments with no interest beginning 30
days after the effective date of the Plan.
The payments required under the Plan will be made from the Debtor's
business operations and rental income, supported by a personal
guaranty from the Principal, Luis Navia.
A full-text copy of the Revised Second Amended Plan dated February
16, 2023 is available at https://bit.ly/3EmRwgA from
PacerMonitor.com at no charge.
Attorney for Debtor:
David W. Langley, Esq.
8551 W. Sunrise Boulevard, Suite 303
Plantation, FL 33322
Tel: (954) 356-0450
Fax: (954) 356-0451
Email: dave@flalawyer.com
About E Qualcom, Corp.
E Qualcom, Corp., filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
22-15957) on Aug. 1, 2022. In the petition filed by Luis Navia, as
officer, the Debtor reported assets between $1 million and $10
million and liabilities between $1 million and $10 million.
Aleida Martinez-Molina has been appointed as Subchapter V trustee.
David W. Langley, Attorney At Law, is the Debtor's counsel.
EDGE ADHESIVES: Gladstone Capital Marks $6.1M Loan at 60% Off
-------------------------------------------------------------
Gladstone Capital Corporation has marked its $6,140,000 loan
extended to Edge Adhesives Holdings, Inc. to market at $2,452,000
or 40% of the outstanding amount, as of December 31, 2022,
according to a disclosure contained in Gladstone Capital's Form
10-Q for the quarterly year ended December 31, 2022, filed with the
Securities and Exchange Commission on February 6.
Gladstone Capital is a participant in a Secured First Lien Term
Debt to Edge Adhesives Holdings, Inc. The loan accrues interest at
a rate of 9.9% (L + 5.5%) per annum. The loan matures August 2024.
Gladstone Capital has classified the Debt as "non-accrual".
Gladstone Capital Corporation was incorporated under the Maryland
General Corporation Law on May 30, 2001 and completed an initial
public offering on August 24, 2001. Gladstone Capital is an
externally managed, closed-end, non-diversified management
investment company that has elected to be treated as a business
development company under the Investment Company Act of 1940, as
amended.
Edge Adhesives, Inc. manufactures adhesives and sealing products.
The Company offers tapes, coatings, gaskets, and extruded butyls.
Edge Adhesives serves customers in the States of Texas, Ohio, and
Indiana.
FRONTIER FINANCIAL: Gladstone Marks $198,000 Loan at 77% Off
------------------------------------------------------------
Gladstone Capital Corporation has marked its $198,000 loan extended
to Frontier Financial Group Inc. to market at $45,000 or 23% of the
outstanding amount, as of December 31, 2022, according to a
disclosure contained in Gladstone Capital's Form 10-Q for the
quarterly year ended December 31, 2022, filed with the Securities
and Exchange Commission on February 6, 2023.
Gladstone Capital is a participant in an Unsecured Convertible Debt
to Frontier Financial Group Inc. The loan accrues interest at a
rate of 6.0% per annum. The loan was scheduled to mature in June
2022.
Gladstone Capital Corporation was incorporated under the Maryland
General Corporation Law on May 30, 2001 and completed an initial
public offering on August 24, 2001. Gladstone Capital is an
externally managed, closed-end, non-diversified management
investment company that has elected to be treated as a business
development company under the Investment Company Act of 1940, as
amended.
Frontier Financial Corporation operates as a bank holding company.
The Bank provides a full range of consumer banking services,
including savings and checking accounts, installment and commercial
lending, safe deposit facilities, and other consumer and business
related financial services.
FS ENERGY: Moody's Lowers CFR & Senior Secured Debt Rating to B1
----------------------------------------------------------------
Moody's Investors Service has downgraded the corporate family
rating and long-term senior secured debt rating of FS Energy and
Power Fund (FSEP) to B1 from Ba3 and assigned a stable outlook.
This action concludes the review for downgrade that Moody's
initiated on November 28, 2022.
RATINGS RATIONALE
Moody's downgraded FSEP's ratings to reflect the company's weakened
liquidity management. The maturity date of the company's secured
bank facility (February 16, 2023) has now passed. Since there has
been no event of default, amendment or refinancing transaction
announced, Moody's has assumed that the company repaid this
facility from available cash, which Moody's believes included
proceeds from recent sales of level 2 investments. While repayment
of the facility reduces FSEP's leverage from an already relatively
low level (0.44x debt to equity as of September 30, 2022), Moody's
believes that repayment also indicates limited funding availability
for the company's assets on commercially viable terms, a
characteristic not consistent with a Ba3 rating. Furthermore,
Moody's believes that FSEP will have difficulty refinancing its
$457 million of senior secured notes maturing in August 2023 on
commercially viable terms, indicating weak funding access, and will
instead need to generate sufficient funds either through asset
sales or investment repayments to address the notes.
FSEP reported cash and level 2 debt investments of $246 million and
$555 million, respectively, as of September 30. FSEP does not have
a revolver to supplement its liquidity, relying instead on illiquid
investment repayments and asset sales to build cash. Additionally,
the majority of the company's net investment income is paid out to
shareholders, limiting the company's ability to retain earnings.
However, Moody's does expect that the cash and level 2 investments
that remain are sufficient to address the company's senior secured
notes maturing in August.
FSEP's B1 ratings are supported by its adequate capitalization,
with a stronger asset coverage ratio than is typically observed at
other rated BDCs, offset by its higher risk energy-focused
investment portfolio with a low level of senior secured investments
relative to rated BDC peers. The ratings are constrained by FSEP's
weak funding and liquidity profile, with large debt maturity
concentrations, a sole reliance on secured debt and weak funding
access. FSEP's ratings also reflect its weak profitability and
operating performance over time, driven in part by the volatility
of its energy investments.
FSEP's governance was a consideration in this rating action. FSEP's
governance Issuer Profile Score was changed to G-4 from G-3.
However, the overall Credit Impact Score (CIS-4) is unchanged. The
G-4 score reflects FSEP's inconsistent and weaker-than-peer
financial performance since inception, the company's highly secured
and concentrated capital structure as well it's weaker-than-peer
access to funding and liquidity management. Additional governance
considerations include the external manager's significant influence
over the BDC's strategy and risk appetite and its high dividend
payout that is required as a registered investment company.
The stable outlook reflects Moody's view that the company's cash
and level 2 investments provide adequate coverage of its remaining
outstanding debt and that the company will be able to repay the
August senior secured notes from the proceeds of asset sales in the
event that it is not able to efficiently refinance the
obligations.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
FSEP's ratings could be downgraded if the company does not show
strong, near-term progress toward building greater cash coverage of
its upcoming bond maturity.
If FSEP is able to secure funding ahead of its bond maturity on
favorable terms, providing it with additional liquidity capacity
and demonstrating its funding access, Moody's could upgrade the
ratings. An upgrade would also be contingent upon the company's
earnings and asset quality showing improving trends.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
GLOBAL MEDICAL: Ares Capital Marks $12.1M Loan at 30% Off
---------------------------------------------------------
Ares Capital Corporation has marked its $12.1 million loan extended
to Global Medical Response, Inc. and GMR Buyer Corp. to market at
$8.5 million or 70% of the outstanding amount, as of December 31,
2022, according to a disclosure contained in Ares Capital's Form
10-K for the fiscal year ended December 31, 2022, filed with the
Securities and Exchange Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured loan
to Global Medical Response, Inc. and GMR Buyer Corp. The loan
accrues interest at a rate of 8.63% (LIBOR (M) + 4.25%) per annum.
The loan matures March 2025.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Global Medical Response Inc and GMR Buyer Corp are provider of
Emergency air medical services.
GLOBAL MEDICAL: Ares Capital Marks $25.7M Loan at 30% Off
---------------------------------------------------------
Ares Capital Corporation has marked its $25.7 million loan extended
to Global Medical Response, Inc. and GMR Buyer Corp. to market at
$17.9 million or 70% of the outstanding amount, as of December 31,
2022, according to a disclosure contained in Ares Capital's Form
10-K for the fiscal year ended December 31, 2022, filed with the
Securities and Exchange Commission on February 7, 2023.
Ares Capital is a participant in a first lien senior secured loan
to Global Medical Response, Inc. and GMR Buyer Corp. The loan
accrues interest at a rate of 8.42% (LIBOR (M) + 4.25%) per annum.
The loan matures in October 2025.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Global Medical Response Inc and GMR Buyer Corp are provider of
emergency air medical services.
GLOBAL MEDICAL: Ares Capital Marks $95.4M Loan at 30% Off
---------------------------------------------------------
Ares Capital Corporation has marked its $95.4 million loan extended
to Global Medical Response, Inc. and GMR Buyer Corp. to market at
$71.6 million or 70% of the outstanding amount, as of December 31,
2022, according to a disclosure contained in Ares Capital's Form
10-K for the fiscal year ended December 31, 2022, filed with the
Securities and Exchange Commission on February 7, 2023.
Ares Capital is a participant in a Second lien senior secured loan
to Global Medical Response, Inc. and GMR Buyer Corp. The loan
accrues interest at a rate of 11.10% (LIBOR (M) + 6.75%) per annum.
The loan matures December 2029.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Global Medical Response Inc and GMR Buyer Corp are provider of
Emergency air medical services.
HOLLEY INC: Moody's Lowers CFR to B3 & Alters Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service downgraded Holley Inc.'s corporate family
rating to B3 from B2, probability of default rating to B3-PD from
B2-PD and senior secured rating to B3 from B2. The outlook was
revised to negative from stable. The speculative grade liquidity
rating is unchanged at SGL-3.
The downgrade of the ratings and change in outlook reflects Moody's
expectation that Holley's earnings and cash flow will remain
pressured in 2023 as declining demand for its discretionary
automotive products persists. Holley's weaker sales and higher
costs in 2022 have resulted in significant margin erosion and high
financial leverage. As a result, Moody's anticipates Holley will be
in violation of the maximum leverage covenant required in its
credit agreement by the end of the first quarter of 2023. This
would restrict access to the $125 million revolving credit
facility.
Moody's expects that Holley will be able to partially offset the
impact of volume declines on earnings in 2023 by rightsizing its
cost base and realizing the benefit from lower freight costs.
However, EBITA margin is expected to remain below 15%, which is
materially lower than historical levels that exceeded 20%. Further,
Moody's expects Holley to generate positive free cash flow in 2023,
but notes that the company may be unable to unwind the recent build
up in inventory should demand declines be more severe than
anticipated.
Downgrades:
Issuer: Holley Inc.
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
Senior Secured Bank Credit Facility, Downgraded to B3 (LGD4) from
B2 (LGD4)
Outlook Actions:
Issuer: Holley Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Holley's B3 CFR reflects the company's modest scale, significant
demand risk given the discretionary nature of its products and high
financial leverage. The rating is supported by a strong competitive
position within the niche market for performance automotive
aftermarket products, a historically strong operating margin and
adequate liquidity.
Moody's expects Holley's revenue to decline around 5% in 2023, but
notes that demand drop off could be more pronounced as consumer
discretionary spending remains weak. Holley experienced substantial
organic revenue growth in 2020 and 2021 during the pandemic, which
Moody's believes was the result of a significant pull-forward in
demand.
Holley's weaker performance in 2022 resulted from several factors,
including difficulty in procuring semiconductor chips for key
products, inventory destocking initiatives at primary customers,
and softening consumer demand. As a result, Holley's earnings were
negatively impacted and debt/EBITDA is expected to be a very high
7x at the end of 2022. Moody's expects debt/EBITDA to only modestly
decline in 2023 as Holley stabilizes earnings through cost
savings.
The negative outlook reflects the risk that Holley may be unable to
stem declines in earnings and cash flow over the next 12 months if
demand declines for its products is substantial. Further, without
covenant relief, Moody's believes that revolver availability will
be severely limited.
Holley's SGL-3 speculative grade liquidity rating reflects Moody's
expectation for adequate liquidity over the next 12-18 months.
Moody's expects Holley to maintain a cash balance of at least $20
million over this horizon while generating modestly positive free
cash flow of at least 2% of total debt in 2023. The primary risk to
Holley's liquidity is a likely covenant violation absent any
potential covenant amendment. Holley's $125 million revolving
credit facility, expiring 2026 and undrawn at end of 3Q 2022,
contains a maximum net leverage ratio of 5x. Moody's expects the
company to breach the level by the end of the first quarter of
2023. Moody's expects Holley to maintain cash in excess of any
revolver borrowings, but the loss of or reduced access to the
company's revolver will materially weaken the company's liquidity.
Governance risks continue to have a highly negative impact on
Holley's ratings. The departure of the company's CEO in February
2023 creates, in Moody's view, elevated execution risk as the
company navigates through a more challenging demand environment.
FACTORS THAT COULD LEAD TO A DOWNGRADE OR UPGRADE OF THE RATINGS
The ratings could be downgraded if earnings and cash flow do not
improve due to either persistent revenue declines or the company is
unable to adjust its cost structure to lower volumes. Expectation
for debt/EBITDA to be sustained above 6.5x or an erosion of
liquidity with negative free cash flow could pressure the ratings.
Lastly, an inability to adequately address a potential financial
covenant violation and restore revolver availability would result
in a downgrade.
The ratings could be upgraded if Holley generates consistently
strong organic revenue growth and restores its EBITA margin to near
20%. Debt/EBITDA maintained below 5.5x and good liquidity with
sufficient access to its external credit facilities and free cash
flow to debt of at least 5% could also support an upgrade.
The principal methodology used in these ratings was Automotive
Suppliers published in May 2021.
Holley Inc., headquartered in Bowling Green, KY, designs and
manufactures performance engine products for the enthusiast focused
automotive aftermarket. The company's product offerings include
electronic fuel injection and tuner systems, ignition controls,
carburetors, superchargers, exhaust systems and other products
designed to enhance the performance of the car. Revenue for the
twelve months ended September 2022 was $714 million.
INVACARE CORP: U.S. Trustee Appoints Creditors' Committee
---------------------------------------------------------
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Invacare
Corporation and its affiliates.
The committee members are:
1. Wilmington Trust, National Association
as Successor Trustee
Peter Finkel, VP
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402-1544
Tel: (612) 217-5629
Email: pfinkel@wilmingtontrust.com
Counsel:
Andrew I. Silfen
Beth M. Brownstein
ArentFox Schiff LLP
1301 Avenue of the Americas, 42 Floor
New York, NY 10019
Tel: (212) 484-3900
Fax: (212) 484-3990
Email: Andrew.silfen@afslaw.com
Email: Beth.brownstein@afslaw.com
2. Birlasoft Solutions Inc.
Roop Singh
399 Thornall Street, 8th Floor
Edison, NJ 08837
Tel: (917) 862-4410
Email: Roop.singh@birlasoft.com
Counsel:
John Melko
Foley & Lardner LLP
1000 Louisiana Street, Suite 2000
Houston, TX 77002
Tel: (713) 276-5500
Fax: (713) 276-5555
Email: jmelko@foley.com
3. Max Fulton
2001 Riverside Drive
Chattanooga, TN 37406
Tel: (303) 619-2260
Email: Max.Fulton@kencogroup.com
Counsel:
Benesch
41 South High Street, Suite 2600
Columbus, OH 43215-6163
Tel: (614) 223-9382
Email: snylen@beneschlaw.com
4. Rhenus Logistics China Ltd-Xiamen Branch
Joanna Zou
Unit EF, 27 Floor, International Plaza No. 8
Lujiang Road, Siming District,
Xiamen, Fujian, China 361001
Tel: +86-(0)592-2388683
Fax: +86-(0)592-2388679
Cell: +86-13515962062
Email: Joanna.zou@cn-rhenus.com
Email: Sean.ma@cn.rhenus.com
Email: Carol.chi@cn.rhenus.com
5. Changzhou Dade Machinery Co., Ltd.
Ted Yu
No. 51 Kunlun Road, New Industrial Area
Changzhou, Jiangsu, China
Tel: 0086-0519-68197790
Fax: 0086-0519-85922991
Email: ted@czdade.net
Counsel:
Vahe Khojayan
Henry Li
Michell Lee Yi Hui
YK Law LLP
445 S. Figueroa Street, Ste 2280
Los Angeles, CA 90071
Tel: (213) 401-0970 x 1004
Fax: (213) 529-3044
Email: vkhojayan@yklaw.us
Email: hli@yklaw.us
Email: Mlee@yklaw.us
6. All Pro Freight Systems, Inc.
Chriss E. Haas, President
1006 Crocker Road
Westlake, OH 44145
Tel: (216) 469-9242
Email: chaas@allprofreight.com
Counsel:
Steven B. Beranek
Scott R. Poe
Corsaro & Associates Co., LPA
28039 Clemens Road
Westlake, OH 44145
Tel: (440) 871-4022
Fax: (440) 871-9567
Email: sberanek@corsarolaw.com
Email: spoe@corsarolaw.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 Invacare Corporation
Headquartered in Elyria, Ohio, Invacare Corporation (IVC) is a
leading manufacturer and distributor in its markets for medical
equipment used in non-acute care settings. The company provides
clinically complex medical device solutions for congenital (e.g.,
cerebral palsy, muscular dystrophy, spina bifida), acquired (e.g.,
stroke, spinal cord injury, traumatic brain injury, post-acute
recovery, pressure ulcers) and degenerative (e.g., ALS, multiple
sclerosis, elderly, bariatric) ailments. Invacare employs
approximately 3,400 associates and markets its products in more
than 100 countries around the world.
Invacare Corp. and 2 U.S. subsidiaries 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
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. Street Advisory Group, LLC is serving as strategic
communications advisor to the company.
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.
Brown Rudnick LLP is serving as legal counsel and GLC Advisors &
Co., LLC is serving as investment banker to the ad hoc committee of
unsecured notes.
JDC HEALTHCARE: Ares Capital Marks $4.8M Loan at 46% Off
--------------------------------------------------------
Ares Capital Corporation has marked its $4.8 million loan extended
to JDC Healthcare Management, LLC to market at $2.6 million or 54%
of the outstanding amount, as of December 31, 2022, according to a
disclosure contained in Ares Capital's Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured
revolving loan to JDC Healthcare Management, LLC. The loan matures
April 2024. The loan was on non-accrual status as of December 31,
2022.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
JDC Healthcare Management, LLC is a Dental services provider.
JDC HEALTHCARE: Ares Capital Marks $40.9M Loan at 46% Off
---------------------------------------------------------
Ares Capital Corporation has marked its $40.9 million loan extended
to JDC Healthcare Management, LLC to market at $22.1 million or 54%
of the outstanding amount, as of December 31, 2022, according to a
disclosure contained in Ares Capital's Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured loan
to JDC Healthcare Management, LLC. The loan matures April 2024.
The loan was on non-accrual status as of December 31, 2022.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
JDC Healthcare Management, LLC is a Dental services provider.
JDI DATA: Files Emergency Bid to Use Cash Collateral
----------------------------------------------------
JDi Data Corporation asks the U.S. Bankruptcy Court for the
Southern District of Florida, Fort Lauderdale Division, for
authority to use cash collateral on an interim, emergency basis, in
accordance with the budget, with a 10-15% variance.
The Debtor requires the use of cash collateral to:
a. Pay its secured creditor, the U.S. Small Business
Administration, its monthly debt payment which payment amount is
unknows as the first payment for the SBA loan is coming due. The
SBA Loan was for $1.8 million. The SBA has a UCC-1 recorded in the
Secured Transaction Registry in Florida, which is the State of
Incorporation for the Debtor;
b. Pay all necessary utilities, including remote cloud
services provided by AWS;
c. Pay all applicable taxes and insurances; and
d. Otherwise remain compliant with its current monthly
operational expenses.
The Debtor's proposed use of the cash collateral is for the month
of February and March 2023, to pay the Debtor's estimated monthly
expenses and operating costs as set forth on the budget.
The SBA appears to be the only secured creditor of the Debtor but,
the Debtor's management is verifying the execution of a Security
Agreement to the UCC-1, which was recorded on September 5, 2020,
being owed the principal sum of $1.8 million plus applicable
interest. Although the SBA retains a blanket UCC-1 interest in the
Debtor's personal property, the Debtor proposes to provide adequate
protection to the SBA in the form of the regular monthly payments
due under the note, or in a lesser amount as agreed upon.
Once the Debtor confirms the existence of a Security Agreement and
Promissory Note with the SBA, adequate protection will be provided
as the Debtor will also seek an Order granting the secured
creditor(s) a post-petition security interest to the same extent
and dignity as any security interest(s) the secured creditor(s) had
prepetition, upon its prospective final cash collateral Order.
A copy of the motion is available at https://bit.ly/3Z2LklS from
PacerMonitor.com.
About JDi Data Corporation
JDi Data Corporation has developed innovative solutions for
professionals within the insurance, risk, and legal communities.
Its software solutions are designed to allow organizations to
invest in tools that truly transform their day-to-day processes.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-11322) on February
17, 2022. In the petition signed by John Heller as CRO, the Debtor
disclosed up to $10 million in both assets and liabilities.
Judge Scott M. Grossman oversees the case.
Scott M. Grossman, Esq., at Moffa & Bierman, represents the Debtor
as legal counsel.
JLK CONSTRUCTION: Seeks Chapter 11 Bankruptcy Protection
--------------------------------------------------------
JLK Construction LLC filed for chapter 11 protection in the Western
District of Missouri.
The Debtor is a Missouri corporation in good standing located in
Saint Joseph MO where it operates its business from a leased office
location. JLK excavates and moves dirt. JLK will also handle
concrete flatwork such as driveways and parking lots though not
building slabs or structural work. JLK maintains all required
licenses and insurances. It is a union shop.
Since 2018, JLK has done work on a good number of projects. JLK is
presently working on a sub-division in Piper, Kansas, building
roads and sidewalks and doing grading work for a housing project.
The work also includes underground utility work and building storm
drains. JLK has 6 employees on this job. This job will last about
12 months into the spring, 2023. Total charges for the job will
likely be $2.2 million.
In 2021, the Company's gross income rose to $6,633,555, from
$1,885,303 in 2020. But income dropped to $3,756,595 in 2022. The
Company reported a net operating income of $587,953 in 2021, from a
net loss of $422,763 in 2020. The Company had a net loss of
$1,617,947 in 2022.
Prior to May 2022, bills and payroll were generally paid on time
though JLK had taken out some hard money loans and was paying them
back. JLK missed out on a $5 million contract in May 2022. JLK
had been in negotiations with a GC and had been told that JLK would
be awarded the contract.
In May, 2022, the GC pulled back and delayed making any award to
JLK. This created a serious problem because in anticipation of
this job, JLK had bulked up on machinery, equipment and vehicles.
It had borrowed $5 million from NewTek to acquire the M&E and to
retire old debt. However, the project was put on hold with no new
bidding being requested.
To fill the gap of the $5 million job and to keep employees
employed, JLK
took out hard money loans which, by definition, are meant to be
difficult to pay back. They crimped cash flow. JLK also took
smaller jobs to keep its employees working. However the work did
not add up to $5 million. To get this work, margins were reduced.
JLK now bids its jobs at a 30% margin. These jobs were bid at a
much lower margin.
As the hard money lenders going after JLK and its monies, this
impacted
cash flow and it became harder to pay vendors. Union dues and
benefits fell into arrears. Equipment payments were delayed too.
About JLK Construction
JLK Construction LLC is an excavation services provider in
Northwest Missouri. It moves dirt, excavates dirt and does basic
concrete flatwork.
JLK Construction LLC filed a petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. W.D. Miss. Case No. 23-50034) on
Feb. 13, 2023.
In the petition filed by Jesse L. Kagarice, as managing member, the
Debtor reported total assets of $5,465,012 and total liabilities of
$8,348,453. The petition states that funds will be available to
unsecured creditors.
The Debtor tapped Evans & Mullinix, P.A., as counsel, and LUCOVE,
SAY & CO. as accountant.
JRT340ASSOCIATES: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: JRT340ASSOCIATES, LLC
133 West 72nd Street, Suite 201
New York, NY 10023
Chapter 11 Petition Date: February 21, 2023
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 23-10235
Debtor's Counsel: Clifford A. Katz, Esq.
PLATZER, SWERGOLD, GOLDBERG, KATZ & JASLOW, LLP
475 Park Avenue South
18th Floor
New York, NY 10016
Tel: 212-593-3000
Email: ckatz@platzerlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Michael Trencher as manager.
The Debtor filed an empty list of its 20 largest unsecured
creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/7WJ7STI/JRT340ASSOCIATES_LLC__nysbke-23-10235__0001.0.pdf?mcid=tGE4TAMA
K&N PARENT: Moody's Assigns Caa1 CFR, Outlook Stable
----------------------------------------------------
Moody's Investors Service assigned new ratings for K&N Parent, Inc.
(New), including a Caa1 corporate family rating and a Caa1-PD
probability of default rating. Concurrently, Moody's assigned a B1
rating to the company's new first lien priority term loan facility
due February 2027 and a Caa2 rating to its new first lien term loan
due August 2027. The outlook is stable.
Proceeds from K&N's new term loans were used to complete a
restructuring of K&N's capital structure in February 2023. The
out-of-court restructuring reduced total funded debt from
approximately $450 million to a new total of about $190 million.
The former creditors now hold the equity of the company.
K&N's post-restructuring credit profile reflects its improved
financial flexibility with adjusted debt/EBITDA expected to be
around 6x by the end of 2023. Further, the company's liquidity is
improved with materially lower cash interest costs and an adequate
level of cash. However, liquidity is limited by expectations for
about breakeven free cash flow in 2023 and no access to a committed
revolving credit facility.
Governance risks, which have had a very highly negative impact to
K&N's credit profile, remain a key consideration to the ratings.
K&N's financial leverage remains high and Moody's believes there is
execution risk for K&N to realize planned cost savings over the
next twelve months.
Assignments:
Issuer: K&N Parent, Inc. (New)
Corporate Family Rating, Assigned Caa1
Probability of Default Rating, Assigned Caa1-PD
Backed Senior Secured First Lien Term Loan,
Assigned B1 (LGD2)
Backed Senior Secured First Lien Term Loan,
Assigned Caa2 (LGD4)
Outlook Actions:
Issuer: K&N Parent, Inc. (New)
Outlook, Assigned Stable
RATINGS RATIONALE
K&N's Caa1 CFR reflects the company's modest scale with exposure to
discretionary consumer products, high financial leverage and track
record of negative free cash flow. Moody's expects demand for K&N's
premium automotive filtration products to remain pressured through
2023 although ongoing commercial and pricing initiatives should
keep overall revenue relatively flat year-over-year.
K&N's multi-year corporate initiatives, including the relocation of
its manufacturing and distribution facilities to Texas from
California, contributed to the company's financial distress ahead
of its debt restructuring. Moody's believes these initiatives,
which also included customer and product consolidation efforts,
were largely completed in 2022. As a result, Moody's believes K&N's
earnings and cash flow should improve in 2023 despite softer
consumer demand.
The stable outlook reflects Moody's expectation for K&N to maintain
high financial leverage and adequate liquidity as it navigates a
challenging demand environment over the next 12 months.
Moody's expects K&N to maintain adequate liquidity, primarily
supported by a cash balance expected to be maintained around $30
million. Free cash flow is expected to improve to about breakeven
in 2023 upon lower cash interest costs and reduced capex spend.
Free cash flow had been materially negative in past years, partly
due to costs tied to completing the relocation of its manufacturing
facilities. K&N's liquidity is limited by the absence of a
committed revolving credit facility to support the company should
free cash flow remain negative.
FACTORS THAT COULD LEAD TO A DOWNGRADE OR UPGRADE OF THE RATINGS
The ratings could be downgraded if demand for K&N's products
declines and the company is unable to improve earnings. Weakened
liquidity with continuing negative free cash flow could result in a
rating downgrade.
The ratings could be upgraded if K&N is able to realize cost
savings to materially improve earnings such that debt/EBITDA is
expected to remain below 6x on a sustained basis. In addition,
improving liquidity with positive free cash flow would be necessary
to support an upgrade.
The principal methodology used in these ratings was Automotive
Suppliers published in May 2021.
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.
LATHAN EQUIPMENT: Amends Navitas & Channel Secured Claims Pay
-------------------------------------------------------------
Lathan Equipment Co., LLC, submitted a First Amended Plan of
Reorganization for Small Business.
This Plan of Reorganization proposes to pay creditors of the Debtor
from cash flow from operations.
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.
Classes 8, 9 and 10 consist of the Secured claims of Navitas Credit
Corp. Navitas Credit Corp. shall be deemed secured for Agreement #
40625451, Agreement # 40610621, and Agreement # 40323857 in the
amount of (i) $40,797 as of Jan. 26, 2023 for Account # 40625451,
plus a per diem of $16.62 until the Effective Date; (ii) $58,739 as
of Jan. 26, 2023 for Account # 40610621, plus a per diem of $24.22
until the Effective Date, and (iii) $14,722.70 as of January 26,
2023 for Account # 40323857, plus a per diem of $6.07 until the
Effective Date. In addition, Navitas shall be paid the reduced
amount of $9,500.00 in attorney fees and costs.
Hence the total amount allowed under the Plan and to be paid to
Navitas is $114,259.20 as of January 26, 2023, plus a per diem
subsequent to January 26, 2023 of $46.91 until the Effective Date,
with any adequate protection payments made between January 26,
2023, and the Effective Date to be credited to Debtor, and such
total amount due to Navitas plus $9,500.00 in attorney fees shall
be deemed the allowed "Navitas Claim" which claim shall be paid at
the rate of 7% per annum over a term of 7 years in fixed monthly
payments in the estimated amount of $1,868.00 due on the 25th day
of each and every month commencing on the twenty-fifth day of the
first month following the effective date of the Plan. Navitas shall
have no unsecured claims against the Debtor, the bankruptcy estate
or the Reorganized Debtor except if a default occurs as set forth
herein.
Navitas' claims against Andrew J Lathan individually on account of
his personal guaranty of Debtor's obligation to Navitas shall be
fully released upon completion by the Debtor or Reorganized Debtor
of all the monthly payments to Navitas except if an uncured "Event
of Default as to Navitas" occurs. Navitas shall forbear from
pursuing any action to collect against Andrew J Lathan or to
recover the equipment Debtor financed except in the event that a
monthly plan payment to Navitas is paid late or is not paid (an
"Event of Default as to Navitas" or a "Default") and such Event of
Default as to Navitas is not cured within 21 days of Navitas
emailing a notice to the last known email address of Debtor and an
email to Debtor's counsel. A failure of Debtor or the Reorganized
Debtor to maintain insurance shall also be an Event of Default as
to Navitas. In the event of a Default which is not cured within 21
days of Notice of Default, Navitas may, without further action by
the Bankruptcy Court, pursue its claims against Andrew J Lathan.
Except as expressly set forth in the Confirmed Plan, the terms and
conditions of Agreement # 40625451, Agreement # 40610621, and
Agreement # 40323857 entered into by the Debtor and/or by Andrew J
Lathan shall each continue to govern and control the dealings
between Navitas and/or the Debtor and/or the Reorganized Debtor;
and between Navitas and Andrew J Lathan. To the extent that the
terms of the Confirmed Plan conflict with the contracts or
agreements entered into by the Debtor and Andrew J Lathan, the
terms of the Confirmed Plan control. Finally, upon the occurrence
of an uncured Event of Default as to Navitas, the Reorganized
Debtor (or its successor) shall within five business days turn over
to Navitas the equipment financed by Navitas in the same condition
as delivered, reasonable wear and tear excepted. In addition,
Andrew J Lathan is deemed to waive any statute of limitations
defense and any similar defense at law or in equity as
consideration for the forbearance of Navitas set forth herein.
Navitas shall retain any liens it may have.
Class 16 consists of the Secured claim of Channel Partners. Channel
Partners Capital, LLC shall have an allowed, secured claim in the
amount of $50,064.02 as of February 1, 2023, after crediting Debtor
for all post-petition payments made. As additional adequate
protection for Channel's secured claim, Channel shall be granted a
security interest in all the Debtor's equipment and vehicles and
all proceeds, substitutions and replacements thereof (the "Channel
Collateral"), which security interest shall be perfected by the
filing of a UCC-1 financing statement and the recording of a lien
on the certificate of title for each titled vehicle, and shall be
subordinate to existing purchase money security interests in the
Channel Collateral.
The Debtor shall be permitted to sell or transfer any item of
Channel Collateral, subject to first obtaining written
authorization from Channel, which authorization shall not be
unreasonably withheld. Debtor shall remit the proceeds of sale of
Channel Collateral, net of payment of debt secured by any purchase
money security interest, directly to Channel or otherwise provide
Channel with a replacement lien on any equipment or vehicle(s)
acquired with any portion of the sale proceeds. The Debtor's
failure to remit sale proceeds to Channel or facilitate execution
of documents reasonably required by Channel to obtain a replacement
lien in the purchased equipment or vehicle, shall be considered an
event of default that permits Channel to recover and liquidate the
Channel Collateral without further order of the Court.
Channel's claim of $50,064.02 will be paid with interest at 8.5%
per annum over a term of 5 years in fixed monthly payments in the
amount of $1,027.14, due on the 6th day of each month commencing on
the sixth day of the first month following the effective date of
the Plan.
Like in the prior iteration of the Plan, Unsecured claims totaling
$84,235, will be paid in full without interest in 20 consecutive
equal quarterly payments in the amount of $4,212, payable on the
last day of March, June, September and December each year
commencing March 30, 2025.
The Debtor shall continue in control of its business and shall have
all rights to operate in the ordinary course of business. The
Debtor shall continue to be owned, operated and managed by Andrew
Lathan. The Plan shall be funded from cash flow from business
operations. Debtor shall retain all property of the estate.
A full-text copy of the First Amended Plan dated February 16, 2023
is available at https://bit.ly/3Z6oM3A from PacerMonitor.com at no
charge.
Attorney for the Plan Proponent:
David H. Ealy, Esq.
Trevett Cristo P.C.
Two State Street, Suite
1000 Rochester, NY 14614
Phone: (585) 454-2181
Email: dealy@trevettcristo.com
About Lathan Equipment
Lathan Equipment Co., LLC, provides tree services, roll-off
services and equipment sales.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D.N.Y. Case No. 22-10186) on March 4,
2022. In the petition signed by Andrew J. Lathan, sole
member/president, the Debtor disclosed $1,240,890 in assets and
$675,575 in liabilities.
Judge Carl L. Bucki oversees the case.
David H. Ealy, Esq., at Cristo Law Group LLC, is the Debtor's
counsel.
LIFESCAN GLOBAL: Ares Capital Marks $14.3M Loan at 28% Off
----------------------------------------------------------
Ares Capital Corporation has marked its $14.3 million loan extended
to Lifescan Global Corporation to market at $10.3 million or 72% of
the outstanding amount, as of December 31, 2022, according to a
disclosure contained in Ares Capital's Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured loan
to Lifescan Global Corporation. The loan accrues interest at a rate
of 9.74% (LIBOR (Q) + 6%) per annum. The loan matures in October
2024.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Lifescan Global Corporation is a provider of blood glucose
monitoring systems for home and hospital use.
LTL MANAGEMENT: Thousands of J&J Talc Suits in N.J. Get New Judge
-----------------------------------------------------------------
Brendan Pierson of Reuters reports that a new judge has been
assigned to oversee tens of thousands of lawsuits in New Jersey
federal court against Johnson & Johnson (JNJ.N) over its talc
products, two weeks after an appeals court rejected the company's
plan to offload the claims into bankruptcy.
U.S. District Judge Michael Shipp, based in Trenton, will take over
the long-running litigation from former Chief District Judge Freda
Wolfson, who retired from the bench on Feb. 1, according to an
order filed on Monday. The cases, numbering more than 38,000, had
been on hold since October 2021, when a J&J subsidiary newly
created to hold the talc liabilities filed for bankruptcy.
Plaintiffs have said that J&J's Baby Powder and other talc products
contain asbestos and caused cancer.
J&J maintains its consumer talc products are safe and confirmed
through thousands of tests to be asbestos-free. The company has
said it will challenge the ruling by the Philadelphia-based 3rd
U.S. Circuit Court of Appeals dismissing the bankruptcy, which it
said was intended in good faith to resolve talc claims efficiently
and equitably.
Latest Updates
Shipp, 57, was appointed to the bench by Democratic President
Barack Obama in 2012. He has presided over a separate lawsuit
against J&J, in which an emeritus Harvard Law School professor is
seeking to force the company to put his proposal requiring
shareholders to bring any securities claims through private
arbitration up for a shareholder vote. Shipp dismissed the most
recent version of the lawsuit, which is now on appeal.
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He has overseen several pharmaceutical industry cases including
patent disputes and a class action accusing Merck & Co Inc of
discriminating against pregnant employees, which settled in 2018.
Before the 2021 bankruptcy filing, J&J had faced costs of $3.5
billion in verdicts and settlements stemming from the talc
litigation.
A 2018 Reuters investigation found that J&J knew for decades that
asbestos, a known carcinogen, was present in its Baby Powder and
other cosmetic talc products. The company stopped selling Baby
Powder in the United States and Canada in May 2020, in part due to
what it called "misinformation" and "unfounded allegations" about
the talc-based 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.
MERIDIAN INVENTORY: Case Summary & Seven Unsecured Creditors
------------------------------------------------------------
Debtor: Meridian Inventory Services, Inc.
3166 Cherokee Street
Ste 101E
Kennesaw, GA 30144
Business Description: The Debtor provides medical & pharmaceutical
inventory services.
Chapter 11 Petition Date: February 21, 2023
Court: United States Bankruptcy Court
Northern District of Georgia
Case No.: 23-51682
Debtor's Counsel: Will Geer, Esq.
ROUNTRE, LEITMAN, KLEIN & GEER, LLC
2987 Clairmont Road Suite 350
Atlanta, GA 30329
Tel: 404-584-1238
Email: wgeer@rlkglaw.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Christopher E Green, CEO/CFO.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/CWDHZBI/Meridian_Inventory_Services_Inc__ganbke-23-51682__0001.0.pdf?mcid=tGE4TAMA
MICROSTRATEGY INC: Widens Net Loss to $1.5 Billion in 2022
----------------------------------------------------------
Microstrategy Incorporated has filed with the Securities and
Exchange Commission its Annual Report on Form 10-K disclosing a net
loss of $1.47 billion on $499.26 million of total revenues for the
year ended Dec. 31, 2022, compared to a net loss of $535.48 million
on $510.76 million of total revenues for the year ended Dec. 31,
2021.
As of Dec. 31, 2022, the Company had $2.41 billion in total assets,
$2.79 billion in total liabilities, and a total stockholders'
deficit of $383.12 million.
Microstrategy stated, "Our ability to make scheduled payments on
and to refinance our indebtedness depends on and is subject to our
financial and operating performance, which is influenced, in part,
by general economic, financial, competitive, legislative,
regulatory, counterparty business, and other risks that are beyond
our control, including the availability of financing in the U.S.
banking and capital markets. If our cash flows and capital
resources are insufficient to fund our debt service obligations, we
may be forced to reduce or delay capital expenditures, sell assets,
seek additional capital, or restructure or refinance our
indebtedness. We cannot assure you that future borrowings will be
available to us in an amount sufficient to enable us to service our
indebtedness, to refinance our indebtedness, or to fund our other
liquidity needs. Even if refinancing indebtedness is available,
any refinancing of our indebtedness could be at higher interest
rates and may require us to comply with more onerous covenants that
could further restrict our business operations. In addition, our
bitcoin acquisition strategy anticipates that we may issue
additional debt in future periods to finance additional purchases
of bitcoin, but if we are unable to generate sufficient cash flow
to service our debt and make necessary capital expenditures, we may
be required to sell bitcoin. These alternative measures may not be
successful and may not permit us to meet our scheduled debt service
obligations or our financial covenants, which could cause us to
default on our debt obligations. In addition, any failure to make
payments of interest and principal on our outstanding indebtedness
on a timely basis would likely result in a reduction of our credit
rating, which could harm our ability to incur additional
indebtedness.
"Upon the occurrence of an event of default under any of
MicroStrategy's indebtedness, the holders of the defaulted
indebtedness could elect to declare all the funds borrowed to be
due and payable, together with accrued and unpaid interest and, in
the case of our 2028 Secured Notes, enforce their security
interests on substantially all of MicroStrategy's assets and the
assets of our subsidiary guarantors, but excluding bitcoins that
are currently owned by our MacroStrategy subsidiary or acquired by
MacroStrategy in future periods in transactions permitted by the
terms of the 2028 Secured Notes. Similarly, upon the occurrence of
an event of default under the Credit and Security Agreement, the
lender thereunder could elect to declare all outstanding loan
principal under the 2025 Secured Term Loan to be due and payable,
together with accrued and unpaid interest, and enforce its security
interest on the $5.0 million cash reserve account and the bitcoin
held in the account securing the borrowings under the Credit and
Security Agreement. Any of these events could in turn result in
cross-defaults under our other indebtedness. We may not have
sufficient funds available to pay the amounts due upon any such
default, particularly in the event that there has been a decrease
in the market value of our bitcoin holdings, and we may not be able
to raise additional funds to pay such amounts on a timely basis, on
terms we find acceptable, or at all. Any financing that we may
undertake under such circumstances could result in substantial
dilution of our existing stockholders, and in the absence of being
able to obtain such financing, we could be forced into bankruptcy
or liquidation."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001050446/000156459023002012/mstr-10k_20221231.htm
About MicroStrategy
Microstrategy Incorporated is an enterprise analytics software and
services company. Since its founding in 1989, MicroStrategy has
been focused on empowering organizations to leverage the immense
value of their data. MicroStrategy pursues two corporate
strategies in the operation of its business. One strategy is to
acquire and hold bitcoin and the other strategy is to grow its
enterprise analytics software business.
* * *
As reported by the TCR on June 15, 2021, S&P Global Ratings
assigned its 'CCC+' issuer credit rating to Tysons Corner,
Va.-based MicroStrategy Inc. S&P said, "The stable outlook
reflects our expectation that MicroStrategy's operating results
will remain consistent over the next 12 given its good recurring
revenue base and the low interest expense on its convertible debt,
which will allow it to maintain good EBITDA interest coverage and
generate positive free operating cash flow. We expect these
factors to enable the company to sustain its capital structure over
the subsequent 12 months."
MITCHELL INTERNATIONAL: Ares Capital Marks $98M Loan at 17% Off
---------------------------------------------------------------
Ares Capital Corporation has marked its $98.1 million loan extended
to Mitchell International, Inc. to market at $81 million or 83% of
the outstanding amount, as of December 31, 2022, according to a
disclosure contained in Ares Capital's Form 10-K for the fiscal
year ended December 31, 2022, filed with the Securities and
Exchange Commission on February 7, 2023.
Ares Capital is a participant in a Second lien senior secured loan
to Mitchell International, Inc. The loan accrues interest at a rate
of 11.23% (LIBOR (Q) + 6.50%) per annum. The loan matures October
2029.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Mitchell International, Inc is a provider of technology,
connectivity, and information solutions to the property and
casualty insurance industry.
MMJS ENGINEERING: Unsecureds' Recovery Hiked to 16.81% in 60 Months
-------------------------------------------------------------------
MMJS Engineering submitted a First Amended Chapter 11 Plan of
Reorganization dated February 16, 2023.
Otay Mesa Sales, Inc. filed a complaint in the Superior Court of
San Diego for breach of contract on September 16, 2022. Thereafter,
Otay sought an ex parte prejudgment writ of attachment against the
Debtor on October 11, 2022. This action prompted the Debtor to file
the present case to resolve this litigation and to otherwise
reorganize its debts.
Otay filed an adversary proceeding against the Debtor on January
22, 2023, seeking determination of non-dischargeability of its debt
pursuant to 11 U.S.C. §523(a)(2), 11 U.S.C. §523(a)(4) and 11
U.S.C. Sec. 523(a)(6) (the "Complaint"). The Debtor filed a Motion
to Dismiss Complaint Pursuant to Rule 12(b)(6) of the Fed. R. Civ.
Proc. on February 1, 2023. The hearing is set for March 30, 2023.
San Diego Gas & Electric Company ("SDG&E") filed POC Nos. 9-12 for
claims relating to property damage. SDG&E filed a Motion for Relief
from Automatic Stay on January 23, 2023; in order to pursue
insurance and bond proceeds. Thereafter, the Debtor entered into a
Stipulation Granting San Diego & Electric Company Limited Relief
from Automatic Stay filed on January 27, 2023 (the "SDG&E
Stipulation"); the Court entered an order approving the SDG&E
Stipulation on February 9, 2023. As such, SDG&E is not a claimant
in the general unsecured class.
The Debtor filed a Joint Stipulation Between the Debtor and John
Deere Construction & Forestry Company for Adequate Protection and
Plan Treatment on February 1, 2023 (the "John Deere Stipulation");
the Debtor thereafter filed a Supplement to the John Deere
Stipulation on February 7, 2023; the Court entered the order
granting approving the John Deere Stipulation on February 12, 2023.
The main terms of the John Deere Stipulation are enumerated in the
treatment of Class 4.
The Debtor believes that the equipment/vehicles associated with the
MMJS Enterprises' Obligations are vital to the Debtor's ability to
reorganize. The Debtor uses the equipment/vehicles for its
day-to-day operations. The Debtor uses the equipment for the
installation of the fiber optic conduit and electrical conduit and
does asphalt restoration at job sites. The Debtor uses the
vehicles/trailer to transport the equipment and supplies to each
job site. The Sprinter van stores the Falcon locator/GPS and other
important equipment used in the operation of the drill.
The use of the equipment/vehicles on jobs generates revenue on
behalf of the estate and its creditors. If the Debtor is not able
to make the loan/lease payments, it will lose the
equipment/vehicles. The Debtor would be in a situation where it
would have to stop work on jobs and/or refuse work if it is forced
to abandon the agreements. This would cause the Debtor to fail
because it will not be able to replace the equipment/vehicles
immediately and its customers will not wait. They will simply
terminate the contracts and find a replacement. The Debtor will not
be able to generate any revenue because it will not be able to find
other jobs due to the lack of resources.
The Debtor is proposing to pay claims over 60 months, subject to
the classification of each claim.
Class 4 consists of the claim of John Deere Construction & Forestry
Company. While the contract for the purchase agreement is between
Claimant and the Debtor's predecessor MMJS Enterprises, LLC, the
Debtor contends that it has an equitable ownership interest in the
equipment by virtue of having been in possession of the equipment
since the contract's inception and by having made all the payments
required to be made under the contract for purchase of the
equipment since July 2020. The vehicle is used exclusively in the
conduct of the Debtor's business and the Debtor, and its estate has
obtained value from the possession and use of the equipment. The
Debtor contends that the equipment is necessary to the Debtor's
reorganization.
Subject to the terms and conditions of this Stipulation, as
adequate protection, the Debtor will pay the current accruing
monthly Contract payments of $5,422.71 each beginning January 24,
2023, and continuing through confirmation of the Plan, dismissal,
or conversion to a Chapter 7.
Class 8 consists of the Claim of Altec Industries, Inc. While the
contract for the rental agreement is between Claimant and the
Debtor's predecessor MMJS Enterprises, LLC, the Debtor contends
that it has an equitable interest in the lease agreement by virtue
of having been in possession of the equipment since the contract's
inception and by having made all the payments required to be made
under the contract since July 2020. The equipment is used
exclusively in the conduct of the Debtor's business and the Debtor,
and its estate has obtained value from the possession and use of
the equipment. The Debtor contends that the agreement is necessary
to the Debtor's reorganization. The Debtor has been making
postpetition monthly contractual payments to claimant and will
continue to do so pursuant to the rental agreement. The Debtor will
cure the prepetition arrears of $862 in full on the Effective Date.
Class 10 consists of the Secured Claim of Velocity Capital Group
LLC. Claimant holds a lien on all of the Debtor's assets in the
amount of approximately $29,725. Claimant (its successors or
assigns) will be paid its secured claim of $19,801 (the "Secured
Claim"), at 7.5% over 60 months, estimated to be $397/month. The
remainder of the claim ($9,924) shall be treated as unsecured and
paid its pro rata share of the payments made to that class.
Class 12 consists of General Unsecured Claims. In the present case,
the Debtor estimates that general unsecured debts total
approximately $612,667. Class 12 will be paid $103,000; this is
estimated to pay approximately 16.81% of each claim. This Class is
impaired.
The Debtor will fund the Plan from the operation of its business
and the funds that it has/will have accumulated in its DIP bank
accounts.
A full-text copy of the First Amended Plan dated February 16, 2023
is available at https://bit.ly/3lUjMk6 from PacerMonitor.com at no
charge.
Attorneys for Debtor:
Roksana D. Moradi-Brovia, Esq.
Matthew D. Resnik, Esq.
RHM Law, LLP
17609 Ventura Blvd., Suite 314
Encino, CA 91316
Phone: (818) 285-0100
Fax: (818) 855-7013
Email: roksana@RHMFirm.com
matt@RHMFirm.com
About MMJS Engineering
MMJS Enginering installs fiber optic conduit and electrical conduit
and does asphalt restoration. The Debtor sought for relief under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Cal. Case No.
22-02691) on Oct. 19, 2022. In the petition filed by Mark Anthony
Martini, chief executive officer, the Debtor disclosed up to $1
million in both assets and liabilities.
Judge Margaret M. Mann oversees the case.
Matthew D. Resnik, Esq., at RHM Law, LLP, is the Debtor's legal
counsel.
NELLSON NEUTRACEUTICAL: Moody's Withdraws 'B3' Corp. Family Rating
------------------------------------------------------------------
Moody's Investors Service has withdrawn Nellson Neutraceutical,
LLC's ratings including the B3 Corporate Faming Rating, the B3-PD
Probability of Default Rating, and the B2 rating for the company's
first lien credit facility, which consisted of $65 million
revolving credit facility and $265 million term loan, due December
2023. The rating action follows Nellson's amendment to extend the
term loan maturity and substantially all of the revolver
commitment.
Withdrawals:
Issuer: Nellson Nutraceutical, LLC
Corporate Family Rating, Withdrawn, previously rated B3
Probability of Default Rating, Withdrawn, previously
rated B3-PD
Backed Senior Secured 1st Lien Term Loan A1, Withdrawn,
previously rated B2 (LGD3)
Backed Senior Secured 1st Lien Revolving Credit Facility A1,
Withdrawn, previously rated B2 (LGD3)
Backed Senior Secured 1st Lien Revolving Credit Facility A2,
Withdrawn, previously rated B2 (LGD3)
Issuer: Les Aliments Multibar Inc.
Backed Senior Secured 1st Lien Term Loan A2, Withdrawn,
previously rated B2 (LGD3)
Outlook Actions:
Issuer: Les Aliments Multibar Inc.
Outlook, Changed To Rating Withdrawn From Stable
Issuer: Nellson Nutraceutical, LLC
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
Nellson Nutraceutical, LLC, headquartered in Anaheim, CA, provides
outsourced manufacturing capacity to the U.S. consumer packaged
food companies that sell nutritional bars and functional powders.
NEW MONARCH: Fine-Tunes Plan Documents
--------------------------------------
New Monarch Machine Tool, Inc., submitted an Amended Plan of
Reorganization for Small Business.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income of between $175,000 and
$200,000. The Debtor will commit to a distribution to unsecured
creditors of $200,000.
The final Plan payment is expected to be paid in December 2025.
This Plan of Reorganization proposes to pay creditors of the Debtor
from revenue generated from the operation of its business.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 7 cents on the dollar. This Plan also provides for
the payment of administrative and priority claims.
Like in the prior iteration of the Plan, allowed general unsecured
claims will receive a pro rata amount of the Debtor's projected
2023, 2024 and 2025 disposable income. The distributions will be
made in annual payments in December of each year. The Debtor
reserves the right to make a lump sum payment at any time equal to
the unpaid balance of its 2023 – 2025 projected disposable
income.
The Debtor's equity holders will retain their ownership interests
but will receive no distribution under the plan.
Funding for the plan will come from the Debtor's projected
disposable income from 2023 – 2025. Alternatively, the Debtor
reserves the right to make a lump sum payment equal to the unpaid
balance of its projected disposable income, at any time, in full
satisfaction of its obligations under the plan.
The Amended Plan added the following paragraph:
If the Debtor's Plan is confirmed under § 1191(a), on the
effective date of the Plan, the Debtor will be discharged from any
debt that arose before confirmation of this Plan, to the extent
specified in § 1141(d)(1)(A) of the Code, except that the Debtor
will not be discharged of any debt:
* (i) imposed by this Plan; or
* (ii) to the extent provided in § 1141(d)(6).
If the Debtor's Plan is confirmed under § 1191(b), confirmation of
this Plan does not discharge any debt provided for in this Plan
until the court grants a discharge on completion of all payments
due within the first 3 years of this Plan, or as otherwise provided
in § 1192 of the Code. The Debtor will not be discharged from any
debt:
* (i) on which the last payment is due after the first 3 years
of the plan, or as otherwise provided in § 1192; or
* (ii) excepted from discharge under § 523(a) of the Code,
except as provided in Rule 4007(c) of the Federal Rules of
Bankruptcy Procedure.
A full-text copy of the Amended Plan dated February 16, 2023 is
available at https://bit.ly/3xBky8p from PacerMonitor.com at no
charge.
About New Monarch Machine Tool
New Monarch Machine Tool, Inc. -- https://www.monarchmt.com/ --
offers full line of metalworking equipment and services.
New Monarch Machine Tool, Inc., filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. N.D.N.Y.
Case No. 22-30384) on June 16, 2022. In the petition filed by
Warren D. Wolfson, as secretary, the Debtor estimated assets and
liabilities between $1 million and $10 million each.
Mark J. Schlant has been appointed as Subchapter V trustee.
Jeffrey A. Dove, Esq., at Barclay Damon LLP, is the Debtor's
counsel.
Key Bank National Association, as lender, is represented by Paul A.
Levine, Esq. at Lemery Greisler, LLC.
NIELSEN & BAINBRIDGE: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------------
The U.S. Trustee for Region 7 appointed an official committee to
represent unsecured creditors in the Chapter 11 case of Nielsen &
Bainbridge, LLC.
The committee members are:
1. Wangbin Decorative Material Co.
No. 92, Chaoyang East Road
Fotang Town
Yiwu City, Zhejiang Province
China
Attention:
Brian Mitteldorf
Tel: 818-523-6660
Email: blm@cabcollects.com
2. Lamplux Co., Ltd
No. 176 Xinwu Village Group
Guangdong Province
China
Attention: Shawn
Tel:+86-18038181699
Email: shawn@lamplux.com
3. Rising-Sun Lighting Factory
Sucum Industrial Zone
Yinfeng Road, Danzao Town, Nanhai District
Foshan City, Guangdong Province
Postal Code 528216, China
Attention: Kate
Tel: +086-757-85404083
Email: kate@risingsunlight.com
4. Nantong Rachel Textiles Xo., Ltd.
Jiang‘an Town, Rugao District
Nantong, Jiangsu
China 226000
Attention: Selina
Tel: 18806298533
Email: selina@racheltextiles.com
5. Haining Lige Textile Co., Ltd
No. 127 Wensheng North Road
Shengshi, Xucan,
Haining, Zhejiang
China 314422
Attention: Amy
Tel: 86-13750747101
Email: amy@league-textile.com
6. Chenyu (Anhui) Cultural Arts Co., Ltd
No. 8 Gaoyongdong Road
Kunshan, Jiangsu Province
China
Attention: Nancy
Tel: 0086-563-6028666
Email: sales02@chinachenyu.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 Nielsen & Bainbridge
Nielsen & Bainbridge, LLC together with its debtor and non-debtor
affiliates, is an end-to-end supplier of home decor and hardwire
lighting operating under the trade name NBG Home. NBG Home serves
a portfolio of prominent retail partners in the design,
development, and fulfillment of products such as lighting, accents,
furniture, soft home goods, wall decor, and frames sold under
various brand names. NBG Home operates eight business units
touching the brick-and-mortar and eCommerce spaces.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 23-90071) on Feb.
8, 2023. In the petition signed by Hope Margala, as authorized
signatory, the Debtors disclosed up to $500 million in assets and
up to $1 billion in liabilities.
Judge David R. Jones oversees the cases.
The Debtors tapped Jackson Walker LLP as local bankruptcy counsel,
Kirkland and Ellis LP and Kirkland and Ellis International LLP as
general bankruptcy counsel, Alvarez and Marsal North America, LLC
as financial advisor, Guggenheim Securities, LLC as investment
banker, Hilco Real Estate, LLC as exclusive sales agent, and Omni
Agent Solutions as claims, noticing, solicitation agent and
administrative advisor.
KKR Loan Administration Services, LLC, serves as administrative
agent and collateral agent under the DIP Facility. Attorneys to
the DIP Lenders are Dennis F. Dunne, Esq., and Matthew L. Brod,
Esq., at Milbank, LLP.
Wells Fargo Bank, National Association is the administrative agent
and collateral agent under the Prepetition ABL Facility. Attorneys
to the Prepetition ABL Agent are Julia Frost-Davies, Esq., and
Christopher L. Carter, Esq., at Morgan, Lewis & Bockius, LLP.
NORTHWEST SENIOR: Judge Gives Ruling on Discovery Requests
----------------------------------------------------------
Bankruptcy Judge Michelle V. Larson grants, in part, and denies, in
part, the motions to compel filed by the parties in the adversary
proceeding captioned In re: Northwest Senior Housing Corporation,
Chapter 11, Debtor. Northwest Senior Housing Corporation,
Plaintiff, v. Intercity Investment Properties, Inc. and Kong
Capital, LLC, Defendants. Case No. 22-30659, Adv. Pro. No.
22-03040. (Bankr. N.D. Tex.).
Northwest Senior Housing Corporation has brought this adversary
proceeding against Intercity Investment Properties, Inc. and Kong
Capital, LLC. On Aug. 23, 2022, Northwest filed its Motion to
Compel Defendants to Respond to Discovery Requests. Likewise, the
Defendants filed their Motions to Compel Discovery Compliance from
Plaintiff, and from UMB Bank, N.A.
The Court intends to rule on the distinct legal questions presented
as live at the most recent substantive status conference on the
motions held on Oct. 6, 2022. Those legal questions are: (1)
whether Kong was a consulting expert of Intercity; (2) whether Kong
and Intercity share a common interest privilege; (3) whether
certain communications with Kong are protected by the
attorney-client privilege; and (4) whether a common interest
privilege exists between UMB, Lifespace, and the Plaintiff.
The Defendants claim that Kong was a consulting expert retained in
anticipation of litigation to provide its expert opinion as to
certain impending issues. On the other hand, the Plaintiff claims
that Kong was not retained for litigation purposes. Instead, the
Plaintiff asserts that Kong was retained for a purely business
purpose: transitioning the Edgemere to a rental-based community and
maximizing the profitability of Intercity's interest in the
property. Additionally, the Plaintiff argues that the consulting
expert privilege should not be extended to Kong since it was an
actor in the factual circumstances underlying the present lawsuit.
The Court finds that the Defendants have failed to meet their
burden of proving that Kong was engaged for anything other than the
business purpose asserted by the Plaintiff. As such, the Court
finds that Kong was not a consulting expert and orders production
of the underlying communications. However, even if the Defendants
had met that burden, exceptional circumstances in this Adversary
Proceeding warrant production. The Court notes that (a) Kong is a
named defendant in this Adversary Proceeding; and (b) Kong had a
distinct role in the factual allegations related to the Plaintiff's
cause of action for breach of the NDA, the Intercity Letter, and
the retention of Monument as a public relations firm to facilitate
conversations with the Dallas Morning News. All relevant facts in
this case appear to run through and around Kong. As such, even if
the Court had found that Kong was a consulting expert, the
Plaintiff has established exceptional circumstances that would
warrant production.
The Plaintiff asserts that Kong and Intercity had no common
interest for which their communications could be privileged.
Rather, the Plaintiff asserts that the Defendants had nothing more
than a "rooting" interest insufficient to trigger the privilege.
The Defendants, however, assert that the privilege protects
communications and documents from Feb. 23, 2022 until the filing of
the Adversary Proceeding on April 14, 2022. The Defendants assert
that during this period, they had identical interests, and that
they were on notice that litigation was imminent.
The Court is persuaded that a palpable threat of litigation existed
as of Feb. 23, 2022. Accordingly, the Court finds the common
interest privilege applies from between Kong and Intercity from
Feb. 23, 2022 until the filing of the Adversary Proceeding, so long
as such communications were made in furtherance of a joint defense.
The Court, as required by Fifth Circuit precedent, interprets the
privilege narrowly only to extend this privilege to those documents
or communications related to the threat of litigation by the
Edgemere's counsel. Any communications related to the now "busted"
consulting expert purpose -- transitioning the property, marketing,
etc. -- during this period should be produced.
The Defendants assert that the attorney-client privilege protects
communications between ICI, Kong, and counsel from discovery, for
the period beginning Jan. 7, 2022, the date of Levenfeld
Pearlstein, LLC's -- the Defendants' current lead legal counsel --
engagement, until the present. The Plaintiff, however, claims that
this broad, sweeping assertion of the attorney-client privilege is
inappropriate as the doctrine does not apply to protect
communications with a purely business purpose or communications
that do not reflect legal counsel's advice or mental impression for
the purpose of furthering legal representation.
The Court notes that it has already found that the common legal
interest privilege, merely an extension of the attorney-client
privilege, applies to communications between Intercity and Kong
from Feb. 23, 2022, until the present, so long as they were made in
furtherance of a palpable threat of litigation. Thus, the Court
finds that the attorney-client privilege does not extends backwards
from Feb. 23, 2022 to LP's engagement and Intercity's placement of
Kong in the "control group." Accordingly, these documents and
communications must be produced.
The Plaintiff and UMB separately assert that a common interest
arose between the parties as early as Sept. 1, 2021 in relation to
their preparation for the instant bankruptcy and the Adversary
Proceeding. Thus, they claim that documents and communications
related to this strategy are privileged. In response, the
Defendants assert that no such common interest privilege existed
between the parties. The Defendants claim that no unity of interest
existed between the parties, that the privilege cannot attach to a
nonparty, and that there was no palpable threat of litigation.
The Court concedes that UMB and the Debtor might have had
compatible and even somewhat similar financial goals, but they did
not have a common interest. The Court explains that expanding this
privilege to a secured lender/creditor, with no joint defense
agreement in place and minimal evidence presented, is unjustified
on these facts. There are certainly instances in which parties to
an impending bankruptcy proceeding could have a common interest as
to trigger the privilege. There are certainly instances in which
parties to an impending bankruptcy proceeding could have a common
interest as to trigger the privilege. But the Court finds that this
case is not one of those instances. As such, the Court finds that
Lifespace, UMB, and the Debtors have failed to meet their burden to
establish that the common interest privilege applies to shield
production of certain documents related to their preparation for a
potential Chapter 11 filing.
A full-text copy of the Order dated Feb. 6, 2023, is available at
https://tinyurl.com/4eexj5k5 from Leagle.com.
About Northwest Senior Housing
Northwest Senior Housing Corporation d/b/a Edgemere is a Texas
nonprofit corporation and is exempt from federal income taxation as
a charitable organization described under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended. Northwest Senior Housing
Corporation was formed for the purpose of developing, owning and
operating a senior living community now known as Edgemere.
Northwest Senior Housing Corporation, et al. sought Chapter 11
bankruptcy protection (Bankr. N.D. Tex. Case No. 22-30659) on April
14, 2022. The petitions were signed by Nick Harshfield, treasurer.
Northwest Senior estimated assets and liabilities between $100
million to $500 million and $100 million to $500 million each.
Polsinelli PC serves as the Debtors' bankruptcy counsel. FTI
Consulting Inc. is the Debtors' business advisor. Kurtzman Carson
Consultants LLC is the Debtors' notice, claims and balloting agent
as well as administrative advisor.
NOVA WILDCAT: U.S. Trustee Appoints Creditors' Committee
--------------------------------------------------------
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Nova
Wildcat Shur-Line Holdings, Inc. and its affiliates.
The committee members are:
1. Jiangsu Shihua Electric Appliance Group, Imp. &
Exp. Co., Ltd.
Attn: Jenny R. Kasen, Esq.
70 West WanAn Road, Shangfang Town
Jiangning District, Nanjing, China 210000
Phone: (302) 652-3300
Email: jkasen@kasenlaw.com
2. Pakwell Co., Ltd.
Attn: Georgina Kuo
No. 25 Yanjiang E 5 Rd., Huoju Development Zone
Zhongshan City, 528437 China
Phone: 8618719177681
Email: georgina@pakwell.com
3. Shanghai Xiaobang Household Products Co. Ltd.
Attn: Ying Cao, Esq.
No. 101 Lane 155 Xinrong Rd., Xinqiao Town
Songjiang, Shanghai, China 201612
Phone: 973-310-1688
Email: ycao@yclawllc.com
4. Techxin Electric Appliance Manufacture Co., Ltd.
Attn: Vivian Leung
No. 36, Haitanwei Zone, Zhoujun Village
Tangxia Town, Pengjiang District
Jiangmen City, Guangdong Province, China
Phone: 86-0750-3221868
Email: vivian@techxin.com.cn
5. Taurus España S.a. De C.v.
Attn: Guillermo Freyria
Rosas Moreno No. 4-203, Col. San Rafael 06770
Cdmx, Mexico
Phone: 525526853440
Email: gfreyria@taurus.com.mx
6. Mediterranean Shipping Company S.A.
Attn: Nicholas Hargreaves
420 Fifth Avenue, 8th Fl.
New York, NY 10018
Phone: (843) 971-4100
Email: nicholas.hargreaves@msc.com
7. Yangzhou Sanzhi Fiber Co., Ltd.
Attn: Ying Cao, Esq.
Liuqiao Village, Hongqiao Town
Jiangsu, China 225108
Phone: 973-310-1688
Email: ycao@yclawllc.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 Nova Wildcat Shur-line Holdings
Nova Wildcat Shur-line Holdings, Inc. and affilaites sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Del. Case No. 23-10114) on January 29, 2023. In the petition signed
by Mark Rostagno, chief executive officer and director, the Debtor
disclosed up to $50 million in assets and up to $100 million in
liabilities.
Judge Craig T. Goldblatt oversees the case.
Jason D. Angelo, Esq., at Reed Smith, LLP, represents the Debtor as
legal counsel.
OI S.A.: Brazilian Restructuring Completed, U.S. Cases Closed
-------------------------------------------------------------
The foreign representative in the judicial reorganization
proceeding of Oi S.A. and its affiliates on Feb. 6, 2023, sought
and obtained from U.S. Bankruptcy Judge John P. Mastando III an
order closing the Brazilian companies' Chapter 15 case.
On June 20, 2016, Oi S.A. and three affiliates pursued a judicial
reorganization (recuperacao judicial) before the 7th Business Court
of Rio de Janeiro, in Brazil, to restructure BRL 65 billion in
third-party debt, which at that time was the largest-ever
restructuring case in Latin America.
On June 21, 2016, the Foreign Representative commenced the Chapter
15 cases to seek U.S. recognition of the proceedings in Brazil. In
June and July 2016, the U.S. Bankruptcy Court entered orders
granting the application of the stay under Sec. 362 of the
Bankruptcy to the Chapter 15 Debtors and recognizing the Brazilian
RJ Proceeding as foreign main proceeding.
During the Brazilian RJ Proceeding, the Debtors effectuated their
financial restructuring through a Brazilian plan of reorganization,
which was approved by the majority of the RJ Debtors' creditors
following the approval thresholds applicable under Brazilian
Bankruptcy Law and ultimately confirmed by the RJ Court on Jan. 8,
2018.
On June 15, 2018, the U.S. Court entered an order granting comity
to and providing full force and effect to the RJ PLan within the
United States.
Following the consummation of various transactions contemplated by
the RJ Plan, the Oi Group faced new and significant liquidity
challenges that prevented the full implementation of the
restructuring contemplated in the RJ Plan. These challenges
stemmed from a number of unresolved ancillary matters pertaining to
the Brazilian RJ proceeding such as the classification of certain
claims, certain regulatory changes, the delay and inability to
release certain funds deposited in the judicial accounts and the
implementation of changes ot the RJ Debtors' corporate structure.
Accordingly, in March 2020, the RJ Court allowed the RJ Debtors to
propose an amendment to the RJ Plan. On Sept. 8, 2020, Creditors
approved the Amendment, and the the Court confirmed the RJ Plan
Amendment on Oct. 5, 2020.
The RJ Plan, as amended, allowed the RJ Debtors, including the
Chapter 15 Debtors, to further restructure their debts, monetize
non-core assets and seek financing to invest in their continued
operations. For instance, the Amended RJ Plan provided for the
segregation of certain of Oi Group's assets, such as mobile
operations and data, telecommunication infrastructure, and TV
operations, into isolated productive units or not, which were
subsequently sold free and clear of claims and interests against
the Oi group. The Amended RJ Plan also authorized the RJ Debtors
to incur new financing.
On Dec. 14, 2022, the RJ Court entered an order closing the
Brazilian RJ Proceeding with respect to all RJ Debtors, including
the Chapter 15 Debtors.
Accordingly, the Foreign Representative asked the U.S. Court to
close the Chapter 15 cases as they have achieved the purpose which
they were commenced.
About Oi SA
Headquartered in Rio de Janeiro, and operating almost exclusively
within Brazil, the Oi Group provides services like fixed-line data
transmission and network usage for phones, internet, and cable,
Wi-Fi hot-spots in public areas, and mobile phone and data
services, and employs approximately 142,000 direct and indirect
employees.
On June 20, 2016, pursuant to Brazilian Law No. 11.101/05 (the
'Brazilian Bankruptcy Law'), Oi S.A. and certain of its
subsidiaries filed for recuperao judicial (judicial reorganization)
in Brazil.
On June 21, 2016, OI SA and its affiliates Telemar Norte Leste S.A.
and Oi Brasil Holdings Cooperatief U.A. commenced Chapter 15
proceedings (Bankr. S.D.N.Y. Lead Case No. 16-11791). Ojas N.
Shah, as foreign representative, signed the petitions.
Coop and PTIF are also subject to proceedings in the Netherlands.
The Chapter 15 cases are assigned to Judge Sean H. Lane.
In the Chapter 15 cases, the Debtors are represented by John K.
Cunningham, Esq., and Mark P. Franke, Esq., at White & Case LLP, in
New York; and Jason N. Zakia, Esq., Richard S. Kebrdle, Esq., and
Laura L. Femino, Esq., at White & Case LLP, in Miami, Florida.
On July 22, 2016, the New York Court recognized the Brazilian
Proceedings as foreign main proceedings with respect to the Chapter
15 Debtors, and granted certain additional related relief.
The company exited bankruptcy protection in December 2022.
OLYMPIA ACQUISITION: Ares Capital Marks $50.9M Loan at 25% Off
--------------------------------------------------------------
Ares Capital Corporation has marked its $50.9 million loan extended
to Olympia Acquisition, Inc., Olympia TopCo, L.P., and Asclepius
Holdings LLC to market at $38.1 million or 75% of the outstanding
amount, as of December 31, 2022, according to a disclosure
contained in Ares Capital's Form 10-K for the fiscal year ended
December 31, 2022, filed with the Securities and Exchange
Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured loan
to Olympia Acquisition, Inc., Olympia TopCo, L.P., and Asclepius
Holdings LLC. The loan matures February 2027. The loan was on
non-accrual status as of December 31, 2022.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Olympia Acquisition, Inc., Olympia TopCo, L.P., and Asclepius
Holdings LLC are providers of Behavioral health and special
education platform.
OLYMPIA ACQUISITION: Ares Capital Marks $8.7M Loan at 24% Off
-------------------------------------------------------------
Ares Capital Corporation has marked its $8.7 million loan extended
to Olympia Acquisition, Inc., Olympia TopCo, L.P., and Asclepius
Holdings LLC to market at $6.6 million or 76% of the outstanding
amount, as of December 31, 2022, according to a disclosure
contained in Ares Capital's Form 10-K for the fiscal year ended
December 31, 2022, filed with the Securities and Exchange
Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured loan
to Olympia Acquisition, Inc., Olympia TopCo, L.P., and Asclepius
Holdings LLC. The loan matures February 2027. The loan was on
non-accrual status as of December 31, 2022.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Olympia Acquisition, Inc., Olympia TopCo, L.P., and Asclepius
Holdings LLC are providers of Behavioral health and special
education platform.
PACIFIC GREEN: Posts $2.2 Million Net Loss in Third Quarter
-----------------------------------------------------------
Pacific Green Technologies Inc. has filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $2.22 million on $3.64 million of total revenues for
the three months ended Dec. 31, 2022, compared to a net loss of
$450,390 on $5.25 million of total revenues for the three months
ended Dec. 31, 2021.
For the nine months ended Dec. 31, 2022, the Company reported a net
loss of $7.73 million on $6.86 million of total revenues compared
to a net loss of $8.07 million on $6.71 million of total revenues
for the nine months ended Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $53.08 million in total
assets, $35.59 million in total liabilities, and $17.50 million in
total equity.
As of Dec. 31, 2022, the Company had $2,500,411 in cash and cash
equivalents, $6,647,605 in total current assets, $25,040,664 in
total current liabilities and a working capital deficit of
$18,393,059 compared to working capital of $5,774,993 as at March
31, 2022. The Company's working capital reduced due to reduction
of receivables.
During the nine months ended Dec. 31, 2022, the Company used
$6,094,070 in operating activities, whereas it used $13,262,030
from operating activities for the three months period ended Dec.
31, 2021. The operating cash flow for the nine months ended Dec.
31, 2022, was mainly due to the collection of large receivables.
During the nine months ended Dec. 31, 2022, the Company used
$31,902,457 in investing activities, whereas the Company used
$398,507 in investing activities during the nine months ended Dec.
31, 2021. Its investing activities for the nine months ended Dec.
31, 2022, were primarily related to additions of project under
development and equipment.
During the nine months ended Dec. 31, 2022, the Company received
$34,947,926 in financing activities, whereas the Company used
$99,504 in financing activities for the nine months ended Dec. 31,
2021. Its financing activities for the nine months ended Dec. 31,
2022, were related to cash contribution from noncontrolling
interest and loan facilities.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1553404/000121390023011331/f10q1222_pacificgreen.htm
About Pacific Green Technologies
Pacific Green Technologies, Inc. is focused on addressing the
world's need for cleaner and more sustainable energy. The Company
offers Battery Energy Storage Systems and Concentrated Solar Power
energy solutions to compliment its marine environmental
technologies division.
Pacific Green reported a net loss of $10.75 million for the year
ended March 31, 2022, compared to a net loss of $1.81 million for
the year ended March 31, 2021, and a net loss of $10.38 million for
the year ended March 31, 2020. As of June 30, 2022, the Company
had $32.03 million in total assets, $16.34 million in total
liabilities, and $15.68 million in total equity.
PARAGON DESIGNER: Settles Westbrook Unsecured's Claim for $200K
---------------------------------------------------------------
Paragon Designer Services, LLC, submitted an Amended Plan of
Reorganization dated February 16, 2023.
This Plan deals with all property of Debtor and provides for
treatment of all Claims against Debtor and its property.
Class 1 shall consist of the Secured Claim of Navitas Credit Corp.
Upon information and belief, Navitas asserts a first priority lien
upon Debtor's Isuzu box truck, with VIN ending in 4182 (the
"Truck"). The Navitas proof of claim asserts the outstanding
balance on the Class 1 claim is $42,006.02 (the "Navitas Secured
Claim"). Navitas values the Truck at $36,873.00. Debtor shall pay
the Navitas claim in full ($42,006.82) amortized over a 60 month
time period at an interest rate of 5% per annum, with estimated
payments on the outstanding principal balance being $792.71.
Any payments made post-petition and pre-confirmation shall be
applied pursuant to the underlying loan documents. Because the
claim is not oversecured, no post-petition interest or late fees
may be added to the claim. Navitas' lien shall remain on the Truck
until the claim is paid in full pursuant to the terms of this Plan.
Once the claim is paid in full pursuant to the terms of this Plan,
Navitas shall release any interest it has in the Truck to the
Debtor.
Class 2 consists of the allowed unsecured claim of Westbrook
Atlanta, LLC. Westbrook asserted an unliquidated claim against
Debtor and Mr. Eason for various causes of action under Georgia
law. Westbrook filed a non-dischargeability Adversary Proceeding
(No. 22-02018-jrs) only against Mr. Eason ("Adversary Proceeding").
Debtor and Mr. Eason dispute that Westbrook has a viable claim, and
Mr. Eason filed a counterclaim against Westbrook within the
Adversary Proceeding. Debtor, Paragon, and Westbrook have settled
and compromised the claims (the "Westbrook Allowed Claim"),
contingent on the following Plan terms in Mr. Eason's Plan of
Reorganization and as restated here and on both Mr. Eason and
Debtor's Plans being confirmed.
The amount of the settlement is $200,000.00 ("Settlement Amount").
Mr. Eason and Debtor are jointly and severally liable for the
Settlement Amount. In the bankruptcy cases of Debtor and Mr. Eason,
confirmation of the Plan automatically causes Westbrook's claim
(based on its proof of claim) to be allowed in the Settlement
Amount, for all purposes in each bankruptcy case, regardless of
chapter.
The Settlement Amount shall be paid to Westbrook over 10 years, in
120 monthly installment payments of $1,666.67 each, without any
interest accrual ("Installment Payments"). The payments shall be
made by either Debtor or a combination of both Debtors. The
Installment Payments shall each be due and payable on the 10th day
of each month. The first Installment Payment is due and payable in
the first month following the Effective Date of the Plan.
Installment Payments may be made by personal check or wire, but
each must be received by Westbrook by or on the 10th day of each
month.
The Settlement Amount is deemed non-dischargeable as to Mr. Eason.
A consent judgment for (a) the Settlement Amount and (b) non
dischargeability of the Settlement Amount as to Mr. Eason shall be
presented and entered in the Adversary Proceeding within 3 Business
Days immediately following the Confirmation Date (the "Consent
Judgment"). Westbrook may obtain issuance of a writ of execution on
the Consent Judgment from the Clerk of the Bankruptcy Court (the
"Writ"), however, Westbrook shall not record the Writ in any
property records or lien records, unless either Debtor or Mr. Eason
fail to timely cure an Event of Default after a Default Notice, or
more than one Event of Default occurs in a calendar year.
In the event of any sale or secured financing (including, but not
limited to, any loan, refinancing, equity line, HELOC) of the real
property and improvements thereon located at 3105 Willow Wisp Way,
Cumming, GA 30040 ("Property"), Mr. Eason shall cause payment to be
made to Westbrook directly from the closing, in an amount equal to
25% of the balance of the Settlement Amount owed on the closing
date ("25% Payment"). Mr. Eason shall give Westbrook at least 7
days' written notice before the transaction closes and Mr. Eason
shall give sufficient instructions to ensure that the 25% Payment
is made directly out of the closing of any sale or secured
financing on the day of such closing.
The 25% Payment obligation shall be secured by Mr. Eason and
Heather Eason executing a junior in priority security deed on the
Property for the 25% Payment obligation in the amount of $50,000
and delivery of same to Westbrook no later than three days after
confirmation of Mr. Eason's Plan (the "Security Deed"). Westbrook
will record the Security Deed. Westbrook can enforce the Security
Deed only for the 25% Payment obligation. Upon receipt of payment
of the 25% Payment in full, Westbrook shall release the Security
Deed. The 25% Payment maximum obligation of $50,000 will decrease
as Installment Payments are paid on the Settlement Amount. The 25%
Payment obligation shall be determined by the amount actually due
on the closing date.
The source of funds for the payments pursuant to the Plan is
Debtor's personal income for secured creditors and priority
creditors. Debtor shall pay Class 5 claims from his available
personal assets through liquidation and help from family.
A full-text copy of the Amended Plan dated February 16, 2023 is
available at https://bit.ly/3lJMNyP from PacerMonitor.com at no
charge.
Attorney for Debtor:
ROUNTREE, LEITMAN, KLEIN & GEER, LLC
Will B. Geer
Georgia Bar No. 940493
2987 Clairmont Road, Suite 350
Atlanta, Georgia 30329
(678)587-8740
About Paragon Designer Services
Paragon Designer Services, LLC is a moving company that focuses on
the interior designer industry.
Paragon Designer Services filed a petition under Chapter 11,
Subchapter V of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
22-52437) on March 29, 2022, disclosing under $1 million in both
assets and liabilities. Judge James R. Sacca oversees the case.
Cameron McCord has been appointed as Subchapter V trustee. The
Debtor is represented by Will Geer, Esq., at Geer Law Group, LLC.
The owner of the Debtor is Christopher Eason, also a Chapter 11
debtor-in-possession (Bankr. N.D. Ga. Case No. 22-20261).
PAXE LATITUDE: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Paxe Latitude LP
139 Ocean Avenue
Lakewood, NJ 08701
Business Description: The Debtor is a Single Asset Real Estate
as defined in 11 U.S.C. Section 101(51B).
Chapter 11 Petition Date: February 20, 2023
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 23-11337
Debtor's Counsel: Eric H. Horn, Esq.
A.Y. STRAUSS LLC
101 Eisenhower Parkway, Suite 412
Roseland, NJ 07068
Tel: 973-287-5006
Email: ehorn@aystrauss.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by David Goldwasser, Member of Manager of
General Partner.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/XOHLTYY/Paxe_Latitude_LP__njbke-23-11337__0001.0.pdf?mcid=tGE4TAMA
PG&E CORP: Victims' Trust to Get $25-Mil. Settlement from McKinsey
------------------------------------------------------------------
McKinsey & Co. agreed to pay $25 million to a bankruptcy trust for
PG&E wildfire victims, resolving potential claims related to the
consulting firm's work for the California utility giant and the
state's 2018 Camp Fire.
The Fire Victim Trust settled potential claims against McKinsey &
Company, Inc. United States that the Trust held as part of the
Assigned Rights and Causes of Action transferred to the Trust
pursuant to the Debtors' and Shareholder Proponents' Joint Chapter
11 Plan of Reorganization dated June 19, 2020.
The FVT conducted extensive research and investigation of the facts
and law prior to these mediations to assess the strengths and
weaknesses of potential claims against McKinsey. In conducting
this analysis, the FVT had access to and considered, among other
things, (1) the work of the Butte County District Attorney's
office, which took testimony from nearly 100
witnesses, reviewed approximately 1,600 exhibits, and gathered
extensive other documentary evidence, (2) evidence available from
PG&E's federal probation proceedings about the Butte Fire, the
North Bay Fires, and the Camp Fire, (3) evidence available from
PG&E regulatory proceedings, including regulatory investigations
relating to the Butte Fire, the North Bay Fires, and the Camp Fire,
(4) evidence available from CAL FIRE and other investigators
relating to the Butte Fire, the North Bay Fires, and the Camp Fire,
(5) documentary and testimonial evidence obtained from PG&E in
connection with pre-bankruptcy litigation relating to the Butte
Fire, the North Bay Fires, and the Camp Fire, (6) evidence obtained
from PG&E during the bankruptcy proceedings, and (7) materials
obtained by the FVT or its predecessor via discovery in the
bankruptcy proceedings, including from and about vendors and
consultants of PG&E.
After evaluating the evidence, the FVT found no evidence of a
causal connection between McKinsey's work and the Butte Fire or
North Bay Fires. The FVT determined that it might possess
potential claims against McKinsey arising from the Camp Fire based
on McKinsey's contracts with PG&E and work pursuant to those
contracts via the Assigned Rights and Causes of Action from PG&E to
the FVT, but that McKinsey possesses numerous factual and legal
defenses to any such claims.
The Settlement Agreement provides, inter alia, for McKinsey to
remit to the Trust the total lump sum of $25,000,000 and for mutual
releases to be executed by the Trust and McKinsey.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) -- http://www.pgecorp.com/-- is a
Fortune 200 energy-based holding company, headquartered in San
Francisco. It is the parent company of Pacific Gas and Electric
Company, an energy company that serves 16 million Californians
across a 70,000-square-mile service area in Northern and Central
California.
PG&E Corporation and its regulated utility subsidiary, Pacific Gas
and Electric Company, faced extraordinary challenges relating to a
series of catastrophic wildfires that occurred in Northern
California in 2017 and 2018. The utility faced an estimated $30
billion in potential liability damages from California's deadliest
wildfires of 2017 and 2018.
On Jan. 29, 2019, PG&E Corp. and its primary operating subsidiary,
Pacific Gas and Electric Company, filed voluntary Chapter 11
petitions (Bankr. N.D. Cal. Lead Case No. 19-30088). As of Sept.
30, 2018, the Debtors, on a consolidated basis, had reported $71.4
billion in assets on a book value basis and $51.7 billion in
liabilities on a book value basis.
Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP served
as PG&E's legal counsel, Lazard as its investment banker and
AlixPartners, LLP as the restructuring advisor to PG&E. Prime Clerk
LLC served as the claims and noticing agent.
PG&E has appointed James A. Mesterharm, a managing director at
AlixPartners, LLP, and an authorized representative of AP Services,
LLC, to serve as Chief Restructuring Officer. In addition, PG&E
appointed John Boken also a Managing Director at AlixPartners and
an authorized representative of APS, to serve as Deputy Chief
Restructuring Officer.
Morrison & Foerster LLP served as the Debtors' special regulatory
counsel. Munger Tolles & Olson LLP also served as special counsel.
The Office of the U.S. Trustee appointed an official committee of
creditors on Feb. 12, 2019. The Committee retained Milbank LLP as
counsel; FTI Consulting, Inc., as financial advisor; Centerview
Partners LLC as investment banker; and Epiq Corporate
Restructuring, LLC as claims and noticing agent.
On Feb. 15, 2019, the U.S. trustee appointed an official committee
of tort claimants. The tort claimants' committee is represented by
Baker & Hostetler LLP.
* * *
PG&E Corporation and Pacific Gas and Electric Company announced
July 1, 2020, their emergence from Chapter 11, successfully
completing the restructuring process and implementing PG&E's Plan
of Reorganization that the Bankruptcy Court confirmed on June 20,
2020.
For the benefit of fire victims, the Plan provided for a Fire
Victim Trust, which was funded with an oft-stated value of $13.5
billion, to be half in cash and half in new company PG&E common
stock. The $6.75 billion in cash was paid. With respect to the
stock consideration, 478 million shares of PG&E stock were
delivered to the Fire Victim Trust in accordance with an agreed-to
formula under the Plan.
PLURALSIGHT INC: Ares Capital Marks $200,000 Loan at 50% Off
------------------------------------------------------------
Ares Capital Corporation has marked its $200,000 loan extended to
Pluralsight, Inc to market at $100,000 or 50% of the outstanding
amount, as of December 31, 2022, according to a disclosure
contained in Ares Capital's Form 10-K for the fiscal year ended
December 31, 2022, filed with the Securities and Exchange
Commission on February 7, 2023.
Ares Capital is a participant in a First lien senior secured
revolving loan to Pluralsight, Inc. The loan accrues interest at a
rate of 12.36% (LIBOR (M) + 8%) per annum. The loan matures April
2027.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
Pluralsight Inc is an online education learning platform.
PWM PROPERTY: HNA Says Turnover Order Is Barred Under Del., NY Law
------------------------------------------------------------------
Isaac Monterose of Law360 reports that corporate conglomerate HNA
Group urged a New York federal court to reject an SL Green Realty
affiliate's, PWM Property Management, bid to obtain an HNA Group
unit's assets to satisfy a $185 million arbitral award, arguing
that Delaware and New York laws prohibit the affiliate's request.
About PWM Property Management
PWM Property Management LLC, et al., are primarily engaged in
renting and leasing real estate properties. They own two premium
office buildings, namely 245 Park Avenue in New York City, a
prominent commercial real estate assets in Manhattan's prestigious
Park Avenue office corridor, and 181 West Madison Street in
Chicago, Illinois.
On Oct. 31, 2021, PWM Property Management LLC and its affiliates
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
21-11445). PWM estimated assets and liabilities of $1 billion to
$10 billion as of the bankruptcy filing.
The cases are pending before the Honorable Judge Mary F. Walrath
and are being jointly administered for procedural purposes under
Case No. 21-11445.
The Debtors tapped White & Case LLP as restructuring counsel; Young
Conaway Stargatt & Taylor, LLP as local counsel; and M3 Advisory
Partners, LP, as restructuring advisor. Omni Agent Solutions is the
claims agent.
REMER & GEORGES-PIERRE: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------------------
The U.S. Trustee for Region 21, until further notice, will not
appoint an official committee of unsecured creditors in the Chapter
11 case of Remer & Georges-Pierre, PLLC, according to court
dockets.
About Remer & Georges-Pierre
Remer & Georges-Pierre, PLLC filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
23-10114) on Jan. 6, 2023. In the petition filed by its managing
member, Jason Remer, the Debtor disclosed as much as $1 million in
both assets and liabilities.
Judge Laurel M. Isicoff oversees the case.
Timothy S. Kingcade, Esq., at Kingcade Garcia & McMaken, PA and
Zach B. Shelomith, Esq., at Leiderman Shelomith + Somodevilla,
PLLC, doing business as LSS Law, serve as the Debtor's counsel.
SEARS HOMETOWN: Former Directors, Investors Reach $3.1-Mil. Deal
----------------------------------------------------------------
Leslie A. Pappas of Law360 reports that shareholders of Sears
Hometown and Outlet Stores who filed a class action in Delaware
after a 2019 go-private merger have settled claims with three
former board directors for $3.1 million in cash, paring down the
defendants in a trial scheduled to start February 20, 2023.
About Sears Authorized Hometown Stores
Sears Authorized Hometown Stores, LLC distributes products through
approximately 121 "Sears Hometown Stores," which are locally owned
and operated businesses that offer a selection of the trusted names
in home appliances, lawn and garden equipment, and tools.
Sears Authorized Hometown Stores, LLC and Sears Hometown Stores,
Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D. Del. Lead Case No. 22-11303) on Dec. 12, 2022.
In the petition signed by Elissa Robertson, CEO, Sears Authorized
Hometown disclosed up to $50 million in assets and up to $100
million in liabilities.
Judge Laurie Selber Silverstein oversees the cases.
Saul Ewing LLP is the Debtors' legal counsel. The Debtors tapped
Gray & Company, LLC, as financial advisor and Stretto as claims and
noticing agent.
SEARS HOMETOWN: Seeks Chapter 7 Conversion as Sales Underwhelm
--------------------------------------------------------------
Sears Authorized Hometown Stores, LLC ("SAHS") and Sears Hometown
Stores, Inc. ("SHS") on Feb. 13, 2023, filed with the Bankruptcy
Court a motion to convert their Chapter 11 cases to one under
chapter 7 of the Bankruptcy Code.
The Debtors sought Chapter 11 protection with the objective of
using the breathing spell afforded by the Bankruptcy Code to
establish an orderly process for the sale of their remaining
inventory in a manner that would maximize recovery and reduce harm
to creditors, dealers and customers.
On the Petition Date, the Debtors filed a motion seeking
authorization for the Debtors to operate under a consulting
agreement dated Dec. 8, 2022 between the Debtors and Tiger Capital
Group, LLC, B. Riley Retail Solutions, LLC and SB360 Capital
Partners, LLC, and conduct inventory liquidation or similar-themed
sales at the Dealers' stores in accordance with certain inventory
sale guidelines. By orders dated Dec. 15, 2022 and Jan. 11, 2023,
the Court approved the inventory sales motion.
The Debtors have worked closely with the Consultants and their
other professionals, and in consultation with their prepetition
secured lender, PNC Bank, National Association, to try to liquidate
their inventory in a manner that would achieve these objectives.
Unfortunately, notwithstanding these efforts, the results from the
inventory sales have been materially less than projected and, as a
result, the Debtors have exceeded the permitted budget variances
under the Final Cash Collateral Order. On Feb. 10, 2023, PNC
issued the Debtors a Carve-Out Trigger Notice, which notice
terminated the Debtors' ability to use cash collateral effective as
of close of business on Feb. 12.
Without the ability to use cash collateral or fund the continued
administration of their Chapter 11 Cases, the Debtors have no
choice but to cease operations and seek prompt conversion of the
Chapter 11 cases. While the Debtors are disappointed in this
outcome, they nevertheless believe that there is no better
alternative and that under these circumstances, conversion of their
Chapter 11 cases to cases under chapter 7 of the Bankruptcy Code is
in the best interests of their estates and creditors.
The Debtors request that the Court approve these procedures in
connection with the conversion of these Chapter 11 Cases to chapter
7 of the Bankruptcy Code:
(a) Professional Fees. Professionals shall submit Final Fee
Applications in accordance with the Bankruptcy Code, Bankruptcy
Rules, Local Rules, and orders of this Court by no later than 30
days after the Conversion Date (the "Final Fee Application
Deadline"). Objections, if any, to the Final Fee Applications
shall be filed and served by no later than 21 days after the Final
Fee Application Deadline. A hearing to consider all timely filed
Final Fee Applications should be held on a date convenient to the
Court that is at least 65 days after the Conversion Date.
(b) Books and Records. As soon as reasonably practicable, but
in no event more than 14 days after the appointment of the chapter
7 trustee, the Debtors shall turn over or provide access to the
chapter 7 trustee the books and records of the Debtors in the
Debtors' possession and control or held by Transform, as required
by Bankruptcy Rule 1019(4).
(c) Schedule of Unpaid Debts. Within 30 days of the Conversion
Date, the Debtors shall file a schedule of unpaid debts incurred
after commencement of the Debtors' Chapter 11 Cases, including the
name and address of each creditor, as required by Bankruptcy Rule
1019(5)(A)
(d) Final Report. Within 30 days after the Conversion Date, the
Debtors shall file and transmit to the chapter 7 trustee a final
report and account in accordance with Bankruptcy Rule 1019(5)(A).
(e) Claims. Within 14 days of the Conversion Date, Stretto,
Inc. shall (i) forward to the Clerk of this Court an electronic
version of all imaged claims; (ii) upload the consolidated creditor
mailing list into CM/ECF and, notwithstanding Local Rule
2002-1(f)(x), file the consolidated matrix in each jointly
administered case in lieu of a separate matrix for each Debtor; and
(iii) docket a final claims register in the Debtors' Chapter 11
Case.
About Sears Authorized Hometown Stores
Sears Authorized Hometown Stores, LLC distributes products through
approximately 121 "Sears Hometown Stores," which are locally owned
and operated businesses that offer a selection of the trusted names
in home appliances, lawn and garden equipment, and tools.
Sears Authorized Hometown Stores, LLC and Sears Hometown Stores,
Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D. Del. Lead Case No. 22-11303) on Dec. 12, 2022.
In the petition signed by Elissa Robertson, CEO, Sears Authorized
Hometown disclosed up to $50 million in assets and up to $100
million in liabilities.
Judge Laurie Selber Silverstein oversees the cases.
Saul Ewing LLP is the Debtors' legal counsel. The Debtors tapped
Gray & Company, LLC as financial advisor and Stretto as claims and
noticing agent.
SS&C TECHNOLOGIES: Moody's Alters Outlook on 'Ba3' CFR to Positive
------------------------------------------------------------------
Moody's Investors Service affirmed SS&C Technologies Holdings,
Inc.'s ("SS&C") Ba3 corporate family rating, Ba3-PD probability of
default rating, the Ba2 ratings of the senior secured credit
facilities issued by SS&C's subsidiaries, SS&C Technologies, Inc.
("SS&C Technologies") and SS&C European Holdings S.a.r.l. ("SS&C
Europe Sarl"), and the B2 rating for the senior unsecured notes
issued by SS&C Technologies. The speculative grade liquidity (SGL)
rating remains SGL-1.
The ratings outlook was revised to positive from stable to reflect
Moody's expectations that SS&C will steadily continue to reduce
leverage with debt to EBITDA dropping towards the low 3x level over
the coming 12-18 months as the company utilizes its solid free cash
flow to continue repaying debt while increasing EBITDA at a
moderate pace during this period.
Affirmations:
Issuer: SS&C Technologies Holdings, Inc.
Corporate Family Rating, Affirmed Ba3
Probability of Default Rating, Affirmed Ba3-PD
Issuer: SS&C European Holdings S.a.r.l.
Backed Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD3)
Issuer: SS&C Technologies, Inc.
Backed Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD3)
Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD5)
Outlook Actions:
Issuer: SS&C Technologies Holdings, Inc.
Outlook, Changed To Positive From Stable
Issuer: SS&C European Holdings S.a.r.l.
Outlook, Changed To Positive From Stable
Issuer: SS&C Technologies, Inc.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
SS&C's Ba3 CFR reflects the issuer's moderating debt to EBITDA
(3.8x as of December 31, 2022, Moody's adjusted for operating
leases) as well as its large operating scale and competitive
positioning as a provider of software and software-enabled
services, primarily to financial services firms. SS&C's credit
profile is also supported by its good revenue predictability, about
90% of which is attributable to recurring, transaction-based
services provided to a very large client base. Additionally, SS&C's
strong profitability and healthy free cash flow provides capacity
to gradually repay debt and the company's very good liquidity
affords cushion to absorb temporary operational challenges.
SS&C's credit profile is negatively impacted by a concentrated
geographic and vertical market focus with particularly sizable
exposure to traditional and alternative asset management firms
based in North America. To varying degrees, SS&C's fees from these
customers can vacillate based on the market value of assets under
management/administration and number of transactions processed.
SS&C's credit quality is also negatively impacted by corporate
governance concerns related to the company's aggressive financial
policies, featuring considerable expenditures on share repurchases
and dividends, the company's 13% equity ownership by its CEO, and
an opportunistic, debt-fueled acquisition growth strategy. SS&C's
history of increasing debt leverage significantly to finance
acquisitions results in high event risk and reflects an aggressive
financial strategy, with the potential for continual releveraging,
somewhat constraining the rating.
The SGL-1 liquidity rating reflects SS&C's very good liquidity
profile, with cash of approximately $440 million as of December 31,
2022 and Moody's expectation of over $900 billion in free cash flow
(after dividends) in 2023. SS&C's liquidity is also supported by
the availability of an undrawn $600 million revolving credit
facility maturing in 2027. The revolver is subject to a maximum net
leverage ratio covenant of 6.25x if utilization exceeds 30%.
Moody's does not expect the covenant to be triggered, but expects
that the company has ample operating cushion under the covenant if
it is measured. The term loans do not include any financial
maintenance covenants. The term loans require mandatory repayment
from excess cash flow (as defined in the credit agreement), the
amount of which is based on leverage levels.
The positive outlook reflects Moody's expectations that SS&C will
generate low-to-mid single digit revenue and moderate Adj. EBITDA
growth over the next 12 to 18 months and debt to EBITDA (Moody's
adjusted) will decline towards the low 3x level during this period,
barring additional debt-funded acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if SS&C establishes a track record of
conservative financial policies while realizing strong earnings
growth and sustaining debt to EBITDA (Moody's adjusted) below 4x
while annual free cash flow (after dividends) approaches 15% of
total debt.
The ratings could be downgraded if SS&C experiences meaningful
weakness in operating performance or adopts more aggressive
financial strategies, such that Moody's expects debt to EBITDA to
remain above 5x and free cash flow to be modest over an extended
period of time.
The principal methodology used in these ratings was Software
published in June 2022.
SS&C, headquartered in Windsor, Connecticut, is a provider of
software and software-enabled services to over 18,000 clients in
the financial services and healthcare industries. Moody's projects
that SS&C will generate revenue of nearly $5.5 billion in 2023.
STARRY GROUP: Has $43MM New Money DIP Loan from ArrowMark
---------------------------------------------------------
Starry Group Holdings, Inc. and affiliates ask the U.S. Bankruptcy
Court for the District of Delaware for authority to use cash
collateral and obtain postpetition financing.
The Debtors seek to obtain postpetition financing from a group of
lenders led by ArrowMark Agency Services LLC, as administrative
agent. The loan consists of:
(a) an aggregate principal amount of up to $43 million in "new
money" term loans, of which (i) $12 million will be available
immediately upon entry of the Interim Order, (ii) $12 million will
be available upon entry of the Final Order, and (iii) $19 million
will be available upon the occurrence of the earlier of entry of an
order by the Court (1) approving the sale of all or substantially
all of the Debtors' assets or (2) confirming a plan of
reorganization in the Chapter 11 Cases; and
(b) rolled-up Tranche D Loans under the Prepetition Credit
Agreement held by the Prepetition Lenders providing the New Money
DIP Loans, in an aggregate amount of $15 million in principal,
capitalized fees and accrued interest upon entry of the Interim
Order, and in an aggregate amount equal to the remaining
outstanding principal balance of the Tranche D Loans held by the
Prepetition Lenders providing the New Money DIP Loans, plus
capitalized fees and accrued interest thereon, upon entry of the
Final Order.
The DIP Loan proceeds will be available according to this
schedule:
-- $12 million will be available upon entry of the Interim
Order;
-- Another $12 million will be available upon entry of the
Final Order; and
-- The remaining $19 million will be available upon the
occurrence of the earlier of entry of an
order by the Court (1) approving the sale of all or substantially
all of the Debtors' assets or (2)
confirming a plan of reorganization in the Chapter 11 Cases.
Starry Foreign Holdings Inc. and all of the Borrowers are the
guarantors under the DIP Facility.
The DIP Loan Facility will mature on the earliest to occur of: (a)
August 20, 2023, (b) dismissal of any of the Chapter 11 Cases or
conversion of any of the Chapter 11 Cases into a case under Chapter
7 of the Bankruptcy Code, and (c) the closing of a sale of all or
substantially all assets of the Loan Parties (other than to another
Loan Party).
The DIP Credit Agreement and Restructuring Support Agreement
require the Debtors to meet several milestones. There are
milestones for Marketing and Auction Process:
1. The Company Entities shall have filed a motion to approve
the Bidding Procedures and implement a Sale Transaction as
contemplated therein with the Bankruptcy Court on the Petition
Date.
2. The Company Entities shall have obtained the Bankruptcy
Court’s approval of the Bidding Procedures on or before the day
that is 30 days after the Petition Date.
3. The deadline for qualified bids submitted pursuant to the
Bidding Procedures shall occur on or before the day that is 50 days
after the Petition Date.
4. The Company Entities shall have commenced the Auction, if
any, on or before the day that is 5 days after the Bid Deadline.
5. If one or more third party bidders submit qualified bids
and are selected as the highest or otherwise best bidder to obtain
all or substantially all of the Company Entities' assets in
accordance with the Bidding Procedures and other than a sale
pursuant to the Plan, the Bankruptcy Court shall have entered the
Sale Order on or before the day that is 3 business days after the
Auction concludes.
6. If a Sale Transaction will occur other than pursuant to the
Plan, the Company Entities shall have submitted an application to
the FCC for approval of the transfer of all applicable licenses on
or before the day that is 7 days after the Sale Order is entered.
7. If a Sale Transaction will occur other than pursuant to the
Plan, all conditions to closing of the Sale Transaction, other than
FCC approval, shall have been satisfied on or before the day that
is 15 days after entry of the Sale Order, and FCC approval shall
have been received on or before the day that is 90 days after entry
of the Sale Order. If the regulatory tail extends beyond this
date, the DIP Agent will have discretion to extend.
There are milestones for Plan Confirmation:
1. The Company Entities shall have filed the Plan and
Disclosure Statement with the Bankruptcy Court on the Petition
Date.
2. The Company Entities shall have obtained the Bankruptcy
Court's approval of the Disclosure Statement and the process for
solicitation of votes and noticing of Plan confirmation on or
before the day that is 45 days after the Petition Date.
3. If no Qualified Bid is received on or before the Bid
Deadline, the Company Entities shall have submitted an application
to the FCC for approval of the transfer of all applicable licenses
on or before the day that 10 days after the Bid Deadline. If a Sale
Transaction will occur pursuant to the Plan, the Company Entities
shall have submitted an application to the FCC for approval of the
transfer of all applicable licenses on or before the day that 10
days after the Auction concludes.
4. The Bankruptcy Court shall have entered the Confirmation
Order on or before the day that is 80 days after the Petition
Date.
5. The Effective Date of the Plan shall have occurred as to
each of the Company Entities on or before the day that is 45 days
after the entry of the Confirmation Order. If the regulatory tail
extends beyond this date, the DIP Agent will have discretion to
extend.
And, there are milestones for DIP Financing:
1. The Company Entities shall have filed the DIP Motion with
the Bankruptcy Court on the Petition Date.
2. The Company Entities shall have obtained the Bankruptcy
Court's approval of the Interim DIP Order on or before the day that
is 3 business days after the Petition Date.
3. The Company Entities shall have obtained the Bankruptcy
Court’s approval of the Final DIP Order on or before the day that
is 35 days after the Petition Date.
The Debtors seek authorization to access the DIP Facility and to
use cash collateral, which will, among other things, (a) ensure the
continued, uninterrupted operation of their business as they
implement the transactions contemplated by the Restructuring
Support Agreement, (b) assure their customers, employees, and
business partners that they are well-capitalized during the
pendency of the Chapter 11 Cases, and (c) make available sufficient
funding to pay necessary expenses incurred in connection with the
Chapter 11 Cases.
The Debtors had minimal cash on hand upon commencement of the
Chapter 11 Cases -- they estimate less than $9.0 million in
liquidity -- and that position will be further strained after the
Petition Date by, among other things, continued operation of the
Debtors' business, the costs of administering the Chapter 11 Cases,
and payments expected (and needed) to be made under the Debtors'
requested "first day" relief.
The Debtors are an early stage technology company that has invested
significant resources in research and development and expansion
since its founding in 2014, leading to substantial and continuing
net losses. Before the Chapter 11 Cases, the Debtors pursued a
broad range of strategic transactions designed to address their
continuing liquidity needs.
In the second quarter of 2022, the Debtors retained Silicon Valley
Bank to assist with a potential refinancing of their funded
indebtedness and/or private placement sale of equity. In the third
quarter 2022, the Debtors retained Morgan Stanley & Co. LLC to
pursue a potential sale transaction to a third party.
While the Debtors received responses from several parties
potentially interested in participating in a refinancing
transaction, no such transaction was ultimately consummated.
Similarly, while the Debtors engaged in significant diligence,
discussions and negotiations with one party that had expressed
interest in acquiring the Debtors, which the Debtors believed to be
likely to result in a transaction as talks progressed, such party
ultimately terminated discussions with the Debtors in the fourth
quarter of 2022. The Debtors also entered into a committed equity
facility during the third quarter of 2022, although no funds were
able to be raised thereunder due to the Debtors' depressed stock
price.
Promptly following the termination of discussions regarding the
sale transaction, the Debtors implemented internal cost reductions
and pivoted toward a broader assessment of a number of potential
alternatives to address their liquidity needs. The Debtors retained
PJT Partners LP and FTI Consulting, Inc. in October 2022 to assist
with strategic planning. In October 2022, PJT commenced another
marketing process aimed at identifying potential buyers for the
Debtors, which involved broad outreach to both strategic and
financial sponsor candidates. Again, while the Debtors received
some potential interest from parties, no actionable bids were
received.
Throughout this process, the Debtors remained in close
communication with the Prepetition Lenders. When it became clear
that an out-of-court transaction was unlikely to materialize, the
Debtors quickly pivoted toward negotiating the terms of a mutually
agreeable in-court process, while simultaneously continuing to
pursue all available out-of-court options. Over the course of many
weeks, the Debtors, the Prepetition Lenders, and each of their
respective advisors engaged in arm's-length negotiations over the
terms of debtor-in-possession financing and restructuring
transactions. These discussions culminated in the execution of the
Restructuring Support Agreement, which the Debtors believe
positions them well to maximize value in the Chapter 11 Cases.
Certain of the Debtors are party to the Credit Agreement, dated as
of February 14, 2019, by and among the Borrowers, the lenders party
thereto from time to time, and ArrowMark as administrative agent.
The Prepetition Credit Agreement provides for a senior secured term
loan facility, having an outstanding balance as of the Petition
Date (and giving effect to the commencement of the Chapter 11
Cases) of $287.509 million in the aggregate, divided across these
tranches:
$81.631 million in Tranche A Loans;
$113.115 million in Tranche B Loans;
$61.268 million in Tranche C Loans;
$15.908 million in 2022 Tranche D Loans; and
$15.584 million in 2023 Tranche D Loans
The Prepetition Term Loans are secured by a senior priority
security interest in substantially all of the Debtors' assets, the
Tranche D Loans have payment priority in the waterfall (from the
collateral proceeds or otherwise) over the other tranches. There is
a financial covenant with respect to the Prepetition Term Loans
that requires the Debtors to maintain a minimum cash balance of $15
million at all times. Upon the occurrence of an event of default,
in addition to the Prepetition Lenders being able to declare
amounts outstanding under the Prepetition Term Loans due and
payable, the Prepetition Lenders can elect to increase the interest
rate by 2.0% per annum.
The proposed adequate protection provided to the Prepetition
Lenders comprises the following:
(a) valid and perfected security interests in and liens on the
DIP Collateral in accordance with the priorities set forth in the
DIP Orders;
(b) allowed, superpriority administrative expense claims under
sections 503(b) and 507(b) of the Bankruptcy Code, in accordance
with the priorities set out in the DIP Orders; and
(c) the reasonable and documented fees and expenses of counsel
and other professionals, as set forth in the DIP Orders.
Each of the DIP Liens, DIP Superpriority Claims, Prepetition Liens,
Adequate Protection Liens, and Adequate Protection Claims shall be
subject and subordinate to the Carve-Out, consisting of the sum of
(a) all fees required to be paid to the Clerk of the Court and
to the Office of the United States Trustee for the District of
Delaware pursuant to 28 U.S.C. sec. 1930(a);
(b) all reasonable fees and expenses incurred by a trustee
under section 726(b) of the Bankruptcy Code in an amount not exceed
$50,000;
(c) to the extent allowed at any time but incurred at any time
before or on the first business day following delivery by the DIP
Agent, at the direction of the Required Lenders, of a Carve-Out
Trigger Notice, all (A) unpaid fees and expenses, including any
restructuring, sale, success, or other transaction fee of any
investment bankers or financial advisors of the DIP Loan Parties
incurred by persons or firms retained by the Debtors; and (B)
unpaid fees and expenses incurred by professionals retained by a
statutory committee; and
(d) Allowed Professional Fees not to exceed $750,000 plus --
without duplication -- any transaction-based fee of any investment
bankers or financial advisors to the DIP Loan Parties after the
first business day following delivery by the DIP Agent, at the
direction of the Required Lenders, of the Carve-Out Trigger Notice
to the extent allowed at any time, whether by interim order.
A copy of the motion is available at https://bit.ly/3Z89hbl from
PacerMonitor.com.
About Starry Group
Boston-based Starry Group Holdings, Inc. (NYSE: STRY) is a licensed
fixed wireless technology developer and internet service provider.
The Company is an early-stage growth company.
Starry Group Holdings, Inc. and 11 affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-10219) on February 20, 2023.
The Hon. Karen B. Owens oversees the cases.
Lawyers at YOUNG CONAWAY STARGATT & TAYLOR, LLP and LATHAM &
WATKINS LLP serve as counsel to the Debtors; PJT PARTNERS LP serves
as their investment banker; FTI CONSULTING, INC. as their financial
advisors; and KURTZMAN CARSON CONSULTANTS LLC as their claims and
noticing agent.
As of September 30, 2022, Starry Group had $270.6 million in total
assets against $309.7 million in total liabilities.
The petitions were signed by William J. Lundregan as authorized
officer.
TEHUM CARE SERVICES: Files for Chapter 11, Removes Suit
-------------------------------------------------------
Tehum Care Services Inc. filed for chapter 11 protection in the
Southern District of Texas.
According to court filings, Tehum Care Services estimates between
$10 million and $50 million in debt owed to 200 to 999 creditors.
The petition states that funds will be available to unsecured
creditors.
The Debtor immediately filed a notice of removal of the lawsuit --
THE CURATORS OF THE UNIVERSITY OF MISSOURI and CAPITAL REGION
MEDICAL CENTER, vs. TEHUM CARE SERVICES, INC. d/b/a CORIZON HEALTH,
INC., CHS TX, INC. and YESCARE CORP., Defendants, Circuit Court of
Boone County, Missouri, Division 4, Case No. 22BA-CV01701-01 -- to
the United States Bankruptcy Court for the Western District of
Missouri the plaintiffs in the State Court Action seek, among other
things, two primary forms of relief: (1) a money judgment against
the Debtor; and (2) a money judgment against the non-debtor
co-defendants (CHS TX, Inc. and YesCare Corp.) based on allegations
that the Debtor fraudulently or preferentially transferred assets.
These theories are core proceedings under the Bankruptcy Code. The
claims against non-debtor defendants, to the extent they have any
merit, are derivative of the plaintiffs' claims against the Debtor
and constitute property of the Debtor's bankruptcy estate.
Plaintiffs' efforts to appoint a receiver in this action
constitutes an act to exercise control over the Debtor's potential
estate causes of action, which are direct violations of the
automatic stay under 11 U.S.C. Sec. 362(a)(3).
According to the Debtor, although plaintiffs assert a panoply of
theories in the State Court Action, the claims are all premised on
the theory that the Debtor's 2022 divisional merger constituted a
fraudulent transfer. Such theories make the claims asserted in the
State Court Action "core proceedings" that are "related to" the
Bankruptcy Case. Whether those transfers can be recovered for the
benefit of the Debtor’s creditors is for the Bankruptcy Court to
decide, for the benefit of all creditors, not merely the
plaintiffs, who have acted first. See Shubert v. Jeter (In re
Jeter), 171 B.R. 1015, 1023 (Bankr. W.D. Mo. 1994). The Plaintiffs
and non-debtor defendants are all potential creditors in the
Bankruptcy Case, as are several other persons not before the
Bankruptcy Court.
"Removal is appropriate pursuant to 28 U.S.C. Sec. 1452(a) and Rule
9027 of the Federal Rules of Bankruptcy Procedure. The claims
pursued by the plaintiffs in the State Court Action, when boiled
down to their basics, are essentially breach of contract against,
and alleged fraudulent transfers from, the above-captioned chapter
11 Debtor. Accordingly, these claims belong before Bankruptcy
Judge Christopher Lopez to assess the merits and the impact on the
Debtor's bankruptcy estate to ensure an equitable distribution to
creditors (which may include the plaintiffs and the non-debtor
co-defendants herein). Accordingly, removal is proper," the
Debtor's attorney, Scott B. Haines, of MARTIN, PRINGLE, O LIVER,
WALLACE & BAUER, LLP, said in court filings.
About Tehum Care Services
Tehum Care Services Inc., doing business as Corizon Health Services
Inc., is a privately held prison healthcare contractor in the
United States.
Tehum Care Services Inc. filed a petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-90086) on
February 13, 2023. In the petition filed by Russell A. Perry, as
chief restructuring officer, the Debtor reported assets between $1
million and $10 million and liabilities between $10 million and $50
million.
The Debtor is represented by:
Jason S Brookner, Esq.
Gray Reed & McGraw LLP
205 Powell Place
Suite 104
Brentwood, TN 3702
Tel: 469-320-6132
Email: jbrookner@grayreed.com
TG HOLDINGS: Cannon's Chophouse in Chapter 11, Remains Open
-----------------------------------------------------------
Ed Palattella of Erie Times-News reports that Meadville restaurant,
Cannon's Chophouse has filed for Chapter 11 bankruptcy protection
and remains open.
A Meadville restaurant that once was so popular it expanded to Erie
County and other locales in northwestern Pennsylvania has filed for
bankruptcy, listing as debts hundreds of thousands of dollars in
overdue payments to a food supplier.
Cannon's Chophouse, at 994 Market St. in Meadville, filed for
Chapter 11 bankruptcy protection on Wednesday, February 8, 2023, in
U.S. Bankruptcy Court in Erie.
Chapter 11 bankruptcy allows a debtor to stay in business as it
reorganizes and develops a plan to pay its creditors over time.
Cannon's Chophouse filed under the subchapter of the Bankruptcy
Code that applies to the reorganization of a debtor that is a small
business.
How much does Cannon's Chophouse owe its creditors?
The bankruptcy petition states that the restaurant's owner, T.G.
Holdings, has assets of no more than $50,000 and liabilities of
$500,001 to $1 million.
The restaurant's largest creditor is Curtze Food Service, of Erie.
Curtze is owed a total of about $403,000, according to the
petition. Other creditors include the IRS and the Pennsylvania
Department of Revenue.
Cannon's Chophouse once had other locations
Cannon's Chophouse is known for its steaks, seafood and ribs. It
now has the one location, on Market Street in Meadville. The
business opened in 2009 as Montana's Rib and Chophouse. It was on
Highline Drive, off Route 19 in Vernon Township near Meadville in
Crawford County.
The restaurant changed its name to Cannon's Chophouse in 2017. It
opened in October 2021 at its current spot in Meadville, the site
of the former 1776 Bar & Grill.
Cannon's Chophouse opened a restaurant in the Erie area in 2018. It
closed in 2019. That restaurant was located at 7165 Peach St. in
Summit Township, the site of the former Famous Dave's restaurant. A
Dunkin' now operates at that spot.
Many restaurants suffered during the pandemic. Bish has indicated
that Cannon's Chophouse was no exception. He told the Meadville
Tribune in March 2021 that the restaurant's troubles were related
to the COVID-19 outbreak, and that it had lost $1.5 million in
sales in a year. Cannon's Chophouse was closed from March 2020 to
September 2020.
The reasons behind the bankruptcy could be disclosed in court
filings to come. The initial bankruptcy petition included only the
basic information that creditor must disclose in the earliest stage
of a bankruptcy case.
What happens next?
The restaurant's bankruptcy lawyer will start working with the
judge and creditors to develop a reorganization plan, which the
judge ultimately must approve. U.S. Bankruptcy Judge Carlota Bohm,
based in Pittsburgh, is assigned the case.
Bohm gave Cannon's Chophouse until Feb. 22 to file an updated
bankruptcy petition, according to an order filed on Thursday. The
order states that Bohm will hold a status conference on April 4 "to
further the expeditious and economic resolution" of the case.
The case typically would have been assigned to a bankruptcy judge
in Erie because Cannon's Chophouse is in Crawford County. It is one
of the 10 counties in northwestern Pennsylvania in the jurisdiction
of U.S. Bankruptcy Court in Erie, part of the Pittsburgh-based U.S.
Bankruptcy Court for the Western District of Pennsylvania.
Erie's bankruptcy judge, Thomas P. Agresti, retired on Friday,
February 10, 2023,. The three remaining bankruptcy judges in the
Western District of Pennsylvania are hearing Erie cases until the
3rd U.S. Circuit Court of Appeals appoints a new bankruptcy judge
for Erie.
About TG Holdings LLC
TG Holdings, doing business as Cannon's Chophouse, is a restaurant
in Meadville, Pennsylvania.
TG Holdings LLC sought relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Pa. Case No. 23-10061) on Feb. 8,
2023. In the petition filed by Charles A. Bish, Jr., as managing
member, the Debtor reports estimated assets up to $50,000 and
estimated liabilities between $1 million and $10 million.
The Debtor is represented by:
Michael P. Kruszewski, Esq.
Quinn Law Firm
994 Market Street
Meadville, PA 16335
TIBCO SOFTWARE: Ares Capital Marks $85.3M Loan at 18% Off
---------------------------------------------------------
Ares Capital Corporation has marked its $85.3 million loan extended
to TibCo Software Inc., Picard Parent, Inc., Picard MidCo, Inc.,
Picard HoldCo, LLC and Elliott Alto Co-Investor Aggregator L.P to
market at $69.9 million or 82% of the outstanding amount, as of
December 31, 2022, according to a disclosure contained in Ares
Capital's Form 10-K for the fiscal year ended December 31, 2022,
filed with the Securities and Exchange Commission on February 7,
2023.
Ares Capital is a participant in a Second lien senior secured loan
to TibCo Software Inc., Picard Parent, Inc., Picard MidCo, Inc.,
Picard HoldCo, LLC and Elliott Alto Co-Investor Aggregator L.P. The
loan accrues interest at a rate of 16.59% (SOFR (Q) + 7%) per
annum. The loan matures September 2029.
Ares Capital is a specialty finance company that is a closed-end,
non-diversified management investment company incorporated in
Maryland. Ares Capital has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940,
as amended. Ares Capital has elected to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986,
as amended, and operates in a manner so as to qualify for the tax
treatment applicable to RICs.
TibCo Software Inc., Picard Parent, Inc., Picard MidCo, Inc.,
Picard HoldCo, LLC and Elliott Alto Co-Investor Aggregator L.P
provide server, application and desktop virtualization, networking,
software as a service, and cloud computing technologies.
TRINSEO PLC: Moody's Affirms Ba3 CFR & Alters Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Trinseo PLC
("Trinseo"; Corporate Family Rating at Ba3) and its subsidiary,
Trinseo Materials Operating S.C.A., subsequent to the announcement
of fourth quarter earnings. Moody's also lowered its Speculative
Grade Liquidity Rating to SGL-3 from SGL-1 and the outlook was
changed to negative from stable.
"Third and fourth quarter results reflect the inherent volatility
in Trinseo's styrene business combined with weak industry demand in
the fourth quarter," stated John Rogers, Senior Vice President at
Moody's and lead analyst on Trinseo. The analyst added,
"Additionally, short term pricing issues for MMA in Europe had a
much greater negative impact on the Engineered Material business
than expected and the company forecasted a slow ramp back to EBITDA
levels that would fully support the rating."
Downgrades:
Issuer: Trinseo PLC
Speculative Grade Liquidity Rating, Downgraded to SGL-3 from
SGL-1
Affirmations:
Issuer: Trinseo PLC
Corporate Family Rating, Affirmed Ba3
Probability of Default Rating, Affirmed Ba3-PD
Issuer: Trinseo Materials Operating S.C.A.
Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD5)
Backed Senior Unsecured Regular Bond/Debenture, Affirmed B2
(LGD5)
Backed Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD2)
Outlook Actions:
Issuer: Trinseo PLC
Outlook, Changed To Negative From Stable
Issuer: Trinseo Materials Operating S.C.A.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
The affirmation of Trinseo's Ba3 Corporate Family Rating (CFR)
reflects its size in terms of revenue and assets, significant and
sustainable market positions in each of its segments, a diverse
operating portfolio, the expected rebound in the profitability of
its specialty businesses and a management team that has managed the
balance sheet in a conservative manner.
The rating is tempered by the company's exposure to commodity
chemicals in Europe at a time when, despite a relatively warm
winter, the near-term profitability of its Styrene and Base
Plastics businesses may remain depressed for longer than usual.
While the size of Trinseo's styrene facilities in Germany and The
Netherlands are relatively small compared to new world-scale
plants, the cost curve is relatively flat, excluding North American
and the Middle East, providing energy cost in Europe are
reasonable. However, new crude oil-based capacity coming on-stream
in China may create problems if Chinese demand does not rebound in
2023 as anticipated.
The move to a negative outlook reflects the expected delay in
returning financial performance to levels that would adequately
support the rating with management projecting EBITDA of $375-425
million, and breakeven free cash flow for 2023, which would leave
leverage close to, or above, 6x. If quarterly EBITDA fails to rise
close to, or above, the $100 million rate by the second quarter of
2023 and the quarterly run rate is not closer to $150 million by
year-end 2023, or the first quarter of 2024, then there would be
further downward pressure on the rating. The acquisition of
Arkema's PMMA business and Aristech's Surfaces business in 2021
significantly increased debt and left the company more vulnerable
to the volatility in energy prices in its European operations and
the unanticipated imports of MMA derivatives from China.
Trinseo's Speculative Grade Liquidity rating was lowered to SGL-3
reflecting adequate liquidity due to the presence of over $200
million of cash on the balance sheet and full availability of the
$150 million accounts receivable facility. Given a weak outlook for
first quarter performance, Trinseo will likely have limited access,
roughly $112 million, to its $375 million revolver, due to a
springing financial covenant. Moody's doesn't believe that Trinseo
will encounter difficulty in getting an amendment from the banks to
address this issue over the near term. While liquidity for its
operations is good, Trinseo will need to come to market to address
the September 2024 maturity of its $665 million secured term loan
B. Given current market conditions, Moody's has factored in a
meaningful increase in Trinseo's interest expense for 2023 and
2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade to the rating is highly unlikely over the next 2 years
due to its weak financial metrics and limited free cash flow.
However, the CFR could be upgraded if Trinseo's businesses
excluding Polystyrene and Feedstocks consistently generates EBITDA
of over $450 million, balance sheet debt falls to roughly $1.5
billion and free cash flow remains above $150 million. This would
also imply that leverage during the next downturn would not rise
above 4x. The rating could be downgraded if quarterly EBITDA fails
to rise close to, or above, the $100 million rate by the second or
third quarter of 2023 and the quarterly run rate is not closer to
$150 million by year-end 2023, or the first quarter of 2024, then
there would be further downward pressure on the rating.
ESG CONSIDERATIONS
Environmental, social and governance (ESG) factors are important
considerations in Trinseo's credit quality but are not drivers of
the actions. Trinseo's ESG credit impact score is low-to-moderate
(CIS-3) similar to most other chemical companies as significant
environmental and social risks. Environmental risks (E-5) are very
highly negative for most large chemical companies due to the amount
of waste and pollution generated on an annual basis relative to
most other industries. Trinseo's reports emissions are at the lower
end of most commodity chemical companies. Social risks (S-4) are
high due to responsible production and health and safety risks
owing to the use, or production of, hazardous, flammable or noxious
chemicals. Among other products Trinseo has exposure to stryene,
which is "reasonably anticipated to be a human carcinogen" by the
US regulatory authorities. Trinseo's governance risks are
moderately negative (G-3) reflecting its financial policies and
management's track record.
The principal methodology used in these ratings was Chemicals
published in June 2022.
Trinseo PLC is the world's largest producer of styrene butadiene
(SB) latex, the third largest global producer of polystyrene and a
sizable producer of PMMA and engineered polymer blends. Trinseo
typically has revenues of $5 billion depending on petrochemical
feedstock prices, 26 manufacturing sites around the world, and over
3,400 employees.
TUESDAY MORNING: Hits Chapter 11 Bankruptcy Again
-------------------------------------------------
Maxwell Adler of Bloomberg News reports that Tuesday Morning Corp.
filed for bankruptcy protection for the second time since the onset
of the Covid-19 pandemic.
The Dallas-based discount retailer filed in the Northern District
of Texas, listing assets and liabilities of $100 million to $500
million, in its bankruptcy petition. It emerged from its last
bankruptcy in January 2021 after closing about 200 stores, cutting
its employee headcount and slashing debt.
But the company soon found itself in trouble again, battling
inflation and supply chain bottlenecks. The company blamed
disappointing sales on "macro headwinds" in a May 2022 conference
call to discuss earnings.
In July 2022, lenders extended the company a $5 million loan. The
company originally had to wait until November to request the
funds.
Founded in 1974, Tuesday Morning operates 490 stores and
specializes in home goods and related products. It had 1,607
full-time employees and 4,692 part-time staffers as of June 2021.
Tuesday Morning is a national off-price retailer that specializes
in home goods, textiles, furnishings and related products. As of
June 30, 2021, the company employed 1,607 people full‑time, and
4,692 part-time staffers. The retailer operates 490 stores across
the country.
About Tuesday Morning
Tuesday Morning Corporation is one of the original off-price
retailers specializing in name-brand, high-quality products for the
home, including upscale home textiles, home furnishings,
housewares, gourmet food, toys and seasonal decor, at prices
generally below those found in boutique, specialty and department
stores, catalogs and on-line retailers. Based in Dallas, Texas,
the Company opened its first store in 1974 and currently operates
hundreds of stores in 40 states. On the Web:
http://www.tuesdaymorning.com/
Tuesday Morning Corporation, then with around 700 stores in 40
states, filed Chapter 11 protection on May 27, 2020 (Bankr. N.D.
Tex. Lead Case No. 20-31476). Tuesday Morning then disclosed total
assets
of $92 million and total liabilities of $88.35 million as of April
30, 2020.
Tuesday Morning announced Jan. 4, 2021, it has successfully
completed its reorganization and emerged from Chapter 11
bankruptcy. The Company exited Chapter 11 with 490 of its best
performing stores. Following emergence from Chapter 11, Tuesday
Morning began trading on Jan. 21, 2021, on OTCQX under the symbol
"TUEM" and then commenced trading on the Nasdaq Capital Market on
May 25, 2021, under the ticker symbol "TUEM".
In the 2020 cases, the Debtors tapped Haynes and Boone, LLP as
general bankruptcy counsel; Alixpartners LLP as financial advisor;
Stifel, Nicolaus & Co., Inc. as investment banker; A&G Realty
Partners, LLC as real estate consultant; and Great American Group,
LLC as liquidation consultant. The official committee of unsecured
creditors tapped Munsch Hardt Kopf & Harr, P.C., as counsel.
Tuesday Morning sought relief for the second time under Chapter 11
of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 23-90000) on
Feb. 14, 2023. In the petition filed by Andrew T. Berger, as chief
executive officer, the Debtor listed assets and liabilities of $100
million to $500 million.
In the 2023 case, lawyers at Munsch Hardt Kopf & Harr, P.C., serve
as counsel to the Debtors. The Debtors tapped Piper Sandler as
investment banker; and Stretto, Inc., as claims and noticing agent.
UPSTART SECURITIZATION 2022-2: Moody's Cuts C Notes Rating to B1
----------------------------------------------------------------
Moody's Investors Service has downgraded three tranches from three
asset-backed securitizations backed by unsecured consumer loans.
These transactions are backed by pools of unsecured consumer
installment loans serviced by Upstart Network, Inc.
The complete rating actions are as follows:
Issuer: Upstart Securitization Trust 2022-2
Class C Notes, Downgraded to B1 (sf); previously on Jun 3, 2022
Definitive Rating Assigned Ba3 (sf)
Issuer: Upstart Securitization Trust 2022-3
Class B Notes, Downgraded to Ba3 (sf); previously on Jul 6, 2022
Definitive Rating Assigned Ba2 (sf)
Issuer: Upstart Securitization Trust 2022-4
Class B Notes, Downgraded to Ba3 (sf); previously on Aug 23, 2022
Definitive Rating Assigned Ba2 (sf)
RATINGS RATIONALE
The rating actions reflect deteriorating pool performance in recent
months with higher borrower defaults driven by high inflation and
declining borrower excess savings. These deals have experienced
higher loss and delinquency rates compared to historical ranges,
prompting an increase in Moody's lifetime loss expectations.
In Moody's analysis, Moody's considered up to a 15% increase in
remaining expected losses on the underlying pools to evaluate the
resiliency of the ratings amid the uncertainty surrounding the
pools' performance. The affected tranches are subordinate notes
that have lower credit enhancement available to protect them,
making them more vulnerable to any increase in defaults relative to
the senior tranches in the deals, which have greater credit
protections.
Moody's lifetime cumulative gross loss expectations are noted below
for the transaction pools. The loss expectations reflect updated
performance trends on the underlying pools.
Upstart Securitization Trust 2022-2: 25.00%
Upstart Securitization Trust 2022-3: 19.00%
Upstart Securitization Trust 2022-4: 20.00%
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was "Moody's
Approach to Rating Consumer Loan-Backed ABS" published in December
2022.
Factors that would lead to an upgrade or downgrade of the ratings:
Up
Levels of credit protection that are higher than necessary to
offset current expectations of loss could drive the ratings up.
Losses could decline below Moody's expectations as a result of a
lower-than-expected cumulative charge-offs. Favorable regulatory
policies and legal actions could also move the ratings up.
Down
Levels of credit protection that are lower than necessary to offset
current expectations of loss could drive the ratings down. Losses
could increase above Moody's expectations as a result of
higher-than-expected cumulative charge-offs. Adverse regulatory and
legal risks, specifically legal issues stemming from the
origination model and whether interest rates charged on some loans
could violate usury laws, could also move the ratings down.
WHIDBEY ISLAND HOSP: Moody's Affirms Ba3 Rating on GOULT Bonds
--------------------------------------------------------------
Moody's Investors Service has affirmed Whidbey Island Public
Hospital District, WA's (Whidbey Health) general obligation
unlimited tax (GOULT) bonds at Ba3, affecting approximately $44.9
million. At the same time, Moody's has affirmed the B3 rating on
the hospital's general obligation limited tax (GOLT) bonds,
affecting approximately $12.3 million. The outlook has been
revised to stable from negative.
RATINGS RATIONALE
The affirmation of the Ba3 GOULT rating reflects the district's
still precarious liquidity position and long-term prospects.
Despite effectively bolstering its liquidity position through the
issuance of working capital loans and securing long-term financing
for a sizeable maturing bond anticipation note (BAN), the
district's days-cash-on-hand and operating margins remain thin and
susceptible to even a minor financial disruption. The Ba3 GOULT
rating also reflects the support of an unlimited tax levy collected
solely for repayment of the GOULT bonds and additionally
incorporates the district's large and growing tax base, average
wealth and income levels, and the stabilizing presence of Naval Air
Station Whidbey Island. Debt liabilities are modest for a local
government and pension liabilities are minimal.
The affirmation of the B3 GOLT rating primarily reflects the
general credit characteristics of Whidbey Health as well as the
full faith and credit pledge of the district. The three-notch
distinction between the GOULT and GOLT bonds reflects the
additional risk inherent to obligations repaid from all available
operating revenues (GOLTs) rather than a dedicated source of
repayment (GOULTs).
RATING OUTLOOK
The revision of the outlook to stable reflects Whidbey Health's
successfully negotiation of long-term financing to avoid default on
a privately-owned BAN. The stable outlook additionally reflects
Whidbey Health's improved liquidity position and cash flow in 2022,
supported by the working capital loans, which will help stabilize
the district's finances over the outlook period.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Improved cash flow and strengthened liquidity metrics
-- Trend of growing patient volumes, supporting an improved
revenue outlook for the district
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Deterioration of liquidity and/or operating margins
-- Insolvency or bankruptcy of the district
-- Inability to produce timely and accurate financial
statements
LEGAL SECURITY
The general obligation bonds are secured by an unlimited ad valorem
tax pledge.
The limited tax general obligation bonds are paid from all
available general operating revenue, including the operating
property tax levy.
PROFILE
Whidbey Island Public Hospital District, doing business as Whidbey
Health, operates a critical access hospital, seven satellite
clinics, an ambulance service and a few related other healthcare
services on Whidbey Island in Puget Sound, 65 miles north of
Seattle. The district serves a population of about 67,000 residents
in 2018 estimates or 81% of the population of Island County, WA.
METHODOLOGY
The principal methodology used in these ratings was US Special
Purpose District General Obligation Debt Methodology published in
November 2022.
WYTHE BERRY: Weiss' Move to Dismiss Petition Denied
---------------------------------------------------
In the bankruptcy case styled In Re Wythe Berry Fee Owner LLC, Case
No. 22-11340 (MG), (Bankr. S.D.N.Y.), Chief Bankruptcy Judge Martin
Glenn denied the motion to dismiss the involuntary petition filed
by Zelig Weiss.
Zelig Weiss filed a motion to dismiss or abstain from hearing the
Involuntary Bankruptcy Petition filed against the Alleged Debtor --
Wythe Berry Fee Owner LLC -- by the Petitioning Creditors. The
Motion to Dismiss also seeks, to the extent necessary, to permit
Weiss to intervene as an interested entity.
The Alleged Debtor is the titular owner of a commercial real
property complex located in Brooklyn, New York, that includes The
William Vale Hotel -- the WV Complex. The Alleged Debtor is owned
entirely by Wythe Berry Member LLC. In turn, Wythe Berry Member LLC
has two owners with 50% interests each -- Zelig Weiss and YGWV LLC.
YGWV is the managing member of Wythe Berry Member LLC. YGWV is a
wholly-owned, direct subsidiary of All Year Holdings Limited -- the
debtor in a separate chapter 11 case pending before the Court.
The WV Complex was originally owned by a different entity, Wythe
Berry LLC. Weiss and All Year's former principal, Yoel Goldman each
owned 50% of Wythe Berry LLC, and Weiss serves as the managing
member. As part of a refinancing in February 2017, the Alleged
Debtor entity was formed and Wythe Berry LLC transferred title to
the WV Complex to the Alleged Debtor. The Alleged Debtor then began
leasing the WV Complex to Wythe Berry LLC pursuant to a lease.
As part of the same February 2017 refinancing, All Year issued
Series C Debentures. On Feb. 28, 2017, the Alleged Debtor executed
a Guaranty of Payment. The Guaranty was delivered specifically to
secure the obligations to the Series C Noteholders (acting through
the Trustee).
Weiss argues that the Petitioning Creditors seek to collect on the
Guaranty, which is akin to enforcement of a judgment. Weiss cites
no support for this argument, and the Court finds no persuasive
reason to equate Petitioning Creditors' potential claim on the
Guaranty with a judgment. The Court finds that the Petitioning
Creditors do not have a judgment they are seeking to enforce.
The parties widely differ in their positions on the extent of
competing creditors and the need for pari passu distribution, which
are factors three and four. The Court considers it uncontroversial
that small and large claims alike may warrant protection in
bankruptcy proceedings. The Court finds that there are likely
multiple competing creditors, and that a pari passu distribution
will be necessary with respect to certain creditors.
Weiss also argues that the Petitioning Creditors have adequate
remedies under state law to enforce the Guaranty, and, to the
extent applicable, they can assert fraudulent transfer actions in
state court. The Petitioning Creditors do not dispute the adequacy
of the relief non-bankruptcy courts would be able to provide for
Petitioning Creditors' own claims or possible fraudulent transfers.
Weiss observes that there is a choice-of-venue provision in the
Guaranty that precludes the Alleged Debtor from objecting to suits,
actions or proceedings initiated by the Trustee in any federal or
state court located in Kings County, New York, or in any competent
court in Tel Aviv-Jaffa, Israel. Thus, Weiss argues, there is an
adequate forum to protect the parties' interests.
The Petitioning Creditors argue that the proceedings present the
best route to deal with issues regarding the Alleged Debtor's
financial and commercial status, including the mortgage on the WV
Complex, any mechanic's liens that may affect the value of that
asset, and the amounts owed under the Alleged Debtor's Guaranty of
the Series C Bonds. The Petitioning Creditors also claim that there
are no more efficient means of achieving equitable distribution of
assets than a bankruptcy proceeding, which will "gather all
creditors and all claims (including those Weiss claims he has)
under a single judicial roof for efficient resolution."
The Court agrees with Petitioning Creditors claim that the benefit
sought -- consolidating litigation involving, and claims against
the Alleged Debtor -- is consistent with the benefit of the
judicial and economic advantages offered by a chapter 11
proceeding.
Weiss argues that no assets are at risk of being dissipated or lost
because Alleged Debtor's primary asset is the WV Complex, which
consists of real property and improvements. While "loss" of real
property itself may be less of concern, Weiss provides no support
for the assertion that real property -- or improvements on real
property -- are less susceptible to dissipation, by definition. On
the other hand, the Petitioning Creditors observe that the
oversight available in bankruptcy cases would help to remedy this
issue. The Court finds that the Petitioning Creditors make the more
compelling argument.
The Petitioning Creditors further argue that given the years-long
litigation campaign and parties' failure to achieve a settlement
through earnest mediation in the All Year bankruptcy, it is
unfortunately clear that an out-of-court solution is out of reach
at this time. The Petitioning Creditors claim that there is no
parallel non-federal insolvency proceeding such as these
proceedings would be akin to "starting afresh."
Weiss does not address the Alleged Debtor's want or need for a
bankruptcy discharge. While the Alleged Debtor may not be able to
consent to the bankruptcy proceeding, the Court concludes, from the
Alleged Debtor's submissions, that the benefits of the bankruptcy
case, including a potential discharge, would be welcomed in its
current circumstances.
A full-text copy of the Memorandum Opinion dated Feb. 6, 2023, is
available at https://tinyurl.com/txe68wrt from Leagle.com.
About Wythe Berry Fee Owner LLC
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.
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. As such, the Court finds that Weiss fails to
prove that dismissal or abstention are warranted.
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.
YS GARMENTS: Moody's Puts 'Caa1' CFR Under Review for Upgrade
-------------------------------------------------------------
Moody's Investors Service placed the ratings of YS Garments, LLC's
(dba "Next Level Apparel") under review for upgrade. The ratings
placed under review include the Caa1 corporate family rating,
Caa1-PD probability of default rating and the Caa1 ratings on the
company's senior secured revolver and term loan due 2024. At the
same time, Moody's assigned Caa1 ratings (under review for upgrade)
to the proposed amend and extend transaction which includes a
senior secured revolver and term loan due 2026. The outlook was
changed to rating under review from stable.
The review for upgrade reflects Next Level Apparel's plan to amend
and extend the maturity profile of its revolver and term loan by
two years from 2024 to 2026. Moody's review of the ratings will
focus on whether or not the proposed transaction closes resulting
in an extension of the company's debt maturity profile to 2026 with
no material negative impact to Next Level Apparel's cost of
capital. The review will also consider the anticipated recovery of
the company's sales and profitability and improvement in liquidity
following the extension of its debt maturities. The ratings on the
revolver and term loan due 2024 will be withdrawn upon repayment.
On Review for Upgrade:
Issuer: YS Garments, LLC
-- Corporate Family Rating, Placed on Review for Upgrade,
currently Caa1
-- Probability of Default Rating, Placed on Review for Upgrade,
currently Caa1-PD
-- Backed Senior Secured Revolving Credit Facility, Placed on
Review for Upgrade, currently Caa1 (LGD3)
-- Backed Senior Secured Term Loan, Placed on Review for Upgrade,
currently Caa1 (LGD3)
Assignments:
Issuer: YS Garments, LLC
-- Backed Senior Secured Revolving Credit Facility, Assigned
Caa1 (LGD3); Placed Under Review for further Upgrade
-- Backed Senior Secured Term Loan, Assigned Caa1 (LGD3);
Placed Under Review for further Upgrade
Outlook Actions:
Issuer: YS Garments, LLC
-- Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Next Level Apparel's review for upgrade reflects the launch of the
"amend and extend" transaction which would meaningfully extend the
debt maturity profile by two years upon completion. Moody's review
will focus on the credit profile benefits from the extended debt
maturity profile as well as the anticipated improvement in
operating performance and liquidity. The review will conclude after
the transaction is completed. Should the transaction close based
on the currently proposed terms, Moody's expects that the review
will likely conclude with a one notch upgrade of all of Next Level
Apparel's ratings with a positive outlook. Moody's also expects the
company to have good liquidity following the close of the
transaction.
Headquartered in Torrance, California, Next Level Apparel designs
and provides branded active wear to the premium basic segment of
the US wholesale wearables promotional products industry. Private
equity firm Blue Point Capital Partners acquired a majority stake
in the company in August 2018.
The principal methodology used in these ratings was Apparel
published in June 2021.
*********
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