/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/230308.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, March 8, 2023, Vol. 27, No. 66 Headlines 5280 AURARIA: Disclosures Hearing Continued to March 30 96 WYTHE: March 22 Hearing on Plan & Disclosures 96 WYTHE: Trustee Files Payout Plan After $96M Sale ABSOLUT FACILITIES: Court Grants in Part EEOC's Default Letter AFSHARFIRM LLC: Voluntary Chapter 11 Case Summary AFTERSHOCK COMICS: Tri Vision Appointed as New Committee Member ALERISLIFE INC: Tender Offer Statement Related to ABP Deal Amended ALLERGY & ASTHMA: Case Summary & 20 Largest Unsecured Creditors ALPHATEC HOLDINGS: Incurs $152.2 Million Net Loss in 2022 AQUA SHIELD: Amends Administrative Claims Pay Details ARUZE GAMING: Klarquist Sparkman Out as Committee Member ASHFORD HOSPITALITY: Has Limited Waiver on Cash Incentives ASHFORD HOSPITALITY: Inks 5th Amendment to Bylaws AUTO MONEY: Plan Depends on Outcome of Constitutional Case BASIC WATER: Seeks to Hire Jorant Commercial as Real Estate Broker BED BATH & BEYOND: S&P Upgrades ICR to 'CCC-', Outlook Negative BELLRING BRANDS: Moody's Raises CFR to 'B1', Outlook Stable BENJAMIN EYE: Court Confirms Reorganization Plan BRIAR BUILDING: Choudhri's Move to Remand Case Granted BRIDGER STEEL: Seeks to Hire Patten Peterman Bekkedahl as Counsel BROOKDALE SENIOR: Reports $238MM Net Loss in 2022 BSPV-PLANO LLC: Court Approves Disclosure Statement BSPV-PLANO: Aims to Complete Project, Return 100% to Creditors CANO HEALTH: Closes $150M Loan With Diameter, Rubicon Founders CARE NEIGHBORHOOD: April 4 Hearing on Plan & Disclosures CINEMARK HOLDINGS: Fitch Alters Outlook on 'B+' LongTerm IDR to Neg CLEARWATER COLLECTION: Court Approves Disclosure Statement CORNERSTONE CHEMICAL: S&P Affirms 'B-' ICR, Outlook Stable CS GROUP: Claims to be Paid From Cash, Sale and Operations EQUINOX HOLDINGS: S&P Upgrades ICR to 'CCC-', Outlook Negative FARADAY FUTURE: Promotes Yueting Jia to Executive Officer Position FIELDWOOD ENERGY: Atlantic's Motion for Certification Granted FOGO DE CHAO: Moody's Rates $33.4MM First Lien Term Loan 'Caa1' FOX SUBACUTE: April 25 Hearing on Clara Burke/Warrington Disclosure FOX SUBACUTE: Unsecureds' Recovery Unknown in Plan FULLER AND FULLER: Voluntary Chapter 11 Case Summary GKS CORPORATION: Plan Committee Seeks Mediator in Statewood Suit GRADE A HOME: Voluntary Chapter 11 Case Summary GREAT WEST: Voluntary Chapter 11 Case Summary GREEN ENVIRONMENTAL: Taps Law Office of Nita Gupta as Counsel GREEN ROADS: Case Summary & 20 Largest Unsecured Creditors IGLESIA CRISTIANA: Seeks Extension for 20 Days to File DS and Plan INSTRUCTURE HOLDINGS: Fitch Hikes IDR to 'BB', Outlook Stable JACKSON FINANCIAL: Moody's Gives Ba1(hyb) to $600MM Preferred Stock JACKSON FINANCIAL: S&P Assigns 'BB+' Rating on New Preferred Stock JUST BELIEVE: Landlord Says Plan Improperly Seeks 3rd Party Release JUST BELIEVE: March 1 Plan Confirmation Hearing KNOW LABS: Ronald P. Erickson Has 3.1% Equity Stake as of Jan. 25 KREATIIVELY KREATIVE: Case Summary & Two Unsecured Creditors L.E.E. PROPERTY: Plan as Modified Confirmed by Judge LA CENTRAL PROPERTY: Taps Law Offices of Raymond H. Aver as Counsel LASHLINER INC: Unsecureds to Get Full Payment in Five Years LEGACY FSRD: Unsecureds Owed $21M-$24M Get 6-8% of Claims LENDINGTREE INC: S&P Downgrades ICR to 'SD' on Debt Repurchase LORENZO ESTEVA: 11th Cir. Lacks Jurisdiction on Appealed Case M & J DUMP TRUCKING: Taps Lefkovitz & Lefkovitz as Legal Counsel MEDICAL GUARDIAN: Midcap Financial Marks $35.8M Loan at 15% Off MERIDIAN INVENTORY: Taps Rountree Leitman Klein & Geer as Counsel MOBIQUITY TECHNOLOGIES: Lind Global Has 9.9% Stake as of Feb. 21 NATIVE ENGINEERS: Disposable Income, Causes of Action to Fund Plan NB HOTELS: To Seek Plan Confirmation on March 28 NEKTAR THERAPEUTICS: Incurs $368.2 Million Net Loss in 2022 NLG LLC: Defendants' Bid to Dismiss Adversary Proceeding Granted NLG LLC: Ineligible Under Chapter 11, Court Says NORTH SHORE ASSOCIATES: Voluntary Chapter 11 Case Summary NORTH SHORE MANOR: Case Summary & 20 Largest Unsecured Creditors NORTHWEST BANCORPORATION: Trustee Plan to Hand Shares to AmeriNat NOSRAT LLC: Case Summary & Three Unsecured Creditors ORCHARD THERAPEUTICS: Midcap Marks $33.M Loan at 67% Off PARAGON 28: Midcap Financial Marks $10M Loan at 25% off PARTNER THERAPEUTICS: Midcap Financial Marks $1M Loan at 43% Off PARTNER THERAPEUTICS: Midcap Financial Marks $5M Loan at 34% Off PEARL RESOURCES: Bid for Mandatory Abstention/Remand Granted PG&E CORP: Noteholders' Administrative Expense Claims Barred PREFERRED CARE DEVELOPMENTAL: Case Summary & 9 Unsec. Creditors PREMIER IMAGING: Midcap Financial Marks $12.4M Loan at 35% Off PRODUCE DEPOT: Unsecured Creditors to Get 4% Under Plan QUORUM HEALTH: Rajeev Varma's Emergency Motion Denied RAKKI LLC: Unsecured Creditors Will Get 100% of Claims in 3 Years RAMIL ABALKHAD: U.S. Trustee Appoints Creditors' Committee RDX TECHNOLOGIES: Case Summary & 20 Largest Unsecured Creditors ROCK RIDGE: Bankruptcy Administrator Unable to Appoint Committee SCOTTS MIRACLE-GRO: Moody's Cuts CFR to Ba3 & Unsecured Notes to B1 ST. PAUL HRA: Moody's Rates $50.9MM School Bonds 'Ba1' TECHNICAL ORDNANCE: U.S. Trustee Unable to Appoint Committee TEHUM CARE SERVICES: Proceedings in K.A. Suit Are Stayed TEHUM CARE SERVICES: U.S. Trustee Appoints Creditors' Committee THOMAS G. GIALAMAS: Dismissal Reversed on Appeal, Case Remanded TOPGOLF CALLAWAY: Moody's Affirms B1 CFR & Rates New Term Loan B1 TOPGOLF CALLAWAY: S&P Affirms 'B+' ICR on $1.1BB Refinancing TRINSEO PLC: S&P Alters Outlook to Negative, Affirms 'B-' ICR UNIVERSAL REHEARSAL: Unsecureds Unimpaired in Sale Plan URBAN COMMONS: Highgate's Objection to DIP Order Overruled US SILICA: Moody's Affirms B2 CFR & Alters Outlook to Positive VASU CONVENIENCE: Seeks Extension to File Plan to May 26 VERISTAR LLC: Gets Approval to Hire Sims Funk as Special Counsel VISTRA CORP: Moody's Affirms Ba1 CFR on Energy Harbor Transaction VISTRA CORP: S&P Affirms 'BB' ICR on Energy Harbor Acquisition VOYAGER DIGITAL: UST Says Plan Disclosures Inadequate WANG LEE: Post-Petition Rent Obligations Are Not Modified WESTBANK HOLDINGS: Court Approves Fannie's Plan Outline ********* 5280 AURARIA: Disclosures Hearing Continued to March 30 ------------------------------------------------------- 5280 Auraria, LLC, sought and obtained an order continuing from March 7, 2023, to March 30, 2023, the hearing on the Debtor's Disclosure Statement. The deadline to circulate a draft Amended Disclosure Statement is reset from Feb. 22, 2023 to March 8, 2023. The deadline to file an Amended Disclosure Statement is reset from February 24, 2023 to March 13, 2023. The Debtor has already moved the hearing several times. In seeking the latest extension, the Debtor explained that DB Auraria and the Debtor have had extensive discussions regarding the Disclosure Statement and underlying Plan, as well as other matters pending before the Court that may impact the Disclosure Statement and Plan. The Debtor has continuously cooperated with DB Auraria to move discussions forward, including responding to numerous informal requests for information and arranging a tour of the Debtor's property on short notice to DB Auraria's principals. Under these circumstances, the Debtor believes that the parties would benefit from an additional week to continue their ongoing discussions. About 5280 Auraria 5280 Auraria, LLC, owns Auraria Student Lofts, a high-rise building in downtown Denver aimed at providing housing for college students. 5280 Auraria's sole member and manager is Nelson Partners, LLC, a Utah limited liability company. The individual principal is Patrick Nelson. 5280 Auraria sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Col. Case No. 22-12059) on June 9, 2022. In the petition filed by Patrick Nelson, as managing member, the Debtor listed between $50 million and $100 million in both assets and liabilities. Judge Kimberley H. Tyson oversees the case. Michael J. Pankow, Esq., at Brownstein Hyatt Farber Schreck, LLP, is the Debtor's counsel. 96 WYTHE: March 22 Hearing on Plan & Disclosures ------------------------------------------------ Judge Sean H. Lane has entered an order provisionally approving the Disclosure Statement filed by Stephen S. Gray, solely in his capacity as the Chapter 11 Trustee of the estate of 96 Wythe Acquisition LLC. The following schedule in connection with final approval of the Disclosure Statement and confirmation of the Plan is approved: The Plan Supplement filing date will be on Wednesday March 8, 2023. The deadline to vote to accept or reject the Plan will be on Monday March 13, 2023 at 5:00 p.m. (prevailing Eastern Time). The voting certification deadline will be on Tuesday March 14, 2023 at 5:00 p.m. (prevailing Eastern Time). The deadline for Objections to Disclosure Statement/ Plan Confirmation will be on Wednesday March 15, 2023at 5:00 p.m. (prevailing Eastern Time). The deadline for replies to objections to Disclosure Statement/Plan Confirmation will be on Monday March 20, 2023 at 5:00 p.m. (prevailing Eastern Time). The Combined Disclosure Statement/ Confirmation Hearing will be on Wednesday March 22, 2023 at 2:00 p.m. (prevailing Eastern Time). As promptly as practicable following entry of this Order, and in any event no later than the Solicitation Commencement Deadline, the Trustee shall mail or cause to be mailed the Combined Hearing Notice to Holders of Claims or Interests in Class 1 (Other Priority Claims), Class 3 (Other Secured Claims), Class 6 (Subordinated Insider Claims), and Class 7 (Equity Interests) are not entitled to vote on the Plan (collectively, the "Non-Voting Classes"). As promptly as practicable following entry of this Order, and in any event no later than the Solicitation Commencement Deadline, the Trustee shall mail or cause to be mailed the Combined Hearing Notice to all creditors and parties in interest on the Debtor's Master Service List and any other party which has filed a Notice of Appearance in this Chapter 11 Case to the extent not included in the Voting Classes or Non-Voting Classes. About 96 Wythe Acquisition 96 Wythe Acquisition, LLC, operates the Williamsburg Hotel, a hotel located at 96 Wythe Ave., Brooklyn, N.Y. 96 Wythe Acquisition sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-22108) on Feb. 23, 2021, disclosing $79,990,206 in liabilities. CRO David Goldwasser signed the petition. Judge Sean H. Lane oversees the case. The Debtor tapped Backenroth Frankel & Krinsky, LLP and Mayer Brown, LLP as bankruptcy counsels; Fern Flomenhaft, PLLC as insurance counsel; and B. Riley Advisory Services as litigation support consultant. Getzler Henrich & Associates, LLC and Hilco Real Estate, LLC serve as the Debtor's financial advisors. Stephen Gray was appointed as Chapter 11 trustee. The trustee tapped Togut, Segal & Segal, LLP; Fragomen Del Rey Bernsen & Loewy, LLP; and Bernstein Redo & Savitsky PC as bankruptcy counsel, special counsel, and special liquor license counsel, respectively. Verdolino & Lowey PC is the trustee's tax accountant. 96 WYTHE: Trustee Files Payout Plan After $96M Sale --------------------------------------------------- Stephen S. Gray, not individually but solely in his capacity as the Chapter 11 trustee (the "Trustee") for the bankruptcy estate of 96 Wythe Acquisition LLC, filed a First Amended Chapter 11 Plan of Liquidation and a corresponding Disclosure Statement. Following an extensive marketing and auction process, the Bankruptcy Court has approved the Trustee's sale of substantially all of the Debtor's assets, including the 147-room Williamsburg Hotel at 96 Wythe Avenue, Brooklyn, New York, to Quadrum Development Corp. ("Purchaser") for an aggregate sale price of $96 million. The closing of the sale is subject to certain conditions precedent and is expected to occur on or before March 31, 2023. All of the proceeds of the sale are subject to the liens and claims of BSPRT 2018-FL3 Issuer, Ltd. ("BSP"), the Debtor's senior secured lender, which the Bankruptcy Court approved in the amount of no less than $108,688,787 (as of August 14, 2022, plus additional accruing interest, fees, and other charges). Thus, absent an agreement with Benefit Street Partners Realty Operating Partnership, LP ("BSP"), the Debtor's senior secured mortgage lender, there would be no sale proceeds available to pay any amounts necessary to confirm a chapter 11 plan, such as administrative claims and priority claims, or any funding to pursue additional recoveries for the benefit of creditors on account of estate claims and causes of action against third parties. Following extensive arm's length negotiations between the Trustee and his advisors and BSP and its advisors, BSP has agreed to carve-out from its liens and claims a substantial amount of the sale proceeds to provide for sufficient funding to confirm this chapter 11 plan, subject to the agreements and deferrals reached with certain administrative and priority creditors. The Plan provides that upon the Effective Date of the Plan and consummation of the Sale, the Trustee will (a) distribute a portion of the sale proceeds to BSP on account its senior secured claims and pay (or reserve for) certain administrative expenses and priority claims and (b) use the remainder of the sale proceeds consisting of $150,000 to fund a reserve that will be used by the post-Effective Date Estate representative to pursue recoveries on account of claims and causes of action not released under the Plan. To accomplish this result, the Plan contains several agreements regarding the deferral of certain administrative and other claims that would otherwise be necessary to pay in cash (or reserve) on the Effective Date of the Plan to the extent allowed by the Court: * The Trustee and the Trustee Professionals have agreed to receive payment of a portion of their allowed fees and expenses in the amount of $4,660,650 from the Sale proceeds and defer a substantial portion of their fees and expenses in the amount of $1,900,109 (subject to certain adjustments for certain professionals depending upon the operation of the Hotel prior to the Effective Date) to recovery from Post-Effective Date Available Cash (i.e., the post-Effective Date recoveries on account of claims and causes of action belonging to the estate, net of the post-Effective Date costs). * The NYC DOF has agreed that its Allowed Priority Tax Claims on account of unpaid hotel occupancy taxes will be paid 15% in cash on the Effective Date of the Plan (which equates to $312,050) with the balance of such claims in the amount of $1,768,286 to be paid from Post-Effective Date Available Cash after payment in full of the deferred portions of the Trustee's and Trustee Professionals' fees and expenses described in the first bullet above. * During the Chapter 11 Case, BSP previously agreed to subordinate a substantial portion of its allowed claims in the amount of at least $12.7 million (as of August 14, 2022, plus additional accruing interest, fees, and other charges) to General Unsecured Claims. In light of the insufficiency of Sale proceeds to pay its Senior Secured Claim in full as required, BSP has further agreed to (a) reduce the amount of its Senior Secured Claim payable on the Effective Date to $88,704,697 and (b) defer a substantial portion of the recovery otherwise available to it on account of its Senior Secured Claim in the amount of $5.5 million to be paid from Post-Effective Date Available Cash after payment in full of the deferred portions of the Trustee's and Trustee Professionals' fees and expenses and the deferred portion of the unpaid hotel and occupancy taxes owing to the NYC DOF. * The Trustee and BSP have reached an agreement in principle with certain of the professionals retained by the Debtor prior to the appointment of the Trustee to reduce their requests for fees and expenses from more than approximately $7.9 million by 25%, which reduced fees and expenses, if approved by the Bankruptcy Court, will be paid pro rata from a reserved fund of $964,463, with the balance of such unpaid fees and expenses to be paid from Post-Effective Date Available Cash after payment in full of the deferred portions of the Trustee's and Trustee Professionals' fees and expenses, the deferred portion of the unpaid hotel and occupancy taxes owing to the NYC DOF, and the deferred portion of the BSP Senior Secured Claim equal to $5.5 million. After payment, any additional Post-Effective Date Available Cash will be paid first to holders of allowed general unsecured claims (Class 4) pro rata until such claims are paid in full, second to BSP on account of its subordinated secured claim (Class 5), third to holders of allowed subordinated claims held by insiders of the Debtor (Class 6), and finally to holders of the Debtor's equity interests (Class 7). Other persons and entities have asserted administrative expense claims, which will either be paid in full on the Effective Date, estimated at zero dollars for distribution purposes or voluntarily compromised on the as part of confirmation of the Chapter 11 Plan. Failure of any of the trustee's efforts in this regard with respect to each claim will cause the failure of the Chapter 11 Plan and a likely conversion of this Bankruptcy Case to a Chapter 7 liquidation. The Trustee, in an exercise of his business judgment, concluded that a sale of the assets of the Debtor's Estate was in the best interest of its creditors and other stakeholders. On Oct. 21, 2022, the Trustee filed a motion for entry of an order approving bidding procedures related to the Sale of the Hotel and related assets, and on Nov. 15, 2022, the Bankruptcy Court entered an order approving the bidding procedures and scheduling an auction, if necessary (the "Bidding Procedures Order"). Following an extensive marketing and auction process conducted in accordance with the Bidding Procedures Order, on Jan. 11, 2023, the Trustee, in consultation with BSP, designated Quadrum Development Corp. (the "Purchaser") as the Successful Bidder (as defined in the Bidding Procedures Order). Total General Unsecured Claims asserted against the Debtor's estate aggregate approximately $9.7 million. Based on the investigations and analyses conducted by the Trustee and his professionals to date, it is currently anticipated that Allowed General Unsecured Claims will not exceed $1 million to $3 million in the aggregate. Under the Plan, holders of Class 4 General Unsecured Claims will receive one or more distributions of Post-Effective Date Available Cash on a pro rata basis after payment in full in Cash of the Trustee Deferred Compensation, the NYC Priority Deferred Tax Claim Amount, the BSP Senior Secured Claim Deferred Portion, and the Debtor Professional Fee Deficiency, in an amount up to, but not to exceed, the Allowed amount of such holder's Other General Unsecured Claim. Class 4 is impaired. The primary source of funding the Distributions and payments required to be made under the Plan shall be the Gross Sale Proceeds generated by the Sale of the Debtor's Hotel and related Assets. Additionally, the net proceeds, if any, resulting from the possible prosecution of claims and causes of action by the Trustee or the Plan Administrator, as the case may be, on behalf of the Debtor's Estate shall serve as an additional source of funding Distributions to holders of the Trustee Deferred Compensation, the NYC Priority Deferred Tax Claim Amount, the BSP Senior Secured Claim, the Debtor Professional Deficiency Amount, Allowed Unsecured Claims, and the BSP Subordinated Secured Claim. Attorneys for Stephen S. Gray, Not Individually But Solely in His Capacity as Chapter 11 Trustee: Albert Togut, Esq. Frank A. Oswald, Esq. Neil Berger, Esq. Bryan M. Kotliar, Esq. TOGUT, SEGAL & SEGAL LLP One Penn Plaza, Suite 3335 New York, NY 10119 Tel: (212) 594-5000 A copy of the Disclosure Statement dated Feb. 22, 2023, is available at https://bit.ly/3KvEilq from PacerMonitor.com. About 96 Wythe Acquisition 96 Wythe Acquisition, LLC, operates the Williamsburg Hotel, a hotel located at 96 Wythe Ave., Brooklyn, N.Y. 96 Wythe Acquisition sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-22108) on Feb. 23, 2021, disclosing $79,990,206 in liabilities. CRO David Goldwasser signed the petition. Judge Sean H. Lane oversees the case. The Debtor tapped Backenroth Frankel & Krinsky, LLP and Mayer Brown, LLP as bankruptcy counsels; Fern Flomenhaft, PLLC as insurance counsel; and B. Riley Advisory Services as litigation support consultant. Getzler Henrich & Associates, LLC and Hilco Real Estate, LLC serve as the Debtor's financial advisors. Stephen Gray was appointed as Chapter 11 trustee. The Trustee tapped Togut, Segal & Segal, LLP; Fragomen Del Rey Bernsen & Loewy, LLP; and Bernstein Redo & Savitsky PC as bankruptcy counsel, special counsel, and special liquor license counsel, respectively. Verdolino & Lowey PC is the trustee's tax accountant. ABSOLUT FACILITIES: Court Grants in Part EEOC's Default Letter -------------------------------------------------------------- In the Adversary Proceeding captioned as In re: Absolut Facilities Management, LLC, Chapter 11, et al., Debtors. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v. ABSOLUT FACILITIES MANAGEMENT, LLC, et al., Defendants, Case No. 19-76260-ast, Adv. Proc. No. 20-8055-AST, (Bankr. E.D.N.Y.), Chief Bankruptcy Judge Alan S. Trust grants in part the Default Letter and the Dec. 12 Letter filed by the Equal Employment Opportunity Commission. In its Default Letter, the EEOC suggests that an appropriate remedy for the Defendants' discovery violation would be an order (1) granting default judgment in favor of EEOC and releasing the $425,000 Settlement Funds pursuant to the Consent Decree, or, (2) at a minimum, directing that the matters embraced in the Discovery Order or other designated facts be taken as established for purposes of the action, and prohibiting Defendants from supporting or opposing designated claims or defenses. In its Dec 12 Letter, the EEOC requests that the Defendants and Avante Care Management LLC be subject to sanctions, including contempt, for their failure to fully comply with the Court's Discovery Order and/or the Avante Subpoena. Further, the EEOC requests that the Defendants and Avante be ordered to fully comply with the Court's Discovery Order and/or the Avante Subpoena. The Court does not find the requisite willfulness, bad faith or other fault that would justify entry of a default judgment, nor does it find that the information the EEOC is entitled to is lost or that the Defendants acted with the intent to deprive the EEOC of the information's use in this litigation. Rather, the Court finds that the Defendants improperly sought to shift to Avante their obligations to retain the ESI and/or provide the discovery to the EEOC. Thus, an appropriate sanction short of a default judgment is warranted. The Court also finds that Avante has failed to fully comply with the Avante Subpoena. Accordingly, the Court orders as follows: (a) The Defendants are prohibited from opposing the EEOC's claims that the Settlement Fund was created on Nov. 27, 2018 pursuant to the Consent Decree; (b) The Defendants are prohibited from introducing any evidence disputing that the Settlement Fund was deposited on or about Nov. 27, 2018 into a Settlement Funds Escrow Account at M&T Bank ending in 7673, under an account held by Absolute Facilities Management, LLC; (c) The Defendants are prohibited from disputing that Defendants did not disclose the Settlement Fund as an asset of Defendants in their initial filings submitted to this Court in the main bankruptcy proceeding; are prohibited from disputing that, and that at no time prior to the commencement of this adversary proceeding did Defendants ever identify the Settlement Fund as property of the bankruptcy estates on any of the schedules submitted to this Court; (d) The Defendants are prohibited from disputing that Defendants did not amend their disclosures to include the Settlement Fund as an asset; (e) The Defendants will make a diligent search for all books, records, files, and other documents (whether written, digital or electronic) required to be produced under the Discovery Order and will produce all documents requested in the Plaintiff's June 17, 2022 discovery demands in its possession or under its custody or control by March 6, 2023, and by March 6, 2023 file an affidavit of a person with knowledge of the search for such documents identifying all efforts made to locate and produce such documents, and identifying by categories of requests all such documents which have been produced; and (f) Avante Care Management LLC will make a diligent search for all books, records, files, and other documents (whether written, digital or electronic) required to be produced under the Avante Subpoena and will produce all documents requested in the Avante Subpoena in its possession or under its custody or control by March 6, 2023, and by March 6, 2023 file an affidavit of a person with knowledge of the search for such documents identifying all efforts made to locate and produce such documents, and identifying by categories of requests all such documents which have been produced. The Court has scheduled a pre-trial conference to be held on May 23, 2023 at 2:00 p.m. A full-text copy of the Order dated Feb. 13, 2023, is available at https://tinyurl.com/c7csbkkb from Leagle.com. About Absolut Facilities Management Absolut Facilities Management, LLC, through its subsidiaries, owns six skilled nursing facilities and one assisted living facility in the state of New York, have sought Chapter 11 protection. On Sept. 10, 2019, Absolut Facilities Management, LLC and seven related entities each filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-76260). Loeb & Loeb LLP is the Debtors' counsel. Prime Clerk LLC is the claims and noticing agent. The Office of the U.S. Trustee on Oct. 3, 2019, appointed five creditors to serve on the official committee of unsecured creditors in the Chapter 11 cases. AFSHARFIRM LLC: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Afsharfirm, LLC 463 Westfield Blvd #503 Temple, TX 76502 Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court Western District of Texas Case No.: 23-60110 Judge: Hon. Michael M. Parker Debtor's Counsel: Tyler Sims, Esq. SIMS LAW, PLLC 600 Austin Ave Suite 23 Waco TX 76701 Tel: (254) 304-7161 Email: tyler@simslawpllc.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Ali Afshar Shandiz as sole member. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/25QZPVQ/Afsharfirm_LLC__txwbke-23-60110__0001.0.pdf?mcid=tGE4TAMA AFTERSHOCK COMICS: Tri Vision Appointed as New Committee Member --------------------------------------------------------------- The U.S. Trustee for Region 16 appointed Tri Vision Int'l as new member of the official committee of unsecured creditors in the Chapter 11 case of AfterShock Comics, LLC. As of March 2, the members of the committee are: 1. AC Comics Ltd. 23 High Street Pewsey, Wiltshire, UK SN9 5AF Attention: Simon Fawcett Tel: 1 (323) 317-1538 Email: simon@atlanticscreengroup.com 2. Imprimerie L'Empreinte, Inc. 4177 Boulevard Industriel Laval, QC, Canada H7LOG7 Attention: Jean-Pierre Rose Tel: 514-961-1223 Email: jprose@empreinte.qc.ca 3. Tri Vision Int'l 3700 Wilshire Blvd., #460 Los Angeles, CA 90010 Attention: Thomas Cho Tel: 213-700-2238 Email: thomascho.trivision@gmail.com About Aftershock Comics AfterShock Comics, LLC -- https://Aftershockcomics.com -- is an American comic book publisher launched in 2015. The company is based in Sherman Oaks, Calif. AfterShock Comics and affiliate Rive Gauche Television filed petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. Lead C.D. Calif. Case No. 22-11456) on Dec. 19, 2022. At the time of the filing, AfterShock Comics reported $10 million to $50 million in both assets and liabilities while Rive Gauche reported $50 million to $100 million in assets and $10 million to $50 million in liabilities. Judge Martin R. Barash oversees the cases. The Debtors are represented by Levene, Neale, Bender, Yoo & Golubchik, LLP. The U.S. Trustee for Region 16 appointed two separate committees to represent unsecured creditors in the Chapter 11 cases of AfterShock Comics, LLC and Rive Gauche Television. Both committees are represented by Sklar Kirsh, LLP. ALERISLIFE INC: Tender Offer Statement Related to ABP Deal Amended ------------------------------------------------------------------ An amended Tender Offer Statement on Schedule TO was filed with the Securities and Exchange Commission relating to the offer of ABP Acquisition 2 LLC, a Maryland limited liability company as Purchaser, and ABP Acquisition LLC, a Maryland limited liability company as Parent, to purchase all outstanding shares of common stock, par value $0.01 per share, of AlerisLife Inc., a Maryland corporation , at a price of $1.31 per Share, net to the seller in cash, without interest, less any required withholding tax, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated February 17, 2023, and in the related Letter of Transmittal. As previously reported by the Troubled Company Reporter, AlerisLife entered into a definitive agreement with ABP Acquisition under which ABP will acquire all of the outstanding shares of AlerisLife common stock for $1.31 per share in cash, which represents an 85% premium to the average trading price of the last 30 trading days of $0.71 per share. The total consideration to be paid to stockholders in the transaction is approximately $43.8 million and is not subject to any financing condition. ABP is majority owned and controlled by Adam Portnoy, one of AlerisLife's managing directors and the chair of its Board of Directors. ABP intends to acquire AlerisLife through a tender offer which will be subject to, among other things, a number of shares being tendered in the tender offer that, together with the shares owned by ABP and its affiliates, represent a majority of AlerisLife shares. ABP together with its affiliates currently own approximately 6.1% of AlerisLife's outstanding shares of common stock. Diversified Healthcare Trust (Nasdaq: DHC), which holds approximately 31.9% of the outstanding shares of AlerisLife common stock, has also consented to the transaction and has agreed to tender its shares in the tender offer. Promptly following completion of the tender offer, ABP will acquire all remaining shares of AlerisLife at the same price of $1.31 per share in cash through a merger. The transaction is expected to be completed in the first quarter of 2023. The Schedule TO was amended and supplemented to add the Notice of Merger of ABP Acquisition 2 LLC with and into AlerisLife Inc., issued on February 17, 2023, a copy of which is available for free at https://tinyurl.com/5f9hnk5m A full-text copy of the regulatory filing is available for free at: https://tinyurl.com/5dj7p5p9 About AlerisLife Inc. AlerisLife Inc., formerly known as Five Star Senior Living Inc., collectively with its consolidated subsidiaries, is a holding company incorporated in Maryland and substantially all of its business is conducted by its two segments: (i) residential (formerly known as senior living) through its brand Five Star Senior Living, or Five Star, and (ii) lifestyle services (formerly known as rehabilitation and wellness services) primarily through its brands Ageility Physical Therapy Solutions and Ageility Fitness, or collectively Ageility, as well as Windsong Home Health. AlerisLife reported a net loss of $29.93 million for the year ended Dec. 31, 2021, and a net loss of $7.59 million for the year ended Dec. 31, 2020, and a net loss of $20 million for the year ended Dec. 31, 2019. As of Sept. 30, 2022, the Company had $382.54 million in total assets, $126.13 million in total current liabilities, $102.08 million in total long-term liabilities, and $154.33 million in total shareholders' equity. * * * This concludes the Troubled Company Reporter's coverage of AlerisLife until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. ALLERGY & ASTHMA: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Allergy & Asthma Center of S.W. Washington, LLC 10599 Wilshire Blvd., #401D Los Angeles, CA 90024 Business Description: The Debtor is a provider of personalized care for allergies and asthma. Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court Central District of California Case No.: 23-11270 Debtor's Counsel: Michael Jay Berger, Esq. LAW OFFICES OF MICHAEL JAY BERGER 9454 Wilshire Boulevard, 6th Floor Beverly Hills, CA 90212 Tel: (310) 271-6223 Fax: (310) 271-9805 Email: michael.berger@bankruptcypower.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Sanjeev Jain, MD, chief executive officer. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/C7QBPMA/Allergy__Asthma_Center_of_SW__cacbke-23-11270__0001.0.pdf?mcid=tGE4TAMA ALPHATEC HOLDINGS: Incurs $152.2 Million Net Loss in 2022 --------------------------------------------------------- Alphatec Holdings, Inc. has filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $152.15 million on $350.87 million of total revenue for the year ended Dec. 31, 2022, compared to a net loss of $144.33 million on $242.21 million of total revenue for the year ended Dec. 31, 2021. For the three months ended Dec. 31, 2022, the Company reported a net loss of $34.98 million on $105.94 million of total revenue compared to a net loss of $40.18 million on $73.96 million of total revenue for the three months ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had $513.37 million in total assets, $138.87 million in total current liabilities, $349.51 million in long-term debt, $26.56 million in operating lease liabilities (less current portion), $11.54 million in other long-term liabilities, $23.60 million in redeemable preferred stock, and a total stockholders' deficit of $36.71 million. "I applaud the entire ATEC Family for delivering another record-breaking year," said Pat Miles, chairman and chief executive officer. "Our success endures because our priorities do not change: we focus exclusively on spine, pursue the unmet clinical needs of surgery, and we create innovative, integrated procedures to address those needs faster than others in the industry. Many of the leading minds in spine are attracted to ATEC because their passion, like ours, is to obsessively rethink surgical procedures from the ground up. At ATEC, our business is in the operating room. With the know-how we have assembled, I could not be more enthusiastic about the opportunities ahead." A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1350653/000095017023005175/atec-20221231.htm About Alphatec Holdings Alphatec Holdings, Inc. (ATEC) (www.atecspine.com), through its wholly-owned subsidiaries, Alphatec Spine, Inc. and SafeOp Surgical, Inc., is a medical device company dedicated to revolutionizing the approach to spine surgery through clinical distinction. ATEC architects and commercializes approach-based technology that integrates seamlessly with the SafeOp Neural InformatiX System to provide real-time, objective nerve information that can enhance the safety and reproducibility of spine surgery. Alphatec reported a net loss of $78.99 million for the year ended Dec. 31, 2020, a net loss of $57 million for the year ended Dec. 31, 2019, and a net loss of $28.97 million for the year ended Dec. 31, 2018. AQUA SHIELD: Amends Administrative Claims Pay Details ----------------------------------------------------- Aqua Shield, Inc., submitted a Second Amended Small Business Disclosure Statement describing Second Amended Chapter 11 Plan of Reorganization dated March 2, 2023. The Plan will be financed from continuing operating income, reorganized business operations of the Debtors, from the timely collections of outstanding receivables, as well as from funds accumulated in the Debtors' Debtor in Possession accounts. The payments under the Settlement agreement with Kroll & O'Connor was made in full. Administrative claims consist of the Debtor's duly retained professionals and any other administrative expenses allowed under Section 503 of the Bankruptcy Code. Administrative Claims will include the fees and expenses of the Debtor's Counsel, Alla Kachan, Esq., through confirmation which constitutes the full pre-petition retainer, as well as in accumulated post-petition legal fees. Bruce Arthur Lean, CPA asserts a claim for the fees and expenses as accountants for the Debtor. Bruce Arthur Lean received no initial retainer fee prior to filing. The claims of Debtor's professionals shall be subject to final fee applications pursuant to Bankruptcy Code Section 330 and order of the Court approving the fees and expenses as sought by this application. All remaining administrative expenses shall be paid in the ordinary course of the Debtor's business. The Second Amended Disclosure Statement does not alter the proposed treatment for unsecured creditors and the equity holder: * Class II Unsecured Claim shall consist of the unsecured claim of Krol & O'Connor, in the amount of $654,658. The plan offers the unsecured creditor Krol & O'Connor a settlement payment in the amount of $140,000, which represents 21% of its general unsecured claim. In consideration of the mutually agreed terms, Krol & O'Connor shall, upon the approval of the settlement terms by the Bankruptcy Court return a consenting ballot in favor of the Debtor's Plan of Reorganization. Further, following the entry of the confirmation order by the Bankruptcy Court, the Debtor plans to apply to the Supreme Court, New York County, for an order vacating the judgment entered by the Clerk of the Supreme Court, New York County, on October 28, 2020, in the action entitled Krol & O'Connor v. Aqua Shield, Inc., Index no. 651928/2018. Kroll & O'Connor shall neither oppose such application, nor be required to take any steps in support thereof. The Settlement Agreement with Kroll & O'Connor was approved by the Court order dated May 18, 2022. The payment under the Settlement agreement was made in full. * Class III Unsecured Claim shall consist of the unsecured claim of Stephen Frampton and Korri Frampton in the amount of $100,000. According to the terms of the Settlement agreement reached by and between the parties, in full and final satisfaction of Stephen and Korri Frampton's claim against the Debtor, the Debtor will pay to Stephen Frampton and Korri Frampton the amount of $21,000.00 which represents 21% of its general unsecured claim. On Nov. 18, 2022, the Debtor filed a motion to approve the Settlement Agreement with Stephen and Korri Frampton pursuant to Rule 9019 of the Federal Rules Bankruptcy, on shortened notice. * Class IV consists of Equity interest holders. Igor Korsunsky, the 95% equity interest holders, and Yelena Korsunskaya, the 5% equity interest holder, shall retain their interest in the Debtor following Confirmation, in consideration of a new value contribution, being made by them as the equity holder toward the payment of general unsecured creditor claims, as needed. A full-text copy of the Second Amended Disclosure Statement dated March 2, 2023 is available at https://bit.ly/3KXbano from PacerMonitor.com at no charge. Attorney for the Debtor: Alla Kachan, Esq. 2799 Coney Island Ave., Suite 202 Brooklyn, NY 11235 Tel: (718) 513-3145 Fax: (347) 342-315 E-mail: alla@kachanlaw.com About Aqua Shield Aqua Shield, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 20-73191) on Oct. 16, 2020. The case was eventually transferred to the appropriate office under Case No. 20-43635. Judge Nancy Lord oversees the case. At the time of the filing, the Debtor had estimated assets of between $100,001 and $500,000 and liabilities of between $500,001 and $1 million. The Debtor is represented by the Law Offices of Alla Kachan, P.C. Bruce Arthur Lean, CPA serves as the Debtor's accountant. ARUZE GAMING: Klarquist Sparkman Out as Committee Member -------------------------------------------------------- The U.S. Trustee for Region 17 disclosed in a court filing that these creditors are the remaining members of the official committee of unsecured creditors in Aruze Gaming America Inc.'s Chapter 11 case: 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. JCM American Corporation Attn: Dana Talich 925 Pilot Road Las Vegas, NV 89119 Tel: (702) 651-3432 Email: dana.talich@jcmglobal.com Klarquist Sparkman, LLC was previously identified as member of the creditors committee. Its name no longer appears in the new notice. 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. The U.S. Trustee for Region 17 appointed an official committee to represent unsecured creditors in the Debtor's Chapter 11 case. The committee is represented by Samuel A. Schwartz, Esq., at Schwartz Law, PLLC. ASHFORD HOSPITALITY: Has Limited Waiver on Cash Incentives ---------------------------------------------------------- Ashford Hospitality Trust Inc. disclosed in its Form 8-K Report filed with the Securities and Exchange Commission that it has entered a Limited Waiver Under Advisory Agreement with Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC. It entered into the Advisory Agreement Limited Waiver on March 2, 2023. On March 2, 2023, Ashford Trust and Ashford Hospitality Limited Partnership as borrower also entered into a Limited Waiver under their Credit Agreement with certain funds and accounts managed by Oaktree Capital Management, L.P., and Oaktree Fund Administration, LLC, as administrative agent. The Company, the Operating Partnership, TRS and the Advisor are parties to a Second Amended and Restated Advisory Agreement, dated as of January 14, 2021, which: (i) allocates responsibility for certain employee costs between the Company and the Advisor, and (ii) permits the board of directors of the Company to issue annual equity awards in the Company or the Operating Partnership to employees and other representatives of the Advisor based on achievement by the Company of certain financial or other objectives, or otherwise as the Board sees fit. Pursuant to the Advisory Agreement Limited Waiver, the Company, the Operating Partnership, TRS and the Advisor waive the operation of any provision in the Advisory Agreement that would otherwise limit the ability of the Company in its discretion, at the Company's cost and expense, to award during the first and second fiscal quarters of calendar year 2023, cash incentive compensation to employees and other representatives of the Advisor; provided that the awarded cash incentive compensation does not exceed $13,063,844, in the aggregate, during the Waiver Period. Pursuant to the Limited Waiver to Credit Agreement, the Borrower, the other Loan Parties, the Lenders and the Administrative Agent acknowledged and agreed that: (a) certain deferred cash grants were or are being awarded to employees and/or officers of the Advisor and/or their affiliates pursuant to equity compensation plans during 2022 and 2023, in aggregate amounts of $7,950,817 in 2022 and $13,063,844 in 2023 (i.e., $21,014,661 in the aggregate) (the "Specified Deferred Cash Grants"), which the parties agreed may be made (and were or are being made) in lieu of deferred stock grants that would otherwise be permitted and made under the terms of the Advisory Agreement; (b) accordingly, (i) the departure from the terms of the Advisory Agreement in making the Specified Deferred Cash Grants as described in the foregoing clause (a) shall be deemed to be permitted under Section 7.13(b) of the Credit Agreement; provided, however, the Borrower and the other Loan Parties agree that the Specified Deferred Cash Grants, together with any other Restricted Payments (as defined in the Credit Agreement) made pursuant to Section 7.06(f) of the Credit Agreement, shall not exceed $30,000,000 in the aggregate; (ii) the Lenders and the Administrative Agent waive non-compliance with Section 7.13(b), if any, prior to March 2, 2023, which resulted or would result (absent the waiver) from the making of the Specified Deferred Cash Grants in accordance with the foregoing provisions of Section 2 of the Limited Waiver to Credit Agreement, and (iii) effective from March 2, 2023 Section 7.13(b) shall be deemed to be amended to permit the Specified Deferred Cash Grants in accordance with the foregoing provisions of Section 2 of the Limited Waiver to Credit Agreement; and (c) the waiver contained in the Limited Waiver to Credit Agreement shall be effective only in this instance and for the specific purpose for which it was intended and shall not be deemed to be a consent to any other transaction or matter or waiver of compliance in the future, or a waiver of any preceding or succeeding breach of the same or any other covenant or provision of the Credit Agreement. A full copy of the Limited Waiver Under Advisory Agreement is available for free at: https://tinyurl.com/2ckba68b A full copy of the Limited Waiver to Credit Agreement is available for free at: https://tinyurl.com/msw4v7e5 About Ashford Hospitality Trust Inc. Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing predominantly in upper upscale, full-service hotels. The company is based in Dallas, Texas. On December 23, 2022, Egan-Jones Ratings Company maintained its 'CCC+' foreign currency and local currency senior unsecured ratings on debt issued by Ashford Hospitality Trust, Inc. EJR also maintained its 'B' rating on commercial paper issued by the Company. ASHFORD HOSPITALITY: Inks 5th Amendment to Bylaws ------------------------------------------------- Ashford Hospitality Trust Inc. reported in its Form 8-K Report filed with the Securities and Exchange Commission that the Company's board of directors unanimously approved Amendment No. 5 to the Second Amended and Restated Bylaws of the Company. On February 23, 2023, Ashford Hospitality Trust, Inc., by unanimous written consent of its board of directors, adopted Amendment No. 5 to the Second Amended and Restated Bylaws of the Company for purposes of reducing the quorum required solely for the 2023 annual meeting of the Company's stockholders. The Bylaw Amendment reduced the Quorum Requirement solely for the 2023 annual meeting from a majority to at least one-third of all votes entitled to be cast at such meeting, as permitted under the Maryland General Corporation Law. Retail brokers have recently adopted policies whereby they will not cast discretionary votes (including auditor ratification) in the absence of retail shareholder instructions. As an increased number of retail holders have become stockholders in the Company, the amount of shares represented in person or by proxy for purposes of the quorum requirement has steadily declined. In order to ensure a sufficient quorum and allow the Company to hold the 2023 annual meeting, the Company is decreasing the quorum requirement solely for the 2023 annual meeting. The Bylaw Amendment is effective as of February 23, 2023. The above description of the Bylaw Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Bylaw Amendment, which is available at: https://tinyurl.com/2p8uh9x3 A full copy of the Second Amended and Restated By Laws is available for free at: https://tinyurl.com/yjpjt5y7 About Ashford Hospitality Trust Inc. Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing predominantly in upper upscale, full-service hotels. The company is based in Dallas, Texas. On December 23, 2022, Egan-Jones Ratings Company maintained its 'CCC+' foreign currency and local currency senior unsecured ratings on debt issued by Ashford Hospitality Trust, Inc. EJR also maintained its 'B' rating on commercial paper issued by the Company. AUTO MONEY: Plan Depends on Outcome of Constitutional Case ---------------------------------------------------------- Auto Money North LLC filed with the U.S. Bankruptcy Court for the District of South Carolina a Plan of Reorganization for Small Business dated March 2, 2023. Auto Money North LLC is a South Carolina limited liability company organized on May 7, 2019. The Debtor is engaged in state licensed and supervised business activities in South Carolina. Beginning in August of 2019, the Debtor has been the named defendant in 21 lawsuits asserted by 374 North Carolina residents, which have been filed in the State of North Carolina and challenge the legality of South Carolina title loans entered into by the Debtor and North Carolina residents in the State of South Carolina (the "North Carolina Litigation"). The primary reason for the Debtor's bankruptcy filing is to resolve the North Carolina Litigation expeditiously and efficiently by asking the Court to determine the fundamental question of whether the application of North Carolina's consumer protection laws to the Debtor violates the United States Constitution. The Debtor has filed an adversary proceeding complaint (Auto Money North LLC v. Abernathy, et al., AP No. 22 80047-hb (the "Constitutional Case")) to bring this important constitutional issue before the Court. In the event that the Debtor succeeds on the Constitutional Case and the Claim Objections, the Debtor's financial projections show that the Debtor will have projected disposable income from the operation of its business for the 5-year period described in Section 1191(c)(2) of the Bankruptcy Code of $12,638,849.00. This Plan proposes to pay creditors of the Debtor in full, with interest, from such projected disposable income. In the event that the Debtor does not succeed on the Constitutional Case and the Claim Objections, the Debtor will undertake an orderly liquidation of its assets to pay its creditors on a pro rata basis pursuant to the Bankruptcy Code's priority rules. Accordingly, it will not have any projected disposable income. In either scenario, the value of the property to be distributed under the Plan in the 3-year period, or such longer period not to exceed 5 years as the Court may fix, beginning on the date on which the first distribution is due under the Plan is not less than the projected disposable income of the Debtor, satisfying Section 1191(c)(2) of the Bankruptcy Code. This Plan of Reorganization proposes to pay creditors of the Debtor either from its ongoing operations (in the event the Debtor succeeds on the Constitutional Case and the Claim Objections) or from the proceeds of the orderly liquidation of its assets (in the event the Debtor does not succeed on the Constitutional Case and the Claim Objections). 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 plus interest if the Debtor succeeds on the Constitutional Case and the Claim Objections. If the Debtor does not succeed on the Constitutional Case and the Claim Objections, then the Debtor anticipates that the holders of allowed non-priority unsecured claims, which would include the North Carolina Claimants, will receive approximately 42 cents on the dollar from the proceeds of the orderly liquidation of the Debtor's assets. Class 5 consists of the nonpriority unsecured claims against the Debtor, other than the unsecured deficiency commercial guaranty claim of Wells Fargo Bank, N.A. and the unsecured claims held by affiliates of the Debtor, to the extent allowed. At this time, the Debtor estimates that such claims will total approximately $58,236.29 if the Debtor succeeds on the Constitutional Case and the Claim Objections. At this time, the Debtor estimates that such claims will total a maximum of approximately $7,638,972.33 if the Debtor does not succeed on the Constitutional Case and the Claim Objections. To the extent the claims in this class are allowed, and if the Debtor is successful on the Constitutional Case and the Claim Objections, the Debtor proposes to pay all such allowed claims in full, with interest at the federal judgment rate in effect on the Petition Date, on the effective date of this Plan. In the event the Debtor does not succeed on the Constitutional Case and the Claim Objections, the Debtor will undertake an orderly liquidation of its assets to pay its creditors on a pro rata basis pursuant to the Bankruptcy Code's priority rules. If the Debtor undertakes an orderly liquidation of its assets, then the Debtor anticipates that the holders of allowed non-priority unsecured claims in Class 5, which would include the North Carolina Claimants, will receive approximately 42 cents on the dollar from the proceeds of the orderly liquidation of the Debtor's assets. Class 6 consists of the allowed non-priority unsecured deficiency commercial guaranty claim of Wells Fargo. At this time, the Debtor estimates that such claim totals approximately $4,238,787.10. Regardless as to whether the Debtor succeeds on the Constitutional Case and the Claim Objections, Wells Fargo shall receive no payments under this Plan on account of its allowed non-priority unsecured deficiency commercial guaranty claim. Class 7 consists of all non-priority unsecured claims asserted by affiliates of the Debtor. At this time, the Debtor estimates that such claims total $6,833.07, plus certain unliquidated amounts asserted by AutoMoney, Inc. If the Debtor succeeds on the Constitutional Case and the Claim Objections, then the non-priority unsecured claims held by affiliates of the Debtor, if allowed, shall be paid in full, with interest at the federal judgment rate in effect on the Petition Date, on the effective date of this Plan. If the Debtor does not succeed on the Constitutional Case and the Claim Objections, then the priority unsecured claims held by affiliates of the Debtor, if allowed, shall receive no payments under this Plan. Class 8 consists of Equity interests in the Debtor. The two owners of the equity interests of the Debtor will retain such interests. Pending final rulings in the Constitutional Case and the Claim Objections, the Debtor will not make any distributions to Class 8 other than what is required for the Debtor's equity holders to pay the federal and state income taxes (at the highest marginal individual income tax rate) incurred on the Debtor's net annual income. A full-text copy of the Plan of Reorganization dated March 2, 2023 is available at https://bit.ly/3KXonfY from PacerMonitor.com at no charge. Attorney for the Plan Proponent: Stanley H. McGuffin, Esq. Haynsworth Sinkler Boyd, P.A. P.O. Box 11889 Columbia, SC 29211 Phone: (803) 779-3080 / (803) 540-78386 Fax: (803) 765-1243 Email: smcguffin@hsblawfirm.com About Auto Money North LLC Auto Money North LLC is a limited liability company that makes loans secured by motor vehicles, commonly known as "title loans." Auto Money North is a supervised lender that is overseen by the South Carolina Department of Consumer Finance and South Carolina Board of Financial Institutions, whose lending activities are regulated and audited by South Carolina. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.S.C. Case No. 22-03309) on December 2, 2022. In the petition signed by Jeremy Blackburn, officer, the Debtor disclosed up to $10 million in assets and up to $1 million in liabilities. The Debtor operates 16 stores and has 47 employees as of the Petition Date. Stanley H. McGuffin, Esq., at Haynsworth Sinkler Boyd, P.A., represents the Debtor as counsel. BASIC WATER: Seeks to Hire Jorant Commercial as Real Estate Broker ------------------------------------------------------------------ Basic Water Company SPE 1, LLC seeks approval from the U.S. Bankruptcy Court for the District of Nevada to hire Jorant Commercial, LLC as its real estate broker. The Debtor requires a real estate broker to facilitate the sale of seven parcels of real property in Henderson, Nev. Jorant will receive a 4 percent commission on the sale price. David Ober, owner and manager of Jorant, disclosed in a court filing that his firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: David Ober Jorant Commercial, LLC 50 W. Liberty St., Suite 700 Reno, NV, 89501 Phone: 702-768-9162 Email: David@jorantcommercial.com About Basic Water Company Basic Water Company, a water utility company in Nevada, and affiliate Basic Water Company SPE 1, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Nev. Lead Case No. 22-13252) on Sept. 10, 2022. In their petitions, Basic Water Company listed $10 million to $50 million in assets and $1 million to $10 million in liabilities while SPE 1 listed as much as $50 million in both assets and liabilities. Stephanne A. Zimmerman, president, signed the petitions. Judge Mike K. Nakagawa oversees the cases. The Debtors tapped Samuel A. Schwartz, Esq. at Schwartz Law, PLLC as legal counsel, and Force 10 Partners, LLC as financial advisor. Stretto, Inc. is the claims, noticing and solicitation agent. BED BATH & BEYOND: S&P Upgrades ICR to 'CCC-', Outlook Negative --------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on U.S.-based specialty retailer Bed Bath & Beyond Inc. (BBBY) to 'CCC-' from 'D'. The outlook is negative. S&P also raised its issue-level ratings on its senior unsecured debt to 'C' from 'D'. The negative outlook reflects the risk BBBY could pursue a distressed exchange or encounter a liquidity shortfall and default if it fails to execute its turnaround plan or satisfy the conditions necessary to raise additional equity capital this year. S&P said, "BBBY's capital structure remains unsustainable, in our view, due to its heavy debt load, wide operating losses, and sustained cash flow deficits. The company narrowly avoided liquidation earlier this year following an equity offering that raised $225 million in gross proceeds with the potential to raise an additional $800 million in installments over the next nine months. BBBY's ability to raise incremental capital through its current agreement hinges on maintaining certain conditions, including meeting the payment obligations of its significant debt load. In addition to approximately $1 billion of senior unsecured notes, the company's debt includes outstanding borrowings drawn on its $565 million asset-based loan (ABL) facility and $529 million in first-in, last-out (FILO) principal. We project cash generation remaining strained in 2023 based on our anticipation for weak operating results, working capital needs, and elevated interest expense. Further, we expect liquidity will be constrained given the company's reliance on its ABL to fund its turnaround plans. BBBY's senior notes trade at steep discounts to par and we believe there is a high likelihood that the company will pursue a distressed debt exchange, as it has in the past, to reduce principal and interest expense. "Despite its incremental liquidity position, we believe BBBY's turn-around prospects remain very weak. In our view, BBBY's customer value proposition has eroded significantly due to poor merchandising decisions, deficient omnichannel capabilities, and a lack of available inventory in key product categories. We believe comparable store sales fell sharply during the fourth quarter and that these trends have continued into the current fiscal year. A key lynchpin to turning around performance will be BBBY's ability to improve its merchandise offering, which will require mending relationships with vendors that have been frayed due to delayed payments. We expect the company's need to rebuild inventory, coupled with tighter vendor payment terms will continue to strain working capital and cash flow generation. "As part of its turnaround plan, the company will meaningfully shrink its store footprint. It is in the process of shuttering its chain of Harmon stores, liquidating its Canadian operations, closing a modest number of buybuyBaby stores, and reducing its flagship banner to around 360 stores, down from 762, as of Nov. 26, 2022. The company will also need to make significant investments in its supply chain infrastructure and operations to address its inventory management deficiencies. In our view, execution risk is very high given the scale of these wide-ranging initiatives. "Compounding BBBY's company-specific issues, we expect consumer spending on home goods will remain subdued due to inflationary pressures constraining discretionary income as well as redirected spending on other categories and experiences. Further, while there has been significant management turnover, the company has a poor track record of implementing successful strategic initiatives. We believe reversing years of market share losses amid a highly competitive environment featuring better-capitalized and equipped competitors will be very difficult. "The negative outlook reflects our view of BBBY's weak business recovery prospects and the elevated risk of a distressed exchange." S&P could lower its rating on BBBY if: -- It announces or engages in an exchange offer or debt restructuring; or -- It is unable to meet its debt payments. S&P could raise its rating on BBBY if: -- The company effectively implements its turnaround efforts leading to improving operating results and cash generation; and -- There is no longer a high-probability of a near-term distressed exchange. ESG credit indicators: E-2, S-2, G-5 BELLRING BRANDS: Moody's Raises CFR to 'B1', Outlook Stable ----------------------------------------------------------- Moody's Investors Service upgraded the ratings of BellRing Brands, Inc. including the company's Corporate Family Rating to B1 from B2, Probability of Default Rating to B1-PD from B2-PD and senior unsecured notes rating to B2 from B3. The senior secured revolving credit facility is not rated. The SGL-1 Speculative Grade Liquidity Rating is unchanged. The rating outlook is stable. The rating upgrades reflect the continued deleveraging progress over the last year as BellRing's debt/EBITDA (on a Moody's adjusted basis) has declined to 3.5x for the LTM period ended December 31, 2022 from 4.2x as of December 31, 2021, pro forma for the financing transaction and the one-time cash dividend related to the spin off transaction of Post's majority ownership completed in March 2022. Deleveraging is being driven by earnings growth. The upgrades also reflect easing capacity constraints that will drive further earnings growth, deleveraging, and solid free cash flow over the next 12-18 months. Specifically, Moody's expects debt/EBITDA to decline to 3.0x by the fiscal year ending in September 2023, and to approximately 2.5x by the end of fiscal 2024. Moody's expects free cash flow to rebound strongly from $16 million in fiscal 2022 (excluding dividends related to the spin off transaction) to nearly $200 million in both fiscal 2023 and fiscal 2024. Fiscal 2022 free cash flow was weaker because of a large working capital cash drag related to higher costs, rebuilding of inventory levels, and timing of sales/collections. Moody's expects working capital to normalize over the next 18 months as inventory balances have improved substantially and cost increases have moderated. Given limited prepayable debt in the capital structure other than the revolver, Moody's expects the company to use its free cash flow to reduce its outstanding revolver balance ($114 million as of December 31, 2022), repurchase outstanding shares, invest in organic or inorganic growth opportunities, and build additional cash on the balance sheet. The company does not pay a dividend. Moody's expects that BellRing will generate solid sales and EBITDA growth this fiscal year (ending September 2023) of approximately 16% and 18% respectively as carry over pricing flows through from the prior year, capacity constraints ease and cost pressures moderate. Moody's projects further high single digit revenue and EBITDA growth in fiscal 2024 as incremental capacity comes online, marketing and promotions return, and a full range of shake flavors are back on shelf. BellRing reported strong results for 1Q23 ended December 31, 2022 as revenue and EBITDA (on a Moody's adjusted basis) grew 18% and 38% respectively compared to the prior year. Premier Protein revenue grew 23%, and importantly returned to positive volume growth of +4.9% after four consecutive quarters of declines. The volume declines over this period were driven by capacity constraints that resulted in the company putting certain products on allocation, temporarily reducing SKUs, and pulling back on trade promotion and consumer marketing. The inflection of volumes in 1Q23 reflected increased shake production and category strength. The company expects shake production to grow at a low double digit rate in fiscal 2023 with incremental capacity in fiscal 2024 of more than 20% as three new co-manufacturers are planned to come online in 2023. The capacity additions consist of one small co-manufacturer in late 2Q with a large step up in 4Q with two greenfield facilities coming online including the shake processing facility that Post is building dedicated to Premier Protein and another facility that has dedicated specific shake lines to BellRing. Moody's projects Premier Protein volumes to grow at a mid-single digit rate in fiscal 2023 as capacity ramps up throughout the year with volumes projected to increase further in fiscal 2024. Dymatize revenue grew only 2% in 1Q23 compared to the prior year due to discontinued products and because of shipment timing for the international and specialty channels. However, consumption trends remained strong, and Moody's expects Dymatize to generate low to mid-single digit volume growth for fiscal 2023. Dymatize has regained lost shelf space with a major club customer and will begin to lap the discontinuations in the second half of the fiscal year. Moody's took the following rating actions: Upgrades: Issuer: BellRing Brands, Inc. Corporate Family Rating, Upgraded to B1 from B2 Probability of Default Rating, Upgraded to B1-PD from B2-PD Senior Unsecured Regular Bond/Debenture, Upgraded to B2 (LGD4) from B3 (LGD4) Outlook Actions: Issuer: BellRing Brands, Inc. Outlook, Remains Stable RATINGS RATIONALE BellRing's B1 CFR reflects high concentrations in its narrow protein shake, powder and bar product lines, customer base, and supply chain. Specifically, the Premier Protein brand and ready-to-drink ("RTD") shakes currently generate over 80% of the company's sales; approximately 50% of company sales are generated through club channels; and production is highly concentrated among a few contract manufacturers, although manufacturing concentration will decline over the next few years as additional capacity ramps up. The high product concentration creates potential earnings volatility given the highly competitive market for shakes, powders, and bars including new entrants. The competition creates continual investment needs to sustain the good competitive position. The company's credit profile benefits from favorable demand dynamics, reflecting growing consumer demand for healthy, convenient, protein-enriched food and beverages. The credit profile is also supported by BellRing's attractive profit margins, improving scale with revenue of approximately $1.4 billion, solid projected free cash flow exceeding $150 million annually, and very good liquidity. Acquisitions could lead to periodic increases in leverage as the company ultimately seeks to invest in growth and diversify the product portfolio and geographic reach, but the free cash flow and the 3x leverage target (based on the company's calculation; 3.1x as of December 2022) provide the ability to reduce leverage following an acquisition. BellRing's SGL-1 Speculative Grade Liquidity rating reflects the company's very good liquidity, including $136 million of availability under its $250 million senior secured revolving credit facility (net of $114 million drawn) and a cash balance of $44 million as of December 31, 2022. Moody's expects the company to generate more than $150 million of free cash flow over the next 12 months. The forecast reflects low annual capital expenditure requirements of less than $5 million as the company primarily uses co-manufacturers for its products. The forecast also reflects a normalization in working capital trends compared to fiscal 2022, as higher inventory prices, inventory rebuilding, and timing of sales/collections led to a significant working capital cash use in the fiscal year ended September 2022. Moody's expects the company to generate sufficient free cash flow over the next 12 months to pay down the outstanding $114 million revolver balance, although additional share repurchases could delay the full repayment. The revolver is governed by a total net debt-to-EBITDA leverage ratio covenant not to exceed 6.00x. Moody's projects good covenant cushion over the next year. The company has no material debt maturities until the revolving credit facility expires in March 2027. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's view that BellRing will remain highly concentrated in its product offering, customer base, and supply chain. Moody's also assumes in the stable outlook that the company will continue to generate modest growth and increasingly stable earnings, free cash flow will improve to more than $150 million over the next year, and that a focus on operating execution with new capacity coming online limits the potential for leveraging transactions such as acquisitions over the next year. A rating downgrade could occur if operating performance deteriorates, debt/ EBITDA is sustained above 4.0x, free cash flow does not improve as expected, or liquidity deteriorates. A major supply disruption or loss of or volume at a key customer could also result in a rating downgrade. A rating upgrade could occur if BellRing is able to materially diversify its product offerings, geographic reach, and supply chain. Steady organic growth with stable profitability is also necessary for an upgrade. The company would also need to sustain debt/EBITDA below 3.0x and free cash flow-to-debt above 12.5% to be upgraded. ESG CONSIDERATIONS ESG considerations have a highly negative credit impact (CIS-4) on BellRing's rating. The CIS score reflects the weight placed on BellRing's governance, including its high leverage for its business profile that includes significant product, brand, supplier, and co-manufacturer concentrations. BellRing is also moderately negatively exposed to social and environmental risks. The company's concentrations create risk around product recalls, brand reputation, supply chain, and shifts in consumer preferences. BellRing's credit exposure to environmental risks is moderately negative (E-3). Moderately negative exposure to natural capital risks reflects the company's reliance on many agricultural inputs (including milk-based and whey-based proteins) that require use of land and fertilizers that could harm the environment, and which could additionally be affected by climate change. BellRing also has moderately negative exposure to waste and pollution risks as the company creates waste in food manufacturing, packaging, and disposal. Regulations and consumer preferences are likely to evolve to reduce packaging or improve recyclability or biodegradability of packaging, which could increase the cost of compliance in the future. On packaging, the company has made substantial efforts on its sustainable packaging, including introducing a cap made from plant-based sugarcane, and the use of the TetraPak, which is made from 65% paperboard. BellRing's credit exposure to physical climate risks are neutral-to-low because it largely outsources manufacturing, although there is some indirect exposure because the company has co-manufacturer and supplier concentration in certain regions, including Missouri. Adverse events affecting such co-manufacturers or suppliers may impact operating performance. BellRing's credit exposure to social risks is moderately negative (S-3). Moderately negative exposure to customer relations and responsible production risks reflects the need to invest in product development and marketing to maintain relevance with consumers and minimize exposure to potential litigation related to product labeling, marketing, recalls, and contamination. BellRing's brand and product concentration with its Premier Protein ready-to-drink (RTD) shakes also exposes the company to brand perception risk related to these issues. Supply chain risk reflects BellRing's lack of diversity across co-manufacturers and suppliers, and limited control given its high use of co-manufacturers. However, BellRing is actively expanding and diversifying its co-manufacturing network. BellRing's credit exposure to demographic and societal trends is neutral to low as its portfolio has benefitted from consumers' preference for more nutritious products and a gradual channel shift from grocery to club over time, where BellRing primarily sells its products. While these trends have led to solid organic growth for the business, the company is exposed to a potential shift in consumer preferences. Given the company's concentration in club stores and Premier Protein RTD shakes, there is risk that BellRing may not be able to effectively introduce new products in response to such changes. Neutral-to-low exposure to health & safety risks reflects the company's use of co-manufacturers for a majority of its products. BellRing's credit exposure to governance risks is highly negative (G-4). This score reflects BellRing's relatively high leverage for its business profile that includes significant product, brand, supplier, and co-manufacturer concentrations. BellRing has stated that its financial policy includes maintaining net debt/EBITDA at around 3.0x (3.1x as of December 31, 2022 per the company's calculation) with potential to increase temporarily up to 5.0x for an acquisition. The company does not pay a dividend and the preferred mode of distributing cash to shareholders is stock buybacks. Share repurchases weaken the credit profile but are more discretionary than dividends, which allows the company flexibility to redirect free cash flow to debt reduction or reinvestment. Also, less than 75% of the board members are independent and there is also some concentrated ownership in BellRing shares, including by Route One Investment Company, which owned approximately 10% of BellRing shares as of December 31, 2022. The principal methodology used in these ratings was Consumer Packaged Goods published in June 2022. Based in St. Louis, Missouri, BellRing sells convenient nutrition products such as ready-to-drink protein shakes, other RTD beverages, protein powders, and nutrition bars. Prior to the company's IPO in October 2019, BellRing was reported as the Active Nutrition segment under Post Holdings. Following the IPO, Post retained a majority ownership interest in BellRing. Post exited from its remaining ownership position in BellRing through a series of transactions in 2022, and as of December 31, 2022 Post had no ownership of BellRing common stock. The company's primary brand is Premier Protein, which generates over 80% of total sales. Other key brands include Dymatize and Power Bar. Revenue for the last 12-month period ended December 31, 2022 was approximately $1.4 billion. BENJAMIN EYE: Court Confirms Reorganization Plan ------------------------------------------------ Judge Janet S. Baer has entered an order confirming Benjamin Eye Care, LLC's Amended Plan of Reorganization dated Jan. 18, 2023. This matter is continued for post-confirmation status of the confirmed Amended Plan on April 12, 2023, at 10:00 a.m. Benjamin Eye Care submitted an Amended Plan of Reorganization for Small Business Under Chapter 11 Background for Cases Filed Under Subchapter V. The cash flow projections evidence the Debtor's ability to fund plan payments during the term of the Plan. The final payment to Allowed General Unsecured Creditors will be paid within 48 months of the Effective Date of the Plan. The Plan proposes to pay creditors of the Debtor from its monthly business income. Under the confirmed Plan, Class 3 General Unsecured Non-Priority Claims total $1,755,313.25. Allowed Class 3 claims shall be paid a dividend of 20% or $351,062.66 through pro rata distributions of deferred cash payments to holders of allowed Class 3 Claims in bi-annual installments of $43,882.84 each over the period of forty-eight months, as follows: Year 2023: March 24, 2023, and Dec. 31, 2023 Year 2024: June 15, 2024, and Dec. 31, 2024 Year 2025: June 15, 2025, and Dec. 31, 2025 Year 2026: June 15, 2026, and Dec. 31, 2026 The bi-annual installments shall be distributed to allowed Class 3 Claims, pro rata, by the Debtor. Class 3 claimants may be prepaid without penalty or discount. Class 3 is impaired. The Plan shall be funded by proceeds from the Estate's available cash, cash equivalents, and proceeds generated from Debtor's business operations. The Debtor projects that its cash flow will be sufficient to make the Plan payments. Attorney for the Debtor: Gregory K. Stern, Esq. Monica C. O'Brien, Esq. Dennis E. Quaid, Esq. Rachel S. Sandler, Esq. 53 West Jackson Boulevard, Suite 1442 Chicago, IL 60604 Tel: (312) 427-1558 A copy of the Disclosure Statement dated Feb. 22, 2023, is available at https://bit.ly/3YZMLl8 from PacerMonitor.com. About Benjamin Eye Care Benjamin Eye Care, LLC -- https://benjamineyecare.com/ -- offers personalized attention, compassionate care and excellence in eye care. It is based in La Grange, Ill. Benjamin Eye Care filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 22-07349) on June 30. 2022, listing up to $500,000 in assets and up to $10 million in liabilities. Neema T. Varghese serves as Subchapter V trustee. Judge Janet S. Baer oversees the case. Gregory Stern, Esq., Monica O'Brien, Esq., Dennis Quaid, Esq., and Rachel Sandler, Esq., at Gregory K. Stern, P.C. are the Debtor's bankruptcy attorneys. The Debtor tapped Fates, Bodily and Parker, PLLC as its accountant. BRIAR BUILDING: Choudhri's Move to Remand Case Granted ------------------------------------------------------ Bankruptcy Judge Eduardo Rodriguez grants the Motion to Remand filed by the Defendant Mohammad Ali Choudhri in the adversary case styled IN RE: Briar Building Houston LLC, Chapter 11, Debtor. George M Lee, Plaintiff, v. Mohammad Ali Choudhri, Defendant, Case No. 18-32218, Adversary No. 20-3395, (Bankr. S.D. Tex.). In an odd turn of events, Mohammad Ali Choudhri -- the party who initially removed the instant proceeding to this Court, consented to the entry of final orders on all non-core maters by this Court, opposed George M. Lee's motion to remand and won -- now seeks to remand it back to state court after litigating in this Court for over two years. George M. Lee, the party who initially sought remand and lost is now opposing remand. On the day the trial was to commence in this adversary proceeding, Choudhri filed the instant motion to remand for lack of subject matter jurisdiction. In support, Choudhri cites Garza v. Earthstone Energy, Inc., (a recent court opinion) for its holding that the so called "well-pleaded complaint rule" applies across the board to removals asserting bankruptcy jurisdiction. Choudhri argues that an application of the well-pleaded complaint rule to the present case deprives this Court of federal subject matter jurisdiction because the Plaintiff's original state court petition at the time of removal did not assert a federal right or claim on the face of the complaint. Applying the well-pleaded complaint rule, the Court finds that the Plaintiff's original state court petition at the time of removal asserts only a cause of action for breach of guaranty under Texas state law -- there is nothing in the state court petition that invokes a substantive right under the Bankruptcy Code. Here, clearly a breach of guaranty is not a proceeding that occurs only in the context of bankruptcy. Moreover, the Debtor's bankruptcy was dismissed May 22, 2018. As such, even though the Court's related to jurisdiction is broad, since Debtor's bankruptcy estate no longer exists, the Court concludes that the disposition of this Adversary Proceeding could not conceivably have an effect on the administration of the bankruptcy estate. On Feb. 8, 2023, the Court conducted a hearing, and the Court finds that it does in fact lack subject matter jurisdiction over this proceeding and remands it back to the 152nd Judicial District Court of Harris County, Texas. A full-text copy of the Memorandum Opinion dated Feb. 17, 2023 is available at https://tinyurl.com/pew58kj2 from Leagle.com. About Briar Building Houston Briar Building Houston LLC is a real estate company whose principal assets are located at 50 Briar Hollow Lane Houston, Texas. Briar Building Houston sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 18-32218) on April 30, 2018. In the petition signed by George Lee, managing member, the Debtor estimated assets of $10 million to $50 million and liabilities of $10 million to $50 million. Judge Eduardo V. Rodriguez presided over the case. The Debtor tapped Locke Lord LLP as its legal counsel. BRIDGER STEEL: Seeks to Hire Patten Peterman Bekkedahl as Counsel ----------------------------------------------------------------- Bridger Steel, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Montana to employ Patten, Peterman, Bekkedahl & Green, PLLC to handle its Chapter 11 case. The hourly rates of the firm's counsel and staff are as follows: James A. Patten, Esq. $400 Molly S. Considine, Esq. $275 Other attorneys $175 - $350 Diane S. Kephart, Paralegal $160 April J. Boucher, Paralegal $155 Other Paralegals $90 In addition, the firm will seek reimbursement for expenses incurred. The firm received a retainer of $4,945.6510 from the Debtor. James Patten, Esq., a partner at Patten, Peterman, Bekkedahl & Green, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: James A. Patten, Esq. Molly S. Considine, Esq. Patten, Peterman, Bekkedahl & Green, PLLC 2817 2nd Avenue North, Ste. 300 P.O. Box 1239 Billings, MT 59103 Telephone: (406) 252-8500 Facsimile: (406) 294-9500 Email: apatten@ppbglaw.com mconsidine@ppbglaw.com About Bridger Steel Bridger Steel, Inc. is a manufacturer of metal panel systems for roofing, siding and wall, interior, and fencing applications. It is based in Belgrade, Mont. Bridger Steel filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Mont. Case No. 23-20019) on Feb. 24, 2023, with $1 million to $10 million in assets and $10 million to $50 million in liabilities. Dennis L. Johnson, president of Bridger Steel, signed the petition. Judge Benjamin P. Hursh presides over the case. Patten, Peterman, Bekkedahl & Green, PLLC represents the Debtor as counsel. BROOKDALE SENIOR: Reports $238MM Net Loss in 2022 ------------------------------------------------- Brookdale Senior Living Inc. has released its financial results both for the fourth quarter and year ended Dec. 31, 2022. Brookdale Senior Living Inc. also delivered to the Securities and Exchange Commission its Annual Report on Form 10-K. Full Year Summary: * Full-year consolidated revenue per available unit (RevPAR) increased 10.1% year-over-year. * Full-year consolidated weighted average occupancy increased 390 basis points year-over-year. * At year end, liquidity was $453 million, and there are no significant debt maturities until September 2024. Fourth Quarter Summary: * Fourth quarter of 2022 consolidated revenue per available unit (RevPAR) increased from $4.15 million in the 3Q 2022 to $4.2 million in 4Q 2022. * Consolidated weighted average occupancy rose from $76.4 million in 3Q2022 to $77.1 million in 4Q2022. * Total liquidity as of December 31, 2022 increased $57.0 million from September 30, 2022, primarily attributable to $220.0 million of proceeds from mortgage debt and $139.4 million of proceeds from the issuance of tangible equity units, partially offset by $208.3 million of payments of mortgage debt and negative $103.6 million of Adjusted Free Cash Flow. Brookdale Senior Living disclosed a decrease in net loss in the fourth quarter of 2022 primarily attributable to a $73.9 million non-cash gain on sale of communities recognized in the fourth quarter of 2022 for the amendment of leases for 16 communities that were previously accounted for as failed sale-leaseback transactions and the net impact of the resident fee revenue, other operating income, and facility operating expense factors previously discussed, partially offset by a decrease in benefit for income taxes and an increase in interest expense. As of Dec. 31, 2022, Brookdale Senior Living had $5.94 billion in total assets against $5.35 billion in total liabilities, and $582.6 million in total stockholders' equity. "I believe 2022 was a year of growth and continued recovery for Brookdale in several areas of the business," said Lucinda Baier, Brookdale's President and CEO. "We delivered RevPAR growth of just over 10% and continued our positive occupancy momentum. We are optimistic that our recovery will continue in 2023 and in January have seen stronger than expected move-in results. As I think about 2023, we have many improvement opportunities and will be taking an extremely focused approach to improve our operating results, while continuing to provide high quality care and personalized service, and earn our residents’ trust and satisfaction as we further drive our occupancy recovery." The Company expects its full-year 2023 non-development capital expenditures, net of anticipated lessor reimbursements, to be approximately $200.0 million, excluding reimbursable remediation costs at the Company's communities resulting from recent natural disasters. The Company anticipates up to an additional $20.0 million in remediation costs at the Company's communities resulting from recent natural disasters, and such costs are expected to be reimbursed from our property and casualty insurance policies in 2023 or 2024. A copy of Brookdale Senior Living's press release announcing the financial results is available at https://tinyurl.com/5n8992a2 A full-text copy of Brookdale Senior Living's Form 10-K report is available for free at https://tinyurl.com/2p984k86 Supplemental information related to the Company's fourth quarter and full year 2022 results is available at https://tinyurl.com/54pkrfsx About Brookdale Senior Living Headquartered in Brentwood, Tennessee, Brookdale Senior Living Inc. (NYSE: BKD) owns and operates over 700 senior living communities and retirement communities in the United States. On November 22, 2022, Egan-Jones Ratings Company retained its CCC foreign currency senior unsecured ratings on debt issued by Brookdale Senior Living Inc. EJR also retained its 'C' rating on commercial paper issued by the Company. BSPV-PLANO LLC: Court Approves Disclosure Statement --------------------------------------------------- Judge Brenda T. Rhoades has an order approving the Disclosure Statement of BSPV-Plano, LLC and that any remaining objections thereto by the Bond Trustee are overruled. That the approval of the Disclosure Statement in no way prejudices any objection to the proposed Amended Plan of Reorganization for BSPV-Plano, LLC and in no way constitutes the Court's approval of any portion of the Proposed Plan, and that any all objections to the Proposed Plan, except as to the sufficiency of the Disclosure Statement, including all such plan objections as raised by the Bond Trustee, are preserved and not affected by this Order. The hearing to consider the confirmation of the Proposed Plan will commence at 10:00 a.m. on April 13, 2023, and shall resume on April 14, 2023 if needed. The deadline to file and serve any objection to the Proposed Plan will be March 29, 2023, provided that discovery between the Debtor and the Bond Trustee regarding the Proposed Plan may commence immediately. The record date for voting on the Plan shall be February 13, 2023, and only those holders of claims, securities, and equities as of such date shall be entitled to vote, without prejudice to the ability of any movant to file a motion to extend such date. Ballots must be returned to the Solicitation Agent no later than 5:00 p.m. on March 29, 2023, pursuant to the voting instructions set forth more fully in the Solicitation and Voting Procedures, but the Debtor may extend such deadline for any given creditor in its discretion. About BSPV-Plano BSPV-Plano, LLC, a company in Plano, Texas, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Texas Case No. 22-40276) on March 1, 2022, with $50 million to $100 million in both assets and liabilities. Richard Shaw, manager, signed the petition. At the time of the filing, BSPV-Plano was developing a 31.5-acre, "55+" Independent Senior Luxury Apartment Community with 318 units of apartment inventory that is known and branded as "The Bridgemoor at Plano," and located at 1109 Park Vista Road, Plano, Texas. Judge Brenda T. Rhoades oversees the case. Munsch Hardt Kopf and Harr, PC, Grant Thornton, LLP and American Global of Texas, LLC serve as the Debtor's legal counsel, financial advisor and insurance consultant, respectively. BSPV-PLANO: Aims to Complete Project, Return 100% to Creditors -------------------------------------------------------------- BSPV-Plano, LLC, submitted an Amended Plan of Reorganization and a corresponding Disclosure Statement. The Plan is a proposed plan of reorganization under Chapter 11 of the United States Bankruptcy Code, whereby the Debtor seeks to restructure its debt obligations to all of its Creditors and to reorganize. As such, if confirmed, the Plan would constitute a new contract between the Debtor and all of its Creditors and would replace prepetition contractual and other rights, except to the extent preserved in the Plan, with all such rights restructured by the Plan. This would be done on the "Effective Date," which is the date specified in the Plan when the Plan becomes binding and effective, after the Plan is confirmed and all conditions precedent to its effectiveness as satisfied. Creditors generally have the right to vote on the Plan, and the Debtor urges all creditors to vote to accept the Plan. The principal asset of the Debtor is the Project. At present, and on a fair market valuation, the Debtor believes that the Project has more than enough value to pay all Creditors in full, over time, and that this value will only grow, thus protecting the rights of all Creditors and holders of Equity Interests. The Project is not yet finished and is approximately 2 years from stabilization, at which point it will reach its true market value. Approximately $1.5 million is needed to complete the Project, and a significant additional amount of funding is required to properly market and open the Project, all of which the Debtor's Equity Interest holders are funding and have committed to do. Thus, if the Debtor is afforded sufficient time to complete the Project and ramp-up the leasing at the Project, all Creditors will be paid in full, most with interest, and all Creditors will be protected against non-payment. This is why the Debtor filed the Bankruptcy Case -- to preserve value for all stakeholders and to complete the Project -- and this is why the Debtor urges all Creditors to vote to accept the Plan. The alternative is very likely that Unsecured Creditors, junior M&M lien claimants, and even the subordinated class or classes of the Bond debt (Bond Series C and Bond Series D), will ot be paid anything. This is because any realistic alternative would result in a foreclosure by the senior Bond holders Bond Series A and Bond Series B) against the Project and a sale at liquidation value, which is much less than present fair market value and certainly much less than future market value, since any buyer wanting to purchase the Project will have to assume the risks and large construction and carrying costs to get the Project to completion and stabilization. The Estate does not have other readily monetizable assets of sufficient value to pay much, if anything, to any other Creditor in such a situation. The Debtor believes that the Plan and the Project are feasible, and that there is sufficient fair market value to pay all Creditors in full, is best evidenced by the contributions that the Debtor's Equity Interest holders have made towards the Project and the Bankruptcy Case, including: approximately $7 million to fund construction prior to the Petition Date once the Bond Trustee froze access to the Debtor's funds, approximately $1.5 million under the DIP Loan to fund the Bankruptcy Case; approximately $2 million after the Petition Date to fund construction; and an additional $1.5 million and more in present and future construction funding. Those Equity Interest holders are not seeking to "profit" on the "backs" of their Creditors. On the contrary, they have spent and will continue to spend substantial funds to protect the rights of all Creditors and stakeholders against the alternative of a foreclosure. Under the Plan, Class 10 Unsecured Claims total $1,900,000. The Plan proposes to pay Allowed Unsecured Claims, without interest, in full through quarterly payments over 4 years. The Plan provides an option to each holder of an Allowed Unsecured Claim whereby the Debtor will pay the Claim in full through a one-time payment of 33% of the Allowed amount of the Claim. The Bond Trustee believes that to the extent that the portion of its claim for damages resulting from the Debtor's alleged breach of the "no-call" provision is deemed to be an unsecured claim, that said claim must either be paid on the effective date in full, or with interest over time at a rate sufficient to provide the Bond Trustee with the present value of its claim. The Debtor disputes that any claim for any alleged breach of any such "no-call" provision is valid or allowable and intends to contest the same. Creditors will recover 100% of their claims. Class 10 is impaired. The Bankruptcy Court has scheduled a hearing to consider confirmation of the Plan on April 13, 2023 at 10:00 a.m., Central Time, in the United States Bankruptcy Court for the Eastern District of Texas, Sherman Division, which may be continued from time to time. Objections, if any, to confirmation of the Plan must be filed and served on or before March 29, 2023. To be sure the ballots are counted, ballots must be returned by no later than 5:00 P.M., Central Time, on March 29, 2023. Attorneys for the Debtor: Jay H. Ong, Esq. Davor Rukavina, Esq. Thomas D. Berghman, Esq. MUNSCH HARDT KOPF & HARR, P.C. 500 N. Akard Street, Suite 3800 Dallas, TX 75202-2790 Telephone: (214) 855-7500 Facsimile: (214) 855-7584 A copy of the Disclosure Statement dated Feb. 22, 2023, is available at https://bit.ly/3kiWJ2d from PacerMonitor.com. About BSPV-Plano LLC BSPV-Plano, LLC, a company in Plano, Texas, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Texas Case No. 22-40276) on March 1, 2022, listing up to $100 million in both assets and liabilities. Richard Shaw, manager, signed the petition. Judge Brenda T. Rhoades oversees the case. Munsch Hardt Kopf and Harr, PC, Grant Thornton, LLP and American Global of Texas, LLC serve as the Debtor's legal counsel, financial advisor and insurance consultant, respectively. The Debtor filed its proposed Chapter 11 plan of reorganization on Dec. 31, 2022. CANO HEALTH: Closes $150M Loan With Diameter, Rubicon Founders -------------------------------------------------------------- Cano Health, Inc. announced it consummated the closing of a $150 million senior secured term loan, maturing Nov. 23, 2027. Lenders in the 2023 Term Loan were Diameter Capital Partners, Rubicon Founders and their respective affiliates and managed funds. The 2023 Term Loan bears interest at 14% per annum in the first two years after initial funding, payable quarterly in cash or in-kind as an addition to the principal balance of the 2023 Term Loan, at the Company's election, and, thereafter, 13% per annum, payable quarterly in cash. The 2023 Term Loan ranks pari passu in right of payment and lien priority with indebtedness under the Company's existing senior credit facilities. In connection with the 2023 Term Loan, the Company issued to the lenders warrants to purchase up to approximately 29.5 million shares of the Company's Class A common stock, or up to 5.5% of pro forma fully diluted shares outstanding, exercisable until Feb. 24, 2028, at an exercise price of $0.01 per share. The Company has agreed to register the shares of Class A common stock underlying the warrants with the U.S. Securities and Exchange Commission. Cano Health intends to use proceeds from the transaction for general corporate purposes, including the repayment of amounts outstanding under its existing revolving credit facility, and to pay transaction fees and expenses related to the 2023 Term Loan. "We are pleased to partner with experienced investors like Diameter and Rubicon who recognize the value of our platform," said Dr. Marlow Hernandez, chairman and chief executive officer of Cano Health. "With the completion of this financing, we remain focused on optimizing our existing capacity to continue to unlock the embedded profitability within our medical centers. In addition, the Company will continue to review our operations with the objective of further enhancing liquidity, improving margins, and maximizing long-term shareholder value." Jonathan Lewinsohn and Scott Goodwin, co-founders and managing partners of Diameter Capital Partners, said "As an existing lender to Cano Health, we are pleased to demonstrate our conviction in the Company. Cano Health operates in one of the most exciting areas of healthcare services, and we believe that the current capital infusion will help the Company realize its unique potential." "Our partnership with Cano Health meets our mission of advancing value-based primary care for underserved populations. We are pleased to support Cano Health in continuing to fulfill its goals of improving patient health and outcomes in the communities it serves," said Adam Boehler, managing partner of Rubicon Founders. JPMorgan Chase Bank, N.A. served as sole lead arranger and sole bookrunner in connection with the 2023 Term Loan and Goodwin Procter LLP served as legal advisor to Cano Health in connection with the 2023 Term Loan and warrants. Preliminary Unaudited Fourth Quarter 2022 Summary Results Cano Health reported membership and preliminary estimated unaudited total revenue, net loss, and Adjusted EBITDA for its fourth quarter ended Dec. 31, 2022. Total membership at the end of the fourth quarter 2022 is estimated to be approximately 310,000, higher than the previous guidance of 300,000 to 305,000 members. Preliminary unaudited total revenue, net loss, and Adjusted EBITDA for the fourth quarter of 2022 are estimated to be approximately $680 million, $(302) million, and $36 million, respectively. Total revenue and Adjusted EBITDA are within the range implied by prior full year guidance. About Cano Health Inc. Cano Health, Inc. (NYSE: CANO) -- htt;://www.canohealth.com -- is a primary care-centric, technology-powered healthcare delivery and population health management platform. The Company is one of the largest independent primary care physician groups in the United States. It utilizes its technology-powered, value-based care delivery platform to provide care for its members. As of Sept. 30, 2022, the Company had $2.19 billion in total assets, $1.41 billion in total liabilities, and $783.03 million in total stockholders' equity. In October 2022, Moody's Investors Service downgraded Cano's ratings, including the Corporate Family Rating to Caa1 from B3, and the Probability of Default Rating to Caa1-PD from B3-PD. Concurrently, Moody's downgraded the ratings of Cano's First Lien Senior Secured Credit Facilities to Caa1 from B2 and the ratings of the Senior Unsecured Notes to Caa3 from Caa2. The rating outlook is stable. The ratings downgrade reflects Moody's view that Cano will continue to have high leverage and is weakly positioned to absorb future unexpected operating setbacks in light of the company's weak liquidity and current trend in the company's cash burn and poor performance. In November 2022, S&P Global Ratings lowered its issuer credit rating on Cano to 'B-' from 'B'. The outlook is negative. S&P also lowered its issue-level ratings on the company's revolver and term loan to 'B-' from 'B'. It lowered its issue-level rating on the company's senior unsecured notes to 'CCC' from 'CCC+'. S&P said, "The negative outlook primarily reflects our forecast for very weak credit measures through 2023, including near breakeven free operating cash flow (FOCF) generation, with little room for the company to underperform against our assumptions before we could consider its capital structure unsustainable." CARE NEIGHBORHOOD: April 4 Hearing on Plan & Disclosures -------------------------------------------------------- Judge Laura K. Grandy has entered an order conditionally approving the Disclosure Statement of Care Neighborhood Redevelopment Corporation. A hearing on the Disclosure Statement and the confirmation of the Plan of Reorganization will be held on April 4, 2023 at 09:00 AM, in U.S. Bankruptcy Court, Melvin Price US Courthouse, 750 Missouri Ave, East St Louis, IL 62201. Any objection to the Disclosure Statement or to confirmation of the Plan shall be filed on or before March 31, 2023, with a copy forwarded to the attorney for the debtor, Steven M Wallace. Acceptances or rejections of the Plan must be submitted to the attorney for debtor on or before 7 days prior to the date of the hearing. About Care Neighborhood Care Neighborhood Redevelopment Corporation is an Illinois corporation formed for the purpose of acquiring and developing real property in East St. Louis, Illinois. Care Neighborhood Redevelopment filed a Chapter 11 petition (Bankr. S.D. Ill. Case No. 22-30093) on Feb. 21, 2022. The Debtor is represented by Steven M. Wallace, Esq. of GOLDENBERG HELLER & ANTOGNOLI, P.C. CINEMARK HOLDINGS: Fitch Alters Outlook on 'B+' LongTerm IDR to Neg ------------------------------------------------------------------- Fitch Ratings has revised Cinemark Holdings, Inc.'s and Cinemark USA, Inc.'s Rating Outlooks to Negative from Stable. In addition, Fitch has affirmed both entities' Long-Term Issuer Default Ratings (IDRs) at 'B+', and Cinemark USA, Inc.'s senior secured issue ratings at 'BB+'/'RR1' and senior unsecured issue ratings at 'B'/'RR5'. The Negative Outlook reflects Fitch's concerns that near-term attendance growth may not reach expected levels, negatively affecting Cinemark's expected leverage improvement. While studios have publicly committed to theatrical release windows, there is no guarantee those films will drive attendance improvement. Additionally, although film creation cycles are expected to return to historical levels over the rating horizon, the current release schedule could experience further delays which could affect the timing of future film releases. KEY RATING DRIVERS Video Streaming Platform Competition: The ratings factor in the intermediate- to long-term risks of competition from alternative at-home distribution channels, including DTC streaming services owned by film studios such as Disney+, HBO Max, Paramount+ and Peacock. In an attempt to grow their DTC subscribers, these studios began funneling certain films directly to their DTC platforms during the pandemic and into 2022, bypassing theatrical exhibition. However, this strategy has not been as profitable as expected, and the studios have now publicly reaffirmed a return to a more normal theatrical release schedule. Headwinds in The Film Industry: Due to the pandemic and subsequent supply chain challenges, the film industry experienced a significant extension in the typical film creation cycle timeline. The timeline expanded well beyond 33 months, up from an average of 31 months across all genres, further delaying the overall film release calendar, already negatively affected by pandemic-related social restrictions during 2020. Fitch notes the amount of films released in the U.S. and Canada during 2022 were still 40% below 2019 levels. Fitch expects 2023 and 2024 to be pivotal years for the industry with studios streamlining content creation cycles while increasing overall film content creation and returning to a more normalized theatrical distribution schedule. Fitch expects these actions to continue to drive box office monetization improvements. Attendance Levels Recovery: Fitch believes theatrical attendance will continue to rebound in the near to mid-term. However, increasing substitution threats could have a longer-term effect on theatrical attendance, hindering its recovery pace. Fitch believes the preference for at-home movie entertainment viewership will continue to cannibalize traditional theatrical attendance over the long term. As such, Fitch does not expect theatrical attendance to return to historical levels over the rating horizon, offsetting some of the expected growth in average ticket prices and concessions. Adequate Liquidity: As of Dec. 31, 2022, Cinemark had $675 million of available cash and full availability under a $100 million revolving credit facility maturing in November 2024. The company continued to modestly generate positive cash flow from operations in 2022, and is expected to continue increasing cash flow generation, as the industry continues its recovery path. Improving Operating Performance: During 2022, Cinemark reported positive consumer sentiment driving box office momentum, particularly during Q2 and Q4, outpacing industry recovery by approximately 500bps versus 2019. Attendance continued its sequential improvement from its 2Q20 trough, with aggregate attendance almost doubling to more than 105 million in 2021, further increasing to over 173 million in 2022. Average ticket prices and concession revenue continued expanding throughout the year across the different segments, ending 4Q22 with an average U.S. ticket price of $10, reflecting a price increase of 8.6% yoy, while the U.S. concession revenue per patron increased to $7.43 from $6.66 yoy. These increases were supported by a sustained demand for large-format theatrical movies, demand for premium food and beverage products and inflationary pressures. Dependence on Film Studio Product: Movie theater operators rely on the quality, quantity and timing of movie products, which are beyond management's control. Throughout the pandemic, film studios delayed theatrical releases while also redirecting certain titles to their own DTC offerings, with options ranging from day-and-date simultaneous releases on DTC platforms and theaters to theatrical releases only. Studios have since returned almost exclusively to theatrical releases of new films, although the theatrical window has been shortened to allow for earlier transition to DTC platforms. Cinemark's ratings rely on the assumption that theatrical exhibition will remain a key window for film studios' large film releases (tent poles) going forward. Studios have consistently reasserted their belief in theatrical windowing as they understand the opportunity it presents for franchise branding, future revenue opportunities and ultimately film longevity. In addition, theatrical exhibition offsets the high production and marketing costs associated with these projects while the talent involved in creating films rely to some extent on box office metrics for current and future income generation. Diversification and Market Position: Cinemark's ratings are supported by its scale, as the third-largest theater exhibitor in the U.S., operating 4,399 screens in 318 theaters across 42 states and 105 DMAs. The company also has a dominant position in Latin America, where it operates 1,442 screens in 199 theaters across 14 countries. Cinemark is the leading theater exhibitor in Brazil and Argentina, and the second-largest exhibitor in Chile, Colombia and Peru. DERIVATION SUMMARY Cinemark's ratings reflect its scale and market position as the third largest theater chain in the U.S., the largest theater chain in Brazil and Argentina, and the second largest theater chain in Colombia, Chile and Peru. Cinemark maintains a more conservative balance sheet and greater liquidity than its peers, AMC Entertainment and Cineworld plc, which means it can better manage the business through periods of operating and economic uncertainty. KEY ASSUMPTIONS - Attendance continues to recover on sequential basis, driven by increased comfort in out-of-home environments, broader film slates accessing theatrical releases, including the return of video streaming studios into the theatrical release and distribution, growing on a mid-to-low single digits throughout the rating horizon. However, attendance levels are not expected to return to historical levels over the rating horizon; - Average U.S. and International ticket prices return to more normalized low-single-digit growth annually; - Concession revenues return to mid-single-digit growth for both segments; - Fitch-calculated EBITDA margins improve to 18%; however, Fitch does not anticipate margins improving to 2019 levels (19%+); - Capex intensity for 2023 is aligned with management guidance, keeping the rest of the projection in the mid-single digit range percentage of total revenues; - Dividend paid outs reinstated in 2026 at $40 million, increasing to $50 million in 2027; - Repays a portion of its debt over the next two years and refinances its $250 million senior secured notes with similar terms. The recovery analysis assumes Cinemark would be considered a going concern in bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. - EBITDA: Cinemark's going-concern EBITDA is based on FY 2019 pre-pandemic EBITDA of $656 million. Fitch then stresses EBITDA by assuming theaters close due to operational weakness driven by accelerated declines in theatrical attendance as a result of continued media fragmentation and changing consumer preferences. This results in a going-concern EBITDA of $263 million, or a roughly 60% stress. Prior recessions provide little precedent for a stress case as theatre attendance increased in six of the last eight recessions due to the fact that theatrical exhibition was a relatively cheap form of entertainment. However, the rise of alternative distribution platforms and streaming subscription plans with all you can eat offerings (e.g. Netflix, Hulu, Disney+, HBO Max etc.), including independent smaller format movies that are not dependant on exclusive theatrical windows could place added pressure on theatrical exhibition in future downturns, particularly in urban areas where the cost of an average theater ticket exceeds $15. Fitch believes the theater member subscription plans like AMC's Stubs List and Cinemark's Movie Club could help support attendance levels. - Multiple: Fitch employs a 5x enterprise value multiple to calculate post-reorganization valuation, roughly in-line with the median TMT emergence enterprise value/EBITDA multiple, and incorporates the following into its analysis: (1) Fitch's belief that theater exhibitors have a limited tangible asset value and that the business model bears the risk of being disrupted over the longer-term by new distribution models (e.g. Netflix typically releases films in theaters and to its streaming subscribers simultaneously, with some limited exceptions for awards contention); (2) Recent trading multiples (EV/EBITDA) in a range of 6x-17x; (3) Transaction multiples in a range of 9x (e.g. Cineworld Group plc acquired U.S. theater circuit Regal Entertainment for $5.8 billion in February 2018 for an LTM EBITDA purchase price multiple of roughly 9.0x. AMC purchased U.S. theater circuit Carmike for $1.1 billion in December 2016 for a purchase price multiple of 9.2x and AMC purchased international circuit Odeon and UCI for $1.2 billion in November 2016 at a purchase price multiple of 9.1x). - Fitch estimates an adjusted, distressed enterprise valuation of $1.3 billion. - Debt: Fitch assumes a fully drawn revolver in its recovery analysis since credit revolvers are tapped when companies are under distress. For Fitch's recovery analysis, leases are a key consideration. While Fitch does not assign recovery ratings for the company's operating lease obligations, it is assumed the company rejects only 30% of its remaining $1.3 billion in operating lease commitments (calculated at a net present value) due to their significance to the operations in a going-concern scenario and is liable for 15% of those rejected values. This incorporates the importance of the leased space to the core business prospects as a going concern. Fitch excludes Cinemark Holdings, Inc's $450 million convertible notes as they rank junior to Cinemark's existing debt, are structurally subordinated and have no security or liquidity requirements. - Cinemark had $2.5 billion in total debt as of Dec. 31, 2022. - The recovery results in a 'BB+'/'RR1' on the senior secured notes and existing secured credit facilities reflecting expectations that 91%-100% recovery is reasonable. The recovery results in a 'B'/'RR5' on the secured notes reflecting reduced recovery prospects owing to the weighting toward secured debt in the capital structure. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Cinemark's ratings have limited upside potential due to the inherent nature of the theatrical exhibition business, the resulting hit-driven volatility and the reliance on film studios for the quantity and quality of films in any given period. In strong box office years, metrics may be stronger in order to provide a cushion in weaker box office years. - Total leverage (total debt with equity credit/operating EBITDA) sustained below 2.5x and adjusted leverage (including lease equivalent debt) below 4.5x. - FCF margins sustained in the mid-to high-single digits. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Total leverage sustained above 3.5x and adjusted leverage sustained above 5.5x. - Significant deterioration in Cinemark's liquidity position. - Increasing secular pressure as illustrated in sustained declines in attendance and/or concession spending per patron. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Cinemark's liquidity as of Dec. 31, 2022 was supported by $675 million in cash on hand and full availability under its $100 million revolving credit facility which matures in 2024. In addition, over the last two years, the company has shown it can generate positive cash flow, even during periods of low attendance levels. Debt Structure: Cinemark had $2.5 billion in total debt as of Dec. 31, 2022. There are no significant maturities until 2025, when Cinemark's senior secured term loan ($627 million outstanding at Dec. 31, 2022) matures along with the $460 million of 4.5% converts and $250 million of 8.75% senior secured bonds, and 2026 when $405 million of 5.875% unsecured notes mature. The senior secured facility is guaranteed by Cinemark Holdings, Inc. (downstream) and certain of Cinemark USA, Inc.'s domestic subsidiaries (upstream). The credit facility is secured by mortgages on certain fee and leasehold properties and security interests in substantially all of Cinemark USA and guarantor's personal property including a pledge on capital stock of certain Cinemark USA's domestic subsidiaries and 65% of the voting stock of certain foreign subsidiaries. ISSUER PROFILE Cinemark Holdings, Inc. is the third largest theater U.S. exhibitor, operating 318 theaters across 42 states and operates 199 theaters across 14 countries in Latin America, where it is the leading theater exhibitor in Brazil and Argentina, and second in Chile, Colombia and Peru. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Cinemark Holdings Inc. LT IDR B+ Affirmed B+ Cinemark USA, Inc. LT IDR B+ Affirmed B+ senior secured LT BB+ Affirmed RR1 BB+ senior unsecured LT B Affirmed RR5 B CLEARWATER COLLECTION: Court Approves Disclosure Statement ---------------------------------------------------------- Judge Joseph G. Rosania Jr. has entered an order approving Clearwater Collection 15, LLC and Clearwater Plainfield 15, LLC's Disclosure Statement dated Jan. 9, 2023. A hearing for consideration of confirmation of the Plan, and any objections thereto, will be held on April 11, 2023, at 2:00 p.m., via Zoom video conference in Courtroom B, United States Bankruptcy Court for the District of Colorado, U.S. Custom House, 721 19th Street, Denver, CO 80202. The hearing set for March 2, 2023, was vacated. About Clearwater Collection 15 Clearwater Collection 15, LLC, and Clearwater Plainfield 15, LLC, are owners of a shopping center located at 21688 Highway 19 N, Clearwater, Fla. The Debtors sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 22-11320) on April 18, 2022, listing as much as $50 million in both assets and liabilities. Gary Dragul, president, signed the petitions. Judge Joseph G. Rosania Jr. oversees the cases. The Debtors tapped Wadsworth Garber Warner Conrardy, PC as bankruptcy counsel; Perlman, Bajandas, Yevoli & Albright, PL as litigation counsel; and Harper Hofer & Associates, LLC as accountants. CORNERSTONE CHEMICAL: S&P Affirms 'B-' ICR, Outlook Stable ---------------------------------------------------------- S&P Global Ratings affirmed its 'B-' issuer credit rating on Cornerstone Chemical Co. and removed it from CreditWatch negative, where S&P placed it Feb. 9, 2023. S&P assigned its 'B-' issue-level rating and '3' recovery rating to the new senior secured notes due 2027. The stable outlook reflects S&P's view that liquidity and credit measures will remain appropriate for the rating during the next year. S&P will withdraw its ratings on the exchanged senior secured notes due 2024. Substantially all of the noteholders have consented and will receive adequate compensation in its view. The risk that a meaningful portion of noteholders would not consent to the exchange offer and would see the value of their investment impaired has abated. The affirmation and rating assignment reflect our view that the amount of noteholders who have consented to the exchange offer is significant, at 99.35% of the $450 million par value, and that the compensation received is adequate. Consenting noteholders who met the early participation deadline will receive new secured notes equal to 100% of the principal value of the old secured notes and accruing at 10.25% (2% paid in kind) versus 6.75%. Cornerstone Chemcial Co. is the successor issuer. With meaningfully lower refinancing risk (until the next maturity in 2027), Cornerstone's liquidity and credit measures will remain adequate for the ratings. Despite the higher interest cost on the new notes, the company should have enough sources of liquidity to cover its uses during the next year. Availability on the asset-based loan (ABL) improves by $10 million via net proceeds from the new sponsor loan. The company's credit measures are still in the highly leveraged category, but S&P does not believe the ratios will deteriorate to the point that the capital structure is unsustainable. Examples of appropriate credit measures for the current ratings are an adjusted debt-to-EBITDA ratio that is within the 6x-8x area and an EBITDA to interest coverage ratio within the 1.3x-1.8x area. Free operating cash flow should improve meaningfully in 2023, but may still be in the break-even or slightly negative area. This will depend on the company effectively navigating macroeconomic-related challenges via good operational execution. S&P expects Cornerstone's profit margin to improve in 2023. The status of housing-related demand may continue presenting a challenge, as an end to industry destocking in this end market may arrive slower than in others. Still, S&P believes Cornerstone should see its profit margins improve in 2023. The unplanned outages that forced the company to purchase raw materials on the open market at high prices in 2022 may not recur and should allow for higher production volumes. The company should benefit from lower ammonia prices (a key input in all of Cornerstone's product lines except sulfuric acid) along with its advantaged cost position as a U.S.-based producer relative to the higher energy and materials costs in Europe. How effectively the company can manage potentially lower production from Rohm remains a question. Rohm GmbH is one of Cornerstone's major customers (roughly 8% of net product sales) and operates on site at Cornerstone Energy Park, using hydrocyanic acid produced by Cornerstone to produce methyl methacrylate (MMA) and methacrylic acid. In mid-2021 Rohm informed Cornerstone that it seeks to renegotiate the terms on various agreements and provided notice of termination on the agreements ranging from June 2024 through August 2025. How effectively Cornerstone manages the transition as Rohm moves production to its new MMA plant in Bay City, Texas will be an important factor in its performance. S&P said, "The stable outlook reflects our view that Cornerstone's refinancing risk has subsided for another three years and that the company's performance for the next 12 months will be sufficient to keep liquidity adequate while generating credit measures consistent with those expected at the current ratings. A weighted average adjusted debt-to-EBITDA ratio that is within the 6x-8x area and EBITDA to interest coverage ratio within the 1.3x-1.8x area would be indicators of credit measures appropriate for the current rating. "We could lower the ratings if the macroeconomic environment weakens sufficiently (our base-case scenario forecasts a recession in the U.S. for full-year 2023 with recovery to start in the latter half) or if operational execution is poor. These conditions could make the company's capital structure unsustainable with Cornerstone less likely to meet its fixed-charge obligations. Liquidity becoming constrained would be a catalyst for a downgrade. "While we don't expect to do so within the next year, we could raise the ratings modestly if macroeconomic conditions brighten and the company resumes deleveraging on its trailing-12-month adjusted debt-to-EBITDA ratio. We would also look for the company addressing various items including: resolving the arrangements with Rohm and limiting the production and profitability loss, or to find adequate replacement tenants; gaining more clarity regarding how long melamine tariffs (which have benefited the company's competitive dynamics) will remain in place; and potentially reducing or eliminating the PIK-preferred equity tranche of its capital structure." ESG credit indicators: E-3; S-2; G-3 S&P said, "Environmental factors are a moderately negative consideration in our credit rating analysis of Cornerstone Chemical Co., as primarily a commodity chemical producer of acrylonitrile, melamine, and sulfuric acid. The asset-intensive nature of commodity chemical production lends itself to scrutiny and regulations related to carbon dioxide emissions, waste, and pollution. Governance is moderately negative consideration. We view financial sponsor-owned companies with highly leveraged financial risk profiles as demonstrating corporate decision-making that prioritizes the interests of the controlling owners, typically with finite holding periods and a focus on maximizing shareholder returns." CS GROUP: Claims to be Paid From Cash, Sale and Operations ---------------------------------------------------------- CS Group LLC submitted a First Amended Plan of Reorganization. On Jan. 13, 2023, the Debtor obtained court authority to sell the Winnie Property. The Debtor estimates net proceeds in excess of $400,000. On Jan. 23, 2023, the Debtor conducted mediation with the JG Creditors to resolve issues related to the proofs of claim they filed. The mediation resulted in the parties entering into a Settlement. Under the proposed Settlement, the Debtor will resolve objections it may have to the JG Creditors' proofs of claim, pay the JG Creditors a total of $375,000 for such claims, comprising of an initial payment of $150,000 upon approval of the motion to compromise and an additional $225,000 upon the sale of the Winnie Property. Based on the Settlement the Debtor has incorporated certain changes to this Plan with regards to the Winnie Property. A motion to compromise was filed on February 7, 2023 and is currently pending. This Plan proposes to pay Allowed Claims from the Debtor's operating revenues, proceeds from the sales of the Debtor's Properties, and/or other Cash generated during the case. The Plan proposes to give the Debtor at least until September 30, 2023 to sell or refinance the Properties to pay all claims in full. However, if the Properties are not sold during such time, any remaining Properties will be returned to the Lenders in satisfaction of their secured claims. The estimated term of this Plan is 6 to 7 months. Class 3: General Unsecured Claims are impaired: * Class 3(a) JG Creditors' Claims will be allowed in the amount of $375,000 with an initial payment of $150,000 being due upon approval of the Motion to Compromise and an additional $225,00 become due upon closing of the Winnie Property and payment of all Class 1(a) Allowed Claims in Full. * Class 3(b) Non-Insider General Unsecured Claims will receive a Pro Rata distribution from the sale proceeds remaining from the sale or refinance of the Properties after payment in full of the Allowed Secured Claims attaching to the property sold, after payment of all operating expenses, and provided that all Class 2 Claims are paid in full. * Class 3(c) Insider General Unsecured Claims will be permitted to offset any amount due the Debtor but shall otherwise receive no payment until the Allowed Class 1, Class 2, Class 3(a) and Class 3(b) Claims are paid in full in accordance with the terms of this Plan. The source of funds to achieve consummation of and carry out the Plan shall be from (i) Cash as of the Effective Date, (ii) proceeds from the sale the Properties and (iii) the Debtor's operations. "Properties" means collectively the Church Property, Winnie Property, and Texas City Property. A copy of the First Amended Plan of Reorganization dated Feb. 22, 2023, is available at https://bit.ly/3xNGPjh from PacerMonitor.com. About CS Group LLC CS Group LLC owns three rental properties in Galveston County, Texas: (a) 912 Church St., Galveston, Texas; (b) 918 Winnie St., Galveston, Texas; and (c) 732 1st Ave. N., Texas City, Texas. CS Group LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-80112) on June 6, 2022. In the petition signed by Carolina Dupuis, managing member, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Jeffrey P. Norman oversees the case. Vianey Garza, Esq., at Dore Rothberg McKay, PC is the Debtor's counsel. EQUINOX HOLDINGS: S&P Upgrades ICR to 'CCC-', Outlook Negative -------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on Equinox Holdings Inc. to 'CCC-' from 'SD' and raised its rating on the company's $71 million first-lien revolver to 'CCC-' from 'D'. S&P said, "The negative outlook reflects our expectation that, despite a continued recovery from pandemic-related lows, tough operating conditions will persist and the company will likely face a liquidity shortfall over the next six months absent a liquidity-enhancing transaction. "The 'CCC-' credit rating reflects our belief that a default or a debt restructuring appears highly likely within six months without a significantly favorable change in Equinox's circumstances. The rating action reflects the risk that the company may be unable to refinance its first-lien revolver at par prior to its maturity in November 2023. Additionally, we believe that even if the company successfully extends the maturity of its revolving credit facility, it is still burning cash and will likely require additional equity support beyond the $135 million its owners contributed in the first three quarters of 2022 to avoid a liquidity crisis. Therefore, we believe the company's management could seek a distressed debt transaction. "While Equinox continued to recover members and generate positive EBITDA in the third quarter of 2022, we view the current debt balances as unsustainable. The company has grown its membership balance by 24% in 2022, but this is 15.4% lower than at year-end 2019. At this membership level, the company began generating slightly positive EBITDA on a reported basis, and as the company adds members, it will likely see higher incremental revenue flow through to EBITDA and cash flow. "However, we believe that at the current pace of membership and revenue growth, the company is unlikely to generate sufficient cash flow to support its current fixed charges and the refinancing of its approximately $1.4 billion of debt due March 2024 will be difficult. Additionally, the company still owes its landlords $161.1 million of unpaid cash rent as of Sept. 30, 2022, and this balance could prolong the company's cash burn even as its revenue and EBITDA base grow. "The negative outlook reflects our expectation that tough operating conditions will persist and the company will likely face a liquidity shortfall over the next six months absent a liquidity-enhancing transaction. "We could lower our ratings on Equinox to 'CC' if we believe a default is a virtual certainty, including the company announcing it will miss an interest or principal payment or an announcement of an exchange offer or similar restructuring we classify as distressed. "We could raise the ratings on Equinox if we no longer believe the company is at risk of default within the next six months." FARADAY FUTURE: Promotes Yueting Jia to Executive Officer Position ------------------------------------------------------------------ Faraday Future Intelligent Electric Inc. announced that after an assessment by the Board of Directors of the Company regarding the Company's management organizational structure, the Board has approved that Mr. Yueting Jia will now report directly to the Board (alongside the Global CEO, Mr. Chen). Based on the changes to his responsibilities within the Company, the Board determined that Mr. Jia is an "officer" of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and an "executive officer" of the Company under Rule 3b-7 under the Exchange Act. Moving forward, both Mr. Jia and Mr. Chen will report to the Board directly. The Board also approved the Company's Product and Mobility Ecosystem, I.A.I, and Advanced R&D Technology departments will directly report into Mr. Jia, and the Company's User Ecosystem, Capital Markets, Human Resources and Administration, Corporate Strategy, and FF China departments will report to both Mr. Jia and Mr. Chen, subject to processes and controls to be determined by the Board after consultation with the Company's management. The Company's remaining departments including Finance will continue to report to Mr. Chen with a single reporting line. According to the Company, the Board has agreed to promote Mr. Jia, the Company's founder and CPUO, to the position of Section 16 officer and executive officer considering the significant, unique, and indispensable long-term value of Mr. Jia to the Company's product and technology innovation, I.A.I, advanced technology, product and technology power and future development, and his significant contributions to the Company's recent financing and the approval of proposals such as increasing authorized shares at the recent special stockholders meeting, among other things. The decision was made after careful consideration. "The decision to restore founder and Chief Product and User Ecosystem Officer Mr. Jia's Section 16 officer and executive officer status was a very appropriate decision made after careful consideration by the Board," said Adam He, Chairman of the Board. "With YT Jia in charge of Product and the Mobile Ecosystem, I.A.I, and Advanced Technology R&D departments, Mr. Chen can now focus on the manufacturing side of the business, especially as the FF 91 Futurist is about to enter the key stage of start of production (SOP). We believe that the strong collaboration between both Mr. Jia and Mr. Chen will allow outstanding contributions to FF's long-term success in their respective areas of expertise." These last changes represent the completion of the Company's senior leadership transformation, which started with the successful transformation in the Company's governance structure with our major shareholder, FF Top LLC, and continued with the addition of valuable new board members. Together, these changes lay the foundation for the timely and high-quality SOP and delivery of the FF 91 Futurist, as well as the achievement of the Company's medium and long-term strategic goals. Specifically, the Board's appointment of Mr. Jia to executive officer status signifies FF's strong commitment to keep the Company's momentum on track. FF is targeting a SOP date for its flagship FF 91 Futurist of March 30, 2023, at the Company's Hanford, California manufacturing facility, "FF ieFactory California", with the first vehicles coming off the assembly line in early April, and customer deliveries occurring before the end of April, in each case assuming timely receipt of funds from the Company's investors. About Faraday Future Gardena, CA-based Faraday Future -- www.ff.com -- is a luxury electric vehicle company. The Company has pioneered numerous innovations relating to its products, technology, business model, and user ecosystem since inception in 2014. Faraday Future aims to perpetually improve the way people move by creating a forward-thinking mobility ecosystem that integrates clean energy, AI, the Internet. Faraday Future reported a net loss of $516.50 million for the year ended Dec. 31, 2021, compared to a net loss of $147.08 million for the year ended Dec. 31, 2020. Los Angeles, California-based PricewaterhouseCoopers LLP, the Company's auditor since 2018, issued a "going concern" qualification in its report dated May 13, 2022, citing that the Company has suffered recurring losses from operations and has cash outflows from operating activities that raise substantial doubt about its ability to continue as a going concern. FIELDWOOD ENERGY: Atlantic's Motion for Certification Granted ------------------------------------------------------------- In the appealed case is In Re Fieldwood Energy III LLC, et Post-Effective Date Debtors. QuarterNorth Energy LLC, Plaintiff-Appellee, v. Atlantic Maritime Services LLC, Defendant-Appellant, Case No. 4:22-cv-00855, (S.D. Tex.), Magistrate Judge Yvonne Y. Ho for the Southern District of Texas grants the Motion for Certification of Direct Appeal filed by the Defendant-Appellant Atlantic Maritime Services LLC. This appeal arises out of Fieldwood Energy III LLC's Chapter 11 bankruptcy proceeding. Before filing for bankruptcy, Fieldwood contracted for Atlantic to provide drilling services on five leases throughout 2020. Atlantic filed statements of privileges under the Louisiana Oil Well Lien Act (LOWLA) to preserve and perfect its liens on the leases on which Atlantic performed unpaid work. Having determined that a LOWLA privilege is tantamount to a secondary obligation that is extinguished when the primary obligation is extinguished, the bankruptcy court ruled in favor of QuarterNorth Energy LLC. It found that the primary obligation was Fieldwood's unpaid service charges to Atlantic, and "Fieldwood's debt to Atlantic was discharged upon the Effective Date of Fieldwood's Plan." Consequently, it concluded that Atlantic's LOWLA privileges, as accessory obligations, were extinguished. The final judgment enjoining Atlantic from enforcing any LOWLA privileges against non-debtors followed. Atlantic did more to preserve its right to challenge the interpretation of the Plan by voting against confirmation, refusing to opt out of two non-debtor release agreements, and electing a smaller distribution as a result. Thus, while Atlantic did not appeal the Plan's confirmation, it may still be able to challenge whether the Plan contains an adequately specific discharge or release of Atlantic's LOWLA privileges attached to non-debtor property. Atlantic seeks certification of the following question: "Whether the labeling of the treatment of claims against a debtor as a "satisfaction" and "settlement" of such claims under a chapter 11 plan of reorganization -- regardless of whether a creditor rejects the plan and opts out of non-debtor releases under the plan, and regardless of the nature of the creditor's treatment under the plan -- "extinguishes" any statutory privileges held by a creditor against non-debtor property that are granted under LOWLA based on services provided to debtor." LOWLA's policy and, indeed, its express language may be undermined if a debtor, who is also a co-working interest holder in a lease, can extinguish an in rem privilege that otherwise attaches to property on and proceeds from the entire lease. That is, holding that the confirmation of a contractor's bankruptcy plan can extinguish a subcontractor's LOWLA privilege as it pertains to property owned by other co-working interest owners appears contrary to the LOWLA's purpose. In practical terms, if one co-working interest owner's bankruptcy could release the other working interest owners from LOWLA privileges, then the subcontractor would still be left with the full risk of its contractual counter-party's insolvency. However, the Court has not identified any precedent from the Fifth Circuit or Supreme Court of the United States that controls the necessary resolution of this apparent tension. Moreover, there is no dispute that the Disclosure Statement contained a highly specific description of its intent to discharge Atlantic's claims. Because the relevance of a disclosure statement in the "specificity test" has broader implications beyond this dispute, the Court finds that certification of the bankruptcy court's judgment is appropriate to resolve this issue. A full-text copy of the Memorandum and Recommendation dated Feb. 16, 2023 is available at https://tinyurl.com/mv95st7s from Leagle.com. About Fieldwood Energy Fieldwood Energy -- https://www.fieldwoodenergy.com/ -- is a portfolio company of Riverstone Holdings focused on acquiring and developing conventional assets, primarily in the Gulf of Mexico region. It is the largest operator in the Gulf of Mexico owning an interest in approximately 500 leases covering over two million gross acres with 1,000 wells and 750 employees. Fieldwood Energy and its 13 affiliates previously sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 18-30648) on Feb. 15, 2018, with a prepackaged plan that would deleverage $3.286 billion of funded by $1.626 billion. On Aug. 3, 2020, Fieldwood Energy and its 13 affiliates again filed voluntary Chapter 11 petitions (Bankr. S.D. Tex. Lead Case No. 20-33948). Mike Dane, senior vice president and chief financial officer, signed the petitions. At the time of the filing, the Debtors disclosed $1 billion to $10 billion in both assets and liabilities. Judge David R. Jones oversees the cases. The Debtors tapped Weil, Gotshal & Manges LLP as their legal counsel, Houlihan Lokey Capital, Inc. as investment banker, and AlixPartners, LLP as financial advisor. Prime Clerk LLC is the claims, noticing, and solicitation agent. The first-lien group employed O'Melveny & Myers LLP as its legal counsel and Houlihan Lokey Capital, Inc. as its financial advisor. The RBL lenders employed Willkie Farr & Gallagher LLP as their legal counsel and RPA Advisors, LLC as their financial advisor. Meanwhile, the cross-holder group tapped Davis Polk & Wardwell LLP and PJT Partners LP as its legal counsel and financial advisor, respectively. On Aug. 18, 2020, the Office of the U.S. Trustee appointed a committee of unsecured creditors. Stroock & Stroock & Lavan, LLP and Conway MacKenzie, LLC, serve as the committee's legal counsel and financial advisor, respectively. FOGO DE CHAO: Moody's Rates $33.4MM First Lien Term Loan 'Caa1' --------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to Fogo de Chao, Inc.'s $33.475 million senior secured 1st Lien Term Loan due in 2025. The company's existing Caa1 corporate family rating and positive outlook are unaffected. Fogo de Chao amended its existing incremental term loan, increasing borrowings to $33.475 million from $32.5 million and extending the maturity date to April 2025. The increase in borrowings were used to pay related fees and expenses. The term loan extension is credit positive as it addresses its original August 2023 maturity. The company's ratings, however, remain constrained by Fogo's weak liquidity, including limited cash and its revolving credit facility going current in April 2023, which would require refinancing its April 2024 expiration to maintain ample access to funds to support continued project spending on growth initiatives. The following ratings were assigned: Assignments: Issuer: Fogo De Chao, Inc. Senior Secured 1st Lien Term Loan, Assigned Caa1 (LGD3) RATINGS RATIONALE Fogo de Chao's Caa1 CFR rating is constrained by its weak liquidity caused by its revolver expiration in April 2024, which results in any borrowings under the revolver having a limited repayment period, particularly as the company continues to spend on capital requirements as it pursues rapid growth. Other considerations are the company's small size and limited product diversity relative to other rated restaurant chains. Fogo de Chao is also subject to potential earnings volatility due to its higher exposure to more volatile commodities such as beef, and exposure to currency fluctuations with 6.1% of YTD Q3 2023 revenue generated in Brazil while all debt is denominated in US dollars. Fogo de Chao benefits from its strong operating margins, which are attributable to its continuous service model (gaucho chefs serving tableside) and lower operating costs relative to peers, as well as good brand awareness within its core markets. The company's geographic diversity in both the U.S. and Brazil, as well as its unique Brazilian steakhouse customer experience, help drive same store sales and cash generation. Governance is a consideration due to Fogo de Chao's private equity ownership, increasing the potential for event risk and decisions that favor shareholders over creditors. The positive outlook reflects Fogo de Chao's improved operating performance and credit metrics that Moody's expects to be sustained despite increased challenges related to labor and commodity cost inflation as well as a potential for weakended consumer spending. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Ratings could be upgraded if the company improves liquidity through a longer term extension of its debt maturity profile while maintaining solid credit metrics, including debt to EBITDA below 6.5 times and EBIT to interest above 1.0x, and at least break even free cash flow. Ratings could be downgraded should there be any deterioration in liquidity, such as failure to extend its maturity profile well ahead of its incremental term loan going current, or material erosion in performance or credit metrics. Fogo De Chao, Inc. (initially "Prime Cut Merger Sub Inc.") based in Plano, TX, operates a Brazilian steakhouse ("Churrascaria") restaurant chain with 53 restaurants in the U.S., 8 in Brazil, 6 franchised restaurants in Mexico and 1 in the Middle East. Revenue for the twelve month period ending October 2, 2022 was $517 million. Fogo De Chao is owned by affiliates of Rhone Capital. The principal methodology used in this rating was Restaurants published in August 2021. FOX SUBACUTE: April 25 Hearing on Clara Burke/Warrington Disclosure ------------------------------------------------------------------- Fox Subacute at Clara Burke, Inc. and Fox Nursing Home Corp. d/b/a Fox Subacute at Warrington filed an Amended Disclosure Statement and Amended Plan under Chapter 11 of the Bankruptcy Code on Feb. 24, 2023. The Court ordered that the hearing to consider approval of the Amended Disclosure statement shall be held at Sylvia H. Rambo US Courthouse, Bankruptcy Courtroom No. 8 (4th Floor), 1501 N. 6th St, Harrisburg, PA 17102 on April 25, 2023 at 9:30 AM. April 3, 2023, is fixed as the last day for filing and serving in accordance with Federal Rules of Bankruptcy Procedure 3017(a) written objections to the Amended Disclosure Statement. Attorneys for Debtor: Robert E. Chernicoff, Esq. CUNNINGHAM, CHERNICOFF & WARSHAWSKY, P.C. 2320 North Second Street, P. O. Box 60457 Harrisburg, PA 17106-0457 Tel: (717) 238-6570 About Fox Subacute at Mechanicsburg Fox Subacute at Mechanicsburg, LLC is a skilled nursing facility in Pennsylvania that specializes in pulmonary, neurological, and rehabilitative care for patients with degenerative neurological and neuromuscular disease; and pulmonary care and ventilator requirements with an emphasis on vent weaning. Its facilities are located in Plymouth Meeting, Warrington, Mechanicsburg and Philadelphia, Pa., and are licensed by the PA Department of Health. On Nov. 1, 2019, Fox Subacute at Mechanicsburg and its affiliates sought Chapter 11 protection (Bankr. M.D. Pa. Lead Case No. 19-04714). Fox Subacute at Mechanicsburg was estimated to have $1 million to $10 million in assets and liabilities as of the bankruptcy filing. Judge Henry W. Van Eck oversees the cases. The Debtors tapped Cunningham, Chernicoff & Warshawsky, P.C. as their legal counsel, Kennedy P.C. as special counsel, Isdaner & Company, LLC as accountant, and Three Twenty-One Capital Partners, LLC as investment banker. The Office of the U.S. Trustee appointed an official committee of unsecured creditors on Dec. 11, 2019. The Committee is represented by Flaster/Greenberg P.C. FOX SUBACUTE: Unsecureds' Recovery Unknown in Plan --------------------------------------------------- Fox Subacute at Mechanicsburg, LLC, Fox Subacute at Clara Burke, Inc., Fox Subacute At South Philadelphia, LLC, and Fox Subacute at Warrington filed a Joint Plan of Reorganization and a Disclosure Statement. The Bankruptcy Schedules of each of the Debtors set forth unsecured Claims of less than $9,000,000 per case. Included in these unsecured Claims is the large unsecured Claim which is guaranteed by Mechanicsburg of approximately $6,900,000.00 owed to PeoplesBank. This is the guaranty of the FSA Loan. The FSA Loan is only guaranteed by Mechanicsburg. At the time of the filing, each of the Debtors had considerable Accounts Receivable. The amounts of the Accounts Receivable for each Debtor are: Clara Burke $3,096,511.92 Warrington $4,874,660.97 The collectable receivables are believed to be at most, approximately: Clara Burke $2,300,000.00 Warrington $2,800,000.00 It should be noted, however, that a portion of the Receivables are owed and are uncollectable, particularly with respect to Warrington. The amount of uncollectable Receivables could be in excess of $4,000,000.00, respectively with respect to Clara Burke and Warrington. These uncollectible receivables are from several years ago. Current Receivables are generally collectable. During the course of the Cases of Clara Burke and Warrington, until Clara Burke and Warrington closed, each such Debtor would replace it Accounts Receivable on a rolling basis. Each of Clara Burke and Warrington are now collecting their remaining Receivables. Each of the Debtors had similar amounts of office equipment, furniture and computer equipment having a minimal value of approximately $2,000 to $10,000 each. Much of such equipment has either been turned over to Sabra on account of its ownership of such equipment or has been sold to Sabra pursuant to the Sale Motion. Under the Clara Burke and Warrington Lease with Sabra, Sabra retained ownership of certain of the Personal Property of such Debtors. Each of the Debtors also has portable and movable equipment having a value of $200,000 for each Debtor. Such equipment has either been turned over to Sabra on account of its ownership of such equipment or has been sold to Sabra pursuant to the Sale Motion. Each Debtor maintains various supplies of inventory which varies in amount depending upon usage. The amount of the inventory was approximately $150,000 for each Facility. When each Facility of Clara Burke and Warrington closed, the inventory had a lesser value. At the time of the Petition, Clara Burke has 3 Vehicles consisting of a 2005 Ford Eldorado, 2007 Kia Sedona and a 2014 Buick LaCrosse. These Vehicles have a nominal value of approximately $4,000. Such Vehicles have been sold to Sabra under the Sale Motion and Sale Order. At the time of the Petition, each of Clara Burke and Warrington had cash on hand. The cash on hand consists of, as of the Petition Date: Clara Burke $200,000 Warrington $500,000 The cash on hand is much lower as each of Clara Burke and Warrington have been winding down their operations. Because each have stopped operating, there is less Receivables and, thus as a result, less cash on hand. The Classes 6A and 6B general unsecured creditors include all creditors not otherwise classified under the Plan. Claims arising from these Claims include all such creditors notwithstanding the nature of the categorization of any Claim by a creditor, except Claims from Personal Injury Suits. General unsecured creditors will only be paid after liquidation of the Assets of Clara Burke and Warrington and if PeoplesBank and Sabra are paid in full. Further, such payments will occur after payment of all Class 1, Professional Administrative Claims, Class 2, Administrative Claims and Class 3, Priority Tax Claims. Any remaining funds from the sale of the Assets of Clara Burke shall be paid only to Class 6A Claim holders. Any remaining funds from the sale of the Assets of Warrington shall be paid only to Class 6B Claim holders. Any net proceeds realized from the Creditors Committee Litigation will expressly be paid to the Class 6A and Class 6B, General Unsecured Creditors. While Clara Burke and Warrington cannot make a prediction as to how much will be paid to any such creditors, it is not anticipated that any payment will occur, except from the proceeds of the Creditors Committee Litigation. Each of Clara Burke and Warrington intend to liquidate any remaining Assets. Payment upon such liquidation will be used to fund the Plan. Because this is a Liquidation Plan, no projections are filed. As a result, it is unknown if there will be any proceeds available for Class 6A or Class B Unsecured Creditors or as to whether payment in full will occur as to any of the unclassified Classes. Further, any sale may be subject to such further Orders as may occur upon the Sale Motion which may be filed with the Court. Counsel for the Debtor: Robert E. Chernicoff, Esq. CUNNINGHAM, CHERNICOFF & WARSHAWSKY, P.C. 2320 North Second Street, P.O. Box 60457 Harrisburg, PA 17106-0457 Tel: (717) 238-6570 A copy of the Disclosure Statement dated Feb. 24, 2023, is available at https://bit.ly/41lqiAR from PacerMonitor.com. About Fox Subacute at Mechanicsburg Fox Subacute at Mechanicsburg, LLC, is a skilled nursing facility in Pennsylvania that specializes in pulmonary, neurological, and rehabilitative care for patients with degenerative neurological and neuromuscular disease; and pulmonary care and ventilator requirements with an emphasis on vent weaning. Its facilities are located in Plymouth Meeting, Warrington, Mechanicsburg and Philadelphia, Pa., and are licensed by the PA Department of Health. On Nov. 1, 2019, Fox Subacute at Mechanicsburg and its affiliates sought Chapter 11 protection (Bankr. M.D. Pa. Lead Case No. 19-04714). Fox Subacute at Mechanicsburg was estimated to have $1 million to $10 million in assets and liabilities as of the bankruptcy filing. Judge Henry W. Van Eck oversees the cases. The Debtors tapped Cunningham, Chernicoff & Warshawsky, P.C. as their legal counsel, Kennedy P.C. as special counsel, Isdaner & Company, LLC as accountant, and Three Twenty-One Capital Partners, LLC as investment banker. The Office of the U.S. Trustee appointed an official committee of unsecured creditors on Dec. 11, 2019. The committee is represented by Flaster/Greenberg P.C. FULLER AND FULLER: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Fuller and Fuller Enterprises, LLC 9 Terry Court Greenville, SC 29605 Business Description: Fuller and Fuller is primarily engaged in renting and leasing real estate properties. Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court District of South Carolina Case No.: 23-00640 Debtor's Counsel: Jason M Ward, Esq. JASON WARD LAW, LLC 311 Pettigru St Greenville, SC 29601 Tel: 864-239-0007 Fax: 864-239-0343 Email: Jason@WardLawSC.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $500,000 to $1 million The petition was signed by Keith Eric Fuller as owner. The Debtor stated it has no creditors holding unsecured claims. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/ZPBV63Y/Fuller_and_Fuller_Enterprises__scbke-23-00640__0001.0.pdf?mcid=tGE4TAMA GKS CORPORATION: Plan Committee Seeks Mediator in Statewood Suit ---------------------------------------------------------------- The plan committee appointed in GKS Corporation's Chapter 11 case seeks approval from the U.S. Bankruptcy Court for the District of Massachusetts to employ a mediator in its adversary case against Statewood, Inc. In its application, the plan committee said it has asked retired judge Joan Feeney and JAMS Boston to act as mediator whose services will help resolve pending matters in the case (Adversary Proceeding No. 21-03017). Ms. Feeney's mediation fees will be calculated at a rate of $675 per hour, plus a case management fee of $275 per party. The case management fee increases 13 percent of professional fees for time in excess of an initial 10 hours. JAMS received a retainer in the amount of $6,200. In court filings, Ms. Freeney disclosed that she is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The mediator can be reached through: Hon. Joan N. Feeney JAMS Boston One Boston Place 201 Washington St Suite 3300 Boston, MA 02108 Phone: 617-228-0200 Fax: 617-228-0222 About GKS Corporation GKS Corporation -- http://www.theamericaninn.net/-- owns and operates a continuing care retirement community and assisted living facility for the elderly. It is a 50-acre country village setting in Southwick, Mass., with easy access to healthcare services, transportation, shopping and recreation. GKS Corporation sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No. 19-30998) on Dec. 26, 2019, with $1 million to $10 million in assets and $10 million to $50 million in liabilities. Judge Elizabeth D. Katz oversees the case. Michael J. Goldberg, Esq., at Casner & Edwards, LLP is the Debtor's legal counsel while Toby Shea of OnePoint Partners, LLC is the Debtor's chief restructuring officer. On April 23, 2021, the court confirmed the joint Chapter 11 liquidating plan filed by the Debtor and the official committee of unsecured creditors. GRADE A HOME: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Grade A Home LLC 825 Town & Country Ln Suite 1200 Houston, TX 77024 Business Description: Grade A Home LLC Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court Southern District of Texas Case No.: 23-30798 Debtor's Counsel: Suan Tran Adams, Esq. TRAN SINGH, LLP 2502 La Branch St. Houston, TX 77004 Email: stran@ts-llp.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Muhammad Amir Sharif as member. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/QQGUVDA/Grade_A_Home_LLC__txsbke-23-30798__0001.0.pdf?mcid=tGE4TAMA GREAT WEST: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Great West Development, Inc. 3053 E Shadowband Ct Eagle, ID Business Description: Great West is engaged in activities related to real estate. Chapter 11 Petition Date: March 7, 2023 Court: United States Bankruptcy Court Western District of Texas Case No.: 23-10140 Judge: Hon. H. Christopher Mott Debtor's Counsel: B. Weldon Ponder, Jr., Esq. B. WELDON PONDER, JR., ATTORNEY AT LAW 4408 Spicewood Springs Road Austin, TX 78759 Email: welpon@austin.rr.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Phillip R. William as president. 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/RGFTNIQ/Great_West_Development_Inc__txwbke-23-10140__0001.0.pdf?mcid=tGE4TAMA GREEN ENVIRONMENTAL: Taps Law Office of Nita Gupta as Counsel ------------------------------------------------------------- Green Environmental Processing, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Indiana to hire the Law Office of Nita Gupta to handle its Chapter 11 case. Preeti Gupta, Esq., the firm's attorney who will be providing the services, will be billed at his hourly rate of $300. Prior to the petition date, the attorney received a retainer of $4,000 from the Debtor. Mr. Gupta disclosed in a court filing that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Preeti Gupta, Esq. Law Office of Nita Gupta 2680 East Main Street, Suite 322 Plainfield, IN 46168 Telephone: (317) 900-9737 Email: nita07@att.net Green Environmental Processing Green Environmental Processing, Inc. is a manufacturer of rubber product in Newton, Ind. Green Environmental Processing filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ind. Case No. 23-00558) on Feb. 17, 2023, with $100 million to $500 million in assets and $10 million to $50 million in liabilities. Clifford Garrett, president of Green Environmental Processing, signed the petition. Judge James M. Carr oversees the case. Preeti Gupta, Esq., at the Law Office of Nita Gupta represents the Debtor as counsel. GREEN ROADS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Green Roads, Inc. FDBA Green Roads Founders, Inc. FDBA Green Roads, Inc., Delaware FDBA Clarity Labs FDBA Clarity Labs LLC FDBA Green Roads of Florida LLC 601 Fairway Drive Deerfield Beach, FL 33441 Business Description: Green Roads is a privately-owned CBD company that supplies natural CBD Infused products. Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court Southern District of Florida Case No.: 23-11738 Judge: Hon. Scott M. Grossman Debtor's Counsel: Jonathan Kaskel, Esq. DENTONS US, LLP Penthouse 1 Alhambra Plaza Coral Gables, FL 33134-5216 Tel: (305) 670-4843 Email: jonanthan.kaskel@dentons.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Julie Pilch as interim chief executive officer. 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/J2FNQOI/Green_Roads_Inc__flsbke-23-11738__0003.0.pdf?mcid=tGE4TAMA A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/JT6AYWI/Green_Roads_Inc__flsbke-23-11738__0001.0.pdf?mcid=tGE4TAMA IGLESIA CRISTIANA: Seeks Extension for 20 Days to File DS and Plan ------------------------------------------------------------------ Iglesia Cristiana Hefzi-Ba (IS.62) Inc. sought and obtained an order granting a 20-day extension of the Feb. 24, 2023 deadline to file a Disclosure Statement and Plan. The Debtor requested a final extension of time of 20 days to comply with order since debtor reached an agreement with Planet Home and the stipulation has been filed but debtor still working in documents necessary to the case proceeding. Attorneys for the Debtor: Juan C. Bigas Valedon, Esq. P.O. Box 7011 Ponce, P.R. 00732-7011 Tel: 259-1000 Fax: 842-4090 About Iglesia Cristiana Hefzi-BA Iglesia Cristiana Hefzi-BA (IS.62) Inc. sought bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.P.R. Case No. 22-02170) on July 26, 2022. In the petition filed by Deborah Magaly Alvarez Alvarez, pastora, the Debtor estimated assets between $1 million and $10 million and liabilities between $100,000 and $500,000. Juan Carlos Bigas Valedon, Esq., is the Debtor's legal counsel while Orlando Loperena Lopez, MBA is the Debtor's accountant. INSTRUCTURE HOLDINGS: Fitch Hikes IDR to 'BB', Outlook Stable ------------------------------------------------------------- Fitch Ratings has upgraded Instructure Holdings, Inc.'s (INST) Long-Term Issuer Default Rating (IDR) to 'BB' from 'BB-'. Fitch has also upgraded the instrument rating for the first lien term loan and secured revolver to 'BBB-'/'RR1' from 'BB+'/'RR1'. The Rating Outlook is Stable. The upgrade to 'BB' reflects the company's improved credit profile including its low leverage which was 2.8x at the end of 2022 and Fitch forecasts leverage to remain in the range of 2.0x to 2.8x over the forecast period barring any material debt funded acquisitions. Fitch previously stated that if leverage was below 3.0x on a sustained basis while cash flow from operations (CFO) less capex to debt was in the mid-teens or better, it would take favorable rating action. Additionally, Fitch forecasts that CFO less capex to debt will be in the 20's to 30's over the forecast horizon. The rating also reflects INST's high retention rates and Fitch's expectations for strong FCF generation. KEY RATING DRIVERS Low and Declining Leverage: At the end of 2022, INST's leverage was 2.8x, down from 3.4x at the end of the prior year. EBITDA growth was the main reason for the decline in leverage since debt reduction was limited to mandatory amortization payments. Fitch forecasts EBITDA margins in the mid to upper 30's, which should support further deleveraging if the company does not make large debt funded acquisitions. Fitch acknowledges the company's concentrated private equity ownership (approximately 85%) suggests the company may focus on growth versus significant debt reduction. Growing Top Line and Solid Margins: The company's post-IPO revenue profile has been impressive, with strong top line growth. According to management, INST held a strong share of the Learning Management System (LMS) market, commanding roughly 33% and 40% across the K12 and higher ed segments, respectively. As a result, Fitch expects more modest top line growth in the mid to high single digits through the forecast as Ed Tech stabilizes with INST as the market leader. The company's fastest growing revenue stream is the international segment which accounted for 21% of 2022 revenues and it is expected to support revenue growth going forward, with major education systems in countries including Ireland, Japan, and the Philippines adopting the Canvas LMS in the past year. At the end of 2022, 43% of existing customers and 60% of new deals included customers with more than one product solution and INST plans to focus on this growth. Relative to peers, the company's approximately 38% EBITDA margins generated in 2022 are solid, though Fitch doesn't expect them to exceed 40% through the forecast. EBITDA margins expanded 240 basis points between 2021 and 2022, with management citing operational efficiencies as the key catalyst. That said, with much of the opportunities to deliver margin effectuated, plus management guiding to continued expansion of sales and marketing personnel, Fitch sees EBITDA margins steadying around the mid-30's over the next few years. Continued Tuck-in Acquisitions: Fitch expects to see more acquisitions for INST as the company sees M&A as a way to remain innovative and expand its platform. Since 2017, the company has made seven acquisitions where INST targeted smaller companies that offer a learning service with potential to augment Canvas and expand its offerings to a wider range of teaching scenarios and a larger addressable market. Continued Ownership Concentration: Fitch considers the company's private equity ownership concentration (approximately 85%) an inherent credit risk. With five of the company's eight board seats currently occupied by Thoma Bravo employees, INST is susceptible to aggressive financial policy shifts consistent with sponsor control. Though debt financing conditions are likely to remain unfavorable through 2023, the company has significant capacity (up to 7.75x with revolver draw) to issue incremental debt under its current credit agreement. "New Normal" Tailwinds: Fitch believes the company will continue to benefit from the pandemic, as educational decision makers remain committed to a digital transformation to support learning as the space settles into post pandemic normalcy. Despite customers managing budgets judiciously, Fitch believes INST's main offering has emerged from the remote learning era as critical teaching infrastructure, offering the company solid top-line protection through the rating horizon. INST has stated that K-12 customer budgets funded by pandemic stimulus remain largely unspent—with only about 30% being spent to-date—indicating further market share in that segment is available. COVID-19 Impact: As a direct result of the pandemic, the company saw massive tailwinds in their business driving impressive growth in both their top line and bottom line metrics. With students being forced to learn from home, educators were tasked with creating effective learning curricula via a virtual environment, and schools and institutions across the globe had no choice but to adopt online platforms for distance teaching. The rapid shift to online learning has ultimately resulted in the removal of historical impediments to the implementation of learning management systems, with students, professors, and administrators worldwide realizing the mission critical nature of education technology in the modern learning environment. DERIVATION SUMMARY INST's 'BB' rating is supported by its low leverage, sticky customer base and its market-leading role in the LMS market. Relative to ed tech peer Astra Acquisition Corp. (B-/Negative), INST shows stronger operating metrics. INST's credit profile is stronger given its low leverage which was 2.8x at the end of 2022, whereas Astra's leverage is expected to be over 10x at the end of fiscal 2023 (fiscal year end June 30). Astra is a direct competitor of INST and operates operations through Anthology and has grown its platform through the Blackboard acquisition in 2021. Though not a direct peer, INST is rated one notch below Gen Digital (GEN; BB+/Negative), which currently has elevated leverage following an acquisition, which is the driver for the Negative Outlook. However, over the long-term, Fitch forecasts GEN to have leverage of approximately 3.5x. Importantly, GEN has much higher EBITDA margins which are in the mid-50's versus EBITDA margins in the mid-30's at INST. GEN also generates EBITDA which is about 10x larger. INST's rating is also one notch below Open Text (BB+/Negative), which also has a Negative Outlook following a large debt funded acquisition. Like GEN, Open Text is also about 10 times larger than INST and it has leverage over 3.5x which is high for the 'BB+' rating and Fitch does forecast declining leverage. Importantly, both GEN and Open Text are larger generators of FCF, which is over $1 billion (before dividends). INST is rated one notch above MeridianLink (MLNK; BB-/Stable), which generates somewhat less EBITDA than INST. MLNK is also rated below INST reflecting EBITDA margins below INST and higher leverage. At the end of 2021, MLNK had leverage of 4.9x which is forecasted to decline below 4.0x over the forecast horizon. Both INST and MLNK are similar since they are both public companies controlled by Thoma Bravo. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer - Revenues continue to grow in the mid to high single digits over the forecast horizon; - EBITDA margins are in the mid to upper 30's; - Fitch assumes INST will be opportunistic with acquisitions and forecasts modest tuck-in acquisitions funded with cash; - No assumptions are made for dividends or share repurchases. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Favorable rating action is not anticipated unless INST had exposure to at least three business lines while EBITDA leverage was below 2.5x and CFO less capex to debt is above 30%, both on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Should EBITDA leverage exceed 3.5x on a sustained basis, Fitch may consider negative rating action; - Ongoing EBITDA margins below 30%; - CFO less capex to debt below 20% on a sustained basis; - Significant acquisitions largely funded with debt or other actions that favor shareholders while pressuring credit metrics. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: At the end of 2022, INST had liquidity of $307 million reflecting a cash balance of $186 million and a revolver availability of $121 million (reflecting LOCs of $4 million). The company's nearest maturity occurs in 2028, with a $470 million due on the amortizing term loan. This maturity headroom, combined with a manageable, 1% annual amortization schedule on the $500 million loan, also supports the company's liquidity position. Solid FCF generation through the forecast adds an additional supplement to the cash balance over the next few years. ISSUER PROFILE Instructure Holdings, Inc. (INST) is a leading learning management system company offering its products to K-12 as well as higher ed. It has over 30 million students and teachers using its products in more than 70 countries. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Instructure Holdings, Inc. LT IDR BB Upgrade BB- senior secured LT BBB- Upgrade RR1 BB+ JACKSON FINANCIAL: Moody's Gives Ba1(hyb) to $600MM Preferred Stock ------------------------------------------------------------------- Moody's Investors Service has assigned a Ba1 (hyb) rating to Jackson Financial, Inc.'s (Jackson – senior Baa2, negative) anticipated issuance of up to $600 million of Series A fixed rate reset non-cumulative perpetual preferred stock. The net proceeds from the offering will be used towards repayment of its outstanding borrowings on senior unsecured notes maturing in November 2023. The new preferred securities are perpetual and are redeemable by Jackson after five years. The rating outlook on Jackson is unchanged at negative. RATINGS RATIONALE The Ba1(hyb) rating on the preferred stock rating of Jackson reflects Moody's typical notching for instruments issued by insurers relative to their IFS and senior debt ratings. There will be a modest, temporary increase on Jackson's leverage until November 2023 when the debt matures, and reduction in prospective earnings. As of December 31, 2022 Jackson's adjusted financial leverage (excluding accumulated other comprehensive income or AOCI) was around 18%, and with the issuance, pro-forma year-end 2022 adjusted financial leverage (excluding AOCI) temporarily increases to around 19%. Because of equity-like features contained in the preferred stock, the security will receive partial equity treatment in Moody's leverage calculation and adjusted leverage will improve as a result of the transaction. The impact on Jackson's interest coverage ratio, which was over 20 times in 2021, is limited. More importantly, cash coverage is expected to remain good with statutory earnings to support holding company needs Jackson's ratings reflects its leading position in the US asset accumulation business, as well as its multiple distribution channels, and efficient back office infrastructure. Jackson has strong asset quality, and good historical profitability and capitalization. However, it has significant exposure to earnings and capital volatility from equity markets and must manage hedging and capital requirements that are sensitive to policyholder behavior, equity market returns, and interest rates. The negative outlook on Jackson reflects the challenges the company faces in building capital, lowering proforma leverage and diversifying an inforce block of liabilities concentrated in variable annuities (VA). A higher level of regulatory and economic capital is needed to offset the potential volatility in earnings and capital due to the high concentration in VA, as well as the economic exposure to interest rate risk. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Given the negative outlook, there is limited upward pressure on Jackson's ratings. A combination of the following drivers could return Jackson's outlook to stable: 1) Continued improvement in Jackson's standalone credit profile as evidenced by maintaining its business profile and more balanced growth in new product sales with less emphasis on VAs with living benefits, 2) Strong and stable NAIC CAL RBC ratio at Jackson National Life Insurance Company with demonstrated resilience / protection of economic and regulatory capital ratios following a stress scenario, and 3) Adjusted financial leverage ratio (excluding AOCI) remains below 20%. The following factors could result in a downgrade of Jackson's ratings: 1) Jackson National Life Insurance Company's NAIC RBC ratio falling below 425%, 2) Increased volatility of capital levels and/or RBC at the operating companies, 3) Lower than expected sales of products other than VAs with guarantees, or 4) Adjusted financial leverage ratio (excluding AOCI) consistently above 25%. Rating actions: Issuer: Jackson Financial, Inc. Series A Non-Cumulative Perpetual Preferred Stock: Assigned at Ba1(hyb) The outlook on Jackson Financial, Inc. is unchanged at negative. Jackson Financial, Inc. is a financial services company headquartered in Lansing, Michigan focused on retirement savings and income product and services to retail investors in the United States. As of December 31, 2022, the company had total consolidated GAAP assets of $311.1 billion and total shareholders' equity of $9.2 billion. The principal methodology used in this rating was Life Insurers Methodology published in January 2023. JACKSON FINANCIAL: S&P Assigns 'BB+' Rating on New Preferred Stock ------------------------------------------------------------------ S&P Global Ratings assigned its 'BB+' issue rating to Jackson Financial Inc.'s (JFI) proposed preferred stock issuance. The rating on the notes is two notches lower than the 'BBB' rating on the senior debt and the 'BBB' issuer credit rating on the holding company, reflecting the subordination of these notes and the optional interest deferability feature. The shares will be unsecured and will rank junior to all existing and future senior debt. The par call date, outside of regulatory and tax events, and first reset date are March 30, 2028. The notes' fixed coupon will reset every five years at an annual rate equal to the five-year U.S. Treasury rate plus a predetermined spread. JFI has the option to defer interest payments on the notes. S&P will likely categorize these hybrid securities as having intermediate equity content, within our 15% hybrid tolerance limits. S&P said, "We expect JFI to use the proceeds from this offering, together with cash on hand, toward the repayment of its $600 million senior notes due November 2023. The proposed issuance is the inaugural hybrid in its capital structure following the demerger from Prudential PLC in 2021, and we believe JFI will remain committed to such securities over the long term. Following this issuance, we expect financial leverage on a reported basis to be 18%, which is within our expectation for leverage of less than 25% (around 17% excluding accumulated other comprehensive income). Fixed-charge coverage in 2022 was almost 20x, and we expect it to remain above 4x." JUST BELIEVE: Landlord Says Plan Improperly Seeks 3rd Party Release ------------------------------------------------------------------- Landlord Ocean Breeze Station LLC filed a limited objection to Confirmation to the Second Amended Joint Plan of Reorganization for Just Believe Recovery Center of Port Saint Lucie, LLC and Just Believe Recovery Center, LLC. Landlord is the owner and lessor of the real property and improvements of the shopping center development known as Ocean Breeze Shopping Center located in Jensen Beach, Florida (the "Shopping Center"). Just Believe Recovery Center, LLC ("Debtor"), non-debtor, JBRC Medical, LLC ("JBRC", together with Debtor, the "Tenants") and Landlord's predecessor in interest, VS Jensen Beach, LLC ("Original Landlord"), entered into that certain written lease dated as of June 12, 2013 (the "Lease"), for 20,802 square feet in the Shopping Center, known as Unit 1802 and located at 1802 N.E. Jensen Beach Boulevard, Jensen Beach, Florida 34947 (the "Leased Premises"). The Landlord points out that the good faith standard requires a showing that "the plan was proposed with honesty, good intentions and a basis for expecting that a reorganization can be effected with results consistent with the objectives and purposes of the Bankruptcy Code." The Debtor's Plan fails this test as it improperly seeks a third-party release of the Guarantor. The Landlord further points out that the factors weigh overwhelmingly against the Third Party Release. First, the Debtor's principal is the Guarantor of the Lease. Beyond that, there is no unique identity of interests between the Debtor and the Guarantor that would impact the bankruptcy estate or deplete the assets of the estate. Second, Article V of the Plan provides that the creditors will be paid from the sale of the assets. Thus, the Guarantor is not providing any funds to the estate and cannot satisfy the substantial contribution factor. Third, this case is a liquidation. Even though the Plan is titled as a "Joint Plan of Reorganization", the body of the Plan provides that it is a "Plan of Liquidation" and defines the Plan as a Plan of Liquidation. So the Third Party Release is not essential to reorganization because the Debtor is not intending on reorganizing. Fourth, from the terms of the Plan it appears that this Third Party Release impacts Landlord. Landlord is contemporaneously filing a ballot rejecting the Plan. Fifth, the Plan does not provide an opportunity for Landlord to recover from Guarantor on its claims. Landlord asserts that the Third Party Release is not conspicuous on the face of the Plan nor adequately disclosed and should be stricken from the Plan. Counsel for Ocean Breeze Station LLC: Ronald B. Cohn, Esq. Dana L. Robbins, Esq. BURR & FORMAN, LLP 201 North Franklin Street, Suite 3200 Tampa, FL 33602 Tel: (813) 221-2626 Fax: (813) 221-7335 E-mail: rcohn@burr.com drobbins@burr.com About Just Believe Recovery Center Just Believe Recovery Center of Port Saint Lucie -- https://justbelieverecoverycenter.com/ -- is a drug and alcohol addiction rehabilitation and detox facility with locations in Florida and Pennsylvania. Just Believe Recovery Center of Port Saint Lucie sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-15739) on July 27, 2022, listing up to $50,000 in assets and up to $10 million in liabilities. Its affiliate, Just Believe Recovery Center, LLC filed for Chapter 11 protection (Bankr. S.D. Fla. Case No. 22-16046) on Aug. 4, 2022, listing up to $50,000 in assets and up to $10 million in liabilities. The cases are jointly administered under Case No. 22-15739. Judge Mindy A. Mora oversees the cases. Kelley Fulton Kaplan & Eller, P.L. is the Debtors' legal counsel. JUST BELIEVE: March 1 Plan Confirmation Hearing ----------------------------------------------- Judge Mindy A. Mora has entered an order conditionally approving the Amended Disclosure Statement of Just Believe Recovery Center of Port Saint Lucie, LLC. The Court will conduct the confirmation hearing and consider final approval of the Disclosure Statement and any timely-filed fee applications, subject to the following deadlines and requirements, on March 1, 2023, at 3:00 p.m. in 1515 N. Flagler Drive, 8th Floor, Courtroom A, West Palm Beach, FL 33401. The Debtor's counsel: Craig Kelley, Esq. KELLEY, FULTON, KAPLAN & ELLER, P.L. 1665 Palm Beach Lakes Blvd., The Forum - Suite 1000 West Palm Beach, FL 33401 Tel: (561) 491-1200 E-mail: bankruptcy@kelleylawoffice.com About Just Believe Recovery Center Just Believe Recovery Center of Port Saint Lucie -- https://justbelieverecoverycenter.com/ -- is a drug and alcohol addiction rehabilitation and detox facility with locations in Florida and Pennsylvania. Just Believe Recovery Center of Port Saint Lucie sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-15739) on July 27, 2022, listing up to $50,000 in assets and up to $10 million in liabilities. Its affiliate, Just Believe Recovery Center, LLC filed for Chapter 11 protection (Bankr. S.D. Fla. Case No. 22-16046) on Aug. 4, 2022, listing up to $50,000 in assets and up to $10 million in liabilities. The cases are jointly administered under Case No. 22-15739. Judge Mindy A. Mora oversees the cases. Kelley Fulton Kaplan & Eller, P.L., is the Debtors' legal counsel. KNOW LABS: Ronald P. Erickson Has 3.1% Equity Stake as of Jan. 25 ----------------------------------------------------------------- In a Schedule 13D filed with the Securities and Exchange Commission, Ronald P. Erickson disclosed that as of Jan. 25, 2023, he beneficially owned 11,830,540 shares of common stock of Know Labs Inc., representing 3.1% of the shares outstanding. On December 14, 2022, Mr. Erickson received a stock option grant for 1,000,000 shares at an exercise price of $1.41 per share. The stock option grant expires in five years. The stock option grant vests quarterly over four years. The shares are held individually or by entities directly controlled by Mr. Erickson. This total includes 1,483,085 shares of issued common stock, and common stock shares obtainable upon exercise of: 1,716,525 vested stock options, 3,894,666 warrants to purchase common stock, and 4,736,264 shares of common stock obtainable upon conversion of convertible debt. Mr. Erickson beneficially owned 3.1% of the Common Stock outstanding, based on 48,207,937 total shares of Common Stock outstanding as of December 31, 2022 and February 14, 2023. On a fully diluted basis, Mr. Erickson beneficially owned 20.2% of the Common Stock outstanding plus Mr. Erickson's vested stock options, warrants and convertible debt, based on total shares outstanding as of December 31, 2022. Mr. Erickson had sole voting power and sole dispositive power with respect to 1,483,085 common stock shares, and an aggregate of 11,830,540 shares of Common Stock assuming exercise of all 1,716,525 vested stock options, 3,894,666 warrants to purchase common stock, and 4,736,264 shares of common stock obtainable upon conversion of convertible debt. A full-text copy of the regulatory filing is available for free at https://tinyurl.com/mryej7fn About Know Labs Inc. Know Labs, Inc. is focused on the development and commercialization of proprietary biosensor technologies which, when paired with its AI deep learning platform, are capable of uniquely identifying and measuring almost any material or analyte using electromagnetic energy to detect, record, identify and measure the unique "signature" of said materials or analytes. Know Labs call this its "Bio-RFID" technology platform, when pertaining to radio and microwave spectroscopy, and its "ChromaID" technology platform, when pertaining to optical spectroscopy. The data obtained with the Company's biosensor technology is analyzed with its trade secret algorithms which are driven by its AI deep learning platform. Know Labs reported a net loss of $20.07 million for the year ended Sept. 30, 2022, a net loss of $25.36 million for the year ended Sept. 30, 2021, a net loss of $13.56 million for the year ended Sept. 30, 2020, and a net loss of $7.61 million for the year ended Dec. 31, 2019. As of Sept. 30, 2022, the Company had $13.76 million in total assets, $3.81 million in total current liabilities, $87,118 in total non-current liabilities, and $9.86 million in total stockholders' equity. In its recent Quarterly Report, Know Labs, Inc. said the Company anticipates that it will record losses from operations for the foreseeable future. The Company believes that it has enough available cash to operate until at least Feb. 15, 2024. As of Dec. 31, 2022, the Company's accumulated deficit was $105,220,597. The Company has had limited capital resources and intends to seek additional cash via equity and debt offerings. KREATIIVELY KREATIVE: Case Summary & Two Unsecured Creditors ------------------------------------------------------------ Debtor: Kreatiively Kreative Inc. 609 S. Goliad St. Unit 1291 Rockwall, TX 75087 Business Description: Kreatiively Kreative is engaged in activities related to real estate. Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court Eastern District of Texas Case No.: 23-40420 Debtor's Counsel: Robert T. DeMarco, Esq. DEMARCO MITCHELL, PLLC 1255 West 15th St., 805 Plano, TX 75075 Tel: (972) 578-1400 Email: robert@demarcomitchell.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Johnny Robert as director. A full-text copy of the petition containing, among other items, a list of the Debtor's two unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/XTNUDTA/Kreatiively_Kreative_Inc__txebke-23-40420__0001.0.pdf?mcid=tGE4TAMA L.E.E. PROPERTY: Plan as Modified Confirmed by Judge ---------------------------------------------------- Judge Caryl E. Delano has entered an order approving the Disclosure Statement and confirming the Plan of Reorganization, as modified by the Plan Amendments, of L.E.E. Property Enterprises, LLC. The Court will conduct a post-confirmation status conference on Monday, March 27, 2023 at 1:30 p.m. in Courtroom 9A, Sam M. Gibbons United States Courthouse, 801 North Florida Avenue, Tampa, Florida. The objections to confirmation filed by Truist Bank are overruled. The Motion for Cramdown as to Truist Bank is granted. The Motion for Cramdown as to the Small Business Administration is granted. The Motion for Cramdown as to the City of Tampa Code Enforcement is denied as moot. The following amendments to the Plan (the "Plan Amendments") were announced on the record in open court: * Class 1: Truist Bank filed a proof of claim (Claim No. 6) in the amount of $186,409.80 which is secured by a 1st mortgage/judgment on the Debtor's real property located at 5104 N. 47th Street, Tampa, FL. The claim of Truist Bank will be paid based upon a 10-year amortization at 4.25% interest per annum, with a monthly payment of $2,050.00. The payments will be made on the 10th day of each month, through and including September 10, 2025. The outstanding balance of the loan will be paid in full on or before October 10, 2025. Truist Bank will withdraw its objections to confirmation and its objection to cramdown. * Class 2: The Small Business Administration filed a proof of claim (Claim No. 8) secured by a 2nd mortgage on the Debtor's real property located at 5104 N. 47th Street, Tampa, FL. The Small Business Administration will be paid based upon a 10-year amortization at 5.637% interest per annum (contractual rate) with 36 monthly payments of $901.33. The first payment will be paid the month following the entry of this Confirmation Order. The monthly payments will continue for 36 months. The outstanding balance of the loan will be paid in full on the 36th month. * Class 3: The City of Tampa Code Enforcement will release its lien upon compliance with City requirements regarding removal of the carport which was the subject of the Code Enforcement Lien. Compliance with Code Enforcement shall include a payment of $5,000.00 representing the reduced lien claim and $10.00 for the fees. Upon compliance by the Debtor, the City of Tampa will release its lien on the property located at 5104 N. 47th Street, Tampa, FL. The Debtor and the City of Tampa shall file a stipulation dismissing Adversary Proceeding No. 8:22-ap-00103-CED against the City of Tampa upon a release of the lien. * Class 4: To the extent that there are any unsecured claims of general unsecured creditors, such claims shall be paid in full within 180 days from the date of this Confirmation Order. * Class 5: The Equity Holders shall receive no money under the Plan and shall retain their equity interest in the Debtor. The Debtor has complied with the applicable provisions of Title 11 of the United States Code, in compliance with 11 U.S.C. Sec. 1129(a)(2). By way of example, the Debtor solicited acceptances to the Plan only in accordance with Bankruptcy Code s 1125; obtained court orders for the employment of professionals; and complied with the Bankruptcy Code and rules regarding the use, sale and leases of property of the estate. The Court relieves the Debtor from complying with 11 U.S.C. s 1123(a)(6) because it is closely held. The Plan has been proposed in good faith and not by any means forbidden by law, in compliance with 11 U.S.C. Sec. 1129(a)(3). Indeed, no party has suggested that the Plan has not been proposed in good faith. The Plan is fair, equitable, reasonable and proper, is in the best interests of the Debtor's estate, and is binding on all creditors. About L.E.E. Property Enterprises L.E.E. Property Enterprises, LLC, filed a Chapter 11 bankruptcy petition (Bankr. M.D. Fla. Case No. 22-00705) on Feb. 23, 2022, listing as much as $1 million in both assets and liabilities. Judge Michael G. Williamson oversees the case. The Debtor is represented by David W. Steen, P.A. LA CENTRAL PROPERTY: Taps Law Offices of Raymond H. Aver as Counsel ------------------------------------------------------------------- Los Angeles Central Property, Inc. seeks approval from the U.S. Bankruptcy Court for the Central District of California to hire the Law Offices of Raymond H. Aver, a Professional Corporation as co-counsel with the law firm of Stephen L. Burton, Esq. The firm's services include: (a) representing the Debtor at its initial interview; (b) representing the Debtor at the meeting of creditors pursuant to Bankruptcy Code Section 341(a); (c) representing the Debtor at all hearings before the bankruptcy court; (d) preparing legal papers; (e) advising the Debtor regarding matters of bankruptcy law; (f) representing the Debtor with regard to all contested matters; (g) representing the Debtor in the preparation of a disclosure statement and the negotiation, preparation, and implementation of a plan of reorganization; (h) analyzing claims that have been filed in the Debtor's Chapter 11 case; (i) negotiating with the Debtor's secured and unsecured creditors regarding the amount and payment of their claims; (j) objecting to claims as may be appropriate; and (k) other necessary legal services. Raymond Aver, Esq., is the firm's attorney who will be handling the Debtor's bankruptcy case. The attorney will charge an hourly fee of $475 for his services and will seek reimbursement for work-related expenses. The Debtor paid the Law Offices of Raymond H. Aver a retainer in the amount of $15,000. Mr. Aver disclosed in court filings that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Raymond H. Aver, Esq. Law Offices of Raymond H. Aver A Professional Corporation 10801 National Boulevard, Suite 100 Los Angeles, CA 90064 Telephone: (310) 571-3511 Email: ray@averlaw.com About Los Angeles Central Property Los Angeles Central Property, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 22-15054) on Sept. 16, 2022, with up to $50,000 in assets and up to $10 million in liabilities. Aman Kamboj, president of Los Angeles Central Property, signed the petition. Judge Vincent P. Zurzolo oversees the case. Raymond H. Aver, Esq., at the Law Offices of Raymond H. Aver and Stephen L. Burton, Esq., a practicing attorney in Encino, Calif., serve as the Debtor's bankruptcy counsels. LASHLINER INC: Unsecureds to Get Full Payment in Five Years ----------------------------------------------------------- Lashliner, Inc., submitted a Fifth Amended Small Business Debtor's Plan of Reorganization. The LashLiner values are estimated by the Debtor. The Debtor's primary assets consist of the LashLiner Merchandise, deposits, equipment and intellectual property including two new patents covering LashLiner products in Japan. The Debtor estimates the value of the patents as of the date of the filing of this Plan as $371,410. No independent appraisal of the assets has been performed, but the Debtor estimates that the total retail value of LashLiner Merchandise/Inventory and patents is approximately $5,949,635. To this point in 2021 the company had operated entirely on cash flow from operations, despite the severe impact of having over $5 million of cash tied up in inventory. Cash flow demands led Bob Kitzberger and Laura Hunter to personally contribute over $1,680,000.00 to the business in 2021 and 2022 in a series of deposits. Not only did this represent all of their net proceeds from the business to date, but Mr. Kitzberger also contributed the net proceeds from the sale of his house that year. Under the Plan, Class 4 is comprised of all holders of Allowed General Unsecured Claims against the Debtor. The Debtor estimates some 1,983,569.70 in Allowed Class 4 Claims on the Effective Date of the Plan. The Debtor has reached an agreement with Tori Belle to have Tori Belle further secure the Class 4 claim through the recordation of third position UCC-1 on the TB Collateral after senior first lien of PIRS and conditional second junior lien of Bank of America; provided, however, any liens on TB Collateral granted to any creditor under or related to this Plan shall be (i) subordinate to PIRS' firstposition liens on the TB Collateral in all respects, and (ii) further conditioned on and subject to the creditor and Tori Belle accepting and duly executing the Subordination Agreement in favor of PIRS. With respect to Class 4 creditors, acceptance and execution of the Subordination Agreement by the Debtor and the Subchapter V Trustee shall be sufficient to effectuate the subordination agreement and record the junior liens on TB Collateral in Lashliner's name for the benefit of Class 4. Each holder of an Allowed Class 4 Claim will receive its pro rata share of all of the Debtor's projected net disposable income and value contributions from Tori Belle, on as needed basis, over the five-year (60-month) period following the Effective Date and be paid in full, subject to the following terms and conditions: The Debtor anticipates such amount equals 100% of the Class 4 Claims. Said payments will be made on the 30th day of the month following the Effective Date as follows: -- Year 1: $186,931: $40,749.50 in month 6 and 12 from Debtor + $26,240.00 in month 6 in security deposit reimbursement for use of premises by Tori Belle from Tori Belle + $25,986.00 in month 6 and 12 in rent reimbursement for use of premises by Tori Belle from Tori Belle +$27,220.00 in month 12, guaranteed by the new value contribution from Tori Belle; -- Year 2: $296,513: $95,540.50 in months 18 and 24 from Debtor +$52,716.00 in month 18 and 24, guaranteed by the new value contribution from Tori Belle; -- Year 3: $278,843: $86,705.50 in months 30 and 36 from Debtor +$52,716.00 in months 30 and 36, guaranteed by the new value contribution from Tori Belle; -- Year 4: $284,651: $89,609.50 in months 42 and 48 from Debtor +$52,716.00 in month 42 and 48, guaranteed by the new value contribution from Tori Belle); and -- Year 5: $290,682: $92,625,00 in months 54 and 60 from Debtor +$52,716.00, guaranteed by the new value contribution from Tori Belle). Except for the TB Rent Contribution (Tori Belle's unconditional plan contributions of $25,986.00 each in month 6 and 12 in rent reimbursement and $26,240.00 in month 6 in security deposit reimbursement), any and all other plan contributions toward the Plan from Tori Belle are subject to and conditioned on Tori Belle first fully satisfying its obligations to PIRS under the TB Settlement Agreement or a judgment thereon prior to the date of any such contributions. If Tori Belle timely and fully performs its obligations under the TB Settlement Agreement, then the date of the last scheduled payment under the TB Settlement Agreement is projected to occur before the date of Plan payment in month 12 from the Effective Date. Class 4 is impaired. The Plan will be funded from a combination of (i) funds on hand in the estate at the time of Confirmation; and (ii) future income generated through sale of LashLiner merchandise, as well as (iii) New Value contributed to the Debtor by Tori Belle as necessary. On Confirmation of the Plan, all personal property of the Debtor, tangible and intangible, including, without limitation, licenses, furniture, fixtures and equipment, will revert, free and clear of all Claims and Equitable Interests, except as provided in the Plan, to the Debtor and in accordance with Section 6.1 ("Title to Assets") below. The Debtor expects to have sufficient cash on hand to make the payments required on the Effective Date. The Debtor must submit all or such portion of the future earnings or other future income of the Debtor to the supervision and control of the Trustee as is necessary for the execution of the Plan. The receipt of the two patents protecting the LashLiner technology in Japan opens up the $15 billion Japanese cosmetic market for LashLiner. The Debtor conservatively estimates gross sales in a $15 billion cosmetics market of $85,000.00 year 1, $155,000.00 year 2, $161,200.00 year 3, $167,648.00 year 4, and $167,648.00 year 5. The Debtor has transferred essentially 100% of its cost liabilities and all of its employees to Tori Belle, resulting in a vastly scaled down company that will be helmed by Bob Kitzberger and Laura Hunt for no compensation. The overhead to sell LashLiner products in the US market (all costs to acquire inventory have been expended pre-Chapter 11) are essentially zero except for monthly software costs of approximately $475.00. The cost to open the Japan market to LashLiner products is calculated in the projections in Cost of Goods Sold (COGS) of 10%. The Debtor has provided projected financial information detailing the combined revenues resultant from the above referenced income streams as well as any necessary New Value contributions on an annual basis from Tori Belle to pay any required payments to unsecured creditors pursuant to the payment schedule. The projections demonstrates the revenue and expenses (net revenue) available to make payments under the Plan. The Debtor's financial projections show that the Debtor will have an aggregate annual average pre-tax cash flow, after paying operating expenses of between $284,300.00 and $304,719.00, prior to making the Plan payments. The final Plan payment is expected to be paid 60 months following the Effective Date. There are also three major factors on both Tori Belle' and Lashliner's sides that will move LashLiner from losses to gains. First, the management has slashed spending and has identified further cuts to take in March and April. Second, macroeconomic factors effected the direct sales channel worldwide, leading it to underperformin 2022 after a very strong 2020 and 2021. This channel tends to rebound during difficult economic times (as people look for additional sources of income). The management expects to get a general uplift from this cyclical trend. Third, and most significantly, Tori Belle is in the final stages of adding a major new sales channel for Tori Belle-branded products (including LashLiner inventory of Tori Belle-branded products), including a sizable presence in Japan (world's third largest cosmetics market). The management anticipates the channel to begin activation in March-April 2023 and ramp up over 90 days to be more than five times larger than Tori Belle's current channel. In addition, this new channel is far less expensive for Tori Belle to service, leading to further cost reductions. A hearing on the confirmation of the plan is scheduled for March 24, 2023 at 11:00 AM PST in Courtroom 8106 of the Honorable Timothy w. Dore, the United States Bankruptcy Court, 700 Stewart Street, 8th floor, Seattle, Washington 98101. Objection to confirmation of the plan must be made no later than 7 days prior to the confirmation hearing. Ballot stating the vote on the plan must be returned by no later than 7 days prior to the confirmation hearing. Counsel for LashLiner, Inc.: Dmitry Merrit, Esq. 14205 S.E. 36th Street, Suite 100 Bellevue, WA 98006 Tel: (360) 322-4511 Fax: (323) 978-6598 E-mail: merritlaw@yahoo.com A copy of the Plan of Reorganization dated Feb. 24, 2023, is available at https://bit.ly/3KCoy05 from PacerMonitor.com. About LashLiner Inc. LashLiner Inc., doing business as Lashliner LLC, is an innovative cosmetics brand. The company's initial product is a patent-pending magnetic eyeliner and eyelash system. LashLiner Inc. filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wash. Case No. 22-11273) on August 8, 2022. In the petition filed by Robert Kitzberger, as president, the Debtor reported assets and liabilities between $1 million and $10 million. Kathryn E Perkins has been appointed as Subchapter V trustee. The Law Offices of D. Merrit & Associates, is the Debtor's counsel. LEGACY FSRD: Unsecureds Owed $21M-$24M Get 6-8% of Claims --------------------------------------------------------- Judge J. Kate Stickles has entered an order approving the Disclosure Statement and confirming the Joint Chapter 11 Plan of Legacy FSRD, Inc. (f/k/a Fast Radius, Inc., et. al). As set forth in the Plan, Holders of Claims in Class 4 and Class 5 (the "Voting Classes") were eligible to vote on the Plan in accordance with the Solicitation Procedures. Holders of Claims in Class 1, Class 2, and Class 3 (the "Deemed Accepting Class") are Unimpaired and conclusively presumed to accept the Plan. Holders of Claims and Interests in Class 7A and Class 7B (the "Deemed Rejecting Classes") are Impaired under the Plan, are entitled to no recovery under the Plan, and are therefore deemed to have rejected the Plan. Holders of Claims and Interests in Class 6 are either Impaired or Unimpaired under the Plan and are therefore either deemed to have accepted or rejected the Plan. As evidenced by the Voting Report, creditors in Class 4 representing 100 percent by amount of voted claims and 100 percent by number in the aggregate voted to accept the Plan and creditors in Class 5 representing 99.8 percent by amount of voted claims and 90.9 percent by number in the aggregate voted to accept the Plan in accordance with section 1126 of the Bankruptcy Code. The Plan satisfies the requirements of section 1123(a)(2) of the Bankruptcy Code. Article III of the Plan specifies that Claims in Class 1, Class 2, and Class 3 are Unimpaired under the Plan. The Plan satisfies the requirements of section 1123(a)(3) of the Bankruptcy Code. Article III of the Plan specifies that Claims in Class 4, Class 5, Class 7A, and Class 7B are Impaired under the Plan, and that Claims in Class 6 are either deemed Unimpaired or Impaired under the Plan. Class 1, Class 2, and Class 3 are Unimpaired by the Plan pursuant to section 1124 of the Bankruptcy Code and, accordingly, Holders of Claims in each such Class are conclusively presumed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. Class 4 and Class 5 are Impaired by the Plan and entitled to vote on the Plan. As reflected in the Voting Report, creditors in Class 4 representing 100 percent by amount of voted claims and 100 percent by number in the aggregate voted to accept the Plan and creditors in Class 5 representing 99.8 percent by amount of voted claims and 90.9 percent by number in the aggregate voted to accept the Plan. Class 6 is either Unimpaired by the Plan and conclusively presumed to have accepted the Plan or Impaired and deemed to have rejected the Plan. Class 7A and Class 7B are Impaired Classes that will not receive or retain any property under the Plan on account of the Claim in each such Class, are not entitled to vote on the Plan, and are deemed to reject the Plan. The Plan satisfies the requirements of section 1129(a)(10) of the Bankruptcy Code. As set forth in the Voting Report, each Impaired Class that was entitled to vote on the Plan has voted to accept the Plan. Specifically, creditors in Class 4 representing 100 percent by amount of voted claims and 100 percent by number in the aggregate voted to accept the Plan and creditors in Class 5 representing 99.8 percent by amount of voted claims and 90.9 percent by number in the aggregate voted to accept the Plan. Accordingly, with respect to each Debtor, at least one Class of Claims that is Impaired under the Plan has voted to accept the Plan, determined without including any acceptance of the Plan by any insider (as such term is defined in section 101(31) of the Bankruptcy Code. The Global Settlement was negotiated in good faith, is in the best interests of the Debtors, their Estates, and their stakeholders, satisfies the standards of sections 363(b) and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019, and is approved. The Palantir Settlement was negotiated in good faith, is in the best interests of the Debtors, their Estates, and their stakeholders, satisfies the standards of sections 363(b) and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019, and is approved. The UPS Settlement was negotiated in good faith, is in the best interests of the Debtors, their Estates, and their stakeholders, satisfies the standards of sections 363(b) and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019, and is approved. The Plan shall be deemed modified as follows: a. The definition of "Exculpated Parties" set forth in section 1.46 of the Plan shall be amended and replaced in its entirety with the following: "Exculpated Parties" shall mean, each in their respective capacities as such, (a) the Debtors; (b) the Committee and its members; the Debtors' officers, directors, and any employee who served in a fiduciary capacity during these chapter 11 cases, (d) with respect to each of the foregoing in clauses (a) through (c), each of their respective financial advisors, attorneys, accountants, investment bankers, consultants, agents, and other professionals, including the Professionals, who served in such capacities during these chapter 11 cases; and (e) with respect to each of the foregoing in clauses (a) through (d), such Person's or Entity's successors and assigns, solely to the extent such Person or Entity acted as a fiduciary of any of the Estates and served in such capacities during these chapter 11 cases. b. The first sentence of section 7.13 of the Plan shall be amended and replaced in its entirety with the following: The Debtors intend to file a motion to close the Chapter 11 Case of Debtor Fast Radius, Inc. and Debtor Fast Radius PTE. LTD under the Bankruptcy Rules and Local Rules, including Local Bankruptcy Rule 3022-1, as soon as reasonably practicable. c. Section 8.5 of the Combined Disclosure Statement and Plan is revised as follows: "...each Exculpated Party is released and exculpated from, any liability to any Entity for any claims or Causes of Action arising prior to or on the Effective Date" Except as otherwise specifically provided in the Plan, from and after the Effective Date, the Wind-Down Debtor shall be authorized, in the ordinary course of business and without any further notice to or action, order, or approval of the Court, to pay in Cash the reasonable and documented legal, professional, or other fees and expenses related to implementation of the Plan and consummation incurred by the Wind-Down Debtor. From and after the Effective Date, any requirement that Professionals comply with sections 327 through 331 and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall terminate, and the Wind-Down Debtor, may employ and pay any Professional in the ordinary course of business without any further notice to or action, order, or approval of the Bankruptcy Court. Plan With Technical Modifications Legacy FSRD, Inc., et al. submitted a Combined Disclosure Statement and Joint Chapter 11 Plan (With Technical Modifications). The Debtors in these chapter 11 cases consist of Legacy FSRD, Inc. (f/k/a Fast Radius, Inc.), Legacy FSRD Operations, Inc. (f/k/a Fast Radius Operations, Inc.), and Legacy FSRD PTE LTD (f/k/a Fast Radius PTE. LTD). Under the Plan, Class 5 General Unsecured Claims total $21.0 million to $24.0 million. For the avoidance of doubt, the projected General Unsecured Claims pool is inclusive of (i) approximately $11.6 million on account of SVB Capital's Prepetition Lender Deficiency Claim, (ii) $2,000,000 on account of the Palantir Settlement described herein; and (iii) $1,500,660.14 on account of the UPS Settlement. Each Holder of an Allowed General Unsecured Claim shall receive (i) its Pro Rata share of $750,000; and (ii) if such Holder votes to accept the Plan, such Holder shall be deemed a Released Party for all purposes hereunder. SVB Capital shall be deemed to have waived any entitlement to a distribution on account of any Prepetition Lender Deficiency Claim under the terms of the Global Settlement for the first $750,000 Distribution on account of Allowed General Unsecured Claims and further consents that such Distribution can be distributed on a Pro Rata basis to holders of Allowed General Unsecured Claims without including the amount of the Prepetition Term Lender Deficiency Claim in calculation of such Distribution. The Debtors do not anticipate any Distribution on account of Allowed General Unsecured Claims in excess of $750,000. In the event the Plan is not confirmed or consummated for any reason, such waiver shall be null and void in all respects. Creditors will recover approximately 6% to 8% of their claims. Class 5 is impaired. On Dec. 7 and Dec. 8, 2022, the Debtors conducted an auction, and at the conclusion of the auction, SyBridge Digital Solutions LLC was named the successful bidder of the Debtors. The Debtors estimate that the SyBridge going-concern transaction generates a total estimated value of nearly $17 million, inclusive of more than $13 million of cash, offers to more than 75% of the Debtors' employees, the proposed assumption of more than 100 contracts and up to more than $2.4 million of liabilities, among other things. On December 12, 2022, the Bankruptcy Court approved the sale transaction, and on Dec. 16, 2022, the Debtors and the purchaser consummated the sale transaction. On the closing date, the Debtors distributed $7.8 million of cash to Silicon Valley Bank ("SVB") and $2.0 million to SVB Innovation Credit Fund VIII, L.P. ("SVB Capital") while escrowing the remaining $2.0 million of cash consideration paid by the Purchaser. The Debtors also escrowed $1.5 million pursuant to the Sale Order in respect of Lincoln's potential fees. The Plan implements key settlements with every major stakeholder in these chapter 11 cases. The Plan already enjoys support from all of the Debtors' major stakeholders, including the Committee, SVB Bank, SVB Capital, Palantir, UPS, and a landlord. Co-Counsel for the Debtors: R. Craig Martin, Esq. DLA PIPER LLP (US) 1201 N. Market Street, Suite 2100 Wilmington, DE 19801 Telephone: (302) 468-5700 Facsimile: (302) 394-2341 E-mail: craig.martin@us.dlapiper.com - and - Rachel Ehrlich Albanese, Esq. 1251 Avenue of the Americas New York, NY 10020 Telephone: (212) 335-4500 Facsimile: (212) 335-4501 E-mail: rachel.albanese@us.dlapiper.com - and - W. Benjamin Winger, Esq. 444 West Lake Street, Suite 900 Chicago, IL 60606 Telephone: (312) 368-4000 Facsimile: (312) 236-7516 E-mail: benjamin.winger@us.dlapiper.com Co-Counsel for the Debtors: Daniel N. Brogan (No. 5723) BAYARD, P.A. 600 N. King Street, Suite 400 Wilmington, DE 19801 Telephone: (302) 655-5000 Facsimile: (302) 658-6395 E-mail: dbrogan@bayardlaw.com A copy of the Order dated Feb. 22, 2023, is available at https://bit.ly/3m54QQ6 from PacerMonitor.com. A copy of the Combined Disclosure Statement and Joint Chapter 11 Plan dated Feb. 22, 2023, is available at https://bit.ly/3Z1wEno from PacerMonitor.com. About Fast Radius Fast Radius, Inc. (OTCMKTS: FSRDQ) is a cloud manufacturing and digital supply chain company in Chicago, Ill. Fast Radius, Inc. and affiliates, Fast Radius Operations, Inc. and Fast Radius PTE Ltd., sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-11051) on Nov. 7, 2022. In the petition signed by Patrick McCusker, authorized signatory, Fast Radius, Inc. disclosed $69.329 million in assets and $55.212 in liabilities. Judge Kate Stickles oversees the case. The Debtors tapped DLA Piper LLP (US) and Bayard, P.A., as legal counsels; Lincoln Partners Advisors, LLC, as investment banker; Alvarez & Marsal North, America, LLC as financial advisor; and Stretto, Inc. as claims and noticing agent and administrative advisor. The U.S. Trustee for Region 3 appointed an official committee of unsecured creditors in the Debtors' Chapter 11 cases on Nov. 18, 2022. The committee is represented by Potter Anderson Corroon, LLP. LENDINGTREE INC: S&P Downgrades ICR to 'SD' on Debt Repurchase -------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-based online lending marketplace and marketing services provider LendingTree Inc. to 'SD' (selective default) from 'B-'. S&P said, "We view the debt repurchase as distressed and tantamount to a default. The downgrade follows LendingTree's announcement that it has completed a below-par cash repurchase of $190 million in aggregate principal amount of its $575 million senior unsecured convertible notes due in 2025 through separate and individually negotiated transactions with certain note holders. The company repurchased the debt at an average price of approximately 82 cents on the dollar. We view the transaction as distressed because lenders received substantially less than originally promised and absent the transaction, we would view LendingTree's capital structure as unsustainable given our expectation for S&P Global Ratings-adjusted gross leverage above 10x and free operating cash flow (FOCF) to debt coverage of less than 5% over the next several years. LendingTree's operating and financial performance came under pressure in 2022 from rising interest rates that reduced new mortgages and refinancing activity; and headwinds in the insurance industry from rising costs and reduced profitability due to inflation, and higher loss ratios. This all led to reduced spending from the company's network partners. At the same time, we lowered our revenue and EBITDA expectations over the next two years as we expect weak macroeconomic conditions and elevated interest rates will continue to hurt company performance in 2023 and 2024. "We plan to reassess our issuer credit rating on the company in the near term. Over the coming days, we will reassess and most likely raise our issuer credit rating on LendingTree to 'CCC+', reflecting the longer-term issues surrounding the sustainability of its capital structure and the nearer-term risk of further distressed exchanges. We expect leverage of about 9x and FOCF to debt around 4% in 2023 following its recent debt repurchase. We believe LendingTree could have difficulty refinancing its senior unsecured convertible notes if it cannot reduce its leverage back towards 6x in advance of the debt maturity or have to do so at a significantly higher interest rate that could deplete its FOCF to debt coverage. The company will be reliant upon favorable economic conditions to deleverage and meet its financial obligations over the longer-term. However, we expect liquidity to remain adequate over the next 12 months as the company still has $150 million of cash on the balance sheet after the debt repurchase and we expect it to generate around $25 million of free operating cash flow in 2023 to service its debt and fund other liquidity needs." ESG credit indicators: E-2, S-2, G-2 LORENZO ESTEVA: 11th Cir. Lacks Jurisdiction on Appealed Case ------------------------------------------------------------- The U.S. Court of Appeals for the Eleventh Circuit dismissed the appealed case In re: LORENZO ESTEVA, Debtor. LORENZO ESTEVA, a Florida resident, DENISE OTERO VILARINO, a Florida resident, Plaintiffs-Appellees, v. UBS FINANCIAL SERVICES INC., UBS CREDIT CORP, Defendants-Appellants, Case No. 21-13580, (11th Cir.). UBS hired Lorenzo Esteva as a financial advisor in the International Division of its Miami office in November 2015. As part of the bank's recruitment strategy, UBS entered into a series of agreements with Esteva, in which it agreed to loan him approximately $2 million. Esteva deposited the loan proceeds into a UBS account -- the Account. On May 31, 2018, Lorenzo Esteva voluntarily petitioned for Chapter 7 bankruptcy (later converted to Chapter 11). In his bankruptcy petition, Esteva listed the Account as "exempt" from property of the estate due to his interest in the property as a tenant by the entirety and alleged that UBS held an unsecured claim against the estate worth $1.95 million. UBS contested this characterization of its claim as unsecured. UBS filed a proof of secured claim for indebtedness in the amount of $2 million under the Promissory Notes. On March 4, 2019, Esteva and his wife, Denise Otero Vilarino commenced an adversary proceeding against UBS Financial Services Inc. and UBS Credit Corp. to recover funds UBS had frozen in one of its accounts to satisfy debts owed by Esteva. After the bankruptcy court granted partial summary judgment in favor of Esteva and his wife on all of the claims but one -- Esteva's unjust enrichment claim -- UBS appealed to the district court, which affirmed. Then, even though this Court only have appellate jurisdiction over final decisions of the bankruptcy court in the normal course of events, UBS appealed to this Court, urging to apply a more "flexible" interpretation of finality in the bankruptcy arena. In a last-ditch effort to breathe jurisdictional life into this appeal, the parties filed a stipulation for voluntary dismissal in the bankruptcy court on the eve of oral argument. While, under the doctrine of cumulative finality, the subsequent entry of final judgment may cure a premature notice of appeal, the parties' effort to finally resolve the underlying proceeding in this case falls flat. Federal Rule of Civil Procedure 41(a)(1)(A) unambiguously requires that a voluntary dismissal dismiss the entire action -- not just an individual claim. But the parties' stipulated dismissal only sought to dismiss one of the Plaintiffs' claims. The stipulation was therefore invalid upon filing and failed to confer upon the Court the power to decide this case. Because the parties' stipulation for voluntary dismissal was invalid, no final judgment has been rendered in this case. It did not resolve Esteva's unjust enrichment claim or terminate the adversary proceeding, and thus it did not denude the bankruptcy court of jurisdiction over the proceeding -- it did not "leave nothing for the bankruptcy court to do but execute the judgment." Likewise, it did not cure UBS's premature notice of appeal under the doctrine of cumulative finality. The bankruptcy court still must address or otherwise dispose of the unjust enrichment claim in some way. As a court of limited jurisdiction, the Court is bound to dismiss this appeal because the bankruptcy court left Esteva's unjust enrichment claim open and awaiting trial. A full-text copy of the Opinion dated Feb. 16, 2023 is available at https://tinyurl.com/2ee9nefp from Leagle.com. M & J DUMP TRUCKING: Taps Lefkovitz & Lefkovitz as Legal Counsel ---------------------------------------------------------------- M & J Dump Trucking, LLC seeks approval from the U.S. Bankruptcy Court for the Middle District of Tennessee to hire Lefkovitz & Lefkovitz, PLLC as its legal counsel. The firm's services include: a. advising the Debtor as to its rights, duties, and powers; b. preparing and filing statements and schedules, Chapter 11 plans and other documents; c. representing the Debtor at hearings, meetings of creditors, conferences, trials, and any other proceedings; and d. other necessary legal services in connection with the Debtor's Chapter 11 case. The firm will be paid at these rates: Steven L. Leftkovitz $555 per hour Associates $350 per hour Paralegals $125 per hour In addition, the firm will receive reimbursement for its out-of-pocket expenses. The retainer is $8,262. Steven Leftkovitz, Esq., a partner at Lefkovitz & Lefkovitz, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Steven L. Lefkovitz, Esq. Lefkovitz & Lefkovitz, PLLC 908 Harpeth Valley Place Nashville, Tennessee 37221 Phone: (615) 256-8300 Fax: (615) 255-4516 Email: slefkovitz@lefkovitz.com About M & J Dump Trucking M & J Dump Trucking, LLC, a company in Gallatin, Tenn., filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. M.D. Tenn. Case No. 23-00643) on Feb. 23, 2023, with $1,469,786 in assets and $1,752,852 in liabilities. Glen Coy Watson has been appointed as Subchapter V trustee. Judge Charles M. Walker oversees the case. Steven L. Lefkovitz, Esq., at Lefkovitz & Lefkovitz, PLLC represents the Debtor as counsel. MEDICAL GUARDIAN: Midcap Financial Marks $35.8M Loan at 15% Off --------------------------------------------------------------- Midcap Financial Investment Corporation has marked its $35,876,000 loan extended to Medical Guardian, LLC to market at $30,655,000 or 85% of the outstanding amount, as of December 31, 2022, according to a disclosure contained in Midcap Financial's Form 10-K for the transition period from April 1, 2022 to December 31, 2022, filed with the Securities and Exchange Commission on February 21, 2023. Midcap Financial is a participant in a First Lien Secured Debt to Medical Guardian, LLC. The loan accrues interest at a rate of 1% (L+650) per annum. The loan matures on October 26, 2026. Midcap Financial is a Maryland corporation incorporated on February 2, 2004. It is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Apollo Investment Management, L.P. is the investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (AGM). Apollo Investment Administration, LLC, an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. Medical Guardian is an American medical alert systems provider headquartered in Philadelphia, Pennsylvania. The company has appeared in Inc. Magazine's list of 5000 fastest-growing companies four years in a row from 2013 to 2016. MERIDIAN INVENTORY: Taps Rountree Leitman Klein & Geer as Counsel ----------------------------------------------------------------- Meridian Inventory Services, Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of Georgia to hire Rountree, Leitman, Klein & Geer, LLC as its legal counsel. The firm's services include: (a) advising the Debtor regarding its powers and duties in the management of its property; (b) preparing legal papers; (c) assisting in the examination of claims of creditors; (d) assisting in the formulation and preparation of a disclosure statement and plan of reorganization, and with the confirmation and consummation thereof; and (e) other necessary legal services. The hourly rates of the firm's attorneys and staff are as follows: Attorneys William A. Rountree $595 Will B. Geer $595 Michael Bargar $595 Hal Leitman $425 David S. Klein $495 Alexandra Dishun $425 Elizabeth Childers $395 Ceci Christy $425 Caitlyn Powers $325 Paralegals Elizabeth Miller $250 Sharon M. Wenger $225 Megan Winokur $175 Catherine Smith $150 The firm received a pre-bankruptcy retainer of $50,000 from the Debtor. William Rountree, Esq., a partner at Rountree Leitman Klein & Geer, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Will B. Geer, Esq. Rountree Leitman Klein & Geer, LLC Century Plaza I 2987 Clairmont Road, Suite 350 Atlanta, GA 30329 Telephone: (404) 584-1238 Facsimile: (404) 704-0246 Email: wgeer@rlkglaw.com About Meridian Inventory Services Meridian Inventory Services, Inc. is a provider of medical and pharmaceutical inventory services in Kennesaw, Ga. Meridian Inventory Services filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-51682) on Feb. 21, 2023, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Christopher E. Green, chief executive officer and chief financial officer, signed the petition. Judge Lisa Ritchey Craig oversees the case. Will B. Geer, Esq., at Rountree Leitman Klein & Geer, LLC represents the Debtor as counsel. MOBIQUITY TECHNOLOGIES: Lind Global Has 9.9% Stake as of Feb. 21 ---------------------------------------------------------------- In a Schedule 13G filed with the Securities and Exchange Commission, Lind Global Fund II LP, disclosed that as of February 21, 2023, the firm and its affiliate, Lind Global Partners II LLC, and Jeff Easton, the managing member of Lind Global Partners II LLC, held a 9.9% equity stake in Mobiquity Technologies Inc. As of February 21, 2023, Lind Global Fund II LP et al. beneficially owned in the aggregate 1,505,000 shares of Mobiquity's Common Stock, representing approximately 9.9% of the shares of Common Stock outstanding. Lind Global Partners II LLC is the general partner of Lind Global Fund II LP and Jeff Easton is the managing member of Lind Global Partners II LLC. A full-text copy of the regulatory filing is available for free at https://tinyurl.com/347k5bnn About Mobiquity Technologies Inc. Headquartered in Shoreham, NY, Mobiquity Technologies, Inc. is a next-generation marketing and advertising technology and data intelligence company which operates through its proprietary software platforms in the programmatic advertising space. The Company's product solutions are comprised of two proprietary software platforms: its advertising technology operating system (or ATOS) platform; and its data intelligence platform. Mobiquity reported a net comprehensive loss of $34.95 million for the year ended Dec. 31, 2021, a net comprehensive loss of $15.03 million for the year ended Dec. 31, 2020, and a net comprehensive loss of $44.03 million for the year ended Dec. 31, 2019. As of Sept. 30, 2022, the Company had $4.02 million in total assets, $1.83 million in total liabilities, and $2.20 million in total stockholders' equity. In its Quarterly Report filed on September 30, 2022, the Company said that without sufficient revenues from operations, and if the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. These factors create substantial doubt about the Company's ability to continue as a going concern within the 12-month period subsequent to September 30, 2022. NATIVE ENGINEERS: Disposable Income, Causes of Action to Fund Plan ------------------------------------------------------------------ Native Engineers, LLC, filed with the U.S. Bankruptcy Court for the Eastern District of Louisiana a Plan of Reorganization under Subchapter V dated March 2, 2023. The Debtor is a licensed engineering firm across the gulf states. The Debtor will continue to provide architectural and engineering services and will focus its efforts on providing independent cost estimates and schedule management services to government and commercial clients. In 2020, Native entered into a subcontracting agreement with Sauer for a project at Fort Polk, LA. Sauer defaulted the Debtor on six subcontracts which required the Debtor to incur excessive debt while spending some $2.5 million to defend itself and its sureties from Sauer's claims. The Debtor could no longer service these debts and projects. The Debtor lost multiple construction contracts with federal agencies. With its bonding programs decimated, the Debtor made difficult decision to seek relief under Subchapter V of the Bankruptcy Code. The Debtor's decision to seek relief under Subchapter V was also drive in part by the desire to preserve certain Causes of Action and to take advantage of the two-year extension of prescriptive periods under section 108(a) of the Bankruptcy Code. The Debtor has few tangible assets. The Debtor's assets are primarily intangible. The Debtor has an interest in Native-Stanton JV through which it obtains many independent cost estimate and architectural and engineering contracts. The Debtor has formulated a plan of reorganization. The Debtor proposes to apply is projected disposable income over a five-year commitment period as well as distribute the Net Proceeds of Causes of Action. Class 7 consists of Allowed General Unsecured Claims. Except to the extent that any Holder of an Allowed General Unsecured Claim agrees to less favorable treatment of its Allowed Claim, in full and final satisfaction, settlement, release, and discharge of and in exchange for its Allowed Claim, each Holder shall receive Cash in accordance with the Waterfall Recovery. Class 7 is Impaired under the Plan. Class 8 consists of Interests in the Debtor. The sole member of the Debtor is Sean Warren. He shall continue to be a member of the Post-Effective Date Debtor. Class 8 is Unimpaired under the Plan. On April 11, 2023, the Debtor, the Sureties and Sauer will participate in the Global Mediation. It is the Debtor's hope that the Global Mediation will completely resolve Sauer's Claim, the Sureties' Claims, and the Debtor's Causes of Action relating to Sauer. If the Debtor receives any amounts as a result of the Global Mediation, they shall be distributed in accordance with the Waterfall Recovery. The Net Proceeds of any Cause of Action, including the Ft. Polk Causes of Action and shall be distributed to the Holders of Allowed Claims or Interest, as applicable, until paid in full in the following priority and in each case on a Pro Rata basis: (a) first, on account of B1Bank's Secured Claim; (b) second, on account of the SBA's Secured Claim; (c) third, on account of USSI's Secured Claim; (d) fourth, on account of Gray's Secured Claim (but only to the extent it is determined that Gray's Lien is effective under non-bankruptcy law and not avoidable under §547(b)); (e) fifth, on account of Allowed General Unsecured Claims; and (f) sixth, to the Debtor. If a Final Order is entered in favor of Sauer, its Claim shall be Allowed in the amount of any such Final Order and paid by and from the Fort Polk Bonds. Thereafter, USSI and Gray shall be subrogated to Sauer's rights as the Holder of an Allowed Unsecured Claim against the Debtor pursuant to § 509(a) of the Bankruptcy Code. For example, should Sauer obtain a judgment against Gray in the litigation pending in the amount of $3,024,616.00, Gray would be obligated to pay out under the performance bonds. In turn, under the Indemnification Agreement, Gray would then assert a claim in the amount of $3,024,616.00 against the Debtor. The Debtor asserts that such claim would be a general unsecured claim. If a Final Order is entered in favor of Gray and/or USSI, Sauer shall pay the amount of any such Final Order into the Escrow Fund. Thereafter, b1BANK. USSI and Gray can litigate to which entity is entitled to the funds with any distribution under the terms of the Plan. The Debtor must apply all or such portion of its projected disposable income as is necessary for the execution of the Plan. A full-text copy of the Plan of Reorganization dated March 2, 2023 is available at https://bit.ly/41On2y2 from PacerMonitor.com at no charge. Attorneys for Native Engineers: Ryan J. Richmond, Esq. Ashley M. Caruso, Esq. Sternberg, Naccari & White, LLC 935 Gravier St #2020 New Orleans, LA 70112 Phone: +1 504-324-2141/225-572-2819 Email: ryan@snw.law ashley@snw.law About Native Engineers Native Engineers, LLC -- https://nativeengineers.com/-- provides engineering, construction management, and program management services. The company is based in Mandeville, La. Native Engineers filed a petition for relief under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. E.D. La. Case No. 22-11316) on Oct. 28, 2022, with $1 million to $10 million in both assets and liabilities. Greta M. Brouphy has been appointed as Subchapter V trustee. Judge Meredith S. Grabill oversees the case. The Debtor is represented by Ryan James Richmond, Esq., at Sternberg, Naccari & White, LLC. NB HOTELS: To Seek Plan Confirmation on March 28 ------------------------------------------------ The Court has entered an order approving NB Hotels Dallas LLC's Third Amended Disclosure Statement for the Debtor's Second Amended Plan of Reorganization. A hearing on Debtor's Second Amended Plan of Reorganization will be held on March 28, 2023, at 1:30 p.m. before the Honorable Scott W. Everett, United States Bankruptcy Court, 1100 Commerce Street, 14th Floor, Dallas, Texas 75242. Parties may appear in person or via Webex video conference. Objections to confirmation of the Plan must be filed and served on counsel of record for the Debtor no later than March 24, 2023. Ballots accepting or rejecting the Debtor's Plan must be submitted to the counsel of record for the Debtor on or before March 24, 2023. Attorneys for the Debtor: Joyce W. Lindauer, Esq. JOYCE W. LINDAUER ATTORNEY, PLLC 1412 Main Street, Suite 500 Dallas, TX 75202 Telephone: (972) 503-4033 Facsimile: (972) 503-4034 About NB Hotels Dallas NB Hotels Dallas, LLC owns and operates the Le Meridien Hotel Dallas located at 13402 Noel Road, Dallas, Texas. NB Hotels Dallas sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Texas Case No. 22-30681) on April 18, 2022, with $50 million to $100 million in both assets and liabilities. Nadir Badruddin, president of NB Hotels Dallas, signed the petition. Judge Scott W. Everett oversees the case. Joyce W. Lindauer, Esq., at Joyce W. Lindauer Attorney, PLLC is the Debtor's legal counsel. Wells Fargo Bank, National Association, trustee for Morgan Stanley Capital Trust 2019-22 for the benefit of the Commercial Mortgage Pass-Through Certificate Holder, as lender, is represented by Bruce J. Zabarauskas, Esq., at Holland & Knight LLP. On July 27, 2022, the Debtor filed its proposed Chapter 11 plan of reorganization and disclosure statement. NEKTAR THERAPEUTICS: Incurs $368.2 Million Net Loss in 2022 ----------------------------------------------------------- Nektar Therapeutics Inc. has filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $368.20 million on $92.05 million of total revenue for the year ended Dec. 31, 2022, compared to a net loss of $523.84 million on $101.91 million of total revenue for the year ended Dec. 31, 2021. Net loss for the fourth quarter of 2022 was $59.7 million or $0.32 basic and diluted loss per share as compared to a net loss of $145.6 million or $0.79 basic and diluted loss per share in the fourth quarter of 2021. As of Dec. 31, 2022, the Company had $710.60 million in total assets, $343.96 million in total liabilities, and $366.64 million in total stockholders' equity. Cash and investments in marketable securities at Dec. 31, 2022, were approximately $505.0 million as compared to $798.8 million at Dec. 31, 2021. "We are committed to ensuring that our existing cash can support a runway through at least the middle of 2025," said Howard W. Robin, president and CEO of Nektar. "This will enable us to advance our current pipeline to reach value-enhancing milestones. As a result, and as we stated on our analyst call last week, we will be making additional changes at Nektar to significantly reduce operating costs to meet that commitment." A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/906709/000090670923000004/nktr-20221231.htm About Nektar Therapeutics Nektar Therapeutics -- http://www.nektar.com-- is a biopharmaceutical company with a robust, wholly owned R&D pipeline of investigational medicines in oncology and immunology as well as a portfolio of approved partnered medicines. Nektar is headquartered in San Francisco, California, with additional operations in Huntsville, Alabama. Nektar Therapeutics reported a net loss of $444.44 million for the year ended Dec. 31, 2020, and a net loss of $440.67 million for the year ended Dec. 31, 2019. As of Sept. 30, 2022, the Company had $781.01 million in total assets, $368.78 million in total liabilities, and $412.22 million in total stockholders' equity. NLG LLC: Defendants' Bid to Dismiss Adversary Proceeding Granted ---------------------------------------------------------------- In the adversary case styled In re: NLG, LLC, Chapter 7, Debtor. CHRIS KOSACHUK, Plaintiff, v. SELECTIVE ADVISORS GROUP, LLC, and 9197-5904 QUEBEC, INC., Defendants, Case No. 21-11269 (JKS), Adv. Pro. No. 22-50421 (JKS), (Bankr. D. Del.), Bankruptcy Judge J. Kate Stickles grants the motion to dismiss filed by the defendants Selective Advisors Group, LLC and 9197-5904 Quebec, Inc. In 2002, Chris Kosachuk formed NLG, LLC to facilitate the sale of real property located at 6913 Valencia Drive, Fisher Island, Florida to Liza Hazan. Kosachuk served as the sole manager of the company. Kosachuk is also a creditor of NLG. On Sept. 24, 2021, Kosachuk filed an involuntary petition for relief under Chapter 7 against NLG. On the same day, the U.S. Trustee appointed Alfred T. Giuliano as the interim Chapter 7 trustee, which appointment remains in effect. For more than a decade, NLG and/or Kosachuk and Hazan, Selective, and Quebec, have engaged in protracted litigation, spanning multiple jurisdictions, related to the Property. Kosachuk commenced this instant adversary proceeding against Quebec and Selective seeking to cancel the indebtedness caused by the Quebec Judgment -- a Judgment by Confession from the case of 9197-5904 Quebec, Inc. v. NLG, LLC, Case No. 2012-101875 in the Supreme Court for the State of New York. In their motion to dismiss, two issues were raised by the Defendants in this adversary proceeding are: (i) subject matter jurisdiction and (ii) abstention. The Court finds that this action will have no bearing on the administration of the bankruptcy estate. The Trustee filed a notice of no assets to distribute and has certified that the estate has been fully administered. As fiduciary to NLG, the Trustee has taken no position regarding this adversary proceeding. Moreover, the Court determines that all parties to this Adversary Proceeding are non-debtors. Kosachuk brought this action to pursue his individual claims, if any, against the Defendants who are not debtors or creditors of NLG. This adversary action is between two non-debtor parties and involves a state court dispute from 2012 -- the Quebec Judgment -- which is remote in substance and time from the main bankruptcy case. More specifically, this matter does not raise any bankruptcy law issues. The Court further finds that by filing the involuntary petition against NLG, Kosachuk created yet another forum to relitigate issues that have been previously decided. At bottom, the Court cannot be one more forum for NLG and/or Kosachuk to pursue virtually identical claims to those NLG and Kosachuk have been litigating for over a decade. The Court holds that it does not have subject matter jurisdiction to hear this matter. The Court further finds that even if it did have subject matter jurisdiction, the Court would permissively abstain from hearing this proceeding. A full-text copy of the Opinion dated Feb. 16, 2023 is available at https://tinyurl.com/2p954mrn from Leagle.com. NLG LLC: Ineligible Under Chapter 11, Court Says ------------------------------------------------ Bankruptcy Judge J. Kate Stickles denies the motion to convert the involuntary chapter 7 case In re: NLG, LLC, Chapter 7, Debtor, Case No. 21-11269 (JKS), (Bankr. D. Del.). Sixteen months ago, Chris Kosachuk (the sole manager of NLG, LLC) filed the involuntary petition against NLG "in order to stop the Miami-Dade County Sheriff from executing on NLG's assets". He determined when signing the involuntary petition that NLG should proceed in a chapter 7 liquidation. Now, Kosachuk seeks conversion so that "the Debtor may regain possession of its assets and estate, finalize its pending litigation in Florida and New York, where NLG's lawyers are better positioned and more familiar than the Trustee (and his lawyers) and restructure itself through. . . a chapter 11 proceeding, which will maximize value for the Debtor's creditors and the Debtor as a whole." At oral argument, Kosachuk argued that" conversion will provide the highest possible return to all creditors of the estate of NLG, including the potential administrative claim ..." The Objectors argue that NLG is ineligible to be a debtor under chapter 11. Further, they argue a chapter 11 conversion would have all the hallmarks of a bad-faith filing because the Debtor has nothing to reorganize, uses bankruptcy as a litigation tactic and for forum shopping, is being used to resolve what is essentially a two-party dispute, and has few unsecured creditors. At oral argument, counsel for the Objectors argued that the real purpose for the conversion is to address the underlying two-party dispute between Kosachuk and Hazan. The Supreme Court has identified two basic purposes of chapter 11: preserving the going concern value of debtor's business and maximizing property available to satisfy creditor claims. Judge Stickles determines that Kosachuk has not presented any evidence establishing that the Debtor has the financial wherewithal to finance a chapter 11 case or a plan process. Indeed, at the Oct. 25, 2022 hearing on a proposed settlement between the Trustee and Hazan, the Trustee confirmed, following his investigation, what is contained in the Debtor's Schedule and Statement -- there are no "meaningful assets." Following the fallout of the proposed settlement, the Trustee filed the Notice of No Asset, designating this case as a "no asset" case. Kosachuk premises confirmation of a plan on litigation surrounding a 2012 New York state court judgment. However, the record establishes that NLG and/or Kosachuk have been pursuing litigation related to the 2012 Quebec Judgment for more than a decade without success. There is no indication that continued or additional litigation would be successful or result in a financial recovery for the estate to fund a plan process and distributions to creditors. In fact, the Trustee's determination, after investigation, that this is a "no asset case" is contrary to Kosachuk's unsubstantiated argument. Unquestionably, NLG is not an operating business, and it does not have any source of income or liquid assets; and therefore, has no going concern value to preserve in chapter 11 through reorganization or liquidation. Judge Stickles determines that converting this case to chapter 11 to obtain tactical litigation advantages is not within the legitimate scope of bankruptcy laws and would be an abuse of the bankruptcy process. Judge Stickles maintains that the bankruptcy court is not a forum to litigate two-party, non-bankruptcy, state court issues or to relitigate issues previously decided by other courts. To prevent this kind of abuse of the bankruptcy system, the motion to convert is denied. A full-text copy of the Opinion dated Feb. 16, 2023 is available at https://tinyurl.com/kzrmsu84 from Leagle.com. NORTH SHORE ASSOCIATES: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: North Shore Associates, LLP 1365 W. 29th. Loveland, CO 80538-2561 Business Description: The Debtor is a Single Asset Real Estate as defined in 11 U.S.C. Section 101(51B). Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court District of Colorado Case No.: 23-10808 Judge: Hon. Joseph G Rosania Jr. Debtor's Counsel: Keri L. Riley, Esq. KUTNER BRINEN DICKEY RILEY, P.C. 1660 Lincoln Street, Suite 1720 Denver, CO 80264 Tel: 303-832-2400 Email: klr@kutnerlaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $10 million to $50 million The petition was signed by Linda Fogel as partner. The Debtor stated it has no creditors holding unsecured claims. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/RG6PPUA/North_Shore_Associates_LLP__cobke-23-10808__0001.0.pdf?mcid=tGE4TAMA NORTH SHORE MANOR: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: North Shore Manor, Inc. 1365 W 29th St Loveland, CO 80538 Business Description: North Shore Manor operates nursing care facilities (skilled nursing facilities). Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court District of Colorado Case No.: 23-10809 Debtor's Counsel: Aaron A. Garber, Esq. WADSWORTH GARBER WARNER CONRARDY, P.C. 2580 West Main Street Suite 200 Littleton, CO 80120 Tel: 303-296-1999 Email: agarber@wgwc-law.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Robert D. Church, Jr. as interim chief executive officer. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/OPCDUMI/North_Shore_Manor_Inc__cobke-23-10809__0001.0.pdf?mcid=tGE4TAMA NORTHWEST BANCORPORATION: Trustee Plan to Hand Shares to AmeriNat ----------------------------------------------------------------- Catherine Steege, not individually but solely as Chapter 11 Trustee of Northwest Bancorporation of Illinois, Inc., and AmeriNational Community Services, LLC filed an Amended Joint Chapter 11 Plan of Reorganization and a corresponding Disclosure Statement on Feb. 22, 2023. The Amended Plan provides for AmeriNat to receive: (a) 100% of the common stock of the Reorganized Debtor; and (b) Junior TruPs in a reduced amount which will be repaid in accordance with the terms of the Junior TruPs Indentures. The Debtor will reinstate the Senior TruPs and recapitalize the interest that has accrued through the Petition Date. Repayment of the Senior TruPs will be made pursuant to the terms of the Senior TruPs Indenture. Administrative Claims, Professional Fee Claims, U.S. Trustee Fees, Priority Tax Claims, Other Priority Claims, and Allowed Unsecured Claims, if any, will be paid in full on the Effective Date from the proceeds of an Exit Facility to be furnished by an affiliate of AmeriNat. The Interests of the Debtor's existing shareholders will be cancelled. AmeriNat's ability to acquire 100% of the ownership of the Debtor is dependent upon the approval of the Illinois Department of Financial and Professional Regulation, the Federal Reserve Bank of Chicago, and the Board of Governors of the Federal Reserve System (the "Regulators"). AmeriNat has begun the process of seeking such approval and the Amended Plan will not become effective until all required approvals are received. The Amended Plan refers to this proposed transaction as the "Reorganization Transaction." In the event that AmeriNat is unable to obtain the necessary approvals, the Trustee will commence an auction to find a buyer for the Debtor's interests in First Bank. Any buyer selected through such an auction would also be required to obtain the approval of the Regulators. The Amended Plan refers to this alternative as the "Sale Transaction." The Debtor's only scheduled assets are: (i) its stock in First Bank, which the Debtor listed on its Schedules as having a book value of $17,304,816; (ii) its ownership of the trusts which issued the TruPs, which the Debtor listed on its Schedules as having a book value of $568,406; and (iii) $73.70 in cash. The Debtor scheduled unsecured claims in the total amount of $18,407,554.20, primarily on account of the amounts due to the Holders of Senior TruPs and the Junior TruPs. The TruPS are a hybrid form of security that has characteristics of both debt and equity. Regulatory changes in the late 1990s allowed for banks to include 25 percent of their outstanding TruPS in their calculation of Tier 1 capital. To qualify as Tier 1 capital, a TruPS had to provide for a five-year deferral of interest period which, once triggered, would temporarily suspend the obligation of the TruPS issuer to make interest payments due on the TruPS. During the deferral period, interest on the TruPS accrues and becomes due once the deferral period ends. On Sept. 30, 2021, the Court authorized the Debtor to retain Janey as its investment banker to market the Debtor's stock in First Bank. Also on Sept. 30, 2021, the Court granted the Debtor's Motion to Establish Bidding Procedures for the Sale of Debtor's Only Material Asset and approved the bidding procedures, as amended. Originally, the deadline for submitting bids to purchase the stock in FirstBank was set as December 31, 2021. In the event multiple bids were received, an auction was scheduled for January 7, 2022. As a result of concerns with the sale process, the Committee filed its Emergency Motion to Reschedule Auction. The extended bid deadline was February 18, 2022. According to the Debtor's Status Report, Janey contacted over 70 potential bidders. Twenty-one prospective bidders signed Non-Disclosure Agreements to gain access to the data room. Janey received four bids by the February 18, 2022, bid deadline. On March 2, 2022, the Committee filed its own status report, raising its continued concerns about the fairness of the auction process. The Committee also stated that the Debtor had failed to respond to the Committee's concerns or to meaningfully consult with the Committee as required by the Bidding Procedures Order. The auction never took place. Janey terminated its engagement on May 3, 2022. Under the Plan, Class 2 General Unsecured Claims, one Unsecured Claim was filed in a liquidated amount of $26,371.15. This Claim has not been Allowed. Each Holder of a Class 2 Claim shall receive, in full and final satisfaction, settlement, release, and discharge of and in exchange for, such Holder's Allowed Claim in Class 2: Reorganization Transaction: If a Reorganization Transaction is consummated, on the Effective Date, each Holder of an Allowed Class 2 Claim shall receive payment in full in Cash from the Reorganized Debtor as soon as reasonably practicable after the latest of: (a) the Effective Date, or (b) if a Disputed Claim, the date the Class 2 Claim becomes an Allowed Class 2 Claim. Sale Transaction: If a Sale Transaction is consummated on the Effective Date, each Holder of an Allowed Class 2 Claim shall receive its Pro Rata share of the Net Sales Proceeds. For purposes of calculating the Pro Rata share of each Class 2 Claim, if the available Net Sales Proceeds are not sufficient to pay the Allowed amount of all Class 2, Class 3, and Class 4 Claims in full, the Pro Rata share will be determined by including the Allowed amount of all Class 2, Class 3, and Class 4 Claims in the denominator. Class 2 is impaired. AmeriNat, which is the Holder of all Class 4 Claims, proposes to acquire 100% of the equity of the Reorganized Debtor by converting a portion of its Class 4 Claims into new common stock of the Reorganized Debtor. The Exit Lender will also provide an Exit Facility to the Reorganized Debtor, which in turn will be distributed to the Trustee, in an amount sufficient to allow the Trustee to pay all Effective Date Distributions in full. The Effective Date of the Amended Plan is conditioned, upon other things, AmeriNat and the Exit Lender receiving approval from the Regulators to be the owner of the Reorganized Common Stock and lender to the Reorganized Debtor. In the event that AmeriNat or the Exit Lender is unable to obtain the necessary approvals from the Regulators, then the Trustee will implement the Sale Transaction. The Effective Date of the Amended Plan will occur on the first Business Day following receipt of necessary approvals from the Regulators. In the event that the applicable Regulators do not approve AmeriNat as the holder of the Reorganized Common Stock or the Exit Lender as the lender to the Reorganized Debtor, the Trustee shall, subject to Bankruptcy Court approval, retain an investment banker to market the Reorganized Debtor's assets and shall petition the Court to conduct a sale of such assets free and clear of any liens, claims, encumbrances, and interests to the highest and best bidder pursuant to Section 363 of the Bankruptcy Code. The Effective Date of the Amended Plan shall occur on the date that such Sale Transaction is closed, and the Trustee completes the Distribution of the Net Sales Proceeds. Counsel for the Chapter 11 Trustee: Catherine L. Steege, Esq. Landon S. Raiford, Esq. William A. Williams, Esq. JENNER & BLOCK LLP 353 N. Clark Street Chicago, IL 60654 Tel: (312) 222-9350 E-mail: csteege@jenner.com lraiford@jenner.com Counsel for AmeriNational Community Services, LLC: Jay Jaffe, Esq. Elizabeth Little, Esq. FAEGRE DRINKER BIDDLE & REATH LLP 300 N. Meridian Street Indianapolis, IN 46204 Tel: (317) 569-9600 E-mail: jay.jaffe@faegredrinker.com elizabeth.little@faegredrinker.com A copy of the Disclosure Statement dated Feb. 22, 2023, is available at https://bit.ly/3YZswnF from PacerMonitor.com. About Northwest Bancorporation of Illinois Northwest Bancorporation of Illinois, Inc., is a bank holding company incorporated under the laws of the state of Delaware. Northwest Bancorporation filed its voluntary petition for Chapter 11 protection (Bankr. N.D. Ill. Case No. 21-08123) on July 2, 2021, listing as much as $50 million in both assets and liabilities. Judge Carol A. Doyle oversees the case. The Debtor tapped Taft Stettinius & Hollister, LLP as legal counsel and Janney Montgomery Scott, LLC, as financial advisor and investment banker. The U.S. Trustee for Region 11 appointed an official committee of unsecured creditors on Aug. 4, 2021. The committee is represented by Jeffrey D. Sternklar, LLC and SmithAmundsen, LLC. Catherine Steege is the Chapter 11 trustee appointed in the Debtor's case. Jenner & Block, LLP, serves as the trustee's legal counsel. NOSRAT LLC: Case Summary & Three Unsecured Creditors ---------------------------------------------------- Debtor: Nosrat LLC 45 North Station Plaza, Ste. 315 Great Neck, NY 11021 Business Description: The Debtor is a Single Asset Real Estate as defined in 11 U.S.C. Section 101(51B). Chapter 11 Petition Date: March 7, 2023 Court: United States Bankruptcy Court Eastern District of New York Case No.: 23-70776 Judge: Hon. Alan S. Trust Debtor's Counsel: Mark Frankel, Esq. BACKENROTH FRANKEL & KRINSKY, LLP 800 Third Avenue New York, NY 10022 Tel: (212) 593-1100 Fax: (212) 644-0544 E-mail: mfrankel@bfklaw.com Total Assets: $25,002,000 Total Liabilities: $20,923,965 The petition was signed by Enrique Ventura as controller. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/VIUBSWQ/Nosrat_LLC__nyebke-23-70776__0001.0.pdf?mcid=tGE4TAMA List of Debtor's Three Unsecured Creditors: Entity Nature of Claim Claim Amount 1. Harris Home Repair Services $500,000 Service Corp. 3-14 127th St. College Point, NY 11356 2. PPK Concept LLC Materials $350,000 8401 Boul Ray Lawson Anjou, QC Canada H1j1k6 3. Small Business Disaster $154,269 Administration Assistance Office of Disaster Assistance 14925 Kingsport Rd Fort Worth, TX 76155 ORCHARD THERAPEUTICS: Midcap Marks $33.M Loan at 67% Off -------------------------------------------------------- Midcap Financial Investment Corporation has marked its $33,071,000 loan extended to Orchard Therapeutics PLC to market at $10,792,000 or 33% of the outstanding amount, as of December 31, 2022, according to a disclosure contained in Midcap Financial's Form 10-K for transition period from April 1, 2022 to December 31, 2022, filed with the Securities and Exchange Commission on February 21, 2023. Midcap Financial is a participant in a First Lien Secured Debt to Orchard Therapeutics PLC. The loan accrues interest at a rate of 1% (L+595) per annum. The loan matures on May 28, 2026. Midcap Financial is a Maryland corporation incorporated on February 2, 2004. It is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Apollo Investment Management, L.P. is the investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (AGM). Apollo Investment Administration, LLC, an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. Orchard Therapeutics PLC operates as biopharmaceutical company. The Company offers medical research, gene therapy, and inherited disorder treatment services. Orchard Therapeutics serves customers worldwide. PARAGON 28: Midcap Financial Marks $10M Loan at 25% off ------------------------------------------------------- Midcap Financial Investment Corporation has marked its $10,000,000 loan extended to Paragon 28, Inc. to market at $7,450,000 or 75% of the outstanding amount, as of December 31, 2022, according to a disclosure contained in Midcap Financial's Form 10-K for the transition period from April 1, 2022 to December 31, 2022, filed with the Securities and Exchange Commission on February 21, 2023. Midcap Financial is a participant in a First Lien Secured Debt to Paragon 28, Inc. The loan accrues interest at a rate of 1% (SOFR+600) per annum. The loan matures on May 1, 2026. Midcap Financial is a Maryland corporation incorporated on February 2, 2004. It is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Apollo Investment Management, L.P. is the investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (AGM). Apollo Investment Administration, LLC, an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. Paragon 28, Inc. operates as a medical device company. The Company offers medical products for products for foot and ankle ailments, such as fore-foot plating, hind-foot plating, medical screws, custom bone wedges, and other surgical instruments. PARTNER THERAPEUTICS: Midcap Financial Marks $1M Loan at 43% Off ---------------------------------------------------------------- Midcap Financial Investment Corporation has marked its $1,000,000 loan extended to Partner Therapeutics, Inc. to market at $565,000 or 57% of the outstanding amount, as of December 31, 2022, according to a disclosure contained in Midcap Financial's Form 10-K for the transition period from April 1, 2022 to December 31, 2022, filed with the Securities and Exchange Commission on February 21, 2023. Midcap Financial is a participant in a First Lien Secured Debt - Revolver to Partner Therapeutics, Inc. The loan accrues interest at a rate of 2% (SOFR+375) per annum. The loan matures on December 30, 2027. Midcap Financial is a Maryland corporation incorporated on February 2, 2004. It is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Apollo Investment Management, L.P. is the investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (AGM). Apollo Investment Administration, LLC, an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. Partner Therapeutics, Inc. operates as a biopharmaceutical company. The Company focuses on development and commercialization of therapies that improves the treatment of cancer. PARTNER THERAPEUTICS: Midcap Financial Marks $5M Loan at 34% Off ---------------------------------------------------------------- Midcap Financial Investment Corporation has marked its $5,000,000 loan extended to Partner Therapeutics, Inc. to market at $3,309,000 or 66% of the outstanding amount, as of December 31, 2022, according to a disclosure contained in Midcap Financial's Form 10-K for the transition period from April 1, 2022 to December 31, 2022, filed with the Securities and Exchange Commission on February 21, 2023. Midcap Financial is a participant in a First Lien Secured Debt to Partner Therapeutics, Inc. The loan accrues interest at a rate of 2% (SOFR+715) per annum. The loan matures on December 30, 2027. Midcap Financial is a Maryland corporation incorporated on February 2, 2004. It is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Apollo Investment Management, L.P. is the investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (AGM). Apollo Investment Administration, LLC, an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. Partner Therapeutics, Inc. operates as a biopharmaceutical company. The Company focuses on development and commercialization of therapies that improves the treatment of cancer. PEARL RESOURCES: Bid for Mandatory Abstention/Remand Granted ------------------------------------------------------------ Chief Bankruptcy Judge Eduardo V. Rodriguez for the Southern District of Texas grants the motion for mandatory abstention and remand filed by Parsley Energy, Inc., Parsley Energy, LLC, and Parsley Energy Operations, LLC in the case styled In Re: Pearl Resources LLC and Pearl Resources Operating Co. LLC, Chapter 11, Debtors. Pearl Resources Operating Co. LLC and Pearl Resources LLC, Plaintiffs, v. Transcon Capital, LLC, Defendant, Case No. 20-31585, Adversary No. 22-3297, (Bankr. S.D. Tex.). At the Hearing, Pearl conceded that the only requirement at issue in Parsley's argument for mandatory abstention is the fifth element and that the other elements were "undoubtedly satisfied." The Court agrees with Pearl. The request for mandatory abstention is timely since the Motion to Remand was filed just twenty-days after removal of the State Court Matter. Next, the second requirement is met because each of the claims in the State Court Matter originate under Texas state law and section 1334(b) provides the only jurisdictional basis to this Court. Similarly, since these claims do not invoke a substantive right provided by title 11 and can arise outside of the bankruptcy context, they are non-core and the third requirement is met. Finally, it is undisputed that the State Court Matter was initiated in State Court on Dec. 17, 2021, thus satisfying the fourth element. Of the five elements for mandatory abstention, Pearl contested only the fifth requirement -- that the action could be adjudicated timely in state court. In this case, Pearl confirmed the Plan on Sept. 30, 2020. In order to fully administer the assets of the estate, however, Pearl needs to resolve numerous causes of actions including the pending matter with Parsley. Thus, the current state of the bankruptcy case does not support retention in this Court. The Court determines that the State Court Matter can be timely adjudicated in the State Court, and as such, mandatory abstention applies and the Motion to Remand is granted. A full-text copy of the Memorandum Opinion dated Feb. 17, 2023 is available at https://tinyurl.com/2p8ddjyf from Leagle.com. About Pearl Resources Pearl Resources, LLC is a privately held company in the oil and gas extraction industry. Pearl Resources and Pearl Resources Operating Co., LLC filed their voluntary petitions under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-31585) on March 3, 2020. The petitions were signed by Myra Dria, manager and sole member of Pearl Resources Operating and manager of Pearl Resources. At the time of the filing, each Debtor disclosed assets of between $10 million and $50 million and liabilities of the same range. The Debtors tapped Walter J. Cicack, Esq., at Hawash Cicack & Gaston, LLP, as legal counsel and David G. Gullickson as accountant. PG&E CORP: Noteholders' Administrative Expense Claims Barred ------------------------------------------------------------ In the appealed case In re: PG&E Corporation; Pacific Gas and Electric Company, Debtors. Elliott Management Corporation, on behalf of itself and certain funds and accounts managed, advised, or sub-advised by it; et al., Appellants, v. PG&E Corporation, Reorganized PG&E, Appellee, Case No. 22-15560, (9th Cir.), the U.S. Court of Appeals for the Ninth Circuit affirms the district court's affirmance of a bankruptcy court order barring the Noteholders from bringing certain administrative expense claims against PG&E Corporation and the Pacific Gas and Electric Company. Elliott Management Corporation and other creditors (the Noteholders) made this appeal. The Release Provision (Section 10.9(b)) of the restructuring plan plainly encompasses the Noteholders' claims arising from the alleged breach of the "best efforts" provision of the restructuring support agreement (the Noteholder RSA). The Release Provision states that "the Released Parties," including PG&E, "are deemed forever released and discharged . . . by the Releasing Parties," including the Noteholders, "from any and all claims . . . based on or relating to, or in any manner arising from, in whole or in part . . . the Noteholder RSA." This sweeping language and explicit reference to the Noteholder RSA make clear that the Release Provision encompasses the Noteholders' claims. The Ninth Circuit holds that neither exception to the Release Provision -- for (1) rights "otherwise provided in the Plan" or for (2) "rights that remain in effect from and after the Effective Date to enforce the Plan and the Plan Documents" -- applies. The first exception is inapposite. The Plan does not "otherwise provide" for the Noteholders' alleged right to assert their administrative expense claims. The Ninth Circuit rejects the Noteholders' argument that Sections 2.1 and 1.4 of the Plan preserve such claims. Section 1.4 defines an "Administrative Expense Claim" as "any cost or expense of administration of any of the Chapter 11 Cases arising on or before the Effective Date that is allowable under section 503(b) of the Bankruptcy Code." Section 2.1 cross-references Section 1.4 in setting forth a procedure for satisfaction of "Allowed Administrative Expense Claims," and further provides that "for the avoidance of doubt, no Administrative Expense Claims shall be discharged pursuant to the Plan." The Ninth Circuit explains that the language in Section 2.1 preserves only "allowable" claims -- not, as the Noteholders suggest, all administrative expense claims allowable on the merits under section 503(b) of the Bankruptcy Code. To determine if a claim is allowable, the district court and bankruptcy court properly consulted other Plan provisions, including the Release Provision. The second exception applies only to rights "to enforce the Plan and the Plan Documents." The Noteholders seek to enforce a provision of the "Noteholder RSA," which is neither the "Plan" nor a "Plan Document." Each of those three terms is separately defined in the Plan. The Ninth Circuit rejects Noteholders' reliance on their faulty reading of Section 2.1 to assert that their claims fall within this exception, arguing that such claims constitute "new contractual obligations of PG&E" because they are preserved under Section 2.1. A full-text copy of the Memorandum dated Feb. 17, 2023 is available at https://tinyurl.com/3ndctcsu from Leagle.com. 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. PREFERRED CARE DEVELOPMENTAL: Case Summary & 9 Unsec. Creditors --------------------------------------------------------------- Debtor: Preferred Care Developmental Centers of MS I, Inc. 5733 State Hwy 121 Suite 210-306 The Colony TX 75056 Business Description: The Debtor operates nursing care facilities (skilled nursing facilities). Chapter 11 Petition Date: March 7, 2023 Court: United States Bankruptcy Court Northern District of Texas Case No.: 23-40659 Judge: Hon. Edward L. Morris Debtor's Counsel: Stephen A. McCartin, Esq. FOLEY & LARDNER LLP 2021 McKinney Avenue, Ste. 1600 Dallas, TX 75201 Tel: (214) 999-3000 Email: smccartin@foley.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Robert J. Riek, vice president. A copy of the Debtor's list of nine unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/JIKCQTI/Preferred_Care_Developmental_Centers__txnbke-23-40659__0003.0.pdf?mcid=tGE4TAMA A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/GKUZYKQ/Preferred_Care_Developmental_Centers__txnbke-23-40659__0001.0.pdf?mcid=tGE4TAMA PREMIER IMAGING: Midcap Financial Marks $12.4M Loan at 35% Off -------------------------------------------------------------- Midcap Financial Investment Corporation has marked its $12,419,000 loan extended to Premier Imaging, LLC to market at $8,114,000 or 65% of the outstanding amount, as of December 31, 2022, according to a disclosure contained in Midcap Financial's Form 10-K for the transition period from April 1, 2022 to December 31, 2022, filed with the Securities and Exchange Commission on February 21, 2023. Midcap Financial is a participant in a First Lien Secured Debtto Premier Imaging, LLC. The loan accrues interest at a rate of 1%(L+575) per annum. The loan matures on February 1, 2025. Midcap Financial is a Maryland corporation incorporated on February 2, 2004. It is a closed-end, externally managed, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Apollo Investment Management, L.P. is the investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (AGM). Apollo Investment Administration, LLC, an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. Premier Imaging provides diagnostic imaging services. PRODUCE DEPOT: Unsecured Creditors to Get 4% Under Plan ------------------------------------------------------- Produce Depot USA LLC submitted an Amended Small Business Disclosure Statement. The Plan incorporates terms of the Amended Stipulation resolving Paca Trust Claims of Prometo Produce Corp. and C.H. Robinson Worldwide, Inc., that was approved by the bankruptcy court order dated September 15, 2022. In accordance with the terms of the Stipulation, the plan offers as follows: The Paca Trust Claim of Prometo Produce Corp. shall be compromised, reduced, allowed and paid in the amount of $100,000.00 from Produce Depot USA, LLC; the Paca Trust Claim of C.H. Robinson Worldwide, Inc shall be compromised, reduced, allowed and paid in the amount of $120,000.00, with $100,000.00 from Produce Depot USA, LLC and $20,000.00 simultaneously from Luis A. Ruelas. The payments under the stipulation shall be within 14 days following the entry of the order approving the stipulation by the bankruptcy court. the payments under the stipulation were made in full. The plan incorporates terms of Stipulation of Settlement concluded between the Debtor and Paca Trust Creditor Natural Flavor Produce LLC (the "stipulation of settlement"), that was approved by the bankruptcy court order dated February 9, 2023. In accordance with the terms of the stipulation of settlement, the plan offers as follows: the debtor shall pay to Natural Flavor Produce LLC $20,000.00, the settlement amount, in full and complete satisfaction of all claims and debts owed to Natural Flavor Produce LLC, the payment under the Stipulation of Settlement was made in full on February 14, 2023. The plan offers the general unsecured creditors in the case a pro rated payment of 4% of the total amount of unsecured debt to be paid in one lump sum payment on the effective date of the plan. The PACA Trust Claims of Prometo Produce Corp. and C.H. Robinson Worldwide, Inc was settled and paid in full pursuant to terms of the Stipulation, approved by the Court on September 30, 2022, which terms and conditions are incorporated and part of the Plan. The Stipulation has been funded by Produce Depot USA LLC, the Debtor herein, and by Luis A. Ruelas. On Feb. 14, 2023, pursuant to the terms of the Stipulation of Settlement dated August 2022, reached between Produce Depot USA, LLC and Natural Flavor Produce LLC and approved by the Bankruptcy Court order dated Feb. 9, 2023. All remaining administrative fees, priority and non-priority, undisputed, unsecured creditors, will be paid from funds accumulated in the Debtor's DIP account from the date of the petition and from the personal contribution of Luis A. Ruelas. As of date of this Disclosure Statement and Plan, the balance of the Debtor's DIP account is $49,206. Luis A. Ruelas will make a supplemental contribution from personal funds to the Chapter 11 Plan of Reorganization payments without the expectation of repayment. The contribution is nor a repayment of debt or any other obligations. Under the Plan, Class II Unsecured Claim is impaired and shall consist of the PACA Trust Claim of Prometo Produce Corp. in the amount of $203,757.11 and substantially withdrawn on October 13, 2022. The claim was settled pursuant to the terms of Amended Stipulation Resolving PACA Trust Claims of Prometo Produce Corp. And C.H. Robinson Worldwide, Inc, that was approved by the Bankruptcy Court order dated September 15, 2022. According to the said Stipulation, the claim of Prometo Produce Corp. shall be compromised, reduced, allowed and paid in the amount of $100,000.00 from Produce Depot USA, LLC. The payment under the Stipulation was made in full. Class 2 shall consist of the PACA Trust Claim of C.H. Robinson Worldwide, Inc initially filed in the amount of $177,877 and substantially amended to $0 on October 13, 2022. The claim was settled pursuant to the terms of Amended Stipulation Resolving PACA Trust Claims of Prometo Produce Corp. And C.H. Robinson Worldwide, Inc, that was approved by the Bankruptcy Court order dated September 15, 2022. According to the said Stipulation, the claim of C.H. Robinson Worldwide, Inc., shall be compromised, reduced, allowed and paid in the amount of $120,000, with $100,000 from Produce Depot USA, LLC and $20,000 simultaneously from Mr. Ruelas. Class 2 shall consist of the PACA Trust Claim of Natural Flavor Produce LLC in the amount of $32,697.90. The claim of Natural Flavor Produce LLC was fully settled and paid in full pursuant to the terms of the Stipulation of Settlement dated August 2022, reached between Produce Depot USA, LLC and Natural Flavor Produce LLC. According to the said Stipulation of Settlement, On February 14, 2023, Produce Depot USA, LLC paid Natural Flavor Produce LLC a settlement amount of $20,000 in full and complete satisfaction of all claims and debts. Class III Unsecured Claim is impaired and shall consist of a General Unsecured Claims of creditors, in total amount of $742,221. In the event the Debtor's claim objection with respect to the proof of claim filed by Green Light Go. Inc. in the amount of $83,747.90 is sustained, Green Light Go. Inc. will receive 4% dividend in the amount of $3,349.92 to be paid in one lump sum payment on the Effective Date of the Plan. In the event the Debtor's claim objection with respect to the proof of claim filed by Chrome Capital Funding Group in the amount of $168,883.30 is sustained, Chrome Capital Funding Group will receive 4% dividend in the amount of $6,755.33 to be paid in one lump sum payment on the Effective Date of the Plan. The claim of A to Z Produce, ADP Totalsource Inc., Atlantic Fresh Produce Inc., Avocado House Inc., Chase Inc., David S Friedkin CPA, Edward Produce, First Law Group, GRIFFITH, Guerrero Avocados, Horizon Marketing Inc., Izguerra Produce Inc., McLean Produce & Ice Co, Natural Flavor Produce LLC, Queen Funding LLC and Stein & Stein LLP were originally listed in the schedule E/F as unsecured disputed. On March 21, 2022, the Bankruptcy Court entered Bar Date Order setting a proof of claim to be filed by 5/31/2022 and Government proof of claim by 8/29/2022. Service thereof was duly and properly made on all impaired creditors. Up to the date of the filing of this Disclosure Statement, A to Z Produce, ADP Totalsource Inc., Atlantic Fresh Produce Inc., Avocado House Inc., Chase Inc., David S Friedkin CPA, Edward Produce, First Law Group, GRIFFITH, Guerrero Avocados, Horizon Marketing Inc., Izguerra Produce Inc., McLean Produce & Ice Co, Natural Flavor Produce LLC, Queen Funding LLC and Stein & Stein LLP have not filed claim in the Debtor's case. The bar date to file a claim expired on May 31, 2022. It is the Debtor's position that A to Z Produce, ADP Totalsource Inc., Atlantic Fresh Produce Inc., Avocado House Inc., Chase Inc., David S$ Friedkin CPA, Edward Produce, First Law Group, GRIFFITH, Guerrero Avocados, Horizon Marketing Inc., Izguerra Produce Inc., McLean Produce & Ice Co, Natural Flavor Produce LLC, Queen Funding LLC and Stein & Stein LLP are now barred from filing claim in the Debtor's case and are thus not afforded treatment thereunder. Attorney for debtor Produce Depot USA LLC: Alla Kachan, Esq. 2799 Coney Island Ave, Suite 202 Brooklyn, NY 11235 Tel: (718) 513-3145 Fax: (347) 342-315 A copy of the Disclosure Statement dated Feb. 24, 2023, is available at https://bit.ly/3IzGjKG from PacerMonitor.com. About Produce Depot USA Produce Depot, LLC, is a merchant wholesaler of grocery and related products in Brooklyn, N.Y. Produce Depot sought Chapter 11 bankruptcy protection (Bankr. E.D.N.Y. Case No. 22-40412) on March 2, 2022, listing $1,660,488 in liabilities. On June 9, 2022, the case was transferred to the U.S. Bankruptcy Court for the District of New Jersey (Bankr. D.N.J. Case No. 22-14771). Alla Kachan, Esq., at the Law Offices of Alla Kachan, P.C., is the Debtor's counsel. QUORUM HEALTH: Rajeev Varma's Emergency Motion Denied ----------------------------------------------------- District Judge Gregory B. Williams for the District of Delaware denies the Emergency Motion filed by the Appellant Rajeev Varma in the case styled IN RE: QUORUM HEALTH CORPORATION, Chapter 11, Reorganized Debtor. RAJEEV VARMA, Appellant, v. QUORUM HEALTH CORPORATION, Appellee, Civ. No. 23-40-GBW, (D. Del.). The Emergency Motion arises out of the appeal of a Jan. 12, 2023 Order issued by bankruptcy court which dismissed with prejudice the Appellant's amended complaint seeking revocation of the bankruptcy court's June 30, 2020 plan confirmation order entered in the case of Debtor Quorum Health Corporation. On Jan. 13, 2023, the Notice of Appeal was transmitted to the Court along with various other documents filed by Appellant in the bankruptcy court, which are listed on the docket of the adversary proceeding as "emergency" matters (Emergency Motion) and appear to seek a stay of an asset sale authorized under the Plan. In a statement filed twice, the Appellant advised he would submit an "emergency brief" contemporaneously with the Emergency Motion, but no such brief was submitted. Notwithstanding the two-page email that the Appellant filed as an "emergency exhibit," it remained unclear what relief Appellant seeks from the Court in connection with his appeal of the Dismissal Order. On Jan. 24, 2023, the Court issued an Order directing that the Appellant's brief in support of the Emergency Motion to be filed no later than Friday, February 3. But the Appellant failed to file his brief by the deadline. Instead, a one-page "motion brief" was emailed to Chambers at 12:29 a.m. on Saturday, Feb. 4, 2023 which cited "lack of PACER CM/ECF privileges. . . and the record cold weather outside." The Court holds that the submission was late. Even assuming it had been timely, the "motion brief" offers no coherent legal or factual support for the Emergency Motion -- it does not explain how staying the Dismissal Order, which is the subject of this appeal, will affect the sale he seeks to enjoin. The Dismissal Order does not mention any asset sale. Rather, it dismissed with prejudice the Appellant's amended complaint seeking revocation of the Bankruptcy Court's June 30, 2020 plan confirmation order. The Court finds and concludes that the Appellant's brief does not come close to satisfying the requirements for a stay of an order pending appeal. A full-text copy of the Memorandum Order dated Feb. 17, 2023 is available at https://tinyurl.com/49hawhjv from Leagle.com. About Quorum Health Quorum Health Corporation -- http://www.quorumhealth.com/-- is an operator of general acute care hospitals and outpatient services in the United States. Through its subsidiaries, the Company owns, leases or operates a diversified portfolio of 22 affiliated hospitals in rural and mid-sized markets located across 13 states with an aggregate of 1,817 licensed beds. The Company also operates Quorum Health Resources, LLC, a leading hospital management advisory and consulting services business. Quorum Health incurred net losses attributable to the company of $200.25 million in 2018, $114.2 million in 2017, and $347.7 million in 2016. As of Sept. 30, 2019, Quorum Health had $1.52 billion in total assets, $1.72 billion in total liabilities, $2.27 million in redeemable non-controlling interest, and a total deficit of $203.36 million. On April 7, 2020, Quorum Health Corporation and 134 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10766) to seek confirmation of a pre-packaged plan. McDermott Will & Emery LLP and Wachtell, Lipton, Rosen & Katz served as the Company's legal counsel, MTS Health Partners, L.P. served as financial advisor and Alvarez & Marsal North America, LLC acted as restructuring advisor. Kirkland & Ellis LLP served as legal counsel and Jefferies LLC served as financial advisor to the ad hoc noteholder group, which agreed to equitize their note claims into new equity of the Company and invested $200 million of new equity capital in the Company. Milbank LLP served as legal counsel and Houlihan Lokey, Inc. served as financial advisor to the ad hoc group of term lenders. The Company in June 2020 won approval of its reorganization plan. Members of the ad hoc noteholder group will hold substantially all of the reorganized Company's equity. RAKKI LLC: Unsecured Creditors Will Get 100% of Claims in 3 Years ----------------------------------------------------------------- Rakki LLC submitted a First Amended Plan of Reorganization dated March 2, 2023. Debtor's Plan of Reorganization provides for the continued operations of the Debtor in order to make payments to its creditors as set forth in this Plan. Debtor seeks to confirm a consensual plan or reorganization so that all payments to creditors required under the Plan will be made directly by the Debtor to its creditors. Class 3-1 consists of the claim of Texas Comptroller of Public Accounts on behalf of the State of Texas and Local Sales Tax Jurisdictions (Claim No. 3-1; filed in Case No. 22-42915; Kyodai Handroll & Seafood Bar). This claim is for sales and use tax due and owing to the Comptroller based upon returns filed by the Debtor for October 2022 and an estimated return for December 2022, in the amount of $10,839.50. Proof of Claim #3-1 shall be paid in full in equal monthly installments of principal and interest no later than 36 months after the Debtor's bankruptcy petition date (being November 2025), or as otherwise agreed to by the Comptroller. Equal monthly installments of principal and interest at 4.25% per annum are to be paid beginning 30 days after the Effective Date and continue until paid in full. The monthly payment amounts for Proof of Claim #3-1 shall be at least $321.23. Class 3-5 consists of claim of Texas Comptroller of Public Accounts on behalf of the State of Texas and Local Sales Tax Jurisdictions (Claim No. 4-1; filed in Case No. 22-42914; Kyodai FTW LLC). This claim is for sales and use tax due and owing to the Comptroller based upon returns filed by the Debtor for estimated return for December 2022, in the amount of $4,809.44. Proof of Claim #4-1 shall be paid in full in equal monthly installments of principal and interest no later than 36 months after the Debtor's bankruptcy petition date (being November 2025), or as otherwise agreed to by the Comptroller. Equal monthly installments of principal and interest at 4.25% per annum are to be paid beginning 30 days after the Effective Date and continue until paid in full. The monthly payment amounts for Proof of Claim #4-1 shall be at least $142.53. Class 3-6 consists of the claim of Texas Comptroller of Public Accounts on behalf of the State of Texas and Local Sales Tax Jurisdictions (Claim No. 5-1; filed in Case No. 22-42916; Kyodai Sushi & Handroll Bar). This claim is for sales and use tax due and owing to the Comptroller based upon returns filed by the Debtor for estimated return for December 2022, in the amount of $9,500.07. Proof of Claim #5-1 shall be paid in full in equal monthly installments of principal and interest no later than 36 months after the Debtor's bankruptcy petition date (being November 2025), or as otherwise agreed to by the Comptroller. Equal monthly installments of principal and interest at 4.25% per annum are to be paid beginning 30 days after the Effective Date and continue until paid in full. The monthly payment amounts for Proof of Claim #5-1 shall be at least $281.54. A failure by the Debtor or Reorganized Debtor to make a plan payment to an agency of the State of Texas shall be an Event of Default. If the Debtor of Reorganized Debtor fails to cure an Event of Default as to an agency of the State of Texas within 5 days after service of a written notice of default, then that agency may (a) enforce the entire amount of its claim; (b) exercise any and all rights and remedies available under applicable non-bankruptcy law; and (c) seek such relief as may be appropriate in this court. The Debtor and/or Reorganized Debtor can receive up to 3 notices of default, however, the third default cannot be cured. Class 5-1 consists of the claim of NewCo Capital Group VI LLC. (Claim No. 1-1 filed in 22-42915; Kyodai Handroll & Seafood Bar LLC) filed a proof of claim in the secured amount of $36,494.70. NewCo Capital Group VI LLC asserts it is fully secured by Kyodai Handroll & Seafood Bar LLC's business property pursuant to a UCC Lien that was recorded on July 5, 2022 which puts this claim in Lien Position 1. Therefore, NewCo Capital Group VI LLC is fully secured due to the liquidation analysis as to the assets of Kyodai Handroll & Seafood Bar LLC on the plan filing date. Debtor proposes to pay the secured portion of NewCo Capital Group VI LLC's claim in the amount of $36,494.70 at 7.75% over 3 years in 36 equal monthly payments at $1,139.41 per month. Class 5-2 consists of the claim of ODK Capital, LLC aka OnDeck. (Claim No. 2-1 filed in 22-42915; Kyodai Handroll & Seafood Bar LLC) filed a proof of claim in the secured amount of $106,707.64. ODK Capital, LLC asserts it is fully secured by Kyodai Handroll & Seafood Bar LLC's business property pursuant to a UCC Lien that was recorded on July 25, 2022 which appears to put this claim in Lien Position 2. Therefore, ODK Capital, LLC is partially under secured due to the liquidation analysis as to the assets of Kyodai Handroll & Seafood Bar LLC on the plan filing date. Debtor proposes to pay the secured portion of ODK Capital, LLC's claim in the amount of $18,506.30 at 7.75% over 3 years in 36 equal monthly payments at $577.79 per month. This remainder of this claim will be paid in accordance with the terms and distributions of the unsecured creditors in Class 7. Class 6-1 consists of the claim of Torro LLC. (Claim No. 4-1; filed in 22-42916; Claim is for Kyodai Sushi & Handroll Bar) filed a proof of claim in the allegedly secured amount of $56,794.00. Torro LLC asserts it is fully secured by Kyodai Sushi & Handroll Bar, LLC's business property pursuant to a UCC Lien that was recorded on September 26, 2022 which appears to put this claim in Lien Position 1. However, Torro LLC is partially under secured due to the liquidation analysis reveals that only $49,700 of that claim would be secured. Therefore, Debtor proposes to pay the secured potion of Torro LLC's claim in the amount of $49,700 at 7.75% over 3 years in 36 equal monthly payments at $1551.69 per month. The remaining under secured portion of this claim will be paid in accordance with the terms and distributions of the unsecured creditors in Class 7. Class 6-2 consists of EBF Holdings, LLC d/b/a Everest Business Funding (Claim No. 2 1 filed in 22-42916; Kyodai Sushi & Handroll Bar, LLC) filed a proof of claim in the allegedly secured amount of $49,690.36. EBF Holdings, LLC d/b/a Everest Business Funding asserts it is fully secured by Kyodai Sushi & Handroll Bar, LLC's business property pursuant to a UCC Lien that was recorded on November 7, 2022 which puts this claim in Lien Position 2. However, EBF's claim is fully under secured due to the prior lien and partially secured claim of Torro LLC. Accordingly, this claim will be paid in accordance with the terms and distributions of the unsecured creditors in Class 7. Class 7 consists of Allowed Impaired Unsecured Claims. All allowed unsecured creditors shall receive a pro rata distribution at zero percent per annum over the next 3 years beginning not later than the 15th day of the first full calendar month following 30 days after the effective date of the plan and continuing every year thereafter for the additional 2 years remaining on this date. Nothing prevents Debtor from making monthly or quarterly distributions that may begin on the 15th day of the month after the effective date of confirmation, so long as 1/3 of the annual distributions to the general allowed unsecured creditors are paid by each yearly anniversary of the confirmation date of the plan. Debtor will distribute up to $529,826.66 to the general allowed unsecured creditor pool over the 3-year term of the plan. The Debtor's General Allowed Unsecured Claimants will receive 100% of their allowed claims under this plan. Debtor anticipates the continued operations of the business to fund the Plan. A full-text copy of the First Amended Plan dated March 2, 2023 is available at https://bit.ly/3kMFsi5 from PacerMonitor.com at no charge. Counsel for Debtors: Robert C. Lane, Esq. Joshua D. Gordon, Esq. The Lane Law Firm 6200 Savoy, Suite 1150 Houston, TX 77036 Tel: (713) 595-8200 Fax: (713) 595-8201 Email: notifications@lanelaw.com Joshua.gordon@lanelaw.com About Rakki LLC Rakki LLC is the parent company of 3 separate sushi restaurants that are managed and operated in the Dallas Fort Worth area. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 22-42669) on Nov. 4, 2022. In the petition signed by Viet Nguyen, managing member, the Debtor disclosed up to $500,000 in assets and up to $1 million in liabilities. Robert C. Lane, Esq., at The Lane Law Firm, is the Debtor's legal counsel. RAMIL ABALKHAD: 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 Ramil and Melina Abalkhad. The committee members are: 1. Home Acceptance Corporation Representative: Henry W. Tubbs III (CFO) 1061 N. Kraemer Place, Suite G Anaheim, CA 92806 Phone: 800-413-4422 Fax: 714-414-0985 Email: htubbs3@yahoo.com 2. Merchant Acquisition Group Representative: Bruce Jackman 131 N. Tustin Ave. #200 Tustin, CA 92780 Phone: 714-573-2846 Fax: 714-573-2865 Email: bjackman@mag-llc.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 The Abalkhads Ramil and Melina Abalkhad sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Calif. Case No. 23-90029) on Jan. 27, 2023. Michael R. Totaro, Esq., is the Debtors' bankruptcy attorney. RDX TECHNOLOGIES: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: RDX Technologies Corporation DBA Ridgeline Energy Services (USA), Inc. 7900 E. Greenway Pkwy. Scottsdale, AZ 85260 Chapter 11 Petition Date: March 6, 2023 Court: United States Bankruptcy Court District of Arizona Case No.: 23-01373 Judge: Hon. Madeleine C. Wanslee Debtor's Counsel: Scott R. Goldberg, Esq. MOYES SELLERS & HENDRICKS LTD. 1850 N. Central Ave., Ste. 1100 Phoenix, AZ 85004 Tel: (602) 604-2141 Email: docket@law-msh.com Estimated Assets: $100,000 to $500,000 Estimated Liabilities: $10 million to $50 million The petition was signed by Anthony Ker, director and CEO. 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/4ZW5P2Y/RDX_TECHNOLOGIES_CORPORATION__azbke-23-01373__0003.0.pdf?mcid=tGE4TAMA A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/4TF2ARY/RDX_TECHNOLOGIES_CORPORATION__azbke-23-01373__0001.0.pdf?mcid=tGE4TAMA ROCK RIDGE: Bankruptcy Administrator Unable to Appoint Committee ---------------------------------------------------------------- The U.S. Bankruptcy Administrator for the Eastern District of North Carolina disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of Rock Ridge Farms Partnership. About Rock Ridge Farms Partnership Rock Ridge Farms Partnership is in the business of farming sweet potatoes, soybeans, corn, and peanuts in and around Wilson County, N.C. Rock Ridge Farms sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.C. Case No. 23-00291) on Feb. 2, 2023, with up to $10 million in both assets and liabilities. Robert C. Boyette, partner at Rock Ridge Farms, signed the petition. Judge Joseph N. Callaway oversees the case. David F. Mills, Esq., at Narron Wenzel, P.A., represents the Debtor as legal counsel. SCOTTS MIRACLE-GRO: Moody's Cuts CFR to Ba3 & Unsecured Notes to B1 ------------------------------------------------------------------- Moody's Investors Service downgraded The Scotts Miracle-Gro Company's Corporate Family Rating to Ba3 from Ba2 and the Probability of Default Rating to Ba3-PD from Ba2-PD. The senior unsecured note ratings were downgraded to B1 from Ba3. The speculative grade liquidity rating is unchanged at SGL-3. The outlook is negative. The downgrade reflects Moody's view that Scotts' leverage will remain high and liquidity adequate over the next two years even as the EBITDA margin and free cash flow improve. Moody's sees these factors as a significant credit risk considering the seasonality of cash flow and sensitivity to weather patterns and chemical prices. Leverage is currently high because of a weak 2022 in the lawn and garden business due to adverse weather and a lag in mitigating higher input costs, a significant pullback at the Hawthorne business, and acquisitions and shareholder distributions that consumed cash and led to higher debt. While Moody's anticipates the lawn and garden business will improve if weather conditions normalize because the company has taken steps to overcome the increase in input costs, there is continued uncertainty in the recovery of the Hawthorne business given the oversupply conditions in the cannabis market. Moody's expects that debt-to-EBITDA (Moody's adjusted) will improve to around 4.5x over the next two years from 6.1x for the 12 months ending December 31, 2022. A meaningful decline in fertilizer, diesel, and other input costs, higher volumes partly due to better weather, cost savings from Project Springboard, and further pricing will help to lift earnings and reduce leverage. Additionally, the oversupply conditions impacting the cannabis industry and volumes at Hawthorne should eventually subside although the timeline of the recovery is unclear, and the cannabis market faces considerable competition and regulatory challenges. Scotts' manages to a long-term net leverage ratio of 3-3.5x using company calculations (5.9x for the 12-months ending December 31, 2022 in part due to seasonal borrowings) and aims to reach 4.0x or below by the fiscal year-ending September 2024. The target indicates the company's commitment to reducing leverage including using the roughly $600-$650 million of projected free cash flow (after dividends) over the next two years to repay debt but translates to Moody's adjusted leverage level that is above Moody's expectations for the Ba2 rating given the company's operating profile. Liquidity is projected to remain adequate over the next 12 -15 months, as denoted by the company's SGL-3 speculative grade liquidity rating, because of projected tightness in the financial maintenance covenant. Moody's expects good free cash flow generation of around $600-$650 million after dividends through fiscal 2024 supported by working capital improvement as the company sells down unusually high inventory. However, free cash flow will need to go towards reducing debt ahead of the step-down of the maximum net debt-to-EBITDA leverage covenant on the revolving credit facility to 4.5x by June 30, 2024. The covenant is 6.25x currently and will increase to 6.5x at March 31, 2023 to accommodate seasonal needs before stepping down meaningfully to 5.5x at March 31, 2024 and 4.5x by June 30, 2024. Moody's expects covenant cushion to remain tight and this could impact Scotts' capacity to borrow on the revolver and overall financial flexibility. Scotts' had $26 million of cash and cash equivalents on its balance sheet and $681.5 million borrowed on its $1,500 million revolving credit facility that expires in April 2027. The expiration of Scotts receivable facility on August 18, 2023 may result in higher utilization of the revolver if the company is not able to extend. Moody's believes the cash, projected free cash flow and unused revolver capacity provide good coverage of projected cash needs with a required $50 million of annual term loan amortization the only meaningful debt maturity until the term loan and revolver come due in April 2027 (unrated). However, the overall liquidity position is negatively affected by the tight financial covenants. While Moody's anticipates in the CFR that the company would be able to obtain a covenant amendment if necessary given its size, market position and cash flow generation, a covenant amendment is not assumed in the liquidity analysis. The downgrade of the senior unsecured notes to B1, one notch below the CFR, reflects the downgrade of the CFR and the unsecured notes effective subordination to the credit facility in a default scenario. Downgrades: Issuer: Scotts Miracle-Gro Company (The) Corporate Family Rating, Downgraded to Ba3 from Ba2 Probability of Default Rating, Downgraded to Ba3-PD from Ba2-PD Senior Unsecured Regular Bond/Debenture, Downgraded to B1 (LGD5) from Ba3 (LGD5) Outlook Actions: Issuer: Scotts Miracle-Gro Company (The) Outlook, Remains Negative RATINGS RATIONALE Scotts Miracle-Gro's Ba3 CFR reflects the company's high leverage and adequate liquidity relative to the seasonality of earnings and cash flows, sensitivity to chemical prices and weather patterns and a highly concentrated customer base. The company's use of fertilizers, pesticides, and other specialty chemicals expose the credit profile to environmental and societal risks as consumers have shown an increasing preference for organics and as exhibited by the brand image risk associated with the weed killer Roundup and use of chemicals such as 2, 4-D and Glyphosate. Moody's adjusted debt-to-EBITDA is expected to continue to constrain the company's credit profile but improve to 4.5x by the fiscal year ended September 2024 from 6.1x for the 12 months ending December 31, 2022 due to lower chemical and transportation costs, benefits from additional pricing and incremental cost savings from Project Springboard. Moody's anticipates earnings in the US Consumer lawn and garden segment will improve if weather normalizes in 2023 though continued weakness in Hawthorne will limit consolidated earnings gains. The Ba3 rating reflects Moody's view that the company has the capability to reduce debt-to-EBITDA below 4x by fiscal 2025 with good execution and use of free cash flow to repay debt but the long time period of elevated leverage weakly positions the company in the rating. Moody's projects free cash flow after dividends will be strong at $600-$650 million cumulative over the next two years because working capital will be reduced. Thereafter, Moody's expects free cash flow to moderate to a level above $100 million in fiscal 2025. Scotts' leading market position in the North American lawn and garden industry affords it a strong relationship with key retailers and drives strong brand recognition at the point of sale. Brand support and product development help the company retain its market share. The expansion into hydroponics supports growth despite the risks related to a cannabis industry that faces regulatory headwinds and early stage growing pains and is likely to exhibit volatile volumes as it gains scale, evidenced by the current oversupply conditions. Scotts' consumer-oriented products are relatively resilient to economic downturns, but profitability has faced pressures from higher chemical prices and consumers economizing spending during market downturns. Shareholder distributions are aggressive including large special dividends and share buybacks although distributions are currently restricted to a maximum $225 million in dividends and $25 million of additional restricted payments until April 1, 2024 unless pro forma net leverage is below 4.0x, coinciding with the step-down of the revised covenants to 4.5x for the quarter ending June 30, 2024. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The outlook is negative given that leverage is likely to remain elevated until fiscal 2025 even with earnings improvement and the use of free cash flow to repay debt. Moody's assumes in the negative outlook that the company could obtain a covenant amendment if necessary but the covenant will constrain liquidity and leaves limited room for operational missteps or declines in end-market conditions. The outlook also accounts for the challenging operating environment and uncertainty impacting Hawthorne as well as the ongoing geopolitical tensions stemming from the Ukraine/Russia military conflict, which poses a meaningful risk to fertilizer and diesel pricing. Ratings could be upgraded if operating performance improves such that debt-to-EBITDA is maintained below 3.5x (outside of seasonal borrowings). An upgrade would also require stabilization of Hawthrone's operating performance and would require at least good liquidity going forward. Scotts would also need to generate consistent and sizable free cash flow and maintain a shareholder distribution philosophy consistent with maintenance of a higher rating. Ratings could be downgraded if Moody's does not see meaningful improvement to the EBITDA margin or free cash flow due to continued operating pressure and lower volumes such that debt-to-EBITDA leverage is sustained above 4.0x. The rating could also be downgraded if liquidity deteriorates including if the company is not able to address its modest covenant cushion or shareholder distributions impair expected balance sheet improvement. ENVIRONMENTAL SOCIAL AND GOVERNANCE CONSIDERATIONS Scotts Miracle-Gro's ESG Credit Impact Score is moderately negative (CIS-3) with moderately negative risk exposure to environmental, social and governance factors. The CIS score reflects the company's exposure and production of consumer lawn & garden fertilizers, pesticides, and social risks related to responsible production and waste management. Governance risk is moderately negative, reflecting the use of leverage and the Hagedorn family's ownership of 26% of the outstanding shares. ESG attributes have a limited impact on Scott Miracle-Gro's current rating, with greater potential for future negative impact. The principal methodology used in these ratings was Consumer Packaged Goods published in June 2022. The Scotts Miracle-Gro Company ("Scotts" or "SMG") is a manufacturer and marketer of consumer lawn care and garden products as well as hydroponic growing products, primarily in North America (approximately 91% of sales). The Hagedorn family owns 26% of the publicly-traded company, which generated revenue of about $3.9 billion for the 12 month period ended Dec 31, 2022. ST. PAUL HRA: Moody's Rates $50.9MM School Bonds 'Ba1' ------------------------------------------------------ Moody's Investors Service has assigned an initial Ba1 rating to the Housing and Redevelopment Authority (HRA) of the City of Saint Paul, MN's $50.9 million Charter School Lease Revenue Bonds (Community School of Excellence Project), Series 2023. Following the sale, the school will have about $51 million in outstanding revenue debt. The outlook is stable. RATINGS RATIONALE The Ba1 rating reflects the school's long operating history with multiple charter renewals, positive enrollment trends and healthy liquidity balanced against the school's modest waiting list and fair academic performance. The rating also reflects the school's strong financial oversight and management that has resulted in good operating margins. Debt service coverage is currently sound but will require continued enrollment growth at the high school for it to be maintained, with prospects aided by the school's large 8th grade class size. The rating also incorporates the school's high leverage following the issuance of the Series 2023 bonds. Governance is a key consideration for the initial rating action. Governance considerations key to this rating action include the school's experienced board and senior management team, as well as comprehensive financial planning and management. The school's strong governance limits the risk of charter nonrenewal. RATING OUTLOOK The stable outlook reflects Moody's expectation that the school will maintain sufficient operating margins, liquidity and debt service coverage while achieving high school enrollment growth projections. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING Stronger operating margins and liquidity that materially outpace projections Reduction in leverage FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING Declining enrollment that results in weaker operating margins and debt service coverage Inability to complete the high school addition within budget, resulting in reduced liquidity or weaker operating margins LEGAL SECURITY The Series 2023 bonds are secured by lease payments, which will be paid by state aid, including building lease aid and general education revenue, received from the State of Minnesota. The bonds are further secured by a first mortgage lien on the entire K-12 school facility. There is no appraised value on the school's K-12 facility. Financial covenants include 45 days' cash on hand, annual debt service coverage of 1x to 1.1x, depending on 90 days' cash on hand threshold, and an additional bonds test of 1.2x historical and 1.25x projected debt service coverage. The bond documents also require a repair and replacement fund funded on a monthly basis in amounts required by a comprehensive capital assessment plan over a five-year period. USE OF PROCEEDS The 2023 bond proceeds will be used to refinance the school's outstanding Series 2016 bonds, which were originally issued to finance the construction of the school's existing K-8 facility, and to finance a high school addition to the existing K-8 facility to serve students in grades 9 to 12. PROFILE Community School of Excellence, MN is a Hmong culture and language school located in St. Paul, MN and serves students throughout the Twin Cities metropolitan area in grades PreK-12. The school opened in 2007 and currently operates under charter contract with the Minnesota Guild of Public Charter Schools that is set to expire on June 30, 2026. Hmong Education Foundation serves as the school's education management organization and provides operational, management, administrative and curriculum development services. METHODOLOGY The principal methodology used in this rating was US Charter Schools published in September 2016. TECHNICAL ORDNANCE: 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 cases of Technical Ordnance Solutions, LLC and its affiliates, according to court dockets. About Technical Ordnance Solutions Technical Ordnance Solutions, LLC is a manufacturer of ordnance accessories in Naples Fla. Its affiliates, Atomic Machine and EDM, Inc., is a precision contract manufacturing company servicing the defense, aerospace and medical industries while Energy Technical Systems, Inc. is in the small arms ammunition manufacturing business. The Debtors sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Lead Case No. 23-00125) on Feb. 5, 2023. At the time of the filing, Technical Ordnance Solutions listed up to $100,000 in assets and up to $10 million in liabilities. Clyde William Colburn, III, owner of Technical Ordnance Solutions, signed the petition. Judge Caryl E. Delano oversees the cases. Mike Dal Lago, Esq., at Dal Lago Law, represents the Debtors as legal counsel. TEHUM CARE SERVICES: Proceedings in K.A. Suit Are Stayed -------------------------------------------------------- Chief District Judge Laura Taylor Swain for the Southern District of New York stays the proceedings in the case titled "K.A., et al., Plaintiffs, v. CITY OF NEW YORK, et. al., Defendants, Case No. 16-CV-4936-LTS-JW, (S.D.N.Y.)" as to the Defendant Tehum Care Services, Inc., d/b/a/ Corizon Health, Inc. only, which recently sought Chapter 11 bankruptcy petition. A full-text copy of the Order dated Feb. 16, 2023 is available at https://tinyurl.com/559z8d8c from Leagle.com. 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 Gray Reed & McGraw LLP. TEHUM CARE SERVICES: 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 Tehum Care Services, Inc. The committee members are: 1. St. Luke’s Health System, Ltd. 190 E. Bannock Street Boise, ID 83712 Attention: David Barton Phone: (208) 493-0560 Email: bartond@slhs.org 2. Capital Region Medical Center 1125 Madison St. Jefferson City, MO 65101 Attention: Tom Luebbering Phone: (573) 632-5001 Email: tluebbering@crmc.org 3. Maxim Healthcare Staffing Services, Inc. 7227 Lee Deforest Drive Columbia, MD 21046 Attention: Neil M. Williamson Phone: (410) 910-6191 Email: newillia@maximstaffing.com 4. Saint Alphonsus Health System, Inc. 1055 N. Curtis Road Boise, ID 83706 Attention: Stephanie Westermeier Phone: (208) 367-6325 Email: stephanie.westermeier@trinity-health.org 5. Truman Medical Center, Inc. d/b/a University Health 2301 Holmes Street Kansas City, MO 63108 Attention: Claire Hillman Phone: (816) – 404-3617 Email: Claire.hillman@uhkc.org 6. Rachell Garwood 31956 West Cranston Street New Haven, MI 48048 Phone: (586) 260-8325 Email: rachellgarwood@yahoo.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 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. It is based in Brentwood, Tenn. Tehum Care Services filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 23-90086) on Feb. 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. Judge Christopher M. Lopez oversees the case. The Debtor is represented by Jason S Brookner, Esq., at Gray Reed & McGraw, LLP. THOMAS G. GIALAMAS: Dismissal Reversed on Appeal, Case Remanded --------------------------------------------------------------- In the appealed the case captioned as Thomas G. Gialamas, Appellant (Debtor), v. Fiduciary Partners, a/k/a Fiduciary Partners Trust Company and OSTP, a/k/a Old Sauk Trails Park Limited Partnership, Appellees (Creditors), Case No. 21-cv-481-wmc, (W.D. Wis.), District Judge William M. Conley for the Western District of Wisconsin reverses the final decision of the bankruptcy court dismissing Thomas Gialamas's adversary complaint and remands to the bankruptcy court for further proceedings. Thomas Gialamas was placed into involuntary bankruptcy under Chapter 7 by petitioning creditors in October 2018. His case was converted to a Chapter 11 case in early 2019. Gialamas then proposed a Chapter 11 reorganization plan, but he withdrew it after failing to garner support for the plan from his creditors. One of his creditors, appellee Old Sauk Trails Park Limited Partnership, also proposed an alternative plan, to which Gialamas objected. Ultimately, the bankruptcy court overruled Gialamas' objections and confirmed OSTP's proposed reorganization plan. Gialamas did not appeal or seek reconsideration of that confirmation order. Meanwhile, Gialamas had sued the creditors Fiduciary Partners and OSTP in state probate court for breach of their fiduciary duties as trustee and fiduciary of the Thomas G. Gialamas Cosmos II Trust -- a spendthrift trust created originally by Gialamas' parents, to which he was the primary beneficiary. While Gialamas' petition was still pending in probate court, the bankruptcy court confirmed the Chapter 11 reorganization plan. Fiduciary Partners then asserted in the probate court that Gialamas had waived and released all his claims against them consistent with the release provision in section 4.5(d) of the Chapter 11 plan. In light of the parties' dispute in probate court, Gialamas filed an adversary complaint in his bankruptcy case against Fiduciary Partners Trust Company and OSTP, seeking declaratory relief that his claims as the beneficiary of the spendthrift trust (including, but not limited to claims against the trustee and other fiduciaries of the trust) were not property of Gialamas' bankruptcy estate and were not barred by section 4.5(d) of the Chapter 11 reorganization plan. But after hearing oral argument on the cross motions, Bankruptcy Judge Thomas Lynch entered a memorandum decision granting judgment on the pleadings in favor of OSTP and Fiduciary Partners and holding that Gialamas's adversary complaint failed to state a claim on which relief could be granted. On appeal, Gialamas contends that the bankruptcy court erred by focusing on the details of his claims relating to the spendthrift trust, which were not before it, rather than the underlying questions raised in his declaratory judgment complaint filed in the adversary proceeding. Appellees (creditors) argue that the bankruptcy court properly dismissed Gialamas's adversary complaint. The court agrees with Gialamas. To state a plausible claim for relief under the Declaratory Judgment Act, Gialamas was required to plead facts suggesting the existence of "a case of actual controversy." The Court finds that Gialamas's adversary complaint satisfies this threshold under federal pleading requirements, having expressly pleaded that: (1) he had filed a petition in probate court seeking to remove Fiduciary Partners from its role as trustee for the TGG Subtrust; (2) the removal petition alleged misconduct by Fiduciary Partners and other trust fiduciaries, including an entity that controlled OSTP; (3) the probate court defendants had responded that Gialamas's claims were barred by the Chapter 11 reorganization plan; (4) Gialamas took the position that his claims were not part of his estate and were not released through the Chapter 11 reorganization plan; and (5) the removal petition was still pending when the state probate court indicated that the issue of whether Gialamas's claims were property of his estate and released under the Chapter 11 plan should be decided by the bankruptcy court. The Court determines that these allegations establish the existence of a concrete, substantial controversy between parties with adverse legal interests that the bankruptcy court had the authority to address. Instead, the bankruptcy court criticized Gialamas for failing to attach his petition to remove the trustees of his TGG Trust to his complaint and concluded that Gialamas had failed to include "factual allegations" to support his argument that claims he held "in his capacity as a beneficiary of the trust are outside the scope of the waiver and release." The Court finds and concludes that the bankruptcy court failed to address a ripe, concrete controversy between the parties properly before it: whether Gialamas's claims in probate court of harm to the spendthrift trust raised in his capacity as primary beneficiary of the trust was property of the bankruptcy estate, and thereby released through the Chapter 11 reorganization plan. Accordingly, the Court remands this case for further proceedings. A full-text copy of the Opinion and Order dated Feb. 17, 2023 is available at https://tinyurl.com/56d59r5y from Leagle.com. TOPGOLF CALLAWAY: Moody's Affirms B1 CFR & Rates New Term Loan B1 ----------------------------------------------------------------- Moody's Investors Service affirmed Topgolf Callaway Brands Corp's Corporate Family Rating at B1 and Probability of Default Rating at B1-PD. Moody's also assigned a B1 rating to the company's new senior secured term loan B. The company's Speculative Grade Liquidity Rating is unchanged at SGL-2. The outlook remains stable. Topgolf Callaway plans to simplify its existing capital structure by refinancing and combining its term debt at Topgolf Callaway and Topgolf International, Inc. ("TGI" CFR B3, Stable). TGI was acquired by the company in March 2021 in an all-stock transaction valued at $1.7 billion and the capital structures of these two companies have thus far remained separate. Topgolf Callaway now plans to issue a new $1.1 billion 7-year term loan B, proceeds of which will be used to repay existing debt at both Topgolf Callaway and TGI while also increasing cash on the balance sheet. The Company also plans to increase its existing $400 million ABL revolver to $525 million and make it available to both Topgolf Callaway and TGI. Borrowings under the existing $175MM TGI revolver will be paid off with proceeds from the new term loan B and then terminated. There is no impact on TGI's current ratings or stable outlook. Upon closing of this transaction and repayment of the existing debt, Moody's will withdraw all ratings at TGI and of the existing term loan at Topgolf Callaway. The affirmation of Topgolf Callaway's CFR at B1 reflects its good product diversification within its three golf-related business segments, which consist of golf equipment, golf-themed entertainment restaurants, and apparel. The company's continued improving operating performance in the golf equipment business has enabled it to aggressively expand its Topgolf entertainment business to boost growth while keeping financial leverage from increasing. However, the rapid expansion of Topgolf entertainment venues brings with it the potential for high future business execution risk given the Topgolf business is capital intensive, cyclical, and discretionary. There also remains some risk that spending on golf equipment and entertainment may recede over the next year as inflationary pressure continues to challenge consumers and demand for golf equipment moderates from high levels reached during the pandemic. Moody's expects Topgolf Callaway's revenue to remain stable over the next 12-18 months with modest revenue growth of about 2% to 3% as lower demand for golfing equipment and apparel is more than offset by growth in the restaurant entertainment segment as the company continues to add more locations at a cadence of about 11 venues per year. Moody's expects that the company will be able to navigate through the weaker recessionary environment over the next 12-18 months and continue to successfully expand TGI locations to drive growth. Moody's further expects financial leverage will remain high starting at 5.9x debt-to-EBITDA as of December 31, 2022 (pro-forma for the transaction) and then moderating to below 5.0x debt-to-EBITDA over the next 12-18 months. However, the potential for future execution challenges with its TGI expansion strategy or waning demand or increased competition for its highly discretionary categories could derail its ability to deleverage. If the company cannot improve its EBITDA, leverage could increase as the company continues to invest in new TGI venues. Moody's expects that Topgolf Callaway can curtail new investment at TGI and preserve free cash flow if operating conditions turn negative. Further, Moody's expects TGI will not utilize funding from the golf equipment/apparel business by the end of 2023. TGI will nevertheless remain heavily reliant on external cash sources from lease-type structures such as REITs including upfront funding advances during construction to help with new venue builds. This is likely to result in rising lease liabilities that outstrips the consolidated company's free cash flow and leads to rising debt. Moody's expects liquidity to remain good as reflected in the SGL-2 rating with cash on hand of $265 million as of December 31, 2022 pro forma for the proposed refinancing, and $525 million of availability of its ABL facility following its contemplated refinancing. These cash sources along with operating cash flow and leases should provide ample funding for the sizable capital spending. Moody's anticipates that the company will only opt to begin construction on new Top Golf venues once some lease funding is in place, which alleviates some of the reliance on the company's internal cash sources and the revolver. The following ratings/assessments are affected by the action: Affirmations: Issuer: Topgolf Callaway Brands Corp. Corporate Family Rating, Affirmed B1 Probability of Default Rating, Affirmed B1-PD Assignments: Issuer: Topgolf Callaway Brands Corp. Senior Secured Term Loan B, Assigned B1 (LGD4) Outlook Actions: Issuer: Topgolf Callaway Brands Corp. Outlook, Remains Stable RATINGS RATIONALE Topgolf Callaway's B1 CFR reflects its high financial leverage and participation in the broad golf-related equipment and apparel categories that are highly discretionary. The company also owns TGI, a business that is capital intensive and vulnerable to competition from other entertainment options and pullbacks in discretionary consumer spending, though provides good growth potential in the entertainment sector. Topgolf Callaway's credit profile is supported by its strong market position and good geographic and segment diversification within golf-related categories. The credit profile also reflects Topgolf Callaway's good liquidity, large scale, and meaningful improvement in the golf equipment business over the last two years driven by increased participation in golfing. The company also has the ability to adjust the level of future investment in Topgolf should market conditions turn negative. The planned expansion of TGI's venue base over the next 3-5 years will lead to significant capital expenditures and funding needs that exceed Topgolf Callaway's combined operating cash flow. TGI plans to utilize cash, operating cash flow, revolver borrowings and advances from leasing entities such as REITs to help fund the expansion. The significant amount of leases (approximately $2.3 billion as of December 2022) far exceeds the amount of funded debt ($1.35 billion pro forma for the refinancing including the convertible notes). Leases and Topgolf Callaway's total debt are likely to continue to grow to support TGI's expansion, with the significant fixed charges creating vulnerability to any deterioration in returns on the Top Golf venue business that could arise from shifts in consumer spending, higher operating costs, or increased competition. Top Golf's growth potential thus also involves high business risk in the competitive and discretionary entertainment sector. Moody's assumes in the ratings that Topgolf Callaway's $250 million of convertible notes due in May 2026 will convert to equity in 2023 because the company's stock price exceeds the $17.62 conversion price by about 30% and the company can otherwise redeem the notes beginning in May 2023. The company's stock price will need to remain above the conversion price in order to be able to call the notes early. A conversion would help mitigate some of the overall increase in debt Moody's otherwise anticipates in 2023. EBITDA growth and the conversion of the notes should lead to debt-to-EBITDA falling to 5.0x over the next 12-to-18 months from approximately 5.9x as of December 2022 pro forma for the refinancing. Topgolf Callaway Brands Corp.'s ESG Credit Impact Score is moderately negative (CIS-3) with ESG factors having a limited impact on the current rating, with greater potential for future negative impact. Driving this score is the company's moderate governance practices in the context of the company's business profile, which positions it below average and the exposure carries overall moderately negative credit risks. Governance risk is driven primarily by its financial strategy and risk management policies as seen with high financial leverage from debt financed acquisitions and high funding needs to support Top Golf's venue growth plans. As with most consumer durables companies, the company's exposure to environmental risks are considered moderately negative. Topgolf Callaway's exposure to social risks is also moderately negative with some exposure to customer relations, health and safety, human capital and responsible production. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's view that Topgolf Callaway's overall business will remain stable over the next 12-18 months with growth in TGI's entertainment business offsetting modest pressure in revenue and earnings in both the equipment and apparel businesses. Moody's expect this positive momentum in TGI will lead to less cash investment needs from Topgolf Callaway's golf equipment and apparel business to support TGI's expansion. The outlook also reflects Moody's expectation that the company will be able to navigate through the weaker inflationary environment and be prudent with share repurchases and investment in new venues to preserve cash should the downturn impact its business more severely. Moody's also assumes in the stable outlook that the company maintains good liquidity including access to leases to help fund venue expansion, and that the unsecured convertible notes are converted to equity during 2023. Ratings could be downgraded if operating performance weakens, liquidity deteriorates, or ongoing investments in TGI detract from the company's ability to reduce financial leverage from current high levels. A downgrade could also occur if Moody's adjusted debt to EBITDA is sustained above 5.5x or there is a deterioration in returns on the Top Golf entertainment business due to shifts in consumer demand, rising costs or increased competition. Ratings could be upgraded if operating performance is stable or improves across the company's golf and apparel businesses, and returns on the TGI investments are good. An upgrade would also require the company to maintain good liquidity, generate comfortably positive free cash flow and improve EBITDA such that debt-to-EBITDA is sustained below 4.0x. As proposed, the new credit facilities are expected to provide covenant flexibility that if utilized could negatively impact creditors. Notable terms include the following: Incremental debt capacity up to the greater of (A) $560 million and (B) an amount equal to 100% of Consolidated EBITDA of the Borrower calculated on a pro forma basis as of the most recently completed four consecutive fiscal quarters plus unlimited amounts subject to the First Lien Leverage Ratio not to exceed 3.0x. Incremental debt amounts up to $560 million and an amount equal to 100% of Consolidated EBITDA may be incurred with an earlier maturity date than the initial term loans. Non-wholly-owned subsidiaries are not required to provide guarantees; dividends or transfers resulting in partial ownership of subsidiary guarantors could jeopardize guarantees, with no explicit protective provisions limiting such guarantee releases. The credit agreement provides some limitations on up-tiering transactions, including no amendment, waiver or consent, shall, without the prior written consent of each Lender directly affected thereby except with respect to debtor-in-possession financing, (i) subordinate, or have the effect of subordinating, the obligations under the Credit Documentation to any other indebtedness for borrowed money, or (ii) subordinate, or have the effect of subordinating, the liens securing the obligations under the Credit Documentation to liens securing any other indebtedness for borrowed money (except as expressly permitted by the Credit Documentation). The above are proposed terms and the final terms of the credit agreement may be materially different. The principal methodology used in these ratings was Consumer Durables published in September 2021. Topgolf Callaway Brands Corp., (formally known as Callaway Golf Company) is headquartered in Carlsbad, CA, and manufactures and sells golf clubs, golf balls, and golf and lifestyle apparel and accessories. The company's portfolio of global brands includes Callaway Golf, Odyssey, OGIO, TravisMathew and Jack Wolfskin. Topgolf Callaway also wholly owns Topgolf International Inc. (TGI), a business it acquired in March 2021 that owns and operates 78 golfing entertainment centers in the US and 3 in the U.K. Additionally, it has 5 franchised locations. Topgolf Callaway is a publicly-traded company, with consolidated revenue of $4.0 billion for the last twelve-month period ended December 31, 2022 (including TGI). TOPGOLF CALLAWAY: S&P Affirms 'B+' ICR on $1.1BB Refinancing ------------------------------------------------------------ S&P Global Ratings affirmed its 'B+' issuer credit rating on U.S.-based golf equipment, apparel, and entertainment company Topgolf Callaway Brands Corp. (TCB). S&P also assigned its 'B+' issue-level and '3' recovery ratings to TCB's proposed $1.1 billion senior secured first-lien term loan due in 2030. S&P intends to withdraw the ratings on Topgolf International and its debt upon completion of the transaction and debt repayment. The stable outlook reflects its expectation that robust sales growth and continued adjusted EBITDA expansion will support S&P Global Ratings-adjusted leverage in the mid-to-high-4x area at the end of this year. TCB plans to issue a seven-year $1.1 billion secured term loan facility to refinance term loans and revolving credit facility borrowings at the existing parent and Topgolf International subsidiary level. S&P said, "The rating affirmation reflects our expectation that adjusted EBITDA expansion will support increased leverage brought about by the proposed transaction. Topgolf Callaway plans to issue a $1.1 billion term loan facility to refinance its existing borrowings. This includes more than $620 million of parent-level term loan and asset-based lending (ABL) revolver borrowings and $447 million ring-fenced debt at the Topgolf International operating subsidiary. The company is also expected to be the borrower under an upsized $525 million ABL facility. The transaction would consolidate debt, with the parent Topgolf Callaway Brands Inc. being the borrower under both the proposed term loan and ABL facilities. The proposed transaction will increase gross funded debt by rolling over nearly $250 million in revolver borrowings into long-term funding. "We expect sales growth and profitability to remain robust in 2023, supporting S&P Global Ratings-adjusted leverage in the mid-4x area. TCB generated significant growth in sales and profitability in 2022. For example, revenue gained more than 27% on 42% growth at Topgolf in addition to a 14% gain for golf equipment and 27% growth at the active lifestyle segment. Moreover, S&P Global Ratings-adjusted EBITDA gained more than 22%, rising to $670 million, and adjusted EBITDA margins approached 17%. Following the strong growth last year, we expect sales to expand meaningfully, gaining nearly 12% over the next 12 months. Since it contributes more than 40% of sales, we see Topgolf's revenue increasing more than 22% because of new openings and same venue growth. We also project a low-double-digit increase at the Lifestyle Brands (about 26% of sales) segment because of store expansion and new customer acquisition. Both help offset the flat growth to low-single-digit revenue decline expected for Golf Equipment, a segment that contributes more than 30% of revenue. Golf equipment performance expectations consider product launches that partially offset negative sales trends because of the lapping of the channel build from last year. "We project a 25% increase in S&P Global Ratings-adjusted EBITDA in 2023. We also expect adjusted margins will increase to 18.8%, compared with 16.7% last year, as management's efficiency initiatives, including improved supply chain and sourcing at Topgolf and golf equipment take effect. Moreover, we expect sales leveraging to boost margins over the next 12-18 months. This follows less-than-expected profitability in 2022 because of seasonal performance variances and new venue opening costs in the fourth quarter last year. "We believe TCB's unique golf ecosystem model will help support both growth and management's financial policy. TCB operates as a diverse, globally scaled business with a stable of products and service that provide a mix of both growth and relatively stable performance characteristics. The equipment and lifestyle brands hold a strong market position as a leader in golf equipment and adjacent categories including significant market share in golf clubs (24%) and balls (21%). In addition, the Topgolf segment operates venues as golf-focused, highly interactive entertainment and innovative platforms. Most of the company's venues are also in high traffic and population centers, helping support customer growth. "We believe management will continue using operating cash flow to fund capital expenditures, which should drive revenue growth, including the significant expansion of Topgolf venues. We also believe the company will use its relationship with REITs to fund a significant portion of capital outlays, though with some lag in reimbursement. We think the company's REIT partnerships help in site selection and provide low-cost site funding. We believe management has a willingness to reduce debt over time, including the potential conversion or paydown of its convertible notes. Still, the company will likely generate negative free operating cash flow over the next 12-18 months, excluding REIT or other financing. We see this adding risk to the company's overall financial profile despite the growth prospects. "The stable outlook reflects our expectation of relatively steady golf equipment and lifestyle sales and strong Topgolf growth, along with good efficiency initiatives, all of which support S&P Global Ratings-adjusted leverage in the mid- to high-4x area over the coming year." S&P could lower the rating if S&P Global Ratings-adjusted leverage was sustained above 5x, likely a result of weak operating performance. This could result from a combination of: -- A substantial decline in demand for golf equipment and gear; -- Sustained margin compression due to supply chain and inflation pressures that the company is unable to offset through price increases or productivity initiatives; -- Market share losses due to unsuccessful product launches or changing consumer preferences; -- Lower Topgolf visitations leading to lower venue profitability; or -- The company adopts a more aggressive financial policy. S&P could consider a higher rating if the company sustained a track record of good performance through the economic cycle and maintained lease-adjusted leverage below the mid-4x range. This would most likely occur if: -- TCB continued to perform well, leading to market expansion, improved margins, and sustained positive free cash flow generation; -- The company continued to offset high input and labor cost inflation with cost controls, effective management of pricing, and productivity initiatives; and -- Management reduced debt, including the redemption or conversion of the convertible notes that we consider debt. ESG credit indicators: E-2, S-2, G-2 TRINSEO PLC: S&P Alters Outlook to Negative, Affirms 'B-' ICR ------------------------------------------------------------- S&P Global Ratings revised its outlook to negative from stable on Trinseo PLC. S&P affirmed the issuer credit rating on the company at 'B-'. At the same time, S&P affirmed its 'B+' issue-level rating and '1' recovery rating to Trinseo's senior secured B-2 term loan facility. S&P also affirmed its issue-level rating on Trinseo's senior unsecured notes at 'B-'. The recovery rating on the notes remains '4', reflecting its expectation of average (30%-50%, rounded estimate: 30%) recovery. The negative outlook reflects S&P's expectation that Trinseo will have credit metrics that are weak for the rating over the next 12 months. Trinseo's fourth quarter 2022 performance, while showing sequential improvement over the third quarter, was weaker than its initial expectations. The company's full year results, especially the second half of the year, compared with the previous year, were significantly weaker due to lower sales volume across most reporting segments, caused by continued customer destocking intensified by extended year-end shutdowns at many customer sites, COVID-19 impacts in China, and underlying demand weakness stemming from uncertain economic and geopolitical conflicts in Europe. In the fourth quarter, Trinseo was negatively affected as economic uncertainty and falling raw material prices led to a high level of customer destocking, particularly in Europe, and in its building and construction and consumer durables end markets. S&P said, "We expect underlying demand to remain challenged at least in the first half of 2023 but we anticipate the destocking cycle to subside early in the year. "Furthermore, we anticipate sales volumes to gradually improve through the year as demand in China recovers and energy prices in Europe fall, which will hamper competing import opportunities from Asia. Even though we anticipate these issues improving, helping margins and volumes in 2023, we still expect 2023 demand across the globe and credit metrics to remain soft. We expect the company's weighted average credit metrics, such as funds from operations (FFO) to debt and debt to EBITDA, to be between 4% and 7% and 7.5x and 10x, respectively, over the next year." Over the past few years Trinseo has been working to transform itself into a faster-growth, higher-margin, and less volatile specialty material and sustainable solutions provider. The company has been pursuing this strategy through divestitures of its commodity-based businesses and acquisitions of specialty chemicals segments. S&PS aid, "Our assessment of the company's business risk profile as weak reflects its exposure to volatile raw material costs and cyclical key end markets, as well as its modest geographic concentration, particularly in Europe (57% of net sales in 2022). "However, we believe its acquisitions of Arkema's polymethyl methacrylate (PMMA) business and Aristech Surfaces have the potential to partially offset these factors by increasing its EBITDA and margins and reducing its earnings volatility over the next couple of years. Trinseo has favorable market shares in key niches and technological advantages relative to its competitors. We also expect the company will continue to benefit from high operating rates. However, a significant portion of Trinseo's current operations still depends on volatile raw materials such as ammonia and methane, which can cause steep declines in earnings, as we saw in the second half of 2022. "The negative rating outlook on Trinseo reflects our expectation that its credit metrics will remain elevated over the next 12 months. Our base case scenario also assumes the company retains its styrenics business, at least for the near term. We forecast S&P Global Ratings-adjusted debt to EBITDA of about 7.5x-10x and FFO to debt of about 4%-7% over the next 12 months, which we consider weak for the rating." S&P could downgrade Trinseo within the next 12 months if: -- Its debt to EBITDA remained at double-digits or its FFO to debt did not improve from the low- to mid-single-digit percent area on a weighted average basis. This could occur if the company's EBITDA margins continued to decline significantly due to the weakened demand and higher-than-expected energy prices that led to volatility in the styrene markets; or -- Its liquidity weakened such that its ratio of liquidity sources to uses fell below 1.2x, or S&P believed it would be difficult for it to continue servicing its debt. S&P could consider revising the rating outlook on Trinseo to stable within the next 12 months if: -- The company expanded its EBITDA margins to the low-double-digit percent area, supported by favorable conditions in the styrene market; -- Debt to EBITDA fell below 7.5x or its FFO debt rose to the high-single-digit percent area on a sustained basis; and -- S&P believed its financial policies would support its maintenance of these improved credit metrics. ESG Credit Indicators: E-3, S-2, G-3 UNIVERSAL REHEARSAL: Unsecureds Unimpaired in Sale Plan ------------------------------------------------------- Universal Rehearsal Partners, LTD. submitted a Chapter 11 Plan and a Disclosure Statement. The Plan is designed to accomplish the winding down and dissolution of the Debtor following the sale of substantially all of its assets pursuant to section 363 of the Bankruptcy Code. The Plan is the mechanism by which the Sale Proceeds will be disbursed to the holders of Allowed Claims. A Liquidating Trustee will be designated under the Plan to oversee the wind-down process and administer the sale proceeds. The Debtor owns an industrial building located at 9150 Markville Drive, Dallas, Texas 75243 and the adjoining parking lot at 9142 Markville Drive, Dallas, Texas 75243 (together, the "Real Property"). The building has around 70 different rooms that the Debtor rents to bands and musicians to rehearse and store their equipment, which is how the Debtor generates revenue. The Debtor also generates income from renting the parking lot the United States Postal Service. The Real Property is the Debtor's primary asset. The Debtor seeks to sell its Real Property and substantially all of its personal property (collectively, the "Assets") to the highest and best bidder pursuant to Section 363 of the Bankruptcy Code (the "Sale"). The Debtor conducted an open and competitive bidding process in accordance with the Bid Procedures, and the Debtor complied with all applicable deadlines and requirements of the Bid Procedures and the Orders of the Court. Among other things, the Bid Procedures established (i) specific requirements for Qualified Bidders and Qualified Bids (as each term is defined in the Bid Procedures); (ii) procedures for the Debtor to fix the Cure Amounts (as defined in the Bid Procedures) associated with Executory Contracts and Unexpired Leases; (iii) deadlines for the submission of Qualified Bids; (iv) procedures to ensure that all parties were provided adequate and sufficient notice of the Bid Procedures, Auction, and Sale Hearing; and (v) procedures to ensure that the Sale process was conducted in a fair, open, and competitive manner free of any collusion or bad faith. All terms and provisions of the Bid Procedures were approved by the Court via the Bid Procedures Order. The Debtor's Broker engaged numerous potential bidders to foster interest and solicit Bids for the Debtor's Assets. The Debtor's Broker received five Qualified Bids prior to the Bid Deadline, resulting in a competitive Auction. Under the Plan, Class 4 Allowed GUC Claims are unimpaired. As soon as practicable following the resolution of all Disputed Claims, subject to the Liquidating Trustee's sole discretion, each holder of an Allowed GUC claim shall receive its Pro Rata share of the Liquidating Trust Assets (or the proceeds thereof), including interest, in full and final satisfaction, settlement and release of, and in exchange for, such Allowed GUC Claim. The Plan will be funded with the proceeds of the Debtor's Assets, including the Sale Proceeds. Upon Effective Date, the Liquidating Trustee shall make Distributions from the Sale Proceeds in the following priority, as necessary to comply with the terms of the Plan regarding the treatment of Allowed Claims: first, in satisfaction of the Allowed Prepetition Secured Claim of PlainsCapital Bank; second, in satisfaction of all Other Secured Claims that are Allowed as of the Effective Date; third, in satisfaction of all Unclassified Claims that are Allowed as of the Effective Date; and fourth, in satisfaction of all Priority Non-Tax Claims that are Allowed as of the Effective Date. All Sale Proceeds and other Liquidating Trust Assets remaining after the foregoing Distributions shall be held in reserve by the Liquidating Trustee pending a final determination of all Unclassified Claims, Secured Claims, and Priority Non-Tax Claims that may become Allowed after the Effective Date. Counsel for the Debtor: John J. Kane, Esq. S. Kyle Woodard, Esq. JaKayla J. DaBera, Esq. KANE RUSSELL COLEMAN LOGAN PC Bank of America Plaza, 901 Main Street, Suite 5200 Dallas, TX 75202 Tel.: (214) 777-4200 Fax: (214) 777-4299 E-mail: jkane@krcl.com kwoodard@krcl.com jdabera@krcl.com A copy of the Disclosure Statement dated Feb. 24, 2023, is available at https://bit.ly/3EDsGsH from PacerMonitor.com. About Universal Rehearsal Partners Universal Rehearsal Partners, Ltd., is a Texas limited partnership formed in 2001 between John Kirtland and Vince Barnhil for the acquisition of certain real property and the operation at that property of a business that leases practice rooms and rehearsal spaces to musicians and bands. Universal Rehearsal Partners sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Texas Case No. 22-31966) on Oct. 21, 2022, with up to $10 million in both assets and liabilities. Marcus Morriss, managing member of the Debtor's general partner, signed the petition. Judge Michelle V. Larson oversees the case. The Debtor is represented by Kane Russell Coleman Logan, PC. URBAN COMMONS: Highgate's Objection to DIP Order Overruled ---------------------------------------------------------- Bankruptcy Judge Philip Bentley for the Southern District of New York overrules the objection to the DIP Order filed by Highgate Hotels, L.P. Highgate objects to only one aspect of the Motion -- a provision of the DIP Order authorizing and directing the Debtors' former counsel to turn over approximately $5.6 million in insurance proceeds, which counsel has been holding in a trust account since it received these monies from the Debtors' insurer last summer. The DIP Order requires these funds to be released to the Lender and applied to its pre-petition debt, as a form of adequate protection for the priming of that debt by the liens granted to the DIP lender. Highgate contends that turnover of the Insurance Proceeds violates the terms of a purported escrow agreement, dated Aug. 16, 2022 (Procuration Agreement), which provides that no funds will be disbursed from the attorney trust account without the consent of all signatories, including Highgate. The Debtors' only right to or interest in these funds, Highgate claims, is their contingent right to receive the funds if and when Highgate consents. Highgate has neither consented nor given any indication of the circumstances in which it might be willing to do so. Characterizing the Procuration Agreement as an escrow agreement, Highgate contends that the funds held pursuant to this agreement are not property of the Debtors' estates, and therefore the Debtors lack the power to compel turnover of these funds or to use the funds to pay down the Lender's pre-petition debt. According to Highgate, the estates' only right to these funds is their contingent right to receive the funds if and when Highgate agrees to their release. Judge Bentley holds that "the Insurance Proceeds should be disbursed from the attorney trust account in accordance with the parties' underlying rights to these funds." Since Highgate does not dispute that the funds, which are proceeds of the Debtors' insurance policies, belong to the Debtors and are subject to the Lender's perfected senior lien, Judge Bentley concludes that "Highgate has no basis to challenge either turnover of these funds or their use to partially satisfy the Lender's pre-petition debt." Judge Bentley determines that "the hyper-literal reading of the Procuration Agreement advanced by Highgate would produce an absurd result. . . it defies common sense that the Debtors could ever have intended to give Highgate such an unfettered and perpetual veto power over distribution of the Insurance Proceeds. Highgate has offered no explanation why the Debtors might conceivably have intended this, much less any evidence that the Debtors in fact intended or expected such an outcome." Given the absence of any evidence that the parties intended otherwise, Judge Bentley recommends that it is appropriate to add an implied term permitting a judicial determination of the parties' rights to the funds. A full-text copy of the Modified Bench Decision dated Feb. 16, 2023 is available at https://tinyurl.com/22a9hh4r from Leagle.com. About Urban Commons 2 West Urban Commons 2 West, LLC, a company in Corona Del Mar, Calif., and its affiliates, filed voluntary petitions for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 22-11509) on Nov. 15, 2022. At the time of the filing, Urban Commons 2 West listed as much as $100 million to $500 million in both assets and liabilities. Judge Philip Bentley oversees the cases. Davidoff Hutcher & Citron, LLP and Getzler Henrich & Associates, LLC serve as the Debtor's legal counsel and restructuring advisor, respectively. Mark Podgainy, a partner at Getzler, is the Debtor's chief restructuring officer. US SILICA: Moody's Affirms B2 CFR & Alters Outlook to Positive -------------------------------------------------------------- Moody's Investors Service revised the rating outlook of US Silica Company, Inc. to positive from stable. At the same time, Moody's affirmed US Silica's corporate family rating at B2 and its Probability of Default Rating at B2-PD. Moody's also assigned a B2 rating to the proposed $950 million senior secured term loan and $150 million revolving credit facility. The Speculative Grade Liquidity rating remains unchanged at SGL-2. "US Silica's ratings affirmation and positive outlook reflect the company's focus on improving its ability to withstand an industry downcycle through lower fixed costs and debt levels," said Justin Remsen, Moody's Assistant Vice President." "The company's leverage has declined meaningfully in 2022 as a result of higher earnings and over $250 million in debt reduction pro forma for the proposed refinancing. US Silica's ability to de-lever toward 2.5x will be a key consideration during Moody's outlook period," added Remsen. Affirmations: Issuer: US Silica Company, Inc. Corporate Family Rating, Affirmed B2 Probability of Default Rating, Affirmed B2-PD Assignments: Issuer: US Silica Company, Inc. Backed Senior Secured Bank Credit Facility, Assigned B2 (LGD3) Outlook Actions: Issuer: US Silica Company, Inc. Outlook, Changed To Positive From Stable RATINGS RATIONALE US Silica's B2 CFR reflects the company's vulnerability to cyclical end markets, the competitive nature of the business it operates in and significant revenue exposure to the oil and gas industry. At the same time, Moody's takes into consideration US Silica's (i) solid market position as one of the largest providers of industrial and frac sand in the US, (ii) strategic footprint, (iii) distribution capability and (iv) broad customer base. In addition, the rating reflects Moody's expectation that the company's credit profile will benefit from strong underlying fundamentals over the next 12-18 months. Moody's projects US Silica's total debt-to-EBITDA will improve to 2.8x and 2.5x in 2023 and 2024. US Silica's SGL-2 Speculative Grade Liquidity Rating reflects Moody's expectation for good liquidity over the next 12-18 months. The liquidity profile is supported by $140 million cash as of December 31, 2022 pro forma for the refinancing, and Moody's expectation for over $140 million of annual free cash flow generation over the next two years. Given the projected cash flow and cash balance, Moody's forecast assumes no reliance on the proposed $150 million revolver in the next twelve months. The senior secured term loan is expected to contain certain covenant flexibility that if utilized can adversely affect creditors. Notable terms include incremental debt capacity up to the greater of $250 million and 60% of pro forma consolidated EBITDA, plus additional amounts subject to 2.75x total net leverage ratio (if pari passu secured). No portion of the incremental may be incurred with an earlier maturity than the initial term loans. There are no express "blocker" provisions which prohibit the transfer of specified assets to unrestricted subsidiaries; such transfers are permitted subject to carve-out capacity and other conditions. Subsidiaries must provide guarantees whether or not wholly-owned, eliminating the risk that guarantees will be released because they cease to be wholly-owned. There are no express protective provisions prohibiting an up-tiering transaction. The above are proposed terms and the final terms of the credit agreement may be materially different. ENVIRONMENTAL SOCIAL AND GOVERNANCE CONSIDERATIONS US Silica has a highly negative score (CIS-4). This is mostly attributable to highly negative governance risks score (G-4) stemming from the company's history of elevated leverage and exposure to volatile end markets. Moody's does recognize US Silica's commitment to reduce debt to better position the company in an industry downcycle. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Silica generates free cash flow consistently and achieves meaningful debt reduction, leading to a sustained debt/EBITDA ratio below 4x. The rating could be downgraded if Debt-to-EBITDA is expected to be above 6x, EBITA-to-Interest expense below 1.0x, or the company's liquidity profile deteriorates. The principal methodology used in these ratings was Building Materials published in September 2021. Based in Katy, Texas, US Silica operates silica mining and processing facilities. It is one of the largest producers of commercial silica and engineered materials derived from minerals in North America. The publicly-traded company generated revenue of $1.5 billion for twelve months ending December 31, 2022. VASU CONVENIENCE: Seeks Extension to File Plan to May 26 -------------------------------------------------------- Vasu Convenience, Inc., filed a motion to extend its deadline to file a Chapter 11 Small Business Plan of Reorganization and Disclosure Statement. This third extension is not made for the purpose of delay. This requested extension of the time period to file a plan is necessary due to the fact, that the time to file a plan is set to expire on March 28, 2022, and the Debtor needs an additional time to participate at the mediation, to obtain Court approval of the mutually reached terms and thereafter to file a plan of reorganization, incorporating settlement terms reached by the parties and offering treatment to all Creditors of the estate. During the pendency of this bankruptcy case, the Debtor has been working diligently in order to resolve the claim filed by 118 Queens Realty LLC, the Landlords. After numerous exchanges of offers, the parties were not able to reach an agreement and on February 20, 2023, the Debtor filed an application for entry of order assigning this matter to mediation pursuant to Rule 9019-1 of the Local Bankruptcy Rules for the for the United States Bankruptcy Court for the Eastern District of New York. At the hearing, held on February 21, 2023, the Court decided to refer the parties to mediation. Simply put, the Debtor needs a time to resolve a claim filed by the Landlords, and thereafter to file a feasible plan of reorganization. Counsel for the Debtor: Alla Kachan, Esq. LAW OFFICES OF ALLA KACHAN, P.C. 2799 Coney Island Avenue, Suite 202 Brooklyn, NY 11235 Tel.: (718) 513-3145 About Vasu Convenience Vasu Convenience, Inc., filed a petition for Chapter 11 protection (Bankr. E.D. N.Y. Case No. 21-43023) on Dec. 3, 2021, listing up to $100,000 in assets and up to $500,000 in liabilities. Jigar A. Patel, president, signed the petition. Judge Nancy Hershey Lord oversees the case. The Debtor tapped the Law Offices of Alla Kachan, P.C. and Wisdom Professional Services Inc. as its legal counsel and accountant, respectively. VERISTAR LLC: Gets Approval to Hire Sims Funk as Special Counsel ---------------------------------------------------------------- Veristar, LLC and its affiliates received approval from the U.S. Bankruptcy Court for the Middle District of Tennessee to employ Sims Funk, PLC as special counsel. The firm's services include: a. providing legal advice with respect to the Debtor's rights and obligations pertaining to construction law; b. investigating and, if necessary, instituting legal action on behalf of the Debtor to collect and recover assets of the estate based on specific construction law issues and statutes; c. preparing legal papers; d. assisting the Debtor in construction business and litigation matters including, but not limited to, licensure and bonding issues; e. representing the Debtor as may be necessary to protect its interests; and f. other necessary legal services that are within the scope of the firm's engagement. The firm's hourly rates for professionals and paralegals range from $650 to $230. R. Mark Donnell, Jr., Esq., is the firm's attorney who will be primarily responsible for representing the Debtors as special litigation counsel. His hourly rate is $475. The retainer fee is $10,000. As disclosed in court filings, Sims Funk is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: R. Mark Donnell, Jr., Esq. Sims Funk, PLC 3322 West End Ave., #200 Nashville, TN 37203 Phone: (615) 292-9335 Fax: (615) 649-8565 Email: mdonnell@simsfunk.com About Veristar LLC Veristar, LLC provides legal services for a range of practice areas and industries. It offers discovery, specialized legal staffing and veralocity services. Veristar and its affiliates filed their voluntary petitions for relief under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. M.D. Tenn. Lead Case No. 23-00413) on Feb. 5, 2023. Michel Geoffrey Abelow has been appointed as Subchapter V trustee. In the petition signed by its chief financial officer, Ben Gardner, Veristar listed $1,477,959 in total assets and $3,806,865 in total liabilities. Judge Marian F. Harrison oversees the cases. The Debtors tapped EmergeLaw, PLLC as bankruptcy counsel and Sims Funk, PLC as special counsel. VISTRA CORP: Moody's Affirms Ba1 CFR on Energy Harbor Transaction ----------------------------------------------------------------- Moody's Investors Service affirmed Vistra Corp.'s (Vistra) ratings, including its Ba1 corporate family rating and Baa3 senior secured rating. Vistra's SGL-1 speculative grade liquidity rating is unchanged. Moody's also affirmed the rating of Vistra Operations Company LLC (Vistra Operations), including its Ba2 senior unsecured rating. The outlooks of Vistra and Vistra Operations are stable. The ratings affirmation follows the announcement that Vistra will acquire Energy Harbor Corp. (Energy Harbor, Baa3 stable) for $3 billion in cash, a 15% ownership interest in a newly-formed subsidiary Vistra Vision and the assumption of $431 million of Energy Harbor's existing tax-exempt bonds. Affirmations: Issuer: Vistra Corp. Corporate Family Rating, Affirmed Ba1 Probability of Default Rating, Affirmed Ba1-PD Pref. Stock, Affirmed Ba3 (LGD6) Issuer: Vistra Operations Company LLC Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 (LGD5) Senior Secured Regular Bond/Debenture, Affirmed Baa3 (LGD3) Senior Secured Bank Credit Facility, Affirmed Baa3 (LGD3) Outlook Actions: Issuer: Vistra Corp. Outlook, Remains Stable Issuer: Vistra Operations Company LLC Outlook, Remains Stable RATINGS RATIONALE "Moody's views Vistra's acquisition of Energy Harbor to be positive from a business risk perspective as Vistra grows in size, increases both generation and geographic diversity, reduces Texas market exposure and lowers carbon transition risk," said Toby Shea, VP – Sr. Credit Officer, "Although, Vistra's leverage will rise in 2023 because of the acquisition, Moody's expects it to recover in 2024." The assets to be acquired, comprised mainly of four nuclear units, have strong cash flow stability that will be supported by the price floor established by the nuclear production tax credits that are a part of the Inflation Reduction Act of 2022. Vistra's ownership of nuclear units in Ohio and Pennsylvania will increase diversity and moderate the company's material concentration in Texas. Moody's estimates that Vistra's Texas generation business currently contributes about 45% of EBITDA, and its retail business, in which Texas is the dominant cash flow generator, contributes about 25%. By adding Energy Harbor's assets, Moody's expect Vistra's EBITDA contribution from Texas generation to fall to 36% and its retail business to 23%. The transaction will have a moderate and temporarily negative impact on Vistra's cash flow coverage, as measured by CFO pre-WC to debt. The acquisition, which is assumed to achieve financial closing in the third quarter of 2023, is likely to result in a CFO pre-WC to debt ratio of around 15% in 2023, down from 19% without the acquisition. The projected metric is particularly low in 2023 because Moody's have incorporated only three months of cash flow from the acquired assets while including the full amount of debt incurred to purchase the asset. If Moody's used a full year of cash flow associated with the new assets, Vistra's 2023 CFO pre-WC to debt ratio would be around 17%. Liquidity Vistra's SGL-1 reflects the company's very good liquidity, with liquidity requirements heavily driven by a need to post collateral to support its hedging program in a volatile energy price environment. Collateral posting requirements could increase modestly following the Energy Harbor acquisition and Vistra has no plans to increase its credit facilities as a result of the transaction. At year-end 2022, the company had $2.55 billion of available liquidity after posting $5.75 billion of collateral ($3.1 billion in cash and $2.65 billion in letters of credit). Vistra's underlying business generates strong cash flow, which Moody's expect to continue and benefit from the addition of Energy Harbor's nuclear assets. Moody's expects Vistra to generate about $2.0 to $2.5 billion of free cash flow before growth capital expenditures and dividends in 2023. Moody's estimate that the company will pay about $300 million of dividends and fund about $1 billion of growth capital expenditures this year. Vistra Operations has $3.375 billion of secured borrowing capacity under its revolving credit facility that expires in April of 2027. The revolving facility can be used to support letters of credit or fund short-term cash needs. The facility contains a material adverse change clause for new borrowing, a credit and liquidity negative. The revolving facility also has a covenant requiring that it maintain consolidated first-lien net debt to EBITDA below 4.25x, but it only applies when the usage for borrowing is above 30%. Vistra has indicated in its financial disclosure that it is in compliance with this financial covenant as of December 31, 2022. In addition to its $3.375 billion revolving credit facility, Vistra has a $1.35 billion commodity-linked facility that expires in October 2023. Vistra also has some additional uncommitted and short-term "Non-extended revolving credit facilities" to support collateral posting and an additional $200 million revolving credit facility (i.e., non-extended revolving credit facility) that expires in June 2023. As of December 31, 2022, Vistra had short-term borrowings of $650 million under its credit facilities. Upcoming long-term debt maturities include $1.9 billion of secured notes due in 2024 and $1.1 billion of secured notes due in 2025. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Outlook Vistra's stable outlook reflects its strong long-term business fundamentals, robust free cash flow, and the scale, diversification and carbon transition benefits provided by the addition of Energy Harbor. Moody's expects the acquisition to modestly depress Vistra's CFO pre-WC to debt ratio for 2023 but recover sufficiently in 2024 with a combination of rising cash flow and about $1 billion of planned debt reduction in 2024. Factors that Could Lead to an Upgrade Vistra's near-term prospect for an upgrade is limited because Moody's expect the Energy Harbor acquisition to depress its CFO pre-WC to debt ratio temporarily. Moody's could consider a positive rating action in the future if the company commits to and maintains a net debt to EBITDA target of around 2.5x and produces a CFO pre-WC to debt ratio of 24% or higher. This threshold has been lowered from 25% given the modestly lower business risk resulting from the Energy Harbor acquisition. Any upgrade would also take the company's growth plans and financial policy into consideration. Factors that Could Lead to a Downgrade Negative rating action could be considered if the company adopts a more aggressive financial policy or its CFO pre-WC to debt ratio remains below 17% on a sustained basis. This threshold has been lowered from 18% given the modestly lower business risk resulting from the Energy Harbor acquisition. Moody's could also take a negative rating action should the company fails to maintain adequate liquidity to manage energy price volatility. Company Profile Vistra is the second largest independent power producer in the US, with 36.3 gigawatts (GW) of generating capacity and 178 terawatt-hours (TWh) of power production. It is also one of the largest residential energy suppliers in the US, serving about 3.5 million customers. By acquiring Energy Harbor, Vistra's total generating capacity will grow to about 40 GW. The principal methodology used in these ratings was Unregulated Utilities and Unregulated Power Companies published in May 2017. VISTRA CORP: S&P Affirms 'BB' ICR on Energy Harbor Acquisition -------------------------------------------------------------- S&P Global Ratings affirmed its 'BB' issuer credit rating on Vistra Corp., and its issue-level ratings of 'BBB-' on the company's senior secured debt and 'BB' on the unsecured debt. The '1' recovery rating on the company's senior secured debt is unchanged, indicating S&P's expectation of very high recovery (90%-100%; rounded estimate: 95%) in a default scenario. The '3' recovery rating on the company's senior unsecured debt is also unchanged, indicating its expectation of meaningful recovery (50%-70%; rounded estimate: 50%) in a default scenario. The stable outlook reflects S&P's expectation that Vistra will continue its strong operational and retail performance as it integrates EH's assets into its fleet, while maintaining leverage in line with its expectation. Both companies' boards have approved the transaction, which is still subject to customary closing conditions and regulatory approvals. Vistra announced it is acquiring Energy Harbor Corp. (EH) for $3 billion cash and a 15% equity interest in its newly formed subsidiary, preliminary referred to as Vistra Vision (VV), and the assumption of approximately $431 million of existing debt. VV will own all of EH's assets, including its retail and nuclear assets, Vistra's retail and nuclear assets and its operating renewable projects and certain of its renewable development pipeline. The cash component of the acquisition will be funded by debt issued at Vistra's wholly-owned subsidiary, Vistra Operations Co. LLC (Vistra Ops), and from cash on Vistra's balance sheet. Vistra's business risk profile improves to satisfactory from fair. This improvement is largely spurred by the addition of EH's nuclear assets to Vistra's fleet. EH's generation assets consist of three nuclear plants, with a combined 4 gigawatts (GW) of total capacity, in the PJM Interconnection region. S&P said, "We view the addition of EH's nuclear assets to Vistra's fleet as credit supportive in terms of mitigating downside risk, diversifying assets and markets, and improving operational efficiency. In addition to the EH transaction, Vistra has built a strong track record in its retail operations, which we view as credit positive." A larger revenue contribution from nuclear assets will result in better cash flow visibility. Merchant nuclear assets are poised to benefit from a supportive regulatory environment. The production tax credits (PTCs), which were approved through the Inflation Reduction Act, are particularly meaningful because they translate into a floor on power prices of about $40-$45 per megawatt hour (/MWh) between 2024 and 2032. With the addition of EH's assets, we expect Vistra's EBITDA contribution from nuclear assets will materially increase to about 25% from 12% currently. Vistra's market diversity improves with the acquisition. The company's capacity in PJM will increase to about 31% from 23% currently. S&P views this as credit positive because a more diversified footprint will likely mitigate the impact of specific market disruptions. For example, PJM is exposed to different fundamentals compared with those of the Electric Reliability Council of Texas (ERCOT). Vistra's transition toward a lower carbon footprint modestly accelerates with the contribution from EH's nuclear assets. EH's nuclear assets will add about 4 GW of carbon-free generation to Vistra's fleet, which S&P views as credit positive because lower-emission assets will likely better withstand regulatory changes and operate for longer. The company also remains committed to a robust capital expenditure (capex) program, largely geared toward renewable projects. At the same time, Vistra's transition toward a lower carbon footprint is spread over several years, given the considerable size of its thermal fleet. Vistra's retail footprint should continue to provide a countercyclical hedge to its wholesale generation. S&P views Vistra's integrated model as credit supportive in terms of mitigating downside risk. The company has now has a long track record of demonstrated success in ERCOT. Vistra is one of the largest retail providers in ERCOT and benefits from attractive margins and low attrition rates. Since 2019, the company has focused on building a stronger retail platform in markets outside of Texas. The retail operations' performance outside of Texas has been subpar, with the company experiencing lower volume growth and a higher attrition rate. However, Vistra's retail operations in other markets have largely served as a hedging strategy, as opposed to generating margins. With this acquisition, the load match in PJM will increase moderately to about 75%. Vistra's strategy of maintaining some generational length helps mitigate potential risks. The company will continue to have about 2 GW of generational length, which S&P views as mitigating operational issues. In other words, Vistra should still be able to service its retail obligations even in the face of unplanned outages. In addition, having some unhedged wholesale generation allows the company to capture market upside and manage changes in its retail segment more easily. Vistra has maintained an adequate track record in terms of operational performance, with consistent availability rates and capacity factors. Vistra could eventually benefit from market reforms in ERCOT, as S&P expects they will result in lower systematic risk. ERCOT's regulators have implemented measures aimed at reducing systemic risks following the winter storm event in February 2021, including better availability of fuel during cold weather, an updated operating reserve demand curve, and higher ancillary service requirements. At the same time, regulators are also exploring more meaningful market reforms, such as implementing a performance credit market design, which could be transformative. Market participants are in early-stage discussions about this mechanism, which would likely be implemented outside of its outlook horizon. Although there are risks associated with any new market design, S&P believes that a more robust market construct could be positive for Vistra, given its meaningful exposure to ERCOT. S&P views the execution risks associated with the EH transaction as manageable. Execution risks associated with this transaction should be manageable given the nature of the acquisition and the company's track record of managing costs. S&P said, "Vistra is an experienced operator of nuclear assets, with its Comanche plant, which we view as a unique advantage when it comes to integrating EH's assets. We also view the anticipated synergies of about $125 million in cost savings annually as achievable, given the company's track record." Vistra should continue to benefit from a strong cash flow conversion rate. S&P said, "We anticipate that the company will maintain a high cash flow conversion rate. Its adjusted EBITDA translates into meaningful adjusted free cash flow before growth investment, at about a 55%-60% conversion rate. This should result in robust discretionary free cash flows that the company can apply to its capital-allocation priorities. We also anticipate that the company will largely maintain the same capital-allocation priorities, which include a robust capex plan mostly geared toward renewables, share repurchases, and debt repayment." Credit metrics are projected to improve by 2024. Leverage metrics are temporarily elevated in 2023 at about 4.2x-4.4x debt to EBITDA, as the company expects to raise up to $3 billion of debt to pay for the cash component of the acquisition. By 2024, projected S&P Global Ratings-adjusted EBITDA should be about $4.4 billion-$4.6 billion, once Vistra receives a full-year contribution from EH's assets and achieves the anticipated synergy benefits. S&P said, "Combined with our expectation of about $1 billion of debt paydown in 2024, leverage metrics are projected to improve to 3.6x-3.8x by 2024. The company has a track record of deleveraging following meaningful acquisitions. We also expect to have good cash flow visibility over our outlook horizon, given Vistra's robust hedging program, with more than 73% of its wholesale exposure hedged over the next three years." S&P said, "The stable outlook reflects our view that Vistra will delever following its acquisition of EH. We expect leverage of about 4.2x-4.4x in 2023, declining to about 3.6x-3.8x by 2024. We anticipate that this improvement will be largely spurred by debt repayment, which should be supported by Vistra's strong free cash flow conversion rate and meaningful visibility on its upcoming earnings due to a strong hedging program. Vistra will also benefit from a higher contribution from nuclear assets, with the PTCs mitigating the downside risks to energy margins. Finally, we expect Vistra will maintain robust operational performance and adequate retail performance as it integrates EH's assets in its fleet." S&P could take a negative rating action if: -- Debt to EBITDA is above 4.25x and stays there; or -- Funds from operations (FFO) to debt declines below 22% and remains there. This could occur if Vistra revises its financial policies, which could result in lower-than-expected debt repayment; or if the company's performance in the wholesale or retail segments were below expectations and this was not sufficiently offset with debt reduction commensurate with the decline in cash flows. In addition, S&P could take a negative rating action if Vistra were to experience material operational issues that negatively affected its ability to generate power and settle its hedges. S&P could take a positive rating action if: -- Market reforms implemented in ERCOT are geared toward reducing heightened systemic risk; and -- Adjusted debt to EBITDA nears 3.5x and FFO to debt increases above 22% and remains there. Improved credit metrics could be spurred by continued strength in power pricing, with Vistra maintaining its current financial policies, which include debt repayment. ESG credit indicators: E-3, S-2, G-2 S&P said, "Environmental factors are a moderately negative consideration in our credit rating analysis of Vistra. Vistra's acquisition of EH moderately speeds up its decarbonization plan, as EH's fleet consists entirely of nuclear generation and has no associated carbon footprint. As a result, nuclear generation will represent about 16% of Vistra's capacity, a material increase from 7% currently. In addition, Vistra continues to retire its less-efficient coal-fueled assets, representing about 8 GW of capacity, while developing a robust renewable platform." VOYAGER DIGITAL: UST Says Plan Disclosures Inadequate ----------------------------------------------------- William K. Harrington, the United States Trustee for Region 2, filed an objection to the final approval of the Second Amended Disclosure Statement Relating to the Third Amended Joint Plan of Voyager Digital Holdings, Inc. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code and to confirmation of the Amended Plan. The United States Trustee points out that prior to the January 10, 2023 hearing before this Court, the United States Trustee filed an Objection to the Debtors' Motions to enter into an asset purchase agreement with Binance.US and for conditional approval of the Debtors' Amended Disclosure Statement (the "APA/DS Objection"). The United States Trustee argued in the APA/DS Objection that, in the wake of the collapse of their transaction with FTX US, the Amended Disclosure Statement should have contained much more information concerning the new proposed purchaser, Binance.US, "its ability to consummate the sale and its ability to protect customer assets." APA/DS Objection, pg. 2-3 of 16. This is especially true given that the Amended Plan invites Voyager's customers to move over to Binance.US's platform. Among other unanswered questions involved Binance.US's applications to obtain Money Transmitter licenses from four jurisdictions. In addition, the Amended Disclosure Statement states simply that Binance.US has the financial wherewithal to meet its obligations under the APA and that it can protect the Voyager customers' cryptocurrency. The Amended Disclosure Statement, however, provides no detail on either of these points. Finally, the Amended Disclosure Statement provides that Binance.US will not engage in any activities that will require regulatory approval without identifying the "activities" that might otherwise require regulatory approval. Although the Debtors revised the Amended Disclosure Statement after the January 10, 2023 hearing, that document leaves several questions related to Binance.US unanswered. The United States Trustee further points out that the Amended Plan provides for the granting of broad releases to third parties. In addition, neither the Amended Disclosure Statement nor the Amended Plan provide sufficient justification for including all the employees of Voyager and its affiliates, as well as for the retained professionals in these cases. Neither the Amended Disclosure Statement nor the Amended Plan provides a justification for their inclusion among the Released Parties. Thus, the Amended Disclosure Statement should not be accorded final approval because it fails to provide creditors with sufficient information to allow them to make an informed choice as to whether to approve or reject the Amended Plan. The United States Trustee asserts that the Amended Plan inappropriately provides prospective releases to entities that do not yet exist. Specifically, the Wind-Down Debtors, the Plan Administrator, among others, are to receive prospective releases under the Amended Plan's release provisions. The United States Trustee points out that The Amended Plan's proposed exculpation provision is overly broad and should be narrowed consistent with this Court's guidance on the appropriate scope of exculpation provisions. The United States Trustee further points out that although the Amended Disclosure Statement discloses both a Management Transition Plan and an Employee Transition Plan, it does not disclose the terms of these plans. Although the United States Trustee has no objection to the implementation of the Transition Plans, the Amended Plan and Confirmation Order should make clear that the Court is not approving the as-yet undisclosed terms of the Transition Plans. Specifically, the Amended Plan and Confirmation order should provide that the Court is not approving any bonuses or severance plans that may be contemplated in connection with the Transition Plans. f. The Amended Plan improperly provides that all proofs of claim are to "be considered objected to and [d]isputed without further action by the Debtors." This provision violates the Federal Rule of Bankruptcy Procedure 3001(f), which provides that properly filed proofs of claim are prima facie valid and are allowed unless a party in interest files an objection. According to the United States Trustee, the Wind-Down Entity should not be the only entity with the right to object to a Proof of Claim. The United States Trustee asserts that a claim filed after the Bar Date should be deemed a "late-filed" claim; it should not be automatically deemed disallowed and expunged. About Voyager Digital Holdings Based in Toronto, Canada, Voyager Digital Holdings Inc. -- https://www.investvoyager.com/ -- runs a cryptocurrency platform. Voyager claims to offer a secure way to trade over 100 different crypto assets using its easy-to-use mobile application. Through its subsidiary Coinify ApS, Voyager provides crypto payment solutions for both consumers and merchants around the globe. Voyager Digital Holdings Inc. and two affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-10943) on July 5, 2022. In the petition filed by Stephen Ehrlich, chief executive officer, the Debtors estimated assets and liabilities between $1 billion and $10 billion. Judge Michael E. Wiles oversees the cases. The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy counsel; Berkeley Research Group, LLC as financial advisor; Moelis & Company as investment banker; Consello Group as strategic financial advisor; Deloitte Tax, LLP as tax services provider; and Deloitte & Touche, LLP as accounting advisor. Stretto, Inc. is the claims agent. On July 19, 2022, the U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in these Chapter 11 cases. The committee tapped McDermott Will & Emery, LLP as bankruptcy counsel; FTI Consulting, Inc. as financial advisor; Cassels Brock & Blackwell, LLP as Canadian counsel; and Epiq Corporate Restructuring, LLC as noticing and information agent. The committee also tapped the services of Harney Westwood & Riegels, LP in connection with Three Arrows Capital Ltd.'s liquidation proceedings in British Virgin Islands. On July 6, 2022, the Debtors filed a joint Chapter 11 plan of reorganization. * * * Following an auction process, the Debtors in September 2022 selected the bid submitted by FTX US' West Realm Shires Inc. as the winning bid for the assets. But after a series of events, FTX collapsed in November 2022, before the sale could be completed. After reopening bidding, Voyager Digital selected the offer from U.S. exchange BAM Trading Services Inc. (doing business as "Binance.US") as the highest and best bid for its assets. Binance's bid is valued at $1.022 billion. WANG LEE: Post-Petition Rent Obligations Are Not Modified --------------------------------------------------------- Bankruptcy Judge Michael E. Wiles for the Southern District of New York has issued a decision and order regarding post-petition rent obligations of the Debtor Wang Lee, Inc. Wang Lee owns and operates a restaurant that leases space at 311 East 45th Street in Manhattan. The landlord, Turtle Bay L.L.C., filed a motion seeking relief from the automatic stay -- arguing, among other things, that Wang Lee was not making timely post-petition rent payments. Meanwhile, Wang Lee challenged Turtle Bay's standing to seek relief. The Court notes that the lease to which Wang Lee and Turtle Bay are parties makes clear that Turtle Bay is a sublessor of the premises. Accordingly, Turtle Bay plainly has standing to seek relief and to enforce the landlord's rights under the Lease. At a hearing on Jan. 25, 2023 Wang Lee's counsel contended that the parties had agreed to reduce the rents due under the Lease to $4,000 per month, and that the Wang Lee had paid that amount. Turtle Bay denied that it had agreed to any modification of the rents that were payable. The Court scheduled an evidentiary hearing to resolve the parties' dispute. But the parties agreed that there was no need for further evidence, and no basis on which to conclude Wang Lee's post-petition obligations to pay rent are anything other than the amounts specified in the Lease. Wang Lee indicated a desire to try to work out a post-petition arrangement with Turtle Bay, and the Court encouraged the parties to have discussions to see if any such agreements could be reached. A full-text copy of the Decision and Order dated Feb. 16, 2023 is available at https://tinyurl.com/5959r3e9 from Leagle.com. About Wang Lee Wang Lee, Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 22-11363) on Oct. 11, 2022, with up to $50,000 in assets and$500,001 to $1 million in liabilities. Judge Michael E Wiles presides over the case. Yimin Chen, Esq., at Chen & Associates, PC represents the Debtor as counsel. WESTBANK HOLDINGS: Court Approves Fannie's Plan Outline ------------------------------------------------------- Judge Meredith S. Grabill entered an order approving the Disclosure Statement explaining the proposed Plan filed by Federal National Mortgage Association ("Fannie Mae") for debtors Westbank Holdings, LLC, et al. Objections to the Disclosure Statement were filed by Certain Tenants, the Sewerage and Water Board of New Orleans, Joshua L. Bruno, and the Office of the United States Trustee. Fannie Mae may now solicit acceptances or rejections of the Plan of Reorganization filed on behalf of each Debtor in these jointly administered proceedings. No later than Monday, March 6, 2023, an affidavit of mailing shall be filed into the record on behalf of Fannie Mae. Wednesday, March 29, 2023, is fixed as the last day for serving acceptances or rejections of the Plan. Wednesday, March 29, 2023, is fixed as the last day for filing and serving, pursuant to Bankruptcy Rule 3020(b)(1), written objections to confirmation of the Plan. Fannie Mae's counsel is to tabulate the acceptances and rejections of the Plan, certify the Tabulation of Ballots, and file the Tabulation of Ballots into the record by Monday, April 3, 2023. An evidentiary hearing on confirmation of the Plan will be held in person on Wednesday, April 5, 2023, at 9:00 A.M. and Thursday, April 6, 2023, at 9:00 A.M. before the undersigned at the U.S. Bankruptcy Court, Eastern District of Louisiana, 500 Poydras Street, Courtroom B-709, New Orleans, Louisiana. About Westbank Holdings Westbank Holdings, LLC, is a New Orleans, La.-based company primarily engaged in renting and leasing real estate properties. Westbank Holdings and its affiliates filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. La. Lead Case No. 22-10082) on Jan. 27, 2022. In its petition, Westbank Holdings listed as much as $50 million in both assets and liabilities. Joshua Bruno, manager, signed the petition. Judge Meredith S. Grabill oversees the cases. Frederick L. Bunol, Esq., at The Derbes Law Firm, LLC, Alvendia Kelly & Demarest, LLC and G Rowland CPA & Associates, serve as the Debtors' bankruptcy counsel, special counsel and accountant, respectively. Richard W. Cryar, a partner at F M Reed Company, is the Debtors' chief restructuring officer. Dwayne M. Murray, the Chapter 11 trustee appointed in the Debtors' cases, tapped Fishman Haygood, LLP as legal counsel and Patrick J. Gros, CPA, as accountant. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA. Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2023. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. *** End of Transmission ***