/raid1/www/Hosts/bankrupt/TCR_Public/230310.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, March 10, 2023, Vol. 27, No. 68
Headlines
2 MONKEY: Court OKs Cash Collateral Access Thru May 17
225 BOWERY LLC: Taps Nat Wasserstein of Lindenwood as CRO
ACCEPTANCE FINANCIAL: Court OKs Cash Collateral Use Thru April 12
AEARO TECHNOLOGIES: Asks for Estimate on Hearing Loss Claims
AFTERSHOCK COMICS: Taps Michael Bales as Special Counsel
AIG FINANCIAL: Slams Ex-Execs' Motion to Toss Chapter 11 Case
AMERICA-CV: Caribevision to Seek High Court Ch.11 Ruling Review
AMERICANAS SA: Billionaire Shareholders Offer to Boost Capital
AMERICANAS SA: Smaller Creditor Debt Payments Okayed
ARBAH HOTEL: Shuttered Hotel Owner Files Subchapter V Case
ASHLEY CAMPBELL: Continued Operations to Fund Plan Payments
ASPIRA WOMEN'S: CEO to Receive $500K in Annual Salary
ASPIRA WOMEN'S: Veronica Jordan Appointed as Board Chair
AVAYA INC: DIP Loans from Wilmington, Citibank OK'd
AVIRTA LLC: Foreclosure Bids Suit Resumes After Case Dismissal
BED BATH & BEYOND: Receives Additional Proceeds from Offering
BORREGO COMMUNITY HEALTH: Court Approves Sale to DAP Health
BRIGHT HEALTH GROUP: Needs $300 Million to Prevent Bankruptcy
BURGER BUILDING: Seeks Cash Collateral Access
BVM THE BRIDGES: Wins Interim Cash Collateral Access
CACHET FINANCIAL: Stipulated Protective Order Gets Approval
CANO HEALTH: Incurs $301.7 Million Net Loss in Fourth Quarter
CARPENTER TECHNOLOGY: Fitch Affirms BB LongTerm IDR, Outlook Stable
CELSIUS NETWORK: Custody Account Holders to Get 72 Cents on Dollar
CLEARPOINT NEURO: Inks Amended Employment Contracts With Top Execs
CNX MIDSTREAM: S&P Affirms 'BB' ICR on Improving Leverage
COASTAL DRILLING: Court OKs Cash Collateral Access on Final Basis
CONCRETE SERVICES: Seeks to Use Cash Collateral
CORE SCIENTIFIC: $70 Million B. Riley Financing Deal Approved
CORE SCIENTIFIC: Court Okays Appointment of Equity Committee
CRED INC: Trustees Can Get 3rd-Party Claims for Calif. Lockton Suit
CURTIS JAMES JACKSON: 50 Cent Gets $134K Award of Attorney's Fees
DELTA AIR LINES: Fitch Alters Outlook on BB+ LongTerm IDR to Stable
DELUXE CORP: S&P Downgrades ICR to 'B' on Expected Lower Revenue
DIEBOLD NIXDORF: Lauren States Won't Seek Re-election as Director
DIOCESE OF BUFFALO: Abuse Victims Still Wait for Compensation
DIOCESE OF BUFFFALO: Says Not Stalling Abuse Victims' Compensation
DIOCESE OF NORWICH: Committee Files $90M Abuse Victims Payout Plan
DIOCESE OF SACRAMENTO: Faces Insolvency Due to Sex Abuse Suits
EAGLE MECHANICAL: Wins Interim Cash Collateral Access
EARTH HOUSE: No Patient Care Concern, 2nd PCO Report Says
ENERGY HARBOR: Fitch Lowers IDR to 'BB+' & Puts Rating on Watch Neg
ESJ TOWERS: ESJ HOA's Motion for Relief from Automatic Stay Denied
FAIRWAY GROUP: Old Market's Bid for Leave to Appeal Denied
FOREST CITY REALTY: S&P Downgrades ICR to 'B', Outlook Negative
FTX GROUP: Ex-Engineering Chief Singh Pleads Guilty to Fraud
FTX GROUP: InsurAce Pays $40,000 to Co's Collapse Victims
FTX TRADING: Voyager Agrees to Withhold $445-Mil. From Creditors
GIGAMONSTER: Gets Court Okay for $26.6 Mil. Chapter 11 Asset Sale
GRAFTECH INTERNATIONAL: S&P Affirms 'BB-' ICR, Outlook Negative
H-CYTE INC: Issues $300K Convertible Notes to Investors
HAL LUFTIG COMPANY: Seeks to Hire CBIZ Inc. as Tax Accountant
HEALTHIER CHOICES: Signs Trading Plan With Execs, Directors
HEYL & PATTERSON: Plan Administrator Has Proven Avoidable Transfers
HIGHLAND CAPITAL: Plan Definition of Exculpated Parties Changed
HVI CAT: Penalized for Violations of Environmental Laws
ISAGENIX INT'L: Plans Restructuring Deal to Give Investors Control
JACKSON FINANCIAL: Fitch Assigns 'BB+' Rating on Preferred Stock
JDI DATA CORP: Hits Chapter 11 Bankruptcy, To Close Office
LARRY C TALLEY JR: Court Junks ReMa Energy's Fraud Claims
LENDINGTREE INC: S&P Upgrades ICR to 'CCC+' on Distressed Exchange
LUCIRA HEALTH: U.S. Trustee Appoints Creditors' Committee
MICHAEL MAIDAN: Trustee Authorized to Liquidate East End Ventures
MIRION TECHNOLOGIES: S&P Alters Outlook to Pos., Affirms 'B' ICR
MOLECULAR IMAGING: Court OKs Cash Collateral Access Thru April 5
MONTANA RENEWABLES: S&P Affirms 'B-' ICR, Outlook Stable
MONTGOMERY REALTY: Court OKs Interim Cash Collateral Access
MOUNTAIN PROVINCE: Q4 Conference Call Set for March 23
MRC GLOBAL: S&P Alters Outlook to Positive, Affirms 'B-' ICR
MUSCLE MAKER: Regains Compliance With Nasdaq Bid Price Requirement
NANTASKET MANAGEMENT: Unsecureds to be Paid in Full in Plan
NATIONAL MEDICAL: Can Recover Portion of Attorney's Fees and Costs
NGL & EROSION: Seeks Cash Collateral Access
NIELSEN & BAINBRIDGE: Court OKs $60MM DIP Loan from KKR
NORDAM GROUP: Fitch Hikes LongTerm IDR to 'B-', Outlook Stable
NORTH SHORE MANOR: Seeks Cash Collateral Access
NOVA WILDCAT: Court OKs $48MM DIP Loan from PNC Bank
NUSTAR ENERGY: Fitch Affirms LongTerm IDR at 'BB-', Outlook Stable
PACKERS HOLDINGS: Fitch Affirms IDR at 'B-', Outlook Stable
PARTY CITY: Deadline to File Claims Set for April 3
PHASE ONE SERVICES: Files Emergency Bid to Use Cash Collateral
PLATINUM GROUP: Shareholders Approve Three Proposals
PLUS THERAPEUTICS: Closes Subscription Agreement With Board Chair
PUERTO RICO: PREPA's Plan Heads for Creditor Vote
PWM PROPERTY: SL Hasn't Received A Dime of $185 Mil. Judgment
Q BIOMED: Delays Filing of Annual Report
RAPTOR AIRCRAFT: S&P Affirms CCC (sf) Rating on Class C Deals
RC HOME: Lender Seeks to Prohibit Cash Collateral Access
RETAIL ECOMMERCE: RadioShack Owner Seeks Funds for Possible Ch. 11
REVLON INC: Motion to Dismiss Aimco Plaintiffs' Claims Granted
REVLON INC: Puts Bankruptcy Deal to Creditor Vote
RODA LLC: U.S. Trustee Unable to Appoint Committee
SEAGATE TECHNOLOGY: Fitch Alters Outlook on BB+ LongTerm IDR to Neg
SMART AND SASSY: Unsecureds to Split $191K in Subchapter V Plan
SPG HOSPICE: PCO Files 4th Report on SPG Affiliates' Facility
ST. CHARLES MEMORY: Court Directs U.S. Trustee to Appoint PCO
STATERA BIOPHARMA: Stock to be Delisted From Nasdaq on March 13
STEREOTAXIS INC: Incurs $4.2 Million Net Loss in Fourth Quarter
SUNQUEST PROPERTY: Unsecureds to be Paid in Full over 60 Months
TEAL PROPERTIES: Unsecureds to be Paid in Full in Sale Plan
TECHNICAL COMMUNICATIONS: Amends $4M Promissory Note With CEO
TOMS KING: Burger King Franchisee Gets $31-Million Starting Bid
TRADESMAN BREWING: Seeks Cash Collateral Access
TRICIDA INC: Disclosure Statement Hearing Adjourned to March 21
TUESDAY MORNING: $12.5MM DIP Loan from 1903P Loan Agent OK'd
UPLAND POINT: No Resident Complaints, PCO Report Says
VELOCIOUS DELIVERY: Unsecureds Will Get 100% of Claims over 5 Years
VICE MEDIA: Taps Restructuring Expert Amid Bankruptcy Rumors
VISTAGEN THERAPEUTICS: Issued U.S. Patent for PH80 Nasal Spray
VISTRA CORP: Fitch Lowers LongTerm IDR to 'BB', Outlook Stable
VITAL PHARMACEUTICAL: Scheduled for April 27 Bankruptcy Auction
VOYAGER DIGITAL: 97% of Customers Voted in Favor of Bankruptcy Plan
VOYAGER DIGITAL: Amends Account Holder Claims Pay Details
VOYAGER DIGITAL: Paul Hastings Reveals Ties to Celsius
W&T OFFSHORE: Fitch Assigns 'B-' First Time IDR, Outlook Stable
W.A. LYNCH: Wins Cash Collateral Access Thru June 30
WRIGHT EXPERIENCE: Unsecured Creditors to Get 100% by 2024
XPO INC: Fitch Assigns First-Time BB+ LongTerm IDR, Outlook Stable
ZEOLI-BROWN LLC: Unsecured Creditors to Split $37.5K in 3 Years
ZOHAR FUNDS: Delaware Is Inappropriate Venue, NY Court Says
[*] Erin Fay Joins Wilson Sonsini's Restructuring Practice
[*] Joel Moss Joins Cahill's Bankruptcy Practice as Partner
[*] New Hampshire Bankruptcies Increased Again in February 2023
[^] BOOK REVIEW: Hospitals, Health and People
*********
2 MONKEY: Court OKs Cash Collateral Access Thru May 17
------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Orlando Division, authorized 2 Monkey Trading, LLC to use cash
collateral and provide adequate protection to the Small Business
Administration on an interim basis through May 17, 2023.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court; (b) the current and necessary
expenses set forth in the budget, plus an amount not to exceed 10%
for each line item (provided no amount will be disbursed for
pre-petition sales tax, absent proper application and entry of an
order by the Court); and (c) additional amounts as may be expressly
approved in writing by the SBA, to the extent the Creditor has an
interest in the cash collateral. The authorization will continue
until the effective date of any confirmed plan of reorganization of
the Debtor, or until further Court order.
As adequate protection, the SBA will have a perfected post-petition
lien against cash collateral to the same extent and with the same
validity and priority as its respective prepetition liens, without
the need to file or execute any document as may otherwise be
required under applicable nonbankruptcy law.
The Debtor will maintain all its insurances including liability and
casualty insurance coverage in accordance with state law and its
obligations under the agreements with its Creditors.
As additional protection for the SBA's interest in the cash
collateral, the Debtor will make regular monthly payments in the
amount of $2,437 on the loan up to the effective date of any
confirmed plan of reorganization of the Debtor. The monthly
payments will be applied by SBA as provided for in its loan
documents and agreements with the Debtor.
A continued hearing on the matter is set for May 17, 2023 at 1:30
p.m.
A copy of the Court's order and the Debtor's budget is available at
https://bit.ly/3ZO8TyW from PacerMonitor.com.
The budget provides for total operating expenses, on a monthly
basis, as follows:
$189,836 for March 2023;
$185,293 for April 2023;
$195,021 for May 2023;
$185,851 for June 2023; and
$174,472 for July 2023.
About 2 Monkey Trading, LLC
2 Monkey Trading, LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-04099) on
November 17, 2022. In the petition signed by Douglas Ingalls,
manager, the Debtor disclosed up to $500,000 in assets and up to
$10 million in liabilities.
Judge Tiffany P. Geyer oversees the case.
Michael A. Nardella, Esq., at Nardella and Nardella, PLLC, is the
Debtor's counsel.
225 BOWERY LLC: Taps Nat Wasserstein of Lindenwood as CRO
---------------------------------------------------------
225 Bowery, LLC seeks approval from the U.S. Bankruptcy Court for
the District of Delaware to employ Nat Wasserstein, a partner at
Lindenwood Associates, LLC, as its chief restructuring officer.
The Debtor requires a CRO to provide the following services: (i)
crisis management; (ii) corporate restructurings, wind downs, and
divestitures; and (iii) fiduciary services.
Mr. Wasserstein and his firm will be paid at the rate of $20,000
per month. They received an advance retainer of $20,000.
Mr. Wasserstein disclosed in a court filing that the firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The CRO can be reached at:
Nat Wasserstein
Lindenwood Associates, LLC
328 North Broadway, 2nd Floor
Upper Nyack, NY 10960
Phone: 845.398.9825
Fax: 212.208.4436
Email: info@lindenwoodassociates.com
About 225 Bowery
225 Bowery, LLC is a New York-based company operating in the
traveler accommodation industry.
225 Bowery sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 23-10094) on Jan. 24,
2023. In the petition signed by its chief restructuring officer,
Nat Wasserstein, the Debtor reported $50 million to $100 million in
both assets and liabilities.
Judge Brendan L. Shannon oversees the case.
Alston & Bird LLP and Young Conaway Stargatt and Taylor, LLP
represent the Debtor as legal counsel while Nat Wasserstein of
Lindenwood Associates, LLC serves as the Debtor's chief
restructuring officer.
Bank Hapoalim B.M., as lender, is represented by Scott S. Balber,
Esq., at Herbert Smith Freehills New York, LLP.
ACCEPTANCE FINANCIAL: Court OKs Cash Collateral Use Thru April 12
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Louisiana
authorized North American Acceptance Financial LLC to continue
using cash collateral on an interim basis, through April 12, 2023,
in accordance with the previous cash collateral order.
As previously reported by the Troubled Company Reporter, the Debtor
was permitted to use cash collateral exclusively for disbursements
to the extent and in the amount set forth in the Budget, with a 10%
variance.
As adequate protection, First Horizon was granted a replacement
security interest in and liens on all post-petition accounts of the
Debtor on which First Horizon holds valid and perfected liens as of
December 12, 2022, in the same respective priority it held prior to
the bankruptcy filing, and subject and subordinate only to (a) the
payment of the allowed unpaid and outstanding reasonable fees and
expenses of the attorneys, accountants, or other professionals
retained by the Debtor as well as Ryan Richmond, the subchapter V
trustee, up to the amounts set for in the Budget, and (b) valid,
perfected, enforceable and non-avoidable liens and security
interests granted by law or by the Debtor to any person or entity
that were superior in priority to the prepetition security interest
and liens held by First Horizon. The adequate protection lien was
to secure the amount of any post-petition diminution in the value
of the interests of First Horizon in the cash collateral to the
extent such interests are entitled to adequate protection against
such diminution under the Bankruptcy Code.
A further hearing on the matter is set for April 12, 2023 at 1
p.m.
A copy of the order is available at https://bit.ly/3YskK4H from
PacerMonitor.com.
About North American Acceptance Financial, LLC
North American Acceptance Financial, LLC is a subprime indirect
automobile finance lender. Acceptance Financial was organized in
2009 to both originate and service auto loans.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. La. Case No. 22-11537) on December 12,
2022. In the petition signed by Larry Verges, managing member, the
Debtor disclosed up to $10 million in both assets and liabilities.
Judge Meredith S. Grabill oversees the case.
Robin R. De Leo, Esq., at The De Leo Law Firm, LLC, serves as the
Debtor's counsel.
AEARO TECHNOLOGIES: Asks for Estimate on Hearing Loss Claims
------------------------------------------------------------
The bankrupt unit of 3M Co. is asking the bankruptcy judge to
estimate how much the industrial conglomerate would have to pay to
compensate soldiers who claim in more than 230,000 lawsuits that
their hearing was damaged by faulty military earplugs it produced.
In a court filing Feb. 28, 2023, Aearo Technologies argued that
hearing-test data from the US Department of Defense shows that
under one medical standard 90% of the soldiers who are suing have
not suffered any hearing impairment. Lawyers for the soldiers
rejected 3M's interpretation of the data, arguing that it has been
contradicted by hearing experts.
"An expeditious estimation proceeding in parallel with mediation is
a critical step towards a prompt and equitable negotiated
resolution of this bankruptcy case. Section 502(c) of the
Bankruptcy Code requires courts to "estimate[]" the value of
"contingent or unliquidated
claim[s]" when the resolution of those claims outside of bankruptcy
"would unduly delay the administration of the case." 11 U.S.C. Sec.
502(c)(1). There cannot be any doubt that continued litigation of
the more than 235,000 Combat Arms-related tort claims currently
pending against the Debtors would "unduly delay the administration"
of the Debtors’ restructuring. Id. Resolving such an enormous
volume of claims through piecemeal, case-by-case litigation would
take decades
and produce disparate results for similarly situated claimants,"
Aearo Technologies said in court filings.
According to Aearo, Plaintiffs' attorneys have repeatedly asserted
that the Debtors and 3M Company face massive liability based on
claims that hundreds of thousands of veterans suffered permanent
hearing damage:
* "3M cannot escape the fact that they are facing more than
200,000 claims from U.S. service members after supplying them a
defective earplug that caused irreversible hearing damage[.]"
* "[3M's] defective earplugs . . . have permanently damaged the
hearing of hundreds of thousands of servicemembers[.]"
* "We believe the order will ensure the continued efficient
management of this litigation and serve the interests of justice
for the 250,000 service members who have suffered hearing damage
due to 3M's negligence."
But Aearo notes that the objective Department of Defense data tell
a much different story. An analysis by Bates White -- an economic
consulting firm with significant expertise in mass tort claim
valuation, including in the context of bankruptcy court estimation
-- of the recently produced
audiometric data for more than 175,000 active MDL plaintiffs,
reveals that almost 90% of the plaintiffs for whom data were
produced have no hearing impairment under the AMA's methodology,
and over 85% have normal hearing under the WHO standard. Both the
AMA and WHO methodologies measure the functional consequences of
changes in hearing thresholds at various frequencies.
The Debtors seek entry of an order (a) authorizing an aggregate
estimation of Combat Arms-related claims against the Debtors for
the purposes of confirming a chapter 11 plan of reorganization and
informing the negotiation of a settlement trust established under
the plan; and (b) scheduling estimation proceedings.
At the request of the Combat Arms claimants, the Debtors have
delayed filing the Estimation Motion and adjourned the hearing on
the bar date motion to allow mediation to continue to progress
without distraction. But the Debtors are prepared to go forward
with both at this juncture.
Aearp asserts that an efficient, evidence-based estimation of the
Debtors' aggregate liability is in the best interests of all
stakeholders, including servicemembers and veterans with
legitimate, substantiated hearing loss claims. The Debtors plan to
continue
negotiating with the claimants in mediation to consensually resolve
their outstanding tort liabilities. Estimation proceedings will
inform that mediation, will assist the parties in reaching a
settlement, assist the court with confirmation, and should begin
now and run in parallel with
settlement discussions in the mediation.
About Aearo Technologies
Aearo Technologies -- https://earglobal.com/en -- is a 3M company
that designs, manufactures, and sells personal protection
equipment. The Company offers prescription and non-prescription
safety eye wear, face shields, hard hats, and respirators. Aearo
serves customers worldwide.
To address claims related to the Combat Arms Earplugs Version 2,
Aearo Technologies LLC and its affiliates sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Lead Case
No. 22-02890) on July 26, 2022. In the petition filed by John R.
Castellano, as authorized signatory, Aearo Technologies estimated
assets and liabilities between $1 billion and $10 billion each.
3M is not a debtor in the Chapter 11 cases. 3M has committed $1
billion to fund a trust allocated for Combat Arms claims.
Kirkland & Ellis LLP is serving as legal counsel and AlixPartners
LLP is serving as restructuring advisor to Aearo Technologies. Ice
Miller LLP, is serving as bankruptcy co-counsel to the Debtors.
Kroll is the claims agent.
PJT Partners is serving as financial advisor and White & Case LLP
is serving as legal counsel to 3M.
AFTERSHOCK COMICS: Taps Michael Bales as Special Counsel
--------------------------------------------------------
AfterShock Comics, LLC seeks approval from the U.S. Bankruptcy
Court for the Central District of California to employ Michael
Bales, Esq.. a practicing attorney in Los Angeles, as special
counsel.
The Debtor requires a special counsel to:
a. negotiate and draft contracts with parties that transact with
Rive Gauce Television, such as creators, and producers;
b. assist the Debtor with potential financing and investment
transactions; and
c. advise the Debtor regarding continuing operations.
The attorney will be paid $500 per hour
Mr. Bales disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Mr. Bales holds office at:
Michael V. Bales, Esq.
1900 Avenue of the Stars, 19th Floor
Los Angeles, CA 90067
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
arerepresented by Sklar Kirsh, LLP.
AIG FINANCIAL: Slams Ex-Execs' Motion to Toss Chapter 11 Case
-------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that AIG Financial Products
Corp. is defending its use of bankruptcy as a way to resolve
genuine financial distress—not thwart litigation brought by
disgruntled former executives over unpaid bonuses.
The AIG unit, which filed for bankruptcy in December 2022 owing
$37.4 billion on an intercompany loan, urged the US Bankruptcy
Court for the District of Delaware on Tuesday, February 28, 2023,
to reject efforts from the former executives to dismiss what they
have called a "bad faith" Chapter 11 case.
The company, in a court filing, said it has been accruing $133
million in monthly interest liabilities on the revolver loan.
About AIG Financial Products Corp.
AIG Financial Products Corp. is a wholly- owned, direct subsidiary
of American International Group, Inc. It is a Delaware corporation
founded in 1987 and based in Wilton, Conn., is a financial products
company. It was founded for the purpose of trading in the capital
markets and offering corporate finance, structured finance, and
financial risk management products, including complex derivatives
transactions.
AIG Financial Products filed a petition under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Case No. 22-11309) on Dec. 14,
2022, with $100 million to $500 million in assets and $10 billion
to $50 billion liabilities.
Judge Mary F. Walrath oversees the case.
The Debtor tapped Young Conaway Stargatt & Taylor, LLP and Latham &
Watkins, LLP as bankruptcy counsels; Debevoise & Plimpton, LLP as
special litigation counsel; and Alvarez & Marsal North America, LLC
as financial advisor. William C. Kosturos, managing director at
Alvarez & Marsal, serves as the Debtor's chief restructuring
officer. Epiq Corporate Restructuring, LLC is the claims and
noticing agent.
AMERICA-CV: Caribevision to Seek High Court Ch.11 Ruling Review
---------------------------------------------------------------
Nadia Dreid of Law360 reports that a Spanish-language television
company wants the U.S. Supreme Court to decide whether its Chapter
11 plan should be sent back down to a Florida federal court, and it
has asked the Eleventh Circuit to put its remand decision on hold
while the company petitions the justices to take the case.
As previously reported in the TCR, Caribevision Holdings previously
urged the full Eleventh Circuit to rethink a panel's decision to
remand its Chapter 11 plan to a Miami court, arguing that the
judges made "erroneous factual findings."
JUSTIA recounts that just before the Chapter 11 reorganization
plans of Caribevision Holdings, Inc. and Caribevision TV Network,
LLC was set to be confirmed, the debtors filed an emergency motion
to modify the plans under 11 U.S.C. Section 1127(a). The initial
plans called for equity in the reorganized companies to be split
between four shareholders: R.D.B., Pegaso Television Corp., E.B.,
and Vasallo TV Group. The modification, after being approved by the
bankruptcy court, stripped the first three of their equity and
allocated full ownership to the fourth -- a company controlled by
the debtors' Chief Executive Officer. the three ousted
shareholders, who collectively call themselves the Pegaso Equity
Holders, now challenge the bankruptcy court's order granting the
debtors' emergency motion to modify the reorganization plans. They
contend that they were entitled to a revised disclosure statement
and a second opportunity to vote on the plans under Federal Rule of
Bankruptcy Procedure 3019(a) -- a procedural protection the
bankruptcy court did not provide them.
According to JUSTIA, the Eleventh Circuit reversed the order
granting the debtor's emergency motion to modify the reorganization
plans, reversed in part the bankruptcy court's order confirming the
reorganization plans to the extent that it adopts the modification,
and remanded to the bankruptcy court to fashion an equitable
remedy. The 11th Circuit held that the bankruptcy court erred in
granting the debtor's modification without first requiring that the
debtor provide the Pegaso Equity Holders with a revised disclosure
statement and a second opportunity to cast a ballot.
The case is Emilio Braun, et al v. America-CV Station Group, Inc.,
et al., No. 21-13774 (11th Cir. 2023).
About America-CV Station Group
America-CV Station Group, Inc. is a privately held company
primarily in the television station ownership and program
production business. It provides broadcasting services.
America-CV and affiliate Caribevision Holdings, Inc. sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Case Nos. 19-16355 and 19-16359) on May 14, 2019. On May 28,
2019, America-CV Network, LLC and Caribevision TV Network, LLC also
filed Chapter 11 petitions (Bankr. S.D. Fla. Case Nos. 19-16976 and
19-16977). The cases are jointly administered under Case No.
19-16355). At the time of the filing, each of the Debtors disclosed
assets of $10 million to $50 million and liabilities of $1 million
to $10 million.
Judge Jay A. Cristol oversees the cases.
The Debtors tapped Genovese Joblove & Battista, P.A., as their
bankruptcy counsel, and Fletcher, Heald & Hildreth, P.L.C., as
Genovese's co-counsel.
AMERICANAS SA: Billionaire Shareholders Offer to Boost Capital
--------------------------------------------------------------
Cristiane Lucchesi of Bloomberg New reports that the billionaire
shareholders behind troubled Brazilian retailer Americanas SA are
informally offering to boost a capital injection to 10 billion
reais ($1.9 billion) which is being well received by bank creditors
and could unlock talks, according to two people with direct
knowledge of the matter.
The last official offer of 7 billion reais was considered too low
by creditors, but negotiations could begin in earnest if Jorge
Paulo Lemann and his partners are willing to put 10 billion reais
as a starting point, the people said, asking not to be named
discussing private matters.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in
Rio de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25,
2023. White & Case LLP, led by John K. Cunningham, is the U.S.
counsel.
AMERICANAS SA: Smaller Creditor Debt Payments Okayed
----------------------------------------------------
Cristiane Lucchesi of Bloomberg News reports that Americanas SA,
the distressed Brazilian retailer, can begin settling debts with
small creditors, a judge has ruled, in a blow to larger firms that
sought to halt the payments.
The company plans to pay around 192 million reais ($37 million) to
class I and class IV creditors in the short term with part of the
funds obtained from top shareholders, according to a filing seen by
Bloomberg. The move won't affect company cash flow, according to
Tuesday's, February 28, 2023, ruling by Judge Paulo Assed Estefan
in Rio de Janeiro.
About Americanas SA
Americanas was one of the largest diversified retail chains in
Brazil, with a wide platform of physical stores, robust e-commerce,
fintech, and has just entered into the niche food retail. It is
listed on B3, being indirectly controlled by billionaire Jorge
Paulo Lemann, Carlos Alberto Sicupira and Marcel Telles.
The retailer nosedived in January 2023 after becoming mired in an
accounting scandal. The firm filed for bankruptcy at a court in
Rio de Janeiro on Jan. 19, 2023.
Americanas sought protection under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-10092) on Jan. 25,
2023. White & Case LLP, led by John K. Cunningham, is the U.S.
counsel.
ARBAH HOTEL: Shuttered Hotel Owner Files Subchapter V Case
----------------------------------------------------------
Arbah Hotel Corp. filed for chapter 11 protection in the District
of New Jersey. The Debtor elected on its voluntary petition to
proceed under Subchapter V of chapter 11 of the Bankruptcy Code.
The Debtor is a small business with a business address of 2750
Tonnelle
Avenue, North Bergen, NJ 07047. The Debtor is also the owner of
the property located at 2750 Tonnelle Avenue, North Bergen, NJ
07047 (the "Property") and, at times in the recent past, operated a
hotel on the Property.
As of the Petition Date, the Debtor had ceased active operations of
the hotel due to a variety of issues including, but not limited to,
actions of a temporary receiver appointed to represent the
interests of the majority shareholder of the Debtor. The actions
by the temporary receiver included, but were not limited to,
advising hotel staff that they would not be paid in the future and
removing funds from the Debtor's
business accounts.
The Debtor filed the instant Chapter 11 petition to allow the
Debtor to reorganize or liquidate the Debtor's assets including,
primarily, the Property, and to pay debts which have accrued by the
Debtor, or on behalf of the Debtor. The Debtor anticipates having
sufficient liquid funds to maintain the vacant hotel prior to and
after the filing of a Chapter 11 Plan.
According to court filings, Arbah Hotel Corp. estimates between
$100,000 and $500,000 in debt owed to 1 to 49 creditors. The
petition states that funds will be available to unsecured
creditors.
About Arbah Hotel Corp.
Arbah Hotel Corp., doing business as Meadowlands View Hotel, is a
3.5-star business-friendly hotel in North Bergen, New Jersey.
Arbah Hotel Corp. filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 23-11467)
on Feb. 24, 2023. In the petition filed by Mark Wysocki, vice
president and operations manager, the Debtor reported assets
between $10 million and $50 million and liabilities between
$100,000 and $500,000.
Joseph L Schwartz has been appointed as Subchapter V trustee.
The Debtor is represented by:
Justin M Gillman, Esq.
Gillman, Bruton & Capone, LLC
2750 Tonnelle Avenue
North Bergen, NJ 07047
Tel: (732) 661-1664
Fax: (732) 661-1707
Email: jgillman@gbclawgroup.com
ASHLEY CAMPBELL: Continued Operations to Fund Plan Payments
-----------------------------------------------------------
Ashley Campbell, Inc., filed with the U.S. Bankruptcy Court for the
District of Colorado a Subchapter V Plan of Reorganization dated
March 6, 2023.
Debtor is a full-service interior design firm and primarily focuses
on residential projects. Debtor conducts business in the Denver
metro area and has been in business since 2005. Ashley Ehmke is the
CEO of Debtor.
Prior to the filing of this bankruptcy case, Debtor was involved in
extensive and costly litigation with the Ashenmils and with Homuth
relating to the amounts and validity of their claims. The ongoing
expense of this litigation triggered this Chapter 11 filing. Since
the Chapter 11 filing, Debtor has continued its operations as a
Chapter 11 debtor-in-possession.
Ashley Ehmke is the sole shareholder of Ashley Campbell, Inc. Ms.
Ehmke filed a Chapter 13 case on August 18, 2022 in the United
States Bankruptcy Court for the District of Colorado, Case #22
13092-TBM (the "Chapter 13 Case"). Ms. Ehmke has proposed a Chapter
13 Plan in the Chapter 13 Case. Confirmation of Ms. Ehmke's Chapter
13 Plan is pending as of the date of this Plan.
Ms. Ehmke and Ashley Campbell, Inc. have joint liability with four
Creditors. Those four Creditors are: Warren and Lisa Ashenmil,
Larry Homuth, JP Morgan Chase, and Michael Brownlee. Ms. Ehmke and
Ashley Campbell, Inc. do not dispute the validity of the JP Morgan
Chase and Michael Brownlee Claims. Ms. Ehmke and Ashley Campbell,
Inc. do dispute the validity of the Ashenmil and Homuth Claims. The
Court will determine the validity and amounts owing, if any, on the
Ashenmil and Homuth Claims. The Allowed Claims of these four joint
creditors will be paid through either this Chapter 11 Plan or Ms.
Hemke's Chapter 13 Plan. It is anticipated that all Allowed Claims
in the Chapter 13 Case and in this Chapter 11 case will paid in
full through the two plans.
Class II consists of the Claims of all Allowed Unsecured Creditors
of Debtor, except for Administrative Convenience Claims. The
creditors in this class are Warren and Lisa Ashenmil, JP Morgan
Chase, and Michael Brownlee. The creditors in this class also have
identical joint and several claims against Ashley Ehmke in the
Chapter 13 Case. Creditors holding Allowed Unsecured Claims will
have the option to receive either (a) a lump sum payment of 60% of
their Allowed Unsecured Claim in full satisfaction of their Claim.
This lump sum payment will be paid on the Effective Date of the
Plan (the "Chapter 11 Option"); or (b) payment of their Allowed
Unsecured Claim in full from distributions in the Chapter 13 Case
(the Chapter 13 Option).
Creditors who elect the Chapter 11 Option will not be entitled to
receive any payments on their Claim through the Chapter 13 Case.
Any payments that may be received by such Creditor from the Chapter
13 Case will be credited against the payment owing under the
Chapter 11 Option.
Creditors who elect the Chapter 13 Option will not be entitled to
receive any payments through the Chapter 11 Plan. Creditors who
elect the Chapter 13 Option will have their Allowed Unsecured Claim
paid in full through the Chapter 13 Case.
It is anticipated that Creditors who elect the Chapter 11 Option
will receive their payment by July 31, 2023. It is anticipated that
Creditors who elect the Chapter 13 Option will receive monthly
payments from the Chapter 13 Trustee in the Chapter 13 Case and
will be paid in full by May 2024.
Class IV consists of Administrative Convenience Claims. The only
Creditor in this class is Capital One. Capital One has an Unsecured
Claim of $170. Capital One will be paid the full amount of its
Allowed Unsecured Claim on the Effective Date.
Class V consists of Ashley Ehmke's 100% ownership interest in
Debtor. Ms. Ehmke will retain her ownership interest in Debtor
under the Plan.
The Plan provides that Debtor will continue its interior design
operations. Debtor will make all business decisions relating to
this operation. The income from these operations will fund the
payments to be made through the Plan. It is anticipated that the
Plan will pay all Allowed Claims in full.
Cash Flow Projections show the feasibility of the Plan. Pending a
final determination of their Claims, the Claim of Ashenmils has
been valued at $400,000 and the Claim of Homuth has been valued at
$0 for all Plan purposes.
Debtor will be empowered to take such actions as may be necessary
to perform its obligations under this Plan.
A full-text copy of the Subchapter V Plan dated March 6, 2023 is
available at https://bit.ly/3T14PZW from PacerMonitor.com at no
charge.
Attorney for Debtor:
Guy B. Humphries, Esq.
Guy Humphries, Attorney At Law
1801 Broadway Suite 1100
Denver, CO 80202
Tel: (303) 832-0029
Email: guyhumphries@msn.com
About Ashley Campbell Inc.
Ashley Campbell, Inc., sought protection for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Col. Case No. 22-13187) on
August 24, 2022, listing $100,001 to $500,000 on both assets and
liabilities. Judge Elizabeth E Brown presides over the case.
Guy B. Humphries, Esq., at Guy Humphries, Attorney At Law,
represents the Debtor.
ASPIRA WOMEN'S: CEO to Receive $500K in Annual Salary
-----------------------------------------------------
Aspira Women's Health Inc. and Nicole Sandford, the Company's
president and chief executive officer, entered into an amended and
restated employment agreement effective March 1, 2023.
Pursuant to the Sandford Agreement, the Company will pay Ms.
Sandford an annual base salary of $500,000. In addition, Ms.
Sandford will be eligible for a discretionary bonus of up to 75% of
her salary, with the amount to be determined by the Board in its
sole and absolute discretion.
During the term of her employment, Ms. Sandford will be entitled to
the Company's standard benefits covering employees at her level.
If Ms. Sandford is terminated without cause or resigns for good
reason (as these terms are defined in the Sandford Agreement), and
provided that she complies with certain requirements (including
signing a standard separation agreement release), under the
Sandford Agreement: (i) she will be entitled to continued payment
of her base salary as then in effect for a period of nine months
following the date of termination; and (ii) she will be entitled to
continued health and dental benefits through COBRA premiums paid by
the Company until the earlier of nine months after termination or
the time that she obtains employment with reasonably comparable or
greater health and dental benefits. Additionally, the Employment
Agreement provides that if Ms. Sandford's employment is terminated
without cause or for good reason within the 12-month period
following a change of control (as such term is defined in the
Sandford Agreement), then, in addition to the benefits above, 100%
of any then-unvested options to purchase Company common stock
previously granted by the Company will vest upon the date of such
termination (subject to earlier expiration at the end of the
option's original term).
The Sandford Agreement also contains a non-solicitation provision
that applies until 12 months after the termination of the Sandford
Agreement.
About Aspira Women's Health
Formerly known as Vermillion, Inc., Aspira Women's Health Inc. --
http://www.aspirawh.com-- is transforming women's health with the
discovery, development and commercialization of innovative testing
options and bio-analytical solutions that help physicians assess
risk, optimize patient management and improve gynecologic health
outcomes for women. OVA1 plus combines its FDA-cleared products
OVA1 and OVERA to detect risk of ovarian malignancy in women with
adnexal masses. ASPiRA GenetiXSM testing offers both targeted and
comprehensive genetic testing options with a gynecologic focus.
With over 10 years of expertise in ovarian cancer risk assessment
ASPIRA has expertise in cutting-edge research to inform its next
generation of products. Its focus is on delivering products that
allow healthcare providers to stratify risk, facilitate early
detection and optimize treatment plans.
Aspira Women's reported a net loss of $31.66 million for the year
ended Dec. 31, 2021, a net loss of $17.91 million for the year
ended Dec. 31, 2020, a net loss of $15.24 million for the year
ended Dec. 31, 2019, and a net loss of $11.37 million for the year
ended Dec. 31, 2018. As of Sept. 30, 2022, the Company had $23.94
million in total assets, $12.76 million in total liabilities, and
$11.18 million in total stockholders' equity.
In its Quarterly Report dated November 10, 2022, Aspira Women's
Health said it has incurred significant net losses and negative
cash flows from operations since inception and it also expects to
continue to incur a net loss and negative cash flows from
operations for 2022. There can be no assurance that the Company
will achieve or sustain profitability or positive cash flow from
operations. Given these conditions, there is substantial doubt
about the Company's ability to continue as a going concern.
ASPIRA WOMEN'S: Veronica Jordan Appointed as Board Chair
--------------------------------------------------------
The Board of Directors of Aspira Women's Health Inc. appointed Dr.
Veronica G.H. Jordan as the Chair of the Board, effective as of
March 1, 2023. In conjunction with this appointment, Dr. Robert
Auerbach stepped down as the Company's Lead Independent Director,
effective as of March 1, 2023.
In accordance with the terms of that certain Amended and Restated
Employment Agreement effective as of March 1, 2022 between the
Company and Valerie Palmieri, Ms. Palmieri's term as Executive
Chair of the Company concluded on March 1, 2023. In addition,
pursuant to the Palmieri Agreement, Ms. Palmieri resigned as a
director of the Board effective as of March 1, 2023.
About Aspira Women's Health
Formerly known as Vermillion, Inc., Aspira Women's Health Inc. --
http://www.aspirawh.com-- is transforming women's health with the
discovery, development and commercialization of innovative testing
options and bio-analytical solutions that help physicians assess
risk, optimize patient management and improve gynecologic health
outcomes for women. OVA1 plus combines its FDA-cleared products
OVA1 and OVERA to detect risk of ovarian malignancy in women with
adnexal masses. ASPiRA GenetiXSM testing offers both targeted and
comprehensive genetic testing options with a gynecologic focus.
With over 10 years of expertise in ovarian cancer risk assessment
ASPIRA has expertise in cutting-edge research to inform its next
generation of products. Its focus is on delivering products that
allow healthcare providers to stratify risk, facilitate early
detection and optimize treatment plans.
Aspira Women's reported a net loss of $31.66 million for the year
ended Dec. 31, 2021, a net loss of $17.91 million for the year
ended Dec. 31, 2020, a net loss of $15.24 million for the year
ended Dec. 31, 2019, and a net loss of $11.37 million for the year
ended Dec. 31, 2018. As of Sept. 30, 2022, the Company had $23.94
million in total assets, $12.76 million in total liabilities, and
$11.18 million in total stockholders' equity.
AVAYA INC: DIP Loans from Wilmington, Citibank OK'd
---------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
authorized Avaya, Inc., and its debtor-affiliates, on a final
basis, to obtain senior secured postpetition financing, consisting
of a non-amortizing term loan facility in an aggregate principal
amount of up to $500 million from a syndicate of lenders led by
Wilmington Savings Fund Society, FSB, as administrative agent and
collateral agent. An initial draw in the principal amount of up to
$400 million was made available to the Debtors upon entry of the
First Interim Order.
Avaya, Inc., and Avaya Holdings also obtained authority from the
Court to enter into a Superpriority Secured Debtor-in-Possession
ABL Credit Agreement with Citibank, N.A., as administrative agent
and collateral agent, in accordance with the DIP-to-Exit ABL
Commitment Letter and pay necessary fees and expenses. In their
request, the Debtors sought authority for Avaya Inc., in its
capacity as borrower, to obtain a $128.125 million senior secured
post-petition asset-based financing on a superpriority basis,
including (i) a $100 million letter of credit sub-facility and (ii)
a $15 million swing line sub-facility.
The Court also authorized Debtor Sierra Communications
International LLC to use proceeds of the Initial DIP Loans to fund
an intercompany loan in an amount not to exceed $50 million to
non-Debtor Avaya International Sales Ltd.
Avaya Inc. is also authorized to transfer up to $40 million of
proceeds of the Initial DIP Term Loans to the Foreign Reserve
Account.
The Debtors are also permitted on an interim basis to use cash
collateral of their prepetition secured lenders and grant adequate
protection, subject to a Carve Out, to the extent of any diminution
in value of their respective interests in the Prepetition
Collateral.
The maturity date with respect to the DIP Facility will be the
earliest of:
(a) six months after the Closing Date (or if such day will not
be a Business Day, the next succeeding Business Day);
(b) 45 days after the Petition Date if the Final Order has not
been entered prior to the expiration of such 45-day period, unless
otherwise extended by the Required Lenders;
(c) the Consummation Date;
(d) the acceleration of the Loans and the termination of the
Commitments with respect to the Term Facility;
(e) the consummation of a sale of all or substantially all of
the assets of the Borrower (or the Borrower and the Guarantors)
pursuant to section 363 of the Bankruptcy Code; and
(f) the termination of the Debtors' Restructuring Support
Agreement with certain lender groups.
The Debtors are borrowers under these prepetition facilities:
(a) the Prepetition ABL Facility, dated as of December 15,
2017, with Citibank, N.A., as administrative agent and collateral
agent;
(b) the Term Loan Credit Facility, dated as of December 15,
2017, with Goldman Sachs Bank USA, as administrative agent and
collateral agent;
(c) the Legacy Notes, which are 6.125% senior secured first
lien notes issued by Avaya, Inc. pursuant to the Indenture, dated
as of September 25, 2020, with Wilmington Trust, National
Association, as trustee and as notes collateral agent. The Legacy
Notes mature on September 15, 2028;
(d) the Secured Exchangeable Notes issued by Avaya Inc.,
pursuant to the Indenture dated July 12, 2022, with Wilmington
Trust, National Association, as trustee. The Secured Exchangeable
Notes mature on December 15, 2027; and
(e) Convertible Notes issued by Avaya Holdings pursuant to the
Indenture dated June 11, 2018, with The Bank of New York Mellon
Trust Company N.A., as trustee.
Avaya's prepetition capital structure includes approximately $3.4
billion in funded debt as of the Petition Date, consisting of:
Indebtedness Balance Outstanding
------------ -------------------
Prepetition ABL Facility $56,000,000
B-1 Term Loans $800,000,000
B-2 Term Loans $743,000,000
B-3 Term Loans $350,000,000
Legacy Notes $1,000,000,000
Senior Exchangeable Secured Notes $250,000,000
HoldCo Convertible Notes $221,000,000
-------------------
Total $3,420,000,000
Legacy Liabilities Balance Outstanding
------------------ -------------------
US Pension (underfunded
liability) $111,000,000
International Pension
(underfunded liability) $319,000,000
OPEB (underfunded liability) $115,000,000
-------------------
Total $545,000,000
The HoldCo Convertible Notes mature on June 15, 2023.
As adequate protection, each of the Prepetition Term Loan Secured
Parties, the Prepetition Legacy Notes Parties and the Prepetition
Secured Exchangeable Notes Parties are granted allowed
superpriority administrative expense claims as provided for in
Bankruptcy Code section 507(b) in the amount of the First Lien
Adequate Protection Claim, which Prepetition First Lien 507(b)
Claims will have recourse to and be payable from all of the DIP
Collateral, including, without limitation, subject to entry of the
Final Order, the Avoidance Proceeds. The Prepetition First Lien
507(b) Claims will be subject and subordinate to the Carve Out and
the DIP Superpriority Claims.
The Prepetition First Lien Agents (for the benefit of the
applicable Prepetition Secured Parties) are granted valid,
perfected replacement security interests in and liens upon all of
the DIP Collateral including, without limitation, subject to entry
of the Final Order, the Avoidance Proceeds, in each case, junior to
the Carve Out, the DIP Liens and any other liens that are senior to
DIP Liens.
A copy of the Court's Final DIP Order is available at
https://bit.ly/3J0SRLd from PacerMonitor.com.
About Avaya
Morristown, New Jersey-based Avaya offers digital communications
products, solutions and services for businesses of all sizes.
Avaya delivers its technology predominantly through software and
services, both on-premise and through the cloud in a diverse range
of industries, including financial services, manufacturing, retail,
transportation, energy, media and communications, healthcare,
education, and government.
Avaya, Inc., and 20 affiliated entities, including Avaya Holdings
Corp., filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex.
Lead Case No. 23-90088) on February 14, 2023.
The Hon. David R. Jones oversees the cases.
Avaya Inc. and 17 affiliates first sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 17-10089) on Jan. 19, 2017. The
2017 debtors emerged from bankruptcy and their second amended joint
Chapter 11 plan of reorganization was declared effective on Dec.
15, 2017. The 2017 Plan provides holders of first-lien debt with
90.5% of stock in the reorganized company and holders of
second-lien notes with a pro rata share of 4% of stock and warrants
for an additional 5.1% of the shares. Avaya projected to have
$2.925 billion of funded debt and a $300 million senior secured
asset-based lending facility available following emergence.
The 2023 petitions were signed by Eric Koza as chief restructuring
officer. The Debtors estimated $1 billion to $10 billion in both
assets and liabilities on a consolidated basis.
Avaya Holdings' most recent financial report filed with the
Securities and Exchange Commission was for the three-month period
end March 31, 2022. In its Form 10-Q report, Holdings disclosed
$5.8 billion in total consolidated assets against $5.2 billion in
total consolidated liabilities.
In the 2023 bankruptcy filing, the Debtors have retained Kirkland &
Ellis LLP and Jackson Walker LLP as bankruptcy co-counsel; Evercore
Group LLC as investment banker; AlixPartners LLP as restructuring
advisor; PricewaterhouseCooopers LLP as auditor; and Kurtzman
Carson Consultants LLC as claims and noticing agent.
Counsel to Wilmington Savings Fund Society, FSB, as administrative
agent and collateral agent under the DIP Term Loan is Ropes & Gray
LLP.
A group of lenders are represented by Akin Gump Strauss Hauer &
Feld LLP, Centerview Partners LP and Alvarez & Marsal North
America, LLC. Counsel to the Akin Ad Hoc Group.
A group of lenders are represented by Paul, Weiss, Rifkind, Wharton
& Garrison LLP, Glenn Agre Bergman & Fuentes LLP, and FTI
Consulting, Inc. Counsel to the PW Ad Hoc Group.
Counsel to Goldman Sachs Bank USA, as administrative agent and
collateral agent under the Prepetition Term Loan, is Davis Polk &
Wardwell LLP.
AVIRTA LLC: Foreclosure Bids Suit Resumes After Case Dismissal
--------------------------------------------------------------
Kelly Lienhard of Law360 reports that a North Carolina judge ruled
to resume a case against Avirta LLC, which a jury found had
participated in a scheme to rig public bids on foreclosed
properties and extort homeowners, after the company's separate
Chapter 11 bankruptcy filing was dismissed by a Utah bankruptcy
court.
About AVIRTA LLC
AVIRTA LLC filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Utah Case No. 22-25002) on Dec. 24,
2022. In the petition filed by Mark Allen, as manager, the Debtor
reported assets and liabilities between $1 million and $10
million.
The Debtor is represented by:
Steven William Shaw
ShawLaw Legal PLLC
OFFICE OF RECORD
918 S CRESCENT WAY
MAPLETON, UT 84664
BED BATH & BEYOND: Receives Additional Proceeds from Offering
-------------------------------------------------------------
Bed Bath & Beyond Inc. on March 8 announced the receipt of
approximately $135 million in gross proceeds, for a cumulative
total of $360 million through March 7th, 2023, upon exercise of
preferred stock warrants issued in its previously announced public
equity offering. As a reminder, on February 7, 2023, the Company
completed an underwritten public offering which raised initial
gross proceeds of $225 million and enabled the Company to receive
up to an additional $800 million. The Company has used proceeds
received to date to repay outstanding revolving loans, creating
additional liquidity opportunities to support business operating
activities.
Sue Gove, President & CEO of Bed Bath & Beyond Inc. said, "Over the
past month, we have been rebuilding our financial and operational
positioning to execute our customer-focused turnaround plans.
Since closing our equity financing last month, we have engaged with
suppliers to improve our inventory positioning and we have
continued to optimize our brick-and-mortar footprint through store
closures to align with customer preference. Additionally, as
announced last week, we paid the outstanding interest due on all
Senior Notes, which has been acknowledged by key constituents such
as credit agencies. We continue to work with determination and
diligence to fulfill both our near- and long-term goals of
maximizing prospects for all stakeholders."
In connection with the foregoing, the Company entered into a waiver
and amendment to its Credit Agreement.
About Bed Bath & Beyond
Bed Bath & Beyond Inc. (Nasdaq: BBBY), together with its
subsidiaries, is an omnichannel retailer selling a wide assortment
of merchandise in the Home, Baby, Beauty & Wellness markets and
operate under the names Bed Bath & Beyond, buybuy BABY, and Harmon,
Harmon Face Values. The Company also operates Decorist, an online
interior design platform that provides personalized home design
services.
The Company reported a net loss of $559.62 million for the fiscal
year ended Feb. 26, 2022, a net loss of $150.77 million for the
year ended Feb. 27, 2021, and a net loss of $613.82 million for the
year ended Feb. 29, 2020. As of Nov. 26, 2022, the Company had
$4.40 billion in total assets, $5.20 billion in total liabilities,
and a total shareholders' deficit of $798.64 million.
* * *
As reported by the TCR on Jan. 11, 2023, S&P Global Ratings raised
its issuer credit rating on Union, N.J.-based specialty home
retailer Bed Bath & Beyond Inc. (BBBY) to 'CC' from 'SD' (selective
default). S&P said, "The 'CC' rating and negative outlook on BBBY
reflects our view that while not actively in default, the company
is highly vulnerable and a distressed transaction or broader
restructuring is a virtual certainty based on its deteriorating
liquidity position, challenging operating conditions, and the
looming maturities of its outstanding 2024 notes."
As reported by the TCR on Nov. 28, 2022, Moody's Investors Service
retained Bed Bath's corporate family rating at Ca and the outlook
remains stable. According to Moody's, Bed Bath & Beyond's Ca
corporate family rating reflects the very high likelihood of
further defaults over the next 12 months.
BORREGO COMMUNITY HEALTH: Court Approves Sale to DAP Health
-----------------------------------------------------------
Ema Sasic of Palm Springs Desert Sun reports that the Bankruptcy
Court approved the sale of Borrego Health to DAP Health, the latest
step for the federally qualified health center to transfer
operations of clinics to a like-minded center.
On Feb. 15, Borrego Health Board of Trustees announced it selected
DAP Health to acquire Borrego Health clinics in Riverside and San
Diego counties. DAP Health is an advocacy-based health care
organization serving thousands of patients via primary care, mental
health, dental and HIV specialty care.
Innercare and Neighborhood Healthcare would also provide
operational and administrative support.
"With the court's approval of DAP Health's bid, we are now focused
on the important work of coordinating closely with DAP Health and
its partners, Innercare and Neighborhood Healthcare, to support our
patients and our teams through a smooth transition," Borrego Health
CEO Rose MacIsaac said in a statement. "Each of the communities
our organizations serve have different needs, and I'm looking
forward to seeing how our combined expertise and resources will
strengthen access to quality care across the region and improve the
lives of those who count on us."
Borrego Health said clinics will remain open, and patients do not
need to reschedule appointments.
Also, the court approved an agreement between Borrego Health and
the California Department of Health Care Services that facilitates
the sale and transition of operations. The agreement also
resolves pending litigation between Borrego Health and the state
department, according to a press release.
The next step in finalizing the transaction is for the sale to
receive regulatory approval from the Health Resources & Services
Administration. While that process is underway, leaders from
Borrego Health, DAP Health, Innercare and Neighborhood Healthcare
will begin collaborating on how to ensure a smooth transition that
"does not interrupt patient care or team members’ careers," a
press release states.
The timing on receiving regulatory approval is to be determined.
"We entered this process with one goal: to ensure that people who
receive care today will find the doors to that care open tomorrow,"
DAP Health CEO David Brinkman said in a statement. "Today's
decision begins a year of convening and collaborating with our
partners to protect health care access for Borrego's patients. We
look forward to working alongside leadership at each organization
to create the path forward."
In a statement from Jeffrey Pomerantz, of Pachulski Stang Ziehl &
Jones LLP, an attorney for the Official Committee of Unsecured
Creditors of Borrego Health, he said he is "pleased" the sale was
approved by bankruptcy court.
"Our top priority has always been to ensure access to high-quality,
culturally competent care remains uninterrupted for patients and
communities, especially considering the vital care provided to
underserved individuals in San Diego and Riverside Counties,"
Pomerantz said. "We are confident that with this sale, DAP Health
can continue this critically important healthcare mission in the
communities it serves."
He added: "As an advocate for all unsecured creditors, the
Committee is also pleased that the sale will allow for all
unsecured creditors to be fairly and substantially compensated for
goods and services previously provided to Borrego. We thank Borrego
and the Department of Health Care Services for working closely with
the Committee and achieving a mutually agreeable resolution on all
issues. We look forward to this deal attaining regulatory approval
and a new chapter in healthcare services for DAP Health and the
people they’ll serve."
About Borrego Community Health Foundation
Borrego Community Health Foundation --
https://www.borregohealth.org/ -- has clinics serving San Diego
County, Mountain Pass Region, Western Riverside Region, Eastern
Coachella Valley Region, and Inland Empire Region. Borrego, as of
the Petition Date, had 24 brick and mortar sites including
administrative sites, two pharmacies and six mobile units covering
a service area consisting of a 250-mile corridor on the eastern
side of San Diego and Riverside Counties, CA.
Borrego Community Health Foundation sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Cal. Case No. 22-02384)
on Sept. 12, 2022. In the petition filed by Isaac Lee, as chief
restructuring officer, the Debtor reported assets and liabilities
between $50 million and $100 million.
The Debtor tapped Dentons US LLP as counsel; Ankura Consulting
Group LLC, as financial consultant; and Hooper, Lundy & Bookman PC
as healthcare regulatory counsel. Kurtzman Carson Consultants LLC
is the claims agent.
BRIGHT HEALTH GROUP: Needs $300 Million to Prevent Bankruptcy
-------------------------------------------------------------
Paige Minemyer of Fierce Healthcare reports that Bright Health
Group needs to raise about $300 million to avoid bankruptcy after
it overdrafted its credit, executives told investors on March 1,
2023.
Chief Financial Officer Cathy Smith said that the company spent the
$350 million available in its revolving credit facility, violating
its liquidity covenant with its lenders as it is required to keep
at least $200 million in that account. The company did secure a
waiver and must address the shortfall by the end of April 2023.
CEO Mike Mikan said Bright Health took an unexpected $70 million
hit on investment income as well as a settlement of more than $1
billion for risk adjustment on its newly scuttled Affordable Care
Act (ACA) insurance business.
He said the executive team is working with its board of directors
to pursue the cash infusion as well as establish a long-term
capital structure that better reflects its new business focus
without the "volatility" of the ACA plans in play.
"We recognize that at this stage we have much to prove and that is
exactly what we intend to do," Mikan said.
Volatility is nothing new for insurtechs like Bright Health, a crop
of which all went public around the same time and have since then
struggled to chart a path forward. Oscar Health and Clover Health
also posted losses in the fourth quarter and for all of 2022, as
all of these companies have pushed for profitability.
Bright elected to exit the ACA exchange market to stabilize its
business, and executives were confident that, should they meet
their credit obligations, the move was the right one for the
company's future.
The insurtech posted a $669.6 million loss in the fourth quarter,
down from $816.2 million in the fourth quarter of 2021. It also
posted a net loss of $1.4 billion for the full year 2022, up from
$1.2 billion in 2021.
Revenues grew both in the fourth quarter as well as in the full
year, according to the company's earnings report. Bright Health
reported $551.4 million in revenue for the fourth quarter, an
increase from $380.2 million in the prior year's quarter.
Full-year revenues were $2.4 billion in 2022 compared to $1.5
billion in 2021.
The company expects 2023 revenue of between $2.9 billion and $3.1
billion, and that its adjusted earnings before interest, taxes,
depreciation and amortization will be profitable this year.
The looming credit insolvency is just one of the financial woes
Bright Health is staring down in the early part of this year. It is
at risk of being booted from the New York Stock Exchange if it does
not stabilize its stock price above $1 before May 2023.
About Bright Health Group
Bright Health Group, Inc. is a health insurance company
incorporated in Delaware.
BURGER BUILDING: Seeks Cash Collateral Access
---------------------------------------------
The Burger Building LLC asks the U.S. Bankruptcy Court for the
Southern District of New York for authority to use cash collateral
and provide adequate protection to TD Bank, N.A.
The Debtor seeks authority to utilize the funds in its bank account
and the revenues it collects to fund its ongoing operations and to
enable it to reorganize.
The Secured Lender entered into a loan agreement with the Debtor
loaning $1.321 million to the Debtor.
The Debtor defaulted on the Secured Loan due to a loss of its
tenant and inability to lease the Property due to the COVID
pandemic.
The Debtor now has a quality lessee paying approximately $12,000
per month rent.
Further the Debtor estimates that the value of the Property in
Ridgewood, New York, is $1.8 million, which exceeds the Secured
Lender's claimed amount due.
As adequate protection, the Debtor will pay the Secured Lender the
monthly amount set forth in the Budget, and its operating expenses
which consist mainly of insurance and property tax and any
additional proceeds will be utilized as a reserve.
In addition to the proposed payments to the Secured Lender it will
also receive replacement liens.
The Replacement Liens will be subject and subordinate only to: (a)
United States Trustee fees payable under 28 U.S.C. section 1930 and
31 U.S.C. section 3717; (b) professional fees of duly retained
professionals in the Chapter 11 case as may be awarded pursuant to
11 U.S.C. Sections 330 or 331 or pursuant to any fee order entered
in the Debtor's Chapter 11 case; (c) the fees and expenses of a
hypothetical Chapter 7 trustee to the extent of $10,000; and (d)
the recovery of funds or proceeds from the successful prosecution
of avoidance actions of the Bankruptcy Code.
A copy of the motion is available at https://bit.ly/3L7JQD6 from
PacerMonitor.com.
About The Burger Building, LLC
The Burger Building, LLC is the fee simple owner of a property
located at 5718 Myrtle Ave, Ridgewood, NY 11385-4932 valued at $1.8
million. The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. N.Y. Case No. 23-40481) on February
13, 2023. In the petition signed by Paul Amato, managing member,
the Debtor disclosed $2,317,238 in assets and $1,614,216 in
liabilities. The Burger Building, LLC is a Single Asset Real Estate
as defined in 11 U.S.C. Section 101(51B).
Judge Jil Mazer-Marino oversees the case.
H. Bruce Bronson, Esq., at Bronson Law Office, P.C., represents the
Debtor as legal counsel.
BVM THE BRIDGES: Wins Interim Cash Collateral Access
----------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida, Tampa
Division, authorized BVM The Bridges, LLC and BVM Coral Landing,
LLC to use cash collateral on an interim basis in accordance with
the budget.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court, including payments to the U.S.
Trustee for quarterly fees; (b) the current and necessary expenses
set forth in the budgets, plus an amount not be exceed 10% for each
line item; and (c) additional amounts as may be expressly approved
in writing by CPIF Lending, LLC and US Bank, National Association
and Pallardy, LLC (as to The Bridges only).
Each creditor or other party with a security interest or other
interest in the cash collateral will have a perfected post-petition
lien or interest against cash collateral to the same extent and
with the same validity and priority as its prepetition lien or
interest, without the need to file or execute any document as may
otherwise be required under applicable non bankruptcy law.
As adequate protection, the Debtors will provide the Secured
Creditors and Pallardy with a post-petition replacement lien or
interest in cash collateral equal in validity and dignity as it
existed pre-petition.
The Debtors will maintain insurance coverage for their property in
accordance with the obligations under the loan and security
documents with the Secured Creditors.
A continued preliminary hearing on the matter is scheduled for
March 27, 2023 at 10:30 a.m.
A copy of the order and the Debtors' three-month budgets is
available at https://bit.ly/3Jraple from PacerMonitor.com.
The Bridges projects $1,030,545 in total income and $1,014,958 in
total expenses for three months, from February to April 2023.
About BVM The Bridges, LLC
BVM The Bridges, LLC operates an 87-bed/69-unit assisted living
facility known as The Bridges Assisted Living & Memory Care and The
Claridge House at the Bridges located at 11202 Dewhurst Drive in
Riverview, Florida, since 2014. Its average census is 70
residents.
BVM The Bridge sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-00345) on January 28,
2022. In the petition signed by John Bartle, president, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
Judge Michael J. Williamson oversees the case.
Alberto F. Gomez, Jr., Esq., at Johnson, Pope, Bokor, Ruppel &
Burns, LLP is the Debtor's counsel.
CACHET FINANCIAL: Stipulated Protective Order Gets Approval
-----------------------------------------------------------
Bankruptcy Judge Vincent P. Zurzolo for the Central District of
California has issued an order approving the Stipulation and
Proposed Protective Order Re Confidential Information as between
Cachet Financial Services and Axos Bank filed in the bankruptcy
case styled In re: CACHET FINANCIAL SERVICES, a California
corporation, Chapter 11, Reorganized Debtor. CACHET FINANCIAL
SERVICES, a California corporation, Plaintiff, v. AXOS BANK, a
federal savings bank, Defendant, Case No. 2:20-bk-10654-VZ, Adv.
Pro. No. 2:22-ap-01025-VZ, (Bankr. C.D. Cal.).
A full-text copy of the Order dated Feb. 22, 2023 is available at
https://tinyurl.com/yckrjda9 from Leagle.com.
About Cachet Financial Services
Pasadena, Calif.-based Cachet Financial Services --
https://www.cachetservices.com/ -- provides Automated Clearing
House (ACH) processing services for payroll-related electronic
transactions, including direct deposits, tax payments, garnishment
payments, benefits payments, 401(k) payments, expense reimbursement
payments, agency checks, and fee collection.
Cachet Financial Services filed a Chapter11 petition (Bankr. C.D.
Cal. Case No. 20-10654) on Jan. 21, 2020. In the petition signed by
Aberash Asfaw, president, the Debtor was estimated to have $10
million to $50 million in both assets and liabilities.
The Honorable Vincent P. Zurzolo presides over the case.
The Debtor tapped Shulman Bastian LLP as its bankruptcy counsel,
Loeb & Loeb LLP as local counsel, and The Rosner Law Group LLC as
special counsel.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on March 17, 2020. The committee is represented by
Sheppard, Mullin, Richter & Hampton LLP.
CANO HEALTH: Incurs $301.7 Million Net Loss in Fourth Quarter
-------------------------------------------------------------
Cano Health, Inc. reported a net loss of $301.73 million on $680.37
million of total revenue for the three months ended Dec. 31, 2022,
compared to net income of $503,000 on $492.25 million of total
revenue for the three months ended Dec. 31, 2021.
For the year ended Dec. 31, 2022, the Company reported a net loss
of $428.39 million on $2.74 billion of total revenue compared to a
net loss of $116.74 million on $1.61 billion of total revenue for
the year ended Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $1.93 billion in total assets,
$1.43 billion in total liabilities, and $494.27 million in total
stockholders' equity.
"At Cano Health, we are determined to achieve our vision by helping
our patients live their best lives," said Dr. Marlow Hernandez,
chairman and chief executive officer at Cano Health. "We completed
2022 with membership well above our initial expectations, and
revenue and Adjusted EBITDA in line with our most recent guidance.
In 2023, we will focus on optimizing our operations to unlock
embedded profitability at our existing medical centers by utilizing
available capacity. Moreover, we are committed to reviewing all
aspects of our value-based platform to improve liquidity and cash
flow, and maximize long-term shareholder value."
Capital Management Update
On Feb. 24, 2023, the Company consummated the closing of a $150
million senior secured term loan, maturing Nov. 23, 2027.
Investors in the 2023 Term Loan were Diameter Capital Partners,
Rubicon Founders and their respective affiliates and managed funds.
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.
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
investors 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.
A full-text copy of the press release is available for free at:
https://www.sec.gov/Archives/edgar/data/1800682/000180068223000003/q422exhibit991.htm
About Cano Health
Cano Health, Inc. (NYSE: CANO) -- http;://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."
CARPENTER TECHNOLOGY: Fitch Affirms BB LongTerm IDR, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has affirmed Carpenter Technology Corporation's
(Carpenter) Long-Term Issuer Default Rating (IDR) at 'BB'. Fitch
has also affirmed Carpenter's senior unsecured notes at 'BB/'RR4'
and senior secured revolving credit facility at 'BBB-'/'RR1'. The
Rating Outlook is Stable.
Carpenter's ratings reflect its position in specialty metal
products with demanding applications and higher barriers to entry,
strong asset profile, and limited commodity price exposure as well
as high concentration in aerospace which is recovering from a
material down-cycle. Fitch believes the long-term fundamentals of
the aerospace industry are supportive of the company's business
model.
The Stable Outlook reflects Fitch's expectation that steady
aircraft demand, evidenced by its large and growing order book,
will allow the company to sustain EBITDA leverage in the low-3.0x
range by the end of FY24.
KEY RATING DRIVERS
Leverage to Moderate: Fitch expects additional borrowing to be
limited to working capital support and earnings to continue
recovering to pre-pandemic levels. EBITDA leverage is expected to
be about 3.9x in FY23 and improve to the 2.5x-3.0x range thereafter
as EBITDA is expected to average about $300 million per year for
FY24 through FY26.
Recovering Profitability: Fitch expects Carpenter's EBITDA margins
to improve to 10% by FY25 from 6% in FY22, supported by continued
strength in most end markets, improved pricing, and increased
productivity. Fitch expects the company to return to positive FCF
generation in FY25 following the completion of major investments
(workforce) and ramp up of higher production volumes. Since
operations are scalable, average annual capex should be limited to
$125 million per year in FY24 through FY26.
The aerospace industry's recovery since 2H21 supports profitability
improvement. Supply chain challenges related to labor, engine
parts, semiconductors, and raw materials will remain a key theme as
aircraft manufacturers and OEMs ramp up production rates beyond
2022. Fitch expects demand will continue to improve in the medium
term, driven by the ongoing recovery of global air travel and
long-term secular trends in electrification, which should support
Carpenter's revenue growth.
Strong Business Model: Carpenter's focus on specialty alloy
products for critical end-use applications generally supports
EBITDA margins in the low-to-mid teens. The severe downturn in
demand for the company's products coupled with the 25% to 30% fixed
cost nature of the business, resulted in negative EBITDA in FYE
June 30, 2021 and modest EBITDA in the six months ended Dec. 31,
2022.
The company's products are required to meet complex customer
specifications which results in those products commanding a premium
and provides significant barriers to entry. Timely qualification
processes and testing, strict regulations for aircraft use,
technical capabilities and manufacturing processes enhance
competitive advantage. Carpenter continues to achieve additional
qualifications at its Athens, AL facility (commissioned in 2014).
The company constructed a hot strip mill at Reading, PA to
strengthen its soft magnetics capabilities.
High, Diverse Aerospace Exposure: Fitch believes the diversity of
Carpenters aerospace and defense (A&D) offerings and actions taken
during the pandemic position the company well for A&D recovery. The
A&D end-use typically accounts for between 50% and 60% of net sales
excluding surcharge revenues. Carpenter estimates that about 10% of
its A&D products are related to defense, 40% to engines, 20% to
fasteners and 30% to structural & avionics such as landing gear,
slat tracks and electrification and that its products are
represented on all programs.
The company reports that it was able to negotiate increased share
on key growth platforms in exchange for deferrals and order push
outs early in the downturn. More recently, Carpenter reported that
it signed several contracts with aerospace customers that include
favorable pricing and expanded share opportunities.
Strong Backlog: Carpenter has a substantial backlog, which at the
end of FY22 stood at over $1.8 billion, more than two times
pre-pandemic levels. With approximately 75% of the backlog from
A&D, Fitch believes the solid underlying aircraft demand provides
some revenue visibility through the medium term. Fitch expects
near-term shipments to grow given Carpenter's training efforts and
expectations for production to ramp up to pre-pandemic run rates by
4Q FY23.
Fitch's A&D Outlook Improving: Fitch views the 2023 A&D sector
outlook as improving, as favorable demand dynamics should lead to
increasing cash flows and deleveraging capacity beginning in 2023.
Fitch believes commercial aircraft OEMs and suppliers will benefit
from strong global demand for new aircraft as the industry
continues to recover toward 2018 levels despite Fitch's current
expectation for moderate global recessionary pressures in 2023.
Fitch expects passenger aircraft deliveries from The Boeing Company
(BA), Airbus SE and Embraer S.A. will improve by over 20% to around
1,400 in 2023, up from around 1,150 in 2022, but still below the
2018 peak of almost 1,700. The delivery increase forecast depends
on the easing of operational disruptions stemming from supply chain
constraints as 2023 progresses, OEM and supplier production rates,
and the easing of broad travel restrictions. Fitch's rating case
assumes minimal industry supply chain disruption, and steady 737MAX
and 787 inventory reduction at BA.
Raw Material Volatility Mitigated: Carpenter has been able to
mitigate exposure to volatile metal prices by applying surcharges.
The surcharge is based on published raw material prices for the
previous month which correlate to the price of raw material
purchases. This allows the company to effectively pass through most
raw material price fluctuations, albeit with some lag. Surcharge
revenue as a percentage of total revenue as fluctuated between 13%
and 24% since 2016, but tends to rise and fall in-line with metal
price fluctuations. Fitch believes that raw materials prices may
have peaked in late 2021 and will continue to moderate through
2024.
DERIVATION SUMMARY
Carpenter Technology's products are further upstream than those of
Howmet Aerospace Inc. (BBB-/Stable) and Arconic Corporation
(BB+/Positive). Carpenter is more concentrated in aerospace than
Kaiser Aluminum Corporation (BB/Stable), especially following
Kaiser's acquisition of the Warrick rolling mill, Howmet and
Arconic. Prior to the Aerospace downturn, Carpenter had similar
margins to Kaiser and higher margins than Arconic.
In addition, Fitch expects Carpenter to be larger in earnings than
Kaiser but significantly smaller than Arconic. Leverage metrics,
longer term, are expected to be similar to Kaiser, lower than
Howmet and higher than Arconic.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Overall volumes recover by nearly 23% in FY23 and nearly 24%
in FY24. Volumes grow at about 6% in FY25 and 3%-FY26;
- Revenues excluding surcharges to run about $8.00/lb. beginning
in FY24;
- Surcharge revenues are about $3.30/lb. through FY26;
- Dividends are maintained at roughly historic levels.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- EBITDA leverage expected to be sustained below 2.5x;
- EBIT margins expected to be sustained above 8% reflective
of improved market conditions.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA leverage expected to be sustained above 3.5x;
- EBIT margins expected to be sustained below 6%.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of Dec. 31, 2022, Carpenter had $20.0
million of cash on hand in addition to $217.0 million available
under the $300 million secured revolving credit facility maturing
March 31, 2024 ($1.8 million utilized for LOCs). Fitch expects FCF
to be negative in FY2023 as working capital builds with growth and
be modestly positive thereafter, on average.
The revolver is subject to financial covenants which include a
minimum interest coverage ratio of 3.50 to 1.00 at Dec. 31, 2022
and a maximum debt to capital ratio of less than 55%. The company
has covenanted to maintain $150 million of liquidity through the
period for which the interest coverage is less than 2.00 to 1.00.
Security for the facility consists of inventory and receivables and
there is an asset coverage minimum covenant of 1.10 to 1.00.
ISSUER PROFILE
Carpenter Technology Corporation is a leader in high-performance
specialty alloy-based materials and process solutions for critical
applications in the aerospace, defense, transportation, energy,
industrial, medical, and consumer electronics markets.
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
----------- ------ -------- -----
Carpenter
Technology
Corporation LT IDR BB Affirmed BB
senior
unsecured LT BB Affirmed RR4 BB
senior secured LT BBB- Affirmed RR1 BBB-
CELSIUS NETWORK: Custody Account Holders to Get 72 Cents on Dollar
------------------------------------------------------------------
Celsius Network is asking a New York bankruptcy judge to approve an
offer to its so-called "Custody" account holders for a settlement
that will return to them more than 72 cents on the dollar in the
cryptocurrency platform's Chapter 11 plan.
The Debtors, the Official Committee of Unsecured Creditors, and the
Ad Hoc Group of Custodial Account Holders filed a joint motion for
approval of the settlement. A hearing on the Motion is slated for
March 21, 2023, at 10:00 a.m., prevailing Eastern Time.
As the Debtors work towards filing their chapter 11 plan with
Novawulf Digital Management as the proposed plan sponsor, building
consensus among stakeholders is critical. Now, after six months of
litigation, the Debtors have reached agreement with the Custody Ad
Hoc Group and the Committee on a settlement that fully resolves the
disputes between the Parties and secures the support of an
important group of account holders for the Plan. In short, the
Settlement provides for electing Custody Account Holders to receive
72.5% of the cryptocurrency in their Custody Accounts (minus
certain transaction costs) over time. In return for an agreed 27.5%
"haircut" to the electing Custody Claims, the Parties will settle
all causes of action held by the Debtors against such Custody
Account Holders with respect to such holders' Custody Assets,
including preference actions and setoff rights.
The Settlement is the result of good-faith, hard-fought
negotiations between the Debtors, the Committee, and the Custody Ad
Hoc Group and their respective advisors. The Settlement will be
offered to all Custody Account Holders, other than current and
former employees and insiders. The Settlement provides certainty
and finality not only to the Debtors, who are working to file their
Plan, but also for many Custody Account Holders, who will be able
to withdraw a portion of their Custody Assets prior to the
effective date of the Plan.
If the Court approves the Settlement, all Custody Account Holders
will have thirty days to elect to participate in the Settlement to
receive 72.5% of their Custody Distribution Claims in exchange for
certain mutual releases, including the estates' release of all
claims and causes of action (including avoidance actions) against
such Settling Custody Account Holder on account of such holders'
Custody distribution. The payments will be made in two stages --
Settling Custody Account Holders will receive half of such
settlement (36.25%) after the expiration of the thirty-day Election
Period. The second half (another 36.25%) will be
distributed on the effective date of the Debtors' Plan. The
Settlement provides that if the effective date does not occur, the
distributions will still be made by a number of alternative dates,
including a prescribed outside date.
Custody Account Holders who choose not to participate in the
Settlement during the Election Period may still opt-in to such
Settlement by voting to accept the Plan and such holders will
receive the entirety of 72.5% of their eligible Custody Assets on
the effective date of the Debtors' Plan. The balance of Settling
Custody Account Holders' accounts (27.5%) will become the Debtors'
property upon the occurrence of the effective date of the Plan.
Settling Custody Account Holders will benefit from a most favored
nations clause and receive the benefit of any settlement of
avoidance actions offered to other Custody Account Holders under
the Plan.
The Settlement is fair, equitable, and a carefully negotiated
consensual solution to one of the Debtors' most important open
legal issues. Participation in the Settlement is entirely optional
-- for those that "opt-in" to the Settlement, it results in a final
resolution of the Custody Issues on mutually beneficial grounds.
Every eligible Custody Account Holder will have the opportunity to
review the Settlement and independently determine whether to
participate. No Custody Account Holder will be forced to accept
the Settlement. Thus, the Settlement will not unfairly impair the
rights of any Custody Account Holder, who may elect not to
participate and litigate their Custody Claim after the effective
date of the Plan. Moreover, upon approval of the Settlement, the
Parties agree that Custody Account Holders that are eligible for
distributions under the existing Withdrawal Order (as defined
below) may withdraw the entire balance of their Withdrawable
Custody Assets (instead of the 94% already authorized by the
Court).
About Celsius Network
Celsius Network LLC -- http://www.celsius.network/-- is a
financial services company that generates revenue through
cryptocurrency trading, lending, and borrowing, as well as by
engaging in proprietary trading.
Celsius helps over a million customers worldwide to find the path
towards financial independence through a compounding yield service
and instant low-cost loans accessible via a web and mobile app.
Celsius has a blockchain-based fee-free platform where membership
provides access to curated financial services that are not
available through traditional financial institutions.
The Celsius Wallet claims to be one of the only online crypto
wallets designed to allow members to use coins as collateral to get
a loan in dollars, and in the future, to lend their crypto to earn
interest on deposited coins (when they're lent out).
Crypto lenders such as Celsius boomed during the COVID-19 pandemic,
drawing depositors with high interest rates and easy access to
loans rarely offered by traditional banks. But the lenders'
business model came under scrutiny after a sharp sell-off in the
crypto market spurred by the collapse of major tokens terraUSD and
luna in May 2022.
New Jersey-based Celsius froze withdrawals in June 2022, citing
"extreme" market conditions, cutting off access to savings for
individual investors and sending tremors through the crypto
market.
The list of major crypto firms that have filed for bankruptcy
protection in 2022 now includes Celsius Network, Three Arrows
Capital and Voyager Digital.
Celsius Network, LLC and its subsidiaries sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case
No. 22-10964) on July 14, 2022. In the petition filed by CEO Alex
Mashinsky, the Debtors estimated assets and liabilities between $1
billion and $10 billion.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as bankrupty counsels; Fischer (FBC & Co.) as
special counsel; Centerview Partners, LLC as investment banker; and
Alvarez & Marsal North America, LLC as financial advisor. Stretto
is the claims agent and administrative advisor.
On July 27, 2022, the U.S. Trustee appointed an official committee
of unsecured creditors. The committee tapped White & Case, LLP as
its bankruptcy counsel; Elementus Inc. as its blockchain forensics
advisor; M3 Advisory Partners, LP as its financial advisor; and
Perella Weinberg Partners, LP as its investment banker.
Shoba Pillay, Esq., is the examiner appointed in the Debtors'
Chapter 11 cases. Jenner & Block, LLP and Huron Consulting
Services, LLC serve as the examiner's legal counsel and financial
advisor, respectively.
CLEARPOINT NEURO: Inks Amended Employment Contracts With Top Execs
------------------------------------------------------------------
ClearPoint Neuro, Inc. entered into amendments to its existing
employment agreements with Joseph M. Burnett, the president and
chief executive officer, Danilo D'Alessandro, the chief financial
officer, and Mazin Sabra, the chief operating officer.
The uniform amendments to Mr. Burnett's, Mr. D'Alessandro's, and
Mr. Sabra's employment agreements (i) extend certain severance
benefits upon a non-renewal of the employment agreement by the
Company at the end of the then-current term; (ii) adjust the
portion of outstanding awards that will accelerate upon certain
qualifying termination events; (iii) provide for unlimited paid
time off subject to the Company's policies; and (iv) revise the
defined terms "Termination Upon Expiration," "Termination Without
Cause" and "Voluntary Termination" to provide updated context to
Section 8 concerning certain compensation benefits and continuing
obligations following the termination of their respective
employment agreements.
About ClearPoint Neuro
ClearPoint Neuro, Inc. formerly MRI Interventions, Inc. --
http://www.clearpointneuro.com-- is a medical device company that
develops and commercializes innovative platforms for performing
minimally invasive surgical procedures in the brain under direct,
intra-procedural magnetic resonance imaging, or MRI, guidance.
Applications of the Company's current product portfolio include
deep-brain stimulation, laser ablation, biopsy, neuro-aspiration,
and delivery of drugs, biologics, and gene therapy to the brain.
Clearpoint Neuro reported a net loss of $14.41 million for the year
ended Dec. 31, 2021, a net loss of $6.78 million for the year ended
Dec. 31, 2020, a net loss of $5.54 million for the year ended Dec.
31, 2019, and a net loss of $6.16 million for the year ended Dec.
31, 2018. As of Sept. 30, 2022, the Company had $57.74 million in
total assets, $17.86 million in total liabilities, and $39.88
million in total stockholders' equity.
CNX MIDSTREAM: S&P Affirms 'BB' ICR on Improving Leverage
---------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on CNX
Midstream Partners L.P. (CNXM) and its 'BB' issue-level rating on
its senior unsecured debt. S&P's '3' recovery rating on the
unsecured notes is unchanged.
The stable outlook reflects S&P's stable outlook on the
partnership's parent, CNX Resources Corp. The stable outlook on CNX
reflects our expectation it will maintain modest financial policies
over the next 24 months, including its extensive hedging program,
that support its free cash flow generation and balance debt
repayment with shareholder returns.
CNXM's stand-alone leverage has improved.
The partnership used its free cash flow to repay outstanding
borrowings under its revolving credit facility (RCF). S&P said, "We
expect it will maintain leverage in the 1.5x-2.0x range over the
near term, supported by the stability of its EBITDA, which is
backed by fixed-fee and hedged volumes from CNX. Additionally, we
expect CNXM will distribute all of its discretionary cash flow to
its parent. The partnership's leverage improved to 1.8x in 2022
from 2.9x in 2020 due to its debt repayment. Therefore, we now view
CNXM's financial risk profile as stronger, which led us to raise
our SACP to 'bb' from 'bb-'."
S&P's rating on CNXM continues to reflect the risk profile of its
parent, CNX.
S&P said, "We view CNXM as integral to CNX, given the 2020
take-private transaction, the companies' shared management and
operations team, and CNXM's position as the primary midstream
operator serving CNX. CNX Resources continues to be CNXM's largest
customer and accounts for over 75% of its revenue. CNX's production
and drilling activities are the biggest sources of CNXM's revenue,
thus it relies on its parent for future growth opportunities.
"The stable outlook on CNXM reflects our stable outlook on its
parent CNX. The stable outlook on CNX reflects our expectation it
will maintain modest financial policies over the next 24 months,
including its extensive hedging program, that support strong free
cash flow generation and balance debt repayment with shareholder
returns. Therefore, we expect its funds from operations (FFO) to
debt will exceed 45% and its debt to EBITDA will remain below 2x.
Our assumptions are supported by the company's robust hedging
program for about 80% of its production, which provides it with a
cushion against a potential drop in natural gas prices. We
anticipate CNXM will have flat volumes in 2023 and expect it to
sustain debt to EBITDA of 1.6x-2.0x in 2023.
"We could lower our ratings on CNXM if we lower our rating on CNX.
We could lower our issuer credit rating on CNX if we forecast its
leverage will weaken over the next two years such that its FFO to
debt falls below 30% and its debt to EBITDA remains above 3x on a
sustained basis. This would most likely occur due to a sustained
material decline in natural gas prices, likely in combination with
a weakening of the company's hedging program, or if CNX's capital
spending rises without a commensurate increase in its production.
Alternatively, more aggressive than expected shareholder returns
could limit the company's debt repayment and lead to weaker
financial measures.
"We could raise our rating on CNXM if we raise our rating on CNX.
We could raise our rating on CNX over the next 12 months if it
expands its reserves or diversifies its assets such that its
business risk compares more favorably with that of its higher rated
peers. Additionally, we would expect FFO to debt averaging above
60% and debt to EBITDA of less than 1.5x. This could occur if
natural gas prices average well above our assumptions--providing
the company with increased cash flow to expand its capital spending
or make acquisitions--and CNX balances its debt repayment and
shareholder returns."
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 CNXM. As a natural
gas gatherer and processor in the Marcellus and Utica shales in
Pennsylvania and West Virginia, the partnership's volumes and
utilization could decrease over the long term due to energy
transition-related declines in drilling and production. CNXM also
has important indirect environmental exposure through its
exploration and production parent, CNX Resources, which accounts
for the majority of its revenue. However, CNXM (through CNX) has
been taking proactive steps to reduce its methane emissions."
COASTAL DRILLING: Court OKs Cash Collateral Access on Final Basis
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Corpus Christi Division, authorized Coastal Drilling Land Company,
L.L.C. to continue using cash collateral on a final basis in
accordance with the budget.
The Debtor has an immediate and critical need to use the cash
collateral to continue the Debtor's ordinary course business
operations and to maintain the value of the bankruptcy estate.
The Debtor was a party to a Loan Agreement and a Security Agreement
both dated August 19, 2015, by and between the Debtor and First
Horizon, pursuant to which First Horizon made certain loans,
advances, and other financial accommodations to the Debtor to fund,
among other things, the Debtor's operations. The advances from
First Horizon were represented by a Term Note in the original
principal amount of $5.75 million and a Revolving Credit Note in
the original principal amount of $2 million. First Horizon alleges
that (i) pursuant to the Loan Documents, the aggregate amount of
not less than approximately $2.28 million was due and owing by the
Debtor to First Horizon on the First Horizon Term Note as of the
Petition Date.
Vortex Fluid Systems, Inc. alleges that it has a purchase money
security interest (PMSI) in two dual shakers. Vortex alleges that
the Debtor owes $118,932 (excluding interest and prepetition
attorneys' fees) and that such sum is secured by the two dual
shakers.
John Powers alleges he is the subrogee of First Horizon with
respect to the First Horizon Revolving Credit Note. Powers alleges
that:
(i) pursuant to the First Horizon Loan Documents, the
aggregate amount of not less than $2 million is due and owing by
the Debtor to him as subrogee of First Horizon on the First Horizon
Revolving Credit Note as of the Petition Date;
(ii) the First Horizon Revolving Credit Note constitutes the
Debtor's legal, valid and binding obligation, enforceable in
accordance with the terms of the First Horizon Loan Documents; and
(iii) the First Horizon Revolving Credit Note is secured by
valid, binding, perfected and enforceable liens and security
interests granted by the Debtor to and for the benefit of First
Horizon and now to him as subrogee pursuant to the First Horizon
Loan Documents and further set forth in the recorded UCC Financing
Statement of First Horizon, upon and in the property of the Debtor
as described in the recorded First Horizon Loan Documents whether
then owned or thereafter acquired or arising.
As adequate protection, each Secured Lender is granted Replacement
Liens, Superpriority Claims, and any applicable adequate protection
payments.
To the extent of any Diminution in Value, each Secured Lender was
granted valid, automatically perfected and enforceable additional
adequate protection replacement liens, in accordance with the
priority of the applicable Secured Lender and subject to the
Carve-Out and only in collateral of the same type as such Secured
Lender has a valid prepetition lien.
Subject to the Carve-Out, and to the extent of any Diminution in
Value, the Secured Lenders are further granted an allowed
superpriority administrative expense claim, as provided, with
priority over all administrative expense claims and unsecured
claims against the Debtor and its estate, now existing or hereafter
arising, of any kind or nature whatsoever.
The Debtors' authority to use cash collateral will terminate upon
earliest to occur of any of the following:
a. The Debtor's Chapter 11 Case is dismissed or converted to a
case under chapter 7 of the Bankruptcy Code;
b. Either (i) the Court enters an order appointing a trustee
or an examiner with enlarged powers for the Debtor; or, (ii) the
Debtor files a motion, application or other pleading consenting to
or acquiescing in any such appointment;
c. The Court suspends the Chapter 11 Case under Section 305 of
the Bankruptcy Code;
d. The Final Order becomes stayed, reversed, vacated, amended
or modified without the consent of the Secured Lenders;
e. The Debtor violates or fails to satisfy any of the
obligations set forth in the Final Order or any other order entered
by the Court and fails to cure such violation or failure upon three
business days' notice from any Secured Lender or the U.S. Trustee;
f. The Debtor fails to file a Chapter 11 Plan and Disclosure
Statement in the Case by March 17, 2023;
g. The Court has not entered an order approving a Disclosure
Statement in the Case by April 24, 2023, unless such deadline is
extended by order of the Court, or upon the written consent of the
Secured Lenders;
h. The Court has not entered an order confirming a Chapter 11
Plan, in a form reasonably acceptable to First Horizon, in the Case
by May 29, 2023, unless such deadline is extended by Court order,
or upon the written consent of the Secured Lenders.
A copy of the order is available at https://bit.ly/3JlBDK0 from
PacerMonitor.com.
About Coastal Drilling Land Company, L.L.C.
Coastal Drilling Land Company, L.L.C. offers drilling rigs and
services to the South Texas and Gulf Coast regions.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-20204) on August 28,
2022. In the petition signed by CEO Chris McClanahan, the Debtor
disclosed up to $50 million in both assets and liabilities.
Judge David R. Jones oversees the case.
Matthew Okin, Esq., at Okin Adams Bartlett Curry LLP is the
Debtor's counsel.
CONCRETE SERVICES: Seeks to Use Cash Collateral
-----------------------------------------------
Concrete Services, LLC asks the U.S. Bankruptcy Court for the
Northern District of Alabama, Southern Division, for authority to
use cash collateral and provide adequate protection.
The Debtor requires the use of cash collateral to pay expenses
incurred in the ordinary course of business.
In January 2018, the Debtor entered into various loan documents
ostensibly consisting of, inter alia, a note and security
agreement, and possibly a guaranty, with Newtek Small Business
Finance, LLC, in the approximate original loan amount of $400,000.
The Loan was facilitated by the Small Business Administration.
The Debtor believes the principal balance owed under the Loan at
present date is approximately $250,000 as of the Filing Date.
According and pursuant to the Lender's UCC-1 Financing Statement,
the Lender's security interest also attaches to the equipment,
fixtures, furnishings, inventory and other assets of the Debtor. In
the opinion of the Debtor's management, the personal property
securing the Loan, including the Debtor's accounts receivable and
the Debtor's business bank account balance, had an approximate
gross value in the opinion of the Debtor's management of $145,000
as of the Filing Date. Therefore, the secured position of the
Lender was, at the Filing Date and presently, technically
under-secured. The Debtor anticipates, in the opinion of the
Debtor's management, additional deposits from operations to its
business bank account within 20 days of $65,000 or more.
The Debtor believes the Lender may ostensibly assert that any cash
receipts generated from the Debtor's business operations, and any
other proceeds of the collateral, constitutes products and proceeds
of the collateral and, accordingly, may constitute Lender's cash
collateral. The Debtor estimates its average monthly gross receipts
moving forward over the next 6-month period to be in the range of
approximately $80,000 to $100,000 per month, according to the
Debtor's management.
Subject to entry of an appropriate order, the Debtor proposes to
immediately provide Lender with adequate protection for the use of
its cash collateral during the course of this bankruptcy case in
part by (i) extending its pre-petition security interest liens to a
"rollover lien" including future receivables, rents, profits,
proceeds, inventory, fixtures, furnishings, equipment and the
proceeds therefrom, and (ii) at this time resuming monthly payments
to the Lender in a monthly amount that is reasonable and feasible
and that will reasonably preserve the Lender's position as of the
Filing Date. The Debtor believes that it can resume making monthly
remittances to the Lender in some amount within 30 days.
A copy of the motion is available at https://bit.ly/3IUSDpb from
PacerMonitor.com.
About Concrete Services, LLC
Concrete Services, LLC is a concrete construction contractor in the
State of Alabama and outlying slates with its principal place of
assets currently including Jefferson and Shelby Counties, Alabama.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ala. Case No. 23-00520) on March 1,
2023. In the petition signed by James Ward, sole owner and
president, the Debtor disclosed up to $500,000 in assets and up to
$1 million in liabilities.
Frederick M. Garfield, Esq., at Spain & Gillon, LLC, serves as the
Debtor's counsel.
CORE SCIENTIFIC: $70 Million B. Riley Financing Deal Approved
-------------------------------------------------------------
Eliza Gkritsi of CoinDesk reports that the federal judge overseeing
bitcoin miner Core Scientific's (CORZ) Chapter 11 bankruptcy
process approved a $70 million loan from B. Riley Commercial
Capital that will help the company get back on its feet.
Jeremy Hill of Bloomberg News reports that US Bankruptcy Judge
David R. Jones said he'd allow Bitcoin miner Core Scientific Inc.
to borrow an additional $35 million to fund its operations during
chapter 11 proceedings pending minor changes to the deal discussed
in a hearing Wednesday, March 1, 2023. The approval will finalize a
$70 million bankruptcy financing package from B. Riley Commercial
Capital LLC that replaced an earlier loan from a noteholder group
Core previously won approval to draw an initial $35 million under
the replacement credit facility.
According to CoinDesk, Judge David Jones of the Southern District
of Texas also said that he would agree to a group of stockholders'
request to form an official committee to represent their interests
in the case, pending a budget for the committee.
Core Scientific filed for bankruptcy in December, after months of a
sustained crypto market downturn couple with high energy prices
pounding its bottom line. As of the end of November, prior to the
bankruptcy, Core Scientific's debts included $552.5 million of
principal outstanding under senior secured convertible notes, $41.8
million to B. Riley, and $242.5 million under various equipment
financing deals, according to a February 27, 2023 filing.
The B. Riley facility, known as debtor-in-possession financing (DIP
loan), replaces a previous interim order. It is meant to enable the
company to reorganize and includes paying court and adviser fees.
It comes with a 10% annual interest rate and has "super priority"
over all administrative expenses and unsecured claims, except for
some fees known as a carve-out, according to a term sheet filed
with the court.
Another hearing will take place to discuss the appointment of the
stockholders' committee. A final budget for the DIP financing will
also have to be agreed upon.
B. Riley Commercial Capital is a subsidiary of B. Riley Financial
(RILY).
Equipment lender BlockFi had objected to the DIP, saying it didn't
offer adequate protections for its collateral, but the issue was
resolved prior to the Wednesday, March 1, 2023, hearing.
Core Scientific Senior Vice President of Capital Markets and
Acquisitions Michael Bros said in a Dec. 21 filing that the
equipment loans such as BlockFi's are undersecured, with as much as
$90 million in collateral.
The stockholders' claims
On February 3, 2023, a group of equity holders asked the court to
form an official committee they claimed would provide "critical
input with respect to valuation and negotiating Chapter 11 plan
terms on behalf of equity." The group said that Core Scientific is
solvent, and that given the recent rally in bitcoin prices and the
improvement of energy markets, "the value available for equity is
increasing."
In its response, Core Scientific agreed that it is "not hopelessly
insolvent," considering recent market movements, and supported the
motion, setting a budget of $4.75 million, including financial
advisors' fees, to be taken from the secured assets in what is
known as a carveout.
Despite his agreement to forming the committee, the judge said he
will "reserve the benefit" of "hindsight." If he decides that the
interests of the equity holders weren't advanced by the committee,
or it was done at the expense of other creditors, he might use "a
number of tools," including bringing the committee's budget down to
zero.
The equity group represents 69 million shares of common stock.
That's less than the issued and outstanding common stock owned by
company insiders, which is about 29% of the total at 107 million,
according to the office of the U.S. Trustee.
B. Riley previously argued that weeks of negotiations on the
financing should not be upended by the last minute request of $4.75
million from the carveout.
The equity holders also question whether Core Scientific was
protecting their fiduciary duties during negotiations because it
did not adequately shop around for financing options. The equity
holders "successfully encouraged" a third party to submit an
alternative to B. Riley's financing proposal, which they believe
was the only competing offer on the table.
"Had the Ad Hoc Equity Group been involved from the outset, the
Debtors might well have avoided the original agreement with the
secured convertible noteholders that allowed for a $6 million
termination fee, equating to an internal rate of return in excess
of 500%," the group said.
In its response, Core Scientific rejected these claims as ad
hominem attacks and said it spoke to 20 possible lenders for the
original financing proposal.
A proposed agreement between the noteholders and the bankrupt firm
would have left holders of unsecured debt and equity holders to
fight over 3% of the reorganized company, said the stockholders.
About Core Scientific
Core Scientific, Inc. (OTCMKTS: CORZQ) is the largest U.S.
publicly-traded Bitcoin mining company in computing power. Core
Scientific, which was formed following a business combination in
July 2021 with blank check company XPDI, is a large-scale operator
of dedicated, purpose-built facilities for digital asset mining
colocation services and a provider of blockchain infrastructure,
software solutions and services. Core mines Bitcoin, Ethereum and
other digital assets for third-party hosting customers and for its
own account at its six fully operational data centers in North
Carolina (2), Georgia (2), North Dakota (1) and Kentucky (1). Core
was formed following a business combination in July 2021 with XPDI,
a blank check company.
In July 2022, one of the Company's largest customers, Celsius
Mining LLC, filed for Chapter 11 bankruptcy in New York.
With low Bitcoin prices depressing mining revenue to a record low,
Core Scientific first warned in October 2022 that it may have to
file for bankruptcy if the company can't find more funding to repay
its debt that amounts to over $1 billion. Core Scientific did not
make payments that came due in late October and early November 2022
with respect to several of its equipment and other financings,
including its two bridge promissory notes.
Core Scientific Inc. and its affiliates filed petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case
No. 22-90340) on Dec. 21, 2022. As of Sept. 30, 2022, Core
Scientific had total assets of US$1.4 billion and total liabilities
of US$1.3 billion.
Judge David R. Jones oversees the cases.
The Debtors hired Weil, Gotshal & Manges, LLP as legal counsel; PJT
Partners, LP as investment banker; and AlixPartners, LLP, as
financial advisor. Stretto is the claims agent.
A group of Core Scientific convertible bondholders is working with
restructuring lawyers at Paul Hastings.
CORE SCIENTIFIC: Court Okays Appointment of Equity Committee
------------------------------------------------------------
A bankruptcy judge gave the U.S. Trustee for Region 7 the green
light to appoint an official committee that will represent equity
security holders in Core Scientific, Inc.'s Chapter 11 case.
In his order, Judge David Jones of the U.S. Bankruptcy Court for
the Southern District of Texas directed the bankruptcy watchdog to
appoint an equity committee and limit the scope of the committee's
services to the valuation and negotiations related to determining
the terms of confirmation of a Chapter 11 reorganization plan.
The scope of the committee's services, however, can be expanded
with approval of the bankruptcy judge, according to the March 7
order, which also directed the U.S. trustee to cap the fees and
expenses of the committee at $4.75 million.
About Core Scientific
Core Scientific, Inc. (OTCMKTS: CORZQ) is the largest U.S.
publicly-traded Bitcoin mining company in computing power. Core
Scientific, which was formed following a business combination in
July 2021 with blank check company XPDI, is a large-scale operator
of dedicated, purpose-built facilities for digital asset mining
colocation services and a provider of blockchain infrastructure,
software solutions and services. Core mines Bitcoin, Ethereum and
other digital assets for third-party hosting customers and for its
own account at its six fully operational data centers in North
Carolina (2), Georgia (2), North Dakota (1) and Kentucky (1). Core
was formed following a business combination in July 2021 with XPDI,
a blank check company.
In July 2022, one of the Company's largest customers, Celsius
Mining LLC, filed for Chapter 11 bankruptcy in New York. With low
Bitcoin prices depressing mining revenue to a record low, Core
Scientific first warned in October 2022 that it may have to file
for bankruptcy if the company can't find more funding to repay its
debt that amounts to over $1 billion. Core Scientific did not make
payments that came due in late October and early November 2022
with respect to several of its equipment and other financings,
including its two bridge promissory notes.
Core Scientific and its affiliates filed petitions for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
22-90340) on Dec. 21, 2022. As of Sept. 30, 2022, Core Scientific
had total assets of US$1.4 billion and total liabilities of US$1.3
billion.
Judge David R. Jones oversees the cases.
The Debtors hired Weil, Gotshal & Manges, LLP as legal counsel; PJT
Partners, LP as investment banker; and AlixPartners, LLP as
financial advisor. Stretto is the claims agent.
A group of Core Scientific convertible bondholders is working with
restructuring lawyers at Paul Hastings.
B. Riley Commercial Capital, LLC, as administrative agent under the
Replacement DIP facility, is represented by Choate, Hall & Stewart,
LLP.
On Jan. 9, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent unsecured creditors in the Debtors'
Chapter 11 cases. The committee tapped Willkie Farr & Gallagher,
LLP as legal counsel and Ducera Partners, LLC as investment banker.
CRED INC: Trustees Can Get 3rd-Party Claims for Calif. Lockton Suit
-------------------------------------------------------------------
Delaware bankruptcy judge Craig T. Goldblatt issued an opinion Feb.
27, 2023, explaining his decision that nothing prevents the
liquidation trustees of collapsed crypto lender Cred Inc. from
acquiring third-party creditor claims to bolster a suit against
insurance giant Lockton Companies LLC.
On Feb. 10, 2023, the Bankruptcy Court issued an order granting the
motion filed by the trustees of the Cred Inc. Liquidation Trust
clarifying the Court's July 19, 2022 bench ruling. Beyond issuing
the brief order, the Court did not set forth in writing the reasons
for its decision, but instead stated that the reasons were those
"more fully set forth on the record at the Feb. 9, 2023 hearing."
On Feb. 23, 2023, Uphold HQ and Lockton both filed notices of
appeal from the Order.
Judge Goldblatt on Feb. 27, 2023, issued a Memorandum Opinion,
pursuant to that Rule, to supplement the Court's oral ruling in
order to provide the reviewing court further context with respect
to the matter under review.
"Here, there is a serious argument that Lockton is seeking to
invoke protections to which it is not entitled. The argument is,
at bottom, that the trust agreement does not authorize the trust to
sue Lockton on an assigned cause of action. The trust, however,
which was created under the confirmed plan of reorganization in
this bankruptcy case, is intended to protect the interests of its
beneficiaries, who are the creditors in the bankruptcy case. The
trust agreement (consistent with ordinary principles of the law of
trusts) requires the trustees to operate the trust for the
creditors' benefit.33 In the language of Lexmark, Lockton is not a
party that has been afforded rights under the trust agreement, and
therefore should not be permitted to come into court to argue that
its rights are somehow being violated by the manner in which the
trustees are carrying out the operations of the trust," the judge
said in his opinion.
"Uphold HQ, however, is differently situated, since it is both a
defendant in litigation brought by the trust as well as a creditor
in this bankruptcy case. While the trust argues that Uphold HQ
lacks standing here because it "acts as a Defendant, not a
creditor," this Court is disinclined to ignore the objection based
on its assessment of the “capacity” in which Uphold HQ is
acting. To be sure, there is common sense to the trust’s
position. If the trust were prohibited from suing litigation
targets on assigned claims, that would seem likely to inure to the
benefit of the litigation targets (including Uphold HQ in its
capacity as such) and to the detriment of Cred's creditors
(including Uphold HQ in its capacity as such). But as unlikely as
it seems, the Court cannot exclude the possibility that Uphold HQ
believes that the pursuit of assigned claims is a waste of trust
resources and will disserve the interests of creditors. A
determination that Uphold HQ is acting in its "capacity" as
creditor would require the Court to make a finding regarding its
subjective motivations. And while the circumstances of this case
surely provide ample reason to queuestion Uphold HQ's motives,
rather than making a "finding" about the "capacity" in which Uphold
HQ is acting, the Court believes it more appropriate to consider
the objections on the merits."
About Cred Inc.
Cred Inc. is a cryptocurrency platform that accepts loans of
cryptocurrency from non-U.S. persons and pays interest on those
loans. Cred -- https://mycred.io/ -- is a global financial services
platform serving customers in over 100 countries. Cred is a
licensed lender and allows some borrowers to earn a yield on
cryptocurrency pledged as collateral.
Cred Inc. and its affiliates sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 20-12836) on Nov. 7, 2020. Cred was estimated
to have assets of $50 million to $100 million and liabilities of
$100 million to $500 million as of the bankruptcy filing.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Paul Hastings LLP as their bankruptcy counsel,
Cousins Law LLC as local counsel, and MACCO Restructuring Group,
LLC as financial advisor. Donlin, Recano & Company, Inc., is the
claims agent.
The official committee of unsecured creditors in the Debtors'
Chapter 11 cases tapped McDermott Will & Emery LLLP as counsel, and
Dundon Advisers LLC as financial advisor.
Robert Stark is the examiner appointed in the Debtors' cases. Ashby
& Geddes, P.A., and Ankura Consulting Group, LLC, serve as the
examiner's legal counsel and financial advisor, respectively.
CURTIS JAMES JACKSON: 50 Cent Gets $134K Award of Attorney's Fees
-----------------------------------------------------------------
Chief Bankruptcy Judge Ann M. Nevins has issued a memorandum of
decision and order determining the award of attorney's fees and
costs in the adversary case entitled In Re: Curtis James Jackson,
III, Chapter 11, Debtor. Curtis James Jackson, III, Plaintiff, v.
GSO Business Management, LLC, Jonathan Schwartz, Michael Oppenheim,
Bernard Gudvi, Nicholas Brown, and William Braunstein Defendants,
Case No. 15-21233 (AMN), Adv. Proc. No. 17-2068, (Bankr. D.
Conn.).
In the August 29 Decision, the Court entered judgment in favor of
Curtis James Jackson, III as to the Bankruptcy Related Fee Claim,
but in favor of GSO Business Management, LLC as to the $90,000
Monthly Fee Claim and the IRC Section 1398 Claim. In relation to
the Bankruptcy Related Fee Claim, the Court ordered GSO to disgorge
$88,692, plus post-judgment interest, on or before Sept. 30, 2022,
for its knowing and unauthorized withdrawal of funds from Mr.
Jackson's DIP account in violation of the Retention Order. In
addition to disgorgement, the Court awarded Mr. Jackson attorney's
fees and costs related to the Bankruptcy Related Fee Claim in an
amount to be determined.
Now, Mr. Jackson seeks an award of $236,565 of attorney's fees and
$4,148 of costs, totaling $240,713. To support this request, Mr.
Jackson submitted a statement detailing the time incurred by Mr.
Jackson's counsel -- Joseph P. Baratta and Imran H. Ansari -- in
prosecuting this adversary proceeding from Sept. 10, 2017, through
Aug. 29, 2022. Notably, the Statement is not an invoice of
attorney's fees and costs billed to Mr. Jackson, but rather, a
cultivated list of time entries specifically sought as part of this
award. The Statement did not include any time incurred by any
paralegal staff, time or expenses incurred related to expert
depositions related to the IRC Section 1398 claim, or local
counsel's fees. The Statement reflects attorney's fees totaling
$394,275.
Because the court limited any award to the fees related to the
Bankruptcy Related Fee Claim, Mr. Jackson asserts 60% of the
$394,275, or $236,565, should be awarded as attorney's fees. GSO
objected to the requested fees and costs on a number of grounds
including: (a) the 60% allocation is arbitrary and not tailored to
actual time spent on the Bankruptcy Related Fee Claim; (b) the
hourly rate of $750 is unreasonable and not customary for hourly
rates charged in this District for similar services; and (c) the
time records contain excessive and redundant billing by two
attorneys and/or vague entries warranting an across-the-board
reduction.
Due to vague and excessive billing entries, the Court finds and
concludes that a 15% across-the-board reduction is warranted to
reach a reasonable number of hours for this case. Having determined
the reasonable hourly rate ($500) and the reasonable number of
hours (268.1), the Court concludes that Mr. Jackson is entitled to
an award of attorney's fees of $134,054. Since Mr. Jackson removed
costs associated with the IRC Section 1398 claim and because GSO
failed to raise any specific objection to the costs now sought, the
Court concludes that the costs of $4,149 are reasonable.
The Court directed GSO to pay the awarded attorney's fees and costs
to Mr. Jackson, on or before April 15, 2023.
A full-text copy of the Memorandum of Decision and Order dated Feb.
23, 2023 is available at https://tinyurl.com/yryh4myt from
Leagle.com.
About 50 Cent
Born July 6, 1975, Curtis James Jackson III, known professionally
as 50 Cent, is an American rapper, actor, businessman, and
investor.
50 Cent filed for Chapter 11 bankruptcy protection (Bankr. D. Conn.
Case No. 15-21233) on July 13, 2015 with $32.5 million in debt. The
bankruptcy filing came days after a jury ordered him to pay $5
million to rapper Rick Ross's ex-girlfriend Lastonia Leviston for a
sex tape scandal.
In July 2016, U.S. bankruptcy court judge approved a Chapter 11
reorganization plan for 50 Cent. The Plan required 50 Cent to pay
$18 million to Sleek Audio to settle a judgment, $6 million to
Leviston, and about $4 million to settle a guarantee claim with Sun
Trust Bank, among paying off other creditors over a five-year
period.
In February 2017, U.S. Bankruptcy Judge Ann Nevins discharged Mr.
Jackson's bankruptcy case.
DELTA AIR LINES: Fitch Alters Outlook on BB+ LongTerm IDR to Stable
-------------------------------------------------------------------
Fitch Ratings has affirmed Delta Air Lines' (Delta) Long-Term
Issuer Default Rating at 'BB+' and revised its Rating Outlook to
Stable from Negative. Fitch has affirmed Delta's senior secured
debt ratings at 'BBB-'/'RR1' and its unsecured ratings at
'BB+'/'RR4'. Fitch has also affirmed ratings on Delta's 2019-1
class AA and A certificates at 'BBB+' and 'BBB' respectively.
The outlook revision reflects better than expected profitability
and cash flows in 2022 that push Delta's credit metrics towards
levels that are supportive of its 'BB+' rating. Fitch anticipates
that a healthy supply/demand balance in 2023 along with Delta's
network restoration will lead to higher operating margins and free
cash flow that will allow the company to execute on its
de-leveraging plan. Macroeconomic concerns drive a level of
downside risk to our forecasts.
KEY RATING DRIVERS
Leverage improving: Fitch expects Delta's total adjusted
debt/EBITDAR to fall to 3x or below by YE 2024, roughly a turn
higher than where leverage stood prior to the pandemic. Leverage at
YE 2022 was just under 5x, which remains high for Delta's 'BB+'
rating. However, risks associated with current leverage are
tempered by Delta's publicly stated goal to reach and maintain a
2x-3x leverage metric and by ongoing progress towards paying down
debt and freeing up financeable collateral.
While not captured in Fitch's leverage metrics, the company also
benefits from reduced pension risk. Delta reported that its pension
obligations were fully funded at YE 2022, marking a material
improvement from prior to the pandemic when the plans were
underfunded by more than $5 billion.
Healthy Demand Outlook for 2023: Solid fourth quarter results from
Delta and other carriers along with early reports around booking
trends have provided confidence in an improving operating
environment for this year. All of the U.S. network carriers
reported bookings ahead of 2019 levels on recent earnings calls.
Demand resilience likely points to an increased priority in
consumer spending on experiences over goods coming out of the
pandemic, which may hold up despite a weaker macroeconomic
environment.
Growth is likely to be supported by yoy increases in international
and business demand, both of which were depressed during the first
half of 2022. Meanwhile, supply growth is set to remain muted this
year due to ongoing pilot shortages and delivery delays from the
aircraft OEM's, which Fitch believes will support a favorable
pricing environment and offset rising operating costs.
Inflationary Headwinds: Rising operating costs, particularly
related to wage inflation, will remain a headwind in 2023. However,
Fitch expects costs to be offset by higher fares and increased
operating efficiencies as the airlines move back towards normalized
levels of utilization. Pilot wages are set to move materially
higher. Delta's pilot union recently voted to ratify a new contract
that includes a more than 30% pay increase over four years and will
represent an estimated three-point headwind to cost per available
seat mile this year. The company also announced an across the board
5% pay increase for employees effective April 1.
Despite these pressures, Delta expects non-fuel unit costs to
decline by 2%-4% yoy in 2023 as operational efficiencies improve.
Operating costs were heavily impacted in 2022 by a high level of
hiring and training as the company built back from the pandemic.
Crew shortages, also left a meaningful portion of Delta's fleet
underutilized. For instance, the company estimates that 80-100
regional jets are currently not flying at full capacity. Fitch
expects these factors to offset other inflationary pressures as the
company restores capacity over the course of the year. However,
downside risks to its forecast persist as cost improvement is
predicated on growing capacity, which may be at risk should the
demand picture soften in an economic downturn.
Loyalty Program Revenues are Supportive: Revenues from airline
loyalty programs continue to grow in importance to the industry,
and act as an offsetting factor in potential downturns. Delta
reported $5.5 billion in total remuneration from its partnership
with American Express in 2022, and expects that number to grow to
$7 billion in 2024. Loyalty revenues have proven resilient,
rebounding to pre-pandemic levels by YE 2021, well ahead of travel
related revenues. The U.S. network carriers all continue to report
positive momentum with respect to loyalty program member growth and
co-branded credit card spend.
Fitch views a growing base of card holders and loyalty members as
risk reducing for the airline as travelers enrolled in Delta's
ecosystem tend generate more revenue per passenger compared to
non-members and tend to book travel directly through the airline's
website, reducing distribution expenses paid to online travel
agencies.
Expected Positive FCF: Fitch expects Delta to generate positive FCF
through its forecast period. Improving profitability amid a more
normalized operating environment is expected to drive FCF margins
in the low single digits, allowing the company to address its
planned capital spending while also bringing down debt. Capex is
expected to be elevated relative to prepandemic levels, but will
remain manageable. The company expects total capital spending of
$5.5 billion in 2023. Fitch expects the company to generate FCF
margins in the 2%-3% range through its forecast period.
Delta 2019-1 EETC: Fitch has affirmed its ratings on Delta Air
Lines Pass Through Trust Certificates Series 2019-1 (Delta's EETC
2019-1) class AA at 'BBB+' and class A at 'BBB'.
The class AA and class A certificates fail to pass our 'A' and
'BBB' stress levels with loan-to-value (LTV) exceeding 100%. The
rating of class AA is supported by a bottom up approach. The
tranche is eligible fora four-notch uplift from the airline's 'BB+'
IDR, but is capped at 'BBB+' per Fitch's criteria due to Delta's
'BB+' corporate rating. The four-notch uplift consist of a high
affirmation factor (+2), the presence of liquidity facility (+1)
and strong recovery prospects (+1). The class A rating is supported
by similar factors, except for zero recovery uplift due to weak
expected recovery. The class A could be supported by up to
three-notch uplift, however, the rating is capped by one-notch
differential from the Class AA, reflecting the class A subordinated
position. The potential one notch uplift for class AA and class A
provide some downside cushion for the ratings if Delta's IDR were
to be downgraded.
Affirmation of Class AA Certificates: LTV of the transaction
slightly exceeds 100% in Fitch's 'BBB' level stress, up modestly
from its prior review. Collateral coverage is initially strong for
this transaction but deteriorates over time due to its bullet
structure as opposed to most EETCs, which generally amortize over
time. Fitch has also moved the B737-900ER from a Tier 1/2 to a Tier
2 in a recent tier reassessment due to its last technology and
relative active fleet size compared to other solid Tier 1 aircraft
such as the A321neo.
Affirmation of Class A Certificates: The ratings for the A
certificates are also based on Fitch's bottom-up approach. The
class A certificates are eligible for up to three notches of uplift
from Delta's 'BB+' IDR (+2 for the affirmation factor and +1 for
the benefit of a liquidity facility). No recovery uplift is
assigned due to the certificates' weak recovery prospects. The
rating is capped to 'BBB' to maintain a ratings distinction between
the class AA and A certificates.
Fitch considers the affirmation factor for 2019-1's pool of
aircraft to be high primarily due to the number of older planes in
Delta's fleet that are more likely to be rejected in a distress
scenario than the collateral aircraft, which consist of young
vintage A220-100s, A321-200s, A350-900s and 737-900ERs. The
affirmation factor also benefits from the strategic importance of
these aircraft to Delta.
DERIVATION SUMMARY
Delta's 'BB+' rating remains higher than its two major network
competitors, United (B+) and American (B-). The rating differential
is driven in part by Fitch's expectations for Delta to maintain
leverage metrics favorable to its peers in the years following the
pandemic, along with its strong history of margin and FCF
generation relative to its major competitors. Delta maintains a
lower total debt balance than United, though on a net basis, the
two are similar.
However, Delta has lower capital spending commitments than United
in the coming years, and lower execution risk relative to United's
ongoing fleet renewal plan. Delta is rated three notches lower than
Southwest Airlines. The rating differential is largely driven by
Southwest's balance sheet, as it remains in a net cash position.
KEY ASSUMPTIONS
Key Assumptions Within Its Base Case Include:
- Delta's capacity grows in the low double digits in 2023 and low
to mid-single digits annually thereafter;
- Continued passenger growth in 2023, keeping load factors in the
83%-84% range;
- Flat to modestly increasing unit revenues;
- Jet fuel prices averaging around $3.20/gallon in 2023, implying
Brent crude prices in the mid $80/barrel range, while crack spreads
remain elevated above historical averages;
- Capital spending in line with the company's public guidance.
2019-1 EETC
- The rating case for the issuer include a harsh downside scenario
in which Delta declares bankruptcy, chooses to reject the
collateral aircraft, and where the aircraft are remarketed in the
midst of a severe slump in aircraft values. A Delta Air Lines
bankruptcy is hypothetical, and is not Fitch's current expectation
as reflected in Delta's 'BB+' IDR. Fitch's models also incorporate
a full draw on liquidity facilities and include assumptions for
repossession and remarketing costs;
- In its stress analysis, Fitch has opted to apply the mid-point of
its value stress range to the A321s and A350-900s (20% in the BBB
level scenario). Fitch applies the mid-point of its tier two stress
range to the 737-900ER and the low end of its stress range to the
A220-100;
- Fitch's analysis incorporates a 6% annual depreciation rate for
tier I aircraft and a 7% annual depreciation rate for tier II
aircraft.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Achievement of network restoration and cost control targets
driving FCF margins back to the low single digits and EBITDAR
margins in the high-teens or better;
- Sustained commitment to conservative financial policies leading
Adjusted debt/EBITDAR to around or below 2.5x and gross debt
trending towards pre-pandemic levels;
- Maintaining or increasing financial flexibility through
increasing unencumbered assets and moving towards a less encumbered
capital structure.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Sustained adjusted debt/EBITDAR above 3.3x or
EBITDAR/Interest+Rent falling below 3.5x on a sustained basis;
- FCF margins declining to neutral on a sustained basis;
- A deviation of FCF deployment causing total liquidity to fall
below $7 billion absent an offsetting increase in leverageable
assets.
2019-1 EETC
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Positive rating actions are unlikely at this time due to
declining levels of overcollateralization through the life of the
transaction;
- Based on criteria, rating for the class AA is capped at 'BBB+'
due to Delta rated in the 'BB' category. The class A certificates
are capped at 'BBB', below the class AA rating, to reflect their
subordinated position.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- The ratings for the class AA and class A certificates are based
on the bottom up approach. If Delta were to be downgraded to 'BB',
class AA certificates may stay at 'BBB+' and class A at 'BBB' due
to the potential for four and three uplift, respectively. The
rating is also subject to changes in Fitch's view of affirmation
factors for the underlying collateral. Unexpected decline in
collateral values could result in Fitch's lower assessment of class
AA recovery.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Delta ended FY 2022 with $9.4 billion in total
liquidity, consisting of $2.9 billion in availability on its
revolving credit facilities, $3.3 in short term investments, and
$3.3 billion in cash and cash equivalents. Delta has pared down
liquidity more quickly than its large network peers in the U.S. but
total liquidity remains well above pre-pandemic levels, which
tended to be closer to $5 billion.
Delta's total adjusted debt declined to $32.9 billion at YE 2022
down from $37.1 billion in 2021. The company repaid $3.9 billion of
debt in 2022, well ahead of its scheduled debt maturities of $1.5
billion. Upcoming maturities of $2 billion and $2.8 billion in 2023
and 2024 respectively, are manageable given Fitch's expectations
for the company to generate a significant amount of FCF in the
coming two years.
2019-1 EETC
The class AA and A certificates benefit from dedicated 18-month
liquidity facilities, which are provided by Commonwealth Bank of
Australia acting through its New York Branch (A+/F1/Stable).
ISSUER PROFILE
Delta is one of the largest airlines in the world, operating hubs
in Atlanta, Boston, Detroit, Los Angeles, Minneapolis-St. Paul, New
York-JFK and LaGuardia, Salt Lake City and Seattle. It is part of
the SkyTeam Alliance, one of three major alliance networks of
global airlines.
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
----------- ------ -------- -----
Delta Air Lines
Pass Through
Trust Certificates
Series 2019-1
senior secured LT BBB+ Affirmed BBB+
senior secured LT BBB Affirmed BBB
Delta Air Lines LT IDR BB+ Affirmed BB+
senior secured LT BBB- Affirmed RR1 BBB-
senior
unsecured LT BB+ Affirmed RR4 BB+
DELUXE CORP: S&P Downgrades ICR to 'B' on Expected Lower Revenue
----------------------------------------------------------------
S&P Global Ratings lowered the issuer credit rating on Deluxe
Corp., a U.S.-based provider of check printing and payment
services, to 'B' from 'B+'. At the same time, S&P lowered the
issue-level rating on the company's senior unsecured notes to
'CCC+' from 'B-'.
The stable outlook reflects S&P's expectation that Deluxe will
reduce leverage to mid-5x over the next 12 months despite continued
restructuring costs and secular declines in its checks segment.
S&P said, "We expect lower revenue will result in elevated leverage
of mid-5x over the next 12 months. Despite new business wins that
grew revenue in 2022, we expect revenue to decrease in 2023 and
beyond in the company's check business, because of secular declines
in the commercial print industry. The company will also exit the
web hosting business in the first half of 2023. This business
contributed about $74 million of revenue in 2022. This will result
in a revenue mix shift toward the lower-margin payments business,
which will limit near-term EBITDA margin improvement and leverage
reduction. Longer-term, we expect the company will generate
low-single digit revenue growth as declines in the check business
are offset by growth in the payments segment.
"We believe ongoing restructuring expenses will constrain EBITDA
growth. While we expect a large portion of these one-time costs
will subside, we estimate that roughly half will continue into of
2023. The company experienced elevated expenses to improve its
enterprise resource planning (ERP) system and invest in other
technologies, and we expect these to recur over the next 12 months
as the company consolidates its lockbox facilities, improves ERP,
and pays additional severance costs. We view these restructuring
costs as recurring in nature and include them in our adjusted
EBITDA calculation. Deluxe also incurred higher costs while
reinstating its 401(k) matching program." Deluxe initially
discontinued the program at the onset of the COVID-19 pandemic and
brought it back at the beginning of2022. The company plans to enact
additional cost actions to address corporate overhead expenses such
as improving organization design and reducing its real estate
footprint.
Interest rate hedges and working capital improvement will help
generate and sustain good cash flow. Deluxe entered into $500
million of total interest rate hedges capped at around 3.9%, which
will reduce the impact of rising interest rates on cash interest
expense. S&P also expects the company will benefit from working
capital improvements, improving free operating cash flow (FOCF) by
about $10 million. Deluxe made substantial investments in working
capital during the pandemic to help solidify its inventory base
because of global supply chain challenges.
S&P said, "The stable outlook reflects our expectation that Deluxe
will reduce leverage to mid-5x over the next 12 months despite
continued restructuring costs and secular decline in its checks
segment. We also expect the company's payments segment will
overtake checks as the largest revenue contributor, enabling Deluxe
to maintain leverage below our 6x downgrade threshold despite
declines in the checks business."
S&P could lower the rating on Deluxe over the next 12 months if:
-- Leverage increases and is sustained above 6x;
-- FOCF to debt falls below 5%; or
-- A decline in the checks segment or greater competition in other
business lines lead to lower sustained organic revenue.
S&P could raise the rating over the next 12 months if the company:
-- Reduces and sustains leverage below 5x; and
-- Generates positive organic revenue growth.
ESG credit indicators: E-2, S-2, G-2
DIEBOLD NIXDORF: Lauren States Won't Seek Re-election as Director
-----------------------------------------------------------------
Lauren C. States won't seek re-election to the Board of Directors
of Diebold Nixdorf, Incorporated at the 2023 annual meeting of
shareholders.
Ms. States's decision not to stand for re-election is not the
result of any disagreement between Ms. States and the Company on
any matter relating to the operations, policies or practices of the
Company, as disclosed by the Company in its Form 8-K filed with the
Securities and Exchange Commission.
About Diebold Nixdorf
Diebold Nixdorf, Incorporated -- www.DieboldNixdorf.com --
automates, digitizes and transforms the way people bank and shop.
As a partner to the majority of the world's top 100 financial
institutions and top 25 global retailers, the Company's integrated
solutions connect digital and physical channels conveniently,
securely and efficiently for millions of consumers each day. The
Company has a presence in more than 100 countries with
approximately 22,000 employees worldwide.
Diebold Nixdorf reported a net loss of $585.6 million for the year
ended Dec. 31, 2022, a net loss of $78.1 million for the year
ended Dec. 31, 2021, a net loss of $267.8 million for the year
ended Dec. 31, 2020, and a net loss of $344.6 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2022, the Company had $3.06
billion in total assets, $1.60 billion in total current
liabilities, $2.58 billion in long-term debt, $245.4 million in
long-term liabilities, and a total deficit of $1.37 billion.
* * *
As reported by the TCR on Jan. 11, 2023, S&P Global Ratings raised
its issuer credit rating on U.S.-based ATM and point-of-sale
provider Diebold Nixdorf Inc. to 'CCC+' from 'SD'. S&P said, "The
positive outlook reflects our expectation that the company's
increased backlog, price increases and cost-cutting efforts coupled
with supply chain efficiencies will materially improve EBITDA
margins and reduce leverage toward the mid-8x area by the end of
2023. We also expect this will improve prospects for growing free
cash flow generation to support FOCF to debt in the
low-single-digit percent area over the next 12 months."
Early this month, Moody's Investors Service affirmed Diebold
Nixdorf, Inc.'s corporate family rating of Caa2 following the
closing of the Company's debt capital restructuring.
DIOCESE OF BUFFALO: Abuse Victims Still Wait for Compensation
-------------------------------------------------------------
Jay Tokasz of The Buffalo News reports that five years after
Buffalo Diocese sex abuse scandal erupted, its victims are still
waiting for compensation.
The lid on the Buffalo Diocese's long-held secrets about clergy
molesters was pried open in 2018 when a Catholic priest admitted he
had sexually abused dozens of boys.
Five years later, despite promises to do right by abuse victims,
the diocese has not paid a penny in damages to an estimated 900
people who filed claims alleging they were sexually abused by
priests or other diocese employees. Despite pledges of greater
transparency, the diocese has yet to make public internal documents
on its handling of abuse cases. And no one connected with the
diocese has been charged with any crimes related to child sex abuse
or its cover-up in the past five years.
"It seems to me that nothing has changed," said Michael F. Whalen
Jr., who held a news conference on February 27, 2018, to tell the
public that the Rev. Norbert Orsolits had abused him nearly 40
years ago when he was a teenager.
About The Diocese of Buffalo, N.Y.
The Diocese of Buffalo, N.Y., is home to nearly 600,000 Catholics
in eight counties in Western New York. The territory of the
diocese is co-extensive with the counties of Erie, Niagara,
Genesee, Orleans, Chautauqua, Wyoming, Cattaraugus, and Allegany in
New York State, comprising 161 parishes. There are 144 diocesan
priests and 84 religious priests who reside in the Diocese.
The diocese through its central administrative offices (a) provides
operational support to the Catholic parishes, schools, and certain
other Catholic entities that operate within the territory of the
Diocese "OCE"; (b) conducts school operations through which it
provides parish schools with financial and educational support; (c)
provides comprehensive risk management services to the OCEs; (d)
administers a lay pension trust and a priest pension trust for the
benefit of certain employees and priests of the OCEs; and (e)
provides administrative support for St. Joseph Investment Fund,
Inc.
Dealing with sexual abuse claims, the Diocese of Buffalo sought
Chapter 11 protection (Bankr. W.D.N.Y. Case No. 20-10322) on Feb.
28, 2020. The diocese was estimated to have $10 million to $50
million in assets and $50 million to $100 million in liabilities as
of the bankruptcy filing.
The Honorable Carl L. Bucki is the case judge.
Bond, Schoeneck & King, PLLC, led by Stephen A. Donato, Esq., is
the diocese's counsel; Connors LLP and Lippes Mathias Wexler
Friedman LLP are its special litigation counsel; and Phoenix
Management Services, LLC is its financial advisor. Stretto is the
claims agent, maintaining the page:
https://case.stretto.com/dioceseofbuffalo/docket
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on March 12, 2020. The committee is represented by
Pachulski Stang Ziehl & Jones, LLP and Gleichenhaus, Marchese &
Weishaar, PC.
DIOCESE OF BUFFFALO: Says Not Stalling Abuse Victims' Compensation
------------------------------------------------------------------
Jay Tokasz of Buffalo News reports that Bishop Michael W. Fisher
denied claims that the Buffalo Diocese was attempting to drag out
its Chapter 11 bankruptcy and asserted that the diocese was
"actively engaged in good faith negotiations" with sex abuse
survivors and insurance carriers to settle the case.
Fisher wrote a letter to parishioners after The Buffalo News
published stories Sunday, February 26, 2023, and Monday, February
27, 2023, in which abuse survivors expressed outrage over a 3-year
old bankruptcy process that so far has cost $11 million in legal
fees but hasn’t resulted in a single payment to an abuse victim.
The Buffalo Diocese's bankruptcy case has taken longer to resolve
than at least 14 other diocese bankruptcies filed since 2005,
according to a Buffalo News analysis and research by Pennsylvania
State University Professor Marie T. Reilly, who studies Catholic
institution bankruptcies. Only the Archdiocese of Milwaukee, at
nearly five years to a confirmed plan, and the Archdiocese of St.
Paul and Minnesota at three years and seven months, have taken
longer.
Mediated settlement talks in the Buffalo Diocese began in earnest
late last summer, and Chief Judge Carl L. Bucki of U.S. Bankruptcy
Court Western District of New York recently appointed a second
mediator to help move the process along.
Abuse survivors have accused the diocese of foot dragging to
prolong the bankruptcy and wear them down so they accept a lower
settlement offer.
5 years after Buffalo Diocese sex abuse scandal erupted, victims
still waiting for compensation.
Five years later, despite promises to do right by abuse victims,
the diocese has not paid a penny in damages to an estimated 900
people who filed claims alleging they were sexually abused by
priests or other diocese employees.
Fisher maintained that the bankruptcy filing, which happened Feb.
28, 2020, prior to Fisher’s arrival as bishop, was still the
right course of action given the number of Child Victims Act
lawsuits that had been filed against the diocese.
Bankruptcy court rules, he said, "help to ensure that all survivors
will be treated fairly."
"If the Diocese had not pursued reorganization in bankruptcy, there
was every likelihood that judgments in favor of early litigants
would have completely depleted the Diocese's limited resources,
leaving the Diocese without the ability to provide financial
restitution to the vast majority of other survivors," he added.
Fisher said the Covid-19 pandemic and accompanying lockdowns
"unavoidably delayed progress early in the case" but he was
optimistic the diocese, abuse survivors and insurers will be able
to agree on a fair settlement.
The diocese, he said, "is doing everything in its power to achieve
that result as quickly as possible."
But Denis Riley sees it much differently.
The diocese in 2018 compensated Riley for the abuse he suffered
from Monsignor Edward Walker when he was an altar boy at St. Joseph
parish in Fredonia in the 1960s.
The diocese paid out $17.5 million to 106 clergy abuse victims
through a voluntary compensation program in 2018 and 2019. The
diocese hasn’t paid any compensation to victims since that
program ended.
Riley accepted the diocese's compensation offer because he figured
then that the diocese was hurtling toward bankruptcy, as other
dioceses had done before, in an effort "to avoid paying a dollar
more than they have to."
So Riley isn't waiting to receive money through a bankruptcy
settlement, like the 900 people who filed claims.
It's still upsetting, though, to see how the diocese is handling
things, he said.
"They're using every tactic they can, under the cover of trying to
communicate and bargain in good faith," he said.
The bishop's letter was sent Tuesday to pastors and parish
administrators, who were encouraged to distribute it via a bulletin
insert or to read it from the pulpit at weekend Masses, according
to diocese spokesman Joseph Martone.
Fisher also objected to criticism that the diocese hasn’t made
its records on abusive clergy more readily available to the public.
Many abuse victims have been calling for years for the diocese to
release such files, which could provide greater insight into how
church authorities handled abuse complaints and clergy facing
molestation claims.
Fisher said the diocese handed over “voluminous records” to the
creditors’ committee that represents abuse survivors in the
Chapter 11 proceeding and to the Office of the New York Attorney
General, which launched an investigation in 2018 and subpoenaed the
records.
Survivors of abuse at the hands of priests say Michael Whalen's
courage became the history-changing push that finally overwhelmed
diocesan secrecy, going back generations.
The records given to the creditors committee were done so under a
nondisclosure agreement, so they are not available to the public.
The Attorney General's Office, in an investigative report that
accompanied its 2020 lawsuit against the diocese, cited some
diocese files related to 25 clergy accused of abuse.
"We are aware of no outstanding requests from any of those parties
for additional records relating to acknowledged perpetrators or the
Diocese’s handling of reports of abuse," Fisher said. "Due to the
sensitive nature of these records however, including the need to
protect the identities of survivors, it would not be appropriate to
make them available to the general public."
Riley described those comments as laughable. He's asked the diocese
in writing for files on Walker for many years.
"I just want to know what the diocese knew," he said. "The people
who don't want to be identified, OK, their names can be taken out
of them, but all the records should be released, to the extent they
can be, to the public. But they're afraid of that, because the
firestorm would be unbelievable."
Fisher added that no diocese employee who is credibly accused of
abuse "will ever be shielded."
The bishop also acknowledged that no amount of money can undo the
harm survivors have suffered, and he said it was unlikely the
diocese could ever gather enough assets, even with contributions
from insurance companies, to "fully satisfy survivors' expectations
and demands."
But he said his highest priority as bishop is to work toward the
healing of victim-survivors of abuse.
"Ultimately it is in what we do – far more than what we say –
that will demonstrate to survivors and all of our communities that
the failures of the past cannot be repeated," he said.
About The Diocese of Buffalo, N.Y.
The Diocese of Buffalo, N.Y., is home to nearly 600,000 Catholics
in eight counties in Western New York. The territory of the
diocese is co-extensive with the counties of Erie, Niagara,
Genesee, Orleans, Chautauqua, Wyoming, Cattaraugus, and Allegany in
New York State, comprising 161 parishes. There are 144 diocesan
priests and 84 religious priests who reside in the Diocese.
The diocese through its central administrative offices (a) provides
operational support to the Catholic parishes, schools, and certain
other Catholic entities that operate within the territory of the
Diocese "OCE"; (b) conducts school operations through which it
provides parish schools with financial and educational support; (c)
provides comprehensive risk management services to the OCEs; (d)
administers a lay pension trust and a priest pension trust for the
benefit of certain employees and priests of the OCEs; and (e)
provides administrative support for St. Joseph Investment Fund,
Inc.
Dealing with sexual abuse claims, the Diocese of Buffalo sought
Chapter 11 protection (Bankr. W.D.N.Y. Case No. 20-10322) on Feb.
28, 2020. The diocese was estimated to have $10 million to $50
million in assets and $50 million to $100 million in liabilities as
of the bankruptcy filing.
The Honorable Carl L. Bucki is the case judge.
Bond, Schoeneck & King, PLLC, led by Stephen A. Donato, Esq., is
the diocese's counsel; Connors LLP and Lippes Mathias Wexler
Friedman LLP are its special litigation counsel; and Phoenix
Management Services, LLC is its financial advisor. Stretto is the
claims agent, maintaining the page:
https://case.stretto.com/dioceseofbuffalo/docket
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on March 12, 2020. The committee is represented by
Pachulski Stang Ziehl & Jones, LLP and Gleichenhaus, Marchese &
Weishaar, PC.
DIOCESE OF NORWICH: Committee Files $90M Abuse Victims Payout Plan
------------------------------------------------------------------
James Nani of Bloomberg Law reports that the creditors of the Roman
Catholic Diocese of Norwich have proposed a bankruptcy exit plan
that could pay as much as $90 million of cash and insurance payouts
to resolve child sex abuse claims.
The proposal Feb. 28, 2023, by the committee representing abuse
victims sets up a showdown with the Norwich Roman Catholic Diocesan
Corp. The church proposed its own reorganization plan in January
2023 that calls for paying $29 million to settle about 142 clergy
sexual abuse claims.
The looming battle is part of a larger trend involving potentially
valuable insurance rights, bankrupt dioceses, and child sex abuse
victims.
About The Norwich Roman Catholic
Diocesan Corporation
The Norwich Roman Catholic Diocesan Corporation is a nonprofit
corporation that gives endowments to parishes, schools, and other
organizations in the Diocese of Norwich, a Latin Church
ecclesiastical territory or diocese of the Catholic Church in
Connecticut and a small part of New York.
The Norwich Roman Catholic Diocesan Corporation sought Chapter 11
protection (Bankr. D. Conn. 2:21-bk-20687) on July 15, 2021. The
Debtor estimated $10 million to $50 million in assets against
liabilities of more than $50 million. Judge James J. Tancredi
oversees the case.
The Debtor tapped Ice Miller, LLP as bankruptcy counsel and
Robinson & Cole, LLP as Connecticut counsel. Epiq Corporate
Restructuring, LLC is the claims and noticing agent.
DIOCESE OF SACRAMENTO: Faces Insolvency Due to Sex Abuse Suits
--------------------------------------------------------------
Mathew Miranda of the Sacramento Bee reports that the Roman
Catholic Diocese of Sacramento is facing insolvency following more
than 200 lawsuits alleging the sexual abuse of minors. Bishop Jaime
Soto said in a letter Sunday night addressing the civil claims and
acknowledging the possible financial impact. The majority of the
lawsuits predate the 1990s as state law extends the statute of
limitations on these cases.
"A vital aspect of owning and atoning for the sins of the past is
resolving claims brought forward by victim-survivors in a fair and
responsible manner," Bishop Soto wrote. "I have committed to this
principle and attempt to live it in every case."
The bishop admitted that in the face of a "staggering number" of
claims, the "financial challenge" is unlike anything we have faced
before. "I must consider what options are available to us, should
the diocese become insolvent," Soto said.
About Sacramento Diocese
Sacramento Diocese is a Latin Church ecclesiastical territory or
diocese of the Catholic Church in the northern California region of
the United States.
EAGLE MECHANICAL: Wins Interim Cash Collateral Access
-----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana,
Indianapolis Division, authorized Eagle Mechanical Inc. to use cash
collateral on an interim basis in accordance with the budget.
The Debtor's secured lender, First Merchants Bank, N.A., has
consented to the use of cash collateral on a limited basis.
The Debtor is permitted to use cash collateral to pay necessary
expenses, which are approved by Creditor in writing in advance.
To the extent First Merchants has an interest in the Debtor's cash
collateral, the Court grants the bank adequate protection as
follows:
a. First Merchants is granted post-petition replacement liens
in the cash of the Debtor; and
b. First Merchants is further granted a post-petition
replacement lien against (i) any accounts receivable created
post-petition; (ii) any inventory or equipment acquired
post-petition; and (iii) the products and proceeds thereof; and
c. The replacement liens granted secure the total aggregate
amount of the value of the cash collateral that existed as of the
Petition Date and is used by Debtor to the same extent and priority
as First Merchants' properly perfected, prepetition security
interest.
A final hearing on the matter is set for March 27, 2023 at 11 a.m.
A copy of the order is available at https://bit.ly/3STZkMM from
PacerMonitor.com.
About Eagle Mechanical Inc.
Eagle Mechanical Inc. sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S.D. Ind. Case No. 22-00291) on
January 27, 2023. In the petition signed by Rogelio Mancilla Jr.,
chief executive officer, the Debtor disclosed $7,751,209 in assets
and $9,136,761 in liabilities.
Judge James M. Carr oversees the case.
Weston Overturf, Esq., at Overturf Fowler LLP, is the Debtor's
legal counsel.
EARTH HOUSE: No Patient Care Concern, 2nd PCO Report Says
---------------------------------------------------------
Debra Branch, the court-appointed patient care ombudsman, filed
with the U.S. Bankruptcy Court for the District of New Jersey her
second report regarding the quality of patient care provided at
Earth House, Inc.'s mental health treatment center.
This second PCO report is based on telephone interviews with the
Executive Director held on Jan. 30 and Feb. 22.
The PCO cited no changes in full time staff during this reporting
period. Earth House is using flexible part time and partial shifts
to accommodate graduate students interested in employment with the
program. Earth House states that there are no significant changes
in staff since its Chapter 11 bankruptcy filing.
The PCO reported that the treatment center, located in a rural
community near Princeton, accommodates a maximum of 14 residents.
Two new students began the program in January and an additional
student started the program in February. Earth House states there
are no significant changes in the services offered since the
bankruptcy filing.
Meanwhile, the PCO noted no patient complaints. Pursuant to Section
333(b)(3) of the Bankruptcy Code, the quality of patient care
provided patients has been maintained since the filing. Earth House
has not reduced staff and the number of in-resident students has
increased.
The PCO further noted that the bankruptcy filing has not affected
Earth House's ability to continue to deliver at risk psychiatric
patients a unique and innovative program with a good standard of
care.
A copy of the ombudsman report is available for free at
https://bit.ly/3SO02eu from PacerMonitor.com.
The ombudsman may be reached at:
Debra H. Branch, Esq.
Law Office of Debra H. Branch
1814 E. Route 70, Ste 411
Cherry Hill, NJ 08003
Phone: (856)489-7163
Email: DHBRANCH@aol.com
About Earth House
Earth House, Inc. is a health care business as defined in 11 U.S.C.
Sec. 101(27A).
Earth House filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case No. 22-18011) on Oct. 10, 2022.
In the petition filed by its executive director, James F. Karwosk,
the Debtor reported assets between $500,000 and $1 million and
liabilities between $100, 000 and $500,000.
Judge Kathryn C. Ferguson oversees the case.
The Debtor is represented by the Law Firm of Andre Kydala, Esq.
ENERGY HARBOR: Fitch Lowers IDR to 'BB+' & Puts Rating on Watch Neg
-------------------------------------------------------------------
Fitch Ratings has downgraded Energy Harbor Corporation's Long-Term
Issuer Default Rating (IDR) to 'BB+' from 'BBB' and placed the
rating on Rating Watch Negative. The downgrade reflects Energy
Harbor's willingness to pursue a permanent capital structure that
will result in materially higher leverage than Fitch's original
expectation, as evidenced by the company's agreed-to-acquisition by
Vistra Corp (BB/Stable).
The Rating Watch Negative indicates additional negative action is
likely as Fitch expects to equalize Energy Harbor's IDR with
Vistra's IDR. If the transaction does not close, Fitch will affirm
the 'BB+' IDR, remove the Negative Rating Watch and assign a Stable
Rating Outlook to Energy Harbor.
KEY RATING DRIVERS
Acquisition by Vistra Increases Financial Risk Profile: Vistra will
acquire Energy Harbor in a transaction valued at $3.43 billion and
15% equity interest in a Vistra subsidiary called Vistra Vision.
Given the complimentary asset base, and Vistra's existing
experience with nuclear generation, Fitch believes there is a high
likelihood that the approval process will proceed as planned and
the merger will close successfully. Upon close of the transaction,
Energy Harbor's nuclear and retail businesses will combine with
Vistra's nuclear, retail, renewables and storage businesses under a
newly formed subsidiary holding company, that is currently referred
to as "Vistra Vision".
While the acquisition provides modest improvement to the combined
enterprise's business position, the proposed acquisition results in
a weaker financial profile. Vistra would fully control the legal,
strategic and operational aspects of the combined business, and as
a result, Fitch will likely equalize Energy Harbor's IDR with
Vistra's. Fitch expects Vistra's EBITDA leverage (defined as total
debt with equity credit/operating EBITDA) will remain above its
current negative sensitivity threshold of 3.5x until 2026 following
the acquisition.
Weaker Standalone Financial Policy: In the low probability event
that the merger fails, Fitch views Energy Harbor's financial
policy, including target leverage and capital allocation policy as
being somewhat uncertain. The company has not significantly changed
its capital structure since it emerged from bankruptcy. In
establishing a permanent capital structure, Fitch estimates Energy
Harbor's leverage could be materially higher than Fitch's previous
expectation of around 1.0x over the 2023-2025 period. The current
rating action incorporates this assumption.
Energy Harbor's only existing debt is approximately $430 million in
municipal bonds, which will be assumed by Vistra Vision upon close
of the transaction. Fitch does not rate this debt.
DERIVATION SUMMARY
Energy Harbor and Vistra Corp. (BB/Stable) have similar business
strategies of combining generation and retail businesses and a load
match book. While Vistra has a larger generation portfolio than
Energy Harbor, it is predominately in ERCOT, which does not benefit
from capacity prices, and includes coal fired-generation in
addition to natural gas assets. In comparison, Energy Harbor is in
the process of divesting its thermal assets and thereafter will
have a nuclear-baseload profile, which runs at nearly 92%
capacity.
Fitch views Ontario, Canada based nuclear generator Bruce Power
(BBB+/Stable) as having slightly stronger profile as its generation
capacity at 6.5GW is larger than Energy Harbor's, and the output
from its facilities is sold on a wholesale basis to the Independent
Electricity System Operator (IESO) under favorable contractual
terms including a supportive rate of return and escalators, resets,
and pass-throughs for most cost items.
Both Vistra and Energy Harbor benefit from their ownership of large
retail electricity businesses, which are typically countercyclical
to wholesale generation given the length and stickiness of customer
contracts. Vistra benefits from its incumbent position in Texas
with a high-margin mass retail market, while Energy Harbor's retail
unit serves a mix of C&I, residential, small and medium-sized
business, Provider of Last Resort and government aggregation
customer base with margins that are generally lower and a customer
base that is more stable. Bruce Power does not have any retail
operations for physical delivery.
In the interim period before the transaction closes, Fitch expects
Energy Harbor and Vistra to maintain leverage in-line with current
expectations: around 1.0x at Energy Harbor compared with around
3.5x at Vistra and around 2.0x at Bruce Power.
KEY ASSUMPTIONS
- The acquisition closes as per the stated terms;
- Vistra receives approvals in a timely manner;
- No material impact from Energy Harbor's planned disposition its
fossil fuel assets.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- The Rating Watch could be removed and the ratings affirmed if the
transaction fails to close and the company states its financial
policy such that leverage (as defined earlier) is sustained between
2.0x and 3.0x;
- Further positive rating action could be considered if the
transaction fails to close and the company states its financial
policy such that leverage is less than 2.0x on a sustained basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Transaction closes as per currently understood terms;
- Transaction fails to close and leverage exceeds 3.0x on a
sustained basis.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Energy Harbor has adequate liquidity, given its
substantial cash on-hand as of Dec. 31, 2022. The company is
expected to be FCF positive, and Fitch projects cash on-hand will
continue to increase over the next 12-18 months. The company also
has a Zero Carbon 366-day LC facility. The facility is due for
renewal on Oct. 5, 2023. Fitch believes liquidity is sufficient for
collateral posting given likelihood of volatility in natural gas
prices. Absence of a long-term credit facility is a slight
weakness, but Fitch expects the company can access additional bank
lending to bridge short-term liquidity needs.
Other uses of cash could include payments related to fossil fuel
asset disposal. There are no long-term debt maturities over the
next five years.
ISSUER PROFILE
Energy Harbor Corp. is a privately held energy producer and
retailer, headquartered in Akron, Ohio. The company owns and
operates four nuclear power generation units in Ohio and
Pennsylvania totaling about 4.0GW. The company also serves nearly
one million residential, commercial and industrial customers.
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 Prior
----------- ------ -----
Energy Harbor Corp. LT IDR BB+ Downgrade BBB
ESJ TOWERS: ESJ HOA's Motion for Relief from Automatic Stay Denied
------------------------------------------------------------------
In the case styled IN re ESJ Towers, Inc. d/b/a Mare St. Clair
Hotel, Chapter 11, Debtor, Case No. 22-01676 (ESL), (Bankr.
D.P.R.), Bankruptcy Judge Enrique S. Lamoutte denies the Urgent
Motion for Relief from Automatic Stay filed by ESJ Towers
Condominium Homeowners Association.
The ESJ HOA filed the instant Motion for Relief from Automatic Stay
due to the Debtor's failure to pay its post-petition maintenance
fees for the past four months so that it may proceed to disconnect
the utilities of the Debtors' alleged wholly controlled 124
condominium units out of the 274 units in which the Debtor has an
interest.
ESJ HOA contends that relief from the automatic stay is warranted
due to lack of adequate protection of an interest in property of
ESJ HOA. ESJ HOA's position is that it has a security interest on
the 124 units based on these statutory liens.
Common expense debts are only secured as soon as they are
registered in the Property Registry, albeit the continuous
obligation of an owner to contribute as required by law. The lien
contemplated by Article 41 of the Condominium Act is not
self-perfecting; rather, in order to be perfected and for it to
encumber the apartment, the lien must be recorded in the Registry
of Property.
This Court finds that the bankruptcy estate has a property interest
in the 124 units in which the Debtor was the lessee as of the
petition date and continues to be the lessee until the leases
expire in December 2029 or until the Debtor rejects the same.
Therefore, the Debtor's interest in the leases constitutes property
of the bankruptcy estate.
Moreover, the Court finds and concludes that ESJ HOA does not have
a security interest over the 124 units because the liens need to be
registered, therefore ESJ HOA is not entitled to adequate
protection pursuant to 11 U.S.C. section 361 and it is an unsecured
claimant.
A full-text copy of the Opinion and Order dated Feb. 27, 2023 is
available at https://tinyurl.com/47dhf6jy from Leagle.com.
About ESJ Towers
ESJ Towers, Inc. owns the ESJ Towers in Carolina, P.R. The luxury
apartments and condo units at ESJ Towers have direct access to Isla
Verde Beach, widely considered one of the best in Puerto Rico.
ESJ sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D.P.R. Case No. 22-01676) on June 10, 2022, with as much as
50 million in both assets and liabilities. ESJ President Keith St.
Clair signed the petition.
Judge Enrique S. Lamoutte Inclan oversees the case.
The Debtor tapped Charles A. Cuprill, Esq., at Charles A. Cuprill,
PSC Law Offices as bankruptcy counsel; Ramon Luis Nieves, Esq., at
RL Legal Consulting Services, LLC and Luis Daniel Muniz, Esq., as
special counsels; Dage Consulting CPAS, PSC as financial advisor;
CPA Luis R. Carrasquillo & Co., P.S.C. as financial consultant; and
De Angel & Compania, PA, LLC as auditor.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on Sept. 12, 2022. MRO Attorneys at Law, LLC
and Dage Consulting CPAS, PSC serve as the committee's legal
counsel and financial advisor, respectively.
FAIRWAY GROUP: Old Market's Bid for Leave to Appeal Denied
----------------------------------------------------------
District Judge P. Kevin Castel denies the motion for leave to
appeal filed by Old Market Group Holdings Corp. in the case
captioned as In re Old Market Group Holdings Corp., et al. Chapter
11. Old Market Group Holdings Corp. Appellant, v. 400 Walnut
Avenue, LLC, Appellee, Case No. 20-10161 (PB) (Jointly
Administered), No. 22-cv-10934 (PKC), (S.D.N.Y.).
Fairway Group Holdings Corp. and its affiliates filed for chapter
11 bankruptcy and reorganized as Old Market Group Holdings Corp.
Most of Fairway's assets were sold off by the Debtors during the
bankruptcy proceedings. In one such arrangement, the Debtors agreed
to sell five stores and a product distribution center warehouse to
Village Supermarkets. The "sale" was completed by assumption and
assignment of the leases on these properties to Village.
The asset purchase agreement stated that Village would acquire the
assets "free and clear all Liens and Claims." Village's
responsibility for any cure costs associated with the sale would be
limited to one month's rent, an amount it paid at the closing. The
Sale Order "specifically shielded Village from any liability to
counterparties, including the warehouse's Landlord (400 Walnut
Avenue LLC), for cure claims or pre-sale defaults of any sort."
In anticipation of the transaction, the Debtors filed a February
2020 notice proposing to pay the Landlord $86,000 to cure defaults
associated with the warehouse's lease. The Landlord objected and
asserted approximately $2.01 million in cure costs.
According to the Debtors, there was no default for the Debtors to
cure under the code. In a written decision, the bankruptcy court
rejected this argument. Because the bankruptcy court was dealing
with the threshold issue of the grounds for default, the amount
necessary to cure any default was left to subsequent proceedings.
Now, the Debtors move for leave to appeal this interlocutory order.
The Debtors concede that this was an interlocutory, rather than a
final Order. Accordingly, the Court will deny the Debtors'
request.
At the outset, the Court notes that, as framed, the question
presented does not reflect the determination of the bankruptcy
court. The Order did not compel the Debtors to cure a future
default under the terms of the lease, and it did not require
anything as of the filing of the cure objection. Instead, the
bankruptcy court determined that at the time of the transaction the
Debtors were already in default as to allegedly unmet repair
obligations -- even under the plain teams of the lease -- and the
Debtors were required to cure these present defaults. Additionally,
the bankruptcy court ruled that the lease provisions did not even
control: The word "default" in section 365 of the Bankruptcy Code
was used in its ordinary sense and operated irrespective of the use
of the word in the lease.
A full-text copy of the Opinion and Order dated Feb. 24, 2023 is
available at https://tinyurl.com/24me2wkk from Leagle.com.
About Fairway Group Holdings Corp.
Fairway Group -- https://www.fairwaymarket.com/ -- is a food
retailer operating 14 supermarkets across the New York, New Jersey,
and Connecticut tri-state area, including two with freestanding
wine and liquor stores (the Stamford and Pelham locations) and two
with in-store wine and liquor stores (the Woodland Park and Paramus
locations). The company's flagship store is located at Broadway and
West 74th Street, on the Upper West Side of Manhattan, featuring a
cafe, Sur la Route, and state of the art cooking school. Fairway's
stores emphasize an extensive selection of fresh, natural, and
organic products, prepared foods, and hard-to-find specialty and
gourmet offerings, along with a full assortment of conventional
groceries.
Fairway Group Holdings Corp. and 25 affiliated companies sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-10161) on
January 23, 2020.
In the petitions signed by CEO Abel Porter, the Debtors were
estimated to have $100 million to $500 million in assets and
liabilities.
Judge James L. Garrity, Jr., is assigned to the cases.
The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel;
Peter J. Solomon and Mackinac Partners, LLC as financial advisor;
and Omni Agent Solutions as claims, noticing, and solicitation
agent. Grant Thornton LLP, serves as tax advisor to the Debtors.
FOREST CITY REALTY: S&P Downgrades ICR to 'B', Outlook Negative
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Forest City
Realty Trust Inc. to 'B' from 'B+'. At the same time, S&P lowered
its issue-level rating on its credit facilities and term loan to
'B' from 'B+', both with a recovery rating of '4'.
The negative outlook reflects S&P's expectation for credit
protection measures to remain under pressure, with FCC potentially
declining well below 1.3x on its adjusted basis due to sustained
high interest rates, material exposure to variable-rate debt, and
elevated refinancing risk.
S&P said, "We expect Forest City's office portfolio to remain
challenged from secular changes and macroeconomic headwinds, offset
by healthier fundamentals at multi-family and retail assets. Office
is Forest City's second-largest asset class contributing 31.2% of
annualized net operating income (NOI) as of Sept. 30, 2022. The
portfolio is centered in gateway markets, which have lower
utilization rates and higher adoption of remote and hybrid work
arrangements following disruption from the pandemic. This includes
significant exposure to Brooklyn, where workers have been slower to
return to the office and some employers have downsized footprints.
After a large office tenant moved out in the second quarter of
2022, same-store office occupancy declined to 76% as of Sept. 30,
2022 (from 82.8% the prior year) with rents for leases signed
during the quarter declining 12.5% on a same-store last-12-month
(LTM) cash basis versus the prior year. Due to these vacancies and
free rent periods associated with recent tenant renewals,
same-store NOI declined 17.3% in the third quarter of 2022. We
expect performance at the company's office properties to remain
under pressure in 2023 as Forest City works to lease space in New
York and San Francisco (where it has a new class A development
project to lease up over the next year). This could prove
especially problematic if there is a hard landing for the economy
that results in greater than currently anticipated job losses, as
the office sector tends to be cyclical.
"Offsetting this impact somewhat, we expect fundamentals at the
company's multi-family (45.9% of annualized NOI as of the third
quarter of 2022) and retail (22.9%) properties to remain healthier.
Both asset classes had good leasing in 2022, with same-store
physical occupancy at multi-family properties of 94.4% as of Sept.
30, 2022 (up from 93.7% the prior year) and same-store occupancy at
retail properties of 91.0% (up from 91.9% the prior year). In
addition, multi-family outperformed, achieving 15.5% same-store NOI
growth in the third quarter, driven by solid rental rate growth.
Same-store average rents increased 10.5% year over year, reaching
$1,714 per unit in the third quarter. We expect multi-family
fundamentals to remain favorable in 2023, as rising interest rates
contribute to the unaffordability of single-family housing.
"We expect credit metrics to remain under pressure over the next
year amid elevated interest rates. Following improvement in 2021,
Forest City's S&P Global Ratings'-adjusted FCC deteriorated in 2022
amid sharply rising interest rates given material exposure to
variable-rate debt within the capital structure (approximately
73.5% at ownership including Forest City's share of joint
ventures). This increase in interest expense coupled with declining
EBITDA from asset sales and pressured office fundamentals, caused
FCC to decline to 1.4x in the third quarter of 2022, from 1.6x the
year prior. We expect this ratio to weaken further as the company's
metrics include a full-year of elevated interest expense, as 2022
metrics are on a LTM basis. We therefore expect FCC to deteriorate
below 1.3x and potentially below the 1x area over the next year,
depending on the trajectory for interest rates and EBITDA
generation. Our economists forecast interest rates to remain
elevated because the U.S. Federal Reserve will likely keep monetary
policy tight until inflation begins to moderate in late 2023. As
such, we expect the federal funds rate to peak at 5.00%-5.25% by
the second quarter of 2023 before the Fed implements modest rate
cuts in late 2023."
Forest City has elevated refinancing risk relative to peers. Forest
City has over $1.3 billion in mortgages due in 2023 and its $400
million revolving credit facility matures in December 2023 after it
exercised its extension option in 2022. Given the current volatile
financing environment, it remains to be seen how the company
refinances these maturities and at what rates, which could further
pressure its credit protection measures, particularly FCC. That
said, Forest City could walk away from some properties given the
debt is nonrecourse and secured, and it qualifies for extension
options for $326.5 million of the 2023 mortgages and $142 million
of construction loans due in 2023. In addition, it only had only
$25 million drawn on its credit facility as of Sept. 30, 2022, and
its corporate term loan ($600 million remaining) does not mature
until December 2025, which gives the company some time to address
these maturities.
S&P said, "We expect Forest City to selectively dispose of mature
assets (as of Sept. 30, 2022, it had $356.9 million in assets held
for sale), using proceeds to repay some debt and pay distributions
to investors. We also expect the company to continue improving
office occupancy, which could come with additional concessions
and/or increased capital expenditures (capex) to entice tenants to
lease space. However, it remains to be seen how many asset sales
the company will execute over the next year given transaction
volume remain muted and tighter access to financing , given
macroeconomic headwinds. This could result in elevated debt to
ETBIDA and weakening FCC, should Forest City instead address most
maturities by refinancing at higher rates.
"We are monitoring Forest City's FCC covenant compliance and credit
facility maturity. Due to differences between our and the company's
FCC calculation, there is sufficient cushion under its FCC covenant
currently (the covenant calculation was 1.94x as of Sept. 30, 2022
vs 1.4x on our adjusted basis). However, as interest rates rise,
this cushion could deteriorate to a level where we believe the
company could breach a covenant if cannot obtain a waiver. This
could cause us to reassess the company's liquidity position and
overall ratings. In addition, there is refinancing risk as the
facility is due in December 2023 following the exercise of the
one-year extension option. If the company does not execute on a
refinancing, liquidity could weaken. That said, we believe it
should be able to refinance the facility, given the relationships
Brookfield has with banks.
"The negative outlook reflects our expectation for Forest City's
office portfolio to remain challenged from secular changes and
macroeconomic headwinds over the next year. It also reflects our
expectation for credit protection measures to remain under
pressure, with FCC potentially declining well below 1.3x on our
adjusted basis due to sustained high interest rates, exposure to
variable-rate debt, and elevated refinancing risk."
S&P would lower its rating on Forest City if:
-- Credit metrics compare unfavorably to peers, such that FCC
declines below 1x with debt leverage elevated beyond expectations,
perhaps from EBITDA dilution from asset sales and/or occupancy
pressure coupled with outsized distributions; and
-- Operating performance deteriorates, perhaps due to structural
changes within its largest markets or segments that cause
below-average occupancy and limit future rent growth potential; or
-- Interest rates rise and Forest City is at risk of breaching its
FCC covenant, provided it cannot obtain a waiver or the company is
unable to refinance the credit facility, causing liquidity to
weaken.
S&P could revise the outlook to stable if:
-- The company's FCC improves to and remains above 1.3x, perhaps
due to lower levels of debt or less exposure to floating rate
debt;
-- Operating performance performs about in line with peers across
all segments, with office occupancy and rents improving materially;
and
-- Forest City successfully refinances its revolving credit
facility with sufficient coverage under its covenants.
ESG credit indicators:E-2, S-2, G-3
Governance is a moderately negative consideration, as is the case
for most rated entities owned by private-equity sponsors. S&P
believes the company's highly leveraged financial risk profile
points to corporate decision-making that prioritizes the interests
of controlling owners. This also reflects the generally finite
holding periods and a focus on maximizing shareholder returns.
FTX GROUP: Ex-Engineering Chief Singh Pleads Guilty to Fraud
------------------------------------------------------------
Ava Benny-Morrison of Bloomberg Law reports that the former
engineering chief of FTX Group Nishad Singh pleaded guilty to fraud
as part of a cooperation deal with prosecutors, the third member of
the collapsed cryptocurrency exchange's inner circle to flip
against co-founder Sam Bankman-Fried.
Singh said at a hearing on Tuesday, February that he was
"unbelievably sorry for my role in this and the harm it caused." He
admitted he knew for months that Alameda Research, the exchange's
trading arm, was borrowing billions of dollars in funds from FTX
without customers' knowledge.
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year. According to Reuters, SBF
shared a document with investors on Nov. 10, 2022, showing FTX had
$13.86 billion in liabilities and $14.6 billion in assets.
However, only $900 million of those assets were liquid, leading to
the cash crunch that ended with the company filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
FTX GROUP: InsurAce Pays $40,000 to Co's Collapse Victims
---------------------------------------------------------
Yahoo! Finance reports that DeFi Insurance protocol InsurAce has
paid out over $40,000 to policy holders who purchased Custodian
Risk Cover for FTX.
InsurAce provides protection against Smart Contract Risks,
Stablecoin De-Peg Risks, IDO event Risk, and Custodian Risks.
InsurAce had several active covers at the time of the FTX incident,
totalling around $40,000 USD (or equivalent), which the company had
anticipated would be claimable events. In an announcement made on
November 11th, 2022, InsurAce confirmed that FTX had completely
suspended all withdrawals for an unconfirmed duration, and
policyholders were able to submit claims after 90 days had
elapsed.
As per the terms of the policies held, policyholders were able to
submit claims after 90 days had elapsed. Active cover holders of
InsurAce's Custodian Risk Cover, were eligible to submit their
claims over FTX’s suspension of withdrawals via the InsurAce dApp
(app.insurace.io). Due to perceived difficulties over users proving
their losses over the reported hack vs. asset withdrawals over
Chapter 11 bankruptcy filings, and the alleged dangers of logging
onto FTX, InsurAce believed it was easier for its cover holders to
file a claim over the suspension of withdrawals.
InsurAce provided an evidence checklist for its cover holders,
which contained a list of evidence required by the company to
review their claims. The company advised all active cover holders
to collect the necessary evidence as soon as possible and when it
was safe to do so.
Withdrawals were halted for all FTX customers on November 8, 2022.
In response, InsurAce began the claim settlement process to provide
relief to affected users who had purchased their custodian risk
covers. The process was extensive and required careful planning and
execution to ensure that users were fairly compensated for their
losses.
Following payouts to victims of $UST de-pegging in May 2022 and an
exploit on Elephant Money in April 2022, this latest payout for
victims of the FTX collapse shows clearly the need and usefulness
of insurance in DeFi. InsurAce continues to lead in this space,
consistently developing new and innovative products to protect
users and make crypto safer for everyone.
InsurAce is proud to have supported policyholders during this
difficult time and will continue to work tirelessly to provide
protection to the DeFi community. For more information on
InsurAce.io, please visit their website at https://insurace.io/.
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year. According to Reuters, SBF
shared a document with investors on Nov. 10, 2022, showing FTX had
$13.86 billion in liabilities and $14.6 billion in assets.
However, only $900 million of those assets were liquid, leading to
the cash crunch that ended with the company filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims agent,
maintaining the page https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
FTX TRADING: Voyager Agrees to Withhold $445-Mil. From Creditors
----------------------------------------------------------------
Steven Church of Bloomberg News reports that Voyager Digital Ltd.
agreed to reserve $445 million in case it loses a bankruptcy court
fight with FTX Group, instead of quickly handing the cash to
creditors under the crypto firm's plan to end its insolvency case,
court papers show.
Under a deal between the two bankrupt companies, FTX will drop its
demand that Voyager repay certain loans, but will continue to press
for the return of as much as $445 million worth of
cryptocurrencies. The companies will try to resolve the
cryptocurrency fight in mediation.
The agreement lays out a plan for untangling cryptocurrency loans
made last 2022 between the two firms as the industry fought to
survive the decline of digital assets, known among insiders as
crypto winter. The dispute reflects the murky connections among
various crypto exchanges that have complicated reorganization
efforts in some of the biggest crypto bankruptcy cases.
Before Voyager went bankrupt in July 2022, FTX had borrowed
hundreds of millions of dollars worth of crypto, but also agreed to
let Voyager borrow as much as $500 million of cash and digital
assets, according to court documents.
After Voyager entered bankruptcy, FTX returned the crypto it had
borrowed. Around that time, FTX offered to rescue Voyager by buying
the crypto exchange.
Eventually FTX went bankrupt itself and backed away from its rescue
proposal. Voyager was forced to find a replacement buyer for its
assets after concluding FTX wouldn’t close the planned $1.4
billion sale.
Voyager will ask a bankruptcy judge in Manhattan to approve a
payout plan that would repay creditors about half of what they are
owed, according to court documents.
The collapse of FTX, which was founded by accused fraudster Sam
Bankman-Fried, reverberated through the industry, playing a role in
the bankruptcy case of crypto lender BlockFi Inc.
Crypto hedge fund Galois Capital had $40 million to $50 million of
exposure to FTX, with “significant” funds stuck. And brokerage
Genesis needed a $140 million infusion from its parent company
after it disclosed $175 million in funds locked in a FTX trading
account.
Celsius Network LLC had entanglements with FTX totaling $3.6
billion early last year, Chief Restructuring Officer Chris Ferraro
said in a November bankruptcy court hearing. That figure eventually
fell to about $13 million as Celsius worked to get away from
third-party crypto platforms.
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.
About FTX Group
FTX is the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offers
innovative products including industry-first derivatives, options,
volatility products and leveraged tokens.
Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that
FTX paused customer withdrawals after it was hit with roughly $5
billion worth of withdrawal requests.
Faced with liquidity issues, FTX on Nov. 9 struck a deal to sell
itself to its giant rival Binance, but Binance walked away from the
deal amid reports on FTX regarding mishandled customer funds and
alleged US agency investigations.
At 4:30 a.m. on Nov. 11, Bankman-Fried ultimately agreed to step
aside, and restructuring vet John J. Ray III was quickly named new
CEO.
FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc.
(d/b/a FTX US), Alameda Research Ltd. and certain affiliated
companies then commenced Chapter 11 proceedings (Bankr. D. Del.
Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022.
Additional entities sought Chapter 11 protection on Nov. 14, 2022.
FTX Trading and its affiliates each listed $10 billion to $50
million in assets and liabilities, making FTX the biggest
bankruptcy filer in the US this year. According to Reuters, SBF
shared a document with investors on Nov. 10, 2022, showing FTX had
$13.86 billion in liabilities and $14.6 billion in assets.
However, only $900 million of those assets were liquid, leading to
the cash crunch that ended with the company filing for bankruptcy.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel;
Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal
North America, LLC as financial advisor. Kroll is the claims
agent, maintaining the page
https://cases.ra.kroll.com/FTX/Home-Index
The Official Committee of Unsecured Creditors tapped Paul Hastings
as counsel, FTI Consulting, Inc., as financial advisor, and
Jefferies LLC as the investment banker. Young Conaway Stargatt &
Taylor LLP is the Committee's Delaware and conflicts counsel.
Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory
T. Donilon, Edward L. Schnitzer, and David M. Banker, is
representing Sam Bankman-Fried in the Chapter 11 cases.
White-collar crime specialist Mark S. Cohen has reportedly been
hired to represent SBF in litigation. Lawyers at Paul Weiss
previously represented SBF but later renounced representing the
entrepreneur due to a conflict of interest.
GIGAMONSTER: Gets Court Okay for $26.6 Mil. Chapter 11 Asset Sale
-----------------------------------------------------------------
Vince Sullivan of Law360 reports that Network service provider
Gigamonster Networks LLC received bankruptcy court approval
Thursday, March 2, 2023, from a Delaware judge for a $26. 6 million
sale of its core assets, representing a more than $12 million hike
in the purchase price over the baseline offer.
About GigaMonster Networks, LLC
GigaMonster Networks, LLC and affiliates develop and deploy
universal access networks in multi-family and commercial real
estate properties, providing internet, video and other network
services to approximately 400 customer properties and nearly 35,000
end-user subscribers. GigaMonster contracts with property owners
to set up UANs in their buildings and also provide internet
services to subscribers in those buildings.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Lead Case No. 23-10051) on January
16, 2023. In the petition signed by Rian Branning, chief
restructuring officer, the Debtor disclosed up to $100 million in
both assets and liabilities.
Judge Kate Stickles oversees the case.
The Debtors tapped Pachulski Stang Ziehl and Jones LLP as legal
counsel, Novo Advisors LLC as restructuring advisor, Bank Street
Group, LLC as investment banker, and Kroll Restructuring
Administration as claims and noticing agent.
GRAFTECH INTERNATIONAL: S&P Affirms 'BB-' ICR, Outlook Negative
---------------------------------------------------------------
S&P Global Ratings revised its outlook on GrafTech International
Ltd. to negative from stable and affirmed its ratings, including
its 'BB-' issuer credit rating.
The negative outlook reflects S&P's expectation that the company's
leverage will spike over the next several quarters before improving
in 2024 as Monterrey's contracted sales and market conditions
recover.
S&P said, "We see a risk that GrafTech's credit metrics will weaken
this year due to reduced sales volumes amid softer market
conditions. We anticipate a decline in sales volumes would lead to
an increase in the company's leverage, which would be further
exacerbated by lower average sale prices from a shift in its sales
mix away from long-term agreements (LTAs) towards spot sales in
2023 and 2024. After reaching a low point in the fourth quarter of
2022, steel utilization rates in the U.S. and Europe improved at
the start of 2023 despite the potential recessionary environment,
which signals resilient underlying demand (particularly in the
U.S.) and a reversal of industry wide destocking. However, we still
anticipate GrafTech will face a weaker earnings environment in 2023
across its major markets, particularly in Europe. Elevated energy
prices have led to increased downtime and outages at European steel
mills, enabling them to build up their electrode inventories. This
is suppressing the demand and pricing for GrafTech's products. We
anticipate the company's earnings will improve in the latter part
of 2023 as it returns its Monterrey facility to run-rate sales
volumes and the demand in Europe stabilizes as energy prices ease.
"Lower production and weaker fixed-cost absorption will likely
reduce the company's profitability and cash flow generation this
year. GrafTech has preemptively idled two thirds of its production
capacity in Europe in anticipation of weaker demand amid higher
energy prices. In addition, the shutdown of its Monterrey plant
last year occurred during a contracting window, which will reduce
its contracted volumes for 2023 amid the decline in demand, making
it harder to offset the drop in volumes with spot sales. This
facility has the capacity to produce approximately 60,000 metric
tons of graphite electrodes per year and accounts for roughly 30%
of the company's capacity. At the same time, GrafTech is
transitioning toward spot sales and shorter duration contracts,
which it is currently signing at lower prices based on current
market conditions, and away from LTAs it signed in 2018 under near
record prices. From 2023, we estimate it will sell about three
quarters of its production outside of LTAs. We believe this could
lead to increasing volatility in its earnings and profitability as
the company's exposure to spot graphite electrode prices
increases.
"The negative outlook reflects our expectation that the company's
leverage will spike over the next several quarters before improving
in 2024 as Monterrey's contracted sales and market conditions
recover.
"We could lower our rating on GrafTech if we expect its leverage to
remain significantly above 3x into 2024. This could occur if market
conditions weaken further, leading to a sustained decline in the
company's volumes and lower realized prices, which would erode its
profitability and cash flow generation.
"We could revise our outlook on GrafTech to stable if it becomes
clear that the spike in its leverage is temporary and we believe it
has a path to return its leverage to the 3x area."
ESG credit indicators: E-3, S-2, G-2
H-CYTE INC: Issues $300K Convertible Notes to Investors
-------------------------------------------------------
H-Cyte, Inc., and certain investors entered into a Securities
Purchase Agreement, whereby, the Company sold and issued to the
investors, an aggregate of $300,000 of the Company's convertible
promissory notes, which are convertible into the Company's Common
Stock, $0.001 par value, par value $0.001. In connection with the
aforementioned Notes, the Company also issued to the investors a
warrant to purchase a certain number of shares of Common Stock,
which are equal to 20% of the shares of Common Stock issuable upon
conversion of the Note, based on a price of $2.00 per share. These
warrants have a term of five years, with an exercise price of $2.00
per share. Unless the Company chooses to terminate earlier, the
offering and the sale of the Notes shall terminate on the sooner of
the sale of the maximum offering amount or April 30, 2023.
However, the Company has the option to extend this offering to June
30, 2023.
The Notes have a maturity date of the earlier of (i) one year from
issuance; or (ii) upon the closing of a qualified offering.
Interest on the Note shall accrue on the unpaid principal balance
of this Note at the rate of eight percent per annum, and will be
calculated on an actual/365-day basis. In the event that the
Company moves forward with a qualified offering, as referenced in
the SPA, the Holder may convert the unpaid and outstanding
principal plus any accrued and unpaid Interest into shares of the
Company's Common Stock at a conversion price equal to a 20%
discount to the offering price.
Further, in connection with the SPA, the Company also issued a
Common Stock Purchase Warrant to certain investors, which are
exercisable on or prior to the close of business on the five year
anniversary of the initial exercise date, to purchase up to a
certain amount of shares of Common Stock, with 20% of the shares of
Common Stock issuable upon conversion of the Convertible Promissory
Note purchased by the Holder, pursuant to the SPA between the
Holder and the Company, dated Feb. 24, 2023. The Company issued
Warrants to purchase an aggregate of 30,000 shares of Common Stock.
The exercise price per share of the Common Stock under this
Warrant is $2.00.
About H-CYTE Inc.
Headquartered in Tampa, Florida, H-CYTE Inc. --
http://www.HCYTE.com-- is a hybrid-biopharmaceutical company
dedicated to developing and delivering new treatments for patients
with chronic respiratory and pulmonary disorders.
H-Cyte reported a net loss of $4.80 million for the year ended Dec.
31, 2021, compared to a net loss of $6.46 million on $2.15 million
of revenues for the year ended Dec. 31, 2020. As of Sept. 30,
2022, the Company had $240,559 in total assets, $8.39 million in
total liabilities, and a total stockholders' deficit of $8.15
million.
In its Quarterly Report filed on November 14, 2022, H-Cyte, Inc.
said there is no assurance it will be able to raise additional
funds or that the terms and conditions of any future financings
will be workable or acceptable to the Company or its shareholders.
If the Company is unable to fund its operations from existing cash
on hand, operating cash flows, additional borrowings, or raising
equity capital, the Company may not continue operations."
HAL LUFTIG COMPANY: Seeks to Hire CBIZ Inc. as Tax Accountant
-------------------------------------------------------------
Hal Luftig Company, Inc. seeks approval from the U.S. Bankruptcy
Court for the Southern District of New York to employ CBIZ, Inc. as
its tax accountant.
The Debtor requires a tax accountant to prepare and file tax
returns and provide tax-related advice in connection with its
Chapter 11 case.
The firm will be paid at these rates:
Chris Cacace $615 per hour
Polina Inberg $385 per hour
Thomas (Colby) Trane $260 per hour
Christopher Cacace, a partner at CBIZ, 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:
Christopher A. Cacace
CBIZ, Inc.
685 Third Avenue
New York, NY 10017
Tel: (212) 330-6025
Email: Christopher.cacaace@cbiz.com
About Hal Luftig Company
Hal Luftig Company, Inc., a theatrical producer in New York, filed
a petition under Chapter 11, Subchapter V of the Bankruptcy Code
(Bankr. S.D.N.Y. Case No. 22-11617) on Dec. 1, 2022, with $100,000
to $500,000 in assets and $1 million to $10 million in liabilities.
Charles Persing has been appointed as Subchapter V trustee.
Judge John P. Mastando III presides over the case.
Ruskin Moscou Faltischek, P.C., RK Consultants, LLC and CBIZ, Inc.
are the Debtor's legal counsel, financial advisor and tax
accountant, respectively.
HEALTHIER CHOICES: Signs Trading Plan With Execs, Directors
-----------------------------------------------------------
While it was permissible under the applicable securities laws for
directors and officers of Healthier Choices Management Corp. to
purchase and sell securities of the Company, all of the executive
officers and directors of the Company entered into a binding
trading plan. The executive officers and directors participating
in the 10b5-1 Plan are Jeffrey Holman, John A. Ollet, Christopher
Santi, Clifford J. Friedman and Dr. Anthony Panariello. There will
be a two-year period where sales of the Company's common stock may
occur pursuant to the 10b5-1 Plan.
Rule 10b5-1 permits corporate officers, directors and others to
adopt written, pre-arranged stock trading plans when they are not
in possession of material, non-public information. Using these
plans, insiders may gradually diversify their investment portfolios
and spread stock trades over a period of time regardless of any
material, non-public information they may receive after adopting
their plans. In accordance with the 10b5-1 rules, the officers and
directors will have no discretion over the sales of their shares of
common stock under the 10b5-1 Plan.
Pursuant to the 10b5-1 Plan, certain shares of the Company's common
stock held by these officers and directors will be sold on a
periodic basis without further direction from him in accordance
with the terms and conditions set forth in the 10b5-1 Plan, which
includes minimum sale price thresholds. The 10b5-1 Plan is
designed to comply with Rule 10b5-1 under the Securities Exchange
Act of 1934, as amended, and the Company's insider trading policy.
Transactions made pursuant to the 10b5-1 Plan will be disclosed
publicly through Form 144 and Form 4 filings with the Securities
and Exchange Commission. Except as may be required by law, the
Company does not undertake to report on specific Rule 10b5-1 plans
of the Company's officers or directors, nor to report modifications
or terminations of such plans.
About Healthier Choices
Headquartered in Hollywood, Florida, Healthier Choices Management
Corp. -- http://www.healthiercmc.com-- is a holding company
focused on providing consumers with healthier daily choices with
respect to nutrition and other lifestyle alternatives.
Healthier Choices reported a net loss of $4.04 million for the year
ended Dec. 31, 2021, a net loss of $3.72 million for the year ended
Dec. 31, 2020, a net loss of $2.80 million for the year ended Dec.
31, 2019, and a net loss of $13.16 million for the year ended Dec.
31, 2018. As of Sept. 30, 2022, the Company had $45.47 million in
total assets, $8.13 million in total liabilities, $14.72 million in
convertible preferred stock, and $22.61 million in total
stockholders' equity.
In its Quarterly Report dated November 10, 2022, Healthier Choices
Management Corp. said it expects to continue incurring losses for
the foreseeable future but it does not believe there are any
substantial doubts about its ability to continue as a
going concern. The Company said its current cash and cash generated
from operations will be sufficient to meet the projected operating
expenses for the foreseeable future through at least the next 12
months.
* * *
This concludes the Troubled Company Reporter's coverage of
Healthier Choices Management until facts and circumstances, if any,
emerge that demonstrate financial or operational strain or
difficulty at a level sufficient to warrant renewed coverage.
HEYL & PATTERSON: Plan Administrator Has Proven Avoidable Transfers
-------------------------------------------------------------------
Bankruptcy Judge Carlota M. Bohm for Western District of
Pennsylvania, on Feb. 23, 2023, has issued a Memorandum Opinion
finding that the Plaintiff Albert's Capital Services, LLC, in its
capacity as the Plan Administrator for the Liquidating Estate of
Debtor Heyl & Patterson, Inc. has proven avoidable preferential
transfers to KMX.
The adversary proceedings captioned as In Re: The Liquidating
Estate of H&P, Inc., f/k/a Heyl & Patterson, Inc., Chapter 11,
Debtor. Albert's Capital Services, LLC, Plan Administrator for the
Liquidating Estate of H&P, Inc., f/k/a Heyl & Patterson, Inc.,
Plaintiff, v. Kreitz Motor Express, Inc., t/d/b/a K.M.X. Inc. and
Krietz Motor Express, Inc., t/d/b/a K.M.X. International,
Defendant. Albert's Capital Services, LLC, Plan Administrator for
the Liquidating Estate of H&P, Inc., f/k/a Heyl & Patterson, Inc.,
Plaintiff, v. Custom Fabrications, Inc., Defendant, Case No.
16-21620-CMB, Adv. No. 18-2045-CMB., 18-2046-CMB, (Bankr. W.D.
Pa.), are two preference avoidance actions that were filed by the
Plaintiff against the Defendants KMX in Adv. No. 18-2045, and
Custom Fabrications in Adv. No. 18-2046.
At issue are prepetition payments from the Debtor to KMX totaling
$592,194, and from the Debtor to Custom totaling $513,866.
The Court finds that the Plaintiff has proven preferential
transfers were made to Custom Fabrications and to KMX, and that the
Defendants did not prove any affirmative defenses as to such
transfers. The Court finds and concludes that (a) KMX received
avoidable preference transfers from the Debtor in the amount of
$116,735, and (b) Custom Fabrications received avoidable preference
transfers from the Debtor in the amount of $40,348 in the 90-day
period preceding the filing of Debtor's bankruptcy petition, and
accordingly judgment is entered in favor of the Plaintiff and
against the Defendants. The Court further finds that all other
transfers involved in the case were not preferential.
The Court, however, dismisses the Plaintiff's claims for
disallowance of claims and objection to claim for waiver,
abandonment, and/or failure to prosecute.
A full-text copy of the Memorandum Opinion dated Feb. 23, 2023 is
available at https://tinyurl.com/uxycc563 from Leagle.com.
About Heyl & Patterson
Heyl & Patterson Inc. is an American specialist engineering
company, founded in 1887 and based in Pittsburgh, Pennsylvania.
Heyl & Patterson sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Pa. Case No. 16-21620) on April 29,
2016. The petition was signed by John R. Edelman, CEO. The case is
assigned to Judge Carlota M. Bohm. The Debtor estimated assets and
liabilities in the range of $1 million to $10 million.
The Debtor tapped George T. Snyder, Esq., at Stonecipher Law Firm,
as counsel; and Gleason & Associates as financial advisors.
On May 31, 2016, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. The committee retained
Whiteford, Taylor & Preston, LLC, as its legal counsel; and
Albert's Capital Services, LLC, as its financial advisor.
On April 28, 2017, the Debtor filed a Chapter 11 plan of
liquidation.
HIGHLAND CAPITAL: Plan Definition of Exculpated Parties Changed
---------------------------------------------------------------
The U.S. Bankruptcy for the Northern District of Texas grants the
Motion to Conform Plan filed by Highland Capital Management, L.P.
The Motion was filed in response to a ruling of the U.S. Court of
Appeals for the Fifth Circuit in connection with an appeal of the
confirmation order on Highland's Chapter 11 plan. The Fifth Circuit
affirmed the confirmation order in all respects except the
following: "it determined that certain exculpations in the Plan, as
to certain parties, were impermissible pursuant to section 524(e)
of the Bankruptcy Code and should be stricken as to those parties."
More specifically, the Fifth Circuit held that the only parties
properly entitled to Plan exculpations were -- the Debtor, the
Official Committee of Unsecured Creditors and its members, and the
"Independent Directors". The Fifth Circuit then remanded "to the
Bankruptcy Court for further proceedings in accordance with the
opinion of this Court."
Accordingly, the Court grants the request of the Reorganized
Debtor, holding that the only thing that needs to be done in
response to the Final Fifth Circuit Opinion and mandate is to
change the defined term for "Exculpated Parties," at Art. I.B.62 of
the Plan as follows: "Exculpated Parties" means, collectively, (i)
the Debtor, (ii) the Independent Directors, (iii) the Committee,
and (iv) the members of the Committee (in their official
capacities).
All this Court can be sure of is that the Fifth Circuit declined
the Funds' request (in their Motion for Rehearing) to strike or
modify the defined term "Protected Parties" (that pertains to the
Gatekeeper Provision) so that it would be coterminous with the
defined term "Exculpated Parties." The Court explains that
"limiting the definition of "Protected Parties" to be coterminous
with the defined term "Exculpated Parties" would mean that the
Gatekeeper Provision would have no effect on any conduct that
occurs after the Plan Effective Date. Why? Because the persons
included in the defined term "Exculpated Parties" -- as now limited
by the Fifth Circuit's ruling to include only the Debtor, the UCC,
the UCC members, and Independent Directors -- are all gone now.
They all ceased to exist on the Effective Date."
A full-text copy of the Memorandum Opinion and Order dated Feb. 27,
2023 is available at https://tinyurl.com/bddej4cp from Leagle.com.
About Highland Capital Management
Highland Capital Management, LP was founded by James Dondero and
Mark Okada in Dallas in 1993. Highland Capital is the world's
largest non-bank buyer of leveraged loans in 2007. It also manages
collateralized loan obligations. In March 2007, it raised $1
billion to buy distressed loans. Collateralized loan obligations
are created by bundling together loans and repackaging them into
new securities.
Highland Capital Management sought Chapter 11 protection (Bank. D.
Del. Case No. 19-12239) on Oct. 16, 2019. On Dec. 4, 2019, the case
was transferred to the U.S. Bankruptcy Court for the Northern
District of Texas and was assigned a new case number (Bank. N.D.
Texas Case No. 19-34054). Judge Stacey G. Jernigan is the case
judge.
At the time of the filing, Highland had between $100 million and
$500 million in both assets and liabilities.
The Debtor tapped Pachulski Stang Ziehl & Jones LLP as bankruptcy
counsel, Foley & Lardner LLP as special Texas counsel, and Teneo
Capital, LLC as litigation advisor. Kurtzman Carson Consultants,
LLC, is the claims and noticing agent.
The U.S. Trustee for Region 6 appointed a committee of unsecured
creditors on Oct. 29, 2019. The committee tapped Sidley Austin LLP
and Young Conaway Stargatt & Taylor LLP as bankruptcy counsel, and
FTI Consulting, Inc. as financial advisor.
HVI CAT: Penalized for Violations of Environmental Laws
-------------------------------------------------------
District Judge Fernando M. Olguin for the Central District of
California, on Feb. 25, 2023, has issued his Findings of Fact and
Conclusions of Law in relation to the case titled United States of
America, People of the State of California, ex rel. California
Department of Fish and Wildlife, et al., Plaintiffs, v. HVI Cat
Canyon, Inc., f/k/a Greka Oil & Gas, Inc., Defendant, Case No. CV
11-5097 FMO (SSx), (C.D. Cal.).
This is a joint action brought by the United States of America and
the State of California, ex rel. California Department of Fish and
Wildlife and California Regional Water Quality Control Board,
against defendant HVI Cat Canyon, Inc., formerly known as Greka Oil
& Gas, Inc., asserting claims for violations of the Clean Water
Act; the Oil Pollution Act of 1990; California Water Code; and
California Fish and Game Code.
A bench trial was held on the following federal claims: (1)
liability for the two remaining spills and civil penalties for the
12 spills at the Bell and Zaca/Davis Facilities for violations of
the Clean Water Act; (2) liability and civil penalties for
violations of C.F.R. requiring Spill Prevention, Control, and
Countermeasure Plans at 11 facilities, and Facility Response Plans
at the Bell and Zaca/Davis Facilities; and (3) liability for
removal costs under the Oil Pollution Act, stemming from a spill at
the Bell Facility on Dec. 27, 2007, and the Gatos Ponds removal
action in April 2008. The bench trial also addressed the State's
claims for violations of California Water Code and California Fish
& Game Code involving some of the same oil spills, as well as
additional spills that did not reach waters of the United States.
Based on Dr. Lyndon Lee's, and other evidence presented at trial,
the Court finds that both the Sisquoc Creek and the Spring Canyon
Tributary have a significant nexus to traditional navigable waters,
and that HVI discharged oil in quantities that may be harmful from
the Bell Facility on Dec. 27, 2008, and May 1, 2009. Therefore, HVI
is liable under the Clean Water Act and Oil Pollution Act for the
discharges into the Spring Canyon Tributary, and the substantial
threat of a discharge from the Gato Ponds into Sisquoc Creek that
led to the Gato Ponds removal action in April 2008.
The Court finds that HVI's spills and regulatory violations evinced
both a pattern of reckless disregard, and a series of negligent
acts or omissions that amount to gross negligence under the Clean
Water Act. The Court further finds that the overlapping and
recurring factors and failures that caused or contributed to the
spills and violations demonstrate HVI's systemic failure to operate
its facilities as a prudent oil production facility operator. Many
of HVI's failures, viewed in isolation, represented an extreme
departure below good oilfield industry practices and, in many
instances, multiple failures compounded one another. In sum, HVI's
violations were the result of gross negligence, and is therefore
subject to a civil penalty of up to $4,300 per barrel of oil
discharged.
In addition, Drs. Mace Barron and Yousif K. Kharaka provided
testimony as to the array of physical and biochemical injury crude
oil and produced water can cause to human, animal, and plant life.
Even if actual harm had not been demonstrated, the potential
environmental harms attributable to HVI's spills are sufficient to
categorize these spills as "serious."
The evidence also shows that HVI saved at least $6.32 million by
delaying or avoiding expenditures to: prevent oil spills and/or to
meet obligations under environmental regulations; inspect and
repair equipment and containment structures at its facilities; and
delay or avoid preparation and implementation of adequate SPCC
Plans.
Accordingly, the Court concludes that (1) HVI is liable to the
United States for total a federal liability of $57.5 million plus
the applicable legal rate of interest; and (2) HVI is liable to the
State of California for a total state liability of $7.9million plus
the applicable legal rate of interest.
A full-text copy of the Findings of Fact and Conclusions of Law
dated Feb. 25, 2023 is available at https://tinyurl.com/mr6xaxam
from Leagle.com.
About HVI Cat Canyon Inc.
HVI Cat Canyon, Inc., is a privately held oil and gas extraction
company based in New York.
HVI Cat Canyon sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. S.D.N.Y. Case No. 19-12417) on July 25, 2019. In the
petition signed by Alex G. Dimitrijevic, president and COO, the
Debtor was estimated to have assets of between $100 million and
$500 million and liabilities of the same range.
On Aug. 28, 2019, the New York Court entered an order transferring
the venue to U.S. Bankruptcy Court for the Northern District of
Texas, and assigned Case No. 19-32857.
Weltman & Moskowitz, LLP, is the Debtor's bankruptcy counsel.
The Office of the U.S. Trustee on Aug. 9, 2019, appointed three
creditors to serve on the official committee of unsecured creditors
in the Debtor's case.
ISAGENIX INT'L: Plans Restructuring Deal to Give Investors Control
------------------------------------------------------------------
John Sage of Bloomberg Law reports that dietary supplement company
Isagenix International LLC reached a restructuring agreement with
certain creditors that would cut $130 million in senior secured
debt and hand investors control of the business, according to a
statement Monday, February 27, 2023.
The plan also calls for founders Jim and Kathy Coover to contribute
$95 million in cash and debt forgiveness. They will maintain
minority ownership.
The company and its advisers will begin soliciting creditor support
for the agreement in the coming weeks.
About Isagenix International
Isagenix International LLC is a privately held multi-level
marketing company that sells dietary supplements and personal care
products. The company, based in Gilbert, Arizona, was founded in
2002 by John Anderson, Jim Cover, and Kathy Cover.
To
JACKSON FINANCIAL: Fitch Assigns 'BB+' Rating on Preferred Stock
----------------------------------------------------------------
Fitch Ratings has assigned a rating of 'BB+' to Jackson Financial
Inc.'s (Jackson) issuance of Series A non-cumulative perpetual
preferred stock. The ratings previously assigned to Jackson and its
insurance operating subsidiaries are unaffected by today's rating
action.
KEY RATING DRIVERS
The new issue is rated two notches below Jackson's IDR based on
'Poor' recovery expectations, with one additional notch for
'minimal' non-performance risk. Fitch's approach for notching
reflects the regulatory environment of the U.S., which Fitch
assesses as 'Effective' and classify as following a ring-fencing
approach.
Based on Fitch's insurance rating criteria, the Series A
non-cumulative perpetual preferred stock has been assigned 100%
equity credit in evaluating financial leverage.
The Series A preferred stock has no maturity, dividends are
noncumulative, and the company has the option to defer them at
their discretion. Proceeds from the Series A issuance will be used
towards repayment of the outstanding 1.125% senior notes due Nov.
22, 2023. As such, Fitch expects Jackson's calculated financial
leverage to decline as a result of the issuance.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Significant diversification of Jackson's liability profile;
- Improved capital metrics including a Prism capital model score
consistently above 'Strong'.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- An increase in the degree of reported financial performance
volatility relative to the broader macroeconomic environment;
- A decline in Jackson's Prism capital model score such that
it is consistently below 'Strong', along with declines in
the reported risk-based capital ratio;
- Financial leverage above 25%;
- Fixed-charge coverage consistently below 7x;
- Unexpected economic or operational disruptions as a result of
Jackson's transition to a standalone company.
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
----------- ------
Jackson Financial Inc.
Preferred LT BB+ New Rating
JDI DATA CORP: Hits Chapter 11 Bankruptcy, To Close Office
----------------------------------------------------------
Ashley Porters of South Florida Business Journal reports that JDI
Data Corp., a Fort Lauderdale company that offers claim, policy and
client management software, filed for bankruptcy protection and is
closing its office.
The firm filed for Chapter 11 reorganization February 17, 2023 in
U.S District Court for the Southern District of Florida. JDI Data
has $1 million to $10 million in both assets and liabilities, court
documents said. The company has about $5.6 million in unsecured
claims, with many of those debts owed to law firms.
The bankruptcy occurred after the company's former president and
only shareholder, James DeRosa, "used money that was supposed to be
held for the future use of clients, but was used to fund ongoing
losses," according to a case management summary signed by Chief
Restructuring Officer John Heller.
JDI Data clients received statements indicating funds were being
held in trust, the summary said. But those trust accounts were
eventually consolidated into a master account that was invaded by
DeRosa, the statement said.
DeRosa was JDI Data's sole shareholder and president until his
February 6, 2023 termination. CEO Joseph Wolczanski resigned from
the company in late 2022.
"Wolczanski participated in the Ponzi-type scheme and participated
in the scheme to convert the clients' funds," according to a
lawsuit JDI Data filed against DeRosa and Wolczanski on February
18, 2023.
The software firm had 21 employees in mid-February 2023. JDI Data
is surrendering its leased office at 100 W. Cypress Creek Road and
has not determined if it will move into a smaller space. Its
remaining employees work remotely.
John A. Moffa, a lawyer representing the company, declined to
comment on the bankruptcy case.
"The best sources of information are the pleadings and the filed
adversary proceeding," he said in an email to the Business
Journal.
About JDi Data Corporation
JDi Data Corporation has developed innovative solutions for
professionals within the insurance, risk, and legal communities.
Its software solutions are designed to allow organizations to
invest in tools that truly transform their day-to-day processes.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-11322) on February
17, 2022. In the petition signed by John Heller as CRO, the Debtor
disclosed up to $10 million in both assets and liabilities.
Judge Scott M. Grossman oversees the case.
Scott M. Grossman, Esq., at Moffa & Bierman, represents the
Debtor.
LARRY C TALLEY JR: Court Junks ReMa Energy's Fraud Claims
---------------------------------------------------------
In the adversary proceeding titled In re Larry C. Talley, Jr.,
Debtor. ReMa Energy, LLC, Plaintiff, v. Texas Permian Oil & Gas
Co., Inc., and Larry C. Talley, Jr., Defendants. ReMa Energy, LLC,
Plaintiff, v. Larry C. Talley, Jr., Defendant, Case No.
20-32101-swe-7, Adv. No. 20-3131-swe., 20-3139-swe (Consolidated),
(Bankr. N.D. Tex.), Bankruptcy Judge Scott W. Everett enters
judgment in favor of Larry C. Talley, Jr. and Texas Permian Oil and
Gas Company, Inc.
The Debtor, Larry C. Talley, Jr., is a promoter of oil and gas
deals who does business through his wholly owned entity Texas
Permian Oil and Gas Company, Inc.
The Plaintiff ReMa Energy, LLC is an oil and gas investment vehicle
formed by Mike Whelan in 2009. Whelan was introduced to the Debtor
in 2013. The Plaintiff and Texas Permian began doing business
together shortly thereafter. Over the course of their roughly
five-year business relationship, the Plaintiff entered into
numerous contracts with Texas Permian relating to a variety of oil
and gas projects and transferred substantial sums of money to Texas
Permian pursuant to those contracts. Some of the projects that
Texas Permian worked on with the Plaintiff were successful, but
many were not.
In these consolidated actions, the Plaintiff is (1) asserting
breach-of-contract and fraud claims against Texas Permian, (2)
attempting to hold the Debtor liable for those claims against Texas
Permian under theories of agency and alter ego, and (3) seeking a
declaration that any claims for which the Debtor is liable to the
Plaintiff are nondischargeable.
The Plaintiff alleges that Texas Permian is liable to it for breach
of contract and fraud, that the Debtor should be held liable for
Texas Permian's obligations to the Plaintiff, and that the Debtor's
resulting obligations to the Plaintiff should be declared
nondischargeable.
The Court finds this case to be less about fraud and more about a
few failed projects and the Plaintiff's dissatisfaction with the
Debtor's efforts on those projects. In the Joint Pretrial Order,
the Plaintiff claimed that the Debtor simply did not work on many
of these projects after Texas Permian received the Plaintiff's
funds, but the evidence shows that was not the case. The Debtor did
his best to make each of the projects that the Plaintiff invested
in successful. While it is possible that if the relevant contracts
were in evidence, the Court may have found a breach of contract,
there does not appear to have been fraud.
The Court is somewhat troubled by the fact that the Debtor did not
provide an accounting of what money was spent on the Plaintiff's
projects and did not provide his own reconciliation of what funds
were paid to Kebo Oil and Gas, Inc., but that does not change the
fact that the Plaintiff has simply failed to satisfy its burden
with respect the causes of action in the State Court Lawsuit and
the 523 Action.
The Court finds and concludes that the Plaintiff has not satisfied
its burden of proof for any of its claims. As such, the Court
enters judgment in favor of the Debtor and Texas Permian.
A full-text copy of the Findings of Fact and Conclusions of Law
dated Feb. 27, 2023 is available at https://tinyurl.com/2pw2ur2n
from Leagle.com.
Larry C. Talley, Jr. filed voluntary chapter 11 petition (Bankr.
N.D. Tex. Case No. 20-32101) on August 3, 2020. He is represented
by Melissa Hayward, Esq.
LENDINGTREE INC: S&P Upgrades ICR to 'CCC+' on Distressed Exchange
------------------------------------------------------------------
S&P Global Ratings raised the issuer credit rating on U.S.-based
online lending marketplace and marketing services provider
LendingTree Inc. to 'CCC+' from 'SD' (selective default). At the
same time, S&P lowered the issue-level ratings on LendingTree's
$200 million senior secured revolving credit facility (RCF) and its
$250 million senior secured term loan to 'B' from 'B+'. The '1'
recovery rating remains unchanged.
The stable outlook reflects LendingTree's current cash balance of
$150 million. S&P said, "It also reflects our expectation that it
will generate about $20 million of reported free cash flow in 2023,
which will provide it adequate liquidity to service its debt and
fund its operations, despite our expectations for leverage of 9x
and adjusted free operating cash flow (FOCF) to debt of about 4%
over the next 12 months."
S&P said, "We view LendingTree's capital structure as unsustainable
over the longer term. We expect the company's leverage to be about
9x and FOCF to debt to be about 4% in 2023 following its recent
$190 million below-par debt repurchase because high interest rates,
inflation, and declining consumer spending continue to impair its
business. The company could have difficulty refinancing its senior
unsecured convertible notes if it cannot reduce its leverage back
toward 6x in advance of their maturity, or if it has to do so at a
significantly higher interest rate, which could deplete its FOCF to
debt coverage. We believe the company will have to rely on
favorable economic conditions to deleverage and meet its financial
obligations over the longer term. However, we expect its liquidity
to remain adequate over the next 12 months because the company
still has $150 million of cash on the balance sheet after its
recent debt repurchase and has full availability under its $200
million revolving credit facility. We also expect it to generate
about $20 million of reported FOCF in 2023 to service its debt and
fund other liquidity needs.
"Weak macroeconomic conditions will continue to pressure
LendingTree's performance over the next 12 months. We expect
LendingTree's revenue to fall about 5% in 2023. We also expect it
to generate flat S&P Global Ratings-adjusted EBITDA due to rising
interest rates reducing new mortgages and refinancing activity; and
headwinds in the insurance industry from rising costs and reduced
profitability due to inflation, and higher loss ratios." Its recent
cost-reduction initiatives, including reducing headcount and
discontinuing low-performing products, will slightly offset its
declining revenue. The anticipated revenue decline is significantly
below our previous expectations of 5% revenue and 30% S&P Global
Ratings-adjusted EBITDA growth in 2023 due to the continued delay
in the company's recovery.
LendingTree's cost structure is largely variable but margin
pressure will persist in 2023. Variable marketing expenditures are
a key component of LendingTree's cost base, equating to about
65%-70% of its total revenue. The company can increase or decrease
advertising spending depending on market conditions and lender
activity, which can somewhat offset its margin volatility. S&P
expects the company's marketing spending will decline relative to
2022 levels but not enough to fully offset revenue declines, as was
the case in 2022. Although the 10% decline in marketing spending in
2022 was in line with its 10% revenue decline, its EBITDA fell
significantly more given the remaining fixed costs in the
business.
LendingTree's senior unsecured convertible notes are trading at a
discount, increasing the potential for further subpar debt
exchanges. The company's senior unsecured notes are currently
trading at about 80 cents on the dollar, with a yield of close to
10% following its recent debt repurchase. The discount associated
with the value of the company's senior notes increases the
potential it will negotiate an additional subpar debt exchange. S&P
views any type of distressed exchange in which the lenders receive
less than originally promised as a default.
S&P said, "The stable outlook reflects LendingTree's current cash
balance of $150 million and our expectation of about $20 million of
reported free cash flow generation in 2023 that will provide it
adequate liquidity to service its debt and fund its operations,
despite our expectations for leverage of 9x and adjusted FOCF to
debt of about 4% over the next 12 months.
S&P could lower its rating on LendingTree if we expect it will
default in the next 12 months. This could happen if:
-- Macroeconomic pressures persist, reducing advertising spending
from the company's key network partners and depleting its
liquidity; or
-- S&P expects a subpar debt exchange or restructuring.
S&P could raise the rating if:
-- Interest rates decline and inflation subsides such that the
company's home and insurance segments rebound, resulting in a
period of sustained revenue and EBITDA growth; and
-- S&P expects it to continue to generate sustainably positive
FOCF with a clear path to reducing leverage below 6x well in
advance of its 2025 debt maturity.
ESG credit indicators: E-2, S-2, G-2
LUCIRA HEALTH: U.S. Trustee Appoints Creditors' Committee
---------------------------------------------------------
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Chapter 11 case
of Lucira Health, Inc.
The committee members are:
1. Norwalt Design Inc.
Attn: Michael Seitel
961 Route 10 East, Bldg. 2A
Randolph, NJ 07869
Phone: (973) 927-3200
Email: mike@norwalt.com
2. New England Biolabs, Inc.
Attn: Joseph Secondine
240 County Road
Ipswich, MA 01938
Phone: (978) 380-7481
Email: secondine@neb.com
3. Bluebird Express, LLC
Attn: James Gillett
145 Hook Creek Blvd. Bldg. C2
Valley Stream, NY 11581
Phone: (516) 255-0800
Email: jgillett@bluexps.com
4. Biosearch Technologies, Inc.
Attn: Courtney Scrubbs
2199 South McDowell Blvd.
Petaluma, CA 94954
Phone: (504) 220-0219
Email: courtney.scrubbs@lgcgroup.com
5. Plitek, LLC
Attn: Karl Hoffman
35 Piper Ln.
Prospect Heights, IL 60070
Phone: (847) 827-6680
Email: karl.hoffman@plitek.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 Lucira Health
Founded in 2013, Lucira is a medical technology company focused on
the development and commercialization of transformative and
innovative infectious disease test kits.
Lucira Health filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Del., Case No. 23-10242) on
Feb. 22, 2023. As of Dec. 31 2022, the Debtor posted total assets
of $145,897,301 and total debt of $84,720,814.
Judge Mary F. Walrath oversees the case.
The Debtor tapped Young Conaway Stargatt & Taylor, LLP and Cooley,
LLP as legal counsel; Armanino, LLP as financial advisor; and
Donlin, Recano & Company, Inc. as claims and noticing agent.
MICHAEL MAIDAN: Trustee Authorized to Liquidate East End Ventures
-----------------------------------------------------------------
Bankruptcy Judge Louis A. Scarcella for the Eastern District of New
York grants the motion to authorize Trustee to liquidate assets of
Debtor's Estate filed by Eric Huebscher, in his capacity as Trustee
under the Litigation Trust Agreement.
The Debtor Michael Maidan was a real estate developer and did
business as either the sole member/owner of, and/or held financial
interests in, several limited liability companies. In or around
late March of 2020 the Debtor passed away and shortly thereafter
his son, Joshua Maidan, took over the administration of the
Debtor's chapter 11 case.
On March 17, 2021, the Court confirmed the Debtor's First Amended
Chapter 11 Liquidating Plan which, among other things, (1)
establishes a litigation trust for the benefit of the holders of
Class 4 Unsecured Claims under the Plan, (2) provides for the
vesting of all of the Debtor's causes of action in the Litigation
Trust as of the Plan effective date, (3) provides that the Trustee
of the Litigation Trust has absolute discretion to determine
whether to bring, settle, release, compromise or enforce such
causes of action, and (4) provides that the Trustee of the
Litigation Trust has the authority to pursue such litigation claims
in accordance with the best interests of the Litigation Trust. The
Plan also provides that the Distribution Fund includes recoveries,
if any, from East End Ventures. The Confirmation Order approved the
appointment of Mr. Huebscher as the Litigation Trustee of the
Litigation Trust. The Plan became effective on or about March 18,
2021.
The East End Ventures are owned 50% by Emil Talel and 50% by the
Debtor, both of whom are now deceased.
The instant Motion seeks the entry of an order authorizing the
Litigation Trustee to liquidate the interest of Michael Maidan in
East End Ventures LLC, East End Ventures II LLC, and East End
Ventures III LLC by appointing the Litigation Trustee and Bernard
Jaffe, Esq. (the Executor of the estate of Emil Talel), as
co-liquidators of East End Ventures.
Jay Bialsky -- a builder and developer, concerning a real estate
project in Sag Harbor, New York -- opposed the Motion. The
Litigation Trustee argues that Bialsky lacks standing to object to
the Motion.
The Court agrees and concludes that Bialsky does not have standing
to object to the Motion. The Court finds that the Objection does
not include facts that are sufficient to show that Bialsky is a
party in interest under section 1109(b) or that he meets
constitutional and prudential standing requirements. The Court
further finds that nowhere in his Objection does Bialsky expressly
allege that he has or will suffer an actual injury if the
co-liquidators are appointed or that he is asserting his own legal
rights in voicing objection to the Motion. As he has failed to make
the requisite showing, the Court holds that he has not alleged that
he has the standing to bring any claims or object to the Motion.
The bankruptcy case is In re: Michael Maidan, dba Grand Avenue
Building II, LLC, dba East End Ventures LLC, dba 1907 Harrison
Realty LLC, dba 550 Metropolitan LLC, dba 62 Grand Ave LLC, Chapter
11, Debtor, Case No. 8-19-77027-las, (Bankr. E.D.N.Y.).
A full-text copy of the Memorandum Decision and Order dated Feb.
23, 2023 is available at https://tinyurl.com/3y66tfy5 from
Leagle.com.
Michael Maidan sought Chapter 11 protection (Bankr. E.D.N.Y. Case
No. 19-77027) on Oct. 11, 2019. The Debtor tapped Julie Cvek
Curley, Esq., at Kirby Aisner & Curley, LLP, as counsel.
MIRION TECHNOLOGIES: S&P Alters Outlook to Pos., Affirms 'B' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on Mirion Technologies Inc.,
an Atlanta-based provider of radiation detection, measurement,
analysis, and monitoring products and services, to positive from
stable and affirmed all of its ratings, including its 'B' issuer
credit rating.
The positive outlook reflects S&P's expectation that Mirion will
continue improving its EBITDA margins and maintain its current
financial policy such that it reduces its S&P Global
Ratings-adjusted leverage below 5x by the end of 2023.
S&P said, "The company's debt repayment has accelerated its
deleveraging. Following Mirion's February 2023 repayment of $125
million of debt with equity proceeds, we now forecast its S&P
Global Ratings-adjusted leverage will decline to the mid- to
high-4x area by the end of 2023, which compares with our prior
forecast for the low-5x area. The prior forecast incorporated our
expectation for modest increases in its revenue and EBITDA margin,
which we continue to anticipate.
"We forecast Mirion will increase its revenue by the low- to
mid-single digit percent area in 2023 on the strong expected demand
for radiation therapy and nuclear medicine, as well as the
consistent revenue from its industrial installed base. Our forecast
is supported by the company's robust backlog ($737 million as of
Dec. 31, 2022), which rose by 10% year over year. The forecast also
reflects our assumption the company's supply chains will remain
stable relative to their performance in the fourth quarter of 2022,
which will likely support Mirion's ability to convert its backlog
to revenue this year.
"Further, we forecast the company will improve its S&P Global
Ratings-adjusted EBITDA margin by about 300 basis points in 2023,
primarily due to reduced costs related to the integration of its
previous acquisitions and restructuring. This margin improvement,
combined with our revenue growth assumption, supports our forecast
for S&P Global Ratings-adjusted leverage in the mid-4x area by the
end of 2023.
"We believe the company's financial policy will support its ability
to maintain S&P Global Ratings-adjusted leverage of below
5x.Mirion's debt reduction and affirmation of its leverage target
(net leverage of between 2.5x and 3.5x, which translates to S&P
Global Ratings-adjusted leverage of 4x-5x) demonstrate its
commitment to deleveraging, leading us to believe it will maintain
its credit measures in this range.
"Mirion continues to generate positive free operating cash flow
(FOCF) to support its acquisition strategy. We expect the company's
S&P Global Ratings-adjusted FOCF in 2023 will benefit from its
inventory optimization and improving operations. Specifically, we
forecast between $60 million and $80 million of FOCF, which is up
significantly from about $13 million in 2022. We believe this cash
flow, in combination with the about $78 million of cash and
short-term investments on its balance sheet as of Dec. 31, 2022,
will likely be sufficient to fund modest bolt-on acquisitions.
Although we believe Mirion could fund its annual bolt-on
acquisitions without drawing on external funds, we believe its
ample revolver availability will further support its liquidity
position through 2023.
"The positive outlook reflects our expectation that Mirion will
continue improving its EBITDA margins and maintain its current
financial policy such that it reduces its S&P Global
Ratings-adjusted leverage below 5x by the end of 2023."
S&P could raise its rating on Mirion if its S&P Global-adjusted
leverage remains consistently below 5x. This could occur if:
-- Its operating performance continues to improve and the company
books less restructuring costs; and
-- It maintains financial policies, particularly related to future
shareholder returns and acquisitions, that support this level of
leverage.
S&P could revise its outlook to stable if Mirion's S&P
Global-adjusted leverage remains above 5x. This could occur if:
-- Its operating performance weakens due to supply chain
constraints, pricing pressure, or reduced order flow; or
-- The company adopts financial policies, particularly related to
future shareholder returns and acquisitions, that causes S&P to
believe its debt leverage will remain above 5x on a sustained
basis.
ESG credit indicators: E-2, S-2, G-2
MOLECULAR IMAGING: Court OKs Cash Collateral Access Thru April 5
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois,
Eastern Division, authorized Molecular Imaging Chicago LLC to use
cash collateral on an interim basis in accordance with the budget,
with a 10% variance, through April 5, 2023.
Byline Bank and any other lien claimants are granted and will have
post-petition replacement liens, to the extent and with the same
priority as held pre-petition, in and to the cash collateral and
all post-petition property of the Debtor of the same type or kind
substantially equivalent to the pre-petition Collateral.
A further hearing on the matter is set for April 4 at 1:30 p.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3yw2oVL from PacerMonitor.com.
About Molecular Imaging Chicago LLC
Molecular Imaging Chicago LLC provides diagnostic testing services,
including PET/CT, MRI (Open and High Field), Diagnostic CT,
EMG/NCV, Ultrasound, Arthrogram, and Digital X-Ray services.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Court (Bankr. N.D. Ill. Case No. 22-10864) on September
22, 2022. In the petition signed by Rajeev Batra, managing member,
the Debtor disclosed up to $500,000 in assets and up to $10 million
in liabilities.
Judge Jacqueline P. Cox oversees the case.
Gregory K. Stern, Esq., at Gregory K. Stern, P.C., is the Debtor's
counsel.
MONTANA RENEWABLES: S&P Affirms 'B-' ICR, Outlook Stable
--------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on
Montana Renewables LLC (MRL). At the same time, S&P assigned a 'B-'
issue-level rating to MRL's proposed tax-exempt senior bonds with a
'4' recovery rating, indicating its expectations of average
(30%-50%; rounded estimate: 45%) recovery in the event of a payment
default.
The stable outlook reflects S&P's expectation that MRL's production
will continue to ramp up as it completes conversion of the plant in
the first quarter of 2023. Based on our conservative assumptions on
margins, S&P expects adjusted debt to EBITDA of about 8x in 2023
will improve to about 4.5x-5x in 2024.
MRL has launched $250 million in senior secured fixed rate
tax-exempt senior bonds due Oct. 1, 2053.
S&P expects MRL to complete the conversion of its facility in 2023,
which will increase volumes.
Since November 2022, the plant has been operational and producing
renewable diesel. S&P expects completion of the hydrogen plant,
pre-treater unit, and sustainable aviation fuel (SAF) unit in the
first quarter of 2023, which will further increase processing
capacity to 12,000 barrels per day (bpd). MRL expects to complete
further expansions in 2024 with an option for incremental SAF
production. S&P expects the increasing plant capacity and
subsequent volumes to drive increasing EBITDA in 2023 and 2024 such
that adjusted leverage will improve from 8x in 2023 to 4.5x-5x in
2024. The total processing capacity of 12,000 bpd makes the company
smaller in scale than its refining peers.
S&P lowered the stand-alone credit profile for MRL to 'b-' from 'b'
due to elevated leverage.
S&P said, "We expect MRL will have high capital expenditure in 2023
and 2024, reflecting the conversion and expansion projects that
will be partially funded by the issuance of $250 million tax-exempt
senior bonds. While the expansion is credit positive, leverage
expectations have greatly increased compared to our previous
forecast. We now forecast adjusted debt to EBITDA of about 8x in
2023 versus our previous expectation of 3.9x.
"We continue to view MRL as a nonstrategic subsidiary of Calumet
Specialty Products Partners L.P. (Calumet).
"Given the ownership and control by Calumet, we consider MRL part
of the Calumet group. While there are significant structural
separations between the two entities, we do not believe it is
enough to delink the ratings at this time. As a result of Calumet's
control, MRL cannot be rated higher than Calumet.
"The stable outlook reflects our expectation for a ramp-up in
volumes through 2023 and 2024, reflecting the completed conversion
and expansion project that will provide additional capacity. As a
result, we expect adjusted debt to EBITDA to improve to about
4.5x-5x in 2024, based on our conservative assumptions on
margins."
S&P could consider a negative rating action on MRL if:
-- S&P views the capital structure as unsustainable over the long
term; or
-- Liquidity becomes constrained.
S&P could consider a positive rating action on MRL if:
-- S&P expects MRL's adjusted debt to EBITDA will remain below 4x
on a sustained basis; and
-- The rating on MRL is not constrained by the group credit
profile, which could occur if Calumet was upgraded to 'B' or the
relationship between MRL and Calumet changes. This could be driven
by an equity partner or a sale of MRL.
ESG credit indicators: E-2, S-2, G-3
MONTGOMERY REALTY: Court OKs Interim Cash Collateral Access
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of California,
Oakland Division, authorized Montgomery Realty Group, LLC to use
cash collateral on an interim basis to fund certain expenses.
The Court noted that Jo-Ann Stores has suspended the payment of
rent, and the existence of material cash collateral will be
dependent on a resumption in the payment of rent by Jo-Ann Stores.
As previously reported by the Troubled Company Reporter, the Debtor
requires the use of cash collateral to fund the operating expenses
of its property, which is a portion of a shopping center consisting
generally of large "big box" retailers on the periphery of the
Center, facing a central parking lot.
In 2018, the Debtor refinanced the Property and obtained mortgage
financing for the Property from Cathay Bank, with the mortgage to
mature in November 2023. Cathay Bank is the Debtor's sole secured
creditor holding a perfected security interest in the Debtor's
Property and its rental income, providing it with cash collateral
rights. During the months pre-petition, Cathay took actions which
had the effect of leading tenants to withhold their rent.
As adequate protection, Cathay is granted a replacement lien
against its post-petition assets. The Replacement Lien will be
perfected and enforceable without the need for Cathay Bank or the
Debtor to take any further action, but it will be subject to
further Court orders. The Replacement Lien will have the same
nature, extent, validity and priority, and be subject to the same
defenses and offsetting claims, if any, as Cathay Bank's
prepetition lien.
A continued hearing on the matter is set for March 29, 2023 at
10:30 a.m.
A copy of the order is available at https://bit.ly/3ynPMQz from
PacerMonitor.com.
About Montgomery Realty Group, LLC
Montgomery Realty Group, LLC is the owner of the commercial real
property located at 1675 Willow Pass Road, Concord, California.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Cal. Case No. 22-41290) on December
20, 2022. In the petition signed by Raj Maniar, manager, the Debtor
disclosed up to $50 million in both assets and liabilities.
Judge William J. Lafferty, III oversees the case.
Michael St. James, Esq., at St. James Law, P.C, is the Debtor's
legal counsel.
MOUNTAIN PROVINCE: Q4 Conference Call Set for March 23
------------------------------------------------------
Mountain Province Diamonds Inc. provided the details of its Q4 and
full year 2022 earnings release and conference call.
Earnings Release and Conference Call Details
The Company will host its quarterly conference call on Thursday
March 23, 2023 at 11:00 am EST. Prior to the conference call, the
Company will release Q4 and full-year 2022 financial results on
March 22nd, after-market.
Conference Call Dial-in Details:
Conference ID: 95971630
Date of call: 03/23/2023
Time of call: 11:00 Eastern Time
Expected Duration: 60 minutes
Webcast Link:
https://app.webinar.net/Vq63nNZnRkK
Participant Toll-Free Dial-In Number: (+1) 888-390-0546
Participant International Dial-In Number: (+1) 416-764-8688
About Mountain Province
Mountain Province Diamonds Inc. is a Canadian-based resource
company listed on the Toronto Stock Exchange under the symbol
'MPVD'. The Company's registered office and its principal place of
business is 161 Bay Street, Suite 1410, P.O. Box 216, Toronto, ON,
Canada, M5J 2S1. The Company, through its wholly owned
subsidiaries 2435572 Ontario Inc. and 2435386 Ontario Inc., holds a
49% interest in the Gahcho Kue diamond mine, located in the
Northwest Territories of Canada. De Beers Canada Inc. holds the
remaining 51% interest. The Joint Arrangement between the Company
and De Beers is governed by the 2009 amended and restated Joint
Venture Agreement.
As of Sept. 30, 2022, the Company had C$966.17 million in total
assets, C$435.42 million in current liabilities, C$27.75 million in
Dunebridge junior credit facility, C$223,000 in lease obligations,
C$74.44 million in decommissioning and restoration liability,
C$36.40 million in deferred income tax liabilities, and C$391.93
million in total shareholders' equity.
Toronto, Canada-based KPMG LLP, the Company's auditor since 1999,
issued a "going concern" qualification in its report dated March
28, 2022, citing that the Company faces liquidity challenges as a
result of liabilities with maturity dates through December 2022 and
short-term financial liquidity needs that raises substantial doubt
about its ability to continue as a going concern.
MRC GLOBAL: S&P Alters Outlook to Positive, Affirms 'B-' ICR
------------------------------------------------------------
S&P Global Ratings revised its outlook on MRC Global (US) Inc. to
positive, from stable, and affirmed all ratings, including the 'B-'
issuer credit rating.
The positive outlook reflects S&P's expectation that MRC will
maintain S&P Global Ratings-adjusted debt to EBITDA below 4x over
the next 12 months while generating positive free operating cash
flow, and that this level of operating performance will support the
company's term loan refinancing prospects.
S&P said, "We forecast MRC to maintain S&P Global Ratings-adjusted
leverage below 4x for the next 12 to 24 months given supportive
demand trends in its end-markets, and stable EBITDA margins. Our
forecast for adjusted leverage incorporates our expectation for
continued, albeit decelerating, revenue growth in 2023 following
strong (about 26%) growth in 2022. We anticipate that price will
become less of a growth driver as inflation slows, and that growth
will be underpinned mostly by volume in 2023, supported by broad
demand across MRC's end-markets. We expect upstream and
midstream-related revenues will be positively affected by
exploration and production (E&P) producers increasing capital
expenditures (capex) spending (we forecast E&P capex budgets to
increase by 15%-20% in 2023) as concerns around energy security and
relatively low global inventories drive a supportive commodity
price environment. We believe MRC's downstream, industrial, and
energy transition (DIET) segment will continue to benefit from
relatively stable maintenance, repair, and overhaul (MRO) related
revenues, supported by high capacity utilization rates, previously
deferred maintenance spending, and global energy transition
projects. Additionally, we expect continued demand for ongoing
safety and integrity projects for the company's gas utilities
segment, despite our forecast for lower housing starts.
"Furthermore, we forecast MRC's S&P Global Ratings-adjusted EBITDA
margins will remain stable, around 7% in 2023, as operating
leverage from volume growth is partially offset by reduced pricing
as some commodity input prices decline. Margin stability, in
conjunction with our forecast for revenue growth, translates to S&P
Global Ratings-adjusted EBITDA growth of about 9.5% to 11.5% in
2023 and an associated improvement in S&P Global Ratings-adjusted
leverage to the low-3x area, from 3.4x at the end of 2022.
"We expect free operating cash flow (FOCF) to improve substantially
amid lower working capital requirements. Given the sizable revenue
growth that MRC generated in 2022, the company experienced a $210
million use of working capital, which led to a $20 million outflow
in cash from operations for the year. However, we expect that
working capital requirements will begin to normalize in 2023 as
revenue and inventory growth rates moderate, resulting in cash from
operations of around $90 million-$100 million.
"Notwithstanding our expectations for solid operating performance
in 2023, refinancing risks remain around the company's $295 million
term loan that matures September 2024. We view MRC's September 2024
term loan maturity as a risk; although the company has reduced its
exposure to more volatile commodity-price exposed end markets over
the past several years, upstream and midstream revenues remain
about one third of our total expected revenues in 2023. As a
result, if the economy weakens more than we expect, or if oil or
gas prices continue to decline, it could create a risk to our base
case forecast, and potentially lead to more challenging refinancing
prospects. Nevertheless, we expect the company will be proactive in
addressing the maturity prior to it becoming current, and we
believe MRC will continue to prioritize the strength of the balance
sheet over shareholder returns.
"The positive outlook reflects our expectation that MRC will
maintain S&P Global Ratings-adjusted debt to EBITDA below 4x over
the next 12 months while generating positive free operating cash
flow, and that this level of operating performance will support the
company's term loan refinancing prospects.
"We could raise our rating on MRC if the company successfully
addresses its September 2024 term loan maturity while maintaining
stable operating performance such that S&P Global Ratings-adjusted
leverage remains below 4x, a level that would provide some cushion
at a one notch higher rating to absorb a high degree of EBITDA
volatility. An upgrade would also be dependent on our expectations
for cash flow, specifically that the company will be able to
generate positive FOCF amid an environment with lower working
capital investment requirements.
"We could revise the outlook to stable if we expect that S&P Global
Ratings-adjusted leverage will increase and be sustained above 4x,
or if the company is unable to generate positive FOCF amid a
moderate-growth environment with lower working capital
requirements. Additionally, downward pressure on the rating could
occur if we do not believe the company will be able to refinance
its term loan maturity. This could occur if operating performance
deteriorates or if speculative-grade credit market conditions
remain volatile."
ESG credit indicators: E-3, S-2, G-2
MUSCLE MAKER: Regains Compliance With Nasdaq Bid Price Requirement
------------------------------------------------------------------
Muscle Maker, Inc. received notice from The Nasdaq Stock Market LLC
on March 2, 2023, confirming that the Company has cured its bid
price deficiency and has fully regained compliance with the Minimum
Bid Price Rule.
As previously disclosed by Muscle Maker in its filings with the
U.S. Securities and Exchange Commission, the Company had received
letters from Nasdaq notifying the Company of its non-compliance
with Nasdaq Listing Rule 5550(a)(2) and granting the Company
extensions to demonstrate such compliance to Nasdaq.
About Muscle Maker
Headquartered in League City, Texas, Muscle Maker, Inc. is the
parent company of "healthier for you" brands delivering food
options to consumers through traditional and non-traditional
locations such as military bases, universities, delivery and direct
to consumer ready-made meal prep options. Brands include Muscle
Maker Grill restaurants, Pokemoto Hawaiian Poke and SuperFit Foods
meal prep.
Muscle Maker reported a net loss of $8.18 million for the year
ended Dec. 31, 2021, a net loss of $10.10 million for the year
ended Dec. 31, 2020, and a net loss of $28.39 million for the year
ended Dec. 31, 2019. As of Sept. 30, 2022, the Company had $25.38
million in total assets, $6.45 million in total liabilities, and
$18.93 million in total stockholders' equity.
* * *
This concludes the Troubled Company Reporter's coverage of Muscle
Maker, Inc. until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
NANTASKET MANAGEMENT: Unsecureds to be Paid in Full in Plan
-----------------------------------------------------------
Nantasket Management, LLC, filed with the U.S. Bankruptcy Court for
the District of Massachusetts a Small Business Chapter 11 Plan of
Reorganization under Subchapter V dated March 6, 2023.
The Debtor is a Delaware limited liability company, formed December
12, 2016, with principal assets located in Hull, Massachusetts. The
Debtor is in the business of operating a real estate development
and construction company.
As with most businesses, the Debtor was greatly impacted by the
COVID-19 pandemic. Prior to the Petition Date, the Debtor had
acquired 8 former U.S. Coast Guard properties, each with a
single-family house thereon in Hull, MA. The Debtor was the winning
bidder in a GSA auction for 8 properties located in Hull, MA. Two
of the six houses were sold in 2021. At the time of the filing of
this proceeding, the Debtor had 6 remaining properties located on
Nantasket Avenue in Hull, MA.
The mortgagee on the properties scheduled a foreclosure on its
mortgages for December 7, 2022. The parties were unable to resolve
this matter prior to the scheduled foreclosure date and the Debtor
proceeded with the filing of this case The Debtor proceeded with
the filing of this case in order to invoke the protections afforded
by the Bankruptcy Code and to continue its operations.
The Debtor will shortly be filing a motion to borrow approximately
$730,000.00 from Investor's Source, LLC of 118 E. 29th Street,
Suite H, Loveland, CO 80538. Those funds will be used to pay off
the existing mortgage of the Class 4 holder Velocity Commercial
Capital and to provide for the costs of the new construction on
that parcel. It is anticipated that the sale of the parcel located
at 1161 Nantasket Avenue will realize approximately $1,200,000.00.
The Debtor intends to repeat this process for the other 5 single
family homes later in the spring, summer and autumn of 2023.
By the end of June 2023, the Debtor intends to commence marketing
its completely renovated single family home at 1161 Nantasket
Avenue, Hull, MA. The sales will be conducted in accordance with
§363 of the Bankruptcy Code. The sales will provide sufficient
funds to pay all allowed claims secured by that parcel.
The Debtor anticipates that offers for each property will be made
shortly after marketing commences, on 2-story, 5-bedroom, 3,025 sq.
ft. ocean-view homes for families that are within 2 minutes of
walking distance to Hull Elementary School. Thereafter, the Debtor
and any potential buyer will execute a Purchase and Sale Agreement
("P&S Agreement"). Any P&S Agreement will contain a Rider that
compels the Debtor to immediately seek this Court's Approval for
the Sale pursuant to §363 of the Bankruptcy Code, set a date of
sale ("Sale Date") and be subject to counter offers and bidding
wars that may benefit the estate.
Class 9 consists of General Unsecured Claims. In full and complete
satisfaction, settlement, release and discharge of the Class 9
Claims, each holder of the Allowed Class 9 Claim shall receive
payment in full upon the Effective Date. The scheduled and filed
claims of this Class totals approximately $130,000.00. Class 9 is
unimpaired under the Plan.
Michael Kim, the sole member and holder of interests in the Debtor
will retain such interests in the Debtor.
This Plan will be funded with available cash realized by the sale
of its six parcels of real estate located on Nantasket Avenue,
Hull, MA. Pursuant to section 1190(2) of the Bankruptcy Code, the
Plan provides for the submission of all or such portion of the
future earnings of the Debtor as is necessary for the execution of
the Plan.
The Debtor's financial projections are omitted since the Plan will
be funded by the sale of the units and there will be no downstream
payments.
A full-text copy of the Chapter 11 Plan dated March 6, 2023 is
available at https://bit.ly/3SZbjbY from PacerMonitor.com at no
charge.
Counsel for the Debtor:
John F. Sommerstein, Esq.
Law Offices of John F. Sommerstein
1091 Washington Street
Gloucester, MA 01930
Telephone: (617) 523-7474
Email: jfsommer@aol.com
About Nantasket Management
Nantasket Management, LLC is a Delaware limited liability company,
formed December 12, 2016, with principal assets located in Hull,
Massachusetts. The Debtor filed its voluntary petition for Chapter
11 protection (Bankr. D. Mass. Case No. 22-11772) on Dec. 6, 2022.
In the petition signed by its manager, Michael Kim, the Debtor
listed up to $10 million in both assets and liabilities.
Judge Janet E. Bostwick oversees the case.
The Law Offices of John F. Sommerstein serves as the Debtor's
bankruptcy counsel.
NATIONAL MEDICAL: Can Recover Portion of Attorney's Fees and Costs
------------------------------------------------------------------
Bankruptcy Judge Eric L. Frank for the Eastern District of
Pennsylvania has issued an Opinion finding that DVI Defendants are
liable to National Medical Imaging, LLC and National Medical
Imaging Holding Company, LLC in the adversary case In re: NATIONAL
MEDICAL IMAGING, LLC, NATIONAL MEDICAL IMAGING HOLDING COMPANY,
LLC, Chapter 11, NATIONAL MEDICAL IMAGING, LLC NATIONAL MEDICAL
IMAGING HOLDING COMPANY, LLC, Plaintiffs, v. U.S. BANK, NATIONAL
ASSOCIATION, et al. Defendants, Case Nos. 08-17351 (ELF), 08-17348
(ELF), Adv. No. 14-250., 14-251, (Bankr. E.D. Pa.).
On November 7, 2008, six related entities, all of which have the
initials "DVI" as part of their names filed involuntary bankruptcy
petitions against National Medical Imaging, LLC and National
Medical Imaging Holding Company, LLC. This Court, acting through a
predecessor judge, dismissed the involuntary petitions filed on
Dec. 28, 2009. The dismissal precipitated the years-long
proceedings that lead to today's ruling.
In 2014, NMI filed this adversary proceeding to hold the DVI
Defendants and two other parties -- U.S. Bank, National Association
and Ashland Funding, LLC -- liable for an award of attorney's fees
and costs under 11 U.S.C. Section 303(i)(1). Since 2008, the
parties have engaged in an all-out litigation war on multiple
fronts. As a result, in this action to recover attorney's fees and
costs incurred in obtaining dismissal of the 2008 involuntary
cases, NMI seeks to recover attorney's fees totaling $5.12 million
and costs in excess of $300,000.
The Court determines that NMI is entitled to recover a substantial
portion of the attorney's fees and costs it seeks, amounting to
$2.56 million in attorney's fees, costs and pre-judgment interest,
with the Defendants largely, but not entirely, jointly and
severally liable. However, the Court is unable to enter a final,
appealable judgment at this time because there is one piece of
NMI's section 303(i)(1) claim -- involving approximately $240,000
in requested attorney's fees -- that is not ripe for a decision due
to a pending appeal before the Third Circuit Court of Appeals.
Thus, the Court sets out its determination regarding the
compensable amount of those fees and costs at issue that are ready
to be decided, subject to a potential increase in the award after
the conclusion of the Third Circuit appeal. After the appeal is
decided, NMI's section 303(i)(1) entitlement can be finalized, and
the Court can enter a final money judgment in NMI's favor.
Therefore, to advance this litigation, the Court determines that:
-- the Defendants are jointly and several liable to NMI under
11 U.S.C. section 303(i)(1) for attorney's fees and costs in the
amount of at least $2.29 million, which includes pre-judgment
interest through Feb .28, 2023 in the amount of $229,742;
-- U.S. Bank is separately liable to NMI in the amount of
$237,280;
-- Ashland is separately liable to NMI the amount of $36,025;
-- US Bank's separately liability may be augmented after the
conclusion of the appeal in the 2020 AP if this Court's declaratory
judgment order is affirmed on appeal;
-- the joint and several liability will also be increased for
additional pre-judgment interest at such time as the court enters
judgment.
A full-text copy of the Opinion dated Feb. 27, 2023 is available at
https://tinyurl.com/wtzn2bwn from Leagle.com.
About National Medical
National Medical Imaging, LLC, and National Medical Imaging Holding
Company, LLC provide medical and diagnostic laboratory services
with a principal place of business located at 1425 Brickell Ave.,
Apt. 57E, Miami.
U.S. Bank's DVI Receivables Trusts and other alleged creditors
filed involuntary chapter 11 petitions (Bankr. E.D. Pa. Case Nos.
05-12714 and 05-12719) against Philadelphia, Pa.-based National
Medical Imaging, L.L.C., and National Medical Imaging Holding
Company, L.L.C., on March 3, 2005. The Creditors amended the
involuntary petitions three times: on Nov. 10, 2008; April 10,
2009; and on Aug. 26, 2009, following a contested hearing.
On June 12, 2020, National Medical Imaging and National Medical
Imaging Holding Company filed voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa. Lead Case No.
20-12618). At the time of the filings, each Debtor disclosed assets
of $10 million to $50 million and liabilities of the same range.
Judge Eric L. Frank oversees the case. The Debtors have tapped
Dilworth Paxson LLP as their bankruptcy counsel and Kaufman, Coren&
Ress, P.C. and Karalis P.C. as their special counsel. On October
23, 2020, the Debtors hired Erwin Chemerinsky, the dean, and Jesse
H. Choper Distinguished Professor of Law of the University of
California, Berkley School of Law, as their special counsel.
Before Debtors' voluntary Chapter 11 filing, DVI Receivables Trusts
and other creditors filed involuntary Chapter 11 petitions (Bankr.
E.D. Pa. Case Nos. 05-12714 and 05-12719) against Debtors on March
3, 2005.
In 2014, National Medical Imaging hit U.S. Bank N.A. and eight
others with a $50 million lawsuit in Pennsylvania federal court
alleging the bank ruined its business by forcing it into
involuntary bankruptcy proceedings just as it was beginning to
implement a turnaround plan. National Medical Imaging claims that
the involuntary bankruptcy petitions ultimately destroyed its
business even though the cases were ultimately tossed.
NGL & EROSION: Seeks Cash Collateral Access
-------------------------------------------
NGL & Erosion Control Group, LLC asks the U.S. Bankruptcy Court for
the Northern District of Georgia, Gainesville Division, for
authority to use cash collateral on an emergency basis to operate
its business in accordance with the proposed budget.
The Debtor requires the use of cash collateral to pay general and
administrative expenses.
Synovus Bank f/k/a AFB&T assert an interest in the Debtor's cash
collateral.
The Debtor's sole member is James Scott. In 2018, Scott agreed to
form a limited liability company with Amin Porbunderwala and Abdul
Malik Sawja through which to operate the Business. AMJ Contracting,
LLC was formed in November of 2018. AMJ commenced operating the
Business under the d/b/a NGL & Erosion Control Group.
AMJ assumed and continued to pay the Debtor's equipment debts to
John Deere and others. Johns Deere filed UCC-1 financing statements
identifying AMJ and Debtor as parties. Unfortunately, in order to
address cash needs, AMJ entered into high interest rate loans,
including merchant cash advances from, among other, Green Capital
Fundings, LLC and Westwood Funding Solutions, LLC.
In June 2020, AMJ obtained an EIDL loan from the Small Business
Administration in the approximate amount of $80,000. SBA recorded a
UCC-1 financing statement at file 038-2020-015397. The SBA's UCC-1
identified AMJ as the debtor and covered inventory, equipment,
accounts, instruments, intangibles, deposit accounts, and
government payments.
In 2021, the Business faltered under AMJ. AMJ lost a contract for
work with the State of Tennessee, which resulted in a default under
a bond with Fair American Insurance and Reinsurance. Porbunderwala
filed for Chapter 7 bankruptcy on September 25, 2021. AMJ
ultimately dissolved. The Debtor assumed operation of the Business
and paid down significant amounts of the AMJ debt, including MCA
debt. Green filed an amended UCC-1 identifying NGL & Erosion as the
debtor party.
The Debtor also entered into high interest rate loans with MCAs.
The Debtor has paid the high interest and MCA loans that Debtor
owed Green, Liquidibee, LLC, Mobilization Funding, LLC, and others.
However, the payment of the loans drained the Debtor's cash, which
resulted in installment payment defaults to John Deere and others.
The Debtor is indebted to Synovus Bank f/k/a AFB&T in the
approximate amount of $23,815, pursuant to a renewal promissory
note dated December 6, 2019. The Note is secured by a security
interest in, among other assets, inventory, equipment, accounts,
instruments, intangibles, deposit accounts, and government
payments, the proceeds of which constitute "cash collateral." The
security interest of Synovus is perfected by a duly recorded UCC-1
financing statement at 038-2014-010533, Coweta County Records, and
continuation statement at 038-2019-016033, Coweta County Records.
AMJ is indebted to Westwood in the approximate amount of $90,000.
Westwood filed a UCC-1 financing statement recorded at
007-2021-030407 Barrow County Records. The Westwood UCC-1
identifies AMJ as the debtor. The second page identifies an
additional debtor as "NGL & Erosion Control." The Debtor requires
additional review to determine if it signed as an obligor for the
AMJ debt or is otherwise liable to Westwood for the AMJ debt.
In connection with Debtor's use of cash collateral during the
Interim Period and to provide Synovus adequate protection in
respect of the Debtor's use of such cash collateral, the Debtor
agrees to grant Synovus a valid and properly-perfected replacement
lien, subject to prior perfected security interests and liens,
pursuant to 11 U.S.C. section 361(2) on all property acquired by
the Debtor after the Petition Date.
The Debtor also agrees to grant the Junior Potential Lenders an
Adequate Protection Lien, subordinate to Synovus, on all property
acquired by the Debtor after the Petition Date that is the same or
similar nature, kind, or character as the collateral to which the
security interest of the Junior Potential Lenders attached
prepetition, except that no such replacement lien shall attach to
the proceeds of any Chapter 5 Actions.
A copy of the motion is available at https://bit.ly/3mCIjun from
PacerMonitor.com.
About NGL & Erosion Control Group, LLC
NGL & Erosion Control Group, LLC provides services to buildings and
dwellings. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-20266) on March
6, 2023. In the petition signed by James Scott, managing member,
the Debtor disclosed up to $10 million in both assets and
liabilities.
G. Frank Nason, IV, Esq., at Lamberth, Cifelli, Ellis & Nason,
P.A., represents the Debtor as legal counsel.
NIELSEN & BAINBRIDGE: Court OKs $60MM DIP Loan from KKR
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Houston Division, authorized Nielsen & Bainbridge, LLC and its
affiliates to use cash collateral and obtain postpetition financing
on a final basis.
The Debtors obtained postpetition financing pursuant to a secured,
superpriority, priming debtor-in-possession multi-draw term loan
facility and the Senior Secured Superpriority Debtor-in-Possession
Credit Agreement by and among:
-- the Borrower,
-- the DIP Guarantors,
-- Credit Advisors (US) LLC and Silver Point Capital, L.P., as
lenders, and
-- KKR Loan Administration Services, LLC, as administrative
agent and collateral agent.
The DIP Facility consists of:
(i) new money term loans in an aggregate principal amount of
$30 million, of which $10 million will be available upon entry of
the Interim Order, and the remainder will be available upon the
entry of the Final Order, and
(ii) $30 million of DIP Roll-Up Loans, which will be deemed
rolled up and converted into DIP Obligations on a dollar-for-dollar
basis based on the amount of New Money DIP Term Loans actually
funded and on such day as the New Money DIP Term Loans are actually
funded.
The Borrowings will be repaid in full and in cash, and the
commitments will terminate, on the earliest to occur of the
following:
(a) two months following the Closing Date;
(b) the effective date and the date of the substantial
consummation of a plan of reorganization that has been confirmed
by an order of the Bankruptcy Court;
(c) the consummation of a sale or other disposition of all or
substantially all of the assets of the Debtors under section 363 of
the Bankruptcy Code;
(d) the date the Bankruptcy Court orders the conversion of the
bankruptcy case of any of the DIP Loan Parties to a Chapter 7
liquidation;
(e) the acceleration of the loans or termination of the
commitments under the DIP Facility, including as a result of the
occurrence of an Event of Default;
(f) the date that is 35 days after the Interim Order entry
date if the Final Order entry date will not have occurred by such
date; and
(g) the date of consummation of one or more sales that, in the
aggregate, constitutes a sale of all or substantially all of the
DIP Collateral.
The Debtors are required to comply with these milestones:
(a) No later than the Petition Date, the Debtors will file an
acceptable plan of reorganization and related disclosure
statement;
(b) No later than February 11, three days after the Petition
Date, the Bankruptcy Court will have entered an Interim Order;
(c) No later than March 9, 30 days after the Petition Date,
the Debtors will have entered into new or amended terms with
vendors in a sufficient number and on terms and conditions
necessary to support the Debtors' business, in each case, that are
acceptable to the Debtors and the Required DIP Lenders;
(d) No later than February 25, 17 days after the Petition
Date, the Bankruptcy Court will have entered an order approving the
Disclosure Statement in form and substance satisfactory to the
Required DIP Lenders;
(e) No later than March 14, 35 days after the Petition Date,
the Bankruptcy Court will have entered a Final Order;
(f) No later than March 19, 40 days after the Petition Date,
the Bid Deadline will have occurred;
(g) No later than March 21, 2023, 42 calendar days after the
Petition Date, the Auction, if needed, will have occurred;
(h) No later than March 25, 2023, 45 days after the Petition
Date, a hearing to consider confirmation of an acceptable plan of
reorganization will have occurred;
(i) No later than March 30, 2023, 50 days after the Petition
Date, the Bankruptcy Court will have entered a final order, in form
and substance satisfactory to the Required DIP Lenders, confirming
an approved plan of reorganization; and
(j) No later than April 8, 2023, 60 days after the Petition
Date, the plan effective date will have occurred.
The Debtors are party to the First Lien Credit Agreement dated as
of April 26, 2017, and any other agreements and documents executed
or delivered in connection therewith, by and among (a) NBG
Intermediate Holdings Inc. (b) NGB Acquisition Inc., as initial
borrower, (c) KNB Holdings Corporation, as Prepetition 1L Borrower,
(d) the guarantors party thereto, (e) Deutsche Bank AG New York
Branch, as administrative and collateral agent, and (f) the lenders
party thereto from time to time.
As of the Petition Date, the Prepetition 1L Loan Parties were
indebted and liable to the Prepetition 1L Secured Parties in the
aggregate principal amount of not less than $282.262 million.
The Debtors are also party to the Second Lien Credit Agreement
dated as of April 26, 2017, and any other agreements and documents
executed or delivered in connection therewith, by and among (a)
Holdings, (b) NGB Acquisition Inc., as initial borrower, (c) KNB
Holdings Corporation, as Prepetition 2L Borrower, (d) the
guarantors party thereto, (e) Cortland Capital Market Services LLC,
as administrative and collateral agent, and (f) the lenders party
thereto from time to time.
As of the Petition Date, the Prepetition 2L Loan Parties were
indebted and liable to the Prepetition 2L Secured Parties in the
aggregate principal amount of not less than $73.359 million.
The Debtors are party to the ABL Credit Agreement dated as of April
26, 2017 and any other agreements and documents executed or
delivered in connection therewith, among (a) KNB Holdings as ABL
borrower, (b) Holdings, as guarantor, (c) Wells Fargo Bank,
National Association, as administrative agent and collateral agent,
and (d) the lenders from time to time party thereto.
As of the Petition Date, the Prepetition ABL Loan Parties were
indebted to the Prepetition ABL Secured Parties for not less than
$57.7 million in outstanding principal amount of Loans.
The Debtors have demonstrated an immediate and critical need to
obtain the DIP Financing and to use Prepetition Collateral to
permit, among other things, the orderly continuation of the
operation of their businesses, to maintain business relationships
with vendors, suppliers and customers, to make payroll, to satisfy
other working capital and operational needs, and to fund
administrative expenses of the chapter 11 cases.
As adequate protection for the use of cash collateral, the Lenders
are granted a valid, binding, enforceable, non-avoidable and
automatically and properly perfected replacement security interest
in and lien upon all of the DIP Collateral and an allowed
superpriority administrative expense claim in each of the Chapter
11 Cases and any Successor Cases.
A copy of the order is available at https://bit.ly/41VQnGC from
PacerMonitor.com.
About Nielsen & Bainbridge, LLC
Nielsen & Bainbridge, LLC together with its debtor and non-debtor
affiliates, is an end-to-end supplier of home decor and hardwire
lighting operating under the trade name NBG Home. NBG Home serves
a portfolio of prominent retail partners in the design,
development, and fulfillment of products such as lighting, accents,
furniture, soft home goods, wall decor, and frames sold under
various brand names. NBG Home operates eight business units
touching the brick-and-mortar and eCommerce spaces.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 23-90071) on
February 8, 2023. In the petition signed by Hope Margala, as
authorized signatory, the Debtors disclosed up to $500 million in
assets and up to $1 billion in liabilities.
Judge David R. Jones oversees the case.
The Debtors tapped Jackson Walker LLP as local bankruptcy counsel,
Kirkland and Ellis LP and Kirkland and Ellis International LLP as
general bankruptcy counsel, Alvarez and Marsal North America, LLC
as financial advisor, Guggenheim Securities, LLC as investment
banker, Hilco Real Estate, LLC as exclusive sales agent, and Omni
Agent Solutions as claims, noticing, solicitation agent and
administrative advisor.
KKR Loan Administration Services, LLC, serves as administrative
agent and collateral agent under the DIP Facility.
The counsel to the DIP Lenders are Dennis F. Dunne, Esq. and
Matthew L. Brod, Esq. at Milbank LLP.
Wells Fargo Bank, National Association is the administrative agent
and collateral agent under the Prepetition ABL Facility.
Counsel to the Prepetition ABL Agent are Julia Frost-Davies, Esq.
and Christopher L. Carter, Esq. at Morgan, Lewis & Bockius LLP.
NORDAM GROUP: Fitch Hikes LongTerm IDR to 'B-', Outlook Stable
--------------------------------------------------------------
Fitch Ratings has upgraded The NORDAM Group LLC's Long-Term Issuer
Default Rating (IDR) to 'B-' from 'CCC+'. Fitch has also upgraded
the ratings of NORDAM's senior secured ABL facility to 'BB-'/'RR1'
from 'B+'/'RR1' and the term loan B to 'B+'/'RR2' from 'B'/'RR2'.
The Rating Outlook is Stable.
The upgrade to NORDAM's ratings reflects Fitch's expectation that
the company's EBITDA coverage will increase to around 2.0x and
leverage will improve to below 6.0x by the end of 2023 or early
2024, driven predominantly through organic growth. Fitch also
projects FCF will turn positive during 2023 as working capital
built up during 2022 unwinds and supply chain and labor constraints
begin to dissipate. Other contributing factors to the 'B-' rating
include NORDAM's adequate and improving diversification, and its
strategic position within the aerospace and defense market.
Risks to the rating include the company's small size and scale,
which makes the company somewhat more vulnerable to deteriorating
performance as a result of project cost overruns or industry
downturns. Leverage and cash flow fragility are also key
considerations incorporated in the 'B-' rating.
KEY RATING DRIVERS
Leverage Forecasted Below 6.0x, Coverage Around 2.0x: Fitch
forecasts NORDAM's EBITDA leverage will improve to below 6.0x by
around YE 2023 and EBITDA coverage will approach 2.0x, supporting
the upgrade to 'B-'. Fitch believes the improvement will be driven
by organic growth as the commercial aviation market recovers from
the pandemic, and the company pursues new program awards. Fitch
projects NORDAM's revenue will grow by greater than 10% on average
over the next two to three years.
Positive FCF in 2023-2025: Fitch projects NORDAM's FCF will be
slightly positive in 2023 after several consecutive years in
negative territory, despite the agency's projection of heavy capex
investment expected during the year. Fitch forecasts much of the
working capital that built up during 2022 -- which was a principal
driver of negative FCF during the year -- will begin to unwind
beginning in 2023. Recent labor and inflation-related pressures
will also lessen over the course of the year and should lead to
gradual annual margin expansion until returning to near
pre-pandemic levels around 2025.
Capex will likely return to normalized levels beginning in 2024.
Separately, the company also took steps to limit cash flow
vulnerability to rising rates by hedging approximately 50% of its
term loan through derivative instruments during 2022.
Supportive End-Markets: The company has historically generated the
majority of its revenue from the business jet market, which is
perceived to be more cyclical than the commercial and military
aviation markets. However, the larger jets where NORDAM generates a
significant portion of revenue have actually been relatively stable
during previous downturns such as the recent pandemic and the 2008
financial crisis. Stability and improvement in the business jet
market was a strong revenue driver during the company's recovery
during 2022.
The company should also benefit from increasing build rates at
commercial original equipment manufacturers (OEM) such as Boeing
and Airbus, which are expected to grow by double digit percentage
annually through 2025. Increasing air traffic towards pre-pandemic
levels will also support growth in maintenance, repair and
operations (MRO) work requirements.
Small Size, Limited Scale: Fitch views NORDAM's size and scale as
limiting factors to its credit profile. Larger companies are
generally more able to easily absorb cost overruns and changes in
production rates in the face of adverse market conditions or
contract terms. The company's lack of scale previously led to
bankruptcy when one program, the PW800, experienced significant
regulatory approval delays. However, Fitch believes cost overruns
similar to the magnitude of those experienced between 2017 and 2018
are less likely to occur in the intermediate term, as the company
is not currently exposed to a contract the size of the PW800.
Adequate, Improving Diversification: Despite its smaller size,
Fitch considers NORDAM's current portfolio to be relatively
diversified within the Aerospace & Defense sector, with exposures
to business jets, commercial aircraft, and military programs. The
company also benefits from both new production and MRO work.
However, Fitch believes NORDAM will continue to try and diversify
its product offerings by competing on opportunities in various
arenas including space and ESG-focused aircraft.
Strategic Position: NORDAM's strategic position as a niche supplier
to the aerospace and defense industry supports a higher rating. The
company generates a significant portion of its manufacturing
revenue and MRO revenue through sole-source contracts, which
provide a heightened level of confidence in future profitability
and cash flow under a normal operating environment.
DERIVATION SUMMARY
The NORDAM Group, LLC is one of the smaller suppliers in Fitch's
aerospace and defense portfolio, lacking meaningful size and scale
compared to peers such as Spirit Aerosystems, Inc. (not publicly
rated by Fitch) or TransDigm Group, Inc (not publicly rated by
Fitch). The company compares well operationally to other private
aerospace companies. Compared to StandardAero parent Dynasty
Acquisition Co., Inc., (B-/Stable), NORDAM has similar historical
margins, but may experience a higher degree of cyclicality due to
its manufacturing operations and smaller scale.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Revenue increases in the mid- to high-teens per year in 2022
and 2023 as MRO demand increases with recovering commercial
travel and aircraft production rates begin to pick up;
- Steady medium-term growth as end markets recover, however the
company does not return to pre-pandemic levels of revenue
until 2025;
- EBITDA margins increase towards historical levels during 2024
and 2025 as inflationary pressures and supply chain issues
lessen;
- Capex, including the purchase of rotables, totals between 2.0%
to 4.0% of annual revenue;
- FCF is negative in 2022 before turning modestly positive in
2023 and beyond.
Recovery Assumptions
The recovery analysis assumes that NORDAM would be considered a
going concern (GC) in bankruptcy and that the company would be
reorganized rather than liquidated. A 10% administrative claim is
assumed in the recovery analysis.
In Fitch's recovery analysis, potential default is assumed to come
from a combination of one or more of the following scenarios: a
materially negative hit to the company's reputation affects its
ability to retain contracts or win new business; certification or
design delays cause several periods of large cash outflows; or a
significant disruption to the aerospace and defense industry that
materially affects OEM production. Fitch's recovery assumptions are
based on NORDAM's high percentage of sole source contracts, program
diversification, and long-term relationships with key OEMs. Fitch
also considered the meaningful execution risk and potential for
cost overruns.
Fitch assumes $50 million as the GC EBITDA in the analysis,
representing Fitch's estimate of post-downturn earnings. Fitch
believes a GC EBITDA greater than 2021 EBITDA is appropriate in
this instance, due to the highly cyclical nature of the industry,
particularly following one of the greatest aviation downturns in
history as a result of the coronavirus pandemic and based on
Fitch's assumption that liquidity/refinancing issues, rather than a
further deterioration in the business, would be the catalyst for a
restructuring.
The actual emergence EBITDA for the company's recent bankruptcy in
2019 was $69 million, which included $16 million of additional
annual cost savings expected to be realized following actioned
headcount reductions and other measures; however, a future
bankruptcy would likely be driven by contract cost overruns or
significantly deteriorated end markets.
Fitch assumes NORDAM will receive a GC recovery multiple of 6.0x
EBITDA under this scenario. Fitch calculates the enterprise value
multiple used in the actual NORDAM bankruptcy at approximately
7.5x. NORDAM's creditors received a 100% recovery in conjunction
with their restructuring. The company received $250 million in debt
financing through a term loan B, with an equity valuation of $311
million based on Carlyle's purchase of a 45% stake for $140
million. Another bankruptcy would further diminish the value
prospects of the company resulting in a lower multiple and lower
EBITDA.
Fitch assumes the company's $100 million ABL revolver was drawn up
to its borrowing base around $67 million, which is lower than
Fitch's previous assumption of being 85% drawn. This is in line
with other companies observed in Fitch's various bankruptcy case
studies.
The 'BB-' rating and Recovery Rating of 'RR1' on the ABL revolver
are based on Fitch's recovery analysis under a GC scenario, which
indicates outstanding recovery prospects. The 'B+' rating and
Recovery Rating of 'RR2' on the company's first lien term loan B
would indicate strong recovery prospects for the credit facility.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- EBITDA Leverage sustains below 5.5x, coupled with a
corresponding
financial policy by management to maintain these levels;
- EBITDA interest coverage sustains around or above 2.25x;
- Operational normalization by both the company and broader
aerospace & defense industry contributes to unwinding inflated
working capital balance, sustained positive FCF and EBITDA
margins approaching pre-pandemic levels.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Heightened liquidity risk and refinancing risk because of
deteriorating EBITDA margins, failure to unwind high working
capital balance, and/or sustained negative FCF, which could
result in EBITDA Interest Coverage ratio sustained below
1.5x or ABL availability of 50% or less;
- Leverage sustained above 8.0x.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Fitch views NORDAM's liquidity as adequate to
cover near-term expenses without additional external sources. Total
liquidity will likely remain between $80 million and $120 million
and Fitch projects it will consist of full availability on the $100
million ABL revolver (up to its borrowing base) and cash of at
least $15 million per year over the forecasted horizon. NORDAM's
debt structure at YE 2022 primarily consisted of its term loan B
and $100 million ABL revolver. The company's ABL has a maturity in
April 2024, while the term loan matures in 2026. Fitch expects the
company will look to extend the revolver during 2023.
ISSUER PROFILE
The NORDAM Group (NDM) is a private aerospace and defense company
that serves business jet, commercial aircraft and military aircraft
customers. The company operates in two main segments; manufacturing
and MRO.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
The NORDAM Group LLC
LT IDR B- Upgrade CCC+
senior secured LT B+ Upgrade RR2 B
senior secured LT BB- Upgrade RR1 B+
NORTH SHORE MANOR: Seeks Cash Collateral Access
-----------------------------------------------
North Shore Manor, Inc. asks the U.S. Bankruptcy Court for the
District of Colorado for authority to use cash collateral and
provide adequate protection to properly perfected secured
creditors.
The Debtor requires the use of cash collateral to pay necessary
operating expenses.
The Debtor's bankruptcy filing was prompted by a number of
financial and managerial issues. The Debtor guaranteed a promissory
note with BOKF, NA d/b/a Bank of Oklahoma and in conjunction
therewith granted a security interest in substantially all of its
assets. The BOKF loan comes due on March 7, 2023. The Debtor also
entered into a secured loan with First National Bank n/k/a First
National Bank of Omaha which comes due in the third quarter of
2023. The bankruptcy case was also prompted by host of issue left
by the Debtor's current manager, Columbine Management Services Inc.
Among other issues, there have been a large number of financial
transactions between CMS and insider and related entities. As a
result the Debtor has been left with strained cash position.
The facility is located on land owned by North Shore Associates, an
entity affiliated with the Debtor.
The Debtor maintains two secured lenders who holds potential
secured claims which liens arising therefrom could encumber the
Debtor's "cash collateral". The liens are held by:
a. BOKF pursuant to a loan agreement date March 7, 2016
between BOKF and borrower NSA, the Debtor as guarantor, who granted
a security interest associated therewith. The March 7, 2016 loan
matures on March 7, 2023. The March 7, 2016 loan is in the
principal amount of $2.475 million.
b. BOKF, pursuant to a loan agreement date August 9, 2022
between BOKF and borrower NSA and the Debtor, and, upon information
and belief, associated therewith the Debtor granted a security
interest in substantially of its assets. The August 9, 2022 loan
matures on August 8, 2023. On October 31, 2022, BOKF filed a UCC-1
asserting a lien on substantially all of the assets of the Debtor.
c. First National Bank n/k/a First National Bank of Omaha,
pursuant to a loan agreement, which was entered into by CMS and to
which the Debtor does not have any loan documents. Upon information
and belief, the FNB loan matures in the third quarter of 2023. On
July 18, 2002, FNB filed a UCC-1 asserting a lien in the Debtor's
"cash collateral."
As of the Petition Date, the amount owing to BOKF is estimated to
be approximately $1.8 million under the March 7, 2016. It is
uncertain whether the August 9, 2022 loan has been paid in full.
The amount owing to FNB is estimated to be approximately $406,643.
BOKF, on account of the March 7, 2016 loan, has the only lien that
encumbers the property owned by NSA. The property owned by NSA is
valued at not less than $12 million.
To provide adequate protection for the Debtor's use of cash
collateral to the Secured Creditors, to the extent the Secured
Creditors are properly perfected, the Debtor proposes:
a. The Debtor will provide a replacement lien on all
post-petition accounts and accounts receivable to the extent that
the use of the cash collateral results in a decrease in the value
of the collateral pursuant to 11 U.S.C. section 361(2);
b. The Debtor will maintain adequate insurance coverage on all
personal property assets and adequately insure against any
potential loss;
c. The Debtor will provide to those creditors who request in
writing all periodic reports and information filed with the
Bankruptcy Court, including debtor-in-possession reports;
d. The Debtor will only expend cash collateral pursuant to the
Budget subject to reasonable fluctuation by no more than 15% for
each expense line item per month;
e. The Debtor will pay all post-petition taxes; and
f. The Debtor will retain in good repair all collateral in
which the Secured Creditors have an interest.
A copy of the Debtor's motion and budget is available at
https://bit.ly/3Zu89zn from PacerMonitor.com.
The Debtor projects total operating disbursements, on a weekly
basis, as follows:
$91,855 for the week ended March 11, 2023;
$343,342 for the week ended March 18, 2023; and
$68,455 for the week ended March 25, 2023.
About North Shore Manor, Inc.
North Shore Manor, Inc. operates skilled nursing facilities. North
Shore Manor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Colo. Case No. 23-10809) on March 6,
2023. In the petition signed by Robert D. Church, Jr., interim
chief executive officer, the Debtor disclosed up to $10 million in
both assets and liabilities.
Aaron A. Garber, Esq., at Wadsworth Garber Warnder Conrardy, P.C.,
represents the Debtor as legal counsel.
NOVA WILDCAT: Court OKs $48MM DIP Loan from PNC Bank
----------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Nova Wildcat Shur-line Holdings, Inc. and its debtor-affiliates to
use cash collateral and obtain post-petition financing, on a final
basis.
The Debtors obtained $48.5 million in post-petition financing and
other financial accommodations in accordance with the terms and
conditions of the Debtor-In-Possession Credit Agreement dated as of
February 2, 2023, by and among the Debtors, as borrowers and
guarantors, PNC Bank, National Association, in its capacity as
administrative agent and collateral agent, and the financial
institutions from time to time party thereto, as lenders. Up to
$10 million of the DIP Loans were made available following interim
approval of the Debtors' request.
The Debtors are required the comply with these milestones:
(i) The Debtors must file a motion under section 363 of the
Bankruptcy Code seeking authority to conduct a sale of
substantially all of the Debtors' assets and requesting to
establish bidding procedures for such a Comprehensive Sale on or
before February 1, 2023;
(ii) The Debtors must obtain an order of the Bankruptcy Court
authorizing the Debtors to conduce such a Comprehensive Sale and
establishing bidding procedures for such a sale on or before March
1, 2023;
(iii) The Debtors must conduct an auction in accordance with the
Bidding Procedures Order on or before March 20, 2023;
(iv) The Debtors must obtain an order of the Bankruptcy Court
to the successful bidder(s) at the Comprehensive Sale Auction on or
before March 24, 2023; or
(v) A Comprehensive Sale must be consummated in accordance
with the Comprehensive Sale Order on or before March 31, 2023.
Nova Wildcat Shur-Line, LLC, World And Main (Cranbury), LLC, and
World And Main (Air), LLC are borrowers; and Nova Wildcat Shur-Line
Holdings, Inc., HBC Holdings LLC, and HBC Chemical LLC, as
Pre-Petition Guarantors, under the Pre-Petition Credit Agreement
syndicated by PNC, as Pre-Petition Agent. The Pre-Petition Lenders
provided Term Loans, Revolving Loans, outstanding letters of credit
and other financial accommodations to, and for the account of, the
Pre-Petition Borrowers. As of the Petition Date, the aggregate
principal amount of outstanding Pre-Petition Obligations under the
Pre-Petition Secured Facility was approximately $49.691 million.
Certain of the Debtors are also borrowers under a separate
unsecured loan agreement with PNC, provided in connection with the
Paycheck Protection Program. The outstanding principal balance of
this loan as of the Petition Date is $2.13 million.
The Debtors require the use of cash collateral and DIP Facility to
continue their operations.
As adequate protection, the Pre-Petition Secured Parties are
granted:
(i) Adequate Protection Liens upon all of the DIP Collateral,
subordinate in priority only to the DIP Liens and any liens to
which the DIP Liens are Junior and to payment in full in cash of
the Carve-Out;
(ii) allowed superpriority administrative expense claims as
provided for in Section 507(b) of the Bankruptcy Code with recourse
to the DIP Collateral and subordinate to the payment in full in
cash of the Carve-Out and the DIP Superpriority Claims;
(iii) subject to the Carve-Out, payment of (x) all accrued and
unpaid interest and fees at default rate under the Pre-Petition
Credit Agreement and (y) all reasonable and documented fees,
out-of-pocket expenses and disbursements of the Pre-Petition
Secured Parties, upon entry of the Interim Order;
(iv) ongoing payment postpetition of the fees, expenses, and
disbursements payable to the Pre-Petition Secured Parties; and
(v) delivery of all required written financial reporting and
other periodic reporting that is required to be provided to the DIP
Agent or the DIP Lenders under the DIP Credit Agreement.
These events constitute an "Event of Default":
(1) The occurrence of any Event of Default as defined and
under the DIP Credit Agreement;
(2) The failure of the Debtors to obtain entry of a Final
Order on or before 25 days from the Petition Date, unless otherwise
agreed in writing by the Pre-Petition Agent and the DIP Agent;
(3) The Debtors seeking approval of a sale of all or a portion
of the Debtors' property that is not acceptable to Pre-Petition
Agent and DIP Agent; or
(4) The sale of all or substantially all of the Debtors'
Property without the order approving such sale providing for the
indefeasible payment and satisfaction in full in cash of the
Pre-Petition Obligations and the Post-Petition Obligations.
Among others, the DIP Lenders agree to carve out from their
Collateral and shall direct the Debtors to, but not later than the
close of business on (a) March 22, 2023, wire the sum of $325,000
to Archer & Greiner, P.C., proposed counsel to the Committee, and
(b) March 29, 2023, wire the sum of $325,000 to Archer, in each
case to be held by Archer in escrow which funds may be allocated
among the Committee's professionals at their discretion or used as
a winddown budget or as otherwise directed by the Committee,
including for the benefit of unsecured creditors, in its sole
discretion and consistent with its fiduciary duties.
The DIP Lenders agree to carve out from their Collateral the first
$100,000 of any net proceeds the DIP Agent is entitled to retain
from the Shur-Line Tariff Litigation (or upon sale of such claims)
after giving effect to any applicable sharing arrangement, which,
for the avoidance of doubt, shall be net of any fees (including
attorneys' fees), costs, and expenses incurred by the DIP Agent in
connection with the Shur-Line Tariff Litigation. The DIP Agent
shall have no obligation to pursue the Shur-Line Tariff Litigation
should the Debtors determine not to continue to pursue it and the
Debtors, and the DIP Agent after obtaining appropriate stay relief,
shall have the absolute right to prosecute, abandon or sell such
claims.
The Shur-Line Tariff Litigation means the complaint, dated
September 18, 2020, brought by World and Main (Cranbury), LLC, Nova
Wildcat Bulldog, LLC, Nova Wildcat, Shur-Line LLC and Craig
Elections Inc. against United States of America; Robert E.
Lighthizer, in his official capacity as United States Trade
Representative; Office Of The United States Trade Representative;
Mark A. Morgan, in his official capacity as Acting Commissioner of
U.S. Customs & Border Protection; U.S. Customs & Border Protection,
Court No. 20-1668, the proceeds of which constitute DIP Collateral.
If the DIP Agent is entitled to 85% of the net proceeds, then it
will carve out up to the first $100,000 of its 85% share of such
net proceeds.
The DIP Lenders agree to carve out from their Collateral 50% of the
net proceeds of (a) all Avoidance Actions, (b) the Debtors'
commercial tort claims other than Related Claims, and (c) any
claims against the Debtors' past or present directors and officers,
and (d) any claims against a Related Person. The funds may be
utilized by the Committee in its sole discretion, including for the
benefit of general unsecured creditors and consistent with its
fiduciary duties; provided, however, the Shared Claims shall not
include (x) any claims or causes of action against the DIP Agent,
DIP Lenders, Prepetition Agent or Prepetition Lenders or (y) any
Avoidance Actions that could be asserted against (i) the Debtors'
pre-petition vendors, suppliers, customers, and trade creditors,
(ii) the Partner (as defined in any court-approved stalking horse
agreement), and (iii) any Affiliates or Related Person.
"Related Person" means all past, present and future members,
managers, stockholders, controlling persons, financial consultants,
or investment bankers of the Debtors.
A copy of the order is available at https://bit.ly/3Jb6cRA from
PacerMonitor.com.
About Nova Wildcat Shur-line Holdings, Inc.
Nova Wildcat Shur-line Holdings, Inc. and affilaites sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Del. Case No. 23-10114) on January 29, 2023. In the petition signed
by Mark Rostagno, chief executive officer and director, the Debtor
disclosed up to $50 million in assets and up to $100 million in
liabilities.
Judge Craig T. Goldblatt oversees the case.
Jason D. Angelo, Esq., at Reed Smith, LLP, represents the Debtor as
legal counsel.
NUSTAR ENERGY: Fitch Affirms LongTerm IDR at 'BB-', Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) for NuStar Energy, L.P. (NuStar) and NuStar Logistics,
L.P.'s (Logistics) at 'BB-'. The Rating Outlook for both entities
is Stable. In addition, Logistics' senior unsecured ratings have
been affirmed at 'BB-'/'RR4' and junior subordinated notes at
'B'/'RR6', and NuStar's preferred equity rating has been affirmed
at 'B'/'RR6'.
The ratings reflect the company's diversified asset base, contract
structure with a mix of minimum volume commitment (MVC) contracts
and acreage dedications, as well as some structurally exclusive
assets, and strong relative leverage. Concerns include meaningful
volume exposure, beyond MVC contracted levels, and a small amount
of direct commodity price spread exposure. The Stable Outlook is
based on Fitch's view of supportive fundamentals underlying
NuStar's businesses including expectations for continued crude oil
production growth in the Permian Basin, further increased demand
for renewable fuels along the West Coast and resilient demand for
refined products across North America.
KEY RATING DRIVERS
A Stable Base: Roughly one third of NuStar's EBITDA is expected to
come from contracts where the company will receive payment
regardless of whether a product is moved or not. These contracts
are with high credit quality counterparties including roughly 63%
of 2022 revenue coming from investment grade rated entities and
approximately 13% coming from large private or international (not
rated) customers. This provides good visibility into a portion of
future expected cash flows. Additionally, roughly another third of
forecast EBITDA is expected to come from fixed-fee volume exposed
arrangements where NuStar has structural exclusivity.
The company operates the only pipelines that carry crude oil into,
and refined products out of, a number of Valero refineries. The
advantaged location and high capacity utilization of these
refineries offer more certainty to expected NuStar volumes,
compared to other fixed-fee fully volume exposed arrangements (i.e.
acreage dedications).
Some Volume and Price Exposure: NuStar generates roughly one third
of its EBITDA from fixed-fee volume exposed contracts and less than
5% from direct commodity price spread exposed activities. This
exposure provides less visibility into future cash flow. Outside of
the Fuels Marketing businesses (i.e. direct commodity price spread
exposure), expected volumes and throughput for NuStar are supported
by the relative attractiveness of its Permian crude oil pipeline
system. The Permian Basin continues to be the preeminent oil
producing region in the U.S., with breakeven costs that support
continued near-term development expansion.
The company's exposure to the Permian somewhat reduces near-term
volumetric risk, compared to issuers with exposure to relatively
less attractive basins. For Fuels Marketing, NuStar seeks to reduce
volatility through the use of hedging; however, this business
remains a source of variable cash flow for the company.
Renewables Momentum: NuStar benefits from an early mover advantage
in renewable fuels on the West Coast, increasing both the diversity
of its asset base and supporting near-to-medium-term growth
expectations. Additionally, the company has a unique franchise in
its large-scale ammonia pipeline system, to participate in the
growth of "blue" or "green" ammonia. Both businesses offer NuStar
growth opportunities outside of its traditional liquid petroleum
operations and an ability to participate directly in the sector's
move towards energy transition.
Strong Leverage and Liquidity Position: NuStar has posted strong
leverage for its current rating. Fitch forecasts leverage to remain
around 5.5x over the forecast period. This forecast is based on
improving EBITDA, driven by growth spending on the company's
Permian pipeline system and within its West Coast renewables fuel
businesses, among others. Increasing EBITDA is partially offset by
a rising debt balance.
NuStar has begun redeeming its outstanding Series D preferred
units. This series of preferred units represent the highest cost
instruments in NuStar's capital structure and, as such, redeeming
them with internally generated cash flow and revolver borrowings
have a positive impact on expected cash flow. However, the Series D
preferred units received 50% equity credit under Fitch's Corporate
Hybrids Treatment and Notching Criteria. Accordingly, the portion
of Series D preferred units redeemed with another form of debt is,
by its nature, a leveraging transaction. Additionally, Fitch no
longer ascribes equity credit to the remaining Series D preferred
units as Fitch no longer considers them a part of the long-term
capital structure of the company.
NuStar completed meaningful asset sales in 2021 and 2022, the
proceeds from which were used to reduce debt outstanding. In
addition, in early 2022 the company extended the maturity date on
its $1 billion unsecured revolving credit facility and $100 million
receivables financing facility from 2H23 to 1H25. These amendments
also included the replacement of LIBOR as a base interest rate with
SOFR.
NuStar has no debt maturities before 2025. As of Dec. 31, 2022,
NuStar had available liquidity of $789 million including $14
million of cash on hand and roughly $775 million available of its
revolving credit facility. Fitch considers NuStar's liquidity as
meaningfully improved over the past two years and expects liquidity
to remain adequate over the forecast period.
Rating Linkage: There is a parent subsidiary relationship between
NuStar and Logistics. Fitch determines NuStar's standalone credit
profile (SCP) based on consolidated metrics and considers
Logistics' SCP stronger than NuStar's. As such, Fitch has followed
the stronger subsidiary path. Legal ring fencing is open given the
cross guarantees between NuStar and Logistics and the minimal
limitations on flows between the entities. Access and control is
also open given NuStar's 100% ownership interest in Logistics. Due
to the aforementioned rating linkages, Fitch rates both entities on
a consolidated credit profile with the same IDRs.
DERIVATION SUMMARY
NuStar's closest rated peers are Buckeye Partners, L.P. (BB/Stable)
and Plains All American L.P. (PAA: BBB-/Positive). All three
feature operations that focus predominantly on the liquid petroleum
midstream value chain providing pipeline, terminalling and storage
services, among other activities. NuStar has smaller scale and less
geographic and operational diversity, compared to both Buckeye and
PAA.
Leverage at NuStar is expected to remain around 5.5x over the
forecast period. This compares to falling below 6.0x by 2024 at
Buckeye and below 3.5x by 2024 at PAA.
Buckeye's diverse asset base and larger relative size and scale
more than offset the expected leverage difference and accounts for
the one-notch difference between the IDRs of NuStar and Buckeye.
The combination of much larger size and scale and meaningfully
lower leverage account for the three-notch difference between the
IDRs of NuStar and PAA.
KEY ASSUMPTIONS
- Crude and refined product production consistent with the Fitch
price deck;
- Pipeline segment results show continued upward momentum over the
forecast period, driven in large part by volume growth on the
company's Permian pipeline system, as well as incremental growth
projects on the ammonia pipeline system;
- Storage segment results in 2023 to benefit from inflation-indexed
rate increases as well as growth capital spent in the West Coast US
franchise, largely offset by weakness at the St. James Terminal;
- 2023 Fuels Marketing segment results in-line with current
underlying commodity spread margins impacting, among other, the
company's butane blending business;
- Growth capex and maintenance capex for 2023 in line with
management guidance;
- Distributions to common unitholders grow annually at a low-single
digit rate;
- No meaningful asset sales or equity issuances;
- Series D preferred units are fully redeemed by the end of 2024;
- Base interest rates applicable to the company's outstanding
variable rate debt obligations reflects the Fitch Global Economic
Outlook.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- If EBITDA leverage were expected to be sustained below 5.5x;
- A meaningful increase in geographic or business line diversity
and/or a meaningful increase in the percentage of EBITDA coming
from long-term take or pay-type contracts, organically or through
an acquisition or acquisitions funded in a debt-friendly manner.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA leverage above 6.5x on a sustained basis;
- Significant increases in capital spending beyond Fitch's
expectations with negative consequences for the credit profile;
- An acquisition or acquisitions that meaningfully raise the
business risk of NuStar.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of Dec. 31, 2022, NuStar had total liquidity
of $789 million, which included $775 million undrawn on its $1.0
billion revolver, after accounting for $4.7 million in letters of
credit. Cash on the balance sheet was $14 million.
NuStar's ability to draw on the revolver is restricted by a
leverage covenant as defined in the bank agreement, which does not
allow leverage to be greater than 5.0x for covenant compliance.
Bank defined leverage was 3.79x, as of September 30, 2022, lower
than the 3.99x at YE 2021. The maturity on the revolver is April
2025.
Fitch expects NuStar to remain in compliance with its covenants
over the forecast period. Fitch notes that the covenant calculation
allows for the exclusion of junior subordinated notes ($402.5
million) and preferred equity Series A, B, C and D, totaling nearly
$1.2 billion. The covenant calculation allows for inclusion of pro
forma EBITDA for material projects and acquisitions, providing some
cushion in calculations.
NuStar also has various notes outstanding aggregating $2.5 billion.
The nearest unsecured maturity is the $600 million 5.75% notes due
Oct. 1, 2025.
The company also has a $100 million receivable financing agreement.
The borrowers are NuStar and NuStar Finance LLC (NuStar Finance), a
special purpose vehicle (SPV) and wholly-owned subsidiary of
NuStar. There was $80.9 million of borrowings outstanding under the
agreement as of Dec. 31, 2022. The securitization program extends
until Jan. 31, 2025.
ISSUER PROFILE
NuStar is a publicly traded master limited partnership that is
primarily focused on the transportation and storage of crude oil,
refined products and anhydrous ammonia with operations in United
States and Mexico.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch applies 50% equity credit to Logistics' junior subordinated
notes due 2043 and 50% equity credit to NuStar's Series A, B and C
preferred equity securities. Fitch does not apply any equity credit
to NuStar's Series D preferred equity units.
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
----------- ------ -------- -----
NuStar Logistics,
L.P. LT IDR BB- Affirmed BB-
senior
unsecured LT BB- Affirmed RR4 BB-
junior
subordinated LT B Affirmed RR6 B
NuStar Energy L.P. LT IDR BB- Affirmed BB-
preferred LT B Affirmed RR6 B
PACKERS HOLDINGS: Fitch Affirms IDR at 'B-', Outlook Stable
-----------------------------------------------------------
Fitch Ratings has affirmed Packers Holdings, LLC's (PSSI) Issuer
Default Rating (IDR) at 'B-' and the long-term rating on the
company's senior secured term loans and revolver at 'B'/'RR3'. The
Rating Outlook is Stable.
Fitch has removed the Rating Watch following the conclusion of the
U.S. Department of Labor investigation into PSSI. The outcome of
the investigation included $1.5 million in fines against PSSI for
violations under the Fair Labor Standards Act. Fitch expects the
outcome to have a negative but manageable impact on the company's
financial results in the near-term, but a 2024 rebound is likely as
its relationships with key customers and stakeholders appear
largely healthy.
The company's rating and Outlook reflect PSSI's strong cash flow
generation, leading market position as the largest contract
sanitation company serving the food processing industry in North
America, and the high degree of regulation within the markets in
which it operates. The Outlook also considers the company's
financial flexibility and Fitch's expectation the company may repay
a portion of the company's $250 million in mezzanine debt before
its 2025 maturity.
KEY RATING DRIVERS
Federal Investigated Concluded: Fitch placed PSSI on Rating Watch
Negative in November 2022 following the news of U.S. Department of
Labor investigation into PSSI for child labor violations under the
Fair Labor Standards Act. The Department of Labor concluded its
federal investigation into PSSI in February 2023 and found
violations at 13 meat processing facilities across eight states,
and fined the company $1.5 million. Fitch views the fines and
outcome as negative, but manageable.
According to management, PSSI strictly adheres to a zero-tolerance
policy on employing minors, will continue to cooperate with the
Department of Labor and is committed to improve compliance and
enforcement efforts going forward. Fitch expects the litigation
risk stemming from the federal investigation to be limited going
forward.
Long-Term Position Offsets Near-Term Headwinds: Fitch expects the
company's financial performance to be impacted somewhat in 2023 due
to the limited loss of individual contracts, but will improve over
the forecast horizon as the company wins new contracts, limits
customer attrition, passes through inflation costs to customers,
and demonstrates adherence to stricter compliance practices. PSSI
lost the contracts at the two JBS USA's facilities where labor
violations were found and could potentially lose some further
contracts following the investigation. PSSI's relationships with
its customers like JBS USA and other stakeholders may need to
rehabilitated on the local level but Fitch believes they remain
largely healthy overall.
Fitch believes the risk of contract loss and attrition is partially
mitigated by its market position, scale, and capabilities. As the
largest contract sanitation company for the food processing
industry in North America, PSSI has a limited set of competitors
that can fully service large plants or quickly relocate resources
to address customer needs. The industrial food preparation segment
is highly fragmented across the U.S. and Canada with a large
concentration of closely held regional players; however, PSSI is
approximately three times the size of its closest competitor, The
Vincent Group-QSI, based on facility number.
Flexibility Mitigates Elevated Leverage Above 7x: Fitch expects
PSSI's leverage will remain elevated but will improve to
around7.5x, Fitch's negative sensitivity, in 2024. PSSI's
consistent profitability, strong FCF generation and
mission-critical nature help mitigate the company's temporarily
high leverage. PSSI's maturity schedule is relatively favorable
with $1.2 billion of the company's $1.5 billion total debt
comprised of senior secured term loans due in March 2028.
The company also has $250 million in mezzanine debt due in December
2025 but Fitch expects the company to a portion of the debt due
before its maturity. Separately, interest rate risk is somewhat
mitigated by PSSI's interest rate hedging program with almost half
of the company's total debt hedged against interest rates.
Customer Relationships: Fitch considers PSSI's customer
concentration one of its more material concerns, particularly in
light of the recently concluded investigation. Fitch estimates the
company's top-five customers comprise approximately one-half of the
company's revenue. The loss of any of these top customers would
significantly affect the company's financial performance and,
consequentially, its credit profile.
The concentration is mitigated by the fact that these relationships
are spread out across dozens of unique plants that have discrete
plant managers, each responsible for plant performance and
regulatory compliance, who decide to employ PSSI's services.
Additionally, contracts are typically negotiated on a
plant-by-plant basis, rather than on a corporate level, although
corporate relationships may affect broader wins, renewals and
losses.
Necessity of Service: Fitch believes the company's ratings are
supported by its clear and strong position and regulatory barriers.
All U.S. protein plants are USDA-inspected daily prior to opening.
Protein plants must pass these daily inspections or be subject to
fines, citations and production delays with costs running in the
tens-of-thousands of dollars per hour. In addition, non-protein
plants are regularly reviewed by the FDA with end customers such as
Walmart, McDonalds and Subway driving higher sanitation standards.
DERIVATION SUMMARY
PSSI compares favorably to its industry peers in terms of cash flow
generation, strategy and profitability. In particular, Fitch
considers the company's stable FCF margins to be exceptional
compared with similarly rated companies. Fitch also considers PSSI
to be differentiated from its other 'B-' rated peers due to its
strong market position within its segment. Many other companies in
the 'B' category operate in highly fragmented markets with minimal
competitive advantage.
The company's rating is somewhat limited due to its leverage, which
is high compared to similarly rated companies. The propensity for
shareholder-focused leveraging transactions was also a rating
consideration. There are no parent/subsidiary, Country Ceiling or
operating environment influences or constraints on this rating.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Sales to decline in 2023 as the company experiences some
contract losses; mid-single-digit annual growth over the
next few years beyond 2023;
- EBITDA margins contract near term but return historical
levels over time;
- Capital intensity normalizes to 0.5% of sales over the
forecast period;
- Acquisitions, sponsor dividends and dividend recapitalization
transactions are limited near term as the company deleverages
below 7.5x;
- Limited litigation risk stemming from the federal investigation.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Increased confidence of limited commercial and litigation risk
subsequent to the investigation and demonstrated continued
adherence to strict compliance standards;
- Shift to a more conservative financial policy, leading to an
EBITDA
leverage sustained below 5.5x;
- EBITDA to interest paid sustained above 2.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Loss of a major customer or group of major customers results in
deterioration of financial and competitive positions;
- EBITDA to interest paid sustained below 1.5x and/or EBITDA
leverage
consistently above 7.5x, heightened refinancing risk;
- Heightened liquidity risks, including credit facility
availability
below 50% or sustained negative FCF.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Fitch considers PSSI's liquidity adequate to
maintain operations given the company's cash, revolver and positive
FCF generation, which Fitch expects to continue over the rating
horizon. The company has a relatively nimble operating structure
and minimal annual maintenance capex. Fitch does not consider any
of the company's cash to be restricted, and Fitch does not believe
the company requires a material cash balance to sustain operations,
given its lean operating structure and minimal fixed costs. Fitch
considers the company's capital structure and maturity schedule to
be relatively favorable as the company's capital structure consists
of $1.2 billion in senior secured term loans due in 2028 and a $250
in mezzanine debt due in December 2025.
ISSUER PROFILE
Packers Holdings (PSSI) is North America's largest and only
nationwide provider of mission-critical outsourced cleaning and
sanitation services to the growing food processing industry. PSSI
serves a broad customer base of protein and non-protein (e.g.,
bakery, produce, snack food) processing plants.
ESG CONSIDERATIONS
Packers Holdings, LLC has an ESG Relevance Score of '4' for Labor
Relations & Practices due to the recent Department of Labor
investigation that may lead to a potential loss of key customers,
which has a negative impact on the credit profile.
Packers Holdings, LLC has an ESG Relevance Score of '4' for
Management Strategy due to concerns on inadequate risk governance
and controls or possibly misaligned incentives contributing to
alleged labor violations, which has a negative impact on the credit
profile.
Packers Holdings, LLC has an ESG Relevance Score of '4' for
Governance Structure due to its exposure to board independence
risk, due to sponsor ownership and the potential for aggressive
shareholder distributions which also has a negative impact on the
credit profile.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Packers Holdings, LLC
LT IDR B- Affirmed B-
senior secured LT B Affirmed RR3 B
PARTY CITY: Deadline to File Claims Set for April 3
---------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas set
April 3, 2023, at 5:00 p.m. (Prevailing Eastern Time), as the last
date and time for all entities including, individuals,
partnerships, estates, and trusts to file proofs of claim against
Party City Holdco Inc. and its debtor-affiliates.
The Court also set July 17, 2023, at 5:00 p.m. (Prevailing Eastern
Time) as the deadline for governmental units to file their claims
against the Debtors.
Each proof of claim must be filed, including supporting
information, by either (i) electronic submission through Public
Access to Court Electronic Records (PACER) at
http://ecf.txsb.uscourts.gov,(ii) electronic submission using the
interface available on the claims and noticing agent's website at
https://cases.ra.kroll.com/CHI, or (iii) if submitted through
non-electronic means, by U.S. mail or other hand delivery system,
so as to be actually received by the claims and noticing agent on
or before the claims bar date or the governmental bar date, or any
other applicable bar date, at: If by first-class mail, and hand
delivery mail, or overnight mail:
Party City Holdco Inc.
Claims Processing Center
c/o Kroll Restructuring Administration LLC
850 3rd Avenue, Suite 412
Brooklyn, NY 11232
If you have any questions regarding the claims process or you wish
to obtain a copy of the bar date notice, a proof of claim form or
related documents you may do so by (i) calling the Debtors'
restructuring hotline at (888) 905-0493 (Toll Free US) or (646)
440-4580 (Non-US Parties) or (ii) visiting the Debtors'
restructuring website at: https://cases.ra.kroll/PCHI.
About Party City Holdco
Party City Holdco Inc. (NYSE: PRTY) is the global leader in the
celebrations industry, with its offerings spanning more than 70
countries around the world. It is also the largest designer,
manufacturer, distributor, and retailer of party goods in North
America. Party City Holdco had 761 company-owned stores as of
September 2022. It is headquartered in Woodcliff Lake, N.J. with
additional locations throughout the Americas and Asia.
On Jan. 17, 2023, Party City Holdco and its domestic subsidiaries
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D. Texas Lead Case No. 23-90005). Party City Holdco
disclosed total assets of $2,869,248,000 against total debt of
$3,022,960,000 as of Sept. 30, 2022.
Judge David R. Jones oversees the cases.
The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP
and Porter Hedges, LLP as legal counsels; Moelis & Company, LLC as
investment banker; A&G Realty Partners as real estate consultant;
and AlixPartners, LLP, as restructuring advisor. David Orlofsky,
managing director at AlixPartners, serves as the Debtors' chief
restructuring officer. Kroll Restructuring Administration, LLC is
the claims, noticing and solicitation agent.
Davis Polk & Wardwell, LLP and Lazard serve as legal counsel and
investment banker, respectively, to the ad hoc group of first lien
holders.
PHASE ONE SERVICES: Files Emergency Bid to Use Cash Collateral
--------------------------------------------------------------
Phase One Services LLC asks the U.S. Bankruptcy Court for the
Southern District of Texas, Houston Division, for authority to use
cash collateral to pay expenses as set forth in the budget and any
other unforeseeable expenses that may arise and pose a threat to
the Debtor's continued operations.
A search in the Texas Secretary of State shows that allegedly
secured positions are held by (1) First Corp Solutions (believed to
be TBS Factoring); (2) U.S. Small Business Administration; (3)
Corporation Service Company (Vehicle Lien)(Believed to be Dakota
Financial), (4) Navitas Credit (Vehicle Lien), (5) Corporation
Service Company (Unknown Creditor), (6) The LCF Group, (7) Plexe
LLC, and (8) Cashable LLC.
Emergency consideration is requested because the Debtor depends on
the use of cash collateral for payroll, truck maintenance,
supplies, rent, fueland other general operating expenses. If the
Debtor is unable to use cash collateral, it will be forced to cease
operations.
The Debtor produces revenue from its transportation business and
intends to use the revenue to pay the budgeted expenses.
A copy of the motion is available at https://bit.ly/3JqZHuY from
PacerMonitor.com.
A copy of the budget is available at https://bit.ly/3l0RZhY from
PacerMonitor.com.
The Debtor projects $250,000 in total cash receipts and $226,698 in
cash disbursements for 30 days.
About Phase One Services LLC
Phase One Services LLC sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. S. D. Tex. Case No. 23-30835) on March
8, 2023. In the petition signed by Ashley Williams, president, the
Debtor disclosed up to $1 million in both assets and liabilities.
Robert C Lane, Esq., at The Lane Law Firm, represents the Debtor as
legal counsel.
PLATINUM GROUP: Shareholders Approve Three Proposals
----------------------------------------------------
Platinum Group Metals Ltd. held its Annual General Meeting in
Vancouver, British Columbia, at which the stockholders elected
management's six nominees for directors, namely: Diana Walters,
Frank Hallam, Timothy Marlow, John Copelyn, Stuart Harshaw, and
Mpho Makwana.
The re-appointment of PricewaterhouseCoopers LLP as auditors of the
Company for the ensuing year at a remuneration to be fixed by the
directors was voted in favor by 99.64% of the Shareholders.
The shareholders also voted 95.48% in favor of an ordinary
resolution to re-approve the Share Compensation Plan until Feb. 28,
2026.
About Platinum Group Metals
Headquartered in British Columbia, Canada, Platinum Group Metals
Ltd. -- http://www.platinumgroupmetals.net-- is a platinum and
palladium focused exploration, development and operating company
conducting work primarily on mineral properties it has staked or
acquired by way of option agreements or applications in the
Republic of South Africa and in Canada.
Platinum Group reported a net loss of US$8.24 million for the year
ended Aug. 31, 2022, a net loss of US$13.06 million for the year
ended Aug. 31, 2021, a net loss of US$7.13 million for the year
ended Aug. 31, 2020, a loss of $16.78 million for the year ended
Aug. 31, 2019, and a loss of $41.02 million for the year ended Aug.
31, 2018.
* * *
This concludes the Troubled Company Reporter's coverage of Platinum
Group Metals Ltd. until facts and circumstances, if any, emerge
that demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
PLUS THERAPEUTICS: Closes Subscription Agreement With Board Chair
-----------------------------------------------------------------
Plus Therapeutics, Inc. entered into a Subscription and Investment
Representation Agreement with Richard J. Hawkins, the Chairman of
the board of directors of the Company, who is an accredited
investor, pursuant to which the Company agreed to issue and sell
one share of the Company's Series F Preferred Stock, par value
$0.001 per share, to the Purchaser for $1,000 in cash. The sale
closed on March 3, 2023.
The Subscription Agreement contains customary representations and
warranties and certain indemnification rights and obligations of
the parties.
On March 3, 2023, the Company filed a certificate of designation
with the Secretary of State of the State of Delaware, effective as
of the time of filing, designating the rights, preferences,
privileges and restrictions of the Preferred Stock. The
Certificate of Designation provides that the Preferred Stock will
have 50,000,000 votes per share of Preferred Stock and will vote
together with the Company's common stock, $0.001 par value as a
single class exclusively with respect to any proposal to amend the
Company's Amended and Restated Certificate of Incorporation to
effect a reverse stock split of the Common Stock. The Preferred
Stock will be voted, without action by the holder, on any such
proposal in the same proportion as shares of Common Stock are voted
on such proposal. The Preferred Stock otherwise has no voting
rights except as otherwise required by the General Corporation Law
of the State of Delaware.
The Preferred Stock is not convertible into, or exchangeable for,
shares of any other class or series of stock or other securities of
the Company. The Preferred Stock has no rights with respect to any
distribution of assets of the Company, including upon a
liquidation, bankruptcy, reorganization, merger, acquisition, sale,
dissolution or winding up of the Company, whether voluntarily or
involuntarily. The holder of the Preferred Stock will not be
entitled to receive dividends of any kind.
The outstanding share of Preferred Stock shall be redeemed in
whole, but not in part, at any time: (i) if such redemption is
approved by the board of directors in its sole discretion or (ii)
automatically and effective upon the approval by the Company's
stockholders of a Reverse Stock Split. Upon such redemption, the
holder of the Preferred Stock will receive consideration of $1,000
in cash.
About Plus Therapeutics
Headquartered in Austin, Texas, Plus Therapeutics, Inc. --
http://www.plustherapeutics.com-- is a clinical-stage
pharmaceutical company focused on the discovery, development, and
manufacturing scale up of complex and innovative treatments for
patients battling cancer and other life-threatening diseases.
Plus Therapeutics reported a net loss of $20.27 million for the
year ended Dec. 31, 2022, a net loss of $13.40 million for the year
ended Dec. 31, 2021, a net loss of $8.24 million for the year ended
Dec. 31, 2020, a net loss of $10.89 million for the year ended Dec.
31, 2019, a net loss of $12.63 million for the year ended Dec. 31,
2018, and a net loss of $22.68 million for the year ended Dec. 31,
2017. As of Dec. 31, 2022, the Company had $23.86 million in total
assets, $17.42 million in total liabilities, and $6.44 million in
total stockholders' equity.
* * *
This concludes the Troubled Company Reporter's coverage of Plus
Therapeutics, Inc. until facts and circumstances, if any, emerge
that demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
PUERTO RICO: PREPA's Plan Heads for Creditor Vote
-------------------------------------------------
Rick Archer of Law360 reports that Puerto Rico utility, PREPA,
reorganization plan is heading for creditor vote.
A New York federal judge sent a $4.3 billion reorganization plan
for the Puerto Rico Electric Power Authority out for a creditor
vote Tuesday, February 28, 2023, overruling arguments from
bondholders that the plan stands no chance of confirmation.
PREPA's PLAN
As reported in the TCR, the Financial Oversight and Management
Board for Puerto Rico in December 2022 filed its proposed Plan of
Adjustment to restructure more than $10 billion of debt and other
claims against the Puerto Rico Electric Power Authority (PREPA).
The Plan, filed with the U.S. District Court for the District of
Puerto Rico, proposes to cut PREPA's
unsustainable debt by 48%, to approximately $5.4 billion, and
should provide the financial stability
necessary to invest in a modern, resilient, and reliable energy
system for Puerto Rico.
Two classes of creditors agreed to support the Plan, which should
satisfy the legal requirement that
at least one class of impaired claims must accept the Plan to allow
the Court to make the Plan binding
against all other classes of claims.
There is currently no agreement with the holders and guarantors of
$7.6 billion of other PREPA bonds. The Plan allows those
bondholders to join a settlement class with a guaranteed minimum
distribution, or to join a class whose distribution will depend on
the outcome of litigation the Oversight Board resumed in September
to limit bondholders' lien on PREPA's revenue and to limit severely
their allowable claim on which they may be paid distributions.
The class for bondholders desiring to settle proposes a minimum 50%
recovery for those bondholders subject to additional potentially
large incremental payments if the bondholders desiring to litigate
do not prevail against PREPA. The class for bondholders desiring to
litigate will receive distributions based on the Court’s
determinations of two principal issues. The Oversight Board will
continue to negotiate with creditors in the hopes of avoiding
expensive and time-consuming litigation.
The Plan also proposes to distribute to settling bondholders a
contingent value instrument (CVI). If PREPA repays its new bonds
sooner than the expected 35 years, bondholders would receive the
revenue from the connection fee and the volumetric charge through
year 35 if PREPA outperforms the projections of the certified PREPA
Fiscal Plan.
Under the Plan, for most creditors PREPA would issue new bonds with
a 6% annual interest rate (coupon), paid by a hybrid charge
consisting of a flat connection fee and a volumetric charge that
would be added to PREPA customers' electricity bills based on their
electricity usage. The Oversight Board has not finalized how the
charge will be implemented and impact individual households and
businesses, but the average charge under the filed Plan would be
roughly half of what PREPA's existing debt would cost customers for
the duration of the term of the bonds.
The Plan is consistent with the support agreement the Oversight
Board reached with Fuel Line Lenders to reduce their claim of more
than $700 million by 16% and with the support agreement with Vitol
Inc. Fuel provider Vitol would receive 50% of what general
unsecured claimholders ultimately receive. These two classes of
claims agreed in advance to the distributions proposed in the
Plan.
The estimated $800 million General Unsecured Claims will receive
distributions based on the outcome of the bondholder litigation.
Further, the Plan contemplates PREPA issuing to the Commonwealth
$400 million in bonds in exchange for cash to fund payments of
administrative expenses, some of which might be reimbursed by the
Federal Emergency Management Agency (FEMA).
The Plan proposes to treat PREPA's retirees the same as the
Commonwealth’s retirees were treated
under the Commonwealth's Title III Plan of Adjustment. Although
PREPA’s pension plan is gravely underfunded, retirees will be
paid in full for all benefits earned through the effective date of
the Plan.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States. The chief of state is the President of the
United States of America. The head of government is an elected
Governor. There are two legislative chambers: the House of
Representatives, 51 seats, and the Senate, 27 seats. The
governor-elect is Ricardo Antonio "Ricky" Rossello Nevares, the son
of former governor Pedro Rossello.
In 2016, the U.S. Congress passed PROMESA, which, among other
things, created the Financial Oversight and Management Board and
imposed an automatic stay on creditor lawsuits against the
government, which expired May 1, 2017.
The members of the oversight board are: (i) Andrew G. Biggs, (ii)
Jose B. Carrion III, (iii) Carlos M. Garcia, (iv) Arthur J.
Gonzalez, (v) Jose R. Gonzalez, (vi) Ana. J. Matosantos, and (vii)
David A. Skeel Jr.
On May 3, 2017, the Commonwealth of Puerto Rico filed a petition
for relief under Title III of the Puerto Rico Oversight,
Management, and Economic Stability Act ("PROMESA"). The case is
pending in the United States District Court for the District of
Puerto Rico under case number 17-cv-01578. A copy of Puerto Rico's
PROMESA petition is available at
http://bankrupt.com/misc/17-01578-00001.pdf
On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation
(COFINA) commenced a case under Title III of PROMESA (D.P.R. Case
No. 17-01599). Joint administration has been sought for the Title
III cases.
On May 21, 2017, two more agencies -- Employees Retirement System
of the Government of the Commonwealth of Puerto Rico and Puerto
Rico Highways and Transportation Authority (Case Nos. 17-01685 and
17-01686) -- commenced Title III cases.
U.S. Chief Justice John Roberts named U.S. District Judge Laura
Taylor Swain to preside over the Title III cases.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose LLP; and Hermann D. Bauer, Esq.,
at O'Neill & Borges LLC are onboard as attorneys.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at:
https://cases.primeclerk.com/puertorico
Jones Day is serving as counsel to certain ERS bondholders.
Paul Weiss is counsel to the Ad Hoc Group of Puerto Rico General
Obligation Bondholders.
PWM PROPERTY: SL Hasn't Received A Dime of $185 Mil. Judgment
-------------------------------------------------------------
An SL Green entity says a New York federal judge should deny HNA
Group's bid to sidestep a $185 million judgment it owes the office
space giant."
In its memorandum of law in opposition of the FRCP Rule 60(B)
motion of HNA Group (International) Company Limited, 245 Park
Member LLC says HNAI's motion seeking relief from the $185 million
judgment the U.S. District Court for the Southern District of New
York entered on July 27, 2022 (the "Judgment") is based on
irrelevant, misleading, and untrue statements, and defenses HNAI
expressly waived, to create the false impression Petitioner has
been made whole.
According to SL Green Realty Corp.'s 245 Park Member LLC
("Petitioner"), "HNAI has not paid Petitioner a dime of the
Judgment. There is no factual or legal basis to relieve HNAI from
the Judgment, and the Motion should be denied."
To recall, HNA's United States affiliates -- HNA 245 Park Ave JV
LLC ("HNA JV Member"), 245 Park JV LLC (the "Company") and certain
subsidiaries specially created to help finance the acquisition
through mezzanine loans (collectively "HNA USA") -- acquired the
Property in May 2017 for $2.21 billion. HNA USA initially owned
the Property alone. Shortly after HNA USA acquired the Property,
the Chinese parent entity, HNA Group, required significant capital.
As HNA's global liquidity needs became more acute, it turned to
SL Green Realty Corp. ("SLG") to make that investment, given that
SLG is New York City's largest owner of commercial office space, is
a well-regarded Class-A property manager, and is an experienced
investor in assets similar to the Property with the financial
resources to fund the investment quickly. On June 22, 2018, SLG,
through 245 Park Member LLC, made a preferred equity investment of
$148 million in exchange for an approximately 49% interest in the
Company.
HNAI's failure to pay the full Redemption Amount upon demand led
Petitioner to file a demand for JAMS arbitration against HNAI on
Dec. 21, 2021. Following substantial briefing and argument,
Justice Hall awarded Petitioner $185,412,764 (the "Arbitration
Award"), comprising the Redemption Amount that accrued through June
30, 2022 as well as legal fees and costs. On July 27, 2022, the
Court granted Petitioner's motion to confirm the Arbitration Award
and denied HNAI's motion to vacate it, resulting in the Judgment.
The Judgment arises out of an ironclad bad boy guaranty
("Guaranty") in which HNAI guaranteed -- as an express inducement
for Petitioner to provide HNAI's parent company $148 million in
desperately needed capital -- to pay Petitioner "unconditionally,
irrevocably and absolutely" the "complete payment in full (and not
merely the collectability)" of all of the contractually defined
"Guaranteed Obligations." HNAI also acknowledged and agreed in the
Guaranty that the Guaranteed Obligations are not limited "to any
specific liability amount" and terminate only upon "payment and
performance of the Guaranteed Obligations." Among the Guaranteed
Obligations is payment of the "full amount of the Redemption
Amount." The Redemption Amount—a defined term in the underlying
joint venture agreement between Petitioner and HNAI's subsidiary
(the "JV Agreement") -- is the sum of Petitioner’s $148 million
investment plus an agreed-to rate of return that accrues until the
joint venture pays the total accrued amount in full. Petitioner's
rights under the JV Agreement extinguish only when it receives
payment "in full" of the Redemption Amount. Moreover, as part of
HNAI's unconditional, irrevocable, and absolute payment obligation,
HNAI expressly waived any argument or defense based on Petitioner's
acquisition of assets in a bankruptcy.
The Petitioner notes that HNAI's arguments as to why it should be
relieved from the entire Judgment would eviscerate these
bargained-for rights under the Guaranty. HNAI's two-pronged
argument is doubly wrong:
* First, HNAI incorrectly contends that by diligently obtaining
a $185 million arbitration award in April 2022 (the "Arbitration
Award") -- which comprises, among other things, the accrual of the
Redemption Amount through June 30, 2022—Petitioner somehow
irrevocably waived its contractual right in the Guaranty for a
payment in full of all of the Guaranteed Obligations and its
contractual protection that the Guaranteed Obligations are not
limited "to any specific liability amount."
* Second, HNA incorrectly contends that because Petitioner
acquired, in September 2022, commercial real estate located at 245
Park Avenue in Manhattan ("the Property"), with a purported value
of $2 billion, in a bankruptcy of HNAI's affiliates (the "HNA
Debtors") in the United States Bankruptcy Court in the District of
Delaware (the "Bankruptcy"), Petitioner has been made whole on the
Judgment.
245 Park Member asserts that as an initial matter, the Motion
should be denied because it was not filed within a reasonable time
after the event that is the basis for the relief—i.e.,
Petitioner's September 9, 2022 Bankruptcy acquisition.
Notwithstanding that Petitioner was taking significant (and
expensive) judgment enforcement steps as early as August 2022, HNAI
delayed five months before filing the Motion. Courts in this
circuit "typically consider a delay of approximately three months
significant." William v. City of New York, 2018 WL 11219952, at *2
(S.D.N.Y. July 23, 2018), aff'd, 771 F. App’x 94 (2d Cir. 2019).
The filing of the Motion was unreasonably late—indeed, it was
purely tactical—and can be denied on this basis alone.
The Motion also lacks merit, 245 Park Member tells the Court.
According to 245 Park Member, both of HNAI's arguments as to why it
should be relieved from the entire Judgment are completely contrary
to the unambiguous terms of the Guaranty and JV Agreement,
Petitioner's purchase and sale contract for the asset in the
Bankruptcy (which the Honorable Mary F. Walrath confirmed in the
Bankruptcy), and common sense itself:
* First, the Arbitration Award did not cause the JV Agreement or
the Guaranty to "expire." The JV Agreement "expires" only upon
payment of a "Redemption in Full" and there has been no such
payment. The Guaranty only "expires" upon payment of all the
"Guaranteed Obligations," and there has been no such payment. JAMS
arbitrator, the Honorable L. Priscilla Hall, a former Associate
Justice of the State of New York Appellate Division, Second
Judicial Department, ruled only that HNAI breached the Guaranty and
that HNAI owed Petitioner the Guaranteed Obligations that had
accrued through June 30, 2022. Justice Hall did not relieve HNAI
from its contractual guaranty to pay Petitioner the full Redemption
Amount. Likewise, the Arbitration Award could not possibly have
capped HNAI’s obligations under the Guaranty to the specific
liability amount of $185 million because the Guaranty unambiguously
provides otherwise.
* Second, Petitioner's purchase of an asset in connection with
the Bankruptcy did not relieve HNAI of the Judgment or make
Petitioner whole. Whatever the value of the asset, the fact is
that Petitioner and HNA Debtors agreed in the purchase and sale
agreement that Petitioner's acquisition would reduce the value of
Petitioner's preferred equity interest by only $40 million, not
$185 million. HNAI’s attempt to recast the deal other than as
reflected in the sale agreement is an improper collateral attack on
Judge Walrath's order approving the sale on those terms.
The case is 245 Park Member LLC v. HNA Group (International)
Company Limited, Case No. 1:22-cv-05136, S.D.N.Y.
Counsel to 245 Park Member LLC:
KASOWITZ BENSON TORRES LLP
Mark P. Ressler
Paul M. O'Connor III
Henry B. Brownstein
1633 Broadway
New York, New York 10019
About PWM Property Management
PWM Property Management LLC, et al., are primarily engaged in
renting and leasing real estate properties. They own two premium
office buildings, namely 245 Park Avenue in New York City, a
prominent commercial real estate assets in Manhattan's prestigious
Park Avenue office corridor, and 181 West Madison Street in
Chicago, Illinois.
On Oct. 31, 2021, PWM Property Management LLC and its affiliates
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
21-11445). PWM estimated assets and liabilities of $1 billion to
$10 billion as of the bankruptcy filing.
The cases are pending before the Honorable Judge Mary F. Walrath
and are being jointly administered for procedural purposes under
Case No. 21-11445.
The Debtors tapped White & Case LLP as restructuring counsel; Young
Conaway Stargatt & Taylor, LLP as local counsel; and M3 Advisory
Partners, LP, as restructuring advisor. Omni Agent Solutions is
the claims agent.
Q BIOMED: Delays Filing of Annual Report
----------------------------------------
Q BioMed Inc. has filed a Form 12b-25 with the Securities and
Exchange Commission with respect to its Annual Report on Form 10-K
for the year ended Nov. 30, 2022.
The Company has not completed its Annual Report on Form 10-K due to
administrative delays.
About Q BioMed Inc.
Q BioMed Inc. -- http://www.QBioMed.com-- is a biotech
acceleration and commercial stage company. The Company is focused
on licensing and acquiring undervalued biomedical assets in the
healthcare sector. Q BioMed is dedicated to providing these target
assets the strategic resources, developmental support, and
expansion capital needed to ensure they meet their developmental
potential, enabling them to provide products to patients in need.
Q Biomed reported a net loss of $8.24 million for the year ended
Nov. 30, 2021, compared a net loss of $13.49 million for the year
ended Nov. 30, 2020. As of Aug. 31, 2022, the Company had $498,034
in total assets, $7.73 million in total liabilities, and a total
stockholders' deficit of $7.23 million.
In its Quarterly Report filed on November 3, 2022, Q Biomed stated:
"We depend upon our ability, and will continue to attempt, to
secure equity and/or debt financing. We cannot be certain that
additional funding will be available on acceptable terms, or at
all. Our management determined that there was substantial doubt
about our ability to continue as a going concern within one year
after the condensed consolidated financial statements were issued,
and management's concerns about our ability to continue as a going
concern within the year following this report persist."
RAPTOR AIRCRAFT: S&P Affirms CCC (sf) Rating on Class C Deals
-------------------------------------------------------------
S&P Global Ratings lowered five ratings and affirmed one rating
from two aircraft ABS transactions. Four classes from these two
transactions that were previously placed on CreditWatch with
negative implications on Feb. 15, 2023, were also removed from
CreditWatch.
The downgrades primarily reflect the respective notes' insufficient
credit enhancement at their previous rating levels, based on its
assumptions and the continued pressure on aircraft lease
collections in the aftermath of the COVID-19 pandemic.
The COVID-19 pandemic and resulting collapse in world travel
negatively affected the liquidity and long-term credit of airlines
whose lease payments partially secure the transactions. S&P said,
"We believe the credit quality of the two reviewed aircraft ABS
transactions has declined due to health and safety fears related to
the COVID-19 virus, despite the current strong recovery in the
airline industry. We also believe this will continue to negatively
impact the cash flows available to the issuers."
S&P also considered the following general trends in its rating
analyses:
-- Improvements in air travel and the resurgence in values of some
aircraft types from the pandemic lows (however, the pandemic's
prolonged negative impact on global travel and the resulting stress
continue to constrain some airlines' liquidity and ability to make
timely lease payments);
-- The transactions' declining debt service coverage ratios due to
lower collections because of payment arrearages, lease
restructurings, and power-by-the-hour (PBH) arrangements, and the
resulting delay in repayment of scheduled principal payment
amounts;
-- The large number of aircraft and engines currently off-lease or
with near-term lease expirations, uncertainties over the timing and
pricing for the re-lease transactions (lease rates for renewals and
extensions are generally lower than existing, pre-COVID-19,
leases), and/or disposition values (the proceeds are generally
lower than the depreciated base values); and
-- The slow pace of principal repayments and the resulting
accumulation of unpaid scheduled principal payment amounts on the
notes.
Assumptions For The Review
Collateral value
S&P said, "We typically use the lower of the mean and median value
(LMM value) of the half-life base and market values from three
appraisers (excluding appraisals that are 25% above the average of
other valuations), as the starting point in our analysis. Using
this LMM value, we applied our aircraft-specific depreciation
assumptions from the date of the appraisal to the first payment
date. To the extent half-life market values were not available, we
applied 50% of our 'B' (base-case) lease rate decline stress--in
addition to our aircraft-specific depreciation assumptions from the
appraisal date to the first payment date--to adjust the starting
portfolio value for our analysis.
"The application of our 'B' lease rate decline stress to values is
intended to address downward pressure on market values since the
onset of the pandemic."
Aircraft-on-ground (AOG) times
S&P made a criteria exception that extends the AOG downtime during
the first modeled recession and differentiates the downtime for
wide- and narrow-body aircraft because we believe wide-body
aircraft are more vulnerable to lower demand.
Table 1
Aircraft On Ground
IN MONTHS
BEFORE APPLICATION OF AFTER APPLICATION OF
CRITERIA EXCEPTION CRITERIA EXCEPTION
STRESS ALL AOG RECESSION RECESSION RECESSIONS
ONE NB AOG ONE WB AOG TWO AND THREE
--ALL AOG
'A' 10 12 15 10
'BBB' 9 11 14 9
'BB' 8 10 13 8
'B' 7 9 12 7
AOG--Aircraft on ground.
NB--Narrow-body.
WB--Wide-body.
Default pattern
S&P applied defaults evenly over a four-year period during the
first recession and assume defaults will occur in a 30%/40%/20%/10%
pattern in the subsequent recessions.
Useful life
S&P said, "We generally assume a 22-year useful life for all
aircraft, except for portfolios that have a weighted average age of
less than eight years (by value), where we assume a 25-year useful
life for all aircraft. For aircraft where our useful life
assumption would result in a sale prior to the contracted end of
lease, we extended the useful life to the expiration of the lease
term. Additionally, to the extent we received a fleet plan from the
lessors indicating their future strategy (re-lease or sale) upon
current lease expiry, we adjusted the useful life accordingly."
Transaction Summary
Tables 2 and 3 show the transactions' key portfolio and liability
statistics.
Table 2
Portfolio
KDAC AVIATION RAPTOR AIRCRAFT
FINANCE LTD. FINANCE I LTD.
No. of aircraft/engines/airframe 25/8/1 16/0/0
Current off-lease (no.)(i) 1 aircraft/
7 engines/1 airframe 0
Off-lease + near-term lease
expirations (no.)(i)(ii) 6 aircraft/
7 engines/1 airframe 2 aircraft
LMM at appraisal (mil. $) 486.1 472.1
LMM as modeled (mil. $)(iii) 424.1 (iv) 462.2
DSCR (x) 0.27 0.28
(i)Includes aircraft that are specifically off-lease or had their
lease expired prior to February 2023.
(ii)Near-term expirations are leases that are scheduled to expire
on or before February 2024.
(iii)Values are calculated as LMM reduced further by
aircraft-specific depreciation rate (excluding appraisals that are
25% above the average of other valuations).
(iv)Values calculated in (iii) minus S&P Global Ratings' starting
value haircut (50% of 'B' lease rate decline stress).
LMM--Lower of mean and median.
DSCR--Debt service coverage ratio.
Table 3
Liabilities
KDAC AVIATION FINANCE LTD.(I)
CLASS A CLASS B CLASS C TOTAL
Balance (mil. $)(iii) 332.71 73.90 49.72 456.33
Paydowns in 2022 (mil. $) 59.00 0.00 0.00 59.00
LTV (%)(iv) 78.5 95.9 107.6 --
Unpaid scheduled principal
amount (mil. $) 55.26 27.00 35.49 117.75
RAPTOR AIRCRAFT FINANCE I LTD.(II)
CLASS A CLASS B CLASS C TOTAL
Balance (mil. $)(iii) 386.00 90.60 52.20 528.80
Paydowns in 2022 (mil. $) 23.00 0.00 0.00 23.00
LTV (%)(iv) 83.5 103.1 114.4 --
Unpaid scheduled principal
amount (mil. $) 65.57 22.86 28.65 117.08
(i)As of the latest payment date, February 2023.
(ii)As of the latest payment date, January 2023.
(iii)Includes the unpaid interest amount of class C notes, if
applicable.
(iv)Calculated as note balance divided by value in "LMM as modeled"
row in table 2 above.
LTV--Loan-to-value.
LMM--Lower of the mean and median value.
Deal-Specific Details
KDAC Aviation Finance Ltd.
S&P said, "We lowered our ratings on KDAC Aviation Finance Ltd.'s
class A, B, and C notes. We had placed our ratings on the class A
and B notes on CreditWatch with negative implications on Feb. 15,
2023."
The downgrades primarily reflect the transaction's slow pace of
principal repayments, as well as the current number of aircraft,
engines, and airframe that are off-lease or have lease expirations
within the next 12 months, as well as the insufficient credit
enhancement to support the class A and B notes at their previous
rating levels. The ratings on the class B and C notes also reflect
S&P's "Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC'
Ratings," published Oct. 1, 2012. Generally, issuers and issues
that face at least a one-in-two likelihood of default are rated in
the 'CCC' category.
The transaction paid down the class A notes by approximately $59
million in calendar year 2022, while the class B and C notes did
not receive any principal payments during this period. The class C
notes continue to defer and capitalize their unpaid interest. The
class A, B, and C notes are significantly behind on their targeted
scheduled principal payments, for a total of approximately $118
million, primarily due to the continued pressure on lease
collections.
The portfolio is currently backed by 25 aircraft (manufactured
between 2000 and 2012, with an average age of approximately 16
years), eight engines, and one airframe. The portfolio also
includes five A330 wide-body aircraft (2001-2007 vintage), which
are a potential risk to the transaction due to surplus capacity for
this model and the shift to newer technology aircraft such as the
A330-900 aircraft. Seven engines, one aircraft, and one airframe
are currently off-lease. While the servicer has a plan to release
the aircraft, part out the engines, and sell the airframe, the
timing and economics of the execution remain uncertain given the
asset characteristics. There are five aircraft that are nearing
lease expiration: four are expected to be sold after the lease
expiration, while one has an uncertain return date. S&P also
observed that some of the disposition proceeds have been below
previously appraised values, which further stresses the capital
structure.
S&P said, "Under our cash flow runs, none of the classes passed our
'B-' rating stress. For the class A notes, we considered the
current loan-to-value (LTV) ratio, which is under 100% despite our
adjustment to the LMM values and their priority in the payment
structure.
"For the class B notes, although the current LTV is under 100%, we
considered the fact that the notes have not received any principal
repayments since at least September 2020. This, combined with the
ongoing decline in aircraft values given the portfolio profile,
will further stress the LTV going forward. Given that the class B
notes can defer interest while the class A notes are outstanding,
and the calculated LTV is below 100%, we believe that the notes,
although currently vulnerable, are unlikely to default in the near
term.
"We believe that the class C notes are more vulnerable to a default
given their subordinated position in the priority of payments, the
calculated LTV being greater than 105%, and the capitalization of
unpaid interest on the notes that will further stress the LTV.
Therefore, we lowered our rating on the class C notes to 'CCC
(sf)'."
Raptor Aircraft Finance I Ltd. (Raptor)
S&P said, "We lowered our ratings on Raptor's class A and B notes
and affirmed our rating on the class C notes. We had placed our
rating on the class A and B notes on CreditWatch with negative
implications on Feb. 15, 2023."
The downgrades primarily reflect the transaction's slow pace of
principal repayments and the insufficient credit enhancement to
support the class A and B notes at the previous rating level. The
rating on the class C notes also reflect S&P's "Criteria For
Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings," published Oct.
1, 2012. Generally, issuers and issues that face at least a
one-in-two likelihood of default are rated in the 'CCC' category.
The transaction paid down the class A notes by approximately $23
million in calendar year 2022, while the class B and C notes did
not receive any principal payments during this period. The class C
notes continue to defer and capitalize their unpaid interest. The
class A, B, and C notes are significantly behind on their targeted
scheduled principal payments, for a total of approximately $117
million, primarily due to the continued pressure on lease
collections.
The portfolio is currently backed by 16 aircraft, which are all on
lease to 12 airlines. The aircraft were manufactured between 2009
and 2017, with an average age of approximately seven years. Two
aircraft have lease expirations in October 2023, which are expected
to be extended. The servicer also indicated that more than half of
the lessees are behind on their lease payment obligations.
S&P said, "Under our cash flow runs, the class B and C notes did
not pass our 'B-' rating stress. For the class B notes, we
considered the current calculated LTV, which is greater than 100%,
and the fact that the notes have not received any principal
repayments since at least September 2020. This, combined with the
significant shortfall on the class A and B scheduled principal
payments, will further stress the LTV going forward. Given that the
class B notes can defer interest while the class A notes are
outstanding, we believe that the notes, although currently
vulnerable, are unlikely to default in the near term.
"The rating affirmation on the class C notes at 'CCC (sf)' reflects
our view that there has been no significant change in performance
for the notes since our last review. We believe that the class C
notes are more vulnerable to a default, given their subordinated
position in the priority of payments, the calculated LTV being
greater than 110%, and the capitalization of unpaid interest on the
notes that will further stress the LTV.
Following the acquisition of Seraph Aviation (servicer at closing)
by Aergo Capital, S&P anticipates that the Raptor portfolio will be
serviced by the latter going forward.
S&P will continue to monitor the transactions' performance to
determine if the ratings assigned remain consistent with the credit
enhancement available to support the notes, and we will take rating
actions it deems appropriate.
Environmental, social, and governance (ESG) credit factors for this
change in credit rating/outlook and/or CreditWatch status:
-- Health and safety
Ratings Lowered
KDAC Aviation Finance Ltd.
Class A to 'B- (sf)' from 'BB- (sf)/Watch Neg'
Class B to 'CCC+ (sf)' from 'B (sf)/Watch Neg'
Class C to 'CCC (sf)' from 'CCC+ (sf)'
Raptor Aircraft Finance I Ltd.
Class A to 'B+ (sf)' from 'BB+ (sf)/Watch Neg'
Class B to 'CCC+ (sf)' from 'B+ (sf)/Watch Neg'
Rating Affirmed
Raptor Aircraft Finance I Ltd.
Class C: CCC (sf)
RC HOME: Lender Seeks to Prohibit Cash Collateral Access
--------------------------------------------------------
Manuhen Enterprises, LLC asks the U.S. Bankruptcy Court for the
Southern District of Florida, Miami Division, to prohibit RC Home
Showcase, Inc. from using cash collateral.
On December 22, 2020, Manuhen, the Debtor and BES Associates, Corp.
entered into an Amended Stock Purchase Agreement, whereby Manuhen
sold all of its shares of stock in the Debtor to BES, for the
purchase price of $4.270 million.
BES is owned by Eusebio Paredes who is also the principal of the
Debtor.
The Purchase Price was comprised of: (a) cash in the amount of
$400,000; (b) a promissory note in the amount of $2.970 million, in
favor of Manuhen; and (c) a promissory note in the amount of
$900,000, in favor of Manuhen.
In connection with the Amended SPA, on January 13, 2021, the Debtor
and BES executed and delivered a Promissory Note, to Manuhen, in
the amount of $2,970,000.00, at the rate of 4% per annum, amortized
over 25 years, and payable in 11 consecutive monthly installments
of $15,677 each, commencing on February 12, 2021, with a final
payment of the unpaid outstanding principal and interest due on
January 12, 2022. Default interest would accrue at the rate of 18%
per annum.
In addition, on January 13, 2021, the Debtor and BES executed and
delivered a Promissory Note, to Manuhen, in the amount of $900,000,
at the rate of 4% per annum, payable in 60 consecutive monthly
installments of $16,575 each, commencing on March 14, 2021, with a
final payment of the unpaid outstanding principal and interest due
on March 14, 2026.
The Debtor failed to make certain payment(s) due under the Balloon
Note and the Term Note.
As such, on September 14, 2021, Manuhen commenced a lawsuit against
the Debtor, BES and Paredes, for damages under the Balloon Note and
Term Note, for the foreclosure of its security interest in the
Collateral and for breach of the guaranties by Paredes. The lawsuit
also included a count for breach of a subsequent (unsecured)
agreement between Manuhen and the Debtor, whereby the Debtor was
obligated to pay Manuhen an additional $176,000.
On November 1, 2021, the Debtor, BES and Paredes filed a
Counterclaim in the State Court Lawsuit, asserting fraud in the
inducement and requesting rescission of the documents. Manuhen has
denied the claims set forth in the Counterclaim.
Although the State Court Lawsuit was stayed as to the Debtor upon
the Petition Date, it is continuing with respect to BES and
Paredes.
Having previously owned the Debtor and being familiar with the
value of its assets, Manuhen believes that the Debtor either: (a)
substantially undervalued its assets, and in particular, Manuhen's
Collateral; or (b) disposed of Manuhen's Collateral, either prior
to or after the Petition Date.
At the section 341 Meeting of Creditors held on January 20, 2023,
Manuhen, through counsel, advised the Debtor, through Paredes, that
it had a lien on the Collateral and inquired about the filing of a
motion to use cash collateral, pursuant to 11 U.S.C. section
363(c).
Thereafter, undersigned counsel and the Debtor's counsel began
informal discussions regarding the appropriate adequate protection
payments that the Debtor would be making to Manuhen. However, to
date, those discussions were never completed, and the Debtor
continues to use Manuhen's cash collateral, without its consent,
despite the fact that almost three months have passed since the
Petition Date.
In addition, upon information and belief, on February 28, 2023, the
Debtor moved from its prior business premises, located at 16115 NW
52 Ave, Hialeah, FL 33014, to another business location, the
address of which is unknown to Manuhen.
Manuhen is in the dark as to the whereabouts or the location of its
Collateral and is concerned about the sale or dissipation of the
Debtor's assets, including the Collateral, given its move from its
initial location to its new (and undisclosed) location.
Manuhen seeks entry of an order prohibiting the use of the cash
collateral, or alternatively, conditioning the use of the cash
collateral, on:
i. The payment of an appropriate monthly adequate protection
payment to Manuhen during the pendency of the bankruptcy
proceeding;
ii. The filing of a cash budget, which indicates that the
Debtor is operating on a cash flow-positive basis, including the
contemplated adequate protection payment to Manuhen;
iii. An inspection of the Debtor's new business premises within
7 days from the date of the entry of an order granting the Motion,
and confirmation that none of Manuhen's Collateral has been sold or
disposed of;
iv. Replacement liens in accordance with applicable law; and
v. Any other relief resulting in the realization of the
"indubitable equivalent" of Manuhen's interest in the Debtor's
assets.
A copy of the motion is available at https://bit.ly/3F6EdRC from
PacerMonitor.com.
About RC Home Showcase, Inc.
RC Home Showcase, Inc. is in the glass product manufacturing
business. RC designs and manufactures windows, sliding glass
doors, glass railings and curtain wall.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-19571) on December
15, 2022. In the petition signed by Eusebio Paredes, president, the
Debtor disclosed up to $50,000 in assets and up to $10 million in
liabilities.
Judge Laurel M. Isicoff oversees the case.
Chad Van Horn, Esq., at Van Horn Law Group, P.A., represents the
Debtor as legal counsel.
RETAIL ECOMMERCE: RadioShack Owner Seeks Funds for Possible Ch. 11
------------------------------------------------------------------
Rachel Butt of Bloomberg News reports that the owner of Pier 1
Imports and RadioShack is sounding out investors to finance itself
through a possible bankruptcy, according to people with knowledge
of the situation.
Retail Ecommerce Ventures LLC is considering pledging the
intellectual property of some of the brands it owns to raise money,
said the people, who asked to remain anonymous because the talks
are private.
When the pandemic sparked a wave of retail bankruptcies, Retail
Ecommerce Ventures picked up a slew of iconic brands on the cheap,
with the aim to revive them as online-first businesses. Its
portfolio also includes Modell's Sporting Goods and Stein.
REVLON INC: Motion to Dismiss Aimco Plaintiffs' Claims Granted
--------------------------------------------------------------
Bankruptcy Judge David S. Jones, on Feb. 24, 2023, has issued an
Amended Decision and Order granting the Debtor Defendants' motion
to dismiss all claims against them and all equitable claims in the
complaint filed in the case entitled In re: REVLON, INC., et al.,
Chapter 11, Debtors. AIMCO CLO 10 LTD, et al., Plaintiffs, v.
REVLON, INC., et al. Defendants, Case No. 22-10760 (DSJ), (Jointly
Administered), Adv. Pro. No. 22-01167 (DSJ), (Bankr. S.D.N.Y.).
In September 2016, Revlon, Inc. acquired the beauty brand Elizabeth
Arden for $1.03 billion. To finance the acquisition, the Debtor
Revlon Consumer Products Corporation entered into a 2016 "Credit
Agreement" which included a secured $1.8 billion term loan facility
and provisions for the issuance of supplemental revolver loans to
fund RCPC's business operations. The Plaintiffs claim to hold
interests in more than 50% of the term loans outstanding under the
2016 Credit Agreement. Part of the collateral that secured the term
loans was Revlon's intellectual property assets, including its
trademarks and other rights associated with many of the best known,
most well-established beauty brands in the world.
Beginning in 2019, Debtors explored and implemented a variety of
financing and other corporate transactions to address their capital
structure. Two of these transactions were the 2019 "Ares Financing"
and the 2020 "BrandCo Facilities" -- both of which are the subject
of this lawsuit. In addition, a nearly $1 billion mistaken payment
to lenders by Citibank, N.A. (the Administrative Agent for the 2016
Term Loan Facility) caused significant uncertainty and complexity
for the Debtors' capital structure.
On Oct. 31, 2022, the Plaintiffs commenced this adversary
proceeding. The Plaintiffs allege that the Defendants orchestrated
a scheme "to improperly manipulate Revlon's capital structure and
strip hundreds of millions of dollars of collateral that should be
available to secure Plaintiffs' claims in these bankruptcy cases."
In the Complaint, the Plaintiffs demands relief including, among
other things, the invalidation of the "Sham Revolver," the 2020
Amendment, and the transactions undertaken pursuant thereto.
The Plaintiffs' Equitable Relief Claims against the Debtor
Defendants, without exception, turn on allegations that through the
2019 Ares transaction and the 2020 BrandCo Transaction, the
Defendants improperly manipulated Revlon's capital structure and
stripped hundreds of millions of dollars of collateral that secured
Plaintiffs' interests under the 2016 Credit Agreement. The
Plaintiffs' Equitable Relief Claims seek to rescind or, to the
greatest extent possible, reverse these transactions so as to
restore Plaintiffs' first-priority lien status on that collateral
or subordinate the BrandCo Lenders' rights to Plaintiffs'.
All Defendants have moved to dismiss the Complaint, with three
separate motions before the Court, filed, respectively, on behalf
of the Defendants who are Debtors, the Jefferies Defendants, and
the BrandCo Lenders. However, this Decision resolves the Debtor
Defendants' Motion and does not resolve the separate motions of the
BrandCo Lenders and the Jefferies Defendants, which will be decided
separately.
Collectively, the Defendants argue that the Plaintiffs lack
standing to pursue their equitable relief claims because such
claims are derivative of claims that belong exclusively to Debtors'
estates and therefore must be dismissed. The Debtors argue that
"Plaintiffs are bystanders to their Equitable Relief Claims: rather
than seek direct relief for themselves, they demand, on behalf of
the non-BrandCo Debtors, return of the BrandCo IP to the
non-BrandCo Debtors and an order voiding the non-BrandCo Debtors'
obligations under the BrandCo Transaction documents."
The Court takes judicial notice that, in the main bankruptcy case,
the Official Committee of Unsecured Creditors took steps to
preserve its possible standing to assert claims on behalf of the
estate arising from the BrandCo Transaction and any other
arrangement that gave rise to the BrandCo Lenders' assertedly valid
security interests as against estate property.
The Court is not unsympathetic with the Plaintiffs' observation
that they stand to recover vastly less than they might if they had
retained their first-priority liens against the BrandCo IP. The
Court observes that "all impaired creditors are in an unfortunate
spot, and Plaintiffs have not been deprived of meaningful
opportunities to vindicate their rights. They could have, but never
did, seek to enjoin the 2019 Ares transaction when it occurred. . .
The injuries Plaintiffs assert all flow from the 2019 and
especially the 2020 transactions, which have come to lie at the
heart of this bankruptcy case, and the Plaintiffs' equitable claims
therefore are derivative of injuries sustained by, and
asset-recovery and obligation-minimizing rights held by, the
estate."
The Court concludes that the Plaintiffs' claims for equitable
relief are derivative of claims that belong to the Debtors'
estates, and that the Plaintiffs therefore lack standing to bring
the claims for equitable relief that they assert in this adversary
proceeding. The Court therefore grants the Debtor Defendants'
Motion.
A full-text copy of the Amended Decision and Order dated Feb. 24,
2023 is available at https://tinyurl.com/ms87m2kh from Leagle.com.
About Revlon Inc.
Revlon Inc. manufactures, markets and sells an extensive array of
beauty and personal care products worldwide, including color
cosmetics; fragrances; skin care; hair color, hair care and hair
treatments; beauty tools; men's grooming products; antiperspirant
deodorants; and other beauty care products. Today, Revlon's
diversified portfolio of brands is sold in approximately 150
countries around the world in most retail distribution channels,
including prestige, salon, mass, and online.
Since its breakthrough launch of the first opaque nail enamel in
1932, Revlon has provided consumers with high-quality product
innovation, performance and sophisticated glamour. In 2016, Revlon
acquired the iconic Elizabeth Arden company and its portfolio of
brands, including its leading designer, heritage and celebrity
fragrances.
Revlon is among the leading global beauty companies, with some of
the world's most iconic and desired brands and product offerings in
color cosmetics, skin care, hair color, hair care and fragrances
under brands such as Revlon, Revlon Professional, Elizabeth Arden,
Almay, Mitchum, CND, American Crew, Creme of Nature, Cutex, Juicy
Couture, Elizabeth Taylor, Britney Spears, Curve, John Varvatos,
Christina Aguilera and AllSaints.
Revlon sought Chapter 11 protection (Bankr. S.D.N.Y. Case No.
22-10760) on June 15, 2022. Fifty affiliates, including Almay,
Inc, Beautyge Brands USA, Inc., and Elizabeth Arden, Inc., also
sought bankruptcy protection on June 15 and June 16, 2022.
Revlon disclosed total assets of $2,328,093,000 against total
liabilities of $3,689,240,395 as of April 30, 2022.
The Hon. David S. Jones is the case judge.
The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP as
bankruptcy counsel; Mololamken, LLC as special litigation counsel;
PJT Partners, LP as investment banker; KPMG, LLP as tax services
provider; and Alvarez & Marsal North America, LLC as restructuring
advisor. Robert M. Caruso and Matthew Kvarda of Alvarez & Marsal
serve as the Debtors' chief restructuring officer and interim chief
financial officer, respectively. Meanwhile, Kroll Restructuring
Administration, LLC is the Debtors' claims agent and administrative
advisor.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors on June 24, 2022. Brown Rudnick, LLP, Province,
LLC and Houlihan Lokey Capital, Inc. serve as the committee's legal
counsel, financial advisor and investment banker, respectively.
REVLON INC: Puts Bankruptcy Deal to Creditor Vote
-------------------------------------------------
Georgina Caldwell of Global Cosmetics News reports that Revlon has
reached an agreement with its creditors which, if voted through,
will allow the US make-up giant to complete the bankruptcy process
by April 2023, according to a report published by Reuters.
The deal removes the last obstacle in the process, meaning
Revlon’s restructuring proposal will be sent to lenders for a
vote. Under the terms of the settlement, 2016 lenders can receive
up to US$56 million in cash or opt for up to 18 percent of the
company’s bankruptcy equity shares.
Revlon filed for bankruptcy last June 2022 amid a high debt load
which affected cash flow leaving it unable to pay suppliers.
About Revlon Inc.
Revlon Inc. manufactures, markets and sells an extensive array of
beauty and personal care products worldwide, including color
cosmetics; fragrances; skin care; hair color, hair care and hair
treatments; beauty tools; men's grooming products; antiperspirant
deodorants; and other beauty care products. Today, Revlon's
diversified portfolio of brands is sold in approximately 150
countries around the world in most retail distribution channels,
including prestige, salon, mass, and online.
Since its breakthrough launch of the first opaque nail enamel in
1932, Revlon has provided consumers with high-quality product
innovation, performance and sophisticated glamour. In 2016, Revlon
acquired the iconic Elizabeth Arden company and its portfolio of
brands, including its leading designer, heritage and celebrity
fragrances.
Revlon is among the leading global beauty companies, with some of
the world's most iconic and desired brands and product offerings in
color cosmetics, skin care, hair color, hair care and fragrances
under brands such as Revlon, Revlon Professional, Elizabeth Arden,
Almay, Mitchum, CND, American Crew, Creme of Nature, Cutex, Juicy
Couture, Elizabeth Taylor, Britney Spears, Curve, John Varvatos,
Christina Aguilera and AllSaints.
Revlon sought Chapter 11 protection (Bankr. S.D.N.Y. Case No.
22-10760) on June 15, 2022. Fifty affiliates, including Almay,
Inc, Beautyge Brands USA, Inc., and Elizabeth Arden, Inc., also
sought bankruptcy protection on June 15 and June 16, 2022.
Revlon disclosed total assets of $2,328,093,000 against total
liabilities of $3,689,240,395 as of April 30, 2022.
The Hon. David S. Jones is the case judge.
The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP as
bankruptcy counsel; Mololamken, LLC as special litigation counsel;
PJT Partners, LP as investment banker; KPMG, LLP as tax services
provider; and Alvarez & Marsal North America, LLC as restructuring
advisor. Robert M. Caruso and Matthew Kvarda of Alvarez & Marsal
serve as the Debtors' chief restructuring officer and interim
chief
financial officer, respectively. Meanwhile, Kroll Restructuring
Administration, LLC is the Debtors' claims agent and administrative
advisor.
The U.S. Trustee for Region 2 appointed an official committee of
unsecured creditors on June 24, 2022. Brown Rudnick, LLP, Province,
LLC and Houlihan Lokey Capital, Inc. serve as the committee's
legal
counsel, financial advisor and investment banker, respectively.
RODA LLC: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------
The U.S. Trustee for Region 18 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Roda, LLC.
About Roda LLC
Roda, LLC, a company in Washington County, Ore., sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ore. Case
No. 23-30250) on Feb. 6, 2023. In the petition signed by its
managing member, Roy MacMillan, the Debtor disclosed up to $10
million in both assets and liabilities.
Judge Teresa H. Pearson oversees the case.
Douglas R. Ricks, Esq., at Vander Bos and Chapman, LLP and
Intellequity Legal Services, LLC serve as the Debtor's bankruptcy
counsel and special counsel, respectively.
SEAGATE TECHNOLOGY: Fitch Alters Outlook on BB+ LongTerm IDR to Neg
-------------------------------------------------------------------
Fitch Ratings has affirmed the 'BB+' Long-Term Issuer Default
Rating (IDR) of Seagate Technology plc and its wholly-owned
subsidiary, Seagate HDD Cayman, as well as the 'BB+'/'RR4' senior
unsecured rating for Seagate HDD Cayman. Fitch also assigns a
'BB+'/'RR4' rating to Seagate HDD Cayman's $750 million of 9.625%
senior notes due Dec. 1, 2032, which were privately placed on Nov.
30, 2022. The Rating Outlook has been revised to Negative from
Stable.
The ratings and Outlook reflect the magnitude of the current
downturn, which will far outpace Fitch's prior expectations for
2023 and result in weaker average FCF and credit metrics over at
least the medium term. In the absence of stronger than anticipated
recovery, Fitch believes Seagate will need to prioritize using FCF
for debt reduction in order to return leverage metrics to levels
in-line with the current rating over roughly the next 24 months.
KEY RATING DRIVERS
Capital Allocation Prioritization: Fitch believes its forecast for
only modest FCF through fiscal 2024 and Seagate's recent credit
agreement amendment will limit excess liquidity, constraining the
company's capacity for capital returns. Nonetheless, Fitch views
the prioritization of debt reduction with any FCF in order to
accelerate a return of EBITDA leverage to back within Fitch's 3.0x
negative rating sensitivity as demonstration of management's
commitment to a strong-'BB' rating. This could extend beyond the
covenant relief period set to end June 28, 2024. Over the longer
term, Fitch expects Seagate will resume a more balanced capital
allocation framework, including using at least 70% of pre-dividend
FCF for capital returns.
Profitability Profile: Fitch expects the magnitude of the current
downturn to reset Seagate's baseline FCF well below historical
levels, given that Fitch is not anticipating robust recovery. Over
the nearer term, Seagate is cutting operating expenses and capital
spending to support profit margins and FCF, which Fitch forecasts
will be flat to down (after dividends) in fiscal 2023 before
recovering beginning in fiscal 2024. Over the longer term, Fitch
anticipates gross profit margins will return the high-20% and,
along with moderating capital intensity, will drive mid to high
single-digit FCF margins.
Secular Demand: Fitch believes robust demand for storage across
media types provides a path for modest positive organic long-term
revenue growth. Artificial intelligence and 5G-enabled applications
across computing environments will be a significant driver of
demand. Fitch expects the significant majority of data creation
will be cool/cold storage on lower cost hard-disk drive (HDD)-based
capacity drives in the public cloud, driving the bulk of Seagate's
long-term revenue growth, with surveillance penetration and gaming
markets leading the remainder of top-line growth.
Constructive Supply Conditions: Fitch believes Seagate's nearly 50%
capacity drive market share supports constructive supply conditions
that should enable long-term profitable growth and solid FCF
margins. Seagate's intensified capital spending in recent years and
the repurposing of existing capacity as legacy revenue declines
should enable the company to manage capital spending at
structurally lower levels through the forecast period, including
more significant near-term cuts to capacity additions in order to
support FCF.
Meaningful Technology Risk: Fitch believes storage technology and
product risks remain meaningful, with regular areal density
increases required to offset significant pricing pressure to
sustain HDD's total cost of ownership (TCO) advantage over SSDs and
keep pace with its chief competitor, WD. Energy assist-based drives
promise to provide a roughly decadelong roadmap to drives of more
than 50 terabytes (TB; versus 20TB drives shipping today), reducing
Seagate's technology risk. At the same time, the breakdown of
Moore's Law constrains SSD makers' ability to close the TCO gap.
DERIVATION SUMMARY
Seagate's position relative to the 'BB+' rating has weakened, given
Fitch's expectations for less than robust recovery from this
current severe downturn that will constrain intermediate-term
profitability and FCF, pressuring credit metrics beyond Fitch prior
expectations for moderate downturn in 2023. Seagate's operating
profile hinges upon its strong market positions in HDDs,
significant barriers to entry from high investment intensity
required for meaningful market participation and secular demand for
storage solutions supporting higher-than-global GDP long-term
revenue growth. However, lower FCF with a track record of capital
returns in the face of upcoming debt maturities has weakened the
financial flexibility and structure factors that underpin the
rating.
Fitch views Seagate's operating profile as overall in-line with
that of HDD competitor, Western Digital Corp. Together they
represent effectively all available capacity HDD supply, markets
benefitting from secular growth dynamics. However, Western
Digital's higher long-term growth prospects by virtue of its
exposure to flash are offset by far greater cyclicality, given a
less consolidated industry structure and more commodity-like nature
of flash products. Investment intensity ends up being similar for
Seagate and Western Digital mainly due to the latter's ability to
source NAND flash while sharing investment intensity with its JV
partner.
From a financial profile perspective, Fitch has viewed Seagate's as
weaker than that of Western Digital due to the latter's financial
policies, including prioritization of FCF for debt reduction to
achieve a 1.5x-3.5x EBITDA leverage range through the cycle and
dividend suspension in support of that target. Meanwhile, Seagate's
lack of publicly-articulated financial policies and prioritization
of capital returns, including debt funded share repurchases in
December 2020, are in-line with a 'BB'-rating category.
KEY ASSUMPTIONS
- More than 30% negative revenue growth in fiscal 2023, driven by
customer inventory digestion and consumer and enterprise spending;
- Markets begin recovering meaningfully in fiscal 2024 and moderate
to long-term growth rates through the remainder of the forecast
period;
- Operating EBITDA margins approximate 10% in fiscal 2023 and
expand to the mid-teens in fiscal 2024 before returning to the
high-teens in the out years, driven by a normalization of gross
profit margins and the impact of operating expense reduction
initiatives;
- Capital intensity remains in the 3.5%-4.5% range;
- No material acquisitions;
- The company uses available FCF and refinancing to meet debt
maturities through the covenant relief period;
- Seagate resumes a balanced capital allocation framework,
including using at least 70% of pre-dividend FCF for capital
returns, beyond the covenant relief period.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Public commitment to manage debt levels for total leverage
sustained below 2.5x;
- Expectations for annual FCF margins consistently in the mid to
high single digits while growing revenue, structurally higher
market share and diversifying end market and product exposure.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Expectations for annual FCF sustained below $500 million or FCF
margins in the low single digits from persistently weaker than
expected revenue trends or profit margins, indicating poor
execution on its roadmap;
- Expectations for total leverage sustained above 3.0x, from debt
issuance to support debt-funded shareholder returns persistently in
excess of FCF.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Fitch views Seagate's liquidity as adequate
and, as of Dec. 30, 2022, consisted of $770 million in cash and
cash equivalents and an undrawn $1.75 billion senior unsecured
revolving credit facility expiring Oct. 14, 2026. Fitch expects
only modest near-term FCF but 500 million of annual FCF beyond
fiscal 2024 that will also support liquidity.
ISSUER PROFILE
Seagate is a leading provider of data storage technology, primarily
hard disk drives, a market in which it has roughly 45% share.
Seagate focuses on storage solutions for edge-to-cloud service
providers, original equipment and design manufacturers, as well as
surveillance, gaming, digital video recording and attached storage
providers.
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
----------- ------ -------- -----
Seagate Technology
Public Limited
Company LT IDR BB+ Affirmed BB+
Seagate HDD Cayman LT IDR BB+ Affirmed BB+
senior unsecured LT BB+ New Rating RR4
senior unsecured LT BB+ Affirmed RR4 BB+
SMART AND SASSY: Unsecureds to Split $191K in Subchapter V Plan
---------------------------------------------------------------
Smart and Sassy, LLC, filed with the U.S. Bankruptcy Court for the
District of Nebraska an Amended Plan of Reorganization for Small
Business under Subchapter V dated March 6, 2023.
Debtor was formed in 2016 to provide unique subscription based gift
boxes for consumers via website and other methods of marketing
products from multiple vendors. Debtor utilizes an order
fulfillment service as part of its operations and its staff
primarily focuses on inventory procurement and marketing.
Debtor filed for protection under Chapter 11, Subchapter V of the
Bankruptcy Code on October 6, 2022. Debtor filed as a result of
declining sales in 2022 after acquiring a surplus of inventory.
Because of a decline in market, Debtor was unable to support
necessary payments for fulfillment of orders while servicing its
debt on a monthly basis.
After filing, the relief of debt repayment pressure has allowed
Debtor to operate as normal and Debtor expects sufficient net
profits to make the payments.
The liquidation analysis indicates Debtor shall pay general
unsecured creditors $117,001.89, however, Debtor's disposable
income requires it to pay $190,554.50 toward unsecured creditors in
the final 8 months of the plan.
The financial projections show that Debtor will have projected
disposable income of $1,048,961.80 over a four-year period, which
is sufficient to pay amounts required to general unsecured
creditors. Debtor's final payment under this plan is expected to be
paid on or around December 1, 2026.
This Plan of Reorganization proposes to pay creditors of Debtor
from the net income of Debtor in operation of its business as a
subscription based gift-box service.
Class 1 consists of the fully secured claim of Five Star Bank.
Class 2 consists of the fully secured claim of OUIBY, Inc., and
Class 3 consists of the fully secured claim of NewCo Capital. All
classes of secured claims are impaired.
The priority, unsecured tax claims consist of multiple creditors:
Minnesota Department of Revenue; Nebraska Department of Revenue;
Virginia Department of Revenue, Internal Revenue Service, North
Carolina Department of Revenue, Georgia Department of Revenue, and
Massachusetts Department of Revenue. These claims shall be paid in
full their priority portions (unclassified claims).
Class 4 consists of General Unsecured Creditors and general
unsecured portion of any other claim, including the claim of
Forward Financing which was unperfected on date of petition. Debtor
shall pay to the Chapter 11 Trustee, as disbursing agent, the sum
of $23,819.31 monthly from May 01, 2026 – December 01, 2026 for a
total of $190,554.50.
The Chapter 11 Trustee shall disburse these funds to general
unsecured creditors prorata, based on allowed general unsecured
claims and general unsecured portions of any secured claim
deficiencies.
Class 5 consists of Equity Interest holders Abigail Bartholomew
(90% member) Kimberly Blankenburg (10% member). Debtor shall retain
equity, after payment of ordinary expenses and payments pursuant to
this plan for the benefit of equity holders.
Debtor shall continue operation of its business and will also
expand marketing efforts to solicit more business in order to fund
this plan and continue its history of positive cash flow.
A full-text copy of the Amended Plan dated March 6, 2023 is
available at https://bit.ly/4214LO8 from PacerMonitor.com at no
charge.
Attorney for Debtor:
John A. Lentz, Esq.
Lentz Law, PC, LLO
650 J St Ste 215B
Lincoln, NE 68508
Phone: (402) 421-9676
Email: john@johnlentz.com
About Smart and Sassy
Smart and Sassy LLC, doing business as Smartass and Sass, filed a
petition for relief under Subchapter V of Chapter 11 of the
Bankruptcy Code (Bankr. D. Neb. Case No. 22-40874) on October 6,
2022, with between $1 million and $10 million in both assets and
liabilities. James A. Overcash has been appointed as Subchapter V
trustee.
Judge Thomas L. Saladino oversees the case.
The Debtor tapped John A. Lentz, Esq., at Lentz Law, PC, LLO as
counsel and Andrew Berg, CPA, at Berg Advisors as accountant.
SPG HOSPICE: PCO Files 4th Report on SPG Affiliates' Facility
-------------------------------------------------------------
Susan Goodman, the court-appointed patient care ombudsman, filed a
fourth interim report regarding the quality of patient care
provided at the healthcare facility operated by SPG Hospice, LLC's
affiliates, Scottsdale Physicians Group, PLC and United Telehealth
Corp.
Scottsdale Physicians Group Entity
In this interim reporting cycle, PCO continues to monitor the
Scottsdale Shea hospitalist daily physician-to-patient encounter
ratios that are typically provided via email on weekdays. In
speaking with the hospital Director of Nursing, the clinical team
continues to speak positively regarding the services provided by
the clinician team; and, certainly, the healthcare dynamics in the
acute care setting are challenging nationally – making it
difficult for the PCO to conclude that continued unmet provider
recruitment needs are solely attributable to the bankruptcy.
Some bankruptcy nexus seems certain, however, with the Honor Health
Scottsdale Shea Hospital ("Shea") Chief Medical Officer indicating
Scottsdale Physicians Group reported an inability to hire
additional providers due to financial constraints. Scottsdale
Physicians Group leadership reported the lack of closure regarding
the billing audit or investigation materially impacted this
business segment, most notably by disqualifying it from
participating in Shea's latest Request for Proposal (RFP) for the
upcoming hospitalist contract.
The court is already aware of the financial negotiations between
Scottsdale Physicians Group and Shea to bridge the former's current
service offering to the new provider selected from the RFP. The
Chapter 11 trustee reported this effort was successful.
The post-acute, long-term care (PA-LTC) clinician team staffing
remains unchanged from the PCO's third report. Because the PCO
personally knew a PA-LTC customer Chief Clinical Officer, she took
the opportunity to reach out to that individual. The CCO reported
positively on the services provided by Scottsdale Physicians Group
clinicians. She also indicated that she was aware of the bankruptcy
due to a news story relative to the facts leading up to the
bankruptcy filing.
United Telehealth Corp. Services
also known as SPG Virtual Care
PCO was informed of potential sale efforts associated with this
business segment. Given the volume of patients and payers utilizing
SPGVC's services, this avenue would be the least disruptive to the
patients served through this entity.
Because an existing grievance process was in place for most
patients serviced through SPGVC, direct patient notice of the PCO
appointment was felt to be more scary than helpful given the legal
nature of the notice which, in PCO's experience, often results in
patients associating the notice with collection efforts.
Alternatively, SPGVC leadership, with the assistance of the revenue
cycle team, will assist PCO in defining what insurers cover the
bulk of the patients who are served in more than just an acute-care
transitional capacity with a plan to provide PCO's contact
information to these payers.
The hospitalist group's inability to participate in the Shea RFP
has shifted the focus from a plan confirmation to some combination
of entity sales and/or orderly Clinician transitions to other
organizations. While the PCO feels confident that all
constituencies are dedicated to the premise of continued,
uninterrupted patient services across four business segments, the
very nature of the intricacies associated with this many service
lines makes it more likely that some level of service interruption
could occur despite these well-intentioned efforts. PCO will remain
engaged and promptly engage the court if any impacts are noted.
A copy of the fourth interim report is available for free at
https://bit.ly/3YmBfPN from PacerMonitor.com.
About SPG Hospice
Established in 2018, SPG Hospice, LLC provides hospice services
throughout Arizona but primarily located in the Phoenix
metropolitan area.
SPG Hospice's affiliate, Scottsdale Physicians Group, PLC, provides
hospitalist staffing services for hospitals and physician staffing
services to skilled nursing facilities and other post-acute
settings. Its workforce is comprised of medical providers and
disease support personnel.
Meanwhile, United Telehealth Corp., another SPG Hospice affiliate,
provides advanced virtual care medical services to patients in
their homes throughout Arizona. It combines the remote provider
aspect of traditional telemedicine with an in-person medical
technician "Tech" who is physically present with the patient in
their home or facility.
SPG Hospice, Scottsdale and United Telehealth Corp. sought
protection for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Ariz. Lead Case No. 22-02385) on April 19, 2022. At the
time of the filing, SPG Hospice listed up to $50,000 in assets and
up to $500,000 in liabilities.
Judge Eddward P. Ballinger, Jr. oversees the cases.
Jonathan P. Ibsen, Esq., at Canterbury Law Group, LLP serves as the
Debtors' legal counsel.
James Cross, the court-appointed Chapter 11 trustee for the
Debtors, tapped Cross Law Firm, PLC as bankruptcy counsel; Terry A.
Dake, Ltd. as special counsel; Baldwin Moffitt Behm, LLP as tax
preparer; and Kathy Steadman of Coppersmith Brockelman, PLC as
healthcare personnel and regulatory compliance specialist.
Susan N. Goodman is the patient care ombudsman appointed in the
Debtors' bankruptcy cases.
ST. CHARLES MEMORY: Court Directs U.S. Trustee to Appoint PCO
-------------------------------------------------------------
Judge Mark Mullin of the U.S. Bankruptcy Court for the Northern
District of Texas directed the U.S. Trustee for Region 6 to appoint
a patient care ombudsman for St. Charles Memory Care, LLC.
The bankruptcy judge finds that the provisions of Section 333(a)(1)
of the Bankruptcy Code for appointment of a patient care ombudsman
apply to St. Charles Memory Care after having filed its bankruptcy
petition, indicating that it operates a health care business.
Judge Mullin further ordered as follows:
* A patient care ombudsman shall be appointed for the limited
purpose of making an initial visit to St. Charles Memory Care's
facility and preparing one initial report.
* The patient care ombudsman shall monitor the quality of care
provided to patients or clients of St. Charles Memory Care to the
extent necessary under the circumstances, including interviewing
patients, physicians, and health care providers, and file the
initial report no later than 60 days after the date of his or her
appointment.
* The patient care ombudsman shall immediately notify the
court, the U.S. trustee and parties in interest by motion or
written report, if he or she determines that the quality of patient
or client care provided by St. Charles Memory Care is not adequate,
deteriorating, or is otherwise materially compromised;
The court order is without prejudice to any party in interest,
including the U.S. trustee or any agency represented by the
Illinois Department of Public Health or the Illinois Attorney
General's Office to seek a continuation of the appointment of a
patient care ombudsman if the initial report demonstrates the need
for the continued appointment of a patient care ombudsman.
About St. Charles Memory Care
St. Charles Memory Care, LLC operates a continuing care retirement
community and assisted living facility for the elderly. It is based
in Grapevine, Texas.
St. Charles Memory Care sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. N.D. Texas Case No. 23-40253) on Jan.
27, 2023. In the petition signed by Tracy Bazzell, agent, the
Debtor disclosed up to $10 million in assets and up to $50 million
in liabilities.
Judge Mark X. Mullin oversees the case.
Joyce W. Lindauer, Esq., at Joyce W. Lindauer Attorney, PLLC,
represents the Debtor as legal counsel.
STATERA BIOPHARMA: Stock to be Delisted From Nasdaq on March 13
---------------------------------------------------------------
The Nasdaq Stock Market LLC has determined to remove from listing
the common stock of Statera Biopharma, Inc., effective at the
opening of the trading session on March 13, 2023.
Based on review of information provided by the Company, Nasdaq
Staff determined that the Company no longer qualified for listing
on the Exchange pursuant to Listing Rule 5250(c)(1). The Company
was notified of the Staff determination on Sept. 1, 2022. On Sept.
8, 2022, the Company exercised its right to appeal the Staff
determination to the Listing Qualifications Hearings Panel (Panel)
pursuant to Rule 5815.
On Sept. 20, 2022, Staff issued an additional delist determination
for the Company failure to meet the requirement in Listing Rule
5550(a)(2). A Panel hearing was held on Oct. 6, 2022. On Oct. 11,
2022, Staff issued an additional delist determination letter for
the Company failure to meet the requirements of Listing Rules
5550(b)(1) and 5250(e)(2)(D).
On Oct. 26, 2022, upon review of the information provided by the
Company, the Panel determined to grant the Company request to
remain listed in the Exchange subject to a series of milestones.
After failing to meeting the Hearings Panel exception, on Jan. 10,
2023, the Hearings Panel issued a final decision denying the
Company continued listing and notified the Company that trading in
the Company securities would be suspended on Jan. 12, 2023. On
Jan. 25, 2023, the Company exercised its right to appeal the Panel
decision and requested a hearing to the Nasdaq Listing and Hearing
Review Council (Council) pursuant to Rule 5820(a).
On Feb. 9, 2023, in application of Rule 5820(a) the Panel issued a
letter deeming the matter closed as the Company had failed to
evidence payment of the appeal fee. The Staff determination to
delist the Company became final on Feb. 13, 2023.
About Statera
Statera Biopharma, Inc. (formerly known as Cytocom, Inc. and
Cleveland Biolabs) is a pre-clinical and clinical biopharmaceutical
company developing multiple product candidates to address unmet
medical needs for use in diseases involving immune system
dysfunction.
An involuntary Chapter 11 bankruptcy case was filed against Statera
on Aug. 16, 2022, by three alleged creditors of the Company
alleging they are owed a total of $2.1 million on account of notes,
unpaid wages, and severance.
Statera Biopharma reported a net loss of $101.87 million for the
year ended Dec. 31, 2021, compared to a net loss of $12.09 million
for the year ended Dec. 31, 2020. As of Sept. 30, 2022, the Company
had $12.75 million in total assets, $22.92 million in total
liabilities, and a total stockholders' deficit of $10.17 million.
Lakewood, Colo.-based BF Borgers CPA PC, the Company's auditor
since 2022, issued a "going concern" qualification in its report
dated Oct. 4, 2022, citing that Company has suffered recurring
losses from operations and has a significant accumulated deficit.
In addition, the Company continues to experience negative cash
flows from operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
STEREOTAXIS INC: Incurs $4.2 Million Net Loss in Fourth Quarter
---------------------------------------------------------------
Stereotaxis, Inc. reported a net loss of $4.15 million on $7.30
million of total revenue for the three months ended Dec. 31, 2022,
compared to a net loss of $3.35 million on $8.24 million of total
revenue for the three months ended Dec. 31, 2021.
For the year ended Dec. 31, 2022, the Company reported a net loss
of $18.29 million on $28.15 million of total revenue compared to a
net loss of $10.72 million on $35.02 million of total revenue for
the year ended Dec. 31, 2021.
As of Dec. 31, 2022, the Company had $53.41 million in total
assets, $21.48 million in total liabilities, $5.58 million in
convertible preferred stock, and $26.35 million in total
stockholders' equity.
"This year is poised to be an important and exciting year for
Stereotaxis, as we bring multiple strategic innovations to key
regulatory and commercial milestones," said David Fischel, Chairman
and CEO. "This transition to a new product ecosystem is
strategically transformational as it addresses structural
inefficiencies, dependencies and limitations while setting us up
for significant growth."
"Technology developments continue to advance well, and we expect
regulatory approvals and commercial launches this year for our
proprietary robotically-navigated ablation catheter, smaller
self-shielding robot, and cloud-based connectivity app. We also
expect regulatory submissions for a guidewire that expands our
robotic technology into several new indications, a comprehensive
product ecosystem in China, and an integrated operating room
display. These innovations collectively serve as a foundational
product ecosystem for a high-growth medical robotics company poised
to transform endovascular surgery."
"The effort to grow revenues while in the midst of this transition
was challenged in 2022. We experienced growth in system orders,
but delays in system placements led to a decline in overall
revenue. We continue to see a healthy pipeline for systems and
expect growth in orders this year. We expect double-digit revenue
growth in 2023 driven by revenue recognition of our backlog and new
system orders."
"We retain a strong balance sheet which allows us to bring our
transformative product ecosystem to market, fund its
commercialization, and reach profitability."
A full-text copy of the press release is available for free at:
https://www.sec.gov/Archives/edgar/data/1289340/000149315223006634/ex99-1.htm
About Stereotaxis
Based in St. Louis, Missouri, Stereotaxis, Inc. --
http://www.stereotaxis.com-- designs, manufactures and markets an
advanced robotic magnetic navigation system for use in a hospital's
interventional surgical suite, or "interventional lab", that the
Company believes revolutionizes the treatment of arrhythmias by
enabling enhanced safety, efficiency, and efficacy for
catheter-based, or interventional, procedures. The Company's
primary products include the Genesis RMN System, the Odyssey
Solution, and related devices. The Company also offers to its
customers the Stereotaxis Imaging Model S x-ray System.
Stereotaxis reported a net loss of $10.72 million for the year
ended Dec. 31, 2021, a net loss of $6.65 million for the year ended
Dec. 31, 2020, and a net loss of $4.59 million for the year ended
Dec. 31, 2019. As of Sept. 30, 2022, the Company had $56.07
million in total assets, $22.72 million in total liabilities, $5.58
million in convertible preferred stock, and $27.77 million in total
stockholders' equity.
* * *
This concludes the Troubled Company Reporter's coverage of
Stereotaxis, Inc. until facts and circumstances, if any, emerge
that demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
SUNQUEST PROPERTY: Unsecureds to be Paid in Full over 60 Months
---------------------------------------------------------------
Sunquest Property Services, LLC, filed with the U.S. Bankruptcy
Court for the District of New Jersey a Small Business Plan of
Reorganization dated March 6, 2023.
The Debtor engages in the business of buying, selling,
constructing, renovating, managing and/or residential real
property. Sunquest owns two residential properties in Wildwood, New
Jersey, and one residential property in Port S. Lucie, Florida.
Unfortunately, Sunquest's business was substantially, negatively
impacted by the Covid-19 pandemic which took root in the Spring of
2020. As a result of the pandemic, including its effects on the
supply chain for construction materials, the labor market,
inflation, interest rates, and credit markets, Sunquest's ability
to renovate the targeted properties and return them to the
rental/sale market was significantly delayed and, as a consequence,
Sunquest's cash flow could not sustain its debt obligations.
On or about June, 2022, Civic Real Estate Holdings III, LLC,
initiated foreclosure proceedings in the Circuit Court for the 19th
Judicial Circuit in and for Indian River, Martin, Okeechobee and
St. Lucie Counties, State of Florida, against the Twi Beech Parkway
property. On October 20, 2022, the Florida court entered a Final
Judgment of Foreclosure, and thereafter, scheduled a sheriff's sale
for December 7, 2022.
On June 30, 2022, Civic Real Estate Holdings III, LLC, also
initiated foreclosure proceedings in the Superior Court of New
Jersey, Atlantic County, Chancery Division, General Equity Part,
against the Roberts Avenue Property. At the time of the bankruptcy
filing, the New Jersey foreclosure proceeding remained pending.
The Roberts Avenue Property is worth approximately $335,000.00 and
is subject to a mortgage loan obligation with a balance of
$357,643.75. The Roberts Avenue Property is rented and produces
rental income of $2,000.00 per month. At the time of the filing of
this Plan, the tenant is current on her monthly rent payments.
The Twin Beech Parkway Property is worth approximately $646,000.00
and is subject to a mortgage loan obligation with a balance of
$532,495.16. The Twin Beech Parkway Property is rented and produces
rental income of $3,000.00 per month. At the time of the filing of
this Plan, the tenant is current on her monthly rent payments.
The Baker Avenue Property is worth approximately $505,000.00 and is
subject to a mortgage loan with a balance of approximately
$385,000.00. The Baker Avenue Property is currently under
renovation. Additionally, Sunquest will be seeking to convert the
current two-unit apartment dwelling to two, separate condominium
units. Upon completion of the renovations and condominium
conversion, Sunquest intends to sell the two condominium units and
use the proceeds to fund the Plan.
Class 5 consists of the Unsecured Claim of Amit and Amanda Roy in
the amount of $54,432.00. This Class shall be paid in full in equal
monthly installments at legal rate of interest amortized over 60
months.
Class 6 consists of the Unsecured Claim of FGC Group International,
LLC in the amount of $149,587.44. This Class shall be paid in full
in equal monthly installments at legal rate of interest amortized
over 60 months.
The Plan will be funded through the sale of the Baker Avenue
Property and the sale or refinance of the Roberts Avenue Property
and the Twin Beech Parkway Property. Additional funding for the
Plan shall be provided via rental income from the Robert Avenue
Property and Twin Beech Parkway Property; and through capital
contributions made by DeMarzo.
A full-text copy of the Plan of Reorganization dated March 6, 2023
is available at https://bit.ly/3kWZq9V from PacerMonitor.com at no
charge.
About Sunquest Property Services
Sunquest Property Services LLC is engaged in activities related to
real estate.
Sunquest Property Services LLC filed a petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. D.N.J.
Case No. 22-19630) on Dec. 6, 2022. In the petition filed by Gary
Stephen DeMarzo, as managing member, the Debtor reported assets and
liabilities between $1 million and $10 million.
Holly Smith Miller has been appointed as Subchapter V trustee.
The Debtor is represented by:
Robert A. Loefflad
Ford, Flower, Hasbrouck & Loefflad
503 W. Burk Avenue
PO Box 2081
Wildwood, NJ 08260
TEAL PROPERTIES: Unsecureds to be Paid in Full in Sale Plan
-----------------------------------------------------------
Teal Properties, Inc., filed with the U.S. Bankruptcy Court for the
Eastern District of Tennessee a Second Amended and Restated Chapter
11 Disclosure Statement on behalf of Chapter 11 Plan dated March 5,
2023.
This is a partial liquidation plan. In other words, the Proponent
seeks to accomplish payments under the Plan through the liquidation
of real property (464 Craighead, Nashville, TN) which should be
sufficient to pay all of the creditors in this case in full.
The principal cause for filing a Chapter 11 stems from extended
litigation between the Debtor and Dog House Investments, LLC. The
foregoing is a summary of the facts, which the Debtor still
disputes, to wit: Dog House Investments, LLC v. Teal Properties,
Inc., 448 S.W.3d 905, 910-11 (Tenn. Ct. App. 2014) This dispute
arises from damage to real property caused by the May 2010 floods
throughout Nashville. Steve Lassiter (Mr. Lassiter) and Nancy
Purvis (Ms. Purvis) are the sole members of Plaintiff Dog House
Investments, LLC ("Dog House"). Dog House operates a dog camp
facility on real property which it leases from Defendant Teal
Properties, Inc. ("Teal Properties"). The five–year lease
agreement ("the Agreement") executed by the parties in June 2008
provides, in relevant part:
* Dog House alleged that it incurred expenses in excess of
$39,000 to repair the property; that it submitted invoices and
supporting documentation to Teal in June 2010; that Teal recovered
more than $40,000 from its insurance carrier after submitting
documentation of expenses incurred by Dog House; and that, despite
direct inquires by Dog House, Mr. Teal concealed that Teal had
received the insurance proceeds. Dog House alleged that Teal never
intended to reimburse it for expenses incurred in repairing the
property.
* Teal denied that Dog House was entitled to any proceeds of
the insurance recovery based on the terms of the parties'
Agreement, however, and generally denied liability. Following a
hearing in November 2012, the trial court entered judgment in favor
of Dog House on the basis of breach of contract, breach of implied
contract, and promissory fraud in the amount of $35,191.28. It also
found, by clear and convincing evidence, that Teal's conduct was
fraudulent and intentional and that punitive damages accordingly
were warranted. It awarded Dog House punitive damages in the amount
of $10,000.
* The trial court found that Mr. Teal is the owner of Teal
Properties and that Teal Properties is merely a sham or dummy
corporation and is the alter ego of Jerry Teal. It held Mr. Teal
personally liable for the judgment, and awarded Dog House
prejudgment interest in the amount of eight percent, totaling
$6,143.03. The trial court denied Dog House's motion to alter or
amend the judgment to increase the amount of punitive damages. The
trial court entered judgment against Teal in the amount of
$53,736.05 by final order entered January 25, 2013. Teal filed a
timely notice of appeal to this Court and the matter was heard by
the Western Section sitting in Nashville in November 2013.
The Debtor commenced ongoing litigation with this Dog House
Investments, LLC. The net result of this protracted litigation was
a claim in the amount of $412,277.58. While the allowance of this
claim is currently on appeal, the plan proposes to pay in full the
allowed amount of the claim after all litigation has been
exhausted.
The Debtor has sufficient equity in 464 Craighead, Nashville, TN to
pay all claimants in this case in full.
Class 5 consists of the Claims of General Unsecured Claimants other
than Armor Concepts, LLC. The Allowed Claims in this class will be
paid in full on the Effective Date of the plan from the sale of the
real property located at 464 Craighead, Nashville, TN. Claimants in
this class will be paid in full on the Effective Date of the plan.
This Class is unimpaired.
Class 6 consists of the Claims of General Unsecured Claimants
including Armor Concepts, LLC. The Allowed Claims in this class
will be paid in full from the proceeds of the sale of the real
property located at 464 Craighead, Nashville, TN, under the
following conditions, to wit:
* The Armor Claim shall be deemed an allowed Class 4 General
Unsecured Claim in the full amount set forth in the Armor Proof of
Claim to be paid in full consistent with the treatment of the other
Class 4 General Unsecured Claims pending objection by the Debtor as
set forth herein.
* If the Debtor wishes to object to the Armor Claim and seek
its disallowance, in whole or in part, it shall initiate a
contested matter seeking disallowance in compliance with applicable
bankruptcy law and the Federal Rules of Bankruptcy Procedure within
30 days of confirmation of the Plan or any other plan of
reorganization proposed by the Debtor (the "Armor Claim Allowance
Litigation"). In the event the Debtor does not timely initiate the
Armor Claim Allowance Litigation via a contested matter in
compliance with applicable law, the Armor Claim shall be deemed
allowed and paid in full pursuant to the Plan as modified herein.
* Following any sale of the Property but pending a final
determination of the allowance of the Armor Claim, whether through
the Armor Claim Allowance Litigation or otherwise, the full amount
of the Armor Claim shall be segregated and held in escrow by the
Debtor's counsel of record in its trust account (the "Armor Claim
Proceeds"). The Debtor shall have no right to use any portion of
the Armor Claim Proceeds, which shall remain held in escrow pending
further order of this Court.
* Upon a timely objection to the Armor Claim as provided
herein (the "Armor Claim Allowance Litigation"), the Armor Claim
Proceeds shall remain in escrow pending a final adjudication of the
Armor Claim Allowance Litigation. In the event that the Armor Claim
is deemed allowed following final adjudication of the Armor Claim
Allowance Litigation, the Debtor shall immediately disburse or
cause to be disbursed to Armor the full amount of the Armor Claim
as this Court deems allowed in such Armor Claim Allowance
Litigation from the Armor Claim Proceeds.
The Plan will be funded from the liquidation of property located at
464 Craighead, Nashville, Tennessee. The Debtor has received offers
on this property from multiple sources from $4,500,000.00 to
$5,200,000.00. The Debtor is currently considering an offer for
$5,200,000.00, carrying back a mortgage of $1,000,000.00 which
still provides for sufficient funds to pay all the claimants in
this estate in full.
A full-text copy of the Second Amended and Restated Disclosure
Statement dated March 5, 2023 is available at
https://bit.ly/3Jk9u65 from PacerMonitor.com at no charge.
Counsel to the Debtor:
Steven L. Leftkovitz, Esq.
Lefkovitz & Lefkovitz, PLLC
908 Harpeth Valley Place
Nashville, TN 37219
Tel: (615) 256-8300
Fax: (615) 255-4516
Email: slefkovitz@lefkovitz.com
About Teal Properties
Teal Properties, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. E.D. Tenn. Case No. 22-12203) on Sept. 30, 2022, with up to
$1 million in both assets and liabilities. Judge Nicholas W.
Whittenburg oversees the case.
The Debtor is represented by Lefkovitz & Lefkovitz, PLLC.
TECHNICAL COMMUNICATIONS: Amends $4M Promissory Note With CEO
-------------------------------------------------------------
Technical Communications Corporation issued on Feb. 23, 2023, a
Fourth Amended and Restated Promissory Note in the principal amount
of $4,000,000 in favor of Carl H. Guild, Jr. and Michelle S. Guild.
Mr. Guild, the Company's chief executive officer, president, chief
financial officer and chairman of the Board, had loaned the money
to the Company to provide working capital. The current outstanding
principal on the loan is $4,000,000, with $212,348.63 in interest
currently on the Company's books as accounts payable. The loan may
be prepaid at any time without premium or penalty. Payments are
due monthly in the amount of $78,264.59 beginning March 2023 over a
period of 60 consecutive monthly installments.
The Note has been amended to (i) fix the rate at which interest
accrues after the date of the Note on the outstanding principal
balance at 6.5%, (ii) remove the demand aspect of the Note and to
require montly payments of principal and interest, and (iii) add
Michelle S. Guild (Mr. Guild's spouse) as a holder of the Note.
About Technical Communications
Concord, Massachusetts-based Technical Communications Corporation
-- http://www.tccsecure.com-- specializes in secure communications
systems and customized solutions to protect highly sensitive voice,
data and video transmitted over a wide range of networks, serving
government entities, military agencies, and corporate enterprises.
As of Dec. 24, 2022, the Company had $1.91 million in total assets,
$4.68 million in total liabilities, and a total stockholders'
deficit of $2.77 million.
Westborough, Massachusetts-based Stowe & Degon LLC, Technical
Communications Corporation's auditor since 2019, issued a "going
concern" qualification in its report dated Dec. 22, 2022, citing
that the Company has an accumulated deficit, has suffered
significant net losses and negative cash flows from operations and
has limited working capital that raise substantial doubt about its
ability to continue as a going concern.
TOMS KING: Burger King Franchisee Gets $31-Million Starting Bid
---------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that a bankrupt Burger King
franchisee group based in Illinois has landed a $31 million opening
bid in its planned auction to sell 79 restaurants.
The debtor group, all subsidiaries of TOMS King Holdings LLC,
reached a deal to have 13th Floor Capital serve as a stalking-horse
bidder, according to a filing Monday, February 27, 2023, in the US
Bankruptcy Court for the Northern District of Ohio.
Subject to court approval, 13th Floor would be entitled to a
$775,000 break-up fee and up to $250,000 in expense reimbursements
if the investment firm is outbid at an auction scheduled for March
21, 2023.
About TOMS King
TOMS King LLC is a franchisee of Burger King restaurants. TOMS
King and its affiliates operate 90 Burger King restaurants spanning
four states: Illinois, Ohio, Pennsylvania, and Virginia.
TOMS King (Ohio) LLC and six affiliates, including TOMS King LLC,
filed for Chapter 11 bankruptcy protection (Bankr. N.D. Ohio Lead
Case No. 23-50001) on Jan. 2, 2022. In the petition filed by
Daniel
F. Dooley, as chief restructuring officer, the Debtor reported
assets up to $50,000 and liabilities between $10 million and $50
million.
Attorneys at Allen Stovall Neuman & Ashton LLP and Womble Bond
Dickinson (US) LLP are advising the Debtors. Omni Agent Solutions,
Inc., is the claims agent.
TRADESMAN BREWING: Seeks Cash Collateral Access
-----------------------------------------------
The U.S. Bankruptcy Court for the District of South Carolina
authorized Tradesman Brewing Co., Inc. to use cash collateral on an
interim basis in accordance with the budget.
The Debtor sought permission to use the cash collateral to ensure
that its operations continue without interruption.
The Debtor has represented that monies owed to its creditor, Climb
Fund, are secured by a lien in the Debtor's furniture, fixtures,
equipment, inventory, supplies, and proceeds thereof, that
represent cash collateral, as defined by 11 U.S.C. section 363(a).
Additionally, the Debtor has represented that monies owed to its
Creditor, U.S. Small Business Administration are secured by a lien
in the Debtor's tangible and intangible personal property.
To resolve the U.S. Trustee's objection, the Debtor represents that
insiders being paid under the budget are providing services to the
Debtor and are being compensated in an amount that is comparable to
those paid to non-insiders and are at a commercially reasonable
rate. The Debtor further represents that the shortfall in the
budget for January, February, and March 2023 will not occur because
the Debtor reduces its expenses based on the level of operations.
To resolve the Subchapter V Trustee's objection, the Debtor agrees
to remit payment to the Subchapter V Trustee in the amount of $750
per month beginning in May 2023, when the Debtor anticipates income
will be trending upward and sufficient to cover the cost.
As adequate protection for the Debtor's use of cash collateral,
Climb Fund and the SBA are granted replacement liens on post-
petition cash collateral to the same extent, validity, and priority
as their pre-petition liens on the petition date in all types and
descriptions of collateral that were properly secured and perfected
under the applicable, valid, and enforceable pre-petition loan
documents, for any post-petition diminution in the prepetition cash
collateral up to $89,287 for Climb Fund and $37,102 for the SBA.
A copy of the order is available at https://bit.ly/3ymOrcO from
PacerMonitor.com.
About Tradesman Brewing Co.
Tradesman Brewing Co., Inc. filed a petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.S.C. Case No. 23-00147)
on Jan. 13, 2023, with up to $50,000 in assets and up to $1 million
in liabilities.
Judge Elisabetta G. M. Gasparini oversees the case.
Steadman Law Firm, PA serves as the Debtor's bankruptcy counsel.
TRICIDA INC: Disclosure Statement Hearing Adjourned to March 21
---------------------------------------------------------------
Vince Sullivan of Law360 reports that drug developer Tricida Inc.
failed to receive court approval Monday, February 27, 2023, for its
Chapter 11 plan disclosure statement when a Delaware bankruptcy
judge said he had concerns about the release of claims through a
disfavored opt-out provision that would extinguish the claims of
shareholders in pending securities litigation against the company's
CEO.
After considering the Disclosure Statement Motion, the Court
adjourned the Hearing to March 6, 2023
According to court filings, on March 6, 2023, at the request of the
Debtor and its major stakeholders, the Court held a status
conference and agreed to further adjourn the Hearing to March 21,
2023 at 2:00 P.M. (ET).
About Tricida Inc.
Tricida Inc. -- https://www.tricida.com/ -- is a pharmaceutical
company working to turn the tide on metabolic acidosis and
progression of chronic kidney disease. The company is based in
South San Francisco, Calif.
Tricida filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Case No. 23-10024) on Jan. 12,
2023. It disclosed $93,879,000 in total assets against
$229,977,000 in total debt as of Sept. 30, 2022.
The Debtor tapped Sidley Austin, LLP and Young Conaway Stargatt &
Taylor, LLP, as counsels; SerraConstellation Partners, LLC as
financial advisor; and Stifel, Nicolaus & Company, Inc., and Miller
Buckfire, LLC as investment bankers. Kurtzman Carson Consultants,
LLC is the claims agent and administrative advisor.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtor's Chapter 11 case.
Womble Bond Dickinson (US) LLP and Rock Creek Advisors, LLC serve
as the committee's legal counsel and financial advisor,
respectively.
TUESDAY MORNING: $12.5MM DIP Loan from 1903P Loan Agent OK'd
------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
authorized Tuesday Morning Corporation and affiliates to use cash
collateral and obtain postpetition financing, on an interim basis.
The Debtors may borrow up to $12.5 million pursuant to the
Debtor-in-Possession Credit Agreement dated as of March 3, 2023, by
and among the Borrowers, the Guarantors, 1903P Loan Agent, LLC, as
administrative agent, for itself and for and on behalf of the other
lenders party thereto.
The Debtors will also need to use the cash collateral of (a) the
DIP Agent, for itself and for and on behalf of the DIP Lenders, (b)
Wells Fargo, in its capacity as administrative agent under the
Credit Agreement dated as of May 9, 2022, by and among, among
others, the Debtors, the Prepetition Agent, and the Prepetition ABL
Lenders, (c) Alter Domus (US) LLC, in its capacity as the term loan
representative for itself and on behalf of the other lenders under
the Credit Agreement, dated as of December 31, 2020, by and among
the Debtors, the Prepetition Term Loan Representative, and the
Prepetition Term Loan Lenders, and (d) TASCR Ventures CA, LLC, in
its capacity as the collateral agent for itself and on behalf of
the purchasers under the Amended and Restated Note Purchase
Agreement, dated as of September 20, 2022, by and among Tuesday
Morning Corporation, Tuesday Morning, Inc., the Prepetition
Convertible Noteholders and the Prepetition Convertible Notes
Agent.
The Debtors are parties to several loan documents including the
Prepetition ABL Claim Documents which consist of:
(i) revolving credit loans in the outstanding principal amount
of $5.226 million and issued and outstanding letters of credit in
the amount of $12.840 million to Wells Fargo and the Prepetition
ABL Lenders; and
(ii) FILO B Obligations in the amount of $10.644 million, plus
any and all interest, fees, costs, expenses, charges, premiums, and
other claims, debts or obligations of the Debtors.
The Debtors require the use of cash collateral and DIP loan to
maintain their assets, sell or otherwise liquidate their assets,
provide financial information, and pay employee compensation,
payroll taxes, overhead, and other expenses necessary to maximize
the value of the Debtors' estates.
The consent of the DIP Agent and DIP Lenders, the Debtors'
authority to use cash collateral and the DIP Lenders' commitment to
provide credit under the DIP ABL Credit Agreement and the Interim
Order, will be effective upon entry of the Interim Order to and
including the earlier of: (a) the Termination Declaration Date;
provided that the Debtors will be authorized to use cash collateral
following delivery of a Termination Declaration solely to the
extent set forth in the Interim Order; and (b) [TBD], 2023, at 5
p.m. Central Time, at which time all of the Debtors' authority to
use cash collateral and to obtain credit under the DIP ABL Credit
Agreement and the Interim Order will terminate, as will the DIP
Agent's and the DIP Lenders' obligation to continue funding the DIP
Facility, unless extended by written agreement of the parties, a
copy of which with an updated Budget will be promptly filed with
the Court by the Debtors.
The Debtors are required to comply with these milestones:
(a) On or before March 21, 2023 at 4 p.m. (CT), the Debtors
will designate a Stalking Horse Purchaser and Stalking Horse Asset
Purchase Agreement, in form and substance acceptable to the DIP
Agent, providing for the sale of all or substantially all of the
Debtors' assets pursuant to 11 U.S.C. section 363.
(b) On or before March 21, 2023, the Bankruptcy Court will
have entered the Final Order in form and substance acceptable to
the DIP Agent.
(c) On or before March 21, 2023, the Bankruptcy Court will
have entered one or more orders, each in form and substance
acceptable to the DIP Agent, approving the Bid Procedures Order and
providing, among other things, that qualifying bids will be due by
no later than April 10, 2023.
(d) On or before March 24, 2023 at 4:00 p.m. (CT), the Debtors
will send Cure and Possible Assumption and Assignment Notices to
All Contract Counterparties and Notice of the Sale.
(e) On or before April [19], 2023, the Bankruptcy Court will
have entered an Order in form and substance acceptable to the DIP
Agent, authorizing the sale of all or substantially all of the
Debtors' assets pursuant to section 363 of the Bankruptcy Code.
(f) On or before April [21], 2023, the Debtors will have
consummated a sale of all or substantially all of the Debtors'
assets pursuant to section 363 of the Bankruptcy Code.
As adequate protection, the DIP Agent and Prepetition Agents are
granted continuing, valid, binding, enforceable, non-avoidable, and
automatically and properly perfected first-priority priming liens
on and security interests in the DIP Collateral and allowed
superpriority administrative expense claim status pursuant to 11
U.S.C. section 364(c)(1) in each of the Cases and any Successor
Cases to the DIP Obligations.
A final hearing on the matter is set for March 21, 2023 at 1:30
p.m.
A copy of the motion is available at https://bit.ly/3ypBbUN from
PacerMonitor.com.
A copy of the order is available at https://bit.ly/3J3du9Q from
PacerMonitor.com.
About Tuesday Morning
Dallas, Texas-based Tuesday Morning Corporation is an off-price
retailer specializing in products for the home, including upscale
home textiles, home furnishings, housewares, gourmet food, toys and
seasonal decor, at prices generally below those found in boutique,
specialty and department stores, catalogs and on-line retailers.
Tuesday Morning and several affiliates filed for Chapter 11
bankruptcy protection (Bankr. N.D. Tex. Lead Case No. 23-90001) on
Feb. 14, 2023. The Debtors said both assets and liabilities, on a
consolidated basis, are between $100 million and $500 million.
The Hon. Edward L. Morris presides over the case.
Lawyers at Munsch Hardt Kopf & Harr, P.C., serve as counsel to the
Debtors. The Debtors tapped Piper Sandler as investment banker;
and Stretto, Inc., as claims and noticing agent.
UPLAND POINT: No Resident Complaints, PCO Report Says
-----------------------------------------------------
Kim Marheine, the court-appointed patient care ombudsman, filed
with the U.S. Bankruptcy Court for the Western District of
Wisconsin a report, dated March 1 regarding the quality of patient
care provided at Upland Point Corporation's health care facility.
During each visit all residents and visitors present were invited
to speak with the ombudsman or PCO. Generally, residents reported
being content, having their needs met by staff who are kind and
attentive. Very few concerns were expressed, and typically revolved
around wanting more outings into the community.
Summarizing the visits to residents and the interactions with
staff, the PCO would note the following:
* The staff and leadership have appeared to remain overall
consistent, and in the homes where multiple staff were present,
they seemed to work well together and with a high degree of
familiarity, respect and attentiveness toward the residents.
* Even during those times of complaints to the Ombudsman
Program about inadequate staffing, few concerns were received from
the residents or resident representatives of these homes regarding
staffing issues. Staff did at times discuss working with fewer
staff than they may have felt were ideal, but also stated that all
staff worked together to ensure resident needs were met and staff
also had opportunities for time off.
* During each visit the staff of each home responded to the
ombudsman's or PCO's questions and requests with professionalism
and a clear knowledge for each resident's needs and abilities. The
positive rapport between staff and residents was always evident.
* Visits were often made during or around meal preparation
times when kitchen staff could be interviewed, and food preparation
processes observed. No complaints were received from residents
about food quality or quantity, and snacks appeared to be in good
supply and with variety.
* The residents of each home consistently appeared content and
typically engaged with staff. They were well-dressed and groomed,
were often involved in some sort of social program or personal
activity preference, and offered no complaints.
A copy of the ombudsman report is available for free at
https://bit.ly/3ycJNht from PacerMonitor.com.
About Upland Point Corporation
Upland Point Corporation, which operates six assisted living
facilities, sought protection for relief under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Wisc. Case No. 20-12186) on Aug. 21,
2020, with as much as $1 million in both assets and liabilities.
Judge Catherine J. Furay oversees the case.
Michelle A. Angell, Esq., at Krekeler Strother, S.C. is the
Debtor's legal counsel.
VELOCIOUS DELIVERY: Unsecureds Will Get 100% of Claims over 5 Years
-------------------------------------------------------------------
Velocious Delivery LLC filed with the U.S. Bankruptcy Court for the
Southern District of Texas a Plan of Reorganization dated March 6,
2023.
The Debtor is a delivery service specializing in the delivery of
pharmaceuticals and was created on August 19, 2020.
The Debtor was forced to file bankruptcy due to its inability to
make the requisite daily payments of several high interest loans
and the aggressive collection efforts of merchant cash advance
companies.
The Debtor filed this case on December 9, to seek protection from
aggressive collection efforts by creditors that, if continued,
would be to the detriment of other creditors. The Debtor proposes
to pay allowed unsecured based on the liquidation analysis and cash
available. The Debtor anticipates having enough revenue to fund the
plan and pay the creditors pursuant to the proposed plan.
The Debtor will continue operating its business. The Debtor's Plan
will break the existing claims into five classes of claims. These
claimants will receive cash repayments over a period of time
beginning on the Effective Date.
Class 4 Claims General Unsecured Claims. These claims are impaired.
All allowed unsecured creditors shall receive 100% of their allowed
unsecured claim at zero percent per annum, paid in monthly
installments, over the next 5 years beginning no 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 4 years.
* 4-1 American Express (Claim No. 1) filed an unsecured claim
for $1,821.99. The Debtor will pay the full amount of the claim at
zero percent interest per annum over the next five years with the
first monthly payment being due and payable on the 15th day of the
first full calendar month following the Effective Date, unless this
date falls on a weekend or federal holiday, in which case the
payment will be due on the next business day. The monthly payment
will be $30.36.
* 4-2 Wells Fargo Bank, N.A. (Claim No. 2) filed an unsecured
claim for $9,668.43. The Debtor will pay the full amount of the
claim at zero percent interest per annum over the next five years
with the first monthly payment being due and payable on the 15th
day of the first full calendar month following the Effective Date,
unless this date falls on a weekend or federal holiday, in which
case the payment will be due on the next business day. The monthly
payment will be $161.14.
Class 5 consists of Equity Interest Holders. Current Owners are not
impaired under the Plan. The current owners will receive no
payments under the Plan; however, they will be allowed to retain
their ownership in the Debtor. Class 5 Claimants are not impaired
under the Plan.
The Debtor anticipates the continued operations of the business to
fund the Plan.
A full-text copy of the Plan of Reorganization dated March 6, 2023
is available at https://bit.ly/3FbaCqb from PacerMonitor.com at no
charge.
Attorney for the Debtor:
Samuel L. Milledge, Sr.
The Milledge Law Firm, PLLC
2500 East T.C. Jester Blvd. Suite 510
Houston, TX 77092
Telephone: (713) 812-1409
Facsimile: (713) 812-1418
Email: milledge@milledgelawfirm.com
About Velocious Delivery
Velocious Delivery LLC is a delivery service specializing in the
delivery of pharmaceuticals. The Debtor sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Case No.
22-33690) on December 9, 2022. In the petition signed by Brandon
Toledo, president, the Debtor disclosed up to $100,000 in assets
and up to $500,000 in liabilities.
Judge Jeffrey P. Norman oversees the case.
Samuel L. Milledge, Sr. Esq., at The Milledge Law Firm, PLLC,
represents the Debtor as counsel.
Jarrod B. Martin has been appointed as Subchapter V Trustee.
VICE MEDIA: Taps Restructuring Expert Amid Bankruptcy Rumors
------------------------------------------------------------
Lydia Moynihan of NY Post reports that Vice Media has named a
well-known restructuring guru to its board amid speculation that
the company could be on the verge of bankruptcy, On the Money has
learned.
After more than a year of trying to sell itself, Vice has brought
in Mo Meghji -- who served as Chief Restructuring Officer for Sears
and Barney's -- to the board, sources said.
"Oftentimes, large, troubled companies will bring a restructuring
expert to the board to guide the company through this process,"
Perry Mandarino, co-head of restructuring and at B. Riley
Securities, told On the Money.
The move reveals a new level of desperation and an increasing
likelihood Vice will be chopped up and sold in pieces with
shareholders being wiped out. Vice previously retained FTI and
AlixPartners to explore restructuring. FTI is now suing to recover
$1 million in fees.
"They hired a financial advisor a year ago — a year later and
they're losing money so they're not paying their vendors…Fortress
had to put in $30 million more so Vice doesn't get the electricity
shut off." David Wander, partner at Tarter Krinsky & Drogin told On
the Money, referring to the failed auction last 2022.
"Sometimes bankruptcy is the only way to get a sale — and it
seems like that's what they’ll have to do because they haven't
been able to get the bride to the altar to close a deal," he
added.
At this point, bankruptcy is a possibility even if Vice manages to
attract a buyer for its assets, some of which look appealing such
as its TV studio and ad agency.
"In bankruptcy, a buyer can cherry-pick the assets and liabilities
it wants to buy and assume." Mandarino added.
In a statement to The Post, a spokesperson for Vice said, “The
VICE Board of Directors is undertaking a comprehensive review of
options, including a potential sale of the company, and has engaged
a range of advisors to assist in that effort. We’re excited about
the response thus far – which reflects the unique power and value
of the VICE brand and the opportunity for long-term growth and
success.”
During the past few days, Vice CEO Nancy Dubuc departed and the
company’s Global President of News & Entertainment Jesse Angelo
left. Vice also recently took a $30 million loan from so-called
“vulture fund” Fortress Investments that previously was part of
a consortium that loaned Vice $250 million in 2019.
A report last month in the Wall Street Journal revealed Vice
hasn’t been able to pay its bills — it owes millions including
debts to vendors ranging from media measurement group Nielsen to
$400,000 owed to a company named AIR.TV
It's a dramatic fall from grace for a company that at its apex in
2017 was valued at $5.7 billion. Some insiders speculate that the
total sum of its part at this point could be worth less than the
$400 million it paid for the young woman-focused website Refinery
29.
At the height of its valuation, Vice was bringing in several
hundred million in revenue. But that revenue has turned into a
trickle, sources told On the Money.
Rich Greenfield, analyst at LightShed Partners says this is
emblematic of the industry writ large. "A lot of these digital
media companies got overinflated values and missed the window to
sell and now they're stuck," Greenfield adds "I'm surprised Vice
has been able to survive as long as it has; many people thought it
would die several years ago."
About Vice Media
Vice Media Group LLC -- https://www.vicemediagroup.com/ -- is an
American-Canadian digital media and broadcasting company.
VISTAGEN THERAPEUTICS: Issued U.S. Patent for PH80 Nasal Spray
--------------------------------------------------------------
Vistagen announced that the U.S. Patent and Trademark Office
(USPTO) has granted a U.S. patent for Vistagen's PH80 nasal spray
for treatment of migraine. The newly issued patent will be in
effect until at least 2040.
PH80 is an investigational pherine nasal spray designed with a
potential rapid-onset mechanism of action that is fundamentally
differentiated from all currently approved treatments for migraine.
PH80 does not require systemic exposure to produce an effect,
providing a significant potential therapeutic advantage over
traditional pharmaceuticals targeted at the CNS. PH80 nasal spray
initiates neural impulses in the olfactory bulb transmitted by
pathways that rapidly affect brain function, including the amygdala
and hypothalamus, which have been linked to the pathology of
migraine.
Migraine affects about 40 million adults in the U.S. each year, and
while approved treatments are available, many individuals could
benefit from safer and more efficacious treatment options. PH80
has the potential to be a safe, fast-acting, easy to use nasal
spray for the treatment of migraine.
Vistagen's recently completed acquisition of Pherin Pharmaceuticals
resulted in the full ownership of intellectual property rights
worldwide to five pherine drug candidates, including, the newly
issued PH80 patent for the treatment of migraine (U.S. Patent
11,419,881), among others.
About VistaGen
Headquartered in San Francisco, California, VistaGen Therapeutics,
Inc. -- http://www.vistagen.com-- is a biopharmaceutical company
committed to developing and commercializing innovative medicines
with the potential to go beyond the current standard of care for
anxiety, depression, and other CNS disorders.
VistaGen reported a net loss and comprehensive loss of $47.76
million for the fiscal year ended March 31, 2022, compared to a
net
loss and comprehensive loss of $17.93 million for the fiscal year
ended March 31, 2021. As of Dec. 31, 2022, the Company had $29.71
million in total assets, $9.03 million in total liabilities, and
$20.67 million in total stockholders' equity.
In its Quarterly Report filed on February 7, 2023, Vistagen
Therapeutics said it had cash and cash equivalents of approximately
$25.0 million at December 31, 2022, which it believes will not be
sufficient to fund its planned operations for the next 12 months,
which raises substantial doubt regarding its ability to continue as
a going concern.
VISTRA CORP: Fitch Lowers LongTerm IDR to 'BB', Outlook Stable
--------------------------------------------------------------
Fitch Ratings has downgraded the Long-Term Issuer Default Rating
(IDR) of Vistra Corp. and Vistra Operations Company, LLC to 'BB'
from 'BB+'. The Rating Outlook is Stable. Fitch has affirmed the
senior secured debt at 'BBB-'/'RR1' for Vistra Operations, and
downgraded the senior unsecured debt to 'BB'/'RR4' from 'BB+'/'RR4'
and Vistra Corp.'s preferred stock rating to 'B+'/'RR6' from
'BB-'/'RR6'.
The downgrade of Vistra is driven by yesterday's announcement of
the debt financed acquisition of Energy Harbor's (EH) nuclear
assets and its retail business and management's willingness to
delay the return to its stated leverage targets yet again. Fitch
expects Vistra's debt to EBITDA ratio will remain above the
negative sensitivity threshold of 3.5x until at least 2025.
Although the addition of EH's assets provides diversification away
from Vistra's retail and generation concentration in ERCOT, it
increases leverage such that Vistra's credit profile is more
in-line with a 'BB' rating.
KEY RATING DRIVERS
Transaction Increases Leverage: Vistra's downgrade reflects higher
EBITDA leverage for 2023 and beyond compared to prior Fitch's
expectations, driven by about $2.6 billion of planned debt
issuances to finance the EH acquisition. Acquisition financing is
also pushing out Vistra's previous debt paydown plans.
While management still aspires to achieve investment-grade leverage
metrics and is targeting net debt/EBITDA leverage below 3.0x, the
goal has been pushed back by a few years. Fitch expects an
improvement in pro forma EBITDA over time as a result of improved
energy margins at EH following the roll off below market hedges and
merger synergies from EH integration. However, the trajectory of
credit metrics will largely be driven by management's financial
policy.
Deleveraging Over Time: Per Fitch's calculations, Vistra's 2022
EBITDA leverage jumped to 4.5x as increased liquidity requirements
due to higher than average collateral requirements resulted in
higher short-term debt. Over the forecast period total pro forma
consolidated leverage is expected to decline as collateral
requirements are reversed and assuming some of the free cash flow
is allocated for debt paydown. Even though commodity prices have
moderated in recent months, these remain higher than Fitch's prior
expectations, bolstering Vistra's EBITDA and FCF generation profile
over the forecast period.
Fitch projects total consolidated leverage post acquisition to
trend toward 3.5x in 2025-2026, which is later than previously
expected. Fitch's leverage calculations reflect 50% debt allocated
to $2 billion preferred stock. Fitch assigned a 50% equity credit
to the preferred stock based on the ability to defer dividend
payments for at least up to five years.
Fitch expects planned investments into renewable and battery
storage opportunities will be mostly financed by third-party
non-recourse debt. Vistra's capital plan includes about $1.4
billion of non-recourse debt over next couple of years; however,
there is none currently issued.
Acquisition Provides Diversification: Fitch views the announced
acquisition of EH as positive for Vistra's credit profile. The
acquisition of four nuclear plants located in PJM provides
geographical diversification while adding strong baseload assets to
Vistra's generation portfolio, including relatively low fuel cost
dynamics and assets that run at capacity factors in excess of 90%.
The Inflation Reduction Act (IRA) establishes a nuclear Production
Tax Credit (PTC) mechanism, thereby providing a revenue floor for
nuclear plants. In Fitch's view, the nuclear PTCs provide a key
credit strength that somewhat offsets Vistra's increased leverage.
EH's assets, including synergies from integration, should
contribute about 20% of Vistra's consolidated EBITDA by 2025.
Despite the positive aspects of nuclear assets, Fitch regards
nuclear generation as having higher operating risk. EH's nuclear
fleet is mature with an average age of over 40 years, but plants
are permitted for the next 20+ years, excluding the Perry facility,
which is due for license renewal by 2026. No nuclear asset in the
U.S. has failed to be permitted in the last 30 years. Fitch
believes the company's strong operating performance record largely
mitigates re-licensing risk. Over the last five years, EH's average
outage rates have been lower than 5%.
Equity Ownership in Vistra Vision: Fitch expects EH shareholders
could look to monetize their minority equity interest in Vistra
Vision in the next several years. This could involve a sale of the
minority interest. Long term, Fitch expects, Vistra might explore
options to divest Vistra Vision into a standalone business.
Hedges Provide Near-Term Earnings Visibility: Vistra (standalone)
is well hedged for 2023 to 2025 (approximately 92% hedged for 2023
and over 70% hedged for 2024, which implies about 50% for 2025),
providing increased confidence in the company's EBITDA
expectations. The addition of EH's nuclear assets provides
additional revenue security supported by Nuclear PTCs.
In addition, Vistra's retail business provides revenue stability
with relatively high renewal rates and stable margins in its
primary Texas market. Retail margins in the commercial and
industrial segments generally remain range-bound during commodity
cycles, and residential retail margins are usually countercyclical,
given the length and stickiness of the customer contracts. TXU
Energy Company LLC, Vistra's largest retail electricity operation
in Texas, has demonstrated strong brand recognition, tailored
customer offerings and effective customer service, which are
driving high customer retention.
DERIVATION SUMMARY
Vistra is well-positioned relative to Calpine Corporation
(B+/Stable) and NRG Energy (BB+/Stable) in terms of size, scale and
geographic and fuel diversity. Vistra is the largest independent
power producer in the country, with approximately 40GW of pro-forma
generation capacity compared with Calpine's 26GW.
Vistra's generation capacity is well-diversified by fuel, compared
with Calpine's natural gas-heavy portfolio. Vistra's portfolio is
less diversified geographically, with more than 70% off its
consolidated EBITDA currently coming from operations in Texas,
while Calpine's fleet is more geographically diversified across
PJM, Texas and California. The addition of EH will provide
diversification from Texas and larger presence in PJM, a credit
positive. In addition, EH's nuclear fleet supported by federal
nuclear PTCs provides a high degree of revenue visibility for the
next decade. NRG's acquisition of Vivint will continue the
company's transformation from its origins as a power generator and
provide additional revenue channels, further diversifying NRG's
revenue stream compared to Vistra.
Vistra, like NRG, benefits from its ownership of large and well
entrenched retail electricity businesses in Texas, compared with
Calpine, which has a smaller retail business. Calpine's younger and
predominant natural gas fired fleet bears less operational and
environmental risk compared with Vistra's portfolio that also has
nuclear and coal generation assets. In addition, Calpine's EBITDA
is more resilient to changes in natural gas prices and heat rates
as compared to its peers. NRG is short generation compared with
Vistra and Calpine, and serves load from sources other than its own
generation.
Fitch projects Vistra's leverage to trend toward 3.5x in 2025-2026,
which compares favorably with Calpine's leverage, which is forecast
to remain around 5.0x. Fitch expects NRG to allocate FCF to
maintain leverage within rating thresholds of 3.0x-3.5x beyond
2023.
KEY ASSUMPTIONS
- Acquisition of EH for $3 billion cash and a 15% equity interest
in Vistra Vision;
- Acquisition financed with issuance of $2.6 billion of Vistra
Operations debt in 2023;
- Acquisition of EH to be completed as of Sept. 30, 2023;
- Hedged generation in 2023-2026 per management's guidance;
- Power prices in key markets such as PJM and ERCOT at a discount
to current forward prices;
- Annual retail load of approximately 100TWH for Vistra and about
25TWH for EH;
- Capacity revenues per past auction results; future PJM capacity
auctions in-line with the last auction results;
- Total capex of about $5.4 billion over 2023-2026 including Vistra
Vision;
- Share repurchases of approximately $4.0 billion over 2023-2026;
- Common dividends of about $300 million annually;
- Run rate synergies of about $125 million by 2025;
- Issuance of about $1.4 billion of project finance debt over the
forecast period consolidated on the Vistra's balance sheet.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- While Fitch does not anticipate positive rating actions in the
near to medium term, demonstrated EBITDA leverage lower than 3.5x
on a sustainable basis coupled with track record of stable EBITDA
generation and continued emphasis on an integrated wholesale-retail
platform could lead to a positive rating action.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Gross debt/EBITDA above 4.0x on a sustained basis;
- Weaker power demand and/or higher than expected supply depressing
wholesale power prices and capacity auction outcomes in its core
regions;
- Unfavorable changes in regulatory constructs and markets;
- Lack of access to adequate liquidity to meet collateral
requirements;
- An aggressive growth strategy that diverts a significant
proportion of FCF toward merchant generation assets and/or
overpriced retail acquisitions.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Vistra's liquidity has been negatively affected
by rising natural gas and power prices that drove up collateral
postings in 2022 given its hedged profile. Management was able to
increase its revolver commitments in 2022 and accessed capital
markets to bolster liquidity. As of Dec. 31, 2022, the company had
approximately $2.87 billion of liquidity available consisting of
$455 million of cash in hand and $2.4 billion available under
various revolving facilities.
There was $650 million of short-term borrowings outstanding under
the Commodity-Linked Facility and the Revolving Credit Facility as
of Dec. 31, 2022.
As of Dec. 31, 2022, Vistra's revolving credit facility agreement
had a total commitment of $3.375 billion, of which $3.175 billion
expires April 2027, while the balance of $200 million expires June
2023. Vistra can issue LCs under its revolving credit facility up
to $3.245 billion.
On Oct. 5, 2022, Vistra initiated an amendment to the
Commodity-Linked Facility to extend the maturity date to October
2023 from October 2022 and reduced the aggregate available
commitments to $1.25 billion from $2.25 billion. On Oct. 21, 2022,
the Commodity Linked Facility was further amended to increase the
aggregate available commitments to $1.35 billion.
ISSUER PROFILE
Vistra is the largest independent power generator in the U.S. with
approximately 37 GW of capacity. Vistra Retail is one of the
largest retail providers in the country with roughly 95 TWHs of
load and approximately 4 million customers.
ESG CONSIDERATIONS
Vistra Corp. has an ESG Relevance Score of '4' for Exposure to
Environmental Impacts due to exposure to deficiencies in ERCOT's
energy only market construct caused by extreme weather events,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
ESG Relevance Score for Exposure to Environmental Impacts of '4'
has been revised from '5'. The score was set at '5' following the
effects of February 2021 severe winter weather, which has had a
material negative impact on Vistra's credit profile. The storm has
exposed deficiencies in ERCOT's market design and ability to keep
the grid functioning well in the face of an extreme weather event,
which increases the risk of owning power generation and retail
electricity businesses in the state. The financial hit to Vistra as
a consequence of the weather event resulted in a material jump in
near-term leverage and a change in the Outlook to Negative.
Subsequently, ERCOT has taken some measures to improve grid
reliability in the face of the extreme weather, but has not
resolved potential future reliability issues cause by severe
weather events stemming from its energy only market construct.
Vistra's management has also taken steps to address its fleet fuel
related issues, which were the main drivers of the financial loss
Vistra experienced due to winter storm Uri.
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
----------- ------ -------- -----
Vistra Corp. LT IDR BB Downgrade BB+
Preferred LT B+ Downgrade RR6 BB-
Vistra Operations
Company, LLC LT IDR BB Downgrade BB+
senior secured LT BBB- Affirmed RR1 BBB-
senior
unsecured LT BB Downgrade RR4 BB+
VITAL PHARMACEUTICAL: Scheduled for April 27 Bankruptcy Auction
---------------------------------------------------------------
Brian Bandell of South Florida Business Journal reports that Vital
Pharmaceuticals, the parent company of energy drink maker Bang
Energy, is slated for auction through U.S. Bankruptcy Court.
The Weston-based company (VPX) filed Chapter 11 reorganization in
October 2022 with more than $1.7 billion in liabilities. It cited
litigation from rival Monster Energy and a flawed distribution
agreement with PepsiCo as reasons for heading to bankruptcy court.
On Feb. 24, 2023, U.S. Bankruptcy Judge Peter Russin approved VPX's
motion to hold a court auction for its business on April 27, 2023.
In its motion to sell the business on Jan. 27, 2023 VPX said it
already started marketing the company to potential buyers through
its investment bank, Rothschild & Co.
Under the approved order, VPX has until March 24, 2023 to select a
stalking-horse bidder. That bidder would set the floor for the
auction with an initial bid, and would be owed a breakup fee if
another party wins the auction. Parties in the case would have
until March 31 to object to the selection of the stalking-horse
bidder.
Following the auction process on April 27, Russin would hold a
hearing May 10 to approve or reject the results of the auction.
Miami-based attorney Jordi Guso, who represents VPX in Chapter 11,
couldn't be reached for comment; neither could company officials.
John "Jack" Owoc was listed as the company's CEO and sole
shareholder. At the time of its Chapter 11 filing, the company had
1,103 employees and $581 million in assets.
According to its case summary, VPX had year-to-date revenue of $442
million through August 2022, compared to $728.3 million for all of
2021. It’s among the largest private companies in South Florida.
Being on the losing end of litigation caused problems for Bang
Energy.
In January 2022, Monster Energy and its affiliate, Orange Bang, won
an arbitration award in California court against VPX over a
trademark infringement claim. After the court refused to set that
$214.8-million judgment aside, VPX appealed it to the 8th U.S.
Circuit Court of Appeals.
In another case, Monster Energy won a $292.9 million jury verdict
against VPX and Owoc in September 2022 over false advertising,
trade secret misappropriation, violation of the federal Computer
Fraud and Abuse Act, and interference with contracts for retail
shelf space. VPX and Owoc have appealed.
VPX filed a lawsuit Feb. 17, 2023 in bankruptcy court against
Orange Bang and Monster Energy, asking the court to ensure that
whoever buys Bang Energy remains subject to an arbitration award
between VPX and Monster Energy. VPX is allowed to continue using
the Bang Energy trademarks as long as it pays Monster Energy 5% of
net sales. VPX hopes that whoever buys the company could continue
that arrangement without losing access to the valuable Bang Energy
trademarks.
About Vital Pharmaceuticals Inc.
Since 1993, Florida-based Vital Pharmaceuticals, Inc., doing
business as Bang Energy and as VPX Sports, has developed
performance beverages, supplements, and workout products to fuel
high-energy lifestyles. VPX Sports is the maker of Bang energy
drinks, among other consumer products.
Vital Pharmaceuticals, Inc., along with certain of its domestic
subsidiaries and affiliates, filed voluntary petitions for
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Fla. Lead Case No. 22-17842) on Oct. 10, 2022.
VPX estimated $500 million to $1 billion in assets and liabilities
as of the bankruptcy filing.
The Hon. Scott M. Grossman is the case judge.
The Debtors tapped Latham & Watkins, LLP as general bankruptcy
counsel; Berger Singerman, LLP as local counsel; Haynes and Boone,
LLP and Faulkner ADR Law, PLLC as special counsels; Huron
Consulting Group, Inc. as CTO services provider; and Rothschild &
Co US, Inc. as investment banker. Stretto, Inc. is the notice,
claims and solicitation agent.
The U.S. Trustee for Region 21 appointed an official committee of
unsecured creditors on Nov. 1, 2022. The committee tapped
Lowenstein Sandler, LLP as general bankruptcy counsel; Sequor Law,
P.A. as local counsel; and Lincoln Partners Advisors, LLC as
financial advisor.
VOYAGER DIGITAL: 97% of Customers Voted in Favor of Bankruptcy Plan
-------------------------------------------------------------------
Decrypt reports that Voyager Digital announced that 97% of its
customers with account holder claims have voted in favor of the
proposed restructuring plan that will see Binance.US acquire the
firm’s assets for $1.02 billion.
Bankruptcy administration company Stretto, which conducted the
poll, divided the eligible voters into four categories, one for
“account holder claims” and three for “general unsecured
claims.” The majority of voters representing the latter groups
also voted in favor of the proposal.
General unsecured claims have a lower priority and may not be paid
until the account holder claims are paid in full.
Voyager added that more information will follow after a hearing
scheduled for Thursday.
The New York-based Voyager filed for bankruptcy in July 2022,
citing the firm’s exposure to Three Arrows Capital (3AC). At the
time, Voyager said it had more than 100,000 creditors and between
$1 and $10 billion in assets, with the same range for its
liabilities.
3AC, a Singapore-based crypto hedge fund, failed to meet margin
calls from several lenders prior to that, also filing for
bankruptcy.
In December 2022, after the purported deal with FTX fell through
due to the collapse of Sam Bankman-Fried's crypto empire, Voyager
announced that Binance.US -- the American entity of Binance -- had
made the highest and best offer for its distressed assets, with the
approximate value of the deal of $1.022 billion.
If the deal is executed, Voyager customers will get up to 51% of
their capital back.
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.
VOYAGER DIGITAL: Amends Account Holder Claims Pay Details
---------------------------------------------------------
Voyager Digital Holdings, Inc., et al., submitted a Third Amended
Joint Plan dated March 5, 2023.
Although proposed jointly for administrative purposes, the Plan
constitutes a separate Plan for each Debtor for the resolution of
outstanding Claims and Interests pursuant to the Bankruptcy Code.
Class 3 consists of all Account Holder Claims. Each Holder of an
Allowed Account Holder Claim will receive in exchange for such
Allowed Account Holder Claim:
* If the Sale Transaction is consummated by the Outside Date:
-- its Net Owed Coins, as provided in and subject to the
requirements of the Asset Purchase Agreement and Article VI.C.8 of
the Plan; provided that (i) for Account Holders in Supported
Jurisdictions who do not complete the Purchaser's onboarding
requirements within 3 months following the Closing Date and, (ii)
Account Holders in Unsupported Jurisdictions and who make a written
election, in accordance with a notice to be issued by the Debtors
and within 3 months following the later of the Closing Date or the
date which the terms and conditions for the Binance.US Platform are
made available to such Account Holders to accept, to receive value
in Cash on account of the Net Owed Coins allocable to such Account
Holders, and (iii) Account Holders in Unsupported Jurisdictions who
do not make the election in the prior clause only to the extent
that the Purchaser does not obtain the Unsupported Jurisdiction
Approval for the jurisdiction in which such Account Holder resides
within 6 months following the Closing Date, such Account Holders
shall receive, after expiration of such applicable time period
(i.e., (a) 3 months following the Closing Date for the Account
Holders described in subsection (i) of this paragraph, (b) 3 months
following the later of the Closing Date or the date which the terms
and conditions for the Binance.US Platform are made available to
such Account Holder to accept for the Account Holders described in
subsection (ii) of this paragraph, and (c) 6 months for the Account
Holders described in subsection (iii) of this paragraph), value in
Cash at which such Net Owed Coins allocable to such Account Holder
are liquidated;
-- its Pro Rata share of any Additional Bankruptcy
Distributions, in Cryptocurrency or Cash as provided in and subject
to the requirements of the Asset Purchase Agreement;
-- its Pro Rata share of Distributable OpCo Cash; and
-- to effectuate distributions from the Wind-Down Debtor, its
Pro Rata share of the Wind-Down Debtor Assets attributable to OpCo;
provided that any distributions on account of the Wind-Down Debtor
Assets attributable to OpCo shall only be made following payment in
full of, or reserve for, Allowed Administrative Claims, Allowed
Priority Tax Claims, Allowed Secured Tax Claims, and Allowed Other
Priority Claims at OpCo;
provided that distributions made to any Account Holder pursuant to
clauses (B), (C), and (D) shall be made after taking into account
the Acquired Coins Value of the Net Owed Coins or the value in Cash
at which such Net Owed Coins are liquidated, as applicable,
previously allocated to such Account Holder; or
* If the Sale Transaction is not consummated by the Outside Date
or the Asset Purchase Agreement is terminated:
-- its Pro Rata share of Distributable OpCo Cash;
-- its Pro Rata share of Distributable Cryptocurrency, which
such Account Holder shall be able to withdraw in kind, alternative
Cryptocurrency, and/or Cash for a period of 30 days after the
Effective Date through the Voyager platform or, if elected by
Seller pursuant to the Asset Purchase Agreement, through the
Binance.US Platform; provided that if the applicable transfer is
made through the Voyager platform and such Account Holder does not
withdraw its Pro Rata share of Distributable Cryptocurrency
available to such Account Holder from the Voyager platform within
such 30 day period, such Account Holder will receive Cash in the
equivalent value to its Pro Rata share of Distributable
Cryptocurrency; and
-- to effectuate distributions from the Wind-Down Debtor, its
Pro Rata share of the Wind-Down Debtor Assets attributable to OpCo;
provided that any distributions on account of Wind-Down Debtor
Assets attributable to OpCo shall only be made following payment in
full of, or reserve for, Allowed Administrative Claims, Allowed
Priority Tax Claims, Allowed Secured Tax Claims, and Allowed Other
Priority Claims at OpCo.
The Sale Transaction
If the Sale Transaction is consummated by the Outside Date,
pursuant to the terms of the Asset Purchase Agreement, then the
following terms shall govern:
On or prior to the Effective Date, the Debtors shall have
consummated the Sale Transaction, and, among other things, the
Acquired Assets and Assumed Liabilities shall have transferred to
the Purchaser free and clear of all Liens, Claims, Interests,
charges, or other encumbrances, and the Purchaser shall pay to the
Debtors or Holders of Account Holder Claims and Holders of OpCo
General Unsecured Claims, as applicable, the proceeds from the Sale
Transaction, as and to the extent provided for in the Asset
Purchase Agreement, and this Plan. The Confirmation Order shall
authorize the Debtors, the Purchaser, and the Wind-Down Debtor, as
applicable, to undertake the transactions contemplated by the Asset
Purchase Agreement.
Notwithstanding anything to the contrary in the Asset Purchase
Agreement, this Plan, or any Definitive Document, the Debtors, each
Account Holder or Holder of an Allowed OpCo General Unsecured
Claim, as applicable, shall retain all right, title, and interest
in and to any Cryptocurrency allocated to such Account Holder or
Holder of an Allowed OpCo General Unsecured Claim pursuant to this
Plan through and including such time as such Cryptocurrency is
returned or distributed to the Debtors or such Account Holder or
Holder of an Allowed OpCo General Unsecured Claim, as applicable,
hereunder, and such Cryptocurrency shall be held by Purchaser
solely in a custodial capacity in trust and solely for the benefit
of the Debtors or Account Holder or Holder of an Allowed OpCo
General Unsecured Claim, as applicable, thereafter.
The Liquidation Transaction
On or after the Outside Date, the Debtors will pursue the
Liquidation Transaction in accordance with the Liquidation
Procedures. Pursuant to the Liquidation Transaction, the Debtors,
the Wind-Down Debtor, or the Plan Administrator, as applicable,
will distribute certain of the Cryptocurrency in-kind to Holders of
Account Holder Claims in accordance with the Plan, transfer all
Wind-Down Debtor Assets to the Wind-Down Debtor, liquidate certain
of the Cryptocurrency, distribute Cash to Holders of Claims, wind
down and dissolve the Debtors, and pursue final administration of
the Debtors' Estates pursuant to the Bankruptcy Code.
The Debtors, or the Wind-Down Debtor, as applicable, shall be
authorized to take all actions as may be deemed necessary or
appropriate to consummate the Liquidation Transaction pursuant to
this Plan. On or before the date that is twenty-one days prior to
the anticipated commencement of the Liquidation Transaction, the
Debtors, or the Wind-Down Debtor, as applicable, shall file the
Liquidation Procedures with the Bankruptcy Court. Parties in
interest shall have ten days to object to the Liquidation
Procedures, and if no objections are timely filed, the Liquidation
Procedures shall be approved. In the event of a timely objection,
the Bankruptcy Court shall adjudicate any objection to the
Liquidation Procedures.
Distributions under the Plan shall be funded by (i) the proceeds of
Purchaser's payment obligations under Sections 2.1 and 2.2 of the
Asset Purchase Agreement and distributions of Acquired Coins
pursuant to the Asset Purchase Agreement, (ii) the Wind-Down Debtor
from the Wind-Down Debtor Assets; provided, however, that Allowed
Professional Fee Claims shall be paid from the Professional Fee
Escrow Account in the first instance. The Wind-Down Debtor Assets
shall be used to pay the Wind-Down Debtor Expenses (including the
compensation of the Plan Administrator and any professionals
retained by the Wind-Down Debtor), and to satisfy payment of
Allowed Claims and Interests as set forth in the Plan.
A full-text copy of the Third Amended Plan dated March 5, 2023, is
available at https://bit.ly/3mvyJtb from Stretto, Inc., claims
agent.
Counsel to the Debtors:
Joshua A. Sussberg, Esq.
Christopher Marcus, Esq.
Christine A. Okike, Esq.
Allyson B. Smith, Esq.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
About Voyager Digital Holdings
Based in Toronto, Canada, Voyager Digital Holdings Inc. --
https://www.investvoyager.com/ -- runs a cryptocurrency platform.
Voyager claims to offer a secure way to trade over 100 different
crypto assets using its easy-to-use mobile application. Through its
subsidiary Coinify ApS, Voyager provides crypto payment solutions
for both consumers and merchants around the globe.
Voyager Digital Holdings Inc. and two affiliates sought protection
under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead
Case No. 22-10943) on July 5, 2022. In the petition filed by
Stephen Ehrlich, chief executive officer, the Debtors estimated
assets and liabilities between $1 billion and $10 billion.
Michael E. Wiles oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP as general bankruptcy
counsel; Berkeley Research Group, LLC as financial advisor; Moelis
& Company as investment banker; and Consello Group as strategic
financial advisor. Stretto, Inc. is the claims agent.
On July 19, 2022, the U.S. Trustee for the Southern District of New
York appointed an official committee of unsecured creditors. The
Committee tapped McDermott Will & Emery as counsel, and FTI
Consulting as financial advisor. Epiq Corporate Restructuring,
LLC, is the Commitee's noticing and information agent.
VOYAGER DIGITAL: Paul Hastings Reveals Ties to Celsius
------------------------------------------------------
Rick Archer of Law360 reports that Paul Hastings LLP Wednesday,
March 1, 2023, asked a New York bankruptcy judge to adjourn a
hearing on a motion by cryptocurrency platform Voyager Digital
seeking to retain the firm in its Chapter 11 case, saying it had
just uncovered ties to Voyager creditor Celsius Network.
In court filings, the U.S. Trustee has alleged that Paul Hastings'
representation of certain current and former officers of Celsius
and its representation of the official committee of unsecured
creditors in the bankruptcy cases of FTX Trading Ltd. and its
affiliates precludes it from being retained by the Debtors for the
limited purposes set forth in the Application.
In Feb. 27 court filings, the Debtors responded that the U.S.
Trustee fails to demonstrate any actual or even potential conflict
of interest that would merit denial of the Application. Moreover,
the U.S. Trustee makes a conclusory assertion that the Application
must be considered under section 327(a) of the Bankruptcy Code
instead of Section 327(e), but fails to show (or even discuss) why
it has reached such conclusion given the discreet, limited matters
for which Paul Hastings would be retained.
The Debtors note that Paul Hastings LLP is not being retained as
general bankruptcy counsel to represent or assist the Debtors in
carrying out the trustee's duties under chapter 11 of title 11 of
the United States Code. Instead, the Debtors seek to retain Paul
Hastings for the limited purpose of providing services with respect
to the following discreet, special matters.
According to the Debtors, the retention of Paul Hastings to provide
these limited services will maximize the value of the Debtors'
estates by, among other things, utilizing Paul Hastings'
familiarity, experience, and expertise and avoiding delays and
costs that would be associated with finding and retaining
replacement counsel.
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.
W&T OFFSHORE: Fitch Assigns 'B-' First Time IDR, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has assigned W&T Offshore, Inc. (WTI) a first-time
Long-Term Issuer Default Rating (IDR) of 'B-'. Fitch has also
assigned 'BB-'/'RR1' ratings to WTI's first priority lien secured
reserve-based lending credit facility (RBL) and 'B'/'RR3' ratings
to the $275 million senior second lien notes. The Rating Outlook is
Stable.
WTI's rating reflects its position with low decline Gulf of Mexico
(GoM) assets, an absolute debt reduction in 1Q23 which has resulted
in improved refinancing risk, leverage under 2.0x over the forecast
period and limited natural gas hedging in place. Offsetting factors
include its small operational scale with 9M22 production of 40.6
thousand barrels of oil equivalent per day (mboepd), more natural
gas assets compared to peers, growing capex over the forecast
period, significant environmental remediation costs relating to
higher plugging and abandonment (P&A) costs and relatively higher
operating costs.
KEY RATING DRIVERS
Offshore Gulf of Mexico E&P: WTI fully operates as an offshore E&P
in the Gulf of Mexico (GoM). The company's asset base differs
materially from that of an onshore producer. In general, GoM assets
can typically be acquired at relatively lower costs, experience
lower decline rates and benefit from extensive midstream
infrastructure, providing direct access to gulf coast refineries
which typically brings higher price realizations. These strengths
are offset by significantly higher plugging and abandonment (P&A)
obligations, exploration projects that require substantial capital
requirements, longer spud to first oil times, higher environmental
remediation costs and additional tail risks from hurricane activity
and potential oil spills.
Absolute Debt Reduction and Improved Refinancing Risk: Fitch
believes that WTI has taken positive actions to mitigate its
refinancing risk with the new $275 million 11.75% second-lien notes
issuance, which along with cash on hand was used to redeem the
$552.5 million 9.75% senior second-lien notes that matured in
November 2023. This refinancing has resulted in an absolute debt
reduction of approximately $280 million and extended the note
maturity to January 2026. Concerns over access to the capital
markets in the medium term remain as WTI bonds have a higher coupon
and trade at higher yields compared to other energy issuers, which
may limit future access.
Limited Scale Relative to Rated E&P Peers: WTI had daily production
of 40,568 Boe/d (48.9% oil) in 9M22, ranking the company as one of
the smaller E&P producers' in Fitch's coverage universe. The
limited scale, coupled with more natural gas assets compared to
peers, along with its high cost of operations limits negotiating
and operating leverage relative to competitors that are larger in
size and can benefit from economies of scale of diversification
between onshore and offshore assets. Furthermore, some portions of
the GoM present challenges for operators due to third-party
pipelines outages, maintenance, and weather-related incidents,
which impacts costs and production schedules.
Growing Capex, Moderate Leverage: Fitch expects WTI to increase
capex from its 2022 run rate of approximately $40 million in order
to achieve low double-digit production growth. Fitch expects the
company to manage its capital allocation policies in a manner that
continues to support positive FCF going forward. The low decline
rate of its wells allows for substantial capital spending cuts
during periods of low oil prices with a relatively modest impact on
production and, historically, the company has benefitted from this
dynamic by slashing capital spending in lower price environments in
order to maintain positive FCF. Fitch's base case currently
forecasts production to average approximately 39 mboepd in 2023,
increasing towards 48 mboepd in 2025 with EBITDA Leverage
increasing to 1.8x by 2025.
Substantial Decommissioning Costs: Due to the company's focus on
mature offshore assets and an active M&A strategy, WTI's
environmental remediation costs for P&A are elevated compared with
onshore peers. Asset retirement obligations (AROs) as of Sept. 30,
2022 totalled $454 million. Fitch recognizes that the AROs are
long-dated, WTI holds $21.8 million restricted cash in escrow and
expects annual P&A costs of $76 million in 2022 reducing down to
$40 million over the forecasted horizon. Fitch believes there is
potential for reduced outlays to the degree the company is able to
extend the lives of fields through recompletions and workovers.
Limited Hedging Program: WTI excluding the SPV has no hedging
requirements with no oil hedges in place and only natural gas
purchased calls between 2023 and 2025. The natural gas hedges for
the consolidated entity (including the Mobile Bay SPV) are
approximately 60% hedged in 2023, 50% hedged in 2024 and 45% hedged
for 2025. The hedging (Swaps and purchased puts) at the Mobile Bay
SPV are required to cover a majority of debt servicing. Additional
oil and gas hedging would be positive to the credit profile, as it
supports development funding and reduces cash flow risk.
DERIVATION SUMMARY
WTI operates on a much smaller scale than Fitch rated E&P peers.
With 3Q22 production at 41.5 mboe/d (50% oil), the company produces
significantly less than Talos Energy pro-forma the closing of the
EnVen acquisition (B/Stable) with expected 2024 production in the
mid-to-low 80 mboepd. This is similarly rated to onshore operators,
such as HighPeak Energy (B-/Stable) at 26.2 mboepd or 93% liquids
and Callon Petroleum (B/Stable) at 107.3 mboepd or 82% liquids.
Following the recent refinancing and reduction in debt, Fitch
expects WTI to operate with debt levels at or below 2.0x on a
Leverage EBITDA basis through the forecast horizon. Despite the
lower leverage levels, the potential challenges to accessing
capital markets (although there is no near-term refinancing), and
smaller scale relative to other E&P issuers are concerns.
WTI has relatively good proved reserves for 'B' rated issuers. At
fiscal 2021, the company's 1P/production was 11.4 years which is
higher than Talos (6.9) and Baytex (9.5). Additionally, the
company's offshore footprint exposes it to significantly higher
remediation (P&A) costs than onshore shale-based peers. Operational
risks are also higher, given potentially adverse effects of any oil
spills or hurricane activity on a company of WTI's size.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within The Rating Case for the Issuer:
- WTI oil prices of $81/bbl in 2023, $62/bbl in 2024 and $50/bbl in
the long term;
- Henry Hub natural gas prices of $5.00 per thousand cubic feet
(mcf) in 2023, $4.00/mcf in 2024 and $3.00/mcf in 2025;
- Production declines marginally in 2023 before increasing in the
low double digits in 2024 and 2025;
- Capex excluding P&A expense growing throughout the forecast
period;
- Cash cost of P&A obligations consistent with management guidance
throughout the forecast;
- Successful execution of the second-lien notes refinancing in 1Q23
and RBL facility extension;
- No material M&A throughout the forecast.
Recovery Analysis:
The recovery analysis assumes that W&T Offshore, Inc. would be
reorganized as a going-concern in bankruptcy rather than
liquidated. Fitch has assumed a 10% administrative claim. Fitch
assumes no recovery from the Mobile Bay SPV.
Going-Concern (GC) Approach
Fitch assumed a bankruptcy scenario exit EBITDA of $80 million.
This estimate considers a prolonged commodity price downturn
($32/WTI and $2.00/mcf gas lows in 2024, increasing to $42/bbl WTI
and $2.25/mcf gas in 2025) causing liquidity constraints and
inability to access capital markets to refinance debt. The GC
EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which we base the enterprise
valuation.
An EV multiple of 3.00x is applied to the GC EBITDA to calculate a
post-reorganization enterprise value versus the historical energy
upstream sub-sector multiple of 2.8x-5.6x for recent E&P
bankruptcies, and median EV/EBITDA multiples in observed offshore
transactions in the 2.0x-4.0x range. The lower multiple also
reflects the impact of Asset Retirement Obligations.
These assumptions lead to an EV of $240 million, greater than the
liquidation valuation.
Liquidation Approach
The liquidation estimate reflects Fitch's view of the value of the
company's E&P assets that can be realized in sale or liquidation
processes conducted during a bankruptcy or insolvency proceeding
and distributed to creditors. Fitch used historical transaction
data for the GoM blocks on a $/bbl, $/1P, $/2P, $/acre and PDP
PV-10 basis to attempt to determine a reasonable sale, based on
Talos' recent M&A transaction, other recent offshore M&A
transactions, and valuations from emerging, offshore bankruptcies
of Fieldwood Energy, Stone Energy and Arena Energy.
Fitch assumed a 25% advance rate on A/R given that in a pro-longed
downturn, A/R would likely decrease.
Waterfall Analysis
Fitch assumed the $50 million revolving credit facility was drawn
at 80% to account for downward borrowing base redeterminations as
the company approaches a bankruptcy scenario. The first priority
lien secured revolver recovers at an 'RR1' level while the second
lien notes recovers at an 'RR3' level.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Increased size and scale evidenced by production trending above
75 mboepd;
- Demonstrated ability to manage P&A obligations and reduced AROs
per flowing barrel or proved reserves;
- Midcycle EBITDA Leverage maintained below 2.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Loss of operational momentum, evidenced by production trending
below 30 mboepd and/or deteriorating unit economics;
- Reduction in liquidity or drawdown under revolver;
- Midcycle EBITDA Leverage above 3.5x and/or EBITDA Interest
Coverage below 2.0x on a sustained basis;
- Unfavorable regulatory changes, such as increased bonding
requirements, or accelerated P&A spending;
- Implementation of a more aggressive growth strategy operating
outside FCF that negatively impacts liquidity or access to the
capital markets.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Fitch does not see material near-term
liquidity needs and believes the company's refinance risk is low
given its neutral to negative FCF over the forecast and material
unrestricted cash on the balance sheet. Management stated that
capital budgets would be determined on the ability to generate FCF
even in commodity price declines. The company's hedging program
provides limited protection, but an enhanced program would provide
more security.
In 1Q23, following the senior second lien note refinancing, WTI has
approximately $160 million of cash on hand and $50.0 million of
availability under the first priority lien secured RBL facility. On
Sept. 30, 2022, the company had $4.4 million outstanding in letters
of credit which have been cash collateralized.
In February 2023, WTI redeemed the $552.5 million 9.75% senior
second-lien notes due November 2023 with cash on hand and proceeds
from the new $275 million 11.75% senior second-lien notes due
January 2026.
The credit facility matures in January 2024. The credit facility is
provided by Calculus Lending, LLC, a company affiliated with, and
controlled by WTI's Chairman and CEO, Tracy Krohn, who is the sole
lender under the Credit Agreement.
The Mobile Bay SPV, has a $157.0 million 7% term loan outstanding,
which is non-recourse to WTI and any subsidiaries other than the
subsidiary borrowers (Aquasition LLC, and Aquasition II, LLC). The
term loan is secured by the first-lien security interests in the
equity of the subsidiary borrowers and a first-lien mortgage
security interest and mortgages on certain assets of the subsidiary
borrowers (the Mobile Bay properties).
ISSUER PROFILE
W&T Offshore, Inc. is an independent oil and natural gas producer
with a 40-year track record of operating in the Gulf of Mexico. The
company holds working interests in offshore fields in federal and
state waters and leases approximately 622,000 gross acres spanning
across the outer continental shelf on the Gulf of Mexico shelf and
in the deepwater.
Entity/Debt Rating Recovery
----------- ------ --------
W&T Offshore, Inc. LT IDR B- New Rating
senior secured LT BB- New Rating RR1
USD 50 mln ABL
03-Jan-2024
92922QAH7 LT BB- New Rating RR1
Senior Secured
2nd Lien LT B New Rating RR3
W.A. LYNCH: Wins Cash Collateral Access Thru June 30
----------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana,
Indianapolis Division, authorized W.A. Lynch Construction, LLC to
use cash collateral on an interim basis in accordance with the
budget, with a 10% variance, through June 30, 2023.
The Debtor requires the use of cash collateral to continue
operating its business and attempt a successful reorganization
pursuant to the provisions of Chapter 11 of the Bankruptcy Code.
The Debtor acknowledges it entered into transactions with WeFund,
True Business Funding, LLC, Vivian Capital Group, LLC and Pinnacle
Business Funding, LLC pre-petition and that the Funders assert they
purchased receivables from the Debtor under those transactions and,
as a result, the receivables are not property of the bankruptcy
estate and cannot be used by the Debtor as cash collateral.
The Debtor is required to pay the Funders $30,000 on or before
December 30, 2022. The Funders will determine how the funds will be
disbursed among them prior to December 30.
The Funders and all parties with an interest in the cash collateral
will be granted replacement liens in the cash collateral and in the
post-petition property of the Debtor of the same nature and to the
same extent and in the same priority held in the cash collateral on
the Petition Date. The adequate protection liens will be valid and
fully perfected without any further action by any party and without
the execution or the recordation of any control agreements,
financing statements, security agreements, or other documents.
The Debtor's authorization to use cash collateral will immediately
terminate on the earlier to occur of: (a) the date on which any
creditor provides, via facsimile, e-mail or overnight mail, written
notice to the Debtor or Debtor's counsel, of the occurrence of an
Event of Default, and the expiration of a 10-business day cure
period; or (b) June 30, 2023.
These events constitute an Event of Default:
i. The Debtor's case case is converted to a Chapter 7 case or
dismissed;
ii. The Debtor fails to comply with any term of the Order,
including but not limited to its payment obligations and compliance
with the Budget;
iii. The Debtor makes any payment not set forth in the Budget;
iv. The Debtor fails to comply with any of the adequate
protection or reporting obligations set forth therein.
A final hearing on the matter is set for June 26 at 10 a.m.
A copy of the order is available at https://bit.ly/3yjqP8X from
PacerMonitor.com.
About W.A. Lynch Construction, LLC
W.A. Lynch Construction, LLC is in the construction industry
focused on commercial concrete, construction, design, and build.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Ind. Case No. 22-04836) on December 1,
2022. In the petition signed by William A. Lynch, president, the
Debtor disclosed up to $50,000 in assets and up to $10 million in
liabilities.
Judge Jeffrey J. Graham oversees the case.
Harley K. Means, Esq., at Kroger, Gardis & Regas, LLP, represents
the Debtor as legal counsel.
WRIGHT EXPERIENCE: Unsecured Creditors to Get 100% by 2024
----------------------------------------------------------
The Wright Experience, Inc. submitted an Amended Plan of
Reorganization for Small Business dated March 6, 2023.
The Debtor is a Corporation. Since 1998, the Debtor has been in the
business of researching and building authentic Wright Brothers
Flyers/Gliders for sale to museums and collectors.
Debtor is the foremost building of aircraft that are museum quality
reproductions from the early history of aviation. Because of Covid,
museums fell on hard times so that Debtor's plans to market to
museums Debtor's extensive work on reproductions has been far short
of expectations and Debtor has been unable to proceed in any way
according to expectations and was forced to file for bankruptcy
protection.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income (overwhelmingly from sale of
assets) for the period described in § 1191(c)(2) of $780,659.88,
of which $273,000 is secured and $507,659.88 is unsecured.
The final Plan payment is expected to be paid on April 30, 2024. If
not, the trustee would expeditiously sell the Debtor's assets.
The numerical projections are based on (a) selling the subleases of
hangers after moving some of the contents of those hangers
elsewhere; (b) auction and/or sale of what remains in the hangers
at the time of the auction (c) sale of one aircraft or the entire
collection of aircraft; and, sale of the contents now in the
hangars that are removed before the auction.
This is different from prior experience and the first plan because
(i) what is set forth (a) was not contemplated prior to the
bankruptcy because the Debtor was using the subleases of hangers to
store aircraft and equipment and plans to sell the unexpired
portion of those subleases out of necessity after having determined
that the aircraft in the hangers not sold may well be moved to
hangers in Fredericksburg, Virginia; and (ii) the Debtor believes
it will be practicable to sell non-aircraft contents of the
hangars, and (iii) instead of waiting to try to sell the aircraft
and equipment, out of necessity, the Debtor plans as set forth in
(b) to auction as needed the applicable aircraft and equipment. If
the aircraft and equipment cannot be sold by April 2023, the Debtor
is prepared to agree to sale of the same by the trustee.
Debtor has sought Court approval to employ a broker to sell the
property in the Hangers to obtain sufficient resources to satisfy
that part of the debt owed to the secured and unsecured creditor,
McCormick 106, LLC. Debtor has sought Court approval to allow for
the sale of Hanger contents with the condition that the Debtor is
seeking court approval to allow Kenneth Hyde, who has the sole
ownership of the Debtor and also has sole ownership of Virginia
Aviation & Machine, Inc. to cause Virginia Aviation to contribute
resources to Debtor and to himself contribute financially to the
Debtor, both in order to help the Debtor towards success of the
Plan.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately 100 cents on the dollar. This Plan also provides
for the payment of administrative and priority claims.
Class 2 consists of the Secured claim of McCormick 106, LLC. This
Class shall receive 100% payment to be paid in 2023. This Class is
impaired.
Class 3 consists of Non-priority unsecured creditors. This Class
shall receive 100% payment to be made by April 30, 2024. This Class
is impaired.
Reorganization Plan will be implemented by Ken Hyde, officer of the
Debtor Company. Plan funded by sale of assets.
A full-text copy of the Amended Plan dated March 6, 2023 is
available at https://bit.ly/3T3SSmf from PacerMonitor.com at no
charge.
Counsel for Debtor:
Henry W. McLaughlin, Esq.
The Law Office of Henry McLaughlin, P.C.
707 E Main St. Ste 1050
Richmond, VA 23219
Tel: (804) 205-9020
Fax: (804) 205-9029
Email: henry@mclaughlinvalaw.com
About The Wright Experience
The Wright Experience, Inc., a company in Warrenton, Va., filed a
petition under Chapter 11, Subchapter V of the Bankruptcy Code
(Bankr. E.D. Va. Case No. 22-11257) on Sept. 21, 2022, with as much
as $1 million to $10 million in both assets and liabilities. Marc
E. Albert serves as Subchapter V trustee.
Judge Klinette H. Kindred oversees the case.
The Law Office of Henry McLaughlin, P.C., is the Debtor's legal
counsel.
XPO INC: Fitch Assigns First-Time BB+ LongTerm IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has assigned a first-time 'BB+' Long-Term Issuer
Default Rating (IDR) to XPO, Inc. The Rating Outlook is Stable.
Fitch has also assigned XPO's ABL facility a 'BBB-'/'RR1' rating,
its term loan a 'BBB-'/'RR2' rating, and its senior unsecured notes
a 'BB+'/'RR4' rating.
XPO's ratings reflect its top-four market position within the
less-than-truckload (LTL) industry, returns-based investments in
network and fleet capacity, efficiency-enhancing productivity and
technology initiatives, and recent gross debt repayment with
financial policies and capital allocation plans targeting net
leverage 1x-2x. Fitch's rating case forecasts EBITDAR and EBITDA
leverage to trend toward the mid-2.0x and low-2.0x by 2025-2026 as
the company pays down debt and realizes benefits from its
operational improvement initiatives.
The strengths are weighed against execution risks associated with
realizing these initiatives to enhance profitability and cash flow.
While Fitch does not currently assume an exit, the divestiture of
XPO's European operations, which generated around $165 million of
EBITDA, is another opportunity to deleverage.
KEY RATING DRIVERS
Operating Initiatives Support Improving FCF: XPO has significant
operating improvement plans underway that would support higher
profitability and cash flow, as well as accommodate investment and
deleveraging goals. Execution in line with management's
expectations would be an upside to Fitch's current forecast, which
considers some temperance with driving the improvement in volume,
yields and cost structure. Fitch currently assumes revenue growth
in the low-to-mid single digits and Fitch-calculated EBITDA margins
improving to 13% over the next few years, up from 11% in 2022,
which is on an XPO standalone basis.
Leverage Improving to Mid/Low-2x: Fitch expects debt/EBITDA and
adjusted debt/EBITDAR to range in the high 2.0x to 3.0x in 2023
before declining to the low-2.0x and mid-2.0x, respectively, over
the subsequent two years. Fitch's rating case projects annual CFO
to be in the $700 million-$800 million range with capital
allocation prioritizing annual investments of $500 million-$550
million followed by debt repayment. Further a divestiture of the
European Transport business could accelerate deleveraging ahead of
Fitch's expectations.
Established Market Position: XPO is a top 4 LTL operator by revenue
in North America and its established network supports its market
position and creates some barriers to entry. The LTL market is
fairly consolidated with the top five operators making up roughly
50% of the market. Fitch believes this, as well as its incremental
operational complexities, supports pricing rationality, which is
relatively stronger than truckload markets. Competition is also
based on service levels, which is an area XPO plans to continue to
improve upon. While XPO's European transport platform holds
regional leadership positions, that market is fragmented and
relatively less profitable.
LTL Cyclical Yet Resilient: The trucking industry is cyclical,
reflecting the high exposure to industrial and consumer markets
that can weigh on volumes and yields. Through the most recent
business cycles, industry volumes have been the most affected while
yields, excluding fuel, were relatively steady. Fitch believes this
reflects the industry's focus on profitability through the cycle.
Pricing stability through business cycles is also supported by the
contracted nature of XPO and other operators, though tenors
typically only last for one year. Fitch expects the profitability
of the LTL industry to be relatively resilient through business
cycles due to its comparative rationality and vital nature of the
service to the economy's supply chains.
Exit from Brokerage Focuses Business Profile: Fitch views the
increasing proportion of LTL operations as a credit positive,
particularly as XPO exits its freight brokerage operations. Fitch
believes the increasingly streamlined nature of XPO focuses
operational and capital deployment decisions, particularly given
its large and more asset-intensive network. Whereas freight
brokerage is highly competitive, with limited differentiation
between brokerage platforms and low switching costs necessitating
different operational and capital deployment priorities. Fitch does
not expect meaningful strategic dis-synergies from separating the
LTL and brokerage business due to XPO's practice of managing the
relationships on an arm's-length basis.
Weaker Demand Environment is Manageable: Freight market conditions
deteriorated in 2022, most noticeably in the second half of the
year, and Fitch expects weakness to broadly continue in 2023. XPO's
recent business wins with national accounts have supported volumes
and pricing trends continued to be positive in Q4 2022. Fitch
assumes low-single digit growth and modest margin contraction in
2023, largely reflecting the weaker operating environment, which is
moderated by new business wins and progress in operating efficiency
initiatives.
DERIVATION SUMMARY
XPO is comparable to other transportation companies such as The
Brink's Company (BB+/Neg), Stericycle (BB/Sta), and TFI
International (NR). Brink's and Stericycle are expected to benefit
from a relatively high level of demand stability associated with
their end markets. TFI is similar to XPO as a trucking and
logistics company and carries much of the same business model
risks.
Brink's and TFI have an acquisitive nature that largely drives
their leverage profiles while Stericycle has been focused on
operational improvements over the last few years. Brink's
debt/EBITDA is expected to remain at or above 4.0x over the next
few years, which is a result of its acquisitive nature as well as
shareholder returns. SRCL's debt/EBITDA is relatively low in the
low-to-mid 3.0x though its cash flow profile remains at risk from
operational challenges. TFI's leverage has historically been
managed to the mid-1x to low 2.0x.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- Revenue growth in the low-single digits in 2023, reflecting
softer economic conditions. Growth remains in the low-to-mid
single digits thereafter with some success in XPO's growth
initiatives;
- EBITDA margin is modestly lower in 2023 at 12% due to softer
rate and volume conditions. Profitability trends towards 14%
over the next few years as a result of moderate success in
growth and cost optimization plans;
- Capital intensity remains around 6%-7% through the forecast
due to terminal and fleet investment;
- XPO remains committed to deleveraging and after organic
investment, debt repayment is the primary focus of cash
flow over the next few years.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Solid execution on XPO's LTL 2.0 growth and margin expansion
targets supporting stronger CFO-Capex/Debt, above the
mid-single digits;
- Adherence to a capital allocation plan that reduces gross
debt and retains financial flexibility;
- Financial policies remain supportive of mid-cycle adjusted
debt/EBITDAR and debt/EBITDA sustained below 2.5x and 2.0x,
respectively;
- Transition to a less encumbered capital structure.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A less conservative financial policy that leads to adjusted
debt/EBITDAR and debt/EBITDA sustained above 3.0x and 2.5x,
respectively;
- A deviation from capital allocation plans, such as initiating a
large dividend or M&A strategy, that restricts financial
flexibility;
- A change in strategy or operating challenges that increases the
variability or constrains XPO's cash flow profile.
LIQUIDITY AND DEBT STRUCTURE
Comfortable Liquidity: At Dec. 31, 2022 XPO had comfortable
liquidity with $460 million of cash and $470 million of
availability under its ABL facility, which has commitments of up to
$600 million. The next maturities are the $2.0 billion term loan
due February 2025 and $112 million of notes due in May 2025. Fitch
expects the term loan and notes to be addressed prior to maturity.
ISSUER PROFILE
XPO is a leading provider of freight transportation services. It
focuses on LTL shipments within its North American footprint. In
its European business it provides LTL, truckload and brokerage
services.
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
----------- ------ --------
XPO, Inc. LT IDR BB+ New Rating
senior
unsecured LT BB+ New Rating RR4
senior secured LT BBB- New Rating RR1
senior secured LT BBB- New Rating RR2
ZEOLI-BROWN LLC: Unsecured Creditors to Split $37.5K in 3 Years
---------------------------------------------------------------
Zeoli-Brown LLC filed with the U.S. Bankruptcy Court for the
Eastern District of Michigan a First Amended Plan of Reorganization
dated March 6, 2023.
The company has existed since 2017 and operates a sit down Italian
restaurant in downtown Clawson, Michigan serving a full menu of
pastas and other Italian favorites. It's sole member is Scott
Brown.
The Debtor is a LLC in good standing with the State of Michigan.
The restaurant does a vigorous takeout business as well as
occasional catering. The restaurant has a full bar and liquor
license. The LLC has 10 employees including Mr. Brown who is the
head chef and manager.
Post-petition the Debtor has taken numerous step to improve its
bottom line. This was created by a conscious decision to cut costs.
The Debtor has generated a profit each month post-petition an is
continuing to take steps to limit its costs.
The Debtor's financial projections show that the Debtor will have
projected disposable income in an amount sufficient to pay all
creditors in full.
Class 9 consists of Unsecured Creditors. The amount of unsecured
debt in this case totals $811,789 and comes from those creditors
who have filed claims, those who have not filed claims and from
deficiency claims of those who have secured interest in the
property of the estate for which no collateral value exists to
secure those debts. The Class 9 claim of unsecured creditors in the
amount of $811,789 shall share prorate in the sum total of $37,500.
This amount shall be paid in 3 equal yearly installments with the
first yearly payment due 24 months from confirmation.
Title to all property of the Debtor shall vest in the Reorganized
Debtor upon the effective date of the Plan. The Debtor shall be
discharged from its status as Debtor and the affairs and business
of the Reorganized Debtor shall thereafter be conducted without
Court involvement except as may be governed by the Plan.
A full-text copy of the First Amended Plan dated March 6, 2023 is
available at https://bit.ly/3YAki4i from PacerMonitor.com at no
charge.
Debtor's Counsel:
George E. Jacobs, Esq.
Bankruptcy Law Office
2425 S. Linden Rd., Ste. C
Flint, MI 48532
Tel: (810) 720-4333
Email: george@bklawoffice.com
About Zeoli-Brown LLC
Zeoli-Brown, LLC -- https://ZeolisItalian.com/ -- operates the
Italian restaurant Zeoli's Modern Italian in Clawson, Mich.
Zeoli-Brown filed a petition for relief under Subchapter V of
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mich. Case No.
22-48133) on Oct. 18, 2022, with $123,998 in assets and $1.15
million in liabilities. Mark H. Shapiro has been appointed as
Subchapter V trustee.
Judge Maria L. Oxholm oversees the case.
George E. Jacobs, Esq., at Bankruptcy Law Office and McNeil &
Associates, P.C. serve as the Debtor's legal counsel and
accountant, respectively.
ZOHAR FUNDS: Delaware Is Inappropriate Venue, NY Court Says
-----------------------------------------------------------
Magistrate Judge Katharine H. Parker for the Southern District of
New York denies the Trustee's motion to transfer the case styled
Patriarch Partners Agency Services, LLC, Plaintiff, v. Zohar CDO
2003-1, Ltd. et al., Defendants, Case No. 16-CV-04488 (VM) (KHP),
(S.D.N.Y.).
This case involves a dispute between Patriarch Partners Agency
Services, LLC and Zohar Funds for which PPAS served as
Administrative Agent under various credit agreements. Certain of
the Zohar Funds are Delaware limited liability companies and others
are Cayman Island companies, but all of their principal places of
business are New York. PPAS is a Delaware limited liability company
with its principal place of business in New York. Affiliates of
PPAS served as Collateral Managers for the Zohar Funds.
During the pendency of the Bankruptcy Proceedings and in connection
with a settlement, Ankura Trust Company LLC replaced PPAS as
Administrative Agent to several portfolio company borrowers. In
March 2020, the Zohar Funds initiated an adversary proceeding
related to the chapter 11 proceeding in the Bankruptcy Court in
Delaware. The Adversary Proceeding involves claims against PPAS and
various of its affiliates as well as a number of other entities and
persons who are not parties to the instant litigation.
On Aug. 1, 2022, the Bankruptcy Court issued an order providing for
the transfer of the Zohar Funds' litigation assets, including the
claims and counterclaims in this action, to two litigation trusts
and the appointment of a Trustee for the litigation trusts.
Accordingly, the Trustee has now been substituted for the Zohar
Funds as Defendant and Counterclaim Plaintiff in this action. On
Sept. 13, 2022, the Bankruptcy Court in Delaware closed the
Bankruptcy action, bringing an end to the automatic stay.
As this case stands now, PPAS seeks certain fees owed to it for the
period between when the Zohar Funds purported to terminate its
services as Administrative Agent and the time it ceased to be
Administrative Agent. The parties in this case have agreed with the
parties in the Delaware Adversary Proceeding to coordinate or share
discovery, to the extent it overlaps, in the two proceedings.
Through the instant motion, the Trustee seeks to transfer this case
to the Delaware Bankruptcy Court in which the Adversary Proceeding
is pending. The Court finds, however, that the Defendants have
failed to demonstrate by clear and convincing evidence that
transfer to Delaware is warranted.
The Court points out that "PPAS could not have brought this action
in Delaware in the first instance. All of the initial defendants in
this action would not have been subject to personal jurisdiction in
the District of Delaware at the time this action was filed.
Specifically, three of the Zohar Fund defendants are Cayman Islands
companies with their principal places of business in New York.
Thus, they are not subject to general jurisdiction in Delaware. . .
none of the initial defendants were subject to specific
jurisdiction in Delaware because none of the conduct alleged in the
claims related to or arose out of their contacts with Delaware. . .
the conduct occurred in New York -- the principal place of business
for PPAS, the Zohar Funds, and AMZAS."
In light of the mandatory forum selection provision designating New
York as the appropriate forum for this action, the Court finds and
concludes that all factors relating to the parties' private
interests weigh against transfer to Delaware. Given the forum
selection provision, PPAS had to commence an action in New York
County because its claims involved an alleged breach of a provision
of the credit agreements. It would have violated this provision by
bringing the action in Delaware. Likewise, under the provision, the
Zohar Funds waived any objection to litigation in this forum.
Similarly, because the Zohar Funds' counterclaims likewise involve
breach of the credit agreements, they too were obliged to bring
them only in the state or federal courts in New York County. If
they had brought the counterclaims in Delaware, PPAS could have
invoked the forum selection provision to argue Delaware was an
inappropriate venue.
A full-text copy of the Order dated Feb. 24, 2023 is available at
https://tinyurl.com/y5fsu956 from Leagle.com.
About the Zohar Funds
New York-based Patriarch Partners, LLC, is a private equity firm
specializing in acquisition, buyouts, and turnaround investment in
distressed American companies and brands. Patriarch Partners was
founded by Lynn Tilton in 2000. Lynn Tilton and her affiliates
held substantial equity stakes in portfolio companies, which
include iconic American manufacturing companies with tens of
thousands of employees.
The Zohar funds were created to raise money through selling a form
of notes called collateralized loan obligations to investors that
was then used to extend loans to dozens of distressed mid-size
companies, often in connection with the acquisition of those
companies out of bankruptcy.
Patriarch bought "distressed" companies via funding from a series
of collateralized loan obligations (CLOs) marketed through
Patriarch via its $2.5 billion "Zohar" funds. Tilton placed the
funds into bankruptcy in 2018 in an attempt to keep Patriarch's
portfolio from being liquidated by Zohar creditors including bond
insurer MBIA, which insured $1 billion worth of Zohar notes.
Combined debt of the funds is estimated at $1.7 billion.
Zohar CDO 2003-1, Zohar CDO 2003-1 Corp., Zohar II 2005-1, Limited,
Zohar II 2005-1 Corp., Zohar III, Limited, and Zohar III, Corp.
(collectively, the "Zohar Funds"), sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D. Del. Case Nos. 18-10512 to
18-10517) on March 11, 2018. In the petition signed by Lynn
Tilton, director, the Debtors were estimated to have $1 billion to
$10 billion in assets and $500 million to $1 billion in
liabilities.
Young Conaway Stargatt & Taylor, LLP, is the Debtors' bankruptcy
counsel.
[*] Erin Fay Joins Wilson Sonsini's Restructuring Practice
----------------------------------------------------------
Wilson Sonsini Goodrich & Rosati, the premier provider of legal
services to technology, life sciences, and growth enterprises
worldwide, on March 8 disclosed that Erin Fay has joined the firm
as a corporate partner in the Wilmington, Delaware office, where
she will be a member of the restructuring practice. Ms. Fay is the
third partner to join Wilson Sonsini in Wilmington in the last
seven months, reflecting the firm's success in expanding both the
scope of services it offers clients and its team in Delaware—an
important location for corporate and commercial matters in the
United States.
In September 2022, Wilson Sonsini announced that Allurie Kephart
had joined its Wilmington office as a partner in the firm's
corporate department. Kephart has experience in restructuring and
bankruptcy matters, as well as other areas of expertise. In August
2022, the firm announced that former Delaware Court of Chancery
Vice Chancellor Joseph Slights had joined the litigation department
in Wilmington as a partner. Wilson Sonsini's Wilmington office has
grown to 35 attorneys, including 10 partners.
Ms. Fay has spent the past 15 years focused on bankruptcy and
restructuring matters. Over the same period, she also amassed
significant Delaware law experience, making her background not only
unique, but valuable to clients since Delaware is one of the
country's top two bankruptcy venues. Companies registered in
Delaware are more likely to file a bankruptcy case there for many
of the same reasons they chose to incorporate in the state -- the
expertise and experience of Delaware's judiciary system and the bar
in overseeing complex disputes and matters of law in the state's
judicial venues.
"Adding Erin, with her unique balance of bankruptcy, restructuring,
and Delaware law experience, represents another successful step
toward expanding the range of sophisticated services we offer
clients and our latest effort to expand our talented Delaware
team," said Doug Clark, managing partner at Wilson Sonsini. "While
many of our clients remain engaged in pursuing acquisitions,
mergers, and other strategic transactions, there are some that will
need to confront market challenges, and they'll benefit from the
expert counsel that Erin and others in the firm can provide."
Throughout her career, Fay has represented a broad range of
clients—including debtors, lenders, individual creditors, equity
holders, official committees, and ad hoc committees—in Chapter 11
cases and out-of-court restructurings. She has also represented
companies preparing for Chapter 7 filings, representing foreign
representatives in Chapter 15 proceedings and representing
assignees in assignments for the benefit of creditors under
Delaware law in the Delaware Court of Chancery. In addition, Fay
has counseled management, boards, and creditors on an array of
issues related to distressed companies, the rights of creditors,
and insolvency. She has represented clients in a variety of
industries, including the energy, financial services, healthcare,
manufacturing, retail, and transportation sectors.
"I am truly excited about joining Wilson Sonsini and the
opportunity to work with the team in Wilmington and others across
the firm," Fay said. "Wilson Sonsini has an amazing platform and
brand that's been built through its work with impressive clients. I
am thrilled to be able to strengthen the firm's offerings to
companies needing liquidity solutions or exploring restructuring
alternatives. I also look forward to being part of the firm's
dynamic, collaborative culture, and am ready to leverage my
experience to help the firm address the needs of its clients."
Wilson Sonsini's bankruptcy and restructuring practice represents
debtors, creditors and other constituents in matters involving
distressed entities. The firm negotiates and assists companies in
executing upon restructuring agreements and workouts on behalf of
private and public companies, and also represents banks, private
equity firms, and other financial institutions in restructuring and
bankruptcy matters.
Before joining Wilson Sonsini, Fay was a partner at
Wilmington-based Bayard, P.A., where she was a member of that
firm's business restructuring and liquidations group. Prior to
joining Bayard in 2017, she worked at Morris, Nichols, Arsht &
Tunnell LLP as an associate for more than eight years. Previously,
Fay clerked for three judges of the United States Bankruptcy Court
for the District of Delaware. She is the immediate past Chair of
the Bankruptcy Section for the Delaware State Bar Association.
Ms. Fay earned her J.D. from the University of Wisconsin Law School
and a B.A. in English and political science from the University of
Wisconsin-Stevens Point.
About Wilson Sonsini Goodrich & Rosati
For more than 60 years, Wilson Sonsini's services and legal
disciplines have focused on serving the principal challenges faced
by the management and boards of directors of business enterprises.
The firm is nationally recognized as a leading provider to growing
and established clients seeking legal counsel to complete
sophisticated corporate and technology transactions; manage
governance and enterprise-scale matters; assist with intellectual
property development, protection, and IP-driven transactions;
represent them in contested disputes; and/or advise them on
antitrust or other regulatory matters. With deep roots in Silicon
Valley, Wilson Sonsini has 19 offices in technology and business
hubs worldwide. For more information, please visit www.wsgr.com.
[*] Joel Moss Joins Cahill's Bankruptcy Practice as Partner
-----------------------------------------------------------
Cahill Gordon & Reindel LLP on March 9 disclosed that Joel Moss has
joined the firm as a partner in its Bankruptcy & Restructuring
practice.
Mr. Moss's practice focuses on representing a broad range of
clients including financial institutions, hedge funds, direct
lenders and ad hoc secured lender and noteholder groups in complex
in-court and out-of-court restructurings, workouts, rescue
financings, liability management transactions and DIP and exit
financings. He also has substantial experience advising financial
institutions and hedge funds in connection with the mitigation of
risks associated with derivative, futures and securitization
transactions.
"Joel has an innate understanding of our creditor clients' needs,
given the broad range of bankruptcy and restructuring matters he
has managed over his career," said William M. Hartnett, Co-Chair of
Cahill's Executive Committee. "He is well-placed to see around
corners on behalf of all of our creditor clients, anticipating
their concerns and developing potential solutions."
"Joel's impressive client roster extends well beyond financial
institutions, encompassing ad hoc groups of secured lenders and
note holders, direct lenders, hedge funds and others, helping
prepare them to navigate deeply complex workouts and
restructurings," said Jennifer Ezring, Co-Chair of Cahill's
Executive Committee.
"As the top-ranked legal advisor to financial institutions in
leveraged finance and high yield products for decades, Cahill's
market-leading experience and deep client relationships are a
force-multiplier for anyone advising the financial services
industry on restructuring related matters, including myself," Mr.
Moss said. "I am eager to begin collaborating with the team here."
In highlighting Mr. Moss's role as a leading bankruptcy attorney,
The Legal 500 writes that his "former in-house experience means he
has a deep and unique understanding of what his bank clients are
looking for." He has also been recognized by IFLR1000 as a Rising
Star. In addition, Mr. Moss is a widely respected thought leader
and speaks regularly at industry conferences.
He received his J.D. from New York University School of Law,
graduating magna cum laude and his B.A. from Duke University, also
graduating magna cum laude.
About Cahill Gordon & Reindel LLP
Cahill -- https://www.cahill.com/ -- is among the most successful
law firms in the world. With a history of legal innovation dating
back to the firm's founding in 1919, Cahill is trusted by
market-leading financial institutions, companies and their boards
to manage significant corporate transactions, litigation and
regulatory matters. Based in New York, Cahill also has offices in
London and Washington, D.C.
[*] New Hampshire Bankruptcies Increased Again in February 2023
---------------------------------------------------------------
Bob Sanders of NH Business Review reports that the number of
bankruptcy filings in New Hampshire went up in New Hampshire. Some
52 individuals and businesses filed in February, nine more than the
43 that filed in both January and the previous February -- a 17
percent increase.
Still, the number of filings this January and February 2023 each
were two above record lows for those months, and bankruptcies are
still just about a tenth of the 506 that filed for protection in
February 2010.
In fact, we haven't seen fewer filings in February 2023 since the
1980s – except for last year, of course.
But February 2023 is now the third consecutive month with an
increase in bankruptcy filings over the previous year. The question
is, are we at the start of a continued increase in the number of
lost personal and business fortunes or have we settled in?
Meanwhile, there were four filings with business-related debt in
February, compared to three in January 2023. Only one filed
directly, compared to two the previous month, and it was a
reorganization under Chapter 11.
The business was Beato Auto Sales Inc. of Derry, which filed Feb.
13 under Chapter 11. It reported assets of $1,885,012 and
liabilities of $4,700,173.
[^] BOOK REVIEW: Hospitals, Health and People
---------------------------------------------
Author: Albert W. Snoke, M.D.
Publisher: Beard Books
Softcover: 232 pages
List Price: $34.95
Order your personal copy today at
http://www.beardbooks.com/beardbooks/hospitals_health_and_people.html
Hospitals, Health and People is an interesting and very readable
account of the career of a hospital administrator and physician
from the 1930's through the 1980's, the formative years of today's
health care system. Although much has changed in hospital
administration and health care since the book was first published
in 1987, Dr. Snoke's discussion of the evolution of the modern
hospital provides a unique and very valuable perspective for
readers who wish to better understand the forces at work in our
current health care system.
The first half of Hospitals, Health and People is devoted to the
functional parts of the hospital system, as observed by Dr. Snoke
between the late 1930's through 1969, when he served first as
assistant director of the Strong Memorial Hospital in Rochester,
New York, and then as the director of the Grace-New Haven Hospital
in Connecticut. In these first chapters, Dr. Snoke examines the
evolution and institutionalization of a number of aspects of the
hospital system, including the financial and community
responsibilities of the hospital administrator, education and
training in hospital administration, the role of the governing
board of a hospital, the dynamics between the hospital
administrator and the medical staff, and the unique role of the
teaching hospital.
The importance of Hospitals, Health and People for today's readers
is due in large part to the author's pivotal role in creating the
modern-day hospital. Dr. Snoke and others in similar positions
played a large part in advocating or forcing change in our hospital
system, particularly in recognizing the importance of the nursing
profession and the contributions of non-physician professionals,
such as psychologists, hearing and speech specialists, and social
workers, to the overall care of the patient. Throughout the first
chapters, there are also many observations on the factors that are
contributing to today's cost of care. Malpractice is just one
example. According to Dr. Snoke, "malpractice premiums were
negligible in the 1950's and 1960's. In 1970, Yale-New Haven's
annual malpractice premiums had mounted to about $150,000." By the
time of the first publication of the book, the hospital's premiums
were costing about $10 million a year.
In the second half of Hospitals, Health and People, Dr. Snoke
addresses the national health care system as we've come to know it,
including insurance and cost containment; the role of the
government in health care; health care for the elderly; home health
care; and the changing role of ethics in health care. It is
particularly interesting to note the role that Senator Wilbur Mills
from Arkansas played in the allocation of costs of hospital-based
specialty components under Part B rather than Part A of the
Medicare bill. Dr. Snoke comments: "This was considered a great
victory by the hospital-based specialists. I was disappointed
because I knew it would cause confusion in working relationships
between hospitals and specialists and among patients covered by
Medicare. I was also concerned about potential cost increases. My
fears were realized. Not only have health costs increased in
certain areas more than anticipated, but confusion is rampant among
the elderly patients and their families, as well as in hospital
business offices and among physicians' secretaries." This aspect of
Medicare caused such confusion that Congress amended Medicare in
1967 to provide that the professional components of radiological
and pathological in-hospital services be reimbursed as if they were
hospital services under Part A rather than part of the co-payment
provisions of Part B.
At the start of his book, Dr. Snoke refers to a small statue,
Discharged Cured, which was given to him in the late 1940's by a
fellow physician, Dr. Jack Masur. Dr. Snoke explains the
significance the statue held for him throughout his professional
career by quoting from an article by Dr. Masur: "The whole question
of the responsibility of the physician, of the hospital, of the
health agency, brings vividly to mind a small statue which I saw a
great many years ago.it is a pathetic little figure of a man, coat
collar turned up and shoulders hunched against the chill winds,
clutching his belongings in a paper bag-shaking, tremulous,
discouraged. He's clearly unfit for work-no employer would dare to
take a chance on hiring him. You know that he will need much more
help before he can face the world with shoulders back and
confidence in himself. The statuette epitomizes the task of medical
rehabilitation: to bridge the gap between the sick and a job."
It is clear that Dr. Snoke devoted his life to exactly that
purpose. Although there is much to criticize in our current
healthcare system, the wellness concept that we expect and accept
today as part of our medical care was almost nonexistent when Dr.
Snoke began his career in the 1930's. Throughout his 50 years in
hospital administration, Dr. Snoke frequently had to focus on the
big picture and the bottom line. He never forgot the importance of
Discharged Cured, however, and his book provides us with a great
appreciation of how compassionate administrators such as Dr. Snoke
have contributed to the state of patient care today.
Albert Waldo Snoke was director of the Grace-New Haven Hospital in
New Haven, Connecticut from 1946 until 1969. In New Haven, Dr.
Snoke also taught hospital administration at Yale University and
oversaw the development of the Yale-New Haven Hospital, serving as
its executive director from 1965-1968. From 1969-1973, Dr. Snoke
worked in Illinois as coordinator of health services in the Office
of the Governor and later as acting executive director of the
Illinois Comprehensive State Health Planning Agency. Dr. Snoke died
in April 1988.
*********
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
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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
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*** End of Transmission ***